Living Standards

Lord Watts Excerpts

Wednesday 30th November 2011 Commons Chamber

[Mr Byrne]

We do happen to believe that further action is needed to get people back to work, because we are now seeing the costs of the right hon. Gentleman’s Government over the past year and a half. We have now seen the Chancellor set out £158 billion of extra borrowing because he has drained the recovery of growth and put the benefits bill up over the course of this Parliament by £24 billion. That is the only part of his budget that is growing.

[Mr Dave Watts (St Helens North) (Lab)]

Does my right hon. Friend not find it strange that Government Members talk only about deficit? They do not talk about unemployment, poverty or growth. Do we not need a more balanced approach to the problem?

[Mr Byrne]

My hon. Friend is absolutely right—and that is why unemployment is set to spiral over the course of this Parliament, with £24 billion on the benefit bill, which means a £1,000 extra bill for every household in this country.

--- Later in debate ---

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I am tempted to ask, “Is that it?”, but perhaps I will not.

Yesterday, the Office for Budget Responsibility published its forecasts for the UK economy over the coming years, which painted a very difficult picture: Britain is expected to grow this year by 0.9% and next year by 0.7%; growth is forecast at 2.1% in 2013, 2.7% in 2014, 3% in 2015 and 3% again in 2016. The OBR showed that in 2009-10 borrowing was £156 billion a year. Last year, that fell to £137 billion. This year, the OBR expects it to fall again to £127 billion.

The OBR did not just publish forecasts. It did us a favour, because it looked back and reopened the books on the era of the previous Government, and an important factor emerged. It told us that an even bigger component of the growth that preceded the financial crisis was part of an unsustainable boom, and that the bust was deeper and had an even greater impact on our economy than previously thought, meaning that the effects will last even longer. It said:

“The peak-to-trough fall in output over the recession is now estimated to have been greater than previously thought at 7.1% rather than 6.4%”

That is a huge change to the figures. It found that from near the end of 2010 we were taking a serious hit from rising global food and energy prices.

I want to add a further quotation from the OBR as these matters form the baselines of our debate today:

“Most of the weakness can be explained by an external inflation shock”.

Its third point is that the eurozone crisis is

“likely to have contributed to weaker UK growth and business and consumer confidence.”

[Mr Watts]

What credibility will the public attach to the forecasts of the right hon. Gentleman and his advisers when despite every forecast they have made, the deficit and unemployment have gone up and growth has gone down?

[Mr Duncan Smith]

I hope they will attach no credibility if they were our forecasts. We set up the OBR—an independent body that Opposition Members accepted—and its forecasts are about as good as we shall get, so we should give it credibility for at least trying to get the forecasts right. That is a damn sight better than the past 12 years of gerrymandered Treasury figures, not one of which had any credibility.

--- Later in debate ---

[Mr Duncan Smith]

Wait a minute—I am trying to answer the hon. Lady. She may not like the answer, but I want to finish it. The reality therefore is, yes, of course, but I think that we have done as much as we can to protect those who are in difficulty.

In answer to the hon. Lady, I should like to list a few things that we have done. Bearing in mind the changes we have made to taxation, more than half of those who will be lifted out of income tax will be women. We are investing an additional £300 million in child care support on top of the £2 billion already being spent. There will be 5,000 mentors to support women entrepreneurs and we are creating the women’s business council to advise Government. There will be up to £2 million to support women to set up and expand businesses in rural areas. We are improving child tax credits this April with a £180 real-terms permanent increase in the child element. Next April, there is an increase of 5.2% and a further £135. We are doubling the number of two-year-old kids who receive 15 hours of free education a week. There is also the £2.5 billion pupil premium. I could go on and on. We are doing huge amounts to try to protect the poorest in society.

[Mr Watts]

Part of the help package that has been set out is the money that will go to London families to keep rail and bus fares down. Does the right hon. Gentleman have a similar package for my constituents?

[Mr Duncan Smith]

It is all rail fares, but I do not want to split hairs with the hon. Gentleman about whether he thinks it will help his constituency. I think it will.