“objectives in relation to fiscal policy and policy for the management of the National Debt,”
and to establish the Government’s “fiscal mandate”. Opposition Members have no problems with that concept; indeed this House legislated for similar goals in the Fiscal Responsibility Act 2010, but the real difficulty is with the Government’s proposed fiscal mandate of attempting to eliminate the deficit over a four-year period—and the effects that that is already having, as the country can see, on growth.
The OBR has already revised down its growth forecast for 2011, from 2.6% when the Government took office last May to 2.3% after the emergency Budget in June; and it did so once more, to 2.1%, after the comprehensive spending review in November. We will see on 23 March whether those figures have to be downgraded again in the light of growing evidence that the Government’s decisions on the economy have seen it take a turn for the worse this winter.
When Labour left office, the recovery was picking up, with growth of 1.1% in the second quarter of 2010, and, according the OBR’s own analysis, the deficit for 2009-10 came in more than £20 billion lower than forecast. The Office for National Statistics was clear that, even once the effects of December’s inclement weather were taken into account, there would have been no growth at all in the last quarter of 2010.
The Government should adopt a fiscal mandate in the Bill to put jobs and growth first in order to ensure that cutting the deficit does not harm the productive capacity of the economy, and they should end their complacent argument that the economy is “out of the danger zone”. With the country facing 20% youth unemployment, rising prices and stagnant growth, that is not a claim that either the Prime Minister or the Chancellor can credibly make.
Sajid Javid: The hon. Gentleman will know that Government debt stands at £1 trillion. According to a recent ONS report, if we add on the bank debt that the country inherited from the previous Government’s policies, we find that the figure is about £2.3 trillion—equal to 160% of GDP. Does he consider that to be a good legacy with which to engender growth?
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Mr Bain: I am grateful for that intervention, because it gives me the opportunity to compare and contrast the public sector net debt of 1996-97, which was 42.5%, with that of 2007-08, before the financial crisis—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I am trying to allow some freedom, but we are in danger of straying off Second Reading and on to a general debate about the economy. Can we please come back to the debate in hand?
Mr Bain: I am very grateful for that guidance, Mr Deputy Speaker.
To conclude my response to the hon. Gentleman, public sector net debt in 2007-08 was 36.5%, so it was lower than that which we inherited when we came to office.
The analysis of the IFS, in chapter 2 of its green budget, produces the conclusion:
“The financial crisis and associated recession have reduced revenues and, to a greater extent, increased public spending as a share of national income. Without action, there would have been an unsustainable increase in borrowing and debt. The government’s spending cuts and tax rises are forecast to be sufficient to return the UK’s public finances to a sustainable position, but the same would have been true under the fiscal consolidation plan set out by Labour in its March 2010 Budget.”
I doubt that even Government Members would label the IFS a deficit denier, so a fiscal mandate that pays insufficient attention to the impact of higher growth and employment in bringing the public finances back to stability will fail the needs of the country.
We look forward to scrutinising the Bill in Committee, to improving the operation of the OBR and perhaps, during the Bill’s proceedings, to securing the change in fiscal mandate that would improve the economic prospects of the British people.
7.9 pm
Alec Shelbrooke (Elmet and Rothwell) (Con): In this debate on the Bill and the Office for Budget Responsibility, I would like to focus on the word “responsibility”. Interestingly, Members in other parts of the House have focused on the downgrading of the growth forecast from 2.6%, to 2.3%, to 2.1% and possibly lower, but at no point has it been said that this allows the Chancellor to ensure that we have a Budget that is based on facts rather than on what he would like the growth figures to be. That is the problem of previous years that led to a bunker scenario.
David Rutley (Macclesfield) (Con): I wonder whether my hon. Friend has noticed that the Institute for Fiscal Studies has said:
“If an OBR had been in existence over recent years it might have discouraged Gordon Brown from persevering with fiscal forecasts that most independent analysts thought over-optimistic from 2002 onwards”.
Alec Shelbrooke:
I am most grateful for my hon. Friend’s intervention, which makes my point. If the OBR had been there in the past, it would not have been possible to proceed with the bunker mentality that I mentioned. Alternatively, the Chancellor could still have moved forward with the same forecast, but everybody would have known exactly where the blame lay and
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got rid of the arguments that we hear time and again whenever we talk about the horrific financial mess that this country is in—the chorus from Labour Members saying, “It’s the banks, it’s the banks.”
Alec Shelbrooke: My point is proved by that sedentary intervention. Labour Members think that the whole financial crisis is down to the banks.
There is no doubt that the banks contributed to the global recession, but there is equally no doubt that this country was one of the worst placed countries in being able to deal with the downturn. Let us not forget what a structural deficit is. Again, I see Opposition Members shaking their heads, completely in denial of the fact that this country was living way beyond its means. One does not rack up a £1 trillion debt in the good times if one is acting sensibly. While £120 million a day in interest is going to foreign nations, we see councils around the country, especially Labour-run councils, cutting front-line services that impact on the public and trying to blame the Government, yet never mentioning what we could have done with that £120 million a day. We have to get a grip on the economy.
I want to return to the OBR, because I am conscious, Mr Deputy Speaker, that you have been trying to keep the debate on track. Let us consider the name of this body —the Office for Budget Responsibility. “Responsibility” is a word that has been lacking in the governance of this country and its fiscal policy, not only in the Treasury but, as we recently learned from senior civil servants, in other Departments that lost control of spending. We in this House have to be responsible and move things forward.
Alison McGovern: The hon. Gentleman rightly says that we should be cautious. How successful does he feel that previous attempts to add caution to Budgets were? The National Audit Office has previously examined the assumptions made by the Treasury. For example, it was assumed in the March 2010 Budget that GDP growth was 0.25% lower than it really was. Would he like to comment on how those previous attempts at caution might feed into the OBR’s future work?
Alec Shelbrooke: As the hon. Lady suggests, previous forecasts and attempts at caution came from many different angles. The public will recognise that the OBR is giving us a proper set of figures that can be relied on. If the Chancellor of the Exchequer then ignores those figures and ploughs ahead, not only would the calls from the Opposition be deafening but the public would know that the Chancellor was acting against their interests.
Matthew Hancock: Does my hon. Friend know that in 1995 the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) called for a panel of independent forecasters to express their views on public finances? Does he agree that it is a great shame for the nation that the right hon. Gentleman did not act on that when in government, because it might have meant that there was restraint and, in turn, that he would not have left this country in such a terrible mess?
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Alec Shelbrooke: I am grateful for that intervention. Needless to say, one of the very first things that our Chancellor of the Exchequer did was to give away the forecasting power to an independent body so that our statistics be relied on. This is about not just public faith in the statistics but the faith of the money markets internationally. That is why the forecasts and credit ratings of this country have been upgraded since the emergency Budget, and secured since the Government laid down a clear, responsible fiscal policy on how they were moving forward. These are highly important matters.
Like many people, I am sure, I am sick to death of the cherry-picking by Labour Members. Stopping that taking place strengthens the case for the Office for Budget Responsibility. The hon. Member for Glasgow North East (Mr Bain) told the House about GDP figures between 1997 and 2010, when Labour left office, but he never mentioned that the private finance initiative was taken off the books. That meant that huge amounts of public debt and public spending were not linked in to those GDP figures because of a fiddle done with the statistics. That cherry-picking must, and will, stop under the Office for Budget Responsibility.
We are told that forecasts can change and that it is therefore not the fault of the previous Chancellor that we are in such a mess. I would like to have seen the forecasts that were made for the price of gold in 2000, when it was at its lowest level ever. Was everybody saying, “It will just drop further and further, so sell the lot now”? I very much doubt it. When things go wrong, it is too easy for the Opposition to say, “It wasn’t our fault—forecasts change.” We now have a Chancellor of the Exchequer who has taken the bold step of passing responsibility to the Office of Budget Responsibility and has put together a Budget that is based on realistic figures rather than what he would like them to be, buried in his bunker at No. 11.
7.16 pm
Alison McGovern (Wirral South) (Lab): It is a pleasure to follow the hon. Member for Elmet and Rothwell (Alec Shelbrooke), whose robust arguments I always enjoy, if not agree with.
The purpose of this Bill is to separate politics and economics, which is not always an easy job but is one that it is important to do. There is a body of academic understanding about the importance of the independence of judgments, forecasting and transparency, and that importance is recognised and understood on both sides of the House. In many ways, the Bill makes clear Labour’s economic legacy of the past decade—rules-based economic policy. The reasons for the sustainable investment rule and the golden rule were clear: after decades of boom and bust, it was felt that the way forward was to establish clear lines of accountability and rules by which economic policy might be set.
Alec Shelbrooke: I agree that the golden rule was important, but how does the hon. Lady respond to the fact that the dates of the cycles were moved to fit in with what the then Chancellor was claiming instead of sticking to the timeline that he originally outlined for the fiscal cycle?
Alison McGovern:
Understanding the business cycle has been the job of economists since the dismal science began. The fact that it is difficult does not make it the
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wrong thing to try to do. I applaud some of the work that has been done by the Treasury and others in trying to find a better way forward. The hon. Gentleman asks an important question that cannot be dismissed by saying, “Oh, this is just people politicking.” Understanding the business cycle is extremely difficult.
When we consider the importance of rules-based economic policy, it is important to reflect on the fact that the Office for Budget Responsibility is to fiscal policy what the independence of the Bank of England was, and remains, to monetary policy: that is, it is an external-to-the-Treasury body that is charged with an important economic function that will drive the policy prescriptions that the Government make, in liaison and discussion with, and working alongside, independent chairs and officials from the organisations concerned. I have no doubt that that is an extremely difficult job. I wonder how real that independence can be. That is an important question for us to consider as the Bill moves through the House. The OBR’s work will be inextricably linked with Departments.
That point was brought home to me by the answer to a parliamentary question in which I asked the Department for Work and Pensions for forecasts of the number of young people who would be unemployed through the life of this Parliament. The Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling) wrote:
“The Department produces projections for business planning purposes which are aligned to the overall independent claimant count forecasts published by the Office for Budget Responsibility”.—[Official Report, 31 January 2011; Vol. 522, c. 587W.]
I wondered what the nature of that alignment would be. I understand that it will be an iterative process as business planning projections are made and discussed in challenged conversations with the OBR. It will not be easy to maintain the independence of this body, but we must all strive to do so.
If you will allow me, Mr Deputy Speaker, I will take this opportunity to say that I mentioned that parliamentary question in Treasury questions last Tuesday, and said that
“the Government’s own business planning projections show that the proportion of young people on the dole by the end of this Parliament will be reduced by less than 1%.”—[Official Report, 8 February 2011; Vol. 523, c. 153.]
I misspoke, and should have said less than one percentage point.
It will be a difficult job behind the scenes to maintain the independence of the OBR. Lars Calmfors, who has been mentioned, has argued that it will be difficult to stop or prevent behind-the-scenes negotiations with the Treasury. However, I believe that the Government have set such store by the independence of the OBR that they want it to succeed and its independence to be maintained. As hon. Members have suggested, it could have increased accountability to Parliament via the Treasury Committee. I am sure that the members of that Committee will be perspicuous in demanding that accountability and independence.
To conclude, I will make a few remarks about rules-based economic policy. I take it from this debate that it is agreed across the House that the right way to make economic policy is to set out ahead of events the rules and principles that the Government wish to stick to, and that the Government should allow themselves to be
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held up and judged on the basis of those rules. What could possibly be the problem with that approach to making economic policy? In some ways, we are already seeing the problem. Young people in this country who are unemployed because of the global shock face significant difficulties. We have to ask ourselves how the rules that we have set as the basis of our economic policy allow us to act to ensure that our economy runs well. Surely, economic measures are the tools to aid a well-functioning society, not the other way round. If so, our economic policy must be able to respond to shocks.
Not only must the Government say what the rules for their economic policy are and allow themselves to be judged by independent bodies on those rules, as they are doing; they must also say how they will respond to crises. Should this country find itself in a further economic downturn, facing an even worse situation for residents of this country, especially those on the lowest incomes and at the start of their careers, who face severe unemployment, how will the Government use the flexibility in their economic policy to return the country to growth, and how will their economic rules take account of the possibility of shocks? This is a significant challenge for the Government and I hope that all hon. Members will add to the scrutiny of the Bill as it progresses.
7.24 pm
David Rutley (Macclesfield) (Con): Like other hon. Members, I will focus my remarks on the measures that will put the Office for Budget Responsibility on a statutory footing, where it needs to be. I will talk about how important it is to take forecasting out of the Treasury and to give Parliament a greater role in maintaining the independence of the OBR, which will be vital, as everybody has said.
Above Bollington stands one of the most loved landmarks in the Macclesfield constituency: White Nancy. This unique, brilliant white summerhouse was built by the Gaskell family in 1815 and it stands proudly on top of Kerridge hill. Some think that it was built to commemorate the battle of Waterloo. Whatever the reason, White Nancy is today a well known and trusted reference point. When someone sees it, they know exactly where they are. That is what I hope the OBR will become in the landscape of the UK economy.
The Economic Secretary mentioned several reasons for the creation of the OBR, and spoke of the importance of creating it at this moment in time. I think that it will provide better forecasts, address the “judge and jury” issue that we have heard about and effectively hold Governments of all persuasions to account. That is exactly what is required.
To begin, I will give a few thoughts on better forecasts. I was reminded recently of an observation made by the American economist John Kenneth Galbraith:
“The only function of economic forecasting is to make astrology look respectable.”
I am not a great fan of his economics, but his one-liners were pretty good. Like many Members, I accept that economic forecasting is not a precise science. However, it is vital that our expert forecasters are allowed the objectivity and independence that are needed to do the best possible job. They must be able to look into their crystal balls outside the Treasury building and free from Treasury influence. The ability to recruit economic
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talent from outside the Treasury will be a great help. I believe that the OBR is well placed to provide better forecasts.
The creation of the OBR can address the fundamental conflict that we have seen in successive Governments of the Chancellor and the Treasury being both judge and jury, through setting fiscal policy and making the forecasts for the economy and public spending. By their nature, economic forecasts are based on assumptions, opinions and judgments. The temptation for Treasury Ministers to make a judgment or prepare a forecast that helps the Government of the day presents a clear challenge to the credibility of the forecasting process. The OBR is an important and positive step in removing that temptation.
I was struck by Lord Turnbull’s response to me on this subject when I served on the Treasury Committee some months ago:
“What happens is that there’s a sense of giving yourself the benefit of the doubt, of wishful thinking. That is what the OBR is there to correct.”
“The OBR is important because it is an antidote to and a constraint on wishful thinking. It will bring more rigour, and it has already begun to do so”.
When I asked him more about the wishful thinking during his time at the Treasury, he said:
“I think that there was wishful thinking all the way through. If you had experienced 60 quarters of uninterrupted growth, it wasn’t surprising that you tended to think that somehow something fundamental had changed.”
That is exactly the type of thinking that the OBR has been designed to review, scrutinise and challenge, which is an urgent priority.
The OBR can provide better forecasts, it will tackle the judge and jury dilemma, and it is empowered to hold this Government and future Governments to account. That will be a vital task at this challenging time and for future generations. So what of the OBR’s priorities? In its short life, it has demonstrated its independence, the professionalism of its personnel and the high quality of its output. In its first forecast on the economy back in June, it brought some realism back to the growth forecasts. It was pretty clear that those published by the previous Government in the run-up to the election contained too much wishful thinking. The markets were openly sceptical, which in itself was an unsustainable position. In that sense, the OBR has scored a notable success already by helping to restore confidence in the forecasts for public spending and the performance of the UK economy.
It is vital that we build on that promising start and put the OBR in an unrivalled position. I was pleased to see the recent publication of a report by the OBR that detailed how it sets out to co-ordinate its activities with other Government Departments to produce fiscal forecasts, and the processes that it will follow. That transparency will help further strengthen the organisation and its standing. Its chair, Robert Chote, said recently that he wanted the process of fiscal forecasting to be as accessible as possible. In his words, he wants to
“let people see inside the forecasting sausage machine”.
That is not quite how I would have put it, but I agree with the sentiment.
Beyond the transparency and accessibility of the OBR, which is pivotal, it is essential for it to become a respected and trusted reference point. That is a big
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ambition that will require the highest standards to be maintained, and constant vigilance will be needed to ensure that we get the OBR where it needs to be.
Having served on the Treasury Committee, with hon. Members who were present earlier in the debate, when the creation of the OBR was debated and key officers were appointed, I commend the work that the Committee undertook at that time and the role that it continues to perform today. I also wish to take the opportunity to commend the Chancellor for his decision and for the inclusive approach that he adopted during the creation of the OBR. By giving the Treasury Committee a meaningful role, he has gone a long way towards empowering Parliament and demonstrating the need for the OBR’s independence. That established from the very start its credibility as an independent body and will help build that credibility in Parliament. By giving the Committee the power of consent over appointments and dismissals, the Chancellor is giving Parliament greater power. The Committee also has the important power to carry on vetting those who are appointed, as it did last year and will continue to do. It is important that the OBR has the ability to prevent Ministers from removing people who might be perceived as being a bit too objective for their liking.
The Government have gone further and even given the OBR the power to submit to the Treasury Committee its own additional estimates memorandum, which will enable it to undertake scrutiny of funding for the OBR. As the Committee’s report set out clearly, it will take a much stronger role in observing the OBR’s work. It states that
“it is vital that it commands confidence across party boundaries. We will take evidence from the organisation regularly as part of the budget process. We will intervene if we believe the OBR’s independence is threatened. We expect the members of the Budget Responsibility Committee or the nonexecutive directors to report any concerns they have to us. Only if it is independent will the OBR be successful.”
There is a clear role for the Committee. It has the OBR in its sight and will continue to involve the OBR in its important work.
Some Members, such as the hon. Member for Glasgow North East (Mr Bain), mentioned international comparisons, and other countries have indeed had bodies similar to the OBR established for decades. One of them is the Central Planning Bureau in the Netherlands, which he mentioned. That body has responsibility for scrutinising not only Government but opposition spending plans. I am sure that Labour Members’ heartbeat fluttered briefly as they thought about the implications of that, but perhaps if the CPB operated in the UK it would not have too much work on its hands right now. We will see what develops on the Opposition Front Bench over the decades ahead. The serious point is that the OBR could learn from such international comparisons. A huge amount of learning can be done from other countries, and I hope that the OBR will examine them in developing its functions and work in the years ahead.
The permanent creation of the OBR is an overdue step. It will bring more transparency and greater confidence to economic forecasts, and it has already begun to build a solid reputation as an objective and authoritative voice as well as gaining respect in all parts of the House.
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The Bill represents an important structural change in how the Treasury works. It will take the politics out of economic forecasting and give Parliament greater powers of scrutiny. Personally, I want to ensure that the OBR becomes the trusted, respected reference point that I talked about earlier, and I will do all in my power to support it in that work. This country needs it. We must put such institutions in place to ensure that our public finances are never allowed to get into this mess again.
7.35 pm
Kate Green (Stretford and Urmston) (Lab): Like colleagues throughout the House, I welcome putting the Office for Budget Responsibility on a statutory footing and the opportunity that it offers for independent forward financial forecasting. That will enable us to see clearly the impact of policy decisions on the public finances, and it will set the context for, and inform, future policy choice. However, as has been pointed out, the OBR and its forecasting mechanism do not of themselves correct or reshape policy mistakes. It is the Government who set the fiscal mandate, and the OBR is there to say whether that mandate has been met. There is no requirement on the OBR to offer any critique of that mandate, or to judge whether it is fair.
We cannot examine only whether the Government have achieved their forecasts. I support the remarks of my hon. Friend the Member for Wirral South (Alison McGovern), who suggested that there was a larger context to address—whether the Government’s policies reflect the right policy ambitions and produce the right social outcomes, and whether the spending on them is effective. To that extent, I am particularly interested in Ministers’ comments on the relationship between the OBR and the other organisation highlighted in the Bill, the National Audit Office.
Like my hon. Friends, I am concerned about the Government’s current mandate to eliminate the deficit within four years. We are concerned to critique not just the mandate but the policies that will bring about the achievement of it. We are extremely concerned that those policies will have a harsh impact on the lives of the people across the country whom we represent, and we are concerned about their impact on growth, employment and intergenerational fairness. That last point is specifically highlighted in the draft charter, and I would be interested to hear the Exchequer Secretary explain how the OBR will judge and assess long-term intergenerational fairness. It is not sufficient simply to say that we cannot pass on to tomorrow’s children the deficit of today, because today’s children are bearing the burden of the policies that the Government are adopting to address that deficit. I would welcome an explanation of exactly what Ministers mean by intergenerational fairness and how the OBR will assess it.
Alison McGovern: Does my hon. Friend think that in addition to that, the Government ought to consider the effect of unemployment on a person’s long-term career, and therefore on their family, as part of intergenerational fairness?
Kate Green: My hon. Friend makes an excellent point. Some superficially appealing terminology has been bandied about in relation to the Bill, but we need to know the substance of what Ministers understand to be fair.
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Members in all parts of the House welcome the opportunity for transparency that lies within the Bill, but as others have pointed out, that transparency is potentially undermined if the OBR does not secure the resources necessary to ensure that its independence is not compromised. The OBR needs to be adequately resourced to carry out a full and proper analysis. In that context, looking at the full impact of policy includes modelling imputed behavioural change, about which the Government have so far shown themselves to be casual, including in their analysis on the introduction of the universal credit, which is one of their major policy proposals. Great claims have been made for the universal credit’s impact on increased benefits take-up and labour market participation, but the Department for Work and Pensions’ analysis of such behavioural changes to drive such outcomes is remarkably thin. How deep can the OBR dig when departmental analysis apparently does not do so?
There is two-way traffic in policy making and in analysing the impact of policy initiatives. The OBR has been set up specifically to reflect in its forecasts what we might call policy “knowns”, but as was pointed out, there are opportunities to allow for dynamic forecasting so that we can judge the impact of new policies on the public finances in future. I believe strongly that the creation of the OBR offers an opportunity to tie those two aspects of policy forecasting together, so that it is possible to verify departmental impact assessments at the time when policy is being considered—prior to its implementation—and as part of the process of legislative scrutiny and approval by the House.
As my hon. Friend the Member for Wirral South pointed out, there are tensions involved in ensuring that the OBR has a role in scrutinising policy making as it develops and emerges, but there is an important opportunity to enable Parliament effectively to critique, to challenge and to improve. How do Ministers see the OBR’s role in the context of iterative policy making, and how do they think that tension will be resolved?
I look forward to the ongoing process of the passage of the Bill to implement the OBR, and to its independent reports and analysis. However, it is important to understand that the Bill is a step on the way to better policy making and scrutiny rather than a job fully done. Of course, the OBR offers great potential to aid our understanding, but I am clear that it is just one element of how we judge policy cost and impact, and most importantly, policy success.
7.42 pm
Stephen Williams (Bristol West) (LD): I guess that you, Mr Deputy Speaker, and many hon. Members have a collection of fridge magnets. I have one back home in Bristol that I acquired on a visit last summer to Hughenden manor. Of course, Disraeli, who lived there, is a rich vein of quotes, and perhaps one of his most famous is that there are “lies, damned lies and statistics”, which is what this debate is all about. Statistics are never more controversial than in economics. There was quite a controversy surrounding the last quarterly growth figures—I will make no jokes about snow—but in forecasts and retrospective reporting, there are random factors, and such reports are often revised.
Forecasting, of course, is even more contentious than retrospective reporting on economic events. I am sure that all Chancellors have at least been tempted to inject
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political factors into what the hon. Member for Wirral South (Alison McGovern) called the “dismal science” of economics. Whether economics is a science at all is debatable, but it is certainly inexact as a social science, and very heavily influenced by politics. In fact, it was traditionally known as “political economy”.
In all Budgets and autumn statements, Chancellors forecast tax yields and outlined the effect of their policies on employment and unemployment. They said who would benefit and described the impact of their policies on the fiscal balance and debt. As a chartered tax consultant and in the last six years as an MP, I watched a decade of Budgets by the former Prime Minister and Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), whose first act as Chancellor was to set up the independence of the Bank of England, to which many hon. Members have referred. The implementation of a Liberal Democrat manifesto commitment 13 years before we got around to joining the Government was welcome, but after 1997, the former Chancellor made up his own rules as he went along on everything other than monetary policy. The golden rule has been mentioned several times, but his best friend, Prudence, has understandably not been mentioned by Opposition Members, because as we all remember, in all his Budgets and forecasts, everything was rosy. The Chancellor always confounded his critics and said, “Everyone else is wrong. Lo and behold—what a surprise! —I have a marvellous thing to announce.” What happened? The 2008 crash happened.
Alison McGovern: On that very note, which was the more prudent: putting the country into a situation in which people could not withdraw cash from the banks or recapitalising the banks, as happened?
Stephen Williams: I was talking about events prior to the crash, rather than the policy response to the crash itself, which was in any case initially rather timid and slow. My right hon. Friend the Member for Twickenham (Vince Cable) repeatedly urged the Chancellor to nationalise Northern Rock, which was the first symptom of the crisis, but those urges were resisted for quite some time.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. We are getting tempted into an area where we should not be. We are dealing with Second Reading. I am sure the hon. Member for Bristol West (Stephen Williams) will stick to that, and that Mr Shelbrooke’s intervention will be relevant to it, and not a history lesson for those in the Chamber.
Alec Shelbrooke: Thank you, Mr Deputy Speaker. My hon. Friend was trying to make the point that the key word in the name of the Office for Budget Responsibility is “responsibility”.
Stephen Williams: I thank my hon. Friend for that intervention.
Predictions and forecasting are at the heart of the Bill. I slightly disagree with my hon. Friend the Member for Cities of London and Westminster (Mr Field), my coalition colleague, who has now gone off to his black-tie
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dinner, because the crash—if not its scale—was forecast by my right hon. Friend the Member for Twickenham. I remember him being derided and sneered at in the House at the time, including by the hon. Member for Wallasey (Ms Eagle), who today led for the Labour party.
I welcome the setting up of the OBR, and particularly the appointment of Robert Chote from the Institute for Fiscal Studies as its first permanent chair. I am sure that all hon. Members have cited IFS reports in support of our policies at various times, and that we have all been on the receiving end of its critiques, which are not always welcome. Nevertheless, everyone recognises that those reports were arrived at independently, and therefore that they had authenticity and credibility about them. I also welcome the appointment for five-year terms of Mr Chote’s fellow board members and the ongoing Treasury Committee scrutiny, of which my hon. Friend the Member for Macclesfield (David Rutley) spoke. As we heard, the Bill is not a panacea for dealing with economic ills, but I am sure that the OBR will none the less restore credibility to our statistics and give a sound basis for decisions.
The second part of the Bill, which has not been mentioned much, deals with the National Audit Office. As I have mentioned Disraeli, I will mention in balance Gladstone, who set up the NAO. All Members of Parliament will recognise that the reports produced by the NAO are excellent and well informed across the range of policy issues. As the hon. Member for Stretford and Urmston (Kate Green) said, it is the role of the NAO to review the impact of Government policy especially in financial areas, and to examine whether money has been spent efficiently according to the original remit of the policies. Although the NAO formally reports to the Public Accounts Committee, of which I was briefly a member in the last Parliament, its reports and its work are fundamental to the operation of the House of Commons itself.
I welcome the statement made by the board of the NAO and the professional qualifications now held by some of its board members. I remember going to a briefing by the NAO not long after I became a Member of Parliament and being astonished by the lack of financial qualifications of many people in the civil service—I shall avoid looking in their direction—who none the less managed the purse strings of billions of pounds of public money. Professional qualifications should also be rolled out around Departments.
David Rutley: As hon. Members have said, one of the opportunities provided by the OBR will be more expertise from people outside the Treasury, who will put their views, thoughts and experience to work on forecasting. Does my hon. Friend agree?
Stephen Williams: Indeed, I do agree and the OBR as it develops will be able to draw on the expertise in the Treasury, although its forecasts must be its own, not the Treasury’s. Over time, the OBR will develop its own in-house expertise, although it will hopefully not grow into too large a quango—if we are still allowed to use that word.
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The Bill is an important hallmark of coalition Government. It shows that the Government are interested in transparency and evidence-based policy making, as well as in listening, especially to advice. It will certainly provide confidence in our national statistics and economic forecasts, underpinning the Government’s overriding aim of restoring confidence and stability to our national economy and public finances.
7.52 pm
Sheila Gilmore (Edinburgh East) (Lab): I seem to be fated—this is the second time in two weeks—to be the last Back Bencher to contribute to a debate. Tempted though I am to continue to speak until as close to 10 pm as allowed by the need for wind-up speeches, I shall resist temptation—I can see my colleagues’ looks of horror. For those of us who are far from home and whose potential valentine is 400 miles away, we have nothing better to do than speak in this debate.
More seriously, it will be useful to have independent forecasts; indeed, it already has proved useful. In the short life of the Office for Budget Responsibility we have seen some figures that even this Government, who have professed a desire to be transparent, might not have been too happy about. Several of my hon. Friends have referred to figures such as the forecasts for unemployment and for economic growth. Had it not been for those reports, the Chancellor and other members of the Government might have been tempted to be a little more optimistic and gung-ho. We saw a little of that even last year when some Ministers talked about economic growth in the second and third quarters. We might have thought that everything was now motoring forward, but the OBR was able to tell us that that was not quite the case. The OBR’s forecasts may not always be palatable, even to the Government who have set it up.
I appreciate, Mr Deputy Speaker, that you have not wanted people to discuss the economy generally, but it was clear from the context in which this debate was put by the Economic Secretary that we cannot entirely avoid doing so. She made it clear that the OBR’s remit is determined by the Government’s view of the economy and what needs to be done to deal with it. She said that deficit reduction was the priority and the context for the OBR, but the question of how to do that remains. How do we reduce the deficit, how fast, and what are the implications of reducing it too fast? The Opposition believe that the actions that have been taken in order to fit the framework set for the reduction of the deficit in this Parliament may be counter-productive. The deficit may in fact rise, because if unemployment rises, demand falls and the economy does not grow, tax revenues will fall even further—and that was part of the reason for our current position. If that happens, we will see the deficit grow.
Alec Shelbrooke: As the hon. Lady has said, the OBR will indeed stop a Chancellor saying, “Growth is going to be this amount, and therefore I will borrow this amount,” while knowing full well that growth might not be so high and he might not be able to repay it. Surely that was the problem in recent years, and it is hoped that the OBR will stop such mistakes from being made again.
Sheila Gilmore:
Our views of when it is appropriate to borrow and what the Government should do about the economy are clearly different. Emotive words have
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been used in this debate, including the term “mountain of debt”. Coalition Members are fond of saying that interest payments on borrowing are wasted. They are also fond of domestic analogies, and we hear a lot about the national credit card being maxed out, but there is another domestic analogy that we might use. When we pay our mortgage payments, we do not say that that is money wasted—it is money being invested for the purpose of acquiring a home.
When I was the convenor of housing for Edinburgh city council, 40p in the pound of tenants’ rents went on debt repayment. Sometimes the local newspaper and council opposition members would say, “This is terrible mismanagement”, but it was not mismanagement—it was an investment in building homes over many years and improving homes with such luxuries as central heating and double glazing.
Stephen Williams: The hon. Lady is talking about debt being run up for investment. Of course the previous Government put most of that debt off the balance sheet of the Treasury completely and into private finance initiative schemes. They ran up debts to fund current expenditure on public services, and that is why we ended up in a crisis.
Sheila Gilmore: The hon. Gentleman is wrong about that. Up to the point of the recession, most of the borrowing was for investment in schools, homes, roads and transport projects. Yes, there were some PFI schemes, and I was interested to hear the hon. Member for Elmet and Rothwell (Alec Shelbrooke) castigate such schemes, because it is my recollection that PFI was a favourite mechanism of the previous Conservative Government, who introduced it. Many of my colleagues in the Labour party were less than enthusiastic about it even during the years of the Labour Government.
I am trying to make the point that there are different ways of looking at the economy and at what the appropriate policies are. I was interested in a brief debate in the Treasury Committee about whether the OBR should look at other policies: should it look at the policies of an Opposition what might be? Outwith that, why should it just look at the particular ground rules that the Government have set out? Those rules will represent one view, but there might well be other views and policies that could lead to different results. The Government appear to have rejected the view that the OBR should look at anything other than Government policy, on the grounds that that would not make it politically neutral, but we need real transparency and a proper debate in the country about the best way forward.
Andrew Griffiths (Burton) (Con): I have been listening to the hon. Lady’s analogy. She does not like talk of the credit card being maxed out, and thinks it more akin to taking on a mortgage to purchase a home. Does she not agree, however, that having to pay £120 million a day in interest alone is actually more akin to using a credit card to pay the mortgage every month?
Sheila Gilmore:
Clearly, I do not agree with that. These two analogies are interesting ones, in that they show the different viewpoints of the different sides of the House. They are both legitimate viewpoints, and it
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is right that we pull them out and have this debate, because there is not just one way of coming to a conclusion on what we should do.
If the OBR is to develop in the future, one option is to look at different ways of arriving at the ends we all want. There is no suggestion, despite what Government Members say, that Labour Members think it right to run a very big deficit on an annual basis. We have never said that; we have said that we want to reduce the deficit. However, we differ with the Government over the speed at which that is done. That will determine all of these forecasts and where we go from there. If we have those different viewpoints, would it be helpful—other people might think it is not—for a truly independent OBR to be able to look slightly wider than the tramlines that the Government are setting down and about which we have heard so much? Should we be able to forecast only on that basis? It would be interesting to consider whether alternative policies could lead to a different and—I would hope—better outcome.
I do not want to add anything else because I can see that some people here have somewhere far more interesting to go. I hope that some people receive red roses and chocolates tonight in celebration of the day.
8.2 pm
Kerry McCarthy (Bristol East) (Lab): This has been an interesting, if somewhat truncated debate. My hon. Friend the Member for Edinburgh East (Sheila Gilmore) is probably right that the relatively few number of people in the Chamber and the fact that the debate will finish a couple of hours early is not evidence of a lack of interest in the subject under discussion, but proof that romantic hearts beat beneath our tough and cynical exteriors. [Interruption.] I mean some of our tough and cynical exteriors.
We support much that is in the Bill, but I will turn first to the contributions of hon. Members. My hon. Friend the Member for Wirral South (Alison McGovern) said that the establishment of the Office for Budget Responsibility was an attempt to separate politics from economics. I suspect that that will be difficult to achieve, but as she said, it is important that we at least try. She also talked about rules-based economic policies, how they were introduced under the previous Government, and how the establishment of the OBR entrenches that approach. She also spoke at the end of her speech about something that I know is a great passion of hers: the problem of youth unemployment and what we can do to tackle it. I am sure that she will return to it on many other occasions in the Chamber.
As ever, my hon. Friend the Member for Stretford and Urmston (Kate Green) made an excellent speech and talked about how it is important that, when discussing such issues that are technical and very much about structures, we focus not just on the numbers, but on the outcomes that we want to achieve. This is not just a dry discussion about the fiscal mandate and the mechanisms that we put in place to monitor it or to forecast the future trajectory of Government economic policy; it is about the underlying policies brought in to achieve that mandate. She spoke passionately about intergenerational fairness and the importance of considering how we can better model imputed behaviour, and she suggested that departmental evidence was very thin on behavioural change and that the OBR might have a role in fleshing that out. That was a valid point.
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My hon. Friend the Member for Edinburgh East talked about how the OBR, if it does not totally instil caution in the actions of Ministers, will at least act as a brake on Governments’ over-optimism and the wishful thinking that leads them to think that things are rosy, or will be rosier than the evidence suggests. She made the point that we cannot divorce the question of reducing the deficit from the question of how we go about doing it and the policies we implement to achieve that end. My hon. Friend the Member for Glasgow North East (Mr Bain) warned of the dangers of complacency, and of thinking that the recovery is secure, that we are out of recession and that the country is out of the danger zone. He also talked about the fiscal mandate for eliminating the deficit and warned of the dangers of pursuing that in too rapid a fashion.
The hon. Member for Cities of London and Westminster (Mr Field) has had to leave to go to a black-tie event. I suspect that he has rather more black-tie events than most of us in the House. The sorts of events I attend usually involve the St George Labour club and beer at 99p a pint. However, he obviously leads a more exalted existence than many of us. Both he and the hon. Member for Elmet and Rothwell (Alec Shelbrooke) were fairly political—dare I say it—in their comments. They made references to the previous Government living beyond their means. The hon. Member for Elmet and Rothwell denied that the banks were responsible for the recession and again mentioned the country living beyond its means. At this time of night, and perhaps with better things to do, we do not want to rehearse those arguments. However, it is important that rather than trying to score political points, we look at the details of the Bill and the seriousness of what it is trying to achieve in introducing a more evidence-based approach to economic forecasting.
The hon. Member for Macclesfield (David Rutley) made a very good and thoughtful speech. He quoted J. K. Galbraith, which I suspect my hon. Friend the Member for—
Kerry McCarthy: I knew it began with a W. Anyway, she is probably very familiar with this quote:
“The only function of economic forecasting is to make astrology look respectable.”
The hon. Member for Macclesfield said that he was not a great fan of J. K. Galbraith. I happen to be a great fan, although I had not heard that quote before. His “A Short History of Financial Euphoria” ought to be required reading for anyone who takes up a job in the City these days. The hon. Gentleman resisted the temptation to resort to political point scoring. His point that the OBR can in time become a respected and trusted reference point is valid—I certainly hope it will be achieved.
What the hon. Member for Macclesfield said about greater powers being given to the Treasury Committee was interesting. I was a member of the Committee for a couple of years when first elected to Parliament in 2005, and I remember spending many sittings seeking assurances from the Financial Services Authority and the Bank of England about regulation, the risks that derivatives trading imposed, and so on. I remember receiving blithe assurances that it was difficult for Committee members—
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with their limited resources—to challenge on an ongoing basis. If increased powers are given to the Treasury Committee to vet appointments, to scrutinise the work of the OBR, particularly its funding, and to ensure that it has the necessary resources to do its job, thought needs to be given to whether the Committee has the resources necessary to do that job.
The hon. Member for Bristol West (Stephen Williams) slightly lost me at the beginning with his talk about Disraeli and fridge magnets, but then moved on to talk about Bank of England independence, which he claimed was a Liberal Democrat manifesto—
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath): It was.
Kerry McCarthy: I am not denying it. The hon. Member for Bristol West said that it was an example of Liberal Democrat manifesto policy being implemented 13 years before they got into government. I would suggest that the reason he is claiming credit for that is that there are very few examples of that now that they are in government.
Let me move on to the Bill. The plans for the National Audit Office have received very little attention in this debate, because there is a general consensus that they are the right thing to do. They are almost exactly in line with our plans for the National Audit Office that we set out in our Constitutional Reform and Governance Bill, which we did not get through the parliamentary process before the May 2010 election was called.
We support the creation of the Office for Budget Responsibility, which we see as continuing the direction of travel that we set in government by giving independence to the Bank of England and the Office for National Statistics. However, we have a number of concerns about the details of the proposals. We welcome the amendments that were introduced in the other place—with some, limited success—to try to make the OBR more independent from the Government, for example by giving it budgetary independence, so that we can be sure that it has the resources that it needs to do its job and produce genuinely independent forecasts without being compromised by Treasury control. We intend to explore that further in Committee, to see whether we can give the OBR greater independence. It is also important to explore in Committee how we make the OBR more accountable to Parliament, rather than to the Treasury.
However, we will not let this Government hide behind the OBR or use its independence as a shield to protect them from valid criticism of the impact of their economic policies. The Government are wrong if they believe that the OBR will protect us from the consequences of the Chancellor’s misjudgments. Indeed, the OBR will help to hold the light up to the Government’s record. It is notable that the OBR has already predicted that unemployment will be higher under this Government than under Labour plans, that growth will be lower under this Government, and that consumer prices index inflation will be higher. In fact, as has been mentioned—I think by my hon. Friend the Member for Glasgow North East, or perhaps by my hon. Friend the Member for Wirral South—the OBR has already had to revise its growth forecast downwards twice, down from 2.6% to 2.3% after the emergency Budget, and down again, to 2.1%, after the spending review. That is a telling verdict
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on this Government’s policies for growth—or lack of them—and the Chancellor’s failure to produce a growth plan. We wait to see whether the March Budget will force the OBR to downgrade its growth forecast yet again.
The OBR has also confirmed—although the Government seem to have ignored this because it is politically inconvenient for them to acknowledge it—that the deficit was more than £20 billion lower in 2009-10 than expected, owing to firm and decisive action taken by the Labour Government. What is clear—we do not need the OBR to tell us this—is that under this Government unemployment and inflation are rising, living standards are falling and the recovery has stalled. Although we support the substance of this Bill to a large extent and we shall not seek to push its Second Reading to a vote this evening, we remain deeply sceptical about whether the Government have learnt any lessons from the past eight months during which the shadow OBR has been in place. We hope that lessons will be learnt going forward.
8.13 pm
The Exchequer Secretary to the Treasury (Mr David Gauke): We have had an interesting debate and it would be fair to say that there has been some consensus from both sides of the House that it is right and proper for us to establish the Office for Budget Responsibility. I am grateful to my hon. Friends the Members for Cities of London and Westminster (Mr Field), for Elmet and Rothwell (Alec Shelbrooke), for Macclesfield (David Rutley) and for Bristol West (Stephen Williams) for expressing their concerns about the state of the public finances and the record of the previous Government. However, I am also grateful for the comments of Opposition Members, such as the hon. Members for Glasgow North East (Mr Bain), for Wirral South (Alison McGovern), for Stretford and Urmston (Kate Green) and for Edinburgh East (Sheila Gilmore), who supported the concept of the Office for Budget Responsibility.
As my hon. Friend the Economic Secretary to the Treasury said at the start of this afternoon’s proceedings, fiscal responsibility is the overriding priority of this Government. The deficit that we inherited, the debts that the previous Government amassed and the fiscal forecasts that accompanied both have clearly shown the inherent weaknesses that plagued the old way of doing things. The reputation of the Government’s forecasts in recent years was that they had a bias towards optimism. After all, a balanced budget was always just around the corner. In 2003, the budget would be back in balance by 2005. In 2004, it would be back in balance by 2007, and in 2006, by 2008. In 2007 we would have a balanced budget by 2009, and in 2008, we would reach the balanced budget in 2011. It is perhaps apposite to quote Robert Chote in his previous capacity as the man in charge of the Institute for Fiscal Studies, who said that this was a
“sustained display of conviction forecasting”.
Indeed, the over-optimistic approach to the public finances of that era is not purely a thing of the past. We recently learned, for example, that the shadow Chancellor continues to believe that there was no structural deficit in the UK economy in advance of the credit crunch. How wrong can one be? The fact is that there was a perception that, all too often, the temptation to nudge up a growth forecast here or reduce a borrowing number
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there proved all too great. Governments would preach the principle of prudence while in reality the onus was always on optimism. That serves no one’s interests. Economic policy needs to be based upon the reality—grounded in fact and not fallacy—and to be able to stand up to external scrutiny when put under the spotlight. Credibility must be restored.
It is worth pointing out that the previous Government attempted to do just that with the notorious Fiscal Responsibility Act 2010. I looked up what Chris Mullin, the former Member for Sunderland, South, said about it in his diaries. In his entry for 5 January 2010, he writes that he came into the Chamber to listen to the debate, describing the proposal as:
“Surely the most pointless piece of legislation ever devised.”
“To be fair to Alistair”—
the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling)—
“this is not his doing. It shows every sign of having been dreamed up in the fun factory at Number 10. He managed to keep a straight face throughout as George Osborne shredded it mercilessly.”
We have come up with something somewhat better, because we need to demonstrate to the British people that the Government can be relied upon to tax and spend sensibly. The Office for Budget Responsibility will do exactly that. This fully independent body is bringing integrity back to the official forecasts. With full access to all the data, assumptions and economic models needed, the OBR is making the key judgments that underpin our economic and fiscal decisions.
Let me touch on the issue of independence, which a number of hon. Members raised. It is right that the OBR has access to all the numbers. We believe that the relationship with the Government strikes the right balance. The OBR will perform a core executive function in providing the official forecasts and a published assessment of the likelihood of the Government’s meeting their fiscal mandate, but it will do so independently of Ministers, with all judgments and methodology questions being at the complete discretion of the budgetary responsibility committee. That model has been supported by a range of external commentators, including the Institute for Fiscal Studies. It is also worth noting that Lord Turnbull said on Second Reading in the other place:
“What is proposed is a pragmatic and, in my view, well judged hybrid”.—[Official Report, House of Lords, 8 November 2010; Vol. 722, c. 22.]
The OBR will appoint its own staff and will have a budget responsibility committee confirmed by the Select Committee on the Treasury. That process of confirmation will ensure that the right staff are appointed to the BRC. The non-executives will be required to report regularly on the extent to which the OBR has been able to perform its duties, with complete discretion through the annual report. That is an important safeguard for the OBR.
Let me touch on Parliament’s role, which was raised by the hon. Member for Wirral South and my hon. Friend the Member for Macclesfield, who is a member of the Treasury Committee. The OBR will submit all its findings to Parliament, with each forecast and report being laid before the House, as was the case for the economic and fiscal outlook produced by the OBR in
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November. To ensure accountability, any written questions from hon. Members will be passed directly to the OBR, which will respond in the usual manner. All members of the budget responsibility committee, as well as the OBR’s non-executive directors, will also be available for Select Committee hearings. The evidence that OBR representatives have already given to the Treasury Select Committee has been widely welcomed by hon. Members.
I want briefly to mention the National Audit Office. As we have heard, the measures in the Bill largely reflect the provisions in the previous Government’s Constitutional Reform and Governance Bill. There was no time for the other place to consider those provisions before the general election, and this Bill represents the earliest opportunity to bring them before Parliament and to implement the recommendations of the Public Accounts Commission following its review of the National Audit Office’s corporate governance. This, too, has been welcomed on both sides of the House.
The provisions in the Bill will restore confidence and responsibility to our country’s fiscal framework. For too long, there was suspicion about the reputation of the forecasts produced by the Treasury: to put it kindly, they were suspected of optimism. What we now need is stronger institutions. We need to allow for expert scrutiny of the public accounts. We need improved economic governance, and much-improved transparency, and this Government are taking great steps towards achieving that. This is the right course of action for our economy, and for our country. I commend the Bill to the House.
Bill accordingly read a Second time .
Budget responsibility and national audit Bill [Lords] (programme)
Motion made, and Question put forthwith (Standing Order No. 83A( 7 )),
That the following provisions shall apply to the Budget Responsibility and National Audit Bill [Lords]:
Committal
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 8 March 2011.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
14 Feb 2011 : Column 784
Other proceedings
7. Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Stephen Crabb .)
Budget responsibility and national audit Bill [Lords] (Money)
Queen’s recommendation signified .
Motion made, and Question put forthwith (Standing Order No. 52(1)( a )),
That, for the purposes of any Act resulting from the Budget Responsibility and National Audit Bill [Lords], it is expedient to authorise—
(1) the payment out of money provided by Parliament of any expenditure incurred by the Treasury or the National Audit Office in consequence of the Act, and
(2) the payment out of the Consolidated Fund of—
(a) amounts payable in accordance with remuneration arrangements made in relation to the Comptroller and Auditor General and the person who chairs the National Audit Office, and
(b) amounts payable in consequence of liability for breach of duty in relation to audits, examinations and inspections carried out as part of the Comptroller and Auditor General’s functions.—(Stephen Crabb .)
Budget responsibility and national audit Bill [Lords] (Ways and means)
Motion made, and Question put forthwith (Standing Order No. 52(1)( a )),
That, for the purposes of any Act resulting from the Budget Responsibility and National Audit Bill [Lords], it is expedient to authorise—
(1) the imposition of charges to corporation tax in relation to transfers of property, rights and liabilities, and
(2) the payment of sums into the Consolidated Fund.—(Stephen Crabb .)
Business without Debate
Home affairs
That Mr Aidan Burley be discharged from the Home Affairs Committee and Michael Ellis be added.—(Geoffrey Clifton-Brown , on behalf of the Committee of Selection .)
International development
That Mr James Clappison be discharged from the International Development Committee and Mr Sam Gyimah be added.—(Geoffrey Clifton-Brown , on behalf of the Committee of Selection .)
Science and TEchnology
That Alok Sharma be discharged from the Science and Technology Committee and Stephen McPartland be added.—(Geoffrey Clifton-Brown , on behalf of the Committee of Selection .)
14 Feb 2011 : Column 785
Southend (City Status)
Motion made, and Question proposed, That this House do now adjourn.—(Stephen Crabb.)
8.22 pm
Mr David Amess (Southend West) (Con): I am fortunate, on Valentine’s day, to be able to describe to the House the merits of Southend being granted city status next year. In the bid, I am supported by my hon. Friend the Member for Rochford and Southend East (James Duddridge) and my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois). As they are both Government Whips, however, they are unable to catch your eye, Madam Deputy Speaker. So on this occasion, it is I alone who will be speaking on behalf of Southend.
Southend is asking the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Forest of Dean (Mr Harper) to be its Valentine tonight. I know only too well that he does not have the power to say tonight, “Yes, Southend can be a city.” Obviously, I understand that. Nevertheless, given that I was involved in the previous bid in 2002, I thought that it was right to put down an early marker. It would also be useful if the Minister were to set out exactly what considerations are involved.
Let me start from the beginning. The biggest advocate for Southend being granted city status is my own mother, Maud. God willing, she will shortly be celebrating her 99th birthday. She lives near the Olympic stadium in Stratford, and she is, in every sense, an east end girl. When she was bringing me up, it was a wonderful treat to travel to Southend-on-Sea. My children would laugh at the idea that going to the British seaside was a wonderful treat; they would probably expect to go round the world, and might not even be satisfied by that. In those days, however, to go to Southend was a great joy. I have childhood memories of going there to see the longest pier in the world, having the excitement of travelling by train out along the Thames estuary, enjoying Rossi’s ice cream, going down to the old town of Leigh and having cockles, mussels and shrimps. All those things left a great impression on me. Probably my strongest memory is of going to the amusement arcades along the golden mile in the constituency of my hon. Friend the Member for Rochford and Southend East. My mother is privately leading the charge for city status for Southend.
The “Oxford English Dictionary” defines the word “city” as simply being
“a large town or other inhabited place”,
but it distinguishes a city as being
“a title ranking above that of ‘town’”.
According to such definitions, Southend-on-Sea certainly meets the very basic defined requirements to call itself a city.
I have googled quite a lot of stuff about cities, I was surprised to discover that there are only 66 cities in the United Kingdom and that—shock horror!—there are none in Essex. How is it possible that the biggest county does not have a city? I do not want to fall out with my hon. Friend the Member for Rochford and Southend East and my right hon. Friend the Member for Rayleigh and Wickford—I will not fall out with the former; the
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latter is considering putting in a bid for his own town to become a city—but it is absolutely staggering that there is no city in Essex.
I am sure that my hon. Friend the Minister will not be able to tell the House tonight whether a town in Essex other than Southend has put in a bid, but if Southend is the only town to do so thus far, as seems to be the case, I think that speaks for itself. There are many complex requirements involved in a town becoming a city, but it would be fair to define a city as a cultural and economic hub with a large, diverse local community and an area in which communities and businesses seek to centralise their interests.
As far as culture is concerned, Southend is awash with it. I was at the annual dinner of the Essex yacht club on Saturday. The original guest speaker was unable to fulfil the engagement, so at relatively short notice we brought in a “stand-in”—a chap called Paul Carslake. He had an electric spray-on-paint device and created the most wonderful drawings I have ever seen by using a microphone and holding the spray. It was just incredible. He auctioned one his works of Michael Caine. This chap is famous: he has done stuff for the Rolling Stones and has travelled all over the world. He provides just one example of talent from absolutely nowhere.
We all know about the famous actors and actresses in Southend—starting, of course, with Helen Mirren, but we are awash with them, as there is also Lee Mead. As I say, we are awash with talent of every description: actors, actresses, singers, dancers, painters, sculptors—the whole gamut can be found in Southend. In every sense, then, we fulfil the cultural criterion.
Like most seaside towns, Southend faces many challenges. It is not as popular as it used to be to spend holidays in English seaside resorts. Nevertheless, Southend has repositioned itself as a centre of learning. We have the wonderful new Southend-based university of Essex; we have magnificent schools in the town; and we have a language college—and it is all bringing in a good deal of income to the town. We are also awash with small entrepreneurs as well as larger businesses, adding still more value.
We have a diverse local community from all parts of the world, bringing different cultures to the town. I hope that my hon. Friend the Member for Rochford and Southend East and my right hon. Friend the Member for Rayleigh and Wickford will confirm with a nod that relations between the cultures in Southend are extremely good indeed, with no problems at all.
I believe it would be hard to differentiate Southend in its everyday life from any other British city. I do not want to upset colleagues, but I have looked carefully at a few towns that have become cities and I cannot see how Southend fails to meet the criteria, because it has every bit as much going for it—and more! That puzzles me.
The Queen’s diamond jubilee will be celebrated next year. As the Minister will no doubt tell us, it has been announced that, as part of the national celebrations, a bidding process will be opened to bestow the honour of city status on areas whose bids are successful. As I have already told the Minister, who kindly replied to confirm it, Southend is bidding for city status.
Why does Southend want to become a city? It would have a significant impact on the morale of the local communities and would give the local economy a major boost during a difficult time for business and individuals
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alike. A key theme of the bid will be the projection of the community’s views of Southend, highlighting in particular its vibrancy and ambition. Furthermore, our bid will champion the various successful aspects of the town, celebrating the thriving local businesses in the area, its wonderful cultural and volunteering communities, the massive regeneration projects to improve pedestrian and road safety while giving Southend a modern and clean feel, the growing education sector and the fabulous local schools that the town boasts and its diverse and multicultural population.
I had the privilege of chairing the Committee considering the London Olympic Games and Paralympic Games Bill. Given that I come from the east end of London, as I mentioned, I am very excited at the prospect of the Olympic games. Hadleigh, the neighbouring area to Southend West, will host the bike events, which is good news. At the moment, Southend is actively seeking to attract international teams to choose Southend as a base for their training camps. I am delighted to tell the House that so far we have had visits from team representatives of Sri Lanka and the Philippines, with more to follow. I hope to attract international interest because we are only 40 miles from where the Olympic camp will be based and because we have wonderful facilities. The visiting teams were given a first-class presentation at Eastwood school, where there are marvellous sports facilities. Belfairs high school, which is being refurbished, will have wonderful facilities that will be unveiled later in the year.
Only a few weeks ago, Mark Foster, another Southend lad—well known because he is very tall, has won a few world championships, has competed in the Olympics and has appeared on “Strictly Come Dancing”—opened our new swimming pool, which features the best diving facility not just in the country but in the world. It also has a dry area. I think that international teams who are proficient in that sport will consider Southend very attractive as a base for their training camps. I hope that I have given the House a sense of the wonderful facilities that we have there.
In many ways, Southend-on-Sea already has the look and feel of a modern British city, but there is no sign saying “Welcome to the city of Southend”, and that is what I want to see. Southend is a town to be proud of, and it should be celebrated as such. In towns up and down the United Kingdom, during tough times like these, we sometimes need to remind ourselves of the greatness of where we live. If we are declared to be a city, that moment alone will lift the hearts and spirits of everyone. Last week we suffered a terrible tragedy when Trevor Bailey, who lived in my road and was a wonderful cricketer, lost his life. He served in the second world war and gave much for his country in every sense, and he would have been the first to support Southend and its community in the bid for city status.
I should add that I represent the part of the country with the most centenarians. Southend, which has appeared three times in “Guinness World Records”, contains a range of senior citizens who would be absolutely delighted if we were granted city status.
The recognition of Southend’s greatness, locally and nationally, would have a real impact on the civic pride felt by local communities. Evidence from previously
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successful bids has shown that city status can lead to a reduction in antisocial behaviour—in graffiti, for instance—and can increase aspiration among communities, and aspiration in itself can lead to higher attainment and economic activity.
Southend has achieved a great deal over the past five years. It has improved social housing to meet the needs of the local population. It has also improved adult community care, children’s services, education at all levels—from Sure Start centres to the university—and the area has been regenerated, including roads and public spaces. Its population of 164,000 is the largest in the east of England. Let me repeat to my hon. Friend the Minister that I am puzzled by the fact that it is not already a city.
Southend is seen by many as a hub for learning, culture and business. It has superb transport links to the surrounding areas and to London. We have nine railway stations, two bus companies, vastly improving road networks and an expanding airport. Only last Friday I visited one of the hangars at the airport to observe a number of apprentices at work, and I know that the skill that they have already acquired in refitting some of their planes is truly remarkable.
Southend has facilities to accommodate members of all religious faiths in its strong multicultural community. It provides outstanding educational opportunities, catering for everyone and anyone. As I have said, Southend has a large campus for the university of Essex specialising in drama and the arts, a regionally renowned adult community college, four outstanding grammar schools, and a generally excellent education service. Southend certainly has strong academic credentials. The principal of South Essex college, Jan Hodges, has done a magnificent job in all she has achieved for the college.
The town is a hub for the arts and culture, with one of the largest regional theatres in the Cliffs Pavilion. We also have the renowned Focal Point art gallery and museums with collections of national importance. Saxon remains were found in Priory park. They are being restored and will eventually be displayed in a suitable museum. We have a cultural events programme, including an annual carnival along the seafront. We have a thriving local music and visual and performing arts scene, and the internationally famous “Metal” which is based in Chalkwell park in Southend, where we invite artists from all over the world to share their skills with local artists. We have an annual festival, and “Metal” links in with the Royal Opera House in dance and theatre. Therefore, culture and the arts in Southend are second to none.
Unlike many seaside towns, Southend has a varied economy, enjoying a vibrant entrepreneurial culture, global companies with bases in the town, innovative and cutting-edge companies, and some of the best performing stores in the region in both the high street and the sought-after boutiques in Leigh-on-Sea. My predecessor, the late Lord Channon, used to take Princess Margaret along the little boutiques there, so impressed was she with that shopping area.
Southend has some outstanding historical architecture throughout the town, including the world-famous mile-long pier, which is being restored, the beautiful Regency architecture in the Clifftown conservation area, the historic fishing village in Leigh-on-Sea and the award-winning Pier Hill development. Southend is steeped in
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history and is proud to showcase the beautiful architecture, with the new designs, including the Pier Hill development, fitting seamlessly into the town.
The profile of Southend will be raised significantly with a successful city status bid, thus changing the perceptions of Southend not only for the local population but also throughout the country—if those perceptions are in any sense negative. The economy of Southend will also benefit significantly if the bid is successful. Raising the profile of Southend in such a positive way will enhance the activities that are pursued in Southend, setting a positive example that will lead to securing further inward investment into the town. City status will appeal to foreign markets in particular.
One of Southend’s key economic sectors is tourism, and it will also receive a significant boost. There is often greater interest in visiting a city than in visiting a town. City status will give Southend the opportunity to highlight everything it has to offer to wider audiences, enabling the town to secure more vital income from tourism.
Southend has benefited from the significant regeneration projects that have been carried out, yet there are still ambitious plans for the town. With the reductions in public sector funding, new avenues need to be explored in order to secure investment for the town. A successful city status bid will not only raise the profile of the plans for the new museum and the redevelopment of the pier, but will also enable a successful fundraising effort among trusts and foundations. These projects will in turn generate more income and job opportunities for Southend and go a long way to enhancing civic pride and aspiration among local communities.
I am puzzled by the fact that there are 66 cities, but not one in Essex. I am puzzled that Southend, whose population of 164,000 and growing is the biggest in Essex, is not already a city. On every count, Southend meets the criteria for city status. I very much regret that our bid in 2002 was unsuccessful, but a decade later I hope that this Minister will accept the wish that Southend wanted me to pass on to him tonight, which is that he be Southend’s Valentine.
8.45 pm
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper): It is tempting to begin by saying, “With an offer like that, how can one possibly refuse?” However, I will have to disappoint my hon. Friend the Member for Southend West (Mr Amess), at least on the immediate offer to be Southend’s Valentine.
The Government have noted with pleasure the considerable interest of towns throughout the United Kingdom in entering the competition for city status to mark the Queen’s diamond jubilee in 2012. My hon. Friend has certainly used his opportunity to explain to the House the considerable merits of Southend, and that is entirely understandable. Clearly, if he ever ceases to be a Member of Parliament, he will be able to get a job as a senior tourism officer for his borough, given that he set out a kaleidoscope of things it has to offer. Other hon. Members will have noted this Adjournment debate and those whose constituencies are bidding for city status will doubtless seek an opportunity of their own, so you will have many more interesting bids to hear about, Madam Deputy Speaker. My hon. Friend used this opportunity not only to set out Southend’s case for city status, but to remind us that Southend
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provides a number of training opportunities for Olympic teams. He used this debate to set those out and remind other countries of the opportunities for them in his constituency.
I am sure that my hon. Friend will understand the reason why I have to disappoint him, which is that Ministers must remain impartial in this competition. Indeed, during Prime Minister’s questions the hon. Member for North Antrim (Ian Paisley) tempted my right hon. Friend the Prime Minister to support the campaign for Ballymena in County Antrim to win the competition. Although my right hon. Friend recognised the powerful case that had been made, he, too, had to remind an hon. Member that Ministers must remain neutral. That is the reason why I have to decline my hon. Friend’s kind invitation on this Valentine’s day.
The reason fairness is so crucial in this competition is that this competition does not have any criteria in the usual sense of that word. City status continues, in this country, to be an honour granted by the sovereign—nowadays, following a competition—as a rare mark of distinction. Reasons for success or failure in these competitions are never given, and city status is not and never has been something that towns claim by ticking off a list of hard and fast criteria. The reason for that is fairly obvious. As we see when we look at a list of cities, any attempt to draw up a list of criteria would run into difficulties immediately. Some cities in the UK are large and some are small. Some have conspicuously attractive and well laid out city centres, whereas that applies less to others. Some have wonderful cathedrals, universities, airports, underground systems or trams, and some may lack those physical features, but boast a vibrant cultural life. My hon. Friend not only drew attention to the physical characteristics of his borough, but spent some time setting out its cultural attractions.
Mr Amess: Will my hon. Friend allow me to add something? I forgot to say that when Southend approached me about the bid, I immediately said, “Fine, but we don’t have a cathedral.” We have a number of churches that could perhaps be cathedrals, but will my hon. Friend confirm that a town does not need a cathedral to become a city?
Mr Harper: I can confirm that. There is no checklist of criteria that people can tick off to qualify. The guidance for entries to the competition is on the diamond jubilee pages of the Department for Culture, Media and Sport website. It lays out the type of information that towns bidding in the competition should include. They should give a flavour of the town and should lay out its interesting features and why it should become a city, as my hon. Friend has done this evening. The Government have said that we would like city status—and a lord mayoralty or lord provostship under the parallel competition among existing cities—to be conferred on a vibrant, welcoming community with an interesting history and a distinct identity. Those are the characteristics we have set out, but there are no hard and fast criteria. It is for towns to put together bids that spell out what makes them special.
If a town considers that it deserves to be granted city status, it should look at the guidance on the Department’s website, and if it confines its case to the broad limit of 100 pages set out in the guidance its entry will be
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welcome. All valid entries received by the closing date of 27 May 2011 will be carefully and fairly assessed on their merits. The Government look forward to receiving strong entries from a variety of local authorities, including Southend, and to announcing the new city in early 2012.
My hon. Friend said that his mother Maud is a champion of Southend’s bid for city status and that she
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will celebrate her 99th birthday soon. Whatever happens with Southend’s bid, I look forward with him to his mother’s receiving a communication from Her Majesty the Queen on her 100th birthday in 2012. So, whatever happens, there will be something to celebrate in Southend for my hon. Friend and his mother Maud.