Amendment of the Law

Kwasi Kwarteng Excerpts

Tuesday 29th March 2011 Commons Chamber

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I know that the Secretary of State learned some time ago that attack is the best form of defence, but I expected him to do a better job of defending the Budget that we heard last week. The Budget debate started with no acknowledgement that growth was coming down—and the same is true of its conclusion. The right hon. Gentleman refused to admit that this so-called Budget for growth has knocked 0.5% off the rate of growth this year and next, put unemployment up by 200,000, and is putting the benefits bill up through the roof—and he seems to think that we are the ones in denial.

A fortnight ago, the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), who has responsibility for work, was rolled through the television studios and asked to give his progress report on how well the Chancellor had done in his first year. He was asked to report on how good a job the Chancellor was doing of getting the country back to work. Fifteen months after the end of the recession, the House could be forgiven for expecting unemployment to be falling rather than rising. However, at the very point when unemployment should be falling, the Minister was forced to report that it was actually rising. He decided to choose his words very carefully. He said that the jobs market was “stabilising”.

Last week it was left to the Chancellor to tell us that the jobs market was doing nothing of the sort. He did not dare spell it out, but in the fine print of the Budget we learned the truth: this is not even the beginning of the end. His first year has gone so well that unemployment, which should be falling, is set to rise until the summer. In fact, it is not expected to fall below 2.5 million until way through next year. Now we face the prospect that unemployment is not going to fall below 2 million for the rest of this Parliament.

[Kwasi Kwarteng (Spelthorne) (Con)]

Will the right hon. Gentleman give way?

[Mr Byrne]

Perhaps the hon. Gentleman can tell us what he thinks of that.

[Kwasi Kwarteng]

Will the right hon. Gentleman remind the House which member of the previous Cabinet wrote a note saying, “There’s no money”?

[Mr Byrne]

I would rather have written a bad joke in public than a bad Budget in public.

Now we know—and now the Secretary of State has been forced to admit—that unemployment is not going to fall below 2 million. He will remember, just as we remember, the last time that happened. For those with long memories, what has happened is all too familiar. The last time the Tory party was in office, it took a couple of years to get unemployment above 2 million, but after that it did not fall below 2 million for 18 years, until the Labour party was elected in 1997. Now the Government have decided that that record of the 1980s is worth a rerun, or something of a repeat, because there is one thing that has not changed: the Conservative party still believes that unemployment is a price worth paying.

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[Stephen Barclay]

The hon. Gentleman mentioned productivity, but I urge him to read what the independent National Audit Office says about the health service. Spending doubled, so of course waiting lists went down—we would expect that—but the NAO found that health productivity fell dramatically. The spending fell to many of the best-paid staff such as consultants, so productivity did not match funding.

On procurement waste, the NAO says that Firebuy, an arm’s length body set up by Labour, cost twice as much to set up and run as the savings that it made. On NHS procurement, the NAO found that

“NHS…trusts pay widely varying prices for the same items.”

One NHS trust bought 177 types of surgical gloves.

The huge waste in the opaque spending in local budgets needs to be addressed. For example, Cambridge fire service spends £1.77 million, an increase of £600,000, on what it defines as “other services and supplies”. It cannot explain what that spending is. Cambridgeshire police define £7 million of spending as “other”.

[Kwasi Kwarteng]

What was the cause of all that waste in the first place?

[Stephen Barclay]

I would attribute it to a number of factors. Let me give an example. I have mentioned local spending in Cambridgeshire, but a national organisation, Ofcom, is an arm’s length body run by a former adviser to Gordon Brown and Tony Blair. He was paid £1.5 million over the last four years, and he reduced his head-count but managed to increase his staff budget. Last year he spent £9.8 million on 180 different consultancy providers. Ofcom even managed to spend £200,000 on newspapers and magazines, but it has only 800 employees, which works out as more than one free newspaper a day for every member of staff. Seven Ofcom staff managed to claim in expenses more than the average wage, with one racking up £5,500 on taxis. I do not know whether they took taxis to the protest on Saturday, but that is the waste that we hear about.

My local police bought six Land Rover Freelander cars for senior officers at £28,000. Bobbies on the beat are far cheaper than the management tier, and I suspect that they make more arrests. We should look to protect front-line services, not to make cuts in them when there are other significant costs.

My final point is on the disconnect in terms of the information that the House has when it sets Budgets. I do not believe that we are effectively scrutinising what happens. In 2009-10 we spent £1.5 billion on consultants and £700 million on arm’s length bodies, without any central data being collected. So we know there is waste. Gershon, Green and many others have looked at the matter, and I welcome the steps taken by the Front-Bench team in setting up the Major Projects Association, even if at the moment it only has 38 members of staff. In 13 years in office, however, the Labour party did not even define what a major project was, which is why we have such wide variations in Government.

Despite all the differences in the headline figures and some of the scaremongering we have heard, I hope that we do not lose sight of how money is spent. We cannot cut waste too fast or too deeply. It is clear that there is waste in our system, and unless we have good-quality data with which to benchmark, standardise and give visibility to the problem, our debates will end up returning to the soundbites that we have heard too frequently over recent days.

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[Kwasi Kwarteng (Spelthorne) (Con)]

I am glad to have been called—a happy outcome for me.

It seems to me that Labour Members are ostrich-like inasmuch as they are not aware of what is going on or of what led us to the position we are in. There is always a context, and we appreciate that savings had to be made in Government spending. Everyone knows that. When we ask ourselves why we are in the position we are in, we get conflicting answers. As Government Members have said, Labour Members suggest that it was the fault of American bankers, of evil people in the City of London who were making too much money and of international business. I think my right hon. Friend the Secretary of State for Work and pensions even suggested that at some point they would blame Dr Evil. None of those reasons, however, is remotely relevant to the deficit or the fiscal situation we are in.

The simple fact is that we had a much larger deficit than any other country in the G7. These facts are known to the world. Labour Members have to accept that when they came into office in 1997, there were balanced Budgets. For four years, the then Chancellor of Exchequer essentially balanced the Budgets and it was a matter of deliberate policy in 2001 when the Labour Government turned the taps on and presided over a massive engorgement of the public sector.

It was that decision in 2001-02 that led to the position we are in now. The cause was simple: the last Prime Minister, when he was Chancellor, believed in his hubris that he had abolished boom and bust. He thought that the economy would keep on growing and that he could then use tax and other income to fund his bigger national projects and his huge public spending. What happened, of course, was that the economy stalled. The income receipts to the Exchequer stopped coming in, so we were left with this massive deficit of £160 billion—the largest in peacetime. The coalition Government came in with the principal purpose of dealing with the deficit. That has always been this Government’s purpose. It was almost a Government of national unity, with two historic parties with different views and different traditions coming together to sort out the mess that the Labour party had left behind.

It is a very simple narrative, but because of all the obfuscation and the deliberately misleading comments of Labour Members, all that has been forgotten. My constituents are all too well aware of the mess that Labour made. In fact, one man said to me, “Well, we have seen it all before; exactly the same thing happened in the 1970s. Labour comes in and makes all sorts of spending commitments, and we run out of money.” It was that simple—and exactly the same thing has happened in Labour’s last two years in power. Blaming the global crisis for what was essentially decisions taken by the Labour party in government is entirely wrong.

[Emma Reynolds]

Does the hon. Gentleman blame Labour Members for the recession in Germany, for the recession in France, for the recession in the United States and for the recession in other parts of the world? How can he stand up and say it was all our fault? It was a global financial crisis.

[Kwasi Kwarteng]

Let me point out to the hon. Lady that in Germany the deficit to GDP ratio was 3.3%; our deficit to GDP ratio was 12.8%. That differential had nothing to do with the global crisis; it had everything to do with spending commitments made on the Treasury Bench when the hon. Lady’s party were in government. It is a deliberate obfuscation to try to blame the sub-prime crisis in America and all the rest of it for decisions taken by her party in government. It is like a magician’s trick: one always tries not to let the audience focus on what is actually being done. That is what magicians do, and it is exactly the sort of tactics that Labour is employing. As I say, it is trying to obfuscate and shift the blame for decisions that it made.

I think it is a scandal and an insult to the intelligence of Members generally that Labour Members are still in denial about the mess they created and the errors they made, which were based on hubristic assumptions about the economy growing for ever and ever. We all remember the former Prime Minister himself saying that there was an end to boom and bust. What does that mean? Anyone who says “an end to boom and bust” genuinely believes that there will be no downturn and so makes spending assumptions on the basis that money from income receipts will keep coming in. That is absolutely crazy.

[Emma Reynolds]

I ask the question for the third time in this debate, as I have yet to receive an answer from Conservative Members. Why on earth did the Conservative party back our spending plans right up to the start of the global financial crisis? This is revisionism by the hon. Gentleman’s side; it is his side that is being ostrich-like, not ours.

[Kwasi Kwarteng]

With respect to the hon. Lady, that is entirely irrelevant. Her party was in office; her party had the ultimate responsibility for the government of this country—not only in 2007, but for the 13 years before the last election. It is a strange paradox that when Labour Members got into power in 1997, they did the right thing. They balanced the books; for four years, we were not running deficits, as they stuck to our spending plans. The Chancellor was prudent; “prudence” was his favourite word. Then, all of that was deliberately swept away, and they went on a mad spending spree, which directly caused the deficit and the savings that have to made now.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that the honest answer to the question put thrice by the hon. Member for Wolverhampton North East (Emma Reynolds) is that if we were guilty of anything, it was to fall for the same lie that the British public fell for—to believe that new Labour had become the party of economic competence and that in government it could be trusted with the public finances?

[Kwasi Kwarteng]

My hon. Friend is exactly right. I think there was an element of delusion in the country inasmuch as people believed that Labour could be trusted with the economy. That was clearly not the case. Older voters I speak to in my party association and more widely in Spelthorne remember the appalling legacy of the 1970s, when exactly the same thing happened. None of this is new; we have seen it all before. Exactly the same thing has happened 30 years later: Labour came into power, made all sorts of spending commitments with the best intentions, but found that we had run out of money. It was that simple. On that note, I urge the House to vote in favour of the Budget motions.