Charter for Budget Responsibility

Debate between William Bain and Jim Cunningham

Tuesday 13th January 2015 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

Nothing says more about why we need change in 16 weeks’ time than the Government’s cynical attempt in this debate to divide Parliament and the country by tactical tricks and wheezes as a cover for their failure on the deficit and their inaction on the other big challenges that face our country: wages, productivity, inequality and banking reform.

This is a debate that the Chancellor has been plotting for months as his election battleground, but just last week we saw his attack on the fiscal policies of the Labour party collapse within hours. In 2010, he pledged to eliminate the deficit within five years, but now, having borrowed £200 billion more than he planned, he presents a watered-down charter for budget responsibility in a desperate attempt to ensnare the Opposition on tactics. This is a Chancellor who makes billions of pounds of unfunded tax commitments but refuses to allow the impartial OBR to cost all parties’ election spending promises. Today, his guile has deserted him and his economic failure has rebounded on him. From iron Chancellor to boomerang Chancellor in just five years: Britain surely deserves better than this.

When the OBR slashes its forecasts for receipts from income tax and national insurance contributions as comprehensively as it did in December, we have the proof that the Government are taking the country down the wrong path. In December, the OBR downgraded its forecasts for income tax receipts and national insurance contribution receipts for this and the next four fiscal years by a staggering £39 billion and £53 billion respectively, compared with its forecasts from March 2014. The bulk of that shift was down to much lower than predicted wage growth. That shows that our economy under this Government is simply not generating the scale and number of higher wage, higher skilled jobs that modern Britain needs to succeed in the world. That failure on skills and prosperity is led by a Chancellor who has been the worst for the nation’s pay packets since the 1870s.

[Mr Jim Cunningham (Coventry South) (Lab)]

When we look at the general trend over the past five years, we can see that the Chancellor thought that the problem was confined to Britain. He has consistently made excuses every time his targets have not been met because the Tories cannot face up to the fact that the crisis started internationally, particularly in America, but unless they face up to that, they will never get the economy right. They will tinker with it, but they will not get it right and as a consequence the cost of living has gone up and wage values have gone down by 6%.

[Mr Bain]

My hon. Friend makes an incredibly powerful point. The historic weakness of wage growth under this Government, the disastrous levels of productivity, the growth of insecure work, the failure of the Government to meet their targets on export-led growth and the fact this is a country in which the number of apprenticeships fell, rather than rose, in 2013-14 are not factors that any Chancellor who wants to get the deficit down should ignore. Tackling them will be central to any credible plan to get our deficit down and to move forward the living standards of millions of ordinary people in this country.

The reason for this Government’s failure on wages and tax receipts was explained to me by a constituent I met on her doorstep in Ruchazie last Saturday morning. It is important that the voices and experiences of ordinary people are brought into this debate. Her husband works as a security guard and earns barely above the minimum wage. He does not earn a living wage. She told me that life is tougher for her family than it was five years ago. They are working harder, but they have less to show for it. They do the right thing and get up early and go to work, but they have never felt so insecure. They keep going, but they speak for millions of people in this country who have suffered the same fate. In just 16 weeks, they will have the opportunity for change.

Like the Prime Minister chickening out of televised debates, the Chancellor is ducking out of an independent evaluation of our spending proposals because, like the Prime Minister, he knows that he would be the loser. All the Government have left are weeks of cynical tactics rather than a vision of hope for our country, but political stunts are no substitute for a national strategy for increasing our nation’s productivity, increasing the minimum wage over the next few years, restoring the promise of our young people with a credible plan for skills and rising apprenticeships, and making a plan for a fairer economy with rising living standards. If the Government find that task beyond them, they should get ready to move aside because others are ready to offer hope in place of fear in just 16 weeks’ time.

The Economy

Debate between William Bain and Jim Cunningham

Tuesday 11th December 2012 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

Regrettably, the economy is on course for a lost decade under this most paradoxical of Chancellors: reckless on one hand, but complacent on the other; a historian, but with precious little grasp of learning its most obvious lessons; and a tactician, but now pursuing the basest strategy of all in politics—attempting to divide and rule by separating those on middle incomes from low-wage Britain, and the poorly paid from the unemployed. His Conservative predecessors, people such as Winston Churchill, Harold Macmillan and Iain Macleod, would surely recoil in horror if they could they see what this Chancellor is doing to the reputation of the party that once proudly stood for the principle of one nation, but does no longer.

There is no social group that this Chancellor will not exploit for perceived political gain, but he stands exposed in this debate: he has no idea of how to regenerate the missing growth in the UK economy; he has no clue on how to undo the damage he is doing to ordinary families’ living standards and slumping real wages; and he has no concept that his policies on welfare represent no more than a throwback to the worst excesses of harsh Victorian Toryism.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my hon. Friend not recall that when Government Members were in opposition, in the good years, as we might call them, they took the credit, but they will not take the credit for getting us into this mess in the bad years?

[Mr Bain]

I thank my hon. Friend for that. What I do remember is that when the right hon. Gentleman was shadow Chancellor he backed every single penny of the public spending plans of the Labour Government until the financial crisis hit. Indeed, he had the sauce to call them “eye-wateringly tight” on occasion in this House.

What we see is a Chancellor with a plan aimed at winning marginal seats at the next general election at any cost, but bringing in the cruellest sequence of benefit cuts since those of the national Government in 1931 and aiming his harshest measures at the most vulnerable in our society.

Our economy is suffering from the slowest journey out of recession since the 1870s. As a result of the extreme austerity measures that the Chancellor has introduced, it will now take nearly seven years to repair the lost output from this recession, compared with just four years during the great depression in the 1930s. We were told two and a half years ago that a policy of expansionary fiscal contraction would restore confidence, but instead nearly 4% of output has gone, the Chancellor’s supplementary target on debt falling as a share of GDP by the end of this Parliament has gone, and many economists, including at Citigroup, expect the loss of Britain’s triple A credit rating within the next 18 months, the retention of which the Chancellor made his principal criterion of credibility.

No wonder that on The New Yorker website last week, the Chancellor’s policies were dismissed as an example of what the US should avoid—a commitment to the deflationary economics of the 1930s, with the Reaganite trickle-down economics of the 1980s and the even harsher Benthamite economics of the 1830s. Instead of uniting this country in a crusade against long-term and youth unemployment and what Beveridge called the social evil of idleness, this Chancellor wants to divide society by demonising the unemployed in a way that no Government have done since the time of the Poor Law in 1834.

Despite the Bank of England running the loosest monetary policy in several generations and owning three tenths of our national debt through the use of its asset purchase facility, the OBR predicts that joblessness will rise by as much as 340,000 over its forecast period. So we can see that the US economy, having adopted a different policy from the austerity of this Government, yet described by the Nobel laureate Paul Krugman in The New York Times yesterday as

“still, by most measures, deeply depressed”,

has grown nearly three times as fast as the UK, and according to the Congressional Budget Office, will have a deficit next year of 4%, compared with a deficit of 6.1% in this country, and UK debt will be nearly 18% higher in 2015-16 as a share of GDP than that forecast by the OBR in 2010 on the EUROSTAT measure.

Make no mistake, this Chancellor’s policies on taxation, benefits and spending are cutting the incomes of the poorest tenth of households by 2.7%, at a time when the OECD forecasts that we will see barely half the rise in economic demand that will be seen in America next year, and barely a third of that the year after, despite the looming fiscal cliff. Despite the stream of measures unveiled in the autumn statement, the OBR’s verdict on their usefulness was as unerring as it was deadly for the Chancellor’s reputation—just a 0.1% rise in GDP over the next two years, at the same time as the OBR downgraded growth by 1.7% over the same period.

Increasingly, we see that this Chancellor’s legacy will be to turn the long-term prospects of the UK economy into those of a low-wage, low-skill, low-investment and low-productivity economy. On wages, this Government cannot answer positively the question posed by millions of ordinary people across the country: am I better off now than I was four years ago? The Government cannot answer positively the question: am I better off now than I was eight years ago? The reality is that with the median wage across the UK having fallen by a shocking 7.9% in real terms in this Chancellor’s first two years in office, and by 7.4% in Scotland, people are worse off now than they were 10 years ago. The Resolution Foundation, in evaluating the effects of the autumn statement, predicted that real wages in 2017 will be no higher than they were in 1999. This Government have made the wrong choices on who to help at a time of poor consumer confidence and weak demand. When they could have helped households with the cost of child care, which is rising in Scotland by 6% a year, boosted female employment and cut inequality, they decided to hurt the poorest 40% of the public harder, as a share of their income, than they will hurt the richest 10%. Lone parents who are in work and on tax credits, of whom there are 115,000 in Scotland, will be worse off by an average of £300 a year by 2015, according to the Resolution Foundation. Three quarters of the cuts in tax credits will hurt precisely the strivers the Chancellor purports to back.

The Chancellor’s legacy on investment is equally dire. Business investment is now lower than the Office for Budget Responsibility forecast a year ago, with manufacturing investment having dropped by 6.7% in the last quarter compared with a year ago. Despite funding for lending, there is precious little evidence that demand for lending in the economy is rising. Net lending by the banks to small and medium-sized businesses fell by a further £2.4 billion in the three months to August this year, according to the Bank of England.

The Government could have changed course in the autumn statement and acted to stem the £20 billion rise in the benefits bill during this Parliament by getting more of the 1,320 long-term jobless in my constituency back to work by cutting VAT and adopting more active labour market policies than their failing Work programme. They could have bolstered construction and housing by building as many as 100,000 homes across the UK by allocating the 4G proceeds to productive use rather than simply trying to cook the books with them. They could have done that, but they did not. They have let the country down, and that is the legacy not only of the Chancellor, but, sadly, of the entire Government.

Remploy Factories

Debate between William Bain and Jim Cunningham

Tuesday 4th December 2012 Westminster Hall

[Mr Bain]

Absolutely. My hon. Friend highlights precisely the complete lack of logic in the proposals, at this time when the disabled, young people and people in long-term unemployment are encountering the toughest employment conditions in decades.

[Mr Jim Cunningham (Coventry South) (Lab)]

We have Remploy in Coventry, and it is one of the most profitable organisations there are. It has contracts with Jaguar and Ford, and if a factory can get such contracts and drive hard bargains it is doing very well. The tragedy, which anyone who has met these people from Remploy knows, is that within days they were sacked, and some of them will never work again. The Coventry plant operates like a normal factory as, I am sure, do others. It is amazing. They have their own representation. What is being done is short-sighted and, more importantly, it shows the true face of this Government.

[Mr Bain]

Indeed, and the Government should be looking at the application of procurement rules, striving every sinew within the Cabinet Office, the Treasury, the Scotland Office, the Northern Ireland Executive and the Welsh Assembly Government to ensure that good industries such as these have the accessibility to public service contracts that would give them a good long-term future. That is one of the things that I will be asking for later.

The Minister, perhaps inadvertently, revealed the real picture when I last secured a debate on the topic in this Chamber: of the 1,021 disabled workers sacked by Remploy and this Government in their closure programme of this year, a mere 35 have found other work. Will she be able to update us on the most recent figures when she winds up?

[Mr Bain]

I entirely agree with my hon. Friend.

Those 35 people are not in jobs of equivalent pay and skills to the ones they had with Remploy; they are the only 35 people who have got any work at all. Additionally, the Work programme is placing only 2.5% of long-term jobless people in my constituency, and less than 4% across the country, into sustained work.

To have any chance of producing a solution to the crisis, the Minister must recognise the true problem: the economy is too weak and long-term unemployment is soaring. Some 1,320 people in my constituency alone are long-term jobless. Vulnerable groups such as the young and the disabled are suffering the most. The OECD has shown that a disabled person is twice as likely to be unemployed as a non-disabled person. It is clear from the figures so far that the Minister’s plans for Remploy workers, and for the disabled as a whole, are not working.

The reality is that the longer someone is out of work, the lower their chances are of finding another job. So instead of doing nothing, the Minister should be redoubling her efforts to help disabled people in long-term unemployment get jobs now. It is unacceptable to plough on with a failed strategy that simply consigns sacked Remploy workers to near certain long-term unemployment, and crushing poverty, as a result.

In the spirit of constructive engagement, I offer the Minister a plan out of the hardship that the closure programme is inflicting on disabled workers across the country. First, given the ways in which I have shown it is increasingly hard for the disabled to find new work, the Minister should announce today a moratorium on any further factory closures in phases 1 and 2 to lift the threat from 18 other Remploy factories in communities such as Clydebank, Cowdenbeath, Dundee, Stirling and Leven, as well as in Springburn.

Secondly, I ask the Minister to convene an urgent working group, to report by the end of the year, composed of officials from her Department, the Scottish Government, Glasgow city council, Scottish Enterprise, trade unions and other representatives of the disability and local business communities to help locally elected politicians draw up plans to save the Springburn factory.

Thirdly, I ask the Minister to engage specifically with the Scottish Government to build on the commitments made by Minister Fergus Ewing in Holyrood last Thursday to introduce a proper strategy to support Remploy staff in Scotland and those who have already lost their jobs but not found new work, as the Welsh Assembly Government and the Northern Ireland Executive have already done.

Fourthly, the Minister should ask ministerial colleagues to review the application of public procurement rules, particularly the application of article 19, and to draw up plans for how supported employment workplaces can more effectively win Government contracts and secure their long-term futures. The Springburn factory makes high-quality wheelchairs for the NHS, but it has no long-term relationship with the NHS in Scotland or with Government agencies at UK level.

Finally, given the disastrous conduct of the tendering process in relation to the Springburn factory, the Minister should order an inquiry into what went wrong, why the process collapsed and how the hopes of workers were raised last month only to be so cruelly dashed by her letter of a few weeks ago. In particular, she needs to provide answers to questions being posed by workers at the factory and by one of Scotland’s major newspapers.

Last Wednesday, the Daily Record reported that Remploy Healthcare entered a deal with R Healthcare, otherwise known as R Link, in July 2011 to take over the “front end” of the business, including

“the sales, marketing and distribution of Remploy’s healthcare products.”

There are many people who believe that that contract may have endangered the probity of the tendering process for the sale of the Remploy Springburn factory. Workers at the factory believe that the contract, which was not made public at the time, sealed their fate as long ago as last year.

Will the Minister tell the Chamber why there has been such a lack of transparency on the existence of those contracts? How can she ensure that this tendering process and future tendering processes will operate on a level playing field for other potential buyers of the Springburn factory and any others? She will be aware of the concerns of Greentyre and other potential bidders—they felt excluded from the tendering process because of the link with R Healthcare. Why were the contracts kept secret only until the decision to close the factory was announced? Why has her Department refused my freedom of information requests on those contracts? The reply refusing the request was sent on the same morning as the confirmation that the factory would close. Does she really believe it reflects well on her Department that R Healthcare is planning to keep Remploy’s wheelchair order book, and to benefit from the business that will be released thereby, after dumping all the workers and closing the factory?

The Minister will remember from when we debated the issue previously that if the factory had been sold, the workers would have benefited from the protection of the TUPE regulations. If any workers are taken on by Haven, R Link’s subcontractor, they will not benefit from the protection of TUPE, which is the difference. If workers are fortunate enough to be re-engaged, they might be hired on markedly poorer terms and conditions. Such asset stripping should not be worthy of contracts issued under the aegis of her Department.

[Mr Jim Cunningham]

What my hon. Friend has revealed is nothing short of scandalous. Having said that, will he include the affected factories in Coventry and the rest of the UK in his proposals to the Minister?

[Mr Bain]

Absolutely. My hon. Friend is entirely right that, given the scale of the disaster being faced by people in the disabled community, the only answer is for there to be a moratorium so that this incompetent Government can produce a strategy for disabled employment that actually works.