Comprehensive Spending Review

Stephen Lloyd Excerpts

Thursday 28th October 2010 Commons Chamber

[Ms Eagle]

We entered the crisis with the second-lowest deficit in the G7. We were affected by the credit crunch because we have a very large financial services sector, which is why both sides in the House are talking about how we can rebalance our economy. We are too exposed to the kind of risks that crystallised when the credit crunch struck. [Interruption.] The Chancellor, from a sedentary position, asks whose fault that was. If we are going to be sensible and have a proper, nuanced, balanced and grown-up debate on this issue, all of us—as members of political parties that are, or have been, in government and in charge of running the country over the past few years—need to take our fair share of responsibility for how the banking sector came to dominate too much. Both sides of the House have to learn those lessons. I hope that we all will.

[Stephen Lloyd (Eastbourne) (LD)]

Does the hon. Lady agree that it has been down to this Government to introduce the bank levy of £2.5 billion, and that the Labour party, when in government, failed to do so? Why did they fail to do so?

[Ms Eagle]

We introduced the bonus tax, which the Conservative party opposed and which raised £3.5 billion. We have said that we need to consider how to ensure that the banks shoulder their fair share of the burden in ensuring that the deficit is reduced in a sensible way.

--- Later in debate ---

[Stephen Lloyd (Eastbourne) (LD)]

I have had the pleasure of listening to speeches all afternoon. In a way, they could be summed up by saying that Labour Members believe we are all going to hell in a hand cart, whereas Government Members believe we are heading towards the sunny uplands. My own view is that we are somewhere in between, but I am a little closer to the Government side.

Tony Blair apparently said to the right hon. Member for Birkenhead (Mr Field) in 1997, “Go away and think the unthinkable on welfare reform.” He promptly went away and thought the unthinkable, and a key part of it was recognition that benefits had to follow low incomes for people to get back into work and that benefits cost far too much—and the then Chancellor of the Exchequer and subsequent Prime Minister crushed it on the spot. So what is happening under the comprehensive spending review? It looks as if welfare reform is heading towards thinking the unthinkable. My understanding is that an extra £2 billion is to be included within the universal benefit, which will mean that people on low salaries can take a lot of their benefit with them. I will obviously need to check the fine detail as it gets presented over the next few months, but if that is right, it will make a profound difference to many hundreds of thousands of people.

Let me provide an example. A few years ago, I had to do something in Eastbourne. Although it is clearly the best constituency in the whole country, this was a little bit of a nightmare, which I suspect other Members might have experienced at some time in their lives. I refer to judging a beautiful baby contest. Trust me, it is a nightmare. How do we ensure that we do not win only the winning parents’ votes and lose all the others of the babies that we do not choose? I recall coming across a particular lady whom I knew. She looked about 50, but was probably in her late 30s. She was holding a baby of about six months or less. Standing next to her was her daughter—probably 17 or 18, but she looked a lot older—and the grandmother, who was completely inebriated. This was at 2 o’clock in the afternoon. As I looked at that child, I have to admit that behind the veneer of the politician’s smile, I felt utter fury because I knew that I could write that baby’s curriculum vitae right away—it was a goner. I find that absolutely unacceptable. If the changes to welfare reform, when followed through by people coming off benefit and going into initially low-paid jobs, mean that they can take their benefits with them, it will be a rational decision to get a job.

[Chris Williamson]

If the hon. Gentleman is so concerned about low-paid workers, will he not concede that cuts to housing benefit will make it much more difficult for many of them to hold down their jobs? Contrary to his assertion that the policies he supports will help people to get into work, they will throw more low-paid workers out of the jobs that they are undertaking at the moment.

[Stephen Lloyd]

The reality is that when a nation has reached a place where it is acceptable and normal for rents upwards of £30,000, £35,000 or £40,000 a year to be paid by the state, something has to give. I see the challenges, but I am hopeful that the Government will come up with a greater amount of discretionary money, particularly for places like London. In principle, however, I support the narrative. We need to realise how crazy the vast majority of working people view the fact that they could never rent a £20,000-a-year flat in a million years, yet the state allows rentals for much more than that. Forgive me, but I genuinely believe that anyone supporting that lives on a different planet.

Let me make another couple of important points about this comprehensive spending review and welfare reform. Just last week, I stayed at the Premier Inn—as we all know, that very salubrious place across the river. I have stayed there about 20 times since the election. I have met about 20 to 30 members of staff, and very nice they are too, but not one of them is an indigenous black or white British person. Not one! What is going on? I spoke last week to a friend who runs a café in Eastbourne. He said, “Stephen, I keep trying to get people to work and I offer them jobs, but they keep telling me that they cannot accept them because they will lose their benefit if they work for more than 16 hours a week.” What is going on? We have to forget all the backwards and forwards; I profoundly believe that we have got to change the system. It is not only inefficient, it is profoundly cruel.

As I have the Minister here, I want to flag up a number of areas of the CSR about which I have concerns. The first relates to Equitable Life. I commend the Government for their payments to Equitable Life policyholders; they came forward when the previous Government did not. However, the payment of £1.5 billion could have been higher. Considering that the second instalment of £500 million is going to be paid in the second term, I certainly believe that we should increase and expand it. We have a moral duty to do so.

My second area of concern is small businesses. I spent a few years working as a consultant with the Federation of Small Businesses in south London before I got elected to this place. Small businesses broadly support the comprehensive spending review, but they need the Government to be really active on cutting bureaucracy and setting small businesses free. I urge the Government to do that. I believe that this is a fair comprehensive spending review. It is a challenging one, and I appreciate that we shall have to see what happens over the next few years, but I commend it to the House.