The Economy
Debate between Gordon Birtwistle and Chris Leslie(10 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie
How disappointed the hon. Gentleman’s constituents must be to hear his comments, which contained no reflection or recognition of any of the problems that they face, including their cost of living difficulties. No, as far as the hon. Gentleman is concerned, everything is fine and wonderful: it is all working totally as it should be. I must tell him that he will have to face his electorate in a few months’ time, and that he will face their anger and concern about his failure to deal with the living standards that they have been experiencing.
Gordon Birtwistle
Will the shadow Minister remind the House what the growth of the economy was in 2009?
Chris Leslie
We had a global banking crisis, but, as I recall, growth was 1% in the first quarter of 2010. We had a strong level of growth as we came out of that crisis, because we took up the challenge to stimulate the economy and get it moving again. There was a VAT reduction at that time, and then what happened? What did the Chancellor of the Exchequer do? What did he do, with the help of the hon. Gentleman’s votes? He whacked up VAT to 20%, although the hon. Gentleman had not mentioned that in his election manifesto. He, too, will have to face his electorate and account for the decisions that he has made.
I do not want to take up too much time, because I know that many other Members wish to speak, but it is important for me to say something about the fiscal challenge. There will have to be other difficult decisions, which is why Labour is looking at every single Department and every item of expenditure, line by line, in our zero-based review, and identifying the different choices that can be made to enable us to live within our means. We have already proposed scrapping winter fuel payments for the richest 5% of pensioners, cutting Ministers’ pay by 5%, capping child benefit rises at 1% for two years, reviewing the value for money of assets and non-essential buildings owned by the Government, and making savings of £250 million in the Home Office budget—by, for example, scrapping police and crime commissioners—in order to better protect front-line policing. Over the weeks ahead, we will set out more of our early findings from other Departments.
Our plan is to balance the books and get the national debt falling as soon as possible in the next Parliament. While the Prime Minister and Chancellor think it is okay to make £7 billion of unfunded pledges—the Prime Minister said that again today at Question Time—although even the Secretary of State for Business, Innovation and Skills has described that as a “total fantasy”, our manifesto will not make commitments that would be paid for by additional borrowing. When we make promises, we will say where the money will come from. We would willingly put all our costings before the OBR so that it could check and validate them—but, of course, that would upset the Chancellor’s plan to smear our proposals and run a dirty election campaign based on fear rather than fact. If the Chancellor only had the guts to put his plans, and all our plans, in front of the OBR, perhaps we could let the public form a judgment based on the values and merits of the manifestos and their policy proposals.
Cost of Living
Debate between Gordon Birtwistle and Chris Leslie(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie
Government Members see what they regard as green shoots for our economy. They hope that the public will just forget what has happened for the past three and a half years, but the public have long memories and will remember the harm and anxiety that the cost of living crisis is now causing them. Perhaps those record-breaking extremes from this Prime Minister and Government reflect the new extremism in the Conservative party and the drift away from the centre ground of British politics.
Chris Leslie
I will come to the Liberal Democrats in a moment. I am talking about the Conservative party.
The Conservatives and the Prime Minister like to pretend that they understand the concerns of hard-working people. When they finally realise the strength of public opinion, they will grudgingly come up with a half-baked effort on energy bills, just as they finally caved in with a long overdue cap on payday loans. The trouble is that they just don’t get it, because their hearts aren’t in it. As with the action on payday loans and banking reform in this week alone, why does the Chancellor always have to be pushed into doing the right thing?
The forces of moderation in the Conservative party—I am looking around desperately to see them; perhaps there are a couple of them here—complain that they are seen as the party of the rich and that voters do not trust their motives. Twenty-five of the dwindling number of those anxious Conservative Members of Parliament had a meeting with the Prime Minister to express their concerns, although that was before some of them announced that they were standing down from Parliament.
The moderates—there is one opposite me—are right to worry, because the Prime Minister’s pretence that he represents the middle of British politics has finally stretched beyond belief, as time and again his true instincts shine through. In the lord mayor’s banquet speech a fortnight ago, the mask slipped as the Prime Minister proclaimed the need for permanent austerity and the shrinking of public investment in perpetuity. The true ideological intentions of the Conservatives are there for all to see. Perhaps that is why the party’s Free Enterprise Group published its plans—
Local Government Financing
Debate between Gordon Birtwistle and Chris Leslie
Chris Leslie
No, I would not agree. The tactic of the hon. Gentleman and of many hon. Members on the Benches opposite is to pick one or two anecdotal examples of problems, creating from those a whole story about how the public sector is rife with inefficiency and difficulties, and has to be culled. I presume he thinks that the only way forward is this fantastic private sector drive, which is always correct in all circumstances. There are examples of poor practice in the public sector, just as there are in the private sector. All I say to him is that taking 25% of public spending out of these vital services within four years will affect his party and the Liberal Democrats at the ballot box, particularly in the local elections next year; it will be interesting to see the reaction from the Liberal Democrats then.
We are all constrained by time in this debate, but I wish to raise a couple of points, especially on the local government finance particulars that have not been addressed so far. Some of my hon. Friends have mentioned the difficulties created by the in-year reductions in the first wave of announcements. Strangely, there will probably be four chops of the axe: the first announcement at the end of May/beginning of June; the Budget; the spending review coming up in the autumn; and another Budget in March. One consequence is that the ability for any sensible local authority to plan ahead carefully, cautiously and sensibly on a medium to long-term framework containing some understanding of what settlements it might achieve, given that the vast bulk of local government money comes from grant, has gone entirely. No sane or sensible local authority will be able to make any decisions about how it proceeds for the medium term until it has heard what is in the spending review. The danger in making some of the reductions within this mid-year period is that the short-termism will create extra harm, because changes will not be thought through or evidence based, and unfortunately they will probably hit those in most need.
Another consequence of this short-termism is that it affects some of the carefully constructed partnerships between public agencies within localities, which we have all been hearing about. We all, of course, want Total Place and we want local authorities to work together, be it at local strategic partnership level or under the local area agreement frameworks. Those partnerships have been shattered into smithereens because each public agency will retrench into its shell, with local authorities having to focus very much on their own situation and being unable to pool discretionary resources with other agencies. I am sure that the same will be the case in respect of police authorities, health bodies and others, and I very much regret that move.
The Government also decided to scrap the local area agreement reward grant. Again, this is a technical area, but the grant was important in process terms because it encouraged some sharing of objectives between central and local government. Not every front-line service is determined by a local authority alone. Of course, as we have heard, all sorts of services depend on central and local government working in tandem. Driving a coach and horses through the local area agreement framework will mean that local authorities will have absolutely no incentive to work in partnership with central Government, because in doing so all they have been given is a slap in the face. That is a great pity, because although this approach may not necessarily be noticed by our constituents, it is a crucial piece of the jigsaw that made a big difference.
The notion that the Government have been so generous in removing the ring-fencing from a series of grants after they took the axe to area-based grant that already exists is worrying. If the first thing that the Government decide to cut is that budget, which already contained a degree of flexibility and involved local authorities having an amount of freedom—local councils were getting used to working without the constraints of the centre—and straight away the front-line thing that goes is the area based grant and that flexible money, what will be the reaction of any local authority when the next tranche of money is magically un-ring-fenced? Naturally, those will be the next sums of money to go through the exit door, be they for the de-trunking of roads or for housing market renewal—the Government say they are removing some of the ring-fencing from that. Those will be the items of expenditure that will probably be cut next, because that is the signal that the Government are sending.
Gordon Birtwistle (Burnley) (LD)
The housing market renewal grant was obviously spent on renewing areas. Does the hon. Gentleman think that spending 10% of the total money—more than £300 million—on mini-quangos that simply passported the money through was sensible? Last year, more than £33 million was spent on these quangos, which basically just passported the money through. That has now been running for four years. More than £130 million, which could have been paid direct to local authorities to deliver the programme, was sent through totally unnecessary quangos set up by the Labour Government.
Chris Leslie
The hon. Gentleman can make these points, but they are dancing on the head of a pin. I think it is important that this money goes to the front line and gets spent, but it certainly will not help to cut these sums of money by a quarter—probably more than that—over four years. The hon. Gentleman seems to have these issues completely out of proportion. It is also interesting that in a written answer to me, the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), had to correct the announcement that the Government had made to the House about the un-ring-fencing of so much money. They discovered that a mistake had been made when they said that £300 million of private sector renewal moneys and the housing and planning delivery grant had been un-ring-fenced. It turned out that that money was already flexible, so their totals were changed entirely.
I want to talk about one or two other points that have not been mentioned much. Capital spending on infrastructure and on the improvement of the basic facilities in many of our constituencies is essential. Not only is capital grant being reduced significantly, but a little-spotted change was announced in the Budget in respect of prudential borrowing and the freedom that the previous Administration gave to local authorities so that they did not have to jump through all sorts of Treasury bureaucracy to be able to access capital loans from the Public Works Loans Board. An item in the small print in the Red Book now states that local authorities will have those requests from the PWLB scrutinised far more closely than before. In other words, it is a return to the days of centralism, if they get that money at all. Local authorities will have less capital grant as well as less ability to access PWLB money.
Does that mean that local authorities will have to go for bond finance, which is more expensive? I would certainly like to hear more from the Government about that; there was not an announcement in the Budget about bond finance. I would also like to hear where we stand in terms of accelerated development zones, tax increment financing and other measures that would be useful in encouraging innovation in the way in which local authorities access capital markets.
My final point concerns the choices that local authorities face and where they go with these difficult decisions. Many Government Members might have local authority members who are happy to take on the full burden of the reductions in the services that affect their constituents who are in most need. Many Labour authorities—and indeed, those run by the Liberal Democrats as they used to be—might want to try to temper that and to consider raising revenue from other sources. Traditionally, council tax has been the only option, although there is a quasi-capping arrangement going on with the supposed one-year council tax freeze deal. Most local authorities will probably be fairly daft not to accept the money that is on the table, although it is entirely unsustainable. There is no way that the Government will be able to extend that for long. After we have gone past this first year, we should be aware that the gearing ratio means that local council tax increases could easily be of the 10% to 15% variety. Does that mean that the Secretary of State will bring capping back in? Again, so much for his localism.
I suspect that the real burden will end up hidden away in the fees and charges that all our constituents have to pay, with a return to the easyJet council model—it will be hidden not just in planning charges, parking charges, swimming and library charges and so on but in those social care charges that hit the poorest most of all. Unfortunately, this is an ideological set of changes— although I hope that the Liberal Democrats will think again—that are certainly not in the interests of any of our constituents.