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I agree entirely with my hon. Friend. Both the Chancellor of the Exchequer and I have rejected proposals that have come forward from officials and
others to make cuts when we believe that those would endanger either the key front-line services that all of us want to protect, or people on low incomes. All of us know that the decisions that we take to get on top of the public sector deficit that we have been left will be increasingly difficult, but in the spending review, in the Budget and in the next spending review our minds will always be the need to protect not only those front-line services, but those people in our society who would otherwise be most vulnerable to the action that we must take to deal with the public sector deficit that we have inherited.
Mr Nigel Dodds (Belfast North) (DUP): I welcome the Chief Secretary's commitment to making statements first to the House so that Members can find out here, rather than reading them in the press or hearing them on television. I welcome also his statement that the devolved Administrations will be able to defer cuts until next year if they so wish. In Northern Ireland we are already making 3% year-on-year efficiencies and budgets have been set. May I make a plea to him to ensure that in future Treasury Ministers treat Ministers in devolved Administrations with respect? As a former Finance Minister in Northern Ireland, I know that under the previous Government there was not genuine dialogue but diktat from the Treasury, to the cost of the devolved Administration. Will the Chief Secretary ensure that there will be such a dialogue in future?
Mr Laws: I am grateful to the hon. Gentleman for his kind comments. We are giving that flexibility to the devolved Administrations, although I say to them that it is important that they start to make the savings as soon as possible; if they simply wait until next year, they will find it more difficult to make the adjustment. I make an undertaking to the hon. Gentleman that the Treasury will remain open to discussions with all the devolved Administrations, to make sure that their concerns are properly taken into account.
Conor Burns (Bournemouth West) (Con): I warmly welcome my right hon. Friend's announcement on the future of our colleges, which were so cruelly deceived by the previous Government. It will give great optimism to Bournemouth and Poole college, which was encouraged by the Labour Government to move out of its buildings and seek new funding for new buildings. The announcement will give great optimism and prove that, even in these difficult times, the Government are committed to giving our young people the best start in life.
Mr Laws: I agree very much with my hon. Friend. The management of the colleges capital programme was, as independent commentators as well as party politicians have said, an absolute and utter shambles. It was perhaps the best example of the incompetent financial management of the previous Government and it wrecked the plans of many colleges across the country, including colleges that had incurred considerable expenditure in preparing their bids. I am very pleased that the Chancellor agreed to put the £50 million aside to help colleges with their capital programmes. The aspiration is that that will leverage in additional private investment to a fund of £150 million in total, which we hope will be able to help up to 50 colleges in a very real way, even in these tough times.
Mr Dennis Skinner (Bolsover) (Lab): Is the Minister aware that not a single member of the Cabinet has turned up to back him in this statement here today? They are all part of this rag-tag and bobtail army-not one of them is here. Can there be a more pathetic sight than this Liberal Democrat, who campaigned against cuts in 2010, now hammering the young and the old and putting people on the dole as a member of this rag-tag and bobtail Government? Get out!
The hon. Gentleman talked about the decisions that we have made. Perhaps he could acknowledge two things. First, we have protected the NHS and we have protected schools. We have put money into social housing, which he might have aspired to do if he had had influence on the previous Government. We have also done something that the last Labour Government failed to do-announced the restoration of the earnings link on the state pension, from April 2011. He should acknowledge that.
Mr Peter Bone (Wellingborough) (Con): May I congratulate my right hon. ally on having been made Chief Secretary? Does he think that we are living in Alice in Wonderland when the shadow Chancellor complains about making announcements to the press first? He knows a lot about that.
Will the Chief Secretary confirm that the coalition Government's commitment is to increasing spending on the NHS in real terms each and every year, while improving efficiency, so that front-line services improve?
Mr Laws: I agree with my hon. Friend on both those points, including his first comments about the shadow Chancellor. Yes, we are going to commit to increasing the real budget of the NHS each year, even in these tough economic times when we will have to deal with the consequences of the deficit that the previous Government racked up. We will also ensure that, even with that protection in its budget, the NHS delivers the savings that make sure that we can protect the front-line services that people want to be protected.
Mr Mike Hancock (Portsmouth South) (LD): I congratulate my right hon. Friend on his appointment and his performance here today. Will he explain to the House some of the benefits that will accrue, particularly with regard to the amount of money being put into social housing? Will he also say whether he was as impressed as I was by the transition of the former Chancellor from Chancellor of the Exchequer to stand-up comedian in a very short space of time?
My hon. Friend makes a very good point. I am pleased to have support from another Gladstonian Liberal on the Liberal Democrat Benches. I am grateful to him for drawing attention to the additional investment that we are making in social housing. That is a real priority for many Members across the House, including those in the Liberal Democrat party and the Conservative party, and, I suspect, for a lot of Members on the Labour Benches, who have been sad that the previous Government were unable to invest more in social housing. Among the many black holes that we are discovering in
the public finances left to us by that Government, we have already found a very big black hole in the funding of the social housing programme. We are determined to do everything we can to ensure that the vulnerable people who depend on social housing-those who are on the waiting lists that built up under the previous Government-will have some hope under this Administration.
Miss Anne Begg (Aberdeen South) (Lab): We have experience of removing ring-fencing in Scotland, because the Scottish National party Government have done that for local government. May I advise the Chief Secretary to take a look at the Lib Dem council in Aberdeen to see the effects of the removal of that ring-fencing? Its priorities are to close schools and day centres for disabled people; instead, it is spending money on grandiose building schemes.
Mr Laws: I have already made it clear that our priority is to protect schools, which is precisely what we have done in the spending statement. I am afraid that there is a basic ideological differences between those on the Labour Benches and those on the Government Benches-we believe in devolving power and giving freedom to people. We do not believe that Government know best, and the previous Administration proved that very effectively.
Christopher Leslie (Nottingham East) (Lab/Co-op): Given that the Chief Secretary is taking more than £1 billion away from local authorities in this financial year, can he give a categorical guarantee that no local authorities will have to issue emergency changes to council tax bills in this financial year? Many people are worried about that.
Penny Mordaunt (Portsmouth North) (Con): I am sure that the Chief Secretary knew about Labour's mismanagement before coming to office, as did many others, which is why Labour Members now sit on the Opposition Benches. However, did he know about the scorched-earth policy that we have heard so much about in the past few weeks and leading up to the general election? What will his Department do to ensure that that abuse will never happen again?
Mr Laws: I am grateful to my hon. Friend. I agree that there seems to have been a scorched-earth strategy as regards not only the state of the public finances but the way in which the Government were spending money at the end of their term. We are looking very closely at all the decisions that have been made, and we will be making further announcements shortly about the action that we will have to take.
Caroline Flint (Don Valley) (Lab): I am firm believer that we should provide real opportunities and have employers at the heart of devising these schemes. What on earth is to be gained by taking away resources from the future jobs fund, which I understand means that there will be 80,000 fewer job opportunities working with employers around the country?
We are maintaining the young person's guarantee. I have to tell the right hon. Lady that the clear advice that we have had is that that particular part
of the young person's guarantee was simply not effective and was wasteful-that the proportion of expenditure that was being saved as a consequence of it was minor and the administration costs were huge. I would instead point out to her the real action that we are taking to help young people in these tough times, with an additional 50,000 apprenticeship starts. That will make a real difference and will be far more effective than the scheme that we are amending in order to save money, which frankly was simply not working.
Mr John Baron (Basildon and Billericay) (Con): Perhaps the Chief Secretary would like to take this opportunity to correct a fundamental flaw in the thinking of the Opposition in believing that spending cuts necessarily take money out of the economy, whereas in reality every pound that is spent and borrowed by Government ultimately comes from the private sector, and we need a strong private sector-led recovery to help us to reduce the deficit.
Mr Laws: My hon. Friend makes a very good point. He will also be aware that some of these funds are going to be used to avoid part of the tax on jobs that the previous Administration were intent on, and that will help to preserve employment in this country.
Mr Kevin Barron (Rother Valley) (Lab): Could the right hon. Gentleman tell the House what is fair about cutting the future jobs fund, which was aimed at helping 8,000 young unemployed people in Yorkshire and Humberside? Would he personally be happy to see youth unemployment rise to the levels that we saw in the recession of the early 1990s?
Mr Laws: Of course we would not, but I have to tell the right hon. Gentleman that the policy that we set has to be informed by the facts, and the facts and advice that we had from the Department for Work and Pensions about the future jobs fund suggested that it was simply not effective and that the money was wasted. We have a £156 billion deficit to deal with, and if we did not tackle the wasteful expenditure we would have to make cuts in the areas that matter. I repeat the point that I made to the right hon. Member for Don Valley (Caroline Flint) a moment ago: we are reinvesting money in apprenticeships, which will make a real difference to many of the young people about whom the right hon. Gentleman cares.
Mr Andrew Tyrie (Chichester) (Con): The whole House will have heard the concerns expressed in all parts of the House about the need to make statements here first, and I am sure that the Chief Secretary will take that on board when formulating policy for the Budget and for the vital spending review that will come in the autumn. Will he do a little more to remind the House why such an emergency set of policies was necessary-in particular the Greek-style deficit and debt level that he has inherited?
The hon. Gentleman is exactly right, and in the news even this morning and over the past few days we have seen the real risk that the lack of financial confidence could spread across the European Union and engulf even some nations that have not been affected to date. As a consequence, all countries are having to take very hard decisions. Because of the mess in the public finances created by the last Government, the amount of debt interest that we have to pay out is
growing and beginning to exceed some core Government budgets. Had we not acted to maintain the credibility of our fiscal policy, there was a real risk that we could have seen a big rise in interest rates that would have gobbled up additional expenditure and helped to wreck the recovery that is now taking place.
Mr Graham Allen (Nottingham North) (Lab): The Chief Secretary will know, as we all do, that these cuts are the easiest ones-they are the first tranche-yet they are still very hurtful in constituencies such as mine. Addressing the structural nature of the deficit will be even harder. He is a member of the Cabinet Sub-Committee on early intervention, so will he seek to address some of the problems of the structural deficit by ensuring that we invest in babies, children and young people, so that they do not later require billions of pounds of remedial treatment for drug addiction, teenage pregnancy and a lack of aspiration in education and work, and so that we can build the type of society that most of us in the Chamber want to see?
Mr Laws: As ever, the hon. Gentleman makes a serious and important point, and he is absolutely right that as we take tough decisions and come towards the spending review at the end of the year, we will have to try to maintain the services that we particularly value and that protect individuals in society who are on very low incomes. We need to protect investments that have the potential to pay off in the future, and I promise him that I will examine carefully the matters that he mentions. If he wants to meet to discuss them at some stage, I would welcome the opportunity.
Tony Baldry (Banbury) (Con): Given the unambiguous admission of my right hon. Friend's predecessor that the Labour party left the public finances without any money, will he place in the Library as soon as is convenient a straightforward statement that we can share with our constituents setting out clearly and unambiguously the exact nature and extent of the public finances that this Government have inherited? In that way, as we progress through this Parliament there can be no attempt by those on the Opposition Benches to rewrite history.
Mr Laws: The hon. Gentleman makes a very good point, and there are two answers to his question. The first is that the Chancellor of the Exchequer will make a Budget statement in this place on 22 June, when he will set out precisely the state of the public finances, and the second is that crucially, through the Office for Budget Responsibility, he will make assumptions about the public finances and growth that are objectively and independently informed. He will not do what previous Governments have been able to do, which is fiddle the growth figures for their own purposes.
Mr Lindsay Hoyle (Chorley) (Lab):
I welcome the Chief Secretary's commitment to the defence budget. Will he share with us the benefits to the north-west,
such as the jobs that are important to us? Will he confirm that tranche 3 of Eurofighter, the Typhoon aircraft, will now go ahead?
Mr Laws: We are about to embark on a strategic defence review, and all such issues will be considered as part of that. We will, of course, seek to protect the parts of the equipment budget that are particularly important, but I cannot pre-empt the review.
Richard Ottaway (Croydon South) (Con): Will the Chief Secretary agree that no Labour Government have left office with unemployment lower than when they came in? Does he agree that this lot, the last Government, were absolutely no different, and that it is a bare-faced cheek for them to come and ask questions of such a nature on this occasion?
Mr Laws: My hon. Friend is right that the Labour party's record on unemployment is very far from the original boasts that were made. That is why, even while we are taking tough action to bring down the deficit, we are ensuring that we invest in apprenticeships. We are also-this is the most important thing of all for employers-creating a stable economic environment, keeping interest rates low and ensuring that the recovery will be sustained.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Can the Chief Secretary to the Treasury guarantee that his transport cuts will not affect rail electrification or the Northern Way, which are both essential for economic regeneration and jobs?
Mr Laws: Both those issues are for the Secretary of State for Transport rather than for me. I suggest that if the hon. Lady is concerned about them, she should arrange to meet one of the Ministers in the Department for Transport, who, I am sure, will be delighted to receive her representations.
Roger Williams (Brecon and Radnorshire) (LD): On 26 November 2009, the then Secretary of State for Wales made a commitment, which was supported by the current Secretary of State for Wales, that the Government will take action if Wales is adversely affected by the outdated Barnett formula. Will the Chief Secretary and the Government make a similar commitment, particularly as regards Barnett consequentials resulting from Government spending reductions?
Mr Laws: My hon. Friend is absolutely right that we need to ensure that these things take place in a fair way. He will welcome the fact that a fair share of the additional £500 million that we are investing to sustain the recovery will go to Wales.
Richard Burden (Birmingham, Northfield) (Lab): I am afraid that I do not buy what the Chief Secretary has said about the future jobs fund. The fact is that the Liberal Democrats and the party of his new-found allies agreed and made a commitment on the future jobs fund to protect existing commitments, and they are abrogating that commitment. He says that his apprenticeship plans are an alternative, but what mechanism will ensure that the 10,000 jobs allocated under the future jobs fund in my region are somehow transferred to those apprenticeship schemes?
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