Budget Resolutions and Economic Situation

Alison Seabeck Excerpts

Wednesday 20th March 2013 Commons Chamber

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I preface my remarks with my usual declaration of an indirect interest.

It is always a pleasure to follow the hon. Member for Harwich and North Essex (Mr Jenkin), although I do not agree with much of his analysis, other than the fact that things are not happening as quickly as they should be. I think that the Chancellor has probably had a number of sleepless nights leading up to today’s Budget statement, with the nightmares of Budgets past haunting him—grannies, churches and caravans swirling around in the dead of night. He should also be worrying about the men, women and children whose lives are affected by every tax change and spending cut that he and his Government have introduced and the effects they are having on the public at large. They are certainly giving me sleepless nights—nights disturbed by e-mails at 2.30 am from people desperately worried about how they will make ends meet.

The Chancellor gave a number of excuses for the dire position the country finds itself in, all of which we have heard before and none of which is terribly convincing. However, the one finger of blame he did not point was the one that could be pointed at his boss, the Prime Minister. He is the man whose failure to manage his Cabinet colleagues’ behaviour, announcements or policy direction has left the Chancellor desperately seeking changes to support the grand plan, plan A—A for austerity or for agony, as the hon. Member for Harwich and North Essex mentioned.

There is the failure of the Secretary of State for Work and Pensions to get a grip of welfare reform, because he did not carry out a proper evidence-based assessment of the implications, which is costing the Treasury dear and causing untold misery. There is the failure of the Secretary of State for Communities and Local Government over the past two and a half years to push through any effective policy on the affordable homes we desperately need. There is also the failure of the Department for Transport to deliver infrastructure to get the country moving. All those failures are contributing in one way or another to the lack of growth in the UK economy.

Indeed, the Red Book’s section on infrastructure states:

“The Government will reform its approach to infrastructure delivery, including creating an enhanced central cadre of commercial specialists”.

It states that by the summer of 2013 the Government will get around to

“establishing new infrastructure capacity plans for key government departments.”

It really is surprising that by later this year, more than three years into this Parliament, they might just about get around to developing a plan.

All those failures are contributing to the lack of growth, growth that was there in 2010 when the Chancellor took the reins of office. Yes, it was fragile, but the Government’s decision to come in and, like a bull in a china shop, smash everything that was in place before, regardless of whether or not it was delivering, was just plain stupid and, frankly, arrogant.

Plymouth city council, because of its strong local leadership—it is now Labour-led—has now grasped the nettle and is delivering on its promise to find jobs for our young people through the 1000 Club. That is local government working closely with local businesses to achieve a shared aim. They are acting in the face of a loss of income of around £16 million a year, money that is being taken out of our economy because of the cumulative effect of the cuts in the tax and benefits systems. Of course tackling abuse in the system is important, but devastating local economies because of a rigid commitment to austerity is not.

We will see a wider impact of cutting family incomes in such a deep and devastating way: local shops closing and other businesses struggling. Poor people spend their money locally, so removing millions of pounds from cities and towns across the country will do absolutely nothing to boost growth. These changes are not just damaging growth; we have also seen a fall in average weekly earnings, as set out clearly in the OBR’s report.

It would be churlish of me not to welcome yet another attempt to kick-start the housing market and get it moving, but it is oh so very late. All the other myriad schemes we have seen have failed, and I think that this, too, risks failing to deliver, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) pointed out. Given that the Kickstart scheme was working under the previous Labour Government, why did the incoming Government see fit simply to wipe it out? Why did they not look at the problems facing the housing market and accept that some schemes were helping? Any proposal needs to be de-risked for the developer; then we will genuinely see things pick up and more houses built. Developers do have the capacity to build, and that is exactly what we saw under Labour’s scheme.

My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) expressed reasonable concerns about the nature of these schemes, however, and she was right to do so. We will need to ensure that the Help to Buy scheme is absolutely watertight against people who are trying to buy en masse, and there is a whole range of other questions on which we will need to look at the detail. I would certainly welcome an attempt to get second-steppers off and moving. We also need to think about the impact on house prices in general and whether there will be some unsettling of the market as a result of this scheme. The Federation of Master Builders—we must remember that smaller builders generally deliver about a third of all new homes, often in rural areas—has welcomed the scheme but does not think that it goes far enough or will help them to deliver energy efficient homes. Like Labour Members, it believes that a VAT cut would have been much more effective in revitalising home repair and maintenance, and the energy efficiency market.

In the south-west, we have been pressing for infrastructure projects in road and rail to support our local economies, plus investment to maintain Plymouth’s vital air link. We have seen little progress, despite the rhetoric. Of course, the news about Hinkley is welcome; at last that seems to be making progress. The British Chambers of Commerce has already said today that the developments in this Budget are too little, too late. We need this work now, not in 2016, 2017 or 2018. In so many ways, this Budget is a case of “This year, next year, some time, never.” Working families with children will not really benefit. The tax break on child care is likely to be of greater interest to people on higher incomes. So many decisions are being shoved back, towards and beyond the next general election.

The Government’s economic policy is not making sense. We need a steady and more balanced plan in which the cuts that have to be made are seen to be fair and proportionate and the same rules apply to tax breaks. Fairness in adversity is something that people understand; what they do not understand is why some sections of our community are getting such a kicking from this Government.