Budget Resolutions and Economic Situation

Adam Afriyie Excerpts

Wednesday 18th March 2015 Commons Chamber

[Adam Afriyie (Windsor) (Con)]

Does the hon. Lady not recognise that when certain taxes are cut, the overall take by the Exchequer increases, as has been demonstrated over the past five years?

[Sheila Gilmore]

We have heard the argument that if we reduce taxes, we get more revenue in. Of course, it is usually heard in relation to the 50p rate of tax, but that was a very poor example. It hardly had any effect, and so many people made their own arrangements before and after the announcement was made on reducing the rate again that we cannot tell what really happened.

It is important that we should have a discussion about the kind of values we want and the kind of society we want to live in. There has been a similar debate north of the border, where we have a Government who are trying to suggest that, although they do not necessarily want to cut taxes, it is possible to have fantastic services without ever putting up taxes. That will also leave the public confused about what can really be achieved.

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[Mr William Bain (Glasgow North East) (Lab)]

This was the Chancellor’s sixth Budget, and after a Parliament of unparalleled failure on living standards not seen in decades, today was his final chance to chart a fairer course for the British people. He failed that test. He failed it because the values by which he has conducted economic and fiscal policy for the past five years are not the values that build an economy where we have a dynamic industrial policy and public spending plans that generate more growth, decent jobs and rising living standards with higher productivity. He failed because, by his actions, he has shown that he does not believe in a society where opportunity and assets are more equally distributed to the benefit of all, and inequality is lower. He failed because time after time he has put short-term tactics before a long-term strategy for growth in our green industries. This is the Chancellor who told us he could balance the books without hurting the poor, yet young people have seen the biggest drop in incomes during this Parliament and all he has to offer now is a vision of a low-wage, lower-skill economy drifting out of the EU, thereby damaging our future prosperity even further.

Britain is a better country than this Chancellor gives it credit for. He said that his policies today will tackle waste and inefficiency, but what can be more inefficient than the waste of young talent or over-25s being idle? A Government with real ambitions for our country would be creating opportunities to give them hope with a decent job. He says his chancellorship has been about fairness, but what could be more inequitable than bonuses rocketing at the very top of society, while he has broken his promise on the minimum wage by raising it by a measly 70p, instead of to the £7 per hour by this autumn which he promised last year? He boasts of his record on growth, but the UK has had the slowest recovery from recession of any other developed country apart from Italy and Greece, with the IMF and other forecasters predicting that growth will be lower next year and the year after than this year.

According to the Fraser of Allander Institute’s most recent commentary on the Scottish economy, full-time employment is more than 4% below its pre-recession peak and the total numbers of hours worked in Scotland is still lower than it was before the recession. On this day, when unemployment has gone up in my constituency and risen across Scotland by 6,000, this Government should have had more measures in their Budget to deal with that.

We know that bank lending to small and medium-sized businesses has been falling and that exports are weak, with the OBR pointing out that net trade will make a negative contribution to growth all the way until 2019. Productivity is poor. People are having to take out credit and take on more personal debt to make ends meet. This was supposed to be a recovery based on the march of the makers, yet it has stretched households, who are taking on more debt and shouldering the burden of fuelling growth. This should have been the Budget that addressed structural problems in the British economy, because a Chancellor who wants a credible deficit reduction plan for the next Parliament has to have a plan for more balanced growth and prosperity. The rewards of that growth have to be more fairly shared among ordinary working people than this Chancellor has achieved. But he failed. He failed because not only does he have the wrong plan for Britain’s future, but he has the wrong values for our economy and our society, too.

[Adam Afriyie]

This is the 10th Budget that I have listened to in the House of Commons. The first five led to massive unemployment and a huge deficit, and really damaged the lives of the least well-off in this country. The five under the current Government seem to have led to greater levels of growth, lower youth unemployment, low unemployment overall and a lower deficit. Does the hon. Gentleman recognise that in any way, shape or form?

[Mr Bain]

I gently point out to the hon. Gentleman that the emergency Budget and the spending review adopted in autumn 2010 led to three years of hardly any growth at all in the economy, a dramatic fall in tax revenues, the deficit having not fallen or been wiped out as the Chancellor had promised, and debts doubling over the course of this Parliament. That was the reason the economy has underperformed and why this Government are going to leave to their successor the highest deficit in the developed western world. The fiscal policies that this Government have adopted could not have been more wrong.

We need a different plan for public spending and for more balanced economic growth, not the one the Chancellor has offered today. We need a plan for a fairer tax system, with tougher action against those who do not pay their fair share of tax or indeed do not pay any tax at all. It was very troubling to read in the OBR’s fiscal outlook this afternoon that it has doubts about the £5 billion that the Government have suggested they will pull in from the tax evasion measures set out today. For example, the OBR said that some of the specific measures were “unlikely” to generate the extra revenues that were scored in the Red Book.

The test for this Government in their Finance Bill next week is whether they will be prepared to bring in legal penalties for those who evade or avoid taxes so that we can fill the gap of £34 billion of tax that should be collected by the Exchequer and has been foregone under this Government. That is what hard-working taxpayers will want to see in the Finance Bill next week.

Despite the Chancellor’s modest U-turn today, he still intends by 2018 to force through the biggest fall in core public service expenditure since 1938. The cynicism of this Budget is that, by bringing in deeper cuts between 2016 and 2018 and then partially reversing them in 2019 and 2020, we can see that it is the electoral cycle that has motivated the Chancellor more than the cycle of what is good for jobs and stable growth in this country.

Labour has a different and a better plan. It is one that does not jeopardise investment in infrastructure. If we balance the current budget in the next Parliament, then, as the National Institute of Economic and Social Research has said, we would have more growth, more jobs and faster rises in wages—a better plan for Britain.

I welcome what the Chancellor did for the oil industry. With receipts forecast to fall to £700 million in the next fiscal year, there is an even stronger case for an oil resilience fund, which would do a great deal to secure investment and jobs in the offshore sector in Scotland.

We should have had a Budget that raised the minimum wage to beyond £8 an hour. We should have taken steps to encourage the living wage to be paid to as many people as possible in this country. We should have had a higher rate of income tax for those earning more than £150,000 a year. We should have had the opportunity to begin the job of change, but change is coming. A Labour Government are coming, and I believe that the British people will begin that job of change by voting, in just seven weeks’ time, for a Labour Government and for a more equal and prosperous society.

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[Adam Afriyie]

Will the hon. Gentleman give way?

[Huw Irranca-Davies]

I have no time—I apologise. [Interruption.] Oh, I do have time, so I will give way. Perhaps the hon. Gentleman will explain why the Government chose at that time to do the complete polar opposite of what I did as Minister in the Department for Environment, Food and Rural Affairs, when we had capital spending on flooding and chose to keep people employed in their jobs.

[Adam Afriyie]

Of course we all agree that we want the least well-off in society to do well, and the measures that the Chancellor has taken over the years are beginning to show effect. Does the hon. Gentleman not remember that under Labour’s Budget proposals, the cutting of the deficit was at a steeper rate?

[Huw Irranca-Davies]

Nearly every party is agreed on this, apart from some who have said that there is no need to cut the deficit. We agreed that we had to cut the deficit, but we also made it clear that we had to keep people in jobs while doing so. That is why, when I was a DEFRA Minister, we brought the funding forward and made sure that people in the Environment Agency were employed building flood defences.

My argument to Government Members and to the Chancellor is that there seems to be a complete disconnect. Throwing around claimant counts stats and saying that everybody has had to shoulder the burden simply does not ring not true for my constituents. Over the years, there has been an honourable tradition among those on the Government Benches of arguing for the working poor as well as others, but that seems to have disappeared over this five-year cycle. I hope that next time we will have a Government who deal with zero-hours contracts and the exploitation of agency workers, give a jobs guarantee to young people, have the sorts of initiatives that are being carried out by Labour in Wales, and build an economic recovery that benefits everybody, not just those at the top.