Finance (No. 3) Bill

Alec Shelbrooke Excerpts

Tuesday 26th April 2011 Commons Chamber

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I welcome the Finance Bill in so many ways, many of which are to do with creating growth and jobs. The former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), noted in his comments after the Budget that it will create growth, so it is interesting that some of the newer members of the shadow Cabinet on the one hand praise him for the things he said but on the other ignore his praise for a Budget that creates growth.

The Budget is helping to rebalance the economy, which is never an easy thing. We need to get more from private sector, as we have been over-reliant on the public sector. An important point that is often missed when discussing the private and public sectors and whether the Government should spend more money here or there is that the Government do not have any money. It is not our money; it is the public’s money. It is the money we take off people and businesses and from trading throughout the world. It is not our money for us to do with as we like. It is the public’s money, and we should ensure that we deal with it responsibly.

[Mel Stride (Central Devon) (Con)]

I am following my hon. Friend’s powerful argument closely. Will he add that, to the extent that we go into debt, it is actually our children’s and grandchildren’s money?

--- Later in debate ---

[Alec Shelbrooke]

Absolutely. My hon. Friend makes an important point. That leads me to the problem, which I had not intended to mention, of how indebted the nation was personally. Indeed, my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) made the point that a total private sector debt that is 450% of GDP is something to fear and shake at.

One reason I believe we did not see the increase in the public’s spending in certain areas despite the historically low interest rates—the Bank of England brought interest rates down and I think we understand why—was because people saw the opportunity to use the extra money they had in their pockets from the reduction in their mortgage payments to start paying off credit card debts, although many were on fixed-rate mortgages. That money was not poured back into the economy as was originally envisaged because people saw the writing on the wall and started to reduce their personal debt, and the Government should take a big lesson from that. We need to get debt down if we are to sustain future growth. We talk about interest of £50 billion a year on £1 trillion-worth of debt, but that does not mean anything to people because those numbers are huge. However, when we tell them that £120 million is being given to foreign nations every day because of the money we have borrowed, they start to realise the situation we face.

We all face such situations in our constituencies, where certain services are being cut—there is some politics involved, but that is not my point—and local councils need more money, which they cannot have because of the situation we are in. People realise that rather than going to foreign nations, that £120 million could be used to go some way towards addressing, for example, the closure of a leisure centre in my constituency that is losing £100,000 in a year.

That is why we needed to rebalance the economy. We became far too reliant on public debt and public money—public money that comes from private money—and we cannot keep magicking public money out of the air, because in the end it leads to hyperinflation. Indeed, the shadow Chief Secretary to the Treasury, the hon. Member for Wallasey (Ms Eagle), made some link, which I could not follow, between our policies and the rise of the far right in the 1930s, which in turn led to the second world war. Hyperinflation certainly played a big role in nationalism among Governments, however, and it came about precisely because of the economic circumstances that we were moving towards recently.

I take issue with the hon. Lady when she says that we are attacking ordinary hard-working people. That is, quite frankly, a disgraceful comment to make. There is not a person on either side of the House who deliberately wants to attack the ordinary hard-working person, so let us just put down a few facts. We have just brought in an income tax cut for 23 million people and taken almost 1 million people out of income tax altogether. Let us compare that with doubling income tax for the lowest paid in society.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

indicated dissent.

[Alec Shelbrooke]

But you cannot deny that your Government doubled income tax for the lowest paid in society and destroyed pensions—not you, Mr Deputy Speaker, but the previous Government. The previous Government destroyed pensions, leaving many people whom we would class as the most vulnerable in society to take their pensions with fear and trepidation. At least we have brought in the triple lock on pensions, meaning that people should never again get the 75p rise in their pension.

[Matthew Hancock (West Suffolk) (Con)]

In addition to the facts that my hon. Friend is bringing to bear in this debate, is it not shocking that the amount that the Government have borrowed only over the past year is equivalent to more than £2,000 for every family?

[Alec Shelbrooke]

Again, that illustrates my earlier point: when the figures are brought down to a smaller level, people can understand their full impact and the state of the nation’s finances. When I compare that to our personal finances, I say to people, “For every £1 we’ve spent, we’ve borrowed 25p. How long would your household finances survive with that sort of economics?” They simply would not. Indeed, the increase in private debt and in people’s credit card debts, with some even committing suicide because they used credit cards to pay off credit cards, is a lesson that Governments should learn.

Let us look at the growth and debt figures. Our debt is 10.4% of GDP, Spain’s is 9.2% and Portugal’s is 9.1%, but I do not see our interest rates on the gilt markets being as high as Portugal’s. My hon. Friend the Member for North East Somerset made an excellent point when he described the percentage rates being below RPI by 300 unit points, or 500 unit points below normal. That shows that a credible plan had to be put in place.

I find it distressing when we get into this argument with the Opposition, who say, “You don’t need to do all this.” I will give the House an analogy. For 13 years, the previous Government fed everybody chocolate and burgers, and every person in this country now weighs 35 stone. Along comes the doctor, in the form of this Government, who says, “I’m afraid if you don’t lose at least 20 stone you are going to die very young and it is going to be disastrous for you.”

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Your doctor said that?

[Alec Shelbrooke]

Yes, probably! I am in a rotund position to say this, and I certainly speak with a certain authority on these matters, but it is never easy to lose weight, as indeed I can testify. I am getting married in a month’s time—[Hon. Members: “Hear, hear!”] Thank you. I am desperately trying to lose weight, and it is not easy, but it is never easy for someone if the previous lot who fed them when they were trying to lose weight say, “Go on, have another bacon sandwich, it won’t do you any harm. Have another chocolate. We’ll pay for that on the credit card by the way, which we’ve nicked off you.” But seriously, if we do not get the economy under control, we will find that it leads to the situation that we see in Portugal.

What does that mean to the public? The Opposition have attacked the Government and said that they have not done anything to protect people, but what would higher interest rates do to people? We have had an interest rate of 0.5% for well over a year. We used to think that 3% or 4% was a low interest rate when the Bank of England maintained it at that level for a good period of the last decade. If the interest rate went back to 4% in the next six months, what effect would that have on the people of this country? Having spent a great deal of time with interest rates at an historically low rate, they have learned to live within those means. We do not have the option to go back to 4% interest rates—that would be a disaster for hard-working families. Ironically, it could increase the pound’s value against the dollar, reduce the oil price and reduce petrol prices—I suppose there is a quid pro quo to everything—but let us not get away from the fact that going back to what we then thought were historically low interest rates would be seen as an absolute disaster.

I get annoyed with the twisting of the Keynesian argument when people say that in times of recession Governments should pour money into an economy. That was only half the truth: the other half was to invest it in capital investment.

[Ben Gummer (Ipswich) (Con)]

My hon. Friend misses the other half of the other half, which was to accrue a surplus in a time of plenty.

[Alec Shelbrooke]

My hon. Friend pre-empts me, because I was going to say that the Swedes put aside 2% of gross domestic product during the good times and the Australians paid off their national debt in the last quarter, leaving them well placed to deal with these issues.

People often say that the new deal in America, with its Keynesian attitude, dug the American economy out of its hole. No, it did not—that was achieved by the second world war and the fact that America was able to lend money and sell armaments to the rest of the world while not having its mainland invaded. That put the Americans in the economic driving seat, from which they have never looked back.

I want to talk about fuel prices. The Opposition were going to add another 5p to the price of petrol. I know that it is difficult to prove a negative. If we say to people, “We’ve cut 6p off a litre of petrol,” they will say, “No, you haven’t—you only cut a penny,” because if they are not paying that 5p it is difficult to prove it to them. However, at least we have done something to help, and we have to pay for that somehow. We cannot just go on printing money and saying, “It doesn’t matter. It’s the Government’s money—we’ll supply it, don’t worry about it,” because that completely misses the point and gets us into these problems. Under the previous Government, fuel prices rocketed because of taxation; under this Government, fuel prices have gone up because of the oil price, over which we do not have influence. If we are to believe what is said, we may have reached peak oil. We could have a discussion for three hours about whether that is so, and people would say, “Well, more oil comes online because at the current high oil price it becomes more economical and there is plenty of oil out there—it isn’t going to run out.” However, the key to that argument is that it relates to the current oil price. Let us not forget that the oil price is controlled by the oil traders and speculators, and if they believe that we are at peak oil, that oil price is here to stay. We have tried to cushion the impact and help hard-working families, and it is pretty cheap for Labour Members to snipe at that.

Drawing on the comments by the shadow Chief Secretary to the Treasury, at the same time as the argument that we should try to reduce our carbon emissions, we hear that we should not build any nuclear stations or put any subsidies into moving forward with nuclear power. We have seen an absolutely terrible and disastrous event in Japan—something that shocked the world and daily covers the newspapers, and still gets talked about constantly, with Russia now making criticisms. As far as I am aware, that nuclear reactor has not killed anyone. It is funny how quickly people completely forget about the 20,000 people who died in the tsunami: the real human cost. But no, they focus on a nuclear power station hit by the third biggest release of energy the world has ever seen and a 30-foot tsunami doing 60 mph, and everybody says that that is why we should not have nuclear power. Nobody adds that more than 20,000 people have been killed by this natural disaster. Let us get some perspective. We know that nuclear power may not be the best way forward, but it is the best way forward at this moment. Until we develop the technology so that we can get to nuclear fusion and perhaps some better green technologies, these are our options and this is what we face. We cannot keep saying no to everything.

The Opposition always want it both ways. They want to cut the fuel price, but they do not want to tax oil companies. They want the banks to lend more, but they want to tax them so much that they would leave the country. They want to reduce carbon and to have secure energy, but they do not want to go nuclear. They are a joke. Their speeches vary from Member to Member. Some could be on this side of the House, some could be old Labour and some could be new Labour. I do not know what their policy is, but the blank sheet of paper is certainly something that they are all sticking to vigorously. We have seen very little in the local election campaign except for criticism of the Government.

[Jim McGovern (Dundee West) (Lab)]

The hon. Gentleman speaks about nuclear energy and fossil fuel energy. Does he have an opinion on the Scottish National party’s view on nuclear energy?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman must sit down. He has asked his question. Members should not just walk into the Chamber and intervene.

[Alec Shelbrooke]

I am not aware of the SNP’s policy. It may have escaped the notice of the hon. Gentleman, but I stand here as a Conservative Member of Parliament.

I have a final plea to the Minister. I know that there are problems with the European Union interfering in all aspects of alcohol and that we cannot do certain things, but can he look at putting higher taxation on non-draught beer? He may have done so already and it would be interesting to hear about that when he sums up. That does not involve saying that if beer is sold in a supermarket it will be taxed more, which brings competition law into play, but just that draught beer will not be taxed as much as other beers. The reason for raising tax on non-draught beer is that draught beer is served in pubs and publicans have a responsibility to ensure that people do not drink out of control, because they are licensed and controlled. I think that that idea would go some way towards countering the binge drinking problem. It may be that we cannot do that under European law, but I make the plea to the Minister. I will be interested to hear whether it is something that he has considered.

I support the Bill and believe that it is the only way we can secure growth. It is an intelligent and credible way forward that, frankly, is not just trying to get a good headline in The Guardian, which the shadow Chancellor seems keen on.