The Economy

Baroness Ritchie of Downpatrick Excerpts

Tuesday 11th December 2012 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I begin by congratulating my hon. Friends the Members for Rotherham (Sarah Champion), for Croydon North (Steve Reed) and for Middlesbrough (Andy McDonald) on making their maiden speeches today.

I commend the Treasury for coming to its senses and cancelling the proposed increase in fuel duty. It seems there is at least some acknowledgement of the need to encourage growth in the economy rather than cut a path to perpetual stagnation. The move will put money back in people’s pockets, encourage local businesses and hopefully spur growth in the local economy, particularly in rural areas. Social Democratic and Labour party Members called for that measure, like many of our colleagues from other parties who take their seats in the House of Commons.

However, that was a brief moment of hope in an otherwise dismal autumn statement. Statistics show that this is the slowest recovery from a financial crisis in history. The OBR downgraded growth to minus 0.1%. Since the statement, the City of London has cast doubt on the Chancellor’s assertions that the economy will return to growth next year, stating that falling revenues from North sea oil and poor manufacturing figures could push the UK into an unprecedented triple-dip recession.

In the light of that, the only commitment the Chancellor will have no problem meeting is his promise to extend austerity until 2017-18. The only reason the borrowing figures look slightly healthier than expected is the sleight-of-hand, last-minute inclusion of the 4G spectrum auction windfall. On that topic, will the Chancellor or the appropriate Minister confirm, as I was told in response to a written question recently, why Northern Ireland will not receive Barnett consequential funding as a result of that sale?

Against such a backdrop, it is hard to see how anyone could argue that the Chancellor’s economic strategy is bringing the economy back to a position of strength. Quite simply, austerity is not working, including for people in Northern Ireland.

[David Simpson (Upper Bann) (DUP)]

At the beginning of the hon. Lady’s speech, she mentioned the cancellation of the 3p increase—it is a good thing the Chancellor did not go ahead with that because it would have had a detrimental effect on the domestic user. Does she agree that one way to help the Northern Ireland economy would be for the Government to get to grips with smuggled fuel from the Irish Republic, which loses them tens of millions of pounds?

[Ms Ritchie]

I thank the hon. Gentleman for his intervention. Like him, I believe that fuel laundering and smuggling is a major problem. It needs to be addressed by the Treasury, and by the Department of Finance and the Revenue Commissioners in the south of Ireland.

We have record youth unemployment in Northern Ireland, and local businesses face a climate of extremely low consumer confidence and no prospect of growth. We had the highest rate of youth unemployment in the last quarter for which figures are available—some 18%. More recently, we heard the terrible news of the closure of Patton, a major construction firm, with the loss of more than 150 jobs.

The Government have spoken repeatedly of rebalancing the economy, but talk of their flagship policy—the devolution of corporation tax—was notable only by its absence from the Chancellor’s statement last week. It is critical that the Northern Ireland Assembly and Executive are granted more economic levers that we can use to rebuild our economy. The Government’s decision has been a long time coming, but it is crucial for our medium and long-term planning that they make it as soon as possible.

The Chancellor listened to our concerns about the adverse impact of the carbon floor price and the exemption will deliver a degree of much-needed support to local business. However, such news does not remove the reality of the broader economic picture. As the Northern Ireland Finance Minister has indicated, the result will likely be more cuts being implemented by the Northern Ireland Executive, particularly with regard to welfare payments.

[Dr William McCrea (South Antrim) (DUP)]

I commend the hon. Lady for her speech. Does she agree that banks need to be more sympathetic in lending to small and medium-sized businesses if they are to prosper, because of the challenges they face?

[Ms Ritchie]

I thank the hon. Gentleman for his intervention. I agree that the banking regime in Northern Ireland is stringent at the moment. We have a unique situation in Northern Ireland. Some of the banking institutions are owned by the south of Ireland, but some have direct links to the Royal Bank of Scotland and Danske Bank. So there is that sort of mix as well. Suffice it to say that small and medium-sized enterprises are facing difficult economic challenges, and to have banks unwilling to lend or provide the necessary credit at this difficult time is not helping economic growth. That needs to be explored by the Treasury and, in the case of Northern Ireland, in some instances, directly with the Department of Finance in Dublin.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady think that one way of boosting the economy would be to encourage the construction industry, which, as all Members know, has had particular problems? Does she think that the banks should be more sympathetic to the construction industry in particular?

[Ms Ritchie]

I agree that the construction industry, along with agriculture and tourism, is a vital economic lever in Northern Ireland, but, owing to the economic challenges of the recession, many people employed in the construction industry have found themselves without work and many businesses have gone to the wall. They did not meet with a sympathetic reception from the banking institutions, but they need assistance because they are necessary to pump-prime our local economy.

The Chancellor’s welfare plans will remove more than £4 billion from the welfare budget by uprating benefits by just 1% a year until 2015. With a legacy of physical and social neglect from the troubles, this will remove the necessary level of support from many of our people and a substantial sum of money from the local economy. Instead of addressing their own shortcomings, the Government are vilifying the poor and those on welfare as a smokescreen for their own appalling economic record. That will place those most needy and vulnerable in the current economic climate in an even more precarious situation and will hurt not just the unemployed, but those who rely on in-work benefits. It is nothing more than a real-terms cut for those most in need by the same Chancellor who handed out a tax cut for the wealthiest in society at the last Budget. It would seem that some of us are more “all in this together” than others.

The autumn statement might have been politically more surefooted than the Chancellor’s last Budget, but I fail to see what it will do to address the core problems facing the economy. It might reassure some Tory voters here, but I do not think that my constituents or the people of Northern Ireland will find much to cheer about. I fear that we will be having this same debate, with similarly poor economic figures, come the next Budget.