The Economy
John McDonnell Excerpts(10 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John McDonnell (Hayes and Harlington) (Lab)
I beg to move,
That this House believes that the Government has failed to deliver on its commitment to stand up for working people; notes that the Government’s existing plans to cut tax credits will cost more than three million working families an average of £1,300 a year from next April; further notes that 4.1 million children now live in absolute poverty, an increase of 500,000 since 2009-10; notes that in 2014 the UK’s current account deficit reached the highest level ever recorded, at 5.1 per cent; notes that 85 per cent of the money saved from tax and benefit changes in the last Parliament came from women; further believes that the Government has failed to deliver the more sustainable economy the country needs; notes that, rather than investing in building new homes to cut housing benefit costs, housing investment has been slashed and housing benefit has risen by over £2 billion a year in real terms; notes that the gap between UK productivity per hour worked and the rest of the G7 grew to 20 percentage points in 2014, the widest productivity gap since 1991; believes that further deep cuts to the budget of the Department for Business, Innovation and Skills could damage the Government’s ability to boost innovation and productivity and could restrict opportunities for British businesses and workers to succeed in the global economy; calls on the Government to reverse fully and fairly its plans to cut tax credits from next April; and further calls for the Government to invest in growing a more productive economy with a focus on science, technology and green jobs to equip Britain for the future and share more fairly the proceeds of growth.
We have chosen to devote a section of today’s Opposition day to set the scene for next week’s autumn statement and comprehensive spending review. This will be the last chance many MPs from across the House will have to put their case to the Chancellor before he comes to his final conclusions on his spending plans and economic strategy for the coming period.
The Chancellor is not in the Chamber today. Naturally, we are disappointed, but I spoke to him before this debate. He is working hard on the comprehensive spending review, so I think we will forgive him if he gets his sums right and comes to the right conclusions.
The Chancellor’s decisions next week will have serious consequences for every constituency in the country. What we all need from the Chancellor is wise judgment and fairness. Our country faces serious challenges and risks ahead, which we should not underestimate.
Let me first deal with one issue that overrides all others. It has been heart breaking to watch the tragic events in Paris at the weekend unfold into the suffering of families coming to the realisation of their loss. I sent a message of condolence and solidarity to our counterpart Michel Sapin, the French Finance Minister, at the weekend. It is true that the first duty of a state is to protect its citizens, so may I therefore assure the Chancellor that he and the Prime Minister have our full support for the enhanced expenditure to strengthen our security services that they have announced this week?
May I also say that we share the view of the Metropolitan police commissioner and other police chiefs that the first line of gaining intelligence on potential hazards and threats to our safety, preventing terrorist attacks and responding to them is often the police officer in the community and on the street? There has been a great deal of speculation in the media about the scale of potential cuts to the policing service, prompting severe warnings from police authorities—on a cross-party basis—about the consequences for the safety of the public if this scale of cuts goes ahead. May I therefore assure the Chancellor that we would also support an urgent review of the policing budget proposals to avert this risk to the service, and that we would support any enhanced expenditure plans being placed outside the parameters of the fiscal constraints of the charter for budget responsibility?
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend agree that the fact that the tragic atrocities in Paris were focused on young people in social environments suggests that such attacks could occur anywhere in Britain at virtually any time?
John McDonnell
We are all fearful of the risk that exists, but we place our confidence in our intelligence and policing services. To be frank, when our community is under such a heightened physical threat, now is not the time to be dogmatic. When it comes to national security and keeping the public safe, I say to the Chancellor and the Government that they will always have the support of the Labour party.
Let me turn to an issue of fairness—tax credits—which I hope Ministers can reassure us today that the Chancellor has now sorted out once and for all. It came as a shock to Members on both sides of the House when he brought forward the proposals to cut tax credits without fully understanding, or calculating the consequences of, his actions. Plainly, it was an error of judgment. I want to thank all the Members of this House from all parties and our colleagues in the other place who found that they could not support the Chancellor’s proposals and hence forced him to think again. What convinced many people was exactly what Gordon Brown, our former Prime Minister, summed up so eloquently last week—that this is an attack on children. The prospect of 200,000 more children being pushed into poverty pushed many MPs and Members of the other place over the edge to oppose the proposals.
There has been a lot of speculation in the press about how the Chancellor has been trying to resolve the tax credits question, with much talk of cuts to universal credit and threatened Cabinet resignations, but I am pleased that the quiet man may have had to raise his voice and has won the day. However, the threat seems to have moved on to housing support and other matters. I do not expect Ministers to reveal to us today the detail of the Chancellor’s proposals to resolve this matter, but for the 3 million families who face a cut of £1,300 a year, may I ask them at least to assure us and those families that they will withdraw the tax credits cuts in full and that no existing or new claimant will lose out?
Mr David Hanson (Delyn) (Lab)
May I give my hon. Friend another reason for tackling this issue head-on? In the 10 constituencies across north Wales, £58 million will be taken out of the local economy next year if the proposals go ahead. That money would be spent in local shops, local businesses and local communities. If that is taken out, not only will families and children suffer, but local business will suffer.
John McDonnell
At a time when we are seeking to grow the economy, it seems bizarre to do so by reducing aggregate demand within a local area, which could in many respects bring about a localised recession.
Jeremy Quin (Horsham) (Con)
The hon. Gentleman has just agreed with the argument made by the right hon. Member for Delyn (Mr Hanson), so does he not accept that the same argument could be deployed for never cutting the deficit under any circumstances ever?
John McDonnell
The whole point of this debate is about political choices. To be frank, we have said to the Chancellor on a cross-party basis in debate after debate that this was the wrong political choice and that he should therefore look elsewhere. I am not asking for the detail of how he is resolving it—we will wait to hear that next week—but I am urging Ministers at least to give us the assurance that nobody will lose out. Families want that assurance now, because of the insecurity that they face.
Steve McCabe (Birmingham, Selly Oak) (Lab)
With my constituency of Selly Oak now in the top 13% in the country for unemployment, with more than 20% of those in work not earning the living wage and more than 60% of families dependent on tax credits, is it not clear that five years of the long-term economic plan has not worked for Selly Oak? What we need next week is not a rethink, but a step change in the approach to working families.
John McDonnell
I hope that that is what the Chancellor is working on at the moment and that that is why he cannot be with us.
Lucy Frazer (South East Cambridgeshire) (Con)
The hon. Gentleman has mentioned children twice so far. The Greek Government overspent, leaving tens of thousands of children unschooled in Greece in September. Does he not accept that a country that does not look after its finances does not look after its children?
John McDonnell
Of course that is true, but there are false economies. On a cross-party basis, we came to the conclusion that cutting tax credits to working families would be a false economy because it would remove an incentive to work—one of the principles on which many of our budgetary proposals are founded.
John McDonnell
I will press on with my speech, because Mr Speaker has warned me that a large number of Members want to speak. I will come back to the hon. Lady.
It would be helpful to have an assurance today that no one will lose out. I have said repeatedly that if the Chancellor withdraws the tax credit cuts in full and fairly, he will have our support. On fairness, will Ministers also assure us that if the Chancellor does scrap his tax credit cuts, it will not be paid for by cutting the benefits and support for families elsewhere? I seek that assurance because, unfortunately, the Chancellor has a bit of a reputation for giving with one hand and taking with the other.
Maria Caulfield
I appreciate the hon. Gentleman’s wish for cross-party support in reducing the deficit. I take it from his stance that his party wants to control the deficit, so where does he suggest the cuts should be made? Should they be made in the health service, schools, local government or defence? Will he give some suggestions as to how he would reduce the deficit?
John McDonnell
We have raised this matter time and again. I think that Members on both sides of the House found it incongruous that, at the same time as the Chancellor was seeking to cut working families’ tax credits, he was reducing inheritance tax for the wealthiest families in our country. People saw that as being basically unfair.
There is much that we hope the Chancellor will address in next week’s statement. We agree that we must continuously bear down on the deficit and debt, but that has to be done with realistic good judgment and fairness. I say that the judgment must be realistic because it will undermine confidence in government if we go through another comprehensive spending review like the one in 2010, when the Chancellor announced that he would eliminate the cyclically adjusted current deficit in the five-year period—that is, by this year—whereas he has cleared only half of it. In the last financial year, the current budget deficit stood at a massive £44 billion. I also remember the Chancellor saying in 2010 that he would reduce the debt to 69% of GDP. It now stands at over 80%.
The mistakes of the last CSR should not be repeated in this one. Our fiscal rules must be realistic, achievable and fair. The Chancellor’s rules, for all the revisions in recent weeks, have been none of those things.
David T. C. Davies (Monmouth) (Con)
The hon. Gentleman and his colleagues have criticised the Government on many occasions for cutting too fast. Is he now suggesting that we should have cut faster? If so, we will be more than happy to co-operate with him.
John McDonnell
I would be happy to have that co-operation at any stage. What we said to the Chancellor five years ago was that he was going too fast and that he should have been investing in growth, which would have enabled us to reduce the deficit. He promised to reduce the deficit and debt in five years, but he is going to do it in 10. That is a doubling of the target.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Will my hon. Friend remind the House at what rate the Chancellor has accrued debt over the past five years? Has he not accrued approximately the same amount of debt over the past five years as the last Labour Government accrued in 13 years?
John McDonnell
Yes. Let me press on because time is limited in this debate.
We need to be realistic in recognising that our economy faces severe challenges. I warned in September that many of the factors that contributed to the last economic crisis are re-emerging. This is the slowest recovery in living memory. It is based on rising house prices and unsecured consumer lending rising at record rates. The Government’s own forecasters expect household debt shortly to surpass even the level reached before the crash. We have an increasingly unbalanced economy, based more than ever on insecure jobs in the service sector and an over-reliance on the finance sector.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
Will the hon. Gentleman give way?
John McDonnell
I will press on because time is limited. I will come back to the hon. Gentleman if I have time.
Regrettably, all the predictions are that manufacturing is likely to go into recession next month. The UK’s current account deficit on the balance of payments was at an all-time high last year. That deficit is driven by a slump in British investors earning abroad, while those in the rest of the world continue to profit from the assets that we sell and the loans that we take out.
There are warning signs in the rest of the world, yet the Chancellor is bequeathing us an economy even more poorly prepared than it was on entering the storm in 2008. Back then, we had room to manoeuvre. The Bank of England was able to cut interest rates to rock bottom, sustaining the economy as the global recession hit. It hit us hardest of all because our financial system was appallingly over-exposed to risks that it did not or, in some instances, would not understand. At least at that time, the Government could take action. They slashed interest rates and introduced quantitative easing. Seven years on, the Bank of England base rate remains jammed at the lowest level in history. The room for manoeuvre in conventional monetary policy is essentially zero.
Michael Tomlinson
Does the hon. Gentleman welcome the jobs figures in my constituency for the past year, which show that the number of people claiming jobseeker’s allowance is down 30%, showing that Government Members are on the side of working people?
John McDonnell
Of course we welcome any increase in employment or reduction in unemployment. The problem is that the economy is unsustainable because it is based on rising house prices, borrowing and debt. My fear is that the jobs that have been gained in the past year may be lost in the forthcoming crisis, if we do not take avoidance action.
Andrew Haldane, the chief economist at the Bank of England, has warned that the third wave of the financial crisis, which is breaking out in the emerging markets, centred on China, could have an impact on Britain. Why? Because Britain is the country with the largest exposure to Chinese debt, at $500 billion. Any upset in the rest of the world will, thanks to our extraordinarily large financial system, rapidly make its way here. That is exactly how the last crisis happened, when failures to repay mis-sold mortgages by some people in American society turned into the failure of the entire banking system in this country.
We cannot know what will happen over the next few years. The Chancellor has warned repeatedly of trouble ahead, but surely these challenges are better faced if we have a more balanced and resilient economy that provides real security for all of us. Instead, we have a single-minded fixation on a single target: the 2020 surplus, which no credible economist supports. By clinging on to that so tenaciously, it appears that the Chancellor is putting the needs of his political career ahead of the prosperity of the country.
Jeremy Quin
The hon. Gentleman refers to the balance of trade. Part of the impact of that is that our country has been growing. Dividends have gone up 30%. Those who are investing in the UK are taking more money out of the UK because it is growing. We could be investing in places such as China, which are growing faster. Would he ban investment in China? Is that what he is saying? Should that be the result of his concerns?
John McDonnell
Part of the problem is that growth has not been high enough. In addition, we have sold off so many of our assets that money is pumping out of this country, rather than being invested in it. We are not making home-grown investments in our own economy, so the money is flowing abroad. That is causing our balance of payments deficit. In addition, our trade, particularly in manufacturing, has unfortunately not picked up on the scale it should have done.
Let me press on, because a large number of Members want to speak. We know, from the drip-feed of announcements, that the Chancellor intends to make swingeing and potentially devastating cuts to Government Departments and welfare spending. Let me make it clear that austerity is a political choice, not an economic necessity. The record of this Government shows that the Chancellor’s political choices are having a devastating impact on people across the United Kingdom. In many cases, his cuts are falling on the heads of those who are least able to afford them. [Interruption.] The Exchequer Secretary is asking for examples, so let us look at local government.
Since 2010, councils have dealt with a 40% real-terms cut in their core Government grant. In adult social care alone, funding reductions and demographic pressures have resulted in a £5 billion funding gap. Where are the cuts falling? According to the Institute for Fiscal Studies, the 10 most deprived local authority areas have lost £782 per household, while the 10 wealthiest areas have lost just £48 per household. Choices have consequences for people’s incomes and lives and the services upon which they rely. As a consequence of the Chancellor’s choices, ordinary people are being left worse off. He has made those choices and still failed to meet his self-imposed fiscal targets, so I pose this question: are the choices that are being made right, moral and fair? If the answer to any of these questions is no, it is self-evident he needs to rethink, and rethink fast.
Suella Fernandes (Fareham) (Con)
Is the hon. Gentleman seriously preaching about making the right choices, given that his party was responsible for the highest level of public sector borrowing? Is that the choice he is recommending—more borrowing and a greater burden on British men and women, just to feed the coffers of Government?
John McDonnell
We have to explain again: the deficit did not cause the crisis; the crisis caused the deficit. When Gordon Brown was Chancellor of the Exchequer and intervened with quantitative easing and by reducing interest rates, he was supported across the House, because that was the way to save what was left of the financial system in this country.
There is an alternative to the cuts. The Chancellor could, within the five-year timeframe of the spending review, lay out a long-term vision for the economy and how the Government can help to deliver it. He says he wants a high-wage, low-tax and low-welfare economy. We all want people in secure high-paid work, because it is the surest way to bring down the deficit—that is what we have been arguing all these months—but the Chancellor has no proposals on where the high-wage jobs are to come from. All he has had to offer in recent months is the national living wage, but it is set below the official living wage, so it is a national living wage that no one can live on, and it is nowhere near high enough to compensate for the proposed cuts to tax credits.
The Chancellor cannot deliver high wages unless he delivers investment. Investment is the fuel of future growth. Spending today on new equipment, new technology and infrastructure will deliver well-paid, secure jobs in the future. Yet investment in the UK is still below its pre-crash level as a share of GDP, and that level of investment is itself far below that in France, Germany and the US. Failure to invest has a dramatic impact. Every hour worked in Germany is, on average, a third more productive than every hour worked here. Productivity has flatlined for years in this country. Instead of investing in capital, too many businesses have relied on cheap labour. Our flexible labour market has made it too easy for employers to rely on low pay, and the Chancellor’s response has been woeful.
Mrs Anne Main (St Albans) (Con)
I am listening carefully to the hon. Gentleman’s speech. If he is so set against any form of welfare reform, why did he and his party not vote against the Second Reading of the Welfare Reform and Work Bill? Why the road to Damascus now?
John McDonnell
Some of us did vote against it. As we argued in that debate, there is a way to reform welfare while making sure people do not lose out. For example, we have proposed reducing housing benefit by building the homes people need to make sure they have roofs over their heads. In that way, we reduce rent levels as well.
Instead of investing in the future, using the Government’s powers to borrow carefully and invest wisely, the Chancellor has allowed Government spending on our vital infrastructure to fall from 3.3% of GDP in the last year of the last Labour Government to just 1.6% today. It is set to fall further to 1.4% over the next few years—less than half what the OECD thinks is necessary in a developed economy to sustain a decent standard of living. A lack of investment is why National Grid is warning of electricity shortages this winter and why too many businesses suffer from poor broadband connections and transport delays. His response to growing calls from business has been to run to the Chinese Government and hope they will get him out of this mess. We have been presented with the extraordinary sight of a British Chancellor refusing to use his own Government’s powers of investment but more than happy to exploit those of the Chinese.
While every other major developed country is pushing up its research and development spending, recognising the future value of science and technology, our Government have cut spending by £l billion in real terms.
Lucy Frazer
The coalition Government set up a £160 million fund for agri-tech investment, and that investment has continued under this Government through the regional growth funds. It is really helping the east of the country, particularly my constituency. What ideas does the hon. Gentleman have for investment in agri-tech?
John McDonnell
We should increase the amount invested. So far, so little has been invested, it is not having the impact it should have.
On investment in training, research from the House of Commons Library has shown that the budget for sixth-form and further education colleges could fall by at least £1.6 billion under the Government’s spending plans. This is the equivalent of four in 10 sixth-form and further education colleges being closed. Local councils, often the engines for investment-led growth in their communities, are having their budgets cut to ribbons, and even statutory services are now at risk. All this confirms that there is no long-term economic plan. It is a short-term quick fix from a Chancellor who cannot think beyond the Conservative leadership election.
Mr Graham Allen (Nottingham North) (Lab)
This is the first occasion on which I need to disagree with my hon. Friend. I think there is a long-term economic plan: to drive down the amount of money spent by Government as a share of GDP to 1920s levels. Is that not the real agenda, and a not very hidden one at that?
John McDonnell
The Chancellor’s agenda is to shrink the state and privatise most of what is left.
Instead, Labour would seek to use Government powers to invest to deliver world-class infrastructure across the whole country. The northern powerhouse will only become a reality when it is matched by real spending commitments. We would build on our country’s history of science, technology and innovation to deliver real increases in funding for research and development, seeking to match the commitments made by our neighbours; and we would work alongside the private sector to ensure that our businesses, rather than hoarding cash to the tune of at least £400 billion, would be seeking out opportunities to invest in the future. That is the role of a strategic state.
Margaret Greenwood (Wirral West) (Lab)
The Green Investment Bank has been a real success, generating investment in renewable energy projects. In just three years it has invested in 58 projects, committing £2.3 billion of its own money and leveraging more than £10 billion in additional private capital. It has done this despite Government policies working against investor confidence in the renewables energy sector. What are my hon. Friend’s thoughts on the Government’s plan to privatise the bank?
John McDonnell
Just as we are about to take off with regard to renewables, the Government are impeding and undermining their future. My hon. Friend, like me, will have spoken to some of the companies. Some have gone to the wall and others are struggling. It is a devastating blow.
Labour would also tackle the large-scale tax evasion and avoidance that the Chancellor is so reluctant to address. Let me say what many working in our economy want to hear from the Chancellor next week. First and most importantly, he must reverse, fairly and in full, his cuts to tax credits. That should be his absolute priority. Secondly, there should be a plan to support investment to well beyond the minimum 3.5% of GDP recommended by the OECD, in terms of both infrastructure and training investment. Thirdly, we need a plan to address the balance of payments crisis, so that we can pay our way in the world once more. The Government are focusing on one deficit while ignoring another possibly more serious one. Fourthly, we want a realistic plan to tackle the deficit, based on sustainable economic growth and fair and wise judgments. Finally, we want an end to the self-defeating cuts and a serious programme to address tax evasion and avoidance and improve the overall efficacy of our tax system. If the Chancellor fails to take these steps, he places in jeopardy the long-term health of our economy. The choice next week is his to make.
Oral Answers to Questions
John McDonnell Excerpts(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
My hon. Friend speaks for her Lincolnshire constituents and for the whole United Kingdom in saying that we want to move to a lower tax, lower welfare, higher wage society. We took such a step in the Budget by increasing the personal allowance to £11,000. We also cut taxes for business, reducing corporation tax and expanding the employment allowance so that smaller businesses could take on more people. It is all about continuing to deliver the record levels of employment we see in our country, and indeed the growing economy that today’s GDP figures confirm.
John McDonnell (Hayes and Harlington) (Lab)
May I remind the House that for 3 million people out there who have done everything asked of them and have been bringing up their children and going to work, this is not a constitutional matter? Those people will lose £1,300 a year. Given what happened in the other place last night, may I reassure the Chancellor that if he brings forward proposals to reverse the cuts to tax credits, fairly and in full, he will not be attacked by Opposition Members; indeed, he will be applauded? Can he assure us that whatever proposals he brings forward, he will not support any that an independent assessment demonstrates will cause any child to be forced to live below the poverty line?
Mr Osborne
I am, of course, happy to accept any proposals that the hon. Gentleman puts forward—[Interruption.] I am happy to listen to those proposals, but there is a difference between those who say, “We want to make no savings to welfare at all; we want to abolish things like the benefit cap; we are not prepared to make any savings at all to the tax credit system”, and those who say, “Yes, we want to move to a lower welfare society, but we want help in the transition.” If the hon. Member for Hayes and Harlington (John McDonnell) has proposals to help with the transition, of course I will listen to them, but if he is again promoting uncapped welfare and unlimited borrowing, I do not think that the British people will listen to him.
John McDonnell
The Chancellor has a choice before him: he can push on with tax giveaways to multinational corporations, and press on with cuts to inheritance tax for the wealthiest few that he announced in the summer Budget, or he can reverse those tax breaks for the few, and instead go for a less excessive surplus target in 2019-20. He can avoid penalising 3 million working families with cuts to tax credits, and stick to his self-imposed charter. Is he prepared to listen to reason on this matter? Is he, or any Government Member, prepared to step up and show some leadership on this issue?
Mr Osborne
Let us remember that we inherited a tax system where City bankers were paying lower tax rates than the people who cleaned for them, and multinationals were paying no tax at all. We have introduced a new tax to ensure that multinationals do not divert their profits, and we increased capital gains tax precisely to avoid that abuse of tax rates. We will not take lectures from the Labour party about a fair tax system.
In a way, the hon. Gentleman reveals what he believes, which of course I completely respect. He says that we should abandon our surplus rule and run a deficit forever, but I profoundly disagree with that central judgment. If we borrow forever and are not prepared to make difficult decisions on welfare, we will condemn this country to decline. As a result, people will become unemployed and living standards will fall. That is not the Britain I want to see. We will go on taking difficult decisions to deliver that lower welfare, lower tax, higher wage economy, and this elected House of Commons will continue promoting the economic plan that delivers that.
Finance Bill
John McDonnell Excerpts(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John McDonnell (Hayes and Harlington) (Lab)
On a point of order, Mr Speaker. In the light of the votes in the other place this evening, the Chancellor has, I believe, informed the media that he will bring forward measures to respond to the Government’s defeats. It is the responsibility of Ministers, as you know and as you have ruled, to make this sort of announcement to this House first. While there are indeed Treasury questions tomorrow, given the level of interest from Members in all parts of the House and the significance of this matter, I am asking that the Chancellor make an oral statement to this House tomorrow, promptly.
Mr Speaker
I am grateful to the shadow Chancellor for his point of order. Those on the Treasury Bench will have heard what he has said. It is open to a Minister to do that tomorrow. Given that a Treasury Minister is present on the Treasury Bench, he is welcome to rise to his feet if he wishes.
Charter for Budget Responsibility
John McDonnell Excerpts(10 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John McDonnell (Hayes and Harlington) (Lab)
I suppose I should deal straightforwardly with the U-turn. Yes, two weeks ago, I recommended that Labour MPs vote for the charter, and today I shall urge them to vote against it. Is that embarrassing? Yes, of course, but a bit of humility among politicians never goes amiss. When circumstances and judgments change, it is best to admit to it and change as well, so I would like to take this opportunity to welcome the Prime Minister’s change of heart on the bid for the Saudi prisons contract.
Let me clear: I have changed my mind not on the principles of the need to tackle the deficit, but on the parliamentary tactics for dealing with this charter. Labour will tackle the deficit. [Interruption.] The Chancellor has a record of ignoring the targets he sets in these charters and mandates, treating his own charter with contempt, so I recommended two weeks ago that we should do the same. It is difficult to take seriously the charters and mandates when time after time the Chancellor has come to Parliament to revise his own charter. It is difficult to take it seriously when he has consistently failed to meet his own targets.
I remember the promises; I was here. The Chancellor promised to wipe out the deficit in one Parliament, but he did not get through half. In 2010, he promised to reduce borrowing to £37 billion by 2014-15. Last year, it was £87 billion—135% more than forecast. He promised public sector net debt would fall to 69% of gross domestic product in 2014-15. Today, it stands at 80% and above. It is no wonder that the charter has been seen as one of the puerile political traps the Chancellor likes to set.
Several hon. Members rose—
John McDonnell
Let me make some room; I will give way in due course.
Voting against the charter makes someone a deficit denier; voting for it would lead to the Chancellor claiming for the next five years that we had signed up to support every one of his cuts in public services and benefits.
I regret that the procedure followed today is an unamendable order—a take-it-or-leave-it order. My initial view was to use today’s debate for a bit of traditional parliamentary knockabout to ridicule the Chancellor’s performance against his own charter. I admit it: I was trying to out-Osborne Osborne.
Apart from the economic analysis and professional advice I have received, what really changed my mind was a trip to Redcar last week, where I met steelworkers and their families in tears at losing their jobs, their livelihoods, their futures. The Government’s failure to invest in our manufacturing industry, even if only to mothball the plant until better times arrive, has meant the end of steelmaking in Teesside and immense distress to families. The Government’s refusal to invest will be embedded in this charter as it now moves on to limit all public sector borrowing.
Gareth Johnson (Dartford) (Con)
I am grateful to the shadow Chancellor for giving way. According to Hansard, during the last Parliament there were more than 100 occasions on which the hon. Gentleman criticised the Government and other organisations for failing to consult sufficiently. Does he now understand the irony, given his complete failure to consult his own colleagues over his position?
John McDonnell
In the Labour party, we have a democratic process involving the shadow Cabinet and the parliamentary Labour party. In fact, it is so democratic that it is reported in the press virtually daily.
This charter will be used time and again as an excuse for the Government’s refusal to intervene and invest, but the more we know about its potential use, the more my view is strengthened—it has to be vigorously opposed. It will be used to justify cutting services and support to families across the UK, including the cuts to tax credits, which are the working families’ penalty. I cannot support the cuts to tax credits for working families. These are people who have done everything asked of them: they have gone to work and looked after their children, yet because of the policy direction in this charter they are going to be hit with a £1,300 cut. Neither can I support the continuing attack on disabled people, which is inherent in this fiscal mandate.
John McDonnell
I will in a minute.
Disabled people are already harassed—some to death—by the brutal work capability assessment and often by benefit sanctions, yet they are to lose over £30 a week. Disabled people under this Government and under the coalition have been hit 18 times harder than other citizens by the impact of cuts. I do not want the Labour party to be associated in any way with these policies, and to dissociate ourselves clearly we need to vote against them tonight.
Sir Edward Leigh (Gainsborough) (Con)
Everyone understands the hon. Gentleman’s views, but he has to explain to the House what circumstances have changed in the last two weeks. There has to be some element of consistency, and of trust in the Opposition: trust that, in future, he will not be blown off course so easily.
John McDonnell
The hon. Gentleman has clearly not been listening. It was professional advice. It was watching the economic headwinds grow. But, in addition to that, it was meeting families who had lost their futures in Redcar that made me decide that we need a Government who would invest and would not leave them adrift.
John McDonnell
I will in due course.
It is increasingly clear that the charter and the fiscal mandate are not economic instruments, but political weapons. This is not an economic debate. It is about the politics of dismantling the welfare state, the closing down of the role of the state, and the redistribution of wealth from the majority to the minority. Austerity is not an economic necessity; it is a political choice.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
The hon. Gentleman said at the beginning of his speech that he wanted to reduce the deficit, but whenever any cut is proposed, he is against it. What would he cut? What would he do to balance the books?
John McDonnell
If the hon. Gentleman bears with me, he will discover the answer. He is renowned for his patience.
John McDonnell
No. This is a limited debate, so I need to press on.
Over the last five years, the focus of the economic debate on the deficit has reflected the capture of the economic narrative by the right since the crisis in 2008. Over six years, the Conservatives have managed to convince many people that the economic crisis and the deficit were caused by Labour Government spending. It has been one of the most successful exercises in mass public persuasion and the rewriting of history in recent times. Today I am going to correct the record.
The facts speak for themselves. The Conservatives backed every single penny of Labour’s spending until Northern Rock crashed. The average level of spending under Labour was less than it was under Mrs Thatcher. It was not the teachers, the nurses, the doctors and the police officers whom Labour recruited who caused the economic crisis; it was the recklessness of the bankers speculating in the City, and the failure of successive Governments to ensure effective regulation. In opposition, this Chancellor and his colleagues wanted even less regulation of the banking sector that crashed our economy. The deficit was not the cause of the economic crisis, but the result of the economic crisis.
Mr Clarke
What happened under the last Labour Government was that the Chancellor and his regulatory authorities allowed first the dotcom bubble and then the crazy credit boom. Tax revenues temporarily soared to astonishing levels. The Labour Government carried on running a deficit on top of those tax revenues, and then the revenues collapsed, leaving us with the worst annual deficit in the G20. The last Government were complicit in the consequences of 2008.
John McDonnell
And when that expenditure was being determined in the House, the Opposition supported it, and never objected. The right hon. and learned Gentleman may well have rejected it, but I remember his Budgets. His Budgets balanced, but when they balanced, there were 40,000 homeless families in London. People were dying on waiting lists before they got their operations. Those were the consequences of his economic policies.
Focusing on the deficit continues to mask the underlying weaknesses and failures of our unreformed economic system. We are witnessing a recovery based on rising house prices, growing consumer credit, a ballooning current account deficit and still inadequate reform of the finance sector. I worry that some of the warning signs are reappearing. But the Conservatives have adhered to their dictum: never let a crisis go to waste. They have skilfully used their narrative of the deficit to enable them to cut public services, slash benefits, and give tax cuts to the rich and corporations. Successive charters and fiscal mandates brought before this House have been cynically used as a weapon in that cause.
The purpose of the original Fiscal Responsibility Act 2010, brought in by Labour, was to bolster the then Government’s economic credibility. I recall what the current Chancellor said. He described it as little more than a political stunt. But he soon learned what a useful tool charters and mandates can be, and immediately upon the coalition’s election, he introduced his own. The fact that he missed most of his targets was irrelevant to him; what was more valuable was that charters could be picked up whenever needed and prayed in aid to excuse any attack on the welfare state and any cut in benefits, and provide a means to redistribute wealth upwards.
The charter before us today also has little basis in economics. Let me quote Dr Ha-Joon Chang, Professor Thomas Piketty, Professor David Blanchflower, Mariana Mazzucato and Simon Wren-Lewis. Those eminent economists in our society said that it has
“no basis in economics. Osborne’s proposals are not fit for the complexity of a modern 21st-century economy and, as such, they risk a liquidity crisis that could also trigger banking problems, a fall in GDP, a crash, or all three.”
They go on to say that if the Government
“chooses to try to inflexibly run surpluses…Households, consumers and businesses may have to borrow more overall, and the risk of a personal debt crisis to rival 2008 could be very real indeed.”
James Cleverly
The wording of this charter has not changed in the past two weeks, and I am therefore curious: what happened two weeks ago? Did the hon. Gentleman read the charter and not understand it, or had he not read the charter when he advised his colleagues to vote on it?
John McDonnell
May I just say to the hon. Gentleman that it is always best before making an intervention to have listened to the debate so far and it is always best to make a calculation as to whether he is going to add to the sum of human knowledge by the intervention? [Hon. Members: “Ooh!”] All right, I was a bit harsh. Sorry about that. Mr Speaker, I am not usually so undiplomatic, am I? May I press on? The Chancellor may not appreciate the economic points that have been made, but—
Lucy Frazer (South East Cambridgeshire) (Con)
I would like to make the point that my learned Friend—my hon. Friend the Member for Braintree (James Cleverly)—was making: if there is no basis for this measure, why did the hon. Gentleman agree to it two weeks ago?
John McDonnell
May I apologise to the hon. Gentleman, as I was too harsh? I certainly do not want to be with the hon. and learned Lady, but if she could just keep up it would be really helpful. I have tried to reiterate three times—I have said it three times. [Interruption.]
Mr Speaker
Order. Let us have a bit of order, on both sides. The nature of such a debate is the existence of strong and contrary opinions. If people insist on shouting from a sedentary position as part of a sort of group therapy, thinking they are being clever, they should just think of what the electorate want, which is a civilised debate, not the most juvenile badinage.
John McDonnell
I am sorry for being so ungallant to the hon. and learned Lady and I apologise to her for that, but I have explained three times already.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
We are getting to the crux of this debate, which is that this fiscal charter is intellectually moronic. It essentially commits this House to never borrowing to invest, even when the cost-benefit analysis of that investment is such that the country would benefit greatly. That is why it has not one serious economist backing it, other than the self-styled experts on the Government Benches.
John McDonnell
I could not have said it better myself. Can we move on?
The Chancellor may not appreciate these economic points, but I believe many of his advisers do. That is why there is a sizeable get-out clause for the charter rules not to apply outside normal times when there is a significant negative shock to the UK economy. Not only are the social consequences of this programme devastating, but the scale of the cuts we are witnessing represents a false economy. They jeopardise the long-term economic prosperity of our country. It is a false economy to cut adult social care when the burden is shifted on to hospitals and accident and emergency departments. It is a false economy to pursue an ideological sell-off of council housing eventually to put up the rents and eventually increase housing benefit. It is a false economy, ironically, that when this Government came to office there were 70,000 people at HMRC and within the next year that is planned to fall to 52,000—a cut of more than 25% in the number of tax-collecting staff, when HMRC says that tax evasion is as high as £10 billion a year. But the worst—
John McDonnell
If the hon. Lady does not mind, I have taken a large number of interventions. The debate is time-limited. If she has any points that she would like to raise with me, I am happy to meet her separately or write to her. [Interruption.] I am doing my best to be nice. It is the new politics of the Labour party.
The worst false economy is the failure to invest. This will be a direct result of Government policy embedded in this charter, with its limits on all public sector borrowing. Economists from across the spectrum have written and commented on the need for investment for the future. The World Economic Forum ranks the UK 10th for the quality of our infrastructure, behind Germany, France, the Netherlands and Spain. This Chancellor’s strategy has given us investment as a share of GDP lower than all the other G7 countries, falling even further behind the G7 average in recent years.
That is why business leaders, trade unions and a host of others are calling for investment. It is incomprehensible for the Chancellor to rule out the Government playing a role in building our future. For him to constrain himself from doing so in the future, no matter what the business case for a project, has no basis in economic theory or experience.
We also face an uncertain medium-term future for the global economy. In recent weeks there has been mounting evidence of a decline in global demand, particularly in the emerging markets.
Several hon. Members rose—
John McDonnell
I will press on, if hon. Members do not mind, as time is short.
Economists have warned of the potential for a future slowdown in western economies as a result. Former chief economist at the World Bank, Larry Summers, wrote last week that the dangers facing the global economy are more severe than at any time since the height of the crisis. Faced with these potential challenges, it makes no sense to close down the fiscal options available, especially when there is a possibility that monetary policy options may also be constrained.
I want to break the stranglehold that the focus on deficits has had on the economic debate in this country in recent years. Yes, the deficit is vitally important, but we need a paradigm shift to open up the wider debate on what makes a healthy economy, a prosperous economy, in which everybody shares in that prosperity and in which everybody is secure, not just the wealthy few, where everybody has a decent home in a sustainable environment, is able to develop their talents to the full, has secure, stable, well-paid and rewarding employment, and support when they fall on hard times. We will tackle the deficit, yes, but we will not tackle—[Interruption.] Hon. Members should listen and they will hear.
We will not tackle the deficit on the backs of middle and low earners, and especially not on the backs of the poorest in our society. We will tackle the deficit, but we will do it fairly and to a timescale that does not jeopardise sustainable growth in our economy. We will balance day-to-day spending and invest for future growth, so that the debt to GDP ratio falls, paying down our debts. We will do this, first, by ending this Government’s programme of tax cuts to the wealthiest in our society. This winter, when the letters go through the letterboxes telling working families how much they will lose in tax credits, we will be reminding them that their tax credit cut has paid for a cut of billions of pounds in the inheritance taxes of the richest families in this country.
Secondly, we will give HMRC the resources and powers to tackle tax evasion and avoidance—no more Facebooks paying less than £5,000 in tax despite £35 million in bonuses and total global profits of £1.9 billion—but above all else we will grow our economy. We will use smart Government institutions to strategically invest in the key areas that increase GDP in the future: education, health, research, technology, human capital formation and training—a progressive economic agenda that recognises that wealth creation is a collective process, working in partnership with businesses, workers, public institutions, and civil society organisations that create wealth in this country.
John McDonnell
I have given way a number of times and this is a time-limited debate; I apologise.
That is why we will establish a national investment bank to invest in innovation across the entire supply chain, from the infrastructure we need to the applied research and early stage financing of companies. To tackle the growing skills shortages we will prioritise education in schools and universities along with a clear strategy for construction, manufacturing, and engineering skills to build and maintain sustainable economic growth. The proceeds of that growth will reach all sections of our society.
So we are launching the debate on the economy we need and the economic instruments and policies needed to achieve that prosperous and sustainable growth. That is why we are reviewing every aspect of economic policy and systematically assessing our economic institutions, the Bank of England, HMRC and the Treasury.
Today I can announce that I have appointed a former member of the Monetary Policy Committee, Professor David Blanchflower, to lead a review into whether the Monetary Policy Committee should be given a broader mandate. He is joined by Lord McFall, the former Chair of the Treasury Committee.
This is Labour’s radical project. It is based upon the sound advice of some of the best economic brains in the country. We will be testing our policies and economic instruments and we will be asking the Chancellor to give us access to the resources of the Office for Budget Responsibility to model our proposals. I am asking the same of the Governor of the Bank of England.
We are seeking the widest public engagement in our economic policy discussions. The dividing lines between us and the Government are not just on how to tackle the deficit and who pays for the crisis. They are more fundamental. It is about for whom the economy works and the role of the strategic state in this process. So today we will oppose this charter as an instrument for imposing austerity on our community unnecessarily. We are bringing to an end the petty game playing and moving on to a more serious debate of how the economy can work for everybody.
Stewart Hosie (Dundee East) (SNP)
Thank you, Mr Speaker. I shall be as concise as I can be, within reason.
The Chancellor was right to talk about the ups and downs in the economy, and he is right to be cognisant of the risks involved, but to set out a charter with a fixed target with a fixed timescale—namely, to run a fiscal surplus by 2019-20—is precisely to remove any flexibility that might be required in the meantime. No one could have been in any doubt about the Government’s intention when the charter for budget responsibility summer update—the most recent update—was published in July. It was to target a fiscal surplus by 2019-20 and continue to run a surplus thereafter.
The problem for us is what that means in the real world, for ordinary people in the real economy. We kind of know what it means because many have told us—not least the Institute for Fiscal Studies, an organisation often prayed in aid by the Chancellor. We have had our disagreements with the IFS, but for the purposes of tonight’s debate I have to say that it is doing a sterling job. It has published an updated analysis on the scale and distribution of the public sector spending cuts expected in the November spending review. Those cuts underpin the charter’s objectives and the Government’s austerity policies, but the IFS says that those policies put a disproportionate burden on the most disadvantaged families.
The IFS also talks about the higher minimum wage, but says that it will not be enough to compensate lower income households for the welfare cuts. That is a particularly important point, given how many of the welfare cuts are now being directed at tax credits. We all believed that tax credits were an essential tool to “make work pay”, but they are now to be removed to the extent that perhaps 3 million households will be worse off. Also, the scale of cuts to public services envisaged by this trajectory in the public finances will be substantial, with non-ring-fenced Whitehall Departments being asked to find real-terms cuts of between 25% and 40% over the next four years. In short, the austerity measures announced in July will disproportionately harm the poorest and most vulnerable households and non-ring-fenced Departments while of course giving tax breaks to the better off, thus increasing inequality.
Indeed, the IFS and others have repeatedly warned that the planned changes to the tax and benefit system are regressive. They have said that, given the array of benefit cuts, it is no surprise that the changes overall are regressive, taking much more from poorer households than richer ones. The September analysis of the IFS said that the poorest two income deciles will each lose on average about £1,000 a year as a result of the tax and benefit changes announced for implementation during this Parliament. Of course the richest two deciles will be largely unaffected.
According to research by the House of Commons Library—this is the most commonly accepted figure—we are now looking at some 3 million households losing somewhere in the order of £1,300 a year. Importantly, notwithstanding the rhetoric we sometimes hear from the Government Benches, it is the case that the increase in the minimum wage for people aged 25 and over—wrongly branded a living wage—is nowhere near enough to offset the cuts in tax credits.
If we go back to what the IFS said, the national living wage is not a substitute for targeted benefits and tax credits when it comes to helping poorer households and tackling poverty, which runs rather contrary to the assertions made in answers by the Prime Minister at Prime Minister’s questions today. The irony is that the largest part of the gains from the new minimum wage will not go to the poorest households. Indeed, 55% will go to households with higher than average median earnings. The Chancellor’s national living wage is no such thing. In the context of the charter it is important to remember that the real living wage reflects the minimum income necessary to achieve an acceptable standard of living and accounts for existing in-work support. As tax credits are cut, the current living wage, which is already higher than the proposed national minimum wage, will have to be increased further. On top of that, the UK Government are set to continue with their cuts to day-to-day public services. That is the implication of the fiscal charter. Those day-to-day cuts to public services in unprotected Departments will be around £24 billion—19% in real terms over the rest of this Parliament. Scotland, Wales and Northern Ireland will see something in the order of a 5.2% real terms cut to their budgets over the same time frame.
Let us put that in context for the people who may be watching this debate. This will be 10 years of discretionary consolidation—a decade of austerity for real people and the real economy. Austerity strangled the recovery early in the previous Parliament and it will increase inequality in this one. All of that is driven by the fiscal charter. [Interruption.] I think I will leave our friends in the Labour party to their own mourning over the shambles of the position changes over the past 24 hours.
Stewart Hosie
Before I move on to the fiscal charter, I will happily give way to the shadow Chancellor.
John McDonnell
Is it not true that the proposals that the Scottish National party have now brought forward are actually Labour’s proposals from six months ago?
Stewart Hosie
May I say gently to the hon. Gentleman, whom I genuinely like, that we voted against the fiscal charter on 13 January? Whether he liked it or not, it was his party that voted with the Tories. I am pleased that it has changed its position, but I think on balance it might be better to focus on this matter, where the Chancellor and his party are on rather weak ground, rather than on some internecine struggle.
Before I move on to the fiscal charter, I want briefly to ask the Chancellor about the consequences for Scotland. He knows that under the Scotland Act 2012 Scottish Ministers now have limited borrowing powers, so can he confirm that there is nothing in the charter that will limit the exercise of those statutory powers and that, irrespective of whether or not the UK is borrowing, Scottish Ministers will remain free to borrow up to the agreed limits?
What the Chancellor has done, of course, is insist that the economy not only breaks even, but runs a current account surplus that will hit £40 billion by 2019-20. He announced in July that, in order to do that, additional welfare cuts would total £33 billion in this Parliament. Cuts to essential capital expenditure would total another £5 billion in this Parliament. Essentially, he is cutting £40 billion more than is necessary to run a balanced current budget, and almost all of it will be paid for by punishing the poor and stripping the capital budget of another £5 billion.
Greece
John McDonnell Excerpts(10 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
I will tell my hon. Friend what I have to say about that: we are not going to sign up to some European corporation tax rate.
John McDonnell (Hayes and Harlington) (Lab)
Is it not ironic that the institutions that turned a blind eye to Greece’s economic situation when it joined the euro and then did nothing about profiteering through speculative lending to the Greeks throughout the period afterwards are the same organisations that are now withdrawing liquidity before the result of the referendum and therefore before the Greek people have made their decision? We are not members of the eurozone, but we are supporters of the International Monetary Fund. Therefore, was the Chancellor consulted about the timing of the withdrawal of liquidity in advance of the referendum and, if so, what view did he express?
Mr Osborne
The decision to which the hon. Gentleman refers was taken yesterday by the European Central Bank, and it was a decision not to expand the amount of liquidity assistance provided; it did not cancel the existing liquidity assistance. We are not in the eurozone, of course, so we are not part of the European Central Bank, but there have been close discussions and the European Central Bank is keeping the Bank of England directly informed about the decisions it is making.
European Union Referendum Bill
John McDonnell Excerpts(10 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Jenkin
I am grateful to my hon. Friend for drawing the Committee’s attention to that point. We should all be grateful for the fact that the Government have listened, but they are still requesting that we withdraw the amendment. To do so would be to concede the principle that purdah might not exist in statutory form. The Labour party’s amendment on purdah would not actually create purdah; it would require the Government to produce a list of things. What we want in the Bill is purdah. If the Government are not prepared to accept that principle now, on the Floor of the House, I fear that we will have to force the amendment to a vote, because it is a matter of principle.
John McDonnell (Hayes and Harlington) (Lab)
He is not in his usual place, but may I commend the hon. Member for Stone (Sir William Cash), whose health is fragile today but who has still turned up to fulfil his parliamentary duties? I apologise for the fact that I had to leave the debate for 20 minutes to chair a meeting.
I want to speak about amendments 46 and 47, but before I do so, I will say a few words about purdah. I remember the original legislation going through the House. It came about as a result of concerns expressed about what had happened prior to other elections and referendums. At the time, I thought that a number of lessons had been learned about the need to ensure that purdah existed, so that confidence could be expressed in the outcome of a referendum. For the life of me, I cannot understand why the Government are varying the procedure this time. They have not advanced any consistent argument in which I can have any confidence. When we are dealing with such a controversial matter, why stir up such controversy over such a relatively minor point? I do not understand the Government’s motives.
I am minded to support amendment 11. Although the Government have assured us that we will return to the matter on Report, I would like some certainty at this stage, which we might vary on Report. I am quite attracted to the idea of a fairness commission, as proposed in new clause 4. I was a bit anxious when I learned who might be a member of such a commission, but I agree that there needs to be a mechanism for dealing with any unfairness.
I will be brief, because we are running out of time. I have tabled two amendments concerning the Transatlantic Trade and Investment Partnership. Several hon. Members have campaigned doggedly for openness and transparency regarding the negotiations on that proposed partnership between the EU and the US. I accept that it would be out of order for me to go into any detail about that, but the principle is this. For two days in the Chamber, we have debated sovereignty and democratic rights in relation to Scotland and the EU. TTIP may result in Parliament handing over sovereignty and democratic decision making not only to the EU but to transnational corporations and an investor dispute panel of corporate lawyers, meeting in secret. Their decisions could affect regulations governing health and safety, food safety, labour rights and even our recent attempts to achieve some sort of regulation of our finance sector, but we have not had any debate that resulted in a democratic decision of the House. We have had Adjournment debate after Adjournment debate, but there has been no report from Government on the progress of the negotiations. Why? Because the negotiations are held in secret. There was a debate in the European Parliament only last week. When a report was eventually produced, 200 amendments were tabled, and the EU Commission has backed off and delayed the matter.
Kelvin Hopkins (Luton North) (Lab)
My hon. Friend is making an excellent speech and bringing TTIP into the argument. Does he agree that if the EU is seen as a vehicle for imposing TTIP on us, that would have a significant bearing on the outcome of the vote? Millions of trade unionists will be fearful of voting in favour of the EU because they may get TTIP with it.
John McDonnell
I thank my hon. Friend for bringing me back into order. That is exactly my point. If we are to have any chance to shape the Prime Minister’s negotiations with other European leaders, this is our opportunity. I want to place on the agenda what is happening with TTIP. I want the Prime Minister to address that in his discussions, and when he reports back to the House and the country about the way forward, I want him to detail the achievements he has made, to open up the transparency and openness of those negotiations.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend makes an interesting point. In the discussions in Europe in relation to some of the subjects that he has just mentioned, there is also the issue that the Government will negotiate about matters such as wages and terms and conditions, which affect people in this country. We have not had a lot of debate about that, either.
John McDonnell
This debate has allowed us to place some of those issues on the agenda. The major issue with TTIP is that the Prime Minister, until now, has not seen it as particularly relevant or important to give us a direct report on those negotiations, so those negotiations have remained secret. Therefore, the purpose of my amendment, which I will not press to a vote, is to identify it as an issue on which we need a report. That will help to ensure, to echo the point made by my hon. Friend the Member for Luton North (Kelvin Hopkins), that in the referendum, people can make a decision based on the consequences of further European membership for the concrete aspects of the treaty that will affect their lives. My hon. Friend the Member for Coventry South (Mr Cunningham) made exactly that point. This will affect labour rights, including working conditions, health and safety, and wage levels.
In addition, TTIP could affect the ability of a sovereign Government of this country to make a decision on policy. I give just one example that we have debated in the past. I want to ensure that there is no further privatisation and that some services that have been privatised are brought back into public ownership—for example, the railways. If TTIP goes through, a sovereign Government could be prevented from implementing those policies. I want the Prime Minister to go to Europe and say, with regard to TTIP, “On the issue of the referendum I want to ensure that we maintain the sovereign right of this Chamber to take a decision that its Government can then implement without undue interference from transnational corporations who can then head off to arbitration panels meeting in secret.”
James Cartlidge (South Suffolk) (Con)
I accept the hon. Gentleman’s point about sovereignty—many hon. Members are concerned about that—but surely one of the biggest challenges facing Europe at the moment is youth unemployment, which in Spain has only just gone below 50%, and which would be reduced if transatlantic trade volumes increased.
John McDonnell
I do not want to take up any further time, but that is an excellent point. That is why, in most of the assessments undertaken to date, we have looked at job losses rather than job increases.
Amendments 46 and 47 simply say that before we come to the decision on the European referendum the Government must publish a report on TTIP and its processes. The OBR should look at the economic aspects, but Government overall should consider all other aspects of policy. We need to receive information about the implications of this treaty and the European role in it, and whether, therefore, we would want to remain within the European Union as a result.
I do not wish to press the amendments, but I do think we need a serious debate about the agenda that the Prime Minister is to construct for the negotiations prior to the referendum.
Mr Grieve
It is a pleasure to participate briefly in this debate. I want to direct my remarks towards amendment 11, tabled by my hon. Friend the Member for Stone (Sir William Cash).
My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) and I probably agree on two main points: first, that neither of us has yet seen a convincing case made for pulling out of the EU; and secondly, our shared and gentle cynicism about the amount of froth and hyperbole that is generated in this Chamber. That said, I must politely disagree with his approach to what this Bill does with regard to section 125 of the Political Parties, Elections and Referendums Act 2000. I served on the Committee that considered the Bill that became that Act, and there was a lot of anxiety about the capacity for referendums to be manipulated. Doubtless there was quite a lot of hyperbole in the Committee as well. We argued for a 10-week period of purdah, as opposed to 28 days, because that was what the Electoral Commission was suggesting and what the Neill committee had proposed. Nevertheless, we ended up with 28 days, and I have seen nothing in the period since to make me think that the system does not work, broadly speaking, perfectly well. I am sure there will sometimes be complaints that the rules are being infringed and we ought to try to improve on that, but when all is said and done, the system seems to have worked remarkably well.
I confess that I was therefore rather surprised, when I looked at the Bill we have before us, to find that section 125 had been arbitrarily deleted without any real explanation being provided whatsoever. A justification for that deletion has not been made. I anticipate that my right hon. Friend the Minister will shortly tell us that the Government will go away and review the matter, and I will be very pleased to hear that. I have to say, however—I hope he will forgive me for doing so—that that is a reflection of the rather strange and cack-handed way in which, from time to time, the Government seem to behave when approaching legislation. Either they think that all my right hon. and hon. Friends who feel very exercised about this are going to miss this deletion, or it is an open invitation for discord that takes up quite a lot of the time of this House.
In my view, section 125 could properly have been left in, and the better course of action would have been for my right hon. Friends on the Front Bench to come up with an amendment of some kind if they really thought there was going to be a major problem during the purdah period in the run-up to the referendum. It is very important that when this referendum is over, the people who participated in it are able to say that it was fairly conducted, provided that reassurance does not come at great cost.