(13 years, 2 months ago)
Commons ChamberMost importantly of all, the private sector has created half a million jobs, and I would have hoped that the whole House could have agreed that that is good news for the country, as my hon. Friends the Members for Witham (Priti Patel) and for Thurrock (Jackie Doyle-Price) said. We must not talk down the economy, but the Opposition have persistently done so.
As the International Monetary Fund has said,
“repair of the UK economy is underway.”
Of course that is a difficult task, and of course recovery will be choppy, but that is because our predecessors left us with an unprecedented and unenviable challenge, as was eloquently pointed out by my hon. Friends the Members for Dover (Charlie Elphicke), for Gloucester (Richard Graham) and for Elmet and Rothwell (Alec Shelbrooke). They understand the problem the country faces, and their constituents knew that, which is why they chose a different and a better Government.
Many people in our country will be incredulous that the Opposition have had the gall to come here today and lecture MPs about economic credibility, because the shadow Chancellor and the Labour party have absolutely none. Their legacy to the British people was higher unemployment, a broken economy and enormous debt. The shadow Chancellor said a lot, but there was one word missing from his speech that people would have liked to have heard: sorry. There was no apology for the disastrous mess his party left on leaving office, and no acceptance of responsibility for its actions. The shadow Chancellor is still in denial about there even being a structural deficit—if he wants to confirm that he does think there is a structural deficit, he can intervene on me now.
If the shadow Chancellor had spent less time when he was a Minister plotting with his political master, he might have done a more effective job. He was the architect of the tripartite banking regulatory scheme that failed so badly. He was the City Minister when the City went off the rails. He was the economic adviser to the former Chancellor and Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he ran up a structural deficit that the OECD described as a snowballing of debt.
Many people in our country would not put the shadow Chancellor in charge of their household finances, let alone the nation’s finances, yet he called for a debate on the economy today. We might have expected him to have something meaningful to say, therefore, but he did not. There were no plans to tackle the deficit at all; not a word on how to rebalance the economy and replace some of the 1 million manufacturing jobs that were lost between 1997 and 2007; nothing on financial services reform; and hardly any mention of his party’s VAT proposal. That seems to have fallen apart within days. Members on the Government Benches talked more about that than Labour Back Benchers. When the VAT rise went through last year, what did the Opposition do? They abstained. They did not stand up and say that it was wrong. A few months later, however, they decided that there should be a VAT reduction on fuel, and now, even before the Finance Bill has completed its passage, they want a VAT reduction on everything. This is policy made on the hoof.
Today’s motion refers to halving the deficit, but we have heard not a word from the shadow Chancellor on how he would do that or on their spending plans. The bottom line is that those plans do not exist. He is trapped by misguided, discredited and irrelevant policy, and yet he still runs with it. He used to be a bruiser, but now he is a kitten. He is Macavity’s kitten trapped in his own ball of policy wool which he has woven around himself, churning out the same old lines that will take neither his party nor the country forward.
We heard many contributions from Labour Members, but I must say that they were let down by their Front Benchers, who clearly have no economic alternative. All they have is pointless opposition. We heard a lot of amnesia from them on employment. Let us remember that they left unemployment higher, just as every Labour Government before them did. Presumably they will say that that was the result of the recession. Presumably they think it is a coincidence that every Labour Government leave Britain’s economy in crisis. The amnesia goes deeper. We heard amnesia on social housing. Somehow they think that they created lots of social housing.
Will the hon. Lady clarify something for the House? During Prime Minister’s questions today the hon. Member for Clacton (Mr Carswell) said that the hon. Lady had signed a memo on the European financial stabilisation mechanism after the election stating that cross-party consensus had been agreed on the matter. Will she clarify whether she signed the letter and whether such a consensus had been reached? If so, was the Prime Minister wrong when he said today that there was no consensus?
Well, there is a cross-party consensus, because his party agrees with it. We are now in government, so I do not think that that is particularly complicated. He is trying to waste my time, so I will make a little more progress.
The bottom line is that the Labour party has only one economic policy: spend, spend, spend. When times are good, their policy is to spend, spend, spend, because they can afford to. When times are bad, their policy is to spend, spend, spend, because they cannot afford not to. It is no wonder that this Government ended up mired in debt when Labour left office. The hon. Member for Airdrie and Shotts (Pamela Nash) talked about the previous Government’s record but was unaware that she had abstained on the VAT rise. As we have seen with the overall VAT policy, there is clearly a huge disconnect between their Front and Back Benches. After all that spending and the creation of the structural deficit, even Labour Members asked themselves, “We’ve spent all this money, but what have we got for it?” The answer is, “Not enough”.
When the Opposition called this debate, people might have been entitled to think that they had something relevant to say on the economy, but they do not, and we have seen that demonstrated again. We do have a plan. As my hon. Friends the Members for Bromsgrove (Sajid Javid), for Spelthorne (Kwasi Kwarteng) and for Ipswich (Ben Gummer) all pointed out, it is a plan backed by the IMF, which described it as essential. It is a plan backed by the OECD, which described it as vital. It is a plan backed by the CBI, the rating agencies and pretty much everyone who understands why it is important that we get our economy back on track and our public finances back in order.
We have a plan to rebalance the economy, generate growth and ensure that those communities that can most benefit from the new jobs do. We have a plan to create the most competitive business tax regime in the G20. We have plans for more apprenticeships and work placements—
(13 years, 5 months ago)
Commons ChamberListening to the Opposition is stunning. The outgoing Chief Secretary’s message to the incoming Government was that there was no money left. Worse than that, the previous Government had pre-planned increases, which were due to come in now, as the hon. Lady just pointed out. The bottom line is that it is outrageous for the Labour party to cry crocodile tears about tax increases that it had planned—it is disingenuous in the extreme, and shows that it has no credibility and no leadership on the issues that matter to people, such as motoring, which we are debating today. The audacity of the motion is stunning.
Let me turn—as I was about to—to the Opposition’s proposal to cut VAT on fuel. [Interruption.] The shadow Chancellor is hectoring from a sedentary position, and I think the reason is that he is worried that we are about to talk about his policy—a policy that unravelled within hours of his announcing it. He has come late to the debate on motoring. Obviously he spent many years being driven around in a Government car that the taxpayer paid for. I understand that it was reported in the papers that he used to use it for journeys of just 100 yards. Perhaps he was not aware at that point of how much it cost people to fill up their cars, but perhaps he knows now, and perhaps that is why he has suddenly realised that this is an issue, as we did in opposition. He has come to this debate late, but his policy-making suggestions are, to put it bluntly, illegal under EU law.
It is quite an achievement to make a proposal along those lines. As I said to my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) , the shadow Chancellor is quite wrong to say that we can reverse the VAT rise on fuel, because doing so would be illegal under the EU VAT directive. However, if the right hon. Gentleman thinks that the UK operates under a different VAT directive, perhaps he would like to intervene on me right now. [Interruption.] I think we have established that there is only one EU VAT directive, and his proposal is illegal under that directive. The other big flaw in his argument—[Interruption.] Does he want to intervene?
When we have only one reduced rate, but Italy, France and Poland have three reduced rates, and when the French President secured a VAT rate cut for French restaurants, is the hon. Lady really saying that she is going to hide behind European law and fail to stand up for the British motorist? Is that really what she is saying?
There is only one party failing to stand up for the British motorist, and it is the Labour party. Let me outline precisely why France was able to get a reduced VAT rate on—
There is no point the right hon. Gentleman asking a question and then getting excited about the fact that I might answer it.
If the right hon. Gentleman just calms down for a second, I will answer him; if he then wants to intervene on me, he can do so. However, if he is that desperate to get in on this debate, perhaps he should have opened it instead of his hon. Friend the Member for Wallasey (Ms Eagle).
The right hon. Gentleman is right to point out that across Europe different products have different VAT rates. Some are exempt from VAT, some have a zero rate, some have a reduced rate and some have a standard rate. Indeed, he should be well aware of that because he was an economic adviser at the Treasury the last time the negotiations that he referred to started. In fact, they took six years. He mentioned President Sarkozy’s determination to secure a reduced VAT rate for restaurants, which is indeed what he did. However, in that renegotiation of the rules governing which products would be in which categories and which would no longer have standard VAT rates, I am not aware of the UK Government at any stage pressing for anything other than the standard rate to apply to road fuel. Perhaps the right hon. Gentleman can confirm that: yes or no?
At no point did we apply for a special reduced VAT rate for road fuel, and the reason was that we never raised VAT on fuel. The people who have raised VAT are this Government. Can the Minister confirm that it is entirely in her gift and that of the Chancellor, who is not here, and the Chief Secretary, who has not turned up either, to apply for a derogation to reverse their mistaken increase in VAT? They have not done so and will not, but they could if they wanted to stand up for the British motorist.
I do not think the right hon. Gentleman even believes that himself. The bottom line is that he wants—[Interruption.] The shadow Chief Secretary says that we need to take action now, but he wants us to embark on a process that took six to seven years the last time it happened. How is that taking action now?
Let me tell the House on which items the rate was changed. Here are a few of the products and services to which a reduced VAT rate is now applied in other countries:
“minor repairing of bicycles, shoes and leather goods, clothing and household linen”.
Window cleaning was also one, and hairdressing was another. The Government at that time—a Government of whom the right hon. Member for Morley and Outwood (Ed Balls) was part—did not seek to add road fuel to that list. He says that that was because the previous Government never raised VAT on fuel. That is not strictly true, of course: they reduced it, but then put it back up again, as we have heard. The other reason was that, year on year—and, in the final stages, month on month—they were consistently raising fuel duty, so they had no need to use VAT as a tool. They were getting plenty of additional tax from the motorist.
Absolutely none, so all this is nothing more than political opportunism in advance of the Budget, and it is incredibly poor quality opportunism too, because the Opposition have made a proposal that is impossible to implement and is utterly flawed in every respect.
No, sorry.
The other reason why the Opposition’s proposal is flawed is that they say in their motion that they would pay for the proposal with receipts from the bank levy. The first thing to say about that is that we introduced a bank levy—something that Labour never managed to do—but, secondly, we brought forward the rate at which it would fully kick in early, because the banks were doing better and therefore could afford it. The money is a one-off additional revenue stream that we are getting a year earlier, but the Opposition are so economically illiterate that they want to use it to fund a long-term, permanent tax reduction on fuel. Looking at their faces, I do not think they necessarily realise that yet, so as well as their proposal being illegal, their figures do not add up.
To finalise my comments, it is only this Government who are serious about helping British motorists. We tasked the Office for Budget Responsibility with investigating the impact of oil price fluctuations on the economy and we are actively considering proposals for a fair fuel stabiliser.
No, I will not.
Motorists deserve better than a VAT proposal on fuel that everyone knows is completely unrealistic and unworkable. It is disingenuous of the Opposition to suggest it, and it is unaffordable, given the economic mess that we inherited. They want a derogation that would be unsuccessful and take six to seven years to implement. We are talking about taking action to tackle the cost of living now. That is the choice facing the House today. At the end of the day, we all know that this motion is just a smokescreen, and that the Opposition have no plans whatever to tackle the deficit. Yet again, they have missed a chance to be credible on the economy. Yet again, they have failed to show any leadership on their solutions to the big problems facing Britain today. I sincerely hope that the House will vote against their motion, because it is one of the lowest-quality and most disingenuous motions that we have debated on the Floor of the House recently.