Budget Resolutions and Economic Situation

Debate between Ed Miliband and Matt Hancock

Thursday 24th June 2010 Commons Chamber

[Edward Miliband]

My hon. Friend is completely right. He has experience of booting out Liberal Democrats locally—something that will happen in many constituencies at the next general election. It is blinkered short termism: that is the only way to describe what they have done.

What is the assessment of the Budget from a green point of view? Friends of the Earth says that the

“June Budget does little to suggest”

that the coalition will keep the

“promise to be the greenest Government ever.”

That is not a very good start, but I want to reassure the Secretary of State by telling him that there is praise for the Budget from an unlikely quarter. Roger Helmer, a Conservative MEP and a well known climate change denier, quite likes the Budget and says:

“Green lobbyists are whingeing that ‘this is the least green Budget for years’. Brilliant! Well done George. Maybe we’ve come to our senses”.

I have to tell the Secretary of State that for the first Budget in which he was involved to have congratulations from Roger Helmer and condemnation from Friends of the Earth is not a very good start.

The second test we should apply to the Budget is that of fairness. Is it a fair Budget or not? Let us be clear: as well as going beyond the decisions that the Liberal Democrats advocated for the first year, the Budget goes well beyond the pace of deficit reduction that they recommended. To sustain the Secretary of State’s argument, we are talking about not only cuts now, but a much faster timetable. He shakes his head, but the Institute for Fiscal Studies analysis published at the time of the election shows that the Liberal Democrats had set out exactly the same pace of deficit reduction in 2014-15 as we had, but this Budget goes beyond that, with £30 billion of extra cuts in spending and the rise in value added tax.

The question at the heart of the Budget debate over the past 48 hours is where do the cuts fall? Who bears the burden? That is the question that Lloyd George asked in this House years ago. The truth is becoming clearer: this is a regressive Budget, not a fair one. The Chancellor claimed in his speech that the Budget was fair, and I think it important to quote him exactly. These are not my words, but those of the Chancellor of the Exchequer. He said:

“Overall, everyone will pay something, but the people at the bottom of the income scale will pay proportionally less than the people at the top. It is a progressive Budget.”—[Official Report, 22 June 2010; Vol. 512, c. 180.]

That is simply not the case. That was exposed yesterday by the IFS. When one looks at the Budget measures, one sees that it is regressive, not progressive. According to the IFS, as my hon. Friend the Member for Leeds West (Rachel Reeves) said, as a result of the measures in the Budget the poorest 10% will pay four times more as a proportion of their income than the richest. I repeat: four times more.

[Matthew Hancock]

Will the right hon. Gentleman give way?

[Edward Miliband]

I will give way to the hon. Gentleman in a minute, because as a former adviser to the Chancellor, he might be able to explain what is going on—but let me offer an explanation first.

What the Chancellor did was an extraordinary sleight of hand. He published in the Red Book figures that take credit for Labour’s last Budget, which was progressive, and he combined the impact with that of his regressive Budget. Remember, this is a guy who claimed in his Budget speech that there was a renewed transparency and honesty in the Budget process. What he had done was exposed within hours by the IFS. I give way to his former adviser.

[Matthew Hancock]

I can certainly be more proud of having been an adviser to the current Chancellor than if I had been an adviser to the one who said that he had abolished boom and bust.

Following on from the right hon. Gentleman’s misleading use of statistics, which are described by the OBR on page 93 of the Red Book as “misleading”, does he agree with me that the IFS said that when all the Budget measures are taken into account, the impact is greatest on the richest 10%, not the poorest 10%, and that he is quoting partially?

[Edward Miliband]

I want to be generous to the hon. Gentleman, as a new Member of Parliament, but I fear that he has walked into the most enormous elephant trap. Let me read from the last page of the IFS handout:

“Treasury said that reforms to be implemented between now and 2012-13 progressive, but

—This is mainly because of reforms announced by the previous government

—They only look at reforms to 2012-13—benefit cuts announced yesterday for subsequent years hit the poorest hardest”.

The IFS concludes:

“So likely that overall impact of yesterday’s measures was regressive”.

If the Chancellor wants to bring a new transparency and honesty to the debate, he cannot take credit for measures announced by my right hon. Friend the former Chancellor and say that they are somehow part of his Budget.