Amendment of the Law
Jacob Rees-Mogg Excerpts(13 years, 1 month ago)
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David Wright (Telford) (Lab)
Last week’s Budget was delivered by a Chancellor who was quite frankly in denial about the impact of his Budget last year. He used to accuse the former Chancellor of the Exchequer and Prime Minister, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), of being in a bunker, but the current Chancellor has not only gone into the bunker but has had it sound-proofed and cut off the phone lines. He is not listening to what is going on in the economy at all.
In my speech in last year’s Budget debate, I cited the example of Japan and the problems that the Japanese economy has had over the past 10 to 15 years. Of course our hearts go out to the people of Japan after what has happened to them over the past few weeks, but it is interesting to see how their economy has behaved over the past 10 to 15 years. We have seen a series of growth figures that just bump along the bottom. There has been no significant stimulus in the economy there, and this country is in real danger of following Japan’s example.
It is clear that the Chancellor has not taken into account the impact of last year’s Budget on confidence in the economy, on the housing market and on the jobs situation in constituencies such as mine. He has gone on to build on the problems that he has already created in the UK economy.
David Wright
I will not.
In the Budget, we have seen that growth estimates have gone down for last year, this year and next year. Borrowing is up by £43.4 billion, and debt interest will be £17.6 billion higher. According to the Chancellor’s forecast, unemployment will go up by up to 200,000 every single year until 2015. That is a significant price for people to have to pay for what I believe are the sado-monetarist views of this Chancellor.
We have seen a massive squeeze on living standards right across the board. The hon. Member for Bury St Edmunds (Mr Ruffley) rightly spoke of the impact of inflation on the economy. People see it every time they go to their local supermarket as the costs of the core products that they buy rise significantly. There is an impact on the cost of food, as well as significant rises in the cost of fuel. It is interesting that the Chancellor’s much-heralded policy for cutting fuel costs was destroyed within two days of the Budget, when I saw a gentleman arguing with the staff in my local Sainsbury’s filling station. He said, “Hasn’t the price of petrol gone down?” and they said, “Yes, it went down on Budget day, but we put it back up again the day after.” That policy was blown out of the water as soon as it was announced, and, anyway, the Chancellor had already put a 3p a litre rise in the price of petrol into the system through the VAT increase.
It was interesting to listen to the Chancellor’s speech. It contained a complicated segment at the beginning on tax thresholds, which he went through very quickly. That was because it contained all the clawbacks relating to the changes in tax thresholds, following the debate on the consumer prices index and the retail prices index and the announcements of all the cash that he was giving out—actually, he did not give out that much cash; he gave out a bit. All the cash that went out had already been clawed back in the measures announced at the start of his speech. The impact of his decisions in last year’s Budget was that the average family with a child would be paying about £450 a year more in VAT anyway, so he had already wiped out any goodies to be given away in this year’s Budget by the approach he took last year.
There has been much debate about youth unemployment. The corporation tax cut from the Chancellor is one way of proceeding for a Budget strategy, but I believe he could have done something far more radical: instead of giving away that corporation tax cut, he could have spent the cash on a massive programme of employment, training and support for young people in the economy. He could have made that choice and, as I say, invested the money in training and skills for young people.
The Red Book is useful for looking at the Government’s overall strategy. The table on page 12 is headed “International consensus on fiscal consolidation”. It shows that we are up there as consolidators-in-chief with France, Turkey, Canada and Spain. There is, however, a significant outlier on this table—it is the United States. The table suggests that the US is going to move its fiscal consolidation position significantly next year, but I have my doubts. Let me explain what I think is going on.
I believe that the US is looking more carefully at where its economy is and is planning significant investment to lift its people out of recession. Obama’s programme on public spending and expenditure right across the board shows that he is not pursuing a strategy of significant fiscal consolidation, and I doubt whether he will next year either. He is trying to ensure that his economy recovers throughout this period of downturn and that it does not go into significant levels of depression.
Finally, the enterprise zones are positive, but infrastructure investment has to be put in place alongside them; otherwise, they will not work and local economies will be blighted. This is a Chancellor who has got it generally wrong in the Budget. He needs to change his strategy and adopt a plan B very—
Amendment of the Law
Jacob Rees-Mogg Excerpts(13 years, 1 month ago)
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Ed Balls
I have not been silent at all. I said that there was a global financial crisis, which meant that our deficit and our debt rose, as it did in America, France, Germany and Japan. It is a good job that we went into the crisis with a lower national debt than we inherited, and a lower level of national debt than France, Germany, America and Japan. It is a good job that we did not listen to the Conservative party, or our debt would have been higher, our unemployment would have risen and we would still be in a depression.
Jacob Rees-Mogg
Thank you. I am grateful for such widespread support.
May I draw the shadow Chancellor’s attention to page 8 of the Red Book? He referred to private sector debt, which rose from 200% of GDP to 450% of GDP when the Labour Government were in office. That fundamental instability led to our troubles. It was great while debt was rising—it led to full Government coffers—but it got out of control and that is the root cause of the problem.
Ed Balls
As I said, the OBR says that subdued consumption outlook requires households to dip into their savings again in 2011, so the savings ratio continues to fall back from its post-recession peak. It also says that the savings ratio is now forecast to be historically low. Household debt as a percentage of income rises every year from 2010, even though it fell in 2009-10. Those are the facts.
Yesterday we needed a plan from the Chancellor to help hard-pressed families facing the squeeze, to get people back into work and to get our economy growing again. That is what we needed, and that is what we did not get. There was no change to a deficit reduction plan that is faster than that of any other major economy in the world. It pushes growth down and unemployment up. The Chancellor fails to realise that cutting too deep and too fast will make it harder to get our deficit down. He also failed to understand that while he gives the banks a tax cut this year, ordinary families are being hit hard now. It was a smoke-and-mirrors Budget.
Mr Robinson
I shall in a moment.
It is no good the Business Secretary asking us for our plans. He now has responsibility, he chose to take it and he chose, also, to go into this coalition, having been convinced by a concerted effort by the Governor of the Bank of England and others that the Liberal Democrats were wrong before the election—that within one week of the election campaign, everything had been turned on its head and we faced an imminent crisis, the outcome of which was that we would face interest rate rises and an inability to borrow nationally, along the lines of the situation faced by Greece and Portugal. He knows that he did not even meet the Governor for a working over, because his leader, the Deputy Prime Minister, had already been worked over. Nobody else on the Government side needed to be worked over—the Governor had worked them over before and during the election campaign. The implicit deal was, “Go along with this huge deflationary package, and I will keep monetary policy so loose that you don’t need to worry—you’ll still get growth.” I believe that that is the sort of Faustian deal to which the Business Secretary referred in his reply to the Budget debate last year.
What have we seen since? Interest rates are still low and policy has been loose. No doubt it might even continue to be loose for a period of time, but I am sure that interest rates will go up in the near future. Irrespective of that, there is still no credit for the SMEs from which, as Sir Richard Lambert pointed out, the vast majority of jobs must come if the commercial and business sector—the private sector—is to recover. However, there is still no prospect of their being able to borrow. Why does the Business Secretary say, therefore, that there is no alternative because the OECD says so? The OECD is as wrong as everyone else. We heard last night from Robert Chote that all those forecasts are a “load of rubbish”. One cannot always be right about such things; nobody ever is. One might ask what the point of them is. Certainly, to invoke the OECD, which can be as wrong as anyone else, and say, “It says that we have to go on with this strategy, so therefore we will,” in the face of all the mounting evidence that the strategy is not working is perverse and not worthy of the intellectual distinction that the Business Secretary is capable of bringing to these problems.
The only thing that could be said in favour of the Government’s policies is that they have not had enough time yet—not quite a year—to have worked, but it is obvious that they are not working.
Mr Robinson
I shall in a moment, but the hon. Member for Penrith and The Border (Rory Stewart) is first.
The figures for every crucial forecast area of activity are pointing in the wrong direction. Unemployment is up, growth is down, inflation is up, bizarrely, and Government borrowing is up—the very thing they are meant to be getting down—as measured against the OBR forecasts. Those are the only measures we can use to judge whether their policies are working. We can look at the past and it is clear that they are not, but to see whether they are working, we have to look at the forecasts. The Government’s whole policy is predicated on such forecasts, but look at the figures now—down, down, down! Every single indicator is going the wrong way, but they still say that we have to press on with their programme—plan A or whatever it is. I think I heard the Business Secretary say, in response to an intervention from an Opposition Member, that some flexibility is built into the Government’s plan A. I do not know whether he will elaborate on that or whether I misheard—we will see in tomorrow’s Hansard whether I did. I did not raise the issue at the time because I was not sure whether I had heard right—I could not believe it. If there is some flexibility, the sooner it is acknowledged, built in and practised the better.
Amendment of the Law
Jacob Rees-Mogg Excerpts(13 years, 1 month ago)
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Joseph Johnson
I am not sure which of those many points to focus on. Greece’s economy is of course very different from ours, and we have a history of repaying our creditors in full, on time and when we say we will. We do not want to lose that reputation, which is why it is so important that the Government stick to their plans to bring our public finances back on to a sustainable path. We cannot compromise or jeopardise our standing in the international financial markets.
Jacob Rees-Mogg (North East Somerset) (Con)
Does not the fact that £332 billion needs to be raised on the gilt market over the next two years, which at an extra 3% would be £9 billion a year of extra interest, show the utterly cavalier approach of Opposition Members in their recent interventions?
Joseph Johnson
Absolutely—their way of looking at our borrowing requirements is completely irresponsible. To think that we should pay more than £120 million a day in interest, which we are currently paying, is utterly absurd.
Oral Answers to Questions
Jacob Rees-Mogg Excerpts(13 years, 1 month ago)
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Justine Greening
I simply do not agree. As we have heard, every independent forecaster is backing our fiscal consolidation plan. The hon. Gentleman talks about evidence, but the retail sales volume grew strongly in January. The Chartered Institute of Purchasing and Supply purchasing managers index grew faster in January than analysts expected, while manufacturing reached a record high. Only today, the CBI industrial sector survey says that orders are going up. Our economy is rebalancing over time, and although the hon. Gentleman says that there is no evidence for that, there is such evidence. There is job creation, and that is what we will need if we are to turn our public finances around.
Jacob Rees-Mogg (North East Somerset) (Con)
Is it not the case that the Government’s debt reduction plan is absolutely right, as we see in the gilt market and the country’s credit rating? Is it not also true that, throughout history, coalition and Conservative Governments clean up the economic mess left by socialists?
Justine Greening
My hon. Friend is right. The consequence of that economic mess is that Labour Governments always leave unemployment higher than when they came into office. It is always that that we seek to tackle. He is right that there is no alternative plan. We have heard about a defunct plan for VAT and petrol, but we have not heard from the Opposition any plan to tackle the deficit. They said they would have some thoughts. Clearly, they are totally thoughtless.
Fuel Prices and the Cost of Living
Jacob Rees-Mogg Excerpts(13 years, 1 month ago)
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Jacob Rees-Mogg
The hon. Lady is always enormously gracious and generous in giving way. The Labour party is now proposing tax cuts, and has not proposed any serious spending cuts. Does it just want the country to go bankrupt?
Ms Eagle
The hon. Gentleman should not believe the propaganda from Tory central office. Of course we do not want the country to go bankrupt. We had a plan that would have halved the deficit, rather than dealing with it in four years. If I were in the Conservative party, I would not be quite so proud of producing the third largest fiscal consolidation—public spending cuts in ordinary language—of the top 29 industrialised countries, beaten only by Iceland and Ireland. As the hardship and the squeeze on living standards in this country become clearer in the coming year, the Government will come to rue their decision to cut too far and too fast. People will suffer day in and day out as a result of that decision.
Budget Responsibility and National Audit Bill [Lords]
Jacob Rees-Mogg Excerpts(13 years, 2 months ago)
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Ms Eagle
The important thing to note about forecasts, particularly those on the tax take, is that it is difficult to be accurate with them. When I served on the Treasury Committee prior to becoming a Treasury Minister, there was comment on how accurately the Treasury was able to forecast the tax take. Clearly, it is more art than science, so the House would be mistaken to believe that because something has been forecast, it is automatically an objective certainty. Those of us who deal with these issues, on both sides of the House, know that forecasting the economy can be as uncertain as forecasting the weather—Michael Fish found out how uncertain that can be one night. Forecasts are what they are; they can sometimes be wrong and sometimes they can be accurate. I honestly think that, in general—I am not making a party political point—the Treasury has a reasonably good record on forecasting.
Jacob Rees-Mogg (North East Somerset) (Con)
I entirely agree with the hon. Lady on the difficulty of forecasting, as even the best economic forecasters get it wrong, but I wonder whether she was as shocked as I was to read in the Financial Times about the bullying of the International Monetary Fund by the Treasury and the Financial Services Authority. Was that not a pretty disgraceful way to behave?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are in danger of going off into past subjects. The hon. Lady may be tempted to answer, but we have to deal with the Bill before us and not with speculation in a newspaper about bullying. I think that we will stick to the Bill.
Court of Auditors 2009 Report
Jacob Rees-Mogg Excerpts(13 years, 3 months ago)
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Jacob Rees-Mogg (North East Somerset) (Con)
In the time available, I shall try to speak without hesitation, deviation or repetition. I want to deal with one point, EuropeAid, and draw a conclusion from it.
EuropeAid was found not to be perfect by the European Court of Auditors. The ECA noted a high frequency of non-quantifiable errors due to the lack of formalised and structured demonstration of compliance with payment conditions. It found poorly documented and ineffective checks. EuropeAid was terrified by the mighty power of the Court of Auditors coming down before it, so what did it say it would do? It said that it would have a little more training and disseminate a financial management toolkit.
If I were a fraudster, I would be quaking in my boots at a financial management toolkit. That comes to the nub of the problem. Bodies such as EuropeAid could not give a brass farthing. The European Union is fundamentally corrupt because it is undemocratic. There is no check on it from electors. What can the electors of North East Somerset do? They can send me here to rail against it and try to stir the Minister, but the Minister needs no stirring. She is valiantly defending British interests. The shadow Minister, the hon. Member for Bristol East (Kerry McCarthy), my neighbour, is in agreement.
But what do the Government face with our European partners? When we look across the channel, we see countries that have been corrupt for generations—for decades. With the Roman empire, we can go back to the tax collectors at the time of Christ who were corrupt. There is institutionalised corruption within Europe. It is an empire that has an emperor, and the emperor has no clothes. We know that. We see the corpulent emperor in his fat rotundity gorging on the money of the British people. I urge Her Majesty’s Government to go along with my hon. Friend the Member for Wycombe (Steve Baker) and say enough is enough. They should say as the great lady said—“It’s our money, and you can’t have it unless you can prove that you are spending it honestly.”
National Insurance Contributions Bill
Jacob Rees-Mogg Excerpts(13 years, 5 months ago)
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Mr Hanson
I think I know Delyn better than the hon. Gentleman. If he would like to come to me to talk to the 320 people who lost their jobs yesterday at Headland Foods in Flint, I should be happy to discuss the issue. That happened only yesterday in my constituency, so I will not take any lessons from him about what happens on my patch in north Wales.
I will tell the hon. Gentleman straight away, however, that West Ham has 6.8% unemployment, Tottenham 7.4% and Camberwell 6%. That is more than three times the level of unemployment in Tatton, in Richmond (Yorks), represented by the Foreign Secretary, and in Derbyshire Dales, represented by the Government Chief Whip. Indeed, it is four times the level in Sheffield Hallam, represented by the Deputy Prime Minister. All those areas will benefit from the scheme, while areas of severe deprivation in London will not.
Let us look at the constituencies of coalition Cabinet members. Berwickshire, Roxburgh and Selkirk has 2.8% unemployment, North East Somerset has 1.6%, Tatton has 2.1%—
Mr Hanson
In a moment. [Interruption.] Not North East Somerset. The hon. Gentleman knows that I meant the Defence Secretary’s constituency. I am sure that the hon. Member for North East Somerset (Jacob Rees-Mogg) will eventually make the Cabinet, however, because he is an assiduous attender of the Chamber.
Richmond (Yorks) has 1.8% unemployment, Derbyshire Dales has 1.6%, Rushcliffe has 2%, Sheffield Hallam has 1.8%, Sutton Coldfield has 2.6%, North Shropshire has 2.7%, and Inverness has 2.3%. All the Cabinet members representing those constituencies will benefit from the payment holiday, while colleagues representing seats in Walthamstow, Islington, Mitcham, Luton North, Luton South, Tottenham, Tooting, Dulwich, Streatham, Hampstead, Vauxhall, Hammersmith and the two in Hackney will not.
If we are to make the scheme fair, taking the point that the hon. Member for Central Devon made, we should divvy up the benefits that the Government are bringing forward in a way that tackles the central issues of deprivation and unemployment.
Stephen Pound (Ealing North) (Lab)
A common theme running through the debate—almost the golden thread of it—has been that of not seeking to oppose for the sake of opposition. Of course, I entirely subscribe to that emotion. However, although I rejoice in seeing a sinner repentant, and the Conservative party being converted once more to the policy of Keynesian fiscal incentives, I feel that the Bill is in many ways a disincentive and, even more seriously, a crude, clumsy and extremely complicated one.
Much has been made of geography and the fact that large parts of the country are excluded from the glorious sunshine of this Bill’s benefits, which will cause flowers to bloom and businesses to leap, as from the brow of Jove, into the marketplace fully formed. The excluded areas are not just the leafy shires where the only concern is getting one’s second au pair, or third Range Rover. They are also places such as Milton Keynes, Medway—Medway!—Portsmouth, Reading, Slough, Southampton, Luton, Peterborough and Thurrock. It is true that the Bill also excludes parts of the south-west London-Surrey border where people are so wealthy that they can afford the luxury of electing Liberal Democrats, but in excluding such a large area the Government are assuming that within the eastern region, the home counties and London there exists a seething tide of entrepreneurial energy, ready to burst forth at any minute, that needs no assistance.
The hon. Member for York Outer (Julian Sturdy) said that there was a message coming from the House tonight. Well, the message is, “London, the home counties, East Anglia: get lost. You can manage on your own, you don’t need any help.” That is desperately crude. In times of tight margins, small incentives make a huge difference. The geography of this country is so tight and small that whereas Hampshire is excluded from the benefits of the Bill, Dorset and Wiltshire are not. One does not have to read one’s Blackmore to know that the boundaries and borders in those areas are very close and tight. Is the coalition Government’s aim to empty out as much of London, the home counties and East Anglia as possible and send everybody flooding to Somerset, Wiltshire and Dorset?
Stephen Pound
We have had some very successful imports from there in the House, particularly from North East Somerset. None the less, I am not entirely convinced that it should be the policy of Her Majesty’s Government of the United Kingdom to act in that crude way.
Talking of crudeness, advancing the idea that we can somehow assume that people will not move into a low-tax zone, like one of those Chinese economic zones, is simply not being serious about the realities of modern business. There are no Liberal Democrats in the House tonight—a happenstance that will doubtless be replicated on a longer-term basis after 2015. One thing that they tried, in one of their strange, clouded pipe dreams during the election campaign, was the suggestion that we could have geographically specific immigration—presumably with border posts on the M1, so that certain parts of the country could benefit from immigration while other parts could not. A quick glance at the map of this country shows that that simply is not possible. We will immediately have the difficulty of disincentivisation occurring in the south-east, while the benefits are transferred to the rest of the country.
The Bill is also ferociously complicated. Everybody thinks they know what a new business is, but nobody can define it. We heard in an intervention by the hon. Member for Newton Abbot (Anne Marie Morris) that apprentices are not covered.
I turn, as ever I do, to the explanatory notes, which have been written in the most extraordinary way. We read about Roy the carpenter; Sam the noble publican wishing to hand his business on to Tom; and Rosie and Jim the plumbers—none of whom is included in the Bill’s provisions. We read of an extraordinary ménage in what I had previously thought was the rather dull world of accountancy, in which Alan, Ben, Charles and David decide to link up with Ellen and Frances. In doing so, they also bring in a mutual friend, George. That is experience beyond that of most Members.
My particular favourite example is almost a Mills and Boon novel: John and Paul the dentists, who have been partners for many years but fall out. One imagines John and Paul, their eyes meeting over the face masks as they attend to a cavity together, their latex-covered digits brushing against each other. Then, one day, they fall out and set up alternative dental practices. John and Paul, once so close, are close no more. The explanatory notes should be published by Mills and Boon, not by the House of Commons.
After all those examples, what do we find? We find that the complicated reality of new businesses is such that the coda to that great, glorious, rather romantic tale is, to quote paragraph 46:
“The intended effect of this provision is that a person will be prevented from enjoying a holiday if, before beginning to carry on a business, the person enters into arrangements that mean that at some point after the person’s business has started he may undertake activities carried on by another business and, had the person been undertaking those activities at the time the business was started, a holiday would not have been allowed.”
That is reductio ad absurdum. How can we possibly even begin to take seriously a Bill that, leaving aside the romantic dentists and Rosie and Jim the entrepreneurial plumbers, creates such an incredibly complicated mechanism? That is not what we should be doing.
The Economic Secretary, as ever, cuts to the heart of the matter. I have great admiration for her. She is no stranger to the streets of Acton, where first we met. She had a reputation then for striking through all the persiflage that normally infests this place like wisteria—if that is not a painful subject for the Conservatives. She asked earlier, “Would it be better for this holiday to be extended across the whole country, or is it better for it to go to two thirds of the country?” I have to say that it should be all or nothing. The minute we try to set up those complicated differentials, there are immense problems. Why could the measure not be applied sectorally? Why could we not choose a particular sector and incentivise it? I am talking about those that employ large numbers and have a proven track record of entrepreneurial success. Why could we not continue with the enlightened work of the previous Labour Administration and provide start-up support for capital equipment and allow deferred VAT payments?
There are so many things that we could have done. What we have before us is probably—I say probably—rooted in decency and good, honest Keynesian politics. However, it has become so complicated that I fear that there will be very few businesses leaping to life in Liverpool, Manchester, Rotherham or wherever. There are some entrepreneurs in London who may say, “Without that additional advantage, why not relocate not only outside London but outside the UK?”
The hon. Member for Central Devon (Mel Stride) said that he was as comfortable operating a company in this country as he was in the United States. People will look at this measure in the context of a global economy. What we have here is crude, complicated and unfocused. I am not entirely sure that it will be the agency that will kill unemployment and bring us all into some glorious new future. I appreciate that hundreds of new civil servants will be employed to make this system work, and I welcome that; we need more work. How tragic is it that this Bill—the Bill to encourage the private sector outside the home counties—will end up employing more civil servants in London and, almost certainly, not providing that great entrepreneurial spark in the rest of the nation?
European Union Economic Governance
Jacob Rees-Mogg Excerpts(13 years, 6 months ago)
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Jacob Rees-Mogg (North East Somerset) (Con)
But does Mr Van Rompuy’s report not suggest that there should be a binding minimum set of requirements for national fiscal frameworks that would apply to all member states?
Mr Hoban
I think my hon. Friend is reading an earlier draft of the report, because we amended that language at the latest ECOFIN. I will come to this point in a minute, but we believe that fiscal frameworks should be political agreements and should not be driven by directives or regulations.
Economic Governance (EU)
Jacob Rees-Mogg Excerpts(13 years, 6 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Jacob Rees-Mogg (North East Somerset) (Con)
The Minister has drawn our attention to paragraph 18 of the report. I am curious about paragraph 16, which refers to “New reputational and political measures”, including the threat of “enhanced surveillance”. Would the British fiscal position be subject to enhanced surveillance in certain circumstances, and what would that mean?