Finance (No. 2) Bill

Debate between Jacob Rees-Mogg and Chris Leslie

Tuesday 1st April 2014 Commons Chamber

[Chris Leslie]

We have said that a 50p rate needs to be the policy for the next Parliament. We make judgments in manifestos from one Parliament to the next. Tax policy should never be written in perpetuity. We have said that while the deficit is likely to be as high as it is, the 50p rate is justified. The hon. Member for Cities of London and Westminster (Mark Field) talked about social cohesion. While the process of deficit reduction will now have to continue well into the next Parliament, when it was not expected, the 50p rate is perfectly justified for good social cohesion reasons.

[Jacob Rees-Mogg]

Will the hon. Gentleman give way?

[Chris Leslie]

How could I resist the hon. Member for North East Somerset (Jacob Rees-Mogg)?

[Jacob Rees-Mogg]

I am extremely grateful on behalf of North East Somerset to the hon. Gentleman for giving way to me. Is he therefore saying that he believes that the 50p rate is a good thing in and of itself for the symbolism that it brings to bear, even if it does not raise any money?

[Chris Leslie]

I think it will raise a significant sum to help to alleviate the burden on lower and middle earners, and that is why it is important to have it. If it is there for not just a temporary period, but for a significant period, it would settle and be an important part of the tax system. But generally speaking, of course we all want all taxes to come to a lower level. I do not want to see taxes higher than they need be, but the hon. Gentleman has to understand that the context will be, I am told, a potential £75 billion deficit to be inherited by the next Government—I hope the next Labour Government—a significant amount of borrowing, hanging around the necks of whoever wins the general election, made worse by the fact that the Government promised that it would have been eradicated altogether.

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[Chris Leslie]

Of course the banking sector is very important. It has been dysfunctional for a prolonged period. Net lending to business has fallen consistently throughout this Government’s time in office. But I have to tell the hon. Gentleman that when the Treasury said that the levy would raise £2.5 billion, it should have got that money in. All our constituents are paying more in tax and have lost out significantly because that money has not been forthcoming from the banks, which after all owe a little bit back to the taxpayer for the bail-out that followed their reckless lending decisions in previous years.

The very least we should do is ensure that we have a functioning bank levy that brings in the expected sums. We would ensure that it raises a further £800 million. We would use that money to expand free child care places for working parents of three and four-years olds by extending free nursery care from 15 to 25 hours a week. That would also be a good way of helping parents to get back into the labour market and to get the jobs they need. A 15-hour arrangement—three hours a day—for child care does not give a parent looking after a youngster the opportunity to get into work, but 25 hours a week would make a significant difference. We could do that through a reasonable and modest change to the bank levy.

[Jacob Rees-Mogg]

Following the point made by my hon. Friend the Member for Cities of London and Westminster (Mark Field), does the hon. Gentleman recognise that an £800 million additional bank levy would reduce the ability of the banks to lend into the real economy by between £8 billion and £12 billion?

[Chris Leslie]

I disagree with the hon. Gentleman on that point, not least because the shortfall in the amount the Treasury said it would raise from the levy has been so much larger than £800 million. I think he needs to speak with Ministers. If he disagrees with £2.5 billion, he needs to tell them now. The Exchequer Secretary is in the Chamber, because he is the one—unbelievably—who was responsible for designing the bank levy. He must be massively embarrassed by its total failure. Why has it raised so little? How does he explain the shortfall? I will give way to him if he wishes to offer an explanation.

Financial Services (Banking Reform) Bill

Debate between Jacob Rees-Mogg and Chris Leslie

Monday 8th July 2013 Commons Chamber

[Chris Leslie]

That raises the question of the operation of the inflation target. If I draw a parallel between a leverage target and an inflation target, clearly the Chancellor has been setting out his inflation target. It has been missed on a number of occasions—quite a few months and quarters have gone by—so the interplay between the Chancellor and the Bank of England is critical here. I am more than happy to come back to the issue. My point in the new clause today is that we need to start seriously discussing how, from a UK perspective, we are going to deal with the issue of leverage from a home-grown point of view, rather than waiting for the European Union to come along with a set of arrangements which may or may not fit our circumstances.

[Jacob Rees-Mogg]

There are two points that occur on the hon. Gentleman’s target weighting. One is that it is very arbitrary. If the regulator could set it for each individual bank, that would give a very strong arbitrary power to the bank to meet that overall target. The second is that although people say that their assets are particularly good ones and better than others, that is exactly what they said in the crisis and it turned out not to be reliable.

[Chris Leslie]

I agree with the hon. Gentleman, but it would be invidious for us as politicians to try to delve into the specific analysis of bank-by-bank asset or liability, quality and the risk weighting of assets. That is why we have regulators and what their job should be, but it is important that as a body politic, so to speak, we make a judgment about the level of leverage that we should have in the economy as a whole. That is why I raise the issue today.

For us, tackling the leverage question is incredibly important. We should not wait for the European Union to decide these things for us. We sought in Committee to clarify this in part. Rather than put it in the “too difficult to handle” box, as the Government seem to be doing, we should try to move forward constructively. The approach that we have taken is on the amendment paper. First, it is necessary to prevent the banks from over-extending themselves beyond the point of safety. Ring-fencing does not do that. We think ring-fencing changes should go alongside capital requirements and leverage regulation.

Secondly, we have been hearing arguments recently about the leverage ratio as anathema to bank lending into the real economy. Sometimes it is characterised as one or the other. I do not necessarily agree that there is a seesaw trade-off between the two. Andrew Bailey at the Prudential Regulation Authority has recently made the particularly pertinent argument that capital can be lent onwards in any case, so it should not be a case of one or the other.

For the sake of clarity, in new clause 9 we looked to address this explicitly by framing a leverage target strategy for the system as a whole, which must be constructed in such a manner so as to maintain adequate credit availability to support a growing economy. It is important to recognise that we will always operate with a degree of leverage. That is part and parcel of the way our banking system works, and our constituents rightly want us to focus on getting the economy moving, while preventing excessive risk-taking. In the spirit of constructive engagement, we hope the amendment strikes the right balance.

It is sometimes argued that leverage should be a back-stop rather than a front stop. The argument about what is a back-stop and what is a front-stop can get rather theological. Andy Haldane makes the point in his famous “The Dog and the Frisbee” speech that leverage needs to be brought much further forward as a primary tool for the regulators, and that other capital and risk-weighting issues should be subordinated. The main point is that leverage should be recognised as a key dynamic in our economy and needs to be regulated in a way not dissimilar to the regulation of inflation.

For us, there are three essential elements: set a leverage target for the system as a whole, which is a task for the Government; measure that risk—the threats to whether loans are going to be repaid—more accurately by sector, to determine which sector needs more capital to make it safe if leverage is rising and which could be dealt with in a normal way; stress-test to back-test the pressures in those particular institutions to be clear that the choice of the leverage target is correct. The regulator should do that.

New clause 9 would also augment Bank of England independence in relation to operational decisions on monetary policy and take into account the need to supply credit to the wider economy. I am glad that the Building Societies Association and others support it.

Financial Transaction Tax and Economic and Monetary Union

Debate between Jacob Rees-Mogg and Chris Leslie

Tuesday 18th June 2013 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move amendment (a), leave out

‘further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice’;

and insert

‘calls on the Government to support the principle of an FTT and to learn lessons from the EU proposal and work with other global financial centres, especially the US, to reach a consensus on a design set at a modest rate without creating negative economic consequences and which minimises international tax arbitrage;’.

Before I discuss the amendment, let me briefly deal with the latter set of issues that the Minister raised—the general issues of national parliamentary sovereignty, the remit of EU policy, enhanced co-operation and so on. Clearly, the European Scrutiny Committee is right to monitor the relationship between EU decisions and the need for public engagement and accountability. Most Labour Members, however, take a more positive view of the role that Britain should be playing in Europe, because the European Union should be a force for good that increases the chances of greater prosperity, peace and the values we hold being asserted with greater impact across the world. We are comfortable, though, with a degree of flexibility and variance across member states; “enhanced co-operation” could be used to our advantage here in the UK for the future.

Individual member states should have some latitude rather than follow a blind adherence to anything and everything emanating from Brussels. There is a danger that sometimes those who regard themselves as good Europeans—pro-Europeans—end up defending the poor decisions that the Commission and the European Parliament can sometimes come out with. There is nothing wrong at all with national Parliaments disagreeing with the European institutions; it is a healthy sign of an internal dialectic, a constructive challenge and a reality check for those who are more distant from public opinion. We should acknowledge that both the European Commission and the European Parliament need to be reformed to improve their accountability and transparency.

In the short time available to us today, let us not lose sight of what our electors sent us here to do. Our view is that the British people want us to focus right now relentlessly on getting jobs created, boosting prosperity, creating wealth, and helping to stimulate the economic recovery which is now three years overdue. Navel gazing into the constitutional niceties that fall between the gap of domestic or European institutions is slightly indulgent in that context; we should not lose sight of the most important priorities that our constituents want us to focus on. That is why we tabled this amendment.

[Jacob Rees-Mogg]

There seems a slight illogicality in what the hon. Gentleman has been saying. He says that he wants to create jobs but it has already been established that the financial transaction tax would destroy half a million jobs across Europe. How can he have it both ways?

[Chris Leslie]

The Minister was talking about the European variant of the FTT, but of course he was forced then to admit that we have already got a partial FTT of sorts—the stamp duty that is in place. I will discuss that in a moment, but it was very instructive that he was vehemently against the extra-territoriality aspects of the European version. Of course the EU version does need to change, and I am not saying in any way that it is perfect. His argument is, “They should stop extra-territoriality aspects in their financial transaction tax”, but our stamp duty contains many of those characteristics, and individuals—those trading UK shares and UK equities—are liable wherever that trade takes place in the world. So the Government clearly have not thought through their position on these things.

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

I begin by referring Members to my declaration of interests and by celebrating the 198th anniversary of the battle of Waterloo. We are debating Europe on Waterloo day, which commemorates an occasion when an alliance of nation states came together to defeat the ambition of a Frenchman to have a single European state, so it could not be a better day for debating these matters.

I will deal first with the financial transaction tax, because it is a rotten idea. The fact that we have stamp duty, a tax that has been around for centuries and is not paid on rapid transactions—it is paid only on long-term holdings—or by market makers, or for contracts for difference, or on American depositary receipts, is not an argument for saying that a financial transaction tax can work in the sophisticated financial system that the world operates today.

What the hon. Member for Nottingham East (Chris Leslie) consistently ignores is who the tax would ultimately fall on. In the wonderful world that he was creating, there was a tax that could be designed—not, of course, the one that the Europeans have designed, but another, imaginary tax—that would never seem to fall to anybody. It could take £10 billion out of the economy without anyone really having to pay for it, apart from some nasty, evil bankers who, when they take their hats off, can be seen to have horns underneath.

However, that is not the real world, because the transactions that take place in the City represent an underlying reality, be it the debt issued by the Government, mortgages sold on by banks, or pension funds being invested around the globe. Individuals would end up paying that tax because the costs of their doing business with banks would increase. We know that clearly from the mortgage market, complicated as it may be, because the ability to package mortgages and sell them reduces the cost of capital to banks and reduces the cost to people of buying their own homes. What the Opposition are saying is that they want to make mortgages more expensive. They want to put a tax on people who are least able to pay.

[Chris Leslie]

The hon. Gentleman was doing so well, but unfortunately the level of scaremongering undermines his whole argument. Is he really saying that there is absolutely no case for a tiny fraction, less than a tenth of one percentage point—[Interruption.] I am talking not about the EU variant but about the principle of a financial transaction tax. Is he saying that there is absolutely no case to be made for a financial transaction tax on derivatives or bonds when we have 50 basis points—half a percentage point—of stamp duty on UK equities, or is he also calling for repeal of UK stamp duty?

[Jacob Rees-Mogg]

There is no case for a financial transaction tax. It would be enormously destructive of this country’s financial system. The cascade effect to which the Minister referred is at the heart of this. When things are being traded dozens of times a day, what starts off as a little tax suddenly becomes a very big tax. The hon. Gentleman conjures £10 billion out of the air. We cannot withdraw £10 billion from the economy without it having an economic effect and without it being paid for by somebody.

Finance (No. 2) Bill

Debate between Jacob Rees-Mogg and Chris Leslie

Thursday 18th April 2013 Commons Chamber

[Jacob Rees-Mogg]

I obviously do not know about the individual cases that come to the hon. Gentleman’s surgery, but with a benefits bill for this country of £220 billion a year, there really ought to be—

[Chris Leslie (Nottingham East) (Lab/Co-op)]

And rising.

[Jacob Rees-Mogg]

It is rising, as the hon. Gentleman says. There is a huge amount of money in the benefits system. If it is not going to the right people, that will be rectified by the reforms being pushed through by my right hon. Friend the Secretary of State for Work and Pensions, which are some of the Government’s most ambitious and important changes.

Banking Union and Economic and Monetary Union

Debate between Jacob Rees-Mogg and Chris Leslie

Tuesday 6th November 2012 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

No pressure there, then, Mr Deputy Speaker.

I have a lot of sympathy with the Minister today. Let us hope that he is a little luckier than he was last Wednesday, although of course the curse of Tunbridge Wells will have its way. In a way, as he explained, banking union is a natural downstream consequence of monetary union. It would be wrong to resist it for the eurozone, as the eurozone crisis has exposed a series of risks to economic stability, not least of which is the relationship between sovereign debt and banking debt and the need to find credible ways to prevent private banking losses from dragging down sovereign fiscal positions. The UK has its own banking union and our monetary policy sovereignty has given us a measure of protection during the sovereign and bank debt crises that have engulfed the eurozone.

I thought the Minister was perhaps labouring under the impression that his plucky Members of Parliament kept us out of the euro between 1997 and 2010—that is too funny, as of course that was the decision of the previous Labour Administration. It was the right decision.

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

rose—

[Chris Leslie]

I will not give way yet, as I am conscious of the time.

We were right, too, to bail out the banks in 2008, but that came at a high cost for the taxpayer and for the country’s economic prospects. UK public debt was adversely affected by the purchase of banking assets and the subsequent loss of revenues from financial services. These issues are now affecting countries around the world, especially in the EU. Monetary policy sovereignty has allowed the UK to adopt an active interest rate policy to counteract those economic headwinds—something less available to those in the eurozone.

To save the euro, the eurozone has looked at new rules to grip the fiscal policies of its member states. Fiscal union in the EU is now widely recognised as dependent on banking union. Germany initially insisted on that, and it has asked that the single supervisory mechanism—the eurozone nation state regulators and Governments—be completed before banks can access the European stability mechanism and the European Central Bank’s outright monetary transactions programme, hence the imperative to agree these matters. In recent weeks, however, Germany is rumoured to have lost some enthusiasm for that tougher banking union and its consequences, especially as some of its smaller banks face major regulatory upheaval.

It is right that the ECB’s role in supervisory policy should be triggered, by unanimity if necessary, as required in the Maastricht treaty. Central banks are increasingly in the driving seat in financial regulation, as is the case in the UK, and it is necessary for the ECB to have a clear capability in its role overseeing the operation of the eurozone. The ECB is a full treaty institution, and it must be governed by treaty rules and member state unanimity, as we heard from the Minister. In that process, the rights of non-eurozone members, particularly the UK, must be safeguarded in several ways. We should not be party to any deposit guarantee mechanisms or pre-fund recovery or resolution mechanisms. The UK has undertaken its own measures in that respect, and there are no proposals on the table that would affect our taxpayers directly.

The rules for the single market, including a single rule book for the financial services sector in the EU, should involve all 27 member states. The European Banking Authority—as well as other European supervisory authorities—is the vehicle for preserving the integrity of the single market. The Commission says in its documentation that

“it is proposed that voting arrangements within the EBA should be adapted to ensure EBA decision-making structures continue to be balanced and effective and preserve fully the integrity of the Single Market”.

That is absolutely crucial, but we need far more details about how that will work. The 17 eurozone countries will act en bloc through the ECB in their seats on the EBA, which could represent a permanent majority on all issues, as the Minister explained. The EBA has rule-making powers under qualified majority voting decisions, it mediates between supervisory institutions, and it shares supervisory best practice. There is a real risk of the ECB bloc acting as a permanent caucus to overrule the 10 non-eurozone nation states.

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[Chris Leslie]

I do not want to get too much into the history of these things. We could go back to the Maastricht treaty, the formation of the eurozone and the inexorable logic of how we have got to where we are today. All I know is that it is important that we try our best and redouble our efforts to ensure that we have a negotiating strategy that secures the best deal possible for the UK.

[Jacob Rees-Mogg]

Will the hon. Gentleman give way?

[Chris Leslie]

I should like to make a little progress if I may.

I know that hon. Members will say, “How can we manage to secure these particular arrangements? What should our stratagem be?” Government Members will recall Lady Thatcher’s invocation of the Luxembourg compromise—a quiz question for hon. Members who recall that device. It has not been in use in recent times, but it was a way, in certain circumstances for qualified majority voting arrangements, to ensure that there was a capability of promoting vital national interest. There was at one point a recognised device for ensuring that one could stay in the room. If vital national interests were affected, then certain levels of protection were possible. I do not in any way deny that that is a difficult position, but that is the sort of scale of proposition that the Government should be more actively asserting. The Government need to negotiate a clearer and more distinct set of rules that protect our status outside the eurozone while ensuring that we have an ongoing role in how new rules develop across the whole EU. In our view, that must be the Prime Minister’s negotiating objective.

We have other concerns and questions about the SSM. How can it connect with the wider public and be subject to democratic accountability? That is an important point, because the bodies at the heart of the SSM will need to be more transparent. I am not clear whether they will publish their minutes in the same way as the Bank of England or the Federal Reserve, but we need to start addressing some of those transparency questions. Furthermore, what will be the relationship between the ECB’s monetary policy stance and its approach to decisions on financial supervision?

The composition of the SSM is complex and lines of accountability are extremely confused. For example, the European Central Bank is a superior treaty institution, yet the EBA will in theory sit on a junior institution. It is extremely difficult to see lines of accountability and how the legal issues raised in the amendment will be resolved. What will happen in the intervening months and potentially years before this complex constitutional wiring is settled? What if new market pressures force banking crises that require the stability mechanism or outright monetary transactions to be triggered, and what if there is no SSM in place?

How do we prevent City of London institutions and firms, which contribute about one sixth of Britain’s GDP, from changing their opinion about London in the long run as the right place to locate, when there is a risk that we will be marginalised in the decision-making forum for EU banking rules? They will worry about the prospects of operating under a different set of rules from those on the continent. Our vital national and economic interests are at stake, so we need to ensure that we keep involved, do not get pushed out and avoid being marginalised, while of course reserving our rights.

Draft European Union Budget

Debate between Jacob Rees-Mogg and Chris Leslie

Thursday 12th July 2012 Commons Chamber

[Chris Leslie]

I am glad that the hon. Gentleman is, as ever, in his place.

If people realised how weak the Government were being in their negotiating stance, they would be totally appalled.

[Jacob Rees-Mogg]

The hon. Gentleman is very reasonable in all these matters and of course he wants answers from the Government, but in that spirit of frankness, does he personally regret the loss of £10 billion to the UK Government by giving away the rebate? I know he was not personally responsible for that.

[Chris Leslie]

The hon. Gentleman has to realise that the European Union was going through a totally different era of accession countries and enlargement. Now, we are in a post-financial crisis era, in which it is absolutely clear that, as my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, serious spending cuts are taking place in our domestic economy and budget. Many of our constituents want pro-job, pro-growth and pro-stimulus measures to be priorities here in the UK, and they feel aggrieved that some administrative budgets in the EU will continue to roll forward without the UK Government showing the restraint that they ought to show while they are at the height of their potential negotiating powers—hence the amendment that we have tabled.

Despite the Financial Secretary to the Treasury’s sudden animation when I asked him what exactly the Government are doing, the motion does not set out clearly the view, which ought to be and would be shared by all hon. Members, that the budget and the multi-annual financial framework should be reduced in real terms. It is a simple statement that would help the Government in their negotiations, and that is why the House should support the amendment.

Connecting Europe Facility

Debate between Jacob Rees-Mogg and Chris Leslie

Thursday 19th January 2012 Commons Chamber

[Chris Leslie]

I hope that I am not striking a lecturing tone. I am simply imploring the Government to pull their finger out and do something about economic growth in the UK and Europe. I am making the point that what happens in Europe affects our economy. The regulatory debate did indeed go on for many years. The Minister himself called for deregulation and light-touch approaches across the City and elsewhere. We have to get regulation issues correct, and we all have lessons to learn from what went wrong in that regulatory debate. We have admitted that mistakes were made, but I am still waiting for the Minister to accept that he too made poor decisions in calling for deregulation, particularly in financial services.

Nothing in the Government’s motion seeks to steer the Commission towards a more activist role in boosting and stimulating European economies, particularly in the short term. There is no sense that the Government are seeking to influence this connecting Europe facility in order to re-phase capital investment and bring real help now to an economy on the brink. One-dimensional collective austerity, as advocated by our Government—and also, unfortunately, by the Germans and others—makes it harder to get deficits down, not easier to reduce public debt.

Hon. Members do not have to take my word for it. Six days ago, the credit ratings agency Standard & Poor’s, after downgrading the status of some eurozone nations, stated that

“a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers’ rising concerns about job security and disposable incomes, eroding national tax revenues”.

Even the credit rating agencies are now worried about the lack of growth in the European economy and about whether the eurozone has the right strategy for building its way out of the fiscal hole in which it finds itself.

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

Given that we are net contributors to the EU budget, which puts a great burden on our taxpayers, will the hon. Gentleman explain how building a railway in Romania would help the UK economy?

[Chris Leslie]

It is important that the European Commission, and the eurozone in particular, focus on getting economic growth. My simple point is that it is not happening. An austerity-only approach is being taken, but it is not working, just as it is not working in this country. Of course we have to ensure that we reduce the proposed budget increases—we do not disagree with that—but there are ways to stimulate an economy within that envelope, including through a phased approach towards the European spending review process. That is my point. It is the glaring omission from the Government’s plans so far.

Credit Institutions and Investment Firms

Debate between Jacob Rees-Mogg and Chris Leslie

Tuesday 8th November 2011 Commons Chamber

[Chris Leslie]

I am simply highlighting the anxieties felt across the City, the financial service sector and by many hon. Members, who are worried that we are stepping into a new set of financial service regulation structures domestically within the UK that are far away from those bodies we need to be influencing, steering and having our voices heard by. It may well be that we are stepping in the wrong direction. That is the anxiety I am voicing today.

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

I am very grateful to the hon. Gentleman for allowing me to interrupt his characteristically thoughtful speech. Given what he is saying, does he think that this would be a very good, if not ideal, area in which to repatriate powers?

[Chris Leslie]

I do not think it is wrong to try to have some level of co-ordination on financial services regulation across the EU. This is a global industry, and that is broadly sensible. However, we now know very well how those supervisory institutions of the EU are to be structured, and yet we are designing new arrangements for the post-Financial Services Authority world that do not match very suitably with those. There may be different approaches to how we can make the fit more effective and improve Britain’s voice. However, there is genuine concern that even though we knew about these arrangements 18 months ago, the Government have not yet provided the capability to adapt the regulatory reforms to ensure that we do not lose influence—and, in fact, build our influence.

As regards the capital requirements directive, it is clear that for the time being we need to resist the Commission’s challenge to proper subsidiarity and give our reasons for retaining national discretion to have safer and higher standards for financial regulation here in the UK.

We support the motion but hope that Ministers will take the opportunity to think more strategically about how best to address the structural mismatch between their proposed reforms and the European arrangements, because that risks marginalising the UK’s voice time and again.

Section 5 of the European Communities (Amendment) Act 1993

Debate between Jacob Rees-Mogg and Chris Leslie

Wednesday 27th April 2011 Commons Chamber

[Chris Leslie]

There are several factors underpinning the German economy. The Germans do not pursue the same degree of hard and fast austerity that we are pursuing, they have a different approach to productivity, and they are achieving higher levels of growth. Our economy needs a pro-growth strategy. I do not say that as a whim—it is a hard-headed credible necessity for reducing the deficit and getting the economy moving again. Without growth, the Treasury will be losing revenue.

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

When the hon. Gentleman talks about a pro-growth strategy, does he mean spending? If so, where on earth is the money coming from?

[Chris Leslie]

As the hon. Gentleman knows, the paradox of austerity and of an anti-growth strategy is that it costs more in the long run. I quite understand that many Government Members do not understand the causes of the deficit. It is therefore improbable that they are the right people to solve the deficit. If they understood its causes, perhaps I would accept their rationale on how to solve it, but they do not.

Savings Accounts and Health in Pregnancy Grant Bill

Debate between Jacob Rees-Mogg and Chris Leslie

Tuesday 26th October 2010 Commons Chamber

[Jacob Rees-Mogg]

The hon. Lady makes a brilliant and inspired point with which I completely agree, and it is therefore wise to ensure that such benefits as there are are directed to the people who need them, not wasted on people who do not need them. [Interruption.] If the hon. Member for Nottingham East (Chris Leslie) wants to say something, I am more than happy to give way.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

The Bill does not achieve what the hon. Gentleman wants, however. While I am on my feet, may I ask him whether he knows how many children in the United Kingdom are born with spina bifida each year, possibly as a result of a folic acid deficiency?

[Jacob Rees-Mogg]

The hon. Gentleman says the Bill does not say where the money is going to be spent, but that is an absurd point to make because the public finances are in such a weak condition that, at this moment, money needs to be saved. The first principle for the Government—their first ambition and intention—must be to get the finances of this country on to a stable footing so that they can then, with economic growth, ensure that the money is there to help people in the future.

[Jacob Rees-Mogg]

My hon. Friend makes an extraordinarily good and important point. The payment of this £190 comes too late in the process to be of benefit to people whose children may be at risk of spina bifida.

[Chris Leslie]

I would be surprised if many mothers—I certainly include my wife in this, when we were having our daughter—were able to discover that folic acid is available on the NHS. A multivitamin and folic acid supplement costs about £10, I think. Do the hon. Gentleman and the hon. Lady really think it is absolutely essential that these women having children should potentially be deprived of help to pay for that folic acid supplement because of this deficit reduction strategy?

[Jacob Rees-Mogg]

As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) wonderfully and accurately pointed out, the hon. Gentleman had got the wrong part of the pregnancy; we have to go back, not forward.

Finance Bill

Debate between Jacob Rees-Mogg and Chris Leslie

Tuesday 6th July 2010 Commons Chamber

[Jacob Rees-Mogg]

I am sorry to say that the hon. Lady left my train of thought at the wrong station. The point I was making was that, if we carry on issuing gilts at an even faster rate, long-term interest rates will rise, and it is on long-term interest rates that mortgages end up being priced. If we look at the gilts market, we see that the very thought—the prospect, the hope—of a Conservative Government saw it rally, therefore reducing the cost of borrowing to people in this country, whether Her Majesty’s Government or private individuals. So yes, we have very low overnight rates, but the long-term rate set by the gilts market is more important for mortgages.

[Chris Leslie]

Will the hon. Gentleman give way?

[Jacob Rees-Mogg]

It would be a privilege.

[Chris Leslie]

But surely the hon. Gentleman, as a sensible and grounded individual, will recognise that there is a world of difference between the Greek situation, to which some of his more hot-headed colleagues have compared our country, and the rather sturdy and well managed way in which we deal with our debt and gilts issuance in this country.

[Jacob Rees-Mogg]

I do not believe that I had mentioned Greece in the few words that I had spoken. I would say, however, that it is better to cut before getting into a Greek situation. I admire my right hon. Friend the Chancellor of the Exchequer because, in his foresight, he has brought forward action early. Countries in a Greek situation find that they can get no money from the financial markets and have to go cap in hand to the International Monetary Fund or the European Central Bank. How much better it is—how much more “prudent”, to use a word once popular with Labour Members—to get our house in order before reaching that state of desperation.

--- Later in debate ---

[Jacob Rees-Mogg]

I think that Neville Chamberlain managed to balance the budget, so we had a Chancellor who was a Conservative doing quite a good deal of work in the 1930s. However, we may be getting a little abstruse and far away from the 2010 Finance Bill.

[Chris Leslie]

Can I ask one last question on the 1930s?

[Jacob Rees-Mogg]

I know that I am accused of being old-fashioned, but I do not want to conduct the whole debate in the 1930s.

Let us move back to 2010 and the need for the tax rises to be as they are, not higher. Clearly, at 36.4% of GDP, we are at a tax level that it is very difficult to surpass. I remind Labour Members who disparage the great Professor Laffer that when tax rates were at 83%, they still failed to get above 36.4% of GDP, so taxation is as high as it can be.

My final point is on spending. The problem with spending is that it got out of control post the period when Labour followed the Conservative plans for public spending. It is simply not sustainably to have Government spending at 48% of GDP when the tax base is 36.4% of GDP.