Previous Section Index Home Page

Ms Keeble: An active debate on the fiscal stimulus took place some time ago, but when one looks at the figures, one finds that the packages that most countries have come up with are roughly similar, give or take a bit. After all the hullabaloo caused when Germany said that this country was doing the wrong thing, the package
23 Apr 2009 : Column 446
it has come up with is not dissimilar to ours. I also think that there is a lot of wrongspeak about whether people predicted the crisis.

Angela Eagle: On the fiscal measures alone in this financial year, 2009-10, does my hon. Friend agree—I think that she is making the point very well—that fiscal support worth 4 per cent. of gross domestic product from measures announced in the Budget, combined with what is in the pre-Budget report and the operation of the automatic stabilisers, will make the fiscal expansion in this country one of the largest overall in the G20?

Ms Keeble: Yes, indeed. Giving way allowed me to pick the Red Book up. If one looks at what Germany did, one finds that its discretionary measures were actually larger than ours. Given all the debate that took place and all the criticism that the Chancellor and Prime Minister faced from the Germans, one would never have expected that.

The hon. Member for Carmarthen, East and Dinefwr is also wrong to say that people predicted the crisis. Some hon. Members, particularly the hon. Member for Sevenoaks (Mr. Fallon), who is not in his place but with whom I serve on the Treasury Committee, have listened ever since 2005 to various people, almost all of them men in grey suits, talking about the economy. I did not hear any of them say that we were heading for the biggest ever cataclysm. The only people who were predicting the crisis were the people who have always predicted the collapse of capitalism, and they are to be found in the Socialist Workers party and the Liberal Democrats. Everybody else failed to spot it.

Even at the end of 2007, after the collapse of Northern Rock, people were saying that the situation was difficult but it would get better in the spring. It was not until the collapse of Lehman Brothers that it became absolutely clear that a domino effect was taking place and that we were into something that we had not seen before. The first person who publicly called it, much to my irritation, was the Chancellor on that infamous weekend that he spent in Scotland with that Sunday Times journalist.

Mr. Hayes: I certainly do not wish to claim that I predicted the crisis—it would be an unwise Member who did so—but the hon. Lady has to acknowledge that real doubts were expressed by Conservative Members and others about the level of personal debt and, in particular, the dependence of economic growth and prosperity on borrowing. I, like others, argued that the collapse in the savings ratio over the period of this Government was extremely dangerous and jeopardised the future of the economy. That point was continually made, was it not?

Ms Keeble: The hon. Gentleman is absolutely right about the arguments that were made about personal debt, but what was not predicted was the drying up of the wholesale market, the impact on and collapse of Lehman Brothers and then the extent to which the UK retail banks were exposed to the risks involved in Lehman Brothers. I did not hear anybody calling that set of circumstances, despite my having listened and listened. The angst about the level of personal debt is real and a very important discussion took place on whether that should be limited, but one cannot extrapolate from that predictions of what has actually unfolded.


23 Apr 2009 : Column 447

Dr. John Pugh (Southport) (LD): Is it not a strange irony, that although practically nobody predicted the present situation, everybody seems capable of predicting where we are going now?

Ms Keeble: While things were going well, everybody wanted to believe that that was going to continue—

Mr. Bone: No.

Ms Keeble: A lot of people did. It is now really important to learn the lessons of what happened and to work out not only how to prevent it from happening again, which is not the subject of this debate, but how to build our way out of the difficulties that we have experienced. The Government have been very bold—some might say excessively bold—in what they have done through the asset protection scheme and the asset purchase facilities that have been extended. We do not know exactly what the outcomes will be, but such schemes are one way to get the financial markets moving, to get credit flowing and to get things moving again.

The Government have also been bold in picking up some of the immediate pressures and dealing with them in this Budget. The hon. Member for Carmarthen, East and Dinefwr was a bit unfair on this point. He and I were at the same presentation by David Blanchflower. The fiscal stimulus package that he wanted was not huge, and its main focus was a measure to deal with what happens to young people who miss out. The focus in the Budget on the opportunities for 16 to 24-year-olds is very important, even though it is perhaps more modest than David Blanchflower might have liked. I want to see the detail of these provisions because I want quality schemes to be provided, unlike the youth training schemes, youth opportunity schemes and so on that we saw before. The Budget has dealt with some of the issues raised by David Blanchflower in type, if not in scale. The hon. Gentleman and I have both pressed the Government to deal with those issues, too.

Let me talk a bit about housing and about the elephant in the Chamber—the shape of public services and how we fund them. That is a major issue, and we all have an interest in its resolution. I am keen to see improvement in the housing market in terms of people’s ability to buy houses and the availability of mortgage finance; I also want the supply of housing to be improved. I am pleased that the Budget has dealt, to an extent, with both those points. More money is being put in, particularly for new builds, which are extremely important, through local authorities and in conjunction with the private sector, in order to ensure the provision of a range of housing and tenures. Again, I want to see the details, because it is important that there should be some qualifications and some clarity about what will happen. I hope that guidance will be given on the cost per unit and so on, as well as specifications for the number of units.

I hope that when money is provided to local authorities to enable them to build, they will be given clear guidance on how procurement should work. My local authority is spending money on getting housing up to standard—it is not building new housing, but carrying out refurbishment—and the procurement is being done in such a way that, so far, all the local firms have been excluded from the tender list and have been unable to bid for work. Particularly during a recession, it is extremely
23 Apr 2009 : Column 448
important not only to get the houses built and to obtain good value, but to support small and medium-sized local businesses, so that we retain across the country a good range of skilled workers and people who can win and manage building contracts.

I hope that when the money is provided to local authorities, they are given clear guidance on two points. The first is on having local labour clauses, so that there are no arguments about whether the jobs are being given to British workers, and so that there is clarity about what is expected in terms of making sure that local unemployed people and local young people coming off apprenticeship schemes get the chance of a job. Secondly, local building firms should clearly be given the opportunity to compete for contracts with the very big contractors on a level playing field. Particularly at present, some of the big building firms will try to keep themselves going by picking up public sector work, and the pricing will be very competitive. Unless we make sure that we support small and medium-sized building firms and enable them to keep going, we might find that when the upturn comes, we have the brickies and the plasterers, but not the contract managers and the people who can look after the range of types of contract that we will need.

On the mortgage side, in what may be a hidden part of the Budget, the proposals include those for the mortgage rescue scheme, which is in place now. Four of the big building societies are signed up to it and a number of other building societies are providing similar programmes. It is vital that the money starts flowing again for the provision of mortgages. The most recent figures from the Council of Mortgage Lenders show that there have been improvements. It is important that that continues and that institutions continue to provide the financing for new building schemes in the private sector.

I have been dealing with a case in my constituency in which HBOS reviewed a loan facility provided to a local small or medium-sized developer and withdrew it. As a result, a residential unit, which was to have provided social housing, has been mothballed purely because of a lack of available financing. I ask my hon. Friend the Exchequer Secretary to make absolutely sure that banks that have received public funds stick to their obligations to maintain their 2007 lending levels, and that we get reports quarterly, not just annually. That way, we can be absolutely certain that the banks that the public bailed out are now supporting the public by providing the lending that is needed for recovery.

Mr. Hayes: While the hon. Lady is on the subject of housing—I know that she shares my interest in that subject—will she say a word about HomeBuy? The Government announced £80 million for the HomeBuy scheme, and the estimates that I have suggest that that will help roughly 10,000 buyers. However, given that, even in very bad times, there are about 10,000 applications for mortgages each month from new buyers, is that not an extraordinarily marginal proposal by the Government? Does she see shared equity as a critical way of helping new buyers on to the ladder, as we have done for many years?

Ms Keeble: There are quite a few measures that will help people in different sectors of the housing market, of which HomeBuy is one. It is not a huge scheme, just
23 Apr 2009 : Column 449
as the mortgage rescue scheme is not huge. There is a range of different measures targeted to support different groups of people. Furthermore, although it might sound cruel, the reduction in house prices will help first-time buyers, and the Building Societies Association projects that that reduction still has a bit further to go. Figures that have come out show that the cost of housing as a multiple of income is at its most favourable level for first-time buyers for a long time.

The group about which I am most concerned, to which a lot of people in my constituency belong, comprises those who lose part of the family income, but who still have half a job, or work some hours. They do not qualify for the income-based jobseeker’s allowance and so do not qualify for the support for mortgage interest payments. They are the people who will probably have the hardest time in the coming months, which is why I ask the Government to look again at that measure.

Mr. Hayes: But the whole point is that what we actually need is a more fluid housing market, where people—for example, those in local authority housing who want to own their own home—can get on the ladder through shared equity, freeing up social housing for the 4.5 million people who are, I remind the hon. Lady, on local authority housing lists. As she will know, that is a 73 per cent. increase since 1997.

Ms Keeble: I agree, but what will help greatly is the increase in supply that the Government are providing through the Budget. That is really important and will be one of the measures that improves the housing market.

Before I make my main point about the shape of services, I want particularly to welcome the proposals to allow grandparents’ care for their grandchildren to be counted towards their pension. That is a really important scheme, which will give practical help to many women who have already taken time out of work to look after their children. It also sends out important signals about support for the family and about our understanding of what people want in terms of caring for their children. I pass on my thanks for that.

One of the big issues we all have to face is that, even without the recession, there were real questions about the future direction of public services and their provision. Because circumstances have changed in the years of Labour Government, people have become used to a different standard of living and different standards of service. Those questions will become more acute now that spending is tighter. As a number of Members on both sides of the House have said, we have to make sure that public spending counts and is even more effective than it has been so far. We need to look at how we provide services and think about not just how we cut, but how we reconfigure. By any measure, cutting services year on year until 2015 would probably destroy the morale of everybody who came into public service, because, by and large, they do so to make sure that public services are provided.

During the lifetime of the Labour Government, people have got used to having more choice of service and more control over the type of service they receive, which is all to the good, but it has profound implications for the range of our delivery agencies. There are many tiers of local government and there are different types of quango and semi-quango and arm’s length delivery
23 Apr 2009 : Column 450
agencies. We need to take a hard look at them, so that we can have not necessarily a smaller state, but certainly a flatter one without so many quangos and hierarchies of structure. For example, I know of one town where there are two chief executives sitting across the road from one another—I suspect my colleague on the Conservative Benches, the hon. Member for Wellingborough (Mr. Bone), knows about them too. Each of those executives draws a large salary and each has a large bureaucracy serving exactly the same community. We need to give some thought to how such services are delivered in the future, while of course maintaining the democratic commitment.

The one service that the public want to access most acutely is probably the health service, where public pressure for access to drugs such as Herceptin and treatments such as in vitro fertilisation has driven the provision of services, rather than the local purchasing authority. It is all to the credit of the Labour Government that people have got used to a standard of public service that is light years ahead of what they were used to—now, people complain if they have to wait two months for an operation, whereas previously they had to wait two years.

Looking at the way in which a new configuration of services might work and the savings that it might produce, I refer my hon. Friend the Exchequer Secretary to the Treasury to an interesting report—I have already mentioned it to her briefly—by PricewaterhouseCoopers on bridging the fiscal gap. It considers two models: one would make cuts, but PWC finds that completely unacceptable, because it would mean a level of cuts that we had never seen in the public sector; and the other would raise taxes, combining a 2 per cent. rise in VAT, a 1 per cent. rise in all national insurance contribution rates and a £5 billion increase in green taxes, which, again, would test public patience past breaking point.

The report also considers the savings that could be made by reconfiguring public services in a way that maintained front-line services but changed some back-office functions. For example, over the time scales in the Budget, there are projected savings in back-office operations and IT of £8 billion, in collaborative procurements of about £24 billion, and in properties and facilities of about £5 billion. Those figures are indicative, but they certainly posit that, if we think carefully about the services that the public want, the way they want to access them and how they are provided, in a very different world where people want more say and do not want people to purchase for them—in other words where purchasing power is with the public, not with an institution—we can maintain the quality and quantity of public services to which people have become accustomed and still make sensible savings that chime much more with the public mood than heavy tax rises or public spending cuts ever would.

Angela Eagle: My hon. Friend is right to point to the potential savings from collaborative procurement. Some of the work of the operational efficiency programme, the results of which were published the day before the Budget, demonstrate that there is up to a 200 per cent. difference in the price per therm that Departments pay for electricity and gas. Does she agree that such differences must be driven out? Those are potential efficiency savings that would not impact on the front line.


23 Apr 2009 : Column 451

Ms Keeble: I completely agree that there is scope for efficiency savings. It points to changes to the way in which services are provided, so that, instead of having multi-tiered delivery agencies between a Department and the public, the public have much more direct control over the way in which services are provided. That involves much careful thought about service design, implications and ensuring equal access for disadvantaged groups that do not have the same clout as others. It also means ensuring that the people who work for such agencies—an awful lot of whom are women—do not suddenly lose their jobs. Given the current situation and attitudes towards public services, it is important that we think carefully about how our polices are designed and how services are provided. We should not just think, “Let’s take a standard model, chop a bit off there, put a bit of tax on there and roll it forward for the next 10 years to a time when, perhaps, the public finances will be balanced again.”

The Government have taken some big and important steps towards getting the economy moving again, and in the Budget they have introduced a range of important measures, particularly on housing. I welcome them and look forward to seeing them make a real impact in the community.

4.49 pm

Mr. Peter Bone (Wellingborough) (Con): It is a great pleasure to follow the hon. Member for Northampton, North (Ms Keeble). She made some very good comments about house building and I can relate them to my constituency. One of my constituents, a builder, cannot get on the tendering list, although I am sure that he would be as cheap and efficient as some of the other builders.

Let us not be under any illusion: this Labour Government have destroyed our economy. It does not matter whether we are talking about new Labour or old Labour—there has been a tax and spend approach, which has increased unemployment. Every time a Labour Government have been thrown out, unemployment has been higher than when they came in—and it will be just the same with this one. We can talk about the global financial crisis and its far-reaching effects on world economies, but the United Kingdom is in a far worse position than most. In fact, our country has the worst public finances in the G20. Under the Prime Minister’s stewardship, our country is now in the longest recession since the second world war.

In my constituency, unemployment is more than two thirds higher than it was in 1997. That is not a mistake; it is 67.1 per cent. higher than it was in that year. That is the dire consequence created by the man who spent and spent and never planned for the future economic stability of this country. He is the man who has created the fastest rise in unemployment.

Let me put the issue in the context of families in my constituency. At the end of March 1997, under the Conservative Government, unemployment in my constituency was 1,938—one thousand nine hundred and thirty-eight families were looking at a bleak future. At the end of March 2009, after 12 years of Labour rule, the figure had increased to 3,239, so three thousand two hundred and thirty-nine families—67 per cent. more—were facing such a future.


Next Section Index Home Page