Cost of Living

Justine Greening Excerpts

Wednesday 16th May 2012 Commons Chamber

[Mr Leigh]

We all accept that the Government can usefully spend on assets. I do not deny that. There is nothing wrong with Government spending, but there is something wrong with wasteful Government spending. In a recent global competitiveness report, Britain was ranked an unbelievable 72nd in the world behind Ethiopia and Tajikistan on the wastefulness of Government spending. That simply is not good enough. If a private company was ranked so low in the pecking order, questions would be asked about the people serving on the board, would they not? We have to try harder and do better. Government money does not come from nowhere. Every pound wasted by Whitehall is a pound that could have been invested by a British company or spent by a British family.

Before I conclude, let me speak about a few other issues, including aspects of the Queen’s Speech which I welcome. The right hon. Member for Croydon North talked about family life. One reason I have supported a marriage tax allowance, which sadly was once again not in the Queen’s Speech, is that it would address precisely the point he was making—the tax disincentive for a parent, usually a woman, to stay at home to look after her children. Nobody pretends that a tax gets people married or keeps people married. It simply deals with the totally unjust situation that a married person, normally a woman, who stays at home and looks after her young children is uniquely attacked by the tax and benefit system. That cannot be right.

I am glad that the high-speed rail line was not in the Queen’s Speech. I will do a deal with my right hon. Friend the Transport Secretary, who will sum up the debate. I will support her high-speed line, which will admittedly cut the journey time between London and Birmingham—no doubt that is all very good and means spending the assets that the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) spoke about—if she will support the building of a third runway at Heathrow airport.

[The Secretary of State for Transport (Justine Greening)]

indicated dissent.

[Mr Leigh]

She shakes her head, sadly, but one never knows: we might win this argument in the end. This is about ensuring that the UK is globally competitive. I have talked a lot about waste in Government spending and about spending less. We have to be globally competitive, and Heathrow has to remain globally competitive. The City of London and Heathrow are the two things that have really propelled the British economy forward over the past 15 years. The situation seems madness to me. If Heathrow is prepared to expand with virtually no cost to the Government, we should do it. I know there is a long way to go on that argument, but we will keep trying. By all means, if people want to build a new high-speed line between Gatwick and Heathrow, I am all in favour of that, but I want to create the biggest and best international airport in the world, because I want Britain to be a successful transport hub. I cannot believe that on, frankly, spurious green grounds—I do not think the argument has been particularly well made—we are denying ourselves the opportunity of creating the best airport transport hub in the world.

If I may change the subject before I conclude, I am sorry that we are not going further on education. The Secretary of State for Education gave a marvellous speech last week. He rightly bemoaned an issue about which there is very little conversation in the House. Why is it that half the places in our best universities are taken by private school pupils, despite the fact that only 5% or 10% of people go to private school? That is scandalous. What is the left doing about it? Why do we have a situation in which people are able to afford such an extraordinary advantage for their children by sending them to a private school?

I believe we should go further with the education reforms. We have created academies, which are a great success, and the Secretary of State for Education is one of the most successful members of the Government, but as well as creating academies we could learn from the success of the independent sector and create independent academies. I am not saying that the existing academies that perform well should be allowed to become independent, but what if the bottom half—those that are not performing very well—were allowed to become independent academies? What about free schools not being allowed to charge but in all other respects having the total freedom of independent schools? Let us set them up in the poorest areas and see if we can remove what is almost an appalling bias which prevents people from rising up from the ghetto and our poorest areas. Let us try to be innovative in education.

I was talking to a Labour councillor last week. Funnily enough he was from the Speaker’s constituency; I was amazed that there were any Labour councillors left in the Speaker’s constituency, but apparently there are. That councillor, who is a very good man, not a market-driven, Thatcherite, right-winger like myself, said, “This situation can’t carry on; perhaps we should actually pay some of our poorest people to go to private school.” As a way round, we could say that any child who has never been to a private school—so there would be no deadweight cost—or any pupil coming from one of the 100 poorest postcodes should be subsidised by the state to go to private school. Why should we not at least try that? Why should we, whether we are on the right or the left, be prepared to accept the great elephant in the room: that a smaller proportion of people on free school meals across the entire country get into Oxford or Cambridge than those from schools attended by the leader of the Conservative party and the deputy leader of the Labour party? Why do those two private schools send more people every year to Oxford and Cambridge than come from the entire stock of pupils in the country on free school meals? Why are we not prepared to be radical and try to think of new solutions to help those at the bottom of the heap to rise to the top and get the same opportunities enjoyed by people going to private schools?

Those are the kind of radical ideas that the coalition could propel. We have a coalition and we have to live with that. There is no point bemoaning its existence, because we did not get enough votes to get a purely Conservative Government. There are many areas where our two parties can work together. One of the best things the Liberal party has done in recent years is to make the economic the ideological case for taking people out of tax. That is the best way to help the low-paid—ordinary people—and it is one of the very best things the Government are doing.

We heard an excellent speech from the Secretary of State. He talked about freeing up the electricity sector. That is something we can work on with our Liberal friends—radical ideas to free up the economy.

This morning, there was a press conference about reforming the Public Order Act 1986 and getting rid of section 5, which outlaws insulting language. Again, Liberals, Labour people and Conservatives can unite. Section 5 has a chilling effect on debate out there. We want more vigorous debate not just out there, but in here. We want fresh and radical ideas to try to free people from the overwhelming incubus of wasteful Government spending and regulation that holds down families and small businesses. I firmly believe that this Government—a coalition of Conservatives and Liberals—is moving in that direction.

--- Later in debate ---

[Albert Owen]

I understand what has come from the Government Whips—I have seen copies of it, and it says that all the time; indeed, it has probably got into the psyche. However, let us look at proper economics. When we have low interest rates—and we have had historically low interest rates—it is during a recession. That is what happens; it is a natural phenomenon. Since January 2009, interest rates have been at an historic low. That did not start when this Government came in; it started in January 2009. Gilts and bonds are low as well, which gives us a golden opportunity to borrow at lower rates. That is how we got out of recessions in the past across the world. Pure austerity measures have never worked. People should look at economic history. Austerity is part of the package, but unless we get growth and jobs, we will not get out of the double-dip recession we are in.

We sometimes get accused of being deficit deniers. I am neither a deficit denier nor a deficit extremist. It is extremism that gets us into trouble, and I have to say that there are many people in this House who are recession deniers—they are denying the fact that we are going down. Many people are paying the price, and that is why the cost of living is so important.

Let me move on to energy and electricity market reform. I support reform in principle, although we do not know the details, so it would be a little naive to support it fully until it is implemented. I am a member of the Select Committee on Energy and Climate Change, and we have looked at the principle of electricity market reform. We produced a report highlighting some of our concerns. There has been a White Paper for a long time, but we are only going to get pre-legislative scrutiny. We need to know what is in the Bill in order to deal with the issue properly and provide the certainty needed to invest in our infrastructure.

The Government have missed an opportunity in this Queen’s Speech. On one side, yes, there should be incentives for investment—that is very important—but there is very little protection for consumers. I have long argued in this House that Ofgem, the energy regulator, should have more teeth. It should be standing up. It is a damned cheek for the new Energy Secretary—whom I welcome to his place today—to try to claim some credit for the fact that energy companies are providing greater transparency in their bills. It is campaigns by the likes of Which? and Consumer Focus and so on that have highlighted the problems and embarrassed the energy companies, while the Government stood by and watched. Ofgem should have greater teeth. I make a plea to the Government to take that on board, because energy costs are hurting people, in peripheral areas in particular. Many are off the gas mains and off the grid. I want Ofgem, the regulator, to have the same powers to protect customers who are not on the gas mains as it enjoys in protecting those who are on the gas mains.

Finally, let me move on to the subject of transport. I welcome the concept of High Speed 2, but I want to see it up and running. The Transport Secretary is quoted as saying, “Well, we’re preparing for legislation.” The legislation is vital, so can she give some indication of when it is likely to be introduced? We have done the consultation and the matter has been agreed by this House, although it is not popular with certain sections.

[Justine Greening]

The hon. Gentleman is right that there is an awful lot of preparatory work to be done to ensure that the hybrid Bill contains the information that this House needs to scrutinise the proposal properly. We expect that preparatory work to be done through the course of this year and next, and for a hybrid Bill to be introduced by the end of next year.

[Albert Owen]

I appreciate that. A hybrid Bill in itself will take a long time, so we are unlikely to see anything soon. However, I support the main thrust of high-speed rail. We saw benefits under the previous Government in north-west Wales, north-west England and Scotland after we invested in faster line speeds. High-speed rail is important.

My final point is about VAT on fuel duty. Every time people spend £1 on petrol, they have to pay an extra 2.5p. That really hurts people. It is wrong, and it should be reversed.

We needed a Queen’s Speech that set out proposals for jobs and growth. This has been a missed opportunity, on top of a botched Budget which has led us into a double-dip recession. That is damaging the living standards of my constituents and those across the United Kingdom.

--- Later in debate ---

[The Secretary of State for Transport (Justine Greening)]

I am obviously delighted to be here today. The hon. Member for Garston and Halewood (Maria Eagle) ought to try re-moding some time. We re-moded a lot of Ministers out of their cars at the last election, and I am pleased to say that many of them have had to get used to using the public transport system that many Ministers themselves use today, and very good it is, too. I came in on the District line today, and it was working perfectly.

We have had a broadly constructive and important debate on the cost of living, and some measured contributions from around the House. They have borne out that everybody realises the pressures that global oil and food markets and prices—combined, of course, with inflation—have put on household bills in recent years. That is why, even as we deal with the deficit left to us by Labour, this Government are taking action wherever we can to help family budgets. It is why, through raising the personal allowance, we are cutting income tax for 24 million people and taking 2 million people on the lowest incomes out of income tax altogether. It is why we have helped councils up and down the country to freeze the council tax for the second year running. It is why we cut fuel duty in the Budget last year, deferred the increase planned by the last Government in January, and cancelled another increase proposed by the last Government for this August.

When it comes to home owners being able to pay their bills, the most important thing we as a Government can do is to help maintain the conditions for the Bank of England to keep interest rates low. The hon. Member for Washington and Sunderland West (Mrs Hodgson) talked about the importance of that aspect of family budgets, and she is absolutely right. We have focused on that through the spending review, making a number of announcements setting out a credible plan to tackle the deficit and get control of our debts, meaning that we really help to keep interest rates low for the 11 million households with mortgages. That is in stark contrast to the impact of Labour’s plans.

I was very pleased to hear a number of Members welcome the Groceries Code Adjudicator Bill, which is in many respects long overdue. I look forward to the debate that will take place in this House to ensure it can be as effective as I am sure many Members want it to be.

The right hon. Member for Croydon North (Malcolm Wicks) and the hon. Member for Newport East (Jessica Morden)—I cannot see her in her place—talked about the importance of supporting families. This Government agree, which is one of the reasons why we have extended free nursery care to 15 hours for all three and four-year-olds and doubled the number of disadvantaged two-year-olds receiving 15 hours of free child care a week, helping 260,000 families. These are difficult decisions that we face, but we are doing our best to ensure that, in spite of that, we are helping the families that need our help and taking action wherever we can.

We need not take any lessons on the cost of living from Labour. Most people in Britain remember their record in government. Theirs was a Government who never lived within the public’s means, giving us the deepest recession since the war and running up the biggest budget deficit in our peacetime history. When it comes to measures that help to put money back into people’s pockets, we need not take any lessons from a party whose only approach to helping hard-working people make ends meet was to take more and spend more, raising tax 178 times, including 12 hikes in fuel duty. Labour Members talk about the cost of living, but on their watch band D council tax more than doubled; gas bills doubled; between 2004 and 2009 regulated train fares went up by nearly 20% and unregulated train fares went up by a quarter; and, for the first time since records began, GDP per capita actually fell in the last Parliament.

[Mr Harris]

rose—

[Ian Lucas (Wrexham) (Lab)]

rose—

[Justine Greening]

I will not give way to the hon. Member for Glasgow South (Mr Harris), as he has not been in this debate at all. I will give way to the hon. Member for Wrexham (Ian Lucas).

[Ian Lucas]

The right hon. Lady is talking about hard-working families, so can she explain why her Government chose to give tax cuts to millionaires rather than put money in the pockets of hard-working families so that they could stimulate the economy?

--- Later in debate ---

[Justine Greening]

I remember being in the Finance Bill debates last year, when the hon. Gentleman’s party voted against closing tax loopholes, which would really have strengthened our tax system. He knows full well that alongside reducing the top rate of income tax to 45%, which will help to stimulate entrepreneurship, we are closing loopholes, which will raise five times as much money from those very same people. We know that this sort of economic illiteracy that we are hearing yet again from the Labour party, which has no credible plan to tackle the deficit—its only plan is to spend more and borrow more—would mean that the economic credibility of the UK would collapse and interest rates would be likely to increase. Any business with a loan, any home owner with a mortgage and taxpayers funding the huge debt that Labour left our country would suffer the consequences, and that is not a path we plan to go down.

I shall briefly discuss some of the particular cost of living issues that hon. Members across the House have raised today. First, let me briefly address some of the challenges associated with rail fares. We know that keeping rail fares affordable is important, which is one of the reasons why we took action this year to limit the increase in regulated fares to 1% above inflation—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I apologise to the Secretary of State, but a lot of private conversations are taking place on both sides of the House and they are disturbing my ability at least, let alone that of hon. Members, to hear what she is saying. Perhaps people who want to have private conversations could go outside.

[Justine Greening]

Thank you very much, Madam Deputy Speaker. That was extremely helpful.

We have taken action to limit the rise in rail fares, but all in this House know that if we are really going to tackle the underlying reason why rail fares are pressured to go up year after year, we have to make the railway system that we inherited from Labour, which is costing us £3.5 billion a year more than it needs to, work more efficiently. That is the best way of bringing a long-term end to the era of inflation-busting increases in regulated fares.

I have to say that one of the most depressing things in this House is to hear Labour Members raise a whole load of problems but provide no solutions. Making the railway industry work more effectively together is another area where I have heard no solution from the hon. Member for Garston and Halewood (Maria Eagle). I recall that when I delivered my Command Paper oral statement she said, “I will be setting out our alternative shortly,” but she has never done so. I will not even talk about the response to the flex, because the Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), demolished the hon. Lady’s argument so comprehensively that there is no need to go over that, compounding injury with further insult. In addition, we are, of course, making huge investments in rail and road. Those things will not only tackle some of the challenges we face today, but will build our country for the future.

On fuel duty, my hon. Friend the Member for Rossendale and Darwen (Jake Berry) and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) made vital points about why it is important that we make sure that motoring remains affordable, and about some of the pressures on motorists arising from the high cost of fuel. We have all seen the oil price go up across the world and how that has fed into the price of petrol at the pumps. It is one of the reasons why, last April, we cut fuel duty, why we scrapped Labour’s automatic fuel duty escalator and why we have postponed the planned rise this January to August, as well as cancelling the next planned increase. As a result of that action from the Chancellor we have eased the burden on motorists by £2.5 billion this year. In fact, over the coming two years it will add up to £4.5 billion in motorists’ pockets that otherwise, under the previous Government’s plans, would have been in Treasury coffers.

[Mr MacNeil]

I am grateful to the right hon. Lady for giving way. Is there any news on the fair fuel stabiliser coming down the tracks at all?

[Justine Greening]

The hon. Gentleman will be pleased to know that we have done that. He knows that we introduced it in the Budget last year and that it was partly funded by the tax rise for oil companies. I know that he welcomed the rural fuel duty discount pilot and I was pleased to get that from him. It is an important pilot and we will see how it progresses over the coming months and years.

Let us make a comparison with what would have happened under Labour’s fuel duty plans. Labour would have had motorists paying £144 more and the average haulier would have been £4,400 worse off if we had not taken the action we have taken. When it comes to prices at the pumps, no one will forget Labour’s record: 12 increases in fuel duty while they were in office and a further six fuel duty hikes planned for after the election.

Let me address the very important issue of buses. I listened intently to the speech by the hon. Member for Darlington (Mrs Chapman) and I am happy to meet her to talk about her local issues. She asked whether we could have a Transport for London-type approach in the rest of the country, but local transport authorities have had the power to impose such a model locally since 2000 and the flexibility to do so should they want to do that. The Government think it is up to local authorities, rather than Whitehall, to take that decision, but I am very happy to talk to her about her particular local issues.

We have protected capital spending on transport but have also had to take difficult decisions regarding the bus service operators grant. Nevertheless, I am delighted that we continue to make improvements in bus services, not least through the £70 million for the better bus area fund, the £31 million for green bus funding to cut carbon emissions and support British jobs and, of course, the £560 million of local sustainable transport fund money that funded 35 successful bids in part, including for improvements to bus services. Some £200 million has been spent on local major bus schemes. There is £20 million going to community bus services and £15 million supporting the roll-out of smart ticketing technology across England’s bus fleets. There are lots of good things going on in buses and we are still taking the steps needed to tackle the fiscal deficit left by Labour.

To conclude, whether we are talking about an income tax cut for 24 million people, taking 2 million of the lowest-paid out of income tax altogether, freezing council tax, helping home owners with their energy bills or limiting increases in rail fares, the Government recognise the pressures on the cost of living. Wherever we can we will continue to take action to help further, but there is no getting away from the fact that we are operating in a financial straitjacket as a result of the deficit. As my hon. Friend the Member for Worcester (Mr Walker) pointed out, there is no magic wand we can wave; we have to work hard to sort out our public finances and get our economy back on track.

Perhaps the greatest tragedy of the Labour years in office was what we got for all the money that was wasted and all the debt that was racked up. Nothing. In addition, there was an infrastructure deficit that was as bad as the financial deficit. Long-term security of energy supplies? Nothing. Low-cost railway? No. Reform of the welfare system? Nothing. Sustainable pensions? Nothing.

The reality is that tackling the financial deficit is one of the problems the Government need to solve, but we will make sure that we help out on the cost of living wherever we can as we rebuild our country. It would be fundamentally wrong to continue with Labour’s failed policy—to spend more, borrow more and pass the buck for our debts to our children and the next generation.

[Mr Alan Campbell (Tynemouth) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the question be now put.

Question agreed to.

Question put accordingly (Standing Order No. 31(2)), That the amendment be made.