Budget (North-East)

Chloe Smith Excerpts

Tuesday 17th April 2012 Westminster Hall

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

This has been an interesting debate, and I thank hon. Members for their contributions, whether in a constricted four-minute speech or an intervention. The hon. Member for Gateshead (Ian Mearns) spoke with great passion about his constituency and the broader region, and I hope in the time available to address some of his concerns and those of other hon. Members. With a smile on my face, that gives me a chance to place on the record the apology that I have already given to the hon. Member for Bolton North East (Mr Crausby) for having mistaken his constituency on the Floor of the House last month.

[Roberta Blackman-Woods]

Will the Minister say whether she has visited the north-east to look at the impact of the dreadful Budget on that area, and to refresh her geography at the same time? Perhaps more significantly, has she asked her officials to look at the impact of the Budget on the north-east, and to come up with measures that will support growth in the region?

[Miss Smith]

If the hon. Lady had let me press on, she would have heard the answer to much of what she asks a little sooner. Let me reassure her that I have often visited the north-east, although not since the Budget, so I look forward to a chance to do that, perhaps in the next recess. As many Members have said, it is a fine region and a great place that we should all seek to support.

Let me return to the matter in hand. In the Budget, the Government made it clear that they have three priorities: first, the creation of a stable economy; secondly, a fairer, more efficient and simpler tax system; and thirdly, reforms to support growth. The 2012 Budget, together with the national infrastructure plan that we published in last year’s autumn statement, set out the Government’s latest steps towards achieving those priorities, based on a model of sustainable and balanced growth, including, of course, in the north-east.

As hon. Members have made clear, the north-east faces difficult challenges. It remains, however, a significant contributor to the national economy, and I would like to reiterate and highlight the numerous good news stories that have been mentioned and involve companies that are already investing in the north-east and creating jobs for people in the area. For example, the Japanese automotive company Vantec has created 230 new jobs and secured 800 existing posts in Sunderland. Nissan has announced the creation of 225 jobs at its Sunderland factory and 900 more with its British suppliers. Both companies have been pledged money from the regional growth fund, which illustrates the difference that that initiative makes on the ground. I join other hon. Members in celebrating the relighting of the blast furnace at the SSI Redcar steelworks, which my hon. Friend the Member for Redcar (Ian Swales) mentioned earlier in the debate.

The reforms set out in the Budget will give businesses and individuals in the region a further boost on top of those private sector initiatives. Corporation tax will be cut by an additional 1% on top of the cuts announced last year. From April this year, the rate of tax will be reduced to 24%, and it will ultimately fall to 22% by 2014—a competitive rate when we consider our competitors around the globe. Let me reiterate that the Budget increases the personal tax allowance by £1,100, which will take 34,000 people in the north-east out of tax altogether. It also increases the Growing Places fund, which will provide additional funding for the infrastructure that is needed to unlock developments that lead to jobs and growth. Local enterprise partnerships in the north-east will receive a further £11 million.

I also confirm that Newcastle has been selected to become a super-connected city. I do not sneer at that; hon. Members may fail to welcome it, but the city will receive up to £6 million of funding to deliver ultra-fast broadband to residents and businesses, which is valuable. On top of that, the Budget includes investment of almost £28 million in stalled development projects within the north-east.

Hon. Members were keen to talk about capital spending in percentage terms, but let me provide some absolute terms and mention £4.5 billion for the intercity express programme; £260 million for the new Tyne tunnel; £57 million for the Tees valley bus network; £350 million to reinvigorate the Tyne and Wear metro; and £82.5 million for a new Sunderland bridge, which perhaps hon. Members will welcome.

[Grahame M. Morris]

I am grateful to the Minister for giving way as I know that time is short. However, she is reading out a list of projects that have already been delivered and were planned by the previous Government. Can she equate the £10 million in the Growing Places fund to a distance of new motorway, for example? Would it buy one, two or three miles of new motorway? We are talking about relatively modest sums of new money.

[Miss Smith]

I am afraid that my mental arithmetic does not extend to working out pounds per mile on the spot, but I will be happy to look into the hon. Gentleman’s question.

I will continue with my comments, which I hope will help hon. Members. I want to talk briefly about support in the Budget for individuals and families to buy new-build properties with a 5% deposit through the NewBuy scheme, and I wish to put it on record that the Budget increases the maximum right-to-buy discount—[Interruption.]

[Sir Roger Gale (in the Chair)]

Order. I am sorry to interrupt the hon. Lady. Hon. Members have participated in the debate and should do the Minister the courtesy of listening to her response.

[Miss Smith]

Thank you, Sir Roger. The new right-to-buy discount introduced by this Government is more than three times the current limit in the north-east of £22,000.

In his opening comments, the hon. Member for Gateshead used words such as “outdated”, and various other words have been bandied around today. I think that the hon. Gentleman, and other hon. Members, need to look around and see the threat to today’s economy, which in one word is debt. Debt is a problem both in the UK and globally, and this Government are determined to sort it out. Fiscal consolidation is necessary. Those in the Labour party seek to spend more, borrow more and owe more, and therefore to pile more debt on their children, and indeed my children. The hon. Gentleman, and those on the Opposition Front Bench, still believe that child benefit should be claimed by millionaires. We do not; we believe that there should be consolidation.

[Ian Mearns]

Will the Minister give way?

[Miss Smith]

I am afraid that I have no time. If we do not tackle our deficit, it will be worse for everybody. The really outdated view is to burden future generations with more debt, and for the Government to fail to take responsibility and consign all regions in the country to economic disaster. One need only look to the eurozone to get the picture. The Government’s actions have kept our interest rates closer to those in Germany than those in Greece, and made Britain a safe haven.

The topic of young people was raised by the hon. Members for North West Durham (Pat Glass) and for Hartlepool (Mr Wright). I am shocked that the hon. Gentleman thinks that it is patronising to believe that young people can start their own businesses and I disagree strongly. As a constituency MP, I make it my business to support Jobcentre Plus, the youth contract, the work experience programme and the Work programme—perhaps the hon. Gentleman acts differently in his constituency—and that is what I call working together to achieve things for our young people.

[Chris Leslie]

Will the Minister give way?

[Miss Smith]

No. I am afraid that I must move on. I know that the hon. Gentleman’s colleagues wish me to talk about regional or local pay.

[Chris Leslie]

It is a very quick question. I wish simply to ask whether the Minister will utter the words, “We’re all in it together”?

[Miss Smith]

The hon. Gentleman asks me to do that as well as to respond to other hon. Members in three minutes, but I value his Back Benchers more than he does, and I wish to talk about local pay. The hon. Member for Gateshead focused much of his contribution on that issue, and I wish to reassure him about something that he already knows. At this stage, the Government are not setting out detailed proposals; they are asking experts how public sector pay might better reflect local markets. Localising pay has the potential to improve the resources available to private sector businesses that need to compete with higher public sector wages. It can improve or reduce unfair variations in the quality of public services, and tackle a limit on the number of jobs that the public sector can maintain created by having to support disproportionate wages. The principle of local pay has already been established, and I confirm, as has been mentioned, that the Labour party did that in 2007.

I will move on briefly to pasties and the sausage rolls mentioned by the hon. Member for Redcar. The point is that the Budget closes loopholes and addresses anomalies to ensure a level playing field. The National Federation of Fish Friers states:

“There should be a level playing field. Why should the UK’s fish and chip shops have to pay 20 per cent. on all the hot food they sell…when the bakery next door sells hot pies, pasties and sausage rolls free of VAT?”

The Budget seeks to introduce that level playing field.

[Mr Anderson]

Will the Minister give way?

[Miss Smith]

I am afraid that I do not have time because I must respond to concerns about local government funding and the claim that local authorities in the north-east have taken disproportionate cuts. As I have made clear, the previous Government left an appalling economic and financial mess, and we have a moral obligation to pay back our debts as quickly as possible. Therefore, tough decisions are necessary. The hon. Member for Gateshead will know that the formula grant in his area will be nearly £555 per person in 2011-12, compared with an average of £372 across England. That reflects the higher level of need in Gateshead, and I expect him to welcome that. In the light of issues raised by hon. Members, the Government’s key priority is returning the UK economy to sustainable, economic growth.

Before time runs out, I want to talk about local enterprise partnerships. Such partnerships have radically reshaped the way businesses and the Government interact at local level, and they mark a sharp break from the top-down, politically driven regional policy of the previous Government. The winners of the first two rounds of the regional growth fund are expected to create over 13,500 direct jobs and 25,000 indirect jobs in the north-east, including at Gateshead college in the hon. Gentleman’s constituency. The Government are taking forward an ambitious work programme that will assist with city deals for core regions, and I encourage all hon. Members present to engage with that.

[Sir Roger Gale (in the Chair)]

Order. Will hon. Gentlemen and Ladies who participated in the last debate and are leaving please do so quietly? As they are doing so, I thank everyone for their courtesy and patience this morning, which has allowed every hon. Member to have at least some say.