National Minimum Wage

Ian Murray Excerpts

Wednesday 15th January 2014 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

The small number of Members on the Government Benches at the tail-end of this debate highlights their commitment to the national minimum wage, and I have to say I was slightly disappointed by the Business Secretary’s response to this debate. He said he did not want a tribal debate, and then went on to give a very tribal response to the shadow Secretary of State. He also said he was delighted to have laid regulations today to increase the amount in fines that would be payable by employers if they did not abide by the national minimum wage legislation. I do wonder with my cynical nature why those regulations were laid only today yet the Prime Minister announced this policy back in November. Perhaps the Opposition’s calling for this debate has oiled the wheels.

It was unkind of the Business Secretary to say that the previous Labour Government had only one or two successes, the national minimum wage being one. Several others were shouted at him across the Dispatch Box and he responded by saying perhaps there were those things as well. However, the one thing that the Business Secretary has managed to do—his one great success and what his legacy will be—is to destroy completely the Liberal Democrats party.

I would like to acknowledge and put on record that we were perhaps slightly unkind to the Business Secretary, not realising the circumstances behind his not voting in favour of the national minimum wage, and we apologise if we got that wrong. However, that does not take away from the fact that the Liberal Democrats were against the national minimum wage when they were campaigning in the run-up to the 1997 election. They supported it in the Chamber on Second and Third Reading of the Bill, but that simply shows that they flip-flopped between what they stated in their manifesto and what they did in the House. I am sure that we have seen that before. Also, in the House of Lords they strengthened the regulations on the requirements for the Government to take enforcement action. I was disappointed by the Secretary of State’s response to this debate.

When moving the Second Reading of the National Minimum Wage Bill in December 1997, the then President of the Board of Trade, my right hon. Friend the Member for Derby South (Margaret Beckett), said that the national minimum wage was

“a clear example of how a Labour Government can and will make a real difference to the lives of people across Britain, contributing to fairness and prosperity for the many, not the few.”—[Official Report, 16 December 1997; Vol. 303, c. 173.]

How relevant that statement is today.

Fifteen years have passed, and the national minimum wage is now an economic and political fact of life for us all. It is undoubtedly one of Labour’s proudest achievements, and I wonder whether the present Prime Minister now regrets campaigning against it in the mid-1990s. The then Opposition castigated the policy as a burden on business, arguing that increasing wages at the bottom would cost more than 1 million jobs. It did nothing of the sort. We should celebrate the fact that it contributed to the ending of poverty pay and boosted living standards in this country. That was confirmed by the Low Pay Commission in 2013, when it stated that

“the research had…found few adverse effects on aggregate employment;…individual employment or unemployment probabilities; or regional employment or unemployment differences.”

The days when an employer could legally pay someone as little as £1 were brought to an end despite the vehement opposition of the Conservatives.

It was not only the Conservatives who were against the introduction of the national minimum wage. I should like to draw the attention of the House to the record of the First Minister for Scotland. When he was in this House, he abstained on Second Reading of the National Minimum Wage Bill, and the Scottish National party as a whole did not vote on Third Reading.

[Dr Whiteford]

Will the hon. Gentleman give way?

[Ian Murray]

I am afraid I do not have time to give way, although I see that when the nationalists are provoked, they tend to respond.

I want to comment on some of the contributions from both sides of the House to today’s debate. My right hon. Friend the Member for Dulwich and West Norwood (Dame Tessa Jowell) was right to say that the existence of the national minimum wage is a statement about the kind of country we are. She was also 100% right to highlight the real-life impact of low pay on individuals and families, and particularly on women with child care responsibilities, who are disproportionately affected by employers who do not abide by national minimum wage legislation.

I was quite taken by the remarks of the hon. Member for Harlow (Robert Halfon). He was right to be contrite, and to apologise for his party’s previous stance on the national minimum wage. Unfortunately, however, as recently as yesterday, the hon. Member for Esher and Walton (Mr Raab) wrote in the Evening Standard that any increase in the national minimum wage would be a

“massive jobs tax on business”.

He also described it as “oversold”, and said that this

“policy cross-dressing is more likely to confuse than impress voters”.

Perhaps the hon. Member for Harlow is a lone voice on the Conservative Benches when it comes to defending the national minimum wage in the trenches. That would be a shame.

My hon. Friend the Member for Vale of Clwyd (Chris Ruane) said that the very low-paid could not even comprehend the pay packets of the most wealthy in this country. He summed up the debate well when he said that the minimum wage was for the many and not for the few. He also reminded us that the National Minimum Wage Bill Committee sat for an unprecedented 70 hours. Anyone here who has served on Bill Committees over the past four years will realise that to do so for 70 hours involves quite an undertaking. That just shows the then Government’s commitment to getting the legislation through.

I am always delighted to hear the hon. Member for Burnley (Gordon Birtwistle) speak in the Chamber, although I never agree with a word that he says. Given that he is a Liberal Democrat, I thought he might have been a little more contrite on this subject. Let us give credit where it is due, however. He did say that he had always supported the national minimum wage and always paid it. If any of the hon. Gentleman’s employees or former employees want to get in touch to dispel that rumour, we would be willing to hear from them.

My hon. Friend the Member for Glasgow North East (Mr Bain) reminded the House of the statistic that the UK has the fifth worst levels of poverty pay in the OECD. We should be doing something about that. He also mentioned the impact of low pay on the welfare budget, and the fact that since 2010 the national minimum wage has fallen behind to the tune of 50p an hour.

The hon. Member for Elmet and Rothwell (Alec Shelbrooke), always an entertaining speaker in this House, talked about how increasing wages for the lowest paid was false and fake. I do not think the pay of the poorest in this society is false and fake, but I did enjoy his restatement of the Tories’ trickle-down policy of economics in this country. My hon. Friend the Member for Derby North (Chris Williamson) talked passionately about the need for effective enforcement and rightly said that it would take political direction to bring in the living wage. The Business Secretary did say that the Low Pay Commission should be free of political interference, but bringing in the national minimum wage and, indeed, the living wage is a political direction, and we should all be striving for that.

My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) was one of the hon. Members who stayed in this House all night trying to get the national minimum wage legislation through. Let us not underestimate the former right hon. and hon. Members, and those who still sit in this House, who made such effort to get this legislation through, despite the vehement opposition of many on the Opposition Benches.

My hon. Friend the Member for Corby (Andy Sawford) has done some wonderful work in his constituency since he was elected in that wonderful by-election victory, and he gave numerous examples of where workers are paid less than the national minimum wage because of unlawful deductions. He mentioned the increasing problem of the personal accident insurance that is being taken off employees; it is costing employers pennies but they are taking pounds from employees. We have to make sure that there is enforcement on such issues.

My hon. Friend the Member for North Tyneside (Mrs Glindon) is a passionate advocate for the living wage and rightly gave credit to the councils that are paying it. My local council in Edinburgh is paying above the living wage and has done since 2011, and we should encourage more councils and employers to do more. When I am at this Dispatch Box I always find that my hon. Friend the Member for Hayes and Harlington (John McDonnell) speaks last, or second last, and is curtailed in his contributions. I would like to hear an awful lot more of him speaking in this Chamber, because he deserves significant congratulations on the campaign he has run against national minimum wage exploitation; we heard some of the issues relating to the shipping industry from him.

Last, but certainly not least, my hon. Friend the Member for Blaydon (Mr Anderson) talked about why enforcement fines should go back into the enforcement industry, to make sure that we can enforce the system better and that exploitation is rooted out.

We have had a robust debate on the national minimum wage, in which I have been struck by the Government’s restatement of their policies. Indeed, they have re-announced their policy on naming and shaming more times than they have actually used it, which is surprising. We need more action from the Government on these issues, rather than the restating of policies. When the Prime Minister, no less, announced the increase in fines back in November, I am sure that the Government had no intention of rushing them through—until the Opposition called this debate. But that is not new in this House, and this Opposition will continue to press the Government to get results.

Labour will also bring in Make Work Pay contracts to encourage people to pay the living wage, and we have instigated a review led by Alan Buckle, the former deputy chairman of KPMG. He will look in detail at how to restore the value of the minimum wage; how to ensure that sectors that can afford to pay more do so; and how we can promote better the living wage. In November, the Leader of the Opposition also outlined how a future Labour Government will provide tax incentives for employers that sign up to pay the living wage—employers, employees, trade unions, the Government and the Treasury all working together to share the benefits of lifting pay for the lowest paid in this country. Those benefits can be shared for all; I think that that is the right way to go.

Labour created the national minimum wage, despite strong opposition, and it is Labour that will strengthen it for all the low-paid people around our country, moving together towards the shared goal of making work pay for all. It is Labour that will take proper sanctions against those who do not pay it. That is only fair to those who work hard, do the right thing and deserve to be paid properly. That is what we are trying to do today, and I hope that the Government will support our motion.

Interest Rate Swap Derivatives

Ian Murray Excerpts

Thursday 24th October 2013 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to follow the hon. Member for Ceredigion (Mr Williams). The cross-party consensus in the Chamber shows how important this issue is, and it has to be dealt with as quickly as possible.

May I add my congratulations to the hon. Member for Aberconwy (Guto Bebb) on securing this debate? I would have been delighted with his custom in my previous life as a publican. He mentioned a £30 cheque for two nights out, but that must have been at least 15 or 20 years ago if he was a student—[Interruption.] I am sorry; 25 or 30 years ago. Those must have been some parties if he was cashing £30 cheques for a night out so long ago.

We have to put this debate in context. There have been many financial scandals—not only since 2008, but even before that. This is the latest scandal in the financial services sector. We had the payment protection insurance mis-selling scandal, the manipulation of LIBOR rates by banking institutions, which has been highlighted today, and the global financial meltdown, which was caused partly by financial institutions gambling on the financial market with other people’s money. Now we have the mis-selling of interest rate swaps. It is right for the FCA to look into that, but hon. Members have rightly made the criticism that not enough is happening. The hon. Member for Ceredigion was right to highlight the fact that only 32 of the 30,000 cases have been dealt with so far.

Interest rate swaps are hugely complicated. I had a briefing from an expert on them about eight months ago, and the complex nature of how they are put together makes them impossible to understand. He was an expert, but he found it difficult to explain some of the more complex points about them.

It is worth highlighting that the banks were able to cancel the instruments in question when interest rates were going down, but the customer was unable to cancel them when interest rates were rising. Not only were sellers incentivised to sell them without much knowledge, but the financial institutions made the vast majority of the money out of them on day one, when they were sold. They sold them to the customer and made money out of the derivative part of the product, and then sold them on to a third party, who subsequently sold them on to other parties further down the tree.

[Mike Thornton (Eastleigh) (LD)]

Does the hon. Gentleman agree that one reason for the appalling mess was the unfair and incredibly pressurised target culture that senior managers at banks imposed on their staff, to the extent that people had to use unethical means to keep their job? I have particular experience of that culture.

[Ian Murray]

I am grateful for that intervention, because not only the FCA but the Government have to change the culture in the banking sector. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who was part of the Parliamentary Commission on Banking Standards, has talked about the culture in banks and the pressure to sell complicated products. If a customer buys a product that is not properly explained, that is surely mis-selling and there should be redress.

Customers have been unable to seek redress, or to negotiate with their bank, because the banks were able to sell on the products at great profit on day one. The relationship between the customer and the bank therefore broke down, because when a customer wanted to renegotiate the contract, they were told that they would have to compensate the bank for not only the interest rate lost, but the proportion of profit that it had gained by selling the product on to a third party. The break costs were impossibly high for many people even to contemplate buying their way out of swap products. That breakdown in the relationship has got us to the position we are in today.

Many constituents have come to see me about the matter, such as Mr Dixon, who has highlighted today’s debate and the all-party group that has been set up to examine the matter. One customer of the Clydesdale Bank who contacted me after he had been mis-sold a product was in the process of losing his house. My hon. Friend the Member for North East Derbyshire (Natascha Engel) was right to talk about the impact on not just businesses, but people’s lives. There are life and death issues in some instances, because some business owners have lost their homes, livelihoods and businesses.

There has not been a proper response from banks—not just to their customers, but to Members of Parliament. I have written to banks to see whether they can assist customers in dealing with mis-selling, but I have been batted away. There has been some table tennis between the FCA, the Government, the Financial Ombudsman Service and the banks about who should take responsibility, and I hope that the Financial Secretary will put it firmly on record that the FCA should deal with the matter. It should be the point of contact for businesses, Members and banks.

Members have talked about whether the selling culture of banks made the problem worse, which I believe it did. The mis-selling also went against the policy of treating customers fairly, which most of our banks have trotted out. When customers go to meet their business development manager or anyone else in the banking sector, they are told that their problems will be dealt with and that everything possible will be done to resolve them. However, in many of the cases that my constituents have brought to me, they have not been able to seek proper redress through that relationship, and that is why we have ended up in this situation.

The House should take a stand and say that the scandal was completely and utterly unacceptable. We should encourage the banks and the FCA to resolve the problems as quickly as possible to ensure that small businesses affected by the mis-selling scandal can have redress and a proper appeals process, so that we can get them back on their feet. If small businesses are falling because of a mis-selling scandal, it is up to the House to take a stand to support them.

Banking Reform

Ian Murray Excerpts

Thursday 14th June 2012 Commons Chamber

[Mr Hoban]

My hon. Friend is right, and I think transparency plays a key role in holding the financial system to account. We need to make sure that data on lending is transparent, but we also need to focus on identifying other ways in which we can help small businesses. That is why the Government introduced the national loan guarantee scheme—to help support lending to new businesses. That scheme is working; it is making thousands of loans to small and medium-sized enterprises, which are benefiting from the lower interest rates that the scheme delivers. That is an important way to help businesses grow.

[Ian Murray (Edinburgh South) (Lab)]

Why will the Treasury not agree to Opposition requests for the Vickers commission to implement a progress report on how the Government are doing with its recommendations? Is it because the Government are trying to water them down?

[Mr Hoban]

The process we are going to go through is a very transparent one. We have published a White Paper today, setting out clearly our response—our detailed response—to John Vickers’ recommendations. As I said earlier, we are going to publish a draft Bill, which will be subjected to pre-legislative scrutiny. We are being very transparent about how we are implementing Sir John Vickers’ recommendations. I hope that the hon. Gentleman will work with us and ensure that the recommendations get through, so that we remedy the mistakes of the past.

Independent Banking Commission Report

Ian Murray Excerpts

Monday 12th September 2011 Commons Chamber

[Mr Osborne]

Yes, in short: I agree with my hon. Friend. John Vickers and his commissioners explicitly address the costs and benefits of these changes, and although they accept that there will be some additional costs, they will be more than outweighed by the broader benefits that include the benefits of having an environment in which banks are seen as more stable and the benefit to the UK economy of retail banks using their retail deposits to support retail lending.

[Ian Murray (Edinburgh South) (Lab)]

Some 100,000 jobs in Edinburgh are reliant on the financial services sector, including many tens of thousands in my constituency. How can the Chancellor reassure the House and my constituents that the banks will not pay the cost of implementing the Vickers report recommendations by cutting my constituents’ jobs?

[Mr Osborne]

Of course, one of the groups of people who are the innocent victims of what went wrong are the many people who worked in the branches of banks such as RBS and HBOS throughout the country and who lost their jobs even though they were not investment bankers working in the City of London or trading mortgage derivatives and so forth. I hope that we can now build a successful and competitive banking system that, in Scotland and elsewhere, hires people, opens branches and reverses the trend of recent years. Such groups of people have definitely been the innocent victims of what went wrong and we must do right by them.

Finance (No. 3) Bill

Ian Murray Excerpts

Tuesday 26th April 2011 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

The hon. Member for Elmet and Rothwell (Alec Shelbrooke) has taken political propaganda to an all-time low this evening in trying to convince the Chamber that he has not eaten out on Labour’s chocolate and burgers, to use his words. That is a bit rich. None the less, I wish him well for his wedding, which is coming up shortly, and I hope that his battle with the bulge means that he will eventually fit into the dress come the big day.

I am delighted that the Chief Secretary to the Treasury is back in the Chamber, because I want to wish him a happy anniversary. It is exactly a year since the leader of the Liberal Democrats said in a TV interview with Jeremy Paxman:

“Do I think that these big, big cuts are merited or justified at a time when the economy is struggling to get to its feet? Clearly not.”

I wish the Chief Secretary a happy anniversary a year on from that bombshell from the Deputy Prime Minister. It is still the contention of Labour Members that the coalition Government are going too far, too fast, and that that approach is killing growth and causing rising unemployment in this country.

The Chancellor announced with a fanfare that this would be a Budget for growth that would add fuel to the economy. He gave his bold growth fanfare against the backdrop of the economy shrinking by 0.5% in quarter four, even though it was clearly on the road to recovery in quarters one and two of last year under the previous Government. On top of that came a huge embarrassment: the Chancellor’s trumpeted Budget for growth downgraded economic growth in every year of the economic cycle and predicted increased unemployment. The Chancellor’s own Office for Budget Responsibility concluded that the Government’s Budget for growth, which he said would “go for growth”, reduced the economic growth figures. Astonishingly, the hon. Member for North East Somerset (Jacob Rees-Mogg), who is still in his place, blames Labour and not the snow.

We cannot pay back any deficit with lower growth and more people out of work. The Government’s decisions contained in this Finance Bill do nothing to help hard-working ordinary people and families up and down the country. We have heard several times this evening about the potential decimation of the UK oil industry, which will cost yet more jobs.

[Dan Byles (North Warwickshire) (Con)]

Is the hon. Gentleman therefore opposed to the measures taken in the Budget to reduce fuel taxation on hard-working motorists?

--- Later in debate ---

[Ian Murray]

No one would ever deny that a 1p cut would help motorists, but there are certainly no petrol stations in Edinburgh South where fuel is now cheaper than it was before the Chancellor’s Budget. Indeed, money is being taken off the oil and gas industry, and billions of pounds in jobs and future research and development are being put in jeopardy for a 1p cut in fuel prices that nobody is actually seeing at the pump. The Government have to take that on board and act with ferocity.

I agree with the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin), who let the cat out of the bag during an Environmental Audit Committee hearing just before the Easter recess. He said that prior to the Budget, the Cabinet had discussed the fact that there was

“an immediate national crisis in the form of less growth and jobs than we needed”.

The Government’s response to that crisis was to produce a Budget that would make growth and unemployment levels worse—the “Dad’s Army”, “Don’t panic, Captain Mainwaring” approach to what they claimed was a “national crisis”.

Of course we need to get the deficit down, but by cutting too far and too fast, by hitting children, women and families the hardest and by following an ideology that attacks the economic drivers of this country, the Government risk a vicious circle of perpetual slower growth and fewer people in work. With fewer people paying tax, there will be more people drawing benefits and not spending hard-earned cash. The Government have presided over a set of decisions that have resulted in a collapse in living standards not seen since the 1920s.

On the subject of living standards, the Prime Minister promised to lead the most family-friendly Government ever. The Chancellor said, “We’re all in this together,” but changes to tax and benefits this month will hit those least able to pay—ordinary, hard-working people up and down the country—the hardest.

We have been through a global financial crisis, not a recession that was made in Britain. Like every other major economy in the world, the big challenge for us is how to get the deficit down. It cannot come down while confidence is low. VAT will cost a family with children an average extra £450 this year, draining much-needed funds from tight family budgets and potentially harming consumer confidence.

Of course, from this month, there are also cuts to the amount that parents can claim for child care; the freezing of child benefit for three years; the scrapping of the baby element of child tax credit; the setting of benefits on a permanently lower path, with a real-terms cut that means less generous benefits this year and every year in future; the cutting of the second income threshold for the family element of child tax credit; and the increasing of withdrawal rates for tax credits to 41%.—and of course the Liberal Democrats’ champion policy of increasing the tax threshold at the lower level is outstripped tenfold by the VAT increase and the change from the retail prices index to the consumer prices index for uprating tax thresholds, which will erode any threshold increase over time.

The message of this Finance Bill is not growth but the fact that the Government are giving with one hand and taking away with many other hands. They have demonstrated in the Budget and the Bill how out of touch they are. They do not get the fact that hard-working people are being hit by VAT and now face cuts to tax credits and child benefit too. They do not get the fact that communities throughout the country are being damaged by cuts to local services. Even the director of the Institute for Fiscal Studies said after the Budget that

“there is an awful lot of giving with one hand...and taking away with lots and lots of other hands.”

That was an independent commentator talking about what the Government are doing.

The Government often look overseas to build up their justification for this austerity Budget and the Bill, but we have only to look at Ireland to see what too far, too fast austerity measures produce—yes, Ireland, a country that the Chancellor declared had an austerity package that was something of a success story. I suspect that no one in Ireland would agree with him now.

Let us turn, as I might be expected to do, to the Conservatives’ bedfellows on praise for Ireland, the Scottish National party. The SNP held up Ireland as the foundation for their arc of prosperity and as the economic model that an independent Scotland should follow, but look what happened! The SNP not only no longer talk of independence, but they never talk about the arc of prosperity. If Scotland were independent, our banks and our economy would have collapsed, and Scotland would be worse off than Ireland, Greece and Portugal combined.

To be fair to the SNP, not only Ireland formed its arc of prosperity policy, but Iceland too—another economy shattered by the worldwide economic crisis. The Irish austerity measures went too far and too fast, and now the Chancellor and the Chief Secretary to the Treasury never mention Ireland, and neither does the SNP—they have changed indeed.

I could go on and savage the SNP’s 4.8p local income tax proposals, but I know that that is not to do with the Bill, which I shall finish by addressing. The Bill is driven by ideology—an ideology that some have developed in exchange for ministerial Mondeos. The Bill does not improve growth or reduce unemployment, and it continues to hit families and ordinary people the hardest. It kicks away the ladder of opportunity for our country’s young people. It is hurting but certainly not working. For those reasons alone, we should not give it a Second Reading.

Amendment of the Law

Ian Murray Excerpts

Thursday 24th March 2011 Commons Chamber

[Vince Cable]

I really do not know what the right hon. Gentleman is talking about. We started by talking about excessive bonuses in one very large investment bank, and he has now extended that to the whole of the financial services sector. Of course that sector is valuable. Of course the jobs and the tax revenue are valuable, but that is not what he was talking about in his ideological dispute with his deputy leader.

Let me return to the right hon. Gentleman’s central message that the Government should abandon, or substantially modify, their fiscal strategy. I shared a platform last week at the London School of Economics with Angel Gurría of the OECD. He was asked what the Government should do. He had a simple message, which was that we should “stick with it”. He is not some pro-coalition politician or right-wing ideologue; he is the head of an organisation representing 25 Governments. Opposition Members should ask themselves—the shadow Chancellor was asked this but he neatly evaded the question—why all the major international institutions, including the International Monetary Fund, the European Commission and the G20, support the strategy that we have adopted. The reason is that they are all painfully aware that we are in an economically dangerous world in which crises of sovereign debt are not very far away.

[Ian Murray (Edinburgh South) (Lab)]

The Business Secretary is going through a list of international organisations that evidently support his plan. However, as a result of the plan, the UK will have the smallest public sector in the G7 by 2015—smaller even than that of America. Does not that tell the right hon. Gentleman, who was on our side of the argument before the election, that this is an ideological attack on public services in this country?

[Vince Cable]

I cannot see how it can be ideological to have a public sector that, by the end of this Parliament, will have a share of GDP comparable to what it was when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) became Prime Minister. Whatever criticisms the Opposition might want to make, ideology has absolutely nothing to do with this.

The comments of the international organisations are reflected in those of the business community. The former head of the CBI has often been quoted on this, because he was critical of the Government. He had some strong criticisms, which we have taken to heart. However, it is worth remembering how he started the speech that is now so frequently quoted. He said:

“This coalition Government has been single-minded—some might even say ruthless—in its approach to spending cuts…That policy is strongly supported by business, on the grounds that sound public finances are an essential foundation for a sound economy.”

I want to deal more specifically with the suggestion that we are cutting too much too soon. The shadow Chancellor has quoted me on this, and he is quite right. I said on “Newsnight”, and I will continue to say, that there is a serious economic debate that we must constantly have on striking the right balance between not choking off recovery and not risking a financial crisis. That is the calculation that we are having to make. Our approach has been vindicated by the evidence, and the evidence is the response of the financial markets. The bond yields, which are important not just as an indicator but because they set the cost of capital for business and investment, are 3.5% for 10-year bonds, which is close to the rates in France, Germany, the Netherlands and Sweden, compared with 5.2% in Spain, 7.5% in Portugal, 9% in Ireland and 12% in Greece. That is a fair comparison with what they were a year ago when the Labour party was in power. Since then, the differential has widened by 1.5% in respect of Spain, 3.5% for Portugal and 5% for Greece and Ireland. In real terms, the cost of capital—long-term capital in this country—is now zero. The reason why that matters was summarised many years ago by John Maynard Keynes. Labour Members may revere his memory, as do some of us. During the crisis of the 1930s, Keynes wrote to Roosevelt:

“The turn of the tide in Great Britain is largely attributable to the reduction in the long-term rate of interest.”

That is the basis on which we have to take account of interest rates.

--- Later in debate ---

[Vince Cable]

That is right, and I am sure that if we reflected a little we could add further to the list.

Let me talk about employment.

[Ian Murray]

rose—

[Vince Cable]

Let me press on a little first, and then I will take an intervention.

In future, growth and jobs will come from the private sector, and in particular from small-scale business. Taken in conjunction with the trade White Paper to which I have referred, the Budget’s commitment to lower and stable corporation tax gives the strong signal that we are open for business and we warmly welcome inward investors. Growth and jobs also depend on small companies, which provided a giant proportion of the 300,000 additional jobs created in the private sector in the past six months, and they will be helped by the Budget’s extension of small company business rate relief and cuts in small company corporation tax.

--- Later in debate ---

[Ian Murray (Edinburgh South) (Lab)]

There was so much and yet so little in yesterday’s Budget that could be talked about this afternoon, but I will concentrate on the growth section.

The first line of the foreword to the Government’s document, “The Plan for Growth”, states:

“This Plan for Growth is an urgent call for action.”

At last, after almost a year of the coalition Government, they have finally realised that hard-pressed businesses and families up and down this country need an urgent call to action for growth. However, I do not see a call to action for growth in cutting public spending too deep and too fast; the highest unemployment since 1994; the highest youth unemployment since records began, with no plan to get it down; inflation on the march, with the retail prices index at its highest level in 20 years; the largest squeeze on living standards in modern times; increasing VAT to 20%, which puts more pressure on consumer confidence and further compounds business insecurity; a continued lack of liquidity in lending markets through our banks; fuel prices that are out of control; consumer confidence at its lowest level in more than 20 years; and an overwhelming, ideologically driven attack on public services. That is certainly hurting people in my constituency, but it definitely is not working. We have all that, and the real effects of the VAT increase and the public sector job losses are still to feed through to the real economy. This does not seem to me to be a call to action for growth; it is no plan for growth, or perhaps a panic plan for growth.

That point is made clearly by the Office for Budget Responsibility, the independent body set up by the Chancellor, which we debated a few days ago in this Chamber. Even after the Chancellor’s “Budget for growth”, which, to use his words, should add fuel to the economy, the OBR has reduced its growth forecast for this year and next year, as it did last year. It is surely a huge embarrassment for the Chancellor that his Budget for growth actually downgrades growth. It is extraordinary that it does, given the urgent call for growth in the Government’s own document and the Chancellor’s own words that it would be a Budget for growth. This must be a historical first.

The Chancellor has failed to realise that cutting too deep and too fast is damaging our economy. The public and private sectors are inextricably linked. Slow growth and rising unemployment will make it harder to get the deficit down. The move from 2.1% to 1.7% is a reduction. Unemployment has been revised up to 8.2%. As someone said to me at my surgery a few weeks ago, “How can you possibly pay back debt from the dole queue?” They were absolutely right.

[Martin Horwood]

In its submission to the comprehensive spending review, the hon. Gentleman’s party suggested that the cuts in unprotected Departments should be no more than 20%. What the Government actually delivered was only 19%. Does he think Labour’s proposed cuts were going too far and too fast?

[Ian Murray]

I find it surprising that the Liberal Democrats always jump to their feet during these debates and throw out statistical analysis of stuff that is, quite frankly, not true. The Liberal Democrats’ leaflets from the general election, which I still leaf through, tell me time and time again that they supported what we were doing on the economy, that the banks were all to blame, that VAT would not have to go up and that employment was the key to growth. The Secretary of State for Business, Innovation and Skills said that to Jeremy Paxman after the general election.

[Jessica Lee]

Will the hon. Gentleman give way?

[Ian Murray]

I will carry on, if the hon. Lady does not mind, because our colleagues want to contribute to the debate and our time is restricted.

What we heard yesterday was a big Budget con. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who is not in his place at the moment, said that this Budget could not be seen in isolation from the last one. It is a continued attack on the cost of living. As has been said, the Institute for Fiscal Studies said yesterday that the Chancellor is giving with one hand but taking it back not just with the other hand, but with

“lots and lots of other hands”.

Does that not show how out of touch he is? Did he not realise that people would see the Budget con?

The Government trumpeted the increase in the tax threshold, but changed the threshold increase mechanism to the consumer prices index, which will totally offset the increase. Page 42 of the Red Book shows that the Government will hand out £1.2 billion in a tax cut but take £1 billion back over time through the change to the threshold indexation. Of course, the biggest con of all is that indirect taxes will continue to rise by the retail prices index, which of course is the highest measure of inflation.

I have not even touched on the millions of families who will lose their child benefit, or the fact that every family earning less than £26,000 a year will lose their tax credits. It is a Budget con for families. The Budget confirms that although ordinary people will be thrown a little bit of corn, there is little doubt that they will be hit the hardest by this uncaring and out-of-touch Government.

The second con that I wish to examine is the fuel con. We all welcome the 1p cut on fuel. I am not a car driver, but I appreciate how much it costs to drive. My constituents constantly tell me about the pressure on small businesses that have to fill up vans and cars. However, at 7 pm on Monday, the petrol station next to my constituency office was charging £1.28 a litre. On Tuesday night it was charging £1.30 a litre, and on Wednesday night, after the 1p decrease, it was charging £1.29 a litre. The 2.5% VAT increase makes up 3.25p of that price. That is the fuel cut con—the price is 1p down due the Chancellor’s decision, but 3.25p up to due to another decision of the same Chancellor.

As has already been asked, who is to say that oil companies will not just pass the additional tax costs back to the consumer? Oil and Gas UK has said in the past 24 hours that there will be job losses and a reduction in production in the North sea as a direct result of the Government’s policies. We are left in a quandary. Do we have more job losses and less production in the North sea, which could be catastrophic for the Scottish economy, for what might be absolutely no benefit to consumers at the pumps? The IFS said yesterday of the fair fuel stabiliser:

“If oil prices stay high but volatile, this policy will do little to stabilise pump prices.”

It is a policy that does not help hard-working families fill their cars, and may cost jobs.

According to the Government’s own figures, this Budget does nothing for growth. The Chancellor needs to think again before it is too late and he sends this country into a spiral from which it may never recover.

Amendment of the Law

Ian Murray Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

On a point of order, Mr Deputy Speaker. A former Chancellor of the Exchequer, Mr Hugh Dalton, resigned in 1947 for leaking part of his Budget to a journalist when on the way into the Chamber to deliver it. Given that we have heard nothing in the Chancellor’s statement today that had not already been trailed in the media on Monday, Tuesday and this morning, please will you, Mr Deputy Speaker, use the good offices of the Speaker to make sure that senior members of this Government make important statements to the House before going to the media?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The principle is clear, and it will have been heard by those on the Treasury Bench. We must now move on.

Budget Responsibility and National Audit Bill [Lords]

Ian Murray Excerpts

Tuesday 22nd March 2011 Commons Chamber

[Chris Leslie]

If the hon. Gentleman will allow me, I will make a little progress, because I want to ensure that other Members have the chance to comment in this debate.

One reason we feel it necessary to put the concept of a growth mandate in the charter for budget responsibility is our anxiety that the current Chancellor of the Exchequer and Treasury are slightly blinkered when it comes to growth and employment. We know that in all probability, the Chancellor will announce tomorrow that the OBR is to downgrade the growth forecast. [Hon. Members: “No!”] Yes, my hon. Friends may be shocked at that piece of advance news, but apparently it says on the front page of the Financial Times today that the growth forecast for 2011 will be downgraded from 2.1% to 1.8%. The British Chambers of Commerce has also downgraded its 2011 gross domestic product forecast and is now expecting GDP growth of only 1.5%, down from a forecast of 1.9%. Other consensus forecasters are moving in the same direction.

[Ian Murray (Edinburgh South) (Lab)]

Will my hon. Friend explain to the House, and particularly to us new Members, whether the OBR has reduced its forecast at any other time in the past year?

[Chris Leslie]

It is a one-way journey, unfortunately. The OBR started with high expectations of growth soon after the general election, and at every stage at which it has made adjustments, the spiral of the economy’s growth prospects has descended.

--- Later in debate ---

[Mr Cash]

I am very glad to be able to follow that advice. In order for the provisions contained in the amendments to be inserted in the Bill, it is essential for the House to be aware of the implications of judicial authority, the assertions of the Supreme Court in that context, and the sovereignty of Parliament. There is, for example, the question of fiscal policy and the charter, which is set out in clause 1(2) and to which the question of economic growth and job creation would be added by the amendments. Clause 6(3) states:

“The Office must, in the performance of its duty under section 4, act consistently with any guidance included in the Charter by virtue of this section.”

I am deeply worried about the legal status of the charter in this context.

As for fiscal policy, I remind the House that the other day, probably for the first time since 1640—Pym and Hampden and all that—the Government passed a motion saying that we were only primarily responsible for it. I voted against the motion—as did my hon. Friend the Member for Bury North (Mr Nuttall) and a number of others—but the whole House should have voted against it, because in fact we are exclusively responsible for fiscal policy, and that is what the Bill is supposed to be based on.

What worries me particularly is the inconsistency with fundamental questions that are in the background, involving the primacy of European law, sovereignty and judicial authority. I need make no further points, because in a nutshell, if those issues cannot be reconciled with what is in the Bill, and if the duties of the Office for Budget Responsibility are to examine and report on the sustainability of the public finances, to prepare “fiscal and economic forecasts”, to make assessments and analyse sustainability, and to act consistently with the charter as a matter of law, we are surely entitled to ask: which law will prevail?

Obviously, I agree with all the ideas that are being presented. We all want an efficient economy, we all want jobs and we all want growth. We cannot survive without growth, and we cannot generate the revenues to pay for the public sector without that growth in the private sector. What worries me is that all those ideas are being imposed through a Bill, rather than through the judgment of Ministers who are accountable to the House of Commons, and should not be required to refer back to the judicial authority of the courts or the alleged primacy of the European Union.

I fear that we are embarking on one of those Lewis Carroll-type situations. I am reminded of “The Hunting of the Snark”. Members may recall the phraseology. We know that we want it, we know it is there, but the question is, what is it going to do? I have a serious problem with the Bill for that reason. I fear that we are engaged in a process of wishful thinking rather than achievement, and that we are being locked into a withdrawal from parliamentary accountability—and, as some Members may know by now, I regard that as the ultimate test of our democratic system.

[Ian Murray]

It is a pleasure to follow the hon. Member for Stone (Mr Cash). At the end of his contribution he referred to wishful thinking. Labour Members certainly think the Chancellor’s gamble with the UK economy is wishful thinking. The recent reduction in GDP came as a shock to everyone, and serves to highlight some of the wishful thinking indulged in by those on the Treasury Bench.

I think that everyone supports the establishment of the Office for Budget Responsibility. One of the best measures taken by the Labour Government was the courageous step of making the Bank of England independent. We have all seen the benefits of that, in good times as well as bad, as it can now make decisions for the benefit of the economy, rather than the benefit of the Government.

In the establishment in law of the OBR, the Bill should focus on more than just deficit and debt issues. Clause 1(1) states that the Treasury must look at

“the formulation and implementation of fiscal policy and policy for the management of the National Debt.”

That narrow focus takes us away from what we need most, which is economic growth. It does not even give the OBR the ability to take account of various specific objectives the Government may want to achieve, such as on child poverty or unemployment, or in terms of the impact on the economy of decisions made by the Chancellor and his team.

[Justine Greening]

To reassure the hon. Gentleman, may I point out that the OBR is free to consider the impact of any Government policy on the sustainability of the public finances? It therefore does have the discretion to conduct analysis that it may think necessary to assess whether the public finances are in a sustainable state.

--- Later in debate ---

[Ian Murray]

I am grateful to the Economic Secretary. As I have said previously in the House, she is one of the more capable Ministers, but she does occasionally fail to see the wood for the trees, and I would point out to her that the OBR’s remit is purely fiscal, and its fiscal forecasting may not always take into account what is happening on the ground in all the local communities that we represent.

That brings me neatly to my next point, which is about independent forecasting. That is certainly no panacea, nor is it a substitute for the judgments made about the public finances by the Chancellor and Prime Minister. We need to be able to hold the Government to account on the accuracy of the forecasts and the consequences of the judgments and choices that they make. The Conservatives have repeatedly claimed that the Labour Government fiddled the figures, but that is not borne out by the statistics published by the Library. In all the years before the crash, in only two years did the growth forecasts fall below the range that the Treasury had published, so the Treasury was dealing with those issues. The Government are wrong if they believe that the OBR would have prevented a crisis, or that it will protect us from the consequences of some of what in my view are the Chancellor’s misjudgments.

[Stephen Williams (Bristol West) (LD)]

If the OBR is such a good idea, why did the previous Government not introduce it during their 13 years in office? But leaving that aside, will the hon. Gentleman concede that if we had had an office for Budget responsibility in the last Parliament, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) would have found it much harder to dismiss warnings about the economy overheating, because those would have come from an independent office such as that created by this Bill?

[Ian Murray]

I am grateful to my hon. Friend; I get on very well with the hon. Gentleman, so I consider him to be my hon. Friend—

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Shame!

[Ian Murray]

That may not please every Labour Member, but nobody is objecting to the setting up of the OBR. My point is about the previous Government’s record: in only two years did the growth forecast fall below the range that the Treasury had published. I am not claiming that the OBR does not do sterling work.

That last intervention brings me neatly to my point about what the OBR has been able to do. It serves as a strong antidote to the propaganda about the figures that we have been hearing from the Government. The OBR said that because of the actions of the Labour Government, the deficit in 2009-10 was more than £20 billion less than had been expected. It also said that under the Tory-led Government’s plans there would be 110,000 more people on the dole by the end of this Parliament than would have been the case under Labour’s plans. Those are the OBR’s figures, which is why I am so delighted that it was set up—the hon. Member for Bristol West (Stephen Williams) can check the figures if he wishes. The OBR forecasts based on Labour’s plans until the election were that the economy would grow by 2.6% in 2011, whereas the figure under this Government spirals down to 2.1%—and even that may be reduced when the Chancellor speaks at the Dispatch Box tomorrow. So the OBR has been a good antidote to the propaganda that we have heard from those on the Government Benches.

--- Later in debate ---

[Ian Murray]

One would have thought that the three interventions I have taken were scripted across the Chamber, because the hon. Gentleman leads me to the second point in this part of my speech. I was talking about the deficit and the national debt, so let us dispel some of the propaganda in the OBR’s reports. He is welcome to read both them and the fantastic summary of performance indicators in the economy that the Library has produced. This point shows why it is incredibly important that the OBR should examine a wider set of figures, rather than just fiscal and national debt. Public sector net debt was down to 36.5% of gross domestic product in 2007-08, compared with the 42.5% that was inherited in 1996-97. Most of that borrowing was to do with financing capital investment, and not day-to-day expenditure as the Conservatives claim.

[Stewart Hosie]

Unfortunately that is not quite true, because the bulk of the capital expenditure took place through the private finance initiative. If memory serves, the outstanding balance on the credit card for that is £200 billion—of which, under the Labour Government, two thirds was off the balance sheet.

[Ian Murray]

The figures are there for people to see. I am delighted that we have had a contribution from the hon. Member for Dundee East (Stewart Hosie) on this subject, because in the past four years of Scottish National party government not one brick has been laid to build new infrastructure in Scotland. They have refused even to set up anything to do with building public infrastructure.

[Stewart Hosie]

rose—

[Mr. Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are not going to be drawn into the party politics of Scotland. Let us stick to the amendment.

[Ian Murray]

Thank you, Mr Deputy Speaker. I will resist the temptation to have another go at the Scottish National party in the Chamber, and will take your guidance.

I shall finish on two quick points. First, the level of borrowing before the financial crisis did not cause the recession. Every country in the world was affected, so it does not take a rocket scientist to work out that it was a worldwide financial crisis. The coalition Government’s propaganda—

[Stephen Williams]

Will the hon. Gentleman give way?

[Ian Murray]

I may just carry on, as I know you are trying to get through the speakers, Mr Deputy Speaker.

The coalition would have us believe that the previous Government were responsible for the economic crisis in, to name but a few countries, Germany, France, the US, Japan, Greece, Portugal, Spain, Italy, Iceland, and that member of the arc of prosperity, Ireland.

Finally, I want to give a human story and show why there is a need for a growth factor mandate at the OBR. On Sunday in my constituency I met a family who raised the spectre of what the Government’s changes mean for them and the problems that they face as a result. The OBR reflects these issues in the figures it produces, but not in terms of growth. That family gave me a list, which follows on from a list given to me by someone at Her Majesty’s Revenue and Customs: they have listed the cost of all the changes to their family budget, which amount to a loss of £4,000 a year. One member of the family earns just into the upper tax bracket, and his partner works part-time and tends to look after the children. When the national insurance increase and the child benefit cut—because he is a higher tax bracket earner—are taken into account as well as the increase in VAT and pension contributions, the overall consumer prices index increase to pensions, his public sector pay freeze, the extra cost of fuel going into the car, the increase in utility bills, food inflation and general inflation in the economy, it all has a rather hard-hitting effect on the family budget. That is why I think the amendments are sensible, and why the OBR needs a growth mandate to get the Chancellor out of a hole—because he does not have a plan B, and it does not really look as if he has a plan A, either.

[John Mann]

I shall speak solely to the excellent amendment that my hon. Friend the Member for Nottingham East (Chris Leslie) so eloquently put forward. In doing so, I shall argue why it is in the Government’s interests to accept the amendment. I am certain that by the end of my speech the Minister will wish to accept it and will accede by nodding that she will do so.

The amendment is a pro-Government amendment and would be pro-Government whoever was in government, because unlike the usual party-politicking that we tend to get on Report, particularly early on, the amendment is a highly pragmatic and practical amendment to a process that, as the Government stated when they set up the OBR, was itself meant to be independent, practical and pragmatic. The shame is that we could be in a Public Bill Committee given the paucity of the number of Members present to debate this rather important Bill and an area of the economy that is the most fundamental issue that we face, along with every other Parliament in the world. I know we will not have a green Budget tomorrow, but today the green Benches are largely empty of hon. Members ready to participate in and listen to the debate. That is an indictment of the confidence that Back Benchers from both halves of the coalition have in their Government's economic policies on the verge of the Chancellor’s second Budget.

We have an opportunity to shape the independent analysis that will sit alongside this and all future Budgets, including when, at some stage, the coalition parties are in opposition—although I appreciate that the Liberals are, in essence, already in opposition. It is extraordinary that so few of them are present. If I were a Liberal now—I never will be, but if I were—I would be thinking, “Here is an opportunity, with this amendment, to try to have a smidgen of influence over this tawdry Government.” That smidgen of influence is entirely lacking now, because the Liberals are nothing more than lapdogs to the Tories’ economic policies.

I shall illustrate my point with two examples, the first of which concerns the labour market and issues such as immigration and why it is so relevant to what the OBR is not doing and, I believe, will not do in its report that will be presented with the Budget tomorrow. When assessing job creation, it is essential from a Treasury and from a social policy point of view to ascertain precisely what new jobs there are. In doing so, work should not be broken down to the micro-level of particular kinds of jobs, as policy makers do not need to know that. However, they do need to know about the people who have entered the labour market and were not in it before. If it is projected that just over 1 million jobs will be created in this Parliament, it makes a world of difference if those jobs are taken by young people coming into our economy from the accession countries of eastern Europe, perhaps on a temporary basis, to participate in those elements of growth in our economy rather than being taken by the domestically resident, unemployed, underemployed, retired or partially retired population.

The economics of this issue are as important to decision making as the social policy side, which I am sure all hon. Members will recognise is very important. If the majority of jobs being created are semi-permanent, service sector-based jobs in the south-east, particularly in London, and if they are filled by people from overseas, there will be economic and social consequences. One economic consequence will be an overheating of the London and south-east economies.

The failure to take that into account in economic planning was by far the biggest fault line under the previous Labour Government. It is foolhardy of the current Government, with the cheering on the Conservative Back Benches that there has been, to do exactly the same thing given that a tool has been created that would allow that objective analysis—if it were allowed to do that job. If the OBR’s report tomorrow gives a breakdown of where jobs are coming from, how many are in the south-east and London, and how many are new jobs going to people coming into the country for the first time, that will give us far greater certainty about the economic and social consequences. Some of those economic consequences, as well as social consequences, will be an overheated housing market in London and the south-east, which has previously been an impediment to certain forms of growth and to those who have wished to get into the labour market but have not been able to do so.

Oral Answers to Questions

Ian Murray Excerpts

Tuesday 22nd March 2011 Commons Chamber

[Mr Osborne]

At that meeting at Rolls-Royce, John Rose made a very compelling case for how little we had done as a country to support our manufacturing sector. We will set out policies tomorrow to assist, and we have already, as I said, put in place four annual reductions in the corporation tax. More broadly, we have to get away from a model of growth that was pursued over the last decade—based on excessive debt, and growth in one sector, the City of London, in one corner of the country, the south-east. We must have more balanced and sustainable growth in the future.

[Ian Murray (Edinburgh South) (Lab)]

Does the Chancellor of the Exchequer recall saying at the end of 2007:

“Today I can confirm for the first time that a Conservative Government will adopt these”—

Labour’s—

“spending totals…to…the year 2010-11”?

Does he regret calling the article, “Tories cutting services? That’s a pack of lies”?

[Mr Osborne]

We got into office in 2010-11, and we abandoned those spending plans for the years ahead.

Fuel Prices and the Cost of Living

Ian Murray Excerpts

Wednesday 16th March 2011 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

It is a pleasure to follow the hon. Member for Worcester (Mr Walker), who talked about disingenuous and spurious policies. I am sure it was disingenuous to promise not to increase VAT before the general election and then to increase it immediately after it. There is nothing more disingenuous than lying to the electorate.

I would like to follow my hon. Friend the Member for East Lothian (Fiona O'Donnell) in talking about some of the personal stories that have been brought to my attention and which relate to the Opposition motion.

[Andrew Bingham (High Peak) (Con)]

rose—

[Ian Murray]

I would like to make some progress.

My constituents wrote to ask me to bring their stories to the House and put them directly to the Chancellor and the Chief Secretary to the Treasury, so I am disappointed that neither of them is in their place. It shows a real disregard for this place when those two senior Ministers are not present to debate such an important issue. Of course the two Ministers on the Treasury Bench are among my favourites, but it would have been nice for my constituents to have had a response directly from the horse’s mouth.

Let us examine what fuel price rises are doing to the cost of living. I shall start with the case of a constituent in Edinburgh South who runs a small business. Let us look at what these particular fuel increases are doing to growth in the economy; in so doing, I shall echo some of the points made by the hon. Member for Worcester. My constituent runs a business in the service sector, so she uses a lot of suppliers. However, suppliers’ price increases are going through the roof, mainly because of additional fuel costs. She told me that some of her suppliers were charging as much as an additional £5 per delivery to cover their own increased fuel charges. My constituent faces a dilemma of what to do about that £5 increase. Should she pass it on to her customers? She finds doing so difficult. Why? Her problem is compounded by the fact that VAT has increased from 17.5% to 20%, which has also impacted directly on prices to her customers.

[Barbara Keeley]

My hon. Friend makes the important point that this debate is about the cost of living, as well as about fuel prices. He also rightly raises the problem faced by businesses in deciding whether to pass the increases on to their customers. My constituents live in one of the 15 most deprived areas in the country. They have an appalling bus service after the network was privatised by the Conservatives. People in that situation, like my hon. Friend’s constituents, will suffer both from increased costs from fuel charges and from having to pay £450 a year in increased VAT. Does he agree that our constituents are suffering heinously from that?

[Ian Murray]

Of course. The poorest suffer disproportionately because they have to use public transport and face the increased costs, while also having to pay more in VAT for all the supplies they buy. Prices are going up because small business issues, such as the one I am highlighting from my constituency, further compound the problem. I noticed that the Economic Secretary was upset when my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) suggested that she did not live in the real world, but we are talking about what is happening in the real world and I do not think that the Minister’s 40-minute contribution dealt with any of the real issues for our constituents that are happening at the coal face.

The owner of the small business that I mentioned is faced with a dilemma, but it seems that she must increase prices at a time when consumer confidence is at its lowest. People are worried about their jobs, they are worried about prices going through the roof, they are worried about commodity prices, and they are worried about how they are to fill up the family car. It is a quadruple whammy for businesses, which, as I have explained, face increased core costs as well as increased supplier costs, increased prices owing to the VAT rise, and increased borrowing costs. All that is creating unstable consumer demand, which, I am told by small firms in my constituency, is depressing their businesses.

On Friday I was visited by someone who works as a middle manager at Her Majesty’s Revenue and Customs. He has two small children, he is not a high earner by any means, and he and his wife live in my constituency. He described to me plainly how he has been affected by what the Government have done in the past 10 months. It is clear that he is being squeezed from all angles because of this Government, and fuel and the cost of living are part of that. Let me go through the list. He faces increased national insurance contributions, the increase in VAT to 20%, and the fact that his pension will be linked to the consumer prices index rather than the retail prices index, along with the additional pension contributions that he must make. He faces tuition fees for his children, he has lost his child benefit because he is the sole earner in the relevant bracket, and he faces record commodity prices.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

The hon. Gentleman is making a powerful speech about the impact of high fuel prices on his constituents and mine. Like him, I should like to see action from the Government, but will he tell us what he would do to secure the reduction in the deficit to which all the tax rises are contributing? I understand that, because of the legacy of the last Government, the present Government’s net debt will rise in every year of the current Parliament—that, in the final year of this Parliament, we shall still be borrowing more money because of the deficit left to us by the last Government. We should love to be given some idea of how, in the real world, we could both make the savings and deliver the benefit.

[Ian Murray]

I am delighted that the hon. Gentleman has managed to ingrain himself with the propaganda being put out by the Conservative and Liberal Democrat parties about the deficit. He has given me a wonderful opportunity to go back to the start of that list so that he can take it all in.

There is no doubt that the Government’s cuts in public services are going too far, too fast and too deep. Everyone knows that the deficit must be reduced, but reducing it over time would protect my constituents from the ideological cuts that the Government are introducing under the veil of the deficit.

Let me return to what is happening to that squeezed middle manager at HMRC. He faces increased national insurance contributions and an increase in VAT to 20%. His pension will be cut because it will be linked to CPI instead of RPI. He faces tuition fees for his two children. He has lost his child benefit because he is a higher-rate taxpayer, and record commodity prices are pushing up food prices. He faces a high inflation rate, partly owing to the increase in VAT to 20%. His salary has been frozen. He has job insecurity. He faces increased energy prices, increased borrowing costs and lower interest on his savings, all because of this Government. Moreover—this brings us back to the motion—the price of fuel means that the cost of filling up the family car has gone through the roof. The Chancellor of the Exchequer is taking an extra £59 million from the Scottish people because of the increase in VAT, which is directly related to the cost of the fuel that they put in their cars.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Ian Murray]

I will not, if the hon. Gentleman does not mind.

Each time people drive down the street, they see the large neon sign at every petrol station, and that is having yet another damaging effect on consumer confidence.

What are we left with? We are left with a broken promise from the Government on VAT, and a broken promise on the fuel duty stabiliser. Many people in East Lothian and Edinburgh South voted for the Conservatives because they had made that promise before the election. Time after time, promises made to ordinary people in my constituency and throughout the country are broken, and it is about time that Ministers did something about it.