The Economy and Living Standards

Jack Straw Excerpts

Thursday 12th June 2014 Commons Chamber

[Mr Jack Straw (Blackburn) (Lab)]

We heard a vigorous defence of the Queen’s Speech from the Chancellor of the Exchequer, so it is surprising that so many Conservative Members have voted with their feet and emptied their side of the Chamber, obviously lacking the confidence to speak up in favour of their own Chancellor.

A central part of the Government’s defence of their economic policies is the challenge they make to the competence of and decisions taken by Labour Governments between 1997 and 2010. I was privileged to be a senior member of the Labour Government throughout the term and I am proud of their achievements. As John Major once shrewdly observed, the only people who never make mistakes are those who never make decisions. No more than any Government, did we get all our judgments right, but overall I believe we made the correct judgments, including on the economy. The criticism the current Government make of us is not just wide of the mark; it fails to take account of the contradictory policy positions they were adopting at the time.

The first charge the Chancellor has often made is that the Labour Government did not fix the roof when the sun was shining, but we did—we had to. As my right hon. Friend the Member for Stirling (Mrs McGuire) mentioned, one of the scandals of the Thatcher and Major Governments was their palpable neglect of public services. There were hospitals and schools with leaking roofs and buckets everywhere. There were schools where the sun could literally be seen through the open roof. There is not a Conservative constituency in the country where the roofs of its schools and hospitals were not fixed by the last Labour Government, and no Conservative MP complained about that spending at the time.

That brings me to my second point. I have been through what Conservative shadow Chancellors were saying in response to the Budgets and spending reviews between 2000 and 2010. Yes, there are plenty of passages of criticism, in small print, about the levels of borrowing and taxation to which the Conservatives could, and do, point, but if we look at what they were saying about the spending plans that were leading to all those improvements in their constituencies, we find that a very different story emerges. In 2004, they published a medium-term economic strategy, setting out their plans for the years to 2011-12. The Institute for Fiscal Studies published its own commentary on that, saying that if the Conservatives were to win the forthcoming general election, spending would

“still be higher”

under the Conservative plans

“than it was in every year of Labour’s first term”.

At the 2005 general election, the Conservatives’ main pitch, in the face of Labour criticism, was to reassure voters that no significant cuts would take place if they were elected. The Economist newspaper for 14 April 2005 published a major article under the heading “Much ado about nothing: The Conservatives’ spending plans are strikingly similar to Labour’s”. After the 2005 election, the reassurance that the Conservatives would not be cutting public spending continued, but in even more categorical terms. On 3 September 2007, the “ConservativeHome” website proclaimed:

“Tories will match Labour’s spending plans for the next three years”.

It highlighted an article in The Times of the same date, written by the then shadow Chancellor, which stated:

“I can confirm for the first time”—

he solemnly intoned—

“that a Conservative Government will adopt”

the Labour Government’s spending totals for the years 2008-09 to 2010-11.

[Robert Flello]

Does my right hon. Friend also recall that at the same time the Conservatives, to a person, were calling on the then Labour Government to weaken the oversight and weaken the regulation of the banks to allow them greater freedom?

[Mr Straw]

I absolutely confirm that. As we have accepted, we did not regulate the banks and other financial institutes sufficiently, but the Conservatives at the time were demanding, in this Chamber and outside it, not more regulation but less. Just in case readers did not get the point of the then shadow Chancellor’s article in The Times in September 2007, its headline was “Tories cutting services? That’s a pack of lies”. All the plans for the economy—those of the Conservatives, as much as those of Labour—were knocked badly off course by the global financial crisis. But for all the insinuations we now hear about how Labour ignored the warning signs, there is not a line—not a word—of such predictions in that article, nor anywhere else in what Conservatives were saying at the time.

The Chancellor talks today of Britain’s recovery, and I am delighted that output, after the longest recession in modern history, is now close to where it was six years ago. But although he will not do this, future economic historians will, I believe, judge that part of the reason for the recovery was the wise decisions made by my right hon. Friend the Member for Edinburgh South West (Mr Darling) when he was Chancellor of the Exchequer. Let it also be remembered that, for all the Conservative efforts to rewrite history now, the average level of debt to GDP under Labour was below that of the preceding Conservative Governments and below international averages, not only for the 11 years before the recession took hold, but even when our last two years in power are included. We fixed the roofs, for both sun and storms. By contrast, the Conservatives then were calling simultaneously for lower taxation and lower borrowing but the same spending. How on earth did they think those sums would ever add up?

[Sir Edward Leigh (Gainsborough) (Con)]

The whole House has great respect for the right hon. Member for Blackburn (Mr Straw), who, as always, was careful to acknowledge that the previous Labour Government did make some mistakes. One of those has been all over the newspapers this morning. It was a decision that he was closely involved in and that I voted against: the decision to invade Iraq. That has proved to be one of the single most disastrous decisions ever made in foreign policy, and we have reduced that country to chaos. There are also lessons to be learned for the future, when next we think of involving ourselves in foreign countries with military ventures, whether in Ukraine or Syria.

The right hon. Gentleman was also generous in his description of the very difficult economic decisions that both Governments have grappled with. Of course he is right to say that the roof has to be fixed, but I am sure he would accept it when I say, as a former Chairman of the Public Accounts Committee, that there were productivity declines in areas such as the NHS and that extraordinary waste was involved in the rapid increases in expenditure, particularly on health and education. I am sure that both Governments have a lot to learn about that. I agree with him that we were probably wrong to agree to commit ourselves to accepting Labour’s spending plans, which were too high, and I have consistently argued that we should have addressed the deficit even quicker. It is a matter of regret that we are still spending more than ever before. That highlights the key challenge that both parties face: we have to keep addressing this deficit.

The current Government are winning the economic argument because there remains a lack of coherence in Labour’s spending plans. The whole country realises that there has been this monumental waste and the Government are addressing it. Perhaps we could have done more and we could have done it in a better way, but we are seeking to address it. This Labour Opposition, unlike the Labour Opposition before 1997, who accepted our spending plans before 1997, do not apparently have a coherent economic message to address that. We know that elections are won on the economy.

At the moment, we cannot deny that 2 million extra jobs have been created in the private sector, and I have to say, following an intervention from the Opposition Benches, that they have not all come from ex-members of the Bullingdon club. There are a lot of ordinary people who are getting these jobs. The Opposition have to address that problem, and we have to concentrate on the economy. It was significant and a bit of an innovation that, in the Gracious Speech, the Queen often mentioned the economy.

[Mr Straw]

I am extremely grateful to the hon. Gentleman for giving way and for his generosity towards me. Yes, of course I accept the 2 million figure that he mentioned, but does he acknowledge that a significant element of that 2 million, whether we like it or not, is composed of those migrants who have come in, about which he so much complains?

[Sir Edward Leigh]

Yes, of course I acknowledge that, but the point I want to make is that it is by concentrating on the economy during the last year of this Government that we will establish our credibility as a party of government. What worries me is that although there is so much in this Queen’s Speech that is excellent, especially the Bill dealing with pensions, we still sometimes forget the essential lesson that, as a Conservative party and a Conservative Government, where we do conservative things and address the economy in a conservative way, we win. Where we indulge in modernising gimmicks, we stumble and start to lose. Sometimes, we forget that. When we do conservative things, such as cutting the deficit, introducing a benefit cap and attempting—not enough—to deal with immigration, we win.

I am still worried about a couple of things in the Queen’s Speech. Is it really essential, when we are trying to address record spending and difficulties in the economy, to start talking about eradicating plastic bags in supermarkets? Is that a priority? Is it essential to start talking about the recall of MPs? It may at first sight be populist and popular, but it is very difficult to administer and probably will not solve any problems. For centuries, rogue MPs have consistently been kicked out of this place, so let us concentrate on the economy.

--- Later in debate ---

[Nicky Morgan]

I thank my hon. Friend. The Labour party did nothing for the south-west. He has been a doughty champion of investment in the south-west since his election in 2010. The Treasury and other Departments continue to look at road and rail projects, which will make a huge difference. Of course, we saw the speedy rebuilding of the railway line following this year’s floods, which caused such disruption to the south-west. We did not hang around talking about it; we got on and delivered the investment that was needed.

[Mr Straw]

If the right hon. Lady is so critical of the Labour Government’s record, will she explain why the Chancellor, when he was shadow Chancellor, made the commitment in an article in The Times on 3 September 2007 that a Government under him would endorse Labour’s spending plans for the following three years?

[Nicky Morgan]

I thank the right hon. Gentleman very much indeed for his question. Although I was not in the House at the time, my party warned the Labour Government about excessive borrowing and spending. It is frankly rather pathetic of Labour Members to say, not just in this debate but in many debates, “You didn’t warn us. You didn’t tell us that we weren’t doing the right thing.” They were in government at the time and they were running the country.

The right hon. Member for Oldham West and Royton (Mr Meacher) showed in his opening paragraph—[Interruption.]