Budget Resolutions and Economic Situation

Angela Smith Excerpts

Wednesday 20th March 2013 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

It is a pleasure to follow the right hon. Member for Wokingham (Mr Redwood). He has become something of a regular fixture on the first day of the Budget debates during the years I have been in the House. I shall start by agreeing with him about the importance of certain exemptions from the climate change levy. I have the honour of representing a steel area in Rotherham. Steel is one of this country’s strategic industries, and the Chancellor’s announcement today will be very welcome in my constituency. It will help to secure the industry for the future, and I hope that it will also help to secure extra investment from Tata Steel.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

Will the announcement not also help important ceramics industries such as Naylor Industries in Barnsley, and Hepworth’s?

[John Healey]

It will indeed. This is a result of strong cross-party campaigning by Members including my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) and me.

I also welcome the Chancellor’s decision to axe the beer duty escalator. I pay particular tribute to the Economic Secretary to the Treasury for his hand in that. In fact, the escalator was introduced in 2008 for a four-year term. It should have ended last year, but instead of ending it, the Chancellor extended it. I am glad that he has seen sense and realised that we have hit the revenue maximisation point at which the tax rate had gone up, but the tax take had started to go down. I welcome that: it will be a boost for the brewing industry, which is a great British industry, and it will be a boost for the pubs, too.

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[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

It was in June 2010 that the Chancellor presented his emergency Budget. He said then that the measures he was announcing had

“set the course for a balanced budget and falling national debt by the end of this Parliament.”—[Official Report, 22 June 2010; Vol. 512, c. 180.]

However, today our economy is flatlining. We have a cost-of-living crisis, borrowing is increasing and we have lost our triple A credit rating. Since the last spending review the economy has grown by just 0.7%, rather than the 5.3% that was forecast, and last year the country went through a double-dip recession. Instead of the books being balanced by 2015, as the Chancellor promised, national debt as a percentage of GDP is not predicted to fall again until 2017-18. The whole country can see that, when judged by actions not words, this Government have failed every test they have set themselves. It is people up and down the country who are paying the price for their failure—families hit by the mummy tax; part-time workers who have lost tax credits; the 250,000 people in this country who have had to access emergency food aid or visit a food bank last year so that they did not go hungry; and the 200,000 more children who will be pushed into poverty as a result of this Government’s assault on support for families.

Today was a chance to change course—a chance to put right the mistakes of the past 33 months and correct a failing economic strategy. Instead, all we got was more of the same from a Chancellor and a Prime Minister who, despite all the evidence, refuse to accept that their plan simply is not working. In 17 days, millionaires will get a tax cut, so why do my constituents have to wait more than 900 days for help with child care?

[Angela Smith]

It has emerged today that £38.5 million of shares have been given to nine top executives by Barclays bank. Does not that underline the point my hon. Friend is making about how millionaires seem to be faring much better under this Government than people on low pay or middle incomes?

[Luciana Berger]

It is incredibly insensitive that that announcement was made today. People up and down this country will rightly be shocked by it. In a moment I will reference the fact that we are seeing the gap between the richest and the poorest in our society widen. The Government should be doing everything to ensure it is closed.

I acknowledge and welcome the extra money we have heard about today for infrastructure projects, but I note that the majority of it will not be delivered until 2015-16, while work on many of the projects is not expected to begin for years. We must not forget that the Chancellor has spent £12 billion less on infrastructure over the past three years than under the plans he inherited. What is needed is a plan to get our economy growing and to create more jobs across the country right now. The fact that we have a chronic shortage of jobs was reinforced to me last week when I held a jobs fair in my constituency, which was attended by 66 companies. They ranged from local businesses such as the Liverpool Dental Spa and Davey’s Chemists to big global companies such as Nutricia Danone. On the day, more than 500 different job and apprenticeship opportunities were on offer.

My jobs fair last Friday was a great event, with more than 2,000 people coming through the door. That far exceeded my expectations; we had printed only 1,000 welcome packs. Despite what the Chancellor would have us believe, I did not meet anyone whom he would describe as a shirker. That point was also made in a letter to the Liverpool Echo this week from Bernie Hunt of Kensington Fields, a section of which I want to share with the House. Bernie said:

“What a surprise I had on March 15. I called in at the Wavertree Jobs Fair…half expecting to have the car park to myself as Mr Cameron’s Welfare State dependents were supposed to be too busy watching daytime TV recovering from the dole fuelled bender from the night before. What I actually found was those desperate for the chance of a job, or even training for a job, packing the place to the rafters.”

The fantastic turnout reinforced the fact that people who are out of work are not shirkers, but the real problem is that there are not enough jobs. Even if we filled every one of those 500 job and apprenticeship opportunities available at the jobs fair, three quarters of those who attended would still have missed out.

We have learned today that 2.52 million people are still out of work, with youth unemployment at almost 1 million again. There are still more than five people chasing every job vacancy, and even those who can find work still have to accept lower living standards.

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[Angela Smith (Penistone and Stocksbridge) (Lab)]

It is a pleasure to follow the hon. Member for Dover (Charlie Elphicke).

We heard a lot in today’s Budget statement about the “aspiration nation”, but back in 2010 we were told that we could judge the Chancellor by his record and his economic tests. I agree with the Chancellor: we should judge him by his own economic tests, especially now that he has been in his job for three long years. Back in 2010, he told us that he would ensure macro-economic stability by maintaining the UK’s triple A rating. Well, we all know what happened to that, with Moody’s downgrading the Government’s status last month. Back in 2010, he also told us that he would rebalance the economy, creating the conditions for higher exports. A quick look at the statistics shows exports falling in monetary terms and the balance of trade deficit increasing as a percentage of GDP. Quite clearly the UK’s trade with the rest of the world is no success story, despite the 25% devaluation of sterling.

Another promise was that the Chancellor would get people working and reduce youth unemployment. Unfortunately for the blighted lives of the young, he has completely failed on that, too. There are now almost 75,000 extra young people out of work compared with 2010. Worse still, although the Government make a virtue out of the fact that overall unemployment remains static, they need to consider the fact that, without growth, it means that more people are creating less wealth and the country is becoming less productive.

[Mel Stride (Central Devon) (Con)]

The hon. Lady is quite right to focus on employment. Will she congratulate the Government on arriving at a position where we now have around 30 million people in employment, which is the largest number on record?

[Angela Smith]

But the country is becoming less productive. In fact, productivity has declined by 2.4% over the last year, storing up massive problems for the future.

On borrowing, the Chancellor told us that national debt would be falling as a percentage of GDP by 2015-16 and that he would bring down the deficit. It is no secret now that he will miss the first target by a mile, with the OBR saying that debt will not start falling as a share of GDP until at least 2017-18. As for borrowing, it was 6.6% higher for the first 10 months of the 2012-13 financial year than for the same period in 2011-12.

[Alison McGovern]

Is my hon. Friend as worried as I am that so far the Chancellor does not have a very good record at hitting the OBR forecasts? Let us not rely on him for hope.

[Angela Smith]

I completely agree with my hon. Friend. Indeed, when it comes to growth, the Chancellor stood at the Dispatch Box in 2010 and confidently told the House that by this financial year the economy would be on the mend, with growth forecast at 2.8%, but we now know that his forecast was out by 2.5 %. Today, he had to downgrade growth for this year yet again, to 0.6%.

We have a downgraded Chancellor who has sucked demand out of the economy with his ill-thought-through VAT hike and his draconian cuts to public spending. Those cuts have gone too far, too fast. If the latest estimates are right, spending cuts have so far wiped 1.4% of growth out of the economy, and the biggest cuts are yet to come. But at least the millionaires of Sheffield and Barnsley will have extra money in their pockets this April when the 50p tax rate is abolished.

The measures that the Chancellor has introduced today will go nowhere near to addressing the problems that he has caused. Instead of plan B, we have inadequate measures that do not even go halfway towards addressing the problems facing the country. The child care package announced yesterday, for instance, is designed to help hard-pressed working families, but unfortunately it will not come into operation until after the next general election. Once again, it is jam tomorrow. There is not much on offer for the parents and families struggling with the costs of child care today.

There is no doubt that house buyers might be thankful for the help being offered today, but a quick look at the Chancellor’s record on housing does not bode well. This is the same Chancellor who, in 2011, unveiled what was termed a “radical and unashamedly ambitious” strategy to give the housing industry a “shot in the arm”. My right hon. Friend the Leader of the Opposition referred to this earlier. At the heart of that strategy was a scheme which the Chancellor claimed would help 100,000 to people to buy their own homes. To date, just 1,500 people have realised that dream. That is a 1.5% success rate, which is almost as bad as the Work programme—or as good, depending on which way we look at it.

A year later, we had what was described as the Government

“rolling its sleeves up and doing all it can”.

That included introducing a £10 billion guarantee scheme which, while welcome, has yet to deliver a single penny of support for house building. It took the Government six months to release details of the scheme, and it will not be open to receive bids until April this year. Last year, housing starts fell by 11% to below 100,000, which is less than half the number required to meet housing need, and I am not convinced that the help announced today will kick-start the stagnant housing market.

Then we come to infrastructure. The £3 billion a year—£15 billion over the next decade—is nowhere near what we need to invest in roads, schools, transport and housing if we are going to get the economy growing again and build for our economic future. If, as now seems possible, we are entering the third recession in as many years, we needed to see something much more dramatic today. However, the Chancellor has failed to deliver.

Let us take VAT as another example. The Opposition have said that he should temporarily reverse his VAT hike, because consumers need help and they need it now. Reversing the hike would have alleviated some of the pain they are feeling, and it would have helped the pound in their pocket go a little further.

[Ian Swales (Redcar) (LD)]

Will the hon. Lady give way?

[Angela Smith]

No! [Interruption.] I have given way twice and I am not giving way again. I do apologise.

The Chancellor should also dramatically reverse the cut he made to the last Labour Government’s capital spending plans, given that spending is now £12.8 billion lower, year on year, than Labour planned. At a time when the economy is barely moving forward, we need the Government to invest. We need to get the builders back to work, to create the homes to give first-time buyers the future they are looking for. In the process, we need to strengthen our economy. For every 100,000 homes built, 1% is added to our gross domestic product, but this is about more than that. There are millions on council waiting lists, there are first-time buyers who cannot get on to the housing ladder, and homelessness has rocketed. Building houses is good not only for the economy but for society, too. Before it is too late, we need to prevent another lost generation from being scarred by unemployment, by guaranteeing every young person who has been out of work for a year or more a job, funded by the tax on bank bonuses that I mentioned earlier.

It is never too late for this Chancellor to change course. Consumers need to be given confidence to spend again; companies need the confidence to invest again; banks need to lend again to small companies that desperately need finance to invest. The country is in desperate need of infrastructure investment. High Speed 2 is welcome, but we are not going to get HS2 for some time yet. We need that infrastructure now. There are many other road and other transport schemes, and how many primary schools do we need? We know that in every part of the country, pressure on places is increasing; we need to get those schools built. By doing that, we could help to kick-start the economy. The Government need to increase their tax receipts to pay for quality, efficiently produced public goods and services.

Unfortunately, this Chancellor seems to be stuck in a rut—a self-defeating ideological rut of austerity piled on austerity. It is a rut that could, I believe, mean many years of sub-normal growth, with the economy settling at a level much lower than its potential would allow. For ordinary people, that will mean living with high unemployment, falling living standards and the continual deterioration of many of the public services on which our constituents depend. The Chancellor should change course now—decisively and with confidence—before the damage being inflicted on the UK economy becomes even more deeply entrenched and damages us permanently.