The Economy

Lord Hanson of Flint Excerpts

Wednesday 18th November 2015 Commons Chamber

[John McDonnell]

We are all fearful of the risk that exists, but we place our confidence in our intelligence and policing services. To be frank, when our community is under such a heightened physical threat, now is not the time to be dogmatic. When it comes to national security and keeping the public safe, I say to the Chancellor and the Government that they will always have the support of the Labour party.

Let me turn to an issue of fairness—tax credits—which I hope Ministers can reassure us today that the Chancellor has now sorted out once and for all. It came as a shock to Members on both sides of the House when he brought forward the proposals to cut tax credits without fully understanding, or calculating the consequences of, his actions. Plainly, it was an error of judgment. I want to thank all the Members of this House from all parties and our colleagues in the other place who found that they could not support the Chancellor’s proposals and hence forced him to think again. What convinced many people was exactly what Gordon Brown, our former Prime Minister, summed up so eloquently last week—that this is an attack on children. The prospect of 200,000 more children being pushed into poverty pushed many MPs and Members of the other place over the edge to oppose the proposals.

There has been a lot of speculation in the press about how the Chancellor has been trying to resolve the tax credits question, with much talk of cuts to universal credit and threatened Cabinet resignations, but I am pleased that the quiet man may have had to raise his voice and has won the day. However, the threat seems to have moved on to housing support and other matters. I do not expect Ministers to reveal to us today the detail of the Chancellor’s proposals to resolve this matter, but for the 3 million families who face a cut of £1,300 a year, may I ask them at least to assure us and those families that they will withdraw the tax credits cuts in full and that no existing or new claimant will lose out?

[Mr David Hanson (Delyn) (Lab)]

May I give my hon. Friend another reason for tackling this issue head-on? In the 10 constituencies across north Wales, £58 million will be taken out of the local economy next year if the proposals go ahead. That money would be spent in local shops, local businesses and local communities. If that is taken out, not only will families and children suffer, but local business will suffer.

[John McDonnell]

At a time when we are seeking to grow the economy, it seems bizarre to do so by reducing aggregate demand within a local area, which could in many respects bring about a localised recession.

--- Later in debate ---

[Mr Hanson]

May I bring the Minister back to reality? Reality for my constituents is the £1,300 cut to working families tax credits which, if it goes ahead in April next year, will mean that £58 million is taken out of our local economy from the poorest people in my constituency, three quarters of whom are in work. Does she think that is right, and will she commit to review that today?

[Harriett Baldwin]

The right hon. Gentleman will have to wait until my right hon. Friend the Chancellor announces his autumn statement next week. Because of the difficult decisions that we have been prepared to take since 2010, the country’s economy for the right hon. Gentleman’s constituents in north Wales is going from strength to strength, and the overall UK economy is now 12% larger than it was when we took over from the Labour Government. As we reach calmer economic waters, it is worrying that some seem to have forgotten the lessons that the crash of 2008 taught us.

In recent months we have seen the resurgence of familiar but dangerous ideas. First—we heard it here today—is the idea that the deficit does not really matter, that it should not be a priority to rein in unsustainable public spending, and that it is fine to kick difficult decisions down the line. Those views were put to the British electorate in May, and the electorate rejected them overwhelmingly. People looked at the 1,000 jobs that the UK economy had created every day since 2010, and at the highest growth figure in the G7 for the last two years in a row. They looked at rising wages, rising living standards, and falling inequality, and they said, “Your long-term economic plan is working, so we want you to continue the job.” Since the election, national debt has been forecast to fall this year as a share of GDP for the first time in more than a decade.