Budget Resolutions and Economic Situation

Luciana Berger Excerpts

Thursday 24th June 2010 Commons Chamber

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

I welcome you to your seat, Mr Deputy Speaker. I also congratulate the hon. Member for Camborne and Redruth (George Eustice) on his excellent maiden speech, and my hon. Friend the Member for Kingston upon Hull East (Karl Turner) on his.

Many of my hon. Friends have already raised their objections to the Budget. I share all those objections. As was pointed out by my hon. Friend the Member for Telford (David Wright), the Budget attempted to rewrite history, completely ignoring the world economic crisis. This is the first Budget of the 21st century that hits those who are worst off the hardest. Contrary to what was said by the hon. Member for Ealing Central and Acton (Angie Bray), who used the phrase “needs must”, the Tories told us throughout the election campaign that there would be no cuts in front-line services. There is no possibility of cuts of more than 25% in Government Departments without front-line services taking a hit.

I want to focus on two very different elements of the Budget which will have a negative impact on my constituency. The first is the appalling news that the Sure Start maternity grant is to be restricted to the first child. That raises a number of obvious problems, not least the moral hazard of cutting benefits for low-income families and their newborn babies when they need help most.

It seems obvious that, in the interests of all of us, children from low-income families should be supported as much as possible. The proposal in the Budget is less than clear. Will the restriction of the grant to a first child mean that those who did not take the benefit when they had their first child and are now having their second cannot receive it, even if they need it? That seems particularly likely to happen in a number of instances, especially following the recession. Moreover, the Budget seems to make no provision for a number of “blended” families. What of the mother with her first child who is the father’s third? Will that family be eligible for the grant? What of families in which a child is born while an older baby is still using the necessary equipment, and what of twins?

The Government will undoubtedly attempt to justify the cut by saying that the grant is intended to buy permanent equipment such as prams, cots and sterilisers, items that will last and can be used for siblings, but what their decision fails to recognise is that a great deal of the grant is used after the baby is born to offset the high cost of looking after a newborn child. The grant is often spent on nappies, milk, other food products, clothes, medicine, and any number of other perishable items that cannot be used for more than one child.

Furthermore, while it is somewhat more likely that a family with a second child will already have the necessary equipment, it is by no means reasonable to make such an assumption. That is especially true of low-income families who will often buy cheaper, less durable equipment that simply will not last long enough to be used by later siblings. Even if it were reasonable to assume that a pram, for example, could be used for a second child as well as a first, what of the third or fourth? The estimated cost of bringing up a baby during its first year is £4,000. I know from speaking to many constituents that the £500 Sure Start maternity grant has afforded babies in Wavertree a better welcome to our world.

The Chancellor said on Tuesday that his Budget would protect the most vulnerable.

[Robert Halfon (Harlow) (Con)]

The hon. Lady talked about cuts to front-line services in her constituency and I understand her wanting to protect those services, but why even in the boom times did her Government cut front-line services in my constituency, such as closing down the Territorial Army centre, cutting the budget of Harlow college by £1.6 million and closing down the Inland Revenue office? Why are Labour cuts ignored and Tory cuts condemned?

--- Later in debate ---

[Luciana Berger]

I thank the hon. Gentleman for his comments but I do not agree with them. My point was that the Conservatives campaigned during the election on a pledge that they would not cut front-line services. That will not now be the case.

[Toby Perkins]

Does my hon. Friend share my confusion? Have we not been told for the past six weeks that the Labour Government spent too much money? It appears now that we were cutting all the time. Is she as confused as I am as to the policy of the Government?

[Luciana Berger]

My hon. Friend makes a very good point. [Interruption.]

[Mr Tom Harris (Glasgow South) (Lab)]

My hon. Friend is making a powerful and significant contribution in talking about the difficulties that younger parents in particular have in bringing up their first and second children. What conclusions does she draw about the Conservatives’ approach to those difficulties from the fact that Conservative Members are mocking her and laughing when she is trying to make a serious point about the difficulty and cost of bringing up children?

[Luciana Berger]

I thank my hon. Friend for making his point and I am disappointed by the response from Conservative Members.

On Tuesday, the Chancellor said that his Budget would protect the most vulnerable. I urge the Government to address the question of what limiting support to the firstborn will mean in practice. No family that needs help should miss out and, contrary to the Chancellor’s declaration, this cut will affect rather than protect the most vulnerable.

The second very different element of the Budget I wish to raise is the remarkably short-sighted decision not to introduce tax relief for the UK video games industry, which makes a valuable contribution to the UK economy: in 2009, it generated £2 billion of sales, added approximately £1 billion to the UK’s GDP, raised over £400 million for HM Treasury in tax revenues, and employed more than 28,000 people. It is an export-oriented, high-tech, highly skilled, low-carbon industry.

As we speak, the best developers are leaving the UK and going to Canada and the USA. The UK lost 700 jobs in the sector from 2008-09; a full 7% of its work force. That not only is harmful to the UK industry and to games already in production but means that some games that would otherwise have been made in the UK are made elsewhere.

Why are so many of the video games industry work force leaving the UK at a time when global video game sales grew by 24%. between 2007-09? Why has the UK games development industry fallen from the third largest in the world based on revenue in 2006 to fifth place in 2009? It is because the UK’s principal competitors in Australia, Canada, China, France, South Korea, Singapore and the USA all received national or regional state tax breaks for games production. For example, in Montreal, Quebec, there is a five-year income tax holiday for foreign specialists and research and development tax credits cover 20% to 35% of qualifying expenditure.

Other competitive nations have taken a strategic decision that the video games sector is a key element of their economy. Research carried out by TIGA, the trade association representing the UK games industry, indicates that over five years games tax relief would create or save 3,550 graduate-level jobs, increase and safeguard £457 million in new development expenditure and save development expenditure that would be lost without tax relief. Most significantly, introducing games tax relief would increase and protect £415 million in new and saved tax receipts for HM Treasury—far outweighing the £192 million that games tax relief would cost.

Can the Minister explain why it is stated in table 2.1 of the Red Book that the non-introduction of video games tax relief would raise an additional £190 million over the next five years? How was that figure arrived at?

In my constituency and across Liverpool there are a number of video games developers: Genemation, Bizarre Creations, Magenta Software and Playbox. Sony Computer Entertainment, based at Wavertree technology park, employs more than 600 people. Games developed over the past 15 years in north-west England alone have produced and sold over 100 million units, equating to over £3 billion in revenue.

We have an outstanding record for vision and originality of games, but it is clear to me from having spoken to a number of people in the industry that there is a deep sense of frustration. All they want is a level playing field so that we can at least maintain the UK’s position, if not grow the sector, so that jobs are retained and we can compete on a fair basis.

The video games sector is an important and growing knowledge-based industry. More than a third of the work force are carrying out graduate-level jobs in games development. Average salaries exceed £30,000, which is above the national average of £22,000. There is absolutely no doubt that a cultural revolution is taking place in the games sector, whether in serious games such as educational programmes and defence training simulators or recreational games.

Interactive media industries are with us for the next century and we should be doing all we can to support the sector to be a world leader in the field. Just as we have film tax relief in the UK, the Government should uphold the commitment both coalition parties made before the election to have a games tax relief. Britain has traditionally been a leader in the field of video games development, and in many ways it still is. However, we cannot compete without the same tax incentive system that is in place in other countries.

Throughout the Chancellor’s speech on Tuesday, he kept on repeating that his Budget was an accelerated decrease in the structural deficit, but as I have shown through reference to just two of the cuts announced, it is actually an accelerated attack on families. It is an accelerated attack on those who are most vulnerable, on business and on growth and jobs. I will be voting against it next week.