Universal Credit

Jacob Rees-Mogg Excerpts

Tuesday 10th December 2013 Commons Chamber

[Mr Duncan Smith]

I have heard what the Scottish National party has said. All I would say is that it is in complete denial about the cost of welfare and pensions. The reality is that it will not be able to afford the pensions bill with Scotland’s demographic make-up, and welfare alone will cost it a large amount of money. I do not know where it thinks it will get the money from if Scotland breaks free from the United Kingdom.

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

The people of Somerset think that it is the mark of a statesman to take a deliberative and intelligent approach to these problems, and not to rush the process in a typical socialist fashion. I wonder whether my right hon. Friend agrees with me that his critics have forgotten to read their Bible and do not remember the line on motes and beams. Although there may be the tiniest specks in his proposals, there was a veritable forest in their IT suggestions.

[Mr Duncan Smith]

I always do my level best to agree with my hon. Friend. He talks common sense whenever he rises to his feet and today is no different.

Universal Credit

Jacob Rees-Mogg Excerpts

Thursday 5th September 2013 Commons Chamber

[Mr Duncan Smith]

I do not resile from any of what I said; that is exactly the way in which we have tried to manage it. But of course, someone is only as good as the information given to them. I must say to the hon. Gentleman that by September 2012 I had already started the reset process and brought in Philip Langsdale. He was coming into the office and we were going to make those changes. The reality is that this will be delivered on time and on budget. That was my view then and it is my view today. The key thing is that those charged with the responsibility of doing that have the skill to do it.

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

Is my right hon. Friend aware that his transformative scheme has enormous public support, as it will revolutionise dependency by reducing it in this country? Does he note, as I do, that in office the socialist Opposition swallowed any number of camels and are now straining at a gnat?

Budget Resolutions and Economic Situation

Jacob Rees-Mogg Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

In a previous era of austerity presided over by a Tory-dominated Government, the slogans on Conservative party posters in its failed 1929 general election campaign included “Safety First” and “Trust Baldwin he will steer you to safety”. Having presided over the worst recovery in over 140 years, with an economy that is increasingly plagued by low investment, falling real wages, low productivity, dismal demand, stalled deficit reduction and surging public debt, the one guarantee is that the Conservative party will not be using either of those slogans in the name of the current Chancellor or Prime Minister come 2015.

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

Will the hon. Gentleman give way?

[Mr Bain]

I will give way in a moment.

With the OBR having confirmed on Wednesday that people will be worse off in 2015 than they were in 2010, the Conservative party will also be unable to revive the 1959 election slogan: “Life’s Better Under the Conservatives”.

I have spoken in pervious Budget debates about the absurd economic theories that have underpinned the Government’s fiscal policies since 2010. As Mark Blyth writes in his recently published work on austerity:

“Austerity is a zombie economic idea because it has been disproven time and again, but it just keeps on coming.”

The central idea behind the Government’s economic policy is that a short-term sacrifice by the British people would produce long-term benefits in growth and a massive reduction in national debt.

There have been plenty of sacrifices demanded by the Chancellor: the average £10.47 a week in reduced support for child care for ordinary families since 2011; the higher VAT, which is costing ordinary families four times more in this Parliament than they will get back through the rise in the personal allowance to £10,000 from next year; the 1% cap on most benefits and tax credits being introduced in weeks, hurting 5.l million working-age households by as much as £5 a week on average; and, most cruelly of all, the vicious bedroom tax. The cumulative loss to ordinary families’ living standards in Scotland resulting from the tax, benefits and wages policies pursued by the Government has been quantified by Landman Economics for the TUC as £28.63 a week, or £1,488 a year, by 2015. What has it all been for? Where is the growth? When will our debts begin to fall during this Parliament? When will living standards begin to rise again for ordinary people?

Since the spending review in 2010, we have seen the third lowest growth in the G20, the fifth worst industrial production in the European Union and the fourth biggest slump in real wages in the EU. The judgment of the Office for Budget Responsibility on the Budget has been brutal—growth downgraded this year and next, by 0.8% of GDP, even since last December’s autumn statement; this Budget adding nothing to growth all the way through to 2018; borrowing £245 billion more than promised in 2010; and the national debt doubled by 2018 if we continue with the Chancellor’s failing plan.

Four years into a recovery, unemployment is stuck at 2.5 million—and is predicted by the OBR to peak at 2.63 million next year—and there are 3.2 million people underemployed in this country, desperate for more hours at work to pay the bills but unable to get them under a flatlining economy.

The Budget should have attempted to secure two aims: first, to boost economic demand to stimulate higher growth in the short term; and, secondly, to begin the process of rebalancing the economy by ending the culture of short-termism and making the fundamental reforms we need in our banking system.

In Scotland, retail sales are falling in a sector that comprises more than three quarters of economic output. Real wages have slumped by 3.2% since autumn 2010. Median wages are more than £3,000 a year lower in real terms since 2009. This week’s OBR projections mean a further loss of £200 a year in wages—four times more than any benefit from the increase in the personal tax allowance next year. The Chancellor should have eased that burden by cutting VAT to 17.5% in the Budget and putting back some of the £480 a year on average that he removed from average families in the June 2010 Budget. He should have done far more on child care costs.

--- Later in debate ---

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

The Budget shows that this Government’s policies are beginning to work in the context of what Governments can realistically do to help an economy. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) suggested a fantasy world in which Governments can send a Chancellor to the Chamber on a Wednesday morning to press a growth button and introduce a new policy that will suddenly do this, that and the next thing. That is what some rather poor economists thought in the 1960s, but they have been proved comprehensively wrong. What Governments can do is set the framework within which businesses and individuals can lead economic growth. Governments cannot of themselves—they even failed to do this in the Soviet Union—create real growth just by the fiat of the Government.

How can we see that the Government’s policy is beginning to work? Two crucial statistics are now available. The first is the reduction in Government spending—the cut from 47.4% of GDP to 43.6%. That is a substantial reduction in the Government’s share of the nation’s income. It has taken some years to achieve and it needs to be reduced further, because, on average, it is very hard for Governments to get more than 38% of GDP in taxation—if it remains at 43%, there will still be a big deficit—but it is a huge move in the right direction to create stability in the economy, which will then allow businesses and individuals to lead economic growth.

[Jane Ellison]

Does my hon. Friend therefore share my surprise that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) said from the Opposition Front Bench earlier that the Government were making no progress in rebalancing the economy?

[Jacob Rees-Mogg]

Opposition Members are talking about their new path. There was a Shining Path in one country at one point, but that was not very successful, although the Opposition are probably looking for the Via Dolorosa. We are definitely making progress.

I want to pick the hon. Member for Glasgow North East (Mr Bain) up on his wonderful reference to the 1930s. I was pleased that he reminded us of our splendid slogans, which I will certainly use in my election campaign. I think that this was a “Safety First” Budget, and quite right too. What the country needs is genuine prudence, rather than the prudence of the late ’90s and early 2000s.

[Mr Bain]

I was referring to the 1920s rather than the 1930s, but I think the point applies. The hon. Gentleman refers to growth, but given that the private and public sectors are retrenching, where will demand in the economy come from for there to be growth?

[Jacob Rees-Mogg]

There is a union of people whose seats have “North East” in their names and who make helpful interventions. I am extremely grateful to the hon. Gentleman because he leads me right to my next point, which is about the absolute essence of where growth will come from. I refer right hon. and hon. Members to page 56 of the “Economic and fiscal outlook” produced by the Office for Budget Responsibility, which contains charts on household leverage indicators. That is crucial because about three-quarters of the economy is dependent on private consumption. What we needed, and what has taken time, is for household budgets and balance sheets to rebalance at the same point as the Government balance sheet and budget.

In these charts we see that income leverage—interest payments as a percentage of income—is now at an historic low. That is important because it means that households can now afford to spend. Even more important, asset leverage is back alongside historic averages, so households are no longer over-geared in the way they were in 2007 and 2008. I actually think that the figure on household leverage is overstated because there is still a lot of bad debt in the system that the banks have been reluctant to write off because of concerns over their balance sheets. That is what has happened over the past few years. By following stable and sensible policies, the Government have allowed households to shore up their balance sheets, which means that they will now be in a position to begin to spend again should they wish.

Having looked at the big macro picture of two crucial things—Government expenditure under control, and household balance sheets restored—it is worth considering some of the positive detail within the Budget. The £2,000 cut in national insurance for businesses is fantastic. We know that small businesses are the ones that create new jobs—a series of data from the United States show that, on average, large companies shed 1 million jobs a year, while small companies create just over 1 million jobs a year. The reason for that is straightforward: large companies are always looking to cut costs, but small companies are where new ideas are built up. Anything that helps small businesses is welcome and national insurance is a very bad tax on jobs. I hope that ultimately the Government will look at national insurance in the round, but that will need to be in a time of boom, rather than a time of austerity.

The other policy that is relevant to today’s debate, which was opened by my right hon. Friend the Secretary of State for Work and Pensions, is the £10,000 tax threshold. That is a joy to behold because it gets us away from the taxation and benefits merry-go-round where people on low incomes are taxed and then given back some of their own money, once the Government have taken a cut for administration. We want to get that threshold as high as possible so that we do not tax people and then give them benefits. We want to get people out of that altogether, and out of the dependency culture that exists when we tax people on low incomes.

This measure has a further benefit if it can be extended and if the national insurance threshold can be raised, because that will reduce the administration of employment. If the national insurance threshold can be raised towards the £10,000 tax threshold, employers will be able to pay their employees without having a big administrative burden on top. I hope the Government will look at that as it would be a fantastic boost to employment. I think it could possibly be paid for simply by shifting the band for employees national insurance into line with the increase that would be made from the current level to £10,000. I accept there would be a gap on employers, but that might be minimised by doing it in the way I suggest.

[Thomas Docherty]

The hon. Gentleman is making a far more eloquent case than the Chancellor managed for this set of policies. He seems to be saying, however, that we should not have a contributory system towards the welfare state. Is that where his argument is heading?

[Jacob Rees-Mogg]

No, that is not where I am heading. I am saying that the contributions of people at the lowest end of the pay scales should be minimised.

The hon. Member for Hyndburn (Graham Jones) spoke of the Government’s housing scheme. It is potentially a very exciting scheme, and the most important part of the Budget. There has been some talk of the risk, but I believe there is very little risk. I have had a look at the house prices figures produced by the Land Registry from 2008 to date, and at inflation over the same period. If we combine the two, we see that house prices on the Land Registry index have fallen in real terms by nearly 25% since 2008, which means that the scheme is being introduced at a point when house prices are sustainable, and when the risk to the Government’s balance sheet is limited. The scheme has the great potential not only to allow people to buy properties for the first time or to move into better properties, but all that goes with that, such as refurbishment, extra spending on DIY and so on. The measure could be a boost to consumer expenditure as well as free up the housing market.

I have one caveat to make before I conclude. I am concerned about the general anti-avoidance provision, which may threaten the rule of law. I will speak more about that later.

Housing Benefit (Under-occupancy Penalty)

Jacob Rees-Mogg Excerpts

Wednesday 27th February 2013 Commons Chamber

[Steve Webb]

I can assure the hon. Gentleman that the Secretary of State and I are of one mind on this issue. I will explain the context and origins of the policy, and the relevant context as to why we are seeking to take approximately £12 billion a year out of spending on social security.

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

May I tell my hon. Friend that the people of North East Somerset are desperate to hear from him, are looking forward to hearing from him, and are glad that he is leading this debate?

[Steve Webb]

I am very grateful to my hon. Friend.

Before we go into detail about the ending of the spare room subsidy, it is worth providing a little more detail about the fiscal context in which this measure is being taken. In the final year of the Labour Government, borrowing was £150 billion a year. This measure saves £500,000 a year, so if we were trying to fill Labour’s deficit by measures of this sort, we would need 300 such measures to tackle that scale of borrowing. I expected the hon. Member for Banff and Buchan (Dr Whiteford), who opened the debate, to suggest alternative sources of revenue not just for this measure, but for every single welfare spending reduction that she has opposed—all £12 billion of it.

--- Later in debate ---

[Stewart Hosie (Dundee East) (SNP)]

I have been struck by a number of things said by Government Members today. First, I noted the mechanical usage of the almost robotic mantras of, “1 million spare rooms”, “under-occupancy” and “utilisation” and an almost frighteningly casual disregard of the fact that they were talking about people’s family homes. These are places where people have brought up children and may have lived for decades, and, as a result, have created the stable, safe and supportive communities we all want to see. Those are now to be torn asunder for the sake of a money-saving measure—that is what it is—which will not work. The extraordinary thing is that the bedroom tax works only if the policy fails. If everybody could move to what the Government consider to be a “properly sized property”, the housing benefit costs would probably be identical to what they are today—not one penny would be saved. The tax will work only if people cannot move and they give the Government this extra money, over and above what they already pay to stay in their family home.

[Jacob Rees-Mogg]

That is not necessarily the case. If people who need more rooms and are currently living in the private sector move into the social housing sector, while the people in the social housing sector who need fewer rooms move into the private sector, there will be a substantial saving.

[Stewart Hosie]

Unless, of course, we factor in the fact that rents in the private sector are dearer, and we have heard evidence that would rather contradict the assertion made elegantly by the hon. Gentleman.

Another thing that struck me was the hon. Member for Keighley (Kris Hopkins), who is not in his place, saying that he wanted more facts and less scaremongering. That is very sensible; I am all in favour of evidence-based policy making. What he and others have then done is to say that a discretionary payments system is available to help. That confirms that those who live in specially adapted accessible housing are not exempt and that foster carer families are not automatically exempt. By asking for more facts and less scaremongering, and then talking about discretionary payments, which, by their nature, may not be available, particularly if the pot runs out, these people are confirming the lack of exemptions that make this bedroom tax as nasty as Opposition Members think it is.

--- Later in debate ---

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

It is a great pleasure to follow the hon. Member for Dundee East (Stewart Hosie) and to have listened to this debate. When the nationalists have an Opposition day, it is always a reassurance to those of us who are Unionists, because by their presence in the Chamber they show how much better off we are together than separate. I should like to thank them for their contribution to our parliamentary democracy and hope that they will stay with us for ever.

I am pleased to be able to speak in support of the Government’s position, which is fair, measured and just. My right hon. Friend the Member for Wokingham (Mr Redwood) put it rightly when he said that we have to think about our constituents who want social housing because they have a family and need an extra bedroom, but whom we cannot help because there is a house being lived in by one person, who has too many rooms, and there is no pressure on that person to move. We hear a lot from Opposition Members about fairness for one side of the equation, but nothing about fairness for the other side, which is avoided and cast aside. When housing is controlled by the state, we must be fair to everybody, whichever side of the equation they are on. There are those who have large families, live in small accommodation, or are living in the private rented sector, and cannot get into social housing or council housing because of the problem of under-occupancy, which, we have discovered from the Government, amounts to 1 million bedrooms. Just think how many of our constituents could have better housing if only those bedrooms were freed up.

The Government’s position is also measured, because they have put in discretionary powers to look after people who will be in particularly difficult circumstances. Discretion is very important; the Government have got that spot on. If we were to say that every house that had been adapted in any way for a disabled person were to be exempt, we would find that a property with a little ramp, or one handrail, was suddenly exempt, and the whole policy would be removed. By applying discretion, however, we get the overwhelming majority of the benefit of the policy, without putting a heavy burden on that small number of people who genuinely ought to be exempt and protected. The same applies to the £5 million that has been made available to families who foster. If fostering had a general exemption, everybody in receipt of social housing benefit would suddenly go off to the council and say that they wanted to be on the fostering lists, so that they would not have to give up their extra bedroom, but would then refuse any child who was sent to them. If broad exemptions are used, people will try to fit the categories of exemption provided, whereas using discretion ensures that people must bring forward a reasonable case to encourage those who have the discretion to accept that they ought to be allowed to receive the extra funding to maintain their current position.

The Government’s position is also just, because we must ask ourselves what benefits are for. Are they there to allow people perpetually to remain in dependence on the state—

[Helen Goodman]

The hon. Gentleman displays a total ignorance of this policy area, and I am sorry about that. First, the bedroom tax applies to people who are in work as well as to those who are out of work. Secondly, it applies to people on benefits who cannot work.

[Jacob Rees-Mogg]

I am grateful to the hon. Lady, but even if people cannot work, they can take in a lodger, and can get £20 coming in without any effect on their benefit, so they can be better off, because the average that would be lost for one room is £14. The Government have a policy that makes people who are not in work potentially better off, and those who are in work can also be better off, because they will similarly be able to take in lodgers, but they might be able to move to cheaper housing, which they can afford to pay for themselves, rather than being dependent on the state.

[Michael Ellis]

As usual my hon. Friend makes an excellent series of points. As well as the option for those who cannot work of taking a lodger, does he agree that for those people who can work, and are in some work, in many cases the sums involved would require only two hours of the minimum wage per week to make up the difference?

[Jacob Rees-Mogg]

I am sympathetic to what my hon. Friend says, but I think that people need to be able to take responsibility for themselves and to make choices for themselves. The choice they have is either to maintain the benefit they need for the housing they need, or to stay in housing where they have an extra room and adjust their behaviour accordingly. It is not for the state, putting its expenditure on the backs of hard-pressed taxpayers, to fund indefinitely people’s lifestyle choices, and it is a choice if people decide to have an extra room that they are not actually using; they can choose whether to move to a smaller property or, under this new policy, to find a way of getting the extra income they need.

[Bob Stewart (Beckenham) (Con)]

If someone living in social housing wishes to downsize and move to a smaller house, I take it—I ask my hon. Friend or the Minister to confirm this—that they would not have to find the costs in their own budget and that they would be helped to move.

[Jacob Rees-Mogg]

Owing to pressure on the availability of larger properties, many social landlords provide significant incentives for people to move.

It is important to remember that the housing market is dynamic. It is not a static market, with people staying in the same house their whole lives, and they should not expect that to be the case. I understand that people move house, on average, every seven years. It is perfectly reasonable that that happens, and that it should continue to happen, because it frees up the properties people need. I intervened on the hon. Member for Dundee East to make that important point.

When a three or four-bedroom property in the social rented sector is freed up, it might well be filled by someone who had been living in the private rented sector, which is more expensive, so they will be moving into the cheaper social rented sector. The person who had been living in the three or four-bedroom property might move back into the private rented sector, which has a higher cost, but there would be a bigger saving because the other person had moved into the social rented sector. That is important, because some of the debate has focused on the inflexibility of the housing market. It has been said, for example, that there are not enough one-bedroom properties in the social rented sector for people to move down to, but there are plenty of properties across the country as a whole. People will move more freely between the private and public rented sectors and will continue to have their rents paid for them unless they choose, as they will be free to do, to earn more money by working a few more hours a week or by taking in a lodger and so on in order to get the extra income.

[Jim McGovern]

May I ask the hon. Gentleman—he is making the speech, but this applies to everyone on the Government Benches—whether he can imagine asking his mother, sister, brother, daughter or son to take in a stranger as a lodger?

[Jacob Rees-Mogg]

I would be very happy to take in a lodger myself. Indeed, in my earlier life I had lodgers in my house, which helped to pay the bills.

[Helen Goodman]

Would the hon. Gentleman care to share with the House, and with the nation, how large his house is and how many spare bedrooms he has? We are talking about asking women in their 50s, who are suffering from chronic conditions and living in two-bedroom flats, to take in strange men. Is that realistic?

[Jacob Rees-Mogg]

I am extremely grateful to the hon. Lady. It had not been my intention to tell anecdotes about my personal circumstances, but my house in London has four bedrooms with seven people living in it, three adults and four children, so I think that I meet the requirements for maximum occupancy and would not be expected to give up a single room. I am grateful to her for allowing me to illustrate my relatively straitened circumstances, which I had not expected to be able to do.

It is perfectly reasonable for people to live in a house or flat that is suitable for the number of occupants and to ask for that when paying out benefits. Indeed, it is morally right to do so, because every benefit that is paid is money that has come from a taxpayer this year or, through borrowing, will come from a taxpayer in future years.

People pay taxes on very, very low earnings. Even benefit recipients have to pay value added tax, but people click into national insurance at £107 a week of earnings. Are we really saying to those on low earnings, “You must subsidise for ever people who live in houses that are too big for them as their children grow and go and they find eventually that they are the only person there”? Will that same house be funded for ever on the backs of hard-pressed taxpayers, when in fact there is a perfectly reasonable and sensitive way of dealing with the situation that does not throw them out but gives them choice in the form of the ability to decide for themselves what steps they will take to see whether it is possible for them to live there or whether they are willing to move? Thousands, hundreds of thousands, millions of people in this country move house every year, and they do so because their life circumstances have changed. They do not expect the state to say, “We won’t let you move” or “We will prevent you from moving.”

That flexibility is useful. It allows people to move to where there is employment. It allows our hon. Friends the nationalists to move to London so that they can represent their constituents in this great, illustrious Parliament. It is the essential part of ensuring that our economy has a free flow of labour around the country so that people can, in the words of Norman Tebbit, move to where the jobs are. If we have an entirely static housing market we will find that we reduce employment opportunities, undermine growth in the economy, and, worst of all, create deep unfairness for people in large families who can find no social housing and put a burden on the backs of the poorest taxpayers. We should be proud of this Government—proud of a Lib Dem Minister, of all things—for doing what is right, what is noble and what is just.

Fund for European Aid to the Most Deprived

Jacob Rees-Mogg Excerpts

Tuesday 18th December 2012 Commons Chamber

[Stephen Timms]

Yes, the hon. Gentleman is right. One thing that worries me is growing reports of jobcentres taking a trigger-happy approach to sanctions. People do not know why they have been sanctioned; all they know is that their money is suddenly taken away. The network of jobcentres is the Minister’s direct responsibility.

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

Is the right hon. Gentleman arguing that, instead of sending a reasoned opinion on subsidiarity to the EU in respect of emergency aid, we should ask the EU to take over our social services budget?

[Stephen Timms]

I will come promptly to subsidiarity, which the hon. Gentleman properly asks me to address, but it is right first to set out the scale of the need for the kind of aid that, it is envisaged, would be supported through the fund.

The big need that exists is being addressed by organisations such as FareShare and the Trussell Trust network of food banks. There is absolutely no doubt that that need will rise in the coming year. However, as the hon. Gentleman rightly says, the question is whether funding through the EU is the best way to organise the provision of that help. The European Scrutiny Committee, of which he is a member, makes the valid point that there is no reason why the support cannot be delivered through a national initiative rather than by the EU—I agree with the Minister’s point on that.

Setting up a fund at EU level is costly and bureaucratic, so I sympathise with the Committee’s concerns, but the problem is that the UK Government are not providing any such support. I therefore have some questions for the Minister and want to press him further. Does he accept that food banks and others provide a vital and indispensible service, and that without them tens of thousands in Britain would not have enough to eat in 2012? Given the changes that we know are coming in the welfare system over the next few months, does he accept that the problem is bound to get worse? To what extent are the Government interested in what organisations such as FareShare and food banks must do? Will he confirm—I am confident that this is true—that there is currently no UK Government support for them? I believe that local authorities have been able to help in some instances, but local authority funds are being tightly squeezed, so that source is diminishing.

Will the Minister explain why the UK does not take up the €50 million share of the existing EU food distribution programme? That is not a partisan point, but a genuine inquiry—I was part of a Government who took the same view as the Minister, although the problem was a great deal smaller at that time, as my hon. Friend the Member for Liverpool, Wavertree has pointed out. No doubt there is a downside of taking up that aid, but it would be helpful if the Minister could explain what it is.

Is it not a bit rich of the UK Government to argue against the new programme on the ground that they could do the same thing perfectly well—they rightly point to the principle of subsidiarity—if they in fact have no intention of doing so? If the fund is set up—as the Minister has indicated, that could happen despite UK objections—will he consider making the UK share of the fund available to FareShare and others that do such a vital job?

[Mr William Cash (Stone) (Con)]

To paraphrase President Hollande, with whom I have no doubt those on the Opposition Front Bench are in agreement, a Euro handout is not just for Christmas, but for life.

As my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) pointed out, subsidiarity is the issue in this debate. I could spend a great deal of time debating this, but the European Scrutiny Committee’s report sets out some of the aspects in more detail. The Government have set out their arguments in the explanatory memorandum and the Minister has spoken, so it seems to me that on this occasion it would be more appropriate to deal with the question of subsidiarity than to attempt to deal with the questions that arise regarding the relationship between the member states themselves and the United Kingdom.

A reasoned opinion is a new procedure provided for under the Lisbon treaty. It provides a mechanism for challenging Commission legislative proposals on the grounds of subsidiarity. In a nutshell, it means that national Parliaments have eight weeks, from the publication of a proposal, to submit a reasoned opinion. If such opinions represent one third of all the votes of national Parliaments, the Commission has to reconsider its proposal. The deadline in this case is midnight Brussels time on 26 December 2012, which is why the debate is taking place now.

I am glad to read in the motion that the Government agree with the Committee’s proposals. I was also extremely glad to hear the shadow Minister effectively say that the Opposition agree with the principles that underpin our reasoned opinion. The motion before the House is to approve the draft reasoned opinion, which is set out in the annex to chapter 3 of the report, and to instruct the Clerk of the House to forward it to the presidents of the European institutions. That is the formality.

The purpose of the draft regulation is to establish a new fund for European aid to the most deprived with, as the Minister said, a proposed budget of €2.5 billion for the period 2014-2020. I am bound to point out that those years reflect the period of the multi-annual financial framework on which a number of us voted recently, with respect to the European budget, saying that it should be reduced. The object in this instance, however, is:

“to alleviate poverty and material deprivation in the EU by supporting national schemes for the distribution of food products and the provision of basic consumer goods for the personal use of homeless people or children. It would replace an existing EU Food Distribution Programme…in place since 1987”.

The new fund will be based on the EU cohesion policy and resourced from the structural funds.

With respect to the draft reasoned opinion, we conclude that the proposed legislation breaches the principle of subsidiarity for four reasons. The Commission says that there is uncertainty about the ability of some member states to provide the social investment needed to prevent further fracturing of social cohesion, but it does not demonstrate that all member states are in the same position. Furthermore, there is no evidence about which member states are unable to provide this investment. The draft regulation would, however, bind all member states.

Secondly, the Commission has not provided sufficient justification for EU action on the basis of the Europe 2020 strategy—we go into that in more detail in our report, which is available to the House. A principal objective of the proposal is a desire for a highly visible EU funding instrument to mitigate negative perceptions of the EU’s contribution to economic and financial crisis. The Committee argues that such anxieties, whether founded or unfounded, are not a legitimate basis for EU legislation.

I would argue that the answer to alleviating poverty and preventing the difficulties being experienced in member states lies elsewhere. No one can doubt that the difficulties in many member states—youth unemployment running at over 53% in Spain and Greece and vastly increased unemployment among young people and others in all member states, with one or two exceptions—are the result of the economic policies that have been pursued under the existing treaties. The answer lies in growing small and medium-sized businesses. The taxation then taken from their profits could be ploughed back into the relevant part of the public sectors in each member state—including in this country—to provide the kind of help that the Government here have rightly indicated they will provide in order to alleviate poverty, where it is necessary to do so.

The question of whether these anxieties are founded or unfounded is not a legitimate basis for EU legislation. For EU supranational intervention on poverty and social exclusion in member states to be justified, there must be evidence of a problem that cannot be satisfactorily addressed by action at national level in all member states, but this evidence is simply lacking. I am glad to note that both the Minister and the shadow Minister agree with that proposition, and I repeat that the answer lies in growth, although how we get that growth is the subject for a separate debate.

Another problem is that the rule of law, which is the basis on which the much-vaunted aspirations of the EU are meant to be based, is consistently being breached. I could give many such examples; we have reported on them in the past. There is article 122 in respect of the European financial stability mechanism, there are the breaches of the no-bail-out clauses, the failure of the rule of law in respect of the stability and growth pact and the 25/27 decision that the Prime Minister vetoed but which is still subject to a legal reserve. There have been many other instances and they are continuing.

The principle of subsidiarity, which is embedded in the treaties, is meant to mean that, where matters should be dealt with at member-state level, that is where they should be dealt with, and the EU and its institutions should not arrogate to themselves the alleged right to legislate or impose burdens on member states in contravention of the legal requirements prescribed by the treaties, one of which is subsidiarity. It so happens that in the Lisbon treaty member states agreed to this procedure for reasoned opinions, which is a way of challenging a breach of the rule of law. For precisely that reason and in the light of the arguments I have set out, we put forward this reasoned opinion.

There simply is no basis in existing legislation to justify the use of this €2.3 billion for the purpose described by the European Commission. The Commission’s impact assessment states:

“European financial support can demonstrate the direct solidarity of the Union with the poor people, thus taking up on the broad request by European citizens.”

It is difficult to understand what that is supposed to mean in practice. It is just a generalised description, rather than an analysis of the use of the power for the right purpose. I am bound to ask the Minister, therefore, whether he thinks that the cohesion funds—resourced as they are by member states—should be used to

“demonstrate the direct solidarity of the Union with the poor people”

in those member states. On the use of expressions about demonstrating direct solidarity with the poor people, I am bound to say that, yes, people are being seriously adversely affected, but we should be asking what the real cause of that is, and whether this is the right way to try to solve the problem. Those generalised expressions of anxiety are not the way to run the European Union.

[Jacob Rees-Mogg]

Does my hon. Friend agree that that is the most extraordinarily condescending language for people who are on very high salaries and paying very low taxes to be using?

[Mr Cash]

I could not agree more, and I would love to go down that route. I will not do so tonight, but the overpayment of civil servants in the European Union is a scandal.

Does the Minister believe that there is evidence of a broad “request by European citizens” for this type of supranational financial support? From what he has said, he clearly does not. The Commission’s impact assessment also states:

“Currently more and more social stakeholders and EU citizens perceive the EU as a threat for their personal and collective protection.”

It goes on:

“Action at European level is required, all the more so, as a lack of social cohesion would hinder the Union's further development and undermine its legitimacy in the eyes of its citizens.”

In other words, this aspiration is based on the fact that the Commission wants to create a perception that the European Union is helping people, and it is then calling for a vast amount of money to justify that perception. In a way, this is an exercise in legitimised propaganda.

The Committee found that statement startling on a number of levels. Does the Minister agree with the Commission that the EU is perceived as a threat to the “personal and collective protection” of its citizens? Does he think it legitimate for this type of humanitarian funding to be used to reinforce the EU’s legitimacy? This is almost akin to Soviet propaganda.

A constant complaint by our Committee is that the Commission does not pay sufficient attention to the need to confirm that its legislative proposals comply with the principle of subsidiarity. I have given the House some instances of breaches of the rule of law. What kind of Government does the Commission purport to run, if it breaches the rule of law whenever it suits it to do so? When it was breaking the rules on the European financial stability mechanism, for example, Madame Lagarde came out of a meeting and said, “We’ve violated all the rules because we want to preserve the euro.” The thinking, which is very dangerous, seems to be: “Providing we can use the power that the member states have given us to get what we want, it does not matter whether we can justify our actions according to the rule of law or the principle of subsidiarity. We’re going to do it anyway, and we’re going to justify it by talking about people’s perceptions.”

It is no wonder that people like me get up repeatedly—like pestering wasps, as I said to the Prime Minister the other day—and try to ensure that we keep the European Commission under surveillance and control. That is precisely what the European Scrutiny Committee is doing. We are ensuring that these matters are properly looked at, and I am delighted that the Government are going with us on this occasion. In this instance—believe it or not—the word “subsidiarity” is not even mentioned in the Commission’s explanatory memorandum. Will the Minister give us his assessment of the Commission’s assertion that the proposal does comply with subsidiarity? Does he agree that, in order to warrant supranational action, the Commission must show that the provision of emergency aid in some member states is undermining social cohesion in others, and that there is a genuine cross-border element involved?

I am arguing the case on subsidiarity, never mind on the justification of the arguments on the merits of giving money. It is an utter, complete and devastating tragedy that people all over Europe are resorting to using food banks. I sympathise with the concerns of the hon. Member for Liverpool, Wavertree (Luciana Berger) about those very people. I do not have any problem there. It is one of the reasons why I spend as much time as I can on matters relating to international aid in countries throughout the world and in the Commonwealth. I am concerned about these people, but we cannot use this sort of legislative framework because of the misuse to which it is being subjected. So does the Minister think that the Commission has proved the existence of this cross-border element?

--- Later in debate ---

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

As so often, the European Union finds itself in these positions essentially by accident. If we look at the documentation, we see that this proposal would replace the existing EU food distribution programme for the most deprived, which has been in place since 1987. That was put in place when the common agricultural policy was building up butter mountains and milk lakes—and, rather excitingly, wine lakes—and it was thought that it would be a good idea to distribute them to member states and the people within them rather than allowing them to rot or having to pay large sums for storage. I cannot remember anybody getting any of the wine out of the wine lake, but that problem went away when the basis of subsidising the CAP was changed and there was a move away from all the payments relating to production. Production fell to be more in balance with demand, so the lakes and the mountains dissipated.

Once the EU as an organisation has its hands on a particular power—[Interruption.]—or piggy bank, it is reluctant to give it up. It sees that it has this power that is no longer of any use because the intervention stores in member states cannot be used to provide food for the needy, so it comes up with a scheme—one that will cost €2.5 billion of our money—to provide a means of distributing that food in deprived member states. It then comes up with the reasons to justify it.

It is worth noting on page 11 of the documentation the justification in the Commission’s explanatory memorandum. It states:

“EU action is justified on the grounds of Article 174 (TFEU) which provides for the Union to ‘promote its overall harmonious development’ by ‘developing and pursuing its actions leading to the strengthening of its economic, social and territorial cohesion’, and on Article 175 (TFEU) which specifies the role of the EU structural funds in achieving this objective and makes provisions for the adoption of specific actions outside the Structural Funds.

EU-level action is necessary given the level of poverty and social exclusion in the Union and the unacceptable diversity of the situation among individual Member States, further aggravated by the economic and fiscal crisis, which has led to a deterioration of social cohesion and lessened the chances of achieving the Europe 2020 Strategy’s objective in relation to the fight against poverty and social exclusion.”

There we see the heart of the matter.

Having bankrupted its member states by making them tie themselves into an overvalued euro, the European Union now says that people are poor and suffering as a result, and that we—the European Union—must therefore look after them. That is like shooting someone in the leg and then ringing for an ambulance. It is a most unsatisfactory way of carrying on, and it does not remove the offence of shooting someone in the leg in the first place. It is, in its way, deeply dishonest, troubling and bordering on wicked that the European Union should force such great austerity on Portugal, Ireland, Spain and, in particular, Greece so that grandmothers in Greece cannot afford their housing, and then come along with a scheme that will give them a little bit of money. Although €2.5 billion of our money is a lot to us who are paying into Europe, it is not a huge amount in the grand scheme of expenditure across member states. It is a little bit of money to spend on a propaganda exercise to persuade member states that things are not as bad as they seem.

[Mr Cash]

Does it not smack rather of the words attributed to Marie Antoinette at the time of the French revolution, when she allegedly said of the starving people of Paris, “Give them cake”?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I should like both hon. Members to return to the specific points that we discussing this evening. The scope of the debate is the subsidiarity issue as outlined in the proposed reasoned opinion, and that is what we should be discussing.

[Jacob Rees-Mogg]

Thank you, Madam Deputy Speaker. I am very glad that you have returned me to this absolutely key point.

Amendment X to the United States constitution, which is part of the Bill of Rights, provides for all powers that are not specifically designated for the United States to be reserved to the states themselves. What do we have in Europe? We have the vague term “subsidiarity”, which means that if in an impossibly short time a sufficient number of member states lodge an objection with the European Commission, it may, out of its benevolent generosity and kindness, decide to reconsider its proposals. This is what we are doing: we are saying to the European Union, “We think that what you are doing is wrong. We think that what you are doing is so fundamentally wrong that it should be opposed, and that it is indeed a scandal. We think that what you have done to member states is ruin their economies and then give them back €2.5 billion of their own money.”

The document states:

“European financial support can demonstrate the direct solidarity of the Union with the poor people”—

my hon. Friend the Member for Stone (Mr Cash) quoted this as well—

“thus taking up on the broad request by European citizens.”

Well, I do not like being a European citizen anyway. I think that it is an affront to be called such a thing. I am a subject of Her Majesty, and long may I remain so. However, I cannot imagine that anyone in this country, whether he or she accepts the term “European citizen” or not, really wants the EU, having crushed nations, then to give them crumbs from the rich man’s table. I am therefore delighted that Members on both sides of the House support the reasoned opinion.

Question put and agreed to.

Resolved,

That this House considers that the draft Regulation of the European Parliament and of the Council on the Fund for European Aid to the Most Deprived (European Union Document No. 15865/12 and Addenda 1 and 2) does not comply with the principle of subsidiarity for the reasons set out in Chapter 3 of the Twenty-second Report of the European Scrutiny Committee (HC 86-xxii); and in accordance with Article 6 of Protocol (No. 2) of the Lisbon Treaty on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the presidents of the European institutions.

Universal Credit and Welfare Reform

Jacob Rees-Mogg Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move,

That this House notes that the Universal Credit is late and over budget; recognises that there is widespread unease surrounding the implementation of the £2 billion scheme’s IT system; further notes that the project is so badly designed that it is set to reduce work incentives for over two million people and hurt small businesses and the self-employed; believes that Ministers have failed to properly account for numerous basic details of how the scheme will work, such as its interaction with free school meals or what is to be done with 20,000 Housing Benefit staff; further believes that the project is poorly thought through and is now at risk of descending into chaos; and calls on the Government to publish the business case, so that the House can see a detailed plan of implementation, and urgently to set out a plan to address these deep flaws before it is too late.

At the heart of the debate is a very simple principle, which is that anyone in this country should be better off in work than they are on benefits. That is a principle in which we in the Opposition passionately believe. We are a party that was founded by and for working people and that is why we want universal credit to succeed. It is now, however, an open secret in Whitehall that universal credit is a flagship that is sinking fast. The Treasury, says Mr Nick Robinson of the BBC,

“have long had deep anxieties that”

the Secretary of State

“might not be able to control spending”

on universal credit. Last week, the Minister for the Cabinet Office and Paymaster General, who is an old friend of the Secretary of State, was asked how universal credit was going. He said:

“Are we there yet? Am I absolutely confident we are there yet?”

His answer? “No.” This morning, an unnamed Minister weighed in to support the Secretary of State in his own way with a ringing endorsement, saying that universal credit

“is another car crash waiting to happen”.

The Secretary of State is no stranger to friendly fire. Indeed, back in 2002, he described himself as the “quiet man” who was about to “turn up the volume”. Today, we are not asking the Secretary of State to turn up the volume. We are asking him to dial down the chaos and dial up the competence in his Department.

The Secretary of State and I share a faith. He, like me, believes that confession is good for the soul, and today is confession time. We need answers to a host of questions about universal credit and we cannot help to get this vital project back on track unless he comes clean about exactly what is going on.

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

While we are on a religious theme, I wonder whether the right hon. Gentleman might think about motes and beams, as there is rather a large beam in the eye of those on the Opposition Benches.

--- Later in debate ---

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

It is a great pleasure to support the Secretary of State today. He is one of the most serious-minded members of Her Majesty’s Government, and he has put forward a proposal where there is amazingly little disagreement over the principle of what is being done. Indeed, the motion is not about the principle; it is about some of the practicalities. However, it is worth concentrating on what the principles underlying the universal credit are.

The first principle must be simplification. All of us know from our surgeries that the people who come in to see us—who are some of the most vulnerable in society—are confused and bewildered by the range of benefits that may or may not be available to them, the interaction between one and another, and the way they can become worse off by doing sensible things, which therefore encourages them to do things that are not in their long-term best interests. To move to a system that is simple and straightforward must therefore be an advantage, and it has, I think, broad support across this House.

Then there is the issue of the reduction rate—the rate at which people lose money from benefits when they move into work. I have spoken before in this House about the Laffer curve. It is often pooh-poohed by Opposition Members, although I see—as they themselves say—that there is an irony in that we quote it most often in favour of high-rate taxpayers and they quote it most often in favour of people on benefits. However, in my view the Laffer curve applies equally to both. People work because they get money out of it. It was Dr Johnson who said that nobody but a blockhead writes, except for money. It is not just writing that is done just for money; it is most employment—with the exception of being a Member of Parliament, which I think most of us are so privileged to do that we might even pay for the opportunity.

The importance of that point is that the withdrawal rate is going to be the absolute key. It is crucial that, at all times, being in work makes people better off than being unemployed, not only for their financial benefit but because dependency is bad for people and their families. It is destructive to their lives. It leaves them without a focus, unable to get up in the morning or to do anything. It can also lead to depression. We want a society in which people want to be, and are encouraged to be, in the work force, and in which dependency is an option that is limited to those for whom nothing can be done. We need to become a society in which dependency is rejected.

The principles behind the reforms are fantastic, and they are worthy of widespread support. I agree with my hon. Friend the Member for Aberconwy (Guto Bebb) that we would like the withdrawal rate to be reduced from 65%, but 65% is still a lot better than some of the very high rates that exist, which is extremely good news. In respect of the practicalities of the reforms, my admiration for the Secretary of State is unbounded. I have never before seen a Minister or an Opposition spokesman in the House being so open to suggestions, thoughts and questions about what they were doing, or being so careful about the way in which their proposals were being implemented.

It was notable at questions yesterday that, in response to a point about refuges raised by the hon. Member for Manchester Central (Tony Lloyd), the Secretary of State said:

“If he has any concerns that he thinks we might not have dealt with, my door is open for him to come and talk to me.”—[Official Report, 10 September 2012; Vol. 550, c. 14.]

That is a Conservative being open to a socialist Member of Parliament. Politics normally involves a Minister being defensive and saying, “I’ve got it right. You know I’ve got it right, and my troops will vote for me because the Whips have arranged that in advance.” It has been wonderfully refreshing to hear the Secretary of State go through all the points today. Has anyone ever seen a Secretary of State take more interventions than he did in his speech? In each case, if he did not have an immediate answer, he said that he would be willing to listen and to consider the matter, to ensure that we got this right. Pilots are being carried out, and the scheme is being implemented carefully and cautiously.

[Jackie Doyle-Price]

Will my hon. Friend give way?

--- Later in debate ---

[Jacob Rees-Mogg]

It would be an honour.

[Jackie Doyle-Price]

Does my hon. Friend agree that the spirit in which the Secretary of State is approaching this issue stands in clear contrast to the approach of the Opposition, who have tabled this mealy-mouthed, negative motion? They are willing the reforms to fail, but we should all want them to succeed if we really want to make work pay.

[Jacob Rees-Mogg]

I am very sympathetic to what my hon. Friend says. This is something of a puzzle to me, because the Labour Front-Bench spokesmen on this subject are among the most civilised members of the Opposition, and it seems uncharacteristic of them to table such a motion—[Hon. Members: “Hear, hear!”] I felt sure that they would be delighted to be flattered by me, of all people. What I have said about them is true, however; it is recognised by those on my own Front Bench.

However, the motion before us is extremely overstated. It uses the language of chaos and disaster, as did the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), and calls on the Government “urgently to set out” plans. In contrast, the Secretary of State answered every question that was put to him. He was willing to listen, and he is doing something that, in principle, those on both sides of the House agree with.

[Mark Durkan]

I thank the hon. Gentleman for giving way during his praise of the Secretary of State. Last week, the Secretary of State refused to accept a reasonable job offer and incurred no sanction. If that is okay for him, why is it not okay for others?

[Jacob Rees-Mogg]

That was a most brilliantly phrased intervention. In turning down the opportunity to be Lord High Chancellor—one of the most ancient posts in the land, and one that most people would be honoured to hold—the Secretary of State showed his commitment to ensuring that the reforms will work. In turning down a promotion, he showed his nobility. Having listened to his speech in the debate today, I wonder whether there ought to be an amendment to “Erskine May”, so that when an argument has been comprehensively won by a Minister at the Dispatch Box, the debate could simply end, to a round of applause and cheering, with no further need for discussion.

Pensions Bill [Lords]

Jacob Rees-Mogg Excerpts

Monday 20th June 2011 Commons Chamber

[Nick Boles]

I entirely agree. Indeed, clarity, simplicity and dependability are what we seek to achieve in all areas of public policy, and when we do not have that we end up with the public finances we inherited from the last Government.

We should not be shy about admitting that the state of the public finances is leading us to make a whole series of decisions that unquestionably have rough edges. Nobody on the Government Benches wants to withdraw child benefit from people paying the higher rate of income tax. Nobody on the Government Benches wants to withdraw education maintenance allowance from people hoping to stay on in education after the age of 16. Nobody on the Government Benches wants to charge students of the future the full cost—up to £9,000 per annum—of studying at university. Nobody on the Government Benches wants to put up VAT, which is paid by everybody in this country regardless of their income. We do not want to do any of those things, and not a single one of those decisions has no rough edges, not a single one of those decisions has no victims and not a single one of those decisions treats everybody in the country equally.

We have never claimed that these decisions have no rough edges—that they do not have victims, and that they treat everyone equally—but we have claimed, and do claim, that each of the decisions is an essential part of the overall objective of putting our public finances on a sustainable basis. If these decisions are not made and implemented in full, all the people affected by them—the very same young people who will not be getting EMA, the very same students who will be paying tuition fees, the very same pensioners who will be receiving their pensions a bit later—will suffer far more.

The Opposition’s stance is very revealing. They could have decided to restrict their opposition over the past year and during the rest of this Parliament to those matters on which they have a profound ideological dispute with the Government. They could have decided to oppose the benefits cap, whereby in future nobody will get more than average income from benefits and which will make it clear to people that the only way to earn more than the average is to work for a living. They could have decided to oppose the universal credit, which demonstrates our view that we have to remove excessive means-testing from the benefits system in order to make work pay. They could have decided to oppose immigration controls, which illustrate our view that we need to restrict the entry of people into this country, so that it is British people who can go out and get the jobs that our recovery creates.

The Opposition could have decided to focus on and restrict their opposition to those matters, about which they have genuine ideological differences of opinion with us that I entirely respect. However, instead, they are choosing to oppose all the measures we are introducing—even those that are driven not by an ideological programme or by an attempt to reshape the way this country operates, but by a wish to rescue this country from a road to ruin.

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

May I declare an interest as a trustee of the Conservative agents’ pension fund, and my other registered interests? Does my hon. Friend agree that Labour Members are opposing this because they are deeply embarrassed that they failed to increase the retirement age when they were in government? A much preferable approach is that followed by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), who gave very long notice of these programmes and really did fix the roof when the sun was shining.

[Nick Boles]

I thank my hon. Friend for his intervention and he is absolutely right: the contrast is stark and is not flattering to the Opposition. Indeed, I would go so far as to claim that the curious thing about the Labour Government is that they demonstrated the quality we would normally associate with Oppositions: total opportunism—the total failure to grapple with any difficult long-term issues, and instead doing just the easy things that win votes at the next election.

State Pension Reform

Jacob Rees-Mogg Excerpts

Monday 4th April 2011 Commons Chamber

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

What the Minister has announced will be enormously welcome in my constituency. I know from correspondence with my constituents that they will be particularly interested in the raising of the state pension age, because they want a degree of certainty about when they can expect to retire. I urge the Minister to provide that certainty as rapidly as possible.

[Steve Webb]

As my hon. Friend says, people want certainty about the future. We have said that we must move rapidly in respect of those reaching the age of 66. However, the new mechanism is designed not just to make changes more automatic, but to provide notice periods. Young people will not have that certainty, because life expectancy is always changing, but as people approach the state pension age, we want to be able to give them more certainty. That is part of our plans.