Looking back at the legacy that we left Labour, we can see that there was an unbroken period of growth from 1992 to 2008. We had growth up to the economic
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downturn in 2007. The deficit in 1997-98 was £15 billion. By 2007—before the economic downturn—it had already increased to £33 billion. We were not living within our means.
Emma Reynolds: I want to put the same question to the hon. Gentleman that I put to the Secretary of State. Up until 2008, his party backed our spending commitments, so is there not a little bit of revisionism on his side of the House?
Mr Ellwood: I was not in government then. The spending commitments that we backed did not take into account the state of the economy at the time. They were the plans for the future, but they did not take into account the money that had been spent.
The point that I was trying to make was that, from a deficit and a debt perspective, the previous Government wasted money during the boom years. They lived beyond their means, which placed us on the back foot when the economic downturn came. Again and again, we hear Labour say, “It isn’t our fault. It was an international issue. It was the Americans. It was Fannie Mae and Freddie Mac. It was the sub-prime market.” Well, that was possibly the case at the start, but in 2007, 2008 and even 2009, I could have gone to Bradford & Bingley and picked up a 125% mortgage. That was simply wrong. We were still not in control of the situation well after we knew that things were going down the pan.
The Opposition’s approach is now based on several themes. They tell us that, 12 months ago, unemployment was falling, growth was rising and inflation was low and stable. However, unemployment was higher when Labour left office than when it came in. In fact, that has happened every time Labour has been in office. No emergency measures had been put in place. Unemployment goes up in every recession; that is one of the impacts. It was wrong of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) to suggest that if Labour were in power now, unemployment would continue to fall. That is completely incorrect. The Opposition also talk about growth, but it is actually continuing to rise. It rose by 1.3% last year, and the figure will be 1.7% this year. That is not what we expected, but the economy is still growing faster than the EU average. Of course, 2011 is going to be a year of pain. Urgent measures have been introduced, and the VAT rise will hit us.
I do not have time to go through all the other aspects of the situation, but I will end by saying that the Budget is all about continuing to bring spending under control. It is about gaining sustainable revenues from the banks and protecting the most vulnerable in our society. It is also about a shift from big government to small government, and about providing businesses with the tax breaks and incentives to expand, to compete in new markets and to tackle the expected rise in unemployment. History will show that we came close to the economic abyss, but that this Government took the tough decisions necessary to build a strong and stable economy.
7.6 pm
Frank Dobson (Holborn and St Pancras) (Lab):
In the debates in the run-up to the last general election, I was in the habit of saying that there would be four ways of dealing with the deficit. The first would be to make
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cuts. The second would be to introduce tax increases. The third was the method that dare not speak its name but which would be employed by every Government around the world: inflation, which would involve paying money back at a lower value than that at which it was borrowed. The fourth would involve growth. This Government have been pretty good on the first three, but they have been very poor on growth.
The Government are now, as ever, turning their attention to holding down the living standards of people on middle and lower incomes. There is now talk among the Tories about restricting the legal rights of people at work and of paring back the minimum wage. There is also talk of reducing job security, and they have certainly done that for practically everyone in the country. We have also heard them say today, and yesterday, that they want to slash regulation, because it is a burden on business. In fact, good regulation is vital. It protects employees, consumers, the environment, public health and the taxpayer. Some regulation is unnecessary, and some of it is out of date. Some of it is cumbersome and time consuming, and some of it is out of proportion, but we have to accept that virtually all of it has been passed by this House, so we should not go blaming other people; we have introduced it over the years.
Another argument put forward by the Government is that British business is over-regulated. The Chancellor was quoting the OECD with approbation in his Budget speech, but he obviously does not read, or approve of, everything that the OECD does. It produces a league table of employment protection. Are we, according to that league table, the most over-regulated country in the world? No, we certainly are not. The United States is the least regulated country. Canada is the second least regulated, and the United Kingdom is the third least regulated. The Chancellor also referred favourably to Germany, so I looked Germany up in the league table. It is the 19th least regulated country. The German economy is far more regulated than ours, yet it is recovering more quickly. There has always been higher investment in plant and equipment in Germany than in this country, and a lower turnover of employees.
What we really need is better regulation, and, in some cases, more and newer regulation, particularly to help agency staff. Let us look at how the Tories are always trying to create a great fuss and fear. When the great Michael Foot introduced health and safety measures, which I have to say were welcomed from the Front Bench by that decent old Tory, William Whitelaw, there were dire predictions from a lot of Back-Bench backwoods Tories that it would lead to all sorts of terrifying consequences. Well, there has been one massive improvement. When people talk about reducing the “burden” of regulation in health and safety, I point out that before the Health and Safety Executive was set up, 651 people were killed in accidents at work; the comparable figure is now 152—and it ought to be lower still.
It was obviously good for employees that there were fewer injuries and less pain and suffering, fewer people suffering from bad health and fewer people losing income because they were out of work as a result of what had happened to them. However, it was also good for employers. The employers did not lose vital staff to accidents; they did not lose the value of the training that vital staff had received before they were injured; they did not lose a
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great deal of production; they did not lose money; and if they obeyed the law, they were not in a position of facing court action.
The health and safety regulations were also good for taxpayers, because they reduced the demand on the national health service and meant that benefits did not have to be paid. People were not off work so they continued to pay tax and we did not lose production in the British economy. I hope that the Tory party, including the Prime Minister, will therefore stop all this scaremongering about regulation and health and safety, and take a much more careful and thoughtful approach to the problem. Conservative Members should try to make sure that when people are working in this country, they are safe from accidents and safe from illness caused by the conditions in which they work.
7.12 pm
Kwasi Kwarteng (Spelthorne) (Con): I am glad to have been called—a happy outcome for me.
It seems to me that Labour Members are ostrich-like inasmuch as they are not aware of what is going on or of what led us to the position we are in. There is always a context, and we appreciate that savings had to be made in Government spending. Everyone knows that. When we ask ourselves why we are in the position we are in, we get conflicting answers. As Government Members have said, Labour Members suggest that it was the fault of American bankers, of evil people in the City of London who were making too much money and of international business. I think my right hon. Friend the Secretary of State for Work and pensions even suggested that at some point they would blame Dr Evil. None of those reasons, however, is remotely relevant to the deficit or the fiscal situation we are in.
The simple fact is that we had a much larger deficit than any other country in the G7. These facts are known to the world. Labour Members have to accept that when they came into office in 1997, there were balanced Budgets. For four years, the then Chancellor of Exchequer essentially balanced the Budgets and it was a matter of deliberate policy in 2001 when the Labour Government turned the taps on and presided over a massive engorgement of the public sector.
It was that decision in 2001-02 that led to the position we are in now. The cause was simple: the last Prime Minister, when he was Chancellor, believed in his hubris that he had abolished boom and bust. He thought that the economy would keep on growing and that he could then use tax and other income to fund his bigger national projects and his huge public spending. What happened, of course, was that the economy stalled. The income receipts to the Exchequer stopped coming in, so we were left with this massive deficit of £160 billion—the largest in peacetime. The coalition Government came in with the principal purpose of dealing with the deficit. That has always been this Government’s purpose. It was almost a Government of national unity, with two historic parties with different views and different traditions coming together to sort out the mess that the Labour party had left behind.
It is a very simple narrative, but because of all the obfuscation and the deliberately misleading comments of Labour Members, all that has been forgotten. My constituents are all too well aware of the mess that Labour made. In fact, one man said to me, “Well, we
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have seen it all before; exactly the same thing happened in the 1970s. Labour comes in and makes all sorts of spending commitments, and we run out of money.” It was that simple—and exactly the same thing has happened in Labour’s last two years in power. Blaming the global crisis for what was essentially decisions taken by the Labour party in government is entirely wrong.
Emma Reynolds: Does the hon. Gentleman blame Labour Members for the recession in Germany, for the recession in France, for the recession in the United States and for the recession in other parts of the world? How can he stand up and say it was all our fault? It was a global financial crisis.
Kwasi Kwarteng: Let me point out to the hon. Lady that in Germany the deficit to GDP ratio was 3.3%; our deficit to GDP ratio was 12.8%. That differential had nothing to do with the global crisis; it had everything to do with spending commitments made on the Treasury Bench when the hon. Lady’s party were in government. It is a deliberate obfuscation to try to blame the sub-prime crisis in America and all the rest of it for decisions taken by her party in government. It is like a magician’s trick: one always tries not to let the audience focus on what is actually being done. That is what magicians do, and it is exactly the sort of tactics that Labour is employing. As I say, it is trying to obfuscate and shift the blame for decisions that it made.
I think it is a scandal and an insult to the intelligence of Members generally that Labour Members are still in denial about the mess they created and the errors they made, which were based on hubristic assumptions about the economy growing for ever and ever. We all remember the former Prime Minister himself saying that there was an end to boom and bust. What does that mean? Anyone who says “an end to boom and bust” genuinely believes that there will be no downturn and so makes spending assumptions on the basis that money from income receipts will keep coming in. That is absolutely crazy.
Emma Reynolds: I ask the question for the third time in this debate, as I have yet to receive an answer from Conservative Members. Why on earth did the Conservative party back our spending plans right up to the start of the global financial crisis? This is revisionism by the hon. Gentleman’s side; it is his side that is being ostrich-like, not ours.
Kwasi Kwarteng: With respect to the hon. Lady, that is entirely irrelevant. Her party was in office; her party had the ultimate responsibility for the government of this country—not only in 2007, but for the 13 years before the last election. It is a strange paradox that when Labour Members got into power in 1997, they did the right thing. They balanced the books; for four years, we were not running deficits, as they stuck to our spending plans. The Chancellor was prudent; “prudence” was his favourite word. Then, all of that was deliberately swept away, and they went on a mad spending spree, which directly caused the deficit and the savings that have to made now.
George Freeman (Mid Norfolk) (Con):
Does my hon. Friend agree that the honest answer to the question put thrice by the hon. Member for Wolverhampton North
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East (Emma Reynolds) is that if we were guilty of anything, it was to fall for the same lie that the British public fell for—to believe that new Labour had become the party of economic competence and that in government it could be trusted with the public finances?
Kwasi Kwarteng: My hon. Friend is exactly right. I think there was an element of delusion in the country inasmuch as people believed that Labour could be trusted with the economy. That was clearly not the case. Older voters I speak to in my party association and more widely in Spelthorne remember the appalling legacy of the 1970s, when exactly the same thing happened. None of this is new; we have seen it all before. Exactly the same thing has happened 30 years later: Labour came into power, made all sorts of spending commitments with the best intentions, but found that we had run out of money. It was that simple. On that note, I urge the House to vote in favour of the Budget motions.
7.20 pm
Mr Frank Field (Birkenhead) (Lab): Labour Members have already expressed the deep anxiety that is felt in not just Labour households but many households in the country about what the future holds for them. At the end of my short contribution, I shall return to a refrain that the Chancellor used at quite an early stage in his introduction of measures intended to rebalance the economy. We all know that we are experiencing immensely difficult times, but the Chancellor told us that we were all in it together. The question to which I intend to return is this: are we sharing those sacrifices fairly or not? However, I also intend to describe the challenges that the economic situation has posed both to the country and to the political parties.
Let me deal first with the question of national debt. Given that we hope to win the next election, I want to consider the position that we will inherit if we are entrusted with power by the voters on that occasion. Comment has already been made about the size of the national debt when the Government came to office. It was £760 billion then. We are told that we are now experiencing an extreme programme of cuts the like of which we have never seen before, and that at the end of this Parliament the national debt will stand at £1,400 billion. In other words, it will have doubled.
Our views cannot entirely be explained away by the fact that we disagree with the Government’s policy of allowing unemployment to rise and the effects that that will have on Exchequer costs and revenues. Already, a third of the money that we borrow each year is to service our debt. The level of our long-term interest rates is therefore crucial and fundamental to our survival. It is difficult to see how we can come out at the other side as a great industrial and trading country if we lose our current rating and costs rise.
I have three more points to make, one to my own side and two to the Government. This is the first. Before the last election, we had a clearer view of our cuts programme. At this stage of a Parliament it is easy to blame the other side and to oppose all cuts, but the next election may be closely contested. We will have to account for our behaviour in this Parliament, and my plea to my party’s Front Benchers is that we regain the clarity that existed before the last general election about where we would cut, where we would not cut, and where we would fight cuts.
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My second point concerns inflation. Although what we have is not wage-induced inflation but inflation that is imported, the Bank of England has been directed to reduce inflation to below 2%. The Government’s current strategy for growth is based on a tough fiscal stance and a loose monetary policy. My worry is that in abiding by that inflation target, we might encourage the Bank of England to drive up interest rates in a vain attempt to control inflation. We know that that policy will not work, but it might satisfy those who feel that we should make more of an effort to reach the 2% target. It is impossible for Governments, once they have set themselves such targets, ever to abandon them, but this Government need to take such action if they are to safeguard future growth.
My last point is the one about our all being in it together. I have never known a Parliament in which the changes came so fast and were plainly so important, and I have no clear view on who is getting off lightly and who is not. A few weeks ago, in a letter to the Prime Minister, I wrote that I would be very surprised if I were the only person in the country who wanted all of us to be in this together but wondered whether we were. I suggested that he set up, in public, a committee whose remit was to examine that very question: are we all in it together?
If we are concerned about families, we should bear in mind that families, both rich and poor, have taken a significant beating from the Government. Obviously, however, my concern is not only with them but with the poor in general. I do not believe that any Minister on the Treasury Bench could stand up and tell us honestly that we are all in this together, and I consider that appalling. I think that the Government ought to take measures enabling us all to be better informed about the question on the occasion of our next major debate.
7.25 pm
Mr John Leech (Manchester, Withington) (LD): It is a pleasure to follow the right hon. Member for Birkenhead (Mr Field), who made some very measured comments.
I am delighted to be able to contribute to the debate, and to welcome a number of measures that will be good for Manchester and good for the people of Manchester. I must confess that I approached the Budget with a certain amount of trepidation because of the difficult decisions that the coalition Government had already made in order to deal with the mess with which the previous Government left us. However, I was also well aware of all the work done in the Treasury and between Departments to produce a Budget that would stimulate growth and help to kick-start the economy.
The question is whether the Budget has delivered for Manchester. Before it had even been announced, Manchester Labour councillors tabled a motion which is to be dealt with in the council tomorrow, stating that the council
“notes the damaging impact of George Osborne’s budget on the people of Manchester.”
It was pretty clear that, regardless of what the Chancellor announced, Labour would try to spin it as terrible for Manchester, just as it has tried to absolve itself of any blame for the financial mess in which the country finds itself and the unnecessary and vindictive political cuts that it has proposed in Manchester.
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Of course, we would expect the Liberal Democrat opposition in Manchester to take a more positive view of the measures in the Budget. We would, perhaps, expect Simon Ashley, the leader of the Liberal Democrat opposition on the council, to say something like
“This is good news for… Manchester.
It’s a double win because not only does it give incentives for new businesses to develop at Airport City, it also generates income we can use to encourage development across the whole of Greater Manchester.”
However, he did not say that, although he has warmly welcomed the good news of the enterprise zone for Manchester. That comment was, in fact, made by Richard Leese, the Labour leader of Manchester city council, who, interestingly, is one of the signatories to the Labour motion that condemned the Budget even before the Chancellor had come to the Dispatch Box to deliver his speech. Yes, even the Labour leader of the council has been forced to admit that the Budget has delivered good news for Manchester.
Under the last Labour Government, private sector job growth in Manchester lagged massively behind that in the rest of England between 2003 and 2008, at less than half the average percentage. That is set to change under the coalition Government. Manchester airport was a beneficiary as one of the first enterprise zones, and up to 13,000 new jobs will be created in the city—more than five times as many as there are unemployed people in my constituency. At the same time, the Chancellor has given the go-ahead for the Ordsall Curve rail project, which will increase rail capacity and improve journey times and encourage investment, growth and job creation in Manchester. During 13 years in government Labour failed to deliver that vital infrastructure project, but it has been delivered in fewer than 11 months by the coalition Government, which is proof of the Government's commitment to investing in our rail infrastructure. Moreover, an extra £873,000 will come to Manchester to help to repair our damaged roads. That will go a long way towards dealing with the thousands of potholes in our streets.
All those measures will help to get people in Manchester into work and protect existing jobs, and the additional 40,000 apprenticeships that have been announced will help more Manchester residents to gain the skills and experience that are needed to grow the economy further.
What about those surviving on pensions? One of the lasting memories of the previous Labour Government was the derisory 75p rise in the state pension. For all their talk, the last Labour Government failed to deliver for pensioners. When the coalition Government were formed, there was a real commitment to give a better deal to pensioners. Pensions have been re-linked to earnings—which was unaffordable, according to Labour—and the triple-lock guarantee will ensure that there is never a repeat of the disgraceful 75p rise. Instead, as a result of this Budget, pensioners will receive an extra £4.50 a week, taking the pension above £100. That is in addition to the decision to make permanent the increase in the excess cold weather payment to £25 for every week of excess cold in the winter. My only objection is that the Chancellor has decided to follow Labour’s plans and not to make permanent the temporary increase in the winter fuel allowance. In my view, that is a mistake and should be looked at again.
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Finally, the Budget has also delivered on the coalition promise to take some of the lowest-paid out of paying tax altogether. The increase in the personal allowance by £1,000, and the announcement of a further increase next year, will scrap income tax for more than 1 million of the lowest-paid people. That puts the coalition on track to deliver a key Liberal Democrat manifesto commitment: to increase the personal allowance to £10,000. That has been welcomed by the Institute for Fiscal Studies as “progressive” and by The Times leader column for increasing “the incentives to work.” These changes mark a stark contrast to the Labour Budget that abolished the 10p tax rate, increasing the tax burden for some of the lowest paid.
Overall, the Budget is good news for Manchester—
Madam Deputy Speaker (Dawn Primarolo): Order. Time is up.
7.31 pm
Catherine McKinnell (Newcastle upon Tyne North) (Lab): Last week, the Chancellor delivered a Budget and promised a plan for growth. There is no doubt that we in the north-east need growth, and it must be growth that creates jobs. The fact that the Office for Budget Responsibility’s growth forecasts have had to be revised downward yet again is therefore deeply worrying for people across the north-east. In my constituency, there are currently 8.8 jobseekers per advertised vacancy, and in some parts of the north-east—mainly on Teesside—there are more than 19 jobseekers for each job available. Those figures are alarming, but we should compare them with the figures for the constituencies of the Prime Minister and the Chancellor of the Exchequer, which are, respectively, 1.9 and 1.6 jobseekers per vacancy. That makes it clear that we are simply not all in this together. Moreover, these are the figures for the period of time before many of the Government’s spending cuts have started to bite; about 50,000 jobs in both the public and private sectors are expected to be lost across the north-east.
The Government believe that the private sector will move in to fill the gap, but I believe that is misguided. The abolition of One North East has left a gaping hole in the capacity of the north-east economy to drive growth, and there is genuine and widespread concern that many of the opportunities for growth in the region could be lost due to the lack of properly funded and co-ordinated structural support. I hope I am proved wrong for the sake of our region, but this Budget and the downgraded growth forecasts do not fill any of us with much hope.
The Chancellor announced in his speech last week the creation of 21 new urban enterprise zones, and he stated that one of them would be located on “Tyneside”. Although I have grave doubts about the overall policy, I acknowledge that we need swift action, clarity and leadership in implementing it if it is to deliver the positive impact the Government intend. Yet how do the Government intend to ensure that the policy does not simply lead to jobs and businesses moving from one part of Tyneside to another? How will they guarantee that it genuinely creates new jobs? Serious thought will need to be given to how these zones will contribute to a genuine rebalancing of the economy, when so many zones have been announced across the country, including
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in London. That view appears to be shared by the North East chamber of commerce, which last week expressed its concerns that
“the plan for 21 across the country smacks of spreading a policy too thin.”
Ever since I was elected to the House, I have been campaigning for apprenticeships. The benefits are clear and widely accepted. Apprenticeships provide a structured career path for young and older people alike, while also helping to develop the skills that UK plc needs if our economy is to move back into growth and compete effectively on the global stage. Expanding the number of apprenticeships is vital for employers and employees, and for the country as a whole. I therefore believe the Government should be doing everything in their power to increase the number of places available.
That is why I introduced my Apprenticeships and Skills (Public Procurement Contracts) Bill, which seeks to increase the number of apprenticeship places by making that a requirement of public procurement. I have had a number of discussions about my proposals with the Minister for Further Education, Skills and Lifelong Learning, and I thank him for his positive response. He recently confirmed to my local paper that he is
“a strong advocate of the use of public procurement to support our objectives”,
and I have no doubt that his support and persistent enthusiasm have been very influential in securing the further 50,000 apprenticeship places that have been announced for the next four years. I am concerned, however, that the Minister has a real challenge ahead to ensure that all of his colleagues are singing from the same hymn sheet on this issue, particularly as Construction News recently quoted the Minister for the Cabinet Office and Paymaster General as stating that the Government would not be backing his idea because the use of public procurement to stimulate the creation of more apprentices was simply not appropriate.
Governments cannot create apprenticeships; businesses do that. Government must provide support for businesses by helping with training costs, incentives and encouragement, but without growth in our economy, real, new apprenticeship opportunities will not be delivered.
The Secretary of State outlined earlier a chicken and egg situation: young people are unable to get work experience and therefore unable to get a job, and as they are unable to get a job they are unable to get work experience. The same applies to apprenticeships. Businesses are required in order to create apprenticeships, but they will not have the confidence to provide those opportunities if we do not have growth. Therefore, although I welcome the positive moves in this Budget in relation to apprenticeships, providing funding for places is not enough. Government must take the lead, and be seen to take the lead, by using all available levers to increase both the number of apprenticeship places available, and the number of apprenticeships completed. I truly believe that one of those levers has to be the use of public procurement, for Government to lead the way for businesses.
7.37 pm
Mr Edward Leigh (Gainsborough) (Con):
It is a pleasure to follow the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), and her comments about
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the importance of apprenticeships are right, of course. I want in particular, however, to congratulate the right hon. Member for Birkenhead (Mr Field). In the past he chaired the Select Committee on Social Security, and I was proud to serve on it with him. He gave the best speech of the debate—with the exception, of course, of the contribution from the Secretary of State; I will be in trouble if I do not say that. The right hon. Gentleman was realistic about the position we are in. I do not want to say a great deal about the structural deficit; we all know it is there, and how much it is. We all know the political imperative behind the Labour party campaign against the cuts. We also all understand that it is in the interests of the Government to play up that campaign because it makes them look stronger and more determined. It is therefore in the interests of both parties to talk about this topic in that way.
The right hon. Gentleman highlighted a point that I want to emphasise too: we have yet to turn the tide against the culture of spending and the fix of borrowing. We are going to borrow £485 billion over five years. That is more than our total public debt in 1997. The annual interest repayment on the UK debt for last year alone was £42 billion. I know the public cannot visualise what £42 billion is, but if we consider that we are spending more on simply repaying the interest on our debt than the entire amount we spend on educating our children, that should bring home the scale of the crisis facing us.
I am not a very party political person, so I am not very good at apportioning blame. We all know the last Government had to go through a massive international crisis, but we also all know that there was an underlying structural deficit that they did not deal with. The key question, however, is: what are we going to do now? I want to take as my text what the TUC has been talking about, because I would like to bring a few Opposition Members with me. The TUC asks how we are going to deal with this deficit without making cuts in public services, and it says there is £13 billion-worth of tax avoidance by individuals and £12 billion-worth of tax avoidance by corporations. Let us assume for a moment that that is true. How are we going to deal with it? If we follow the TUC line, the only way in which we can deal with it is through a radical simplification of how tax is raised and how the Government spend it.
The Chancellor made one historic announcement that has not been discussed much today, on the merging of national insurance and income tax. I urge him to continue with that theme, despite the siren voices that we have already heard, including that of a former Chancellor, who has said that it will result in winners and losers. The Chancellor must embark on this essential crusade. It may take many years, but it is vital, because simplification of the entire tax system lies at the heart of how we are going to deal with the deficit, with tax avoidance and with tax evasion.
The UK tax code has more than doubled in size since 1997 and it is now the world’s largest, recently surpassing even that of India. The only way to achieve simplicity in taxation is through a gradual move towards a much flatter rate of tax for both personal and corporate income, while eliminating the complicated system of loopholes, deductions and exemptions. Thus we would,
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eventually, have a system whereby we would set a single exemption for individuals, so that low-income earners would pay tax only if they earned more than a determined level of income. Many countries have already taken such an approach, including nine in eastern Europe, Hong Kong and Russia, the largest country in the world.
On defending the poor, I say to the right hon. Member for Birkenhead that it is not in the interests of the poor to have a so-called “progressive” income-based tax system. Such a system is structurally biased against them because they do not have the same access as the wealthy do to accountants and lawyers, and so cannot be instructed by them in the complex methods of tax avoidance. The poor are also caught in the poverty and unemployment trap. Many scenarios and Treasury models can be used, but it is estimated that if we had a flat tax rate of 22% with a £15,000 tax-free allowance, about 10 million of the poorest taxpayers would see their entire income tax burden disappear.
I know that people will say that the wealthy must pay more, but every time the top tax rate has been significantly reduced anywhere in the world, the wealthy have increased the proportion of tax income that they contribute. Under Mrs Thatcher’s Government, the top tax rate declined from 83% in 1979 to 40% in 1990, but high-earning individuals paid 35% of the total in 1979 compared with 42% in 1990. So it makes sense to have a much flatter rate of taxation—it makes sense for the economy and for the poorest in society, and it makes sense in terms of re-creating a sense of enterprise in the nation.
Once we dramatically simplify the tax system and get rid of all those loopholes and deductions, we will be able to explain the whole Budget process so much more easily to Parliament. At the moment, the Budget process is largely incomprehensible. I have been involved in the “Clear line of sight” project, and we want to simplify the whole process so that we know, line by line, what we are spending on behalf of taxpayers and how we are trying to get the nation moving forward again. I urge the Chancellor to be vigorous and brave in this debate.
Madam Deputy Speaker (Dawn Primarolo): I call Cathy Jamieson.
7.43 pm
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Thank you, Madam Deputy Presiding Officer. [Interruption.] I am sorry, Madam Deputy Speaker; I knew I would do that one day. I have just left the Scottish Parliament, so I should have been slightly more careful in ensuring that I got the terminology right.
People I have met on the doorstep in my constituency are pretty clear about why they did not vote for either of the parties that make up this Government—it was because they remember what happened the last time there was a Tory Government. In Kilmarnock, people recall the loss of the factories that made the town well known worldwide: BMK carpets; Glenfield and Kennedy; and others. In the Irvine valley, the textile industry was all but destroyed as cheap imports produced in sweatshop conditions flooded the market. And in the former coalfield communities of Auchinleck and Muirkirk people remember
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how Tory policies deliberately and systematically killed off the mining industry, leaving a generation of people on the dole for the long term.
My constituents resent getting lectures on a big society from people who have never had to worry about whether their weekly income is going to stretch to the extras that others take for granted, be it the school trip for the kids, the birthday present, or the day out to try to give the family some respite from the daily grind. They are angry that their public services are being slashed and that the voluntary sector is being left to pick up the pieces without proper funding. Over the years those former industrial communities have tried hard to stand on their own two feet. They looked to the Government for a hand up, not a handout, and we got people back to work during Labour’s years in government.
Although people in my constituency did not vote for this Government, some of them perhaps had at the back of their mind the vain hope that maybe, just maybe, these Tories would be different, and would deliver a Budget that would bring some hope for hard-pressed families already worried about their jobs and keeping the roof over their heads. What did they get in reality? The facts are simple: unemployment forecasts have risen; inflation forecasts have risen; the growth forecasts have fallen; an increase in the personal allowance threshold was cancelled out by an increase in the cost of living; the cut in fuel duty was swallowed up by the increase in VAT; and the rise for pensioners was wiped out by the small-print cut in the winter fuel allowance.
The people on the Government Benches can have their private conversations, they can laugh and they can sit and smile—they can do what they like—but behind the figures we have heard about today are real people whose real lives are being affected now. The number of unemployed claimants in my constituency in February was more than 3,500, which represents a rate of 8.1%. Those people, who are desperately trying to get a job, feel that the Tories are reverting to type; they do not feel that the revised projections of unemployment rising are a price worth paying, but it is clear that the Tories do.
In Scotland Labour has pledged that there will be a Scottish future jobs fund that will create real jobs and provide training for about 10,000 young people, and for others who have been unemployed for six months or more. It will be supported by up-front and flexible funding for businesses to create those jobs. By contrast, the Tory Government here have announced only an extra 40,000 two-month work experience placements a year, and only 12,500 more apprenticeships a year.
I heard the Chancellor say in his Budget speech that the Government would consult the Scottish Government on how a new set of enterprise zones might operate north of the border. I welcome that. But before he does that, I want him to think about some of the criticisms of the previous incarnation of enterprise zones and ensure that his proposals do not fall into the same traps. The Institute of Chartered Accountants of Scotland has pointed out that although 63,000 jobs were created in the enterprise zones between 1981 and 1986, only 13,000 of those were new, the rest had simply been displaced. That will not do in the future. It will be important for those initiatives to be backed by significant infrastructure investment, and there must also be engagement with local authorities to build on economic regeneration work already under way. I am pleased that my constituency
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has just received the news that we are to get £2 million in European regional development fund money, but we need more help from the Government to back that.
In conclusion, Madam Deputy Speaker—I got it right that time—when I was elected I pledged that I would work with anyone who had the best interests of my constituents at heart, even if that meant putting aside political differences. That is exactly what I have done in my support for the “Make it Kilmarnock” initiative, because East Ayrshire council, which set it up, is of a different political persuasion from me. But sadly, what will define this Budget in history will be the economic mindset of a political class that is walking in Margaret Thatcher’s footsteps but has failed to learn the lessons of taking the wrong path on the economy.
7.49 pm
Bob Blackman (Harrow East) (Con): It is a privilege to follow the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson).
Every Budget is a step along the way in implementing the strategy of any Government. Part and parcel of the strategy that the Government have chosen to follow is wholesale welfare reform, which I welcome. A plethora of benefits are being simplified, people are being taken out of taxation, and the central issue at the heart of that strategy is that work should always pay. In this country—including London—today, I could take hon. Members to places where there are three generations of people who have never worked. They feel that it is better to be on benefits than to work, and we have to change that fundamental view in society.
My right hon. Friend the Secretary of State mentioned in his opening speech the scandal that is housing benefit in society today. It has fuelled rental rates and has got totally out of control. The squeals from Opposition Members when we try to implement fairly simple and straightforward reforms to housing benefit are legion. The housing benefit reforms are long overdue, and I welcome them.
Last year, after the general election, we had an emergency Budget that set out the emergency position that had to be implemented to counter the inheritance that this Government received. Some tough decisions had to be made at the time, and we were all warned that they would have a catastrophic effect on the economy. Clearly, the financial markets and every sane and sensible individual in this country could see that those decisions had to be taken, for the long-term benefit of this country.
We then had the comprehensive spending review, which set out tough targets for public expenditure over a range of years. There was tremendous consultation, certainly among Government Back Benchers, to ensure that the decisions taken were in the long-term interests of this country. Now, of course, we have the Budget for growth. That is the third part of the story.
It is clear that we must have private sector growth that generates job opportunities for the people of this country. Governments do not create wealth-creating jobs; it is up to the private sector to do that, but it is Governments’ duty to ensure that they create the environment in which the private sector can invest. The problem we inherited was that over the last 10 years of the Labour Government, the growth in employment all came in the public sector. Unsurprisingly, we hear from
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Labour Members about the percentage or number of people in their constituency employed in the public sector. We need to rebalance the economy completely to make the private sector predominant, and that is clearly where we are going.
The Opposition have two mantras: “It’s hurting but it isn’t working” and “The cuts go too far and too fast”. I detect the whiff of fear from Opposition Members that the Government’s strategy will work, and that by the next general election the public will realise that all the tough choices the Government have made were in the best interests of the economy and that the Opposition were wrong, and Labour will be defeated heavily at the polls as a result.
The Budget has brought in long overdue planning changes. I am concerned, as I do not want local people to be overridden, but I want business to have certainty about the decisions that are taken. Decisions on planning will be taken within a 12-month window that allows businesses to plan for the future and allows everyone to express their objections and comment on areas of uncertainty.
The council tax freeze has, without a doubt, already worked. Every council in England and Wales has frozen its council tax this year, and the Government have provided additional funds to ensure that services are provided by local authorities. I look forward to the Government, next year and the year after, providing a similar type of grant to freeze council tax again, so that instead of council tax more than doubling, as it did under Labour, it is frozen under the coalition agreement.
We clearly need a work force who are fit for purpose and apprenticeships that are available. I welcome the decision to fund more apprenticeships and training and to ensure that the work force are ready for the jobs as and when they are created. That is a key part of the strategy. The challenge now, after this Budget for growth, is for the private sector to start to create the jobs that the Budget wishes to see.
There is also a challenge for the Opposition. There is a potential alternative: we could borrow more money, increase taxation, increase interest rates and get into a position where there is more bust in society. I am sure the whole House will take the view that the Government have embarked on the right strategy and the right course, and will endorse the Budget tonight.
7.55 pm
Graeme Morrice (Livingston) (Lab): Thank you for calling me to speak, Madam Deputy Speaker—although I am from Scotland, I can get your title right.
The Budget has been billed as the Budget for growth and jobs, yet many right hon. and hon. Labour Members have already demonstrated ably why it has failed to live up to its billing on growth. It is also crystal clear that it is not a Budget for jobs either. Unemployment continues to rise, reaching a higher level than at any point under the previous Labour Government, yet the Chancellor’s Budget did next to nothing to address that serious issue.
The Government, like all previous Tory Administrations, basically believe that rising unemployment is a price worth paying. When they say that we are all in it together, we know that what they really mean is that the
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vulnerable, the unemployed and the poor are all in it together as they will bear the brunt of the Government’s reckless policies.
Labour’s priority in responding to the recession was to keep people in work. The previous Labour Government were determined to prevent the same devastation to families and communities that the Tories presided over in the 1980s and early 1990s, when unemployment rose to more than 3 million. Labour’s strategy was working and unemployment was falling, but now, less than a year into the life of this Government, unemployment is rising again, reaching its highest level for 17 years. That should have put jobs at the forefront of the Chancellor’s plans last week, but the evidence from his statement proves otherwise.
The £20 million funding allocated next year to support initiatives aimed at creating jobs is a pitiful amount in the grand scheme of things and the centrepiece of the Government’s plans for promoting the creation of new jobs, the establishment of 21 enterprise zones in England—not applicable in Scotland—simply takes us back to the failed past of the Thatcher and Major years. Indeed, entrepreneur William Chase, founder of the Chase distillery and Tyrrells crisps, described the plan for enterprise zones as a “criminal waste of cash”. He said:
“The Thatcher government wasted huge amounts of cash on enterprise zones in the eighties. They didn’t work then and I don’t see any reason why they should work now.”
According to a recent Centre for Cities report, which my hon. Friend the Member for Rochdale (Simon Danczuk) mentioned earlier, the cost to the public purse of each additional job created in an enterprise zone during the 10 years of the programme was estimated at £17,000 at 1994-95 prices or £26,000 at 2010-11 prices, yet Labour’s future jobs fund cost only £6,500 per job created and the new deal for young people just £3,500 per job.
Stephen Lloyd: Is the hon. Gentleman aware that recent research showed that 50% of people who had been placed through the future jobs fund were unfortunately back on benefits seven months afterwards? Does he agree that that shows that it might not have been money well spent?
Graeme Morrice: And 50% of those people continued in full-time employment.
The Centre for Cities report also said that most jobs had simply been displaced from elsewhere and so they may bring short-lived prosperity to one area at the expense of another. That point was ably made earlier by my hon. Friends the Members for Wolverhampton North East (Emma Reynolds), for Kilmarnock and Loudoun (Cathy Jamieson) and for Newcastle upon Tyne North (Catherine McKinnell). Given the Government’s professed enthusiasm for efficiency it seems bizarre that they should pursue such an inefficient means of creating new jobs, but when it comes to unemployment the Tories continue to be stuck in a time warp. They believe that the Thatcherite policies of the 1980s are the solution to today’s job crisis, but we know they are no more the solution now than they were then, when millions were left on the unemployment scrap heap.
The most alarming aspect of unemployment today is the UK’s high level of youth unemployment. As Members will know, the number of unemployed 16 to 24-year-olds increased by 30,000 in the last quarter to reach nearly a
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million—some 20% of all young people—which is the highest figure since comparable records began in 1992. The Government have been pretending that this is somehow not their problem and that they are not responsible for that record high, but let us look at what they have done since taking office last year. They have axed Labour’s future jobs fund—a criminally short-sighted decision—they have axed the education maintenance allowance, thereby disincentivising young people to stay in further education and improve their skills, and they have axed other employment schemes that were aimed at supporting into the workplace young people who have been out of work for more than six months. Let there be no doubt that this Tory Government and their Lib-Dem pals are the ones who are responsible for the record levels of our young people out of work.
Youth unemployment in my constituency stands at nearly 1,000, which is certainly not the worst figure in the country by any means, but every unemployed young person is one too many. I know from speaking to young people in my area that many feel a sense of hopelessness about their situation. They feel that little is being done to support them, that no one in Government cares about their plight and that their future is bleak. Once again, a whole generation of young people is being cut adrift by the dogmatic policies of the Members on the Government Benches.
The Government’s work experience placements will not improve young people’s employment prospects in the same way that six months of real work would. The Department for Work and Pensions has already said that
“the target group for work experience will be a very small proportion of young claimants aged 18-21”
and that it is not about guaranteeing young people a permanent job. The extra 12,500 apprenticeships a year announced in the Budget are woefully inadequate given that nearly a million young people are out of work and need help.
The Federation of Small Businesses has said that the Chancellor’s Budget did not go far enough to incentivise job creation, so action on job creation is another clear dividing line between the Government and the Opposition. The Government stick with their reckless cuts and do nothing to address the record level of unemployment, particularly youth unemployment, that they are presiding over.
Madam Deputy Speaker (Dawn Primarolo): Order.
8.2 pm
Mary Macleod (Brentford and Isleworth) (Con):
Thank you, Madam Deputy Speaker, for allowing me the opportunity to speak in this Budget debate, which affects each and every household in the country. The Budget presented last week was unique in post-war British history because the country has never found itself in more difficult times and the level of borrowing is at an all-time high in modern memory. We needed to face that challenge. Real politicians do not come into politics to be popular—they come to do what they believe is right. Politicians need do what is right for the country and that is why the Government have taken some very difficult spending decisions. We need only look at Portugal, which has singularly failed to implement a credible plan to deal with its budget deficit, to see why
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we need to continue with our plan to get our country back on track. We need to continue to deal with the deficit while also ensuring that the conditions for economic growth are in place and I commend the Chancellor on a job well done in achieving the balancing act referred to by the Institute for Fiscal Studies.
The Budget is first about promoting business growth, as we have heard already, secondly about helping households and families and thirdly about dealing with the tough issues that need to be addressed. First, on business growth, one aspect that stood out in the Budget was the measures to encourage business growth. The Prime Minister recently spoke of his desire to implement the
“most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government”
and I believe that the Government will achieve that.
How will we rebuild our economy? The new, low rates of corporation tax will help our home-grown businesses and will encourage new investment from overseas companies. Other measures include the entrepreneur’s tax relief and new finance available for small and medium sized firms, the simplification of the tax system, the removal of red tape and unnecessary bureaucracy, the extension of the small business rate relief holiday and the increased funding for work placements and apprenticeships, which will encourage investment and trade, as my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) has said. There is also the support for science and technology that my hon. Friend the Member for Warrington South (David Mowat) mentioned. Those measures and others will help to stimulate business growth.
The reaction to the Budget from business has been favourable. The CBI’s director general John Cridland has said:
“This budget will help businesses grow and create jobs. The chancellor has made clear the UK is open for business.”
I have been speaking to businesses in my constituency to get their views on the Budget and how it will impact on them. Frank Wingate, the chief executive of West London Business said that his company
“welcomes the measures aimed at stimulating business growth—particularly lower corporation tax, enterprise zones, fuel price caps, reduced red tape and simplified planning processes. They will all help.”
Mike Freely, the managing director of design firm Octink, who recently met the Prime Minister to discuss how the Government could help small and medium-sized enterprises, said:
“There is a lot in the Budget for Small and Medium Enterprises like ours and a feel good factor that should inspire more confidence throughout our sector”.
The Budget has a lot to offer businesses both large and small. My constituency is full of successful and aspiring entrepreneurs and I hope that some of the measures in the Budget will encourage new business start-ups and continued expansion and investment. I am particularly interested in encouraging women who would like to start their own business, because a recent Federation of Small Businesses report has suggested that women could contribute far more to the UK economy if they started up more businesses. If we had the same level of entrepreneurship among our women as there is in the US, there would be 600,000 extra female-owned businesses contributing an additional £42 billion to the
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economy. We also need to get more women on boards. I refer hon. Members to the recommendations in Lord Davies’ report that FTSE 100 companies should have 25%-female boards and that companies should publish and disclose the number of women at all levels in their organisation. I believe that that would help to create growth, improve performance and make use of the great skills that are available to us in this country.
Secondly, the Budget will help households and families. The oil price, the scrapping of the fuel duty escalator and the cutting of duty have already been mentioned. I am also delighted that the Chancellor has announced the next step in increasing the personal tax allowance, as was mentioned earlier. Also, the announcement of £250 million to help first-time buyers will directly benefit many young people and will help on to the property ladder people who would not otherwise have been able to get on it.
Thirdly, the Budget is about dealing with tough issues. The Government have proved that they are not afraid to deal with difficult issues and the Chancellor has shown that he is willing to be resolute in fighting the deficit.
In conclusion, the Budget is one for business growth, helping households and families and continuing to face up to and deal with tough issues. We have a job to do and we are getting on with it. This country of ours has a genius for invention, industry and trade. There are great and powerful forces awaiting liberation in our economy—the forces of commercial creativity and innovation. Entrepreneurs just need to have their hands untied so that they can create wealth for this country. The Budget supports aspiration, will help many people to achieve great things for themselves and will create a stronger, sustainable and stable economy—a better future for us all. I commend the Budget to the House.
8.8 pm
Geraint Davies (Swansea West) (Lab/Co-op): I am pleased to say that this morning we had a coalition ground force moving into Swansea in a dawn raid at 8.30 am, with the Business Secretary alongside the Secretary of State for Wales talking in the chamber of commerce, and they had a great deal of local resistance from people with placards and the like. In Swansea, 40% of people in public services are facing cuts and unemployment, and we have been denied electrification by the Government, which would have meant inward investment in Swansea. In addition, Tata Steel has just had a bomb dropped on it about the new carbon tax, which will focus only on its facility in the UK and not on those in any of the other 20 countries in which it makes quality steel. Obviously, it is a very valuable employer in the area.
The people resisting the Secretaries of State this morning were similar to the hundreds of thousands who marched in London on Saturday. Who were those people? They were nurses, doctors and teachers—people who keep our work force healthy and educated. They were tax collectors who face losing their jobs—people who are supposed to be collecting tax more efficiently. They were police officers, who are meant to patrol and police, as well as look after the riots and protests being incited by the cuts. They were small business people who are clearly concerned that the Government’s attitude
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to small business is, “If you make a loss, sell your tools,” as opposed to achieving growth through increased sales. They were service users—people who face cuts in libraries, leisure centres, pools, centres for the elderly, Sure Start and so on. The people on the march had one common cause—that there should be an alternative mix of growth, tax, cuts and timing that is optimal to confront the deficit before us.
It is worth reminding ourselves that the deficit did not come out of some sort of Labour inadequacy. It was the price paid to avoid a depression caused by the banks. Two thirds of the deficit—£84 billion—has been evaluated by the Institute for Fiscal Studies and others as being the impact of the financial disaster that we imported from sub-prime debt. The fiscal squeeze on which the Government have embarked is about £98 billion, more than the overall financial crisis. That is to take place over four years. The question is whether, if there is a massive outside impact on the country’s financial deficit, we can hope to get rid of that and more within four years without disrupting our economic capacity and social fabric. Should it be the case that three quarters of that is cuts and only one quarter is tax?
The OBR has reached its verdict. It has had to change the growth forecast from 2.6% to 1.7%, which shows that less revenue will come in from people working, and the Government will have to rely more and more on savage cuts. There is an alternative, the Labour alternative—to halve the deficit in four years rather than get rid of it completely, and to use three methods instead of just one, cuts. The three methods are to focus on growth, make the bankers pay their fair share and make savings over time. Germany, for example, is clearing its deficit through export-driven growth, rather than focusing on cuts.
I was over in Germany. I went to UK Trade & Investment, which markets Britain for inward investment. There are lots of German companies queuing up to invest in Britain. Those offers were put on a computer platform for regional development agencies to draw down, but because the RDAs have been abolished, those inward investments are not being taken up and are going to other countries. German regions, let alone the whole country, have offices in Seoul and other emerging markets and are trading and getting inward investment there, and we are not. We are undermining our ability to grow. Instead of a budget for growth, we have cuts.
Growth went negative in the last quarter of last year. Why? Because consumer confidence, the inclination to spend, and investment confidence were washed away by the talk of austerity and the reckless, breakneck speed at which the cuts were made. In addition to the 300,000 people who are to be sacked from public services, PricewaterhouseCoopers says that another million jobs will be lost in the private sector, costing around £7 billion in lost tax and benefit costs per year. Add to that the £4 billion that we have to spend on restructuring the NHS to help privatise it, and the other costs of unnecessary structural change at a time of shrinking budgets, and we can see that this is economic incompetence at its worst. It is not necessary in its current contortion, it is not fair and it is not sensible.
The key issue on banks is that they need to provide liquidity to small business as the engine for growth. We all heard about Merlin, but the question is whether that
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will be delivered. Sadly, a person in my constituency is on hunger strike over the issue. Finally, people may not have noticed the 3p reduction in inheritance tax given to bankers, who are now paying a smaller proportion. If they give money, for example through works of art, we can see from the fine detail—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order.
8.14 pm
Richard Drax (South Dorset) (Con): It is a great pleasure to follow the hon. Member for Swansea West (Geraint Davies) and other Members who have spoken so well.
May I begin with a story? It is about a family brewery in Blandford, which is not in my constituency, but in the neighbouring one. The brewery was run by one of my closest friends, David Woodhouse. Tragically, he died prematurely of a heart attack recently, aged only 49. His brother, Anthony, now runs the business, which employs 1,500 people, and he plans to invest £5 million in a new brewery. When David was alive, he and I used to speak regularly about taxes, red tape, bureaucracy. His bugbear was the duty on beer. “Do they realise,” he used to say, “what politicians impose on our business every single year?” Our conclusion was that they—the politicians—did not realise, because so many have not operated in a business.
Now it is Anthony’s turn and he is aghast that the beer duty, as we heard from my hon. Friend the Member for Burton (Andrew Griffiths), has risen by 10p for no reason other than the nature of the product he produces. Why do we go on punishing this industry, year in, year out? Is it to discourage drinking? If it is, there is no logic in punishing publicans who serve, in the main, law-abiding citizens in a safe environment. The lager louts get their beer from cheaper sources, not least the supermarkets.
On that subject, Mr Woodhouse makes an additional point. Pubs have to pay VAT on food, while supermarkets which sell prepared meals—often full of salt and preservatives—do not. This inequality is crippling the pub business. On the continent, VAT has been reduced on eating out—what an excellent idea and incentive.
The only other reason for this annual tax raid is to fill the Treasury’s coffers. And this from a Government who want to encourage the private sector. Let us stop targeting the brewers, remove the escalator and allow a vital UK business to survive. On the subject of removing burdens, surely the Budget was a wonderful opportunity for boldness. Conservative economic principles—I emphasise “Conservative”—are simple: low taxes, the minimum of red tape and bureaucracy, fair and balanced employment law, and freedom from unaccountable institutions like the EU.
The EU is one of the main handicaps to business in this country and to growth and prosperity. We can talk until we are blue in the face about deregulating, removing taxes and all the rest of it, but unless we leave the EU and renegotiate a trade agreement, business will never truly be set free. The EU superstate will fail, as sure as eggs are eggs. The question is are we bold enough to lead the way to pastures new where our economy can thrive and our people prosper?
Let me dwell briefly on personal taxes. Why have we kept the 50p tax rate? I agree that we should all pay our fair share, but surely a ceiling of 40% is more than
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adequate. Taxes are not there to punish people who aspire, work hard and contribute enormously to their country. Regrettably, and all too often, it appears to many that taxes imposed by the Opposition were based on envy. Our coalition partners are no better. The Secretary of State for Business, Innovation and Skills suggested a mansion tax. That suggestion was spiteful, vindictive and regressive. Let us lower personal taxes. There is more than enough evidence to suggest that such a move increases the tax take.
Finally, let me touch on Saturday’s march. It proved to me and many others one point—how effective the Opposition had been in 13 years. Why? Because they effectively bought the electorate and created a bloated and unaffordable public sector. For those who are losing their jobs, I have every sympathy. We do not enjoy sitting on the Government Benches watching people lose their jobs, contrary to what many Opposition Members say. That is disingenuous of the Opposition. Now, as we have seen, tens of thousands of people are paying the price for Labour’s ideology. Wealth, which pays for the public sector, must come from the private sector. It is here that we must be bolder and far more far sighted.
The Government must free us from the EU yoke, lower and simplify business and personal taxes, review employment law and create a leaner public sector that we can afford. Let us finally take politics and politicians out of the economy and allow our business men and women get on with it. The Budget is a small beginning, but more boldness is needed in the years ahead.
8.20 pm
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): I apologise to the House for my brief absence from the debate, which was caused by my attendance at a meeting that I had requested in a previous debate. After I intervened on the hon. Member for North East Cambridgeshire (Stephen Barclay), he said that I had not been here for the duration, so I would like to make that clear for the record.
I believe that a major focus of the Budget should have been the inclusion of measures that would boost growth, stimulate the economy and increase employment opportunities as a result, but what we have seen yet again from the Government is a set of ideologically driven and politically based measures, rather than anything based on practical economics. Fundamental to the Government’s entire approach is the belief that cutting the deficit deeply and quickly will stimulate growth in our economy. The very cornerstone of this approach is wrong. A year ago a Member of this House responded to the previous Labour Government’s Budget by declaring:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.
The Member who said that is now the Secretary of State for Business, Innovation and Skills.
It seems that the Office for Budget Responsibility agrees with the Business Secretary. It has shown that growth is down for this year and next year. This revision of the figures is a sad reflection of the fact that the Government have got it wrong. It appears that the Government do not realise that if the economy is not growing, thousands more people will lose their jobs, fewer people pay tax, more people claim benefits and it
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becomes harder to get the deficit down. That is what we mean by cutting too fast and too deep, and I think that it is reasonable for us, as the Opposition, to ask the Government what their plan B is if the downward trend continues.
The lack of growth is the central story of the Budget, but the Chancellor did announce some measures aimed at mitigating this and they are worthy of consideration. Enterprise zones look interesting, but we will need more details of their resources. As a Greater Manchester Member, I am willing to give them a cautious welcome, given our inclusion in the initial list of zones, but I heed the comments of my hon. Friends the Members for Rochdale (Simon Danczuk) and for Livingston (Graeme Morrice) about the problems the zones might cause.
I had been hoping to hear more about improved resources for the regional growth funds, which seem to have modest budgets for what is expected of them. I worry that with the loss of the regional development agencies we in the north-west have lost more from this Government than we have so far gained. The Northwest Regional Development Agency was not a perfect institution, but research shows that it brought to the region more than £5 for every £1 it invested. I am not certain that local enterprise partnerships, which have more restricted powers and limited coverage, will be able to match that success.
I also welcome the Chancellor’s comments on manufacturing. I represent a part of the world where manufacturing is still very important and am often frustrated by comments in the House to the effect that there is almost no manufacturing industry left in the UK. Such comments are very misplaced. The UK is a world leader in a number of high-value manufacturing sectors, including pharmaceuticals, life sciences, advanced engineering and aerospace. Although we cannot deny that the number of people employed in manufacturing has been in steady decline for 30 years—people in my area know that only too well—the British Chambers of Commerce states that output and value have risen throughout that time, hitting an all-time high in 2007. Manufacturing will never return to the share of the economy it had in the 1980s, but there is a real potential for growth. There was an excellent meeting of the associate parliamentary manufacturing group this morning, where we looked at finance for small and medium-sized enterprises. I hope that the Government will engage with the group and look at some of its work.
I also note with interest the measures in the Budget that are designed to make the planning process simpler. I welcome any changes that would stimulate economic growth, but the biggest barriers to growth in some areas come from a lack of powers for local authorities to deal with planning blight. I have been working with local businesses in Stalybridge. I am passionate about retaining our town centre and the sense of identity it gives our community. Traders tell me how their businesses are often affected by the number of empty and unsightly properties around them. In some cases, these are large buildings with absentee owners who are unwilling to sell in the present economic climate, yet their very presence deters new investment from coming into the area. In one specific case, a consortium is interested in buying a building that is falling down, but complying with the legislation to use compulsory purchase orders and the
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powers to force a sale are difficult for local authorities. Piloting the relaxation of some of those regulations would be welcome, and I would be very pleased to see such developments.
I also want to say something about investment in infrastructure. I welcome the £85 million investment that the Government have promised in the Budget for a link between the Victoria and Piccadilly railway stations in Manchester, which will have a positive impact on journey times. I sincerely hope that in due course the Government will support the rest of the northern hub proposals, which would have a significant impact on economic growth in the area. In particular, I think there is a lot of scope to boost growth by improving transport links between the north-west and Yorkshire regions, and with that in mind I hope the Government will reinstate the planned Mottram-to-Tintwistle bypass through my constituency.
In many of the speeches made in the response to the Budget, Members have highlighted the impact of the Government’s agenda on the poorest and most vulnerable people in our society. I will never abrogate my responsibilities to speak for these people and I endorse what has been said, but I also want to speak for the thousands of my constituents who may not be the most vulnerable but who are still struggling to get by. These working and middle-class people are the backbone of Britain, and right now they are finding life hard. Rising fuel prices, the increase in VAT and changes to tax thresholds, particularly the changes to indexation, will increase the pressure. Next year, families with incomes as low as £26,000 will lose their tax credits entirely, and the year after l.5 million families will lose all their child benefit, which will be deeply felt.
For many of my constituents, the decisions taken by this Government are really hurting. With revised figures pointing to lower growth, higher borrowing and higher unemployment, there is no evidence that their approach is working. Is the Budget so ideological that the Government cannot see the danger signs staring us in the face? What we really need instead is practical and pragmatic economic leadership.
8.26 pm
George Freeman (Mid Norfolk) (Con): “Rescue, rebalance and recover”. No, Mr Deputy Speaker, I have not got hold of a copy of the late George Best’s doctor’s notes, nor a copy of the advice from the right hon. Member for South Shields (David Miliband) to his younger brother after a mauling at Prime Minister’s questions. I refer to the three words that the Chancellor used at the beginning of his Budget statement last week, which are so important in setting out its significance: “rescue” because the coalition has had to rescue the British economy from a debt crisis that would have seen our interest repayments rising to £70 billion a year; “rebalance” because the Labour party has tested to destruction the thesis that a modern economy can be driven through public spending and an unsustainable boom and bust; and “recover” because without a private sector-led recovery, we are condemned to a decade of stagflation.
Having listened to the debate yesterday and today, I must say that Opposition Members still do not seem to have got the two real golden rules of modern economics.
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The first is that every pound they commit at the Dispatch Box, claiming it as their own, has to be earned by the private sector before it can be spent on public services. The second golden rule, which we proved in the ’80s and must now prove again, is that cutting taxes on business increases the amount of money available to us in this House.
The truth is that, like a gambler forced to come home one day and ’fess up to his sad family that he has not been working but living off debt and gambling with his credit card, the British economy must now be weaned off the unsustainable boom that was fuelled by cheap credit under the Labour party. As in our personal lives, crises are always opportunities. The Budget was significant to me for this reason above all: it set out carefully the steps towards a sustainable recovery and the rebalancing of our economy. “What”, I hear Opposition Members ask, “will this rebalanced economy look like and where will the jobs come from?” Let me try to explain.
The Budget again contains the seeds of the recovery: in the enterprise investment scheme reforms, in the venture capital trust reforms and in the encouragement for investors putting their own wealth at risk to start small companies, it will first be an enterprise recovery. In the emphasis on the clean economy, high-technology jobs and life sciences, it will secondly be a smart-growth recovery. And in the emphasis on corporation tax reductions and sending a signal around the world that this country is open for business, it will be a global and export-driven recovery.
Nowhere will that be cheered more loudly than in my constituency, Mid Norfolk, and my region, East Anglia, a region that for 30, nay 40, years has been treated by London Governments as nothing more than a commuter reservoir to feed the London economy. Our area has huge resources in offshore energy, in high-tech engineering at the Hethel centre, in the headquarters of Lotus, in Norwich research park, a global centre of food science and agriculture, in the university of East Anglia, a leading, world-class centre of climate science, and 40 miles down the road, in what the Americans would term one cluster, Cambridge university, with all its strengths in science and research. How woeful that over the past 30 or 40 years we have treated the area as a commuter reservoir.
Well, the people of East Anglia are ready to rise to the challenge, and with the investment in infrastructure that this Government have laudably managed to secure from a difficult financing settlement, in terms of dualling the A11 and the money announced last week for regional rail, we finally have some hope that our area will be able to stand again and lead the economic recovery as we have in the past.
Norfolk, as Members will remember and not need me to remind them, was the county that gave us the agricultural revolution, our finest military hero and our first Prime Minister, but it is a county that has been left behind and failed by the model of state dependency which the Labour party has pursued. In championing the high-technology and life science potential of our area, I draw attention to the Register of Members’ Financial Interests. I am proud to have entered the House after a 15-year career helping to start some of those businesses and to help entrepreneurs to take the risk of creating new businesses.
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In closing, I want to concentrate on the laudable support given to the life sciences. As we think about the markets throughout the world in which we have the chance to grow our economy, we should look no further than the recent Foresight report, which drew attention to the fact that the world’s population will rise to 9 billion. With that rise will come huge markets in food, medicine and clean energy. Those are the markets of tomorrow, the markets in which this country has the potential to lead; and those are the markets for which this Budget will begin to sow the seeds of a sustainable recovery.
The significance of that point is not just economic. The Budget last week set us on the road to a recovery that we can be proud of—a recovery that will give this country back a sense of purpose throughout the world. What finer mission is there than to be a small nation putting its experience in science, trade and enterprise to the benefit of people in the developing world, giving them the hope that there is a model for them and that they do not have to take 200 or 300 years to reach the privileged position that we have reached? It is therefore with huge pride that I support the Budget and commend it to the House.
8.31 pm
Hazel Blears (Salford and Eccles) (Lab): I want to talk about work, the value of work, the economic necessity of work and the consequences of millions of people being without work.
Work is more than what we do; it goes to the very heart of who we are. When we meet people, what is the first question that we ask? “What do you do for a living?” In the early 1980s in Salford, in my city, we had two really deep recessions, high unemployment and flight from the city, leading to a completely unbalanced community, low self-esteem particularly among our young people, very high crime and antisocial behaviour and lots of family breakdown. Again, in the 1990s, after almost 20 years of Conservative government, I had 50% male unemployment in two of my inner-city wards and more than 70% youth unemployment. That scarred our city, and it has taken us a whole generation to recover, and I am very worried that we are about to repeat some of the mistakes that we made then.
Unemployment has risen to more than 2.5 million, the highest since 1994; youth unemployment is almost 1 million, up 70,000 since the Government took office; and almost 30% of unemployed people in Salford and Eccles are between the ages of 18 and 24. But every statistic, every number, is a real person and somebody’s life. Just in the past three days, I have been contacted by a young man called Jack, who is about to graduate in criminology. He has been a special constable for the past three years and is desperate to become a police officer, but he has very little chance of that now, with the cuts to our police service. I have also been contacted by Tracy, a young mum with three children, who went out and became qualified as an adult residential nurse, but again, we are making redundancies in the hospital, and she has very little chance of getting such a job.
The increase in apprenticeships in the Budget is of course welcome, but it is simply not enough. The future jobs fund would have given 150,000 opportunities to our young people, and in Salford and Eccles alone 800 young people secured opportunities through that fund and many have full-time work.
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The enterprise zone at Airport City is also very welcome, but all the evidence, including from IPPR North in a good report by Ed Cox, shows that the previous enterprise zones were far more about displacement than about creating new jobs—and what we really need are those new jobs.
We find that some people are juggling two or three jobs on very low pay. They are desperate to make ends meet, they see little of their families and they have no leisure time. Others have no work at all; at least 10 people are chasing every vacancy in my area. Just last week, a charity shop opened on our local shopping precinct, and 200 people queued up for it to open. That is an incredibly grim existence—a really depressing life and no money to enjoy anything else. I remember the days when we talked about the future and how it would mean a decent home, a decent job and lots of leisure time. It was like a painting of utopia—we would have time to go to the theatre and have arts, beauty, culture and all of that. What we are left with is a reality where people have very little money and no time with their families, and cannot enjoy that better life.
If we are going to get through this undoubtedly difficult time and get our country on to a better footing, then we all have to pull together and do our bit. There is a big, resounding silence at this point. Yes, we need more volunteers, and public services do need to be more efficient, but if we really are all in this together, business has to step up to the plate, think hard and change the way it operates. Old-fashioned capitalism that simply maximises profit and squeezes its workers is exactly that—old-fashioned, out of date, and not always even very efficient. It is time to think hard about a new capitalism that is socially responsible, respects those who work and contribute, and makes good economic sense rather than one that is based on a race to the bottom with people competing for the lowest wage.
The best, most modern and most forward-looking companies “get it”, whether it is Google or Microsoft. Andrew Witty, the chief executive of GlaxoSmithKline, said in the papers at the weekend:
“I really believe one of the reasons we’ve seen an erosion of trust…in big companies is they’ve allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is...isn’t it better to be in a country and say ‘let’s try and work through the difficult times and get to the good times’?”
That is the kind of company that we need—one that is dedicated to this country and recognises the value of its workers. The Co-operative bank has increased its dividend payments by 16%, and it has had a 38% increase in the number of current accounts and 140,000 extra customers. That is because it operates ethically. It did not take the high risks that many other banks took, and therefore it has a sense of trust and reliability. That is the kind of new industry that we need.
The new model for successful industry is to embed companies in the UK. We should not close our borders through protectionism, but want them to come here and stay here, creating the conditions for growth and—dare I say it—a true sense of corporate social responsibility, not a bit of charity at the end of the year. That will not be achieved by limiting rights to request flexible working or limiting maternity and paternity leave. That flies in the face of a proper joint enterprise. This is a moment
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when we should take a step back and realise the damage that has been done to our economy and to our people primarily by the actions of greedy, risk-taking banks selling loans that could never have been repaid. Let us say, “Never again.” We want a responsible capitalism that recognises the interdependence of those who finance the wealth and those who produce it.
The future looks very bleak for many people in Salford and Eccles who have little or no shelter from the storms that are heading their way—people without savings who struggle to pay the rent and have an insecure job, and hundreds of thousands who have little hope of any job at all. The economic numbers are appalling, with unemployment going up, growth down and inflation up. I believe that this Government will live to regret the political choices that they have made with our economy.
8.37 pm
Charlie Elphicke (Dover) (Con): It is a real privilege, as ever, to follow the right hon. Member for Salford and Eccles (Hazel Blears), who spoke so movingly and who is prepared and brave enough to set out an alternative—something that her Front Benchers are not courageous and bold enough to do.
I want to deal with the issue of poverty and the least well-off, and what this Budget does for people who struggle and do not have a lot of money. The previous Government were like a game of two halves. First, when Tony Blair was in charge between 1997 and 2001, they were a responsible Government who were quite effective in many ways, particularly when it came to fighting poverty. However, after that period, as the former Prime Minister increasingly got his hands on the levers of our public finances and wider economic policy, things started to go wrong.
It is against that backdrop that I am particularly keen to see the measures in this Budget succeed. It is not good enough that the 60% median for child poverty—relative poverty—went from 3.6 million in 2004-05 to 3.9 million in 2008-09, or that the number of those in deeper poverty went from 2.3 million to 2.6 million in the same period. That rise was really disappointing considering that the previous Government had pledged to take positive action on that problem. The problem is not just with child poverty; it is wider than that. The figures for all individuals show that 13.4 million people were worse off than the 60% median in 2000-01, and that in 2008-09, that figure was stuck at 13.4 million. To me, that is a real disappointment.
In this afternoon’s debate in the Welfare Reform Public Bill Committee, I raised what has happened to those who are of working age and are in poverty. According to the relative poverty measures, in 2000-01 6.5 million such people were in relative poverty, and that had risen to 7.8 million people by 2008-09. The second half of the game of two halves that was the previous Government was not a ringing endorsement of how we look after the least well-off in our communities. As we all know, the rising inequality in that period between those in the bottom quintile and those in the top quintile was a great shame. Over the whole period, inequality rose. That is a great shame.
I therefore welcome the measures in the Budget that aim to make work pay. That is the key message that we need to send. We are taking 1.1 million people out of
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tax altogether by increasing the personal allowance. We are helping and understanding by engaging in the issues of fuel duty and introducing the fair fuel stabiliser.
The most important measure is the universal credit. I am pleased to see from chart A.5 on page 78 of the Red Book that there is a clear plan that in 2012-13 the distribution will be such that the least well-off will be protected from expenditure decisions. I am pleased to see that the universal credit will make work pay. That is focused not on the middle classes who are on the fifth or sixth deciles, and who are frankly quite well off, relatively speaking, but on the least well-off, who are on the bottom two deciles. Too often under the previous Government, those people were sadly neglected. Those are the people who really need help and on whom we should focus. Those are the people for whom we should make work pay through incentives to enter work. What I particularly like about the universal credit, which is shown on pages 80 to 81 of the Red Book, is the real help for lone parents and first earners that was not there before. Those pages also show that the marginal withdrawal rate is under control, and that it will broadly incentivise work and make part-time work more possible and practical.
To conclude, I welcome the measures that should provide help on the issue of child poverty. The Budget measures are aimed at reducing child poverty by 50,000. That is really positive. I hope that as we come out of recession and out of the difficulties, things will start to improve for everyone across the board. However, we really need to look after the least well-off as best we can.
8.43 pm
Mr Michael Meacher (Oldham West and Royton) (Lab): The Government’s main jibe at the Opposition throughout this debate has been, “What is the alternative to the cuts?” I will spell out what I think that alternative should be. Of course the deficit has to be brought down —we all agree on that—but slashing public expenditure by £80 billion in four years is probably the most risky and counter-productive way of doing that. The Chancellor has largely ignored the other three ways.
First, there are the proceeds of economic growth. The estimate of the independent Office for Budget Responsibility for growth over the next five years, albeit recently scaled down, has growth at 1.7% this year, 2.5% next year, then 2.9%, 2.9%, and 2.8%. That means that, on the Government’s own estimates, there will be an increase in the national income of £185 billion. Governments always take about 40%. That means that there will be extra Government revenues over the next five years of £74 billion. That is half the current Government deficit of £146 billion, and nearly three quarters of the Government’s estimated structural deficit of £109 billion. Therefore—on their own estimates, I repeat—the Government would halve the budget deficit in five years without making a single public expenditure cut. I am not against such cuts, and I think there should be some, but I am simply pointing out that there are alternative and far better ways of dealing with the problem.
The reason why the Government have chosen to focus obsessively on benefit and public expenditure cuts is not because they are economically necessary on the
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scale that they say, but because of their overriding ideological objective of chopping back the welfare system and shrinking the state. That is what it is really about.
The second way to reduce the deficit is obviously through tax increases, but the Government have chosen to minimise that option and maximise the cuts option—the balance between the two is 77% and 23%. Thatcher never went beyond 50:50. The Chancellor has ostentatiously avoided any tax rises that might disturb the rich. The non-dom loophole has not been closed; it would bring in an extra £3 billion. The promised £2 billion to be saved in tax avoidance is really pretty small beer, given that even Her Majesty’s Revenue and Customs admits that avoidance will cost £16 billion this year and most independent experts think that the figure will be £50 billion. The tripling of the Government’s bank levy, which was recommended by the International Monetary Fund and would bring in another £6 billion, has simply been passed over.
Moreover, the Chancellor has simply turned his eyes away from any fiscal innovation that might produce a fairer Britain where all of us are in it together. A financial transaction tax at a modest rate of 0.05% would raise about £30 billion. An empty property tax would raise £5 billion, and a land value tax, which would be a great deal fairer than the council tax, which it could replace, would raise more than £30 billion. A minimum tax levy on high earners would put a cap on avoidance and raise more than £10 billion.
The Chancellor really ought to be less timid. The public want taxes that will hurt the rich, and particularly bankers. I do not think the Government realise that. Any permutation of the taxes that I have mentioned could raise at least £30 billion a year—probably rather more if the Chancellor chose, but of course he will not, because the Tory party gets half its funding from the bankers.
Then there is the third option for reducing the deficit, which is a jobs and growth strategy. The cost of putting a million people on the dole, which is what the Government are planning to do, is probably about £6 billion depending on the level of benefits involved. Instead of throwing a million people on the scrapheap, which will substantially worsen the deficit, the Government could invest in a million jobs to provide the social housing and transport infrastructure that are so desperately needed; to develop the green technologies that the green investment bank was supposed to fund if only the Government had not shrivelled its powers; to deal with the rising child protection case load; to train a more skilled work force; and to care for a growing ageing population, to mention just some of the service jobs that could be provided. There would be a significant net gain in deficit reduction for many reasons, not least because of instead of a million people being a drain on the Exchequer, they would contribute to it.
The real cause of the financial crash has not been addressed at all. It is astonishing that three years on, nothing has been done to address the massive flaws in the banking system’s structure and its use of derivatives, bonuses, lending practices, offshoring and speculation. The Budget sets out £80 billion-worth of spending cuts that are not economically necessary on such a scale, will do lasting damage to the social fabric and do not deal with the real—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order.
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8.49 pm
Mel Stride (Central Devon) (Con): I have listened to this debate with growing incredulity this afternoon and for some hours yesterday, as speaker after speaker on the Labour Benches has risen to deny that the last Government’s profligacy could in any possible manner have had an effect on the economic situation that we now find ourselves in.
We need to remind ourselves that we have a £150 billion deficit, which, as my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) pointed out, represents about 12% of GDP. Back in 1976, when another Labour Chancellor, Denis Healey, went cap in hand to the International Monetary Fund because we were bust, that figure was only 7%. Our economy has been completely and utterly out of balance. We spend £43 billion on interest alone, which is more than we spend on education, and more than we spend on defence, the Foreign Office and overseas aid combined. That is an absolute disgrace.
There is no doubt that the previous Government brought us to within a scintilla of being where Greece is. We would have been there, if we had had a credit downgrade and our interest rates had gone up. That is where we would have been headed if Labour had won the election.
The previous Government presided over a halving of the manufacturing sector in this country, a fall in our share of world trade, and an expansion of the gap in prosperity between the north and the south. We should take no lessons on economic management from Opposition Members.
I welcome the Budget, which is a Budget for growth and jobs, against a tough background. Nobody enjoys figures such as the 0.6% contraction in the last quarter, or the OBR’s downgraded forecast of 1.7% growth for this year, but equally, nobody who looks at the previous Government’s record can imagine that under Labour, those figures would be anything but worse.
Labour Members offer no constructive alternative. Instead, they offer opportunistic objections to every sensible suggestion by the Government about saving on expenditure. Every time an Opposition Member stands up and says, “No. We don’t want this measure on tuition fees and we don’t like moving from RPI to CPI in pensions,” and so on, they are really saying, “We’re going to increase expenditure, and we’re going to increase either the deficit or taxation as a consequence.” That opportunistic approach is at odds with their rhetoric of prudence, which is in turn at odds with the marchers’ placards on Saturday calling for no cuts whatsoever. That did not stop the Leader of the Opposition strutting his stuff on the stage in Hyde park and trying to assume the mantle of Martin Luther King. He had the dreams, but he did not have the detail or the substance.
Tax for corporations will be reduced under this Government to 23%, which is 16 percentage points lower than the rate in the US. On the radio the morning after the Budget, Sir Martin Sorrell told us that WPP, the largest advertising agency in the world, would relocate to this country from Ireland. On that subject, even when suffering and having to go to the IMF, what is the one thing that Ireland holds on to and defends above all else? It is its low corporate taxation rate, which, at just 12.5%, has enabled that country to attract double the average level of EU inward investment. We need to bring taxes down.
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I welcome the fact that small business taxes will be reduced to 20%, and that we will support entrepreneurship by doubling the enterprise allowance to £10 million, so that those who go out and create businesses and wealth for themselves are encouraged to do so. In the process, they employ people, generate wealth, and pay the taxes that pay for the front-line services that we all want protected.
I was astonished by what the right hon. Member for Holborn and St Pancras (Frank Dobson), who I am pleased to see is in his place, said. He regaled us with all the benefits of red tape and told us all about how regulation was such a marvellous thing. In the real world of business, not a single business person would ever say that. I have not heard one business person further that argument.
I welcome the fact that we will implement Lord Young’s review in full, and that we will ensure that companies that employ fewer than 10 people and genuine start-ups will be exempt from domestic regulation. That is a step forward.
I also welcome the support that we are providing for the young. There will be 50,000 new apprenticeships, increasing to 250,000 over the period of this Parliament, and the work placement schemes—the 80,000 places that we heard about earlier. We will also double the number of university technology colleges from 12 to 24.
I am pleased that something was done on fuel, particularly for rural areas such as mine in Central Devon, and I am particularly pleased about the rise to 45p of the tax-deductible mileage allowance, which will help many voluntary organisations that rely on voluntary drivers. I also welcome the fact that the Budget is fair in raising the tax threshold, because it means that we will take more of the poorest hard-working people in our land out of tax altogether. That is the right and the decent thing to do. I shall conclude now—because I am aware that others wish to speak—by saying that this is a Budget for growth, it is a Budget that stands for enterprise, and it is a Budget to which Labour Members have no answer.
8.55 pm
Gemma Doyle (West Dunbartonshire) (Lab/Co-op): As we debate the Budget it is deeply disappointing, but not a bit surprising, that Labours Members are once again forced to highlight the impact that the Government’s approach is having in our communities. The Budget was more of the same. The Chancellor has confirmed that he will not alter his course, in spite of the pain it is causing to ordinary families. The Government’s cuts are too deep and too fast, and they are hurting. In my West Dunbartonshire constituency the jobless total is at its highest for well over a decade, and the predictions are that many more people will lose their jobs.
Pensioners are feeling the pain of the VAT rise and now, thanks to the Budget, will be hit with another attack on their income, because the Government are doing what they promised they would not do and slashing the winter fuel payment. Shame on them. And let us not forget that pensioners will lose thousands of pounds through the Government’s plan to link public sector pension rises permanently to the consumer prices index rather than the retail prices index. The Government say that that is necessary to reduce the deficit, but pensioners now, and those who will collect their pensions
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in years to come, will continue to see the value of their pensions slashed long after the deficit has been paid off. That leads us to conclude that the changes are an ideological measure intended to make pensions much less generous.
The Government say that it is okay to cut public sector jobs because the private sector will fill the gap. Perhaps that will be achievable in some areas—I really hope it will—but in my constituency there are 35 unemployed people for every job vacancy. The Government’s approach, therefore, is breathtakingly complacent and reckless as far as my constituency is concerned. The fact that in many parts of the country there are such high numbers of people out of work compared with the number of vacancies goes to show just how out of touch the Government are, if they think that the private sector will come to the rescue.
Furthermore, the Government’s plans to equalise the state pension age earlier than previously planned and at a greatly accelerated rate means that hundreds of thousands of women in their mid-50s will lose thousands of pounds. This change is fundamentally unfair on women who have planned carefully for their retirement. It cannot be fair that with just seven years to prepare and plan, they find that they must work an extra two years before being able to draw a state pension. In contrast, men of a similar age have been given eight years’ notice of a one year change. On Friday in Dumbarton I met a woman who said that she could not continue to meet the physical demands of her job for that extra time. What is the Government’s response to such women? They are not arguing that the state pension age should not be equalised, and neither am I, but the Government are going about all this the wrong way.
The cuts will impact hard on vulnerable people. I support the basic principles of welfare reform—trying to simplify the benefits system and doing all we can to help people into work where they are able to work—but the Government are going too far. Imposing an arbitrary 20% cut to the bill for disability living allowance proves that the Government’s approach is ill considered, and by publishing the Welfare Reform Bill before they have finished consulting, they cannot even pretend that they have taken into account the impact on the vulnerable people who will be affected by these changes. Scrapping the mobility component of DLA for people in residential care shows pure indifference to the needs of millions of people with disabilities who need vital support. It is an outrageously unfair cut that will leave many disabled people trapped in their homes. We had an intervention earlier from the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), but we still have not cleared up the confusion on this issue. Earlier the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), who is not in his place at the moment, said from a sedentary position, “Stop frightening disabled people.” Let me be very clear with the Government Front-Bench team: it is their reforms that are frightening disabled people.
I have been contacted today by a number of individuals and charities that fear that the new work capability assessment will discriminate against many seriously sick and disabled benefits claimants, including, for example, blind people with guide dogs. The Government need to think again before rushing through any changes in that area.
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The Government’s cuts are fundamentally unfair and completely contradict the claims that we are “all in this together”. They are driving up unemployment, cutting lifeline support for ordinary families and pensioners, and targeting women and vulnerable people. In response to a point made by the hon. Member for Mid Norfolk (George Freeman), let me say that public sector workers pay taxes too. It is ridiculous to suggest that they do not contribute to the economy of this country. Ordinary people are being forced to pay the price of the excesses of the bankers, while the banks themselves have been given a massive tax cut by the Government this year. The huge march in London at the weekend showed that the mainstream majority across the country want the Government to change course. Sadly, the Budget was just more of the same.
9 pm
Neil Carmichael (Stroud) (Con): It is a great honour to speak in this important debate. I am mindful of the contribution made by the right hon. Member for Oldham West and Royton (Mr Meacher), who talked about the importance of growth. He recognised that the economy would start growing soon and suggested that this would yield a considerable amount of additional money for us to spend. He is quite right, and I welcome that admission. However, he is completely wrong to think that growth will simply happen without our tackling the deficit. That is what we must do, which is why the Budget is essentially fiscally neutral: we have already set out plans lasting for four years that will deliver the outcomes that we need for growth. That is why the Budget is all about growth, and I want to focus on those important issues.
First, one reason why I was not marching in London on Saturday—although I would not have done it anyway—was that we were celebrating the Chancellor of the Exchequer’s announcement of massive investment in infrastructure in my constituency, with the Stroud to Kemble redoubling. That kind of development really matters. My constituents are delighted to know that we will have a better way of getting to London. Businesses are already gearing up for more investment, and there is a general feeling that the scheme will lead to more prosperity. That stands in sharp contrast with, for example, the haphazard way in which the regional development agency attempted to promote growth in our area. Indeed, it was more likely to end up building houses than promoting factories. I welcome the fact that the Government have invested so wisely, and they are doing so elsewhere in the country too.
The second important thing is the announcement about the green investment bank, with £3 billion to start with. That is a great start, and is exactly the sort of investment that we need—certainly in my constituency, but across the board too. I look forward to the day when the green investment bank can start raising capital on its own. I understand why there is caution about that, but we have made an excellent start and the green investment bank will deliver some important things.
The third important thing—my right hon. Friend the Secretary of State mentioned this in his opening speech, and I will develop it—is giving people the opportunity to get to work. Once people are in work, we need to ensure that they benefit from appropriate training, which is why I welcome the emphasis on training and apprenticeships. For far too long under the Labour
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Government, we were effectively training people up to a standard that was good, but not good enough: it was just level 2, and we want level 3. We should learn a few lessons from Germany’s export-led recovery, one of which is that good training matters. I therefore celebrate the Government’s efforts to deliver really good training for our young people.
It is important to mention planning, too. We need a more flexible and collaborative planning system, involving those being planned for—home owners and local communities—businesses and local authorities. We should see more agreement at an earlier stage, so that things happen more smoothly. We do not want to see the kind of attitude that we have seen in the past, which at worst has involved planning by appeal— and, sometimes, not a huge amount getting done. I welcome those changes.
I also welcome the measures on fuel. I have had a lot of complaints from my constituents about the rising cost of fuel, and I understand them. We are in a rural area, and we have a large number of haulage firms. For them, the changes in taxation will be welcome. We must stick to a fiscally responsible approach to public expenditure, but we need growth, and we need to be active in promoting it. The right hon. Member for Oldham West and Royton was correct in saying that growth would go up, and that it would do so on the basis of investment, good training and a sensible taxation strategy.
9.5 pm
Alex Cunningham (Stockton North) (Lab): Like others, my speech will focus on people. The number of unemployed claimants in my constituency is now 3,812, which is 9.2%. In the north-east of England, despite the progress made over the past 12 years in diversifying our industrial and business base, we still have the highest rate of unemployment in the whole country, at 10.2%. Even more worrying is the fact that 23% of our 16 to 24-year-olds are out of work. It is against that backdrop that I want to speak today.
The worst of the cuts are yet to come. Thousands of public and private sector workers are set to lose their jobs, and the cuts are being front-loaded, leaving local authorities with no choice but to make quick savings by making staff redundant. My own very efficient local authority, Stockton borough council, is faced with having to make savings of £29 million over the next four years. The Chancellor is effectively throwing hundreds of thousands of people out of work, but he is passing the axe to the local authorities and leaving them to do the chopping.
Let us not forget that recent analysis published by the TUC found that there were almost 10 applicants for every vacancy in Labour-held constituencies. The figure in Tory constituencies was 4.5, and in Liberal Democrat areas, it was 6.1. That is because the cuts are hitting the poorest communities the hardest. Recent research into the impact of the cuts reveals that all but two of the 20 worst-hit councils are in the bottom 20% most deprived council areas in England. It cannot be fair that low and middle-income neighbourhoods should carry the heaviest burden because of the Government’s choices.
We are told that there is no alternative, but there is a choice being made by the Government to cut far too fast. Under Labour, the economy was heading in the
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right direction. It was growing at 1.2% when Labour left office. In the last quarter of 2010, however, it had shrunk by 0.6%. So, under this Tory-led Government, growth has gone down last year and this year, and it will go down next year. The Chancellor blames the poor economic performance on the wrong type of snow, yet Germany and the US suffered from similar Arctic conditions last winter and their growth figures are not so grim.
Inflation is up, and unemployment is up. It is becoming increasingly clear that the Tory-led Government’s plan for the economy is, yes, hurting but not working. Yet we are repeatedly told that there is no plan B. What we have instead is a real-life economic experiment, and the disgraceful thing is that it is completely politically motivated. The coalition hopes to get the worst of the pain out of the way before the next general election. What an irresponsible way to deal with our economy, and with people’s jobs and lives.
What is the Government’s response to this bleak outlook? We have had the announcement of the local enterprise partnerships, but with no money. The Budget announced 21 enterprise zones, including one in the Tees valley. I hope that both those projects flourish and create much-needed new jobs, but the reality is that their funding is a fraction of the funding that was available for regional growth through the now abolished regional development agencies.
What are the Government doing to address the fact that almost 1 million 16 to 24-year-olds are out of work today, the vast majority of whom are desperate for a job to kick-start their adult lives? The budget announced just 40,000 two-month work experience placements a year, and an extra 12,500 apprenticeships a year. That will not deal with the tip of the iceberg. I fear that there will be a lost generation, which will cost this country a great deal, economically and socially, in the years to come if we do not tackle the problem head on. The Government’s Work programme also gives me cause for concern. Every person who receives incapacity benefits is to get a medical reassessment, and huge numbers face being moved on to the jobseeker’s allowance, losing a third of their payments, if they are found to be fit enough to work. Many of them might not be.
As a member of the Work and Pensions Select Committee, I recently visited Burnley, where we spoke to people who had been part of a pilot for these assessments, and some of the stories we heard were very worrying. The test has been severely criticised by groups such as Citizens Advice and some argue that it is not fit for purpose. I look forward to the Committee’s further inquiry into that matter.
Clearly, the proof will be in the pudding, but even if these people are moved on to jobseeker’s allowance and are able to get the comprehensive support they will need to make them job-ready, they then face finding work in a tough environment, competing against people who might recently have been made redundant and against all those young people for fewer and fewer jobs. This will be tough enough in Tory constituencies, never mind those like my own in Stockton North and throughout the north-east. The Government need to think again about providing realistic incentives to create jobs and help people back to work, while still protecting the most vulnerable.
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The real spending cuts are only just starting to hit people. My real fear is that we are facing a jobless recovery. This would be a disaster for Teesside and the north-east, which, as I have already said, suffers from the highest unemployment rate in the whole country. The Government must do much better.
9.11 pm
Priti Patel (Witham) (Con): I am delighted to contribute to what has been a quite well-subscribed Budget debate, particularly because this Budget outlines how Britain can earn its way in the modern world. It is a Budget that seeks to reform the country’s economy and regain the ground that Britain has lost in the world economy.
Ministers on the Treasury Bench should be congratulated on bringing forward a package of measures that, against the backdrop of the most corrosive structural deficit on record, will provide practical and lasting measures to support hard-pressed families and people back into work, to help businesses grow and to stimulate long-term economic growth.
At the heart of this Budget is a clear message to make Britain a better place in which to do business. From the biggest multinational companies to the newsagents, convenience stores and beauty salons on all our high streets, which all employ our constituents, the Budget has recognised the insurmountable burdens that they have faced year on year with an unequivocal aim to give business the long boost that it needs to invest in jobs and grow in Britain. With the Government now accounting for half of our economy, we need a new economic model underpinned by investment, manufacturing and exports.
In my view, this Budget has kick-started the reform with an essential tax cut to business, rate relief for small firms, a doubling of entrepreneurs’ relief and more support for research and development. There are now clear plans to scrap the burdens of regulation that have cost business billions every year. It is absolutely right that we have brought in a moratorium on all new regulations for our smallest companies. I put out a challenge to the Treasury Bench right now: the Government should host a bonfire of the excessive regulations, including many of the gold-plated regulations emanating from Europe as well as those that hinder employment opportunities and stifle enterprise and opportunity across our country.
In the Witham constituency, more than 82% of jobs are in small and medium-sized businesses. That equates to more than 25,000 local people and their families who are dependent on the prosperity of thousands of businesses in high streets, town centres, industrial estates and in the rural communities. The recession has hit them all really badly, but many have survived through their own dogged determination, and it is the inherently Conservative policies of the Budget that provide the light at the end of the tunnel for them.
I know that businesses in my constituency will relish the additional opportunities to tap into the new apprenticeship schemes that are coming on board. With more than two thirds of all apprenticeships in small firms, I can assure this House that businesses throughout Witham and Essex are ready to respond to the Chancellor’s call to action and to take on more new apprenticeships. Young people are looking for work and by creating these apprenticeships and the right conditions for growth, local jobs will certainly be created.
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Finally, Labour has left the British economy unbalanced, with far too much reliance on debt, household borrowing and the City of London and far too little emphasis on manufacturing, exports and balanced growth across the country. The creation of the new enterprise zones will, in my view, drive growth and new jobs everywhere. I have to say that I am tremendously disappointed at the negativity coming from Labour Members about the enterprise zones. If they do not want them in their constituencies, I can tell them that the county of Essex will welcome them with open arms.
The new zones will be targeted at areas with high growth potential, and the House may be not be surprised to learn that I know of one such area. Essex—including my constituency—would benefit from an enterprise zone, because it is a county of entrepreneurs. We not only work hard but save, and we have real drive, entrepreneurial spirit and flair. Our county consists of both urban and rural communities. Surely the point of enterprise zones is that while we should not focus disproportionately on urban centres, we should recognise that the urban parts of our communities offer much in terms of innovation and employment opportunities. There is a significant skills base that we must tap into. My constituency contains businesses ranging from window and glass makers to chocolate and jam makers to high-tech sat-nav companies.
I commend the Budget, which is not just good for jobs and growth but good for my constituency.
9.16 pm
Glenda Jackson (Hampstead and Kilburn) (Lab): I must tell the hon. Member for Witham (Priti Patel) that her speech was a bit like “all our yesterdays”. The one thing that she did not seem to think would create jobs in this country was slashing the national minimum wage, and I was surprised that she did not suggest that.
Today’s debate opened with one of the most lamentable speeches that I have ever heard the Secretary of State for Work and Pensions deliver, in which he presented—as have other Government Members—the rosy view that the Government’s proposals will automatically create jobs, that there will be people who will be qualified to fill them, and that the future will be golden. If we look at the Red Book, which Government Members have waved in our faces on many occasions, we see that what the Government are setting in train is a Budget that will create a vast increase in unemployment. Unless they intend to abolish the whole benefits system at a stroke, an astronomical amount will have to be spent on unemployment benefit and passported benefits—although, of course, they may wipe all those out as well.
Government Members have the audacity to accuse us of frightening some of the most vulnerable people in our society, but it is not us who are frightening them. In my constituency and in those of Government Members, it is the Government who seem to look at nothing but the bottom line. It is they who introduce swingeing policies which, nine times out of 10, do not mesh, and the Secretary of State responsible for delivering those policies does not know what impact they will have on the ground.
A precise example from today’s debate was what I understand to have been the initial proposal from the Department for Work and Pensions in regard to jobseeker’s
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allowance and housing benefit. It was proposed that 10% should automatically be slashed from the housing benefit of anyone who had failed to find a job after 12 months on jobseeker’s allowance despite doing everything demanded by the Government—and that is housing benefit which is being capped.
It is to his shame that, in his opening speech, the Secretary of State ran again with a canard that he is on record as saying he hoped would not be fulfilled: that the majority—he did not use the word “majority”, but it was implied—of people on housing benefit are living in properties where the rent is £100,000 a week. Everyone in the House, and certainly the Secretary of State, ought to know that the majority of people claiming housing benefit are pensioners, people with disabilities, or people on very low pay.
Many hard-working families in this country are entirely dependent on housing benefit. Nowhere is that more marked than in constituencies such as mine in central London, where housing, travel and training costs are vastly above the national average. However, nothing in the Budget appears to acknowledge regional variations, which will of course affect the potential for people to find jobs even if the private sector is capable of providing them.
Another remarkable feature of many speeches from Government Members was their contempt for public sector workers. It seemed that none of them wanted additional nurses in their hospitals, additional doctors in their surgeries, or additional teachers in their schools. Certainly we know that they do not want more policemen, because their numbers are being slashed all over the country, as will be the very people on whom the most vulnerable in our society depend.
That, of course, is the other great canard. This Government came into office saying that they would take tough decisions. They said the road was bumpy, but that they would protect the most vulnerable. They have betrayed the most vulnerable, however—the very young, the very old, people with disabilities. Women are a marked target for this Government. We women are clearly expected to have the broadest shoulders in the country because the cuts will fall on us. The Government are expecting women to go back to work—if there is a job to go to, of course—while at the same time taking away child care support, which is the absolute bedrock that enables a woman with children to go back to work.
The Government have markedly failed to think through their grievous policies. This is not a Budget for investment or growth. Rather, this is the Budget of a group of people who have markedly failed to understand the realities of the situation facing millions of people in this country who do want to work, who wish to take this country forward, and who have optimism and believe in all of us. The people who do not believe in the people of this country, or indeed in this country itself, are the Conservatives.
Mr Deputy Speaker (Mr Lindsay Hoyle): One more Member wishes to speak, but unfortunately I cannot call him. I apologise for that. The Chancellor has also sent an apology, as he has been called away to the G20.
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9.21 pm
Ms Angela Eagle (Wallasey) (Lab): I am gutted that the Chancellor is not present to listen to the winding-up speeches on his Budget.
In the Budget, the Chancellor had the opportunity to help millions of British people and families who are being hit hard by the biggest squeeze in their living standards for 80 years. He also had the opportunity to admit that ploughing full-steam ahead with cuts at the speed and on the scale that this Government have planned is about to have a devastating impact on people and communities up and down the country. People wanted some hope for the future from this Chancellor and this Government, but what they got was a Chancellor and a Government on autopilot. They got a man who refuses to see that the economic storm clouds are gathering around us once more; they got a man who will not admit that his cynical electoral strategy of scaremongering about a sovereign default has collapsed consumer confidence and weakened our prospects of recovery; and they got a man who has been so boxed in by his own political strategy that his only resort is to glory in the folly of sticking to his plan A, even if all the economic indicators show that it is hurting but it is not working.
Of course we accept that the deficit has to be reduced, but we disagree with the sheer speed and scale of the Government’s cuts plan. In the Chancellor’s self-styled emergency Budget last June, he embarked on a risky and extreme experiment with our nation’s future. He chose to cut the deficit deeper and faster than was economically necessary; he chose to cut it faster than any other major economy; he chose to order the largest spending cuts since the second world war with a nasty ideological relish; and he was cheered to the rafters by Members of both coalition Government parties in a distasteful display of enjoyment that none of us on this side of the House will ever forget.
Some £80 billion is to be sucked out of the economy in the next four years, in cuts to services and the public sector. With tax rises included, £126 billion in all will be withdrawn from the economy by 2015. Only Iceland and Ireland are cutting faster than this Government have decided that we should cut, and now the Chancellor is claiming, with his usual modesty, that he has rescued the British economy, but aside from his own vainglorious rhetoric, what are the facts actually telling us? The truth is revealed by the Office for Budget Responsibility: there has been a significant deterioration in economic performance since the Chancellor’s slash-and-burn Budget last year. As its latest forecast demonstrates, things are getting worse, not better, and that is before most of the cuts have really begun to bite.
After just 10 months of the Chancellor’s fiscal masochism, virtually all the important economic indicators are now moving in the wrong direction. Consumer confidence is at a 20-year low; inflation is at more than twice the Bank of England’s target; the VAT rise has pushed prices up, and the OBR expects them to rise even further this year; unemployment, which was falling last year, is now at a 17-year high—in my constituency, 22 people are now chasing every job; and the growth forecast has been downgraded again and again and again.
Because of this lower growth and higher inflation, the Government have admitted that they will have to borrow £46 billion more than they planned in November.
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We warned the Chancellor that huge and rapid cuts in public expenditure risk choking off growth, thereby increasing unemployment, and that that might make the deficit worse rather than better. Last March—conveniently before the election—the right hon. Member for Twickenham (Vince Cable), now the Business Secretary, said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.
I could not agree more. It is a pity that he, like the rest of his party, is now supporting an economic policy which is the exact opposite of the one that he campaigned for.
We warned the Chancellor last year that he needed a growth strategy, alongside any deficit reduction plan, if the economy was to be restored to balance without doing untold damage to our social infrastructure. We waited and waited, but meanwhile growth faltered and then stalled. The economy shrank by a shock 0.5% in the last quarter of 2010. The Chancellor crossed his fingers and blamed the snow, and the Government’s spin machine then cranked into action. Just two weeks ago, at the Tory spring conference, the Prime Minister and the Chancellor promised to make this a pro-growth Budget. The Chancellor said that it was going to be “unashamedly pro-growth” and the Prime Minister went further, by declaring that it was going to
“tear down the barriers to enterprise and be the most pro-growth Budget this country has seen for a generation.”
If we look behind all the Government hype and the propaganda, and check out what really happened last week, we see something a bit different. The Chancellor actually came to this House and downgraded the growth forecasts—they are down this year to 1.7% and down next year too. Far from being a pro-growth Budget, this is actually a no-growth Budget which puts Britain into the slow lane. To distract attention from that inconvenient fact, the Government published, alongside the Budget document, “The Plan for Growth”, a self-styled “urgent call for action”. But this much-trailed growth plan achieves nothing in the short term, when growth is in such short supply. It consists of loud invocations of motherhood and apple pie, and it rehashes the familiar laissez-faire mantras shared by the Orange Book Liberals and the Thatcherite Tories. It is nothing more than a mish-mash of reheated, failed 1980s Thatcherite orthodoxy.
The passages on the Government’s growth strategy in the Chancellor’s speech were so riveting that the Justice Secretary actually fell asleep on the Front Bench right in the middle of them. We sympathised with him, but the 50 punters who had put money on at odds of 16:1 that he would sleep during the Budget were richly rewarded. Now I hear that Ladbrokes has slashed the odds that there will be a double kip from him some time in the next year.
The Office for Budget Responsibility was almost as unimpressed as the Justice Secretary, because page 39 of its report on the Budget states:
“we judge there is insufficient evidence at this stage to adjust our trend growth assumptions in light of these measures.”
In other words, despite all the ministerial proclamations, all the Government propaganda and all the cynically pre-arranged third-party endorsements, this is still a no-growth, go-slow Budget.
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The Chancellor’s extreme austerity programme will suck demand out of the economy, and if growth continues to falter the plan will be irrelevant. We know that inflation is higher than it should be and unemployment is higher than it should be: there will be 30,000 fewer jobs this year and 80,000 fewer next year, and 200,000 more people will be unemployed by the end of this Parliament. I do not know what the Secretary of State for Work and Pensions finds so amusing about that.
Two weeks ago, at the same Tory conference where the Chancellor promised to make his Budget unashamedly pro-growth, he also promised to listen to public concern about the cost-of-living crisis. It is all very well listening, but it is real help that people need. Instead, we got a Budget in which the Chancellor gave a little with one hand but took away much more with the other. The well-trailed £45 tax cut next year is more than clawed back by the decision to raise national insurance thresholds only by the lower consumer prices index. That is a small-print stealth tax that, funnily enough, was not briefed in advance to the press but will raise more than £1 billion extra in income tax by 2015. The VAT rise is already costing a family with children an extra £450 this year alone. The banks have been given a tax cut while families and children bear the brunt of the spending cuts. Even the Chancellor has almost stopped claiming that we are all in this together and he can hardly keep a straight face when he does.
Pensioners were excluded from the tax cut con, only to discover that their winter fuel payment will be lower, too, by £50 or £100. The Treasury explained that that was not actually a cut but merely allowing a top-up to expire, but it seems that no one had told the Deputy Prime Minister that. He clearly had not even bothered to read the Budget that he had just signed off, because during a radio phone-in last Thursday he was questioned about this and claimed at first that winter fuel payments had been increased. He then resorted to accusing my right hon. Friend the shadow Chancellor of frightening people by
“throwing around a lot of…wild allegations”.
The trouble for him was that those wild allegations were actually part of his Government’s plans and, worse still, he had agreed to them. We all know that he will not accept any paperwork after 3 o’clock in the afternoon, but I really think he ought to have made an exception for the Budget. He should really learn that the pesky details in big documents can sometimes be quite important.
The headline-grabbing centrepiece of the Budget was the 1p off petrol duty announced with a great flourish and much waving of Order Papers on the Government Benches, but that is a paltry reduction when compared with the 3p a litre increase that the VAT rise has already added to fuel bills. I wonder how many Members of the parties opposite would have cheered quite so loudly if they had read the small print and understood that the Chancellor has merely delayed and not cancelled future fuel duty increases. Duty is due to rise by 3p a litre on 1 January and to rise again in August next year. VAT at 20% will only make it worse.
There is also mounting evidence that the fuel duty cut has not been fully passed on to motorists, despite the Chancellor’s pledge to watch “like a hawk” to see that it was.