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Geoffrey Clifton-Brown: I am grateful to my hon. Friend. I know that she was upbraided by Mr Deputy Speaker a little while ago-it takes a long time to sort out parliamentary language, and references to "you" and the "hon. Gentleman". She is absolutely right. I was modelling my remarks exactly on Digby Jones, who did a huge amount of work for this country, and spent an enormous amount of time travelling around the world. He had great, in-depth knowledge of huge sections of industry, having served as chairman of the CBI. We need to appoint someone of that calibre, who has the time, energy and availability to be able to do precisely that job.

As I said, the notion that RDAs should have offices around the world competing with one another led to a huge dilution of the UK brand. It caused confusion in the country in which they were located, and it did not serve our interests of attracting foreign direct investment to this country. I have no doubt that Ministers will abolish that structure rapidly, thereby producing much better results. I welcome the proposals for local enterprise partnerships, which are a huge step forward. We can help the private sector by not having a stratified structure of RDAs across the country. We need different structures in different parts of the country, to deal with the problems in each area. We must concentrate Government advice on business sectors, rather than on regions. It was complete nonsense that the Government's car adviser was based in the north-east, unable to give advice to car manufacturers and component suppliers in Birmingham. We must concentrate on sectors, so that the automotive sector, for example, has a proper advice team in the Department for Business, Innovation and Skills.

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We must try to support those sectors that the UK is good at, and see how we can improve their export structure. I say this with hesitation at the moment, but our oil sector was respected throughout the world. Our pharmaceuticals, defence and financial services sectors were respected throughout the world, too, and in line with Sir James Dyson's recommendations, we must aim to become the No.1 high-tech exporter in Europe. We will do that by concentrating on the new, high-growth market sectors, such as those involving low-carbon and green technologies. Those are the industries of the future, and we ought to concentrate on them. We must also ensure that our universities and their basic research are world-beating, and that companies have the incentive to develop those world-beating ideas into products and services that we can sell in greater and greater quantities throughout the world.

Angela Smith: I appreciate what the hon. Gentleman says about the potential of our export and manufacturing sectors, but does he support nuclear power, nuclear energy and the supply of components to the nuclear energy industry as one of those sectors that are important for our future?

Geoffrey Clifton-Brown: I am very grateful for that intervention. I have always been a supporter of nuclear power, and I am one of the very few Members who have been to Chernobyl and survived, so I can see what goes wrong in the nuclear sector. However, with modern technology-I say this carefully-I can see that the nuclear sector has an important role to play in the range and mix of our power generation.

The Labour Government left us with another really dire legacy, however, because if we do not introduce nuclear power generation to this country I do not see how we can keep the lights going in the next 20 years- [ Interruption. ] The Liberal Democrats had different views, but they have looked at the problem and signed up to a nuclear power programme, and I congratulate them on that, because it is the right thing to do. We in this House should not come up with ideological dogma; we should all look at the facts and see what is the correct thing to do, which is- [ Interruption. ] It is all very well the hon. Member for Penistone and Stocksbridge (Angela Smith) pointing at the Liberal Democrats, but we in the Conservative party have had to swallow things that we do not like. We have looked at the facts and seen the correct thing to do. Therefore, I support nuclear power.

John Thurso: My hon. Friend will know of my long-term support for nuclear power, which I expressed often in the House in previous Parliaments. However, the critical thing is to be in favour not of nuclear power, but of a proper engineering and scientific-based assessment of how to ensure the lowest carbon energy, and if that leads us to nuclear, that is the correct answer.

Geoffrey Clifton-Brown: As always, my hon. Friend's wise words are correct. Nuclear power is not only an efficient way of generating energy, but a clean way. We have to use the very latest technology to deal with the nuclear waste that is produced, but I am absolutely certain that if we adopt an open mind and let our scientists get to work, we will find better and better
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ways of dealing with the waste that nuclear power stations produce. I welcome my hon. Friend's support on that.

Innovation and exports are just beginning to return, and I am sure that hon. Members from all parts, if they have listened to businesses in their constituencies, will have had that experience. I have a wonderful firm in my constituency, a small FTSE company called Renishaw. It is the world-beater in measuring technology-metrology-but unfortunately it had to lay off several hundred people during the worst of the recession. I am pleased to report to the House, however, that in the past month or so it has begun to re-employ people. That is good news, because we must all work hard on measures with regard to how we employ the maximum number of people in this country. There is nothing worse than people who want to work but are unemployed-and unemployed through no fault of their own. We should concentrate on the terrible figures for 16 to 25-year-olds not in education, employment or training-the so-called NEETs-who are without jobs at the moment, because we have inherited a shocking waste of young talent.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): In fact, in the 1980s youth unemployment was far higher than it is now. I share the hon. Gentleman's concern that youth unemployment is a major challenge, but when I look around my own constituency at people who have never worked, they are almost all people who found themselves as young unemployed people 20 or 25 years ago. That is the real problem, and words are not enough-we need to find solutions.

Geoffrey Clifton-Brown: I think, without knowing the hon. Lady's constituency backwards, that there are particular factors in her part of the United Kingdom as to why there was that rise in youth unemployment. We can argue about what happened 20, 30 or 40 years ago, but that is almost irrelevant. I am concerned about what the situation is today and what my right hon. and hon. Friends are going to do to deal with it, and I think that they have got some interesting and innovative ideas .

I have another example of a small company. It exports 300 sidecars a year to the Japanese market. We have heard about how difficult the Japanese market is. At our very best, our small and medium-sized, and even our large companies, are very innovative and very good at getting out there and exporting into some of the most difficult markets in the world. They just need a little more support, and then we can get more businesses exporting to the rest of the world. Chatham House recently reported that

It is the small and medium-sized firms that will lead us out of recession. It is the private sector that will compensate for the jobs that are lost in the public sector. It is the private sector to which we must give the right climate and right environment, and then it will thrive.

We have not only the right fiscal environment, but the right environment for dealing with bureaucracy and reducing the amount of burdens that Government place on the private sector. We must give it the right incentive to export and the right tools to do the job. I believe that
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this Government will lead us out of recession and that we will have a very much stronger economy in four or five years. I look forward to holding the hon. Member for Ogmore to his word. When we have a stronger economy, and when we start helping the most vulnerable in our society, I expect an apology from him.

4.37 pm

Angela Smith (Penistone and Stocksbridge) (Lab): May I join those who have congratulated you on your election, Madam Deputy Speaker? If I may give the House an update on the score in the England match, it is still 1-0. I think it is no coincidence that I am surrounded by an unusually large number of Welsh and Scottish colleagues. Thank you, Madam Deputy Speaker, for allowing me to speak in this important Budget debate-the most important in more than 30 years.

Thirty years ago, in 1979, I was a young slip of a thing-only 17 or 18 years old-and I remember what I saw in the following years. I am not going to have a go at the record of the previous Tory Government, so those on the Government Benches can settle down. In areas such as South Yorkshire and northern Lincolnshire, we saw huge devastation of our economies. Those of us who know the Don valley-I know that the Economic Secretary knows it very well-from its origins up in the north of Sheffield and in Barnsley through to Doncaster will remember the devastation of that lunar landscape: that is the only term that could have been used at one point to describe the lower Don valley. We saw the flattening of Hatfield, where now we have the Meadowhall shopping centre, and the devastation-as in the valleys of Wales-caused to other south Yorkshire valleys such as the Dearne valley. Where there were the pits of Manvers, Wath and Cortonwood, we now have a Morrisons supermarket and a retail centre.

I well remember all that. I remember, too, the work that we have done since then to try to repair the damage. We have tried to diversify our economies in the north of England-in places such as south Yorkshire and northern Lincolnshire. To some extent we have succeeded. We have biosciences, sport and leisure, and retail-and we still have advanced manufacturing.

We were making progress, albeit very slowly, on reducing the gap in economic growth and prosperity between London and the south-east and places such as Yorkshire and the Humber, but what is happening now poses a new threat to our economy in the north. If we suffer significant damage yet again because of a return to recession, the fear is that that damage will be permanent and irreparable, and that we will be unable to move forward as we had previously hoped without even more funding-significant funding-from Government and Europe. That is the context to today's debate. I agree with my hon. Friend the Member for Ogmore (Huw Irranca-Davies) that the impact of the Budget on individuals and communities must be at the forefront of our minds.

Unfortunately, the Budget is a wasted opportunity to help the British economy on the road to recovery. Instead of investment and the promise of future jobs, we have a Budget of cuts for the poorest and regressive tax increases-a Budget that risks our future. The race to austerity that the Government seem determined to follow belongs to a lesser-known branch of economics called ignorance economics, as Leslie Budd of the Open
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university calls it. As he correctly points out, although it is sensible to cut waste, the slashing of spending can do much more harm than good. That is what the Budget, with its massive cuts to public spending, will do.

Unprotected Departments could have real-terms cuts of 25% over the next four years. The key question is this: how many nurses, police officers, teachers and other civil servants will be thrown on to the scrap heap in the years and months to come? How fair is it that one of the significant cuts in the local government budget will be in the area-based grant? Sheffield Hallam is one of the richest constituencies in the country, and Sheffield Brightside one of the poorest. The gap has decreased in the past 13 years, but there is still a 14-year difference in life expectancy between those constituencies. The abolition of the area-based grant will hit Brightside, but it will not hit Hallam in any way at all. How can that be fair?

The pupil premium has been promised, but we are hearing that it will be based on the abolition of additional educational needs funding and vulnerable children's grants. If we roll that funding up into a pupil premium, will it be distributed fairly, or will more of it go to the south of England at the expense of the north?

Although I welcome, and offer my support for, the increase in personal allowances from next April, it will be more than wiped out by the regressive increase in VAT to 20% from January next year. There is no rise in the personal allowances for over-65s, which will disappoint many of my older constituents-indeed, I received an e-mail on that subject just this morning. That gives the lie to the argument that the Budget is all about fairness. Although the confirmation of Labour's policy of linking the state pension to average earnings is welcome-it builds on policies developed by the Labour Government-not increasing the personal allowance for pensioners in line with those for everyone else is just wrong.

It is obvious that the Prime Minister's words before the election-never mind the Deputy Prime Minister's words-that he had no plans for an increase in VAT were as worthless as similar words spoken back in 1979. I remember very clearly that in 1979 the Conservatives said they would not double VAT. The first thing they did on coming into office was increasing VAT from 8% to 15%. That was not quite double, but it might as well have been.

When there is a need to maintain demand in the economy, the Budget risks squeezing demand and creating a double-dip recession, which could be worse than the one that we recently experienced. Let us get rid of the myth that the public sector is bad and that only the private sector can get the economy growing again. The balance has to be right, as we in south Yorkshire know better than others; we know it all too well. However, the two sectors are interlinked. Private companies benefit from Government investment, which is why we brought forward the capital projects-to keep the economy moving and to keep construction workers in work. Ensuring that the private sector works with the public sector can give us growth.

Let us also demolish the myth that only by putting forward austerity measures will we see growth in the economy. The lessons of the 1930s show that not to be true. Although the 1929 crash dealt a massive blow to
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the global economy, it was the neo-liberal austerity budgets that followed that led to a vicious decline in international economic activity, leading to protectionism, a collapse in world trade and depression. My fear-it is shared, I think, by every Opposition Member-is that that is exactly where we will go. We have seen austerity measures introduced not just by the UK, but by Germany, Greece, Italy and Spain. The House ought to think carefully before going down that path. It was only after the new deal in America that growth started to return in the 1930s. Sadly, Government Members do not seem able to learn the lessons of that period in our history.

The current rhetoric from Government Members is, "Look at what Canada did!" It has been mentioned already by Labour Members that Canada's actions in the 1990s to wipe out its sovereign debt were taken in a completely different context. Canada was able to reduce interest rates quickly, and had a route for its exports in a booming US economy, because the value of the Canadian dollar was allowed to fall. Interestingly, Canada once again has a large public debt and is not considering the reckless action that the Government are pursuing. Those options are not sensible or credible in the current situation.

Let us also bury the myth about Greece. The UK is not in the same position as Greece. In 300 years of national debt, the UK has never defaulted on its sovereign debt. The UK's debt has a long time to run, with an average of 14 years to maturity-twice as long as most other European countries-which means that the UK needs to finance much less of its debt in any given year and, therefore, is much less sensitive to rising interest rates.

We hear from the Liberal Democrats that fairness is important, and yet they now say that it is right that public sector workers should see real cuts in wages, while capital gains tax rises by only 10% for higher rate taxpayers. They also say now that VAT should rise to 20%, which they once said would be totally unfair on the poor. The Liberal Democrat way now is that it is right to cut benefits by £11 billion for the poorest in our society. Where is the fairness in that? Members can use as many words as they like and whatever sophistry they like, but they will not persuade the British people of the credibility of their position if they say one thing one minute, and another thing the next, just because they have taken the reins of power.

Where is the fairness in freezing child benefit for the next three years-a benefit that is often the only one paid directly to women and mothers? When that is coupled with the reduction in tax credits, many of my constituents will see that this is not a fair Budget. It is a regressive Budget that I believe will get the reception is deserves.

Gordon Birtwistle: Does the hon. Lady agree that if the interest payments on our existing loans, which are approaching £40 billion a year, were half that amount, we would not be in our present situation, and we would be able to spend the money on the things that she is now suggesting?

Angela Smith: As I think I said earlier, equating the national economy to a household budget has already been declared by many respected economists to be ignorance economics. It has been discredited by respected economists throughout the world, including economists of the centre right in the United States who recognise
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the lessons of the 1930s and recognise that we need investment and public spending to bring back growth and jobs.

However, the question is whether the Budget is needed. According to the new body set up by the Government-the Office for Budget Responsibility, which I think we all support-the economy is in growth. OBR statements make it clear that the previous Government's spending plans were credible and would have reduced the deficit gradually, over a four-year period. I believe, as I think everyone on the Labour Benches believes, that that was a sensible course forward. Therefore, it has to be said that the reason why the Government are pursuing this path is ideological dogma. They are cutting for the sake of cutting, in an ideological drive towards the small state. The language of the TaxPayers Alliance is alive and well in the corridors of power, but it is cloaked in the language of "Needs must".

The prospect of a race to austerity is so worrying that President Obama's Administration in the US have felt it necessary to write to the leaders of the G20 countries urging them to continue with the economic stimulus-something with which, as I have mentioned, many economists agree. Although the help for new start-up companies in the regions and the creation of regional development funds are welcome, those measures will be more than offset by the run-down of the regional development agencies, such as Yorkshire Forward, and the loss of no doubt thousands of public sector jobs. It has been said today in the Financial Times, but let me put it on the record, that the overall impact of the Budget, contrary to statements made yesterday, will be a 60% reduction in capital investment by the Government by 2016.

Let us not think for a minute that this is a Budget for investment. The Government have fallen at the first hurdle on that idea. With the £80 million loan to Sheffield Forgemasters, they had the chance to show that they were interested in investing in growth and exports, in state-of-the-art technologies and in UK manufacturing. However, they chose not to do that. The loan would have earned a 3.5% interest rate, and would have involved Westinghouse taking a stake in the company and giving a guarantee of forward orders. It would also have transformed Forgemasters into a major player in the nuclear castings sector. The loan was secured against the company and would have been part of a total package worth around £140 million, with £80 million from the Government on a loan basis.

That would have meant £140 million for Sheffield and UK manufacturing, allowing for the purchase of a 15,000-tonne press capable of making the pressure vessels at the centre of a nuclear power plant. To put things into perspective, the only other company in the world currently making forgings of a sufficient size for the international market is Japan Steel Works, which has recently tripled its capacity in order to make 10 pressure vessels a year. However, 11 new nuclear power stations were commissioned around the world last year, and the pace is accelerating, with 55 reactors in planning at the end of 2009 and more than 30 licence applications under active discussion in the US. Not only that, but with only one company in South Korea and two companies in China now intending to enter the business of making such forgings, any future project for building new nuclear power stations in the UK will have to import pressure vessels.

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