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28 Jun 2010 : Column 645

Quickly gaining a reputation as a problem solver, Dr Reid was given two of the most difficult jobs in Cabinet in his final years in government-Defence and the Home Office. Three years ago today, he woke up for the first time in a decade without the pressures of ministerial office. He returned to the Back Benches with quiet grace and dignity, quickly managing to find an excellent assistant from his constituency. He now moves on to other challenges, including accompanying his predecessor next-door. To the country, he is the Labour fixer who sorted out Departments when they went wrong. To Parliament, he is a man of honour, loyalty and wit, but to me he is the man who gave me the opportunity to reach my potential and I thank him for that.

Before I finish, I pay tribute to the greatest feature of my constituency-its people. Their kindness and good-heartedness are best illustrated by the generosity shown towards St Andrew's hospice in Airdrie, which requires donations of more than £40,000 a week to keep going, yet still manages to get the support it requires. In Shotts, a local boy, Kyle Grant, has won the hearts of our community by raising money with his family to obtain specialist treatment for cerebral palsy in America. Not so long ago, his target of £40,000 seemed like a far-off dream, but he has now managed to achieve double that amount. With the support of local businesses, local newspapers-the Airdrie & Coatbridge Advertiser, the Wishaw Press and the Motherwell Times-and local people, charitable causes will continue to flourish in our area for as long as they are required.

I am proud to come from a place where people put others before themselves. That is at the heart of the politics of the area. It is the birthplace of the Labour movement; people do not just want a better life for themselves and their families, but for everyone else too. That is why when we do well, we do not pull up the ladder of opportunity behind us. That is why we support moves to end poverty at home and overseas. That is why I am proud to serve the people of Airdrie and Shotts.

8.4 pm

Jackie Doyle-Price (Thurrock) (Con): It is a pleasure to follow the hon. Member for Airdrie and Shotts (Pamela Nash) who has just given her maiden speech. I am sure the rest of the House will forgive her for making us feel a little bit old when she reminded us of her first political memory. It was a fantastic start and we all look forward to hearing much more from her in the near future.

I am pleased to have this opportunity to deliver my maiden speech in an extremely important debate. Tackling the long-term culture of welfare dependency is probably the single most important ingredient in really sorting out and fixing our broken economy.

I have the great honour to represent the constituency of Thurrock, which, for Members who do not know, is in Essex, on the borders of London. I am the sixth Member for Thurrock since the constituency was created in 1945. I am extremely honoured to follow in the footsteps of Andrew Mackinlay, who served the people of Thurrock in this place for 18 years. I say that with real sincerity. He was much loved and respected on both sides of the House. He was a committed parliamentarian and a stout and outspoken defender of civil liberties. He will be missed here and in Thurrock where he is held in considerable warmth.

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My constituency is a collection of towns and communities. At its heart is the town of Grays and it extends to the west to Aveley, Purfleet and South Ockendon and to the east to Tilbury and Chadwell St Mary. One of our jewels is the port at Tilbury, which even today supports 10,000 jobs. It is one of the traditional industries that have been much neglected in recent years, and although it goes from strength to strength it needs further support.

Thurrock's communications are one of its biggest strengths. Its proximity to the M25 and to London, and its location on the River Thames all make it an attractive location for business and a key logistics hub. We also have the Dartford crossing, which I am sure is the scourge of many a motorist-including Members-as they queue to pay the toll. I remind the House that when the crossing was constructed it was envisaged that the tolls would be lifted once the construction costs had been met. That time has been and gone, and instead of scrapping the tolls the last Government increased them. Since the tolls were increased the queues have become more problematic and no doubt cause significant costs to business users of the crossing when they find themselves stuck in congestion. We need to think again about the continued existence of the tolls, about future capacity needs on the M25 and crossings on the River Thames and the prospects for additional crossings to the west and the east. The review announced in the Budget must consider all the options thoroughly so that we have a transport system along the M25 fit for the future.

In recent years, Thurrock has become a major retail centre, with the development of the Lakeside shopping centre and retail park. There are signs that the retail offering is likely to expand still further, which is why this is a particularly exciting time to represent Thurrock. I have mentioned its strategic location and although there is much to celebrate, the area can do so much better.

The Thurrock Thames Gateway Development Corporation has been charged with delivering inward investment and has made some progress. I very much hope it will be given the opportunity to deliver its plans, notwithstanding plans to fold it up into the Homes and Communities Agency.

In Thurrock, we are all excited about the potential for the development of creative industries following the major investment made by the Royal Opera House. We need to establish the national skills academy to support Thurrock as a creative industries cluster. I firmly believe that we have a once in a generation opportunity to secure the future development of Thurrock and it should not be squandered. I look forward to playing my part in building a better future for the constituency.

Having indulged the House by describing everything that is great about Thurrock, I turn to the business under discussion. The need for welfare reform was the main issue that brought me into politics as a teenager. In those days, I was living on a council estate in Sheffield. It seemed to me a real injustice that hard-working families-people working every hour to put food on the table-had no better standard of living than many households where no one was in work. The frequent lament at the working men's club was, "Why do we bother?"

Over time, that injustice seems to have become more and more entrenched. The way that tax and benefits interact today means that work simply does not pay for
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far too many households. The result is that we have a society where too many individuals do not have the self-respect or discipline that comes from work and individual responsibility, the rest of society is burdened by an ever-higher tax bill and we as a country are dependent on migrant labour to fill those jobs that simply do not pay for our workers to do. We cannot go on like this.

I hope that the Budget really marks the beginning of our quest truly to reform the dependency culture that exists in Britain today and to give everyone the opportunity and incentive to work. In so doing, we will not only reduce welfare bills, but increase tax receipts to the Exchequer, so that the entire nation will become better off and future Budgets will be a lot less painful than this one.

8.10 pm

Mr Iain Wright (Hartlepool) (Lab): It has been a pleasure to participate in a debate that has included so many excellent maiden speeches-from the hon. Members for East Surrey (Mr Gyimah), for Thurrock (Jackie Doyle-Price) and for Maidstone and The Weald (Mrs Grant)-and an astonishingly powerful maiden speech from my hon. Friend the Member for Airdrie and Shotts (Pamela Nash). I often used to think that parliamentary democracy needed a regular infusion of youth, talent and drive to keep it going, but given how much great talent there now is on both sides of the House, I am not sure that that is the case; I do not think that we should see so much great talent, because it certainly does not do my career chances any good whatsoever.

The best way to secure a sustained recovery is to put in place the conditions for growth, but the Budget fails to do so. Indeed, from reading the Red Book, it is very unclear where growth will come from at all. Paragraph 1.48, backed up by comments from the Office for Budget Responsibility, states that the economic forecast is for a gradual recovery, with

The notion of an export-led recovery is very welcome-it would help some of the firms in my constituency-but how on earth is this going to happen? The eurozone economy is in grave danger, and the notion that we can rely on growing opportunities for exports into Europe in the next few years seems very ill-judged. The policy stance adopted by some of the G20 at the weekend seems to indicate that, where there was once global co-operation for stimulus, there now seems to be broad agreement for austerity. If that is the case and the world's major economies are collectively going to reduce demand, where does that leave the prospect for an export-led growth plan?

In similar vein, the Red Book states that business investment will also be a catalyst for recovery, but how will that happen when the Chancellor is cutting the capital allowances rate that would incentivise businesses to invest in new plant? How will that happen if the OBR's own forecasts envisage companies having to absorb some of the rise in VAT through lower profit
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margins? How will that happen if, as the OBR states in paragraph C.29, business investment has a relatively high import content? How will businesses be encouraged to invest more when they face in the next few years higher import costs and lower profit margins. Admittedly, they will have lower corporation tax rates, but disproportionately higher cuts in capital allowance.

My region of the north-east and my constituency suffer more than their fair share during economic downturns. We in Hartlepool are still suffering from the social and economic consequences of deindustrialisation and the Thatcher Government's response. I would be the first to applaud the Government if they genuinely helped communities such as mine to stimulate their sense of enterprise and entrepreneurialism. I, too, want an economy led by the private sector and for the north-east to achieve its potential, but nothing in the Budget will allow that to happen.

Nothing in the Budget gives us any clue about the future industries that would help our country to prosper in the 21st century. We lead the world in creative industries and are second only to the US in digital industries, but how could the Chancellor state that he wanted to see Britain open for business when he scraps video games tax relief? There was frighteningly little on how this country could lead the world in green jobs and green industries, and how the Government could encourage and facilitate such a move to a leading low-carbon economy. The north-east could be leading the world in energy infrastructure, incorporating nuclear, oil and gas and renewable technology that could help this country to prosper, but there was nothing at all in the Budget to encourage that.

The regional growth fund that was announced in the Budget is very welcome, as is the proposed White Paper on regional economic performance, but the proposals in the Budget were so bland and ambiguous as to be almost meaningless and gave the impression of being put in the Red Book at the last minute, as an afterthought. I am particularly concerned that the regional growth fund will be set up only in 2011-12 and 2012-13, so the job losses that take place now, as a result of the Government's cuts set to take place in this financial year, will not be helped.

Scrapping the future jobs fund, which has been successful in Hartlepool, combined with the deep cuts to working neighbourhoods funding, will stop hundreds of young people from embarking upon a career. Potential growth of the economy in my constituency is therefore being hit now, in this financial year, with no clear assistance from the Government at all.

Within a few days of the new Government taking over, the largest private sector company in my constituency went into administration, which led to the loss of 650 jobs in Hartlepool. I am not blaming the Government for the company's fall, but the coalition's response was incredibly telling and deeply depressing. The response that I received from a Minister at the Department for Business, Innovation and Skills following my request for assistance was offensively complacent-basically washing his hands of the matter and stating that the local authority and regional development agency should be expected to bear the load. Indeed, the local authority's economic development team-the best in the country-and One NorthEast are working closely together for the workers who lost their jobs, but how can they work to
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the best of their abilities when the local authority has been asked to find £1.7 million of cuts this year? How can One NorthEast be expected to operate as effectively as it could when it has heard conflicting, contradictory and confusing reports about its future? How can help for a private sector-led recovery be given-for example, retraining opportunities for the workers who have lost their jobs-when the Department in Whitehall charged with helping business is facing some of the biggest cuts?

Many hon. Members in the Budget debate have mentioned the 1980s, when the Thatcher Government doubled VAT, and it was clear then, as it is clear now, that the priorities were to shift the burden from income taxation to taxation on consumption. That is not only regressive and impacts upon the poorest in society, but deflationary, taking demand and consumption out of the economy, so it will take us longer to climb on to sustained recovery. That deflationary stance always increases unemployment, and I fear that we will once again see unemployment rise to levels that are socially unacceptable and economically wasteful.

The coalition Government's tired policies are devastating in any era. The policies did not work in the 1980s, and they will not work now. I ask the Government to think again and not rush headlong into an ideological zest for cuts that will increase unemployment.

8.17 pm

Lorely Burt (Solihull) (LD): I congratulate the hon. Members for Thurrock (Jackie Doyle-Price), for Airdrie and Shotts (Pamela Nash), for Maidstone and The Weald (Mrs Grant) and for East Surrey (Mr Gyimah). I agree with the hon. Member for Hartlepool (Mr Wright) that they bring inspiration and enthusiasm to the House. We are all here to try to make things better, and I am sure that all of them will play their part.

The coalition Budget has been described as tough but fair, and hon. Members on both sides of the House will certainly agree that it is tough. Why does it have to be so tough? It is tough because we are borrowing £1 in every £4 that we spend, because we owe £22,400 for every man, woman and child in this country and because, thanks to Labour, we have one of the largest budget deficits in the whole of Europe, so we must take the action that Labour dodged. Now that the OBR has been formed, we know the true scale of the problem that we face, and we have worked it out so that no one can fix the figures anymore.

Mr Anderson: Does the hon. Lady disagree with the OECD, which said that the previous Government's actions prevented this country from going from a recession into a depression? If those actions had not been taken, we really would have been in a mess.

Lorely Burt: The hon. Gentleman makes a fair point. Indeed, the Liberal Democrats supported some of the steps that the Labour Government took, but that does not allow Labour Members to wash their hands completely of this country's financial state.

Dr William McCrea (South Antrim) (DUP): But can the hon. Lady and her colleagues wash their hands of the fact that although they opposed a rise in VAT during the election, they will now go through the Lobby to support it? Surely that is hypocrisy.

28 Jun 2010 : Column 650

Lorely Burt: I am glad that the hon. Gentleman raises the issue of VAT. If he has a little patience, I shall address that fully in just a moment.

I applaud the fairness factors in the Budget, many of which were suggested by Liberal Democrats. The £1,000 increase in the threshold at which people start to pay tax will bring 880,000 people out of tax altogether and benefit 23 million people on low and middle incomes. That increase is the first step towards a Liberal Democrat manifesto pledge. The tax on banks will not affect small banks, but it will allow tax cuts for other types of business to be introduced. The changes to capital gains tax will mean that top earners pay 10% more, although there will be thresholds so that others pay at a lower rate. The rate of 28% is not as high as Liberal Democrats might have gone, but the Government have been advised that 28% is the highest rate that can practically be set before revenue starts to be lost, so that is fair enough.

Pensioners have already been discussed today. They will benefit from the earnings link and the triple lock, which will mean that they receive an increase reflecting earnings inflation or 2.5%. No Labour Member has managed to explain why the Labour Government did not restore the earnings link over 13 years, and never again will we have the disgraceful situation of pensioners receiving a 75p increase, as Labour proposed. Child poverty is addressed through an extra £2 billion for child tax credits, and the pupil premium will help the most disadvantaged children.

This is a Budget for business. Business is the engine that will drive us out of the recession, so we have put our emphasis on ensuring that we have cuts rather than taxes, with a 77:23 split.

The hon. Member for Hartlepool said that this was not a green Budget, but there are good incentives for low-carbon investment through the reform of the climate change levy, the proposals on which will come in the autumn. We also have the green investment bank and the green deal for households, which will enable households to make improvements that will pay for themselves over time.

The reduction in corporation tax also shows that this is a Budget for business. In addition, we are pumping money into Royal Mail, which did not happen under the previous Government. The Budget contains nice little touches such as entrepreneurs relief. It does not involve any indexation or a taper, and the amount that retiring entrepreneurs can enjoy has increased from £2 million to £5 million.

The national insurance threshold increase in 2011 will take 650,000 people out of national insurance altogether. What a contrast that is to Labour's proposals for a tax on jobs. The enterprise finance guarantee scheme is being extended to 2,000 businesses. Under the regional growth fund, I look forward to our pumping money into the regions, meaning that we are no longer a London-centric Government. We will ensure that the regions get the kind of support they need, especially for new businesses.

Of course, there have been hard choices. The hon. Member for South Antrim (Dr McCrea) talked about VAT, and it is regressive. The hon. Member for Airdrie and Shotts said that we did not know the meaning of that word, but we really do. However, our VAT rate is still below the average for Europe.

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Ian Swales: Is my hon. Friend aware that after Thursday, when Spain increases its VAT rate by 2%, only Cyprus and Luxembourg will have a lower rate of VAT than we do?

Lorely Burt: My hon. Friend is right and I am grateful for his helpful intervention. We must put all these things into perspective. The existing exemptions will apply to items such as food and children's clothing. My hon. Friend the Member for St Ives (Andrew George) has tabled an amendment about VAT. He is rightly worried about the effect of the VAT rise on particular groups, but I point out that the Red Book states of the chart on page 67 to which he referred:

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