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Whatever my differences with them, I do not believe that people who joined the Liberal Democrat party went into politics to attack poorer mothers, but that is what this Budget does. That is what they will be faced
with voting for in a few days, and I ask them to consult their consciences-never mind their party members-to determine whether that is the right thing to do.
Earlier, I said that it would not be my priority at this time to go for further fiscal tightening, given the fragility of the economy and the lack of demand elsewhere in the world. However, that is not simply my view; it has also been expressed by people who are very significant indeed.
The House will be aware of President Obama's letter to the G20, but hon. Members may not know that KPMG chief economist Andrew Smith has described yesterday's Budget as a "kill or cure" Budget. I note that the same phrase was used in today's Financial Times headline, and there is at least a risk that we might kill the recovery. It is quite extraordinary to see KPMG make such a statement, and Andrew Smith, its chief economist, went on to say:
"The aim is to eliminate the structural deficit over this Parliament, but it risks choking off the recovery. There is no guarantee that private demand will rebound just because the government retrenches."
"All around the world...politicians seem determined...to short-change the economy".
A consensus has emerged in the media about the need for cuts, which is infuriating sometimes, because there is a counter-consensus that has not been properly heard, represented by many people on the Opposition Benches and by leading economists, President Obama and others: we are taking a huge risk with the future of our economy.
Two million private sector employees work for companies that are dependent on Government contracts-Sheffield Forgemasters has already been mentioned. Further damage will inevitably be done to the private sector by cuts aimed at the public sector. When we look at the performance of the private sector we see that it, rather than the public sector, has brought about the reduction in gross domestic product, especially in investment. People may not like to use the word, but if there is a strike going on at the moment, it is not the BA strike but the investment strike in the private sector. We can understand why it happened, but none the less, £6 of every £10 of the reduction in GDP is down to one factor alone-the decline in private sector investment. It is not clear to me how cuts now will suddenly lead to growth in private sector investment, nor have the Government explained how that might happen. Furthermore, the Red Book
shows a decline in public sector investment from £47 billion in 2008-09 to £21 billion, which is less than half that amount, by 2014.
I am troubled both by the assault on poorer communities, which is what the Budget really amounts to, and by the underlying economic philosophy that by reducing the state the private sector will flourish. The reverse is true, as we know from the great economist Keynes and from what happened in the great depression of the 1930s. Recovery in the United States was not brought about by slashing public expenditure, but above all by the new deal. Roosevelt's great adventure rebuilt the American infrastructure and economy. The private sector was able to revive through expenditure, not cuts.
With those reflections, I turn to the politics of the Budget. The election gave no legitimacy for the course the Government have set. The vast majority of people who voted for the Liberal Democrat party did so on the basis that there would be no further cuts in this financial year, and no increase in VAT. The Conservative party did not achieve a majority and did not significantly increase its vote, in terms of the total numbers of people who voted. On the other hand, it is also clear-I would not claim otherwise-that Labour did not win the election either, but looking at the combined votes for Labour and the Liberal Democrats, for a policy of careful financial management, we see that a vast majority voted for that objective.
My conclusion is that there is no democratic legitimacy for the Budget. When the Secretary of State for Business, Innovation and Skills described his conversion on the road to Damascus on the day after the election, his argument was much less than convincing. It feels as though there has been an attack on middle-class and working-class families and on those dependent on welfare. Inevitably, there will be resistance both in the House and outside. When people reflect on the fact that an extreme Thatcherite Budget has been agreed and will be forced through the House without the legitimacy of an elected parliamentary majority, there will be outrage.
It is for the Labour party, particularly our leadership, to reflect carefully on how we respond to a Budget from a Government who were not elected with a majority, and who propose to impose savage cuts on the living standards of poorer people. Resistance will emerge. The Labour party will want to react responsibly, but we will-at least we should-place ourselves alongside people and communities who are resisting the cuts. I very much hope we shall be doing that in the coming weeks and months.
Andrew Jones (Harrogate and Knaresborough) (Con): Thank you, Mr Deputy Speaker, for the opportunity to speak today. It is a great honour to address the House for the first time and it is with some trepidation that I follow the excellent maiden speeches of so many Members.
I pay tribute to my predecessor, Phil Willis, who served with great distinction for 13 years and built up a significant, thoroughly deserved personal reputation as a fine, hard-working constituency MP. I wished Phil a
long and happy retirement, which may have been a little too early, because as soon as I had done so he was made Lord Willis.
I am only the fifth person to represent the constituency since it was created. One illustrious predecessor is the hon. James Ramsden, who became the MP nearly 60 years ago and was our country's last Secretary of State for War. James once confided to me that there were not many of "us Macmillan's Ministers" left now. I have not checked, but I think James is a member of a very small club.
Further back we had some rotten boroughs-the need to equalise constituency size goes back a long way-and over time they were represented by three Prime Ministers. However, the most famous political figure, if I may call him that, with links to my constituency is someone who played a big role in the history of this place: Guy Fawkes, who spent his childhood in the village of Scotton.
When I first arrived here, Members were introducing themselves to each other and asking where they came from. As soon as I said that I came from the Harrogate and Knaresborough constituency everyone said, "Ah, lovely part of the world." They were right. The Harrogate and Knaresborough constituency is Yorkshire at its very best. I am proud to represent such a beautiful area, with its mix of historic towns and villages and rolling countryside.
Knaresborough is by far the older of the two principal towns, and is a very pretty market town with a marvellous natural setting. It has a river and a gorge, a castle and a crag, and a fascinating history. Earlier this year, there were great celebrations on the 800th anniversary of the first award of Maundy money, which took place in the town. I am always struck by the real community spirit in the town, perhaps best exemplified by the annual Knaresborough bed race, which is organised by the Knaresborough Lions and took place only a few days ago.
Harrogate is a spa town, perhaps most famous for its gardens and tea rooms. A regular winner of the Britain in Bloom competition, it is true that the gardens are beautiful, and Betty's tea rooms are justifiably famous for their quality. They are a Yorkshire institution. I should perhaps confess that I have a lot of knowledge of that company, having worked for it, so there is a direct interest. But there is more to Harrogate than that. The quality of life there is very high, based on a robust local economy, which has a mixture of quality companies that operate in a diverse mix of sectors, including one of the UK's largest conference centres.
Many hon. Members will have visited conferences at Harrogate and so will have experienced the transport links, which are poor, especially the rail links. Only 18% of the 350,000 visitors per year to the conference centre travel by rail. More direct trains between London and Harrogate would be far more convenient for visitors to the conference centre, thus boosting business and having a beneficial effect on the broader business community. I will be working to highlight that and to fight for improvements, although I am under no illusion how difficult that will be, given the appalling state of the public finances inherited from the previous Government.
Our public services are good, with motivated public servants delivering quality health care, education and other services, yet over the past couple of years, I have
started to receive calls from people who work on the front line of those services to highlight the bureaucracy that they have to endure and, interestingly, what they see as the waste of public money. Contributions from those who deliver services on the front line will be absolutely crucial in ensuring that we make the right decisions in the changes ahead.
One of the reasons for the high quality of life in Harrogate and Knaresborough is the quantity and range of community groups and social enterprises. I have been particularly impressed on my visits to social enterprises such as Paperworks, Claro Enterprises, Horticap and the Little Red Bus. Numerous voluntary groups do so much to add to the quality of life in our area, and there are 400 charities registered. I have seen the difference that volunteering and social enterprises make, and I welcome the Government's support for the third sector.
Harrogate is also the home of Army foundation college, where our junior soldiers train before being sent to their regiments. It is a fine organisation. It does great work with the 16 and 17-year-olds who join it from a very diverse set of backgrounds, yet all leave with pride and confidence in having made great achievements. I am always conscious that, whenever we hear of a casualty in Afghanistan, there is a high likelihood that that person spent some time training in my constituency. The junior soldiers whom I have met at the foundation college are a credit to our forces, and I strongly welcome the Government's support for our forces.
One thing that I often hear about my constituency is that it is very affluent-parts of it are, that is true-but there are pockets of poverty, which are sometimes overlooked: perhaps pensioners living on fixed incomes, or people who live in rural areas or who work in the hospitality industry, where incomes are often very low. It may surprise hon. Members to know that the average wage from jobs in the area is £440 per week. That is less than both the regional and UK average.
I mentioned earlier that Harrogate and Knaresborough is the best of Yorkshire. In my constituency, we have one of the most desirable areas to live, a successful and diverse economy and an engaged community, yet one of the lessons of the recent election was that people fear that what they have may be under threat. I heard comment after comment from people fearful of the scale of debts facing our country, knowing that the action to deal with them would not be easy. People have understood that the need to tackle the issue was urgent, but that there would be better times ahead when the consequences of the previous Government's debts are dealt with.
There is a lesson from Harrogate on the benefits of clearing debts. The local council has been active in repaying its debts, keen to clear liabilities and save taxpayers paying for interest. Paying interest does not appeal to Yorkshiremen and women-we are famous for liking value. Paying interest is using funds that could be put to better purpose. In this case, I believe that the money that is being saved will be used to expand the local recycling service. The contrast is stark: paying interest, or investing in environmental initiatives. In less than three years, the council will be debt free-the consequences of a good Conservative administration. It will take us far longer than that to clear the debts that we have inherited.
It is crucial for us all to get our economy moving, and I support very strongly the Government's efforts to create the right environment for businesses to thrive. The cuts announced yesterday in corporation tax rates, with the expansion of entrepreneurs' relief and the small business relief, mark a clear change of direction on business taxation, and that will be very welcome in Harrogate and Knaresborough.
A further part of the right environment for business is the emphasis placed on education and skills. In Harrogate and Knaresborough, we have excellent primary and secondary schools. We also have Harrogate college, which is launching a business school tomorrow.
I have already met the representatives of rail operating companies and local education providers, because I know how critical it is to have a robust business sector, built on adding value. That is my background before I joined the House.
I pay tribute to the hon. Member for Harrogate and Knaresborough (Andrew Jones). I am very pleased indeed to follow a fellow Yorkshire MP making his maiden speech. In particular, he talked about some of the best traditions of Yorkshire-first, the community spirit of Yorkshire people and, secondly, the great Yorkshire institution of Betty's tea rooms. I am sure that hon. Members on both sides of the House will appreciate the fact that people can get a good cup of tea and a good piece of cake at Betty's tea rooms.
I wish to comment on one of the other contributions to the debate. The Secretary of State for Business, Innovation and Skills made quite an attempt at explaining his about-face in respect of what the Liberal Democrats fought the general election on and how he now comes to the Dispatch Box to defend the vicious and savage cuts in the economy. He is obviously a distinguished and well-thought-of economist, so it was rather strange that he did not pick up before that the position was so bad that he would have to change his party's policy. He was seen as brilliantly forecasting some of the problems in the economy during the previous Parliament and he has been given great recognition for some of his forward-thinking views, but he was not able to pick that up in the weeks before the election. I was rather taken aback by how out of touch he claimed to be and by how he had to have the meeting to explain the current economic situation and to change his party's policy.
I was also very surprised indeed to hear a Liberal Democrat try to argue that VAT is not a regressive tax. I have never heard anything like it, and it took my breath
away when I recalled that my Liberal Democrat opponent in the general election made it clear on every hustings where I appeared with him that increasing VAT was not something that the Liberal Democrats would support. He constantly attacked the Conservatives for the fact that, whenever they have been in government, they have always put up VAT.
The main reason that I wish to speak in this debate is the growing anger-not only in my constituency of Kingston upon Hull North, but in vast swathes of the north of England-at the coalition's policies so far announced and those in the Budget statement yesterday. Many of the policies that the coalition Government have proposed to the British people have no mandate-obviously, the deal was done after 6 May-and the electorate, particularly Liberal Democrat voters, feel misled, betrayed and disfranchised. When I talk to people in my constituency, they tell me that they did not vote for many of the polices proposed in recent weeks and yesterday. In fact, they feel that they were not given the opportunity to vote on the very policies that the coalition Government have proposed. As I have indicated, the Liberal Democrats sought election clearly on the mandate that they would not let cuts come during this financial year and that they were against VAT increases, but look at them now.
John Thurso: May I reassure the hon. Lady that I have spent a great deal of time talking to my constituents since the Government were formed and that the only thing that they wish to express is their overwhelming relief that the Labour party is no longer in government?
Diana R. Johnson: If the hon. Gentleman talks to the electorate in Yorkshire, he will find they express a different view. He might also find that the views of his electorate have changed considerably since they heard the Budget.
Angela Smith: To underline that point, I am sure that my hon. Friend understands the feelings of the people of Sheffield. They write to the local newspaper every day to say that the Deputy Prime Minister will pay the price.
Diana R. Johnson: That is absolutely right. We have seen a political blind date, but we should not worry because it is clear that Dave agrees with Nick, and that Nick agrees with Dave, so perhaps it will be okay in the end.
There are a few measures in the Budget that I can support, such as the change to capital gains tax and the bankers levy, although I am surprised that the levy will raise only about £2 billion because I think we could raise much more. However, the broad thrust of the Budget is very bad news for my constituents. Hull North will see more individuals out of work, with people's opportunities wrecked and a decline in their quality of life. The programme of fighting child poverty and inequality will go backwards, not forwards, and there will be big problems in health and housing. Most importantly, wealth creation and enterprise will suffer in Yorkshire.
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