Oral Answers to Questions

Kelvin Hopkins Excerpts

Monday 21st May 2018 Commons Chamber

[Sarah Newton]

As I said in answer to an earlier question, we insist and make sure that the healthcare professionals undertaking the assessments are appropriately trained and have the right expertise, and the guidance is kept under constant review to make sure we get it right first time.

[Kelvin Hopkins (Luton North) (Ind)]

14. What recent assessment she has made of trends in the level of fees and charges applied by asset managers to the investments made by defined contribution and defined benefit pension schemes.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Government recognise that customers need value for money, but lowest cost does not always mean best value. By working with the Financial Conduct Authority, we believe price transparency for trustees can drive effective competition and allow asset managers who can add value to thrive.

[Kelvin Hopkins]

The Minister will recall my earlier question to him on 9 October last year, but is it not the case that all essentially private pension schemes, defined benefit or not, incur costs and uncertainties that significantly reduce benefits to savers, and the only way to minimise such costs is to establish a universal full-blown defined contributions and defined benefits state earnings-related pension scheme for all?

[Guy Opperman]

The hon. Gentleman will be aware that the Financial Conduct Authority published the final rules in September 2017, and that independent governance committees on personal workplace pensions have had rules in force since January. On his discrete point, surely auto-enrolment, with 9.6 million people in this country signed up to it, and the enhanced state pension, which stands at over £1,250 more than in 2010, are the answers to his question.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Monday 9th October 2017 Commons Chamber

[Mr Gauke]

Let us be clear: no one needs to go six weeks without financial support when there is a system of advances in place. I make the point to all right hon. and hon. Members that if they are aware of constituents who have not received an advance, they can make it clear to them. Let us be realistic: the fact is that we are now moving towards a welfare system that does not put in place barriers to work and does enable people to make progress. It is no good Labour Members saying they are in favour of the principles, but then trying to obstruct the delivery of a reform that will give 250,000 more people a job.

[Kelvin Hopkins (Luton North) (Lab)]

2. What recent discussions he has had with the Chancellor of the Exchequer on the level of fees and charges applied to investments and pension schemes by asset managers.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Secretary of State has regular discussions with the Chancellor on a range of issues. The Department has had specific discussions with both the Treasury and the Financial Conduct Authority on the FCA’s proposed remedies in this area, and our plans to ensure that details of these costs and charges are published and given to pension scheme members.

[Kelvin Hopkins]

Is not the reality that for millions of ordinary people the only way to guarantee a sufficient income in retirement is a good state pension together with a state earnings-related pension scheme for all, with defined contributions and defined benefits?

[Guy Opperman]

I am grateful to the hon. Gentleman for his question. He will be aware that auto-enrolment has reversed the decline in work-based pension saving, with 8.5 million people signed up and further progress to be made. The reality is that, by reason of the coalition and this Government, we have a new state pension that is worth £1,250 more than in 2010.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Monday 17th October 2016 Commons Chamber

[Kelvin Hopkins (Luton North) (Lab)]

My own personal occupational pension scheme has just been reduced. It is not a problem for me personally with my generous parliamentary salary, but it is symptomatic of the problems facing occupational pension schemes and pensioners. Is not the real long-term solution to establish a compulsory universal state earnings-related scheme for all, with defined contributions and defined benefits?

[Richard Harrington]

As the hon. Gentleman knows, this was looked into by the Turner review and by many people and institutions since. Automatic enrolment is in place, which is a great step forward. Millions of people have now enrolled. I hope that, as time evolves, this will become the main form of pension for people other than the new state pension.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Monday 1st February 2016 Commons Chamber

[Kelvin Hopkins (Luton North) (Lab)]

5. What estimate he has made of the number of people who will receive a lower state pension under the single-tier pension.

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

Provided that people have at least 10 national insurance qualifying years, they will not receive a lower pension under the new state pension based on their own national insurance contributions than they would have already built up under the current system.

[Kelvin Hopkins]

The truth is that under the Government’s new pension system, substantial numbers of pensioners will lose money. Why did the Government turn their face against the obvious solution, which is to move to a much higher basic state pension, backed up by a compulsory state earnings-related scheme for all, with defined benefits?

[Mr Vara]

It is important that the hon. Gentleman appreciates that the new state pension is based on national insurance contributions. He will be aware that for many years many people have contracted out, and a small portion of their national insurance has gone towards a work pension or a private pension. If they add the new state pension to their other pension, which was paid for by national insurance contributions, they will find that in many cases they will be better off than they would be under the new state pension, which is £155.65.

European Union (Approvals) Bill [Lords]

Kelvin Hopkins Excerpts

Monday 14th December 2015 Commons Chamber

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I must admit that I find myself called to the Dispatch Box today in a state of some bewilderment. We are here to debate two matters. The first is whether a new position should be established within an organisation with the somewhat abstruse name of the former Yugoslav Republic of Macedonia Stabilisation and Association Council. Establishing that new position in some way facilitates the admission of Macedonia as an observer to the European Union Agency for Fundamental Rights. The second provision relates to the continuation of the tripartite social summit for growth and employment. I think that is why I am here.

There appears to be a need to update the formal basis of this summit, mostly in recognition of the fact that its function now relates to the “agenda for jobs and growth” and not the “agenda for employment and growth” as was previously the case. Will the Minister confirm that that is the case? If it is, the substance of this Bill is almost the definition of bureaucratic minutiae. Although I understand that both provisions relate to draft decisions of the European Council, which need to be approved by each individual member state as well as by the European Parliament, I find the use of primary legislation in these circumstances quite extraordinary. It comes at a time when the Government are hacking away at the social safety net via secondary legislation, on which it is frankly an uphill struggle to get Minsters to agree even to a short debate up in the Committee corridor. It suggests that the Government do not have their priorities in order.

Anyway, here we are, and I will use my time briefly to recap some of the context of these proposals, which I do not expect to be the subject of raging controversy in today’s debate. As we have heard, the first part of the Bill relates to the admission of Macedonia as an observer at the European Union Agency for Fundamental Rights. That move follows a report from the European Commission, which was published earlier this year and which set out a number of recommendations to revive Macedonia’s long-stalled candidacy for accession to the EU.

[Kelvin Hopkins (Luton North) (Lab)]

My hon. Friend will be aware that the Greeks get very upset when the former Yugoslav Republic of Macedonia is called Macedonia. Perhaps she could use the full title to ensure that we do not upset our Greek colleagues.

[Emily Thornberry]

My hon. Friend is quite right. I do apologise. I hope that Hansard will get it right even if I do not.

This process was initiated in 2005, but has been put on hold as a result of widespread concerns more recently over the country’s deteriorating record on human rights. The admission as an observer of the former Yugoslav Republic of Macedonia to the EU’s Agency for Fundamental Rights was one of a number of recommendations made in the European Commission’s recent report. As the Minister helpfully explained during the debate on Second Reading, it is hoped that

“Observer status at the agency could allow the country to have access to advice and assistance on fundamental rights issues to help to tackle its reform challenges, and provide assistance and help to the country on human rights issues.”—[Official Report, 3 November 2015; Vol. 601, c. 897.]

At the rate this Government are going—I am talking about removing the requirement to respect international law from the Ministerial Code and pressing ahead with their plan to repeal the Human Rights Act—perhaps the Minister and a few of her colleagues should join the Macedonian delegation and learn a few lessons.

The second provision relates to changes to the basis of the EU’s tripartite social summit for growth and employment. The Bill’s explanatory notes describe this summit as:

“a regular forum for meetings of representatives of the European social partner organisations, the European Commission, and the Council to enable high level discussion between the three parties of employment and social aspects of the European agenda for growth and jobs.”

Beyond those exceptionally vague generalities, further details of the summit’s role are surprisingly hard to come by. Nevertheless, any discussion of jobs and growth is hardly objectionable, and certainly not objected to by me. In fact, should representatives of the UK take part in any upcoming meetings, it might provide an ideal opportunity for Ministers to take on board some of the valuable lessons that our European friends may have to offer. At a time when our jobs market is not exactly the envy of the entire continent, the Government should welcome such an opportunity. We have, for example, a higher proportion of graduates doing jobs for which they are over qualified—at 59%—than any other country in the European Union, apart from Greece and Estonia. We have a higher rate of underemployment—with a 10th of our entire workforce working less than they want to—than any other EU country except for Ireland, Spain and again Greece. That particular problem appears to be getting worse. The most recent employment figures from the Office for National Statistics showed that, even though the number of people in work in the UK has risen, the total number of hours worked by the UK has actually fallen. Perhaps the Minister’s European counterparts could teach her a thing or two.

We do not intend to oppose this Bill. In fact, I welcome it, at least as far as it goes, as it offers a reminder of some of the things for which we have to be grateful in our membership of the EU, not least the protection of fundamental rights and freedoms, including some of the most basic rights in the workplace, which many people take for granted. At a time when the Government are undermining those rights on a number of fronts, particularly in the Trade Union Bill, we should welcome the opportunity that this debate provides to remember the positive role that the EU can play in our lives, particularly when it comes to protecting dignity and security in the workplace. It is disappointing that the Government do not seem to share those values.

--- Later in debate ---

[Kelvin Hopkins]

It looks as if the Bill will go through without too much controversy, but it is worth commenting on the state of employment across the whole European Union, including the UK. I am glad that my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has drawn attention to our own problems. Before some hon. Members were born, here in Britain we had the biggest TUC demonstration in history when unemployment went over 1 million; it is now closer to 2 million. We will leave that to one side.

The Bill seeks approval for amendments to be made to the tripartite social summit for growth and employment following institutional changes brought in by the Lisbon treaty. The organisation is meant to discuss increasing the employment rate and investing 3% of gross domestic product in research and development—all sorts of worthy things. However, the EU is living in a dream world if it really thinks it is doing well economically. Austerity has been imposed in many EU countries and there are incredible rates of unemployment—typically 25% in the worst-off states; in Britain, that would mean 4.5 million people unemployed rather than 1.8 million or whatever it is. The situation is in a very bad way and some of the larger countries are quietly suffering—particularly France. People in France are nervous about their futures while they remain stuck inside the euro, if not the European Union.

Anyone who thinks that everything is fine and dandy is being Panglossian—“all is for the best in this best of all possible worlds”. If people in the European Union really believe that, they are living in a dream world.

The reality is that the EU is economically failing. I have mentioned Greece, Italy and France, but Finland also has serious problems; it is thinking of printing billions of euros to try to stop the country from sinking. There are all sorts of serious economic problems inside the eurozone and indeed the European Union. The only way those countries are ever going to get the jobs and growth that are so often talked about is for them to be able to reflate their economies on a national basis. That means they have to be able to control the value of their currencies in relation to others as well as their interest rates. They also need their own fiscal policies. When they can reflate behind their own barriers, Europe as a continent will start to grow again and millions of people who have been out of work for a long time can get back into work.

This is an innocuous Bill, but we should focus occasionally on some of the points about jobs and growth that it covers to show how bad the situation is. When I was a young person, everyone had a job. There was full employment—in fact, there was a labour shortage. Between 1945 and the 1970s there was a growth in living standards such as we had never seen before. Since then, things have gone badly wrong and there have been crises. As I have said from these Benches before, there are more serious crises to come. I do not think that the European Union is being economically successful and when it talks constantly about growth, stability and jobs, it is living in a dream world.

Question put and agreed to.

Bill accordingly read the Third time and passed, without amendment.

European Union (Approvals) Bill [Lords]

Kelvin Hopkins Excerpts

Tuesday 3rd November 2015 Commons Chamber

[Nick Thomas-Symonds]

It is perhaps an indication of the paucity of my teenage years that I can remember watching the television in the mid-1990s and seeing the right hon. Gentleman ploughing his Eurosceptic furrow very finely, as he always does. In answer to his question, it is of course a matter for the countries themselves. I would not seek to dictate to them.

[Kelvin Hopkins (Luton North) (Lab)]

I agree with some of what my hon. Friend is saying, but, on the subject of countries digging themselves out of their problems, Greece was given a bail-out, but on strict conditions, including restrictions on public sector workers taking industrial action, and other such things. This is not a country making its own decisions, but a country that has had conditions imposed upon it by the EU.

[Nick Thomas-Symonds]

I am grateful to my hon. Friend for his intervention. I am sure that across the House we have particular views about the conditions imposed. I have views, and I know that he does too.

On employment rights, I invited the Minister to praise the work on paid leave and equal treatment for part-time workers, as well as the EU’s work on fair pay for agency workers. I hope the House approves the changes to the tripartite social summit, but I also hope we can take this as an indication that the Government will not sign away the employment rights gained over many years for working people in this country through the European Union, and that decency at work will be a fundamental part of the Prime Minister’s renegotiation in the next few months.

--- Later in debate ---

[Chris Heaton-Harris]

It is a bit of both. The agency has the following main tasks:

“to collect, analyse and disseminate…objective, reliable and comparative information”

related to the situation of fundamental rights in the EU;

“to formulate and publish conclusions and opinions on specific thematic topics…on its own initiative or at the request of the European Parliament, the Council or the Commission”;

and it is also about

“the promotion of dialogue with civil society…to raise public awareness of fundamental rights”.

A debate is going on in this country about where those rights should lie, what sort of legislation should exist in relation to them and who should police them. Macedonia has had that debate in its own Parliament, has applied to join this agency and is willing to pay appropriations to it. I do not see why we should step in its way. As I have said, there have been problems with the agency in the past, but it serves an important function in that member states’ voting rights could be suspended, based on the findings of any of its reports. The agency has teeth in no uncertain terms, and it has a decent operating budget of over €20 million a year. Macedonia has made its own choice, and it is right for it to go down that route if it chooses to do so.

I want to speak briefly about the draft decision on a tripartite social summit for growth and employment. There is a new Council decision, following Lisbon, that allows the number of meetings to be increased from one to two a year, and allows the President of the European Council to attend. The European Commission is allowed to host and facilitate meetings, so there should not be too much of a cost to it. My questions are more about the direction of travel of this organisation, its duplication, its purpose in being and whether we can raise questions about what it does.

This is not the European Economic and Social Committee, whose abolition I have called for in the past because of the huge costs for members belonging to one of the three groups of employers, employees and various other interests. The employers group comprises businessmen, people from certain business lobbies; the workers group comprises members from 80 trade unions mostly affiliated to the European Trade Union Confederation; while the third group is made up of lobbies from civil society. Most of those groups are paid for by the European Commission to lobby it in different ways to get the Commission to do more. Many European countries have a national version. However, the organisation I am talking about is not that. It is a separate beast.

One important question is who are the EU’s social partners? A list of social partners organisations consulted under article 154 of the treaty of the functioning of the European Union includes Business Europe. Business Europe is quite an interesting organisation. Unsurprisingly, it has a particular view on the referendum we might be having here. It gets a small sum of money, nearly €457,000, as payment under a grant received for a project running over a couple of years, of which the total budgeted cost was €1.2 million. The members of Business Europe include our CBI—it is one of the ways in which the UK CBI receives some money from the European Union. It includes other organisations such as the European Trade Union Confederation, which I mentioned previously and which received €4 million from European institutions, spending over €1 million lobbying the EU.

[Kelvin Hopkins]

Given the sums that the hon. Gentleman mentions, is it not possible that these organisations will be more kindly disposed towards the EU—simply because they have received such substantial sums?

[Chris Heaton-Harris]

I would like to think that they would not be. If I were a leading light in the CBI or the ETUC, I would want to make sure of being in a position whereby I would not be accused of being biased in one way or the other. Receiving money from the European Commission that is then spent lobbying the EU to do things—whether it be business organisations lobbying for liberalisation or trade union organisations lobbying for workers’ rights or whatever—seems almost like manufacturing a market in this area.

[Kelvin Hopkins]

Just recently, there has been something of a controversy about the BBC receiving some millions of pounds from the European Union for educational purposes—no doubt educating us all about the wonders of the EU. Does the hon. Gentleman not think that if organisations that are supposed to be independent and impartial take large sums of money from the EU, it might have some influence on them?

[Chris Heaton-Harris]

Again, I would like to think not. I follow what the hon. Gentleman and my hon. Friends have been doing on the European Scrutiny Committee. There has been a long and ongoing dialogue with the BBC, as I know because I was a member of the Committee over the last five years running up to the mandate of this Parliament. I hesitate to look in the direction of my Scottish National party colleagues, because I have a feeling they might have a view on partiality and the BBC when it comes to certain matters.

--- Later in debate ---

[Chris Heaton-Harris]

Forgive me, Madam Deputy Speaker, as I did rather provoke reaction from my SNP colleagues, because I wanted to prove the point that when questions are raised about the partiality of an organisation, either through its funding or its actions, it could devalue that organisation’s input into something important, such as a European referendum.

Let me return to the point about who our EU social partners are in this dialogue that we are facilitating through the Bill. As I have said, in 2014 the European Trade Union Confederation received €4 million from EU institutions and spent more than €1 million of that money lobbying those same EU institutions on legislation. In 2013 the CEEP—the European Centre of Employers and Enterprises providing Public Services—spent €120,000 lobbying the European Union and received €155,000 from the EU’s directorate-general for employment.

I question the added value of the dialogue at the tripartite social summit for growth and employment. Like many things in the European Union, its title is motherhood and apple pie. Who could possibly be against a tripartite social summit for growth and employment? However, if it delivers very little and if the only people who attend it and talk to the European Commission are actually paid by the Commission to do so, that will be a significant issue because the conversation will simply go round in ever-decreasing circles.

The EU social partners have agreed to a number of things in the recent past, and they wish to discuss important matters. They have agreed to

“negotiate an autonomous framework agreement on active ageing and an inter-generational approach”.

That is obviously something we need to discuss at a national level, not to mention the European level. They have also agreed to

“step up efforts to improve the implementation of their autonomous framework agreements, with a specific focus on the 8-10 Member States where the implementation has been identified as insufficient”.

This group is going to lobby for more European regulation and harsher implementation of directives.

The social partners’ work programme also notes that they have agreed to

“highlight the importance of more public and private investments”—

I imagine that Labour Members would like to have a conversation about that, especially given their new leadership—

“in order to reach an optimal growth, to boost job creation and to revive EU industrial base”.

The joint working programme also wants to “prepare joint conclusions” on things that we would all wish to see, including

“promoting better reconciliation of work, private and family life and gender equality to reduce the gender pay gap”.

I cannot believe that any Member of this House would not want to achieve that. However, given that the European Commission pays indirectly for this group of people to turn up once every six months to talk about these things, and given that they have already done so for quite some time without any concrete achievements—in fact, some of those ideals may have gone into reverse during that time—perhaps we should question the validity of supporting such a social summit for growth and employment.

Another of the work programme objectives—this did not become controversial until quite recently—is to

“contribute to the efforts of the EU institutions to develop a mobility package, to address loopholes and enforcement issues on worker mobility and to promote mobility of apprenticeships.”

This country is currently having a debate about mobility and, indeed, the freedom of movement of workers and others. It is interesting that we are promoting such a debate—our European partners are also having a big debate on the very same issue—while at the same time funding a summit of the worthy and the good to discuss the same thing.

[Kelvin Hopkins]

The great constitutionalist, Walter Bagehot, said that there are two parts to the constitution: the decorative and the effective. Does the hon. Gentleman agree that the body under discussion is one of the more decorative rather than effective parts of the EU constitution?

[Chris Heaton-Harris]

I probably do, yes. I hate to beat around the bush: I do not think it is worth funding this organisation. It is duplication for duplication’s sake. Given the number of other direct opportunities available to the bodies that will attend the summit to influence the thinking of the European Commission, member states and others, I really do question the value of the group. Obviously, that is why I am on my feet asking the Minister why it is, when we have an opportunity to prevent duplication and to prevent some of the European budget from being spent, we do not actually take it.

I want to ask a number of questions along those lines. Article 152 of the treaty on the functioning of the European Union states that the EU will set up the social dialogue while respecting the autonomy of the organisations, but can those organisations and bodies that attend the summit truly be autonomous when they are funded by the EU? Will they not be a taxpayer-funded echo chamber?

What authority has the EU had until now if the former decision on hosting summits was based on an old article treaty? Article 152 states that the EU should respect the “diversity of national systems”. Given that our national system does not include such summits, can the Government guarantee that the outcome of the meetings will not have an effect on the European Commission’s work programme—in other words, the very programme to which the summit wants to provide input? Is there an estimate of how much the six-monthly meetings will cost, and will the UK choose to host them when it takes over the presidency of the EU in 2017?

The Commission’s directorate-general for employment, social affairs and inclusion has regular dialogue with all the parties that will attend the summit, and there are other EU bodies that do exactly the same thing. When voting on such matters, this place has been almost unanimously in favour of cutting the duplication of European spending. We need to make sure that this country’s massive contribution to the European Commission and Europe is spent more wisely. Given that I have some form in this area—I was a Member of the European Parliament for 10 years and raised many budgetary questions about the issues under discussion—I question the value of approving the Bill.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Monday 2nd November 2015 Commons Chamber

[Mr Vara]

I congratulate my hon. Friend on her efforts in helping to spread the important message about this groundbreaking reform. I agree that small businesses need to advise their employees of the changes, which is why the Government have launched a new national communications campaign for small and micro-employers, as well as for individuals.

[Kelvin Hopkins (Luton North) (Lab)]

Would it not be much more sensible, financially secure and efficient and beneficial to pensioners to establish a compulsory state earnings-related pensions scheme for all, with defined benefits, in place of the Government’s auto-enrolment scheme?

Budget Resolutions and Economic Situation

Kelvin Hopkins Excerpts

Thursday 9th July 2015 Commons Chamber

[Mark Field (Cities of London and Westminster) (Con)]

As the City’s MP, it would be remiss of me not to touch on the issue of the bank levy. When it was introduced in the immediate aftermath of the financial crisis, it was specifically designed to reflect the cost to the public purse of the implicit insurance provided by the Government to the finance sector. The suspicion is that more recently the bank levy has become as much an instrument to assist in deficit reduction.

I understand why the Chancellor sought to outwit his political opponents in March’s coalition Budget—that close to an election, I guess there were few votes to be gained by siding with bankers—but now that we have political stability, I welcome his commitment to ensuring that in future the replacement surcharge does what was initially intended. I suspect that this will sufficiently impress HSBC to stay for now, although I appreciate that perhaps too much good will has been expended by the Government on the ring-fencing arrangement for much to change in that regard—despite the threat to the international competiveness of the UK financial services from elements of the Vickers regime.

The more significant medium-term threat to banks remaining headquartered here in London probably arises from the “reckless banking” legislation. Once this is properly tested in the courts, it will be instructive to see just how many senior executives in the largest global banking conglomerates regard London as a place where they will be happy to be domiciled. That is work in progress for most of the City and the Treasury.

I shall say a quick word on the infrastructure and airport capacity debate. My constituency will undoubtedly be adversely impacted by the enlarged flight paths that will accompany the proposed third runway at Heathrow. I am also deeply concerned about air quality, even before the prospect of additional aviation pollution. However, all of us west and central London MPs need to recognise the national interest. There were certainly only anti votes when I supported Crossrail, which has disruptively carved its way through several residential districts in my constituency, but this major infrastructure is essential. Similarly, the UK and London economies desperately require additional airport capacity.

I would have been keener had the Davies commission come out in favour of Gatwick, but it has unequivocally come out in favour of expansion to the north-west of the Heathrow site. It is a finely balanced judgment, and I think there will be some funding problems when we come to put this in place in the years to come, but with reluctance I now take the view that the Government should move ahead with minimal delay and implement the Davies commission’s clear conclusions.

The Government have been wise to raise their horizons in addressing the sustainability of the UK’s recovery in an ever-expanding sea of global debt. At the last emergency Budget, in June 2010 as the last Parliament began, the Chancellor assumed that the then £1.32 trillion of accumulated national debt would cost some £66.5 billion annually to service. The debt pile has now risen to £1.63 trillion, but here’s the rub: we are expecting that to cost only about £51 billion a year in debt interest.

At this point, it should be said that the Chancellor’s determined rhetoric of fiscal retrenchment has earned him the confidence of the capital markets, which I am sure would rapidly have deserted any Labour Finance Minister. However, there is a herd of investors in the capital markets pricing Government debt with a deceptive, even dangerous, sense of calm. Incidentally, it is worth noting that the record low global interest rates apply to Government bonds issued by all but the most basket-case economies, even in the eurozone. In large part, there is a fear that deflation might be here to stay and that a prolonged period of stagnant or very low growth could be in the offing.

[Kelvin Hopkins (Luton North) (Lab)]

Will the right hon. Gentleman give way?

[Mark Field]

I will not, if the hon. Gentleman will forgive me; we are under a strict time constraint.

In such uncertain circumstances, taking on Government debt often seems the safest bet in the markets. The impact of quantitative easing and the excess demand for bonds, driven largely by EU regulatory requirements to invest in safe havens, have both helped to reduce the cost of borrowing by Governments. At the same time, however, our own Office for Budget Responsibility, along with the International Monetary Fund, is projecting healthy growth for the UK economy in the years to come. They are both predicting not a period of Japanese-style deflationary stagnation implied by the pricing of Government debt but solid year-on-year growth at a rate of 2.5% to 3%. The trouble that lies ahead for the UK economy is that once the markets catch up to this reality, it is a racing certainty that the cost of servicing our debts will rise, and fast.

In short—and perhaps paradoxically—it is a sustained economic recovery that risks blowing a huge black hole in future years’ budgets as the UK continues to grapple with the vastly expanded debt that has been accumulated over the past decade. That is why the Government are absolutely right to say that drastic and determined Government action on deficit reduction is essential for the medium-term health of the economy. The Chancellor is right to tackle the debilitating impact of entitlement in much of our welfare system, and now is clearly the time to do that, while the sun is shining. Given all the difficulties in the markets, and all that is going on in Greece and China, our positive economic news might not be around for much longer.

At the beginning of this year, analysis by the McKinsey Global Institute revealed that global debt had risen by some 17% since the final quarter of 2007, when the collapse of Bear Stearns and Lehman Brothers was in the offing. The racking up of debt on this scale represents the biggest experiment we have ever conducted in the global economy. Short of the unleashing of a burst of unprecedentedly high levels of output and sector-wide productivity growth, or alternatively a programme of fiscal contraction hard to imagine in an era of welfare dependency and universal suffrage, it is impossible to see how the developed world will ever be able to repay these levels of debt properly.

Historically, Governments have dealt with debt piles by allowing a little inflation to develop. The other option is to introduce what the economists call fiscal retrenchment. The double whammy of the 1930s depression and the cost of fighting world war two in the following decade left all western economies with equivalent debt levels relative to national income. Between the 1950s and 1970s, yields from Government bonds were deliberately set at just below inflation. As a consequence of the alchemy that comes with compound interest, a lot of our debts were paid off.

That might seem to be a comforting parallel, but there are key differences today. One is that we live in an age of free cross-border capital flows, and much of our borrowing comes from international sources. The model of squeezing creditors by means of negative real interest rates and rising prices simply will not work when credit is denominated in a foreign currency or in a deflationary era. We need only look at the ongoing travails of the eurozone to see the limits of imposing financial repression when nation states are locked into a monetary straitjacket.

Much is made of the fact that one third of UK Government bonds have been mopped up by the Bank of England, which has helped to keep interest rates very low—we have now had 76 consecutive months at the emergency 0.5% rate. More distorting still is the fact that more than 40% of our gilts are owned by foreigners. In this uncertain world, those overseas creditors might take on the chin the impact of artificially low returns on their bonds, but they may be considerably less sanguine about the impact of currency risk. The market sentiment towards sterling is currently benign, despite record current account deficits, but if that were to change and if the pound were to fall, sterling-denominated gilts in the hands of foreign investors would rapidly lose their value. The prospect of such overseas creditors losing confidence in the UK economy would then be very real.

For that reason, the Government’s actions are of critical importance. They must persist in reducing the deficit as a matter of national urgency, to ensure that we collectively start to live within our means as rapidly as possible. What really concerns me, and what should concern policymakers, is that at the moment it is difficult to imagine the circumstances in which the cost of credit might be rapidly increased—as will be necessary in the years to come—without the economic roof falling in.

--- Later in debate ---

[Kelvin Hopkins (Luton North) (Lab)]

First, may I congratulate all the Members who have made their maiden speeches today? It has been fascinating to hear what they had to say and about their constituencies, which are very different from my constituency of Luton North.

The Budget has given me a tax cut that I do not need, which has been paid for by young people, students, the poor and public sector workers. Social justice would require the opposite of that, so I do not buy the idea that the Chancellor has somehow inched towards the centre ground of politics. He is still a right winger, concerned primarily with helping and protecting the wealthy. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) has recorded today, the IFS calculates that 13 million UK families will lose an average of £260 a year, while those with estates of £1 million will not have to pay any inheritance tax, so we know where the Chancellor’s heart really lies.

Much more interesting than the Budget, which is a typical Tory Budget really, is the OBR’s report “Economic and fiscal outlook”, published at the same time. There are indeed myths about the economy that have to be dispelled. Britain’s economy is not healthy; indeed, the opposite is the case. Britain is a low-wage, low-investment, low-productivity economy. Indeed, the productivity of Germany and France are 25% greater than Britain’s and we are sixth in the G7, with only the ailing Japan behind us—so there are problems, and the Budget will not make much difference to that fact.

Over several decades, Britain’s manufacturing sector has shrunk drastically, and it is now far too small to sustain what we need ourselves. As a result, our trade balance, especially with the rest of the EU, is in enormous and chronic deficit. In his Budget statement, the Chancellor made very little reference to the wider macroeconomic environment—which the hon. Member for Horsham (Jeremy Quin) touched on—and that is very worrying indeed.

The Government chant their mantras about the Government deficit and public finances while private debt is surging once again. An asset price bubble continues to grow that will inevitably burst, with drastic consequences for households and the economy as a whole. One million of our people are now dependent on food banks—a number that will be dwarfed when the crash comes. I use the word “crash” because that is what we face, with inept and misguided economic policies at home and global factors again driving us towards recession. China’s economy is decelerating and is now in a share price crisis; Japan’s economic weakness continues, with no end in sight; the eurozone is a basket case; and the USA has seen a false economic dawn, with another asset price bubble driven by corrupt share buy-back schemes, among other factors.

“Demand is slowing, share prices will be devastated, and recession is coming, with downturns that will be remembered in 100 years.” Those are not my predictions but the words of Crispin Odey, one of London’s leading hedge fund managers, who tends to get his predictions right, including on the 2008 crisis. My own conclusion is simply that globalisation—neo-liberalism—does not work and that leaving the financial markets and the global corporations free to do what they like, with no effective economic borders to constrain them, has caused one disaster and another is coming.

The Government’s claimed economic success since 2010 is a mirage. After 2010, they first tried savage cuts in public spending, in theory to reduce the public finance deficit, but by 2012 they realised that this was simply driving the country into recession, so they reduced their pressure on the economic brake and tried a bit of quantitative easing. Asset prices began to rise, notably in housing, and consumer spending edged upwards, producing a modest rise in economic growth. However, we still have low productivity—a chronic disease in Britain’s economy—and we still bump along, sustained only by low wages and income from asset sales to foreigners: another version of selling the family silver, as Harold Macmillan so famously put it.

The one advantage that Britain does have is its own currency, able to flex to appropriate parities with other currencies. After the 2008 crisis, sterling depreciated against the euro by 27% and against the dollar by 31%, offering a degree of protection against the worst ravages of the crisis. But even that example has been wasted, with sterling surging against the euro from €1.02 to €1.40, increasing our export prices and decreasing import prices by over a third, and driving Britain’s ongoing and gigantic trade deficit with the rest of the EU. That deficit—over £1 billion a week—is equivalent to exporting at least 1 million jobs to the continent. Page 71 of the OBR report shows a gigantic current account deficit of some 6% of GDP—about £100 billion, or £1,600 for every person in Britain.

There are sensible alternatives to all this economic nonsense, and with much more time I would have been pleased to spell them out. In the short term, however, we must not be fooled into believing that the Government and their predecessor coalition have got things right when all the elements are present for another economic crisis. The Government are doing nothing to protect our economy from the next crisis, and they must not be allowed to escape the blame when it comes.

Before I conclude, I must again emphasise my concern about the sterling exchange rate. Some Members may remember that I raised my concerns about sterling’s over-valuation with Gordon Brown during his time as Chancellor. He responded sotto voce that it was not Government policy to target the exchange rate. In more recent times, I have raised the same issue in this Chamber with the Prime Minister and this Chancellor, with similar measured, if negative, responses. In my very last oral question before Dissolution, I again asked the same question of the now-departed Business Secretary, Vince Cable. He responded, astonishingly, by suggesting that there was no evidence that the exchange rate was a significant factor in the economy’s performance. Only a few days later, it was reported that manufacturing was suffering from the high euro exchange rate and that the economy was being sustained only by domestic consumer demand, with the main risks coming from the eurozone.

Much has been made of Britain’s greatly improved automotive sector, which I applaud. It is true that we make excellent-quality vehicles, including the Vauxhall Vivaro, made in Luton, but it remains the case that we import twice as many cars from the rest of the EU as we export to it. Had I had an opportunity to do so, I would have reminded Vince Cable of the big depreciation after 2008; the rapid recovery from the 1992 exchange rate mechanism debacle, driven by a large exchange rate reduction; and even the 1931 departure from the gold standard, which laid the foundation for the economic recovery from the inter-war depression.

An appropriate exchange rate is not a sufficient condition for economic success, but it is a vital one. Had Britain been stuck in the euro, at a parity perhaps as high as €1.50 to the pound, the economy would have been utterly wrecked, with Britain almost certainly crashing out of the euro, probably bringing down the whole euro edifice in the process.

The Government are riding for a fall if nothing is done to bring down Britain’s bloated exchange rate, and soon. Writing recently in The Guardian, Larry Elliott said that the Government were sitting on an economic time bomb. That is surely the case, and the priority must be to bring down sterling’s exchange rate with the euro. The Budget must be seen in that wider context and the Chancellor’s mind should be focused on those wider international dangers, or we will all be in trouble.

Child Poverty

Kelvin Hopkins Excerpts

Thursday 25th June 2015 Commons Chamber

[Mr Duncan Smith]

We have taken millions of people out of tax altogether, which has dramatically improved their incomes. Something like 25 million people have seen their tax bill reduce directly. For those who have a limited amount of income, this is a huge change and a huge support. That is not ever recognised by the Opposition, who basically raised taxes rather than lowered them.

[Kelvin Hopkins (Luton North) (Lab)]

The Secretary of State will have no doubt read “The Spirit Level”, which shows that social ills correlate strongly with income inequality—crime, mental illness, infant mortality and much more besides. At the worst end, there is the USA, and at the best end, the Scandinavian countries. These social ills cost billions to the public purse. We continually languish close to the USA end, rather than the Scandinavian end. Does that not make a powerful case for dramatically reducing income inequality and thus reducing child poverty?

[Mr Duncan Smith]

I agree with the hon. Gentleman. The purpose is to get income inequality down, and it actually fell over the last Parliament. The way to do that is to improve the numbers going into work, to get them to go further and into full-time work. Universal credit helps that enormously.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Monday 9th March 2015 Commons Chamber

[Mr Duncan Smith]

Absolutely, but the point I would make to the hon. Gentleman is that I would love for somebody on his side to get up and say, “The economy under Labour crashed with a 6% fall in GDP.” Does he honestly think that had no effect on his constituents? [Interruption.] Since then, we have got unemployment down below 2010 levels and got employment levels up, and we are doing our best to reskill people through work experience and so forth—[Interruption.]—and for all the shouting on the Opposition Benches, they blame everybody else for the crash but they do not give us the credit for the changes and improvements.

[Kelvin Hopkins (Luton North) (Lab)]

Would the Secretary of State like to thank the former Labour Government—[Interruption.]

[Mr Speaker]

Order. Mr Hopkins is on his feet, seeking to ask a question in his normally robust but courteous manner, and being shouted down by a Member on his own Benches. That is not satisfactory. I want to hear Mr Hopkins; the people of Luton North want to hear Mr Hopkins, the nation wants to hear Mr Hopkins.

[Kelvin Hopkins]

I am most grateful to you, Mr Speaker, for that help. Would the Secretary of State like to thank the former Labour Government for keeping Britain out of the euro, which is the principal cause of the devastation of the southern European members of the eurozone?

[Mr Duncan Smith]

It is a very good thing that we are out of the euro—I am very happy about that. As far as credit is to be given, as the hon. Gentleman knows, I have been opposed to entry into the euro and my party was, under my leadership, absolutely opposed and continues to be so, and I am very pleased about that. May I finish by reminding the House of what even those in Europe say when they look at us? The OECD said of the UK that

“the performance of the labour market has been remarkable!”

That is the point: the rest of Europe says the UK has done better on employment and unemployment than anybody else, and that is down to the Government, thanks to their long-term economic plan. We have got it right; they have got it wrong.