I beg to move,
That this House rejects this Government’s failing austerity plan set out in the Chancellor’s Autumn Statement which the Office for Budget Responsibility has said will take public spending back to a share of national income not seen since the late 1930s, before the National Health Service came into existence; notes that the Institute for Fiscal Studies has said that this would entail cuts on a colossal scale and has raised concerns that this could involve a fundamental reimagining of the role of the state; further notes that the Chairman of the Office for Budget Responsibility has said that these spending figures were based on the policy assumption presented by the Chancellor of the Exchequer and signed off by the quad, which consists of the Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer and the Chief Secretary to the Treasury; and calls on the Government to instead adopt a different, fairer and more balanced approach, which involves sensible reductions in public spending, a reversal of this Government’s £3 billion-a-year top rate of income tax cut for people earning over £150,000 and an economic plan that delivers the sustained rises in living standards needed to boost tax revenues, in order to get the current budget into surplus and national debt as a share of GDP falling as soon as possible in the next Parliament.
I associate myself with the remarks made by my hon. Friend the Member for Barnsley Central (Dan Jarvis) in his point of order. He made the point eloquently and I pass on our condolences from the Opposition Front Bench.
The choice between this Government’s failing austerity plan and a better plan for working families at this election is now clear. The majority of people are not feeling the benefit of the recovery and the squeeze on living standards has not been so prolonged since the 1920s. When we cut through the Chancellor of the Exchequer’s rosy view and spin and look at the report produced today by the Institute for Fiscal Studies, we can see that it confirms that the vast majority of people, typical working people, are worse off than they were in 2010.
I shall give way in a moment. What has been less well known is the devastatingly corrosive effect of stagnant wages, falling tax receipts and rising welfare costs on the health of our public finances. The social security bill is £25 billion more than planned at the outset of the Parliament. Tax credit costs have risen to subsidise the low-wage economy. Incidentally, my hon. Friends know from looking at the statistics last week that, in just one year, the number of zero-hours contracts in our society has grown by 20%.
I shall give way in a moment. The number of working people receiving housing benefit has gone up by two thirds since the last general election, tax receipts have been £68 billion lower than expected and national insurance contributions have been £27 billion lower than expected. That impact on the state and health of the public finances has been a direct result of the stagnant wages and suppressed living standards in our society.
I am grateful to the shadow Chief Secretary for giving way. I will tell him why we are in this situation today: the destruction of the public finances by his right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Chancellor of the Exchequer and the former Prime Minister. When will the shadow Chief Secretary apologise to the British people on behalf of the Labour party for having put them through this misery, which we have now amended? We are restoring the strength of the British economy and we have the fastest-growing economy in the G7. That is no thanks to the shadow Chief Secretary but is thanks to this Government. Apologise.
I expected better than that from a knight of the realm. I thought that such partisanship would be beneath the hon. Gentleman, but no. I did not quite hear him mention those words “global banking crisis” and perhaps I might remind him of the cause of the difficulties our economy has faced. He did not answer my question about the state of our public finances today. He seems to feel content that the Chancellor of the Exchequer, who promised that the deficit would all have been eradicated by now, has not done exactly the job he set out to do in 2010. The hon. Gentleman also did not explain why things have not turned out as the Chancellor promised.
I would be delighted to explain it to the hon. Gentleman. It is about something called the structural deficit and the Opposition must acknowledge that the problem we face was created not just by the banking crisis but by the massive overspending of the previous Government. That is called the structural deficit.
Now we are coming to some of the issues. The hon. Gentleman feels that the Chancellor did not make an error when he promised back in 2010 that by now we would have no deficit and that it would all have been eradicated. The esteemed Chancellor of the Exchequer promised in his autumn statement that
“we will meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15.”—[Official Report, 29 November 2010; Vol. 519, c. 532.]
That is the year we are in now. This is about the Government’s record for the past four and a half to five years.
I will give way to my hon. Friend, whose constituents have been very much affected by the squeeze in living standards. He knows that it is the health of the economy and of the finances of working people across the country that determine the health of our public finances.
Will my hon. Friend explain to the hon. Member for Braintree (Mr Newmark) and everyone else who seems to have forgotten that, in 2008, the massed ranks of the Conservative party supported Labour’s public spending plans, so they cannot now pretend that they were not in this as well?
I will give way to the hon. Gentleman in a moment, because a particular part of my speech is dedicated to him.
On the “Today” programme this morning, the Chancellor of the Exchequer—for it was he—uttered the phrase:
“We’ve got on top of our debts and deficits.”
Those were the words—[Interruption.] If Government Members really believe that they have been reducing the national debt and that the deficit has been eradicated, they are either delusional or not feeling particularly well.
I thank the hon. Gentleman for giving way; he is being very kind. He has blamed the biggest peacetime budget deficit, which we inherited from the previous Government, on the global economic crisis. Will he confirm that the Office for Budget Responsibility’s public finances database clearly shows that public spending rose by £267 billion between 1997 and 2009-10, and that 71% of that rise took place by 2006-07—well before the financial crisis? Will he confirm that that is true?
I wonder whether the hon. Gentleman was making those points before the last general election. If he can point to evidence that he was warning, “No, those spending plans are entirely wrong and we shouldn’t be spending on schools and hospitals in that way,” I will give way to him again. Did he warn us about those problems at the time?
The hon. Gentleman is misrepresenting the OBR’s views. It is clear, as the Institute for Fiscal Studies has said today, that the global banking crisis had a devastating effect not just on this country’s public finances, but across the world. Conspicuous by its absence from the hon. Gentleman’s comments was any evidence that he had said in the past that public expenditure plans were all wrong. The Chancellor of the Exchequer and the Prime Minister signed up to support all the previous Government’s proposals.
Does my hon. Friend agree that Government Members should be reminded of chart 1.1 of the OBR report, which shows that total managed expenditure rose from 36% to 40% of GDP between 1998 and 2008, and then from 40% to 46% by 2009? In other words, the biggest part came from the banking crisis.
If we had a Government who understood that a connection exists between living standards, the health of our economy and the health of our public finances, perhaps we could make some progress on deficit reduction and tackle some of those issues. Instead, recent figures show that the gap between what the Government spend and their income is perpetuating at a very high level. I think it came down from £80 billion in the first nine months of last year to £74 billion in the first nine months of this year. The deficit reduction strategy is a thing of the past for this Government, because they do not realise how stagnant wages have pulled the rug from underneath it.
Of course, the inconvenient truth for the Conservative party is that it cannot whitewash history. [Interruption.] A BBC news online article on Monday 3 September 2007, under the headline, “Tories ‘to match Labour spending’”, said:
“A Conservative government would match Labour’s projected public spending totals for the next three years, shadow chancellor George Osborne has said.”
The reason Conservative Members are getting so irritated is that they do not like being reminded that it was a global banking crisis. They like to airbrush that entirely from the record. That has been their strategy throughout, but we will not let them forget that there was a banking crisis across the globe. We needed to take greater action to regulate it, but I did not hear Conservative Members calling for stronger regulation of financial services; the truth was quite the opposite.
If we had a rational debate, we would see the connection between living standards, growth and the health of the public finances.
I will give way in a moment.
I am afraid that Conservative Members are not driven by rationality when it comes to a strategy for dealing with the public finances. They are driven by dogma. [Interruption.] Oh, yes. They are on an ideological crusade to shrink public services as a percentage of national income. Their plan, when they stand up to talk about these things, is not about eliminating the deficit at all; it is beyond that. The guiding principle of the Conservative party is a desire for public services actively to decline year after year after year.
That is why so many Conservative Members have joined that fabled Conservative group, the Free Enterprise Group of Conservative MPs. The hon. Member for Spelthorne (Kwasi Kwarteng) is not in the Chamber, but he has famously called for massive reductions in public spending. The Economic Secretary, who will wind up the debate, is also a member of the Free Enterprise Group, as is her colleague the Exchequer Secretary and the hon. Members for Macclesfield (David Rutley), for Wyre Forest (Mark Garnier), for Esher and Walton (Mr Raab) and for Dover (Charlie Elphicke). I am sure there are others, although perhaps of a lower ranking order within the Free Enterprise Group structure. [Interruption.] Well, I am not a member of the Free Enterprise Group of Conservative MPs and, with members like that, I am quite glad I am not.
That organisation reveals the true face of the Conservative agenda. It believes very much in shrinking the state and it is driven by that fundamental belief. It is highly dogmatic and has used the financial crisis as a pretext for reducing the level of public investment.
That was a good try, but the hon. Gentleman knows very well that we do not have unfunded spending commitments. Our manifesto will be fully costed and fully funded. He does not need to take my word for it: we would be more than happy to let the OBR audit all of the proposals in our manifesto and to undertake to validate that they are, indeed, fully costed. I wonder if any Government Members would like to support the idea that all the political parties should have their manifestos fully costed by the OBR. Can I see a show of hands?
There is one individual: the hon. Gentleman is an independent champion on Treasury matters. I wonder whether he would like to at least say that there is a strong case for letting the OBR cut through this political nonsense and make sure that we have proper independent validation of spending commitments. Does he agree with that?
I do—absolutely. In the early part of this Parliament the Treasury Committee looked at exactly that point and there was a big and heated debate about it. Conservative members were in favour of it, but Labour members were not, and they were led by the shadow Business Secretary, the hon. Member for Streatham (Mr Umunna), who was dead against it. What does the shadow Minister have to say about that?
Well, we are all in favour of it now and I am delighted that there is consensus. In fact, I am tempted to invite the hon. Gentleman to this side of the Chamber, but we have a rigorous application process and he would need to go through a number of other stages first.
The Conservatives’ strategy is failing and there are good reasons for that. They do not realise the important role that active Government can play in supporting our economy and improving living standards. Government and public investment can make a real difference, whether by guaranteeing apprenticeships, tackling unfair energy bills, raising the minimum wage, banning exploitative zero-hours contracts or action on housing and infrastructure to boost productivity. All these would represent a better plan but the Conservatives’ 1930s strategy, coupled with that trickle-down philosophy, is totally discredited. Lavishing tax cuts on the very wealthiest 1% is not just the wrong priority; it is also the wrong strategy.
The hon. Gentleman is very kind. He speaks about tax cuts being only for the top 1%. Will he congratulate Conservative-controlled South Derbyshire district council, which is not only holding the council tax for the fifth year running, but is going to give a rebate in July to every council tax payer in the whole of South Derbyshire? They will all get a council tax rebate.
Local government matters are for individual authorities. I know that there are a number of authorities that are struggling financially and finding things very difficult, not least because the funding formula has been so heavily rigged and skewed by the Secretary of State for Communities and Local Government. I do not know the individual case of the hon. Lady’s district council. Individual local authorities will have to make their own decisions. Her constituents, like others, have to look at the situation in the round. The Government are very good at giving a little bit with one hand, and taking back so much more with the other. Her constituents know about the rise in VAT that she voted for and those cuts to tax credits, among other things.
I thank my hon. Friend for giving way. He is being far too generous to Government Members, who do not deserve it. In my council area, £328 is being stolen from every man, woman and child and 1,700 good quality public servants are being put on the dole, just to prove that the Government’s long-term economic plan is working. It is not a plan; it is a sham.
Will my hon. Friend remind Government Members that when the Government introduced their Local Government Finance Act 2012, they deliberately set up a system that penalised the poorest councils more than the richest councils, they took no notice of the amount of council tax that could be raised from different boroughs, and in doing so they destroyed the social services system, which is now leading to people remaining in hospital when they should be out—a prime example of a stupid cut which costs more in the end? [Interruption.]
Government Members are trying to shout down my hon. Friend because they do not like to hear the truth. The truth is that many of our public services are affected by the support and the funding formula given to local government. She is right to highlight the impact—
My hon. Friend the Member for Warrington North (Helen Jones) is right to highlight the impact on our national health service of some of the devastating changes that have hit social care. She made her point well.
It is bad enough that the Chancellor and the Prime Minister fight so hard against the idea that an inclusive approach leads to a stronger economy and a better plan. [Interruption.] What is worse is that the Prime Minister, the Chancellor and Government Members fully intend to accelerate the failing plan for a further five years—[Interruption.]
Order. Conservative Members have had their fun in shouting across the Chamber. The debate should settle down now, with interventions when they are taken, but a proper debate. Mr Smith, if you have a question, it is normal to stand up on an intervention, not just speak by Christian name across the Chamber. Thank you.
I may give way to the hon. Gentleman in a moment, but not just yet.
I want to pause for a moment and reflect on the implications of taking UK public expenditure on vital public services down to the 35% level that was announced in the autumn statement. These plans would mean that we are only halfway through the cuts. These are plans for the biggest cuts to public services since the second world war. The Office for Budget Responsibility says on page 148 of its report that
“the closest equivalent in the National Accounts implies that by 2019-20 day-to-day spending on public services would be at its lowest level … since the late-1930s as a share of GDP.”
The OBR goes on to say—Government Members may not have heard this—that
“total public spending is now projected to fall to 35.2 per cent of GDP in 2019-20, taking it below the previous post-war lows reached in 1957-58 and 1999-00 to what would probably be its lowest level in 80 years.”
That recalls a time before we had an NHS, when children left school at 14, and when life expectancy was just 60. That is why Paul Johnson of the Institute for Fiscal Studies said on 4 December that we can expect
“Spending cuts on a colossal scale…taking total government spending to its lowest level as a proportion of national income since before the last war.”
That is one of the few points on which I agree with the hon. Gentleman. He has been quoting selectively from various institutions. He has just quoted the IFS. The director general of the IFS has said that
“if the Conservatives win the election they will neither, despite what the opposition would have us believe, destroy the NHS nor return the welfare state . . . to 1930s level of provision.”
Does the hon. Gentleman accept that, and will he now withdraw his previous comment?
With the greatest respect, I do not accept that. I will come to that shortly.
When we look at the effect on public finances of the plan that the hon. Gentleman has signed up to with the Free Enterprise Group and with the Prime Minister and the Chancellor, the effect on our public services, not least the NHS, could be exceptionally difficult and potentially implausible.
Paul Johnson of the IFS asks:
“How will these cut be implemented? What will local government, the defence force, the transport system, look like in this world? Is this a fundamental reimagining of the role of the state? ... If we move in anything like this direction, whilst continuing to protect health and pensions, the role and shape of the state will have changed beyond recognition.”
Is it any wonder that UKIP has backed Conservative plans? No surprise there.
Be under no illusions—the Conservatives’ pathway for the next Parliament is a statement of intent to wage war on public services, and people need to understand the tremendous risks involved. It is a major threat to the viability of public services, which would wreak havoc especially in non-ring-fenced areas such as policing, border controls, child protection and social care. Such extreme plans would decimate skills, infrastructure, research and development and science, undermining the competitiveness of our economy. Devastation on that scale would not be tolerable, which is why we suspect that the Conservatives have secret plans to hit household finances in other ways.
The difficulty that Government Members have is the question of motive. When people across the country see Sure Start centres, police stations and NHS walk-in centres closing, underinvestment in schools and queues outside our A and Es, they know what a Tory Government have done already, and they know what will happen if we go back to their 1930s plan.
The whole country will be affected, including Scotland, Wales and Northern Ireland, if the Conservatives are given a further five years for their ideological plan. The plan has not just failed to date; it will continue to fail and will continue to harm those on lower and middle incomes and those who depend on public services. The Conservatives will not set out where their billions of social security cuts will hit, for example, so we have to take past performance as a guide.
I will not give way again, because I want to make some progress.
Tax credits, for example, have already been hit hard in this Parliament. The typical household is £1,127 worse off this year as a result of the tax and benefit changes introduced since 2010. Those who depend on tax credits to make ends meet need to be aware of what five more years of Conservative Government would mean.
There is a better, sensible and balanced alternative, a sensible fiscal framework aimed at getting the current budget into surplus and national debt falling as soon as possible in the next Parliament. We must make progress and cut the deficit every year. Where we make promises in our manifesto, supported by the hon. Member for Wyre Forest (Mark Garnier), they will be fully funded—we want them to be audited independently by the OBR—and they will not involve additional borrowing. We need workable efficiencies and spending reductions in non-protected areas. We have already published seven of our interim zero-based review reports listing examples of where those could be made. We need fairer choices on taxation, not a £3 billion give-away to the richest 1% earning over £150,000 a year. Fundamentally, we need rising living standards and sustained growth to repair tax receipts and control welfare spending, which has got totally out of control under this Government.
This Government’s failing plan has not eradicated the deficit, but it has left us with an NHS in crisis, the bedroom tax and 20 million meals served in food banks last year. Their sharp turn towards a right-wing ideological approach would cull public investment to levels not seen since the late 1930s. For our public services, for policing, for social care, for defence and for the NHS, at this election the stakes have never been higher. I urge the House to reject the Conservatives’ risky and extreme approach and instead back Labour’s fairer and better plan for the future.
Well, here is another opportunity to tell the House about the successes of our long-term economic plan. I must say that I am impressed by the Labour party’s courage in selecting the economic recovery for the last Opposition day debate of this Parliament, but not by its judgment. Given the catastrophic situation in which Labour left the country after 13 years in charge, Members might have thought that it would have the good grace to accept that our economic plan is putting Britain back on track, delivering growth, jobs and prosperity for hard-working households up and down the country.
It is right that we focus on spending totals, but there is an even better argument. A careful academic study of National Audit Office and Public Accounts Committee reports over Labour’s time in government recently found that a staggering £230 billion was wasted on incompetence, inefficiency and undelivered programmes. That is a real legacy of 13 years of wasted Labour government.
My hon. Friend is absolutely right. Indeed, as a distinguished Chair of the Public Accounts Committee, he was heavily involved in identifying that wasteful spending. One of this Government’s achievements is the measures we have introduced to reduce such wasteful spending. In particular, the efforts of the Minister for the Cabinet Office in pushing forward reform and identifying efficiency savings have reduced the cost of Whitehall strikingly.
Is not it disingenuous—some might even say slightly dishonest—to pray in aid references to 35.2% of public expenditure, as opposed to GDP, as ideological extremism when we need look back only 12 years to the Blair-Brown Government to find a time when the percentage was 35.9%, which is almost indistinguishable? Is not that trying to hoodwink and fool the voters, and is not that pretty dishonest?
My hon. Friend makes an important point. The statistics he uses are absolutely right. With regard to public spending on services—I will turn to the detail in a moment—we are talking about returning to the levels of 2002-03, before the previous Government lost control of public spending.
My hon. Friend is absolutely right. I was struck that when it came to the substance of the shadow Chief Secretary’s speech, he rather rushed through that process. He tells us that he does not like our spending plans—I will come to the details of that in a few moments—but he does not tell us how much extra he would spend, or, if he is going to spend extra, how he is going to pay for it. Will it be through higher taxes or through more borrowing? We did not get any indication.
If the Minister wants to clear all these things up and make sure that we have an independent appraisal, does he back the hon. Member for Wyre Forest (Mark Garnier) in supporting the idea that the Office for Budget Responsibility should be allowed to report on the proposals of all the parties? What is so wrong with that?
I am afraid that that is a bit of a red herring. If the shadow Chief Secretary wants to set out what his plans are, and if he believes that spending needs to be higher than it would be under a Conservative Government, he can tell us how much higher—he does not need the OBR to look at his numbers. Does he believe that spending should be financed through more borrowing or more tax? What is it to be—a tax bombshell, a borrowing bombshell, or both? I will happily give way to him. He does not want to answer.
The Minister will recall that prior to the 2010 general election, the then Conservative Opposition promised to get rid of the deficit by the end of this Parliament. We have already seen that the Government are planning to borrow £200 billion more than was originally estimated, which is clearly way off track. If they could not get their promises right before the last election, why should we believe them, in government, about what they will do after the next election?
So there we have it—that is the complaint from the Opposition. Their big problem is that we have not cleared up their mess fast enough. That is the essence of their argument. They have opposed every difficult decision we took on the path towards recovery—every spending cut and every welfare change. As for the deficit, they usually forget to mention it. All the rhetoric we are hearing from them is about how they would reverse the decisions that we have taken and presumably turn the clock back to 2010—the time when we had the worst deficit in peacetime history, when we were borrowing £1 for every £4 spent, when we had an economy whose ability to pay its way was questioned internationally, and when the outlook of the Labour Government could be summed up by the note left by the then Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne):
“I’m afraid there is no money.”
This Government have made great steps forward to get us out of that mess. In 2014, our growth rate was 2.6%—the highest of any major advanced economy. Our deficit is down by half as a percentage of GDP. Thanks to the stability that we have put in place, businesses have created 2.16 million private sector jobs since the first quarter of 2010, each and every one representing someone in the UK who is now standing on their own two feet. Some 2.1 million more entrepreneurships have been set up, with over 750,000 more businesses than in 2010. That has all happened under this Government.
Can the Minister explain why the real Chief Secretary is not responding to this debate? Is it because when the OBR finally audited the Government’s future plans and found that they would take us back to the 1930s, the other coalition partner peeled off and left the Tories isolated?
May I ask the Minister about cuts to the Arts Council budget? So far, this Govt have cut it by 30%, but on 5 January, the Tory party produced a report saying that £83 million more would be cut from Arts Council, and that this
“cost is based on the real terms decrease in the Grant in Aid for the Arts Council from 2014/15 to 2015/16”.
Does he stand by the figure that the Arts Council will be cut by £83 million this year?
I recall the debate on arts spending at the beginning of the year. If I remember correctly, the note that was published showing the Labour party’s areas of spending commitments included a commitment on the arts, but the shadow Chancellor very quickly ruled it out. He said it was not correct, and the deputy leader of the Labour party had to withdraw what she had previously said on that subject. That is my memory of it.
If we have any future announcements about the Arts Council budget, we will make them in the usual way.
As we have seen only today from the report of the Institute for Fiscal Studies, average household incomes are back to the levels they were at before the recession began and they are expected to grow by well above inflation this year, while income inequality is down and pensioner poverty is at record lows under this Government: our plan is working.
The Labour party claims that we are taking public spending back to the level of the 1930s, but let us look at the facts. Even on the assumption that 100% of our future consolidation comes from cuts to departmental expenditure, which is not the Conservative party’s approach, the Government’s plans will, as my hon. Friend the Member for Peterborough (Mr Jackson) has pointed out, put spending on public services at their lowest real-terms level since 2002-03, so instead of the late 1930s, we are talking about the early 2000s—only 65 years out.
Throughout the debate, the Opposition have attacked our long-term economic plan, which is delivering the highest economic growth of any developed economy, and has created more jobs in this country than in the whole of Europe added together. Will the Minister remind the House whose economic policies the Labour party was exalting? I seem to remember something about “What Hollande is doing in France I want to do in Britain.”
My hon. Friend makes a very important point, to which I will return in a moment.
Although we have made considerable progress, the reality is that we face further difficult decisions. On that basis, the House signed up to the “Charter for Budget Responsibility” last month. It enshrines in law that the Government elected in May, whatever their colour, must have a plan to tackle the deficit and to bring our national debt under control. Pretty well all of us, with one or two exceptions, committed to achieving falling national debt as a share of GDP by 2016-17, and to balance the cyclically adjusted current budget by the end of the third year of the rolling forecast period, which is 2017-18.
On the latest forecasts, the charter requires about £30 billion of consolidation in the first two years of the next Parliament. Under the plans set out by the Chancellor, it will be achieved by bearing down on spending, the welfare budget, and tax avoidance and evasion. To break the figure down, that is at least £13 billion of savings from Departments’ spending, at least £12 billion from welfare and more than £5 billion from tax avoidance and evasion.
The Labour party agreed to the charter: the motion was passed by 515 votes to 18. Perhaps it believes that a fiscal consolidation of £30 billion is too much. After all, that is the position of the Greens and the nationalist parties, who have explicitly said that they would borrow more over the next three years. That position is irresponsible, but I accept that it is coherent with everything else that those parties are saying. Labour, however, has voted to accept that a fiscal consolidation of £30 billion is necessary, so where is it coming from?
In a moment. If the Labour party does not believe in making savings from departmental budgets or welfare, where is the money coming from? To quote its leader,
“if we just try and cut our way to getting rid of this deficit, it won’t work.”
That is the Labour party’s position. Out come the old answers, but where is the money coming from?
The Minister must have the charter for budget responsibility with him. I will give him a moment if he wants to pick it out of his file. Where does it say in the charter for budget responsibility—perhaps he could give us a page or line reference—that the figure is £30 billion? Can he quote the OBR on that figure either? Is it not the case that the charter for budget responsibility was about agreeing to focus on current budget plans, and not about the absolute budget surplus that his party was apparently committed to? What on earth was going on?
That position is supported by the IFS. The figure is £30 billion. Where is it coming from? The Labour party simply does not have an answer. If it is not prepared to accept the £30 billion figure, it will be borrowing more. If it does accept the £30 billion figure, where is it coming from? If it is not coming from spending, it must be coming from tax.
Does the Minister recognise the figure given by Paul Johnson of the IFS in The Times on 13 January, when he said that Labour’s plans amounted to £170 billion more on the national debt by 2020, which is about a third higher than the entire NHS budget? That is what we are talking about.
That is the key to the matter. The truth is that there will be either a tax bombshell or a borrowing bombshell if the Labour party is in office. It fought the last general election campaigning for an increase in the jobs tax. I have a strong suspicion that a future Labour Government will look at precisely that to fill the gap.
We stand by the OBR’s projections. We have made considerable progress at a time when other economies have struggled and when there has been a eurozone crisis. But for the steps that we have taken, our debts would have risen much more quickly.
Let us return to the position of the Labour party. Where are its answers on deficit reduction? We get the old answers, which are that it would squeeze the rich and reintroduce the 50p top rate of tax. It conveniently forgets that the previous Government had a top rate of 40p for all but 36 of their 4,758 days in office.
The House will want to be aware that our move to the 45p rate cost only around £100 million—a small price to pay for making the international message loud and clear that we are open for business. How much does Labour think that reversing that policy would raise? I am happy to give way to the shadow Minister on that. To say that a return to the 50p rate would bring in an extra £3 billion a year, which is what he implied, is frankly ludicrous, and I challenge him to identify one reputable economist between now and 7 May who will support such a position.
The Minister has probably forgotten that when it came to the millionaires’ tax cut, the Labour party abstained and did not vote against it. More importantly, the National Institute of Economic and Social Research said that if it were not for austerity, UK GDP would be 5% higher. The tax take with 5% more GDP is about £32 billion, or equivalent to 30% of the current deficit. Does the Minister accept that austerity has been a mistake and that we should have gone for growth through investment?
I am not persuaded by the argument that if we borrow more we ultimately borrow less—I am afraid that is far too easy an answer.
The Government believe that those with the broadest shoulders should bear the biggest burden, and as the Institute for Fiscal Studies confirmed today, that is exactly what is happening. That is why the richest in our society now pay more in tax than at any point under the previous Government. The Labour party can lecture us all it likes about taxing the rich, but it was not on our watch that private equity managers paid a lower rate of tax than their cleaners. It was not on our watch that the wealthy could sidestep stamp duty, or that higher earners could disguise their remuneration as loans that were never repaid. Under our watch, however, every single Budget that we introduced raised revenues from the most well off in society.
Will the Minister confirm that, although the motion talks about reversing our changes to income tax, the latest HMRC data show that someone who earns £10,000 to £15,000 a year will pay 54% less income tax than they did under Labour, while someone who earns £1 million to £2 million pays 14% more?
The Minister is right to point out those things, and, as my hon. Friend the Member for Esher and Walton (Mr Raab) pointed out, we have taken many people out of tax altogether. On Labour’s watch, if it were ever to be in government, the deputy leader of the Labour party has already said:
“Yes I think people on middle incomes should contribute more through their taxes”.
Therefore anyone earning more than £26,000 will have a tax rise under the next Labour Government. That is what the deputy leader of the Labour party has committed to.
As I said, the money has to come from somewhere, and middle-income earners are probably pretty high up the list. To be fair, it is not just the 50p rate, although that is the only policy mentioned in the motion. In television interviews, the shadow Chief Secretary to the Treasury has proclaimed one other policy to reduce the deficit. This is the key to deficit reduction and the policy that will restore public finances to health: a future Labour Government will put up fees for gun licences. How much will that raise? A whopping £17 million—except, to be fair, the shadow Home Secretary has already pledged to spend that money elsewhere.
The hon. Gentleman urged me to give the Minister both barrels, but I will try to resist. It is all very good banter trying to claim that that is the only way we would deal with the deficit, but of course that is absolute nonsense—when asked for examples, we give examples. The Minister raises an important point about gun licences. It is a small amount of money but it is still worth doing. Is he saying that we should not raise gun licence fees? Is he ruling that out because he thinks it is the wrong idea?
It was an attempt to show how ridiculous the Labour party’s economic policy is when the only example it puts forward, apart from the 50p rate, which is likely to cost money, is increasing the cost of gun licences. I did not really expect the shadow Chief Secretary to take it seriously that that was the big policy. Does he disagree that the shadow Home Secretary has already claimed that that money will be spent on policing? It is going to be spent on policing, is it not? There was a time in debating these matters when the big argument from Labour Members, their big macro-economic analysis, was that we were going too far, too fast. Now it has come down to this. What have they got a few days away from a general election? They have a policy on gun licences—that is it. What has the great Labour party come to? Gun licences!
Perhaps the Minister can help me out. The Labour party had a top tax rate of 40% for 155 of its 156 weeks in office, which apparently was the epitome of social justice. Why does he think Labour is attacking us for having a 45% rate, which brings in more money but is suddenly seen as feathering the nest for the rich?
My hon. Friend is absolutely right. The problem with the 50p policy is that it is not an effective way to raise revenue. Our record is very clear: we have been very effective at getting more money out of the wealthy. As we see from the IFS analysis today, the wealthiest have made the biggest contribution. What we are left with is a symbolic gesture, not a tax policy.
Does my hon. Friend not agree that it is quite remarkable that the Labour party has not yet come out categorically and refused to raise taxes through a jobs tax? Is it not worth remembering while we are debating a possible jobs tax—or not, depending on what they want to do—that there has never been a Labour Government who have not failed to increase unemployment?
My hon. Friend is absolutely right. It is right that we highlight that point. They do not like our spending plans, but what are they going to do? Are they willing to borrow more? Are they willing to tax more? It must be one or the other or both. Which is it to be: a borrowing bombshell or a tax bombshell?
I want to bring the Minister back to the point he was making about five minutes ago, when he said that there should be £12 billion of cuts to the welfare budget. Would he like to spell out for the House and the nation what those £12 billion of cuts will be?
We will set out the full details in due course, but we have already said that £3 billion of that will come from freezing benefits. If the Labour party is ruling out touching the welfare budget, which is a considerable part of public spending, where else is the money coming from?
I thank my hon. Friend for giving way. He is right to try to pin down the Opposition on how they will fund their spending commitments, but it is a forlorn hope. It is like trying to bottle fog. He should remember their cornucopia of endless money, the bankers’ bonus tax. They have used it 12 times already. Surely they will be using it again before the election.
I am most grateful to the hon. Gentleman for giving way at last.
The “Charter for Budget Responsibility” states that the Treasury will balance the current budget
“by the end of the third year of the rolling, 5-year forecast period.”
Can the Minister point out the reference to 2017-18? If he cannot, his figure of £30 billion of cuts is entirely bogus.
It is by looking at where we are and then adding three years. It is really not that difficult.
In the motion, the Opposition attempt to evade the hard choice between more tax or more borrowing facing those who oppose spending cuts by saying they will grow the economy faster so that wages go up and the problem is solved, despite this being a structural issue. Every Government want the economy to grow faster. When François Hollande came to power, with a new economic model praised by the Leader of the Opposition, I have no doubt that he wanted the French economy to grow faster, but it did not, and I have no doubt that in 2008 the Labour Government also wanted the economy to grow faster, but that did not prevent it from shrinking by 6%. Wanting an economy to grow is not the same as achieving economic growth, and nor is it an excuse for not making the hard decisions necessary to reduce the deficit.
Where is Labour’s plan for growth? If we examine the motion, do we find a single policy that would help economic growth? One specific policy is mentioned, about punishing high earners, but that is hardly a policy for growth. After five years, where are these policies for growth? They could mention increasing the number of apprenticeships, reforming banking regulation and increasing infrastructure investment, except that those are policies delivered by this Government. Or they could set out how they would encourage business investment by putting in place competitive business taxes and reducing regulatory burdens, except those are policies they intend to reverse. Or they could mention improving education standards or securing the future of universities, except that they would abandon the progress we have made, not least with their shambolic policy on tuition fees.
Labour’s policies have three characteristics: they are not long term, they are not economic, and they do not constitute a plan. The motion reveals a vacuous Opposition horribly ill-prepared for government. The motion, like the Opposition, has little to say on macro-economic policy and nothing to say on supply-side policy. It is evasive on the deficit and incoherent on economic growth. The motion, like the Opposition, is destined for a heavy defeat.
For some reason, my mind is drawn increasingly to the time that people are in particular positions, and I note this afternoon a conspicuous absence on the Liberal Democrat Benches. I think back to the early part of this Parliament, when the right hon. Member for Yeovil (Mr Laws) held the post of Chief Secretary to the Treasury for a total of 17 days, and I recall being in the Chamber when, with barely disguised glee and in a remarkable contribution that has continued in the approach of the coalition, he began the process of cutting back on investments, some of which have since been re-announced. This was at a time when the economy was beginning to grow after a long global banking crisis out of which we are only just starting to emerge. Since then, for the past five years, for the vast majority of constituents in all parts of the UK, things have been getting worse, not better. The coalition justified it on the basis of shoddy analysis of how our economy and situation was the same as that in Greece.
My hon. Friend makes a different point from the one I was making, but an important one. The reduction in the price of a barrel of oil has had a significant impact on revenues. If Scotland had become a separate country or was in the process of becoming a separate country, the impact on revenues would have amounted to the equivalent of the entire education budget. That much would have been wiped out in the course of the last few months, highlighting the dangers of an economy being over-reliant on what the record shows to be such a volatile commodity, and indeed, by definition, a declining one, given the amount of oil still left in the ground. This is an important point for Scotland.
The tenure in office of the current Chief Secretary to the Treasury has been slightly longer, and 1,591 days ago, the Prime Minister said:
“In five years’ time, we will have balanced the books.”
He has 63 days left in his job, and I suspect that he is not going to meet that promise.
No, I am going to make some progress, and I have a relatively short time.
The Office for Budget Responsibility has said that borrowing for 2015-16 is set to be £75 billion and that the Government are borrowing over £200 billion more than they planned in 2010—hardly an exemplar of a functioning economic policy.
The last five years, then, have indeed seemed long term—and they felt long term to many of my constituents, who have suffered from declining incomes and struggling to find work. During that long-term five years, they have certainly suffered real economic pain. Such economic pain might well not be appreciated by the Government Members who have chosen to turn up this afternoon, but it is real and long-term economic pain to my constituents. If Government Members were to pay some attention to the entirety of their constituencies, they would find that it is exactly the same for them.
I believe that the Government have failed their own test on the economy because they have failed the test set for them by people’s expectations. Over the last five years, they have failed to create an economy that works for the majority of people. Working people are, on average, £1,600 a year worse off than they were at the start of the Parliament. Wages are stagnant for many people, and I know that all too many of my constituents who have been able to get back into work are in low-paid, insecure work. They are regularly on contracts that make them wait for a text message at the start of the week to be told how many hours’ work they are going to get for that week. [Interruption.]
I note the hon. Member for Macclesfield (David Rutley) shaking his head in disdain, so I invite him to come to my constituency to meet people in my surgeries each week who are suffering as a result of what has been allowed to happen and because of the failure of his party to take action to tackle these types of exploitative contracts. If he thinks that that is a fair basis for our economic growth, I suggest that he is not speaking even for his own constituents, let alone the majority of people in this country.
The hon. Gentleman argues with passion; I argue with similar passion. If he looks at the statistics, he will find that it is clear that the vast majority—more than 70%—of the jobs created are for full-time, permanent work. That benefits his constituents as well as mine. It is working.
Many people in my constituency who were out of work and are now in work are employed on zero-hours contracts—as I said, contracts that make them wait for a text message at the start of the week to find out whether they will get any hours that week. They have variable levels of hours from week to week. It does not involve simply doing a top-up job or an additional job. In many cases, this provides these people’s main source of income, and these contracts have increased over the last five years. That is the reality, and the hon. Gentleman should be ashamed that his Government have failed to tackle it. It is a disgrace that this is where we are in the 21st century—and that is exactly where we are at present.
Indeed. My hon. Friend makes a very important point—that many of the people accessing and using food banks are the same people who are increasingly reliant on in-work benefits. They are not out of work or seeking to be in work, but the hourly wages they receive are not enough to heat their homes or put food on the table for their families. That is a notable feature of the economy at present.
No, I will not. I have already given way three times, and I am running out of time.
As a result of low and stagnant pay, tax receipts are more than £68 billion lower, and receipts from national insurance contributions are £27.3 billion lower, than they were expected to be five years ago. Chronic low pay only drives up the costs of welfare, and the welfare bill is £25 billion higher than it was planned to be in 2010. The problems have been exacerbated over the last five years, not solved, and that has skewed the economy towards the interests of the few rather than the many. We need a fundamental change of approach: we need an economy that is focused on ensuring that people can earn decent wages and survive. That would enable us to increase the tax take, and to reduce the benefits bill. The choice that we shall all have to make at the general election will be crucial to the future of many of our constituents.
My own constituency badly needs that change of approach. Youth unemployment is 5.7%, well above the United Kingdom average of 3.2%, and median wages last year were 10% lower than the United Kingdom average. Every week I hear from people who are concerned about the contracts under which they are employed and about their prospects, and who fear that their children will be unable to find work. To those people, the last five years have meant a Government who have failed them.
As I have said, there will be a choice to be made at the general election. The Government have demonstrated that their plan is failing. They boast of economic success, but they have created the early signs of a recovery that works only for a handful at the top. There is an alternative to a failing plan, and that is a much better plan. The economy must succeed for working families throughout Britain: it must succeed for everyone in the country. I think that, in 63 days’ time, the people of this country will succeed where the Prime Minister has failed, and will hold him to his pledge. He has failed on the economy, so they will kick him out, and it will be good riddance to a failed Government.
We seem to be living in two parallel universes. What the Opposition do not seem to realise is that we were facing bankruptcy as a country. We were in economic meltdown, and the markets were judging us by raising the cost of our borrowing. That is the best judgment of all: the markets know best when it comes to judging what is going on.
We have heard a great deal from the Opposition about a banking crisis. Of course there was a banking crisis—there was a worldwide banking crisis, we all know that—but the real problem with the way in which the Opposition were managing our economy was something called a structural deficit. We were spending much more on running UK plc than we were bringing in.
I am not sure that it is wise for us to go on all the time about the fact that we have cut the deficit in half. We have cut it in half, but that disguises the real crisis that we are still experiencing. We are still borrowing £90 billion a year, which means that we cannot relax for a moment. It is madness to make unfunded borrowing and spending commitments.
My hon. Friend is absolutely right. That is why we had an emergency Budget which laid out clearly our long-term economic plan.
Let us consider our record in government since we picked up the pieces that were left by the last Government. As my hon. Friend has just said, we have halved the deficit. That is important, because it has kept interest rates low for mortgage holders and for business. Income tax has been cut for 25 million people, by about £705 per person. The personal allowance has been raised from £6,500 to £10,600, and some 3.4 million people have been taken out of tax altogether. Benefits have been capped to reward hard-working people. Employment is up, and youth unemployment is down. The Million Jobs campaign, which I put together, managed to persuade the Chancellor to abolish national insurance payments for those who hired people under 21. That has paid dividends, because it has accelerated the decline in youth unemployment. The state pension is also up by £800. Fuel duty has been frozen. Energy costs are down. Overall, wages now are rising higher than inflation; on the latest statistics, total pay is up by 2.1%, whereas inflation is only up by 0.9%.
It is interesting that the hon. Gentleman should talk about our welfare policies as his side wants to increase spending, whereas we are trying to cap it at a reasonable state—£26,000, which is £35,000 pre-tax, which is higher than the average wage of most people.
Labour was financially reckless in government and, it seems, is even more financially reckless in opposition. Already it has £20.7 billion of unfunded spending commitments for 2015-16, which is £1,200 per household. HM Treasury estimates Labour now has £32 billion of borrowing for 2020-21 and £166 billion over the next Parliament—the next five years—or £10,000 extra per household. I hope voters are listening to that. That is £10,000 extra per household; they should remember that before they go into the ballot box. We have learned today that Labour’s new great tax policy is to increase the cost of a gun licence. So Labour’s policy going forward is, as always, tax more and borrow more.
I know, and I suspect Labour will be going into the election with a blank canvas, and no doubt voters will make their judgment on that.
Going forward, the Government are committed to raising the personal allowance once again—up from £10,500 to £12,500. That is a tax cut for 30 million people and removes 1 million of the lowest paid out of tax altogether. The Conservative Government are committed to balancing the books by the end of the Parliament, which the Opposition party is not, and a Conservative Government are committed to reducing Government spending to 35.2% by 2020, as the hon. Member for Nottingham East (Chris Leslie) pointed out. I remind him that when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor he had borrowing at 35.9%, so we are not talking about a huge difference between the 35.2%, which is apparently an absolute crisis, and the 35.9% in 2000.
To conclude, the Government have a track record to be proud of: reducing spending; reducing the deficit; reducing taxes; and reducing unemployment. Here are the words of Christine Lagarde of the International Monetary Fund—although I will not say this in a French accent. She said:
“Certainly from a global perspective this is exactly the sort of result that we would like to see…More growth, less unemployment, a growth that is more”—
wait for it—
“inclusive, that is better shared, and a growth that is also sustainable and more balanced.”
These are the words of Christine Lagarde this year, on 15 January 2015, at an IMF round-table discussion in Washington.
The Government’s long-term economic plan is working, and hopefully on 7 May the British people will not give the keys back to the guys who crashed the car.
We debated similar issues early in January, when the Government laid out their proposals for the “Charter for Budget Responsibility”. I explained in that debate that the Government had promised that they would eradicate the entire structural deficit within the five years of this Parliament. It is important to understand what the Government pledged. They specifically stated that debt would begin to fall as a share of GDP in 2014-15, that the current account would be in balance in 2015-16 and that public sector net borrowing in that year would be barely £20 billion. We now know that, on their numbers, debt will not begin to fall as a share of GDP until 2016-17 at the earliest, that the current account will not be back in the black until at least the following year and that public sector net borrowing will not be £20 billion for the forthcoming year but almost four times that amount, at £75 billion. In short, the Chancellor and the Government have failed to meet a single one of the key targets that they set for themselves. The Tory policy of a fixed-term approach to deficit reduction strangled the recovery in the early years of this Parliament, and with tens of billions in cuts and tax rises still to come, the inescapable conclusion is that austerity has failed.
Does the hon. Gentleman not recognise that there was a big issue, and that it was called Greece? The problems there and in the eurozone blew everything off course completely.
That is precisely why the Government should have taken a flexible approach to deficit consolidation, rather than a fixed-term approach. I will say more about that in a moment.
It is useful today to identify precisely what is on offer, other than the £30 billion of extra cuts that were promised by the Government in January. That is, of course, no more than a continuation of the existing failed policy of fixed-term deficit consolidation and a plan for further attacks on the welfare budget. It is a plan to balance the books on the backs of the poor, which we now understand means taking levels of public expenditure back to those of the 1930s.
Today’s motion calls for a
“different, fairer and more balanced approach”
and I agree with that. The key thing that needs to be changed is the fixed-term approach to cutting the deficit. Instead of that approach, which has self-evidently failed so far, we should have a more flexible, medium-term strategy whose first principle should be about reducing debt to a “prudent” level. It is important that the Government of the day should specify what is or is not prudent, depending on the real circumstances that they face, precisely to deal with the kind of external shocks that the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) has just mentioned.
It is a Labour motion, and I might not even support it. I am merely pointing out that the Tory party told us that the current account would be back in the black, but it is not. We are borrowing almost £80 billion this year. The Tories’ austerity programme has failed.
We need to reduce debt to a prudent level, with the Government of the day specifying what is or is not prudent, depending on the circumstances. A second principle should be that, once debt is reduced, the Government should maintain a balanced budget on average over the medium to long term, not in a way that would prevent them from implementing the steps they believed necessary to achieve their long-term objective, but in order to afford them the flexibility to deal with external shocks over the medium term.
A third principle is that the Government should achieve and maintain a level of net worth that provides a buffer against unforeseen factors. A fourth calls on the Government to manage fiscal risks prudently. A fifth principle is that the Government should pursue policies consistent with a reasonable degree of predictability about the level and stability of tax rates. That is incredibly important, because the tax system, tax rates and tax certainty form a vital component of fiscal stability and fiscal responsibility.
I am sorry; I have given way already, and we are time-limited.
The motion also calls for a programme to get the current account into surplus and to get the national debt falling as a share of GDP as soon as possible. In principle, I agree with that, but my party wants to see an explicit end to austerity because, as the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) pointed out, people have suffered enough already. That is why we have set out a plan for a modest real-terms increase in departmental spending that would deliver £180 billion of investment in the next Parliament. Our plan would result in the deficit coming down, from 3.4% to 3%, 2.5% and 2.1% of GDP from 2016-17. It is a plan that would see the national debt fall as a share of GDP, albeit on a different, more shallow trajectory. It is a plan that would in the first year, 2016-17, not see £23 billion of extra Tory-Liberal cuts, but £25 billion of investment. We think that is extremely sensible, and it ties in to what the Chief Secretary said about active government and what difference that and the Government’s investment can make.
The motion also calls for
“sensible reductions in public spending”.
Our plan is to see a modest increase in departmental spending. Although I would most certainly accept a sensible reduction in spending on Trident and its replacement—a policy apparently supported by three quarters of Labour candidates—that is not on offer today. Sadly, what Labour appears to have proposed is no more than keeping to the Tory spending cuts, and we simply cannot support that.
I hope that tomorrow, in Scotland, Labour will take a different view, and support a real end to austerity and a real increase in public spending, because we do need to take a different approach. We need to take a different approach to economic management because if we do not, we will have set in concrete a further attack on our welfare budgets. With 22% of our children, 11% of our pensioners and 21% of our working-age adults in Scotland in poverty, launching a further attack on welfare, as this Government are planning to do, is simply wrong. We also need to change the way we manage the economy or we will be faced with a plan, set out in January by this Government, for future discretionary consolidation that changes the ratio of cuts to tax rises from 4:1 to more than 9:1—in effect, trying to balance the books on the backs of the poor. I am sure no Opposition Member would support that.
This motion also talks of the need for
“an economic plan that delivers the sustained rises in living standards needed to boost tax revenues”.
That is sensible, so I hope the Labour party and others would support the Scottish Government’s economic strategy, which was published yesterday. In particular, I hope they would support the Scottish business pledge, which is designed not just to promote economic growth, which is necessary, but to drive fairness and help tackle inequality at the same time. In return for assistance from the Scottish Government, businesses will be required to pay the living wage, commit to an innovation programme, cease using zero-hours contracts, agree to pursue international opportunities, make progress on gender balance, support youth and so on. That is the kind of initiative that should form the bedrock of any genuine long-term economic plan, and it is one that recognises not only that business growth and economic growth are essential to fund and pay for our vital public services, but that squeezing out inequality is an absolute prerequisite for a growing economy in the first place.
I am sure that there will be more of this debate as we move towards the end of this Parliament and into the election. I am disappointed that Labour appears on its last Opposition day to have said that it will stick to the Tory spending cuts. Let us hope that the results after the election ensure that everybody can change their mind.
It has been a pleasure to speak twice this week under your guidance, Mr Deputy Speaker. If this is to be my last speech in this Parliament with you in the Chair, may I say that I have had an absolutely great time under your guidance as Deputy Speaker? However, I do hope to come back, and to see you there again and we could have another life of five years together.
Today’s issue is a serious one, but I would like this speech to be in the right vein; it should deal with what this means to those watching our debate today. We are bandying figures about all over the place, but what do they actually mean to people? I can talk only about my experiences over the past five years. I was a newly elected MP and we were going through the Lobby making decisions that we knew were going to affect people’s lives. But we had to take these decisions to get the country on the right track. Over my five years as a first-term MP—after the election I hope to be in a second term, but I do not count my chickens—I have wanted to see what has happened in my community. The first thing I remember talking about was a road in my community. I am glad to say that that road, which took 70 years to build, came to fruition with my guidance and under the coalition Government. Costing £123 million, the road will join up the M6 with the port at Heysham and will increase the prosperity in the area tenfold. For every £1 spent on the road, £10 will be put back into the local economy.
We are considering building a new power station. My constituency already has two nuclear power stations, which account for 2,000 jobs in the area. Thankfully, again under this coalition Government, we have a footprint for a third nuclear power station, which will be completed in the next five to 10 years, creating a further 2,000 new jobs.
Let me turn now to schools. Without wanting to be overtly political, schools that were closed down under the previous Government have reopened under the coalition. In my constituency, a school was closed down and has now reopened. Sadly, another school, Skerton, has closed, but I am fighting to get it reopened as a free school. We can find the money to carry out all this work at a time when austerity is at its worst.
Sea wall defences have been built in my constituency, at a cost of more than £10 million. A mandate went out just before the last general election in which five out of the 10 categories of coastal protection were wiped away. Thankfully, we have put two of them back, and we have saved an area off Sunderland Point.
My hon. Friend has talked a great deal about how much money the Government have put into his area. Does he also not recognise that private sector investment, such as the £140 million of private sector investment that will be put into the Wyre Forest in the future—
Order. I have to intervene. I have allowed some leeway here, but I will not let this debate be turned into an election broadcast for all Members who wish to speak. This is about future Government spending. Obviously, the hon. Gentleman has set out a bit of a programme, but we are in danger of going around every constituency and hearing what the measures will be. That is not what today is about.
I respectfully understand that, but I do agree with my hon. Friend on that particular point.
Under the coalition, we have had to make some very distasteful decisions, but in my area, health is on the up. We had problems in my local hospital which were put to bed yesterday in the Kirkup inquiry. Since 2010, we have had four new hospital wards at the Royal Lancaster infirmary. [Interruption.] Yes, we have had a new health centre costing £25 million in Heysham—
Order. I am trying to be helpful. This debate is about future Government spending. We cannot talk about what has been spent. I have allowed some leeway in that regard. I understand that a general election is coming, but we cannot be so blatant about it. This is about future Government spending. I am sure that the Government want Members to recognise their vision for the future, and that the Opposition want to challenge the Government. I know that that is what everybody wants. If we can stick around that, I will be very grateful.
Thank you, Mr Deputy Speaker, for indulging me. I got a bit carried away with the good news in my constituency. So, yes, where are we going in the future? The deficit has been halved. As the self-employment ambassador to the Government, I can say that one of the largest sectors in our economy is self-employment. I am sad to see that the Opposition have not recognised the importance of that sector.
If the hon. Lady will let me finish, I will gladly give way. Labour’s manifesto, which we have seen on the internet, does not recognise the self-employment sector, as it sees it as a failure in the labour market, which is quite wrong. I say that respectfully to the Opposition. I was self-employed for 30 years, so I know what it is like to survive.
Once again, thank you for your indulgence, Mr Deputy Speaker.
The self-employment sector in this country accounts for 760,000 new businesses created since 2010, which shows that the country has an entrepreneurial spirit, with huge advantages for taxation. I hold out an olive branch to the Opposition and ask them to embrace it, purely and simply because it is better for us all, irrespective of political party. I believe that the country is going in the right direction—[Hon. Members: “Hear, hear.”] Thank you, I really do. Unemployment is moving towards historic low levels and the future is bright. I would like to think that the future is blue, but the electorate will have their say in about eight weeks’ time. I thank the House for the five years for which I have been a Member of Parliament, the Opposition as well as my colleagues, and I thank you, too, Mr Deputy Speaker. I hope that I shall be returned to carry on the good work for Morecambe and Lunesdale’s constituents.
I am somewhat bemused to follow the hon. Member for Morecambe and Lunesdale (David Morris), who seemed to be giving us a public mulling over of his chances of re-election in May. We will leave him to consider that.
We are discussing Government spending and I am sure that Treasury Ministers will have been hard at work this morning trying to find some positive news in the briefing published by the Institute for Fiscal Studies. They will have to keep looking, as the report confirms that working people are worse off now than they were in 2010.
“It’s astonishing actually that seven years later incomes are still no higher than they were pre-recession and indeed for working-age households they're still a bit below where they were pre-recession”.
Those are not my words, but those of the IFS director, Paul Johnson, who has already been quoted today. Mr Johnson might well be astonished that after five years of this Government life for working people in Britain is harder, but I am not. In West Dunbartonshire, we know what a Tory Government means: hardship, job cuts and poverty.
This Government have chosen to pursue an austerity plan that has not worked and that has hurt.
I have already told the hon. Gentleman that I will not give him and his broad shoulders any more time.
The Government’s plan has hurt my constituents. It has hurt the poorest, the people who have to count every penny to pay the bills every month. What have the Government achieved? Nothing but pain. The Prime Minister promised that he would balance the books by 2015, but he has failed. Instead, borrowing for 2015-16 is set to be £75 billion and the Government will have borrowed more than £200 billion more than they planned in 2010. Their failure to balance the books is fundamentally linked to their failure to tackle the cost of living crisis in this country. How can we expect public finances to improve when Ministers have trapped families all over the UK in working poverty? Low pay, rising housing costs, disastrous benefit reforms, sky-high unemployment and spiralling energy costs are the marks of this five years in office and they are all driving up the cost of social security and driving down living standards.
My hon. Friend is absolutely right. It would be naive of us to think that the Government were making life harder for everyone. As he points out, that is simply not the case. The rich are getting richer, bankers’ bonuses are buoyant once again and corporations are lining their pockets at the expense of families in the UK. That is absolutely unacceptable, because when big companies do not pay their taxes, the working man and woman have to pay more. It is clear that five more years of the Tories means a continuation of an economy that rewards only the most privileged while piling on the pressure for millions of families. That unbalanced and extreme approach is only going to lead to deeper spending cuts—cuts that my constituents cannot afford to live with.
The Government want us to return to public spending levels last seen in the 1930s, a time before the NHS even existed.
No, I will not.
Labour Members reject this Government’s failing austerity plan for what it is: unbalanced, unfair and unjust. This election is about saving the NHS and it is about opportunities and jobs for our young people. A Labour Government would take a very different approach to balancing the books, including a bankers’ bonus tax to fund jobs for our young people, a mansion tax to fund an extra 1,000 nurses in Scotland and raising taxes so that the richest pay more.
No, I will not give way.
Our spending plans would support working people, boost living standards, protect our NHS and support the next generation. We want people in this country to do well, but we are not afraid of asking those with the broadest shoulders to contribute more. If someone has done well for themselves under this Government, the next Government or any Government, they should pay their fair share.
We need to pull together as a society, not drift further apart. We need to return to being a country that works for people, not against them, and that provides public services that families can rely on when they need them most. Unlike this Government, we are taking the important step of ensuring that we can deliver every promise we make. I know from talking to my constituents on the doorstep that they are fed up with being told one thing before an election only for something different to happen afterwards. There is too much of that in politics and it should stop.
The IFS has praised Labour’s approach to our spending commitments. It is a shame that this Government have not been able to make promises that they plan to keep. Our plans are simple: we will make life better for people by increasing the national minimum wage, banning exploitative zero-hours contracts, freezing energy bills, expanding child care and providing a paid job with proper training for young people who are unemployed.
I know from my conversations with people on the doorstep in West Dunbartonshire that they have had enough of the Tory austerity plan. This Government have had five years and they have failed.
My constituents are among the poorest in this country. The point is not to cut spending for the poorest people in this country; it is to support them. The point is that millionaires do not need a tax cut; I do not know why the hon. Gentleman thinks they do, but I certainly think they do not. We need to support people in this country who are trying to get by.
The hon. Gentleman’s Government have failed. The verdict is in: they have had five years and they have failed. We need a change of Government. The Labour party will do things differently, and I hope we get the chance to show that in May, because my constituents cannot suffer another five years of this.
I am afraid this Opposition day debate proves one thing more than anything else: Labour has not changed and it never will.
I am a bit of a political anorak and occasionally I watch re-runs of previous general elections. One of my favourite moments is from the 1983 election when, in the early hours of the morning, Robin Day, with a glass of Scotch in his hand, turned to Arthur Scargill and asked him, “Well, Mr Scargill, what do you think a future Conservative Government will mean for all the voters out there?” Arthur Scargill proceeded to give a bit of a diatribe not dissimilar to the utterances of the hon. Member for Nottingham East (Chris Leslie) on the Labour Front Bench. He said, “Public services will be smashed and the NHS will be privatised.” I half expected the four horsemen of the apocalypse to turn up at some point and also to see Mr Burns from “The Simpsons” rubbing his hands.
The reality is that everything changes in politics, but nothing does actually change. If my hon. Friend the Financial Secretary wants guidance on where Labour is in the 21st century, he would do well to look at the soothsaying words of Arthur Scargill, because that appears to be the party’s direction of travel.
As a matter of historical fact, was Arthur Scargill right that the Conservative Government decimated the public service that was the National Coal Board and the coal industry, putting 200,000 miners on the dole and ending up with this country today importing coal from places such as Ukraine, where 30 men were killed yesterday because of the lousy safety record in that part of the world?
The hon. Gentleman’s words prove my point. We need to look forward to the future.
Through 13 years of government and five years of opposition, Labour has not learned from its previous mistakes—mistakes that left us with the biggest deficit in our peacetime history and took this country to the brink of bankruptcy. The Leader of the Opposition has returned to the old Labour argument that cutting spending will work and refuses to accept that the £30 billion of consolidations that we will continue to make are what is needed for the economic health of the country. Labour’s plans to spend more without higher taxes will naturally lead to increased borrowing and an ever-increasing debt burden on future generations. Our children and grandchildren will have to pick up the tab for those plans.
Paul Johnson, the director of the Institute for Fiscal Studies, who has already been quoted, predicts that Labour rule would mean that the national debt will climb £170 billion higher by the 2020s. The irony is that the Opposition frequently rail against banks and the bankers, but it is their policies that will mean that a higher proportion of our national income flows into banks and bankers’ pockets in debt repayments and interest charges, instead of being spent on public services. Surely the Opposition can see that the only way we can get to grips with Britain’s debt is to tackle the deficit. Thanks to the difficult decisions this Government have made, we are cutting it by half.
Let us not forget that there is some good news out there. Opposition Members seem to forget that. Our economy is growing at the fastest rate in the G7, and the only way to ensure that this continues is the Conservatives’ long-term economic stewardship. Over the past few years nearly 750,000 businesses have been created and unemployment is down by almost 2 million. In my constituency, Wolverhampton South West, unemployment has fallen by more than 1,000 since May 2010, after rising in the previous five years.
There is still much more to do, which is why Britain must stick with our long-term economic plan. Labour still believes fundamentally in more borrowing, more spending and more debt. It does not have a serious, long-term plan to fix Britain’s economy or to reduce our debt. Often when talking about public services we look at what is being put in, rather than the more important point of what is being achieved. Through greater efficiency and a reduction in bureaucracy and waste, we can be smarter with public money. People often say to me on the doorstep, “We want politicians to spend our money the way you would spend the money in your own pocket, your own wallet, your own purse.” We need a long-term approach from a party which has the long-term interests of the economy at its heart.
The NHS provides a good example of how less bureaucracy leads to improved services. We have rightly increased the NHS budget, but at the same time we are using public funds better. The NHS is something to be valued and protected, but we have made tough decisions to improve front-line services. Let us be under no illusion. The only thing that is a long-term threat to the NHS is Labour being in power and running our economy into the ground, because without a strong economy we cannot have good public services. If Labour is not going to borrow more to cover its spending binge, how will it pay for it? I am sure most of the country want an answer to that question.
It is my view, and that of many others, that Labour is planning a post-election corporation tax rise. The BBC has already reported that Labour will pay for some of its spending by not going ahead with our vital 1p cut in the main corporation tax. That is not just a cut in the rate of corporation tax, but simplifies the tax system. I fear that Labour will go further and instead increase corporation tax, taking Britain out of its competitive position. Such a rise would be disastrous for the UK economy and our jobs recovery. We have seen the impact that low taxes have had on the jobs market, and that move would undo the hard work that we have done to ensure that families have a guaranteed monthly pay cheque. Analysis has shown that even a 1p rise would lead to massive job losses, forcing unemployment up and increasing welfare. The Institute of Directors has described it as a
“dangerous move to risk our business-friendly environment in this way”.
The BBC has gone even further and said:
“Labour must realise that you can’t rob Peter to pay Paul.”
Our business-friendly policies have helped the UK become one of the best countries to do business in, increasing employment levels and reducing the deficit. Labour’s plans, or the lack thereof, would wreck that.
I am surprised that Labour has chosen to go down this route on its final Opposition day. It would have done better by apologising for the financial heart attack it inflicted on this country. Thank goodness that the Government have sorted it out. We might think that there are lots of smart people in this Chamber, and there are, but one lesson is absolutely crucial: never take the voters out there for fools or think that they are stupid. They can see the reality of what we have delivered over the past five years.
I am glad that the hon. Member for Wolverhampton South West (Paul Uppal) finished his speech by saying that this is Labour’s final Opposition day—hopefully it will be the last for a very long time. Is anyone else sick of hearing the term “long-term economic plan”? Government Members are not; they seem to think it is a catchy phrase. What have we had for the past four years? We have had a short-term economic scam.
The Government promised to cut the deficit in four years, but they have completely and utterly failed. They promised not to borrow, but they have borrowed £219 billion more that they said they would—enough to run the health service for two years. They have decimated public services, destroying hundreds of thousands of good-quality jobs done by people who were delivering vital public services to the people we represent. They were working hard, contributing and paying income tax and national insurance contributions.
The Government have hammered every man, woman and child in this country with a 2.5% VAT rise, and the Liberal Democrats supported it, despite saying they would not. The Government have made life desperate for those people who rely on benefits, so those who were already poor have been made poorer. They have penalised people for having the temerity to be in poverty by bringing in things like the poverty tax—I meant the bedroom tax, but actually I was right first time.
The Government have given away successful public assets such as Royal Mail. They privatised the successful side and nationalised the deficit, which was the pensions. Now even the chief executive worries that it will not be able to keep the universal service obligation. This week they privatised East Coast, the best performing railway line in the country, and now they are talking about privatising Eurostar. We all know, despite their promises, that if they are re-elected the NHS will be moving rapidly towards privatisation, whether via a transatlantic trade and investment partnership or some other route.
My council has been hammered. It now has 45% less money than it did four years ago, meaning that every man, woman and child has been robbed of £328. We have lost 1,700 high-quality people who were delivering services to the people of my town. We have lost a fire engine, and another has been lost in a different part of the constituency, and 130 firefighters had to go across Tyne and Wear. The fire chief’s advice is, “I am being forced to make 35% cuts, and if I do that lives will be lost.” Lives will be lost not only in fires, but on the A1 motorway, which goes through my constituency, the third most congested road in Britain, because firefighters will no longer be available to get people out of damaged vehicles.
There really is a long-term economic plan, and we know what it is: to continue making rich people richer—the same as it has always been with the Tories. They will not stop their friends having dodgy tax deals, because they use the dodgy tax funding for their election campaigns. They will not cut taxes for the poor, but they will for the rich—£7 billion of unfunded tax promises.
My hon. Friend, as an avid watcher of politics, will have seen that at last year’s Conservative party conference the Prime Minister and the Chancellor promised £7 billion of unfunded tax cuts. Is he as worried as I am that they would fund those by making more cuts to the public services that our constituents rely on?
I rarely disagree with my hon. Friend, but I could never bring myself to watch the Tory party conference. However, I heard what they said, and it is quite clear what they would do: they would have to take £7 billion from somewhere, and it will be the public sector. They are committed to going back to the level that things were at in the 1930s, when people in this country were, quite frankly, living like slaves, working in conditions that were abhorrent and going home to houses that were a disgrace. That is why when my party came into government in 1945 we had a massive house building project. That is why we nationalised the coal industry, the rail industry and the steel industry—the Conservatives had let them run into disrepair for decades and did not care a toss about the people who worked in them and lived in conditions that were worse than we could ever imagine.
The Government have not only failed on those levels—they have also failed to collect money because they have made people go out of wealthier jobs into low-paid jobs where they are not paying income tax or national insurance contributions. They have collected £68 billion less in income tax than they projected and lost £27 billion in national insurance contributions. You couldn’t make it up, Mr Deputy Speaker. We can see where they want to be. They want to take us back to the 1930s, when we had a low-paid, low-skill work force who were frightened to stand up to the boss, made to go to work when they did not want to, and made to work for poverty wages. That is exactly what they want to us to go back to—unless, of course, you are one of their friends who happens to be the chairman of a FTSE 100 company, and who last year, on average, had a £4.27 million salary. That is a lot of money, even for the Conservatives. Perhaps it is not as much as some of them earn, but it is a lot of money. The directors in those firms got a 21% pay rise, on average, while at the same time the Government are denying a pay rise of even a meagre 1% to nurses, firefighters and care workers—the people who keep this country running day in, day out, and contribute more in a day than some of these leeches will do in a lifetime.
My hon. Friend is making a very powerful speech. Is it not also a disgrace that young people are being hammered in so many different directions by this Government and have seen an average 7.8% drop in their income over the past five years?
It is an absolute disgrace. One of the saddest things of my life is that I might go out of it—I hope a long time from now—and leave behind a generation who are worse off than I was, for the first time ever. We should hang our heads in shame if that is where we end up with the young people of this country, because it is clearly where we are going. During the past week, I have been approached by a young man who was an apprentice, and who became ill and had to come off work. He was not even allowed to get statutory sick pay. That is how disgraceful things are in this day and age.
I am glad that I gave way: thank you very much for being my straight man, Oliver. The Tories will have us believe that prosperity will trickle down. Where is it going to trickle down from? There is no proof of that. In my part of the world, 4,000 people will benefit from the income tax hand-back, but 144,000 have seen their tax credits cut at the same time. Young people and other people in my part of the world have lost £1,160 a year, so they will not be doing very much to create the wealth of this country.
In the programme that we will put forward, we will put small businesses first by lowering their taxes. We will promote a proper industrial strategy for our biggest employers, not just the high-tech firms, and work in partnership with them and the trade unions—I know that is a dirty word for Conservative Members—to create the situation where we increase the national minimum wage to a level it should be at, unlike the Conservatives, who opposed it at every step. We will reverse the cut in the top rate of tax, because that is the right thing to do. We will close the loopholes that have been exploited by the friends and funders of the Conservatives, who take the money off them to run their election campaigns.
We will freeze gas and electricity bills, because we are sick to death of these companies saying “We can’t do any more.” Now they are saying, “Leave us alone, leave us alone.” They have bled this country dry ever since they were privatised in the 1980s. The hon. Member for Wolverhampton South West complained about what was said in the 1980s, but what was projected then is exactly what happened. Public services were decimated and the people of this country are paying the price every time they pay an electricity bill, a gas bill or a water bill.
We will devolve power to councils and people at lower levels so they can take proper decisions on the front line and at the cutting edge, where they know what is going on in their areas. We will make work pay. We will stop exploitive zero-hours contracts, because nothing in the world will ever convince me that having people on tenterhooks, not knowing whether they will work the next day, is an absolute and utter disgrace. We will increase the minimum wage to £8 an hour. That will boost the pay of more than 76,000 people in my part of the world, which they will be really delighted about.
At the end of the day, we will end this system of despair. People have said, “We had no alternative. We had to do it this way.” They did not have to do it this way; they chose to do it this way—on the back of the most vulnerable in society.
What a pathetic, facile motion the Opposition have brought forward for their last Opposition day debate during this Government. They could have introduced a proper costed programme. As my hon. Friend the Member for Wolverhampton South West (Paul Uppal) has said, they could have apologised for the huge number of errors they made in government. All elections, including the one in 63 days’ time, are about hope versus fear. From them we hear fear and smear, but we have a policy of hope, because we have turned around the economy following the disastrous economic legacy left by the Labour party.
Absolutely. In more than two hours, we have not heard anything, except in relation to gun licences and, of course, the recycled bankers’ bonuses.
What a contrast between the Opposition and the Labour party on the cusp of the election on 1 May 1997, when I was a candidate and lost by the not inconsiderable majority of 19,500 in Brent South. No wonder Labour MPs are depressed when they are sober and catatonic when drunk, quite frankly, because they know there is an acute contrast between that historic election and now. The Labour Government led by Tony Blair was ambitious, and their programme was thoughtful, forward looking, positive, generous and optimistic. Tony Blair is now persona non grata in the Labour party, and it now has a core vote strategy, with a mean-spirited, peevish, insular, dreary collection of bungs to special interest groups, and smears and caricatures aimed at the Conservative party.
What is more, Labour policy does not stand up to any form of scrutiny. We have heard about the utilities price freeze—a disastrous policy that has damaged the industry and, perversely, will damage the interests of consumers. Wither Labour’s cost of living crisis? Today, the IFS says that prices are being outstripped by wages for the first time since 2007. There is no more cost of living crisis because wages are growing at 2.1% against a retail prices index of 0.9%. On fuel, council tax, food, beer duty and children’s air passenger duty, the Government have made efforts to reduce the cost of living of ordinary families. We have driven up the personal allowance, and we are committed to drive it up to £12,500 in the next Parliament.
No, I will not give way at present.
As we have already heard, the 45p tax rate has raised more income for public services than was ever done by the 50p rate, which was put in place for cynical political reasons. We will not take any lectures from the party that abolished the 10p tax rate for the poorest working families. What sticks in my craw is the moral superiority of the Labour party in this debate. In 2011, 1,200 people in my constituency had been parked on out-of-work benefits—incapacity benefit or invalidity benefit—for more than 10 years during a period of economic growth. Some 5.2 million were parked on out-of-work benefits when the economy was growing quarter by quarter during the 13 years of the Labour Government. We will not take any lectures or moral indignation from the hon. Member for West Dunbartonshire (Gemma Doyle) and other Labour Members.
The top 1% of taxpayers are paying 25% of income taxes. We have driven up employment levels. More women than ever are working. Some 30.9 million people are working, despite the ludicrous prognostications of people such as David Blanchflower, who told us that 5 million people would be unemployed, and the right hon. Member for Morley and Outwood (Ed Balls), who said that we could not cut expenditure and have growth in private sector jobs—complete and utter nonsense. In my constituency, unemployment has gone down by almost 60% and youth unemployment by almost 66%.
Under the last Government, almost 1 million young people were out of work. Through apprenticeships and job opportunities, those people now have opportunities and hope for the future. They are the people who are benefiting from this Government. Does my hon. Friend agree?
I absolutely agree. My hon. Friend has put forward the strong views of his constituents in Chester for the past five years, and I expect him to be handsomely re-elected.
What I find depressing is the pernicious smear and myth that we are going back to the 1930s, when there was no NHS. That is a lie. It is disingenuous to make that point. First, the figures were not even collected until 1956. Secondly, the economy is at least 10 times bigger than it ever was in the 1930s. As I made clear in an earlier intervention, expenditure as a proportion of GDP is more or less the same as it was in 2002—the fifth year of a Labour Government.
I will not dwell on Labour’s record on the economy, other than to say that we had a record decline in manufacturing—that is for the benefit of the hon. Member for Blaydon (Mr Anderson)—we had disastrous school results, youth unemployment doubled, a quarter of all public expenditure was borrowed by the end of Labour’s rule and there was a structural deficit when the economy was growing. While we are at it, inequality grew between 1997 and 2010. The gap between the poorest 10% and the richest 10% grew wider during the time of the Labour Government.
What a contrast that is to what we have done. We have capped benefits, focused on capital investment, driven up the number of apprenticeships, created 760,000 new jobs, increased the state pension and come up with a properly costed plan for our future. I am proud of the work that this Government have done, given the appalling financial inheritance they were encumbered by in May 2010.
Let us have a little humility from Labour Members. The reason they have zero credibility with electors on the deficit and the management of the economy is that they do not believe they did anything wrong. That is normal for a party that won 258 seats, even though if we had got the same number of votes, we would have got fewer than 200 seats because of the boundaries. They think, “One more heave. More spending and more borrowing is absolutely fine.”
However, the election of a Labour Government is an existential threat to the health and prospects of the economy and my constituency, and to the mortgages, jobs, pensions, savings and businesses of my constituents. Higher mortgage rates, higher unemployment, higher prices, more debt and borrowing, punishing middle-class earners, punishing aspiring wealth creators, same old class envy, same old spiteful prejudice, same old economic failure, same old Labour—on 7 May, the British people just won’t risk it.
I would like to say that it is a pleasure to follow the hon. Member for Peterborough (Mr Jackson), but he reminded me of a performance by Sir Ian Bowler at a “Stand up for Labour” event at the Labour club in my constituency, which was a caricature of a particularly unpleasant form of Conservatism in this country. I can see now how Ian Bowler was inspired. The hon. Gentleman used ugly language to portray a gross mischaracterisation of the events of recent years.
The hon. Gentleman called for some humility. He might have acknowledged that when the Government came to office, they promised to balance the books and said that we would all be in it together. They have failed on both counts, and people in his Peterborough constituency know that.
“In five years’ time, we will have balanced the books,”
the Prime Minister told the CBI in October 2010. Let us be absolutely clear: that promise has been broken. They have not balanced the books and the next Labour Government are set to inherit a large deficit as a result. The Office for Budget Responsibility says that borrowing in 2015-16 is set to be £75 billion. The Government will be borrowing over £200 billion more than they planned in 2010. It is because of their failure to deliver on debt and tackle the cost of living crisis that we so desperately need a Labour Government.
Despite Tory claims that our economy is fixed—Conservative Members go around the country and we see pictures of the Chancellor in his hard hat doing a lap of honour while the public look on incredulous—wages have stagnated for many workers. Too many of the jobs that are being created are in low-paid insecure work, rather than high-productivity sectors. I have consistently called for action on zero-hours exploitation, and I introduced a private Member’s Bill on the issue. I am pleased that we have made a tiny bit of progress, and I was proud of the role I played in getting the Office for National Statistics to change the way it records figures so that we now have a more accurate reflection of the situation.
The problem of the hon. Member for Peterborough (Mr Jackson) is that a lot of us were in the House when the world economic situation deteriorated. He forgot to tell us that the problems started in America. Conservative Members were in their bunkers at the time and talked about doing something about regulation and so on; they never had a policy. Therefore when they talk about honesty in this debate, they should get up and admit that they suddenly discovered there was a problem after they came to power. What happened? People’s wages have been cut by 7%.
My hon. Friend is right. Conservative Members were calling for less regulation of banking in this country. Not only did they back Labour’s spending plans right up to the time of the global financial crash, but I remember that in my area they paraded around during the 2005 election calling for more spending and criticising the then Labour Government because we had not built enough hospitals, rebuilt enough schools, created enough Sure Start centres, or put more police on the beat. They had the cheek to call for more public spending in 2005, and now 10 years later they pretend that they were counselling caution at that time when they plainly were not.
The notion that the Labour party—the powerful Labour party that created a global financial crash that hit a Conservative-led Government in Germany and right-wing Governments in France and America—did so because we were investing in schools and hospitals is completely absurd. The public have found the Government out and they will be exposed for it at the election.
Let me take my hon. Friend back to what he said about low pay and its impact on the economy. Low pay is not just a tragedy for our constituents who are forced to accept low wages; it is a disaster for the economy of Britain. We have seen tax receipts drop by £68 billion, and national insurance contributions by £27.3 billion—money that could be invested in public services.
My hon. Friend is right. The effect of low and stagnant pay means that tax receipts have been much lower than expected. The Government have failed on the deficit and the cost of living crisis. Low pay is combining with higher housing costs and the failure to deliver benefit reform to drive down social security costs, which are rising under this Government. The Tory-led Government are set to spend £25 billion more on social security than they planned in 2010. We need action on the issues that our constituents are facing.
In my area it is not just zero-hours exploitation that causes insecurity, and many people are working through agencies. They come off the books of the jobcentre to work for an agency. That work might last days, weeks, or a few months if they are lucky, and sometimes they get exploited working year in, year out through an agency without holiday pay or proper terms and conditions—desperately insecure employment. Although a few agencies follow the law, when HMRC investigated agencies in my constituency they found more than 70 breaches of the law, and £120,000 owing to local workers in non-payment of the minimum wage. People were being made to pay to get their own pay through payroll companies, or they had to pay illegally for their own protective equipment. That is the real world that many people face in my constituency and across the country.
I have no more time. The Prime Minister said that he would name and shame those companies. A year ago he made me that promise at the Dispatch Box during Prime Minister’s questions, in front of the whole House and the country. It was on the front page of my local paper, but a year on he still has not named and shamed those local companies. The people in my area do not know which of these agencies is most likely to rip them off.
What about the second part of the Government’s promise: that we are all in this together? They promised us that they would not balance the budget on the back of the poor. They cut the 50p rate to 45p, handing a £3 billion tax cut to the richest 1%. They handed people earning £1 million a tax cut of more than £42,000 a year, while cutting council tax support for war widows and the disabled. They imposed the deeply unfair bedroom tax, which has had the direct result of driving many people into the queues at the food banks in my constituency and across the country. I want to thank Hope church for its brilliant work, which I try to support. The people of Corby have been brilliant. The food bank ran out of stocks recently. We put out an appeal and within 24 hours it was full again. However, people in this country, one of the wealthiest countries in the world, should not have to rely on food banks. That is Tory Britain.
Since 2010, there have been 24 Tory tax rises. Ordinary families are paying £450 a year more in VAT. Figures from the IFS show that households will on average be more than £1,000 a year worse off by the time of the next general election. This is the first Government to lower living standards during their time in office. It gets worse: because of their failure and their dogma—the Tory party tried to stop the NHS being created in the first place—they are now planning to take us back to a time before the NHS existed, to a 1930s level of spending.
At the coming election, there will be a very stark choice. Under Tory plans, the state will shrink from 41% now to 35% by the end of the next Parliament. That is the lowest level since 1939, before the NHS existed and when children left school at the age of 14. That is the equivalent of cutting every penny we spend on schools, half the budget of our NHS, and more than all the Departments’ capital budgets added together, including what we spend on investment in schools, hospitals, roads, railways, housing, science and flood defences.
People in my constituency know that I have been fighting very hard to try to stop cuts to the local fire service and to keep Sure Start centres open. The children’s centre in Raunds has just closed. Our police stations are threatened: the front desk at Oundle has just closed and Corby police station is threatened with closure. We have had cuts to our ambulance services. Last week, the captain of Corby Town football club broke his leg in two places and dislocated his ankle. An ambulance was called at 8.10 pm. It came at 11.10 pm.
That is what has happened in the first five years of a Tory Government. People know what will happen in the next five years of a Tory Government. Our NHS will be completely decimated, as our social care services have been in this Parliament. People in my constituency and across the country cannot afford five more years of this rotten Tory Government.
First, may I thank the Opposition very much indeed for securing this debate? This is one of the most important issues that we need to discuss between now and 7 May. I congratulate my right hon. and hon. Friends on the Treasury team on controlling public expenditure and making progress on reducing the deficit. I do that not only as a Member of Parliament but principally as a taxpayer. I do not particularly want to see my mortgages go up because we have a Labour Government.
I first raised this issue during the 2001 general election campaign, the first of the three times that I have fought my Plymouth seat. At a meeting of the Plymouth chamber of commerce, I pointed out to then Labour MP that the then Chancellor’s Red Book clearly stipulated that the Government would be creating a structural budget deficit. My predecessor looked somewhat blankly at me and did not appear to be familiar with the Treasury’s Red Book. At the 2005 election when I talked about this again, she seemed to have become a little more familiar with the Red Book. I was told that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) always got his sums right and that I was just scaremongering. Well, I just have to ask one question: “Oh, really?”
I would like to pay tribute to Warwick Lightfoot, a very good friend of mine and a former special adviser at the Treasury. He has provided me with the intelligence and ammunition in the past 15 years to deal with these issues. Soon after my election in 2010, with his help, I submitted a paper on my thoughts about the strategic defence and security review. I made it quite clear that while I recognised the need to control the public expenditure envelope, I named my spending priorities as defence and long-term care for the elderly. Representing a naval garrison city, I have in the past five years consistently called on the Government to spend at least 2% of GDP on defence. This could be achieved by taking the renewal of the nuclear deterrent out of the defence budget and returning it to the Treasury.
I am grateful that the seven Type 23 frigates that the previous Labour Government had proposed to send to Portsmouth have been returned to Plymouth, and I am delighted that HMS Protector has been sent from Portsmouth to Devonport. It is good to have another ship there.