Finance (No. 2) Bill

Debate between Jacob Rees-Mogg and William Bain

Tuesday 1st April 2014 Commons Chamber

[Mr Bain]

Over the entire period of the Labour Government, pensioner and child poverty were lower than they were in 1997. If the hon. Gentleman examines the records from the Institute for Fiscal Studies, he will see that that is clearly the case.

[Jacob Rees-Mogg]

Will the hon. Gentleman give way?

[Mr Bain]

I simply cannot resist giving way to the hon. Gentleman, whose constituency shares part of its name with mine.

[Jacob Rees-Mogg]

There is a union between those of us who have “North East” in the title of our constituencies, and we always give way to each other politely and gracefully.

We need to be very careful on the issue of inequality, because it turns out that it can be narrowed by having a deep recession. That surely cannot be the object of any Government’s policy. We should therefore look at the figures with care. The same is true of relative poverty—it can be reduced through a recession.

[Mr Bain]

There is a degree of wisdom in what the hon. Gentleman says. I encourage him to look at the work of the social mobility and child poverty commission, which has come up with some interesting conclusions. It is critical that there is better investment in skills. My constituency was once powered by the railway industry. The economic heart of my constituency is now the college that is across from my constituency office. That is the means by which children in a ward with one of the highest levels of child poverty in Scotland will get the skills that they need to succeed in the jobs that we want to create in a modern economy.

Fairness and Inequality

Debate between Jacob Rees-Mogg and William Bain

Tuesday 11th February 2014 Commons Chamber

[Mr Bain]

Will the hon. Gentleman give way?

[Jacob Rees-Mogg]

Of course I will give way to a Member who represents a seat with “North East” in its title.

[Mr Bain]

What would be the hon. Gentleman’s answer to those well-known leftists in the International Monetary Fund who have published detailed research indicating that when the gap between rich and poor gets too large in an economy, it diminishes growth and therefore living standards for everyone?

[Jacob Rees-Mogg]

The IMF is not full of well-known leftists, but it does seem to be run, by and large, by the French, who have a very different understanding of economics, an absolutely rotten economy, and are the last people from whom I would take lessons. We will not in this Chamber go into the behaviour of the previous managing director—it would shock the viewers of the Parliament channel if they were to consider how Monsieur Strauss-Kahn had behaved. Anyway, I will not be told what to do by people who cannot behave.

I want to come back to the economic benefits of the spending and saving of the wealthy. That is what provides the employment and investment that leads to economic growth, and leads to the rising of living standards for the poorest in society. That is not done by the state. The state can indeed pass money around—it can reallocate money from pot A to pot B—but that does not increase the fundamental size of the pot. It merely reallocates what is already there, whereas the expenditure, saving and investment of individuals in the private sector grows the total amount that is available and therefore leads to cascading wealth.

This is where I must come on to the specific point in the motion calling on the Government

“to halt its further spending and welfare cuts”.

The spending cuts have been essential. The Government and the Chancellor of the Exchequer have been a model to other countries in how they have behaved. In a cross-partisan moment, I thank the Liberal Democrats for the role they have played. It must have been particularly difficult for them to take these tough decisions, having not been in government for so many generations and facing up to more serious responsibilities than parties in opposition sometimes have to deal with. I think they deserve a huge amount of credit for the support they have given to the Conservatives. Lots of economists, some of them quoted by the hon. Member for Na h-Eileanan an Iar, were saying that it was the wrong thing to do. Even the IMF had to eat its words a year after saying that austerity was not the right thing to do. The IMF was wrong and the Government were right. Why was that?

First, when the Government came into office there was a risk that there would be a funding crisis. There was a risk that the Government would simply not be able to raise the money in the gilt market that they needed to pay for the services that the British people wished to receive. That was the first problem. The second problem was that Government expenditure and very high debt crowd out private sector activity. If the Government had not reduced spending, businesses would not have been able to have access to the capital they needed to begin the recovery. The third problem was that by taking money out of the economy, there was a general depression of economic activity as individuals and their families had less to spend throughout the economic spectrum. It was being taken out of productive capacity and used unproductively merely on a money merry-go-round of the state.

This is, again, where I like the fact that the coalition has raised the basic threshold of income tax. I share the ambition of my hon. Friend the Member for Solihull (Lorely Burt) that this should be increased. It is absolutely barmy to tax people on low incomes and then give them their own money back in benefits. Not only do we want to get it to £10,000, we want to get it to the point where people on the minimum wage are neither paying national insurance nor income tax.

Commission Work Programme 2014

Debate between Jacob Rees-Mogg and William Bain

Wednesday 22nd January 2014 Commons Chamber

[Mr Bain]

That is a very interesting intervention. The main issue is what influence we can have over the shaping of the rules. As people in Norway and Switzerland have discovered, the only way to have influence is to be in the organisation. Those who are not full members cannot expect a full say.

[Jacob Rees-Mogg]

The way we would influence things would be by being a member of the World Trade Organisation, of which we would be a single voting member, rather than being one of 28 in an organisation that then subscribes to the WTO. New Zealand has more influence in the WTO than we do.

[Mr Bain]

That would be all very well if we did not look at the actual voting strength that the European Union has as a bloc. How can we best maximise our influence in the WTO? It is by pooling our sovereignty and having that greater voting strength. That is what gives us the best chance of seeing the free trade agreements that will benefit businesses and employees in this country.

The EU also has to look at the nature of the growth that is being generated in our economy. It has to invest more in science and innovation—look at countries such as South Korea that have done that over an extended period. It must focus on skills, to increase employment and as a driver of future wage growth.

Thirdly, on justice and security co-operation, recent tragedies in the Mediterranean have shown the strong need for deeper joint working to prevent accidents and fatalities at sea, and to target would-be people traffickers. It is perplexing that when the rest of the EU is seeking ever closer co-operation on enforcing common standards, the UK is moving in the opposite direction, with its blanket opt-out and opaque, limited opt-in to the justice and home affairs area.

Fourthly, on the EU’s external strategy, it is worth noting that the queue of countries seeking to apply to join the European Union is far longer than that seeking or contemplating the possibility of exit from it. That must count for something, and the reasons are clear—unimpeded access to the single market, a rules-based system governed by the rule of law, and an influence in shaping common provisions. States such as Serbia, Turkey and Moldova recognise the greater influence in the world that the EU’s common foreign policy provides, the additional strength when negotiating trade rules at the WTO, and the sense that they can have another identity without ceding their own national identity. That same motivation has driven millions of people in Ukraine to urge their Government to sign the association agreement with the EU, which would do a great deal to boost that country’s economy.

The tragedy is that this Government are distracted from playing the fullest possible role in achieving these goals by their futile attempt to appease their own Back Benchers, who will not be content until the destinies of the United Kingdom and the European Union are on separate paths. For the sake of the future of 3.5 million jobs in our country, of our future prosperity and of our sense of who we are in the world, the Government should understand a little less, and condemn a little more, those whose policy for a British exit would diminish our imprint on the world, not increase it.

Budget Resolutions and Economic Situation

Debate between Jacob Rees-Mogg and William Bain

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]

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.

Sustainable Livestock Bill

Debate between Jacob Rees-Mogg and William Bain

Friday 12th November 2010 Commons Chamber

[Mr Bain]

The key point for the hon. Gentleman to consider is that the Bill would not introduce any order-making power that affected the agriculture industry. It would create a duty for the Secretary of State to have a balanced strategy that took on the points made by the National Farmers Union and Friends of the Earth, and it would allow the Secretary of State to calibrate a balanced policy for which she will be accountable to this House.

[Jacob Rees-Mogg]

rose—

[Mr Bain]

I will make a little progress and then give way.

Clause 1(3) would ensure that the UK, in its discussions at international level, promoted sustainable food production. At the moment, EU policies promote a reduction in two forms of greenhouse gas emissions: methane emissions from livestock digestion processes, which are stored in animal manure, and nitrous oxide emissions, which originate from organic and mineral nitrogen-based fertilisers. Currently, about 9% of total EU greenhouse emissions stem from agriculture. That represents a 2% reduction from comparable statistics from 1990. The Commission’s 2009 White Paper indicates that agricultural emissions in the 27 EU member states reduced by 20% between 1990 and 2007 owing to the marked decline in livestock numbers, more efficient application of fertilisers and better manure management. This 20% fall in emissions from agriculture is significantly higher than the 11% reduction in emissions in all EU sectors, and contrasts with the 17% increase in global emissions stemming from agriculture.

The cross-compliance and rural development measures of the EU’s common agricultural policy are assisting in the further reduction of agricultural climate change emissions, through the modernising farms programme, extending the use of energy-efficient equipment and buildings, expanding the available support to generate biogas through anaerobic digestion, and the compensatory measures for farmers who assist in environmental protection through agri-environment schemes. These measures should form key elements of a reformed CAP, which members on both sides of the House will wish to see emerging by 2013. They are measures which, under clause 1(3), the Secretary of State would be able to promote at EU level.