The Economy and Living Standards

Thérèse Coffey Excerpts

Thursday 12th June 2014 Commons Chamber

[Ed Balls]

I am very happy to say to the hon. Gentleman that not having transitional controls in 2004 was a mistake, and one that we all still deal with the consequences of. The question is whether we should have allies in Europe whom we can persuade to do things better for the future or walk away from our European partners and find that we are treated with disdain in the decision-making halls of Europe. That is the real question for statesmanship and politics in our country at the moment.

Our view on that question is clear. We say that there is no future for Britain in walking away from the European Union. It is the biggest single market for the companies, regions and countries of the United Kingdom. We have to reform Europe to make it work better for Britain, but we are much more likely to win the arguments if we are fully engaged, rather than having one foot out of the door.

The Prime Minister and the Chancellor used to agree with that argument. They came though the Lobby with us in 2011 to oppose an arbitrary timetable for an EU referendum. Then, they changed their minds. The Prime Minister flounced out of a summit and decided to appease Tory Back Benchers by performing a U-turn. In the memorable words of Lord Heseltine,

“To commit to a referendum about a negotiation that hasn’t begun, on a timescale you cannot predict, on an outcome that’s unknown, where Britain’s appeal as an inward investment market would be the centre of the debate, seems to me like an unnecessary gamble.”

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

On a point of order, Madam Deputy Speaker. Mr Speaker was very clear in his guidance earlier that we should speak to the amendment. I am struggling to find in the amendment any mention of a European referendum.

[Madam Deputy Speaker (Dawn Primarolo)]

Fortunately, that is a matter for me, and not the hon. Lady. The clear argument that is being advanced is about the importance of that matter to the economy. As long as the right hon. Gentleman stays on that point, he is in order.

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[Margaret Beckett (Derby South) (Lab)]

The kindest thing that can be said about this Queen’s Speech is that it is simply inadequate to address the problems which, sadly, our country and its people still face, and about which it is evident that the Government parties are still in denial.

The Chancellor said in his speech that he had made the mistake of reading the record before coming to the House. I made the same mistake: I read the record of the Chancellor’s Budget speech on 22 June 2010. He said today that what we must now do is stick to our long-term economic plan, which is what Government Members continually say—they say it as if saying it were as good as having one—but today’s economy does not reflect the long-term economic plan that the Chancellor set out in 2010.

The Chancellor said today that the Government were “holding out the prospect”. Well, they held it out then. According to that plan, by this year debt was supposed to have fallen as a percentage of GDP, and the structural current deficit should have been eliminated. The public sector borrowing requirement should be down to £37 billion, falling to £20 billion next year. Growth this year was then projected to be 2.7%, but the plan was for growth of well over 2% in 2011, 2012 and 2013. As we all know, that simply did not happen. In other words, far from sticking to a long-term plan that is now delivering, which the Chancellor described as the “inescapable truth”, the inescapable truth is that Government Members have seen their plan and their forecasts fall to pieces around their ears.

[Dr Thérèse Coffey]

I do not recognise the picture that the right hon. Lady is painting, given the increased number of jobs and other improvements. Does she recall the statement by the Office for Budget Responsibility that the recession was even deeper than it had seemed to be when first analysed? That means that it has been even more difficult for us to fill the hole that was left by Labour and to achieve growth. That is finally under way, but the job is not yet done.

[Margaret Beckett]

I think the hon. Lady will find that the OBR’s argument does not account for the total discrepancy between what the Chancellor said would happen and what has actually happened. We have had the nonsense of Government Members claiming that we were wrong to say that their policies might curtail growth, when that is precisely what happened. As for the OBR, if the Chancellor is so proud of it—and I think that he has created a good institution—why does he not allow it to scrutinise our plans, rather than making up his own version?

The Queen’s Speech demonstrates the Government’s utter failure to address the difficulties that people face. The eventual return to growth has been as welcome as it was long overdue, but it is seriously alarming that Government Members do not seem to recognise the great difficulties that still confront so many. Only yesterday, we learned that Ofgem had written to the energy companies highlighting the fall in wholesale prices over the last 18 months or so, and asking them nicely if they ever intended to pass it on to their customers. Where is the legislative framework to underpin action to tackle the energy companies’ disregard for the interests of their customers?

Where are the proposals for reform of the banks, which demonstrate almost daily that for them too it is back to business as before, bonuses and all? Why is there nothing in the Queen’s Speech to address either the decline in housing starts or the increasing pressure and insecurity experienced by many tenants? And why, oh why, have no steps been taken to ease the increasingly intolerable pressures on the many people who have been forced by circumstance to rely on benefits to make ends meet? So many of those people are in work, albeit work that is low paid and insecure.

People with disabilities, in particular, are still being hit by the iniquitous bedroom tax. The Government must have been advised that people would not be able to move because there was not enough alternative accommodation. During the same week in which they introduced that tax, they cut taxes for those who were already the wealthiest.

The most noticeable aspects of the Queen’s Speech are the measures that are not in it and should be. Some of its proposals merit a cautious welcome, although as yet, in many instances, we have only the headlines. However, I want to single out the issue of pensions. I am pleased that the Chancellor mentioned it. I urge caution on all Members, but especially Opposition Members, because in this regard the Conservative party has form. Annuities have long caused concern, although an answer has not been easy to find, but the more that I listened to the Chancellor talking about giving people control of their own money and about the exciting new freedoms that were on offer—which, according to him, were heralding a revolution—the more uncomfortable I became, because, like the Conservative party, I have been here before.

It was in identical terms that the 1980s Tory Government sold so-called pension reforms to an unsuspecting public. That resulted in one of the greatest pension scandals of all time, the mis-selling of personal pensions. Shamelessly misleading advertising implied that if people left existing pension schemes and put their savings in the hands of the financial services experts, they could miraculously put less in and get more out. People were encouraged by the then Government to gamble with their retirement savings without their employers having to contribute, and without even the safety net of pooling their own risk—and it all ended in tears. I heard what the Chancellor said about the assurances that he had given and about whom he had consulted, and I advise my right hon. and hon. Friends to consider what he said in great detail. We have asked the Government to publish in full the assessment of the costs and risks of their proposal, but so far they have refused to do so. I hope that they soon will.

I have noticed that there is an incentive for the Government in this proposal, over and above the well-being of pensioners. The Chancellor stands to gain a few billions of pounds in extra tax. So there is something in it for the Treasury—probably rather more than there is for pensioners, in the short term—and the most careful scrutiny of the details will be required.

Over the past few days—and, today, in the excellent speech with which he opened the debate—the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has drawn attention to our proposals to raise the minimum wage and encourage the use of the living wage so that work can be made to pay; to tackle the abuses of wage and employment law that enable employers to use immigrant labour to undercut the wages and conditions of others; to set up a British investment bank and regional banks to support small businesses, which—as was pointed out earlier—our existing banks are still failing to do; and to address the crises in housing and health care. We would have seen all those proposals in a Labour Queen’s Speech. There is much along those lines that the House and the Government should and could be doing, but clearly it will not be done under this Administration.

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[Stewart Hosie (Dundee East) (SNP)]

The Queen’s Speech said that the stated objective of this legislative programme was to build a stronger economy. It said that it was to strengthen the economy. The Prime Minister used many of the same phrases in his speech last week, and spoke again, as the Chancellor did today, about this fabled long-term economic plan, which is a bit like a fabled unicorn: everybody knows what is meant, but no one has ever seen one. This long-term economic plan is much the same. Anyone with any common sense would assume that a long-term economic plan was predicated on substantial above-trend growth, yet the word “growth” did not appear once in the Queen’s Speech. Indeed, the Prime Minister only uttered it twice: once to chide the leader of the Labour party, not unreasonably, and another time in response to an intervention from his own side. Why the coyness? Where is the plan for real growth in the economy? When one looks at what is proposed in this legislative programme and at what has come before, particularly in the Budget, one can see that, at its heart, this is still an austerity Government. Yes, there are some helpful Bills, such as the national insurance contributions Bill and, potentially, the small business, enterprise and employment Bill, but there is nothing that anyone can point to and say, “That will make a real difference in delivering growth in the economy.” Perhaps the Government think that mining tunnels under people’s homes without permission to carry fracked gas qualifies as a growth measure.

Why are the Government so coy? Why are they giving us this convoluted formulation of words about long-term plans and a focus on a very narrow, although helpful, policy about national insurance? It is because they have failed and they know it. Nothing the Government said last week or this week changes the underlying direction of travel or the underlying shape of the economy as described to us in the Red Book only a few months ago.

[Dr Thérèse Coffey]

I am really interested in the hon. Gentleman’s contribution. The International Monetary Fund has confirmed that we are the fastest growing country in the G7. We have seen growth in all sectors of the economy in the past year. That must be welcomed. There is no unicorn. The only unicorn is the Scottish National party’s claims that Scotland will be better off out of the UK.

[Stewart Hosie]

That is because we would be. Although I welcome the limited growth that we have had, the actions taken by this Government since the last election stifled and strangled the recovery for some years, and that is the underlying problem with their plan.

Let me take Scotland as an example. What the Government are proposing—this was before the Budget—is an 11% fiscal expenditure cut, a 27% cut in capital and a real terms 9.9% cut in the overall budget. This year’s Budget made that position worse, and that applies to spending Departments throughout the UK. Nothing in the Queen’s Speech changes that. Nor does it change the fact that the Chancellor told us that for 2013-14, the current account deficit would be down to 2.3% of GDP, borrowing would be reduced to £60 billion and the net debt would be at 70% of GDP. He was forced to tell us this year that the current account deficit was higher, borrowing was actually £95.5 billion and the net debt was 75% of GDP. The short-term metrics were wrong.

What about the big targets the Chancellor set for himself? They were that the debt would begin to fall as a share of GDP by this year, that the current account would be in balance next year and that the same year borrowing would be down to £20 billion. Presumably, that is what the Prime Minister meant by financial security. Of course, as we know—nothing in the Queen’s Speech changes this—the debt will not fall until 2016-17, two years late. The current account will not be back in the black until 2017-18, two years late. Public sector net borrowing in 2015-16 will not be £20 billion but £68 billion, three and a half times higher.

Although the limited recovery we have seen in the past year is of course to be welcomed—this directly answers the question asked by the hon. Member for Suffolk Coastal (Dr Coffey)—not a single one of the Chancellor’s key targets has been met and his actions, as this is an austerity Government, stifled growth and delayed recovery year on year. No amount of convoluted formulations or warm words about long-term economic plans can change that.

What are the Government planning? It is there in black and white in the Red Book, on page 20 for anybody who wants to have a look. There will be a discretionary consolidation—that is cuts, and tax rises—next year to the tune of £126 billion. That is £2,000 per person in tax rises and cuts. That is what they are planning and that is what they have signed up to.

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[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a great honour to contribute to this debate on the Gracious Speech. Some Members have made their final contribution to such a debate, certainly in this House, but I am sure that some will reappear in the other place.

It is fair to say that the Queen’s Speech is an attempt to build on the Government’s good efforts over four years in order to make our country continue its journey towards a fairer society with a long-term economic plan. Unemployment, long-term unemployment and youth unemployment are all down. That is far from the misery that was predicted several years ago. Nevertheless, I am sure that the Chancellor would be the first to admit that we have not tackled the deficit as quickly as we would have liked. Of course the issue is that, as the Office for Budget Responsibility pointed out, the recession was deeper than was initially realised, and therefore it is taking longer to get out of.

Given the amendment we are considering and the guidance given earlier, I cannot talk about some of the Bills in the Queen’s Speech, but there is one that I think will be iconic and will I am sure receive the support of the whole House: the Modern Slavery Bill. I will keep to the guidance, but it is important that instead of having just a budget debate, we continue to consider the ideas that we will all contribute to in the next 10 months.

Earlier, the hon. Member for Huddersfield (Mr Sheerman) put a question to the Chancellor, to which my right hon. Friend replied, in which he rightly pointed out that productivity is not recovering. As the Chancellor said, however, to some extent choices have to be made. It is fair to say that keeping people in work—indeed, having more people in work—is probably a better choice at this moment in time, which will then allow us to focus on the productivity challenge that all of us in this country need to address in order to keep our economic plan going. However, that challenge is not unique to our country, which is why we continue to seek reform at the European Union level.

The Bills that we have put forward include the small business Bill. One of the things that the Government have been trying to do is to remove some of the barriers to growth, while enabling some of the activities that they would like to see. We will see that with export finance, and with finance being targeted at small businesses and the help in that sector. There is also the important measure adding a deregulation target—a commendable element that I think we will all enjoy passing.

Of course, there are important measures to help people with work and the cost of child care; child care payments will be addressed in the Child Care Payments Bill. The National Insurance Contributions Bill is really important. I am sure that many Members of this House have examples of companies having done the wrong thing, and we will set that right, just as we will on issues such as zero-hours contracts and removing the exclusivity clause.

On the infrastructure Bill, I welcome some of the plans related to housing. I give a cautious welcome to the Nationally Significant Infrastructure Projects regime, with Sizewell C hopefully being built in my constituency. However, I want to ensure that the voice of the community is still part of that NSIP regime, as it should be.

There is no doubt that the economic plan is working. In my own constituency, unemployment is now at 604, which is the lowest it has been since December 2007. These are all good things, but the journey is only halfway completed. That is why I am confident that the British public, having seen five good years of government, will make the right decision next May and allow us to propose another Queen’s Speech in 12 months’ time.