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"a 'remarkably strong' appetite for UK Government debt".
There is no problem about borrowing from the money markets-they are keen to lend to the Government, especially as we are going ahead to ensure that the economy recovers and that they will get their money back in due course. There is not a problem there.
Let me move on to some of the reading that I have done. John Kenneth Galbraith wrote a wonderful book called, "The World Economy Since the Wars". In that, he pointed out that the American economy borrowed massively during the second world war but finished up at the end of the war with the strongest economy in the world and full employment, and beat all the competition. The Americans borrowed massively and invested massively during the war and had a strong economy at the end of it. We did the same. Indeed, in a fully employed economy the debt repays itself over time. The key to it all is ensuring that we create and sustain full employment.
I used to be chair of a group called the full employment forum-a party organisation-and as employment rose we wound the group up, because it seemed that we were getting towards full employment. However, I think that we need to revive it. The economic policies that we had-guided to a large extent by John Maynard Keynes
between 1945 and 1970-worked. What has happened since has not worked. We have had instability, high unemployment and, overall, a lower growth rate than we had at that time. We have made some terrible mistakes, and we have had a warning with this massive economic collapse. We are now, I think, in a good place to recreate the policies of the past and to avoid the catastrophe that so nearly befell us.
John Mason (Glasgow, East) (SNP): There have been a number of speeches so far and I probably agree with quite a few things that have been said. I would like to come at the subject from a slightly different angle and, not surprisingly, to speak from a Scottish perspective.
First, our economy-either the UK's or Scotland's-should not be where it is. Other countries went into recession better prepared. The country that I want to compare Scotland with is Norway, as they are of a similar size- [ Interruption. ] If somebody wishes to intervene, I am happy to give way. Norway built up an oil fund worth $400 billion or thereabouts and has therefore hit the recession with the savings ready for a rainy day. Its forecast surplus for next year is $84 billion, which compares with the UK deficit of $56 billion. Unemployment in Norway is 3 per cent., whereas in the UK it is somewhere in the region of 7.9 per cent. Seeing that Ireland and Iceland have just been mentioned in the same breath in sedentary comments, it is worth noting the IMF figures for gross domestic product on purchasing power parity for 2009. Of those four countries, Norway is at 52,700, Ireland at 39,300, Iceland at 35,700 and the UK is bottom of the four at 35,200.
Mr. Binley: I am slightly concerned about this comparison. Does the hon. Gentleman feel that Scottish citizens would be willing to pay about £6 for every pint that they have? That is the level of taxation that has been necessary to keep Norway going.
John Mason: I thank the hon. Gentleman for that intervention. He is touching on the completely different issue of a minimum price for alcohol, which is also our party policy. As he probably knows, alcohol is a problem in Scotland. I think it used to be more of a problem in the Nordic countries, but that has been dealt with by controlling supply and minimum pricing-which I assume that he is supporting. However, it has to be said that Norway has been more careful with its oil money and that is the main reason why it is so much better off-it is not to do with alcohol pricing.
I agreed with the emphasis that the right hon. and learned Member for Rushcliffe (Mr. Clarke) placed on debt right at the beginning of the debate. Despite some of the reassurances that we have had from Government Back Benchers, I think that debt has been a problem in recent years-and not just Government debt, for that matter. Public sector debt, private sector debt and certainly individual debt have been an accepted part of life in this country, and wrongly so. As we go forward, we must have less emphasis on debt and more on savings-not least savings for pensions, which were mentioned earlier by a Government Member. One of the problems at the moment is that the low interest rates, although they are great for borrowers, discourage future savings and penalise
those with modest savings. I have constituents who had a small amount of savings, which were really important to top up their modest income, and they have now virtually lost them.
We need a balance between manageable debt that is acceptable and excessive debt, which we have had. Individual mortgages and prudential borrowing for local authorities are worthwhile things. We also need to consider where we are trying to go. Let me quote my right hon. Friend the Member for Banff and Buchan (Mr. Salmond), who spoke in Inverness at the weekend. Some hon. Members might not have had the opportunity to hear that speech, so I just thought that I would read it-although I shall not read the whole thing. He said that we need a contract with
"the people in communities across our nation. A contract based on our social democratic values-wealth created and wealth shared"-
"The creation of wealth is important when times are good. It is imperative when times are tough. The sharing of wealth is important when times are good. It is a moral imperative when times are tough."
"the economic choices which we as a society must make in tough times"
"the political decisions that we as a country must take if we are to protect and defend the fabric of our communities."
"put the people of this nation first-creating a rich country and rich society."
"Our objective is a Scotland free to reach its full potential-a Scotland that is more prosperous, fairer, a voice for peace and reconciliation in the world".
I realise that not everyone in the Chamber would accept that. Some people have said that it is the wrong time to talk about the constitution, but I want to argue that it is certainly the right time to do so. The constitution, the economy and welfare cannot be separated. I am fascinated that the title of the debate should be "Economic Recovery and Welfare", yet scarcely one member of the Conservative party has talked to any extent about welfare.
Those issues are inextricably linked, and it is because of the constitution that Scotland is where it is. We have suffered unnecessarily because we are part of the UK. The constitution affects the way in which we spend the money that we have, and we have to prioritise. We should judge expenditure by the way in which it affects jobs, and whether it is sustainable.
The hon. Gentleman has just said that Scotland has suffered unnecessarily because of its association with the UK, and earlier in his speech he acted as John the Baptist for the messiah from Banff and Buchan. However, does he not recognise the effect of the Barnett formula on 5 million people in Scotland and on a similar number of people in the east midlands of England-similar demographically, geographically and in all sorts of ways? Public sector spend in Scotland is 20 per cent. or more greater than that of the east
midlands. That should not be allowed to continue, and when the hon. Gentleman gets independence, he will have to cut the supply of southern taxpayers' money.
John Mason: Our income is so much higher than that of the people of the midlands or any other part of England and we could afford to spend it if we were not spending it on what I am going to refer to next. Does Trident really have to be a priority? Many people-even people who support nuclear weapons-would say that it is not a priority at this time. If we are thinking of how to spend £75 billion, £100 billion or whatever the figure is, we should consider where it would create the most jobs. I suggest that it would not create the most jobs if we spent it on nuclear submarines-we could use the same money for more jobs in roads, housing, schools or similar.
Mr. Bone: The hon. Gentleman has been most generous in giving way. The hon. Member for North-West Leicestershire (David Taylor) made a different point, as he was trying to say that it is the imbalance that is wrong. My constituents each have £2,000 less public money spent on them than people in Scotland, yet we pay the same taxes. Is that fair?
John Mason: The hon. Gentleman reiterates what has been said before, and I reiterate my reply: we consider that we are subsidising the rest of the UK with oil money, which we should be able to use as our own income. It is not that our expenditure needs to be cut-it is more the case that the public sector in the rest of the UK needs to come up to the Scottish level.
Hywel Williams: I hope that my hon. Friend would accept that the gross imbalance in development in England, the huge spending in the south-east, and the deprivation of areas such as the east midlands are not a reason to fail to look at fiscal autonomy for Scotland and a fairer share of the money for Wales.
John Mason: My hon. Friend makes a good point. We certainly believe-and I think some Government Members do so-that expenditure should follow needs. The other argument, apart from Scotland's income, which is extremely healthy, is that we end up being one of the few countries in the world that discovered oil but became poorer as a result.
In my constituency, which is one of the poorest, and in the neighbouring constituency of Glasgow, North-East, which will soon hold a by-election, people do not understand why they are suffering so much when we apparently have so much wealth. The constitution affects Scotland's ability to borrow. We have talked a great deal about borrowing in this debate, and I have said that I agree with a sensible level of borrowing. The UK Government borrow-whether that is sensible is another question-and local authorities are allowed to borrow. It is absolutely incredible that Scotland-and Wales, I
believe-are not allowed to borrow and to get out of the recession in that way. It would boost the Scottish and Welsh economies, and necessarily the UK economy, if we were allowed to borrow wisely and more freely. The Scottish Government are doing very well with the limited powers that they have. Abolishing business rates for small businesses has provided a real boost to that sector.
Finally, moving on to the welfare side of the equation-as I said, I have heard very little about that-I am afraid that I see very little difference between Labour and the Conservatives. Some Labour Back Benchers have spoken well on the issue, but I fear that they are not typical of their party, especially those on the Front Bench. Since coming to the House a little over a year ago, I have seen the introduction of the Welfare Reform Bill, which was supported by both the large parties, but I still consider it a harsh piece of legislation, with lots of sticks but very few carrots.
The Bill contains some interesting words, including "personalised", which also appears in the Conservative motion and was mentioned many times by Government Front Benchers when we discussed the Bill. In practice, however, I see very little evidence of personalisation, as there are too many rigid hurdles that trap ordinary people, preventing them from getting back into work or even from just increasing their income a little. Recently, a constituent came to see me, as he was limited by the £20 earnings rule. If my memory serves me correctly, he worked for Asda, which had a bonus scheme and wanted to give him £21. That caused a huge problem for him, and he had to come along to my constituency surgery for the sake of £1. That kind of rigid response is the exact opposite of personalisation, and I want a lot more reassurance that either major party is thinking seriously about the issue.
We have an extremely rigid system, and I think, to be fair, that that has been recognised. I have been reading the report from the Centre for Social Justice entitled "Dynamic Benefits", which highlights the rigidity and the marginal tax rate that keeps people out of work. Taking into account tax, national insurance, losing council tax and housing benefits, people can sometimes get an extra £1, but lose 90p. There is something very far wrong with that-whether it is 50p or some other limit, we need to address the issue.
Another obvious incentive-it has not been mentioned today, and is not always mentioned when we discuss welfare benefits-is the question of minimum and living wages. If someone or a family cannot live on the minimum wage that is paid, their money is topped up with working tax credit. That is a good thing, and it is better than what we had before, but we must realise what it means: we, the public sector, are subsidising the private sector in many cases to pay wages on which people cannot live. How can that be considered right, and how can it be considered a good use of public money? By raising the minimum wage to something like £7, we would increase the incentives for people to get back to work, and there would be a saving in working tax credit, as well as simplicity in a bureaucratic system.
I have a few final comments on the motion, which mentions the private and voluntary sectors. I am very much a fan of the voluntary sector, but there are certain core functions that the state should carry out. Prisons should be in the public sector, as should health, the
police, the mail service and, I suggest, welfare. The motion talks, too, about "effective recession schemes", but I wonder what that means in practice. The Government are planning to cut the Scottish budget by £500 million. [ Interruption. ] I do not know if we have seen a comparative figure from the Conservatives, but I assume that it is similar to the Government's cuts. I see very little difference- [ Interruption. ]
John Mason: I see very little difference between the two Front-Bench teams or between what they have got to offer. I feel sorry for the people of England, who have to choose between those two parties. At least we in Scotland have a wider choice.
Tony Baldry (Banbury) (Con): My mother's name is Oina Paterson. As one would guess from that, she is a Scot. My grandfather served with the Highland Light Infantry and my great-grandfather was a Gordon Highlander. I find the speeches of hon. Members such as the hon. Member for Glasgow, East (John Mason) so desperately depressing because Scotland is a much greater nation than is articulated by the nationalists in the House. As it is rare that I speak of Scottish nats, I shall get this off my chest-I find their Poujadist politics awfully depressing, and I hope that at the next election the good people of Scotland have the great sense to send the right hon. Member for Banff and Buchan (Mr. Salmond), and all of them, packing, and recognise that Scotland is all the better for being part of the Union, and the Union is all the better for having Scotland as part of it.
We have to recognise that Britain has something of a jobs crisis. This year has seen the highest increase in unemployment on record, with more than 2,000 people a day losing their job. What we have heard from those on the Government Benches today has been incredibly complacent.
Tony Baldry: If and when the Tories get back into government, on past experience I would expect the Government Whips to make sure that there was a good turnout for such a debate. It is amazing that those on the Treasury Bench cannot manage to get a single Back Bencher other than the Parliamentary Private Secretary to support the Treasury Bench team on a debate as important as one on the economy, welfare and unemployment in the run-up to a general election. It is tragic. It is pathetic.
Labour Members ought to be in the Chamber to listen to the fact that there are 3.3 million households-that is, 17 per cent. of all households-where no adults are in work. Britain has a higher proportion of children
growing up in workless households than any other European country. In Work and Pensions questions today, when I asked the Secretary of State whether she could give an example of a single other European country that had a higher proportion of children growing up in workless households than Britain, she weaved all around the question and I think we eventually ended up in Moldova, but that came as a helpful suggestion to her from Labour Back Benchers.
It is a disgrace that so many children in this country are growing up in households where there are no adults in work. This year the Government expect to spend £36 billion on benefits for those out of work. Jobcentre Plus can just about manage to keep up with ensuring that people receive the jobseeker's allowance to which they are entitled, but it is not managing to help get people back into work. The average amount of time that one has for an interview at a jobcentre is 3 minutes. That is not a criticism of the staff. They have to deal with the fact that so many people are losing their jobs.
For every £3 raised in tax, £1 is being spent on social security and debt interest. That is just not sustainable. We have a duty of care to try to ensure that no one is left behind, and that we help those who are out of work while they are out of work and help them get back into work as speedily as possible. We have a moral and an economic case for doing that.
Mr. Brooks Newmark (Braintree) (Con): One of the interesting statistics in Braintree is that the jobseeker's allowance roll today is about 2,700. That is a trebling of what it was six months ago. More important, a fifth of those-27 per cent.-are between the ages of 18 and 24. It is the young people I am most concerned about, because we do not want to end up in a vicious cycle with a generation permanently on benefits.
I am pleased that the Opposition have presented a clear, integrated welfare to work initiative, the work programme. In the past couple of years people have been saying, "It looks like the Conservatives may well win the next general election, but we don't know what your policies are." During the summer we made clear what we intend to do. We intend to provide help for entrepreneurs, offering business mentors and loans to would-be entrepreneurs. We will have a programme to connect people to volunteering opportunities in their area. We will help youth unemployment through youth action for work, which over two years will provide 200,000 additional apprenticeships, 100,000 additional FE college places, 100,000 work pairings and more than 40,000 additional young apprenticeships. That is a well costed and brilliant scheme.
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