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17 Jun 2010 : Column 1049

Mr Aidan Burley (Cannock Chase) (Con): Which individual project was my right hon. Friend most surprised to see had been given the go-ahead?

Danny Alexander: It would be invidious to choose between some of the projects on the list. I realise that each of the decisions has difficult consequences for the communities affected. My surprise is not at an individual project but at the general approach to spending that was taken in the run-up to the general election.

John Woodcock (Barrow and Furness) (Lab/Co-op): In the light of the bizarre suspension of the successor deterrent programme, will the Chief Secretary tell us whether the Trident value-for-money review will consider the overall question of whether the successor to Trident remains the most effective form of deterrent?

Danny Alexander: The hon. Gentleman has no doubt studied carefully the coalition programme for government, and he will know that we have agreed to proceed with the successor deterrent to Trident. The value-for-money review will do precisely what it says on the tin: we want to get the best value for money from the project and not waste taxpayers' money unnecessarily on the renewal.

Penny Mordaunt (Portsmouth North) (Con): I was surprised, but glad, to hear that Treasury staff have been able to help the shadow Chief Secretary to the Treasury to review the projects mentioned in the statement. It is a shame that he did not do that while he was in office. Will the Chief Secretary consider seconding some of his staff-if he can spare them-to help to educate Labour Members and to get them on the same page as the rest of the country, given the state that they have left the economy in?

Danny Alexander: I agree with the hon. Lady that the people of this country are ahead of the Labour party in realising the seriousness of the economic problems that we face. That consensus is now a global one-people will have seen the statement from the G20 summit on the need for faster fiscal consolidation. That is right, and the Opposition are wrong.

Several hon. Members rose -

Mr Deputy Speaker: Order. I remind Members to try to keep to the subject of the statement; the Minister is not responsible for previous Government policies.

Fiona Mactaggart (Slough) (Lab): If the Chief Secretary thinks that the biggest risk to jobs is the deficit, why does Britain have a better employment rate among all other European countries than America?

Danny Alexander: The risk that we face is the fact that we have the largest budget deficit in the EU, with the exception of Ireland, that we have a very substantial structural deficit and that growth is lower than forecast. All those things argue for what we are going to do, which is implement a programme to reduce the deficit faster and further than the previous Government proposed. That is the only responsible course to take; profligate spending of the sort we saw in the final days of the previous Government is not responsible.

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Alec Shelbrooke (Elmet and Rothwell) (Con): Does my right hon. Friend agree with me that, after their cynical attempts to buy the last election, the crocodile tears of Labour Members do nothing to raise the standing of this House in the public's eyes?

Danny Alexander: I share the hon. Gentleman's hopes for higher standards in Parliament, but Ministers of the previous Government ought to have known in the context of the financial situation that the country faces and of their own plans to cut £50 billion from public spending that these additional spending commitments and claims on the reserve were simply unaffordable. That chicken is coming home to roost today.

Michael Connarty (Linlithgow and East Falkirk) (Lab): I note that £1.2 billion-worth of the cancelled projects, as they are called, are from the future jobs fund-for the young people of the right hon. Gentleman's constituency and mine. I wonder what the consequences will be for the Scottish budget. Can he tell us what impact there will be on my constituents in Scotland, or have his Conservative bosses-let us be quite frank-done a deal with the tartan Tories in the SNP in Scotland?

Danny Alexander: The hon. Gentleman will know that benefit and Department for Work and Pensions spending is a reserved matter, so does not have a Barnett consequential. He will also know that the Government have set out plans to establish a Work programme, which will replace those programmes during next year. That will be a more targeted, quicker and effective programme, based on paying suppliers by results to ensure that people get back into work quickly. I welcome that programme and I hope that he will, too.

Mr Rob Wilson (Reading East) (Con): Can the Chief Secretary confirm the good news for Reading and for my constituents-that the Government are fully committed to the Reading station upgrade, because it offers excellent value for money?

Danny Alexander: I have heard what the hon. Gentleman has said. It will be for the Department for Transport to announce the details of projects that have been approved.

Pat Glass (North West Durham) (Lab): I and the people whom I represent will be desperately disappointed that the new North Tees hospital is not going ahead. My understanding is that it was not promised in the last weeks before the election, but had been planned, committed to and expected for five years. The decision will have a massive impact on the Tees area, Cleveland and Durham. The hospital was to provide specialist services for the whole of that area. How does that sit with the promises made by Government Members not to cut health spending?

Danny Alexander: The hon. Lady will know that it is a foundation trust which is coming to the Government for additional funding. She may not be aware, however, that consent for the project was given on 10 March 2010, so it is within this period. Of course I accept that the decision will be very disappointing for people who have worked on the project for that time-I do not wish to belittle that at all-but in the context of the economic situation that we face and the decisions that we have to
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make, it is right and proper to judge such projects on the strict value-for-money and affordability grounds that we have applied.

Mr Philip Hollobone (Kettering) (Con): Which factors convinced the Chief Secretary to cancel the local authority business growth incentives scheme?

Danny Alexander: It was the fact that there is no substantive evidence that it has had any effect on doing the job that it was supposed to do or set out to do-to encourage local authorities to work with business.

Alex Cunningham (Stockton North) (Lab): We have already heard from the new Prime Minister that the north-east of England can expect to suffer hardest from the cuts, so I want to know precisely why the North Tees and Hartlepool NHS Foundation Trust hospital, which is in my constituency, is not going ahead, particularly as we have seen tremendous progress in reducing health inequalities in my area, and that hospital was going to complete the job.

Danny Alexander: In the context of tighter budgets, it is essential that all major hospital buildings must be affordable and provide value for money. On that basis, the Government decided not to proceed with that scheme. It was assessed against a number of other major build projects that were at the same stage of development; those schemes are more urgent. The hon. Gentleman will be aware that the previous Government set out plans to halve capital spending over the next few years. We have to make judgments about capital spending in the context of budgets that are a great deal tighter. I appreciate that that is disappointing, and I do not wish in any way to belittle the point that the hon. Gentleman is making quite fairly on behalf of his constituents, but in judging these things we have to apply the value-for-money criteria as we have.

Phil Wilson (Sedgefield) (Lab): During the general election campaign, the Prime Minister said that any Minister who went to him to propose front-line cuts would be sent back to the drawing-board, so may I suggest that the Minister goes back to the drawing-board, because that is exactly what he is doing? The people of the north-east, in Teesside and south Durham, want the Hartlepool and North Tees hospital, which has been under development for five years and is clinically-led but has been cancelled. On 6 May, people might have voted for the Liberal Democrats because they thought they stood for something; today they know that they do not.

Danny Alexander: I understand the hon. Gentleman's concerns on behalf of his constituents, but the anger should be directed at Labour Front Benchers, who irresponsibly agreed to spend money that, as the former Chief Secretary said in his letter, simply is not there.

Mr Phil Woolas (Oldham East and Saddleworth) (Lab): I ask the right hon. Gentleman to look again at his decision on Sheffield Forgemasters. That £80 million, which is spread over some years, is in the form of a loan and has a huge multiplier effect for the nuclear industry, particularly in the north-west. Is he trying to make sure that if the expansion of the nuclear industry takes
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place, which I hope it does, the infrastructure for it will have to come from overseas? Will he look at this again, because he is doing what he has accused the banks of doing-not providing loans for investment?

Danny Alexander: I have looked very carefully at this and all the projects that we are cancelling or suspending. I believe that the decision that we have made is the right one on value-for-money and affordability grounds. I have discussed it with my right hon. Friend the Secretary of State for Business, Innovation and Skills. In the context of the pressures on budgets and the affordability and value-for-money criteria that we have applied, I am afraid I am not able to go back and reconsider. Officials from the Department for Business, Innovation and Skills will work with the company to try to ensure that it gets access to a private sector solution. As to the nuclear industry, the hon. Gentleman will know that the coalition agreement commits us to no public subsidy for nuclear power.

Helen Goodman (Bishop Auckland) (Lab): This afternoon, the Chief Secretary has taken a further £1 billion out of the Department for Work and Pensions and the fact that one of the cuts is to the young person's guarantee demonstrates how empty is the Government's rhetoric about being concerned about the vulnerable. Moreover, both the Tories and the Liberals voted with the Government for the legislation in March that provided for the two-year jobseeker's guarantee. How can the Chief Secretary defend saying one thing in March and another thing today?

Danny Alexander: Well, there is no money left. The more important point is that we are cancelling programmes that we believe are ineffective and replacing them with the Work programme, which will start during next year and will be more effective at helping people who need help to get back into work quickly. That is an objective that we share; I believe our programme will be more effective in doing that. The hon. Lady will know that in the £6.2 billion announcement that we made a few weeks ago, one of the areas to which money was recycled was additional funding for 50,000 more apprenticeships. That is valuable additional support to help young people find jobs now.

Alok Sharma (Reading West) (Con): Will the Chief Secretary remind us once again why we face such a difficult spending review? It is clearly something that the Labour party has failed to understand.

Danny Alexander: As I said earlier, the reason we face such a tough spending round is the overriding need to bring our deficit down further and faster than was planned by the previous Government. That is necessary to restore confidence in our economy and restore balance to our public finances. It is the overriding priority, and it will restore jobs and growth in this country faster than the last Government would have managed.

Paul Blomfield (Sheffield Central) (Lab): I wonder whether I can help the Chief Secretary by providing the answer that he failed to provide in response to an earlier question about value for money. Will he acknowledge that over the three years for which the Sheffield Forgemasters loan was under consideration, the Treasury conducted an extremely robust value-for-money exercise?
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This Government talk a great deal about consultation, but before the statement I spoke to the chairman of Sheffield Forgemasters, who confirmed that over the period of the Government's review there has been no contact whatever with the company. Will the Chief Secretary confirm that fact?

Danny Alexander: What I can confirm to the hon. Gentleman is that we have applied value-for-money grounds to this as to all the other projects. With a restricted budget, however, we must make choices about where we can spend money, and unfortunately we simply cannot afford to provide funds for this project any longer. As I have said, officials from the Department for Business, Innovation and Skills will continue to work with the company in helping to find a private sector solution to the challenge.

Chris Heaton-Harris (Daventry) (Con): Will the Chief Secretary remind the House of the size of the structural deficit, and perhaps remind Opposition Members that these are Labour cuts caused by the state in which the last Government left the country's finances?

Danny Alexander: That is not a matter for my judgment; it is a matter for the judgment of the independent Office for Budget Responsibility, which we established to restore independence to the statistics on which budget judgments are based. According to the OBR, the structural deficit has risen to 8%, while the overall deficit is £155 billion. That is a vast sum. If we are to restore health to our economy we must narrow that gap, and do so quickly.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): When the cuts that the Chief Secretary has announced today-which his boss will no doubt announce again on Tuesday-lead to lower growth, higher unemployment and the collapse of the construction industry, with consequential reductions in the Government's revenue and increases in their benefit bills and, as a result, an increase in the deficit, what will he cut next?

Danny Alexander: I think that what the hon. Gentleman and, if I may say so, many Opposition Members fail to recognise is that the country faces a choice: a choice between taking the robust action which is needed and which we will take to bring responsibility to the public finances and reduce the deficit, and failing to take that action. The risk posed by the latter course is clear from what has happened in other countries. I believe that the action that we are taking today, and will no doubt take in future weeks and months, is necessary to ensure that in future we have the jobs and growth that we need.

Clive Efford (Eltham) (Lab): Before his right hon. Friend the Member for Yeovil (Mr Laws) wrote the Chief Secretary his "Carry On Cutting Regardless" letter, he came to the House and told Members that he had been advised that the future jobs fund element of the young person's guarantee did not provide value for money. The former Secretary of State for Work and Pensions, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), said that that conflicted with what she had been told when in office. Will the Chief Secretary now publish both sets of advice and place them in the Library of the House so that Members can make up their own minds about who is telling the truth?

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Danny Alexander: What I know is that according to the Department for Work and Pensions the programme provides poor value for money, and that the Work programme with which we will replace it next year will give better, more targeted, quicker and more effective support to the people who are most in need. It will do what I hope every Member wants, and help those people to return to work.

Toby Perkins (Chesterfield) (Lab): In the days when the Liberal Democrats were in a separate party from the Conservatives, did they not say in their campaign that they would not make cuts this year and pull the rug from under the feet of the economic recovery? Did the right hon. Member for Sheffield, Hallam (Mr Clegg) make any representations to the Chief Secretary about Sheffield Forgemasters, and when he stood for election did he make his constituents in Sheffield aware that a vote for the Liberal Democrats would lead to hundreds more people in Sheffield losing their jobs?

Danny Alexander: The hon. Gentleman has asked about four questions in one. I will answer the first. As he knows, the risks facing the country have changed over the past few months. Any survey of the evidence across the world suggests that the risks of sovereign debt crises are huge in other countries. That is reflected in the G20 communiqué, which agreed that faster fiscal consolidation was what was needed in major economies. I think that that is right. Only the Labour party is out of step with that international consensus.

Mr Chuka Umunna (Streatham) (Lab): Again and again, the Chief Secretary, his predecessor and the Secretary of State for Work and Pensions come to the House and assert that the future jobs fund is an ineffective scheme. How can the Chief Secretary say that when the Department for Work and Pensions has not collected the data concerned? The first cohort of young people to take part in the scheme have only just finished, and the data are not yet available.

Danny Alexander: According to my information, the programme represents poor value for money and is not delivering on the objectives set out for it, and our Work programme-which the Secretary of State for Work and Pensions will be announcing-will give people a more effective, quicker and more direct route back into work by paying providers by results, and ensuring that people receive the support that they need.

Gavin Williamson (South Staffordshire) (Con): Has my right hon. Friend received one piece of slightly useful advice from Labour Members about how to sort out the mess that they created?

Danny Alexander: There was one-

Mr Deputy Speaker: Order.

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