Economic Affairs and Work and Pensions

Lord Blunkett Excerpts

Tuesday 8th June 2010 Commons Chamber

[Mr Darling]

Before I leave this point I should say something further because a number of hon. Members mentioned our spending in the earlier part of our Government. It is not just about what we did during the recession; it is about the fact that over the relevant 10-year period, there was an unprecedented decade of growth such as this country had not seen before, as well as low interest rates, low inflation and falling unemployment. Gross domestic product per capita grew faster in this country than in any other G7 country even after one takes into account the effects of the financial crisis. The economic environment was one that this country had not had for many years. Of course, we had to deal with the effects of the banking crisis and the downturn that followed, which had a very severe effect on our public finances as well as other public finances.

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

My right hon. Friend did a phenomenal job as Chancellor of the Exchequer. The measures that he has just outlined and the success were considerable, but is it not also true that back in 2002 his Government, and my Government, finally paid off the second world war and post-war debt that was run up with the Americans in 1947? The final bonds were paid off not by the Conservatives in the 1950s, 1960s or 1980s, but by the Labour Government in 2002. [Interruption.] That is absolutely true.

[Mr Darling]

My right hon. Friend is right. No doubt there will be another occasion to revisit the lend-lease arrangements that the then Government entered into in the 1940s, although I commend to the House Lord Robert Skidelsky’s excellent third volume on Keynes, which deals with this matter quite extensively. Some people thought that we got a pretty bad deal in 1943, but there you are.

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[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

I shall endeavour to adhere to what you have requested, Mr Deputy Speaker.

I am standing to defend the record of my Government, not to traduce it. I am proud of those 13 years—proud of the new schools, the jobs that did not previously exist, the environment that has been improved, the houses that have been completely refurbished, and the complete transformation of Sheffield, Brightside and Hillsborough. I say that because I am little worried about people who are now looking over their shoulder, some of whom are competing for the leadership of my party, and who are in a 1930s denial situation whereby they have to pretend that they had nothing to do with the decisions that were taken. I did, and I am proud of the decisions that we made, some of which were about investing in communities that had been neglected for years.

When I hear Conservative Members saying, as has the Chancellor of the Exchequer in the media and this afternoon in this House, that we are all in this together, it makes me want to be sick, because those Members across the aisle know, and we know, that we are not all in this together. It will be the people we on the Labour Benches represent, and some Liberal Democrats represent, who face the greatest difficulty, because they cannot buy their way out of deteriorating public services, and they do not have the alternatives that those with resources, including capital assets, have.

That is why the decision to do away with the child trust fund is one of the most heinous things in this £6 billion package of cuts. It takes away the future assets of young people who would be able to stand on their own feet, and it reduces the propensity to save, which the Secretary of State for Work and Pensions has extolled over the past fortnight. He is right to do so. In the next breath, however, his Government are cutting at a time when the subsidy from the public purse for tax relief on individual savings accounts is twice as much as the amount that it would cost to maintain the child trust fund, which has a 100% take-up, involving 5 million children, compared with a 30% take-up for ISAs among the adult population.

In the end, we have to ask ourselves three questions. First, who got us into this mess? Was it politicians and politics, or was it the international financiers and bankers, and international capital, that created the situation that the Chancellor of the Exchequer wants to place on the shoulders of the outgoing Government? Of course, it was not the Labour Government’s doing but a result of the problems that we have had to deal with over the past three years in terms of saving ourselves from the banks and avoiding the collapse of our economy.

That brings me to my second point. If we should be doing more, more quickly—cutting faster and more deeply—is it because we need to mirror what is taking place in the rest of Europe and the world, as the Chancellor of the Exchequer has enunciated? If that is true, how is it that all these other countries that we should be emulating came to be in the mire in the first place? I presume that it is the Labour Government in Britain who have brought Spain, Italy, Greece and the Republic of Ireland to their knees. That is why public sector workers are having their pay cut; that is why the Chancellor in Germany is cutting £65 billion; and that is why, across the world, we are seeing this retrenchment: it is all down to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and my right hon. Friend the shadow Chancellor. Everybody in this country who has a brain knows that that is nonsense.

Thirdly, if we are not careful, we will exacerbate an existing problem. Of course we know that there are going to be public expenditure reductions. We do not need to be told that—we had agreed it before the general election—but we wanted growth, an increased tax yield and a reduction in outgoings on benefits and unemployment to help us to bridge that gap. If we are not careful, then Sir Alan Budd, with the difficult job that he has been given in the Office for Budget Responsibility, will predict lower growth to the point where the Chancellor then tells us that because lower growth is projected, we will need to cut services and investment still further to take account of that. If we do that, we reduce the likelihood of growth and of tax yield and redemption without having to cut the essential services of the people we represent. Fourthly, we need to think imaginatively about how we can combine services nationally and locally, so that we do not have to make draconian cuts. We can genuinely reduce the cost of providing the same services.

Under the current shadow Chief Secretary to the Treasury, the Cabinet Office produced an excellent document that I recommend to the new Government. That document showed what is being done around the world and I wish we had given it greater publicity and made more of it at the time. We can use what is now called the Total Place initiative and engage local people. However, we cannot do that if massive draconian decisions to cut centrally are made and local government and local people are blamed for the cuts being made and the pain being inflicted. I shall give one example: aggregate external funding for local government. In the Prime Minister’s Oxfordshire constituency, there is 1.7% of unrestricted expenditure, but that figure is 18.5% in my city. We know perfectly well that the cuts will fall on those who are least able to bear them, and that is why we should oppose them.

--- Later in debate ---

[Mr Duncan Smith]

That is exactly right.

The hon. Member for Belfast East (Naomi Long) said that she was dedicated to bridging the political divide and the regions, as a member of the Alliance party. She should come across to this side of the House: we are the living embodiment of an alliance, so perhaps she could join us. My hon. Friend the Member for Wycombe (Steve Baker) made a very good speech, and I remember his predecessor, Paul Goodman, very well. The hon. Member for Edinburgh South (Ian Murray) made an excellent speech and spoke about astronomical manufacturing. I am not quite sure what that means, but it sounded good at the time.

The hon. Member for Edinburgh West (Mike Crockart) spoke about the pivotal role of community groups. I agree with him. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) paid tribute to the grass roots and sense of respect of the people of Newcastle. She made an extremely witty speech. If she carries on like that in the House, she will rise fast and dominate her own side. I commend her.

My hon. Friend the Member for Orpington (Joseph Johnson), who made a very good speech, said that he did not have the humour gene of his brother, but he proved that not to be true. He has the hair, too, of which I am rather jealous. He will go far in the House, provided he follows his brother’s trait of never sticking to any particular line for any length of time but ending up being elected to highest office while he is at it, which is a pretty good record of success.

The hon. Member for Lewisham East (Heidi Alexander) made a very good speech. My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) spoke about business being strangled by red tape. The hon. Member for Edinburgh East (Sheila Gilmore) made an excellent speech. My hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) made a very good speech in which he spoke in Shakespearean terms about the gathering clouds and the dark lowering economy. I was getting so worried at one stage that I thought I would not get to the Dispatch Box to speak at all. Never mind, here we are.

I shall touch quickly on speeches not made by new Members. The right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), whom I know and like enormously, blamed bankers, the world economy, the leadership candidates in his own party, and everyone except the previous Government, for the shambles that we are now in. He should think again. It was the Government of whom he was a member who reduced the country to the state that it is in.

[Mr Blunkett]

rose—

[Mr Duncan Smith]

We do not have a great deal of time. I will give way, but I shall finish shortly.

[Mr Blunkett]

I am grateful and I shall be brief. Perhaps the right hon. Gentleman, whom I wish well, would describe to all of us why the rest of Europe has been devastated by the Labour Government.

[Mr Duncan Smith]

I can answer many questions, but I cannot say what the last Labour Government did as they toured Europe destroying all those economies, so I am afraid I cannot help the right hon. Gentleman. All I know is that we have spent huge sums, much of it not carefully adjusted to see whether it was working, including the future jobs fund, about which I was asked earlier. The issue is not that it was not creating jobs, but that the jobs that were being created were more than likely to be temporary, they were nowhere near the number originally projected, and the cost of the programme was running out of control.

Everyone wants to create jobs and stop the wage scar for the young unemployed, but I must tell the right hon. Member for Normanton, Pontefract and Castleford that we face a nightmare in which we have to look at the spending to make sure that whatever we spend delivers real life change. We will be doing that with welfare reform to try to make it much easier for people to get back to work, and to make sure that the money they earn is real money and means that going to work pays. We will reform pensions. The right hon. Lady and her party managed to lower the level of life chances for far too many people in this country, and it is the coalition Government who now set out to help the young, the unemployed and the impoverished in Britain once and for all.

Question put, That the amendment be made.