Balancing the Public Finances

James Cartlidge Excerpts

Tuesday 11th July 2017 Westminster Hall

[James Cartlidge (South Suffolk) (Con)]

It is a pleasure to serve under your chairmanship, Ms Ryan. I had 90 seconds at the end of the Queen’s Speech debate, as the last Government Member to speak, and I will continue that speech for these two minutes.

The point I made then was that austerity is not a choice; that is a facile argument. It is a mathematical reality determined by the size of the national debt, and most importantly, the future liabilities we are starting to accrue. The Office for Budget Responsibility says that in 50 years’ time, public spending is expected at current prices to be £156 billion larger than it is today, which is the cost of the NHS plus £10 billion. We have to find that money somewhere or consign our children and grandchildren to terrible austerity.

There are two suggestions for where we find that money. The most important relates to productivity in the public sector. According to the Institute for Fiscal Studies, if the last Labour Government

“had managed to maintain the ‘bang for each buck’ at the level it inherited in 1997, it would have been able to deliver the quantity and quality of public services it delivered in 2007 for £42.5 billion less”—

that is equivalent to the defence budget. The enormous savings that come from better productivity cannot be underestimated.

The other part of this, which I feel most passionately about, comes from the debate that came up in the general election about care and the intergenerational covenant. It is a staggering fact that the value of equity in the homes of those over 65, according to Savills, is now £1.5 trillion and earnt £26,000 last year for each pensioner household, compared with average national earnings of £27,000, or a graduate entering the workplace on £19,000, with no prospect immediately of getting on the housing ladder and no occupational pension, probably retiring at 75.

If people think we can put off that issue through parliamentary arithmetic, they are deluded. Economic arithmetic means that at some point in the future, as a mathematical certainty, whether we like it or not, the issue of equity for those who benefited from the housing boom will come up. We have to decide whether we deal with it voluntarily or put it off until we are bankrupt and in desperation.

--- Later in debate ---

[Peter Dowd]

In a moment, if I may.

A Government can balance the books in many ways, and very many difficult decisions have had to be taken during the past seven years. No one doubts that. However, this Government chose the path of austerity over the long-term prosperity of everyone in the country. Some hon. Members have said that that was not a choice, but it was. The Government chose to cap public sector wages and to cut local council budgets by 40% and in certain cases by as much as 60%, with more on the way.

[James Cartlidge]

Does the hon. Gentleman remember that the 2010 Labour manifesto promised a 1% cap on public sector pay? Does he think that that was because the Labour party does not support public sector workers, or because it was the right thing to do given the circumstances of the economy?

[Peter Dowd]

The reality is that that pay cap has now been institutionalised. It has been there for virtually a decade and it will continue. The Government have also chosen to underfund the NHS and cut £4.6 billion from social care, and they now threaten huge cuts for schools. However, despite those huge and deeply unfair budget cuts to public services, the Government have been able to find £70 billion of tax cuts for those who need them least of all.

Throughout the election campaign, which I might add is a happy memory, we were told that there was no magic money tree that could be used to solve the nation’s financial problems. If anything was magic about it, it was that it turned into a cherry tree, and the Prime Minister proceeded to pick the cherries and hand at least £1 billion-worth to the Democratic Unionist party to keep her in No. 10.