Jobs and Growth

Jacob Rees-Mogg Excerpts

Wednesday 12th October 2011 Commons Chamber

[Ed Balls]

I will make some progress before giving way again. I am always very happy to take interventions. It is clear that the Chancellor has a good whipping operation in place today, although good whipping is something he knows quite a lot about.

A year ago, we warned that a global hurricane was brewing and that it was exactly the wrong time to rip out the foundations of the house but the Chancellor disagreed and recklessly decided to raise taxes and cut spending further and faster than in any other economy. The evidence is clear that his plan has not made the British economy better able to withstand the global storm and that by going too far and too fast he has left it badly exposed. Families and businesses up and down the country are asking how many more businesses must go bankrupt, how many more families must see their living standards fall, how many more young people will have to lose their jobs, how much more unemployment and misery and rising child poverty must we see. How much more evidence do the Government need before they finally change course?

[Jacob Rees-Mogg (North East Somerset) (Con)]

Will the right hon. Gentleman give way?

[Ed Balls]

I will happily give way to my friend over there.

--- Later in debate ---

[Jacob Rees-Mogg]

I am grateful to the shadow Chancellor for giving way, but I wonder whether he has got it the wrong way round. With a global storm brewing, the right thing to do was ensure that the gilt market was secure and that we could carry on borrowing cheaply, which has ensured that a recovery will eventually come. He can no doubt find something I said in 1830 and quote it back to me, but that is not really the point.

[Ed Balls]

I am not sure about 1830, but if the hon. Gentleman was in the House in 1930—he might have been—he will know the dangers of very low bond yields accompanied by rising national debt, rising unemployment and economies locked in stagnation. I do not know whether he was around at the time, but some forefathers and foremothers certainly were. Let me quote the director of the National Institute of Economic and Social Research, the think-tank of the year, who said:

“The reason people are marking down the gilt yields is because they think that the economy is weak.”

That is the truth.

Let me make a prediction. I do not expect the Chancellor to announce a change of course today, but will we hear him repeat his boast made this time last year that the British economy’s recovery is on track? I doubt it. Will he repeat the Prime Minister’s deeply complacent boast that Britain is out of the danger zone? I doubt that, too. Will he describe Britain as a safe haven that is immune from the global storm? Will he repeat his naive forecast that cutting public jobs will boost private confidence and create more private jobs? Even this Chancellor cannot fly in the face of the facts. Employment has fallen in the past 12 months. On the day when unemployment has risen again, will he give any indication that he understands at all how hard things are for families up and down the country? Is he so out of touch that he really believes that a £1.40 a week council tax freeze can compensate for a £9 a week rise in VAT?

--- Later in debate ---

[John Mann (Bassetlaw) (Lab)]

Having listened for an hour and a half to the two Front Benchers, I suggest that we put them in a ring in Westminster Hall the next time we debate the economy—we could charge the public a little fee, which would be a modest contribution to deficit reduction—and allow the rest of us a little more time to discuss the economy.

First, I want to make some points that might be of particular interest to Labour Front Benchers—I trust that they will be noted in detail. I congratulate Labour Front Benchers on two major changes in the past three weeks. I mentioned the first change earlier—the change of policy on VAT. The previous policy, which I disagreed with in the Chamber, was that the Labour party was in favour of a permanent VAT reduction. Now, the policy is for a temporary reduction—from what the shadow Chancellor said, it appears that there would be a 12-month temporary reduction.

The figures are huge. Just in the next Parliament, that change in policy will mean that £50 billion will be available to a new Labour Government from revenues to the Exchequer. In the context of a snap election, potentially £20 billion extra would go into the Exchequer in the next three years. Those are major sums, and I therefore congratulate Labour Front Benchers on that huge change in policy.

That is not the only change in policy—I would recommend the second policy change to the Government, and I should like to hear in the winding-up speeches whether they are prepared to adopt it. Labour’s policy now is that all moneys from the privatisation of the more recently part-nationalised banks will go 100% to offset the debt. That ought explicitly to be the policy of the Government. I trust that they are not thinking of creating youth unemployment now to delay for give-away Budgets just before the election. The electorate, as well as business, will not forgive them for that.

This Government have adopted an economic policy of Japanisation. They are adopting the Japan Government’s approach, and anyone who wants to see precisely where they are going needs to look at the economic history of Japan over the past 20 years.

[Jacob Rees-Mogg]

It is not the Japanese approach. The Japanese Government have enormously increased their national debt, while we are going to reduce it.

[John Mann]

On inflation and monetary policy, this is precisely the Japanese model, but it does not work, which is why there is already £46 billion in additional debt. The lesson from Japan is that we cannot deal with the debt without growth. That is the lesson that the Government are not listening to. I recommend that Members on both sides of the House read up on the economic history of Japan.

I say to the Labour Front-Bench team that we need to be more specific about the cuts that we would make. I realise that on welfare, for example, we cannot be specific. Like the Government, we are in favour of major change, but we do not know whether that will be successful. The fact is that the state will shrink over the next few Parliaments—there is no other way to pay for our deficit reduction plans or the Government’s less coherent plans. We have to pay back the debt. The Government want to pay it all back now, while we are saying, in essence, “No, we wouldn’t pay back as much now, but it would be paid back in future years.” That is the key difference. Either way, it means that the state will have to shrink in future years, and I can suggest some things that we should be stating.

What about Government Departments? Housing costs nine times as much in London as in Bassetlaw. I am not suggesting that a major Department should move to Bassetlaw—although we have the land—but there are Sheffield, Leeds, Nottingham and many other places. Let us see the Department for Culture, Media and Sport shifted to Manchester with the BBC. Let us see the Department for Business, Innovation and Skills shifted. Let us see the Department for Environment, Food and Rural Affairs shifted. Let us see huge Departments, in their entirety, shifted out to the regions of England. That would give a boost to economic growth and bring permanent savings to the Exchequer. That ought to be part of our policy.

There are other smaller things that we could do. What about the British Council? What a nonsense of an organisation to sustain! We could take some of that money and give it to British universities to do English-language training abroad and build their business base in emerging markets. At the same time, that would reduce costs. What about unitary authorities? Of course, many Members, being ex-councillors, do not want to get rid of unitary authorities. What nonsense! There are 27 press officers in Nottinghamshire and 10 chief executives, with head offices all over the place. Scrap them! Scrap large numbers of councils! What about the police? We cannot merge the police, but we can merge their headquarters. We could rationalise NHS buildings across the county. There is a vast array of things that we could do. There are the British Army bases in Germany. We could reduce the size of the base in Cyprus. We should be levying at least 5% on the UK Crown dependencies to which we provide security. We should offer a permanent reduction in national insurance for small businesses to get young people into apprenticeships and back into work.