Mr Geoffrey Robinson (Coventry North West) (Lab): It does seem strange that the House cannot debate the amendment in the names of the hon. Member for St Ives (Andrew George), the hon. Member for Chelmsford-
Mr Robinson: The hon. Member for Colchester (Bob Russell)-I am so sorry-and other very distinguished honourable dissidents opposite, who are clearly being silenced for some reason or other; I cannot comment on why. I thought the amendment very apropos and exactly to the point in all respects. I am sure that it has not been withdrawn, so quite why it has not been chosen for debate I cannot think. It is a pity, because we could have probed even further the support of the hon. Member for Bermondsey and Old Southwark (Simon Hughes) for it and for the package as a whole, which he was trying to defend last Wednesday with as much discomfort as is evident amongst the Liberals who have not yet entirely been bought by, or who have not bought into, the so-called coalition policies.
It is very sad. There has been nothing sadder, in my opinion, than the right hon. Member for Twickenham (Vince Cable), who is now the Business Secretary, coming around to explain why he supports the Budget. One of the two reasons that he gave was essentially that he had been, belatedly-I think his leader got there first-to see the Governor of the Bank of the England, who had assured him that a crisis was imminent, that we were going to be downgraded and that we would be in the same position as Greece, all of which would happen in a matter of days or hours, if he and the Liberal party did not agree to every measure that the coalition subsequently put forward. All of that should have been entirely predictable at any point before or during the election, even as the bond market strengthened and the UK
position strengthened during the election, and even as we learned afterwards that the funding requirement is going to be £20 billion to £30 billion less than expected. Apparently, the leadership of the Liberal party fell for the oldest trick in the book, the bankers' scare, which has gone on for centuries-classically, of course, with Montagu Norman and all the rest in the 1930s taking that party and this country to the brink of collapse.
Mr Jim Cunningham (Coventry South) (Lab): Has my hon. Friend noticed that the same Governor of the Bank of England who backed the stimulus under the previous Government is now backing the present Government's policies-to the detriment of the public?
Mr Robinson: I note also that when the Governor was still an economist, before he converted to being a banker, he signed the famous letter of 364 economists, which he has now, in a piece of classic recantation, given up on.
All those considerations point to the fact that events could have been predicted and should have been accommodated. We should not have reached the situation in which we had the Business Secretary proudly telling the House-I still cannot believe this every time I read it:
"Those factors drove the economy in terms of demand"-
"and they will continue to do so."
"There is a reason for believing that that is what will happen: the Governor of the Bank of England called for this Budget and has now got it, and he has every reason to understand the need for monetary policy to support recovery."-[ Official Report, 23 June 2010; Vol. 512, c. 316.]
It really is absurd. It is one thing to hand over control of the money supply and monetary policy to the Governor. We did that back in 1997, and I think that was a good move. My right hon. Friend the Member for Croydon North (Malcolm Wicks) nods, and I know that he was in agreement with that move. However, it is quite another thing to say, "Look, we are giving up on fiscal policy too; you can have the whole of the economy." When we did what we did, we joked amongst ourselves that we had got rid of one half of economic policy-notably the monetary side-to the Governor and that it would only be a matter of time before he laid claim to and was given the whole of it. Joke though that was, it has come to pass under this Government. That is sad and regrettable. The Work and Pensions Secretary is sincere in what he wants to do, but he has had to absorb many cuts, which will make his job much more difficult, as was brilliantly exposed by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), who spoke for the Opposition.
However, it is not just that. The only two sure things about the Budget is that it will increase unemployment and reduce growth. That we can predict, because the Office for Budget Responsibility has told us. Beyond that, the Government refuse to give any distributional
analysis. Beyond the second year, we do not know what will happen, except that the OBR has pencilled in some figures for growth that it says are hazardous in the extreme.
The Budget is an enormous gamble at the great cost of the working people in this country. It is a gamble based on the assumption that the Governor will increase quantitative easing when he said he would not. Perhaps in some magical way he will take other powers to deal with the fiscal constraints imposed by the Budget, because he can do nothing else. He cannot reduce interest rates much more, unless he wants to reduce them from 0.5% to 0%, or unless he starts shelling money out, which is hardly credible. He said he would not do any of those things, so the truth is that we face a situation in which the future of the country is being gambled.
Apart from the good intentions of, and the megalomania that seems to be developing in, the Bank, that gamble rests on three factors: an increase in inventories, meaning an increase in output; an increase in investment; and an increase in private sector activity. Who really believes in their heart that any of those factors can be counted on, especially given that the Government have made the investment route highly unlikely by reducing capital allowances? They are served at the moment by a Financial Secretary who told the Committee that considered the previous Finance Bill that they would reduce such allowances-on nearly all counts, and they have been as good as if not better than their word. He could see no reason why investment should not be reduced to the cost of amortisation in manufacturing or industrial enterprises. If that is the negative, neutral view of the need for increased investment and output that infuses the Budget, and in particular the crucial elements highlighted by the OBR-it says that there is a need for greater investment and output, and to rebalance exports-we are in for a big let down on that gamble.
Let us take one other example-Sheffield Forgemasters. Anybody who has dealt with the Government knows that it is virtually impossible to get money out of a shareholder executive. It is like getting money out of a stone, but the firm reached a conditional agreement. That would have made an enormous contribution to the rebalancing of the economy, including in respect of import substitution, and now those products will come in from Japan, because the arrangement was cancelled. I am afraid that in their tone and their measures, the Government are making recovery immensely more difficult and, far from recovery, we face a further period of prolonged deflation.
I strongly believe that over the past few years, the state has taken too much. It was interesting listening to the right hon. Member for Normanton, Pontefract and
Castleford (Yvette Cooper). She declared that the nasty party is back, but I know from my personal life that to protect the vulnerable and to give people a genuine chance of making the most of their lives, we need to empower individuals, families and communities.
In talking to several of my constituents in East Surrey, the constituency I have the honour of representing in this House, it became vividly clear to me that budgetary discussions should focus not only on accountancy, numbers and economic jargon, but on people and their lives and futures: including the hard-working young family juggling child care and work, who are concerned about their jobs and the rising cost of living; the 22-year-old graduate with more than £20,000 of debt, wondering whether she will ever get a job or a foot on the housing ladder; and the couple about to retire who are worried about their pension after years of paying their taxes and saving for retirement, and who are left wondering whether they will achieve their aim-this must be the aim for every generation-of leaving a better future for their children and grandchildren.
For my constituents, this is what the Budget boils down to: real people, real lives and real issues. Yes, we have beautiful rolling countryside in East Surrey, most of which has been recognised as green belt, meandering between vibrant towns and beautiful villages. It is the epitome of what makes England unique. We know how fortunate we are, and we take seriously our duty as custodians and protectors of the local environment for future generations. We have great community spirit and pride in our area, which means that for the vast majority of people in my constituency, putting back into the community is a way of life.
It sounds idyllic. However, my constituents work very hard, and I know from my postbag that some of them face difficulties just as real as those faced by people in other parts of the country. A lot of them think-and I tend to agree-that the previous Government treated them as a cash cow, and squeezed and squeezed and squeezed. That is true of all those paying taxes, and of the various local councils who do sterling work on a shoestring budget from central Government.
On a national level, East Surrey has been served with distinction by two great public servants: Peter Ainsworth, for 18 years; and Geoffrey Howe, who now sits in another place, for 24 years. They championed the constituency in this place and always stood up for what they believed in. I know I have big shoes to fill, and at 5 foot 41/2 inches, I need to stand on the shoulders of giants.
Peter's radical stance on the environment was instrumental in shifting attitudes to green issues, and he introduced as a private Member's Bill the Green Energy (Definition and Promotion) Act 2009. I also respect him for sticking to his guns on the Iraq war when it seemed unpopular to do so. From my dealings with him, I can say without equivocation that he is a good man.
I can say the same of Geoffrey Howe, whose mild manner disguised a steely sense of purpose. He was Mrs Thatcher's longest-serving Cabinet Minister- 11 years is a long time in politics. In his now famous 1981 Budget, when our party faced the task of getting the country back on its feet, he followed the courage of his convictions by deflating the economy at a time of recession, in the face of resistance from all sides, including 364 leading economists who wrote a letter to The Times saying that the Budget had no basis in economic theory.
However, I believe we learned a greater lesson from that Budget-that we cannot pull certain economic levers in certain circumstances. The lessons from that Budget lie firmly with its weaknesses rather than its strengths. We have learned that we cannot be coldly dispassionate when setting economic policy, and that we cannot ignore the effect on jobs and people's lives. That is why I support our programme to get people back to work. Getting people into work is the best route out of poverty.
As in 1981, our party once again faces the task of redefining our economy and reshaping our society. That is why I welcome the Chancellor's proposals for small businesses, which are the backbone of our economy. A long-lasting recovery must have its foundations in the private sector, which is where jobs will come from. Jobs will come if we reward enterprise, endeavour and ambition, and if we have a step change in our approach to enterprise. We need to encourage a spirit of adventure. Without accepting that basic premise, we will not have people taking the risks that are essential to creating the next Vodafone, the next Dyson and the next lastminute.com.
Many Opposition Members say that having the state do less by focusing on getting people into work and building an economy based on rewarding endeavour will penalise the less well-off. They are wrong, and I should know. I grew up in very modest circumstances. My standing here in the Chamber is the result of the vision, care and support of a strong mother, who brought us up on her own and overcame numerous odds, and instilled in us character, discipline and the value of hard work. I do not believe that any state programme could achieve what she has. On the contrary, I would have been trapped in poverty, as millions are.
At university I struggled to pay my rent. But for the generosity of my college, Somerville, I would have been thrown out. That could have been the end of my university education, and perhaps I would not have made it here, so I understand that we cannot leave people to the mercy of markets. For me, the crux of the Budget is that we should empower individuals, families and communities to make the most of their lives.
Some have said that on the face of it, I am an unlikely candidate to represent East Surrey. I have pointed out to them that it is a privilege and a pleasure for me to represent this great constituency because every day I see there the values that shaped me and that I hold dear. Those values should be at the heart of our economic policy and should guide us as we seek to reshape our society for the better.
Mark Durkan (Foyle) (SDLP): It is a privilege to follow the hon. Member for East Surrey (Mr Gyimah). He not only reflected on the beauty of his constituency but let us know that, just because people live in idyllic settings, that does not mean that their family or work circumstances are ideal. He has also given us a trailer for the many lively contributions he will make in this House, seasoned with strong personal reflections, which many Members will have taken on board.
Claims have been made that, with the coalition Government, we have a new politics. That new politics, we are told, is about honesty and rebuilding trust. However, we have at the heart of the Budget the departure
of honesty, with parties justifying doing what they said they would not do. Parties campaigned to get votes on the basis that the last thing we wanted was a VAT increase, but it is the first thing imposed by this Budget. It is a Tory Budget with Liberal Democrat accessories. I concede that some of those Liberal Democrat accessories are attractive-and that is part of the political calculation behind the Budget-such as the triple guarantee on pensions, which is there so that the coalition can say to Labour opponents, "We have done something that you didn't do, we have restored the earnings link and better." I regret that Labour Ministers did not listen to all their Back Benchers during their 13 years in government and do something about the pensions earning link.
Simon Hughes: The hon. Gentleman's views are much respected, but may I say that I was always clear on this point? We did not want a VAT increase, although we had it under the last Government when it went up and then came down again. We were hoping that it would not happen, but certainly I said-as did all my colleagues, as far as I know-that it could never be ruled out. For many of us, the current position is that it may be one of the least worst options.
Mark Durkan: I am not sure if that was the least worst defence of a significant U-turn on a significant campaign issue. People did not just imagine that the Liberal Democrats campaigned aggressively on the issue of VAT increases, so to mount new politics on the basis of honesty and trust against that background is dangerous indeed.
I acknowledge that the Budget has Liberal Democrat accessories that are attractive, as are other aspects, such as the increase in personal allowances. But Liberal Democrats perhaps need to consider that this may be as good as it gets in the coalition. I recall a famous observation in Irish politics by a member of the Irish Labour party. Some time next year, the self-image of Liberal Democrats will change. They will realise that they are no longer in the vanguard of social justice and civil liberty, but instead have become the mudguard of a hard cutting Conservative Government. That will be their role in this Government.
It is not the case that the whole Budget is wrong, and from a study of the Budget notes it is significant how many of the measures build on aspects of the Finance Act 2009 and other Acts passed in the last Parliament. There are tweaks here and there, of the good, bad and neutral variety, but we should not pretend that there is no continuity. When the Chancellor made his statement, he said we would not have to look anywhere else for the Budget, because we would get it from him. He said that there would be no details hidden in the Red Book. However, when we compare his speech with the Red Book, we see that it is littered with phrases such as "We will produce proposals on this", or "Other proposals will be published after we have the spending review in the autumn." The details are all to come elsewhere, so we did not actually get them straight from the Chancellor.
This Government gave us some show-cuts on 22 June. Those cuts were for purely presentational purposes to show that this is a new Government, and to try to mark difference. The Chancellor even told us last week that that was one of the messages he wanted to go out from the Budget, so that people would know there was a difference. That is why the shadow Secretary of State was right to say that the Budget had an underlying ideological push. The scale of the cuts that will come in the autumn is there to drive a political narrative that pain has to be imposed, change will happen and those who do not like it should blame Labour, rather than the Government who are imposing that change. That is the narrative that the Government want, and that is why significant cuts will come in the autumn.
Where will we be then? The poor, who are being asked to pay more in VAT, will then see the services on which they rely squeezed. That is when the full toll of this Budget will be felt, contrary to what the Chancellor told us about getting it straight from him on the day in his statement. We know that this will be pain and penury by instalments, over time, so that they can maintain the narrative of blaming it all on Labour.
I agree with the hon. Member for Gainsborough (Mr Leigh) about the need for a Budget committee in this House. When we consider the scale of the banking issues that this House has to deal with, they should not all be left to the Treasury Committee. The scale of the public expenditure issues we will have to cope with means that we need a discrete Budget committee that has a full and proper handle on them, as well as one for the banking issues. If we are serious about giving priority to cutting waste in government, we should also have a committee that tests Government expenditure in real time. The Public Accounts Committee looks at spending post hoc, and there is nobody who challenges spending plans in real time. We do not have a committee that permanently interrogates waste in government, proofing for good priority and busting waste, but that is what we need. There is no point setting up ever more independent offices of this and independent offices of that, when we do not give this House the tools it needs to provide joined-up scrutiny. We hear a lot about joined-up government, but we do not have joined-up scrutiny. We should take added measures, on top of those put through in the last Parliament.
I urge the Government to lead us in changing the Budget by reclassifying the Budget lines, so that we have one for front-line services, say, and one for spending that does not go fully to front-line services but broadly supports them. We should have three or four, but no more than five, classes of Budget line so that we know immediately if a measure affects front-line services or just administrative spend. We could then be more honest when we say that we are defending front-line services, because we would have a Budget information system that allowed us to do just that.