Amendment of the Law

Debate between Baroness Bray of Coln and Kerry McCarthy

Monday 28th March 2011 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

The Government have had to face up to two challenges in this Budget. The first was to do with growth, on which the news presented to the Chancellor as he drew up his Budget was not good. The UK economy shrank by 0.6% in the last quarter and the Office for Budget Responsibility was forced to revise downwards its growth forecast for the next two years. Unemployment is more than 2.5 million, a 17-year high, and is rising rapidly, and again the OBR has had to raise its forecast. The Chancellor must know in his heart of hearts that it is simply not possible to reduce the deficit while the economy is shrinking, tax revenues are falling and the number of unemployed people is rising.

[Angie Bray]

Will the hon. Lady give way?

[Kerry McCarthy]

I am afraid I do not have time, as I want others to be able to speak.

Instead of listening to the mounting evidence that the plan is not working and preparing a fiscal plan B, the Chancellor is not for turning. He has stuck to his plan of cutting too far and too fast, and instead of a plan for growth that would create jobs, he has gone back to the failed Thatcherite ideology of the ’80s—that by simply removing regulations and lowering taxes, the private sector will rush in and save the day.

I welcome the announcement of a local enterprise zone for Bristol, of course—this Government have so little to offer us that we have to grab what we are given—but how long will it be before we see the benefits of such a move, and how will we ensure that this does not simply displace investment from other areas that need it just as much? The Work Foundation says that up to four fifths of the jobs created by enterprise zones in the 1980s were merely shifted from other areas. It also says the cost of creating such jobs was in today’s money £26,000 per person. We should compare that with the £6,500 cost per job created under the future jobs fund, which, as I recall, not very long ago the Conservatives were decrying as a waste of public money.

With the regional development agency axed, where is the strategic overview for the wider city region of Bristol to come from? Where are the sources of match funding? Where is the focus on, or funding for, our infrastructure needs? On infrastructure, may I once again make a plea for an integrated transport authority for the Bristol area, as that is badly needed? On housing, I agree with the National Housing Federation, whose representative said:

“Removing regional spatial strategies, without putting anything in their place, was a short-term mistake”.

The NHF has estimated that local authorities have already scrapped plans for more than 200,000 homes as a result of that, and that there may be no new social homes built until 2015. In Bristol alone, 9,600 planned homes were scrapped by the city council. Shelter says that only 39% of housing need is met in Bristol. Last year, about 10,500 people were on the waiting list for social housing, and with transfers included, the number was as high as 15,000, but only a few thousand people a year are being rehoused. There is a clear need for a strategic level of planning to ensure that local need is met.

The Government now promise a presumption in favour of sustainable development in the planning system, but neither that nor the promised national planning framework were set down in the Localism Bill, and that presumption would appear to be at odds with the Localism Bill itself, which gives nimby power to small sections of a community to block developments in a local area. It is therefore unclear whether or not local people have been given more say over planning decisions in their area.

I welcome the Budget’s proposal to speed up major planning decisions. Developers in Bristol have in the past complained to me that it takes a long time—years sometimes—to get approval for their big projects and that it is simply not financially viable to hang on in there and wait. I accept that the planning authorities do need a rocket put under them, but that must not lead to decisions being railroaded through without local people being given a proper say.

The second challenge the Chancellor faced in his Budget was to deliver help for ordinary people, and again he comprehensively failed. The economic crisis began in the financial sector, but ordinary working families are paying the highest price for it. The cost of living is now rising by over 5% per year on the retail price index measure. That is in no small part due to the Government’s decision to raise VAT. Meanwhile, average wages grow at just 2.3%.

At the same time, cuts to services are also affecting the quality of life of ordinary people. Councils are grappling with cuts to their formula grant of 28% over four years. The Communities Secretary said that councils should be able to find efficiency savings rather than make front-line cuts, and the Deputy Prime Minister said that

“they shouldn’t immediately start issuing redundancy notices for savings that they can phase in over four years”,

but the Local Government Association believes councils will make 140,000 redundancies next year across the UK, and the Liberal Democrat-controlled Bristol city council is making 340 people redundant next year alone, and it is reported that 600 jobs are now under review. The Communities Secretary told councillors last year:

“You are now in charge of something like £38 billion every year, no strings attached.”

He also said that they were back

“in charge of the decisions which matter”,

but in fact the only decision that councillors are now empowered to make is the decision to slash services on which local people rely.

The Chancellor could have chosen to implement a real strategy for growth by keeping people in work, building homes and infrastructure, and investing in businesses and industry. Instead he is cutting too far, too fast, and his Government have removed the strategic mechanisms for delivering the investment we think is needed. Even staying within his fiscal plans he could have chosen to put a greater share of the tax burden on the banks by reintroducing the bankers bonus tax. That money could have been used to create jobs and homes, as we suggested. He could have chosen to smooth the cuts to local authority budgets and protect the most vulnerable groups from sudden front-line reductions, rather than front-loading the cuts. The Chancellor is not listening. I predict that in time he will wish that he had.