Geraint Davies
Main Page: Geraint Davies (Independent - Swansea West)Department Debates - View all Geraint Davies's debates with the HM Treasury
(8 years, 8 months ago)
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John McDonnell (Hayes and Harlington) (Lab)
I beg to move,
That this House believes that the Government has failed to deliver on its commitment to stand up for working people; notes that the Government’s existing plans to cut tax credits will cost more than three million working families an average of £1,300 a year from next April; further notes that 4.1 million children now live in absolute poverty, an increase of 500,000 since 2009-10; notes that in 2014 the UK’s current account deficit reached the highest level ever recorded, at 5.1 per cent; notes that 85 per cent of the money saved from tax and benefit changes in the last Parliament came from women; further believes that the Government has failed to deliver the more sustainable economy the country needs; notes that, rather than investing in building new homes to cut housing benefit costs, housing investment has been slashed and housing benefit has risen by over £2 billion a year in real terms; notes that the gap between UK productivity per hour worked and the rest of the G7 grew to 20 percentage points in 2014, the widest productivity gap since 1991; believes that further deep cuts to the budget of the Department for Business, Innovation and Skills could damage the Government’s ability to boost innovation and productivity and could restrict opportunities for British businesses and workers to succeed in the global economy; calls on the Government to reverse fully and fairly its plans to cut tax credits from next April; and further calls for the Government to invest in growing a more productive economy with a focus on science, technology and green jobs to equip Britain for the future and share more fairly the proceeds of growth.
We have chosen to devote a section of today’s Opposition day to set the scene for next week’s autumn statement and comprehensive spending review. This will be the last chance many MPs from across the House will have to put their case to the Chancellor before he comes to his final conclusions on his spending plans and economic strategy for the coming period.
The Chancellor is not in the Chamber today. Naturally, we are disappointed, but I spoke to him before this debate. He is working hard on the comprehensive spending review, so I think we will forgive him if he gets his sums right and comes to the right conclusions.
The Chancellor’s decisions next week will have serious consequences for every constituency in the country. What we all need from the Chancellor is wise judgment and fairness. Our country faces serious challenges and risks ahead, which we should not underestimate.
Let me first deal with one issue that overrides all others. It has been heart breaking to watch the tragic events in Paris at the weekend unfold into the suffering of families coming to the realisation of their loss. I sent a message of condolence and solidarity to our counterpart Michel Sapin, the French Finance Minister, at the weekend. It is true that the first duty of a state is to protect its citizens, so may I therefore assure the Chancellor that he and the Prime Minister have our full support for the enhanced expenditure to strengthen our security services that they have announced this week?
May I also say that we share the view of the Metropolitan police commissioner and other police chiefs that the first line of gaining intelligence on potential hazards and threats to our safety, preventing terrorist attacks and responding to them is often the police officer in the community and on the street? There has been a great deal of speculation in the media about the scale of potential cuts to the policing service, prompting severe warnings from police authorities—on a cross-party basis—about the consequences for the safety of the public if this scale of cuts goes ahead. May I therefore assure the Chancellor that we would also support an urgent review of the policing budget proposals to avert this risk to the service, and that we would support any enhanced expenditure plans being placed outside the parameters of the fiscal constraints of the charter for budget responsibility?
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend agree that the fact that the tragic atrocities in Paris were focused on young people in social environments suggests that such attacks could occur anywhere in Britain at virtually any time?
John McDonnell
We are all fearful of the risk that exists, but we place our confidence in our intelligence and policing services. To be frank, when our community is under such a heightened physical threat, now is not the time to be dogmatic. When it comes to national security and keeping the public safe, I say to the Chancellor and the Government that they will always have the support of the Labour party.
Let me turn to an issue of fairness—tax credits—which I hope Ministers can reassure us today that the Chancellor has now sorted out once and for all. It came as a shock to Members on both sides of the House when he brought forward the proposals to cut tax credits without fully understanding, or calculating the consequences of, his actions. Plainly, it was an error of judgment. I want to thank all the Members of this House from all parties and our colleagues in the other place who found that they could not support the Chancellor’s proposals and hence forced him to think again. What convinced many people was exactly what Gordon Brown, our former Prime Minister, summed up so eloquently last week—that this is an attack on children. The prospect of 200,000 more children being pushed into poverty pushed many MPs and Members of the other place over the edge to oppose the proposals.
There has been a lot of speculation in the press about how the Chancellor has been trying to resolve the tax credits question, with much talk of cuts to universal credit and threatened Cabinet resignations, but I am pleased that the quiet man may have had to raise his voice and has won the day. However, the threat seems to have moved on to housing support and other matters. I do not expect Ministers to reveal to us today the detail of the Chancellor’s proposals to resolve this matter, but for the 3 million families who face a cut of £1,300 a year, may I ask them at least to assure us and those families that they will withdraw the tax credits cuts in full and that no existing or new claimant will lose out?
Harriett Baldwin
My hon. Friend is right. The bottomless pit of money from the magic money tree has been brought into service a lot over recent days, and we should focus instead on the good news about the UK economy. The employment rate has reached a record high—
Harriett Baldwin
Is the hon. Gentleman going to welcome that fact? I do not think he is. Wages have risen by more than 3% this year. Will he welcome that? For people in continuous employment, wages are up by more than 4%—[Interruption.]
Mr Speaker
Order. We cannot have hon. Members freelancing, or at least not any more than they are already accustomed to doing. The hon. Member for Swansea West (Geraint Davies) can seek to intervene, and the Minister must decide whether to respond. However, since the hon. Gentleman claims to have a point of order, I am keen to discover whether it is a point of order or a point of frustration, so perhaps we can hear from him.
Geraint Davies
On a point of order, Mr Speaker. When the Minister exhibits such massive ambiguity by seeming to say “Yes, yes, yes,” to my intervention, so that then I am getting up and down, does that not cause great confusion in the Chamber and among the greater public? Would you like to make a ruling on that?
Mr Speaker
My ruling on that, for the benefit of the hon. Gentleman and the House, is that any Member who has the Floor should indicate clearly whether he or she is giving way, and if so, to whom. Any gesticulation that obscures rather than clarifies, although not disorderly, is unhelpful.
Harriett Baldwin
My hon. Friend is right to remind us of two important facts. First, no Labour Government have ever left office with the public finances in a better state than when they came to power, and secondly, no Labour Government have left office without leaving more people unemployed than there were when they came to office.
Do we agree with the other points made by the Labour party?
Harriett Baldwin
The hon. Lady is wrong about that. Since 2010, in terms of relative poverty, some 300,000 fewer children are living in poverty. The Government losing control of public finances and not being able to do anything about that would be the worst thing that could possibly happen for the opportunities for those children. The people who suffer when the country loses control of its public finances are the low-paid, and the people who get turned out of work are the ones who suffer the most—
Geraint Davies (Swansea West) (Lab/Co-op)
It is always a hilarious pleasure to follow the hon. Member for Monmouth (David T. C. Davies). I am very sorry that the Economic Secretary to the Treasury, the hon. Member for West Worcestershire (Harriett Baldwin), who is so brightly coloured in her UKIP blazer, has left the Chamber after giving her black and white comedy speech. A part of that speech was about how Labour has caused the problems and misery of the current day, but that is completely false. In fact, in the 10 years to 2008 under Labour, the economy grew by 40%, which is why we could double the size of the health service and the education service and lift millions of people out of poverty.
In 2008, we saw the financial crisis caused by the bankers and the sub-prime debt crisis. The then Labour Government under Gordon Brown along with Barack Obama provided a fiscal stimulus that got us back to growth by 2010. The key strategic issue in this debate is the balance between growth and cuts to get down the deficit. Labour errs on the side of growth, and George Osborne, when he arrived in 2010, decided to revert to cuts—I am talking about half a million job cuts. People stopped spending and we have had flatlining growth until relatively recently. What that has meant is that, while we have had more jobs, the overall production per job has gone down.
Kevin Hollinrake (Thirsk and Malton) (Con)
Does the hon. Gentleman not recognise that, in 2008, the UK was in the deepest recession that it had been in since the second world war, and that we are now the fastest growing economy in the G7? Will he acknowledge those facts today?
Geraint Davies
The fact that I do recognise is that, when we left office in 2010, debt as a percentage of GDP was 55%, and now it is 80%. The Labour party borrowed less in 13 years than the Conservatives have in five years. There has been a complete failure to invest in strategic growth, productivity, and wealth creation. Instead, debt has been used as a cover to attack the welfare state and public services, which are part of the public-private partnership on which Britain relies.
James Cartlidge (South Suffolk) (Con)
I do not know what planet the hon. Gentleman is on. I was a mortgage broker who was running a business leading up to the crunch. I can safely say that the Financial Services Authority, which was created by Gordon Brown in May 1997, completely and utterly failed to regulate the banks. He cannot just walk away from responsibility. Labour has massive culpability for the unsustainable nature of the boom that led up to the massive crash in 2008.
Geraint Davies
The Labour party’s spending plans were all agreed to by the Conservatives. We introduced regulation through the FSA and greater freedom for the Bank of England. The Conservatives opposed greater regulation, yet the lack of regulation led to the awful situation we are in now.
Returning to the current, ridiculous attempt to reduce the deficit and the debt by cutting tax credits, the fact is that, in simple terms, poor people spend all their money in the economy, whereas rich people tend to save it, often offshore. Robbing 3 million people of £1,300 to try to balance the books will therefore massively undermine regional economies, when we already have regional imbalances. Taking money from people who would spend it and giving it to those who will not, through changes to inheritance tax, is economically loopy and, in my view, quite wrong morally. Rather than lifting millions of people out of poverty, we are thrusting millions into poverty, in particular the extra 400,000 children who will be put into poverty.
Tax credits are an American instrument to encourage people to work. They are targeted at working families, so that people with children, who have greater needs, can afford to work. If you ran a business, Madam Deputy Speaker, and you could only afford to pay £10,000 to employ someone and make it viable, and if they needed £15,000 and the difference was made up by the Government, we would end up with a job and a viable business. If we withdraw tax credits, we destroy small businesses, destroy incomes, impoverish families and generate inter-generational poverty. It is disgraceful and quite wrong.
The situation with housing benefit is also ridiculous. Seventy per cent of the growth in housing benefit has been paid into private sector rents. Why? It is because the Government have not built enough social housing. Instead of building more social housing, they are basically selling it off to give the right to buy in housing associations. That is not the way forward.
As for procurement, with HS2 construction we are giving something like a £50 billion contract to the Chinese. If a British consortium had, for example, a £55 billion contract, it would pay corporation tax, income tax and national insurance and would have local supply chains and build capacity in Britain—our steel would be going into the construction, rather than Chinese steel. Why have the Government failed to demand carbon tariffs on the cheap steel coming from China, which is produced more cheaply because China does not have the environmental controls that we demand in Britain?
We need more investment in city regions such as Swansea Bay city region, where the local authorities, industry and universities are working together. If we are going to have a national tax hub for Wales, which I am against, why is it being put in Cardiff, which can look after itself? It should be in Swansea Bay city region, a more deprived area. In terms of the trade deficit—[Interruption.] The point is that, as with the Driver and Vehicle Licensing Agency put in Swansea, if the Government can use the investment as an instrument of economic power, they should do so to help relatively deprived areas, not just London and the south-east.
The trade deficit is a massive 5%. We need to think more about emerging massive markets, such as China and India, whose middle classes are approaching 20%. Why are we not actively engaging to unite the creative and manufacturing industries to provide high-value products that we can sell in those markets, rather than moaning that we cannot produce spoons any more?
We also need to have an eye towards the Transatlantic Trade and Investment Partnership—obviously people will have heard of the free trade agreement with America—as well as the Comprehensive Economic and Trade Agreement with Canada, CETA, which is coming immediately. People are barricading the front door because of TTIP, while CETA is going through the back door—and will give companies powers to fine democratically elected Governments if we pass laws that impact on their future profits. We need to sort that out, but we also need to ensure that TTIP works towards a sustainable future for the world. My hon. Friend the Member for Islwyn (Chris Evans) mentioned global warming, and unless we embrace the need to ensure human rights, workers’ rights and sustainable development within the constraints of TTIP, which will be the blueprint for global trading, we will not have a sustainable world or a sustainable economy.
We need to think more clearly about growth in a focused way, rather than always looking to cut things. As a constituent in Swansea said to me, if a company is making a loss, it has two options: sack the workers and sell the tools, or invest in growth, productivity and products. That is the focus of the Labour party.
The Exchequer Secretary to the Treasury (Damian Hinds)
Protecting the economic security of working people in Britain is precisely what we set about doing in 2010, it is what we fought the general election on earlier this year, and it is what the British electorate asked us to continue to do following the decisive result at the May election, as we were reminded of by my hon. Friends the Members for Dudley South (Mike Wood) and for Fareham (Suella Fernandes) and, graciously, by the hon. Member for East Antrim (Sammy Wilson), who speaks for the DUP.
Our programme for working Britain stands on four interlocked pillars. The first is a stable economy, backed by a credible long-term economic plan. Low inflation and low interest rates support productive investment. The second is to back business. It is firms that give people jobs and families economic security, and it is innovation that generates economic growth. We know that only business can create the wealth that affords us the quality public services we all value so much. The third is the right incentives to work and the support to do so as we strive towards our goal of full employment. The fourth is a fiscal plan to eliminate our deficit and face up to the challenges of this generation, in this generation, instead of leaving an even bigger mountain of debt to our children and their children, as we were reminded by my hon. Friend the Member for Thornbury and Yate (Luke Hall).
We have made important strides on all these fronts. We are cutting the jobs tax, cutting red tape for business and creating record numbers of apprenticeships—my hon. Friend the Member for Eastleigh (Mims Davies) talked about the apprenticeship revolution. Since 2010, the private sector has created almost 2.5 million jobs. We have record levels of employment—indeed, more employment growth in the UK since 2010 than in the rest of the EU put together—and more women in work than before. Real wages have risen by almost 3% on the year, and we are leaving more cash where it belongs—in the pockets of hard-working people. Through our increases in the personal allowance, we are making the typical basic rate taxpayer £905 a year better off. We extended childcare support, and are doing so again, with tax-free childcare extensions under universal credit and free entitlement for pre-schoolers worth £5,000 per child per year. We have also set out a path for sustainable but solid deficit elimination so that we can live within our means and start paying down the debt.
Geraint Davies
What would the Minister say to Ben Bernanke, the former chairman of the US Federal Reserve, who has basically said he disagrees with the primary legislation that states we should always run a budget surplus because it provides no flexibility to respond to another crisis? In other words, is it inept?
Damian Hinds
At the present time, I have no particular message for the former head of the Federal Reserve, except to say that we inherited the most enormous deficit. We will continue to bring it down, which the British people gave us a mandate to do, and we will pay down the debt, because if we do not do that in the good times, when will we ever?
My hon. Friend the Member for Cheltenham (Alex Chalk) reminded us that when the financial crisis hit, the cupboard was bare, because of the structural deficit the Labour Government allowed to build up. In 2010, we immediately began the programme to bring that down. Since then, despite the oil price spike and the eurozone crisis, we have made great progress and have halved the deficit, but much more remains to be done. We set out what that would entail before the election and in the summer Budget: a combination of departmental spending reductions, tax measures and reductions to the welfare bill. Importantly, however, we are maintaining our commitment to the institutions on which Britons most rely: our schools and our world-leading national health service.
Elsewhere, however, we need to make savings, and next week, my right hon. Friend the Chancellor will set out the remaining detail in the autumn statement, alongside an updated fiscal forecast from the Office for Budget Responsibility. I know that right hon. and hon. Members will not expect me to pre-empt what my right hon. Friend will say next week.
We have set out a new settlement for working Britain. My hon. Friend the Member for Eastleigh enumerated some of what we have been doing to help hard-working families, including the increase in the personal allowance. The introduction of the national living wage will directly benefit 2.7 million workers on low wages, and up to 7 million people in total, and it is a measure that will disproportionately benefit women. We are doubling the free childcare offered to working families with three and four-year-olds, we have frozen council tax and fuel duty and we have capped payday loans—all actions that the Government have taken to support working families.
In the little time available I want to respond to some of the important points that have been raised. The hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) spoke powerfully—as he always does—on behalf of his constituents. He reminded us, as we know all too well, that economic growth does not take place evenly everywhere, and that some places and sectors face significant difficulties. This is a difficult and uncertain time for many people who have been affected by the issues that he raised. As he knows, the Government cannot control the world price of steel, and we cannot cover that entire complex subject in this debate. It is right, however, that the multi-million pound package has been put in place for Redcar and Scunthorpe, and my right hon. Friend the Business Secretary is fully engaged on that issue.