Charter for Budget Responsibility and Welfare Cap

Debate between David Linden and John Redwood

Monday 10th January 2022 Commons Chamber

[John Redwood (Wokingham) (Con)]

Let me return to the subject of the debate, the charter for budget responsibility. I will not follow the Opposition into a debate on the general state of the UK economy, which I am sure we will have other opportunities to discuss.

I see this as the Maastricht rules tribute debate. Every year under the Maastricht treaty, whether under Labour, coalition or Conservative Governments, we used to have a debate. We had to look at the two fiscal rules, which of course both came from the European Union: rule one was that the budget deficit had to be 3% of GDP or less; and rule two was that we had to either be below 60% of GDP with our state debt, or we had to show how we were going to get down to 60% of GDP with spending cuts or tax rises. The UK normally favoured the tax rise route, rather than the spending cut route.

That was characterised by the Opposition parties of the day, once the Conservatives or the coalition were in office, as austerity economics, although they would never accept that the cause of the austerity was the rules designed in Brussels. They would point out, when I made that point, that, “Oh well, because the UK is not a member of the euro there are not the same penalties imposed if the UK fails to comply.” The fact was, however, that the whole UK economic machine—Bank, Treasury and officialdom—believed they were very serious commitments and that, as they were treaty commitments, the UK had to keep to them. So when we finally got out of the EU, I was one of those voices saying to the Government, “Let’s scrap all that. Let’s not have those Maastricht tribute debates”—although I think we had one even after we left—“and let’s have our own UK framework.” That is what we should be debating tonight.

The Government have come up with a charter for budget responsibility, which I welcome, but reading the detail, it has a familiar ring to it. What are the two main rules in the charter? One is that we must keep the budget deficit down to 3% or below. It has been repackaged in relation to investment, but it is basically the 3% Maastricht budget deficit rule. The second rule is that, by the third year, debt should be falling as a percentage of GDP. Of course, our debt is well above 60%, and it will be quite a long time before we get back to 60%, if at all. It is now built into the framework as a regular review item, although it has the extra twist that it is a three-year average, so there is a bit more scope for flexing things.

I think we can do better than this Government. We could come up with an economic framework geared to the modern needs of an independent country, and I would suggest that our charter should embed two great aims of economic policy. The first aim that it should definitely embed is controlling inflation. It is right that the so-called independent Bank of England—this House regularly changes the rules and shows that it is actually in charge of the Bank of England—is charged with the duty of keeping inflation down to around 2% on average. I have no problem with that as a target, but the Government need to adopt it as a target as well, because as Ministers must well know, we cannot do all of the heavy lift through monetary policy—we cannot do it all through interest rates or quantitative easing. We also need to have a sensible fiscal policy.

Above all, the Government, who control such a huge chunk of the economy, need to manage their own affairs well, in terms of productivity, sensible real wage growth and so forth, and they have a duty to follow an anti-inflation strategy for the public sector directly under their control as a back-up to what the Bank and monetary policy are trying to do. I think that we should embed the inflation policy more firmly in the charter and that the Treasury should have to tell us how it is contributing to controlling inflation. It will be very topical this year, because clearly inflation is considerably above where we would all like it to be and there is no immediate sign that it is about to drop down, although I think it will drop down towards the end of the year, unless policy is particularly foolish.

The second criterion or objective that I would put in the charter is a growth objective. Labour made an entirely fair point by saying that what matters is growth. The faster the growth—as long as it is not inflationary—the more we would solve our deficit and debt problems. Our economy and our figures are incredibly sensitive to the growth rate. In the first half of the current financial year, we had very fast growth. It was a recovery phase and things were going fairly well from the covid lockdowns. As always, the OBR and the Treasury completely misjudged what favourable impact growth has, so they overstated the deficit for the first six months of the year by a whopping £50 billion. The deficit tumbled by £50 billion more, with no tax rises. But there was a huge tax rise—it was called tax on growth. More people went to work, and more people earned higher wages, bonuses or salaries. More people spent more money, so there was more VAT. So income tax receipts, VAT receipts and other receipts in the economy greatly outperformed the OBR and Treasury forecast, demonstrating that, if we can go for growth, we will make much better progress on the debt and deficit, which we need to do, than if we go for austerity economics, slowing the economy with tax rises and a too abrupt monetary deceleration.

I urge the Government to look again at whether they can improve on the objectives in the charter, to reflect on it and to see how an independent Britain can have a growth policy. If the Government established a growth target—they would not always hit it, but they could establish it—it would start to inform the actions of every Government Department that has a bearing on the strength of our economy, new jobs and all the rest of it. That is what we want. We want a Whitehall that is positive about Britain, not one that is trying to hold it back. We want a Whitehall that thinks Britain can achieve things—can invest here, have more jobs here and substitute for imports—rather than a negative Whitehall that says, “Gosh, there is too much borrowing, What can we cut? What can we tax? What can we stop?” We want less stopping and more positive going. We want more ability, generated by a growth policy, to show that an independent Britain can produce more of its own energy, grow more of its own food, catch more of its own fish, and make more of its own personal protective equipment and of its own medical requirements.

[David Linden (Glasgow East) (SNP)]

That speech would perhaps have done even better with “Jerusalem” on in the background. The right hon. Gentleman speaks about growing more food, but can he tell me who is going to pick that food from our fields?

[John Redwood]

It will be picked by people paid decent wages, and if that requires wages to go up a bit, I have no problem with that. It will also be picked by the growing mechanisation of agriculture. Our agriculture is not as fully mechanised in a lot of farms as it is possible to do when there are better capitalised farms, like those that have been growing more food elsewhere. How pessimistic that was—why is the hon. Gentleman not proud of the United Kingdom, Scotland or wherever, thinking that we can achieve more and do more? Why do we always have to be stopping people doing things, and saying that nothing is going to work and so let us import all our vegetables from Spain, all our flowers from the Netherlands and all our energy from Russia, Germany or the Netherlands or wherever because we are not able to do it here in Britain? It is just not good enough. We have this huge opportunity. We have a very talented people. We have many natural resources. We have a perfectly good temperate climate for growing most of our own food. So, Government, get on with it. Having a growth target would help energise a Whitehall that still seems to be very disappointed in the country it is trying to govern and seems to be trying to hold it back.

One other thing that the Chief Secretary mentioned in his remarks, which is mentioned briefly in the text we are debating tonight, intrigues me. It says that balance-sheet items are being worked on but have not yet reached a state of development where they can be shared with the rest of us. How long does it take? Why do the officials to the Government not know the asset and net asset position for the country? I believe there are some figures we can get from public sources that show that we do have some guesses about all that, but is it not rather important that when we debate the state of the nation’s finances, we understand the balance sheet as well as the income account and that we know whether the public sector is adding value and long-term wealth or not? If it is, why do we not claim some credit for it? If it is not doing enough of that, we need to ask the difficult questions about the wisdom of the investments, the productivity of the schemes and all the things that go into making that a success.

I did ask the Chief Secretary about a balance-sheet item. I think it actually makes a difference if you have bought in your own debt, because you owe the debt to yourself. I am not asking for anything imprudent to be done. I understand why we have gone through this rather tortured process, as has the European Central Bank and the Federal Reserve Board, and as, for many years, has the Bank of Japan. But we should not then fool ourselves into thinking that we have a worse problem than we have. The fact is that all these countries and currency areas spent a lot of money and created a lot of money to buy in debt over the pandemic, and we have got away with it, with a caveat that we have a little too much inflation. That debt is purchased; it is now both an asset as well as a liability of the state, so it is wrong to think that it is just a liability. The new argument is, “We owe the Bank of England and if the short rates go up, we owe the Bank of England more interest and so forth”. Yes, but it gets the receipt. If we want to do the transaction, the Treasury pays the Bank and the Bank can pay the Treasury back, because the Treasury owns the Bank. If I had bought in my mortgage from a mortgage company, I would probably just forget the whole thing. However, on Bank of England and Treasury logic, every month I would pay interest to myself because I still owe the mortgage, but then I could take that money back and spend it because I own the mortgage company and it is no longer a proper debt.

I think we have to understand that something different has occurred with quantitative easing, and I do not think we should go on doing it. It is normally very inflationary and very dangerous. In the strange circumstances of a covid lockdown in which a huge amount of demand and activity were taken out of the system, we could get away with it; indeed, it was right to do it, and I supported the Government at the time and praised them for the stimulus they offered. However, that has gone, and we now need to have sensible finances. To run those well, I strongly recommend a firm inflation target—inflation is a little too high at the moment, and needs to be taken very seriously—coupled with a much more optimistic growth target, because that is the way to grow the balance sheet and get the debt and the deficit down.

Covid-19

Debate between David Linden and John Redwood

Monday 28th September 2020 Commons Chamber

[David Linden (Glasgow East) (SNP)]

It is a pleasure to follow the hon. Member for Middlesbrough South and East Cleveland (Mr Clarke). I had the pleasure of shadowing him when he was at the Ministry of Housing, Communities and Local Government. I always found him to be incredibly courteous and I wish him well for however long he is on the Back Benches—I know he has plans to return to Government at some point.

We know that Governments all around the world have faced the same challenges with this pandemic, whether that is understanding how the virus transmits, how a lockdown should occur and, indeed, under what circumstances, or obtaining PPE. For many, this was unknown territory. For most of us as politicians, no one or nothing truly prepares us for a global pandemic.

It would be remiss of me not to start by mentioning the successful measures put in place, including the public’s overwhelming co-operation with the lockdown restrictions, the unity we have seen in our neighbourhoods and constituencies, especially in offering a helping hand to those who are shielding, and the countless community groups and volunteers who have mobilised during the outbreak. I also acknowledge and say thank you for the brave commitment of so many of our NHS and care staff, who continue to battle the virus every single day.

However, with the stark warnings offered by the Prime Minister last week about a second wave of covid-19 cases and the further restrictions put in place to keep as many of us as safe as possible, we must therefore learn the mistakes made in the earlier half of the year. It is imperative that we all move forward looking at what works best and, most importantly, what we urgently need to improve upon. It is clear that the three most difficult aspects of the coronavirus pandemic have been controlling outbreaks in social care settings, providing enough PPE to those who need it, and setting up a functional and effective test, trace and isolate system. The economic response to covid and the mental health crisis and its legacy are much bigger issues that I am sure other colleagues will focus upon. In the interests of time and of being courteous to other Members, I will confine my remarks to the public health aspects of today’s debate.

I will start with the issue of test and trace. The Scottish contact tracing system, Test and Protect, was based on traditional public health teams, who have managed to reach over 98% of cases and 97% of contacts. Unfortunately, that success has not been mirrored by the British Government’s implementation of its testing and tracing. The Times found that in England, the percentage of successful searches between 1 pm on 16 September and midday on 17 September was just 43%. In comparison in Scotland, it was 97%. The Scottish contact tracing system is the best performing in the UK, particularly compared with the outsourced Serco call centres in England, which are barely reaching 60% of contacts. People are, on average, asked to travel 27 miles to the nearest centre, and at the peak of the shortages, a fifth of all UK postcodes were being directed to sites in another nation. We heard anecdotes in the Chamber only last week of people in Bolton reportedly being told to travel 90 miles to Wales to get a test. In Cambridge, residents were being told to go to Birmingham, Heathrow or Bradford. The ineffective tracing system in England means that thousands of people who may currently be infected with covid-19 are not being advised to self-isolate and, as such, are continuing to spread the virus at a rate leading towards a second wave.

The Scottish Government have also launched the Protect Scotland app, which I have spoken about in this Chamber and have urged people to download. I have downloaded the app in England. As somebody who spends probably half the week in England, I am more than happy to use my position to encourage as many people as possible to download the app. Over 1 million people have downloaded the app in Scotland, helping to effectively trace the virus across Scotland. That figure of 1 million represents 18% of the population, meaning that the figure is already above the 15% threshold required to make a measurable impact on viral spread.

Despite the Scottish Government’s success, however, there are still challenges from the UK Government—mainly, that the Scottish NHS has increased its testing capacity considerably for hospital patients, but instead of funding testing of the public through the expansion of NHS labs, the UK Government set up an entirely separate system organised by Deloitte. As it is a UK-wide system, we have seen an increase in demand in England, leading to appointments being cut in Scotland. In fact, there are multiple reports over the last week of people resident in England being advised to enter a Scottish postcode to obtain authorisation for a test, even though the test was carried out in the south of England. If not dealt with, this could seriously undermine Scotland’s well thought out and effective contact tracing system, and the incorrect data could give the impression that there is an outbreak somewhere where one does not exist. It is vital that we prepare for the second wave. In doing so, we must do everything possible to test as many people as possible, so that we have the most accurate figures and our contract tracing can prevent the transmission of this deadly virus.

I turn to the issue of personal protective equipment. One major challenge from the outset of the pandemic has been the hugely increased need for PPE such as masks, gowns and gloves, amounting to some 485 million items so far. In Scotland, we have had the advantage of central procurement and delivery being part of the Scottish NHS, along with having our own stockpile. Naturally, given the sheer quantity of PPE needed in the first few weeks of the outbreak, there were difficulties in transportation, especially to extra sites that needed additional equipment, including community clinics, GP surgeries, pharmacies and care homes. Our Trade Minister, my good friend Ivan McKee, worked tirelessly to maintain imports of PPE, which came in through Prestwick airport. The Scottish Government invested in the development of our domestic industry so that 50% of our PPE is now manufactured in Scotland, making our future supply more secure.

When we compare the availability, transportation and supply of PPE under the SNP Scottish Government with the situation under the Tory Government here in Westminster, in every regard the SNP Government have been better prepared. The SNP Government put in place clear plans for the future in the event that we faced a second wave—as now, sadly, seems inevitable. The Conservative Government privatised the UK national stockpile and then ran down the stock, with some items up to 10 years out of date, putting at risk the lives of key workers in the NHS—the very same workers we went out to clap for every Thursday night at the beginning of the pandemic.

In 2016, the UK Government was found to have failed woefully in pandemic preparedness. Exercise Cygnus accurately predicted that the NHS would be pushed into a state of crisis if an infectious and deadly disease ever came to the shores of these islands. It highlighted that an effect of such a pandemic could be a shortage of intensive care beds, vital equipment and even mortuary space.

Such predictions became a reality with the covid-19 pandemic, but even after the stark warnings of 2016, no action was taken. Instead, the Government chose effectively to hand out hundreds of millions of pounds in contracts to companies with no experience of providing PPE. The truth of the matter is that the British Government have used this public health crisis to benefit their friends. A contract was handed out without any public tender process to Public First, a company that is run by a former aide to the Chancellor of the Duchy of Lancaster and an associate of Dominic Cummings. It should be no surprise to anyone that millions of pieces of PPE were substandard and even unusable. Much of it never materialised and was never delivered to the countless NHS workers who needed it so badly.

[John Redwood]

Can the hon. Gentleman think of any area where the Union Government, or England and Wales, have done better than Scotland, and that Scotland might be able to learn from?

[David Linden]

It will come as no surprise to the right hon. Gentleman that I am not in a position to be particularly complimentary about how the UK Government have handled this pandemic. I am sure that if he has looked at any of the statistics, he will have reached a similar conclusion, but that is something for him to consider as he prepares to speak this afternoon.

I will deal now with the distressing issue of deaths in social care settings. We simply cannot ignore the fact that the death rate in care homes across the UK has been utterly devastating. In my own constituency, Burlington Court care home in Cranhill saw 13 deaths in just one week. That number can never be regarded simply as a statistic. Each and every one of those residents was a family member and a loved one who will never be forgotten.

The attacks that have suggested that that problem was specific to Scotland are incorrect. In May, the London School of Economics highlighted that more than half of covid-related deaths in care homes in England were not being reported. The Scottish Government made a sustained effort to report all care home deaths so that our figures were as accurate and up to date as possible. Indeed, the data published by the Office for National Statistics clearly shows that deaths in Scotland were not significantly higher than in the rest of the UK. It highlights that excess deaths in care homes in England and Wales were 45 per 100,000—almost exactly the same as Scotland at 44 per 100,000.

Some have blamed the covid outbreaks in care homes on patients being discharged from hospital, but studies actually suggest that there were multiple entry points into care homes from the community via visitors and staff, particularly staff working in several care homes. It would arguably have been even more dangerous to place already-vulnerable care home patients in hospitals, with space already being a valuable commodity in our busy hospitals, particularly in intensive care units. The Scottish Government were quick to step in when it became clear that the social care sector was struggling, providing considerable support in the form of extra funding and supplying additional PPE from NHS supplies. Until this intervention from the Scottish Government, some care homes were not even paying sick pay, which meant that staff could not afford to stay home when they might have had covid symptoms or, indeed, were a contact. To further assist with this, the Scottish Government offered NHS staff to care homes, preventing them from being forced to use agency staff who could arguably be seen as spreading the virus.

The covid-19 pandemic has exacerbated some of the underlying problems within the social care system in the whole of the UK. Currently Scotland is the only UK nation to provide free personal care, which allows two thirds of those who need it to stay in their own homes, but the vast majority of care homes are private businesses, and, until now, they were, without doubt, less connected to the rest of the health and social care sector. In the light of the pandemic and the devastating losses from our care homes, the Scottish Government plan to carry out a review of social care provision and consider developing a national care service, which I warmly welcome and see from my constituency experience as being a good thing.

Globally, the pandemic is still raging, and we must listen to health experts who are very clear on the dangers of a second wave. Summer was our time to learn and prepare for winter. We now have the relevant experience to learn from all the mistakes made in the first part of the year, and they are legion. In the public health response, it is vital that we focus on these three issues: outbreaks in care homes, the availability of PPE, and having an effective test and trace system in place. We know that a second wave is now upon us, and we all know what we need to do. We must all play a role. My party—Scotland’s Government—is committed to playing its part in helping to defeat this deadly virus.

Awarding of Qualifications: Role of Ministers

Debate between David Linden and John Redwood

Wednesday 9th September 2020 Commons Chamber

[David Linden (Glasgow East) (SNP)]

Let me be clear from the outset that I want to approach today’s debate with humility above anything else. Put simply, the grading of this year’s pupil qualifications is a plague on all our houses, and I wanted to put that on record in the opening seconds of my speech. I will try to be constructive in my analysis today.

In approaching this debate, it is important to acknowledge that 2020 is not the academic year that any of us could have envisaged. From the talk of possible disruption in February, we quickly moved to a position where schools and universities had to be closed before the full lockdown a few days later. After the initial shock, staff and students swiftly developed different ways of working facilitated by Zoom, Teams and Glow, and that has not been easy. It has brought into sharp focus the issue of digital exclusion, which has been highlighted to me by Derek Smeall, the principal of Glasgow Kelvin College in Easterhouse in my constituency.

Some young people were able to continue their studies, albeit on a different platform, whereas others found themselves cut off from their support systems just at the point when that support was most needed as they prepared for state exams. The decision to cancel the exams was therefore unquestionably the right thing to do, and I think we all agree on that. It was the right thing to do not just because of the health risks to students in physically participating, but because of the massive inequality that would have been built into any exam results as a consequence of the difficulty in accessing the usual teacher support. Unfortunately, actions meant to tackle inequality ended up embedding it, and that has to be acknowledged and apologised for, and that is exactly what has happened in Scotland.

Above all else, tribute should be paid to the young people campaigning for Governments across these islands to see the error of their ways and to U-turn. In Scotland, that campaign was fronted by my Shettleston constituent Erin Bleakley, who goes to St Andrew’s Secondary. She eloquently articulated the anger and dismay of young people with her placard, “Judge my work, not my postcode”.

There is no getting away from it: this has been a summer of confusion and distress for young people across the UK, who found themselves at the mercy of algorithms. However, it is not the use of the algorithm that is ultimately the problem; it is the litany of errors, ignored warnings, failures to act and missed opportunities for the Secretary of State to be proactive.

In April, experts from the Royal Statistical Society offered to help with the modelling. Their offer was refused. At the start of July, the former director general of the Department for Education, Sir Jon Coles, wrote to the Secretary of State, warning that Ofqual’s grading system would lead to unfairness in the system. His concerns were ignored. On 10 July, the Education Committee warned about the algorithm, saying that it risked inaccuracy and bias against young people from disadvantaged backgrounds. Still the irresponsibility continued. That is why we find ourselves debating Labour’s motion on the Order Paper today, which is very specific in its proposed wording.

When Scotland’s young people received their results on 4 August, it quickly became clear that something had gone wrong. Our Cabinet Secretary for Education and Skills sat down and listened to the young people affected, yet the Scottish Tories were jumping up and down, calling for his resignation. I remember listening on the radio to the Scottish Conservative education spokesperson demanding that resignation. I look across the Chamber this afternoon, and I see no Scottish Conservatives here. That is why I deliberately started by saying that a bit of humility in this might not have gone amiss.

What happened in Scotland should have been a red flag moment for the Conservatives, and it should have been a warning to the Secretary of State to act, but what happened next left many young people in England in turmoil. As Scotland took decisive action, awarding young people their predicted grades, and crucially announcing new funding for universities to ensure that any young people with the entry grades would secure their place, the Tories remained in denial that there might be a problem with A-level results. When these shockingly inaccurate results were published, the Secretary of State dug himself into a hole by denouncing the actions of the Scottish Government, pontificating about the “unfairness” of taking teachers’ predictions seriously as the basis for results and declaring that there would be no “U-turn, no change”. Meanwhile, the Prime Minister was insisting that

“The exam results…are robust, they’re good, they’re dependable,”

before going on to talk about “mutant algorithms”. To make matters worse, the Secretary of State faffed about with the appeals process, leading to Ofqual revoking the process that it had published only a few hours earlier, leaving school leaders and exam boards utterly bewildered.

Despite what the Secretary of State said in his statement to the House last week, his actions were not immediate. He had both foresight and time on his side and squandered both. At the time of his U-turn on results, university places had been lost. The Schools Minister has maintained that he did not see the algorithm until results day, suggesting that something went wrong with its implementation. What questions were Ministers asking prior to the publication of results? Did anyone ask for a trial run of the algorithm? This is a pattern that keeps repeating itself with this irresponsible Tory Government: first, pretend the problem does not exist, then brush away the scrutiny, then make the wrong decision and then blame somebody else.

Can the Secretary of State tell the House how many young people who missed their first choice of university because of the now discredited approach to awarding grades have now been given places? Now more than ever, what has happened calls into question why young people should be paying £9,000 in tuition fees and saddling themselves with an average debt of £50,000. They are due some breaks, and if the Government were serious about their futures, the Secretary of State would be looking at that.

But of course, universities are dealing with much more than just this carry-on. A combination of the covid restrictions and the ongoing hostile immigration environment means that universities are preparing for an unprecedented drop in international students of up to 70%, which will punch a massive hole in the finances of our institutions. Indeed, Universities UK estimates that the shortfall could be close to £7 billion. At a time when universities are facing the loss of Horizon Europe collaborations and funding, the Secretary of State should be acting to protect the very institutions that will help to kickstart the economy. It would therefore be helpful to know what assessment he has made of the impact on universities and what discussions he has had with the Treasury about providing those institutions with additional financial support.

Universities are ready to support these young people, but as well as increased financial support, they need a fresh look at immigration. In Scotland, we have been clear about the need to extend the post-study work visa. It is incredible that, at a time when we most need talented graduates to be economically active, we have not brought post-study visas forward for our 2020 graduates. What is needed now is clear action to ensure that, whether or not we have another year of covid disruption, young people are not the victims.

As well as the steps highlighted earlier, the Scottish Government have gone further. In order to learn lessons and plan for next year, the Cabinet Secretary for Education in Scotland has asked Professor Mark Priestley of Stirling University to carry out an independent review of the events following the cancellation of the examination diet and to make representations for the coming year.

[John Redwood]

Can the hon. Gentleman give the House an update on the summer term in Scotland? How many pupils had the benefit of a full timetable of teaching digitally?

[David Linden]

I am grateful for the right hon. Gentleman’s intervention. What happened in Scotland is perfectly on the record, but we have been back since the middle of August. Children are back in schools, learning. I have been in those schools and seen that for myself, and it seems to be going relatively well, although no doubt there have been hiccups. As I said at the beginning of my remarks, with humility, this is a process that we are all feeling our way through. If that humility was reflected by the right hon. Gentleman and the Government, that might be helpful.

The OECD’s ongoing independent review of the curriculum for excellence will be asked to include recommendations on how to transform Scotland’s approach to assessment and qualifications, based on global best practice.

In conclusion, young people have been extremely poorly served over the summer. We know that the Secretary of State hates to follow Scotland’s example on anything, but he must now ensure that his actions are not ostrich-like, and instead be proactive to ensure that young people have the best possible experience over the next few years, because—to finish with an education metaphor—those who fail to learn the lessons of history are doomed to repeat it.