Amendment of the Law

Tobias Ellwood Excerpts

Tuesday 29th March 2011 Commons Chamber

[Mr Byrne]

Of course, and the hon. Gentleman will also recognise that, despite the fact that we are some way out of the recession, today’s figures also confirmed that in the last quarter for which records are available, the economy shrank. I am not sure that that is a record of which he can be proud.

In the circumstances, I would have thought that the House could expect to hear rather more from the Secretary of State about what the Budget would do to get people back into work. The Office for Budget Responsibility is well aware of the Secretary of State’s Work programme and the Chancellor’s tax breaks on offer for business, yet its conclusion was the cold fact that unemployment will continue to rise. Every time the Chancellor stands up at the Despatch Box to deliver a Budget, he revises down his forecast for growth and revises up his estimate for the number of unemployed people in our country. He is costing this country a fortune.

What, then, did this Budget offer for jobs? Incredibly, it said that by the first quarter of 2013, unemployment would be 200,000 higher than was forecast just last October. What a triumph! Under the circumstances, we could have expected a rather bigger push from the Secretary of State and his right hon. Friend the Chancellor to get people back to work. After all, his Minister for the unemployed, the right hon. Member for Epsom and Ewell, told the Select Committee on Work and Pensions on 14 March:

“If there was a very substantial change in the labour market, one way or the other, frankly, that is the kind of circumstance in which we might need to revisit some of the assumptions.”

Well, 200,000 more people on the dole sounds like rather a substantial change to me.

What is the Government’s response? Some £20 million for work experience. This morning I had a look at the Secretary of State’s accounts for January. It would appear that his new work placement scheme, which was so proudly trumpeted this morning, will cost less than his Department spends on stationery every year. At the very least, we would have expected more resources for the Work programme. The Prime Minister is fond of telling us that the Work programme is

“the biggest back-to-work scheme this country has seen since the 1930s.”—[Official Report, 16 February 2011; Vol. 523, c. 951.]

In fact, as the BBC has shown, there are 250,000 fewer places on it than Labour had last year, when unemployment was lower. The association of bidders for the Work programme now has so much confidence in the Secretary of State’s plans that it says:

“the design of the Work Programme is fraught with risks which may impact significantly on the number of unemployed people who can benefit from it”!

That is hardly a vote of confidence. When my hon. Friend the Member for Westminster North (Ms Buck) asked the Secretary of State how much extra he had received from the Treasury to get people back to work, he refused to give her a straight answer, and we all know what that means: that he asked for nothing and he got nothing. With unemployment now forecast to rise, the very least that we could expect from this Secretary of State is to stand up for his Department, fight his corner and get some extra help to get this country back to work.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

The right hon. Gentleman understands that whoever had won the last election would have had to introduce some tough measures, and we are experiencing those now. Bearing in mind that all other recessions have seen unemployment rising, is he genuinely telling the House that if Labour had won the last general election, unemployment would be continuing to fall today?

[Mr Byrne]

Absolutely. We expected and anticipated falling unemployment, because what we were not doing was cutting so much so fast, or damaging the rate of growth in this country.

[Mr Ellwood]

The right hon. Gentleman is being very generous in giving way, but this is an important point. Labour was in denial before the election about introducing major measures to bring the economy under control. Labour now knows—as we have known—that important measures needed to be introduced after the election. That is what is causing the difficulties now. He is now saying, “Yes, you’d be able to bring those measures in without having any effect on employment.” That is completely wrong; he misleads the House.

[Mr Byrne]

Well, let us go through it, shall we? The deficit plan that we put in place would have involved £57 billion-worth of discretionary action—[Interruption.] Will the Secretary of State just pause for a moment? I know that he has read all 40 pages of chapter 6 of the Budget that was published in March last year, but let me just remind him of their contents: £57 billion-worth of discretionary action; £19 billion-worth of tax rises; and £38 billion of cuts, £18 billion of which would have fallen on capital, and £20 billion of which would have fallen on current expenditure, of which £12 billion would have fallen in Whitehall, £5 billion would have fallen on lower priority projects and £3 billion would have been achieved through a pay freeze and asking public sector workers to—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I just want to clarify that the hon. Member for Bournemouth East (Mr Ellwood) meant that the right hon. Gentleman was inadvertently misleading the House.

[Mr Ellwood]

Of course.

[Mr Deputy Speaker]

Thank you.

--- Later in debate ---

[Mr Tobias Ellwood (Bournemouth East) (Con)]

It is a pleasure to participate in this debate, and I am pleased to see so many hon. Members who also want to participate. I have done my best to speak in other Budget debates, and I am under no illusions that this speech will be read or listened to any more than my previous contributions.

This year’s debate has a different atmosphere from previous years. In 2007 and 2008, there was a sense of denial. In 2009, there was a period of inertia as we waited for whoever was going to win the general election—either Labour or Conservative—to grasp the nettle and make the decisions that the country needed. Finally, in 2010, we saw the launch of the long overdue plan. It is only this year, 2011, that we are really experiencing that pain, which has been debated at length today and in the past four days.

The state of the economy clearly dominates our lives. It is complex: like the cockpit of a 747, there are many buttons, switches and levers. Knowing when to pull a lever and for how long affects the overall performance, the direction of travel and the comfort—or, indeed, the displeasure—of the passengers, who rely on a duty of care. There are four principal levers that we have for the economy: fiscal policy, which determines the management of our deficit and our debt; monetary policy and interest rates, which are now set independently; the regulation of the financial sector and the relationship between the Bank of England, the Treasury, and the financial and business sectors; and finally, micro-economic policies—how we approach education, how to get a competitive tax system, and so on. We need to decide how to use all those levers at this delicate time, as we try to mend the economy. We can be dedicated and vigilant pilots, but we will have our work cut out if we are handed a machine that has been battered and bruised by the previous owner. It is exactly the same with the economy.

We have had five days of debate on the provisions in the Red Book. I will not go into the details of all the issues that have been raised. At the weekend, as I was thinking about what to say in my speech today, I watched the rally that was taking place in Hyde park. I saw all the banners; it was like a summer camp for the unions, like a revival for them as they all called for more money for their own area. They wanted more money for pensioners, for health, for education and so on, but no one said where the money was going to come from or how it was going to be generated, and we have heard no such explanation from Opposition Front Benchers today.

The rally said a lot about Labour, in that the Leader of the Opposition is now firmly embedding himself with the unions. Incidentally, I think he was unwise to make comparisons with previous struggles, such as those of the suffragettes or the US civil rights movement, or with the fight against apartheid. It would also have been nice to hear a bit of mea culpa, a bit of recognition that Labour was partly to blame for what is going on.

[Frank Dobson (Holborn and St Pancras) (Lab)]

Does the hon. Gentleman accept that the issues to which the Leader of the Opposition referred all had one thing in common with the rally on Saturday—namely, that no Tories took part in any of them?

[Mr Ellwood]

I did not receive my invitation. Perhaps I shall find it in my office when I go back there.

The bottom line is that we inherited an economic nightmare—the worst of the messes in the G20. The gap between the richest and the poorest had grown since Labour came to office, and the size of government had bloomed. In the past decade, the civil service had grown by an additional 800,000 people. I have no idea what those people actually did, but they were in addition to those who were running the country a decade earlier. That is the bloated government that we need to try to get rid of. There was also a culture of encouraging people not to work. It was never easier than under Labour to do nothing and get paid for it. Those are the kinds of issues that we need to tackle.

The number of regulations introduced under Labour was astonishing. We are now faced with about 21,000 regulations, of which about 10,000 were created by the last Government. As I said earlier, Labour was planning huge cuts, had it won the election; it just did not say where they were going to be made. Had it won, it would have received a lot of the grief that we are receiving today, because it would have had to implement very much the same measures that we are implementing.

Looking back at the legacy that we left Labour, we can see that there was an unbroken period of growth from 1992 to 2008. We had growth up to the economic downturn in 2007. The deficit in 1997-98 was £15 billion. By 2007—before the economic downturn—it had already increased to £33 billion. We were not living within our means.

[Emma Reynolds]

I want to put the same question to the hon. Gentleman that I put to the Secretary of State. Up until 2008, his party backed our spending commitments, so is there not a little bit of revisionism on his side of the House?

[Mr Ellwood]

I was not in government then. The spending commitments that we backed did not take into account the state of the economy at the time. They were the plans for the future, but they did not take into account the money that had been spent.

The point that I was trying to make was that, from a deficit and a debt perspective, the previous Government wasted money during the boom years. They lived beyond their means, which placed us on the back foot when the economic downturn came. Again and again, we hear Labour say, “It isn’t our fault. It was an international issue. It was the Americans. It was Fannie Mae and Freddie Mac. It was the sub-prime market.” Well, that was possibly the case at the start, but in 2007, 2008 and even 2009, I could have gone to Bradford & Bingley and picked up a 125% mortgage. That was simply wrong. We were still not in control of the situation well after we knew that things were going down the pan.

The Opposition’s approach is now based on several themes. They tell us that, 12 months ago, unemployment was falling, growth was rising and inflation was low and stable. However, unemployment was higher when Labour left office than when it came in. In fact, that has happened every time Labour has been in office. No emergency measures had been put in place. Unemployment goes up in every recession; that is one of the impacts. It was wrong of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) to suggest that if Labour were in power now, unemployment would continue to fall. That is completely incorrect. The Opposition also talk about growth, but it is actually continuing to rise. It rose by 1.3% last year, and the figure will be 1.7% this year. That is not what we expected, but the economy is still growing faster than the EU average. Of course, 2011 is going to be a year of pain. Urgent measures have been introduced, and the VAT rise will hit us.

I do not have time to go through all the other aspects of the situation, but I will end by saying that the Budget is all about continuing to bring spending under control. It is about gaining sustainable revenues from the banks and protecting the most vulnerable in our society. It is also about a shift from big government to small government, and about providing businesses with the tax breaks and incentives to expand, to compete in new markets and to tackle the expected rise in unemployment. History will show that we came close to the economic abyss, but that this Government took the tough decisions necessary to build a strong and stable economy.