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"What we have said is where RDAs are doing a good job and where the partners recognise they are doing a good job, they can continue in a similar form to what they have at the moment"?
Where is the evidence that business wants what he has announced today? Is not the director general of the CBI right to say that local economic partnerships
"have got off to a pretty ropy start. So far it's been a bit of a shambles"?
Is not the Institute of Directors right to say that if local economic partnerships do not have money
"they'll be little more than a toothless talking shop"?
Will the Business Secretary confirm that the local economic partnerships will have no start-up funding, no core funding, no guaranteed access to the regional
growth fund, no new legal powers and no promises of money-for example, from the Department for Work and Pensions-to replace the future jobs fund? Will he confirm press reports that key areas such as the south-west and Lancashire will be left without a local economic partnership? Will he confirm that of places such as Hull, which is 11th in the deprivation index, Blackpool, which is 12th, Blackburn, which is 14th, and Burnley, which is 24th, none will have even a feeble local economic partnership, which other areas will enjoy? Will he confirm that RDA redundancy payments will cost nearly £500 million? Will he confirm that for the next two years, when growth is crucial, most businesses will have no coherent local development agency to talk to about key investments, key infrastructure decisions and major planning decisions? Is it not true that Wales and Scotland will enjoy coherent and focused business support and England will not?
The world outside cares little about the petty power battles between the Business Secretary and the Communities Secretary, but they, together, owed it to business and to the country to provide certainty, clarity, confidence and coherence for the future, and between them they have failed. Will the Business Secretary confirm that in so many other areas the coalition is failing to produce the conditions for growth? There is no plan for growth. How will cutting hundreds of thousands of training opportunities for adults help employers with the skills they need? What has happened to Labour's plans to transfer responsibility for skills to employer-led organisations? At a time when every other OECD country apart from Romania is increasing higher education funding, how will cutting such funding produce the graduates we need?
More than 70 councils have started to withdraw or delay planning applications since regional strategies were scrapped. How does that give the construction industry the certainty it needs? The scheme for retaining business rates seems to build on Labour's business rate supplement, but how much does the Business Secretary expect it to raise? Will it compensate for the 30% cut in local government funding? Does he believe that all councils will benefit equally, or will those facing the greatest challenges get less money from his new policy? Why are green industries laying off workers because of uncertainty about renewable energy policy? When the Government announced eight nuclear power stations, why did they not make the loan to Sheffield Forgemasters which would have made sure that specialist steel was made in Britain, not in Korea or Japan? The Government have turned off the tap on the drivers of growth and jobs. There is no plan for growth. They have given up on growth.
Vince Cable: Many of the specific questions about policy, the role of the local enterprise partnerships, the numbers, those that have been approved and the process of approval are dealt with in the White Paper, which is available at the Vote Office.
The whole premise of the right hon. Gentleman's central arguments is that Government performance is measured by how much money is put in, not by what we get out of it. I will come to the performance of the regional development agencies in a moment. He repeats the argument, which he has done on several occasions, of how much money we should be spending on higher
education, further education and regional development, and I have thrown the same question back at him in all our exchanges. We know that the outgoing Government were planning to cut the budget of this Department by 20 to 25%, but he has never explained where the money was going to come from. Was it from HE, FE, regional development or science? We have never had an answer and until we have one we cannot engage in a serious debate on priorities.
The RDAs were the focus of much of the right hon. Gentleman's response. As I say, the issue is not how much the Government spend, but what they get out of it. The RDAs absorbed £19 billion over a decade, but what did they achieve? Their objective was to achieve a narrowing of the gap in growth between the north and the west midlands, on the one hand, and the south-east, on the other. If one studies the figures, one finds that in fact a widening divergence took place during the decade. The role of the RDAs in stemming that process was utterly ineffective. As the right hon. Gentleman said, the RDAs did, of course, have teeth, but they also had an enormous appetite and they consumed an enormous amount of resource with very little output. What the LEPs will have is the word "partnership"; the partnership will be between local communities and business, and this will be instead of the top-down Government-dictated approach to development.
The right hon. Gentleman asked about planning and the planning system. Let me review some of the legacy. The level of approvals for office, retail and industrial development, in a decade of relatively high growth, actually declined, while the rate of refusals increased. We have a system where every year £750 million is spent on consultancy fees and legal fees by people trying to get through the planning process. It is no wonder that very little happens. The system of planning guidance and advice that we inherited involves 7,000 pages of Government documentation; it is almost as complicated as the tax system that we inherited and it is equally dysfunctional.
The right hon. Gentleman mentioned, in passing, the key issue of housing, which is crucial not only to our population, but to local development on the ground. What is remarkable is that even in the highest boom year of 2008, fewer houses were built in Britain than at the depths of the recession of the early 1990s. In 2009, there were 118,000 housing completions, which can be set against an estimated growth in the number of households of 250,000. The system of planning and the support that the previous Government put in place failed utterly in this central task of development.
My final point is that we inherited a system of local government finance and decision making that was the most centralised in Europe. The only country in Europe that has a higher percentage of central Government funding for local government is Malta. We believe that the previous Government wanted to organise fact-finding missions to Malta to find out how they could improve by having that extra bit of centralised decision making. Our Government are trying to move to more decentralised decision making, based on local communities and a genuine partnership with business, and that is what will produce local growth.
Mr Speaker: Order. A great many hon. and right hon. Members are seeking to catch my eye, but time is limited and we have a heavily subscribed debate to follow, so brevity from Back Benchers and Front Benchers alike is essential. Moreover, I should remind hon. and right hon. Members that they should not expect to be called unless they were in the Chamber at the beginning of the delivery of the Secretary of State's statement.
Margot James (Stourbridge) (Con): I congratulate my right hon. Friend the Secretary of State on bringing the private sector into the driving seat of the economic renewal that is very much required locally. The sector will be in partnership for the first time with local authorities, so that private business will have a seat at the table discussing infrastructure and planning matters at last. He has mentioned-indeed, we now have the White Paper-the 24 LEPs that he has approved. Will he say a little about the next steps for future LEP approvals? May I also commend my area's LEP, the Black Country LEP, for which local business leaders have great enthusiasm?
Vince Cable: In terms of private sector participation, the LEPs will have boards that are split 50:50 between business and the local communities and will be chaired by business representatives. They will be driven by business, which has a direct interest in ensuring that growth takes place. It will be a change from a begging-bowl relationship to a partnership; that is the essence of this approach. The Black Country LEP is not on the first list. The assessment made was that there was not a sufficient business input into the proposal, but we hope it will proceed very quickly.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): I endorse the comment made by my fellow black country MP, the hon. Member for Stourbridge (Margot James), about the quality of the black country LEP bid, and I hope that it will be favourably considered in future. May I focus for a moment on the Secretary of State's comment about particularly welcoming bids from areas that are highly dependent on public sector employment? Such areas are often dependent on public sector employment because of the weakness of the private sector. Given that the public sector is under extreme financial pressures, can he explain how such areas will be able to put together the expertise, and have the people, time and resources, to make a bid to the regional growth fund that would be capable of balancing or rebalancing their regional economy?
Vince Cable: In terms of the process for dealing with the LEPs, we had what my colleagues call a traffic light system. Very good, imaginative proposals with a strong business input that meet the needs of economic geography were put through to the first group. Quite a lot of the proposals were yellow rather than green, and they are being processed. I hope that soon we will have a list. Some had no ambition and no private sector input, and we have simply told them that they need to think again.
It is easy, I think, to fall lazily into stereotypes about growth in areas dominated by public sector employment. I recently looked at the figures produced by my Department on the rate of growth of new company formation in different towns and cities in Britain. The best performance in the UK was in Sunderland, followed by Rotherham.
They are not archetypal south-east of England growth areas. There is a lot of entrepreneurial potential across this country, and we want to encourage and develop it.
Sir Alan Beith (Berwick-upon-Tweed) (LD): Why have Ministers not yet agreed a local economic partnership to cover Northumberland and Tyneside? Will whatever body is created have access to the assets that have been built up for the purposes of redevelopment and the income stream that those assets can give for continuing redevelopment work?
Vince Cable: As far as the north-east-in particular the Northumberland and Tyneside area-is concerned, we were disappointed that we got a very fragmented set of proposals. What has been agreed is that Teesside will go ahead; it is in the first list. Those behind four other LEP proposals that cover almost the whole region have now agreed to work together on a north-east basis. We think that that has great promise. We said that it needed a small additional amount of work and then it would get the go-ahead, and the kind of structure that my right hon. Friend wants will proceed.
As far as the assets are concerned, my Department has set up a working group that will help to manage the RDA asset disposal issue. As I said, we will try to manage this in a careful way, with assets and liabilities together. Some will be transferred, where appropriate, to local communities, councils or the LEP, but the criterion will be getting good value for money for the taxpayer. After all, this is taxpayers' money and that is our primary requirement. There will not be gifts to local communities, but, in terms of maintaining the coherence and integrity of those developments, we will endeavour to keep them together.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. May I suggest very short questions and quick answers? That would be very helpful.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): What the Secretary of State has announced today is very wrong. One NorthEast did a good job for the north-east of England. How can he justify some form of new localism when he is centralising every major decision in his Department and has been completely unable to answer the question of what will happen with residual assets and residual liabilities? Will he be far more specific on that point than he has been in answer to the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith)?
Vince Cable: The process is necessarily complex and we are trying to balance a series of considerations-making order and keeping continuity, as well as getting value for money-and the White Paper explains that. As far as the north-east is concerned, I am disappointed that, faced with the challenge, there was a fragmented response. We are hoping to come to a satisfactory conclusion that will have a north-eastern group together with one for Teesside.
Sarah Newton (Truro and Falmouth) (Con):
I want warmly to congratulate the team of Ministers on the presentation of these very positive proposals. I am
confident that they will promote growth and help Cornwall realise its economic potential. Will the Secretary of State reassure businesses in my constituency, especially those involved in the port of Falmouth master plan, that financial support from the regional growth fund will be targeted at enabling new jobs in private enterprise?
Vince Cable: Yes, it is designed to do exactly that. I can confirm that Cornwall and Isles of Scilly is one of the LEPs that is going ahead in the first wave.
Angela Smith (Penistone and Stocksbridge) (Lab): Given that the £80 million loan to Sheffield Forgemasters was all about providing strategic investment to the advanced manufacturing sector to promote private sector growth, may I take it from the Secretary of State's statement about focused intervention that his early disastrous decision to cancel the loan will be reversed, or will he continue to dig his heels in in the hope that the issue will go away? I can assure him that it will not.
Vince Cable: We have discussed this extensively in the House and in the Select Committee, and we have explained that the situation we were confronted with was that that project was not affordable. If new projects come up from there or elsewhere, they can be considered by the regional growth fund on their merits.
Mr Don Foster (Bath) (LD): May I thank the Secretary of State for allowing the west of England LEP to go ahead and advise him to educate the shadow Secretary of State on what those initials stand for? On the issue of the creative industries, does he agree that the creative industries could be one of the key drivers for growth in this country? Will he therefore assure us that the transformation of Business Link and the planned technology and innovation centres will be specifically directed to help them?
Vince Cable: My colleague is absolutely right that the contribution of the creative industries sector has been consistently ignored in the past. In terms of employment and value-added, it has at least as much growth as the financial services sector. I propose to work with my colleague in the Department for Culture, Media and Sport to bring the industry together to see what we can do to overcome the obstacles to its growth.
John Woodcock (Barrow and Furness) (Lab/Co-op): Given that the Secretary of State was too frit to face concerned students today, I guess we should be grateful that he has had the courage to come to the House at all. Given that he is here, can he explain to an area such as mine, which has greater levels of deprivation and is further away from the natural engines of growth in the economy, how exactly he will guarantee that businesses will get the support they need, given the enormous and significant cuts in funding and the fact that there is no certainty at all in the current arrangements?
Vince Cable:
I think I answered that in my statement. In areas that really matter to business, such as the availability of trained manpower, there will be, as the hon. Gentleman will remember from the outcome of the comprehensive spending review, an increased number
of apprenticeships and increased commitment to innovation centres, for example. Those are the things that really matter.
Richard Fuller (Bedford) (Con): My right hon. Friend will be aware of the enthusiasm in Bedfordshire for the proposed south-east midlands local enterprise partnership and the hard work of the Liberal Democrat mayor of Bedford for that initiative. Does my right hon. Friend agree that the response to the cry of "No funding" from Opposition Members is that the real cry here is, "No more central diktat on local growth and local funding"?
Vince Cable: My hon. Friend makes exactly the right point. This was a good example of cross-party working and it is about decentralisation and local decision making, rather than centrally driven decisions.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Will the Secretary of State explain how these arrangements could replace the vital work done by the Northwest Regional Development Agency in setting up the Daresbury science and innovation campus, which is now a national centre of scientific excellence, supporting biomedical centres across the north-west, including in Liverpool, and making Liverpool's year as European capital of culture the tremendous success it was?
Vince Cable: I would certainly be interested in finding out more about the science and innovation centre. It might well prove to be a key component of the innovation centre programme that we want to roll out across the country and would probably receive rather more support from that than it has to date. We clearly need to do this in a planned and orderly way, and I look forward to hearing more about it.
Duncan Hames (Chippenham) (LD): Businesses and business groups are more interested in the work and agenda of local enterprise partnerships than they are in their constitutions. Does my right hon. Friend share my concern that bids to establish the partnerships might as a result more closely reflect local political rivalries than the reality of business and labour market geographies?
Vince Cable: That was one of the dangers to which we were alerted. For example, when bids were simply a vehicle for local councils that wanted to create a local talking shop without proper involvement from business, they did not proceed. The bids that have been approved are businesslike, focused and well organised, and they will succeed.
Rosie Cooper (West Lancashire) (Lab): The north-west feels that it was badly misled by the Government on the future of the Northwest Regional Development Agency. As we have not had sight of the Secretary of State's decisions today on the successful 24 LEPs, will he tell us the status of the multiple bids made by Lancashire? What observations might he wish to offer Lancashire if they are not, as I suspect, one of the successful 24?
Vince Cable:
Several of the best bids came from the north-west, including Greater Manchester and Liverpool city region. There is a problem with Lancashire as there
are overlapping bids, fiercely competitive and different, and we are in the process of evaluating which are strongest on the criteria that we have set.
Brandon Lewis (Great Yarmouth) (Con): I congratulate the Department. I know that businesses in Norfolk that have been working to put together an LEP bid are excited, despite what the shadow Secretary of State said, about the opportunities offered by an LEP. I know they will be disappointed to be part of the gap and not to have been approved at present. Can the Secretary of State please give advice to colleagues in Norfolk and in Suffolk about what they can do to put a successful bid together?
Vince Cable: The hon. Gentleman is right. Norfolk is not on the first list. We are hoping it will be successful. The advice that I would offer is for the different councils to work together collaboratively, to involve the local business community more actively than it has been, and to be ambitious in their aims.
Jack Dromey (Birmingham, Erdington) (Lab): Advantage West Midlands was the most successful regional development agency, generating £8.14 in the private sector for every £1 of public money invested. Does the Secretary of State share the clear concern expressed by the business community in the west midlands that the combination of, on the one hand, LEPs with no resource, one third of the funding previously available to them, and facing a land grab by the Treasury, and on the other hand, no strategic structure to promote and protect the vital automotive industry in the west midlands, will hit hard the midlands region, which faces 100,000 job losses as a result of last week's spending review?
Vince Cable: I do not share the hon. Gentleman's concern, because several of the strongest bids were from the west midlands, as he knows-Birmingham, Solihull, Coventry and Warwickshire, among others. The strategic oversight and the help that we need to give to the automobile industry-he is right to continue to emphasise that and to pursue me about it-will be pursued through the Automotive Council, which is one of our most successful sectoral bodies.
Pauline Latham (Mid Derbyshire) (Con): In his letter to me of 10 September, the Secretary of State said that he would bear in mind a visit to Mid Derbyshire, where I have two companies that are losing all their jobs or greatly reducing them, and one great success story, a hosiery company called Pretty Polly and Aristoc. Will he come and explain to them the measures that he is putting in place, which I welcome and which I am sure they will welcome, so that he can tell them first-hand what we as a Government are doing?
Vince Cable: My colleague has been assiduous in pursuing me about that, and she is right to do so. That is what good constituency MPs do. There is an LEP for Derby and Derbyshire. It is one of the strongest, and I am happy to meet her to talk about the future or her specific concerns locally.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab):
At present, £1.9 billion of England's European regional development fund pot is still there to
be spent, but in order to be drawn down, ERDF cash must be matched by other public or private sector funding, which was co-ordinated through the RDAs. I have been looking through the Minister's booklet today and there is no clarification of the new structure. It states:
"The new delivery structure will be announced at Budget 2011."
As the coalition has placed a freeze on RDA spending beyond March 2011, including match funding, can the Minister please clarify how we are to draw down crucial ERDF funds for places such as Teesside?
Vince Cable: The hon. Gentleman is right: we need to take maximum advantage of the regional funding available from the European Union. RDAs have a residual role in that, but the process of collating our bids and making sure that we get maximum value will be led by my right hon. Friend the Secretary of State for Communities and Local Government.
Andrew Stephenson (Pendle) (Con): Businesses in Pendle and I are keen that the Pennine Lancashire bid, for which we have recently submitted additional information, will be approved soon. Will the Secretary of State reassure me that the remaining decisions on LEPs will be taken speedily?
Vince Cable: Yes, I can give that assurance. My colleague in the other place, Lord Greaves, has been bending my ear on that proposal, and it seems a good one, but we need to rationalise it.
Valerie Vaz (Walsall South) (Lab): Will the Secretary of State state his intentions for the highly skilled and independent Planning Inspectorate?
Vince Cable: The development of the planning system and what that means for policy and operationally will be set out by my right hon. Friend the Secretary of State for Communities and Local Government. He is bringing forward very soon proposals on planning reform, and I am sure he will address that issue.
Jeremy Lefroy (Stafford) (Con): I welcome the statement by my right hon. Friend and also the fact that the LEP for Stoke and Staffordshire has been approved. Given the importance of manufacturing in both my constituency, Stafford, and Staffordshire and Stoke-on-Trent as a whole, can he give us some news on the Manufacturing Advisory Service?
Vince Cable: The Manufacturing Advisory Service provides one of the best industrial support activities, and we intend to continue it and continue to fund it. With reference to the hon. Gentleman's area, I recently met representatives from several parties on the future of Stoke and the ceramics industry. Although it is a small industry, we want to continue to give support wherever we can.
Emma Reynolds (Wolverhampton North East) (Lab):
Advantage West Midlands invested significantly in the i54 business site on the edge of my constituency and is maintaining and creating jobs for the local area. Will the Business Secretary reassure me that in the absence of Advantage West Midlands and a regional growth
strategy, this significant asset will continue to be maintained by the Government or the local authority to ensure that it continues to bring vital jobs to the area?
Vince Cable: That is another question along the lines of the original question from my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) about the management of RDA assets. They will be managed carefully and, where it is appropriate and sensible, they will be passed over to local organisations, but in a way that realises value for money.
Anne Marie Morris (Newton Abbot) (Con): I warmly welcome the proposals set out this morning. I am delighted. They will make a real difference in the long term in the south-west. However, looking at the approved list, I am sad that the south-west is rather bereft of LEPs, and Devon, which I represent, is not on it. Will the Secretary of State meet me to talk about the Devon proposals so that we can see what can be put right?
Vince Cable: I am sure that I or the Ministers of State in both Departments would be happy to talk about that, but the key problem, as I understand it, is that there was a dispute between several local authorities, which were not able to get their act together. They must take responsibility for that, but we want to help them through the process.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): Despite all the coalition's talk of localism, I am concerned to learn today that assets currently owned by RDAs are not guaranteed to remain in local ownership. Will the Secretary of State confirm that none of the assets currently owned by the RDA, such as the Wavertree technology park in my constituency, will not be sold off by his Department?
Vince Cable: I cannot give guarantees on the treatment of specific assets. As I said, they will be managed carefully and in a way that produces value for money for the taxpayer, who originally invested in them. That will be done in a way that reinforces local development.
Bob Blackman (Harrow East) (Con): The announcements made this morning will be warmly welcomed by all progressive local authorities across the country. In keeping with the incentives to build houses for people to live in, will my right hon. Friend elucidate further the incentives that will be given to local authorities to encourage the growth of private sector businesses in their areas?
Vince Cable: It is revealing, in a way, that half an hour into questions that is the first question we have had about the key development, which is creating incentives for local authorities to grow. Those did not exist before. We have the new homes bonus. We are talking about the repatriation of business rates and a series of incentives that local authorities will in future have to grow and develop, which currently do not exist.
Mr Ben Bradshaw (Exeter) (Lab):
Is not the CBI right to describe the whole process as a shambles? That is certainly what it has been in the south-west, which has fallen back into the worst parochialism and petty rivalry that bedevilled the system before RDAs. Why does not
the Secretary of State think again before it is too late and he does untold damage to the economy of the south-west?
Vince Cable: My Department has been talking to the CBI, which is pleased with the outcome, as it made clear. On petty parochialism, that is a strange way for the right hon. Gentleman to describe his own local community. We have tried to ensure that the process is driven from the bottom up and is not centrally imposed. Good local authorities, working with local businesses, are producing very creative, positive ways forward. What is wrong with that?
James Morris (Halesowen and Rowley Regis) (Con): I welcome the Secretary of State's statement, particularly the emphasis on private sector jobs and skills. Can he be more specific about the time scale and process for the Black Country LEP, given the importance of private sector jobs and skills development to the black country?
Vince Cable: As I think I told one of the hon. Gentleman's colleagues earlier, there was a problem with the black country submission, which did not have a sufficiently substantial business input. We hope that those problems will be resolved within weeks rather than months, and it is important that they are, because the deadline for the first bidding round in the regional growth fund is in January, so the relevant bodies will need to progress quickly if they are to participate.
Helen Goodman (Bishop Auckland) (Lab): The Secretary of State has railed against centralisation this lunchtime, but the truth is that we in the north-east had a consensus on the value of our RDA. Only this morning, James Ramsbotham, the head of the North East chamber of commerce, complained about the pulling back of inward investment to Victoria street. When will the Secretary of State think again?
Vince Cable: I thought that there was a consensus in the north-east, but it manifested itself in a whole series of fragmented bids, and that is rather sad. Fortunately, the situation has been retrieved. Council leaders are now working and talking together, and they have produced a much better proposal, which I think will succeed. On foreign investment, it is absolutely absurd for regional development agencies throughout the country to have separate, competing ambassadors in overseas countries. Such work really has to be done much more sensibly, and the LEPs will have a role in helping foreign investors once they have committed themselves to a particular location.
Julian Smith (Skipton and Ripon) (Con): Will my right hon. Friend pay tribute to Barry Dodd and those behind the Yorkshire Enterprise Partnership, a community interest company that will work with LEPs in Yorkshire to promote inward investment and to co-ordinate opportunities throughout the county? Is that not a great example of bottom-up, rather than top-down?
Vince Cable:
It is, and it also addresses the issue that Opposition Members have raised: the assumption that only if the Government provide a large budget can
such organisations function. A community enterprise partnership of the kind that the hon. Gentleman describes is exactly the way to make LEPs operational and effective.
Grahame M. Morris (Easington) (Lab): Business Link, which is located on the Spectrum industrial park in my constituency, recently announced 150 job losses as a result of in-year cuts to the budget of One NorthEast. Given the announcement that we have just heard, will the Business Secretary clarify where the national Business Link contact centre is going to be based?
Vince Cable: Obviously I regret any redundancies that result from either that decision or others. Clearly, none of us relishes that prospect, but Business Link was widely criticised by the businesses for which it was designed. It was not an effective system, nor was it cost-effective for the taxpayer, so the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), is developing a new model, based essentially on website advice, but more generally, and he will unveil it shortly.
Stephen Mosley (City of Chester) (Con): May I welcome today's announcement of a Cheshire and Warrington LEP and the proposals in the White Paper for a new duty to co-operate on planning matters? Will that new duty apply across national boundaries? I represent the city of Chester, which has a Welsh border within half a mile of the city centre, and it is crucial not only that west Cheshire and Chester have a duty to co-operate with Wrexham and Flintshire in north Wales, but that Wrexham and Flintshire have a duty to co-operate with Chester.
Vince Cable: The answer is yes. We have to respect devolved powers in Wales, but the simple answer is yes: there will be an obligation to co-operate.
Nic Dakin (Scunthorpe) (Lab): How will areas such as the Humber, which has not been awarded an LEP, gain access to regional growth funds and other funds, such as the European regional development fund?
Vince Cable: They will gain access if they are able to bring forward quickly a proposal that meets the key requirements. There was a strong division of opinion, of which the hon. Gentleman will be well aware, about whether the activity should centre on Hull or on the wider Humber region. There were arguments for both, but the relevant bodies really do have to come to a decision quickly if they are to participate in this bidding round.
Iain Stewart (Milton Keynes South) (Con): I warmly welcome the go-ahead for the south-east midlands LEP. Does my right hon. Friend agree that it makes much more sense for an area such as Milton Keynes, which sits at the junction of three regions, to be grouped with its natural economic partners, rather than with an artificial area such as south-east England?
Vince Cable:
The hon. Gentleman highlights briefly and eloquently why the RDA structure just did not work. As I recall, it was designed during the war to
allow for the division of aerodromes; it had absolutely nothing to do with simple economic geography. The structure that he describes is a vast improvement.
Mr Clive Betts (Sheffield South East) (Lab): I have real concerns about the Secretary of State's over-simplistic comments on housing and planning. It might surprise him to hear, however, that by page 8 of his statement I found something with which I might be able to agree. He said that local business rate retention will be considered, but will he confirm that that involves the consideration not merely of local authorities being able to keep marginal increases in business rates, but of the complete localisation of business rates, so that once again local authorities are able to control the majority of their resources? If he is prepared to confirm that, and subject to how it is done, he might find some cross-party support on that particular issue.
Vince Cable: I am glad that I have, because that is indeed exactly what we are considering, albeit with appropriate protections for business.
Mr Andrew Love (Edmonton) (Lab/Co-op): I regret, but perhaps more importantly I suspect that the Secretary of State will come to regret, the abolition of the regional development agencies. I note from his statement, however, that further discussions will take place between the Mayor of London and the London boroughs. Will the right hon. Gentleman take into account in those further discussions the sub-regional business hubs throughout London, and the growth corridors between London and areas outside London? In my area, the M11 is such a corridor. Will he take all those factors into account before making a decision?
Vince Cable:
Yes, we will. In fact, one of the most imaginative and interesting LEPs is what we call the coast-to-capital LEP, uniting the south coast towns with southern London. That is exactly the kind of
geographically based, common-sense approach that we want to encourage. It will link London with those parts outside the capital with which it has a natural economic affinity.
Richard Burden (Birmingham, Northfield) (Lab): In his opening remarks, the Secretary of State said that the thing that local enterprise partnerships will have is partnership. May I press him a little more on whether they will actually have any money to chase such things as the regional growth fund? Will any money be allocated for running costs, or will the money for LEPs come from children's services, emptying the bins and other local authority spending on front-line services?
Vince Cable: The Government are not providing the LEPs with a budget, but that is not to say that the partners, which include local authorities and businesses, cannot contribute to something that is in their self-interest.
Austin Mitchell (Great Grimsby) (Lab): The Secretary of State's words about localism will ring rather hollow on Humberside, where we have just had to face the postponement of improvements to the A160 in order to ease the bottlenecks building up around Immingham, Britain's busiest port. Will he follow up on what he said to my hon. Friend the Member for Scunthorpe (Nic Dakin) about the Humberside economic partnership? Business and the chamber of commerce want a pan-Humber economic partnership, but the local authorities do not seem able to agree. Which side is the Secretary of State going to be on?
Vince Cable: We will look at the quality of the proposals. An LEP is going forward for Lincolnshire, and it is a pity that the partnership did not include the unitary authorities to which the hon. Gentleman refers, but it is really for communities to get their act together. Those that have will succeed; those that do not will fall behind.
Points of Order
1.7 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell): On a point of order, Mr Deputy Speaker. During a debate on housing in Westminster Hall yesterday morning, I used language that, on reflection, was clearly inappropriate and not parliamentary. I seek to withdraw those words and to apologise to you, to the House and to the right hon. and hon. Members concerned in that debate.
Mr Deputy Speaker (Mr Lindsay Hoyle): I thank the hon. Member for withdrawing his comments. He has corrected the record.
Caroline Flint (Don Valley) (Lab): On a point of order, Mr Deputy Speaker. I welcome the apology from the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), but will you seek an apology from the Minister for Housing and Local Government, the right hon. Member for Welwyn Hatfield (Grant Shapps)? In Communities and Local Government questions last week, the right hon. Gentleman said that between 1997 and 2010 there was a net gain of 14,000 new affordable homes. Figures published by the Department for Communities and Local Government this morning show that, actually, the Labour Government built more than 500,000 new homes during that time. In 2009-10, 56,000 new homes were built in the teeth of the recession. He should come to the House and apologise.
Mr Deputy Speaker: The right hon. Lady has put her view on the record. A mechanism exists for corrections, and these can be made. Ministers are responsible for the content of their statements and answers.
John Hemming (Birmingham, Yardley) (LD):
On a point of order, Mr Deputy Speaker. Yesterday the Speaker
made a statement in respect of the process for early-day motions when the Table Office is unhappy with them. I have been operating in accordance with that process on two EDMs, one relating to Andrew France, the other to Noreen Akhtar, since the start of September, and I requested that they be sent to the Speaker on 12 October, which I believe has now been done. Can the process be reviewed from the point of view of establishing a timetable? In certain situations, such as that of Noreen Akhtar, the timetable is quite important, because she is continually maltreated by Birmingham city council, which refuses to give any information about her case.
Mr Deputy Speaker: I thank the hon. Gentleman for that point of order. I will draw it to the attention of the Speaker.
Lilian Greenwood (Nottingham South) (Lab): On a point of order, Mr Deputy Speaker. Was it in order for the Secretary of State for Transport to claim in the Chamber this morning that the A453 widening scheme is in the development pool for decision in 2011 when that is simply not true?
Mr Deputy Speaker: I will certainly bring that to the attention of the Speaker. You have got it on the record.
Mr Ben Bradshaw (Exeter) (Lab): On a point of order, Mr Deputy Speaker. In his statement, the Business Secretary said that the many questions that hon. Members had would be answered in the White Paper, but that document was not in the Vote Office when he stood up to make his statement and when most Members were already in the House. May I ask that when the Government make statements on White Papers in future, they ensure that Members of this House have the document before the Secretary of State stands up?
Mr Deputy Speaker: I believe that what the right hon. Gentleman says is true, but the document is now available to Members.
Comprehensive Spending Review
1.11 pm
The Chief Secretary to the Treasury (Danny Alexander): I beg to move,
That this House has considered the matter of the Comprehensive Spending Review.
It is eight days since my right hon. Friend the Chancellor set out the conclusions of the Government's spending review-this coalition's plan to bring the country back from the brink. We had to act to tackle the deficit: it was the only option to secure our country's future. It is the only option to build a strong platform for future growth and prosperity, and we will see it through.
In charting the course for the next four years, we have made choices. We have chosen to invest in growth, jobs and the future of the economy. We have chosen to protect the most vulnerable and extend the ladder of opportunity. We have chosen to cut the costs of central Government to free up the front line. These are our priorities-growth, fairness, reform. They are the right priorities.
Danny Alexander: I am going to get to end of this section, and I will give way then.
These are some of the most difficult decisions that any modern Government have had to make, with every number on every page representing someone's job or a service someone relies on. They are decisions that I know will affect everyone. So today I will set out why we had to act, the principles guiding our choices, and why fairness is at the heart of this spending review.
Danny Alexander: There is an important debate to be had. The Opposition have a chance to contribute to this discussion, but the price of being taken seriously is a credible and detailed plan. They need to recognise that we cannot go on in the way that they did; they need to say which cuts they support and which they oppose, and what they would do instead. Without that, it is opposition for opposition's sake, and the country will not take them seriously.
Danny Alexander: So today's debate also offers a challenge for Labour Members. I will be listening carefully to what they have to say, and I hope that the British public will receive a long-overdue apology for the mess that one party caused and which two parties have come together to clean up.
Fiona Mactaggart (Slough) (Lab): I thank the right hon. Gentleman for giving way-at last. He says that in order to be taken seriously, we need a plan. In order for him to be taken seriously, he needs to be truthful with people. I do not understand how he can claim that fairness is a principle of this comprehensive spending review when women have been hit twice as hard as men.
Danny Alexander: I do not accept that analysis, and I will come to that point later. The hon. Lady should be aware that her party's plans were for £44 billion-worth of cuts, which would have had an impact on people too. Many of the things that we have done, such as uprating the state pension in line with earnings and protecting the national health service, which her party would not have done, support women.
Toby Perkins (Chesterfield) (Lab): The right hon. Gentleman is perpetuating the myth that there is no alternative, but he just said that the previous Government had a strategy in place for paying off the deficit, so there is an alternative. An alternative was also put forward in 1945. He can take whichever direction he likes, but he cannot keep claiming that the decisions he is making are the only alternative, because others have been put forward.
Danny Alexander: No alternatives have been put forward by the hon. Gentleman's Front Benchers; perhaps he wants to talk to them about that.
Mr John Redwood (Wokingham) (Con): The figures assume 8% inflation over the period, but if, in the first couple of years, we have a complete pay freeze in the public sector and we buy things more cheaply, as is the plan, does not that mean that cash rises can translate into real rises in the programmes that are going up in cash terms?
Danny Alexander: The right hon. Gentleman is certainly right to say that at the end of the spending review public spending will be higher in cash terms than it is at the moment. In real terms, it will go back to the level of about 2008-09, and in terms of a share of gross domestic product to about the level of 2006-07. People need to be realistic about the scale of what is being proposed. The big gainer from the huge deficit that Labour left us with was the department of debt interest, and unfortunately it is the cost of debt interest that we have to meet.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Will the Chief Secretary give way?
Danny Alexander: I will give way one more time, and then move on.
Mr Bailey: The right hon. Gentleman has put great emphasis on the debt that he inherited and the need for the Opposition to be responsible. Given that the greater part of that debt was incurred in bailing out the banks and supporting manufacturing industry, could he be responsible and tell us what he would have cut in that position?
Danny Alexander: We have set out in detail what we would cut-that is the whole point of the spending review.
Danny Alexander: I am going to press on; I will give way again in a moment.
The House and the British people will never forget the financial position of this country when we came into office, with £1 borrowed for every £4 spent-the
largest deficit in our peacetime history. Debt interest payments alone stood at £43 billion a year-that is £120 million a day.
Ian Austin (Dudley North) (Lab) rose-
Gordon Banks (Ochil and South Perthshire) (Lab) rose-
Danny Alexander: I will press on, and give way in a moment.
Thanks to Labour's profligacy, there really was no money left. The country knew it, our business leaders knew it, and, as we discovered, the Labour Chief Secretary knew it too. By May, the alarm bells were ringing-the danger was real. Whether one wants an expansive social policy, a smaller state, or more or less public spending, it must be underpinned by proper control of the public finances. If that control is lost, the policies that have been built, whatever they are, will inevitably crumble.
Stewart Hosie (Dundee East) (SNP): The Chief Secretary said that to be taken seriously one needs to have a credible and detailed plan. He then went on to say that the Government have laid out their plans in detail, so perhaps he can give us some of that detail. Which Revenue offices will shut? Where will the Department for Work and Pensions closures be? Among the 35,000 Ministry of Defence civilians, where will the jobs be lost? Will he give us the detail in the same way as when the spending plans in the 2004 and 2007 CSRs were announced?
Danny Alexander: There is a great deal of detail in the spending review document, as the hon. Gentleman knows because he has had a chance to study it, and of course Departments will set out more detail in due course. He would have a bit more credibility on the subject of controlling the public finances if his colleagues in the European Parliament had not just voted for the 6% rise in the European Union budgets.
Ian Swales (Redcar) (LD): Is the Chief Secretary aware that the 2007 CSR called for £35 billion in cuts, and that in July 2010 the National Audit Office could find only £6 billion that had been achieved? Does he agree that the failure of the last spending review makes this one much more difficult?
Danny Alexander: My hon. Friend makes a very important point. The NAO has indeed criticised the effectiveness of the previous Government's so-called efficiency programme. Many of those criticisms are well founded, and we will proceed on a very different basis. To give an example, the single indicator that they set out for local authorities to report on their own efficiencies had 66 pages of guidance for them to follow, thereby creating a huge industry in local authorities just to meet the reporting requirements.
Ms Angela Eagle (Wallasey) (Lab):
The right hon. Gentleman has been talking about detail, and there is one detail that I am interested in. There was a leak from the Ministry of Justice demonstrating that it has set aside £230 million to pay for the redundancies that it
has announced in its front-line staff. Can he tell the House, because he must have this figure, how much he has set aside to pay the redundancy bills for the job cuts that he has announced?
Danny Alexander: I welcome the hon. Lady to her place. I think that it is the first time we have had an exchange over the Dispatch Box, and I congratulate her on her appointment. Departments will set out their work force plans in due course. They are working on those things, and there are many things that they can do to avoid excessive redundancies. [ Interruption. ] I am not going to go into individual departmental figures.
Danny Alexander: I am not going to give way again. These figures will be for Departments to set out.
Danny Alexander: I am going to press on and make some progress. I will take further interventions later, but I answered the point that the shadow Chief Secretary made.
Rising interest rates choke the finances of those who borrow, and rising inflation bites on those on fixed incomes. It was the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) who once observed:
"Public finances must be sustainable over the long term. If they are not, the poor...will suffer most."-[ Official Report, 2 July 1997; Vol. 297, c. 303-304.]
For once, I agree with Gordon. Those who say that there is a choice between fiscal discipline and supporting growth could not be further from the truth. The choice is between a sound platform to support growth and a lack of control that would undermine it. In reality, it is no choice at all.
Danny Alexander: I am going to press on with this section of my speech, and then I will give way in a moment.
In June's emergency Budget, we set out the road map to recovery and took the country out of the danger zone. The independent Office for Budget Responsibility examined our plans in June and forecast the economy growing and unemployment falling in every year. It also assessed that we were on course to eliminate the structural current deficit and see debt fall by the end of this Parliament, one year ahead of our mandate. The recovery will be choppy, but we are confident that our plan will see us through.
Caroline Lucas (Brighton, Pavilion) (Green): Does the Chief Secretary accept that he is introducing a benefit system based on punishment? Does he agree that anyone out of work for more than a year will now lose 10% of their housing benefit? That is punishment. What advice would he give to my constituent in Brighton who has gone for 465 jobs over the past 10 months without success?
Danny Alexander: I do not accept that. We have to control the welfare bill, which has risen dramatically over the past few years. I will come to that later in my speech.
Mr Bernard Jenkin (Harwich and North Essex) (Con): It is inevitable, of course, that individual Departments will have to set out the costs of redundancies, and it is right that they should do so in due course. However, will my right hon. Friend set out how much extra interest the Government would have to pay, and therefore how much more public spending would have to be cut in future, if we did not start to make such economies now?
Danny Alexander: My hon. Friend asks a very good question. Over the course of the spending review period, our plans will save £5 billion in debt interest, which the Labour party was very happy to pay.
Danny Alexander: I will give way one more time, then I will press on.
Ms Eagle: I thank the right hon. Gentleman. We know that he will know the answer to this question. He has set out a plan that will lead directly to 490,000 people losing their jobs in the public sector. We know that the Ministry of Justice has already made an allowance of £230 million to cover the cost of redundancies. He must have a figure for the rest of Whitehall put together, and he should now give it to us.
Danny Alexander: The hon. Lady is the shadow Chief Secretary, and we read in a memo directed to the Leader of the Opposition that the Opposition had a plan for £44 billion of cuts, but she has not set out a single piece of detail on that. As I said, Departments will set out their work force plans in due course.
The previous Government's plan was not a serious plan to deal with the deficit and support growth. It was not a fair approach. It would have led to more, not fewer, cuts in the end, because of higher debt and higher interest payments-more interest on the debt, and more interest on the interest. Compared with the plans that we inherited, we will save £5 billion in debt interest payments over the course of this Parliament.
The emergency Budget set out our plan to balance the books, and now we have shown how we will find £81 billion of savings by 2014-15. Let me put that in some context. Even at the end of that period, public spending as a share of gross domestic product will be 41%.
Danny Alexander: I will give way at the end of this section of my speech.
That 41% figure is about the same level as in 2006-07, and the same level in real terms as in 2008. It is higher than in any year of Tony Blair's Government. Perhaps that is why he supports our strategy. That is not to say that cuts will be easy-of course they will not-but it nails the myth that we are an ideological Government, hell-bent on shrinking the state out of recognition.
Angela Smith (Penistone and Stocksbridge) (Lab): In 2007-08, the UK debt stood at 36.5% of GDP. In 1997, at the end of the last Tory Government, it was 42%. Does that fact not expose as meaningless spin the Government's line on the record of the Labour Government?
Danny Alexander: I think that that is a classic statement of deficit denial. The hon. Lady has to recognise that we are spending £150 billion more than we raise in tax-the largest budget deficit in the European Union and the largest in our country's history.
Angela Smith: Will the Chief Secretary give way?
We also have the largest budget deficit in the G20. Those are the facts that the hon. Lady should understand.
Angela Smith: Will the Chief Secretary give way?
Danny Alexander: I will not give way again, I am going to press on.
The Chancellor's statement set out the level of departmental spending for the next four years. I will not repeat every decision now, but of course I am happy to take interventions. [Hon. Members: "You're not!"] I have taken a great deal of interventions, and I will take a few more later. Instead, I want to focus on our priorities: growth, fairness and reform.
Danny Alexander: I give way to the hon. Gentleman.
Gordon Banks: I am very grateful to the Chief Secretary for finally seeing me up at the back here. One of the words that he mentioned was growth. How can we have growth when 1 million people are being put on the dole?
Danny Alexander: How could I miss the hon. Gentleman? I will explain the answer to his question as I make progress in my speech. He will just have to listen carefully.
Our priorities-growth, fairness and reform-guide every choice that we make. We are a pro-growth Government, focusing our capital resources on key infrastructure projects in transport and green energy.
David Wright (Telford) (Lab) rose-
Mrs Madeleine Moon (Bridgend) (Lab) rose-
Danny Alexander: I will not give way at the moment.
We are a Government with fairness at our core, and a reforming Government who leave no stone unturned in the search for waste, while devolving power and funding away from Whitehall. In answer to the hon. Member for Ochil and South Perthshire (Gordon Banks), I will address our priorities in turn, and the first is growth.
It is growth that will deliver additional jobs in the economy across England, Scotland, Wales and Northern Ireland. I have said that our plan as a whole will deliver macro-economic stability, which is crucial to restore growth and increase confidence to invest. We are not standing on the sidelines waiting for growth to happen. We have prioritised spending on the areas that can
deliver the best return to growth. Over the spending review period, capital spending will be slightly higher than the previous Government planned, with significant investment in transport capital across the country and more cash being spent on transport over the next four years than in the past four. We will maintain in cash terms resource spending on science, and a new green investment bank will lead the way in the economy of the future. Today we published our local growth White Paper, which includes a regional growth fund of £1.4 billion over three years and announces new local enterprise partnerships. Those actions and many others are major parts of our strategy to secure and support sustainable economic growth.
John Woodcock (Barrow and Furness) (Lab/Co-op): The right hon. Gentleman's speech so far has shown that he is sticking to the outlandish predictions of growth levels that he has made, and of unemployment falling year on year as a result. Will he reassure the House and the country that if they prove wrong, he will change course, and quickly?
Danny Alexander: Outlandish predictions by politicians were the prerogative of the previous Government. We have established an independent Office for Budget Responsibility to make forecasts. We do not make the forecasts, and I am merely quoting what the OBR had to say.
Sajid Javid (Bromsgrove) (Con): Does my right hon. Friend agree that the biggest risk to our economy is the record deficit of 10% of GDP, the highest in the G20? Had we not taken action, that would have posed a big risk and we would have lost more than 490,000 jobs. Opposition Members should think about the jobs that we would have lost had the Government not taken decisive action.
Danny Alexander: I agree wholeheartedly with my hon. Friend. If we had not tackled the deficit, the poor in this country would have suffered most.
Helen Goodman (Bishop Auckland) (Lab): Will the Chief Secretary give way?
Danny Alexander: I will give way to the hon. Lady, and then I will press on.
Helen Goodman: I am grateful. The Chief Secretary has pointed to the forecasts made by the OBR. He will know that between 1994 and 2008, the private sector created 100,000 jobs a year. In that period, growth was 2.8%. The OBR projects growth of 2.4%. How, then, is it possible that 1 million jobs can be created in the forthcoming period?
Danny Alexander: In fact the OBR forecast more private sector jobs than the hon. Lady suggests. She will know that in the past two quarters several hundred thousand jobs have been created in the private sector. I will explain later in my speech the measures that we are taking to support the private sector.
Mrs Moon: Will the Chief Secretary give way?
Danny Alexander: Not for a moment. I am going to press on with my speech. I know that many hon. Members wish to contribute, and the Back-Bench time limit is already at six minutes, so I will make some progress, if I may.
Our second priority is fairness, and let me say what I think that means. Fairness means that across the entire deficit reduction plan, those with the broadest shoulders should bear the greatest share of the burden.
Danny Alexander: Fairness means that even in tough times, we focus our resources on extending the ladder of opportunity through early years provision and schools, and it means that we look carefully at whether we are doing right by those who receive welfare and the working families whose taxes pay for it. Those are our tests and we have met them in full. First, we have published distributional analyses that clearly demonstrate that those on the highest incomes will contribute more towards the consolidation. [ Interruption. ] That is not just in cash terms, but-
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The right hon. Gentleman is giving way, but will hon. Members please take their seats when he does not?
Danny Alexander: Thank you, Mr Deputy Speaker.
As I was saying, we have published distributional analyses that clearly demonstrate that those on the highest incomes will contribute more towards the consolidation, not just in cash terms but as a proportion of their income and consumption of public services.
Mr Alistair Darling (Edinburgh South West) (Lab): I am grateful to the Chief Secretary for giving way. So far, he seems bereft of answers to any of the questions put to him. Does he agree with the Institute for Fiscal Studies' analysis that the June Budget and last week's spending review can be fair only if the Government include all the measures that I introduced in my Budget prior to the election?
Danny Alexander: I think that the phrase "no answers" applies to Opposition Front Benchers on dealing with the deficit.
The measures included in our analyses include measures for which we will introduce legislation, such as the measures on national insurance. Those measures are part of our plan and it is perfectly appropriate that they should be included.
Danny Alexander: I am going to press on and answer this point. I shall give way in a moment.
The right hon. Gentleman talked about our analyses counting measures proposed but not yet introduced by the previous Government. I have to tell him that the measures are as much a part of our plan as any others
we have introduced. We took the decision to proceed with them. However, I am glad to say that some of the measures proposed by the previous Government did not make it into our final analysis. We rejected the jobs tax- [ Interruption. ] They do not like it! We rejected cuts to the overall NHS budget and we rejected the idea of burdening future generations with debt. They were wrong and they were stopped.
Our progressive approach also places responsibility on the banks to make their fair contribution. We will continue to press banks to do more and to bring forward reforms to improve our financial system. That is why we introduced the bank levy. The previous Government stalled on that, saying that we would need international agreement first, but we went ahead with it. As the banks need to follow the spirit and not just the letter of the law, we have engaged in a concerted effort to get the leading banks to sign up to the code of practice on taxation by the end of November. We must ensure that everyone, no matter how rich, pays the taxes they owe. That is why we have agreed a new £900 million package for HMRC. That investment will fund a clampdown, bringing in £7 billion a year by the end of the Parliament.
Richard Burden (Birmingham, Northfield) (Lab): On banks and fairness, will the Minister confirm that families with children are being asked to contribute twice as much to deficit reduction as the banks? How is that fair?
Danny Alexander: No, I will not confirm that. We have made many spending choices to invest additional resources in families with children-a pupil premium in the schools system and an entitlement to 15 hours of free nursery care for two-year-olds in addition to the 15-hour entitlement for three and four-year-olds that we introduced.
Our clampdown on tax avoidance will bring in £7 billion a year by the end of the Parliament, because there is no place for tax cheats in our society-neither is there a place for people who cheat the benefit system. My right hon. Friend the Secretary of State for Work and Pensions has introduced new plans to tackle benefit fraud.
Danny Alexander: I shall get to the end of this section on welfare before giving way, so hon. Members should stop troubling themselves.
Danny Alexander: I shall give way at the end of the section on welfare because I know it is of interest to many hon. Members, but let me explain our position.
The welfare budget accounts for nearly £1 in every £3 spent by the Government. The cost of the welfare system has increased by 45% in the past decade. In some cases, those increases were necessary-it is right that the Government should help those who need it most-but in many cases the previous Administration's over-complicated bureaucracy trapped people in a system in which it does not pay to work. Worse still, many were
simply dumped on benefits by previous Administrations and left there. That is not fair on them or the taxpayer. No one can deny that reform is essential, but the question is how the right balance should be struck.
Our approach is to move to a universal credit system over the course of two Parliaments to do away with the complexity of the current system so that it always pays to work. We will introduce a new work programme to provide personalised support to those who need the greatest help with getting back into employment, with private and third-sector providers being paid for the additional benefit savings they secure. We will fund significant above-indexation increases for the child tax credit to ensure that the spending review has no measurable impact on child poverty over the next two years. Through the welfare reforms in the spending review, we will find £7 billion of net savings on top of those identified in the Budget. Some £2.5 billion comes from removing child benefit from households with a higher-rate taxpayer. That is the largest welfare measure in the spending review and the most progressive, but it is the one that the Opposition have most vocally opposed.
Ms Angela Eagle: I thank the right hon. Gentleman for giving way on that point. There are press reports out on the wires that a source in Her Majesty's Treasury is saying that the child benefit cut is "unenforceable" and will be dropped. The press report says that it is
"panic stations in the Treasury."
Danny Alexander: I think it is panic stations on the Opposition Front Bench if they do not have a single answer to a single question about the action that they would take to reduce the deficit. The story that the measure is unenforceable is nonsense; it will be introduced as planned. The savings were signed off by the Office for Budget Responsibility, which considered the compliance risk involved as well. Higher-rate taxpayers are of course required to disclose all relevant information.
Ian Austin: The Minister's whole plan is based on two things: achieving, first, the biggest rate of export since 1974 and, secondly, a rise in business investment that has been matched only once in our history. Achieving both those things in the same year would be unprecedented, but the Government want to achieve both every year for three years on the trot. I know that the Chancellor and the Prime Minister do not live in the same world as the rest of us, but where did they dream that up-fantasy island?
Danny Alexander: I had planned to give way a few more times, but that intervention took so long that there will not be time to take any more for a while. The spending review is based on one simple principle: cleaning up the mess left behind by the Government of whom the hon. Gentleman was part.
We are making other welfare reforms too. We will cap household welfare payments at the average earnings of working households and we will reform housing benefit so that support better reflects the housing choices that working families have to make. That must be right. The welfare system should provide an effective safety net, but it should not pay workless families far more than most working families earn. That is where benefit traps
and dependency start. Our reforms mark an historic shift from dependency to independence. Our measures are tough but fair.
Kate Green (Stretford and Urmston) (Lab): Does the Minister accept that housing benefit is also an in-work benefit? The Government have presented very little evidence that out-of-work families who receive housing benefit live in significantly better conditions than any working family.
Danny Alexander: The cap that we propose, which will be debated in due course, is nearly £21,000-worth a year of housing benefit. That is more than equivalent to what most working families have to spend on their housing costs.
Matthew Hancock (West Suffolk) (Con): Does the Minister think it fair that his, my and other constituents should pay so that some people can live in houses costing £500, £600 or more a week?
Danny Alexander: No, I do not think it is fair.
Clive Efford (Eltham) (Lab): I have one simple question: will the Minister confirm that the majority of people on housing benefit are in work?
Danny Alexander: Yes; many people on housing benefit are in work. The point of our reform is to say that the fairness should be between people on out-of-work housing benefit gaining the maximum amount, which we will cap at £400 a week, so that that amount is equivalent to what people in work could receive in housing benefit.
Danny Alexander: I want to press on, so I shall not give way.
Our third principle is reform, which manifests itself in three ways. The first is bearing down on back-office costs. Each main Government Department has found at least 33% in administrative savings: we will share services, cut down on waste and abolish quangos. The second is a massive devolution of power from the centre, reflecting our commitment to freedom and responsibility. Apart from schools and public health, we will end the ring-fencing of all Government grants to local authorities from April next year. We will reduce 90 separate core revenue grants to councils to fewer than 10. Under the previous Administration, the comparable number of grants increased by more than 500%. Our new tax increment financing borrowing powers will allow councils to fund key projects, and we have today announced that we will consider options to enable local authorities to retain locally raised business rates. We are putting the local and government back into local government.
Finally, reform means recognising that the old ways of doing things simply were not working, even in times of plenty.
Danny Alexander: I will give way to the hon. Member for Birmingham, Erdington (Jack Dromey), then I will press on.
Jack Dromey (Birmingham, Erdington) (Lab): The House has waited in vain for a straight answer to a straight question. I know the right hon. Gentleman would like to take credit for the sun shining, and indeed for the imprint on the Turin shroud, but will he give a straight answer to the straight question asked by my right hon. Friend the Member for Edinburgh South (Mr Darling), the former Chancellor of the Exchequer? Is it true or untrue that the growth in the first three quarters of 2010 is a direct result of the measures taken by the previous Government to build Britain out of recession?
Danny Alexander: The last quarter of growth-Opposition Members were hoping that things would be worse than they are, which is a pretty poor foundation for any sort of economic policy-took place since the Budget. [ Interruption. ] Of course the previous Chancellor deserves credit for that much of his work in office- [ Interruption. ]
Mr Deputy Speaker: Order. A lot of Members want to speak in this debate, and this disorderliness is doing us no good.
Helen Jones (Warrington North) (Lab): On a point of order, Mr Deputy Speaker. Is it in order for the Chief Secretary to accuse Opposition Members without any evidence whatever of wishing for lower growth to put people out of work? That is what the Government are doing, not the Opposition.
Mr Deputy Speaker: That is not a point of order, as the hon. Lady knows.
Danny Alexander: Finally, reform means recognising that the old ways of doing things were not working.
Danny Alexander: No, I will not give way.
The old ways of doing things were not working even in times of plenty, so we will revamp the failing system of social housing. The number of socially rented properties fell under the previous Government in total, with an increasing proportion of workless households finding themselves trapped in dependency. The terms of existing tenants and their rent levels remain unchanged under our proposals. Some new tenants will be offered intermediate rents nearer to market rent.
Danny Alexander: I am not going to give way because many hon. Members wish to speak.
Together with capital investment, those measures will create a more flexible and responsive model, enabling the Government to deliver up to 150,000 new affordable homes over the next four years.
Danny Alexander: No, I am not going to give way.
There will be reform, too, in the justice system. A prison population that is rising out of control is not right, let alone affordable. The guilty must be punished, but rehabilitation must be the priority.
There are major reforms in other policy areas. Across all that we do, reform is the keystone to delivering better for less.
Mr Nigel Dodds (Belfast North) (DUP): I thank the Government for their work in rescuing savers in the Presbyterian Mutual Society in Northern Ireland; they are very grateful. The Government have built on the work of the previous one, but they have brought a solution to fruition. However, may I remind the Minister of the agreement-the settlement-that was made at the time of devolution for Northern Ireland? Will he look at that again to ensure that the challenges unique to Northern Ireland are faced with confidence?
Danny Alexander: I am grateful for the right hon. Gentleman's intervention-my hon. Friend the Financial Secretary, who did a great deal of work on that issue, will have heard his compliments. I believe that we will introduce a growth paper on Northern Ireland soon, and the right hon. Gentleman's points on that are very important. I know that questions have been asked, for example, on capital spending between June 2005 and 2018. We believe that we are on track to meet those commitments, which were made some years ago.
Danny Alexander: I am not going to give way.
The spending review will have an impact on the public sector workforce. I should like to say that the ideas, effort and commitment shown by the public sector workforce are essential to helping people to get the best from the services they provide, and we should thank them. The reforms that we are making will make the public services a more rewarding place to work-more power, more trust, more independence-but there will be an impact on employment. The best estimate remains that of the Office for Budget Responsibility, to which hon. Members have referred, which forecast in June a reduction of 490,000 employees over the next four years.
Natural turnover will play a big part, but individual employers will make their own decisions on redundancies. Each such decision will be difficult, which we recognise, so we have introduced pay restraint to protect jobs. We will monitor plans closely to try to avoid localised hotspots, and deploy our regional growth fund to support such areas.
Danny Alexander: I will give way to the hon. Member for Warrington North (Helen Jones).
Helen Jones: The Chief Secretary is proposing to make many public sector workers redundant. Given that, why is it considered fair for others to have money in tax avoidance trusts based overseas? Considering the strategies he is introducing, will he give a commitment that no Minister in the Government has or will have money based in overseas trusts designed to avoid paying their fair share of British tax?
Danny Alexander: If the hon. Lady was listening to me earlier, she would know that we have announced significant additional investment for HMRC to tackle tax avoidance and tax evasion. Of course, every Minister should comply with tax law.
Danny Alexander: I will give way to the hon. Gentleman sitting next to the hon. Member for Warrington North.
Huw Irranca-Davies (Ogmore) (Lab): Does the right hon. Gentleman accept that the localised hotspots he mentioned, where the cumulative impact of his measures will take the most drastic and tragic effect, include Wales, the north-east and other areas that either rely heavily on public sector workers as a proportion of the work force or where the benefits reforms will have a significant impact? Does he also accept that he will be judged in 12 or 36 months or five years of this Parliament on whether the north-east, Wales and elsewhere are disproportionately and tragically affected by the cumulative impact of the measures he is ramming through?
Danny Alexander: Of course I accept that people will judge the Government's performance on the basis the hon. Gentleman suggests. I fully understand that, which is why I am spelling out the measures we are taking to ensure that those areas that are most affected are supported through the regional growth fund. His point is important and serious, but I observe only that the previous Government created the mess of the Budget deficit. We have to clean up the problems facing our economy. The worst thing possible for Wales or other parts of the country would be to leave the deficit untackled, which would lead to lower growth, higher interest rates and less employment.
Danny Alexander: I will not give way again to the hon. Gentleman; I shall press on.
Also in June, the OBR forecast total jobs in the economy over the next four years, which Opposition Members seem to have missed. It implies 1.6 million additional private sector jobs over the period. We will do all that we can to help those leaving the public sector to take advantage of those opportunities, and we must remember at all times that the gravest threat to jobs in our economy would be a failure to deal with the deficit. Deficit denial is the single biggest danger to employment in this country today.
Throughout the review, I have been clear on one thing: our decisions need to improve life chances. Fairness is not just the net sum of cash transfers. That is important, but there is more. Fairness is about opportunity and the chance for a better future, especially for the next generation. We know about the attainment gap between children from different backgrounds, which starts at an early age.
In these difficult times, perhaps no one would have noticed had we quietly turned a blind eye, but fairness demands more, so we have chosen to invest. That is why we have introduced a new pledge for 15 hours' child care for disadvantaged two-year-olds, matching the 15-hour commitment for all three and four-year-olds that was
previously introduced by this coalition Government. Cash spending on Sure Start services will be maintained, with a renewed focus on life chances. Although this has meant a greater challenge for other Departments, I am proud that the schools budget will not only match but outstrip inflation in each of the next four years. When we factor in reduced pressure from pay restraint and back-office savings, that amounts to a very significant boost to the classroom. A new £2.5 billion pupil premium will target additional resources on those with the most to gain.
We will be relentless in our focus on social mobility, and in extending the ladder of opportunity. Fairness runs through the heart of this spending review.
Keith Vaz (Leicester East) (Lab): We all accept that those are very difficult decisions. However, the chairman of the Police Federation has suggested that 40,000 police service jobs will be lost because of cuts to the Home Office budget. Does the right hon. Gentleman accept that if that happens, crime will rise?
Danny Alexander: I do not accept that analysis. Of course, it will be for individual police forces in due course to make their own decisions- [ Interruption ] -but given the potential for police forces to become more efficient, we think that there is no reason why those savings should have any impact at all on the presence of police on the front line in communities.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): On the policy to give two-year-olds 15 hours of education based on free school meal eligibility, what mechanism will be used and how much will it cost to ensure that that happens, given that there is no information about two-year-olds receiving free school meals? I have asked Ministers that question twice, but I still have not had an answer.
Danny Alexander: That is a very good question. I imagine that the hon. Gentleman intended to preface his question by saying that he welcomed the commitment to additional nursery education for the poorest two-year-olds. There are many mechanisms available, for example within the Sure Start system, that can target those pupils, and the Secretary of State for Education will no doubt make announcements in due course.
Danny Alexander: I now intend to finish my speech with no further interruptions.
I am often asked about a plan B. Plan A is to deal with the deficit so that we can support growth and invest in fairness. But we all know that the recovery will be choppy, so plan B is to deal with the deficit so that we can support growth and invest in fairness. But we know that the road will be difficult, so plan C is to deal with the deficit so that we can support growth and invest in fairness. Nothing is more important to our future prosperity.
One party made this mess. Two parties are working together to clear it up. We will hold firm. Where we have faced tough choices we have asked, "What are the fair choices? What are the choices that support growth?
How can we achieve more with less?" We have made the right choices for the right reasons. We have given our answers: now let us hear the Opposition's.
1.51 pm
Ms Angela Eagle (Wallasey) (Lab): Last week's comprehensive spending review statement has taken a huge and risky gamble with the jobs and future prosperity of millions of people in this country. This wholly unnecessary risk has been taken because this Conservative-led Government is in ideological thrall to the discredited economic mantra that shrinking the state is always the right answer. They do not state it as provocatively as Mrs Thatcher once did in the 1980s, but they believe it just as firmly. The Orange Book Liberal Democrats, led by the Deputy Prime Minister with the Chief Secretary in tow, believe it too.
Of course, the deficit has to be brought down-[Hon. Members: "Ah!"] We said that before the election and we set out a plan to do so. We also said it at the election and we have said it since. The difference between us is how the deficit is brought down. My right hon. Friend the shadow Chancellor has made it clear that we favour a different balance between spending cuts and tax rises that brings the deficit down but also protects the recovery and boosts growth. None of us should forget the backdrop to this spending review, which is families up and down the country worried about their jobs and homes. That is why the cheers and mass waving of Order Papers on the Government Benches as the Chancellor announced the largest job cuts for generations demonstrate just how out of touch they are. At that very moment at the end of his speech, the masks slipped and we saw what really motivates them. As these cuts begin to bite, the British public will not forget.
Mr Redwood: Given that between 250,000 and 500,000 people leave the public service every year voluntarily, for retirement or other reasons, will the hon. Lady now withdraw her statement that half a million people will lose their jobs under this Government? It can be done by natural wastage.
Ms Eagle: That is not my statement: it is a statement by the Office for Budget Responsibility. It is also the figure that was revealed accidentally the day before the Chancellor's statement by the Chief Secretary when he was filmed in the back of his car with open documents. It is not my figure. The right hon. Member for Wokingham (Mr Redwood) should remember that the Ministry of Justice is already planning 14,000 redundancies, as we know from a leak, and has set aside-
Matthew Hancock: Will the hon. Lady give way?
Ms Eagle: No, I shall finish answering the question. The hon. Gentleman can sit down and be patient, and we will see whether I give way to him a little later.
The Ministry of Justice is already planning cuts of 14,000 in front-line staffing. It has also set aside £230 million to pay for the costs of those redundancies. I asked the Chief Secretary what the figure was for the rest of Whitehall. He will know what that figure is, because he will have signed it off. Twice I asked him for that figure, and twice he avoided the question. It does him no credit if, knowing what that figure is, he comes to this House
for a debate on the comprehensive spending review but avoids the question of the costs to the public purse of the redundancies that will be directly caused by the statement made by the Chancellor last week. He knows that figure and he should stand up now and give it to the House. Silence is sometimes far more revealing than an answer.
Ian Swales: The hon. Lady referred to the number of job losses mentioned in the comprehensive spending review. Can she tell us how many job losses were involved in her alternative plans?
Ms Eagle: The key point about our approach to the difficulties in the world economy was that we spent and invested money to keep people in work. We know that the cost of every 100,000 people on the dole is half a billion pounds. The difference between us and the Government is that we were keeping people in work whereas they are taking people out of work. We know from PricewaterhouseCoopers that half a million jobs in the private sector that are directly connected to public sector contracts will also be lost as a result of the Chancellor's statement last week.
Angela Smith: Is it not the case that the stimulus put into the economy by the Labour Government saved more than 200,000 jobs?
Ms Eagle: Yes, according to the OBR. We saw the undisguised glee of Members opposite as they celebrated the hardship and misery that the Chancellor proposes to inflict on so many people in our society. These are not just numbers; they are police constables, care workers, teaching assistants and dinner ladies. In the private sector, they work in small businesses which rely on public sector contracts at a time when order books are empty. All those people are being asked by this Conservative-led Government to shoulder the burden of a crisis made in the banks and the dealing rooms.
Tom Brake (Carshalton and Wallington) (LD): Will we hear anything concrete from the Opposition today about their alternative proposals?
Ms Eagle: Well, the hon. Gentleman could take a look at the March Budget, which was presented to the House before the general election, and the Red Book that was published subsequently. We went into the election with far more detail about what we would do had we been re-elected than either party opposite, and at least we did not flip-flop immediately afterwards so that we could get into government.
These are not just numbers; they are the people being asked by this Conservative-led Government to shoulder the burden of a crisis that was made in the banks. It is not those who caused the crisis who will now suffer as a result of the Chancellor's reckless gamble with jobs and growth. It is the 490,000 ordinary men and women serving in the public sector whose jobs will go, and it is the 500,000 jobs in the private sector that PricewaterhouseCoopers has calculated will also be lost as a direct result of the spending review. Redundancies on the scale now threatened are not inevitable, but are the result of the Government's choice to cut further and faster.
Richard Harrington (Watford) (Con): Does the hon. Lady agree that it is a basic principle that spending money we do not have does not create long-term jobs? It creates nothing but debt, which has to be paid back. That is what the Government are doing now. That is what we need to do.
Ms Eagle: Perhaps the hon. Gentleman will agree that in an advanced economy with a social security system, if there is a recession, deficits will rise. That is why the deficit rose. What he suggests, if taken to its logical extreme, means that he would not be in favour of paying unemployment benefit to those made unemployed. They tried that in the 1930s and it did not work.
Kwasi Kwarteng (Spelthorne) (Con): What does the hon. Lady think was the reason behind our deficit being worse than that of every other country in the G20?
Ms Eagle: We entered the crisis with the second-lowest deficit in the G7. We were affected by the credit crunch because we have a very large financial services sector, which is why both sides in the House are talking about how we can rebalance our economy. We are too exposed to the kind of risks that crystallised when the credit crunch struck. [Interruption.] The Chancellor, from a sedentary position, asks whose fault that was. If we are going to be sensible and have a proper, nuanced, balanced and grown-up debate on this issue, all of us-as members of political parties that are, or have been, in government and in charge of running the country over the past few years-need to take our fair share of responsibility for how the banking sector came to dominate too much. Both sides of the House have to learn those lessons. I hope that we all will.
Stephen Lloyd (Eastbourne) (LD): Does the hon. Lady agree that it has been down to this Government to introduce the bank levy of £2.5 billion, and that the Labour party, when in government, failed to do so? Why did they fail to do so?
Ms Eagle: We introduced the bonus tax, which the Conservative party opposed and which raised £3.5 billion. We have said that we need to consider how to ensure that the banks shoulder their fair share of the burden in ensuring that the deficit is reduced in a sensible way.
Mrs Moon: Does my hon. Friend agree that it is depressing to see the huge ranks of men opposite talking about cuts that will affect- [Interruption.] Yet again, there are very few Conservative women. The one or two ladies opposite waving and shaking their papers at me do not help. The majority of Conservative Members, as always, are men, but the majority of people to be affected by the cuts will be women. It is women who will lose their child benefit and the tax credits that help them get into work, and it is women, largely, who work in the public sector and rely on its excellent flexible working conditions. Is it women who will find it harder to get into work, thanks to the Government's policies?
Ms Eagle:
I do not suppose it is their fault they are men. I can blame them for some things, but not that. My hon. Friend makes a perfectly fair point though. It is clear that 65% of those who work in public services are women, that 75% of those who work in local
government are women and that there are even higher levels working in the health service and social care. Clearly, they are on the front line, and the Government have a legal duty, which it is not clear that they have fulfilled, to take reasonable account of that fact.
Dr Sarah Wollaston (Totnes) (Con): Has the hon. Lady met people trapped on benefits, many of whom, incidentally, are women? The failure to address the perverse incentives operating in our benefits system was utterly spineless and ignored the real misery affecting those who live trapped in our benefits system.
Ms Eagle: The hon. Lady's intervention was extremely helpful. Of course I have. We have all done a great deal of work on social security reform, and I hope she will be the first to acknowledge some of the progress we made, particularly in helping lone parents into work. Tax credits and all the support we gave on child care were among the measures that were crucial in ensuring that we managed to increase significantly the number of lone parents in work when we were in office. I hope she will be the first to recognise our success in those areas. She should take a close look at the increasing rates of marginal tax that came about because of some of the changes, particularly for lone parents, and the savings made in tax credits, and she should also have a word with her party's Front-Bench team about their priorities for cuts, given that they are taking away benefits that particularly help women go out to work.
In softening up the country for this age of austerity, Ministers have been anxious to establish some myths, the first of which is that the deficit was a Labour spending choice. We heard a lot of that today from the Chief Secretary to the Treasury. The second myth is that the cuts announced are unavoidable. We need to start with some facts. When the credit crunch struck in 2008, Britain had the second-lowest debt in the G7. We had low interest rates, low inflation and low unemployment. There is nothing reckless about that. Now, however, the Conservative party and the Liberal Democrats are trying to rewrite history.
Matthew Hancock: Will the hon. Lady give way?
Public spending did not cause this deficit-the global financial crisis caused it. A large deficit is what we get when the largest financial crisis since the war hits. When companies' profits are hit, tax revenues fall.
Matthew Hancock: Will the hon. Lady give way?
When families have to work shorter hours, they pay less tax. We took a conscious decision to spend money to keep people in their jobs and homes, and I am proud that we did that. As a result of our action, unemployment was half what it had been in previous recessions and repossession levels were also half what they were in the Tory recession of the 1990s. Some of this help has been cut away in the CSR and, as a result, it is more likely that more people will lose their homes, as unemployment and the cuts begin to bite.
Sajid Javid: The hon. Lady is fond of saying, "Let's have a grown-up, sensible debate", so it would be useful if she followed her own rules. Why is she refusing to give way to my hon. Friend the Member for West Suffolk (Matthew Hancock)?
Ms Eagle: There we see it-the old boys' network writ large. They stick together, don't they?
Matthew Hancock: I am very grateful to the hon. Lady for plucking up the courage to give way. She said that Britain went into the crisis with the second lowest deficit in the world, but she has now revised that to point out that, actually, it was the second lowest debt in the world. Does not the fact that she and her colleagues muddle up the debt and the deficit show just why we are in this mess?
Ms Eagle: Whatever happened to old-fashioned courtesy? The hon. Gentleman should ask himself why I do not want to give way to him when he is so generous and lovely to me when I do.
Money spent on infrastructure investment kept the construction sector going. As we saw from the GDP figures on Wednesday, that is still having a positive effect. The deficit was unavoidable. It was vital to support people and businesses through tough times, but let us be clear about Labour's spending before the crisis hit. Far from being too high, it was, as the Prime Minister said-I am quoting him directly-"really quite tough", while the Chancellor was urging us to spend more.
The second myth is that the scale of the cuts is unavoidable. As my right hon. Friend the shadow Chancellor has pointed out, Government propaganda has got it precisely the wrong way round. The fact is that the deficit was unavoidable; it is the June Budget and the Chancellor's spending review that are a political choice. They are not only avoidable, they are downright dangerous. That is why there was no mention of these supposedly unavoidable cuts in the manifestos of either of the parties now in government when they went to the country. That is why they have no mandate for the cuts policy that they have embarked on since the general election.
Since the election, we have seen the contortions of the Deputy Prime Minister, along with his accomplice in what we now have to call the "quad", to justify his volte-face. First he told us that he took a call from the Governor of the Bank of England as he stepped into the ministerial Jag, but the Governor begged to differ. Then the Deputy Prime Minister said that Britain was about to become Greece. That is about as close to a myth as you can get, Mr Deputy Speaker. The Government have made their choice, and we on the Opposition Benches will hold them responsible for the social and economic consequences of those choices.
Mr Chuka Umunna (Streatham) (Lab):
Has my hon. Friend noticed the tendency of those on the Government Benches, and in particular the Chief Secretary and the
Chancellor, when referring to the history of the economy this year, to say that we were on the brink of bankruptcy as a country? Did she, like me, notice Lord Turnbull's appearance before the Treasury Committee this morning, when he clearly said that this country was not on the brink of bankruptcy and that there was no risk of a sovereign debt crisis?
Ms Eagle: It is quite extraordinary that we have a Chancellor who is prepared to make such alarmist statements from the Treasury. He does it for political, not economic, reasons, and it is a disgrace that he continues to do it.
Julian Smith (Skipton and Ripon) (Con): Will the hon. Lady take this opportunity to pay tribute to British business, which has created hundreds of thousands of jobs since this Government started taking the tough decisions that she flunked?
Ms Eagle: I am certainly more than happy to pay tribute to British business, but I do not connect the first part of the hon. Gentleman's question with the second.
Last week two more myths were added to the Chancellor's own special edition of Grimm's fairy tales. He now claims that the measures in the spending review are fair, and even that the scale of the cuts would have been greater under Labour. Let us start with fairness. Last Wednesday, the Chancellor told us that fairness was
"one of the guiding principles of this spending review".-[ Official Report, 20 October 2010; Vol. 516, c. 955.]
Not for the first time, this spin lasted barely 24 hours, before the Institute for Fiscal Studies comprehensively rejected it, proving that, far from the poorest being protected, it is the poorest who will bear the brunt of the cuts. It is families with children who will pay the most. We should not be surprised at that, because the Institute for Fiscal Studies was scathing of the Treasury's analysis of who loses what.
Stephen Gilbert (St Austell and Newquay) (LD): How is it fair that in the time that the hon. Lady has been on her feet at the Dispatch Box, we as a country have spent almost £2 million servicing the interest on the debt that has been created? That is £5 million an hour and £120 million a day. What plans do the Opposition have to bring that under control?
Ms Eagle: I have talked about the importance of getting the deficit down, but the hon. Gentleman is falling for the idea that the coalition have perpetrated that it is somehow not viable to have a bill that needs to be paid. People who have mortgages have to pay them off over time, and they have to pay interest on them. However, it is not sensible for anyone to deal with their mortgage by paying it off so early that they cannot afford to feed their kids in the meantime.
Mr David Ruffley (Bury St Edmunds) (Con): Will the hon. Lady give way?
Ms Eagle: I am very happy to give way to the hon. Gentleman; it is great to see him back in the House.
Mr Ruffley: I am most grateful to the hon. Lady, although I am afraid that I will not be lovely and fluffy, or whatever it was she said she wished my hon. Friend the Member for West Suffolk (Matthew Hancock) was. Is she aware that on 18 October, 35 leading businessmen wrote a joint letter stating that delay would cost this country an extra £100 billion alone in the course of this Parliament? Are they all wrong?
Ms Eagle: I would not expect the hon. Gentleman to be fluffy-that is not a word that I would ever have associated with him-but it is still good to see him back, and I genuinely welcome his return.
It needs to be pointed out that that letter was organised by Lord Wolfson in the House of Lords, via Conservative central office. It is also interesting to note that some of the signatories of the letter have some kind of vested interest. First, quite a few are Conservatives. Secondly, BT, for example, has cut 20,000 jobs in the past year, which is not exactly helping us to replace public sector jobs with private sector jobs. Others are responsible for outsourcing and stand to make direct gains from the shrinking of the state. The hon. Gentleman can believe that guff if he wants; we do not.
The IFS has been scathing about the Treasury's analysis on the fairness front, and on who loses what. It has noted that the Treasury analysis conveniently stops in 2012-13, thereby excluding £12 billion of the announced savings-by which I mean cuts to social security. For those who remain in any doubt, let me quote directly from the IFS:
"The tax and benefit changes are regressive rather than progressive across most of the income distribution."
The Government's immediate response to that report by the IFS was to try to shoot the messenger. The Deputy Prime Minister launched into an attack on the IFS that bordered on the hysterical. He described its analysis as "distorted" and "complete nonsense". He neglected to mention the fact that before the election he had regularly lauded the IFS when the results of its analysis suited him. On 29 April, as he preened himself during the leaders' debate, he told us that he was
"really delighted at the Institute of Fiscal Studies"
for its view of Liberal Democrat proposals. Now that he is in government, he does not seem to like the IFS for pointing out an inconvenient truth.
A flip-flop here, a U-turn there-it is all in a day's work for the Liberal Democrats as they shoehorn themselves into their new and ill-fitting Tory ideology. It is now abundantly clear that, for the Deputy Prime Minister, the slight awkwardness of signing up to one of the most unfair decisions for generations will not get in his way, even if he occasionally has to struggle with his conscience on "Desert Island Discs". I know that he has argued for a different, more convenient definition of fairness, but let me tell him that there are some things that are not fair, however we define them.
Mr David Anderson (Blaydon) (Lab): I thank my hon. Friend for the sterling work she is doing here today. We have discussed the fact that this is not about fairness, and that women and children will be hit by these measures. Does she recognise this quote from Richard Hawkes, the chief executive of Scope? He says:
"Despite the continuing rhetoric that spending cuts will be fair, the Chancellor's announcements today are anything but. This will hit disabled people and their families particularly hard."
Does she believe him, or does she believe Gideon?
Ms Eagle: I think we know who to believe. There is a great deal of real worry out there about the effects of the draconian cuts in public expenditure that have been announced in the spending review.
I will tell the Deputy Prime Minister and anyone else on the Government Benches what they cannot hide about fairness. There is nothing fair about cutting 10% from housing benefit for those who are out of work for more than 12 months when there are already five people chasing every job vacancy-and that is before the Government add another million to the dole queue. There is nothing fair about expecting children to play a bigger part than the banks in getting the deficit down. There is nothing fair about failing to carry out a legally required equality assessment that would have shown that the Budget had a disproportionate impact on women, who often do the lowest paid jobs in the public sector. When it comes to the cuts under this Government, it really is women and children first. Let us have no more of these ludicrous claims of fairness from the Government.
As for the idea that the Government are cutting less than we had planned to do, there is something distasteful in a Chancellor who is prepared to skew his spending decisions, cutting an extra £7 billion from the social security budget, just to get a cheap one-liner at the end of his speech. There is nothing so cynical as a Chancellor who begins his speech by claiming that Britain has been saved from the brink of bankruptcy by his savage cuts, only to conclude it by claiming that Labour would have cut even more. He knows that he cannot have it both ways, and he knows that he has cut £30 billion more from public expenditure than we planned to do. He knows that, in doing this, he has totally failed in his pledge to protect the most essential front-line services. It is now clear that his promises are unravelling, and that there will be a major impact on our schools, our hospitals and the police.
Schools up and down the country are facing cuts in funding, thanks to a budget settlement that takes no account of rising pupil numbers; and before the Liberal Democrats start getting excited about the pupil premium, I am sorry to have to tell them that the Education Secretary has now admitted that it is simply a con. In June, the Prime Minister pledged:
"We will take money from outside the education budget to ensure that the pupil premium is well funded".-[ Official Report, 2 June 2010; Vol. 510, c. 432.]
But at the weekend, the Education Secretary finally came clean and admitted:
"Some of it comes from within the Department for Education budget, yes."
It is not new funding after all; it is just money being moved around within the Department to disguise budget cuts.
The IFS calculates that 60% of primary school pupils and 87% of secondary school pupils will see a real-terms funding cut to their schools as a result of the new funding formula. We knew that the Liberal Democrats supported recycling, but we did not realise that this was what they meant. We were also repeatedly told that health spending was to be protected, yet £1 billion has been raided from the NHS to make up for some of the shortfall caused by the huge cuts in local government spending. With this settlement, the Prime Minister's promise of real-terms increases in health spending will not be met.
There has been no commitment to front-line policing either. The Police Federation tells us that as many as 20,000 police will be sacked. The thin blue line has become a casualty of the thick red pen. For schools, the NHS and the police, there will be no protection for front-line services.
Tom Brake: Will the hon. Lady give way?
Ms Eagle: No. I have given way to the hon. Gentleman before.
No priority is to be given to the services that we rely on, day to day. That is the choice that the Government have made. Let us have a serious debate about the differences between us, and let us have no more nonsense from the Government about the four myths on which their entire defence of the scale of their cuts is based. Let us hear no more nonsense about the deficit being the result of the decision of one party or the fault of spending on our public services, rather than the inevitable result of a global economic crisis and the greed and recklessness of the banks.
Danny Alexander: The right hon. Lady has said that she is opposed to the welfare cuts that we have proposed, opposed to the pupil premium, opposed to the savings in the Ministry of Justice and opposed to the savings in the Home Office. Can she name one single saving that she would propose to help to tackle the deficit?
Ms Eagle: I have not said that I am opposed to all the changes in the social security budget. My right hon. Friend the shadow Chancellor supported some of the changes in welfare spending. Indeed, it was we who developed them: the Government are putting our changes into effect. Let us hear no more of this nonsense about the scale of the Government's cuts being unavoidable, rather than the result of a decision that they made on the balance between taxes and public spending cuts.
Danny Alexander: This really is quite a simple question. Can the hon. Lady name a single cut that she supports?
Ms Eagle: If the Chief Secretary had answered my questions, I might answer his. [Hon. Members: "Incredible!"] What I find incredible is the fact that the right hon. Gentleman has the figures for redundancies and the costs of redundancies across Whitehall in his books. We know what the Ministry of Justice figure is, but he knows what the overall figure is, and he refuses to give it to the House. That is a disgrace.
Let us hear no more nonsense about how the spending cuts that the Government have announced were, as a result of some magical accounting trick, less than those that we planned when we were in government. The truth is that this country faced the gravest of economic challenges. The truth is that our party, in government, rose to meet that challenge, and averted a catastrophe for our country by making tough decisions to protect jobs and homes in our economy. The truth is that whatever party was in government, it would now be making decisions to pay down the deficit. Any party, including ours, would be having to make tough decisions.
It is also true that there is a clear choice in relation to what to cut, and the balance between cuts and measures to bring in revenue. My right hon. Friend the shadow
Chancellor has set out the different approach that we would be taking, which would protect not only front-line services but jobs, growth and the recovery. The Government, for ideological reasons alone, have used the deficit as a fig leaf for an assault on our public services of a kind that they had previously only dreamt of. They can talk of fairness as much as they like; they can spread myths as much as they like; but we are not fooled, and, more important, the British public will not be fooled either.
The spending review document sets out the Government's choices. Those choices were freely made. What the Government have presented is their vision of a future for our country. What we have seen is not the big society but the blueprint for a smaller, meaner and nastier society, and we reject it.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Speeches are limited to six minutes, and a vast number of Members wish to speak. We need restraint on the part of all Members, and if they can cut their speeches to less than six minutes, we may get near to the end of the list.
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