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The minster's most famous curate was an Irish immigrant born Patrick Brunty. His is an interesting story. In 1799, after his victory in Naples, Admiral Nelson received the title "Duke of Bronté" from a grateful King Ferdinand. Patrick Brunty changed his surname in honour of the great naval hero. As Patrick Brontë, he worked as curate at Dewsbury's minster, then went with his daughters to the parsonage at Haworth. The novels written there by his daughters, the Brontë sisters, made their new surname famous the world over. The point is not that those who come to West Yorkshire should change their names to
honour the hero of the hour, but that much of what we regard as a product of England, even its finest literature, has roots further afield.
Integration is important-it is not about where someone is from, but the extent to which people are prepared to mix, and ensuring that we respect one another, whatever our cultural differences. It is about asking ourselves if a particular course of action will be helpful or inflammatory; whether something we want to do or even want to wear can be better explained or even changed if it alienates others. It is a central issue in the town of Dewsbury. We are entitled to expect integration and to say to community gatekeepers that their role is to hold the gate open, not force it shut. I pay tribute to all the organisations that do so much already to pursue that course.
Many people in my constituency are fed up with working hard and doing their best, and seeing others who make little or no effort being better off because of the vagaries of the benefits system. The system is unfair and I am delighted that, under the coalition Government, it will change to reward those who strive in the face of adversity, rather than those who sit back and ask, "What can I have for as little effort as possible?"
I thank those who worked so hard to win in Dewsbury. No one had a better team than me. I recognise that alongside victory comes great responsibility. It is an enormous privilege to shoulder that responsibility on behalf of the constituents of Dewsbury.
3.7 pm
Rachel Reeves (Leeds West) (Lab): I have great concerns about what the Government have outlined today. First, international evidence shows that hasty cuts will derail growth. Secondly, by failing to set out a vision for the future, the coalition destroys our chances of rebuilding a balanced economy. Thirdly, the Budget's measures will hit the poorest in society-those who can least afford the pain-hardest. I fear for my constituents in Leeds West and am worried about how they will fare in the months and years ahead.
On growth, it is clear from the Chancellor's speech that he has chosen to ignore the harsh lessons of history-from Japan in the 1990s and the USA in the 1930s. Despite his talk of a plan for growth, as a result of today, we face the real prospect of a double-dip recession.
I wholeheartedly agree that the deficit needs to be cut, but the issue is whether it should be cut this year or next year, and the method of making those cuts. The surest way to bring down the deficit is to embed strong and sustainable growth, but we heard nothing about that from the Chancellor today. The Office for Budget Responsibility's forecasts have revised growth downwards-after those presented only a week ago-by 0.1% this year and 0.3% next year, and an additional 100,000 people are due to go on the dole.
Kwasi Kwarteng (Spelthorne) (Con): What does the hon. Lady think about the sovereign debt crisis in Greece, to which my right hon. Friend the Chancellor referred in his Budget statement?
Rachel Reeves:
I thank the hon. Gentleman for giving me the opportunity to address that issue. The debt-GDP ratio in Greece is two and half times that of the UK, and the maturity on UK debt is, on average, 13 years,
compared with an OECD average of two to three years. In addition, the Greek economy remains in recession, while the UK is beginning to recover from a recession. We cannot take that recovery for granted, but our economy grew by 0.3% in the first quarter of this year, and we are beginning to emerge from recession.
The downgrades from the OBR reflect the fact that the cuts will stall the recovery and throw more people into unemployment. There are two ways to reduce the deficit: strong growth, or wielding the axe. The Chancellor has today chosen the latter, and the result will be, as we have seen from those forecasts, weaker growth, higher unemployment, more business failures, more home repossessions and a less competitive British economy. Instead of a strategy for growth, we have been given a strategy for austerity, cuts and pain for working people-the people whom I have been sent to Parliament to represent.
Christopher Pincher: When the Governor of the Bank of England, who was of course Governor when Labour was in power, said that the deficit reduction plan is strong and powerful; when José Manuel Barroso says that fiscal consolidation is necessary; and when Lord Myners, who has made an astonishing but none the less welcome conversion to sanity, says that Governments should spend less than they earn, does the hon. Lady agree with them?
Rachel Reeves: I will give way less often if interventions last that long. The hon. Gentleman made a long intervention, but missed a couple of points on which I should like to fill him in. In its statement from South Korea a couple of the weeks ago, the G20, as well as calling for countries to address budget deficits, argued for growth-friendly deficit reduction strategies. Today we did not get that. Another of the hon. Gentleman's omissions is President Barack Obama's warning. In a letter ahead of the G20 meeting this weekend, he said that we should
"learn from the consequential mistakes of the past, when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession".
The hon. Gentleman failed to mention those points, but they are extremely relevant to the debate.
Stewart Hosie: The hon. Lady is absolutely right on the early withdrawal of the fiscal stimulus-so does she regret the fact that her Government were one of only two Governments fully to withdraw the fiscal stimulus package in 2010?
Rachel Reeves: What I regret is that the current Government withdrew the future jobs fund and the extra 20,000 places that Labour introduced to universities, and cut the regional development agencies, which were doing fantastic work in my region of Yorkshire and Humberside. Those are my regrets.
Frankly, there is no vision from the Chancellor and the Government of the sort of economy they want to emerge from the recession. What sort of society and economy do they want when they have reduced the budget deficit? Labour wants a sectorally and regionally diverse economy that is robust enough to face future shocks. None of that is on the Chancellor's or the Government's radar-let alone within their grasp-because
they are cutting the very measures that would ensure not only growth in the short term but future economic security.
The new Government are portraying their cuts as eliminating waste, when in fact they are risking our future economic prosperity. Eliminating the future jobs fund, which has got almost 200,000 people back to work through the recession, axing the loan to Sheffield Forgemasters-an absolute disgrace that has cost jobs and economic growth in my region-cutting funding to universities, and cutting hospitals, transport and school building programmes across the country, including in my city of Leeds, is certainly not my idea of eliminating waste. Rather, it is cutting the front-line services on which my constituents rely.
Jim McGovern: My hon. Friend mentioned her regrets and went on to describe some of the things that are happening in her constituency, but does she agree that the Government's refusal in today's Budget to honour the commitment to tax breaks for the computer games industry will have a detrimental effect in my constituency?
Rachel Reeves: My hon. Friend is absolutely right, and we could think of countless examples of things that the Government have done today that will risk the future economic prosperity of this country.
Worse than that, ordinary people-those least responsible for the recession-will be hardest hit. In Leeds West, average earnings are £16,000 and unemployment stands at 8.7%. Increasing VAT, reducing access to free school meals, abolishing the health in pregnancy grant, freezing child benefit and cutting tax credits will hurt my constituents. The people who bear no responsibility for the financial crisis and recession will be hardest hit. An extra £13 billion is to be paid in VAT, but there will be only £2 billion extra from the bankers. Is that fair? Is that the way to bring down a budget if we are "all in this together"? I think not. Asking those who already struggle to make ends meet, such as those in Leeds West, to make the same sacrifices as, or more than, those at the top is plain unfair and socially divisive.
I began by urging the Government not to forget the lessons from Japan in the 1990s and the United States in the 1930s. However, I am filled with fear that they want to learn a lesson from Canada, because we are in a totally different position from that of Canada when it approached its fiscal consolidation. At that time, Canada was a partner in the newly formed North American Free Trade Agreement, and was experiencing strong demand for its exports. It was also able to loosen monetary policy, which was integral to getting its economy back on track. Given that UK interest rates are at 0.5%, that rates will be low in the long term, and that quantitative easing has already been undertaken, it is pretty much impossible to see how we can loosen monetary policy further-that is simply not at our discretion. I urge the Government not to manipulate the Canadian experience to justify today's deep cuts.
I do not dispute that we need a realistic and credible plan for reducing the deficit-[Hon. Members: "Hear, Hear!"] In response to those heckles, as far as I am aware, it is the Government's responsibility to come up with the plans, but without a credible plan for growth, we risk a double-dip recession, or a British economy that splutters along in the slow lane of the global economic recovery.
The Government are trying to convince the public that there is only one way that Britain will bring down the deficit-pursuing hasty and unjust spending cuts-but that is simply not true. They are using the budget deficit as a cloak for fulfilling their overriding ideological desire for a smaller state. They are set on achieving that by doing the economy down-as the hon. Member for Spelthorne (Kwasi Kwarteng) did when he made the comparison with Greece, which was the most misleading comparison he could have made-and by panicking the public into thinking that there is no other option.
However, there is another option. The surest way to reduce the budget deficit is to ensure strong and sustainable growth and a rebalanced economy. Yes, taxes need to increase and spending to decrease, but not at the expense of the economic future of this country or of a diverse, strong regional and national economy; and not in a way that will plunge more families and children, who played absolutely no role in causing this recession, into poverty, unemployment and despair.
3.19 pm
Mr John Redwood (Wokingham) (Con): I remind the House that, in the declaration of Members' interests, I have revealed that I offer business advice to a global industrial company and an investment company.
In her response to my right hon. Friend the Chancellor's Budget, the Leader of the Opposition gave one of the worst speeches I have ever heard in the House. It was intemperate and ill judged, and did not seem to be based at all on the Budget presented to us today. It is a great pity that she and her party still do not understand their culpability for the financial mess in which we find ourselves, show a little humility over the inheritance they have passed on-the worst financial and economic inheritance any Government have received since the second world war-and show a little willingness to work with us on getting out of this hole.
Many Labour Members, having been Ministers or ministerial advisers until just a few weeks ago, have a lot of information. They told us during the election, in general terms, that they would unleash substantial public spending cuts after the election, and it would be good to know from them where those cuts would have been made. They might be preferable to some of the ones we are thinking about, and it would be most useful if they would share them with us. If they are not prepared to share them with us or the country, the country is entitled to say, "These people got us into this mess, are totally unconstructive and still have not learned anything." As other Members have said, it might be better if they got on with their leadership election, and let us get on with the serious task of debating the state of the country.
Austin Mitchell (Great Grimsby) (Lab): If the public finances are in such a mess, why did the Conservative party want to adopt Labour's spending targets in 2008, and did it oppose the huge amounts of money put into the banks to save the banking system, which was responsible for much of the borrowing?
Mr Redwood:
I was clear throughout the previous Parliament that I thought Labour's spending targets were unaffordable, and I said so in the economic policy
review that I wrote for the Conservative party at the time. I was strongly opposed to the indiscriminate subsidies and moneys flung at the banks on a scale that defied belief and which I felt was totally unnecessary. I offered an alternative way of saving what needed saving in those banks, for the sake of the general economy and at a much lower cost, so I think that the hon. Gentleman has challenged the wrong person on that issue.
I pay tribute to my hon. Friend the Member for Dewsbury (Simon Reevell). He gave an elegant, traditional and classical maiden speech that bodes well for his representation of the people of Dewsbury. It was funny and detailed; showed a great love of the territory and people he now represents; and showed that he will be a campaigning politician. I also detected just a little conservatism in his attitudes, so I was entirely happy with it and wish him a long and successful stay with us in the House.
The Budget has been little understood by some of the people who have commented on it so far-perhaps that is not surprising because those who speak early do not necessarily manage to read the Red Book quickly enough. I praise my right hon. Friend the Chancellor for producing a Red Book half the length of the Labour Red Book-and, therefore, a lot cheaper and economical-but containing much more useful information. With a short read one can understand exactly what he is trying to do in the measures he is proposing, whereas I used to find it took more than a day to winnow out the truths from the great weight of paper that the previous Chancellors of the Exchequer used to present, because they were always trying to disguise the negatives and highlight and exaggerate the positives.
My right hon. Friend is right to say in his Budget that we can get out of this mess only with a strong and vigorous private sector-led recovery. We need to preside over the creation of a very large number of new private sector jobs, because we need to absorb many of the people languishing on benefits as a result of past policies-almost 6 million people of working age without a job, many of whom would like and need a job. We need to create a much more vibrant private sector that can take them into employment, so that the benefit costs come off the public accounts and those people can start to make a contribution through taxes.
We also need to create many more jobs because the 6 million people currently employed in the public sector are too many. I do not wish to see compulsory redundancies, but I am glad that my right hon. Friends in ministerial office are now imposing freezes on recruitment and allowing recruitment from outside only where it is really necessary. We need to reduce the number of people across the public sector, and I am pleased that we will be showing the way here as well, so that nobody can say that MPs are exempt from the process.
Chris Leslie: The right hon. Gentleman is talking about the number of people in public service employment. What sort of reduction does he feel would be acceptable? How many people should no longer be employed in the public sector?
Mr Redwood:
That has to be judged case by case. I will not play the hon. Gentleman's silly political game so that he can create a sensational press release immediately after I have given him a suitably large number, and I am
not going to give him a suitably small number so that he can say it would not have the necessary impact. Suffice it to say that proper management could deliver more for less across many parts of the public sector, and we can do that without compulsory redundancies; we can do it by sensible management.
My first test for my right hon. Friend's Budget is: how does it promote private sector-led recovery? I am pleased that he has said that he wishes to cut, through a steady process, the headline rate of corporation tax by rather more, I think, than under the plans when he was in opposition. The receipts pages-pages 40 and 41 of the Red Book-on "Budget policy decisions" show that he will be reducing the tax burden for most of business, and that not all of it will be given back in the form of reduced capital allowances in the way that Labour feared. However, if we add in the banks tax, the corporate sector as a whole will be making a bigger contribution. So the thrust of the Budget is that non-banking businesses will get a modest benefit from the changes and that overall business will have to help to pay for the large amounts of public spending still going on. However, a clear message will be sent to the outside world that we want lower taxes and that we believe in lower tax rates. The lower headline rate is the most beneficial thing that we can do to get people abroad interested in coming here with their companies, investments and new ventures, which is what we need.
I am pleased that the Chancellor has done more for small business. [Hon. Members: "Hear, hear!"] All the evidence shows that small businesses are not only politically popular with my colleagues, as we have just heard, but the main generators of new jobs during an economic recovery. They are more creative and need to take on more people. He has targeted them favourably with both the small business profits tax rate reduction and, for those outside London and the south-east, the generous national insurance reduction-as a Member for a south-east constituency, I would like him to extend that to the rest of the country as well, but I understand his argument that he wishes to concentrate the help on those parts of the country with the most unemployment and the biggest public sector problem.
Overall, the Budget judgment is not to ensure that 80% of the strain is taken by public spending reductions. The idea is that next year 57% of the strain is taken by public spending changes and 43% by tax increases. That is quite high on the tax increase side, which is a little worrying, but it reflects how my right hon. Friend is very reluctant to cut public spending in a damaging way and his understandable wish to get on with Budget deficit reduction.
Tom Blenkinsop: The right hon. Gentleman mentioned that he would like to see extra advantages for his constituents in the south-east. The Financial Times recently calculated that cuts to benefits and key Departments will have twice the detrimental impact on family incomes in Middlesbrough South and East Cleveland and other constituencies in the north-east as they will in the home counties. Given that, how can the Government talk about us all sharing the burden, and about all of us being in this together?
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