The Economy

Toby Perkins Excerpts

Wednesday 22nd June 2011 Commons Chamber

[Ed Balls]

I am not giving way to the hon. Gentleman again now; I might do later.

The reason why the VAT cut is needed now is that things are getting worse, not better. In recent weeks, we have seen manufacturing output and job vacancies falling and the biggest fall in retail sales for more than a year. The Chancellor likes to boast that a net 370,00 jobs have been created in the last 12 months; what he does not like saying is that 70% of those extra jobs were created in the six months before the spending review and only 29% in the six months after it. That is why his Budget forecasts of a year ago have gone so badly awry.

The Office for Budget Responsibility forecasts for growth have been downgraded three times. Unemployment is now forecast to be 200,000 higher, while inflation is forecasted to be well above target this year and next year. The result of this stalled recovery, higher unemployment and higher inflation is that the Government are now forecast to borrow a further £46 billion more than was forecast in last year’s spending review. Public borrowing in the first two months of this year is higher than it was in the first two months of last year.

[Toby Perkins (Chesterfield) (Lab)]

The Chancellor said yesterday that he does not want to comment regularly on the OBR’s updates. Given that it is downgrading its forecasts every time he opens his mouth, it is hardly surprising.

[Ed Balls]

Whether or not the Chancellor comments, the fact remains that since the last OBR forecast, Britain’s growth forecasts have been downgraded by the International Monetary Fund, the OECD, the CBI, the British Chambers of Commerce and the National Institute of Economic and Social Research. Everybody else is downgrading growth forecasts; we will have to wait for the OBR finally to catch up.

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[Mr Osborne]

My hon. Friend makes two good points. First, there was a very welcome recent reduction in unemployment—the biggest fall for a decade. Secondly, he draws attention to one of the most staggering facts about the past decade: private sector employment in the west midlands fell in the decade leading up to the financial crisis. That shows how unbalanced the British economy became under the last Labour Government.

[Toby Perkins]

rose—

[Mr Osborne]

I will give way, and then I will come on to the shadow Chancellor.

[Toby Perkins]

If the Chancellor feels that the economy was so unbalanced, can he explain why he was still saying in 2008 that he would follow Labour’s spending plans?

[Mr Osborne]

We fought the 2005 election and, sadly, lost it, saying that Labour’s plans were unaffordable. In 2008, we made it clear that we were coming off Labour’s spending plans. [Hon. Members: “You didn’t.”] We did. I happened to be there—I am not sure that the hon. Gentleman was. We came off Labour’s spending plans in 2008, and thank God we did, because we earned a mandate to make the necessary changes to put the economy back on track.

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[Kwasi Kwarteng]

This is the third time that the hon. Gentleman has tried to intervene, and I am afraid that I must press on. I am willing to take interventions from other colleagues, but he has had his say and I would like to have mine.

We have had a difficult time over the last year, during which time my right hon. Friend the Member for Tatton (Mr Osborne) has been Chancellor of the Exchequer. No one will dispute that: the situation has been tough. However, it would have been far worse if we had followed the policies of the right hon. Member for Morley and Outwood (Ed Balls) and not tackled the deficit in the rather aggressive but timely way in which we decided to. Hon. Members referred earlier to Greece, which has indeed been a Greek tragedy. People are on the streets, the Government are practically insolvent and there is a real risk of some kind of political revolution—I am choosing my words carefully, but the situation is very unstable. The situation facing this country was, I confess, not as bad. However, if we had not been serious about tackling the deficit, there was every likelihood that the international markets would have forced our interest rates up, that our cost of borrowing would have increased and that markets would not have bought gilts in the way that, over the past year, they have. The consequent rise in interest rates would have affected every family in this country, who would have had to pay high interest rates simply because the Government did not have the courage or the conviction to deal with the deficit.

[Toby Perkins]

As for the comparison with Greece, does the hon. Gentleman recognise that if we had followed the advice of the Chancellor when the recession struck back in 2008, although events here might not have followed what happened in Greece, they would quite probably have followed what happened in Ireland, which saw huge public spending cuts? Ireland went into a cycle of more and more cuts, and more and more people being put out of work. The result of those cuts was not that Ireland’s deficit shrank, but that public services and poverty got worse.

[Kwasi Kwarteng]

I accept the hon. Gentleman’s point about Ireland, but let us look at what happened last year and the situation that we faced going into the general election in May. The shadow Chancellor quite rightly observed that the market price of gilts was rising and that interest rates on them were coming down in the period before the election. It is true that in the six weeks before the election, interest rates on gilts came down, but that was only because the market realised that there would be an end to the Labour Government. The market anticipated the result of the general election, after it became clear that, as a consequence of Labour’s total irresponsibility, the end of a Labour Government would mean a new Government who were serious about dealing with our financial position. It is true—I remember this—that the rates came down from mid-March, but that was only as a consequence of people in the markets literally rejoicing because Labour was going to leave. The shadow Chancellor was quite right to make that point; I just felt that we needed a bit more context.

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[Toby Perkins (Chesterfield) (Lab)]

I think the hon. Member for Elmet and Rothwell (Alec Shelbrooke) forgets that the reason he sits on the Government Benches is that the Liberal Democrats changed their policies and decided to let him sit over there.

[John Hemming]

rose—

[Toby Perkins]

It is so good to see a Liberal Democrat turn up that I have to let him in. It will encourage him to come again.

[John Hemming]

I simply point out to the hon. Gentleman that we have not changed our policies. He is asking for more money to be borrowed. Where would it be borrowed from, and what would the interest rate be?

[Toby Perkins]

It is interesting that the hon. Gentleman assumes what I am going to say already. I am only three seconds into my speech. I will come to that point.

The hon. Member for Elmet and Rothwell said that he was proud of the Government’s record so far. I would not like to be here when he is ashamed. Government Members would like this debate to be about whether we need to reduce the deficit, but that is not what it is about at all. Everyone recognises that we need to do that, and that in 2008, prior to the onset of the biggest global economic crisis in history, we had a lower deficit as a ratio of GDP than in 1997 when we came into power. It was only the scale of the economic crisis that forced the Labour Government to spend money to stop the awful situation that ordinary people were finding themselves in, with jobs being lost and the danger of houses being repossessed. We are proud of the decisions that we made at the time, which were supported by the IMF. It said strongly that this country, under the Labour Government, showed leadership when the rest of the world did not know what to do in the face of a terrible global economic crisis.

[Kwasi Kwarteng]

rose—

[Toby Perkins]

Because the hon. Gentleman was so generous to me, I will allow him to intervene.

[Kwasi Kwarteng]

I believe in debate—it is good that interventions are taken. If the problem was global, why was our deficit to GDP ratio four times higher than that of the Federal Republic of Germany?

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[Toby Perkins]

Each country was in a different situation. Our ratio was much lower than Japan’s. There are a number of reasons why the German economy was different from ours. We over-relied on financial services and our manufacturing sector was reduced. We had high increases in housing prices. I do not remember any point in the past 13 years when Conservatives jumped up and down saying that they wanted the Government to engineer a house price crash.

[Claire Perry]

Will the hon. Gentleman give way?

[Toby Perkins]

I think I have given way enough. I am grateful for the fact that the hon. Lady has turned up for the debate, but I shall carry on.

As someone who for the five years prior to coming to this place ran a business that relied on people having money in their pockets to buy non-essential items, I know very well how important it is that decisions on our economy are balanced between the need to support growth and the need to reduce the nation’s borrowing. However, we are debating the economy today because since the Chancellor’s Budget a year ago, the OBR’s initial predictions get worse at every stage. The OBR now predicts £46 billion more borrowing than it predicted a year ago. The Government have discovered that the policies that they are pursuing are not working, so why do they not listen to the advice, change course and ensure that we protect not only the growth that we need in our economy to reduce the budget deficit, but the people on the ground in our constituencies—that includes the constituencies of Conservative Members—who are struggling to get by, whose houses are being repossessed? Repossessions are increasing.

[John Hemming]

Will the hon. Gentleman give way?

[Toby Perkins]

I have given way to the hon. Gentleman once. I am grateful for the fact that he has turned up, but I do not want to give him any further encouragement.

The scale of the deterioration in the OBR’s forecasts is stark. The OBR, which was set up to provide an independent view of the state of Government finances, has downgraded its forecasts three times. The Chancellor told us of all the steps he is taking to stimulate growth, but even taking those into account, the forecast is that public sector net borrowing will increase by £46 billion over the next five years, which demonstrates the failure of those policies.

The Chancellor might be failing to get our economy growing, but the same cannot be said of unemployment. Government Members are celebrating, as we all do, the fact that unemployment is down in the last month, but unemployment over the course of the Conservative-Lib Dem Government will go up. Youth unemployment is up. The OBR forecast is that unemployment will rise––[Interruption.] Going forward, the OBR is now predicting that in every year over the next five years unemployment will be higher than in its prediction of a year ago.

[Ben Gummer]

The hon. Gentleman is factually wrong. The OBR says that unemployment will peak at the end of this year and the beginning of next year, and that it will fall in every successive year.

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[Toby Perkins]

The hon. Gentleman did not hear what I said. The OBR suggests that unemployment will be higher in every one of the next five years than it suggested in its predictions a year ago. That is what I said.

Alongside the increase in unemployment, we are seeing increases in inflation and interest rates. We have been here before: growth stagnating; unemployment rising; businesses failing; and inflation, interest rates and house repossessions increasing. Who was the economic genius who advised the Chancellor the last time a Tory Government led Britain down that road? The current Prime Minister. Should we be surprised?

The Prime Minister has a pedigree as an economic failure, but what about the Chancellor? The Chancellor is the master of hindsight. This was the man who told us that bank regulations were too stringent when Labour was in power. This was the man who, up until 2008, told us that the Conservative party supported Labour’s spending plans, but who now claims that Labour overspent for 10 years. We told him that he was cutting too far and too fast, but he then delivered a damp-squib Budget for growth because we had been right in the first place. He is the man who will soon gain huge dividends because of Labour’s sensible decision to nationalise Northern Rock at a time when he was still a rabbit staring into the headlights of an economic crisis that shook all his assumptions about the sanctity of the markets.

When the IMF was still praising Britain following Labour’s response to the international crisis, the now Chancellor was encouraging us to follow Ireland’s example of massive cuts at the heart of a recession. He is fond of his international comparators, so let me give him some. When he was supporting our economic plans, Britain’s net public spending as a proportion of GDP was 6% lower than when Labour came to power. We have seen an unprecedented clean-up of the disgraceful state in which the previous Conservative Government left our public services. At that time, our debt, as a proportion of GDP, was the second lowest in the G7. Now the growth that he promised to return Britain to lags behind every single country in Europe except for the absolute backmarkers.

People in business, whether in plumbing or double-glazing or the sports goods industry, as I was, need their customers to have money and confidence, but under this Government the amount of money in people’s pockets has shrunk, the cost of goods has risen because of the VAT increase, and people have no confidence that the economy is going to grow and so are not spending money. That is why we are not seeing growth in our economy. We all want the deficit shrunk, but that will happen only if we get growth back into the economy now.

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[Charlie Elphicke]

Employment has gone up in my constituency, and unemployment has been falling, which is welcome. We are going in the right direction: across the nation, there are 520,000 new private sector jobs, while public sector employment has fallen by 143,000, so we see a net rise. The most recently announced figures show unemployment falling sharply by 88,000.

[Toby Perkins]

Will the hon. Gentleman give way?

[Charlie Elphicke]

No. Time is pressing, and I need to allow time for the wind-ups.

Youth unemployment has also started to move strongly— although perhaps not as strongly as wider unemployment —in the right direction. Surely the House must welcome that. Manufacturing output is also moving more in the right direction, after being halved in the Labour years, and now being about 11% of our economy. I hope that the economy will rebalance under this Government so that we are less dependent on banks and fat cats—for party donations, frankly—on handing out knighthoods and on bonuses, and more dependent on much more productive service and manufacturing industries. We need less of financial services and housing, and more of making things, producing things, servicing things, and—yes—education.

The narrative of what this Government are doing is to ensure that our economy is stronger, that our work force are more incentivised to work by making work pay through universal credit, and that they are not only incentivised to work but given the skills to work under the Government’s skills and education agenda. We can have a country that is more productive, where more people want to be in employment, where we do not suck in people from overseas to do the jobs, and where we ensure that our countrymen are encouraged to get into work, do their part, fulfil their potential and have more of a sense of dignity, happiness and well-being. That will allow us to build a Britain that is fit for this decade, and it will ensure that we steam ahead, further ahead, of our European colleagues, and do well. The Government are working on that, and deficit reduction is part of it, but the growth, rebalancing, welfare reform and skills and education agendas are parts of the narrative that add up to a much stronger, much more vibrant economy—a much more exciting Britain-to-be where people will be able to benefit from much more success, much more money and much more good fortune, built on a solid foundation for the long term.

Regulatory and Banking Reform

Toby Perkins Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend is absolutely right to highlight the numbers of people employed in financial services not just here in London, or in Edinburgh and Glasgow, which are well-known financial services centres, but throughout the country. We need to ensure that the industry continues to be a strong contributor to employment, to economic growth and to tax revenues, and to ensure a balance so that it does not pose an excessive risk to the strength of the UK economy. The measures that we have put forward today strike the right balance between encouraging the industry to continue to be a wealth and employment creator and ensuring that the right protections are in place for consumers, so that they buy the products that those companies sell. Those companies will not thrive unless there is consumer appetite for buying pensions, for investing in their futures, for taking out deposit accounts and for buying life insurance policies. We need to get that balance right between consumer interest and business interest, but businesses will be best served if consumers feel happy about buying products from them.

[Toby Perkins (Chesterfield) (Lab)]

The Minister rightly says that a key part of the recovery of the banking sector’s reputation is an increase in the public’s confidence in the system, and he is putting a lot of power and confidence in the role of the Bank of England. What specific new powers will the Bank have to enable more public confidence in a safer banking system in future?

[Mr Hoban]

The Bank of England and the FSA published a couple of weeks ago a document setting out the new regulatory approach that the PRA will set. They were clear that, rather than waiting for a bubble to burst and for problems to emerge, they will intervene earlier to force firms to take action to correct problems, and that shift in style—from waiting for a problem to happen to trying to pre-empt its creation—is absolutely vital. We are reliant on the judgment and the discretion of the regulators in following through that new regulatory approach, but rather than waiting until it is all too late, as happened in so many different examples over the past 10 years, giving the regulator the power to intervene early will have a significant benefit on outcomes for our constituents.

Amendment of the Law

Toby Perkins Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Sir Stuart Bell]

I am grateful to the hon. Gentleman for his point, because we have argued consistently—and so has the international community—that we had a financial crisis from 2008 and 2009 and that out of that financial crisis, without referring to tsunamis or earthquakes, there have been many aftershocks and it will take much time to get over that. I agree with that point but it was not us who said that we would raise growth last year—it was the Conservative Government. The hon. Member for Chichester made an excellent point when he said, quite rightly, that under a Labour Government we had 40% debt in relation to gross domestic product. My recollection is that for some years it was 37% and it was the financial crisis that pushed it up to where it was.

[Toby Perkins (Chesterfield) (Lab)]

Would my hon. Friend also say that what is particularly startling today is that, after all the measures we have heard from the Chancellor about in the Budget, the growth forecast has taken place as an after-effect? How bad would the growth forecast have been without those measures? It is still drastically down from what the Chancellor suggested that it would be when he delivered his previous Budget nine or 10 months ago.

[Sir Stuart Bell]

That is the point that the Leader of the Opposition made. I was reminded by those on the Front Bench—I had not got so far in my speech—that if growth is down, inflation is up. The Chancellor made a point about commodity prices going up. They are going up in France, where inflation is 2%. We have higher inflation because of the Government’s policy. We have depreciated the value of our currency over a period of time by 25%. We have increased our exports but we have also increased our imports. Our imports are still greater than our exports. We are now importing inflation. The difference between French inflation at 2% and our inflation, which will run between 3.5% and 5%, is that we are importing it, because of Government policy.

Unemployment is going up; it is at a 17-year high. The Chancellor made a great thing about 3,000 jobs in the manufacturing sector, but he did not refer to all the jobs that have been lost. How many more jobs will be lost when we move into the cuts to local councils that will start on 1 April? How will Middlesbrough council cope with a 28% deficit reduction? How will the national health service cope? We know that we will lose at least 1,000 jobs in Middlesbrough and unemployment in my constituency is disgracefully high. We have the fourth highest unemployment rate in the country and that is wrong. It happened under a Labour Government and under a Tory Government. The cuts that are being announced and those that have been made through the massive deficit reduction programme announced by the Chancellor in his previous Budget will push us further down.

No reference was made, as I have said, to the welfare state. What happened to the welfare state? What happened to the balance between the public and private sectors? What happened to those who are unable to look after themselves? Where was all that in today’s Budget?

Bank Bonuses

Toby Perkins Excerpts

Tuesday 11th January 2011 Commons Chamber

[Mr Osborne]

The discussions are taking place now. In the next couple of weeks, I expect to be able to come back to the House with the conclusions of those discussions. The pay packages and bonuses for UK banks will be announced either right at the end of January or in early February; those for American banks will be slightly earlier.

[Toby Perkins (Chesterfield) (Lab)]

A lot of people will be particularly disappointed, because how the Chancellor is speaking today is so very different from how he spoke in opposition. As someone who has recently been going downhill fast, does he understand how depressed people will be about what they are hearing from him today compared with what he said as shadow Chancellor?

[Mr Osborne]

I hope that what people are hearing from us today are serious proposals: to increase lending in our economy, which is very important; to reduce the bonus pool, so that it is not as large as it was under the Labour Government; and to increase the contribution to communities in the way that we all want to see. That is what we are seeking to agree with the banks. As I say, there is absolutely no proposal to the contrary from the Labour party, which actually created this mess, and feathered the nests of the banks, while it was in office.

Financial Assistance (Ireland)

Toby Perkins Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

The sovereign debt concerns are very heightened at the moment—that is a statement of the obvious—and a Chancellor of the Exchequer who represents the country with the largest budget deficit in the G20, and the largest budget deficit in the EU until Ireland started to overtake us, must make moving Britain out of the financial danger zone their immediate priority, which is what this Government have done.

[Toby Perkins (Chesterfield) (Lab)]

Does the Chancellor agree that the real lesson that comes out of Ireland—he rightly identified similarities with our economy—is that the impact of the global banking crisis added to a drastic programme of public sector cuts does not mean growth? That is dangerous to the economy.

[Mr Osborne]

Quite frankly, that assessment is not shared by the International Monetary Fund or other EU member states. It is not the assessment of anyone who looks at the Irish situation except for the hon. Gentleman.

Oral Answers to Questions

Toby Perkins Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr Osborne]

We have created the independent Office for Budget Responsibility so that the fiscal forecasts for the United Kingdom are no longer produced by the Chancellor of the Exchequer and sometimes influenced by the political judgments of the Chancellor of the Exchequer, but instead are done independently.

[Toby Perkins (Chesterfield) (Lab)]

On child benefit, can the Chief Secretary explain why he believes that families earning £45,000 have broader shoulders than those earning £80,000?

Comprehensive Spending Review

Toby Perkins Excerpts

Thursday 28th October 2010 Commons Chamber

[Danny Alexander]

I do not accept that analysis, and I will come to that point later. The hon. Lady should be aware that her party’s plans were for £44 billion-worth of cuts, which would have had an impact on people too. Many of the things that we have done, such as uprating the state pension in line with earnings and protecting the national health service, which her party would not have done, support women.

[Toby Perkins (Chesterfield) (Lab)]

The right hon. Gentleman is perpetuating the myth that there is no alternative, but he just said that the previous Government had a strategy in place for paying off the deficit, so there is an alternative. An alternative was also put forward in 1945. He can take whichever direction he likes, but he cannot keep claiming that the decisions he is making are the only alternative, because others have been put forward.

[Danny Alexander]

No alternatives have been put forward by the hon. Gentleman’s Front Benchers; perhaps he wants to talk to them about that.

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[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

I am very pleased to have an opportunity to contribute to this debate, as I believe that these economic issues will be the most important issues facing this Parliament. I want to talk in particular about the effects of the spending review on London and inner-city communities—the type of community that I have lived in all my life and sought to represent over the past two decades. I also want to talk specifically about the effects of the spending review on the private sector, as they are not sufficiently debated or understood, and on the public sector, and about the particular effects on housing and housing need in London, because I think the spending review and the mix of proposals on housing benefit and cutting expenditure on public sector housing will hit London harder than any other part of the country, with consequences that I do not think the Government have calculated.

It is not sufficiently understood that more than 1 million jobs in the private sector are directly dependent on public sector contracts with private sector organisations. That is the case in construction, for example, but there are also many jobs in social care and looking after young children that are basically delivered by private sector organisations. Also, when we make these cuts and people lose their jobs, demand will be taken out of the economy, so many retail and service companies in London will suffer. These cuts will have a ripple effect in the private sector in London. The Government and their supporters in the Lib Dem party may be laughing now, but they will be laughing on the other side of their faces when the effects on the private sector become clear.

The coalition Government talk about the public sector as if it is all about men in bowler hats who can easily be switched into meaningful jobs in sectors such as banking. In Hackney and the inner city generally the majority of public sector jobs are women’s jobs, however, and the majority of those women are heads of households, and far from doing peripheral or frippery jobs, they work in the heart of communities as teaching assistants or care assistants or in the voluntary sector, which will suffer because of the cuts in local government spending. These jobs are at the heart of communities. How hypocritical it is of the coalition Government to talk about the big society and then attack ordinary women working in the heart of their communities across a range of important occupations.

I have listened to what coalition Ministers have had to say, but having lived in and represented Hackney for more than 20 years, I can tell them that there are no private sector jobs for women in Hackney who will be made unemployed to step into. That is because of the structure of employment in Hackney and the inner city. Yes, we can count up the number of vacancies and the number of people who might be made unemployed, but there is a mismatch between the types of people that this coalition are going to fling into unemployment and the actual opportunities available to them, such as they are, in the City and the private sector in London generally.

We have to judge these matters on the basis not of political banter, to and fro and Punch and Judy, but of the effect on real people’s—real women’s—lives. The consequences for communities such as Hackney in the next financial year will be very serious indeed. The people in those communities will not have been impressed to see Ministers on the Treasury Bench laughing and congratulating themselves when the statement was read out. What were they congratulating themselves on—thousands of people losing their jobs and thousands more losing their homes?

That brings me on to housing. Members will be aware that since the 19th century one of the core activities of local government in London has been building housing—affordable, quality housing for rent. If hon. Members are not aware of that, I can take them to estates built in Hackney more than a century ago. Of course politicians then, even Tory politicians, recognised that decent housing was at the core of social stability and public health concerns. But what are we getting from this coalition? We are getting cuts in public sector housing expenditure, which, as I said, affect the traditional role of local government; cuts in people’s housing benefit after a year; and, above all, a cap in housing benefit.

I put it to the Government that the majority of people claiming housing benefit are not shiftless people, but working people and those looking after disabled people. These are not people who are simply unemployed. It has been argued that we have to cut housing benefit because, horror of horror, poor people are living alongside rich people in desirable areas of the city.

[Toby Perkins]

My hon. Friend is reflecting on the inequities of the changes to housing benefit. Does she agree that the Government’s focus on the cap is a red herring, because it is relevant to very few housing benefit recipients, and that the really important thing is the 10% cut that will hit housing benefit recipients in the second year?

[Ms Abbott]

I quite agree, and I am grateful to my hon. Friend for raising that issue. I have a sentence or so more to say about the cap. We have been told by the Prime Minister of the horror of poor people living alongside rich people in boroughs such as Islington and Westminster. Let me tell the Government that I can take them to the heart of the Prime Minister’s Notting Hill and show them poor but entirely respectable West Indian couples living alongside merchant bankers who have bought their houses for millions of pounds. London has always been a city where rich and poor live side by side; it has never had the perfumed stockades of the upper east side of New York or the kind of social segregation seen in American cities. This type of cleansing of poor people from what are deemed to be areas that are too good for them to live in is quite unconscionable. As my hon. Friends have said, this is not just about the cap on housing benefit, although that will also have a serious effect on ordinary people in London and may well see the end of some Lib Dem MPs now sitting on the Benches opposite us; it is also about the cuts in housing benefit after a year.

What I say to the House is that we can sit here this afternoon scoring points and doing the Punch and Judy stuff, but real people in our constituencies, whose circumstances are not understood by those on the Treasury Bench, will suffer as a result of this ill-thought-out, ill-paced and wholly ideological spending review. The credit crunch and the deficit have been the occasion of this spending review, not the reason for it.

Savings Accounts and Health in Pregnancy Grant Bill

Toby Perkins Excerpts

Tuesday 26th October 2010 Commons Chamber

[Mr Hoban]

I am turning to child trust funds, and I take on board the right hon. Gentleman’s point. As one of the consequences of our decision to scrap the child trust fund, we are using some of the money that we have saved to provide respite care for disabled children. We have thought carefully about the issues, and, frankly, the decisions are not easy to take. Our decision to scrap the child trust fund is important. It will enable us to deliver the pupil premium and the £2.5 billion package, which was recently announced, to support children from disadvantaged backgrounds. The right hon. Gentleman should look at the issue in the round rather than cherry-picking particular policy areas.

[Toby Perkins (Chesterfield) (Lab)]

Will the Minister give way?

[Mr Hoban]

No; I will continue. I have given way quite a lot, and I want to make some progress. This is an important Bill, which is why I want to ensure that I have given Opposition Members the opportunity to intervene, but I want to continue setting out the case for why we need to take these measures to tackle the problem that the previous Government left behind.

We announced in May that Government payments to child trust funds would be cut in two stages—they will be reduced first and then stopped altogether. In July, we made regulations to take the first step. For those born from August this year, payments at birth were reduced from £250 to £50, or from £500 to £100 for children in lower-income families or children in care. Government payments at the age of seven also stopped completely from August. The regulations will end the additional payments made to disabled children from 2011-12 onwards, although, as I have said, we will recycle the money that we have saved on those payments to provide additional respite breaks.

Those regulations could not end eligibility for child trust funds altogether, because that process requires primary legislation. This Bill completes the process by ending eligibility for child trust funds for all children born from January 2011 onwards, which means that the remaining Government payments will stop altogether.

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[Mr Hoban]

As I have set out, the previous Government left us with no choice but to axe those schemes, because we had to save £80 billion in public spending to get spending back on track and keep the deficit under control and interest rates as low as possible for as long as possible. That was the Government’s priority.

[Toby Perkins]

Will the Minister give way?

[Mr Hoban]

I will not, because I want to continue making progress.

We want to provide people with a clear and simple way of saving for their children, while saving the £500 million a year that we currently spend on child trust funds.

The savings from the child trust fund, the saving gateway and the health in pregnancy grant will allow us to prioritise the limited resources that we have. As the Chancellor set out last week, we have chosen our priorities as we tackle the deficit that we inherited. We are delivering on our commitment that health spending will increase in real terms in each year of this Parliament. We are prioritising long-term growth, creating the conditions for a private sector-led recovery. We are also radically reforming public services to build the big society where everyone plays their part.

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[Mr Hanson]

I shall come to that point later. The Government have chosen to take a sledgehammer to the funds and not even to consider other options such as that mentioned by my hon. Friend.

[Toby Perkins]

My right hon. Friend is touching on the choices that the Government have made. The number of attacks that they have made on children, families and women is revealing. They seem willing to give money to married couples who do not have children but they are taking money from families with children. Anyone who has been married and had kids knows that it is not getting married that costs money but having kids. When my son was four months old I thought that he was robbing my wallet because I had no money left. Does not the Government’s approach show how out of touch they are with the real lives of families and children?

[Mr Hanson]

I agree. The Government are not in touch with the difficulties of raising a child or of meeting the costs when children reach the age of 18.

The child trust fund is worth £500 to each child over their lifetime, but it is worth £1,000 to the poorest children. The Minister will know that the previous Labour Government also introduced a disability living allowance payment on top of £100 or £200 for those entitled to DLA. That measure was introduced to take into account the significant extra challenges that disabled people face at that important time in their lives. When that measure passed through Parliament earlier this year, under the previous Labour Government, the Conservative party did not oppose that addition. Indeed, the present Financial Secretary said that

“we recognise that additional support is required for children with disabilities, and we have no objections to this statutory instrument.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.]

The Liberal Democrats’ spokesperson at the time said they were happy to support the regulations. Quite simply, the Government say one thing in opposition and another in government.

As young people reach 18, the financial challenges—not least those imposed on them by the current Government—will be more difficult. If individuals do not come from a wealthy background, the prospect of stumping up extra money for tuition fees is an eye-watering one. Not everyone will have a trust fund of their own to manage those resources. The children’s trust fund would have provided young people with an extremely welcome lump sum, would have helped people with education and training from the age of 18, and would have helped people to save who had never saved before to supplement their future income.

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[Mr Hanson]

I hope I can assure my right hon. Friend that as we have eight sittings in Committee, I will table amendments on some of those issues. Indeed, I can even offer him a chance to serve, should he so wish, on the Public Bill Committee in due course.

[Toby Perkins]

Teenage pregnancy levels are high in some of our most deprived communities, and the child trust fund at least offered 18-year-olds who were about to have children the chance to take a different track or to receive some support. Does my right hon. Friend agree that the Bill will take away a key tool in the battle against child poverty?

[Mr Hanson]

It will indeed take away a key tool in helping to deal with inequality and poverty at the age of 18. The child trust fund encourages saving, particularly among people from the poorest parts of our communities.

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[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Over the past few days, weeks and months, there has been a lot of talk about “fairness”, which is an easy word to use. Who is the judge of what is fair? Whose standards of fairness are being applied? Many believe that the measure of a civilised society is how it treats its weakest members. If so, the Bill clearly fails the fairness test, because it lets down families and leaves our children to take the strain.

When the Prime Minister spoke about “mending our broken society”, he did not say that he would go around breaking it first.

“I want the next Government to be the most family friendly Government we’ve ever had in this country”.

It was a broken promise, one of many, with more to come. Then we have the Chancellor’s hollow promise of fairness:

“A fair Government make sure that those with the broadest shoulders bear the greatest burden.”—[Official Report, 20 October 2010; Vol. 516, c. 955.]

Today we see the Liberal Democrat and Conservative idea of fairness.

Anyone who has young children running around knows how expensive bringing up a family can be. As we are discussing the removal of a grant of £190 to encourage health in pregnancy, I want to talk about how expensive simply being pregnant can be. There seems to have been a lot of debate and misunderstanding about the value of the grant. My hon. Friend the Member for Walsall South (Valerie Vaz) made good points about the physical nourishment required by a pregnant woman, especially in the later stages of pregnancy. On a physical level, however, a pregnant woman needs clothes to go to work, shoes for her swollen feet, vitamin supplements—I craved fresh fruit salad. I know mothers who have suffered from chronic back pain and chronic pelvic pain. They have struggled to sleep because the later stages of pregnancy are so uncomfortable. All those conditions can be helped by customised cushions, back supports and other aids, none of which is available on the national health service, all of which must be purchased, and all of which I was fortunate enough to be able to purchase, although many on lower incomes would not be able to. The health in pregnancy grant was designed to ease the final stages of pregnancy, and to ensure that a child is not born to a broken mother.

All that arises before we consider the huge impact of the link between the health visitor, the midwife and the pregnant woman that is currently required for the grant to be obtained. The financial pressures during pregnancy are difficult for all women, but teenage mothers suffer a particular burden. The Institute of Education has found that they suffer a lifelong financial disadvantage, with a lifetime family income £12,000 lower—or an annual income 2% lower—than the family incomes of those who become pregnant in their mid-20s.

[Toby Perkins]

Will my hon. Friend give way?

[Catherine McKinnell]

Am I the last speaker?

[Catherine McKinnell]

In that case, I will give way.

[Toby Perkins]

My hon. Friend is making a compelling case. Does she agree that, whatever we may have thought about the upper-class buffoons whom we may have considered to constitute the Conservative party, they always seemed to have a sense of gallantry? When they said “Women and children first”, it was supposed to be a good thing. Nowadays, however, when they say “Women and children first”, they mean that women and children should be in the front line, facing a battering from the cuts. It is women and children first who are losing the benefits, it is women and children first who are losing the payments, and, most of all, it is women and children first who are paying the costs for these upper-class buffoons.

[Catherine McKinnell]

My hon. Friend ably makes a point that I was about to make myself. Families are being asked to bear the brunt of the mistakes made by bankers. The Government plan to take £190 away from the pregnant mothers who need it most. I believe that that constitutes a shameful attack on the most vulnerable and needy in our society. The Government tell us that the banking levy would bring in £2.4 billion, but my hon. Friend the Member for Walsall South set out the economic case—the “you do the maths” case—very clearly.

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[The Economic Secretary to the Treasury (Justine Greening)]

As we have heard, this has been a vigorous debate and I am very grateful to all the Members who have contributed. The discussion has been wide-ranging and I want to start by addressing some of the wider arguments that have been made before moving on to some of the more detailed points about measures in the Bill. I shall try to cover all the speeches, although they were numerous.

My hon. Friend the Financial Secretary set out at the start of the debate the rationale behind the Bill and the role that it will play in our plan—a clear and credible plan—to reduce our budget deficit. Some Members have argued today that our plans move too fast, but our deficit is unprecedented and unsustainable so we must take action to tackle it. That action is supported across the world. Only today, Standard and Poor’s, the credit rating agency, stated that the coalition parties

“have shown a high degree of cohesion in putting the U.K.’s public finances onto what we view to be a more sustainable footing”.

It is simply untenable for Labour Members to spend yet another debate, yet another afternoon and yet more hours in refusenik mode arguing about what they do not like, while setting out no plans for what they would do instead.

We are spending £43 billion this year—£120 million a day—on the debt that the Government have inherited. The Labour party wants to airbrush that amount out of our financial worries, but that is simply not possible. Failing to act now would risk higher interest rates, higher mortgage rates, higher rates of business failure and higher unemployment. The Labour party knows all about higher unemployment, having again left unemployment higher when it left office than when it came in.

[Toby Perkins]

The Minister just said that higher employment is something that the Labour party knows all about. I do not know whether she is aware that unemployment was up near the 4 million mark under a Conservative Government. What does she consider to be a successful level of unemployment this time?

[Justine Greening]

The hon. Member for Edinburgh East (Sheila Gilmore) talked about judging Governments based on what they do. The previous Labour Government left unemployment around 400,000 higher when they left office than when they came in. I do not know what the hon. Member for Chesterfield (Toby Perkins) has to say to those people who were unemployed when the previous Government left office, but those people must be very pleased that the Labour Government are no longer in office taking bad decisions.

Today Labour Members have discussed fairness, but there is nothing fair about failing to tackle the deficit. They have discussed it being unfair to end eligibility for the child trust fund, but there is nothing fair about asking future generations to pay our debts, which is simply unacceptable. It was the ultimate irony to spend the afternoon listening to Labour Members discussing the value of saving, when the Labour Government left office with our savings ratio at an all-time low, as we have heard. A savings culture was nowhere to be seen in the Labour Government. If they had demonstrated a little bit more of that culture themselves, the rest of the country might have followed suit.

Oral Answers to Questions

Toby Perkins Excerpts

Tuesday 12th October 2010 Commons Chamber

[The Economic Secretary to the Treasury (Justine Greening)]

I will be very happy to meet my hon. Friend. The coalition agreement mentions the desire to reform air passenger duty and move towards a per plane duty. In the intervening period, I have had a range of meetings, including with airport owners, and I would be happy to add him to my list of people with whom I have discussed that policy.

[Toby Perkins (Chesterfield) (Lab)]

T8. The Chancellor was a millionaire the day he was born, so he has not got a clue what it is like to try to raise a family on £40,000 a year—[Interruption.] Do you mind? He cannot hear me. People who earn that much are not the super-rich; they are hard-working people who are getting by and getting on. The cuts to child benefit will take about 10% of the income of some of them. By what definition of fairness does he think robbing 10% from hard-working people is a fair deal for such families?

[Mr Osborne]

I will make one observation if the hon. Gentleman wants to lay into my background: I went to the same school as the deputy leader of the Labour party.

On child benefit, we have had to take some difficult decisions. It is quite extraordinary that the Labour party finds itself opposing our decision. Yes, it was a tough decision, but it was fair in the context of the decisions that we must take. The fact that Alan Milburn today warned Labour Members not to oppose the measure—[Interruption.] Of course, the sensible part of the Labour party is no longer on the Front Bench. The fact that Alan Milburn, whom Labour appointed as its social mobility tsar, is warning them is something to which Labour Members should pay attention.

Equitable Life (Payments) Bill

Toby Perkins Excerpts

Tuesday 14th September 2010 Commons Chamber

[Mr Hoban]

I discussed that idea, but I received a strong representation from Equitable Life advising against it, because of the complexity that might be attached to staged payments. Some have suggested that we make payments into people’s pension funds, but some of the key criteria for judging the payments scheme will be simplicity, speed and transparency. People will be concerned that a series of small payments over a long period will not necessarily meet the simplicity, speed and transparency criteria against which a payments scheme ought to be judged.

[Toby Perkins (Chesterfield) (Lab)]

Will the Minister acknowledge that the broad range of issues that he now says he will take into consideration were entirely absent from his discussions in the run-up to the election or in the coalition agreement, which states that the coalition Government will implement the Parliamentary and Health Service Ombudsman’s recommendation? People in the Equitable Members Action Group will be extremely disappointed with the Minister’s tone when they compare it with the tone he took in the run-up to the election.

[Mr Hoban]

It is a bit rich for Labour Back Benchers to complain, when the Labour Government had a chance to resolve the matter but failed to do so. The hon. Gentleman should explain to Equitable Life policyholders in his constituency why his colleagues failed to take the action necessary to resolve the problem when they were in government.

--- Later in debate ---

[Stephen Timms]

I am not sure which investors the hon. Gentleman is thinking of, but I think it essential for us now to move quickly to a scheme. We need a timetable, and we need the details of a scheme, so that this long-standing matter can be resolved.

[Toby Perkins]

Many former Equitable Life policyholders who have spoken to me unquestionably felt that both previous Governments had been too slow to act. They will be very surprised by the extent to which Members who signed that pledge now apparently welcome proposals that are so far removed from what the Conservative and Liberal Democrat parties promised in the run-up to the election.

[Stephen Timms]

My hon. Friend is absolutely right. There is what I would describe as incandescence on the part of those who have been affected, because promises so clearly made to them before the election are not being fulfilled now.