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8.17 pm

Harry Cohen (Leyton and Wanstead) (Lab): First, let me say a word about Afghanistan, because it feeds into this debate. It looks like we are going to commit more troops, and I say do not do it. Since the invasion of Iraq there has been a catalogue of failure, and we cannot really carry on as though the missed opportunity has not been missed, because it has. We are losing the hearts and minds of a growing number of the population, mainly because of the random bombing of civilians by our US allies. There has also been a chronic failure in terms of development, because infant mortality has risen—War Child’s October report talked of a quarter of children dying before their fifth birthday, and that is the third highest level in the world—and the UN development ranking gives only three countries a lower ranking. We cannot afford an unproductive war such as this. Joseph Stiglitz’s book called it “The Three Trillion Dollar War”. That figure is likely to increase if we go down this path. Given the figures that the Select Committee on Defence has produced, and the cost trends and the extra troops, it is likely to be £5 billion a year, and we cannot afford that.

This situation is compared with the 1920s and 1930s, and it is said that the war got the world out of the slump. That is a misreading, because at the end there was greater debt, massive asset destruction and countries were devastated. That took a long time to pay off, and there was a continuation of rationing. What is relevant is that the 1929 great crash also came from unbridled, uncontrolled capitalism. It led to a depression, massive unemployment, misery and hardship for millions, and from there, social upheaval and fascism. Fascism promoted rearmament, which put people back to work, but for conflict.

Elsewhere, the lesson came from Keynes and Roosevelt that government can maintain employment by public works and the welfare state, but admittedly at a cost of
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increased borrowing and debt. However, it is not unreasonable to do that. In fact, it is essential. Local authorities built swimming pools, parks and halls, all paid for over 60 years, and it is okay that those benefiting from them years into the future pay towards them. So, it is not a case of putting future generations into hock.

I am not opposed to a fiscal stimulus, and I think that the VAT cut was a clear signal to encourage trading. It is certainly more appropriate in this context than what the Tories propose—a council tax cut, which is irrelevant in this context. There needs to be more money for those on low incomes and on pensions, but the emphasis should be on capital programmes such as transport infrastructure, new schools, the NHS and new homes. The role of local authorities should be boosted, particularly in building new homes—the point has been made about council houses.

It was right to take a stake in the banks, particularly the commercial banks, to provide stability and to implement our essential socio-economic agenda of getting funds to small businesses and home owners, but regulation needs to be substantially improved. There is no clearer example of that than today’s story of Madoff, with his $33 billion fraud. The City of London is grossly inadequate in these terms. I wrote to the City at the time of the events involving Conrad Black and said, “You wouldn’t have got a prosecution in this country, the way you are operating.” Amazingly, the US is better than the City of London at getting prosecutions. I have not had a reply from the City.

The Tories are still against regulation; their party wants the light touch, or no regulation, that brought us into this mess in the first place. The Tories use the level of debt and borrowing as a political argument to do nothing—laissez-faire economics—but it also goes further: it is the basis of a political position that says for the well-off, “Our share of the cake, whatever it is, is more important than maintaining or having a larger cake overall.” That is an argument for inequality and it writes off a large chunk of the population as victims of unemployment or other aspects of the recession. The Tories leave them abandoned.

There has been overdependence on financial services in the UK, but that has been made worse by the profiteers and speculators thinking of themselves as the lords of the universe who should not be subject to regulation because they are the wealth producers. That is combined with the Chicago school Friedmanites, who are determined, as an ideological doctrine, to eliminate and privatise the state. Naomi Klein has described that very well in her book, “The Shock Doctrine”. The Tories have been the cheerleaders for both those schools of thought, and they have not changed.

For the future, we need more emphasis on productive industry and less on financial services. The emphasis should be rebalanced that way. The bankers have been saved, but Woolworths staff have not. That is unfair. We must have an industrial strategy that protects productive jobs. We need control over who makes credit and in what way. The Government cannot abrogate that matter and give it to the private sector in an uncontrolled way. There needs to be tight control of fancy financial vehicles such as derivatives, which end up worthless. There needs to be accountability and transparency, including of
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offshore transactions. The state has to be the basis of stability and the guardian of the public interest. That cannot be left to the private market and its free-for-all, fraud and failure. Taxpayers must get their money back whenever the banks renew profitability. There must be no swift return to the privatisation of all profits. I say this: taxpayers are more likely to get their money back with Labour than with the Tories.

The Bank of England recently estimated global bank losses at £2.8 trillion. The banks clearly need time for write-offs and state investment is buying that time. In the process, savings and shareholdings are saved from being at zero value, or worthless. It is appropriate for that to apply to the commercial banks—alongside, I might add, tighter regulation, an end to the bonus culture, requirements for them to do their job properly and a shift-out of the top level failures—but I am not convinced that it is so appropriate for the investment banks and hedge funds. By the way, Roosevelt did not want anything to do with them and would not make them legal.

A principal factor about which I am concerned is the pension funds that those investment banks and hedge funds hold. They have been rendered worthless, but those institutions also have them at the end of the queue for payment. The state could take them over at what they are worth now, and then enhance them. Savings could be protected by the scheme that is in place already. However, we could let the rest of the banks—those investment banks and hedge funds—go down. It could be cheaper and fairer in the long term and it would remove that worthless, stultifying debt from the system, thereby allowing the chance for new capital to emerge. Those banks should look to their previous managers and owners in the courts to recoup their losses.

Those are my feelings on the way forward.

8.26 pm

Alistair Burt (North-East Bedfordshire) (Con): It is always a pleasure to listen to the hon. Member for Leyton and Wanstead (Harry Cohen), even if we do not follow all his arguments all the time. Bearing in mind what he said, I wonder how he managed to sit on his hands over the last 10 years, as the very rich became even richer under his Government. No doubt he has an answer, and a charming one, as always.

Just as a dog will ultimately take on the characteristics of its owner, or vice versa, a Queen’s Speech tells us something of the character of a Government. A tired and rather thin Queen’s Speech tells us a little about a weary animal that simply wants to pack up and go home to the fire. The rationale for this Government left when Tony Blair walked out of the door, and since then the Labour party has struggled to convince anyone that it had any intention of doing anything in government except be there to keep the Tories out. I must admit that that has a Machiavellian logic to it, but it probably is not what the public are looking for.

Before I comment on the subject of today’s debate, may I make a couple of brief remarks on other matters in the Queen’s Speech? The snappily named Local Democracy, Economic Development and Construction Bill legislates for, among other things, the transfer of planning powers from the unelected regional assemblies
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to unelected regional development agencies. I have not met anyone connected with regional development agencies who wants those powers. They see them as a poisoned chalice and a way for the Government to get out of their failed regionalisation policy. I hope that the Bill perishes either in the Lords or here.

The policing, crime reduction and airport security Bill will, among other things, finally provide coherence in the provision and costing of airport security, but not before some £2 million has been lost to Bedfordshire police due to the Government’s decision four years ago to cut expenditure on Luton airport—a major national port of entry and departure with obvious security interests. The Government’s inexplicable decision to cut the funding and ask Bedfordshire police to take up more of the burden has increased costs for a hard-pressed police authority. A lot could have been done with that £2 million, and I hope that during the passage of the Bill an amendment will be carried that provides a suitable vehicle to repay that cost.

Although the Government’s continuing efforts on welfare reform are belated, they are to be commended. The Government seem to be accepting some of the analysis that my Opposition colleagues advance consistently, and which Labour Members, most notably the right hon. Member for Birkenhead (Mr. Field), occasionally mention. As a former Minister for disabled people, I welcome the improvements to the access to work scheme. Those improvements, as well as the improvements to ensure that those with disabilities have rather more control over their own lives, follow the path laid down so well by Sir Nicholas Scott during his tenure in that important post. I am pleased to see those developments continued by the Government.

Two further points on welfare reform are worth mentioning. First, any social welfare reform now carried forward without being fully informed by the work of my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) and his Centre for Social Justice will be off track. His comprehensive pulling together of so much statistical information on our damaged communities has done much to mould opinion in recent years and to help us recognise that attempts to move people from benefits into work and to promote economic independence cannot achieve success unless they are accompanied by an understanding of the extent of family and relationship breakdown and of its impact on communities.

Any time spent with those who work on the front line of a country that now exhibits clear signs of social apartheid suggests that while a fortune is spent on the consequences of family and relationship breakdown, too little is spent on supporting relationship structures in the first place and trying to prevent their breakdown later, particularly when children are involved. As recent court cases have further revealed the depth of that brokenness, we need somehow to find national consensus on tackling a problem that will last, Government in, Government out, over the next 50 years. I suggest that my right hon. Friend’s work provides an excellent basis for that.

Secondly, I would be interested in seeing an amendment made to the welfare reform Bill. When I visited a community furniture re-use project in my constituency recently, the organiser raised the issue of community care grants. The project deals with a number of clients
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with addiction issues. When community care grants are paid in cash, there is an understandable temptation and risk that they will not be used for the purpose intended. My local project has suggested to the regional Jobcentre Plus that vouchers should be given rather than cash, and those involved in the project believe that vouchers are in use in some parts of the country. The response from the regional Jobcentre Plus was that to give cash to some individuals and not to others would be rather unfair.

During the passage of the Bill, I wonder whether the Government might consider running some more pilot projects, relegating the concept of “fairness” and giving preference to an understanding of the individual needs of a client. Individual decision making on whether to give money or a voucher to someone who is addicted might require them to be given a voucher, which would be better all round. I would be grateful if the Government could think about that.

Finally, let me move on to the economy. It is clear from many speeches made by Members of all parties that, whatever the intentions of the Government and Whitehall, the financial injection into the banks is not getting through as we would have intended. The chamber of trade in Biggleswade tells me that banks are approaching business customers to tell them that even as base rates are reduced, they are holding businesses to the rates of interest on their loans or credit facilities that were originally agreed. There is a widespread belief, notably shared by the right hon. Member for Birkenhead, that little has been added through the £12.5 billion spent on VAT reduction. Most constituents are aware of price reductions elsewhere, as businesses adopt the traditional practice of dropping the price to sell the goods.

There is a further pressure affecting recession in areas such as North-East Bedfordshire. Earmarked for significant building in the future, the area has now a large number of building schemes that are now at best on hold or might be shelved. In addition to the schemes, the section 106 funding that goes with them has been taken into account in the local authorities’ plans. If the section 106 plans fall foul of the economy’s collapse, the agreements will either be renegotiated or lost and local authorities will find themselves looking for new money to fulfil promises that they have already made to the community. Under the straitened circumstances that they are in, they will be unable to do so. That will put further pressure, which is currently rather underrated, on local economies.

The Government’s attitude to the fall in the exchange rate is puzzling. I have twice attempted to ask both the Prime Minister and the Chancellor of the Exchequer what they believe the reasons to be for the fall in the value of sterling over the past few months. My questions, and those of others, are now met by a standard reply, which is that the Government do not give a “running commentary” on the value of the exchange rate. That is not what we are asking for. Asking for an explanation of what has happened is not the same as asking for a running commentary on what is happening now or might happen tomorrow. The now Prime Minister worked that out when he was shadow Chancellor, when he said that a weak currency was evidence of a weak Government. The probity of asking about the value of exchange rates did not worry him then.

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There are three answers to the question. The first is to say that the world has got things completely wrong, that it is misjudging our economy and that everything is dandy. To say that while praising the rest of the world for ostensibly following what the Government are doing would put the Government into difficulties, so that answer is not given. The second answer to the question of what has happened to the exchange rates is that there has been a snap answer to a series of sudden problems in the British economy; things will pick up next year and people will realise that they have made a mistake. That is not a bad answer, but it indicates that there are some problems at present, so it is not an answer the Government give. The third answer is that the world is completely right: we are in a total Horlicks, the judgment is correct and we are very sorry. That is the right answer, but again it is unlikely to be given. Any of those three answers would be better, however, than simply saying, “We are not giving a running commentary.” Perhaps the Minister who replies to the debate might be given the opportunity to answer the question.

As a nation, as individuals or as a people, the answer to the economic crisis cannot be that we should just go back to where we were. We cannot ask people to return to over-borrowing, not saving and being offered money that they cannot afford to take. They must not be urged to buy things they cannot afford. Consumerism as the answer cannot be where we want to put people after all this is over. Whatever reflections there are after the recession, one of them will surely be to try to understand that the concept “enough” should mean more to us than the concept “more”. At some stage, we shall have to face that as a nation, rather than being asked to go through this whole cycle again.

8.35 pm

Lyn Brown (West Ham) (Lab): I shall consider some of the means that we need to adopt if we are to eliminate child poverty in the United Kingdom by 2020, ensuring that the Government’s ambitious aim becomes a reality for the people on low incomes whom I represent. The Government are rightly proud of their progress in tackling child poverty thus far, but I fear that in the capital there is still much to do. At present, one in four of London’s children live in poverty, almost twice the national average: 650,000 children—a figure equivalent to the entire population of Sheffield.

London is a wealthy city, but that wealth and strength is in massive contrast to the entrenched pockets of deprivation that can be found across the capital. To achieve the child poverty target, co-ordinated cross-departmental action is required. We need a London strategy if we are to reach our target, as the capital faces a unique set of challenges: high rates of worklessness, staggeringly high housing costs and a relatively low skills base. Additional challenges are posed by a highly transient population—transient through necessity, not choice.

The national minimum wage has had a real impact on reducing child poverty across the country. It was a just and morally right policy to pursue and has resulted in positive advancement for many workers and families. However, I fear that the national minimum wage has not had the same impact for Londoners. Many of my
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constituents work their guts out for the minimum wage, which is peanuts in an area where the costs of housing, day-to-day essentials and child care are so very high.

The notional hourly rate of the London living wage is £7.45, but at present about 10 per cent. of full-time workers and a massive 45 per cent. of part-time workers do not receive that rate. The issue needs to be addressed. My next point will be controversial, but we need a debate on whether we should consider the introduction of regional differentiation in the minimum wage to address the needs of the capital. Wage rates matter when we are trying to deal with poverty.

I listened with great interest to the contribution of my right hon. Friend the Member for Croydon, North (Malcolm Wicks). I represent constituents in a borough where the challenge from long-term worklessness, ill health and disability is as entrenched as anywhere in the country. Nearly 7,000 people in my borough have been receiving incapacity benefit for more than five years, and 4,710 receive IB as a result of mental disorders. It is right to remind the House that Department for Work and Pensions research on the pathways to work pilot found that

The research also found that the imposition of sanctions—not work per se—worsens existing health problems, provokes new mental health problems, has a worse impact on the most deprived and isolated people and rarely improves positive engagement:

That document goes on to describe a series of representative cases in which people have struggled to take on work, have been exhausted, panicked, and drained of confidence, and have sometimes failed. For those with physical health conditions, the dominant issue was managing to fulfil their work obligations without experiencing pain or worsening their health condition. It was reported that clients often develop mental health or emotional difficulties such as depression or low confidence as a result of their poor physical health and the impact on other aspects of their life.

I applaud the White Paper’s support for a vision of personalised conditionality, matched by personalised support. I cannot emphasise too much the importance of cross-Government working to explore how we can integrate health, work and skills services for people with mental health conditions.

As I am sure that the majority of Members would agree, adequate, safe and affordable housing is essential for good mental health, and central to the fight against child poverty. The announcement of an £8 billion programme last summer to deliver 180,000 affordable homes has given hope to many young families. Families living in grossly overcrowded homes often fail to thrive. Many tensions are created and the children struggle to keep up at school.

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