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"rebalancing the Northern Ireland economy"?
I suspect that I know what that means. What does the hon. Gentleman fear it means?
Sammy Wilson: I shall come on to the issue of rebalancing the Northern Ireland economy. My understanding is that it is in keeping with the Northern Ireland Executive's programme for government, namely that we cannot for ever remain as dependent upon the public sector as we are at present. There must be a rebalancing, so that we have a structured economy that allows for greater private sector involvement and, therefore, leaves us less open to the dangers of what has had to be done today. I do believe that what has been announced today will be very detrimental to the Northern Ireland economy in the short term.
However, let me turn to what we were looking for in the Budget. We want a Budget that is effective at getting us out of the current economic situation. The Chancellor's view is that, given the size of the debt, the interest that is accumulating on it and the fact that we have to finance it for a large number of years, we must show the financial markets that we are serious about getting the deficit down. That will ensure that our good credit rating continues, and that we do not have to borrow at punitive interest rates and, therefore, take even more money from that which we have for current spending. I have been able to have only a cursory look through the Budget statement, but it seems that the Chancellor's assessment is that if we do not do this quickly, we will find that our credit ratings go down and we lose the confidence of the financial markets, with all the consequences of that.
The other side of the coin is that if that assessment is wrong-if our credit rating is good for a number of years because we show that we are starting to make efforts and we do not have to take draconian measures of the kind that have been announced today-then withdrawing public spending from the economy will lead to a downward multiplier effect. That will impact on the level of growth, thereby getting us into what has been called the double-dip recession, whereby tax revenues go down, welfare spending goes up, support for industry has to increase, and we get ourselves into an even bigger muddle.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Does the hon. Gentleman recall that prior to the election, the leader of the Conservative party particularly targeted Northern Ireland and the north-east of England, my region, for criticism on account of the amount of investment in public sector funding? We have seen in today's Budget that the Chancellor has not heeded the advice of the North East chamber of commerce, a leading voice of business in the north-east, which has said that the Chancellor and the coalition Government need to re-check their commitments on public sector spending so as not to jeopardise economic growth in the north-east.
Sammy Wilson: The hon. Gentleman is leading me on to my second point, which is about fairness, but let me finish this point first.
I have described the two sides of the argument. It is a subjective assessment, because the report before us does not present any conclusive evidence to the effect that the financial markets are so nervous that we have to take such deep, draconian action at this stage. Neither is there an assurance that the reduction in the amount of money that is going into the economy as a result of public spending cuts will not have an impact on economic growth.
Mr Redwood: I think that we should try to talk about the Budget that was actually presented. The figure for total spending in 2009-10, the last year of the previous Government, was £669 billion, and the forecast total spending for the last year of this Government, if they run to five years, is £737 billion. That is an increase of about £77 billion over the period, so what is the hon. Gentleman talking about?
Sammy Wilson: The right hon. Gentleman quotes the figure for spending, not the figures for taxation or, indeed, those relating to bringing down the deficit. That money was borrowed to be pumped back into the economy, so the amount of money going into the economy will be substantially less.
This is a subjective assessment, because the report does not give us any clear picture of what the likely impact will be. At least we now have an independent body reporting on whether these measures will be effective, but only time will tell as to whether the risk that has been taken today will pay off and will balance the economy quickly.
Gavin Barwell (Croydon Central) (Con): Is the hon. Gentleman aware of the paper published by Goldman Sachs on 14 April, which reviewed every major fiscal correction in the OECD since 1975, and concluded,
"we find that decisive budgetary adjustments that have focused on reducing government expenditure have...typically boosted growth"?
Sammy Wilson: The context in which those adjustments take place is important, as is the speed at which they happen. All I am saying is that one way in which this Budget must be judged is on how effective it will be. Neither the report, nor the assurances given by the Chancellor today, offers any firm guarantee, if indeed that can be given, that the Budget will be effective.
The Financial Secretary to the Treasury (Mr Mark Hoban): I suggest that the hon. Gentleman look at the report by the independent Office for Budget Responsibility in the Red Book, which sets out the impact on growth of the package proposed by the Chancellor and suggests that, post-2012, GDP growth will be stronger than the OBR initially estimated in its work prior to the Budget.
Sammy Wilson: As far as I am concerned, this is not about scoring political points off the Conservative party; the Conservatives do not present any threat to us in Northern Ireland. This is all about ensuring that the citizens of the United Kingdom do not have to live in the economic doldrums for a long period. I hope that the projections that have been quoted are correct, but it is right at least to look at both sides of the argument and make an assessment on that basis. Should these measures have been delayed, or should we have jumped in as we have done?
Secondly, we will judge this Budget on the basis of fairness. I look at that in two ways. First, is it fair to individuals; and secondly, is it fair to specific regions of the United Kingdom? The second point, as the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) suggested, is extremely important to people in Northern Ireland. Before the election, the Prime Minister-he has tried to explain it away and qualify what he said-stressed in a "Newsnight" interview that Northern Ireland is heavily dependent on the public sector. That is a fact, but he then implied that Northern Ireland would be targeted as a result. That is one of the reasons why the alliance between the Ulster Unionist party and the Conservative party failed so miserably-I do not know how well it would have done otherwise. People in Northern Ireland were extremely nervous that we in that part of the United Kingdom were going to be treated unfairly.
Under the proposals in today's Budget, a regional fund will make money available immediately. However, it will not apply to Northern Ireland, or to Scotland or Wales, but only to England. Infrastructure projects have been guaranteed spending, but none of that applies to Northern Ireland. We are promised a report in the autumn on how Northern Ireland's economy might be rebalanced, including an examination of proposals on economic enterprise zones, a possible mechanism for changing corporation tax rates, and other economic reform options. I look forward to that paper, and I am sure that the Northern Ireland Executive will do so too, but I note that that paper is merely examining options and proposals.
The Northern Ireland Executive have made a genuine attempt to restructure the economy by using public policy and public spending, trying to build up the infrastructure, trying to get people economically active by giving them new skills and preparing them for work, and so on. The reduction in public spending will have an impact on the ability to do such things, because they required that pump-priming. We will look to see how quickly the impact of the reductions in public spending is offset by some of the proposals in the promised paper on rebalancing the economy. This is important to us, and we want to drive it forward, but it will be made more difficult by some of today's announcements.
Mark Durkan (Foyle) (SDLP): Does the hon. Gentleman recognise that in the autumn, around the same time as the consultation document on rebalancing the Northern Ireland economy is published, the Executive and the Assembly will find out the outcome of the review of departmental expenditure limits in the current comprehensive spending round? That will have an effect on what Northern Ireland gets through the Barnett formula. The Budget also projects serious reductions in annually managed expenditure in the form of social security benefits, and those two squeezes on Northern Ireland combined could have a high economic impact that would make what is in the consultation document pretty irrelevant.
Sammy Wilson: That is related to the point that I made about the downward multiplier impact that the proposals will have on the UK economy, and particularly on the Northern Ireland economy. I am always reluctant to plead special cases, but one has to consider where Northern Ireland is in the economic cycle. We lag behind, as we are still in the downward part of the cycle. All the available indices, whether of output, employment, forward orders, investment or whatever else, show that we are still on the downward slide in the cycle. Our concern is about the impact that the attempts to restructure the economy could have, and the fact that while growth might occur in the rest of the United Kingdom, we might find ourselves still stuck in a recession because of the particular circumstances in Northern Ireland.
Ian Paisley (North Antrim) (DUP): On the subject of fairness and special cases, the Red Book outlines a special case for Scotland, where there is to be a possible pilot scheme for rural fuel duty. Given that Northern Ireland is the only region of the UK that has a land border with another EU state whose fuel duty is progressively lower than ours, would it not be wise for that possible pilot scheme to be extended to the region that would benefit most from its findings?
Sammy Wilson: I would like to see that scheme initiated quickly in Northern Ireland. I suspect that it is one of the proposals that the Liberal Democrats were keen on pushing forward. Given the rural nature of much of Northern Ireland and the particular circumstances that we face, we would welcome it. We will be interested to see the outcome of the pilot scheme and how quickly it is rolled out across the rest of the UK, if at all.
I turn to fairness for individuals, on which there are things to be welcomed in the Budget. I suppose that at the end of the day, it will all be about balance. I am pleased to see that the pledge to restore the link between earnings and pensions has been honoured. For many pensioners who find themselves in difficulty, that will be an important gain. We also have the banking levy, the change to capital gains tax for those paying the top rate of tax and the fact that the pay freeze will not apply to those at the lower end of the public sector pay scale. There has been a genuine attempt to recognise that those who are already on low incomes should not be pushed down further.
On the other hand, there will be concern about the regressive nature of the VAT increase and the freezing of child benefit and tax credits. I am particularly concerned about the backdating of tax credits for one month
instead of three, and I hope that the Chancellor will give us an answer about that. I hope that Her Majesty's Revenue and Customs will improve its performance in dealing with tax credits, otherwise many people will have an unfair result through no fault of their own. They will be powerless against a bureaucracy that seems unable to move on the issue.
Kate Green (Stretford and Urmston) (Lab): Is it not also the case that the families whose circumstances are most prone to change will be particularly hard-hit by a mere one-month backdating period? Those are families, of course, for whom jobs are particularly stop-go and at risk. The risk to families who already face dangerous and unstable economic circumstances will be heightened by that ungenerous measure.
Sammy Wilson: Not only are those the families whose circumstances are most liable to change, they are often the ones who find it the most difficult to deal with the bureaucratic maze that they face when making applications. I should like to hear from the Chancellor what proposals are in place to ensure more efficient processing of claims.
The final thing that I am looking for in the Budget is some certainty, particularly about its impact on Northern Ireland. We have been told that there will be a 25% cut in departmental expenditure limits over the next four years, but that it will not apply evenly and some Departments and areas of Government spending will be hit more than others. In Northern Ireland, we have now started the budget process. Because of the neglect of the previous Government, there was no comprehensive spending review announcement for the previous year, so we are planning in a vacuum. It is important that information be made available quickly to regional Assemblies as to what the impact on their departmental expenditure limits is likely to be, so that effective planning can take place. There is nothing worse than asking Departments to deal with difficult economic circumstances and then giving them a list of parameters and assumptions that are so vague that is almost impossible for them to make any long-term decisions.
If less money is going to be available, it has to be used more effectively. For that, there must be an ability to plan, so that we can look forward and see how that money can best be put to use and how Departments might work together to get more services from the available money. That can be done only if there is certainty, so I appeal for the information that regional Assemblies require to be given to them quickly.
Mr Deputy Speaker (Mr Nigel Evans): Order. I am sure that Members will wish to observe the conventions of maiden speeches when they take place. We will have a small number of them this afternoon.
2.57 pm
Simon Reevell (Dewsbury) (Con): I am grateful to you, Mr Deputy Speaker, for the opportunity to make my maiden speech this afternoon. It is both an honour and a privilege to make these observations on behalf of the constituency of Dewsbury, which sits proudly in the West Riding of Yorkshire and comprises, in its northern half, the towns of Dewsbury and Mirfield, and in its southern half the rural wards of Denby Dale and Kirkburton.
Dewsbury is a diverse constituency in both geography and population. It has many famous sons and daughters, but before I mention just a few of them I should pay tribute again to Corporal Stephen Curley of 40 Commando Royal Marines, who was from Dewsbury and who recently made the ultimate sacrifice for our country in Afghanistan. Those of our footballers in South Africa who hint that their poor performance may be attributed to being away from their families for a few weeks should reflect on the fact that our real heroes are serving six-month operational tours in Afghanistan.
I referred to sons and daughters of Dewsbury, and I cannot make reference to any of them without mentioning Betty Boothroyd, as was, who became Speaker in 1992 and remained so for eight years. Another Dewsbury politician is my predecessor as a candidate, Sayeeda Warsi, who is an inspiration to many young Muslim women in my constituency and beyond. I should mention Sir Owen Richardson, who won a Nobel prize in physics; Patrick Stewart, an outstanding actor on television, screen and stage; Eddie Waring, successful pre-war manager of Dewsbury's rugby club and for so many years the voice of rugby league; and current British super-featherweight champion Gary Sykes.
Although it is interesting to note the achievements of the famous, the real issues that affect people's lives are my primary concern. In the Denby Dale ward, the village of Birdsedge supports sustainable energy, but rightly cannot understand why anyone would try to site huge turbines so that they overshadow the village and village school. Renewables are important, but so is quality of life, and I am pleased that the planning process will soon reflect that. I support BOLT-Birdsedge and district Opposition to Large wind Turbines-the village's action group.
The villages of Skelmanthorpe and Scisset recognise the need to provide homes to sustain their villages, but could not understand how anyone could suggest doubling them in size without addressing the infrastructure that thousands of new homes would necessitate. Thankfully, the regional spatial strategy is behind us, along with the local development framework, but the local authority must recognise local people's legitimate concerns as it considers its plans. I am pleased to support Save Our Scisset and the Skelmanthorpe community action group.
In the Kirkburton ward, there are successful businesses supplying everything from mineral water to precision engineering components. There is a remarkable company, which manufactures a machine that can prevent hair loss-
Simon Reevell: It is good, but not that good. It can prevent hair loss for some chemotherapy patients.
I have given examples of enterprises that must be encouraged, and the same applies to those who farm in rural areas. Honest food labelling is a reasonable request from those who farm the southern half of my constituency. Those who maintain our countryside and those who build up private sector businesses deserve a tax system that recognises generations of careful investment.
In Mirfield, as everywhere, education is important. Mirfield's Castle Hall and the Mirfield free grammar are two of the local authority's top performing schools. It was acknowledged that any sort of merger would
harm the standards in both, yet that was the local authority's plan. Many groups and individuals fought those proposals, and this is an appropriate moment to pay tribute to my predecessor, Mr Malik, who, through this involvement, put party loyalty to one side and stood with parents, pupils, teachers and politicians of all parties to oppose the local authority's proposal. It is a good example of how a constituency MP should and did put people before politics. The schools adjudicator threw out the proposals for Mirfield, and I hope that they never resurface, but against such a background, schools such as Mirfield free grammar now look to academy status.
Mirfield has an excellent Air Training Corps and Army Cadet Force. Those organisations teach young people discipline, self-confidence and respect. Their colleagues in the Sea Cadets and Army Cadets in Dewsbury do the same.
Let me consider the town of Dewsbury. It was in the news again last week when the local authority published the summary of its serious case review into the Shannon Matthews case. I am glad that the publication of the entire report will follow, but publication of the summary was sufficient to cause the media to descend once more on the town. The real story is that the people of the town of Dewsbury are no different from the people of Mirfield, Kirkburton or Denby Dale. The Shannon Matthews case concerned only two members of a single family, who behaved in a truly appalling way, but no two individuals can define a town. What defines Dewsbury is the fact that when the people of the town believed that a vulnerable young girl had been abducted, friends, neighbours and strangers spent hour after hour, night after night searching for her, just as they would do in Kirkburton, Mirfield or Denby Dale.
That is not to say that Dewsbury is without problems. Despite its fine Victorian buildings and the best market in the country, regeneration is a priority, and there is a growing feeling that there is an obligation on the local authority to consider carefully whether relocating part of its work force to Dewsbury, a town with first-rate road and rail access, would be a responsible contribution to that process. Some landlords must be more realistic about their rents and more proactive about their responsibilities to the town centre.
Dewsbury's minster stands on a site of Christian worship going back to 672. In its walls nearly 900 years later, the Protestant faith replaced the Catholic faith. More recently came the chapels, and even more recently, the minster was joined on the skyline by the silhouette of the town's mosques. That is a sign of a confident and tolerant place, and no one should be allowed to jeopardise that.
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