Comprehensive Spending Review

Justine Greening Excerpts

Thursday 28th October 2010 Commons Chamber

[The Economic Secretary to the Treasury (Justine Greening)]

This is a very important issue, and I want to take this opportunity to reassure the hon. Lady that that is precisely what we are doing.

[Ms Ritchie]

I thank the hon. Lady for her response.

The most important thing to us in Northern Ireland is the annually managed expenditure, through which our benefits are paid. What makes this iniquitous is the fact that the money does not come out of the Northern Ireland block, but directly out of the pockets and purses of benefit recipients. In Northern Ireland, that represents up to £0.5 billion being taken from some of the poorest households. The Prime Minister claims that that is fair, but what is fair about snatching the mobility allowance that is payable to people in residential care? What about the changes to child benefit? What about the changes to housing benefit? Are they fair? On the face of it, those large-scale welfare cuts have little to do with the laudable desire to help people move from benefit dependency to the dignity and self-sufficiency of gainful employment. They represent an old-fashioned onslaught on the poor.

I am a former Minister for Social Development in Northern Ireland with responsibility for benefits. Along with my successor, I have engaged in continuing discussions with the Department for Work and Pensions about welfare reform issues and the respects in which welfare reform proposals are inappropriate for Northern Ireland. I believe that we have reached a point at which we may need to redesign the social security system in Northern Ireland to make it much fairer for all, and to give ourselves greater freedom and flexibility to do things differently. I believe that that can be done without the need for an increase in the net subsidy to Northern Ireland.

We are doing a lot of thinking about how we can secure more local control of Northern Ireland’s economic levers, and we expect a robust but fruitful dialogue with the Chancellor when the promised economic paper on Northern Ireland is circulated by the Government within the next few weeks. The Chancellor indicated in last week’s CSR statement that both he and the Secretary of State for Northern Ireland intended to engage with all Northern Ireland Members of Parliament. As one of those Members of Parliament, and as a Northern Ireland party leader, I look forward to that discussion. There is no doubt that we need to rebalance our economy, but one thing that we must not do is throw the baby out with the bathwater and remove people from the public sector, because that will throw asunder our whole jobs and investment scenario.

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[The Economic Secretary to the Treasury (Justine Greening)]

We have had a very good debate on the Government’s spending review, and I thank all hon. Members who have contributed.

Last week my right hon. Friend the Chancellor stood in the House and set out a clear plan to pull Britain back from the brink, to deal with our debts and to put our nation’s finances back on a sustainable path. When we came to power, we inherited an economy that was on its knees and took over from a Government with no clear plan for getting it up and running. There was no strategy for recovery and no ideas for reform, and not a single penny of savings had been identified. If Opposition Members would like to intervene to tell me which of our spending cuts they would like to support, I would be very happy to take the intervention right now.

The right hon. Member for Delyn (Mr Hanson) talked about the March Budget, but it was a Budget and a plan that the British people rejected at the ballot box. While the Opposition are in denial, they will have no prospect of coming up with a plan to solve the grave problems that this country faces following 13 years of their being in government.

We took over when our country was borrowing £1 for every £4 it spent. We were running the highest deficit in our peacetime history and the highest in the G20. Britain was not living within her means, and the world knew it, as my hon. Friends the Members for Spelthorne (Kwasi Kwarteng) and for Central Devon (Mel Stride) pointed out. In fact, the previous year, the International Monetary Fund warned that we needed to accelerate deficit reduction. As my right hon. Friend the Member for Wokingham (Mr Redwood) said, that was critical to getting our country’s finances back on track.

In May we announced immediate reductions in in-year spending, avoiding the sovereign debt crisis that was engulfing the eurozone. In June, we set out our emergency Budget, returning credibility to the nation’s finances, and this October we have had the spending review, bringing years of irresponsible borrowing to an end and giving our country the best chance of keeping interest rates low, stimulating business investment and keeping mortgage rates low, and so helping families.

We have had to tackle the deficit—it has been unavoidable. However, we have chosen to spend the money that we have on the areas that matter most to Britain, which are the education of our children, the health care of our people and the infrastructure that sustains a prosperous economy. As my right hon. Friend the Chief Secretary said, underpinning all our decisions have been three guiding principles: first, the need to support growth; secondly, that our choices are fair; and thirdly, that we deliver reforms to our public services, making them fit for the 21st century. As the hon. Member for Redcar (Ian Swales) pointed out, those principles were entirely missing in the last Government’s comprehensive spending review of 2007.

[Angela Smith]

Can the Economic Secretary give us any indication of the evidence that the Government have used to rely on the creation of 2.5 million new jobs in the private sector over the next five years?

[Justine Greening]

As the hon. Lady will be aware, we have set up the Office for Budget Responsibility, which is an independent office. It is the OBR that is predicting year-on-year falling unemployment and rising employment. I hear Opposition Members talking about 480,000 or 490,000 public sector job losses, but I am afraid they have to consider that the same report assesses that 1.6 million jobs will be created in the private sector. They cannot have it both ways.

[Chris Williamson]

Will the Economic Secretary give way?

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[Justine Greening]

I will not, because we have had a long debate and I have three minutes to respond to each hour of it. I really do want to try to cover the points that hon. Members who participated raised. I apologise to the hon. Gentleman, but I want to respond to what has been said.

The bottom line is that if a country loses control of its finances, it loses the ability to choose how to spend its money, and its priorities become those of its debtors, not of its people. That is why we outlined a clear and credible plan to deal with the deficit when we came to government and that is why we will stick to it. The Government are firmly focused on achieving sustainable growth. Tackling the deficit will help to provide the strong economic bedrock on which the private sector can build, as my hon. Friend the Member for Esher and Walton (Mr Raab) pointed out.

[Chris Williamson]

This morning, I met a representative from the UK construction group that represents some of the largest construction companies in the country, which said that it did not recognise the growth figures that the Prime Minister quoted yesterday. It said:

“The 4% increase in construction turnover in”

quarter 3

“is unbelievable and does not reflect the mood of the major players”.

Is it not a fact that the private sector-led recovery on which the hon. Lady is relying is just a fantasy and will not come to fruition?

[Justine Greening]

I was about to ask the hon. Gentleman to give way, Mr Deputy Speaker. The Government are spending slightly more on capital infrastructure than the previous Government, so heaven knows what the industry would have thought of Labour’s plans. In the next four years, we will invest more than £30 billion in transport projects, £14 billion of which will fund maintenance and investment in our railways and £10 billion of which will be spent on road, regional and local transport schemes. We have created the new green investment bank to help finance sustainable infrastructure for the future and we have launched the £1.4 billion regional growth fund, which has rightly been welcomed by my hon. Friends the Members for Bristol West (Stephen Williams) and for Macclesfield (David Rutley).

Even when faced with the economic problems bestowed by the Labour party, we are still investing tens of billions of pounds in Britain’s future. That goes alongside the reduction in corporation tax that we brought forward in the emergency Budget and the reduction in national insurance that we have also brought forward, scrapping the Labour party’s jobs tax. The hon. Member for Wallasey (Ms Eagle) said that the spending review is not just about numbers, but I shall give her a number—400,000. That was the number of extra unemployed at the end of Labour’s time in power, but Labour still wanted to introduce the jobs tax.

The hon. Members for Easington (Grahame M. Morris), for Stockton North (Alex Cunningham), for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Penistone and Stocksbridge (Angela Smith) and for Nottingham South (Lilian Greenwood) all spoke of their concerns about the spending review and the cuts, but none of them offered any alternatives. We hear about the Opposition supporting cuts, but we never find out which ones they support.

The second principle behind our decisions is to ensure fairness and make sure that those with the biggest shoulders bear the largest burden, while protecting the most vulnerable in our society. That is why the Government have restored the earnings link for the state pension and ring-fenced NHS funding. We want to give every child the best possible start in life by increasing the child tax credit for the lowest-income families and by protecting our investment in schools. There is nothing fair about not tackling the deficit and placing the millstone of debt that we currently have around the necks of our country’s 20-somethings for the future.

[Malcolm Wicks]

Is it fair that when the cuts, including those to child benefit, are analysed, time and time again those who are hit the hardest are mothers and children? Does that make sense in terms of family policy?

[Justine Greening]

I do not accept that at all. The right hon. Gentleman needs to have a chat with the hon. Member for Hammersmith (Mr Slaughter), who was claiming that families on £79,000 a year are too rich to get support from the local council to access housing in London but too poor to have their child benefit withdrawn. That shows the incoherence of Labour’s policy on the economy, particularly on welfare—a budget that accounts for almost £1 in every £3 that we spend.

As my hon. Friends the Members for Harrow East (Bob Blackman) and for Brentford and Isleworth (Mary Macleod) said in their powerful speeches, work simply does not pay in our welfare system. People are put on benefits with no prospect of ever being better off in work and, as my hon. Friend the Member for Eastbourne (Stephen Lloyd) pointed out, successive generations are condemned to a life of state dependency. Opposition Members might think that that is fair, but I do not. It is one reason why over the coming years and next two Parliaments the Government will introduce the universal credit—to make sure that people on welfare will always be better off by moving into work.

[Mr Slaughter]

The Leader of the House will confirm that at business questions today, I quoted the Mayor of London on the reduction of housing benefit, which he described as “Kosovo-style social cleansing.” Since then, he has said:

“I do not agree with the wild accusations that reform will lead to social cleansing.”

Why has he changed his mind in the six hours between now and then? Is it by any chance anything to do with a call from No. 10 Downing street?

[Justine Greening]

That was a completely ineffective intervention. The hon. Gentleman ought to complain to Labour Front Benchers for their being so utterly ineffective at creating extra social housing in the capital during their many years in power. It was shocking how little affordable housing was created under the previous Government.

Even when spending is being reined in, we have found more resources for our schools and for the early-years education of our children. That has meant other Departments taking bigger cuts, but we believe that that is the right choice for our country’s future. The right hon. Member for Croydon North (Malcolm Wicks) quoted Eleanor Rathbone, who said that children are assets to the community. She was right, which is precisely why there will be a real increase in the money for schools in the next four years. In fact, my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) also recognised the importance of that. That is why the schools budget will rise from £35 billion to £39 billion, why we are maintaining cash spending on Sure Start, and why we are introducing a new £2.5 billion pupil premium to focus our resources on the children from the most deprived backgrounds in our country.

Our third and final principle in the spending review was public service reform. We are reducing back-office costs to free more resources for the front line. The right hon. Member for Barking (Margaret Hodge) spoke of the challenges of improving efficiency in government, but unlike her party when in power, we aim to be successful. We have started that process by finding every last penny of possible savings, and we are beginning to eliminate the monumental waste that became endemic in the past decade. We are tackling administration, improving procurement, and scrapping ineffective and expensive IT systems, which became a feature of the previous Government. When we started that process, we looked to make £3 billion of savings, but now we will make £6 billion of savings.

Finally, our reform agenda will see a massive devolution of power from the centre. Apart from schools and public health, we will end the ring-fencing of all Government grants to local authorities from April next year. More than 90 separate core grants to councils will be reduced to fewer than 10. Councils welcome that freedom even if the hon. Member for Leicester West (Liz Kendall) does not. We will change how services are delivered through increased payment by results and personal budgets, and by introducing new rights for communities to run services and own assets. We are therefore giving more powers to the front line and more to local government and communities—the very people who know their area best.

We are cutting the ridiculous levels of red tape that tie the hands of our police forces and so many other people who are working hard in the public sector to deliver the services on which our communities rely. Our approach is different to that of the previous Government. By cutting waste and abolishing unnecessary targets, we will free the public sector to deliver a more efficient, transparent and better-tailored service to the people and communities who rely on them most.

Let me conclude the debate by saying that the decisions that we have taken have restored credibility to our public finances and stability to our economy. When the coalition Government came to power, we faced the worst economic inheritance in modern history. The previous Government spent our money like there was no tomorrow, but tomorrow has now arrived. The Labour Government left debts that undermined the funding of our public services and threatened every job in the country. They wanted to introduce a jobs tax at the very time when employers were crying out for help.

We have had to make tough choices, but they are the right choices. We are determined to ensure that everybody pays their fair share. I simply reject the comments of Opposition Members. As ever in such debates, they spent several hours explaining what they did not like, but simply failed to say what they did like. It is unacceptable to participate in such a debate without offering a meaningful alternative plan.

We have ensured that everybody pays their fair share. We are reforming welfare and cutting waste, and we are investing in growth, schools and health. That is how we will drive growth in this country and create jobs for the future. With no help from the Labour party, we have taken our country back from the brink of bankruptcy and we will build the more dynamic, prosperous and sustainable economy that Britain so badly deserves.

That is why this spending review is how we will get our country back on track. I believe that generations to come will recognise that when our—