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Michael Connarty (Linlithgow and East Falkirk) (Lab): The hon. Gentleman makes an assertion that every analyst I have read denies. The lack of investment—the amount of money held in corporate bank accounts that is not being invested—is a major problem for this economy, so where does he get the evidence of this rising confidence in investment?

Mr Tyrie: I have not brought all the survey data along with me, but I can supply it to the hon. Gentleman if he is interested. He makes a valid point, which is that there is a lot more work to be done fully to restore confidence to the point that is needed to unlock cash piles on the balance sheets of some of Britain’s larger businesses. For smaller businesses, investment is often not taking place at the level we would like, although it is much better, because the small and medium-sized enterprise lending market is still relatively weak. The banks are not supplying them with the resources they need. We desperately need to break down what still amounts to a banking cartel on lending. We need to get to the point where these small firms—the new firms that create so much wealth in Britain—can get access to the lending they need.

Mark Garnier (Wyre Forest) (Con): Does my hon. Friend agree that a very good indication of confidence is the extra 2 million-plus jobs and 450,000 new businesses created in the past five years?

Mr Tyrie: I agree entirely, but I will not linger on the point, because I am sure that my hon. Friend will be making his own speech in his own way very shortly.

What has also happened is that many people have found ways of improving quality and value for money in the goods and services they provide, whether in the public or the private sector. That has generated a good deal of force for the recovery—something that is not fully captured in productivity statistics. Governments do not create wealth; they either get in the way of it or create the conditions for it.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Will the hon. Gentleman give way on that point?

Mr Tyrie: If the hon. Gentleman will forgive me, I would like to make a bit of progress now.

This Government have helped to create those conditions for growth in at least three important ways. First, in the early part of the Parliament, they authorised £175 billion of extra quantitative easing. That was crucial. Secondly, they allowed the so-called automatic stabilisers to kick in—that is, allowing the deficit to widen as eurozone demand collapsed. It is important to recall that the Chancellor was faced, right at the start, with a weakening of demand for our exports in European markets. That caused a great deal of difficulty for British industry. Thirdly, in my view, the Chancellor showed a good deal of tenacity. The coalition has contributed a great deal to restoring confidence. Few predicted that it would last five years. To be frank, I did not think that the Liberal Democrats had it in them to stay the course, but to their credit they have stuck with it, and for that they deserve a good deal of praise.

Sir Robert Smith: I thank the hon. Gentleman for his recognition of the coalition, which the broadcasters have lost sight of in reporting what happens in the

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House. The Budget specifically talked about how Government can get in the way of business, but has it not shown how the Government can, with the right engagement, take positive action, as they have with the North sea oil and gas industry? Entering into dialogue and bringing in incentives will see the industry through the downturn and enable it to reach maturity so that we get a long-term benefit; without the industry, the oil would be left in the ground, and we would get no tax.

Mr Tyrie: I wonder where the hon. Gentleman represents.

Broadly speaking, the hon. Gentleman is right, although I wonder whether we needed quite as many changes to the North sea oil tax regime during this Parliament, particularly since we began it by announcing there would be stability for the medium term in the overall fiscal regime. It can be argued, however, that North sea oil is a special case, and not like the rest of the tax system. Frequent changes in the tax system nearly always have an economic cost in the bottom line for growth.

My colleagues on the Treasury Committee and I will collect as much evidence as possible on the Budget before Prorogation. We will hear from the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chancellor. One measure that was effectively announced before the Budget is the extension of pension freedoms to those who already possess an annuity, and we will take evidence on that major change. Likewise, we will look at the savings measures that have just been announced, not least the savings allowance and the change to the structure of individual savings accounts. Both of those measures sound extremely significant, given that we must revive the savings culture. The Committee will ask about other measures that the Chancellor announced today, including making sure we can be confident that £3 billion will be made available by the tax avoidance measures, the North sea tax regime to which the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) referred, and of course the increase in the personal allowance. There is a great deal for the Committee to do in a short space of time before the election, and we will get on with it as best we can.

We will hear a lot more argument about who is better off. A key recommendation of the Committee in 2010 was that the Treasury and the Chancellor should be required to provide much more information about the distributional impact of tax and benefit changes—who wins and who loses—and, to their credit, they now provide much more detailed analysis at each Budget and autumn statement. For decades, successive Chancellors—my right hon. Friend’s predecessors—were very reluctant to provide that analysis, but they now do so. We will consider the published distributional analysis in the light of the debate, about which we have already heard, about who is better off and who is worse off. It is already clear from the data that almost everybody has borne some of the burden of austerity one way or another, but also that everybody has now almost certainly gained overall, and I will come on to that if I get the chance.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): In relation to the distributional analysis, is the hon. Gentleman concerned that the Institute for Fiscal

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Studies has quite clearly shown that the situation for families on the lowest incomes has worsened, and that the Equality Trust has said that £39 billion has been taken out of the economy as a result of such inequalities?

Mr Tyrie: An answer to that would need to be quite long and involved, but I invite the hon. Lady to come to our hearing with the IFS because that is a central issue. I am not at all sure that the IFS got it quite right on the basis of the published data. In any case, if I may say so, it did not quite say what she purports it to say.

Helen Goodman (Bishop Auckland) (Lab): Will the hon. Gentleman give way?

Mr Tyrie: I will give way one more time, and then attempt to wind up.

Helen Goodman: The Chairman of the Select Committee is trying to make the case that there have not been distributional problems, but as I am sure he knows, the truth is that according to the Government’s own statistics, there are 2 million more households living in absolute poverty in this country.

Mr Tyrie: We will be looking at such issues. I was not trying to make that case, or if I was, I was also pointing out that, in the early stages of the recession created by the financial crisis, almost every sector of society had borne some of the burden. I think that the Hansard record will show that I made that point.

We have to rely on conflicting survey data from the Office for National Statistics. The Bank of England has complained about the quality of data, and a heap of other people have said that the data need to be improved. The Treasury Committee ought to look at that in the next Parliament. Some data suggest that the man in the middle is not much better off even in nominal terms—the point was made by the Leader of the Opposition—which is based on the annual survey of hours and earnings. However, another ONS annual survey shows that the man or woman in the middle who has been in continuous employment has done well since 2010, both in nominal and real terms. Those data need to be considered very carefully, because the overwhelming majority of people in work have been in continuous or near continuous employment for the past five years. The data look quite persuasive as an overall picture of living standards. In answer to the hon. Lady’s intervention, the Treasury Committee will certainly consider that matter.

Whoever wins the next election—I hope the whole House will understand that I am very biased about who I think will win—all these tricky issues will need to be considered carefully. The Committee will need to set to work on further research into some of the points and policies covered in this Budget and over this Parliament. Competition in lending and banking has already been mentioned, and we must find a way of getting much greater competition in the banking sector. In relation to doing more to encourage long-term savings, the measures announced today are only a start, because something has been seriously wrong with the savings culture in this country for a long time. The Committee has already said a good deal about reforming and simplifying the tax system, and more needs to be done. The fact that some parts of the tax system are still hopelessly complex

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provides an opportunity for tax avoidance and evasion, reduces the yield and is bad for overall economic performance. There are also the economic effects—by no means all good—of current energy policy, among many other important energy issues, its reliefs, allowances and public spending subsidies.

What matters most are the measures that will succeed in releasing the energies of the British people. That used to travel under the name of supply-side reform. The next Parliament, with the next Government inheriting a more stable economy, will be an opportunity to get more supply-side reforms under way. I have a clear view, as do many other Members, about how to accomplish that, but it is absolutely essential to move on from the deficit reduction task to that of ensuring we improve the overall economic performance of the British economy in the long run.

2.8 pm

Alison McGovern (Wirral South) (Lab): It is an honour to follow the hon. Member for Chichester (Mr Tyrie). I have listened to his speeches during this Parliament, and he has offered us his wisdom and made a serious contribution. I am very glad that he finished by talking about deficit reduction, because that is how I want to start my speech.

I am afraid that I must begin with what I see as the Chancellor’s failed record on deficit reduction. We must not let people in this country forget what he promised when he came in and wrote the emergency Budget in 2010. He told people in this country that he would close the budget gap by the end of this Parliament, but he has failed to do so. Despite the most severe cuts to some of our communities in this country, he has failed in the objective he set himself. That will leave the next Government, whoever they are, with a serious and significant challenge. I will say more about the right way to meet that challenge.

The Chancellor has also failed on two of his other targets. Let us not forget the target he set himself on protecting our credit rating, which he failed. Given that the Chancellor’s target was to get debt falling, not rising, in this Parliament, do we really expect the British public to accept that a mere 0.2% is good enough to meet that target? That is meeting the target by the merest technicality. We have sort of and a little bit turned the corner on reducing debt, and that is supposed to be okay with the British public. Well, that might be okay for the Tory party, but it is not okay for my constituents.

The Chancellor has failed the tests he set himself, but—much more importantly—he has failed the test that the country set for him, which was to put money in the pockets of British people. I want to set out four ways in which the next Government will get that right. On the deficit, we will close the gap in the right way. We will not do as the Chancellor did and claim that severe austerity will do the job and that we just need to cut indiscriminately to fix the gap.

Caroline Lucas (Brighton, Pavilion) (Green): With those cuts decimating some of the poorest people in society and the need to leave at least two thirds of fossil fuels in the ground if we are to avoid dangerous climate change, does the hon. Lady agree that handing out yet

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more eye-watering tax breaks to multinational oil and gas companies is a deeply irresponsible use of public money?

Alison McGovern: I am glad that the hon. Lady focuses on those with the least. I have been to Brighton and seen people rough-sleeping, and it worries me greatly that the council there is insufficiently focused on those with the least. She also mentioned wrong choices, and I want to say a little more about the right choices. First, we need to focus on the financial services industry, because it worries me that the Chancellor has defended bank bonuses on many occasions, not least in Europe. That is why I want to see us raise more through a bank levy, which we will invest in the next generation through our pledge for free universal child care for three and four-year-olds from working families.

Mr John Redwood (Wokingham) (Con): In the final year of the five-year forecast, the Chancellor will increase public spending by £38.1 billion in a single year. Does the hon. Lady think that is enough? If not, how much more would she like?

Alison McGovern: If the right hon. Gentleman had been listening to my speech, he would have heard me say that we need to make the right choices and show our priorities. As I was saying, the right way to close the budget deficit is to focus on taking money through a bank levy on the financial services industry and investing that money in the next generation and in hard-working families in Britain. I am pleased that we have confirmed that the next Labour Government will have no requirement for new debt for our election pledges. That is the right way to go about managing the British economy.

The right investments matter. It matters whether we choose to invest in infrastructure for the long term. I am sorry that the rhetoric about investment is still not matched by the reality on the ground, and is still so heavily focused—as it has been over the past five years—on London and the south-east. Of course steel in the ground matters, but we also need to think about our education system as part of our country’s infrastructure. I am concerned that we have not heard a pledge from the Chancellor to match our commitment to fund education properly and to ring-fence that budget all the way through children’s lives.

While we are talking about the right balance and right investment, I want to talk about the north of England. I am in politics because I grew up on Merseyside in the 1980s and 1990s and I knew that the then Governments did not care very much about families like mine. I wanted to see a future for my friends and family in Wirral South in which they did not have to leave the place that they loved to have a successful career. Under the last Labour Government, that was happening. We had “The Northern Way”, which saw regional development agencies investing in the north. That was the right way to rebalance the economy, and it was working. Labour investment was working.

Today the Chancellor has tried to use rhetoric and spin to talk about a northern powerhouse that nobody in Merseyside believes in for a second. We have been living with the Chancellor’s true political priorities—a level of cuts not seen in the wealthier parts of the country. That is despite historical deprivation and the

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fact that we are still living with the consequences of a Tory Government who deindustrialised the north and provided no other options. “The Northern Way” and the regional development agencies were working under the last Labour Government, and that was the right way—not soaring rhetoric about northern powerhouses, but actual investment in the north—

[

Interruption.

]

If the Under-Secretary of State for Transport, the hon. Member for Devizes (Claire Perry), wants to intervene, she is more than welcome. As she does not seek to do so, I take it that she has nothing to say about the north.

David Rutley (Macclesfield) (Con): I am a Member from the north-west and I have shared platforms with the hon. Lady in the past. Does she not accept that, under the Northwest regional development agency and the infrastructures that her party put in place, the jobs that were created were public sector jobs? We now have a more sustainable platform of private sector growth. From memory, unemployment in her constituency is down by more than 30% in the last year—does not she welcome that?

Alison McGovern: I bow to no one in my applause when unemployment falls, but to say that Wirral, Merseyside and the rest of the north-west have not suffered from huge cuts to local government is to ignore the facts. I know that that is an argument that almost everyone in the north-west—perhaps with the exception of members of the Tory party—will recognise.

We need not just the right investment but the right protections. We have seen family budgets hit radically and hard, we have seen child poverty rise and, on the relative measure, we have seen people in the middle of the income distribution fall back towards the bottom. That is not offering families in our country the right protections—

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Will the hon. Lady give way?

Alison McGovern: I will not take any more interventions, because I might be here for a long time if I did.

We need a bank levy to fund 25 hours of free child care for working families with three and four-year-olds. That pledge alone will help 51,000 children in poverty and will be a real boost to their families’ incomes, which have been hit hard. Whatever the Chancellor says, and whatever the Tories try to convince themselves of, it is not only the London School of Economics and its analysis of the past five years that shows that the incomes of the bottom half have fallen while those of the top half have risen; the Treasury’s own figures now say that the bottom fifth has done worse. We need the right protections to ensure that when economic growth happens, it is not just for the few but real growth for the many. Rather than failed austerity, we need a truly progressive Government in favour of the many, not the few, and more than anything else we need a Labour Government.

2.18 pm

Mr Mark Hoban (Fareham) (Con): May I first refer Members to my declaration in the Register of Members’ Financial Interests?

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I commend the Chancellor for his Budget, which continues the themes of economic reform and fiscal consolidation that we have seen in each of the Budgets and autumn statements in this Parliament. It is that twin-track approach that has led to a fall in the deficit, putting the nation on a path towards a surplus in 2019-20, with one of the strongest growing economies among our competitors, falling inflation and a job-rich recovery confirmed by today’s unemployment figures.

It is absolutely vital that we continue the programme of deficit reduction. The previous Government spent beyond the nation’s means, increasing the deficit even when the economy was growing. In his speech, my right hon. Friend the Chancellor mentioned the fact that debt as a proportion of GDP increased in each year of the previous Labour Government. Even in the good times, Labour continued to spend more than the country could afford. The problem we inherited was not that the UK was under-taxed, but simply that the Government were spending too much. It has therefore been right that the bulk of deficit reduction has been borne by spending cuts.

I am pleased the Chancellor has reconfirmed our commitment to tackling the deficit after the next general election. It is wrong of both the Labour party and the Liberal Democrats to seek to slow the pace of deficit reduction. The longer the deficit takes to tackle, the more debt we will incur. Labour has failed to mention—I notice the Leader of the Opposition failed to mention it in his speech today—the £30 billion of cuts it has already signed up to. It is also pledging to spend £50 billion more than we are, which would require increased borrowing or increased taxes. The people of this country cannot afford borrowing on that scale, and to continue would be inequitable. There are three reasons why I think it is wrong.

Mr Redwood: I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.

Mr Hoban: That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.

Geraint Davies (Swansea West) (Lab/Co-op): Will the hon. Gentleman give way?

Mr Hoban: Let the hon. Gentleman answer this question: is it really fair for our children and grandchildren to pay the cost of debts we have built up? Let him answer that question.

Geraint Davies: Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?

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Mr Hoban: That is a remarkable argument. Is the hon. Gentleman saying that we should have cut further and faster? That is not the prescription of the shadow Chancellor or the Leader of the Opposition. They always said we were cutting too far, too fast. They cannot have it both ways. That is the problem and that is why the Labour party has no economic credibility: it has no coherent argument on the economy or on the deficit.

While interest rates are at historically low levels we can afford to service those debts, but when interest rates return to more normal levels, money that could be better spent on schools or hospitals will have to diverted to meet higher interest payments. The Chancellor today talked about the £35 billion we have saved as a consequence of lower interest rates. If we return to the economic chaos of the previous Government, will interest rates remain low? Will we not see an increase in the cost of interest payments cutting the amount of money that can be spent on health and social care?

Mr Andrew Love (Edmonton) (Lab/Co-op): I was struck by the hon. Gentleman’s comments about economic credibility. What credibility do the current Government have, given that they insisted they would eliminate the deficit in this Parliament but have achieved only half that?

Mr Hoban: I am surprised by what the hon. Gentleman says, because he is a member of the Treasury Committee and has looked at these things very carefully. He will have seen what happened in the eurozone in the first half of this Parliament. The headwinds from the eurozone—the OBR confirmed this—had a negative impact on the UK economy. We cannot ignore the impact of turmoil abroad on the strength of the UK economy. It is surprising that a respected Member fails to recognise the lessons of what has happened over the course of this Parliament.

David Rutley: I congratulate my hon. Friend on the powerful speech he is making. Does he also recall that the OBR spelled out very clearly, a year or so after 2010, that it had underestimated the real impact of Labour’s recession?

Mr Hoban: My hon. Friend is absolutely right. The problem for Labour Members is that when they are confronted with the facts, they hide. That is the problem they will all face in the course of the next 50 days. They have clearly not developed economic credibility, because their plans and message are confused. They have no idea how they would deal with the economy. All we know about Labour is that it will spend more and borrow more and tax more, the way all Labour Governments have behaved in office.

The final reason we should be moving towards a surplus and reducing the national debt is that if we continue to lock in debt at high rates, we are reducing the capacity of future Governments to withstand future economic shocks. One of the challenges we faced in this Parliament was that the high levels of debt racked up by the previous Government made it increasingly hard to put in place the measures to turn the economy around.

We cannot simply pretend to ignore, or rack up, unfunded spending cuts. We need to work hard to tackle the deficit to ensure debt falls as a proportion of

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national income, as it will at the end of this Parliament, to get the right messages across. Let us be responsible about how much we spend. Let us be responsible on taxation and spending. Running a surplus in the good times will help the economy when difficult times lie ahead.

Mr MacNeil: Does the hon. Gentleman not accept that this has been the slowest recovery from any recession just about ever? Research from the National Institute of Economic and Social Research shows that, had it not been for the austerity cult and the Government choosing austerity, GDP would be 5% higher and extra tax revenue would be about £32 billion—about a third of the current deficit. Cuts and austerity have cost not just the economy but people’s opportunities.

Mr Hoban: I am really not going to be lectured by a Member from the Scottish National party about economic realities. We heard in the Budget today that because the United Kingdom is together, we are able to support the North sea oil sector in a way it could not have been supported if the SNP had achieved independence, so I am not going to take any lessons on economic credibility from the SNP.

In preparing for this speech, the last I will make in this House, I looked back to my maiden speech. Unsurprisingly, it touched on the local economy. I highlighted the strength of the business community in Fareham and its low unemployment rate. I also talked about the pressures on public services and infrastructure from house building. Perhaps it is with this frame of reference that I should talk about the economic reforms the Government have introduced in the past five years.

Fareham’s economy is still strong. In 2010, unemployment was 2.2%; today it is 1%. Strong businesses have helped to contribute to that and they have benefited from the Government’s reforms. Lower employment and corporate taxes have helped businesses to recruit locally. The apprenticeship reforms introduced in the past five years have meant that Fareham businesses have taken 740 apprentices in the past year, compared with just under 600 in 2010-11. The reforms have led to a renaissance at Fareham college where, thanks in part to taxpayers’ money, it has opened a specialist advanced manufacturing centre to meet the growing needs of local business, as well as refurbishing its campus in Fareham.

In my maiden speech, I criticised the top-down housing quotas that characterised the old-fashioned approach to planning. They had failed Fareham. The Government’s planning reforms, focusing on securing consent through a bottom-up approach, have secured widespread consent for 6,500 homes to be built in the new community of Welborne. This new settlement has benefited from the local growth deal funding infrastructure improvements, such as the new all-ways junction at junction 10 of the M27. Whereas in the past infrastructure never quite met local needs, I am more confident now than ever before that new development in Welborne will not harm the quality of life of local residents.

One of the challenges we face in Fareham is getting young people on the housing ladder. The Help to Buy ISA announced today by the Chancellor in the Budget will help to make it easier for many young people in my constituency to get a home of their own.

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The economy of south-east Hampshire is dependent on good infrastructure, which is why I am pleased that the M27 is scheduled to be upgraded to a smart motorway in the next Parliament. I encourage my hon. Friends on the Treasury Bench to ensure that that is delivered in the first half of the next Parliament, not in the second half. Poor road and rail infrastructure makes it harder for those out of work in the older urban areas of south-east Hampshire to access employment opportunities in Fareham.

In taking forward the economy in south-east Hampshire, we have benefited from the abolition of regional development agencies and the introduction of local enterprise partnerships. I always felt that the South East England Development Agency neglected south-east Hampshire and focused its money and efforts elsewhere. The Solent LEP has had a relentless focus on economic growth in our community, playing an outstanding role in delivering all aspects of economic infrastructure in our community. I believe that our economic reforms and long-term economic plan have benefited Fareham and its residents and provided a route for further prosperity and security for local families. It has been an honour to serve those families over the last 14 years as their Member of Parliament, and I am grateful to them for the trust they have shown in me.

Through you, Madam Deputy Speaker, I would like to thank the staff of this House for the support they provide to Members of Parliament. Their work over the past 14 years has been invaluable and has supported me in becoming a more effective Member. It is ironic that I am making my last speech in front of you, Madam Deputy Speaker, as we sparred many times on Finance Bills under the last Government. One of the most important roles of any Government is economic stewardship. We need to provide jobs and growth for families and economic stability, which is vital to people’s confidence and well-being. I leave Parliament at the next election knowing that the economic future of my constituency is much more secure than it was five years ago. We should not squander those hard-won gains by losing the next general election.

2.30 pm

John Healey (Wentworth and Dearne) (Lab): It is a pleasure to follow the hon. Member for Fareham (Mr Hoban) in his last speech to the House. Like you, Madam Deputy Speaker, I faced him through the long hours of many long Finance Bills when he was on the shadow Treasury Front Bench. His reflective and loyal speech this afternoon was characteristic of the way he has served his party and Government. It is a shame he is not on the Front Bench this afternoon, because perhaps then he would not be leaving the House come Dissolution.

However, the hon. Gentleman has a problem, because, as the Leader of the Opposition said, this is a Budget that cannot be believed. I shall pick just two things that the Chancellor said during his Budget statement. He said that living standards were higher than when they entered office and that our economy was fundamentally stronger than it was five years ago. The gap has never been greater between their rhetoric and the everyday reality of people’s lives. I want to pursue two arguments that expose some of the rhetoric we heard from the Chancellor and some of the reasons why their long-term

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economic plan is failing and why the structural and cyclical weakness of our economy remains five years after they entered office.

There are two principal arguments. First, the Government’s economic policy directly choked off the recovery under way at the last election in May 2010, leading to the slowest economic recovery from recession in this country for 100 years. Secondly, the economic recovery is unbalanced, unequal and unsustainable. The structural weaknesses are still there, despite the rhetoric from the Chancellor—the rabbits coming out of the hat—and the underlying failures of the long-term economic plan are unchanged by this Budget.

Mr Brooks Newmark (Braintree) (Con): I am listening carefully to the right hon. Gentleman, as are many Members opposite. Would he at least acknowledge that running a deficit of more than 10% was unsustainable? It might have fuelled some growth in the short term, but in the long term running a deficit in excess of 10% was not sustainable, and something had to be done about it.

John Healey: There are not many Members opposite, as the hon. Gentleman says. [Interruption.] He will remember, however, that after 10 years of the last Labour Government, before the global financial crisis and recession hit, borrowing and debt were lower than when we entered office. We have a deficit to deal with because of how the Government intervened to pull the country through that deep recession, to keep people in their homes and jobs and to keep firms in business. Of course there is a deficit, and of course it needs to be dealt with. The difference between the parties is that we will deal with it in a more balanced way. There is a choice. We can do it with tax rises that are fair, spending cuts and efficiencies. We will do what we need to do in a more balanced way.

Mr Redwood: Is it not the case that the most significant change after 2008 was the plan, which Labour backed and which the coalition continued with for its first two years, of taking the RBS balance sheet down from £2.2 trillion to £1.5 trillion? Was that not what provided the mighty shock to the British economy? It was something that Labour wanted to do.

John Healey: The intervention in the collapsed and failing banking system was a necessary step that the last Labour Government took with support from others, and most of the RBS and other bank intervention is dealt with differently in the national accounts. I would have thought that the right hon. Gentleman would have realised that.

Mr Love: Has my right hon. Friend seen the damning report from the National Audit Office on infrastructure spending, clearly showing the massive cutbacks in roads, education and housing? So much for a long-term economic plan—it is driven by short-term considerations.

John Healey: My hon. Friend characteristically anticipates one of the points I was going to make. He will know, because he will have seen the papers published alongside the Budget, that those papers confirm that over this Parliament public sector capital investment has fallen by 44%. His point is spot on.

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I want to turn to some other facts. When the Government took office, the economy was growing quarter on quarter at a 4% annualised rate. The combination of policies introduced in the emergency Budget in 2010, which the Chancellor reminded us of, meant that by the end of 2010 growth was zero and that over the years 2011 to 2014 the annual rate was just 1.7%, not the 2.4% we were told we would get when he made his Budget statement. They choked off growth because of the policies and cuts they introduced. This has been the slowest recovery from a recession in this country in 100 years.

On public finances, I remind the Government Front-Bench team of that 2010 Budget speech. The Chancellor claimed that

“fear about the sustainability of sovereign debt is the greatest risk to the recovery”.—[Official Report, 22 June 2010; Vol. 512, c. 166.]

National debt then stood at 62% of GDP. Today’s figures confirm that it will be about 80% next year. On the deficit, the Chancellor issued his binding formal mandate in 2010 that the books

“should be in balance in the final year of the five-year forecast period, which is 2015-16”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]

The failure here is astonishing. Far from balance, the Budget figures tell us that we will be in deficit by £75.3 billion. The point of balance is not next year; it is at least three years later than that. It is a comprehensive failure of long-term fiscal and economic planning.

What has gone wrong? The OBR says that the severe cuts and the significant VAT hike—let us not forget that—resulted in a loss to GDP of 2% in those first two years. Other estimates put the figure at 3% to 5%, at least, over the Parliament. The most productive spending in a downturn is capital spending. That is why organisations from the International Monetary Fund to the OECD and the OBR itself have all said that reducing investment spending has the most serious effect on negative economic growth, yet that is exactly what the Chancellor did, as my hon. Friend the Member for Edmonton (Mr Love) has just said. Over the Parliament, public capital investment has almost halved. When the Chancellor was faced with the choice either to spend money on, for example, short-term income tax cuts for millionaires or to invest in the infrastructure this country needs for the long-term future, he chose the tax cuts for the millionaires.

The unprecedented wage squeeze has come partly from the cuts in services, tax credits and benefits. It has come, too, because of the inherently weak demand for labour in this country. Before a Government Member jumps to their feet and asks, “What about the headline unemployment rate?” I would say that it is good that it is down, but the weak demand for labour has meant that people cannot get the hours or the wages to meet the bills that they are struggling to pay. Weak growth has been reflected in real declining wages. The area of South Yorkshire that I represent has seen the average full-time worker take home £2,500 less than in 2010.

Back in 2010, the Chancellor said he had a long-term economic plan. He said in that Budget statement:

“Our policy is to raise from the ruins of an economy built on debt a new, balanced economy, where we save, invest and export”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]

The Parliamentary Under-Secretary of State for Transport (Claire Perry): Hear, hear!

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John Healey: The Minister says, “Hear, hear”, so let me tell her that household debts increased over this Parliament and are set to rocket over the next five years. Ministers have halved public investment over this Parliament, despite a pledge to protect it; and on exports, the balance of payments gap at the end of 2014 stood at 6% of GDP—the biggest since records began in 1955.

At the same time, our country has grown further apart. After 10 years with Labour’s regional development agencies in England, when the poorer English regions were able to achieve almost the same rate of gross value added growth as the richest regions, the gap has grown every year since 2010. The income of the UK’s richest region is now over 10 times that of the poorest, and real output per head has shrunk since 2010 in the north-west, Yorkshire and the east of England.

Let me remind my Front-Bench team of what the Chancellor tried to claim. He tried to claim that the north had grown faster than the south and he was talking about last year, but if we talk about the five-year period of the Parliament, the north has grown by 6% on his watch, while the south has grown by 10%. This is a Budget that cannot be believed.

Finally, at the heart of the Government’s failure is the dogma of pursuing a small state. We have seen less investment despite the consequences for productivity and growth; cuts to benefits and tax credits to fund millionaires’ tax cuts, despite the consequences for living standards; no serious export or industrial strategy, despite the consequences for our balance of payments; and no serious plan for balanced regional growth, despite the consequences for the inequalities in our country.

This Budget provides a warning to people about what is to come in the next Parliament. This Budget tells us that if the Conservative party is re-elected on 7 May, we will have a continuation of an economy and country for the few from a Government of the few.

2.43 pm

Mr John Redwood (Wokingham) (Con): I remind the House of my declaration in the Register of Members’ Financial Interests, as I offer advice to an industrial and an investment company.

I rise to correct some of the myths emanating from the Opposition, who do not seem to read the figures. I hope they will catch up with the Budget detail from the Red Book now that it is more commonly available. We are talking about a set of plans for a five-year period that demonstrate that the Government think that, given the growth in the economy, they can afford to spend £60 billion a year more by the final year of the forecast period than is currently being spent.

The biggest change announced in this Budget is a very substantial increase in the planned amount of spending for the end of the period, 2019-20, at which time the Chancellor proposes a £38.1 billion increase in total managed expenditure—well up on the figures in the autumn statement. This is good news. It shows that the Chancellor is reflecting the confidence in the economy, the reduced cost of interest charges as the cost of borrowing comes under better control and the lower rate of inflation, which will have a beneficial impact on the cost of providing public services.

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Mr MacNeil: The right hon. Gentleman is giving an impression of a growing state, when what is happening in real terms is clear from page 112 of the Red Book—that, as a percentage of GDP, this Chancellor and his party are cutting the state by 13%, which will affect the poorest in society most. That is the legacy of a Tory Government.

Mr Redwood: I am giving the cash numbers, which are clearly set out on page 111. If the hon. Gentleman is patient, I will come on to deal with the argument about real terms and the percentage of the economy.

Let us start with cash. The £60 billion increase in the annual spend at the end of the period is a big increase, and if we can keep inflation of costs down, it could provide a real increase. We had these arguments at the beginning of the last Parliament. When I quoted the cash figures, people said it would amount to a real decline, yet we have had a real increase, with the last two years seeing real increases in total general public spending, as I indicated in a recent intervention and as this Red Book makes very clear. If the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) reads it he will see the real increases in general Government current spending over the last couple of years. Those have been affordable and the lower rate of inflation is helping.

If we look at public spending as a percentage of GDP, we see that, yes, it will fall, but that is extremely good news, because it means people will be able to keep more of the money they earn from their productive activities and as the economy is growing we can have better public services.

One of the cruellest myths being put around by the Opposition at the moment is that if we took public spending to 35% of GDP, we would be cutting it to 1930s levels. That is complete nonsense: for most of the 1930s, public spending as a percentage of GDP was well below 35% in any case, but I recently looked at the numbers and found that, in real terms, public spending this year is nine times the level of real public spending in the early 1930s—nine times in real terms.

Mr Newmark: It is statistically worth pointing out that the direction in which we are heading is towards 35.2% of GDP, but that when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor he was spending about 35.8% or 35.9% of GDP. There is not a huge difference between where we are going and where he was.

Mr Redwood: To make the point, the Chancellor has said that he will spend a little bit more in the last year of the period so that we reach exactly the percentage of GDP that Labour thought appropriate in 2000. We cannot say that because we are spending the same percentage of GDP we have cut spending or that it is down in real terms. If we have a healthy, growing economy, public spending is well up in real terms, as is the general size of the economy. We should welcome that. What we want is growth in the economy, so that we can have affordable growth in the range and quality of public services. That is exactly what this illustrates. I hope that Labour Members will stop trying to con people into believing that if we ended up with 35% of GDP—1% lower than the Chancellor intends—we would

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somehow have 1930s levels of public services. It is so absurd that I cannot believe that they even dare to repeat such nonsense day by day.

What we want from this Budget, and what I think it helps to deliver, is more growth. It is great news that we now have such good employment figures, which show record highs. It is good news that unemployment is reducing and good news that youth unemployment in particular is reducing.

What has happened over these five years is quite remarkable if we consider two important background points. The first is the state of the banks inherited in 2010. This House has never really understood or grappled with the magnitude of what happened to the banking system under Labour, or the magnitude of the changes between 2008 and today, particularly with respect to RBS and HBOS. If we had asked most economic forecasters what would happen to the UK economy if we took about £1 trillion of assets off the balance sheets of two leading banks, they would probably have forecast that the economy would crash in a remarkable way. What is fantastic for our country is that after the initial crash over which Labour presided in 2008-09, we have managed to get the economy back to growth while mending the banks and going through the extraordinary shrinking on the banking balance sheets. [Interruption.]

I find it remarkable that Labour Members will not listen to what I am saying. They lived through this dreadful experience and their regulators allowed the banks to over-expand their balance sheets, when many of us were saying that it was going too far. [Interruption.] Indeed, we did. We constantly said that regulation was too lax. I remember writing in the report of the economic policy review undertaken by the Conservative Opposition that, while in some areas there was far too much regulation, the regulation of the things that really mattered—cash and capital—was far too lax, and needed to be tightened. However, the Labour Government and their regulators then made the worse mistake of over-tightening in a hurry, and precipitated a major crash. Labour needs to learn from that. Indeed, we all need to learn from it, because we do not want it to happen again. We need to understand why there was such a big crash in output and in people’s living standards and real incomes, and why it took time, between 2008 and 2013, for growth to resume. The reason was that the banking system was so badly damaged that, obviously, it took time to get it back into shape.

As the Chancellor said himself, there was another reason for our problems. In 2011 there was an extremely unpleasant euro crisis, which had an impact on Britain because we live by foreign trade as well as by our domestic activities. We had to shelter ourselves from the worst of that. We are now in the process of orientating our trade much more strongly towards Asia and the Americas, the growing parts of the world, and away from the European area, which is mired in recession and is still experiencing enormous difficulties. It decided to create a single currency without creating a single country to back it and love it, and is having to live with awful strains and stresses as a result.

As we meet today, this Budget is an important event. It is certainly a very important event politically in the United Kingdom. However, a far more important set of events is taking place on the continent, where hectic negotiations are taking place between Greece, Germany

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and the rest over whether Greece can stay in the euro. It is not easy to see a happy outcome in either direction from those very pained discussions, but are we not glad that we are not having to live with that awful experience in this country, thanks to some of us who urged very strongly that we should stay out of the euro?

[Interruption.]

The hon. Member for Bishop Auckland (Helen Goodman) thinks it is funny that Greece has a youth unemployment rate of 50%, but I do not. I think it is a disgrace. I also do not think it is funny that several countries on the continent have a general unemployment rate of 25%. That is quite unacceptable, and the Labour party would rightly condemn it every day of the week if it were happening here, but it is not happening here because we ran our own economic policy, and we have done a much better job that they did on the continent.

Mr MacNeil: Does the right hon. Gentleman accept that most of the problems of the European Central Bank are to do with a fixation on inflation—a fixation that he shares?

Mr Redwood: I have no fixation on inflation, but neither do I think that runaway inflation creates prosperity. It is necessary to manage inflation, and to manage growth, and to have an economy that can expand. I am very pleased that this Budget helps to create and preserve the expansion that is now under way in the United Kingdom. I think it is good news that it contains measures to promote more home ownership and saving, and I think it is good news that it contains measures that will help enterprise and business to promote more jobs, because what we want are more jobs and better-paid jobs.

I was pleased to hear the Chancellor say that most jobs now are full time, and that many are highly skilled. That is what the country needs: more skills, more opportunity, and the chance for individuals to train, work and educate themselves well so that they can get better-paid jobs. That is what we all want in the House. It is sometimes suggested that the Conservatives do not want it, and I find that regrettable. We want it as much as anyone else. We want more jobs, better-paid jobs, and more skilled jobs. We know that we have to earn our money, and we want to create opportunities for people to earn theirs.

The Budget contains some sensible judgments on how much the country can afford in increased public spending. I think that £60 billion is a perfectly good judgment of the amount of extra public spending that will be possible by the end of the next Parliament. It also contains a judgment on how we can finally get rid of the deficit and start to cut the debt. I find it a bit odd that Labour has been telling us that too much was cut in this Parliament, and is now saying that the deficit is too high. I have news for Labour. You have to cut if you want to lower a deficit; it does not just magic away. The question is, how do you get that judgment right?

John Healey: It is possible to deal with a deficit simply by cutting, which is largely what the right hon. Gentleman’s party has done, but it is also possible to deal with it in a more balanced way by cutting where cutting is needed, raising revenue where it is right to do so, and ensuring that there is enough growth to bring in

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the revenue. That was the fundamental problem with the policies that existed at the beginning of the current Parliament.

Mr Redwood: The right hon. Gentleman has just described the policy of this Government. They put some taxes up, they went for growth—which is now coming through, and is helping to tackle the deficit problem—and they reduced the over-optimistic spending plans of the outgoing Government.

We have been told that it was wrong to cut capital spending. Well, I seem to recall that the only bit of spending that the Labour Government cut in detail before leaving office was the capital budget. They made massive cuts in capital. The Chancellor has restored some of those cuts, but because of the parlous state of the overall finances, he could not restore all of them.

The Budget presents a good package. There is good news on home ownership, good news on employment and good news on growth. A great many myths need to be put back into the dark room, because they are not going to con the British public.

2.55 pm

Sammy Wilson (East Antrim) (DUP): Let me begin by making it clear that my party has no political axe to grind when it comes to whether one party performs better than the other, although the hon. Member for Reigate (Crispin Blunt) has been on local radio in Northern Ireland telling people to vote for anyone but the DUP. We will not hold that against the Conservative party. We want the United Kingdom to succeed, and we want its economy to succeed. I think it is in the interests of all my constituents that the Government of the day—whoever they happen to be—get the policy right, because that means that people will have jobs, a good standard of living, and good public services.

The Chancellor began his speech today by saying that Britain was now walking tall, and he quoted some impressive figures. We had better growth than the rest of Europe and the other G7 countries, we had lower unemployment, we had rising living standards, and we were selling shares in banks that were bankrupt six years ago. However, while we may be walking tall in some respects, there are still people in the United Kingdom economy who are not walking tall, but are stooped under the burden of parts of the economy which are ailing. The growth that the Chancellor has talked about has not been universal. He cited impressive rates of growth in northern areas, although I note that he did not mention Northern Ireland. As I often used to say to economics students, “Look at the base from which you are starting.” Which areas were hit most by the recession? It was the northern areas, including the north-east and the north-west.

Mr Redwood: What Northern Ireland clearly needs is more private sector industry and activity. Does the hon. Gentleman not think that a good way of promoting that would be a much lower rate of corporation tax, which is just what the Government are giving him?

Sammy Wilson: I shall come to that point. I am not suggesting that everything that the Chancellor has done is wrong. What I am trying to do is paint a picture of a country in which not every region and not every individual

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is walking tall. Not only some regions, but some groups of people, are still suffering and stooped under the burden of an ailing economy. Young people in my constituency are suffering as a result of youth unemployment; other people are in the lower wage brackets, or are in jobs in which there is uncertainty or the effect of the economic downturn has depressed wages the most. Those people are not experiencing the improved living standards that the Chancellor has described today.

I welcome the fact that, as of the last year, 542 fewer people are on the dole or on welfare in my constituency. Nearly every week, however, people come and talk to me about the effects of the recession and the way in which it has changed employment practices, Many are uncertain about their incomes. Some are earning the minimum wage, some have jobs that are insecure, and some are not always paid because of the nature of their contracts. The Chancellor has said today that the minimum wage will be lifted and that some people will be lifted out of taxation; nevertheless, that has to be set against the fact that, for many people, those gains by Government action are depressed by employment practices that are becoming more prevalent in parts of the economy. Banks may be selling shares, but some of that growth and improvement—this is certainly the case in Northern Ireland—is being achieved by banks quickly foreclosing on those to whom they recklessly lent and by suppressing businesses instead of giving them the chance to grow.

Although the economy may be walking tall in the Chancellor’s eyes, there are many obstacles along the road that could cause us yet to stumble. I hope we avoid them, but let us look at some of the information even in the Red Book. Productivity growth is weak, which of course makes it difficult for real living standards to increase—if productivity does not increase, there is not the same chance for wage increases. Exports have not been growing in the way that the Government anticipated; indeed, the fact that the balance of payments deficit is 6% of GDP will have a deflating impact on the economy. Despite what the Chancellor has said, his own figures show that he is still dependent for future growth primarily on consumer spending. In other words, we are still dependent on people taking on the very debt that we have said brought about some of the problems we are now experiencing.

At the same time, growth in investment is weak. Growth in private sector investment is going to go up. That is quite right; however, according to the OBR forecasts, over the period of the next Budget, public sector infrastructure investment will be reduced by 17% as a percentage of GDP. That is one of the problems I have with the current policy. While I understand and, in fact, probably have more sympathy with the arguments put by Government Members—about getting the deficit down and making sure that we do not have huge debt interest, that we have confidence in money markets and that we do not have to pay more for the debt we undertake—there are ways that the Government can stimulate the economy. One way that can be done is through infrastructure investment.

I cannot understand why the money markets are more confident about lending us money to pay for welfare benefits than they are about lending it to pay for

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infrastructure development. There have been infrastructure developments in my constituency, such as the new road from Carrickfergus to Belfast. The improved travel times have led to investment by companies already in the town, which was isolated because of the difficult roads. The return to the Northern Ireland economy from the Titanic project in Belfast, with £90 million of investment and the return in tourist numbers—nearly 1 million in the first year and a half, with the impact that has on local pubs, hotels, restaurants and so on—has been terrific. At a time when we need to stimulate the economy, I cannot understand why the Government are planning to reduce infrastructure investment, which could produce real returns.

Jim Shannon (Strangford) (DUP): One way of helping, which was announced by the Chancellor today, is the plan for farmers to spread their profits and losses over five years. As my hon. Friend will know, in Northern Ireland the dairy industry in particular is having a difficult time. It had to reinvest because of the EU regulations on slurry retention and disposal and also deal with a clear problem with the price of milk. The Chancellor’s announcement will enable the farming industry at least to balance its books over a five-year period. Does my hon. Friend welcome that as a way forward for the farming industry in Northern Ireland and for those in my constituency and, indeed, his own?

Sammy Wilson: I do not want to be churlish about this Budget, because there are a number of things—my hon. Friend has led me on to them—that I welcome. Given the way that farming income changes, it is important that farmers should have the ability to look at their income and spread their profits and losses, and the tax they pay on them, over a five-year period rather than a two-year period. I welcome the announcement of a requirement to have a universal service obligation for broadband, although I see that there is no timing for it, so maybe the Minister can give us some indication of that. I know that in my constituency smaller businesses that want to set up in rural areas are held back because they do not have that easy means of communication.

Ms Margaret Ritchie (South Down) (SDLP): The hon. Gentleman is making a compelling argument about the need for investment in infrastructure, part of which is this whole area of investment in broadband. Does he agree not only that the time scale to be specified is an important consideration, but that we have to see geographical locations? He, like me, will have talked to constituents, particularly those in rural areas, who cannot get access for topographical reasons.

Sammy Wilson: Hopefully, a universal service obligation will mean exactly that and the investment in the infrastructure will include all parts, regardless of how difficult they are—I notice that one of the things that will help is satellite broadband where fixed line broadband cannot be used.

I also welcome the Government’s promise to improve incentives for people to save for the deposit for their first home—especially given the number of young people who come to me looking for ways to get their first home—and to give additional support of up to 20% for those savings. As one who supports the fair fuel campaign

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and represents a rural constituency where many people do not have the opportunity of using public transport, I also welcome today’s announcements on fuel duty.

I suppose the fears we have for the future, especially in Northern Ireland, are these. I welcome the fact that the Government have made available to us the devolution of corporation tax and the impact that I believe it can have on our economy. Nevertheless, as we seek to rebalance the economy, that must not be counterbalanced by serious public sector expenditure cuts, especially for an area that is still dependent on the public sector. It must not be offset by huge cuts in infrastructure. We have already suffered a 40% reduction in public infrastructure investment in Northern Ireland, with devastating effects on the ability to deliver on many of the things that we wanted to deliver on. I hope that the optimism that the Chancellor has expressed today comes to fruition, but I believe there are obstacles. They are highlighted in the Red Book and in the speech today. Some of them are in the Government’s control and some are outside it. I hope we will walk tall and not find that there are many people and many areas of the United Kingdom still stooped under an economic policy that is not doing its best for Britain.

3.9 pm

Mr Brooks Newmark (Braintree) (Con): I am delighted to follow the hon. Member for East Antrim (Sammy Wilson), who is a powerful advocate for his region of the United Kingdom. He raised many important points. It has not been a balanced recovery; he is absolutely right. The south has done a little bit better than perhaps Northern Ireland and some of the areas of the north. However, as the Chancellor pointed out during his speech, recoveries are never linear. Sometimes some regions grow faster than others. Sometimes we get recoveries that are slow and then there is a U-bend and suddenly the recovery accelerates a little more. I suspect that what we are seeing now is a little bit of the J-curve—we have had a much slower recovery than we expected, but it is now moving much faster, as we have seen from the Red Book.

Damian Collins (Folkestone and Hythe) (Con): I wanted to intervene on the hon. Member for East Antrim (Sammy Wilson) but he was reaching his conclusion. Is it not a cause for positive reflection that job creation in Northern Ireland at the end of last year was growing at its fastest rate for more than 20 years? That shows that there has been growth throughout the United Kingdom.

Mr Newmark: My hon. Friend and the hon. Member for East Antrim are both right. The hon. Gentleman’s point was that at the beginning things were a little slower than he would have liked for his constituents, but as he said—this is my point—recoveries are never linear. In the past five years, we have seen slower growth than we would have liked, but we have far more accelerated growth through 2014-15, and certainly beyond to 2016-17 and 2018-19. That is good news.

In 2010, in Labour’s great recession, we faced economic meltdown. As UK plc, we were literally teetering on the brink of bankruptcy. What we needed at that time was an emergency Budget. The Chancellor, working with our coalition partners—I give credit to the Lib Dems—came

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up with a long-term economic plan. In producing that long-term economic plan, we had to deal with one important issue: the structural deficit. The deficit, which was running at roughly 10.2% of GDP, needed to be dealt with. We particularly needed to deal not just with the general deficit but with the structural deficit, which was an enormous problem in terms of our ability to achieve sustainable borrowing.

That was the challenge posed by the right hon. Member for Wentworth and Dearne (John Healey). He wanted an unsustainable deficit of 10%-plus. Perhaps he meant 12%; perhaps he wanted more borrowing. I do not know what direction of travel he would have liked to take, but if we had gone in that direction, we would have been in France’s position today.

Dr William McCrea (South Antrim) (DUP): Does the hon. Gentleman accept that in Northern Ireland the construction industry is still having difficulties? Many of our major construction companies and the people working for them are having to come to the mainland to get contracts rather than staying in Northern Ireland. We need to encourage that industry.

Mr Newmark: The hon. Gentleman makes a good point. In introducing things such as the increased investment allowance—it was £25,000 and went up to £250,000—the Government have done a lot to help to turbo-charge investment. I shall come to the rate of investment and investment growth a little later in my speech.

The important thing was that we dealt with the deficit up front and brought it down by more than 50%. It is now trailing at around 5%. Do we have further to go? Absolutely, but bringing it down from 10.2% was very important.

The important thing about bringing down the deficit and dealing with the structural deficit was bringing back market confidence. Doing so allowed us to maintain low interest rates. Confidence means low interest rates. It is not just a matter of the Bank of England’s confidence in setting them—there is a worldwide market out there. Low interest rates mean low mortgage rates and low business rates for small businesses. All those things were important in helping to create growth in the UK.

John Healey: When the hon. Gentleman intervened during my speech, I made it clear that the deficit was caused after the global financial crisis by the Government stepping in to help the country through. That is what Governments can do. I said clearly that that caused the deficit and we had to deal with it. Any Government would have done so. What counts is how they deal with it. Will he remind us what Labour’s plan in the 2010 election was, as set out by my right hon. Friend the Member for Edinburgh South West (Mr Darling), the Chancellor at the time? Our plan would have reduced the deficit faster and further than the Chancellor has managed in the past five years.

Mr Newmark: I do not want to use the expression ceteris paribus—all things being equal—but the Chancellor at that time was probably right. Unfortunately, he too would have faced a euro crisis, and things would have been very different from what he originally projected, just as things were different for my right hon. Friend the Chancellor when he made his original prediction.

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Sheila Gilmore (Edinburgh East) (Lab): Will the hon. Gentleman give way?

Mr Newmark: I am trying to stick to Mr Deputy Speaker’s instruction to keep roughly to 10 minutes.

Time and again, Labour Members talk about borrowing. Page 22 of the Red Book shows us that public sector net borrowing is coming down annually. That is the point. Labour Members look at the gross figure, but the important thing is that we are bringing borrowing down annually. In 2015, it will go down to £90 billion. It will then go down to £75 billion next year. Hopefully, by 2018-19 we shall be in some sort of surplus.

It is also important to look at cyclically adjusted net borrowing, which is also decreasing—we will be showing a surplus in 2018-19. The borrowing figure has been and is a problem. Are Opposition Members right to point out that the gross figure is growing? Absolutely. The point is that we are tackling the deficit to bring down the annual amount of borrowing. That is what the Government have done very well.

Bill Esterson (Sefton Central) (Lab): Will the hon. Gentleman give way?

Mr Newmark: No, I am not giving way.

I talked about the J-curve. Growth was slower to begin with, but the OBR is forecasting that growth will be much faster than originally predicted. In 2015, GDP growth goes to 2.5%. In 2016, it goes up another 2.3%, and 2.3% beyond that.

It is important to note, as the Chancellor did, that we have rebalanced growth—we have growth in the north as well as in the south. Has the north faced more pain than the south? Absolutely. The facts are there. The important thing is that we are now seeing balanced growth. The service sector is growing hugely, but the manufacturing sector is growing equally fast.

The OBR forecasts business investment growth—this is important—of 5.1% in 2015 and 7.5% in 2016. Hopefully, some of that will benefit Northern Ireland, to support what the hon. Member for East Antrim said.

The critical thing about growth is unemployment and employment. Unemployment has decreased from 7.8% to 5.7%. That has happened much faster than the Governor of the Bank of England projected when I sat on the Treasury Committee. Most importantly, for my constituents unemployment has dropped from 3.7% to 1.5%, and youth unemployment has dropped from 5.4% to 2.6%.

We have a record number of people in work: 30.9 million people in work is a remarkable figure, but even more remarkably, more men and more women are in work than ever before. Some 1.85 million new jobs have been created. I started the Million Jobs campaign to try to address the problem of youth unemployment. I was delighted that the Chancellor took our recommendation to abolish the jobs tax for young people. The Million Jobs campaign supported the abolition of national insurance for under-21s, which will kick in this year. I hope that one year the Chancellor will extend it to 24-year-olds. We are already beginning to see the benefits for the under-21s.

On taxation, I never imagined that we would do this—I thought at the time that it would be costly—but the personal allowance has gone from £6,500 to £10,600.

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That has meant that we have been able to benefit the average family to the tune of something like £905 per taxpayer. That is good news for taxpayers. Increasing the personal allowance to £12,500 in the next Parliament is a great ambition: it would take something like 4 million people out of tax altogether.

Raising the minimum wage from £6.70 to £8 an hour is another good and important move, because it stops the state subsidising the private sector, which is what has been happening as a result of a very low minimum wage. Raising the minimum wage will ultimately benefit taxpayers overall and ensure that businesses take on the responsibility to pay their own employees a fair wage.

On business tax, corporation tax coming down from 28% to 20% has not only encouraged people to set up businesses, but encouraged businesses to come across from continental Europe and set up in the United Kingdom. We now have the lowest corporation tax rate in the G8.

I have mentioned the abolition of national insurance for young people. It is also good news that the employment allowance is saving about £2,000 per business, because it encourages small businesses in particular, which live on the margin, to perhaps take on an extra one or two people.

The freezing of fuel duty has also benefited almost all our taxpayers: my constituents save about £10 every time they fill up their cars. Energy costs coming down will benefit the elderly in particular, so it is all good news on that front.

Most importantly—Opposition Members have been making this point for a while—when inflation was running higher than pay, people were in effect losing money; the ordinary, average earner was suffering. Now, however, pay is up about 2.1% and inflation at 0.9%, so real pay is going up.

As an ex-charities Minister, I am particularly pleased that an extra £75 million will be available for charities from the LIBOR fines. I certainly pushed for that and wrote to the Chancellor asking for support for Essex Air Ambulance, which is based in my constituency. I am delighted that the Budget will provide support from the extra LIBOR fine money for Essex Air Ambulance, because that means it will be able to provide an emergency support service 24 hours a day, seven days a week.

The Labour party was financially reckless in government, but its promises in opposition seem to be even more so. It has promised something like £20.7 billion in unfunded commitments, which is something like an extra £1,200 per household. Labour is indeed the party of tax and spend and borrowing. It has not changed and, if elected, it would still not change and it would damage this country.

What would a future Conservative Government do? They would be committed to raising the personal allowance to £12,500 by 2020; cutting tax for 30 million people; taking 1 million more people out of tax altogether by raising the personal allowance; balancing the books beyond the next Parliament; and reducing Government spending to 35.2% of GDP.

In conclusion, the Chancellor has delivered on his long-term economic plan. He has reduced spending, the deficit, taxes and unemployment. Compared with five years ago, he has also overseen reductions in inequality,

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child poverty and pensioner poverty and a smaller gender pay gap. In the words of Christine Lagarde, head of the International Monetary Fund,

“this is exactly the sort of result that we would like to see: more growth, less unemployment, a growth that is more inclusive, that is better shared, and a growth that is also sustainable and more balanced.”

This is a Budget that the Government can be proud of. The Government’s long-term economic plan is working, and we hope that on 7 May the electorate will not give the keys back to the guys who crashed the car.

Several hon. Members rose—

Madam Deputy Speaker (Dame Dawn Primarolo): Order. May I remind Members that, at the beginning of the debate, the Chairman of Ways and Means asked for each Member to take up to 10 minutes? We have had six speakers and only one has responded to that plea. That was Alison McGovern; everybody else has spoken for longer. That means that there are Members in the Chamber who will not get to speak if others do not comply with the request to speak for no more than 10 minutes. It is very easy to tell 10 minutes on the clock—it is a nice round figure—so I ask Members to keep an eye on the clock and to speak for only 10 minutes. If not, we will have to have a time limit, which would be unfortunate, so please try to stick to 10 minutes.

3.25 pm

Austin Mitchell (Great Grimsby) (Lab): I will not follow the hon. Member for Braintree (Mr Newmark) into his fantasy world; the Government seem to be in danger of moving into a fantasy world where it is as if all the nation’s problems have been solved by the miraculous efforts of this Chancellor. The Budget seemed to me to be a matter of the Government moving furniture around a room in which they have just had four years of a very painful S and M party and inflicted 50 shades of austerity on the country, and they are now trying to clean up the mess for presentation to the electorate. It is a Budget of pathetic measures backed up by endless promises of a glowing future.

The fact is that the economy is better—we have to concede that—but not because of any Government long-term plan. I am getting fed up of hashtag politics and the endless mentions of the Government’s long-term economic policy. It is as if they think that, if they mention it for long enough and as many times as they can, people will believe that they actually had a long-term economic policy. But they did not: they came in with a fiscal policy of slash, cut and burn, and to roll back the state. It was an ideological policy, not an economic policy—that was the essence of what they offered the British people. The policy was designed to reward the rich, because if the state is rolled back and welfare and public spending cut, then taxes can be cut to reward the rich and start the trickle-down effect, but the trickle-down effect is what horses do to roads. That was the Government’s hope for the British people as a result of the money going to the rich.

On the basis of those expectations, the Chancellor made two promises right from the start: to pay off the debt, which he has singularly failed to do; and to eliminate the deficit, which he has also failed to do.

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Those two priorities have given us four wasted years of futile austerity in particular, and of pain, which has hit the poor and the north and cut the living standards and household incomes of people in this country. It has been four years of misery.

Growth in that period has now come about not because of the Government’s long-term economic plan but thanks to the efforts of the Bank of England. The Bank of England has been doing what the Government were not doing and has saved the Government’s bacon. If interest rates are kept flat to the floor for six years and £375 billion is pumped out, printed and shoved into the banks without any revival or economic benefits, the patient is dead. That is what has produced the economic revival, not the Government’s measures. It worked and now the Chancellor is trying to claim credit for it, by giving us a few pathetic tax cuts which he claimed were impossible a few years back; by benefiting the north, which he has been hitting for four years; and through glowing promises of a better future that has now been postponed until 2020. I have news for the Chancellor: that future will not come under this Government, fortunately, and it could not come from this Government’s policies. The Government are essentially the trade union of the rich, implementing policies to benefit the rich, and they will be thrown out by the people who have not benefited from those policies.

The Chancellor tells us that we are better off, but the nation does not believe him. The nation feels squeezed, as its living standards are being cut. It feels that it is still suffering and that it has been betrayed, and it does not like the spectacle of rewards being showered on the rich as a result of cuts to benefits and penalties on the poor. This has been the slowest recovery ever from any recession in this country and it has essentially been slowed by the cuts and reductions in demand introduced by the Government. The Government will not produce a glowing future because their policies cannot work. This is not a real recovery. A real recovery would involve building up British manufacturing strength so that Britain was able to pay its way in the world, and that has not happened and is not happening at the moment.

All the Government have done is repeat some old tricks for making people feel better off. For example, with rising house prices, everybody who owns a house feels better off, whereas the people who do not own houses feel and are worse off. Rising house prices, stoked by the Help to Buy scheme, have helped to produce a better feeling, as has the high pound. The pound is grossly overvalued at the moment, which means cheaper imports, even if it damages exports on a considerable scale. Falling food and fuel prices are transient factors and we can add the spending bonanza that the Government hope to see having given pensioners the freedom to spend their pension pots. Whatever the consequences in the future, that would produce an economic boost and a stimulus now.

This is not a recovery that will work and be sustained. It cannot, because the productivity gap has widened and investment is lower than it needs to be, in the private sector and, in particular, in the public sector, where it has been slashed. Programmes that were cut in 2010 have not yet been fully restored. This is not a real recovery because there is no substantial manufacturing revival on the scale that we need and it will not lead to a real recovery because we are still not paying our way in

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the world. The deficit has been 4%, 5% or 6% of GDP and has been rising. It came down in the past month, but that was a small dent in a long-term rise. We are paying our way only by importing capital, wealth and businesses and by people buying up British businesses, British land, British houses and the country in general. The profits from those buy-ups will eventually have to be exported. Those people will not want to stimulate demand here and it will be exported, dragging down our economy. Investments will be dictated by the long-term needs of overseas boards that take less account of the needs of this country.

Effectively, this has not been a revival in our ability to pay in the world and to stand proudly on our own two feet. The only march of the makers that has taken place seems to me to be the march of the Chancellor and the Prime Minister around factories, wearing hard hats and appealing pathetically for support from factory workers whose living standards have been reduced by their Government.

It is true that we are doing better than Europe, but that is because Europe has embarked on the folly of deflation to make the euro work. Europe has become the low growth, high unemployment blackspot of the west, so to be doing better than that is no great advance or commendation.

The Budget will not lead to the prospects the Chancellor was holding out. We need a real recovery in manufacturing and jobs. Let us remember that, although unemployment is falling, it still stands at 1.86 million, which is very high, and that people who are receiving benefits are not paying taxes. So unless we get a real recovery and a substantial increase in earnings to boost demand in the economy, it follows as night follows day that this Government—if they are re-elected—will have to go in for a massive programme of cuts to achieve their promise to get rid of the deficit by 2020.

This Budget foreshadows an enormous programme of cuts. Welfare cuts of £30 billion have been talked about, and defence cuts have also been mentioned. The Government are not committing themselves to maintaining the defence spending target of 2% of GDP. They have, however, committed to making cuts in local government spending. The Public Accounts Committee has stated that the cuts in welfare and social security are not sustainable.

That is the future that this Government are offering the country if they win the election, but the country will reject that future. It is instead going to accept Labour’s offer to invest to grow, to put people back to work so that more people are paying taxes and fewer are receiving benefits, and to bring down the deficit in that way by reviving the economy. I think that people will accept that offer at the election because they have been so badly bruised and betrayed by this Government, and because they want a party that will offer them hope.

3.35 pm

Damian Collins (Folkestone and Hythe) (Con): Listening to the speech by the hon. Member for Great Grimsby (Austin Mitchell) was a bit like getting a lecture from the captain who crashed the ship on the subject of how well the emergency services conducted the salvage operation.

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No one will believe Labour Members. When the Labour Government were in office, they ran up deficits in the good years while the economy was still growing, but Labour has now suddenly become the hawkish guardian of the balanced budget. It has become the party that shuns deficit and debt, saying that if it had been in power, none of this would have happened. We all remember the shimmer of growth that the last Government thought they had created after the banking crisis, but it was merely an artificial stimulus that they had not budgeted to continue. The money was not there, and Labour would have had to take the difficult decisions on spending, a fact that it consistently and conveniently chooses to ignore.

Looking at the Budget today, we can now see the benefits of the Chancellor of the Exchequer’s long-term strategy. We can also see coming to fruition many of the smaller initiatives and policies to increase investment in the economy, including from overseas, and to back entrepreneurs and growth in the regions. I want to talk about some of those policies today.

I shall start by talking about my own constituency, however, as have all the previous speakers in the debate. The hon. Member for Great Grimsby closed his speech with the word “hope”, and there is now undoubtedly much more hope in my constituency and the local economy in east Kent, based on the policies of this Government. We have seen substantial and consistent falls in unemployment, and that has been backed up today by further falls in the unemployment figures. The unemployment rate is now nearly half what it was at the peak of the recession. That means that there are typically 1,000 fewer people out of work each month than during the recession, which is a remarkable turnaround.

My area, like those of other hon. Members, has also seen substantial falls in youth unemployment. We have to remember that youth unemployment had become a problem in the British economy that was counter-cyclical. It ran through good years and bad, and seemed to be a problem to which there was no answer. However, we are now seeing solid, consistent falls in the youth unemployment figures too. That has certainly been backed up by the Government’s investment in the apprenticeship programme. In my constituency, we now have nearly double the number of young people entering and starting an apprenticeship—learning and earning—and entering the workplace. People were missing out on those opportunities in the past. That change is certainly having a dramatic impact.

These changes are not happening by accident. They are being supported by the Government’s policy of cutting taxes on business, and by the investment in east Kent and other regions through the Government’s regional growth fund. Tens of millions of pounds has been awarded to local businesses. That money has been spent and it has created new jobs in businesses that were wondering, five years ago, where growth was going to come from and how they were going to get support from the banks. Those businesses have now invested in themselves and they are employing more people. They are looking forward to the future. That is the change we have brought about.

That local growth, which has certainly taken place in east Kent, is backed up by good and big infrastructure, which is why I continue to support the Chancellor’s commitment to infrastructure, to improving the economy

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of the north and to investing in the northern powerhouse. There is no doubt that the economy of east Kent is being accelerated by the infrastructure of high-speed rail, which is bringing more investment and more jobs into our communities. Other communities in the UK will benefit from that commitment and that investment, too. Putting money aside for big infrastructure projects of that nature is long-term decision making and planning at its best.

There is also no doubt that the creative economy has been one of Britain’s great success stories for a number of years, particularly the past five years. Exports from Britain’s creative industries are growing at a rate of more than 11%, and their job creation rates are faster than those of the rest of the economy. The gross value added of the creative industries in the British economy is growing as a proportion of the size of the economy as well. That has been supported by decisions such as the investment in the production tax credits for TV drama, for children’s programmes and for animation. I am pleased that that investment is being continued into other sectors of the creative economy, particularly theatre and orchestras. By backing Britain’s productive and creative talent we are not only supporting the underlying strength of the industry, but bringing more revenues into the Treasury. That shows that if we cut the right taxes and provide the right incentive and support, we bring in more revenue for the Treasury and create more growth in the economy. There is no better example of that than there is in the creative industries.

The creative industries are a very important part of the regeneration and growth in towns such as Folkestone, but we see this all around the country: in Manchester we see the fastest growing media city in Europe; film and TV production are a key part of the growth of Belfast and the Titanic quarter; we have the video games industry in cities such as Dundee and many different locations around the country; and we see the growth and importance of creative industries in the regeneration in Digbeth and Birmingham. Right around the country we can see that growth in place, supported by the skills, ingenuity and creativity of the British people, and backed up by the Government and their policies.

Tech city in London is a global centre. After Silicon Valley it is arguably the global centre of tech industries, and it certainly backs up the commitment the Chancellor made at the start of this Parliament that London should be the European centre for creative and digital industries—it certainly is that. The enterprise and investment schemes that this Government put in place have been a key driver in the growth and success stories of many of those small businesses. The continuation of those policies makes London and makes the UK one of the best places in which to invest and start a business in this fast-growing, dynamic sector of the economy.

I particularly welcome what the Chancellor had to say about ultrafast broadband and the commitment to try to bring investment in that, starting with some of the harder-to-reach communities. Members representing areas that are both rural and urban will all have pockets in their constituencies that are hard to reach with superfast broadband. In questions a few weeks ago, the Prime Minister set out that the key challenge would be, once 95% of homes have superfast broadband, reaching the extra 5%. Today, the Chancellor set out a bold strategy

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and vision for how we can reach that final 5%. Delivering ultrafast broadband by satellite into hard-to-reach communities is an excellent way of doing that. We know that that broadband and the internet are not just a “nice to have” service, but an essential tool for homes and businesses, particularly those in rural areas. It enables people to trade, market and sell their goods anywhere in the world from the place where they live and work—it is a necessary tool. That commitment to the future investment in that vital piece of infrastructure is very welcome.

Finally, I wish to discuss what the Chancellor said about consulting on a review of business rates. Many people would agree that that is the right step to take. The nature of the economy has changed substantially; it is no longer based on just the square footage of a building. The nature of someone’s work, be they a tech entrepreneur or a traditional manufacturing company, can be very different, as can the revenues they generate. I just ask the Treasury to consider one thing when conducting that review: the role that business incubation units play in supporting micro-businesses and tech start-up businesses. We see that all around the country. We have seen a successful incubator running in Folkestone—it is called the Workshop—and new incubator spaces are being created. In most of the tech hubs around the country we see incubators as a key part of supporting new business growth. It will be interesting to look at whether business rate reductions or exemptions for genuine incubator spaces for very new start-ups and fledgling companies would incentivise the creation of more space. Equally, we could consider whether companies that have an excess of office space could give up some of it to support an incubator unit and, in return, offset that against their business rates or receive a reduction in their business rates. That would be a very low-cost way of supporting micro-businesses in the start-up economy. I would be interested to see that considered when the Government lead their review of business rates.

There is no doubt that this was a Budget to support the growth in the economy, and to give hope to anyone who is saving, working, or starting a business and looking to get on. It sets out a clear strategy for the next five years.

3.44 pm

Stewart Hosie (Dundee East) (SNP): Since this Government came to power, funding for the Scottish Parliament has been cut. Since 2009-10, it has been cut by around 11% in real terms, but, within that, capital expenditure has been cut by around 25%, and that is a common story around the country. Decisions taken by this Government so far mean that the Scottish Government have some £3.5 billion less in real terms to spend than they otherwise would have had.

The changes announced today will make no substantive improvement to the fiscal position in Scotland. Indeed, the cumulative impact of today’s announcements will lead, over the next five years, to a real-terms cut of around £12 billion. This is very much an austerity Government.

What this Budget and the Red Book also tell us is that the Government and the Chancellor have failed on all the substantive targets that they set for themselves. They promised that debt would fall as a share of GDP by 2014-15, that the current account would be in balance by 2015-16 and that the public sector net borrowing

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that year would be some £20 billion. The debt will not now fall as a share of GDP until the next financial year. The current account will not be in the black for two more years, and the £20 billion borrowing promise will be almost four times that at £75 billion for 2015-16.

In essence, the Chancellor has failed to meet all of his own targets. With Tory and Liberal Democrat policy having strangled recovery in 2010 and 2011 and with some £50 billion of cuts to come—that is the difference between the £106 billion achieved and the £126 billion of cuts promised and the other £30 billion threatened today—we are on track, unless there is a change, for a decade of austerity. And still not a single one of the Chancellor’s major targets has been met.

Amid the rhetorical flourishes, the Chancellor talked about recovery and suggested he was lifting some of the burdens on working people. I notice that he did not apologise for trying to rebalance the economy on the backs of the poor. In essence, this was a political platform for an election. We know that because if we look at the impact not of the threatened future cuts but of today’s Budget announcements we see that the Government will take an extra £1 billion either in tax rises or in cuts to services over the next three years. Not only was the Budget not fiscally neutral, it did not provide any stimulus that we need.

Of course the Chancellor did say a deal about tax, particularly about increasing thresholds, which I welcome. I was intrigued by the notion of increasing the 40p threshold, not least because the number of people paying the 40p rate has increased by 2.5 million over the past 25 years, 1.5 million of whom have emerged in the period of this Parliament. We now have almost 5 million paying a rate of tax that used to be for the rich. There is a question over the affordability of that change and the time scale on which it will be delivered, but we will come to that later.

The Budget also confirmed that for some of the poorest in society the misery of the austerity programme will continue. We know that the proportion of cuts to tax rises has moved from 4:1 to 9:1, which is the clearest indication that the Government are trying to balance the books on the back of the poor. We know that the pain of that will be felt in Scotland by the 145,000 households affected by the changes to incapacity benefit, with people losing about £2,000 each. It will be felt by the 370,000 households who have seen tax credits reduced by almost £1,000 a year. It will be felt by the 620,000 families hit by the child benefit freeze, who are losing £170 a year. It will be felt by the 120,000 people losing, on average, £2,500 a year as disability living allowance is removed. It will be felt by the 835,000 households hit by the 1% cap on benefit increases—almost 1 million people in Scotland alone are hit by that one measure.

That is important in the context of this Budget, because there is now a growing body of opinion, including not least the OECD, that suggests we do not simply need a growing economy to fund our welfare provision; we need to squeeze inequality out of the system to help to deliver a growing and booming economy. Once again, I suggest that the Government are swimming against the tide of informed public opinion.

Many of those austerity measures will have to be mitigated using the precious resources of the Scottish

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Government: £114 million on the Scottish welfare fund, £69 million on the council tax reduction scheme and £90 million to mitigate the bedroom tax—almost £300 million to mitigate the dreadful decisions of this Government. Why do we not devolve welfare so that rather than having to use our precious resources to mitigate bad Tory decisions, we simply do not make them in the first place?

What the Chancellor did tell us today was that he finally expects to see some substantive and prolonged growth, which of course is to be welcomed, but others have noted that we still have the drag-back from the impact of the balance of trade, which appears to be negative for the entire forecast period. I welcome what he said early in his statement about help for UK Trade & Investment with regard to exports to China, but China is only one of many countries and I fear that, in and of itself, that will not be enough to turn the negative impact of the balance of trade into a positive one.

I am also glad that the Government have U-turned on their North sea policy, particularly in relation to the reduction in the supplementary charge—an increase early in this Parliament that should never have happened—but that, in and of itself, does not make for a long-term economic plan. A long-term economic plan would require the Chancellor to change course, away from a further £30 billion of new austerity cuts, away from an approach that continues to put the recovery at risk and away from a further attack on public services and the poor; in short, away from an approach to fiscal consolidation that has damaged not only the public services but the economy and undermined attempts to improve the public finances.

How much better it would have been, as a genuine alternative, had the Government recognised that their plans have failed, which they have, and adopted a stance that, rather than inflicting further cuts, allowed for a modest 0.5% increase in public spending, which would see a real end to austerity and, essentially, see the deficit continue to fall, see debt fall as a share of GDP and deliver up to £180 billion of investment across the UK over the next Parliament, rather than the miserable plans and additional austerity cuts we have seen today.

Our judgment is that this was neither a Budget to strengthen a recovery, nor a Budget for fairness or for tackling inequality. There was no long-term economic plan, merely a long-term austerity plan. It was a political Budget, as ever, from an all-too political Chancellor. As I am sure many of us have said in the past, the Tory Back Benchers might have waved their Order Papers today, but they will pay the price at the ballot box on 7 May.

3.53 pm

Mr Jeremy Browne (Taunton Deane) (LD): I have heard it said that I was the only Minister in history to have been sacked for being too supportive of the Government. Although the decision to determine my future may or may not have been wise—others can judge that—I remain unequivocally enthusiastic about this Government, as I am about the Budget statement made by the Chancellor today. That is what I want to speak about in what will be my final speech as a Member of Parliament.

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The reason I am an enthusiast for this Government and their record over the past five years is that we came into office in 2010 in remarkably difficult circumstances. Our country was in a catastrophic position. At our worst point this Government were borrowing £420 million every day. It is straightforwardly delusional of Labour Members of Parliament to think that if only we had borrowed even more, we would not have the problem of a deficit today. We saved the country—the Conservative party and the Liberal Democrat party, working together in the national interest, pulled our country back from the brink when our deficit was more than 10% of GDP. Far from going too far and too fast, as has been charged by the shadow Chancellor and others, if I am critical at all, I think we have done the minimum of what was required, rather than over-extending ourselves, and we can do even more in the future. But it is a good record.

Interest rates are extremely low. We could easily have had a position where houses were being repossessed right across the country. Inflation is extremely low. Unemployment, including youth unemployment, has fallen dramatically during this Parliament, and the deficit is falling as well. In my view, if this coalition Government put themselves forward for election—they will not, but if they were on the ballot paper on 7 May—they would win emphatically and they would deserve to win because they have an impressive record of taking a country from ruin to relative prosperity, with the prospect of further progress.

The best coalitions are those that are more than the sum of their parts. The worst coalitions are those that operate at the level of the lowest common denominator. This Government have not always functioned as effectively as they might have done, and that is true of all Governments, but more often than not the Government have had the characteristics of the best coalitions rather than those of the worst, and the United Kingdom has benefited from that.

It has also been of benefit that we have had two parties in government. This has been a hugely difficult process, wrestling with the massive deficit and many of the other structural problems that our country faces. Two parties coming together, representing about 60% of the votes cast at the last general election, gave a wider mandate for this Chancellor and this Government. If I am honest about our coalition partners, there would have been greater anxiety about the Conservatives adopting a programme of reducing state spending, had it not been done in partnership with the Liberal Democrats. While I am briefly being mildly critical of our coalition partners, I remember sitting on the Opposition Benches—it seems hard to believe that the Liberal Democrats once sat on the Opposition Benches—and hearing speeches from the now Chancellor promising that the Conservatives would match Labour’s spending commitments, even when we were running a deficit and the economy was growing. So I am pleased that this Government have shown a sober awareness of the predicament that we find ourselves in, and that my party has contributed some of the biggest and most enduring economic policies of this Government, not least the dramatic rise in the point at which people start paying income tax. The Chancellor, I am pleased to say, announced further increases in that threshold today.

There is still a long way to go. Many people in Parliament, the media and elsewhere talk as if this huge task was almost over. Even today the British Government

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are still borrowing £10 million an hour. Our debt interest is about £1 billion a week. Every week £1 billion of the taxes of our constituents goes not on schools, hospitals or the police, but on paying the legacy of overspending in the past, and that figure will rise because we still have a debt that is increasing. However, huge progress has been made.

Where now? Where do we go next? We have huge strengths as a country. Our top level education is among the best in the world, second only to that of the United States of America. Our labour markets are flexible. We attract inward investment. We are a country with a genuine global disposition and we are admired for our innovation and creativity. Britain can be a success; we have reasons to be highly optimistic.

However, we will be successful only if we address some of our serious weaknesses as a country—and we do have serious weaknesses. Our overall education performance, not at the elite level but the general level, is still not sufficiently good for us to be globally competitive. Our infrastructure, particularly our transport infrastructure but also our energy-generating infrastructure, needs to improve. Our welfare costs and welfare dependency are a problem. Angela Merkel has said—I repeat this from memory without the exact numbers in front of me—that Europe has 7% of the world’s population and 23% of the world’s economy but 50% of the world’s welfare spending. That is a very precarious position. The 7% is falling and the 23% is falling, but the 50% is not falling—or at least, not nearly as quickly as the other two numbers. We still have a very high level of Government debt and a high deficit. This Government, whether on educational shortfalls, excessive welfare costs and dependency, infrastructure or debt, have worked systematically to address the weaknesses that will otherwise hold our country back. We have enduring strengths, but in the past five years we have also had a Government with the wherewithal, talent and vision to address our weaknesses as well.

I want us to have a sense of purpose in politics. I want us to think about how we can become the biggest economy in Europe within a generation, as the Chancellor mentioned in his Budget speech. I want us to be able to think about how we, as a country, with less than 1% of the world’s population, can be relevant in an era of much more intense global competition—how we can be world leaders in innovation, skills, and job creation. All these are possible—they are prizes within our grasp—but we must have the level of optimism and vision necessary to realise those outcomes.

It has been a great privilege for me to represent the constituency of Taunton Deane in Somerset—Taunton for five years, and then latterly Taunton Deane—and to serve 10 years in the House of Commons, and also to support a radical and important Government in the history of our country. I want to make my final comments about politics generally and the role of Members of Parliament.

I was listening to the “Today” programme last week when a person was being interviewed—he was French or perhaps a Swiss French speaker—who was seeking to be the first person ever to fly around the world in an entirely solar-panelled plane. It is an extraordinary plane, because it has a wingspan of a 747 but weighs about the same as a family car, so it sounds like an absolutely terrifying undertaking. The interviewer said that he did

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not doubt his courage and his sense of adventure but questioned what possible application this feat of adventure would have, given that Boeing, Airbus and the airliners were not interested in the technology and did not think it would have any great future use. The interviewee said, with, I imagine, a shrug—it was on the radio, but it sounded like he was shrugging his shoulders in the way that only French-speaking people can—“That is to be expected. The inventors of the candlestick did not invent the light bulb.” It was a rather Eric Cantona-esque moment. However, he was making an important point, which is that we cannot, in our politics, always be risk-averse and always in the business of preserving the past rather than trying to seize the opportunities of the future. If we allow politics, in all parts of this House, in all parties, to be about how we can frustrate, regulate and tax light bulb inventors, and subsidise and prop up candlestick manufacturers, we will find that world events—in a globalised economy with very rapid technological, demographic and economic change—leave the House of Commons behind and trust in politics subsides further. That would be hugely regrettable.

We have made enormous progress under this Government in this Parliament, but, whichever Government are in office after the general election, I urge the people in that Parliament and the leader of that Government to be visionary and ambitious for our country, because we can have a great future ahead.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. The Chairman of Ways and Means said at the beginning of the debate that a large number of Members wished to speak, and he asked them to speak for less than 10 minutes. Two Members have achieved that, so I now have to impose a time limit of seven minutes on Back-Bench speeches.

4.5 pm

Mr Russell Brown (Dumfries and Galloway) (Lab): Thank you for choosing me as the starting point for the reduced time limit of seven minutes, Madam Deputy Speaker.

I wish the hon. Member for Taunton Deane (Mr Browne) all the very best for the future in whatever he does. I will not engage with him in any kind of Eric Cantona-esque thoughts because I would probably do nothing more than confuse myself.

My right hon. Friend the Leader of the Opposition was exactly right to say that any recovery we have seen has not been a national recovery. I will return to that in reference to my constituency. I sat through his response to the Chancellor, and from the Opposition Benches the faces of both the Prime Minister and the Chancellor of the Exchequer were an absolute picture. I just got the impression that they wanted to be anywhere other than on that Front Bench.

When my right hon. Friend mentioned table 2.4 on implied departmental expenditure limits, on page 69 of the Red Book, it became glaringly obvious that there are still some major cuts to come. In fact, the OBR spokesman has said that the cuts will be on a greater

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scale than anything we have seen. From looking at the Red Book, we know that the return of a Conservative Government means major cuts in 2016 and 2017 followed, surprisingly, by an increase in spending thereafter. That may be just in time for the 2020 election, but perhaps that is just my suspicious mind. What if the long-term economic plan, as it is called, goes wrong, just as the economic plan of the past five years has not got rid of the deficit, as was promised in the Chancellor’s first emergency Budget?

On the issue of savings and annuities, the Chancellor said towards the end of his statement:

“First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible.”

I do not have much of a problem with the policy or the concept, but there is a risk: the public will suddenly be exposed to a risk. I would tell him that such people do not need the right guidance, but they do need good, sound, solid advice. The vultures are circling and waiting to pounce, and the last thing we need is a different form of mis-selling that exposes the most unfortunate in our society.

I said at the beginning that this has not been a national recovery. I constantly share with the House the desperate plight of my constituency and the problems faced by many of its residents—not only the unemployed, but those in working households. Youth unemployment among 18 to 24-year-olds in Dumfries and Galloway has been above the national average every month since this Government came to power in 2010, and February’s figures showed the UK at 3.2%, Scotland at 4% and Dumfries and Galloway at 4.3%. The area is the lowest-paid region in Scotland, and it speaks volumes that the current average wage in the area is lower than when Labour left office. In 2010, the average hourly wage was £11.17, 11.3% below the national average. Last month, that average hourly wage was £10.96, 16.5% below the national average. The number of people in full-time work in 2010 was 34,100, but that has fallen to 33,300. So we are blighted with below-average wages, under-employment and a hard-core group of some 500 young people who are crying out for an employment opportunity and a chance to prove themselves.

The hon. Member for Fareham (Mr Hoban) said that we cannot ignore the deficit, and he is absolutely right, but we also cannot and dare not ignore the fact that some local economies are suffering and are not part of any recovery that the Chancellor painted in his Budget today. Once again, great play has been made of the increase in the personal tax-free allowance—going up to £10,800 next year and £11,000 the year after that—but only those working in excess of 31 hours a week and earning above the minimum wage will actually benefit from those increases. The employment profile in my area clearly indicates that many will see no benefit.

Small businesses are the lifeblood of the economy in my area. Some small businesses have made it clear to me over the last few years that it was a great boost to them when the previous Labour Government reduced VAT to 15%. Those businesses saw a real benefit from the reduction, and could employ one or two additional people. That is important, because if every small business in my constituency took on an additional pair of hands, there would be no unemployment. The fact that the

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Government have not ruled out a VAT increase, if the Conservatives were to win the next election, will be a worry to small and medium enterprises not just in Dumfries and Galloway, but—I strongly suspect—across the country.

The economy in my area cannot sustain another five years of Conservative Government. That is why May will present the country with an opportunity to take a different direction—a direction and a better plan that puts working people first. It will take a Labour Budget to deliver that.

4.12 pm

David Rutley (Macclesfield) (Con): I wish to add my thanks for the great work that the hon. Member for Taunton Deane (Mr Browne) has done during his service in the House. I worked closely with him in the Home Office and he did an outstanding job as a Minister. His decision to leave the House will be a sad loss to us.

It is a pleasure to speak in this debate, because the Government’s long-term economic plan is working and Britain is back in work with record levels of employment. We accept that further work remains to be done to achieve our aims, and that is our theme—we have achieved much, but there is still further to go. That is the driving force behind the Budget. It is a go-ahead Budget for those who want to get on, whether in Macclesfield or across the country. It includes support for savers, pensioners and hard-working families—and for small businesses, as the hon. Member for Dumfries and Galloway (Mr Brown) pointed out.

In Macclesfield, we have seen unemployment fall by more than 50% since 2010. That is a significant fall that is making a real difference in the lives of many people and I do not want Labour to put that in jeopardy. The Budget shows that we are the optimists. We have realistic plans and we are the party of ideas, leading the agenda that will keep the momentum of the British economy moving forward, with more jobs and greater success. That is particularly important in the north-west—I represent a seat in that area—where gross value added per head has grown by 3.4% per annum according to ONS statistics, a record unsurpassed in other parts of the country. I welcome that. After the disaster of the last Labour Government, and their internationally poor performance, the UK has now got an internationally praised rate of growth—the fastest in the G7, as we heard today. We have improved our position in the important international league of competitiveness, with rates of growth that are sustainable, unlike the unsustainable growth rates that were mentioned earlier.

The Government have delivered, the Budget will deliver more, and the next Conservative Government will deliver more again. No stone has been left unturned by the Government in their attempt to reduce regulatory burdens and enable the financing and growth of British businesses. It is right to continue those important efforts.

Specifically, we need to focus on enabling opportunities in the north-west. Many Members on both sides of the House want to rebalance our economy, which is why we are seeking to create a powerhouse of the north. There will be an extra focus on infrastructure projects in the north, such as the northern hub. We will ensure that there is extra capacity on trans-Pennine rail routes. We will focus on key sectors in the economy, in particular life sciences, which are vital in north-east Cheshire and

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Macclesfield. It is vital that we transfer power and finances to unleash civic renewal and to take the concept of the powerhouse of the north forward. That will require strong local partnerships. The Government will work not just in word but in deed to take this forward. We saw that today, with the announcement by my right hon. Friend the Chancellor of a new pilot to retain and pool 100% of additional business rates growth between Greater Manchester and Cheshire East council. That is the sort of strategic partnership we want between city and county to drive growth in the north and across the country. That success breeds growth. This is a pro-growth agenda, a pro-north agenda and, importantly, a pro-small business agenda.

Small businesses are the engine of our economy, particularly in terms of creating jobs. Since 2010, the total number of businesses in the UK has grown by a staggering 760,000 to 5.2 million, the highest number ever. The number of employers has increased since 2010 by 52,000—another fantastic achievement. There are surely more of the 4 million or so small businesses currently without employees—76% of all businesses—that could take on an additional member of staff given the right market conditions. We have been working hard to create those conditions. There are signs that this is happening, as the Federation of Small Businesses stated on the publication of its latest “Voice of Small Business Index”.

To ensure that the economy continues to thrive, we need to keep the focus on optimal conditions for the four Es: the entrepreneurs, the employers, the exporters and the employees. We want to keep the focus on people who are new to those roles. We want to help them to move forward and to get ahead, particularly those who do not have family history in these areas. We want to be the party of opportunity and ambition to help them to achieve their dreams.

We have record levels of self-employment, which is to be celebrated, but there is a lot more that can be done to help first-time entrepreneurs. The new enterprise allowance has helped. Today, we heard in the Budget the announcement of the abolition of class 2 national insurance contributions for the self-employed. That, combined with annual tax returns being fundamentally changed, will help more people to achieve their ambitions.

We have done more to help first-time employers. We have to do more to help to signpost the opportunities available and tackle the perceived and real barriers that confront them in taking forward their ambitions.

We want to do more for exporters. We heard about the improving current account deficit. We are on the right track, and I am pleased that the Chancellor announced today that more resources will be available for UK Trade & Investment to support our vital work in China.

We must not forget first-time employees. We have to help more young people in particular to get across the line and get that first job. We have done lots to enable more people to take on apprenticeships and traineeships. We have looked hard at how we can help to improve academic rigour. Real wages are now improving and there have been increases in the minimum wage. A lot is being done, but there is more to do. I hope very much that the voters, not only in Macclesfield but across the country, will recognise the economic achievements of this Parliament and the aims of this Budget, and vote for a Conservative Government to get the job done.

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4.19 pm

Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): I would like to begin by exploding the austerity myth, the so-called “mess Labour left behind”, which is repeated ad nauseam on the Government Benches. The myth is Labour’s excessive public expenditure. The reality is that on the eve of the 2008 international financial crisis, public spending was almost exactly the same as it was in the later years of the chancellorship of the right hon. and learned Member for Rushcliffe (Mr Clarke), when public expenditure stood at 39% of GDP.

It is absurd to suggest that Labour created a worldwide economic crisis. Indeed, the current Chancellor called for less regulation of the banking sector—the very banks that caused the problems we are still dealing with—in the months preceding the crash. William Keegan, the distinguished economic commentator, wrote recently that

“for all the apparent political success the Chancellor and his colleagues have had in making people believe them, the charge simply does not stand up.”

We have seen something similar in Scotland: reality turned on its head, facts switched into fallacy, rhetoric in place of reality. Last week, the “Government Expenditure and Revenue Scotland” report showed that with the SNP’s fetish for fiscal autonomy, and even including a geographical share of declining oil revenue, the amount of revenue raised in Scotland would be significantly less than the total Scottish expenditure by both the Scottish and UK Governments—a deficit of £6.5 billion. This is more than half of what is spent on the NHS in Scotland each year, and the equivalent of every person in Scotland losing £800. “So what?”, they say. Crushing the standard of living for pensioners and further impoverishing the struggling; destroying the life chances of young people and inflicting more hardship on hard-working families; putting at risk the NHS; lowering the educational opportunities for Scots; cuts to tax credits, child benefit and pensions; a harder future with less support and even less hope—all this, we are led to believe, is a price worth paying for the imposition of an ideology. In Holyrood, the obsession is with independence and its painful precursor, fiscal autonomy. With this coalition, as we have seen again today, the ideological obsession continues—personified by the Chancellor, whose Budget aims to cut public expenditure, reduce taxes for the rich and deliver for the few, not the many.

People are hurting. The Chancellor failed miserably to meet his own deficit target. My constituents are suffering from declining incomes and failing to find work. Hard-working families in my constituency are on average £1,600 a year worse off than they were in 2010. Stagnant wages, with low-paid and insecure work, are the reality for many of the people I represent. Of course they are hurting. Some 1.4 million people in Britain are on zero-hours contracts, with some of them reliant on text messages to tell them how many hours of work they will get that week. The truth is that unemployment has been replaced by underemployment, with the state subsidising businesses profiting from the low wages they pay their workers. As a result, tax receipts are more than £68 billion lower and receipts from national insurance contributions £27.3 billion lower than they were expected to be five years ago.

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The working poor are increasing in number in our country, and many of them are forced to rely on food banks just to survive. The Trussell Trust told us that in 2009 we had one food bank in Scotland, but today we have 48. I want to live in a society where there is no need for food banks. In my constituency, unemployment is at 3.8% and youth unemployment at 5.3%—both well above the UK average. The average income in my constituency is lower than the UK average, and 3,785 children live in poverty. Government support is not a dispensable luxury; it is a necessity in order to survive, and for some it is simply not enough.

Great progress was made under the last Labour Government, and we should not underestimate it. More has to be done, and I believe more will be done. My constituents and the rest of the country simply cannot endure another five years under the Tories. I have great faith that on 7 May our country, the United Kingdom, will choose to be governed fairly—and that means a Labour Government.

4.25 pm

Charlie Elphicke (Dover) (Con): It is a great privilege to follow the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke). My experience is sharply different from his, as I represent Dover and Deal. Before I was elected to Parliament, under the last Labour Government the number of unemployed claimants in my area went up a shameful 50%. Under this Government and their clear plan, which has been implemented and is working through, the number has fallen dramatically by nearly 40%.

The right hon. Gentleman told us about his constituency experience, but I have looked at figures indicating that the difference was even sharper there. In the previous Parliament, the number of unemployed claimants in his constituency went up by 100%. Since this Government came to power, the number has fallen by 40%. This picture does not apply only to Dover and Deal or to Coatbridge; it applies across the country. We have seen a jobs revolution, which I put down to sticking to our long-term plan.

There are now 2.3 million more people in business jobs and nearly 750,000 vacancies available at any time. It is a dramatic change from how things were. As a country, we now have a record number of people in work, a record number of job vacancies and the lowest unemployment rate since 2008. My constituents tell me that we have come a very long way, and they wonder why anyone would want to return to how things were five short years ago. That provides the key issue for the next election: do we want to return to the economic chaos of the past and the risk of a Labour Government propped up by some kind of SNP deal, or do we want to stay the course and ensure stability by continuing to work through our plan? It matters to our constituents because their jobs matter.

More than 1,000 new jobs have been created every day that this Government have been in office, and 1.9 million more people now have the self-esteem and financial security of a pay packet. I think that matters to people—having that sense of stability and personal security. This is a jobs-led recovery that has done nothing short of transform people’s lives for the better on a daily basis. We are getting people into full-time work, and we are making work pay.

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Let me spend a few minutes looking at the things people say when they rubbish the achievements of this Government. Let us start with zero-hours contracts and remember that the previous Government had 13 years to act on them. In fact, they brought forward some form of White Paper back in 1998, and then spent the rest of their time in office doing nothing whatever about them. That was shameful.

It is also shameful that Labour Members talk about how many people are on zero-hours contracts when they know that it is only 2.3% of those in employment—just one job in every 50. Over 80% of part-timers choose to be on these kinds of contracts because they suit them. Indeed, this Government have reformed zero-hours contracts to get rid of the exclusivity clause, so they should now be called flexible work contracts, which better describes them. They can no longer be used to exploit people in a way that the previous Government were unwilling to do anything about. In addition, we all know that the Office for National Statistics has directly rebuked the Labour party for making misleading claims about these flexible work contracts. I am proud that the Government have reformed zero-hours contract to make them fairer and to end the exploitation that the last Government allowed to take place.

Labour says, “These are all part-time jobs, and no one can get a full-time job.” In fact, more than three quarters of all the jobs that have been created since the election are full time. The number of full-time jobs has increased by 1.42 million since 2010, and the 481,000 on- year increase has accounted for 95% of the rise in employment over the past year. I think that that is dramatic. I think that it is a jobs revolution.

Labour says, “Oh, that is a London recovery”, ignoring the fact that nearly three quarters of the rise in employment since 2010 has taken place outside London. Every region has seen a fall in unemployment in the past year. Labour says, “Young people cannot get a job, and youth unemployment has gone through the roof.” In fact, youth unemployment has fallen by 181,000 in the past year. Excluding those in full-time education, there are now fewer than half a million unemployed young people, and the number of young people claiming jobseeker’s allowance is the lowest since the 1970s.

Labour says, “Wages are terrible, and all the new jobs are rubbish. They are all manual, unskilled jobs like shelf-stacking, and no one wants them.” That is not true either. Since 2010, two thirds of the rise in employment has been in higher-skilled occupations, and there has been a real-terms rise in pay in the past year. Regular pay for employees is up by 1.6% on year, and total pay is up by 1.8%. Over the same period, the annual inflation rate was 0.3%.

Then Labour say, “Women cannot get jobs.” In fact, a record number of women—14.48 million—are in work, and the female employment rate is at a record high of more than 68%. Moreover, the pay gap between men and women has been all but eliminated among those under 40. I think that that is a tremendous record of achievement.

The final lie that I want to nail is that long-term unemployment is increasing and the Government have been fiddling the figures. Actually, the Government have un-fiddled the figures. Labour used to fiddle them by sending people on courses when they had been jobless for two years, and then treating them as new

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claimants when they finished their courses and went back to claiming jobseeker’s allowance. This Government ended that abuse and un-fiddled the figures, but long-term unemployment has nevertheless fallen by 202,000—24%—in the last year, to 629,000, and the number of people claiming jobseeker’s allowance over the past 12 months has fallen by 11% since the last election.

Much has been done, but there is much more to be done.

4.32 pm

Bill Esterson (Sefton Central) (Lab): It is always interesting to enter the fantasy world of the hon. Member for Dover (Charlie Elphicke). He spoke of financial security and flexible work contracts, but, as we heard from my right hon. Friend the Member for Wentworth and Dearne (John Healey), the problem is a weakness in both employment and pay. That is one of the reasons why the deficit has not been paid off. The so-called long-term plan has been a failed plan. The Government promised to eradicate the deficit in one term, but they have failed to do so, and one of the reasons for that failure is the nature of the employment that the hon. Gentleman has just described.

A number of Conservative Members are following the Conservative campaign headquarters script very closely. They claim that the crisis became international on 1 May 2010, when, miraculously, it suddenly changed from what they describe as Labour’s crisis under the last Government to a euro crisis under this one. That is nonsense as well. We have been given a fantasy Budget by a fantasy Chancellor.

I am afraid that what is happening in my constituency is typical of what is happening all over the country: low pay, zero-hours contracts and part-time work. A third of my constituents who are in work are paid less than a living wage, and people have lost an average of £1,600 a year. There has been a recovery for a few at the top, with tax cuts for millionaires, but no sign of recovery for the majority. Just the other day, one of my constituents told me that he was struggling to make ends meet. He has not had a pay increase for years, and he struggles to afford his mortgage, the energy bills, transport, and all the other things that he and his family need. A lack of job security, as well as low pay, leaves many people feeling squeezed, and the position is the same all over the country.

Pensioners are feeling it too, with high energy prices. Added to that, we have a crisis in the NHS—people cannot get a GP appointment and there are huge delays at A and E—all on top of, and partly caused by, cuts to social care. Yet there is nothing in this Budget about the cuts to social care or the cuts to councils, nothing about what the future might look like for local government and nothing about our NHS. All we can conclude is that the Conservatives and their Liberal friends just want as small a state as possible, and that is what they have got in store for the people of this country if they win again. We have had a failure from this Government over five years and we do not need more failure over the next five as well.