Oral Answers to Questions

Steve Baker Excerpts

Monday 26th January 2015 Commons Chamber

[Esther McVey]

This was a complicated case. I will obviously meet the hon. Gentleman to discuss it. His constituent had been laid off and then, as we were trying to support him back into work, he did work experience. It was in a different part of the business, and it was how we could best enable him to move from long-term unemployment into employment. If the hon. Gentleman would like to meet me, I am more than happy to do that, but I have already looked into this case.

[Steve Baker (Wycombe) (Con)]

Will my right hon. Friend confirm that the Work programme has helped hundreds of thousands of people out of the misery of long-term unemployment and into sustainable work?

[Esther McVey]

My hon. Friend raises yet another good point. Under Labour, the number of people living in households where nobody had ever worked doubled. We therefore needed not only to do a lot of work to bring us back to the regular standards of what we had before Labour came into office, but to build on that to get more people into work. That is exactly right. We have helped hundreds of thousands of those people who were left unemployed for a long time.

Oral Answers to Questions

Steve Baker Excerpts

Monday 8th December 2014 Commons Chamber

[Steve Webb]

I discussed this issue with my officials recently. We will publish the figures shortly, but we know that a significant proportion of women are applying successfully for the domestic violence exemption from the £20 fee. We have made the rules relating to access to the exemption as relaxed as possible, and the domestic violence charities with which we have worked believe that we have drawn the right definition for the purpose.

[Steve Baker (Wycombe) (Con)]

20. What steps he has taken to help small businesses prepare for automatic enrolment.

[The Minister for Pensions (Steve Webb)]

We have deferred the date by which small businesses must be automatically enrolled, and have made a number of other changes to ensure that the system works best for them.

[Steve Baker]

When the time does come, how are the very smallest firms to choose a suitable pension scheme?

[Steve Webb]

When the Pensions Regulator notifies employers of their automatic enrolment duties, that letter flags the National Employment Savings Trust, which was designed with small businesses in particular in mind, but the regulator is considering putting more information on its website about other potential providers. I shall be hosting an event in the House for all Members to help them to support small businesses in their constituencies.

Benefit Sanctioning

Steve Baker Excerpts

Tuesday 2nd December 2014 Westminster Hall

[Paul Blomfield]

I thank my hon. Friend for that intervention, which echoes many reports I have received from the food banks in my constituency. The desperate level of hardship that we are talking about needs to be understood in the House. We understand that food banks provide a weekly food parcel, but when I recently spoke to colleagues at the S2 Food Bank in Sheffield, they pointed out that they were now receiving demand for food parcels containing cold food that would not require heating as people did not have enough money not only for food but for basic fuel supplies. People are living in houses or flats illuminated by candles and eating cold food provided by food banks. That is desperate hardship.

[Steve Baker (Wycombe) (Con)]

I am deeply troubled by some of the substance of this debate. The hon. Gentleman will know that the Government argue that nobody should go without essentials as a result of a sanction, and that they should receive hardship payments. Can he imagine why the evidence on the ground that he is presenting falls so far short of the Government’s obvious intent?

[Paul Blomfield]

I thank the hon. Gentleman for his intervention and I will come to that point; often a part of the communications breakdown is people’s lack of awareness of the hardship payments that they are entitled to. The Government have to deal with precisely that issue as part of the challenge.

In the time I have left, I want to stress the inhumane nature of some of the sanctioning I have referred to. It is clear that, if claimants do not understand agreements, they will not keep them and sanctioning will not have its desired effect as a deterrent against non-jobseeking.

--- Later in debate ---

[Steve Baker (Wycombe) (Con)]

One of the things that has troubled me most in my parliamentary career has been when serious allegations have been made about the unintended consequences of benefits reform. In some cases, it is alleged that it has led to people’s deaths.

In the Library brief, I read an article from The Independent about the cases of Mark Wood and David Clapson. Mr Wood died. He had a number of mental health problems and was found starved to death. Apparently, he thought that he deserved only £40 a week, and when a member of his family gave him money, it is alleged that he gave it to charity. Mr Clapson also died. He was a former soldier and a type 1 diabetic. It is said that his benefits were cut. The article says:

“He had no food in his stomach, £3.44 in the bank and no money on his electricity card”,

so he could not run the

“fridge where he kept his insulin.”

Those are appalling cases. The DWP has apparently said of Mr Wood:

“The coroner attributed Mr Wood’s eating disorder and food phobia as the likely cause of his death”

and Mr Clapson had not appealed or applied for a hardship payment. In the system set up to help such people, it may well be that unforeseen circumstances arose that led to the deaths of both those men.

The Government explain that the majority of claimants do not receive a sanction and that vulnerable claimants can receive hardship payments immediately if they are sanctioned. It seems to me that in the cases of both Mr Wood and Mr Clapson, there should have been immediate hardship payments, if not a suspension of the sanction in the first place.

Why do such decisions get made? First, it is because the state is not an instrument of compassion and kindness. In the end, it is an instrument of rule following and coercion. Something is going on in the system when the Minister’s and the Government’s good intent, which I do not doubt for a moment, goes through a set of rules, procedures, structures and bureaucracies that ultimately leads to some edge cases in which people may even die as a result of the system. Why does that happen?

The other question is why people working within the system allow these things to happen in front of them. I have observed that people with the least are often the most generous, and those who are the closest to human suffering usually feel the most for the people they see suffering, so why do these things happen? I am afraid that I found myself turning to the Milgram experiment, which gave a psychological explanation of why people obey authority. It is just a fact—this has been shown repeatedly—that people will obey the rules far beyond their personal morality regarding the consequences. I ask the Government to think about how the incentives for staff could be changed to allow their personal morality to flourish in the system, so that the small minority of cases that are clearly illogical and wrong never arise.

It has been pointed out that the vast majority of decisions are correct. In the 12 months to June 2014, decision makers considered 1.76 million JSA cases and imposed 850,000 sanctions or disentitlements, but fewer than 15% of those decisions were changed on reconsideration or appeal. Some 15% were changed after review and fewer than 1% after appeal, and that was often because the claimant brought forward new evidence. The problem I am most concerned about is how in the tiny minority of cases where a different decision really ought to have been made, it was not made.

[Debbie Abrahams]

The hon. Gentleman is making an interesting speech. He might not be aware of the Select Committee inquiry and the report we published earlier this year that clearly showed that the pressure on Jobcentre Plus advisers to get claimants off-flow—off the books—was such that it was distorting what should happen. He mentioned the rules in society, but the rules and culture being set up within the Department contribute to those tragic cases.

[Steve Baker]

I am grateful to the hon. Lady, because I was not aware of the report. I will be sure to dig it out after the debate and have a good look at it.

My point is that I do not doubt the Government’s good intent or that the overwhelming majority of the people working in the system do an extremely difficult job that is demanding both on their skills and talents and on their emotions; but I have to ask why it is that in a tiny minority of cases things go so badly wrong. The hon. Lady made a good point about the systems that are put in place. How do people end up feeling incentivised to sanction people whom they otherwise might not sanction? Why do they not notice that someone has a mental illness such as a food phobia and feel able to refer them to help elsewhere? How can that possibly be? I am absolutely convinced that every Member of this House believes not only that we should have an ultimate social safety net, but that there is one there that should be and largely is effective.

I will finish my speech with some obvious suggestions for the Government, which I feel sure they will have considered. First, it is obvious that everything should be clearly communicated to people, taking into account issues such as those the hon. Member for Sheffield Central (Paul Blomfield) mentioned, where someone cannot read. It is obvious that a person cannot be expected to comply with rules that have not been explained to them. The rules should be explained simply and people’s understanding of them confirmed. It is not enough sometimes just to send a letter—if people cannot cope with life, they will not open their correspondence. Secondly, how can we expand the capacity of individual members of staff to exercise their personal moral judgment in cases, so that we do not end up with a type 1 diabetic with no money to pay for the electricity to keep the fridge on for his insulin? I suggest that all staff should have a duty to inform claimants of their right to appeal and to apply for hardship payments.

I am absolutely sure that the Government intend to drive people into work, and that is right. If people can work, they should work; it is good for them and it is good for society. I am also absolutely sure that the Government intend to bring hope to people who are without it. I just hope very much that we can deal with all the issues around the edges and set up a system of welfare that works for everyone, all the time.

--- Later in debate ---

[Ian Lavery (Wansbeck) (Lab)]

It is a pleasure, as ever, to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on bringing to the House such an important issue, which concerns me greatly and can have a devastating impact on many people’s lives and on communities up and down the country, including my constituency.

I wonder why “sanction” is used, because the word means “approved”, and people are in fact being disapproved—that is just something to ponder. That sanction may be imposed if a claimant is deemed not to have complied with a condition for receiving the benefit in question. Since October 2012, according to House of Commons Library figures, 1.4 million people have been sanctioned. Sanctions give people a huge problem, as they have four weeks at the very least without any finance—four weeks without the means to live, to put bread on the table or to feed the kids. That is what sanctioning means, and it is unacceptable.

This morning, I had a look on the internet and I found a site that gives some incredible examples of how and why people are sanctioned, and it is worth noting one or two, if not more. The first is the case of an Army veteran who volunteered to sell poppies for the Royal British Legion at a local supermarket in memory of his fallen comrades. He had applied for lots of jobs, including one at the supermarket where he was selling the poppies, but without any success. He was sanctioned for four weeks.

Another fellow got a job interview that was at the same time as his jobcentre appointment, so he had to reschedule that appointment. He tried to do so, but the people at the jobcentre said he did not have a good enough reason for not being there, so he was sanctioned for four weeks. That is four weeks with no food and little electricity, suffering greatly—in 2014, in the sixth richest economy in the world.

In another example, somebody’s relative died during the night, and their partner rang the jobcentre the next day to ask whether they could come in on the following day. Their partner was told that yes, of course they could, but after they went in, they were written to. They replied, explaining the situation in writing, but were sanctioned for six weeks for not replying.

There is a fellow in my constituency who I have seen three times now; I have also mentioned his case in the House. He is 62 years old. He suffers greatly because of a heart condition and has to go to hospital regularly. He has been sanctioned again. The last time he came to see me he had been living on blackberries, apples and mushrooms from the local field. Is that what we want from sanctioning?

There are two ways to look at this issue. We could suggest that the Government did not mean those sorts of things to happen with sanctioning, and that those cases are one-offs. In that case, we might think they would put them right, but I am not sure they are inclined to do that. They see them as consequences, but I see those people as human beings—not as consequences or as collateral damage, but as human beings, like me and like everyone else in this Chamber. The other view is that the Government are aware of the consequences of sanctioning and are prepared to put up with them.

[Steve Baker]

The hon. Gentleman is making a powerful speech. He has given some extremely good reasons why people ought not to have been sanctioned. Under the system, if people give a good reason they should be exempt from sanctions, so has he considered why that system has broken down in those cases?

[Ian Lavery]

I have given lots of consideration and thought to sanctions. My view, which is not perhaps the view of the party that I am proud to represent, is that sanctions are inappropriate in this day and age, in any way, shape or form. I understand the point made by the hon. Member for Upper Bann (David Simpson) that there has to be something in place for the odd person who, as we all know, swings the lead. That does happen, but those people are then put at the top of the agenda, as if everybody was swinging the lead when they are not.

People do not want to be on benefits. People on benefits are not the wealthiest in this world—they are not living a life of luxury but are merely existing. As I have said before, that is not good enough—it really is not. That is not just because of Government policy, but because of a whole array of things. As politicians we have a duty to make sure that we look after the residents of this country.

I have given a few real examples. I have another one: there is a man in my constituency who was sanctioned only two weeks ago. He had got a job, but he was not going to start it for a fortnight; he did not look for any employment after he got it, because he had a job. He was sanctioned because he had not put enough work into finding a job, when he had already found one. That is absolute nonsense. If anyone thinks any different I would be incredibly surprised.

If we look at the class of people who are being impacted by the sanctions, it is the vulnerable and those who are desperate. They are not scroungers, as many people try to portray them—a lot of them are extremely desperate. As my hon. Friend the Member for Sheffield Central mentioned, a lot of people who are being sanctioned do not have anything to eat, so they are referred to the local food bank. Although the next point depends on the figures we have read and want to accept, there are in the region of 500,000 people attending food banks because they do not have enough food. These are families and single parents—people with kids—who have not got a scrap or a morsel on the table to feed themselves. No one here wants that to happen, so why is it happening?

We hear Ministers suggest that food banks are a great thing—we are all in this together and there is great community spirit in seeing people giving food to people who do not have anything. There is a factory in my constituency where, instead of paying proper wages, they are setting up a food bank. I am getting slightly off the issue now, Mr Howarth, but it is all connected to sanctioning and to the fact that the people at the very bottom are desperate and are looking merely to exist. My hon. Friend the Member for Sheffield Central said that the majority of people using food banks are there because of sanctions or delays to their benefits in one form or another. That needs to be looked at.

It is generally accepted that thousands of disabled people are being sanctioned. The group that really concerns me is the mentally ill—there are people who are mentally ill who are being sanctioned through no fault of their own. The hon. Member for Wycombe (Steve Baker) mentioned two prime examples. One was the 44-year-old man living in the Prime Minister’s constituency who starved to death because he had been sanctioned and did not know what the process was. That was in the Prime Minister’s backyard. There was also the case of the individual with type 1 diabetes. Those are just a couple of cases. I say to the Minister that we really need to have a proper look at who is being sanctioned and the consequences of sanctioning them.

I have been involved with the DWP work force for quite some time. Regardless of what might be said today, pressure is being put on people who work in DWP offices and deal with applications to ensure that their targets are as good as those of other offices. Basically, if their individual targets are not good enough, they are brought in to see the manager and are coerced into ensuring that their performances increase in line with those of other people in their section and other sections in other DWP and jobcentre offices. There are unofficial league tables. That will be denied, but I can prove that it is the case.

In concluding, I place on the record my thanks to the CAB in Wansbeck, which does a fantastic job. It is bursting at the seams with people with nowhere to go, no food to eat and no electricity when they get home. The people at the CAB do a fantastic job, although again they are being hit greatly by the cuts. Without them, a lot of people would suffer even more. I have one simple question for the Minister: is there ever any reason here in the UK for depriving people of a means to live?

Oral Answers to Questions

Steve Baker Excerpts

Monday 3rd November 2014 Commons Chamber

[Mr Harper]

I would point out to the hon. Lady that we have had some problems with the work capability assessment—[Hon. Members: “Ah!”] Before Opposition Members jeer, they should remember that this has happened under the provider that the previous Government appointed. We have taken action to sort the problems out, and Atos has agreed to exit from its contract. From 1 March next year, the new provider that I appointed last week, Maximus, will be taking over and will do a better job.

[Steve Baker (Wycombe) (Con)]

I welcome the Government’s decision to introduce a new provider. The Minister has just confirmed that it was the previous Government who appointed Atos. Can he explain how the new provision will be materially different from the outgoing arrangements?

[Mr Harper]

Yes, I can. I have taken a close interest in the contracting process, and we have learned from the previous experience. We are confident, given the bid that Maximus put together and the successful contracts that it has operated in Australia, Canada and the United States of America, that it will be able to deliver the assessments competently over the next three years.

Parliamentary Under-Secretary of State for Welfare Reform (Disabled People)

Steve Baker Excerpts

Tuesday 28th October 2014 Commons Chamber

[Mr Harper]

That is what Lord Freud did. Many people in the press and broadcast coverage acknowledged that he expressed himself in an unhelpful way, but that he raised a real issue. We need to do more to tackle it. My hon. Friend has a fair reading of the situation.

[Steve Baker (Wycombe) (Con)]

rose—

[Mr Graham Stuart]

rose—

Oral Answers to Questions

Steve Baker Excerpts

Monday 31st March 2014 Commons Chamber

[Esther McVey]

My hon. Friend is right. Of course we have to support schemes that work and of course we have to support businesses that want to get involved with our scheme. What is interesting is that we have got industry signed up to everything we do. All the big companies and all the small companies are signed up to what we want to do. The Opposition have come forward with a job guarantee, but not one business has signed up to that.

[Steve Baker (Wycombe) (Con)]

11. What recent assessment he has made of the effect of withdrawing crisis loans on homeless people wishing to raise rent in advance to secure housing.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Crisis loans have been withdrawn, but DWP budgeting loans are still available for rent in advance. There is also a range of support available through local authorities, including discretionary housing payments and local welfare provision, and, as I am sure my hon. Friend knows, there is a rent deposit scheme in his constituency administered by Wycombe district council.

[Steve Baker]

I am most grateful to the Minister for his answer. Unfortunately, Wycombe Homeless Connection has stated categorically that the withdrawal of crisis loans has made it much harder for homeless people to get into flats and homes. Will he write to me to tell me exactly what he expects from Wycombe district council, so that we can ensure it is properly guided? May I also point out that I would support the Department restricting certain benefits to the wealthiest pensioners if that would enable homeless people to get off the streets and into homes?

--- Later in debate ---

[Mike Penning]

As I said to the hon. Member for Cambridge (Dr Huppert), we need to make sure that we get it right as we roll out PIP. The hon. Lady can give me the details of the case if she would like. Thousands of cases have been handled correctly, and if there are mistakes we must ensure that they are addressed.

[Steve Baker (Wycombe) (Con)]

T9. What recent assessment has the Secretary of State made of the innovation fund in helping disadvantaged young people?

[Mr Duncan Smith]

The innovation fund, which started with £30 million put in by my Department, has helped to build up the concept for social impact bonds, which will help to invest in the sort of projects that my hon. Friend is talking about. The trials have been to help children from the ages of 14 to 16 to get remedial education and to be job-ready. That has been a huge success and we will in due course publish the figures, but it opens the marketplace to new money from private investors and trusts.

Pensions Bill

Steve Baker Excerpts

Monday 17th March 2014 Commons Chamber

[Steve Webb]

We have increased our earlier estimate of the number affected from about 20,000 to about 50,000. In 2010, the last Government reduced the scope of what used to be known as home responsibilities protection by reducing the upper age of children being cared for following the end of child benefit and not being covered by credits from 16 to 12, and that has slightly increased the number affected by our proposals. We also made a technical change in starting credits for 16 to 18-year-olds. Those two factors, combined with more recent data, give us an estimate of 50,000. So we have updated our estimates, but, as the hon. Lady says, we need to take the matter further. Although we do not accept the amendment, we do accept the need to build an evidence base, and I will explain in a moment how we plan to do that.

[Steve Baker (Wycombe) (Con)]

The Minister is demonstrating that for low-paid people the system is currently so complicated that they cannot tell whether or not it is worth working an extra hour. Will he make it simple for me? If the amendment were adopted, would low-paid people be worse off in that year while they were earning?

[Steve Webb]

The honest answer to the question is that because there is not enough information in the amendment, we do not know, but that might be so.

Let us take the example of someone with two jobs paying £75 a week, who does not currently pay national insurance. If the two sums were added together to make £150 and national insurance were levied on that basis, that person would then have to pay national insurance. Such people might turn out not to need the qualifying year, because they would already have 35 qualifying years. As the hon. Gentleman says, a set of people could be worse off if the amendment were interpreted to mean what we assume that it means. It may merely mean opting in for a credit, which would be a free entitlement and would therefore constitute pure gain, but in that case there would be a different unfairness. We would have people who did a single job at £150 a week who had to pay NI and somebody else who had two jobs paying £75 a week who did not have to pay NI but got a free year of national insurance. My hon. Friend highlights an important point, and I am grateful to him.

Oral Answers to Questions

Steve Baker Excerpts

Monday 24th February 2014 Commons Chamber

[Mr Duncan Smith]

I have two points for the right hon. Gentleman. First, he, his party and others have deliberately set out to politicise the issue of food banks—[Interruption.] Well, those are not my words. The person who runs the Oxford food bank has said:

“I think this whole debate has become hopelessly politicised.”

Food banks do a good service, but they have been much in the news. People know they are free. They know about them and they will ask social workers to refer them. It would be wrong to pretend that the mass of publicity has not also been a driver in their increased use. The Opposition, notwithstanding the fact that under them the number of food banks increased tenfold, are trying to make a political issue out of this. They have done no service to those who need help and support and no service to those who run the food banks.

[Steve Baker (Wycombe) (Con)]

T1. If he will make a statement on his departmental responsibilities.

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

Today I welcome the latest statistics showing the growth in employment over the past year. Against a rise of 54,000 foreign nationals at work, 360,000 more UK nationals are employed, a far better record than under the previous Government. With new measures to tighten up on immigration still further, such as the minimum earnings threshold announced last week, we are ensuring that those who want to work and who will work hard and play by the rules will see the benefits of Britain’s growth.

[Steve Baker]

The bishops have said that there is an “acute moral imperative” to act on welfare, and I agree, because that has been clear since at least 2006, when the Centre for Social Justice published its report, “Breakdown Britain”. Will the Secretary of State confirm that he is still on a moral mission to break those cycles of deprivation that lead to entrenched poverty so that people can live lives of hope and fulfilment?

[Mr Duncan Smith]

I am determined, as I have been since I arrived as Secretary of State, to improve the welfare system so that it supports people back into positive lifestyles, and that is what we are doing. More people have moved from economic inactivity, which is now at its lowest levels, back into work. There are now fewer workless households than there were on our arrival. When we came into government, one in 20—a fifth—of all households were without work; that figure has now reduced for the first time in 30 years.

Food Banks

Steve Baker Excerpts

Wednesday 18th December 2013 Commons Chamber

[Steve Baker (Wycombe) (Con)]

The quality and quantity of welfare produced by the state has not been good enough for a very long time. It is astonishing and shaming that the welfare state can tax and spend so much, and yet leave people hungry. Some 12,000 children in Buckinghamshire live in income poverty, and one in five children in Wycombe go to bed hungry—that increases to one in three in some parts of my constituency. It is a scandalous indictment of the safety net that is the welfare state that this happens. But I am proud of the One Can Trust, run by Sarah Mordaunt, Kate Vale and more than 100 volunteers in Wycombe, which steps in with emergency food when the state fails.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

A mistaken impression has been created in this debate that all that food banks do is distribute emergency food. What they actually do is give financial advice and debt advice to people who have got into difficult situations—emergency food is only part of what they do.

[Steve Baker]

I am grateful to the right hon. Gentleman for that, and indeed the One Can Trust also provides recipes which help people to get through and use that food effectively. The One Can Trust has delivered 2,859 parcels since March 2012, reaching 3,182 adults and more than 2,000 children—without the trust, poverty in Wycombe would be truly desperate. It operates five pick-up centres, has eight sessions at which people can pick up food and usually delivers within 24 hours. The trust enjoys support from the Big Yellow Self Storage Company, and has matched funding from Barclays and Santander. Warm drinks are provided to volunteers by Starbucks, and the Eden shopping centre provides parking for volunteers. This is an astonishing exercise of social power, and I am very proud of what the trust is doing, particularly because of the story of one young boy.

This is a young boy who about 33 years ago, at the age of eight or nine, bounced down the stairs because his loving father called him down for his tea. This boy bounced joyfully down the stairs but thought it was funny, in his youthfulness and his childishness, to poke the fried egg and say, “Ugh, what’s that?” At that point, his father, with his great working man’s hands, picked up that plate of food and slung it straight in the swing bin, bellowing, “All right, we will both go hungry.” That was my father, a working man who had reached the end of the money and the end of the food. I did not mean to wound my father then, nor do I mean to wound him now, because he loved me and he loves me still. My father did absolutely everything he could, but where was the welfare state? It was not there for him, because it did not know what to do for an independent, self-employed man who had run out of work.

Unfortunately, that went on and on, to and fro, in the legacy of the previous Government; it was tough for a self-employed builder. My father coped by finding further work. My mother took on two and even three tough jobs. I saw her get arthritis in her hands, ageing her early, all because there was no food. What happened eventually is, of course, that they divorced, and my mother went on to live with a man who could at least put food on the table. So I certainly know the consequences—I live with them today—of having too little food in a home.

I am therefore proud of the One Can Trust, because in times of crisis it feeds families. I like to believe that had food been available in my home when I was a child, not only would my father not have had to go hungry, but perhaps my mother would not have had to take on those jobs, perhaps they would not have divorced and perhaps a range of things that ought not to have happened but which did would never have taken place. I am very proud indeed that at this time people across our nation are stepping up where the state is falling that little short. However, I must ask: what is the cause of the crisis? The cause of this crisis—

[Susan Elan Jones (Clwyd South) (Lab)]

Will the hon. Gentleman give way?

[Steve Baker]

I will just make this point. The cause of this crisis has been pretending that there is some magic wand: that prices can be declared to be lower; that wages can be declared to be higher; and that if only Labour Members were on the Government Benches the state would be responsive and in times of crisis would quickly leap in. That is not true now, it was not true 33 years ago and it will not be true in the future. It is essential that things such as food banks step in, but I am encouraged by things such as the community store, which go further and make this kind of mutuality and co-operative approach—this charitable endeavour—much more sustainable by making inexpensive food available to the working poor.

I will leave the final word to the chairman of One Can Trust, David Rooke. He has said:

“David Cameron has got it exactly right. Society needs to be empowered to step up. That’s what The One Can Trust is all about.”

I am proud of it.

--- Later in debate ---

[Mr Syms]

I will not, because my time is limited. I have already taken two interventions.

I am sure that, as the economy recovers, living standards will recover as well, but there is a short-term problem and a long-term problem. The short-term problem is the need for us to recover from the recession, which, as we all know, will take several years. The long-term problem is that, while those in the western world who have benefited from globalisation—particularly people at the higher income scale working in, for instance, financial services—can secure large rewards, many people in ordinary jobs have not managed to increase their living standards. That is a feature of the United States economy and it may be a feature of ours, which is why the Government are interested in apprenticeships and are trying to make our education system far more robust and resilient.

Statistics issued by the OECD the other day demonstrated the importance of ensuring that people are proficient in English and maths and that we have a skilled work force, because that enables those people to generate income and higher living standards. I think that the Government have the right instincts and the right answers, but the fact is that it will take a long time to sort the problem out.

[Steve Baker]

Given that the money supply was allowed to triple during the 13 years when Labour was in power, it should not surprise us if those nearest to the source of the new money got rich while everyone else went backwards.

[Mr Syms]

There is an argument to be had about the impact of that. Certainly it helped people with assets rather than those without assets. Nevertheless, I think that progress is being made, and that this morning’s unemployment figures represent a good staging post.

We need to do much more to educate and skill our work force so that we can compete in the global race and improve everyone’s living standards. All the statistics show that some of the more equal societies in Scandinavia are happier societies. What any Government must do in this country is ensure that, as the economy recovers, all sections of the community can earn a living, and can enjoy rising living standards.

Budget Resolutions and Economic Situation

Steve Baker Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr Byrne]

The words of the chief economist Olivier Blanchard are clear: the Government are on the wrong fiscal path, and we know that the Business Secretary agrees with us.

[Steve Baker (Wycombe) (Con)]

The right hon. Gentleman is telling a tale of catastrophe. I do not doubt that the country is awash with suffering, but may I draw his attention to UK industrial production, which is at a 20-year low? The point is that it collapsed under his watch: UK industrial production collapsed to a 20-year low under his watch. Will he not just admit that it was his Government who dropped us into this mess?

[Mr Byrne]

We have unemployment rising and debt that is £245 billion higher than forecast. The hon. Gentleman should be ashamed of that record.

We needed a Budget to get unemployment down and we did not get one. I hoped to see a Budget that delivered for those who are out of work, but what did we get instead? The conclusion of the OBR was clear that the impact of the Budget on growth would be so significant that it would amount to precisely zero. That is what the Secretary of State has managed to negotiate from the Chancellor. He has been turned over, stitched up and done like a kipper yet again.

Any sensible Secretary of State, faced with a collapsing Work programme and rising unemployment, would surely ask for more help today, not tomorrow. People out of work need help today, not in the years to come. What did we see instead? The OBR has weighed up the efforts of the Secretary of State and the Chancellor and it has concluded that what is in hand is going so well that unemployment will not go down next year, but up—and that is against the projections set out in the 2010 Budget. Next year the International Labour Organisation measure of unemployment is expected to rise from 7.9% to 8%, and the claimant count is set to rise by another 50,000. What is even worse is that the OBR says that the welfare bill will not go down either—it will go up, including for housing benefit. Spending on social security benefits will now be £21 billion higher than the Chancellor first planned.

--- Later in debate ---

[Steve Baker (Wycombe) (Con)]

I am glad to follow the hon. Member for Glasgow North East (Mr Bain), who talked about bad economics, which will be the central theme of my speech. He also asked why there has not been growth. I refer him to the report “Thinking the Unthinkable”, which has the unfortunate subtitle “Project Armageddon—the final report” by Tullett Prebon. It explains that three of the UK’s eight largest industries—real estate, financial services and construction—accounting for 39% of the economy, are incapable of growth now that net private borrowing has evaporated.

The report goes on to say that another three of the top sectors—health, education and public administration, plus defence—account for a further 19% and cannot expand now that growth in public spending is a thing of the past. That means that 58% of the economy is ex growth, a figure that could rise to 70% if, as seems probable, growth in retailing is precluded by falling real consumer incomes. That is why there is no growth, and it is important to understand properly why we are in this mess.

The Budget was one of two halves. I certainly welcome all the tax cuts—the £10,000 personal allowance and so on. I am sure that my constituents will be glad to know that fuel duty will be 13p lower per litre than it would have been under Labour’s plans. However, I want to talk mostly about credit market interventions and monetary activism. I am particularly reminded of the curious fact that the general disinclination to explain the past boom by monetary factors has been quickly replaced by an even greater readiness to hold the current working of our monetary organisation exclusively responsible for our current plight.

The same stabilisers who believed that nothing was wrong with the boom, and that it might last indefinitely because prices did not rise, now believe that everything could be set right again if only we would use the weapons of monetary policy to prevent prices from falling. The same superficial view sees no other harmful effect of a credit expansion but the rise of a price level now has it that our only difficulty is a fall in the price level caused by credit contraction. I thoroughly recommend the preface to “Monetary Theory and the Trade Cycle”, published in 1932, since which little has changed when it comes to the error of the monetary stabilisers.

We need to ask ourselves what is holding the economy back. I refer particularly to feedback from Stewart Linford chair makers in my constituency. Stewart Linford is a great man, and chair making is what made High Wycombe a great town. As costs rose in Britain, Stewart remained competitive by increasing the quality of his product and exporting. Yesterday, he said to me:

“What’s holding me back isn’t red tape. It’s not taxation. It’s not even foreign competition. It’s HSBC bank holding our money against an interest rate swap we didn’t need.”

That swap was originally sold to him by RBS. I fully support the Government’s efforts to change the culture of banking. Previously, they have talked about the need for a responsibility revolution and it is firms such as Stewart Linford’s in my constituency that demonstrate the great David and Goliath battle that is going on.

Why is that battle going on? If we look at debt in the past 10 or 13 years, we find that the big story of banking and money is a great transformation in borrowing. In about 2002-03, under the previous Government, mortgage lending rose substantially. Eventually, the banking system blew itself up and mortgage lending collapsed and deficit spending by the Government took over.

If we look at the money supply back to 1997, we find that under the previous Government it tripled. In 1997, M4 was £693 billion; by 2010, it had risen to £2.2 trillion before stagnating. That chart, if well understood, is remarkable. It tells us that there was an accelerating rush to destruction in debt. Shortly, we will realise that while we were originally told that this was a banking crisis and then that it was a debt crisis, we will have to face up to the reality that what we use as money is debt—debt that was loaned into existence in response to incentives created by central bankers lowering interest rates.

[Mr Kevan Jones (North Durham) (Lab)]

Is it not a fact that when the Labour Government came into office in 1997, debt stood at 42% of GDP? When the banking crisis hit in 2008, it was down to 35%. The reason for its increasing was the fact that we had to bail out the banks and carry out the economic stimulus, which made the economy grow—all that, including the spending targets, was supported by the hon. Gentleman’s party when in opposition.

[Steve Baker]

I am grateful to the hon. Gentleman. I came here to speak today because I expected to have 20 to 30 minutes, and if I had, I would have given him a full explanation. In many ways, I am trying to help him. If he looked at price inflation going back to 1750, he would discover that for the whole of my lifetime, since 1971, we have been living in an inflationary era unprecedented in industrial times. That is why the banking system was broken. If money is pumped into the economy at that rate, that is bound to create asset price bubbles. An independent Bank of England therefore found itself controlling the money supply by looking at price inflation without looking at house prices, which were rushing away. That was bound to end in catastrophe.

Let me explain the problem with the Chancellor’s policy on credit market intervention. When we look across the range of things that were intended, we can see that there is a clear objective, which is to restart the process of credit expansion—credit creation—into the economy. In the short term, that is indeed bound to create an increase in trade and housing and to create a small housing boom. The problem is the damage it does to the rest of the economy. If I had more time, I would talk at some length about the problem being that for far too long people have persisted in believing that there is a simple mechanical linkage between aggregate demand and total employment, but unfortunately that is not true. What matters is the distribution of employment and the use of capital across the structure of the economy and through time.

[Jane Ellison]

I am enjoying my hon. Friend’s argument and would like to hear him expand it further to talk about the effect of the limit on the amount of time that this measure is being given.

[Steve Baker]

I am grateful to my hon. Friend. Time is crucial not only in this debate but in the economy.

When one looks at Mark Carney’s speech of February last year and at what the Government are doing, it is pretty clear what is going to be done. Inflationary expectations will be anchored to the 2% target, and the Bank will be given a more relaxed reporting regime. It is clear from Mark Carney’s remarks that he intends to use monetary instruments. Let us face it: this is about money creation. He is going to increase the supply of money in order to pump up the GDP figure and so manipulate people’s expectations. It is hoped that by manipulating people’s expectations the economy will come back just in time to deal with the money creation process and get inflation back on target. The whole thing is predicated on the Bank of England’s ability to manipulate the expectations of the 65 million people in the United Kingdom.

Somebody such as Stewart Linford, who has to live in the moment as an entrepreneur, keep employing people, and keep creating and exporting wonderful furniture, deserves better than to be deliberately and systematically misled by a big player such as the Bank of England knowingly manipulating expectations through monetary policy in order to produce particular outcomes—if it is lucky and expectations of inflation do not get out of control. Last time I spoke in the Budget debate, I explained that if the Bank loses control of inflationary expectations, the bond market bubble could burst and that could then lead to a very fast rise in interest rates, which it might then have to combat by further printing money.

Government Members know me well for always carrying on my person 1 ounce of fine silver and a $100 trillion dollar note from Zimbabwe. In the end, our society is based on money. One side of every transaction is money. If there is something wrong with money, there is something wrong with the entire economy. Right now, the reason we are in this mess is that we do not have good money—we have bad money. One can hold bad money—bad politics—in one’s hand. If we get into a position where we just borrow, borrow and borrow, with no ability to repay, creating credit out of thin air, as was done in 13 years—[Interruption.] The hon. Member for North Durham (Mr Jones) is smiling; I really do not know why, because 65 million people in this country are having a miserable time. [Interruption.] I was not in Parliament at that time. If he had listened to what I have said and read what I have written throughout all my time, he would find that I have consistently advocated this point: that the problem with the Keynesians and the monetarists is that they neglect the importance of time and the structure of capital. That is what is going on again, and it will end badly.