Budget Resolutions and Economic Situation

Greg Clark Excerpts

Monday 21st March 2016 Commons Chamber

[The Secretary of State for Communities and Local Government (Greg Clark)]

No one can pretend that this has been an easy Budget for the Government, but none of them is. Every single one of them is overshadowed by the events of the previous decade, by the deepest recession since the war and by a financial and fiscal crisis in which a large part of our national wealth disappeared in a puff of debt. GDP, productivity and revenue were all decimated. That is what happens when one spends a decade using a credit bubble to inflate the size of government. One day, the income suddenly disappears, but the commitments remain. In 2010, those responsible in the Labour party left government and did so without looking back. In the six years that followed, they have retreated ever further from any sense of responsibility.

It fell to us on the Conservative Benches to put things right: to rebuild an economy on firm foundations, to wrestle down the deficit and to mend the many institutions left in disarray. Financial regulation, educational standards and the housing market—all were broken, and all are being painstakingly restored to working order by this Government. However, every decision we made has been a hard one, because when the gap between the need and the Government’s resources is so wide there are no easy answers. We have not always got them right first time—the least worst option is not always apparent—but this is a Government willing to listen and to respond, while also keeping on track to squeeze out debt, encourage growth, generate jobs and build new homes. On all these fronts, we are moving the country in the right direction, while the Opposition rush headlong to the left. They can go their way, but we will keep on moving forward.

[Clive Efford (Eltham) (Lab)]

This Government said that they would eradicate the deficit in four years. Will the right hon. Gentleman tell me when that policy changed? How long does a long-term economic policy last for?

[Greg Clark]

I do not know whether the hon. Gentleman was in the Chamber for the Budget statement. If he was, he will have seen that the Office for Budget Responsibility confirmed that we are on track to eliminate the deficit by the end of the Parliament and to have a surplus. He should spend a bit of time talking to his right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), who might provide the answer to why it has taken some time to reduce the deficit.

[Mark Spencer (Sherwood) (Con)]

Hundreds of thousands of small businesses are paying lots of those taxes. What assistance can the Secretary of State give to small businesses that are facing rate demands from local authorities?

[Greg Clark]

My hon. Friend draws attention to a very important point. We have doubled small business rate relief, benefiting businesses right across the country—the small businesses that are the backbone of our economy and that are contributing a record number of jobs, meaning that we have more people employed than ever before.

[Melanie Onn (Great Grimsby) (Lab)]

Will the reduction in small business rates have an impact on local authority incomes?

[Greg Clark]

If the hon. Lady had attended DCLG questions earlier in the day, she would have heard me confirm that every penny will be made up. I am sure she is delighted to hear that.

[Mr Clive Betts (Sheffield South East) (Lab)]

I asked the Secretary of State about this issue in questions earlier. He said that the cost of small business rate relief in this Parliament would be funded by section 31 grants. Will he confirm that that grant will not come from any other part of local authorities’ budgets, and if it is not will he point out precisely where in the Red Book it says how that is funded?

[Greg Clark]

On page 84, line 15.

Let me turn to the subject of today’s debate, which is infrastructure and devolution. Those issues will still matter a year from now—indeed 10 years and 100 years from now. In “The Wealth of Nations”, Adam Smith spoke of three fundamental duties of Government: the defence of the realm, the maintenance of law and order, and a third duty that he described as follows:

“the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit would never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”

We can therefore take it from the father of free market economics that there is no contradiction between faith in free markets and public investment in infrastructure. Indeed, they support one another and this Budget shows how.

The Budget announces new infrastructure investments in every part of the country—from Crossrail 2 in London to High Speed 3 for the northern powerhouse. There can be no more tangible demonstration of our belief in a one-nation economy.

[Toby Perkins (Chesterfield) (Lab)]

rose—

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

rose—

[Greg Clark]

I will not give way.

Not for us the discredited model of a one-city economy, because much as we value London it is wrong to rely on a single centre of wealth creation. Instead, wealth must be created and retained in communities across our nation —hence our ongoing commitment to HS2, a north-south axis linking London to the midlands engine and to the northern powerhouse. Quite literally, we must go further. We must build the vital east-west links needed to unlock the full potential of our great cities beyond London.

The Pennines might be the backbone of England, but frankly they are not the Himalayas. Some of our nation’s greatest cities stretch like a string of pearls across the north—and they can and should be drawn together. That is why this Budget strikes out in a new direction with the key announcement on HS3.

[Toby Perkins]

rose—

[Greg Clark]

No, I am going to make some progress, given the time constraints.

This is a transformative project. In particular, it provides the prospect of a better, faster line between Leeds and Manchester.

[Several hon. Members rose—]

[Greg Clark]

I want to make some progress.

[Mr Betts]

On a point of order, Mr Deputy Speaker. The Secretary of State gave me a direct answer about where in the Red Book the cost of the compensation for local authorities will come from is specified. He referred to page 84, line 15. However, that deals with the cost of the loss for small business rate relief, and does not deal with the grant that will replace it. Whereabouts is the section 31 grant covered in the Red Book?

[Greg Clark]

I have told the hon. Gentleman where it is—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think we had better have an answer to the point of order first. I realise that the Secretary of State has recognised that this was not a point of order, which is exactly the point I was going to make!

[Greg Clark]

Before the Chairman of the Select Committee comes to Budget debates, he should read the Red Book and do his homework. I am not going to help him in this debate.

Our road investment will complement rail investment. This includes the M62, accelerating progress to the achievement a four-lane smart motorway fit for the 21st century. Other improvements to both road and rail are not quite as high profile, but they are just as important—improving local links to bring home the benefit of national infrastructure.

[John Glen (Salisbury) (Con)]

Does my right hon. Friend recognise that the road improvement of most interest in the south-west is the upgrading of the A303—in particular, for my constituents, the tunnel at Stonehenge—which will transform the whole south-west peninsula?

[Greg Clark]

I do agree, and I note two things about what my hon. Friend says. The first is that this never happened when Labour were in government, and the second is that this could not have happened without the strong economy that this Government have built.

Many of these investments, such as the road just described by my hon. Friend the Member for Salisbury (John Glen), are long overdue. It has fallen to this Government to make improvements that could and should, as my hon. Friend says, have been made in earlier decades. That is why we must continue to make savings across the public sector.

[Kevin Foster (Torbay) (Con)]

Will the Secretary of State join me in welcoming not only the improvements to the road links to the south-west but the money put aside for further development work on rail resilience in the south-west to ensure that in future we have a railway that works and serves our region?

[Greg Clark]

I can certainly confirm that. It is a welcome development that we are following the traditions of our Victorian predecessors with the great revival of railway building, which is so important for the south-west that my hon. Friend so ably represents.

[Toby Perkins]

rose—

[Greg Clark]

I am going to make some progress.

In order to make these investments, we need to continue to make savings. The failure to control current expenditure means not just more borrowing, but that less is available for capital expenditure—a double dose of debt for our children and grandchildren, with financial debt compounded by infrastructure debt. The decisions that we make must be for the long-term good of the nation. This Government are therefore determined to draw upon the very best advice available, including that of Lord Heseltine, who will chair the Thames Estuary 2050 Growth Commission, and that of Lord Adonis, the chair of the National Infrastructure Commission, whose excellent work has informed many of the decisions made in this Budget.

[Derek Twigg (Halton) (Lab)]

Further to the point raised by my hon. Friend the Member for Sheffield South East (Mr Betts), on which page and in which paragraph is the compensation issue referred to?

--- Later in debate ---

[Greg Clark]

I have already given not only the page, but the line number—and the hon. Gentleman too should have done his homework.

I am delighted to say that the remit of the National Infrastructure Commission will be expanded to include large housing developments. It is vital that the big decisions we make on transport and utilities infrastructure are co-ordinated with those we make on housing. As well as building more homes, we need to build better homes. The idea that we can sacrifice quality to achieve quantity is utterly wrong-headed. The only way to build the homes we need over the long term is through forward planning, good design and sound finance.

That is why the Budget lays the groundwork for a new generation of garden villages, towns and cities. We will provide targeted support for local authorities to develop locally led schemes. We will adjust the legislative framework to speed up and simplify the process of delivering new settlements. We will adopt a localised, deal-making approach to planning reform, working with councils to tailor the system to local needs in return for commitments on housing delivery. Instead of trying to force new housing through a fundamentally unreformed system—the approach of the last Government—this Government understand that only a different policy can deliver different results.

[Tristram Hunt]

rose—

[Greg Clark]

There are time constraints, so I am going to make some progress.

This month marks four years since the introduction of the national planning policy framework. Overnight, 1,300 pages of central Government guidance were replaced with 52 pages of plain English. I see in his place my hon. Friend the Member for Henley (John Howell), who played such an important role in that. It is a crystal-clear guide to achieving sustainable development. We have seen massive improvements in planning performance and housing delivery in that time. Before, most councils did not even have a local plan; now, most of them do; and before long, all of them will.

This is not just about plans, but about planning permissions—and not just permissions, but new homes actually being built. And not just new homes, but popular support for new homes. We are seeing a rekindling of the faith in development that was destroyed under the tenure of the Labour party. There is a sense that development can make places better, not worse—not least owing to another achievement of our planning reforms, including the NPPF, which was to establish a fully fledged system of neighbourhood planning.

I am proud that the neighbourhood planning process is under way in thousands of communities across the country. Through community consultation and neighbourhood referendums, local people have been given a real say. This is proof that when the planning system is made accessible and accountable, we can deliver both quantity and quality. However, we do not regard the progress of the last four years—important though it is—as mission accomplished. Rather, it is a spur to further action: to implement the new measures set out in the summer Budget, the autumn statement and this Budget, and to continue the work of reform until we have fully achieved our vision of a property-owning democracy.

The NPPF was a new start, not an end point. The same applies to the other great reform agenda that my Department is responsible for: devolution. It was four years ago that I stood before this House to announce the first wave of city deals. The response from the Labour party was mixed: disparaging in this Chamber but welcoming beyond the confines of Westminster. Four years on, the process of decentralisation has gone further and faster than even the enthusiasts thought possible.

[Tristram Hunt]

Will the Secretary of State give way?

[Greg Clark]

I am going to make some progress, given that about 60 hon. Members want to speak in the debate.

We have seen a second wave of city deals and the launch of growth deals and devolution deals to encompass cities and shires alike. We have even seen something of a change of heart on the Labour Benches. I very much welcome that, if it is a genuine source of support—however qualified—for the principles at stake. If the party of central planning accepts that power must be exercised locally, that is progress indeed.

[Norman Lamb (North Norfolk) (LD)]

Perhaps the Secretary of State will come on to this point, but will he tell me whether he is at all concerned about social care? The independent Health Foundation estimates that there will be a gap of about £6 billion by 2020, and the Local Government Association wanted a roll-forward of extra funding for the better care fund, which has not been forthcoming. Does he not have real concerns that if the amount being spent on social care is not enough, it will simply place an extra burden on the NHS?

[Greg Clark]

As the right hon. Gentleman knows, provision was made in the local government financial settlement and the spending review to allocate up to £3.5 billion for adult social care by the end of the Parliament. The directors of social services and the Local Government Association actually asked for £2.9 billion, so our provision went beyond that. We also need to bring together the treatment of our elderly members of society so that councils and the NHS can, between them, look after those people well. After all, those requiring health care and social care are often the very same people. I know that, as a former Minister in the Department of Health, the right hon. Gentleman will favour that. Part of the devolution deals that we are pursuing will do that. We are seeing it happening in Manchester, and I hope that he will follow that with interest.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Will the Minister give way?

[Greg Clark]

I am going to make some progress, as I have said.

This Budget announces a number of new devolution deals establishing combined authorities for the West of England, Greater Lincolnshire and East Anglia, and there are more to come soon. Far from erasing local diversity, the deals make the most of it—for example, by bringing together shire, unitary and district authorities to work together for the common interests of their area. The Budget announces further transfers of power to the Liverpool city region and to Greater Manchester. This shows that establishing a combined authority, with the accountability of a directly elected Mayor, is just the beginning: a democratic basis for the ongoing devolution of power.

Growth deals are another front for the advance of localism. Through the business-led local enterprise partnerships, we are devolving control over the £12 billion local growth fund. The Budget explains how we will allocate the latest tranches of the fund. It will be done on a truly competitive basis to encourage ambition, innovation and the productive use of taxpayers’ money. I am also delighted to see the announcement of new city deals in Wales and Scotland. Specifically, the conclusion of a deal with the Cardiff capital region and the opening of negotiations with Edinburgh and south-east Scotland are important steps forward.

From north to south and from east to west, devolution is transforming our nation. In 2010, the UK was one of the most centralised countries in the free world. There were no combined authorities, and only one big city mayor. Nearly 80% of local government expenditure was centrally controlled. By 2020, there will be combined authorities across the country, and at least eight big city mayors. Local authorities will keep 100% of the income that they collect. This Budget describes and accelerates a process of profound change involving the revival and rebalancing of our economy, the rebuilding of our national infrastructure and the redistribution of power from the few to the many. I commend it to the House.

--- Later in debate ---

[Jon Trickett]

I agree entirely with my hon. Friend’s point.

Let me make some progress on devolution. The average pot of money available to the metro mayors appears to be about £30 million a year, but that is dwarfed by the severity of the cuts that each of their councils has suffered. Top-down devolution, compounded by financial injustice, simply will not work as an enduring solution. Labour wants properly funded, real devolution, which would include, for example, the power for every council to open schools, build homes and regulate buses—mayor or no mayor.

That brings me to the Budget’s implications for the north of England. The Chancellor boasts about his northern powerhouse, but his Budget cuts to northern councils alone since 2010 add up to £3.9 billion being taken out of the northern economy. What do we get instead? A few million pounds for a scaled-down flood defence scheme in Leeds, and a few million more to fund not an electrified rail link, but a study that might report eventually on whether there should be electrification. None of that cuts the mustard—it is more of a power scam than a powerhouse.

Let me express my great admiration for councillors of all parties who do their very best across the nation, despite years of cuts, to protect services. Libraries, for example, are one of the most prized assets in any community, but they are frequently the first to go. On Friday, I visited Wyke library in Bradford. The council has managed to keep it open, despite the prospect of losing half its budget in a decade. The library is a beacon of hope and self-improvement, buzzing with learning. I met people there who were studying to better their lot in life. They told me there was no way on earth they could afford to buy the books they could borrow from a public library or to use the internet, which was also available. The priority had to be putting food on the table for their kids, but they were able to come to the library and have access to knowledge. I met one man who was using the internet—publicly provided in a public library—to complete his PhD. Cutting libraries, cutting museums, cutting theatres—all of this is nothing short of cultural vandalism.

The Secretary of State did a round of media interviews this morning. On ITN, he told Conservative Members to come together again; he said they should stop scrapping with each other. Well, good luck with that. Then he went on the “Today” programme and talked about the rough and tumble of Budget negotiations, as if that explained the resignation of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith).

I think the Secretary of State is a decent man, and I suspect that, in his heart of hearts, he appreciates the value of local government services. He knows the role—how could he not?—that many of them play in supporting the vulnerable, but what does he really know about the rough and tumble of Budget negotiations? He was the first Secretary of State to sign up on the Chancellor’s terms.

On the radio this morning, the Secretary of State referred to the right hon. Member for Chingford and Woodford Green as his very good friend. My guess is that he may not want to follow the path of his very good friend and resign from the Government to defend local councils. I hope, however, that he will decide to fight his corner rather more strongly than he has this year against a Chancellor who has proved his judgment is nil.

[Greg Clark]

I am grateful for this little riff on resignations, but coming from a party that resigned from reality last August, it is pretty rich.

[Jon Trickett]

I think the Secretary of State should have stayed in this seat rather than make that intervention.

It is time for the Secretary of State to stand up to the demands of an unreasonable Chancellor, rather than standing by while communities are decimated. If he will not, we will.