Autumn Statement

Alec Shelbrooke Excerpts

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

We have announced new entitlements on child care, such as the entitlement for two-year-olds from more disadvantaged families to nursery places, which did not exist under the previous Government. We are also working on new proposals on child care, and I hope in the first half of next year to bring those forward.

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

May I warmly welcome my right hon. Friend’s announcement on personal allowances and say how proud I am to be part of a Government who have halved the income tax on the lowest earners in our society? Which does he think represents the true one nation politician: those who in difficult times have halved the income tax on the lowest earners or those who during the boom times doubled it?

[Mr Osborne]

I suspect Benjamin Disraeli was considerably better at the Dispatch Box than the shadow Chancellor, too. My hon. Friend is absolutely right to say that we have taken decisions to help the working poor, through taking them out of income tax and through the personal allowance increase for 24 million people. Whether Conservative or Liberal Democrat in this Government, we can be absolutely proud of the decision we have taken on the personal allowance in these very difficult times.

Professional Standards in the Banking Industry

Alec Shelbrooke Excerpts

Thursday 5th July 2012 Commons Chamber

[Mr Osborne]

I will take one more intervention and then move on.

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

Would my right hon. Friend like to speculate on why the Opposition may want the review to be pushed back? He might like to comment on the fact that at that time, the shadow Chancellor was the City Minister, the shadow Chief Secretary to the Treasury worked at the Bank of England and the Leader of the Opposition was ducking mobile phones in No. 10.

[Mr Osborne]

Of course, part of the Opposition’s problem is that they cannot admit their mistakes in office.

Beer Duty Escalator

Alec Shelbrooke Excerpts

Monday 2nd July 2012 Commons Chamber

[Gavin Williamson]

My hon. Friend makes a valid point about the impact on jobs in the industry of the beer duty escalator, which I was coming on to. In my constituency of South Staffordshire, 1,286 people are employed in breweries and pubs—whether in the fantastic brewery of Enville, the brewery of Kinver, the Morton brewery in Essington, the Marston’s brewery in neighbouring Wolverhampton, or in the 86 pubs scattered across the constituency. Unfortunately, however, these pubs have declined in the last few years, and I am afraid that the beer duty escalator has had an impact in that respect.

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

Does my hon. Friend agree that a sensible way of helping pubs might be to lower the duty on draught beer but raise it on canned beer?

[Gavin Williamson]

My hon. Friend is not known as a visionary—I believe that his new wife often refers to him thus—for nothing. I hope that the Minister is noting his ideas eagerly, and will recommend them to the Treasury as a host of examples of radical new thinking that could improve and support our breweries and pubs.

--- Later in debate ---

[Miss Smith]

Again, a fine point is made. I am the first to support the notion of encouraging young people into work and work experience, but we have to be realistic. The Treasury and the Government face a number of proposals from different industries that say, “Ours is the industry that holds the key,” and I am sympathetic to those arguments. There is, of course, much evidence to go into for all such proposals, but it is important to proceed as a responsible Government, and to try to take into account the revenue that is required to fund vital public services and that, as I say, helps everybody.

[Alec Shelbrooke]

To expand on my intervention on my hon. Friend the Member for South Staffordshire (Gavin Williamson), perhaps we can look at a tax-neutral way of getting more people into pubs, which create so many jobs. As there is an onus on landlords to ensure that people drink sensibly on their premises, that, rather than minimum pricing for alcohol, may help to tackle alcohol abuse.

[Miss Smith]

On that note, let me come on to some of the factors affecting the state of the industry. It is important to be clear that duty is not the only thing affecting the state of the pub industry. We have all, I am sure, been in good pubs and terrible pubs, and the price of the beer is not the only factor involved. On the price of a beer, I point out that the pre-announced alcohol duty increases in question added only 3p to a pint of average-strength beer, including VAT. The total duty on a pint of beer is now 47p. I think that hon. Members will agree that, especially as alcohol consumption does, after all, carry its own costs and concerns, that addition in the Budget this year is not an overwhelming or unreasonable amount. It is something that we can consider in the context of the public finances and the challenges relating to them that have to be met.

As I say, alcohol duty is only one of a wide range of factors that determine the final price paid by the customer. Let us be clear about the position of the industry. The decline in the beer and pub industry that some talk of is influenced by a number of factors. Lifestyles are changing. People’s choices when they walk into pubs and other establishments are changing. People have more choice about whether they go to a pub or somewhere else. Removing the escalator, which is what has been asked for tonight, and the pre-announced duty increases would not solve those problems. There is very much a wider context.

My right hon. Friend the Member for Putney (Justine Greening)—my predecessor as Economic Secretary to the Treasury with responsibility for alcohol duty—and I have met a wide range of representatives from industry. As I said, I am happy to continue doing so. I recognise the important contribution that pubs and breweries make to local communities and to the wider economy. Many groups that have been prayed in aid tonight, such as the Campaign for Real Ale and the British Beer and Pub Association, have welcomed the work that we have done to date, such as the review of alcohol taxation in November 2010. We continue to keep all taxes under review.

Changes to the Budget

Alec Shelbrooke Excerpts

Monday 11th June 2012 Commons Chamber

[Mr Gauke]

In respect of all the measures we are discussing today, this Government have been listening to the arguments. As far as charities are concerned, once we had reached the conclusion that we would not proceed with a cap on relief for charitable giving, we felt it only fair to make the announcement as soon as we could—and we did so.

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

Before I feel tempted to congratulate the Minister on the changes he has made, I should perhaps declare a personal prejudice and a personal interest in the reduction in VAT on pasties.

Welcome as the Minister’s consultation with Back Benchers has been, may I ask him to continue to focus on the main aim of the Budget, which is to ensure that we do not go down the same road as the rest of Europe?

[Mr Gauke]

I am not sure that that particular policy announcement will necessarily do my hon. Friend any good, but he is absolutely right to ask the Government to continue to focus on the big issues that the country faces, and we will do so.

Public Appointees (Tax Arrangements)

Alec Shelbrooke Excerpts

Wednesday 23rd May 2012 Commons Chamber

[Danny Alexander]

I am grateful for the shadow Chief Secretary’s welcome for the steps that I announced today, though it was striking that in her response there was no reference at all to the fact that many of these arrangements date back to the time of the previous Government. About 40% of the cases identified began work under the previous Government.

If the hon. Lady wants to know more about why those arrangements came into place, she could ask her Front-Bench colleagues if they were here. She could ask the Leader of the Opposition, for example, as two cases date back to his time as Secretary of State for Energy and Climate Change. She could ask the shadow Home Secretary, as nine cases date back to her time as Secretary of State for Work and Pensions. She could ask the shadow Health Secretary, as 45 cases date back to his time as Secretary of State for Health. She could ask her colleague the shadow Chancellor, because at least 24 cases date back to his time as Secretary of State for Education. Yes, it is once again their mess and we are cleaning it up.

The hon. Lady asked a few questions. With reference to the chief executive of the Student Loans Company, as I said in answer to the urgent question from the right hon. Member for Newcastle upon Tyne East (Mr Brown) in February, the individual concerned went on the payroll straight away—that day. I announced that at the time of that statement, which I think the hon. Lady responded to. Of course, going on the payroll was the appropriate thing to do. As I made clear then, I had no knowledge of any tax benefit to an individual. As is the practice with cases where those involved are earning more than the Prime Minister’s salary, the approval is given within the Department. My role as Chief Secretary is to examine the salary level to make sure that it is consistent with the pay restraint that we are properly putting in place across the public sector.

This review looked at the salary level above £58,200 because that is the minimum salary level in the senior civil service, and it focused on senior public service appointments. These rules will be available for Departments to apply more generally, should they wish to do so. As I said in my statement, the review was not looking for evidence of tax avoidance because individual tax arrangements are a matter of taxpayer confidentiality, but all the results of the review from across Government have been passed to Her Majesty’s Revenue and Customs so that they can investigate if they choose to do so.

I referred in my statement to organisations that are not within the control of central Government, such as local authorities, the BBC and so on, but I am sure the many Labour councils around the country will have heard the shadow Chief Secretary’s remarks and will be bringing forward as a matter of urgency transparent publication of all the arrangements in their local authorities. I look forward very much to seeing that.

In relation to IR35, I should remind the House that in the spending review we provided an additional £900 million to Her Majesty’s Revenue and Customs specifically to focus on their work tackling tax evasion and tax avoidance. That will include resources to investigate cases caught out by the review or cases under IR35. The hon. Lady will know that the Office of Tax Simplification looked at the operation of IR35 last year and we are carrying forward some of its recommendations, but the proposal on which we are launching a consultation today—that controlling persons in organisations should, as a matter of course, be on the payroll—will strengthen the IR35 regime, which I hope Members on both sides of the House will welcome.

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

I listened carefully to my right hon. Friend’s statement, taking note of his comments regarding the BBC. A great number of my constituents pull their hair out at the huge salaries paid to people at the BBC, only to see them invest them in companies outside to try to avoid tax. Will the IR35 regime go some way towards trying to address the situation?

[Danny Alexander]

The arrangements at the BBC are a matter for the BBC. I know that my right hon. Friend the Secretary of State for Culture, Olympics, Media and Sport has drawn the review to the BBC’s attention, so it is aware of the focus that the Government are placing on the issue. IR35 potentially applies to any taxpayer in the relevant set of circumstances, whether that individual works for the BBC or for any other organisation.

Youth Unemployment and Bank Bonuses

Alec Shelbrooke Excerpts

Monday 23rd January 2012 Commons Chamber

[Danny Alexander]

The Government have taken on the issue of ensuring that the wealthiest pay a greater share, to ensure that there is fairness in our deficit reduction plans. For example, we have increased capital gains tax and put in place the new bank levy that I have mentioned. We have also maintained the 50p rate of income tax. We are making substantial changes to ensure that the wealthiest pay their fair share.

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

On the point just raised in an intervention, we hear much crowing from Opposition Members, but does my right hon. Friend think that they might persuade their former leader and Prime Minister, Tony Blair, to pay more than £315,000 in tax on a £12 million income?

[Danny Alexander]

My hon. Friend has made his point, but I do not think that it is for me to comment on the tax affairs of any individual taxpayer.

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

Thank you, Mr Deputy Speaker; I shall try to keep to four minutes.

I start by echoing what my hon. Friend the Member for Salisbury (John Glen) said. I do not believe that there is anybody in the House who does not want to try to do as much as possible to help the youth unemployed, and I genuinely mean that about all parts of the House. It is easy to score cheap political points, but deep down, I think that there is probably no one in this House, on either side, for whom that is not true. We feel this to be such an important issue for many of the reasons that have been outlined today.

I will come to why I think the motion is not helpful in solving the problem, but let me say that no matter how we approach the issue, everyone wants to do something about it. That is the nature of party politics: the Opposition have a different approach to those of us in government. When I look around at the unemployed young people in my constituency, I think about how to help them. Equally, I have met young people on apprenticeships—16-year-olds—and seen the difference that being able to go out has made to their lives. There are children whom I have known over many years who have got an apprenticeship and who now go out to work. One sees them visibly maturing before one’s eyes, becoming more confident in themselves and thinking about what it means to get a career and move along that path. However, the flip side of the coin is the children and young people who have not been able to get an apprenticeship or get those jobs. We think, “Well, for every high there must a low,” and we worry deeply about the effect that that will have on young people. But is it fair to offer them false hope by suggesting that taxing bankers’ bonuses could create jobs for them?

I worry about the message that we send out from this place, because there is nothing worse than false hope. We have seen so many examples of it in the history of politics. During elections, people vote for something that they believe will give them x, y or z, only to be bitterly disappointed later. It is also easy for the Opposition to make promises—I mean this not as a comment on the Labour party but as a general remark—when the reality of changing circumstances means that those promises cannot be fulfilled. Another good example is that, following the austerity Budget, we were hoping to reduce the structural deficit by the end of this Parliament, but because of the changes in the world economy since then, it does not look as though we will achieve that until 2016 or possibly 2017.

[David Simpson (Upper Bann) (DUP)]

Does the hon. Gentleman agree that a further way in which the coalition could help small to medium-sized businesses would be to reduce the heavy burden of bureaucracy that they have to deal with? A further area in which they could be helped is that of energy costs.

[Alec Shelbrooke]

I am grateful to the hon. Gentleman for that intervention. Bureaucracy has strangled small businesses over the past 13 years and made it almost impossible for the people running them to say, “Let’s go out and employ a few people. Let’s take a punt on it and see what happens. Let’s grow our business and see whether we can grow the economy.” If they tried to do that but did not succeed, the bureaucracy meant that it was very hard for them to scale back the business afterwards. I believe in protection for workers—I think we all do—but there has to be a reality check at some point. Just keeping people employed because of bureaucracy while watching a company go bust does not serve anybody.

That is why the Government have adopted a programme of tackling bureaucracy and some of the more nonsensical parts of the health and safety at work legislation. I have talked to the local businesses in my constituency and found that they have hired, on average, one full-time equivalent employee to deal with the increase in bureaucracy. That is not job creation; that is sapping the resources from a company that might be willing to go a step further.

I am exceptionally worried about creating false hope. My hon. Friend the Member for Rossendale and Darwen (Jake Berry) made it quite clear how many promises have been made about a bankers’ bonus tax, including the suggestion that such a tax would create 100,000 jobs. Bankers are already paying 50% tax on those bonuses. Do I personally agree that the head of RBS should be getting the size of bonus that he is getting when its share price has halved? No, I do not, but I did not draw up his agreement and I do not know what the small print says. I do not know why he feels entitled to take that bonus. Do I think it right that he should do so? No, I do not, but we are not legally in a position to do anything about it. We have to look at the position that we have got ourselves into, and try not to make those mistakes again.

I do not want to get back into the same old hoo-hahs that we have across the Chamber on these issues. We see the same old faces on the other side, and we all have a history, in these ding-dongs, of talking about whether the austerity measures are working and what would happen if we did not do what we are doing. Whenever we introduce a policy to try to rebalance the economy, there will be a negative effect. There is a recession throughout Europe and the world, and growth is practically flat across the whole of the European Union. We have to do something about that. This Government are trying to do something. They are trying to invest in apprenticeships, for example. Their apprenticeship scheme has the advantage over the jobs scheme introduced by the previous Government in that it involves the private sector rather than the public sector. I hope that we can bring hope to the young unemployed in this country, without a false dawn.

Northern Rock

Alec Shelbrooke Excerpts

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

Indeed. Councillor Nick Forbes, whom I quoted earlier, also said:

“The decision by Virgin Money to make Newcastle their home sends a message of confidence in our city and the wider North East.”

Virgin Money backed that up by saying that it would not make any compulsory redundancies beyond those already announced by management for the next three years, and I think that that provides a good level of assurance for Northern Rock’s staff.

When I visited Northern Rock on Thursday and talked to some of its staff, they were clearly pleased that the uncertainty that had hung over the business for the last four years and acted as a brake on its development had been removed. They look forward to its continued growth under Virgin Money.

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

The deal that the Minister has announced represents the best value that can be obtained for the taxpayer at this time, and for as long as financial crises continue to abound. We have secured the jobs of people in the north-east, hence the good cheer that is felt there. Does my right hon. Friend agree that the good news is here, and that the reason people may look po-faced is that, once again, we are clearing up a hell of a mess?

[Mr Hoban]

My hon. Friend is absolutely right. Since we came to office, we have reformed the failed tripartite arrangements that were introduced by the Labour party. We are changing the nature of banking in this country by establishing the Independent Commission on Banking, whose proposals on ring-fencing will mean higher levels of capital and better levels of liquidity for businesses. We are tackling the mess that Labour left behind, and the disposal of Northern Rock is part of that story.

The Economy

Alec Shelbrooke Excerpts

Wednesday 22nd June 2011 Commons Chamber

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

Does my right hon. Friend agree that it says everything that we need to know about the Opposition’s economic policy when the shadow Chancellor’s immediate reaction to the IMF report was, “They don’t know what they’re talking about”?

[Mr Osborne]

It went beyond that—my hon. Friend makes a good point—not only did the shadow Chancellor attack the IMF, but he also attacked in the speech that I have just mentioned the IMF’s acting managing director. So he laid into the Governor of the Bank of England a couple of months ago, and he is now laying into the IMF’s acting managing director. Anyone who disagrees with the shadow Chancellor, which means most of the world, has become his political opponent.

--- Later in debate ---

[Mr Osborne]

This is a debate about the economy. We all enjoyed reading those papers in The Daily Telegraph.

To get the better economy that we all want to see requires the three things that this Government have provided—

[Alec Shelbrooke]

Is it not also telling that after the Opposition have spent a year banging on about the American model and what the Americans were doing, we heard nothing today about the fact that President Obama had to introduce austerity measures because his massive input of billions into the economy did nothing except raise unemployment and increase the deficit?

[Mr Osborne]

The interesting thing is that in the United States the debate in the Congress has turned to discussions about the US budget deficit. The proposal from President Obama in his speech at George Washington university bears some striking similarities to the British Government’s plan, and is similar in pace, scale and composition between tax and spending measures. It shows that this is the discussion that the world is having, but it is not a discussion of which the shadow Chancellor is a part.

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[Stephen Williams]

I have taken two interventions, so I will take no more until near the end, perhaps.

This Government do have a growth strategy: we want to rebalance growth, including rebalancing it geographically. We have just heard about the plight of the north-east. Perhaps it was a failure of the last Labour Government not to rebalance the economy sufficiently, away from the south-east of England and towards other regions and nations of the United Kingdom. Perhaps the hon. Member for Hartlepool (Mr Wright) ought to have a stiff word with some of his colleagues. After 13 years, the economies of some of our regions were still very fragile and unable to withstand external shocks. We also wish to rebalance the different sectors of the economy, away from over-dependence on the City of London, important as it is, and the resources that it generates towards more sustainable parts of the economy, in particular growth from digital media. The Government have announced the establishment of a network of enterprise zones around the country. My local enterprise partnership—the West of England Local Enterprise Partnership—has just announced that it will be based around Temple Meads station in my constituency, where we want to build the country’s leading media hub and business growth area, with a particular focus on digital media.

We also want future growth to be sustainable in a green way. This country has a huge economic opportunity to grow a low-carbon economy. In the Energy Bill, which is just completing its passage through the House, we have something quite revolutionary: the green deal, which gives every household in the country a fantastic opportunity to retrofit their houses to reduce energy bills and help us cope with meeting the demanding climate change targets that we have set, on which there is cross-party consensus and agreement. There is also a fantastic opportunity for British business, and for people to be trained in the skills needed to retrofit our housing stock. On a rather larger scale, the Government have also announced—the Chancellor confirmed this in the Budget—the creation of the green investment bank, in order to provide finance for schemes that might otherwise find it difficult to secure funds in the market. As the country’s green capital, the city of Bristol has a good case for being made the future home of the green investment bank.

A further way in which the coalition Government are going to make a fundamental difference in turning the economy around and reducing unemployment is by making work pay. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) mentioned that the coalition agreement would deliver the Liberal Democrat policy of reducing income tax and taking out of income tax completely those people who are earning up to £10,000 a year. That will be achieved before the end of this Parliament. Our programme of welfare reform and the introduction of universal credit was mentioned earlier by the Chancellor in his confrontation with the shadow Chancellor. The Opposition rather recklessly voted against the entire Welfare Reform Bill.

Reform is also needed in the banks. The Opposition motion calls for a reintroduction of the tax on bankers’ bonuses. It is worth pointing out, however, that the people receiving large bonuses will now pay 50% income tax, rather than 40%, that national insurance has doubled for those on the higher rate of tax, and that employers will pay more national insurance on those bonuses as well. The taxation on those bonuses will certainly increase.

[Alec Shelbrooke]

If a banker pays 50% income tax on his bonus, does not that represent a greater tax take than if the money were left in the bank, where it would be liable to only 28% corporation tax?

[Stephen Williams]

My hon. Friend makes a good point.

What should we do with RBS and the Lloyd’s banking group, which were bailed out in 2008 adding £67 billion to our national debt? Earlier this year, I wrote a pamphlet on what the Government should do with their holdings in the banks. It was called “Getting your share of the banks: giving the banks back to the people” and it was published by the think-tank CentreForum in March. My proposal was to give those shares to every citizen in our country and, when they sold them in the future, the Government would get back the cost of their investment in 2008 while the citizens would keep the result of any growth. That would mean that we would reduce our national debt by £67 billion over time, and that every citizen in the country—each of us who has felt the pain of bailing out the banks—would see some benefit from this upside to the situation. I am pleased that my right hon. Friend the Deputy Prime Minister has been endorsing that proposal today on his trade mission in Latin America.

What have we heard from the official Opposition today? What is their grand idea for turning round the country’s finances and getting our economy back on track? They have opposed all the cuts that we have debated in the Chamber. I have never heard a Labour Member of Parliament stand up and say that they are in favour of any of the measures in our Bills, whether in this Chamber or in the Bill Committees on which we serve. Today, the Opposition have come up with a completely reckless proposal for an unfunded cut in VAT. It has no economic justification and there is no evidence that it would make any difference to the economy. Let us contrast that with the record of the coalition Government. We are determined to have a fair tax burden, and we have plans for sustainable growth and deficit reduction. Both plans have international credibility. That is what this country needs right now: credibility at home and abroad, rather than the reckless opportunism that we have seen from the Opposition today.

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[Alec Shelbrooke]

To expand my hon. Friend’s point about wasted money, does she agree that it was an absolute disgrace to spend £5 million a year of taxpayers’ money on sponsoring British superbikes for 10 years?

[Margot James]

My hon. Friend makes an extremely good point and I thank him for his intervention.

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[Priti Patel]

I will take one intervention, from my hon. Friend there.

[Alec Shelbrooke]

I am most grateful to my hon. Friend for giving way. Labour Members like to harp on about the ’80s, but if we are going to go that far back in history, let us go back to the ’70s, when again a Labour Government completely bankrupted the country. They have learned nothing.

[Priti Patel]

I thank my hon. Friend for that comment. The 1970s was also the era of strikes, and as we all know, strikes cost jobs, they do not create them. Before last year’s Budget, we had the deepest recession, record rates of job losses, and national debt increasing to a peacetime record—

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

I want to start by putting an end to the myth that the Government have no mandate for the action they have taken. [Interruption.] Already I can hear somebody saying from a sedentary position that there is no mandate. Let us look at the figures. I do not think anybody in the House would deny how unpopular the Conservative Government of 1997 were. That led to the Labour landslide. I therefore wonder how the Labour party managed to take an even lower share of the vote in 2010 than the Conservative party took in 1997.

We went into the last general election saying that we would get the budget and the deficit under control, and that we would introduce welfare reform. Everybody heard that message, not least because the Labour party kept delivering leaflets to everybody’s houses saying that we were going to do those things.

[Sheila Gilmore]

I do not dispute that the Conservative party went into the election with those things in its manifesto. The point is that the Conservative party did not secure a majority and its coalition partner went to the electorate with a completely different prospectus.

[Alec Shelbrooke]

I am not sure that I quite understand the hon. Lady’s point.

[John Hemming]

The hon. Lady claims that the Liberal Democrats fought the election on the basis of not dealing with the deficit. We fought it on dealing with the deficit and that is what we are doing.

[Alec Shelbrooke]

Absolutely. It is a salutary lesson in the history of British politics that it has taken two parties to come together to deal with the mess that that lot left behind.

Labour Members say that there is no mandate, but nobody in this country was in any doubt about what the Conservative party would do in government, and they voted for us. [Interruption.] I have already given way twice and I will not give way again because I have only six minutes. The public voted for the Conservative party in big numbers. The only reason that it did not end up with a majority was the in-built advantage to the Labour party. Even with that, Labour could not win the election.

Labour Members have learned nothing from their election defeat a year ago. As far as they are concerned, there was nothing wrong with the economy and they knew how to sort things out. They think that the only reason they are in opposition is because people accidentally voted Conservative, and that we are in government only because of the Liberal Democrats. Well, I point out that we have a majority of 83 in this House. As I said, two of the main parties have come together to deal with the mess left by the Labour party. When I was campaigning up and down the country, that is what the British public wanted. They wanted a coalition Government and they got a coalition Government because this mess needed to be sorted out. I think that we should be proud of our record over the past year: job creation in the private sector—up; export growth—up; manufacturing growth—up; the largest fall in unemployment for more than 10 years; 50,000 apprenticeships; 100,000 work experience places; and millions invested.

What is Labour’s plan? From what we can work out, it is to cut taxes and carry on borrowing. What would be the consequences of that? If we had carried on borrowing money at the rate at which it was being borrowed, the people lending us the money would have thought, “Will they be able to pay it back?” They would have said, “Here, have some money, but I’m charging a higher interest rate.” This country faced the danger of unfettered borrowing, which would have meant higher interest rates in the gilt markets and everywhere else. That would have worked through to people’s mortgages. We have spent the last 12 years on interest rates of about 3% to 4%, which were seen as historically low. If the interest rate went back to 3% or 4% tomorrow, it would cause real damage to the people of this country, who for almost 18 months have been on an interest rate of 0.5%. A responsible Government must ensure that frivolous spending and unfettered borrowing do not end up with the people about whom the hon. Member for Blaydon (Mr Anderson) just spoke suffering the consequences of not being able to borrow, not being able to afford their mortgages and not being able to live within their means.

It was interesting that the shadow Chancellor had clearly spent a long time looking into details about Government Back Benchers whom he though might intervene on him, instead of looking into a credible policy. He picked out statements from Government Members to paint the picture that we were all demanding higher spending. Of course, the reason why he thinks that is that the Opposition have no concept of governing for the long term. They do not understand that when my hon. Friend the Member for Dover (Charlie Elphicke) talks about the policies that he wants to have in his constituency, he is talking about the long term. I am sure my hon. Friend will expand on that when he speaks.

I am sure that the shadow Chancellor, having a neighbouring constituency to mine, had a few choice phrases ready for me. I have made no secret of the fact that I would like a better rail infrastructure in my city. However, I have always made it quite clear that my aspirations are for the long term and do not have to be achieved tomorrow. We do not have to borrow trillions of pounds to put them in place now, but such infrastructure could be built up in the next decade or even two.

[John Hemming]

Does the hon. Gentleman agree that by reducing the rate of interest and the amount of interest paid, in the long term we will be able to spend more on infrastructure than the Opposition would?

[Alec Shelbrooke]

Absolutely, and I am very grateful to my hon. Friend for making that point. I have said in the House before that when we tell people that we have a deficit of £1 trillion that will go up to £1.4 trillion, they look at us blankly and think, “What’s a trillion?” It is such a huge number. However, when we tell them that every day of every year we are giving £120 million to foreign countries—that is the money that we borrow—they recognise the mess we are in. They recognise that we cannot give schools the improvement that they need, because of the absolute shambles of the private finance initiative projects in Building Schools for the Future. Money was wasted once again on bureaucracy.

Labour Members have banged on about regional development agencies all afternoon, but they were a great way to spend bureaucratic money. The RDAs very proudly said that they had created x number of jobs, but they did not create those jobs, the private sector did. The jobs that they created were paid for out of the public purse. Where did that money come from? From the wealth creators in this country. Everybody understands that if I want to spend £1.25 and I have only £1 in my pocket, I cannot afford to do so. We understood that idea, and the country understood it, which is why Labour Members sit on the Opposition Benches and we sit on the Government Benches.

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[Ms Eagle]

No.

The Chancellor’s choice meant breaking promises that he made before the general election by scrapping the future jobs fund, cutting tax credits for people on incomes under £50,000 and increasing VAT to 20%. For the hapless Liberal Democrats, his choice meant that they had to do the exact opposite of what they had promised in their election manifesto. Before the election, they promised a £3.1 billion stimulus package; just after it, they went along with a £6.2 billion cut. They campaigned for an end to tuition fees and then trebled them. They warned about a VAT bombshell and then voted for it.

[Alec Shelbrooke]

Will the hon. Lady give way?

[Ms Eagle]

No.

How strange, then, that the Liberal Democrat election slogan was, “No more broken promises”.

Eurozone (Contingency Plans)

Alec Shelbrooke Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Hoban]

I am not going to comment on whether the eurozone will remain intact. Clearly, this crisis demonstrates the huge strain that the eurozone is under. That is why it was right for us to stay out of the eurozone.

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

Does the Minister agree that one of Greece’s biggest problems is that its people, backed up by the unions, have not accepted the austerity measures going through? Is that not a timely warning to unions in this country, which are complaining about how we are trying to get the deficit under control, of the consequences unless proper and sensible action is taken?

[Mr Hoban]

My hon. Friend has made an important point. It is clear that difficult decisions must be made if our economy is to be put back on the right track, and the Government are demonstrating their commitment to making them. Interest rates are lower than they would have been if we had not made those tough decisions, which is good for families and good for businesses.

Section 5 of the European Communities (Amendment) Act 1993

Alec Shelbrooke Excerpts

Wednesday 27th April 2011 Commons Chamber

[Chris Leslie]

I would regard the hon. Gentleman’s approach as credible, if it was not for the fact that in precisely the same debate a year ago, he would have argued precisely the opposite points. The Liberal Democrat party has made a volte-face away from supporting the economy and pursuing a pro-growth strategy, and has absolutely no credibility when talking about strategies for growth. They used to be a pro-growth party; they are now an anti-growth party that has joined and been assimilated into the Conservative party.

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

I wonder whether I can help the hon. Gentleman. Will he outline for the House whether his speech is based on Keynesian or Brownite economics?

[Chris Leslie]

It is actually based on common-sense economics. I regret that the Government cannot see that. Unfortunately, I think that they will rue the day that they neglected growth in the economy. As we know, there is anxiety in the Treasury at the flat-lining, almost comatose nature of the economy. We hope sincerely that it picks up through the next quarter, but many people predict choppy times in the second quarter of this calendar year. I refer the hon. Gentleman to the paradox that I spoke about: pursuing the austerity approach too hard and too fast undermines growth and pulls from under the economy some of the key drivers for future prosperity that support it. Cutting too far and too fast is bad not just for the economy, but for deficit reduction strategies.

The Government’s spending plans are already coming unstuck. I will wind up with this point because I know that a lot of hon. Members want to speak. On tuition fees, which we debated earlier, we know that the cuts to higher education budgets will mean that universities will charge the highest fees, which will result in the ballooning of student loan pressures and the creation of a funding shortfall. Where will that money come from? We know that the Government have U-turned on school sports and that, when it came to the crunch, even the Financial Secretary had to U-turn on the financial inclusion fund. We are glad that he did so, but it changed the spending trajectory. On forests and on any number of other spending plans, when the rubber has hit the road, the Government have been unable to fulfil many of the so-called spending cuts that they promised in their much-vaunted June Budget.

--- Later in debate ---

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

I start by drawing on the last intervention by my hon. Friend the Member for Stone (Mr Cash). He made an important point, and it was the one that I made last night. Government money is not our money, it is the public’s money generated by the private sector. We cannot simply say that we should carry on pouring in money, because it is not our money. We must think about where it comes from.

The hon. Member for Nottingham East (Chris Leslie) said that if certain actions had not been taken, an extra £6 billion would have come in to the Exchequer, but in our emergency Budget we cut the deficit by £6 billion. If we had not done that, there would not have been any extra money, would there? We would have borrowed an extra £6 billion instead. We would have been borrowing money, churning it out, collecting it back in and saying, “What great money generation”. We would just have been turning money around. We can get money coming in to the Exchequer only through growth, and that can occur only if the private sector is in a credible position so that it can move forward.

The Opposition’s comments are interesting, because there is a paradox in that they paint a gloomy picture but meet it with glee and struggle to keep a straight face. Of course, we know that if we had followed the previous Chancellor’s spending plans, we would have been cutting £7 for every £8 that is being cut now. The margins are small. Let us not get into a discussion about the idea that if the Government’s actions had not been taken, a further £6 billion would have come in. We cut the deficit by that amount in the emergency Budget, so there would not have been any extra money. The money that we borrowed would just have been churned out and collected back in, which would have done nothing to stimulate the growth of the economy. I agree with the hon. Member for Nottingham East that the growth figures are small, but they are growth figures. He says that they may be flat, but we know that things can be choppy. The point is that we are growing and moving forward.

Let us come back to tonight’s debate and the history of the Council of the European Union. Back in July 2008, the Council of Ministers decided that the UK had an excessive deficit and asked it to correct that by the financial year 2009-10 at the latest. In April 2009, the Council concluded that the UK had failed to correct its excessive deficit within the time set. In December that year, it adopted a recommendation that the UK end its continuing excessive deficit by the financial year 2014-15, by bringing it below 3% of gross domestic product. In 2009-10 it was at 11.4% of GDP, but the convergence document now predicts it to be at 2.6% of GDP.

That is in stark contrast to the Opposition argument that it is unnecessary to make cuts and that we should continue as before. I shall tell the House later how I actually feel about the EU’s interference in such matters, but people outside this country were saying, “You are spending too much; you need to make those changes,” and we are now doing so. Whether we should have to do that for the EU is a slightly different debate, and my hon. Friend the Member for Bury North (Mr Nuttall) was right to say that we are using parliamentary time and publishing documents containing information that the EU could quite easily find out for itself. That adds to the already bloated EU system, and perhaps indicates why it asks us for a 5% increase in its budget, which is an absolute disgrace at times of austerity.

The hon. Member for Glasgow South West (Mr Davidson) spoke of the imbalance of trade with the German economy. The German manufacturing economy is a powerhouse of Europe, and as my hon. Friend the Member for Stone outlined, we have a very low manufacturing base. The picture that that paints is that economic integration in the EU is not possible with sovereign countries generating high GDP growth and trade imbalances. For integration, countries must move to one common taxation policy. That, if anything, is proof that the euro is leading to a common taxation policy and a loss of fiscal sovereignty.

[Mr Cash]

As my hon. Friend may have noted, I raised that question with the Prime Minister earlier today in relation to voting against the provisions for a corporate tax base for the whole of Europe. That decision will in fact be made unanimously, and we can get rid of it with our veto. I did not get an answer from the Prime Minister, and I hope my hon. Friend continues to urge against having a tax system imposed upon us by the rest of Europe.

[Alec Shelbrooke]

My right hon. Friend the Prime Minister has a very pragmatic view on such things, and I am sure he took great note of my hon. Friend’s question. I am also sure that the Prime Minister will listen to the mood of the country and ensure that the EU does not move towards such a common economic base.

This is crux of the matter: we are publishing documents tonight to pass back to the EU that show that the UK is in compliance with the rules. Those rules mean that we could qualify for the euro. People have often asked, “With the pound so close to parity with the euro, why don’t we join?” but we will not join because we will not fudge the figures just to get into the euro—not that we want to join—[Interruption.] Please! I would not want anyone to leave the Chamber thinking that I am pro-euro, because I certainly am not—perish the thought.

To qualify for the euro, countries must have a budget deficit of 40% of GDP and they must borrow no more than 3% of GDP annually. We know that the Italians fudged that. That is one reason why the euro is in the mess that it is in, and why it is nowhere near competing with the US dollar, or indeed the Chinese currency, in the way that people thought it would. The fact is that if the EU wants to have a strong economic case, it must go for full monetary union, which is totally unacceptable for sovereign countries.

As we know from the treaty of Rome, the original European partnership of six nations was set up to try to prevent further wars in Europe, to bring peace to the European nations, and to get everybody trading together as one bloc. That was the vision. However, I do not think that the rise of far-right parties across Europe and the increasing moves down the federalist route are coincidental. People feel that they have lost their sovereignty and identity. If the EU moves forward to a full, integrated economic policy, that will be the end of the EU, because people around Europe will vote in extremist parties to try to reclaim their national identity. I say that as a warning, with no joy. I am probably one of the more dove-ish Government Members when it comes to violence or military matters, but I fear where those moves could lead.

The Opposition’s main argument this evening has been: “You’ve got your economic policy completely wrong. You could have had more money coming to the Exchequer.” However, they have forgotten that the money coming to the Exchequer was the money they printed, pumped out and brought back in before saying, “Oh, look at all the money we’ve generated!” I do not think so. This is about creating growth, and in the document before us, an independent body has said that the Government’s policy is correct and in line with what we want to achieve, which is what the previous Government singly failed to achieve despite the warnings in December 2009.

--- Later in debate ---

[Kelvin Hopkins]

The role of the state is much larger than it was even in Keynes’s day; therefore, the state has to generate more demand. The state has a bigger role in the economy—I think that is a good thing—but we cannot withdraw from the idea of managing economies in the way that we did after the second world war. Between 1945 and the 1970s, we had a world that actually worked. We had rising living standards and the highest rate of growth in our history. We had full employment, we developed a welfare state and the national health service, and we had free tuition at universities. Since then, the neo-liberals and the monetarists have got hold of economic policy again and we have gone back to something like the early 1930s, albeit with higher living standards, at the moment, but that could so easily be destroyed if the current mistakes continue to be made.

[Alec Shelbrooke]

I really do not understand the hon. Gentleman’s rose-tinted view of the 1960s and 1970s. In the 1960s we had to devalue, and by the 1970s inflation and wage inflation were huge, to the point where teachers were given a 25% pay rise in the mid-1970s that was worthless the following year. As for the Keynesian arguments, the new deal in 1930s America failed until the second world war came along and the country could manufacture and lend money to support the war effort. That is what created the recovery. Surely the hon. Gentleman is not suggesting that we need another war to sort out the economy.

[Kelvin Hopkins]

I would advise the hon. Gentleman to read an excellent book by J. K. Galbraith called “The World Economy Since the Wars”. He said that wartime investment in American manufacturing transformed the economy, which emerged as the strongest economy in the world.

We could go into those matters at great length; the point is that it is nonsense to try to deflate our way to growth, as has been said by a number of leading economists. Okay, so they happen to be Keynesians rather than monetarists, but do we want to go back to a world of high unemployment and greater inequality, or do we want to go forward to a world of full employment and greater equality? That is the choice. The Government’s proposed strategy, as set out in the document under discussion, will have a devastating effect on our economy and—they may not be prepared for this—will make them detested and massively unpopular. I remind them that, after the second world war, Labour took office with a massive majority as a result of the working people of Britain rejecting what had happened in the 1930s: the recession and the war. We are in danger of going in that direction again, and the end result would be the election of a Labour Government who would have to pick up the pieces of an economy that had been destroyed.

Even PricewaterhouseCoopers—not a noted left-wing organisation—has suggested that, for every job lost in the public sector, one would also be lost in the private sector, as opposed to the private sector picking up where the public sector left off. Much of the demand in the private sector comes from public sector spending and public investment. We have already seen construction levels falling, with the cancellation of many school building programmes. That will create unemployment in the private sector as well as the public sector, and it is conceivable that unemployment could rise by 1 million. If we had 1 million unemployed, in addition to the 2.5 million that we already have, we would be in very serious economic waters. It would be a terrible time, not just for young people but for the whole economy. We would see falling living standards, mass unemployment and a mass political reaction to what was happening.

I had a different view on this matter from those on my own Front Bench, particularly before the election, when I and a number of Labour comrades rejected the idea of cuts altogether. We believe that dealing with the deficit has to be done by generating growth. After the banking crisis, the Labour Government did exactly the right thing. They pushed demand into the economy by printing money, reducing interest rates almost to zero and recapitalising the banks, all of which had to be done. In fact, the Conservative Government, in their first six months, were living on the growth generated by Labour’s policies—[Interruption.] That is the reality. Now, Conservative policies are kicking in and we are starting to see the economy go down.

I could go on about this at greater length, but others want to speak and this is a short debate. I am happy to come back and talk about these issues time and again if hon. Members wish me to. Indeed, I am happy to discuss them in private as well as in public. I am convinced that the Government have got this wrong, and that Keynesian economists such as Krugman and Stiglitz have got it right. We need to generate growth through public spending and public investment; we do not need to cut.

--- Later in debate ---

[Mr David Nuttall (Bury North) (Con)]

I will bear that in mind, Mr Deputy Speaker.

It is always a great pleasure to follow my hon. Friend the Member for Stone (Mr Cash), who speaks with such knowledge and who gives the House the benefit of his long experience of these matters. Let me say at the outset that I am 100% supportive of the economic policies that the Treasury and its Ministers have pursued since the general election. It cannot be the case that the way out of the financial mess created by the last Government, who were borrowing, borrowing, borrowing, is to borrow even more, and to continue to borrow at those levels.

[Alec Shelbrooke]

Will my hon. Friend give way?

[Mr Nuttall]

Briefly.

[Alec Shelbrooke]

I am grateful to my hon. Friend, and I will be brief. Is his view not confirmed by what the hon. Member for Nottingham East (Chris Leslie) said about inflation creeping into the system, and by the suggestion of the hon. Member for Luton North (Kelvin Hopkins) that the way out of the problem was to print more money?

[Mr Nuttall]

My hon. Friend is absolutely right. As everyone knows, printing money invariably leads to inflation. I am sure that that would be the case if we continued to print money today.

I want to address the issue of our dealings with Europe, but first let us consider our net borrowing figures. According to forecasts from the House of Commons Library produced just a few days ago—on 21 April—even if we take into account all the measures that the Treasury are taking, we will borrow £122 billion in the current financial year and £101 billion next year. We are not paying back our debts; we are simply reducing the scale of the debt.

--- Later in debate ---

[Jacob Rees-Mogg]

That is a good point.

I had not intended to speak until we heard so eloquently from the shadow Minister about the virtues of reckless spending—it is tremendously important to stop that view of the world. We have to get back to some of the debate we had yesterday, which is why it is worth supporting the Government’s financial outlook position and policy. The reason for that is that the situation will be increasingly difficult. The economy was left to us in a terrible mess, in terms of not only the public finances, but private sector debt. The idea that this will easily be recovered by getting people to borrow again or banks to lend again is simply wrong.

The hon. Member for Luton North (Kelvin Hopkins), who is an hon. Friend on European matters but an hon. Gentleman on other matters, talked about getting more people to spend and taking money off the rich so that it can be spent by poorer people, who have a greater propensity to spend. That might be fine when the banks have money to lend, but we need to get the loans-to-deposit ratio for the banks as a whole in the United Kingdom below 100%, so that the banks have the liquidity to lend. Until we are able to do that, the idea that we can have debt-fuelled re-growth is simply mistaken.

On Government debt, I wish to return to a point made yesterday by the shadow Chief Secretary on Ricardian equivalence. She does not believe in Ricardian equivalence and I do not think that many people do in exactly the terms that Ricardo spelt it out. None the less, his underlying point was completely sound: the debt of Governments will ultimately have to be paid back through tax income raised. Intelligent electors realise that and know that if the economy is growing on the basis of Government debt, that will eventually be a charge to them. It might not affect their behaviour over one or two months, but over one, two or five years it certainly does. Economies that run indefinitely on debt find that their growth levels are neutered, and anybody who doubts that should look at the Japanese economy.

If we look at what has been going on in Japan since 1990, we see that the Japanese have increased their public sector debt from next to nothing to 200% of their GDP and that in that period they have had absolutely no growth—their economy has been stagnant. Their tax revenues were lower in 2010 than in 1985, because the level of growth in the Japanese economy has been so low.

[Alec Shelbrooke]

Would my hon. Friend like to bring things up to date and comment on the US economy and the fact that the Americans decided to pour a lot of money in, found that that did not work and are now considering very strong austerity measures?

[Jacob Rees-Mogg]

It is relevant to look at the United States economy and at the gold price, which is up at $1,500 and not because more people are getting married and want wedding rings—although I congratulate my hon. Friend on his forthcoming nuptials and I am sure he is buying a large piece of gold for his future wife. The gold price has been so strong because the financial markets have lost confidence in the US dollar and because the American political forces—the President and Congress—have not been willing to tackle the deficit in the way that Her Majesty’s Government have done. The gold price in sterling terms has not risen by anything like so much, because people have confidence in what the Government are doing.

Normally, I take the view that there are two people in this world who should be obeyed. One is the Holy Father and the other is my hon. Friend the Member for Stone (Mr Cash). When my hon. Friend speaks on European matters, he does so with a degree of infallibility that belongs to only one other living person, although I hasten to add that the remit of the Holy Father does not cover European matters. My views diverge slightly from those of my hon. Friend on one point: I think we should be proud of the document that Her Majesty’s Government are sending because of what the Government have got right. The situation they faced a year ago was desperately serious, needed urgent attention and had to be brought under control by their taking measures that are not necessarily popular.

It is important to emphasise that point because all Governments, when they take tough decisions, face gentlemen such as the shadow Minister, the hon. Member for Nottingham East (Chris Leslie). Over the next year or two, as people see the cuts coming through, it will be very tempting to listen to such voices and to think that perhaps there is an easier way and a land flowing with milk and honey that we have not yet found where we can borrow more money, where the financial markets will turn a blind eye, where we can spend money we do not have and not worry about our children and our grandchildren and where the banks will suddenly miraculously lend to bankrupt people to keep inefficient systems going. That is when those on the Treasury Bench must stiffen their sinews and summon the blood and not give way to those voices. At the moment, that is still relatively easy, because there has not been much coming through in the way of cuts. We have not seen the pain that will come from those difficult decisions. Now, however, we are sending our plan abroad. We are telling people not just in this country but in foreign countries of what we are doing and we should be proud of it because it is right. If we do what is right, the economy will begin to recover.

We on the Back Benches, in particular, must support those on the Front Benches when they do such things and when the critics from the other side appear to be doing well in the opinion polls. That is the point of maximum difficulty. Let us think of the great lady in 1981, when 360-odd economists wrote to The Times—a great newspaper with very fine editors—to suggest that the economic policy was wrong. That was two years in and it was the hardest point and that Government stuck to their guns, which led to the recovery we then had.

[Jacob Rees-Mogg]

The fundamental flaw in the hon. Gentleman’s argument is to think that there is a painless way out of a major crisis. It is simply a question of whether we deal with it now and ensure that the problem is resolved and that the economy can grow again or whether we delay it and have a much worse crisis later. The pain I was talking about was political pain for the Government as people notice the cuts. Our approach will reduce the pain for individuals because it will ensure that the economy is rebalanced sooner rather than later. That is the way to minimise pain—not thinking that there is a never-never land with no pain after we have lived on debt and incompetent Government policies for the past 13 years.

[Alec Shelbrooke]

We hear about fairness from the Opposition, but which does my hon. Friend feel is more unfair: bringing in higher taxes to get us out of this problem or letting the economy run away and allowing interest rates to rocket, thereby leaving thousands of people’s homes to be repossessed?

[Jacob Rees-Mogg]

My hon. Friend is absolutely spot on. This is one of the great virtues of the Government’s policy, which is being welcomed by the gilt market.

It is also worth noting what the late John Maynard Keynes said on such matters. Everyone in opposition quotes him and says that we should follow his policies but one of his policies, to quote the Chancellor, was that Governments should mend the roof while the sun shines and should build up reserves in the good times. My godfather interviewed John Maynard Keynes late in life and asked him, “What happens if Governments do not do this? What happens if they spend money in the good times?” to which Keynes replied, “If they do that I shall make a speech in the House of Lords and that will put them off.” Sadly, he was not here between 1997 and 2010 to make a speech in the other House to tell the other side of the policy failures when the economy was booming, so there was no money when the economy went wrong.

Time is short and I have a point to make about the presentation of the document to Europe. I hope that we have a Division because it will be delayed until after the deadline for sending in the papers. I hope that Her Majesty’s Government will show their independent-mindedness and ensure that the House’s approval comes before the requirements of a foreign international body. It would be a great discourtesy to the House if the document were presented to the European Commission before the deferred Division that we are likely to have on Wednesday.

Question put.

The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 5 May (Standing Order No. 41A).