Finance Bill

Debate between Liam Byrne and Stewart Hosie

Tuesday 20th July 2010 Commons Chamber

[Mr Byrne]

Let us come to that point directly. If we want to understand the difference between our parties, we need only compare the recession that we have been through in the past two years with the one presided over by the Conservative party. Unemployment in this recession is half what it was during the recession of the 1990s. Furthermore, repossessions are 40% lower and company insolvencies are running at about a third of the rate reached in the 1990s recession. We Labour Members believe that it is right to act to protect people’s jobs and homes and the firms that they work in.

[Stewart Hosie]

Much as I like the shadow Chief Secretary and much as he is doing a sterling job in attacking this new nasty Con-Dem Government, a wee bit of revisionism is going on here. The UK did not lead the way. The fiscal stimulus packages in the United States, France, Japan and even Germany predated the United Kingdom’s. If there were a bit more reality in this, there would be a lot more credibility to the attacks that the right hon. Gentleman is trying to level at the new Government.

[Mr Byrne]

It would be churlish of the hon. Gentleman not to acknowledge the role that the Labour Government played in bringing the G20 to London and agreeing a £1.1 trillion package of support, as well as the measures on international banking reform. All that ensured that whereas fairly low levels of growth in world trade and world economic improvement were projected last year, we are now looking at a significantly better picture. Surely he will acknowledge that.

[Stewart Hosie]

I supported fiscal stimulus; I still support fiscal stimulus when it is necessary. The question is not what may or may not have been spun at a G20 meeting, but why the Labour Government left the UK as one of only two G20 countries without a fiscal stimulus package in 2010. I welcome banking regulation, but given that Northern Rock began to collapse in the late summer of 2007, why will the real new banking regulation that we need still not be in place until the autumn of 2012?

[Mr Byrne]

I do not know what figures the hon. Gentleman is looking at, but in the March Budget the fiscal stimulus provided by automatic stabilisers was about 4.4% of GDP. The idea that a fiscal stimulus was not sustained into 2010 is fantasy.

Finance Bill

Debate between Liam Byrne and Stewart Hosie

Tuesday 6th July 2010 Commons Chamber

[Stewart Hosie]

Although the right hon. Gentleman’s excoriating attack on the coalition Government is pretty accurate so far, will he confirm that we had a balance of trade deficit in goods last year of some £82 billion, that Labour lost 1 million manufacturing jobs before the recession and that the impact on GDP growth was to suppress it every year since 2000? Just for the sake of accuracy, will he confirm that those figures are right?

[Mr Byrne]

I have not brought those figures with me to the Chamber, but the hon. Gentleman will know that exports from this country have grown strongly over past years. That is precisely why, as we came through the crash, we said that we needed to rebalance our economy, which is why we fought so hard for investment in companies such as Sheffield Forgemasters and why we said that we needed new investment in manufacturing—all investment that has now been cut back.

[Stewart Hosie]

Will the right hon. Gentleman give way?

[Mr Byrne]

No, I am going to make another important point, on which the hon. Gentleman might want to comment. The question of business investment is vital—it relates to the argument at the heart of the Budget—and I hope that we will have a good debate on it this afternoon. Business investment is the subject of clause 1, which offers, I am afraid to say, no salvation through investment allowances, which drive up investment and which manufacturers say make the world of difference. This is what the senior economist of the Engineering Employers Federation had to say about investment allowances:

“For smaller companies…there will be cashflow consequences …that will hurt their ability to reinvest in their own competitiveness.”

That is because the Government have withdrawn such allowances.

What, then, of corporation tax? We were promised in the Budget a four-year plan to bring down the rate of corporation tax to 24%, but clause 1 offers us just a one-year plan. We do not know whether that is a wheeze to avoid an unhelpful valuation of deferred tax assets—the Chief Secretary to the Treasury was silent on that point—but is it not more likely that the Treasury is simply hedging its bets? The Government promised us certainty on corporation tax, and all we have got is more risk. The truth is that business is not going to bet on a one-year deal when this country’s recovery demands a longer-term planning horizon. The Chancellor might be a gambler, but Britain’s business community is not.