Future Government Spending

Mark Hendrick Excerpts

Wednesday 4th March 2015 Commons Chamber

[Mr Gauke]

I am afraid that that is a bit of a red herring. If the shadow Chief Secretary wants to set out what his plans are, and if he believes that spending needs to be higher than it would be under a Conservative Government, he can tell us how much higher—he does not need the OBR to look at his numbers. Does he believe that spending should be financed through more borrowing or more tax? What is it to be—a tax bombshell, a borrowing bombshell, or both? I will happily give way to him. He does not want to answer.

[Mark Hendrick (Preston) (Lab/Co-op)]

rose—

[Mr Gauke]

Perhaps there will be an answer from the hon. Gentleman.

[Mark Hendrick]

The Minister will recall that prior to the 2010 general election, the then Conservative Opposition promised to get rid of the deficit by the end of this Parliament. We have already seen that the Government are planning to borrow £200 billion more than was originally estimated, which is clearly way off track. If they could not get their promises right before the last election, why should we believe them, in government, about what they will do after the next election?

[Mr Gauke]

So there we have it—that is the complaint from the Opposition. Their big problem is that we have not cleared up their mess fast enough. That is the essence of their argument. They have opposed every difficult decision we took on the path towards recovery—every spending cut and every welfare change. As for the deficit, they usually forget to mention it. All the rhetoric we are hearing from them is about how they would reverse the decisions that we have taken and presumably turn the clock back to 2010—the time when we had the worst deficit in peacetime history, when we were borrowing £1 for every £4 spent, when we had an economy whose ability to pay its way was questioned internationally, and when the outlook of the Labour Government could be summed up by the note left by the then Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne):

“I’m afraid there is no money.”

This Government have made great steps forward to get us out of that mess. In 2014, our growth rate was 2.6%—the highest of any major advanced economy. Our deficit is down by half as a percentage of GDP. Thanks to the stability that we have put in place, businesses have created 2.16 million private sector jobs since the first quarter of 2010, each and every one representing someone in the UK who is now standing on their own two feet. Some 2.1 million more entrepreneurships have been set up, with over 750,000 more businesses than in 2010. That has all happened under this Government.

--- Later in debate ---

[Mark Hendrick (Preston) (Lab/Co-op)]

In 2010, the Conservative leader, then in opposition, promised he would be able to “balance the books” by 2015—in other words, during the term of this Parliament that is coming to an end. He failed to do so. Borrowing for 2015-16 is now set for £75 billion. It is clear that the Conservative-led Government have borrowed more than £200 billion more than was planned in 2010. The books have not been balanced, yet there has been a great deal of borrowing. Where has that money gone? I can say where it has not gone. Not much of it has gone on spending in constituencies such as mine.

The Government’s failing austerity plan risks reducing the role of the state to a size not seen since the 1930s, as we have seen. Nowhere is this more evident than in my Preston constituency and certain other parts of Lancashire. The commitment to spending cuts is beginning to show in the quality of local health care. The number of elective operations cancelled in Lancashire has gone up by an average of 12%. Still on health care, I am particularly concerned about the decline in the North West ambulance service response times for both red 1 and red 2 emergency responses. According to the most recent data in 2014, response times within the standard eight minutes were down by 3.5%, while red 2 emergency response times were down by 5%. Those are just two examples of how the health service in my constituency has been degraded and how public services have been degraded generally—despite the extra borrowing undertaken by the Government.

The spending cuts have drastically affected front-line policing in Lancashire. Since 2010, the number of new police officers in the north-west has fallen by 28%. Since 2010, too, 291 police officers have been cut from front-line policing roles in Lancashire, accounting for 10% of the whole of the Lancashire police force. The cut in Government spending on front-line policing in Lancashire has had a direct impact on local crime. Since 2013, drug crimes have risen in Preston, and domestic burglaries have gone up by an average of nearly 6% over the last five years. Offences involving knives and other sharp objects in 2013 rose, on the most recently available statistics, by 8.4%. Hate crimes and disability hate crimes are at an all-time high in Lancashire.

We have seen cuts in child care, too. The number of early-years child care providers in Lancashire has declined by nearly 4.5% since 2012. On housing, there are currently 3,394 households on the waiting list for social housing in Preston—3,394 too many. What we are now seeing is a clear manifestation of what we call the working poor. We used to define people as poor if they were out of work and struggling. Now, however, we see the working poor paying regular visits to Preston’s food banks.

The unemployment figures might be falling, but the real picture is very different. Low pay is endemic, and there is wage stagnation. The Conservatives said that if we introduced the minimum wage, it would cost a million jobs. As we know, the introduction of the minimum wage created lots of jobs. We are seeing more zero-hours contracts, at the same time as we are seeing what I take to be sanctions placed on people—not necessarily because they are not looking for work, but because the Department for Work and Pensions has an unofficial and devolved policy of targeting sanctions on people by various officers and offices. On the “Dispatches” programme on Channel 4 the other night, we saw people dying as a result of these sanctions. Agency workers are contributing to the problem, and people are either being forced to go self-employed or forced off the register altogether.

Some 1,200 properties in Preston have to pay the bedroom tax, while we have seen cuts in local government spending and cuts in health service provision, as I said. For the hon. Member for Peterborough (Mr Jackson) to say that there is no cost of living crisis is incredible, when year after year since 2007 inflation has run ahead of wages. Now, because there has been a small upturn, he tries to pretend that it has never been any different. The Government are a disgrace; the quicker we can get rid of them, the better. Bring on 7 May!

[Andrew Jones (Harrogate and Knaresborough) (Con)]

At the heart of the motion is the idea that the Government’s economic policy is failing. It raises a scenario of a country going back to the 1930s—a country without the NHS and with mass unemployment. It was indeed a dark time, as the hon. Member for Blaydon (Mr Anderson) said. I simply do not recognise that scenario, however—either for my own constituency or for the country more broadly. The motion raises the spectre of no NHS. That is absolute nonsense. The NHS budget has risen by £12.7 billion during this Parliament.

[Mark Hendrick]

The budget may have risen, but the delivery of front-line services, and of services more generally, has been overshadowed by the top-down reorganisation which the Government, when in opposition, said would not happen. That is where much of the money has gone. It has not been spent on the delivery of services.

[Andrew Jones]

I think that the hon. Gentleman is mistaken. The restructuring of the NHS has saved money, and we have more doctors and nurses as a result. Indeed, Members on both sides of the House have backed the NHS’s “Five Year Forward View”. To suggest that we are not investing in health in our country is simply mistaken. The Opposition’s suggestion that the NHS is somehow under enormous pressure is scaring people, because we all rely on the NHS.

Is our plan failing? No, it is not. The evidence simply is not there. Our economic growth is faster than that of any other developed economy, but the best evidence that the plan is succeeding is what that growth means to people, and that is the level of work. Unemployment has been falling, and a huge number of jobs are being created: 1.85 million have been created during this Parliament. In my constituency, the figures are extremely positive. At the start of this Parliament, there were 13,084 unemployed people; now there are 529. That pattern is mirrored throughout the country, and it means that more people are able to provide for themselves and their families.

The motion suggests that the economic plan is unfair. It is not. There is nothing fair about saddling future generations with debt. Of course dealing with a huge recession is a challenge. We all know that people have been under enormous pressure which has been compounded by food price and fuel inflation, although that it is passing. However, the key Government tax policy has been an enormous help. The huge increases in the personal allowance have benefited about 25 million people, and in my constituency about 4,500 people have been taken out of tax altogether. Both the Treasury and the Institute for Fiscal Studies have confirmed that the richest are making the largest contribution to reducing our deficit, as they should. My hon. Friend the Financial Secretary referred to that earlier.

How does the Government’s plan compare with others? If we are failing here, how are other countries doing? I think that they are looking at our progress with some envy. The international response from the OECD, and the national response from business groups, is that the plan is working. The head of the OECD has said that Britain “needs to stick with” its long-term economic plan.

--- Later in debate ---

[Mr William Bain (Glasgow North East) (Lab)]

It has been a pleasure to listen to the whole of this debate and to make a contribution at this stage. It has been a revealing debate, showing the paucity of the Government and the Conservatives’ argument for re-election. It comes down to this: “We have nearly doubled the debt, we have completely broken our promise on the deficit, we have stripped growth out of the economy for the first three years, we have been the worst Government for 140 years on wages and living standards—now go on, vote for us and give us a second term.” That is it: no positive policies; no vision of how the economy can be different; no vision of how to get more people involved in work, in decent, good paying jobs; no vision of high skill, high investment, high exports. No; instead, we have just had negativity and fear and I suspect that that is what will do for this Government on 7 May.

[Mark Hendrick]

My hon. Friend omitted to mention the fact that voters will, on average, be £1,600 per person worse off than they were at the last general election. What sort of Government can present a spectacle of people being worse off by that amount and still expect to get re-elected?

[Mr Bain]

Indeed, and as the Institute for Fiscal Studies said this morning, this has been the slowest recovery in living standards in history. I do not think any reasonable Government would expect to be re-elected with that kind of record, and those are the facts.

What was extraordinary about the debate was the way in which the Government, having twice moved the goalposts on their deficit target, again tried to pull this extraordinary trick over the eyes of the country today. As I said in an intervention, the “Charter for Budget Responsibility”, which this House endorsed in January, made no reference to balancing the current Budget by 2017-18. It talked about a rolling five-year forecast, yet it was used today by the Financial Secretary, who is no longer in his place, to refer to a bogus sum saying that £30 billion in cuts were implied by that charter. That type of approach shows that the view of the Conservative party and this Government is, “This is as good as it gets”, and that we should have no ambition for our country of higher growth, higher skills and higher investment than that which they have been able to provide. My constituents and Opposition Members reject that completely.

Let us look at what the International Monetary Fund is saying on growth. It says that next year growth will fall compared with this year and that it will still be falling the year after. Is that really as good as it gets for Britain in this early stage of the 21st century? The next Government should follow policies that see us have higher growth, higher wages and higher skills.

It was also revealing in this debate that the Minister could not say whether he supported the Office for Budget Responsibility evaluating the fiscal plans of any other party, and small wonder because the National Institute of Economic and Social Research, the one organisation that has evaluated the plans and looked at the difference between the Conservative spending plans and those that would be followed by Labour, has said that there will be more growth, more jobs, and faster rises in wages under Labour’s spending plans than under those of the Tories. So there it is: confirmation that if we want to have ambition for our country, a fairer society, better public spending and better living standards and outcomes for our constituents, seeing an end to this Government is absolutely critical.

We also need in this debate a recognition that the way the Government have tried to reduce the deficit in this Parliament has brought exceptional hardship to our constituents. Anyone who has held the hand of a disabled person, as I have, having to pay the wicked, pernicious bedroom tax, with tears in her eyes, wondering how any decent Government could ever inflict that on any of its citizens, knows that the course the country has been on for the past five years is wrong and needs to change. Anyone who has seen, as I have in my surgery, people on low incomes with family members suffering sanctions imposed through targets from the Department for Work and Pensions knows that we are a better country than that and the next Government can do better for all of its people and produce much more fairness.

It is key that we get more people into work, abolish long-term unemployment among our young people and those over the age of 25, and ensure that we have an economy with more productivity leading to rises in wages and higher living standards for all. We need an economy that is based more on exports and investment than on the racking up of public and private debt that this Government have presided over.

I believe that there is a better way, and that the people of this country will vote for it on 7 May. The hon. Member for Peterborough (Mr Jackson) talked about fear. As we approach this critical general election, we should remember the words of Franklin Roosevelt in his inauguration speech of 1932. He said:

“The only thing we have to fear is fear itself.”

I do not believe that the British people will be fearful on 7 May. I believe that they will be purposeful in voting out this Government, in voting for change and in voting for a Labour Government.