Rt Hon Lord Lilley

    Mr. Peter Lilley (Hitchin and Harpenden): I begin by conveying the apologies of my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard), the shadow Secretary of State for Education and Employment who, as she put it, is temporarily suffering from antibiotics. She will shortly be back in the House.

    I convey my sincere congratulations to the Secretary of State for Education and Employment, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), on his appointment to the Cabinet. I am sure that he will fill his post with great distinction. I say that not as a mere formality: before the election, I was asked on a radio programme whom I most admired on the Labour Benches and I immediately mentioned his name. [Interruption.] I will not continue in that vein or he may think that I am soliciting his vote, but I wish him and his team well— and, indeed, the social security team who do not seem to be present in force today.

    I wish the Government team well, despite our party differences, because their responsibilities are of crucial importance. Failure in education would blight the future of a generation and social security exists to help vulnerable people at times of greatest hardship. During my period of office at the Department of Social Security, I always sought to focus help on those who needed it most. If the Government fail, I know that disabled, sick, unemployed and elderly people will suffer most. In opposition, as in government, their interests will be our prime concern.

    The Queen’s Speech comes in the wake of a severe defeat for my party. There are crucial lessons that we have to learn from that defeat. I have discussed those issues elsewhere, and they are not the subject of today’s debate, but one point is relevant. We have to have the humility to recognise an unpalatable truth about the verdict of the voters. It may even be unpalatable to Labour Members. It was the Conservative party that lost the election, not the Labour party that won it. It was a chastening rejection of a divided Conservative party; it was certainly not a ringing endorsement of the Labour party. Labour Members know only too well that there was little enthusiasm for them on the doorsteps and they ended up with fewer votes than my right hon. Friend the Member for Huntingdon (Mr. Major) secured in 1992.

    Our failings not only damaged us, but allowed Labour to be elected on a bogus prospectus. Labour was able to raise expectations of what it can deliver way beyond what it can afford if it is to honour our spending and tax plans, which it adopted wholesale. Labour appetites will not be satisfied on a healthy Conservative diet and our task in opposition is to expose the inconsistencies, the shortcomings, the damaging consequences of Labour’s programme.

    Nowhere is Labour more vulnerable than in its approach to education, work and welfare, which it has said is the centrepiece of its programme. I am rather disappointed that the Secretary of State for Social Security—my old sparring partner, whom I congratulate on her promotion—is not in her place. Education, work and welfare is apparently the centrepiece of Labour’s programme, yet the whole edifice of Labour’s education and welfare strategy is built on very flimsy foundations.

    Labour’s objectives are fine. It wants to boost spending on education and to finance it by reducing spending on unemployment benefit, and it wants to achieve that by getting people off welfare and into work. Conservatives agree with those objectives. Indeed, that is precisely what the previous Government did. We did boost spending on education, and did so because spending on benefits for unemployed people had been falling steadily for four years as we brought unemployment down. We accomplished that by implementing our policies of reducing burdens on business, increasing incentives and achieving sustainable economic growth. Yet Labour says that it can reduce unemployment further not by encouraging natural economic growth but by job subsidies and artificial make-work schemes.

    Mr. Fabricant: Will my right hon. Friend congratulate the people of Lichfield and Burntwood, in whose area in April the unemployment rate was only 2.9 per cent?

    Mr. Lilley: I certainly convey my congratulations to them and to people in many other constituencies where there is low unemployment—far lower than in countries that have adopted the policies that the Labour party wants to inflict on us.

    There may be a social case for make-work schemes. It may be worth spending money on providing training and work experience for young unemployed people as we have done for 16 to 18-year-olds. It is, however, codswallop to say that such schemes can save money. Those schemes cost money. They cost far more than they ever save on benefits. I have studied similar schemes throughout the world and I can tell the Secretary of State for Education and Employment that there is not a single scheme that saves money.

    Labour’s schemes will generate no social security savings; there will be no additional money to invest in education. Labour said that when it came to office it would look at the official books. After 10 years in office, I know that the officials will be looking at Labour’s books, and I can tell the House what advice Labour will be getting: its sums simply do not add up.

    The reason why job subsidy schemes cost more than they save is obvious if one bothers to think about it. Most of the subsidy goes to people who would have got jobs anyway, so it is wasted. There is no way of stopping employers replacing existing employees with subsidised workers—more money wasted. Given that under Labour’s plans the subsidy will last only six months, many people will find themselves back on the dole in pretty short order. What a cruel deception. If the Secretary of State has hopes of receiving extra money from the social security budget, he is in for a nasty shock, as are any teachers, parents and pupils who have put their faith in Labour’s bogus claims.

    Even though the Government’s schemes will not save money, they are clearly right to believe that job subsidies might create some extra jobs. That is simple economics. The lower the cost of employing people, the more people will be employed. If the Government believe that, however, they must also accept that increasing the costs of employing people through the national minimum wage and European social costs will destroy jobs. Indeed, the deputy leader of the Labour party, before he was lobotomised by the Minister without Portfolio—or perhaps for every portfolio—admitted as much. He said: A minimum wage will cause a shake-out of jobs. Any fool knows that. I do not know whom he had in mind. The jobs destroyed by new Labour’s increases in employment costs will far outnumber any jobs created by its subsidies. The overall effect of the Government’s policies will be the opposite of what they intend. Their programme is not one of welfare to work, but of work to welfare.

    What is more, the Government’s job subsidies will not last: they will end when the windfall tax revenues dry up, and they apply to only a few hundred thousand jobs anyway. The national minimum wage and the European social costs will be permanent increases in the costs of employment and will apply to millions of jobs. Labour proposes a temporary job creation scheme and a permanent job destruction policy: new Labour, new job losses.

    Yesterday afternoon, while the new Prime Minister was delivering his old Opposition speech about 18 years of economic failures, our policies were delivering yet another fall in unemployment. A further 59,000 people came off the dole.

    Mr. Dale Campbell-Savours (Workington): I ask a simple question. Is there a link between youth unemployment—I am sorry, but I cannot continue.

    Mr. Lilley: I will come back to the hon. Gentleman.
    The welcome fall in unemployment today has brought the rate down to around 6 per cent. on the claimant count and 7.5 per cent. on the labour force survey. Either way, the rate is lower than in any other major country in Europe. Those are the very countries whose social policies are destroying jobs and those are the very policies that Labour wants to adopt here. The Labour party will give power to Brussels to impose those job-destroying policies on us, and we shall fight that tooth and nail.

    In my previous role, I travelled on the continent and visited countries to study their employment policies. When I met business men on the continent they told me how much they envied the low social costs of their British competitors. They said that their ambition was to persuade their Governments to reduce their social costs to Britain’s level, but that if they could not achieve that, their second priority was to push Britain’s social costs up to their level. They could not do that so long as we were outside the social chapter, but once we are inside they will.

    Labour has long claimed that the unemployment figures are bogus. It asserted that 4 million people are unemployed and that the number has not fallen. When will the Government publish new unemployment figures? Will their new figures show that there are 4 million unemployed people? If so, will the Government pay all of them unemployment benefit? Will they count people on their new make-work schemes and their environmental task force as unemployed? Or are those ways to take people out of the published figures?

    Mr. Campbell-Savours: I am sorry about my previous intervention. A slight medical difficulty arose. Is there a link between youth unemployment and crime, taking into account answers previously given to me by former Ministers at the Dispatch Box?

    Mr. Lilley: Nobody can define the causes of crime, other than to say that crime is caused by criminals. It is sensible to leave fewer people with idle time, because the devil makes work for idle hands. That is why it has always been our objective to bring unemployment down, and we are proud of our success in doing so. We did it through real measures, but the Government propose bogus make-work measures. I want answers from the Government about whether they will use those measures to manipulate the unemployment figures. Will they count those on temporarily subsidised jobs, for example, as unemployed? Or will those people, too, be taken out of the published figure? Labour’s claims, not the official figures, have been bogus.

    The Prime Minister yesterday boasted of an unprecedented welfare shake-up. To listen to him, one might think that Labour had spent the past five years clamouring for reforms that we stolidly resisted. History is a little different: I introduced 12 Bills to focus help on people in need, to improve work incentives, to tackle fraud and to encourage better provision for old age. Almost every Bill that I introduced was opposed and criticised by Labour, and virtually all Labour’s proposals involved spending more money. Yet at the end of all its years in opposition the only specific money-saving policy that Labour produced was to abolish child benefit for children staying on in school. Now even that policy proposal seems to have been airbrushed out of the Government’s programme. A party that was so vacuous in opposition is unlikely to prove a bold reformer in government.

    When I was Secretary of State for Social Security, nothing mattered more to me than securing the future of pensions in the United Kingdom for present and future generations of pensioners. The Pensions Act 1995, which I introduced, brought equality between men and women, secure funding of occupational pensions and greater choice of methods to provide for retirement. A few weeks ago I unveiled my proposals for basic pension plus. That offered the prospect of higher, secure, funded and guaranteed pensions for the next generation. The proposals were welcomed by virtually every newspaper and by informed commentators across the political spectrum. Even some Labour politicians were forced to recognise the merits of our proposals.

    How shameful it was, then, that Labour chose to scare pensioners on that issue; how disgraceful it was that Labour chose to attack that policy with a cheap smear. At the very beginning of the election campaign, at a meeting in a school with other candidates, I was asked by one of the sixth-formers whether politicians ever told lies. I could reassure them that in my personal experience I had never known anyone—including all those on the Opposition Benches against whom I had debated and with whom I had often disagreed on points of fact—who had knowingly told a falsehood. If I had to attend that school today and answer that question now, I would have to give a different answer.

    It was the Prime Minister who led the way with that smear in every newspaper and on every broadcast—and that was from the man who said, “Trust me.” None the less, according to The Observer, at least one Labour Member of Parliament felt uneasy about such unscrupulous scaremongering. The newspaper reported that a Labour candidate, probably to be made a Minister in a Labour Government, was canvassing an elderly lady who burst into tears out of fear that the Conservatives would abolish the state pension… The candidate, who asked not to be identified, felt moved to explain the Government’s Basic Pension Plus proposal, to reassure the old lady. Thank heaven that at least one sinner repented.

    Labour lost the 1992 election because it told voters that it would spend more money, so in 1997 new Labour pretended that it would not. New Labour spending plans, it promised, would be the same as Conservative spending plans. That promise was the foundation of its appeal to middle England, but Labour cannot honour that promise, and it knows that it cannot. For Labour cannot stay within our spending plans. To avoid extra spending, Labour does not need just to jettison its own policies, but needs to implement ours. Our reforms of the past five years will save £6 billion by the end of this Parliament, and they were introduced in the teeth of Labour opposition.

    Some of our reforms have been announced, but are still in the pipeline. Our spending plans depend upon them. We planned, for example, to equalise benefits for new lone parents and married couples. The Labour Government have said that they want new lone parents to get more. That will mean spending £120 million more than we had planned to spend next year and an extra £500 million in the long run.

    It is not only our lone parent changes that the Government have said that they will not implement. They also propose to block our changes to housing benefit and to social security administration. In all, that is an extra £ 1 billion a year that the Government will have to find, and they will have to find it from within the social security budget because they have said that they will live within that budget. If the Government want to give priority to benefits for lone parents, will they take that £1 billion from pensioners, from disabled people, from married couples or from childless single people? Who will it be? No doubt the Secretary of State for Health will tell us when he winds up the debate.

    The overall picture is clear: new Labour’s claim that it will get money from social security to spend on education is totally flawed. First, its make-work schemes would not save money, but would cost money. Secondly, it has rejected £ 1 billion of savings measures that we have announced. Thirdly, it has no other plans to save money on social security. There cannot be extra money from social security for education.

    The only remaining source of extra money for the education budget comes from the Government’s commitment to abolish the assisted places scheme, but the pickings are not so rich there either. The children currently on the assisted places scheme will be an extra burden on the state system and in any case the scheme can only be phased out gradually, so Ministers will have a long wait before they can get their hands on what will be a paltry sum.

    The real reason for Labour’s decision to abolish the assisted places scheme has nothing to do with the money that it might save. It has everything to do with the unacceptable face of new Labour—hatred of the independent sector, class envy and a knee-jerk hostility to choice. Choice is something that new Labour does not like and does not understand. Its hostility to choice is the common thread tying together the education measures in the Queen’s Speech—the imposition of local authority control on all state schools, the abolition of city technology colleges, the end of grant-maintained status and the end of nursery vouchers. The Government really do believe that the man in Whitehall and county hall knows best. The sheer bossiness of it all is quite extraordinary. Many parents up and down the country are striving to get the best possible education for their children, but they are going to find it much harder if Labour’s Bills are passed. They should know that the Opposition will continue to fight on their behalf.

    The Prime Minister chose to send his child to a grant-maintained school, of course, and the Secretary of State for Social Security sends hers to a selective school. Those are precisely the opportunities that they intend to take away from everyone else. Yet the Prime Minister had the extraordinary cheek to write in his manifesto: What I want for my own children, I want for yours”. The sheer hypocrisy is quite amazing. There is no truck with middle class left-wing parents who preach one thing and send their children to another school outside the area. Those are not my words, but the words of the Secretary of State for Education and Employment, and we all know which parents he had in mind. It is one thing for their children, another for the rest. It is not just the hypocrisy, but the arrogance that is intolerable.

    Mr. Blunkett: I had not intended to intervene, but I wanted to take the opportunity to welcome the new Deputy Speaker to his first sitting and to offer our congratulations to him. I also want to ask the shadow Secretary of State whether he thinks that wanting the best for all children can be described as hypocrisy.

    Mr. Lilley: When what someone has decided is best for his child is what he refuses to others, I think that there is no other word but “hypocrisy” to describe that decision—although “arrogance” is perhaps the runner-up, given the way in which the Government have handled the issue.
    That is the arrogance of which we have seen so much over the first few days of this Government. First, there was the Bank of England: without having warned the voters, the Chancellor ceded interest rate policy to the Bank. He made what he described as one of the most fundamental changes in the way in which the country is governed without even bothering to make a statement to the House. Then came the issue of Prime Minister’s questions. The Prime Minister now tells us that he will answer questions only once a week—and, as though that were not enough, he even wants to be told the questions in advance. That is another change that we now know to have been pushed through without any consultation or agreement with Madam Speaker.

    The Government may be able to steamroller those changes through now. The other side has the votes, but we have the arguments. The numbers may be on the Government’s side, but the facts are on ours. The Government may think that they can use their majority to push their measures through the House, but the hard facts will not be so easy for them to push aside. I shall spend the next five years ensuring that the British people learn the truth about new Labour—for when the British people know that truth, they will not give new Labour a second chance.