Budget Statement — House of Lords, 2015-03-25
Topic: Macroeconomics
Jeffrey Rooker (Labour, Centre-left): My Lords, before I start, I will say that I agree with everything the noble Baroness, Lady Valentine, said in her speech about housing, particularly about the threat of planning. I have said before that we should get planning out of DCLG and into BIS, as part of changing the culture of planning We should have a little history lesson before we close down for the election. I realise that the noble Lord, Lord Skidelsky, and my noble friends Lord Layard and Lady Smith have mentioned the past, but I want to do that in a little more detail. Do any of your Lordships remember 40 straight quarters of economic growth under Tony Blair—there, I have mentioned his name? There were 40 straight quarters of growth under Tony Blair. The UK entered economic recession in the second quarter of 2008 and—wait for it—left it in the fourth quarter of 2009. We then had three quarters of economic growth under Alistair Darling. Then we had the coalition A bit more history—if you google, "How did the economic crisis start?" or "What caused the economic crisis?", you do not get the answer, "Labour". It was born in the United States of America, and the answers you do get from various websites, whether the Economist or Accuracy in Media, are the reminder that we all need. The crisis had multiple causes, but the most obvious is the financiers themselves, and central bankers and regulators also bear the blame. We are reminded when we look at these sites of the terms "subprime mortgages" and "collateralised debt obligations"—CDOs. We are also reminded that it started in the USA, where a house price slump began in 2006. By 2008 in the United States, 6% of all mortgages were in default, which was three times the rate of the historical record. Risky loans were made under pressure—and, by heaven, they were risky, with no deposits and no verification of incomes Remember Fannie Mae and Freddie Mac, which were backed by the US Government? They were ordered to buy up these risky loans. The writing was on the wall. In the United States, attempt after attempt that was made to reform Fannie Mae and Freddie Mac was blocked by the Democrats. The Clinton Justice Department threatened banks with fines if they did not make the dodgy loans. This is all on the record. Clinton reduced Fannie Mae’s and Freddie Mac’s reserve requirements, leaving them, backed by the taxpayer, even more vulnerable when those dodgy loans started defaulting. This is all on the record. The trust was lost the year before the Lehman Brothers bankruptcy. The first casualty of the American-led collapse in the UK was Northern Rock, which was saved by the Government—I fully accept that people might have lost jobs but nobody lost any savings, as it was part of the bailing out of the banks. Looking at these sites, we are reminded that, in the US and UK, regulators were asleep at the wheel. There was severe criticism of them for letting Lehman Brothers go when they did, as it simply multiplied the panic. In the US and the UK, the banks thought they had found a way to banish risk and, under pressure from shareholders, operated with minimum equity, leaving them vulnerable I do not see why my senior colleagues have allowed history to be rewritten. That is the reality, and that is my criticism of the shadow Cabinet, because it has been rewritten. The record of the last Labour Government on economic growth—getting us out of the recession before the coalition—is there for everyone to see, as is the new Labour record in respect of: the minimum wage; literacy and numeracy hours; NHS Direct; more than 2,000 Sure Starts; full-time workers getting 24 paid days holiday for the first time; 1 million pensioners out of poverty; 600,000 children out of poverty; 1 million social houses brought up to standard; free TV licences for the over-75s; free off-peak travel nationally for the first time for pensioners; free eye tests for the over-60s; free nursery for three and four year-olds; the doubling of pupil funding in England; the cutting of long-term youth unemployment by 75%; the cleanest rivers, beaches and drinking water since before the Industrial Revolution; and the New Deal getting 1.8 million back to work I could go on and on and on about the record of that Government, but the point is the Labour leadership should be going on and on about it. I fully accept that new Labour has moved on, but there is no reason not to tell the good story of what was achieved and to stop the rewriting of history. Of course there were mistakes—I was in government most of the time and know some of the internal mistakes that were made. The big, key one of course was the appalling lack of honesty and planning over the Iraq invasion. But come on, election victories came on the back of that record and can do so again—but only if we are prepared to remind people of the facts. That is the reality, but there is a self-denying ordinance: do not talk about new Labour, because of the Iraq war. Therefore, you do not talk about the leadership and the positive things that came from that Government. Then you allow history to be rewritten so that we get the blame for the recession. That is the reality, but we have time to turn it around, if they get their backsides off their seats. That is my view Now we have rising levels of inequality, for which I will give just one example. I am not pleased about the inequality but I am pleased that I chose this example before I heard that the Prime Minister had been booed by pensioners on the issue earlier this week. In the field of social care, there has been very unequal treatment. A report from the Joseph Rowntree Foundation last week, The Cost of the Cuts: The Impact on Local Government and Poorer Communities, showed that social care spending in the most deprived communities has fallen, in real terms, by 14%, but in the least deprived communities it has risen by 8%. The reality is that in the most deprived it has fallen by £65 a head—14%—and in the least deprived it has risen by 8%, which is £28 a head. The independent analysis by CIPFA shows that in the least deprived 40% of local authorities, funding for social care has risen, and in the most deprived 60% of local authorities funding for social care has fallen. People are seeing this as a blatant unfairness—no wonder the Prime Minister was surprised when he got booed by pensioners. He was boasting about the NHS and they said, "But you have cut social care", because the two are interlinked and that is where the cut is now being felt, particularly with the substantial impact on poorer households. That is not the kind of society we should be creating I regret that I missed the beginning of the speech of the noble Lord, Lord Skidelsky, but his final point was—which is true and has been said before but has been denied by Ministers—that the attempt is to depress and close down the size of the state. That is what it is about—making a smaller state. The consequences of that are horrendous with the inequalities we already have. I think we should reverse that and we can do it on 7 May.