Comprehensive Spending Review

Lord Judd Excerpts

Monday 1st November 2010 Lords Chamber

[Lord Judd]

My Lords, we certainly faced a very severe global financial challenge. Corrective action at national and international levels was essential. There can be no argument about that, but, as this debate is well illustrating, the issue is about what action and what timetable.

Adam Smith was a highly ethical man. His first writing was about ethics. He approached economics with ethical commitment as a given. The roots of this crisis lie in an ethical vacuum into which greed relentlessly moved. The heaviest burden of the measures proposed for recovery compounds the lack of principle. It falls on the less affluent and particularly harshly on the poor, on people who struggle to live at a lower or lowest level of society. Those are the innocents who had absolutely nothing to do with generating the crisis, save that they were too often wickedly seduced into grotesque personal debt.

The bankers and self-indulgent rich who live at the top of the pile appear to be escaping with very little real hurt. We live in an age in which wealth and profits are privatised, but in which risk is socialised. This makes a total nonsense of market theory. The self-correcting disciplines are absent. The innocent are crushed and punished to pay for the transgressions of the gamblers.

The Prime Minister likes to talk of broken society and of family, but it is the Government’s response to the crisis which is smashing society and crushing families. The greatly respected Institute for Fiscal Studies has underlined that the poorest are to be hardest hit, with families as the biggest losers. All this is compounded by insensitivity and remoteness from the harsh realities of struggle, of the pressures and acute stress that affect life for millions of ordinary people. Listen to Grant Shapps, the Housing Minister, as reported in yesterday’s Observer. This is what he said:

“I don’t deny some people may well need to move. Not tens of thousands. The impact assessment says that there are about 17,000 people in London whom the cap would affect”.

Seventeen thousand people would be stressed beyond endurance on what matters most for their security and any chance of a constructive life—a home. That is something that all of us, not least those in the Cabinet, take for granted.

The Government have also launched an attack on universalism in benefits. Universalism is about inclusiveness and social cohesion in a healthy community, where people are not stigmatised and institutionally patronised. It is about all belonging with the same rights as citizens. Of course this must mean a convincing system of progressive direct taxation, with all of us paying according to our ability to ensure a society worth living in. For too long, the concept and values of service have been, in effect, denigrated. Service is not seen as being for clever people. Money is their game. But the quality of mutual service is essential for an integrated society. Do any of us really want to be reliant on health provision driven by markets, as distinct from vocational commitment and a culture of service and care? Do any of us really want our children to be at schools and universities driven by markets, not by dedicated teachers and professors in a culture of unyielding commitment to learning and the generation of enlightened self-confident citizens? Are we really happy at the thought of older years dominated by anxiety and the ruthlessness of market forces, as distinct from a national culture of concern and national care?

The Prime Minister talks of big society, but that was exactly the vision of the so-called welfare state—the dignity of secure citizenship as against the insecurity of a rat race for survival, with volunteers scurrying about to put patches on the wounds. Why have we allowed the word “welfare” to become associated with failure? Welfare is about well-being for us all. No; Galbraith was right when he described the stark grimness of private affluence and public squalor. For social justice, progressive taxation, not cuts, is the route which clearly should be taken.

Save the Children, with all its experience and integrity, is convinced that the eradication of child poverty can be achieved only if the income of the poorest households is increased. Save the Children argues that boosting family incomes is the most effective way to improve children’s health, educational attainment and life chances. Its impressive analysis indicates that the comprehensive spending review measures will hurt families experiencing in-work and out-of-work poverty and are likely to reduce the incomes of families with children living on incomes below the 60 per cent median. I fervently hope that the Minister has had time to study the detailed policy brief prepared by Save the Children. Has he? Have the Government? If not, can the Minister give a firm undertaking to do so and put the considered response to that brief in the Library?

It is very welcome that the Government are standing by their pledge of 0.7 per cent of gross national product for overseas development assistance. This is for the most disadvantaged people of the world, although, as a former director of Oxfam, I would be happier if the pledge were to be fulfilled in the context of a demonstrably greater commitment to a fairer society within the UK itself. Within that pledge there are points still to be clarified. Will all the DfID staff cuts to be imposed affect the effectiveness of front-line staff? How will that effectiveness be guaranteed? How will the Government ensure that there are adequate essential human resources to support front-line workers with the policy analysis, research and international advocacy which are indispensible to the quality of aid spending and the best possible use of taxpayers’ money? If the increase to 0.7 per cent by 2013 is to be back-loaded, as seems to be the intention, there will be a steep increase—perhaps as much as 33 per cent—in spending in 2013, rather than straight-line increases from 2010. This will surely require careful scrutiny. How will this scrutiny be provided?

Andrew Mitchell has indicated that the spike in spending in 2013 will be facilitated in part by delaying the UK’s contribution to the 16th replenishment of the World Bank’s International Development Association. As the United Kingdom is the largest donor to IDA this could mean that the World Bank is unable to maintain current levels of disbursement to low-income countries for the first two years of the next IDA round. What reassurances can the Minister give us on the implications of this and how they are being met? The Government have committed themselves to spend 30 per cent of aid, both bilateral and multilateral, on fragile states by 2014. Some of that reprioritisation will presumably take place in the next two years. This coupled with the IDA payment delay could mean that more stable, but nevertheless poor, nations could lose out as the aid budget does not increase and spending priorities are put elsewhere. Again, can the Minister reassure us on this point?

On the Government’s highly welcome commitment to conflict resolution and security sector reform—here I should declare an interest as a trustee of Saferworld—does the Minister agree that addressing root causes of conflict and security in fragile states is about more than spending money on security interventions, that promoting lasting and sustainable security necessitates a holistic approach to security and development and not siloing them off as separate issues; in other words, that development needs security and security needs development? Is it not vital that any security interventions HMG do support must have practical concern and support for poor marginalised and vulnerable populations at their heart?

Climate change is having a devastating impact in poor countries, keeping vast numbers of people trapped in poverty. It is imperative to move towards a global low-carbon economy. At more than 552 million tonnes, the UK’s CO₂ emissions are the seventh largest globally—more than those of the 112 lowest-emitting countries put together. We have an inescapable responsibility. In doing what we should be doing to fulfil that responsibility, can the Minister assure us that raiding the aid budget will not be the easy option, depriving as this would the poorest? Will the Government press for raising climate finance by alternative measures such as aviation and shipping fuel taxes or a tax on international financial facilities?

As the Government squeeze, if not in part throttle, the BBC, how will they make certain that where the BBC is most needed—in its overseas reach, keeping hope and values alive among tyranny and oppression—it will remain fully committed and effective? And where, in places such as Russia, the BBC can help to keep the struggle for accountable democratic government alive, will the Government make certain that there will be no further cuts? Do the Government agree that it is not just a matter of size of audience—a market matter—but a matter of qualitative significance, where this is crucially required? How will the Government use their influence to ensure that the expertise, analysis and in-depth knowledge, which have won the overseas service its outstanding reputation, are not dumbed-down and diluted as overseas news services are combined with mainstream BBC news services?

There has been a severe global financial crisis—of course there has been—from which we have not been immune. This has been aggravated by the greed and irresponsibility of the banks and others. The tragedy is that we do not seem to have learnt—we are drifting back already to the old ways. The gamblers and opportunists are there again. Just as the Government have rejected an imaginative Keynesian approach, so they have failed so far to call the financial system to account. As they increasingly put the burden of the inevitable consequences on the less rich and the poor, they rub salt in the wounds by talk of our all being in it together—of volunteers being mobilised to tend the casualties and victims. One day, the sooner the better, we shall have to rediscover national solidarity and start building a real sense of just community.