Rolling Stock (North of England)

Debate between Angela Smith and Gordon Birtwistle

Wednesday 12th March 2014 Westminster Hall

[Angela Smith]

Indeed. The turnout today draws out an important point in this debate, which is the far-reaching consequences of the weak decisions made by the Department for Transport and its Ministers over the past two or three years, leading to one short-term decision after another and, in turn, leading to consequences that reach far beyond the immediate TransPennine routes, which are, of course, Sheffield-Manchester and Sheffield-Leeds. The consequences reach right out into Scotland.

[Gordon Birtwistle (Burnley) (LD)]

Will the hon. Lady give way?

--- Later in debate ---

[Angela Smith]

I will give way for the last time.

[Gordon Birtwistle]

The hon. Lady will appreciate that Network Rail spent about £20 million on the Todmorden curve and another £20 million-odd reconstructing the Cliviger Holme tunnel. We will have a brand-new tunnel and a brand-new rail link from Burnley to Manchester, but we will not have any trains. [Interruption.] Is the suggestion that people walk the line to Manchester? When are we going to get some trains? I am advised that we are going to get them in December—they have should been coming in May—but even that is now in jeopardy. We are putting a lot of pressure on Northern Rail to deliver the trains, even in the state they are in, never mind getting new trains. If we can get the ones it has to run that link it would be good. Will the hon. Lady request that trains be provided?

[Angela Smith]

The hon. Gentleman has encapsulated perfectly the lack of strategic grip that seems to be present in the DFT. Building a curve and new link but not being able to use them illustrates perfectly the stupidity of the position that we are in.

It appears that Northern Rail will receive fewer additional units from the south than it was promised in 2009, when Lord Adonis, the then Secretary of State for Transport, announced a major programme of electrification in the north. Back then, it was proposed that six Class 319 electric trains would be refurbished and transferred from First Capital Connect to Northern Rail in 2013—last year—and that they would operate between Manchester and Liverpool. However, it was recently reported that only three units would now be delivered, behind schedule and un-refurbished. A senior Northern source has been quoted as saying:

“We’ve told DFT we’re less than 10 months away from the proposed start of the electric service, we’re beyond the critical path, they’re not going to get refurbished and we’re not going to be able to operate the full service in the time we’ve got available.”

On top of these important issues there is another important perspective to this debate: just how serious are the Government about devolving power to the regions? The Minister knows well, following encouragement from the Department for Transport, that northern transport authorities have formed the Rail North group, with a view to taking responsibility for Northern and TransPennine services from 2016, and that date cannot come quickly enough for me. The proposed core of this network would cover around 21% of all UK stations. However, Ministers now appear to be rowing back on these proposals.

In November, it was reported that the Government were reconsidering their position, and in January a poorly defined partnership agreement between the DFT and the Rail North group was announced, without much of the devolution that was first promised. It subsequently emerged that the Department may force the Northern Rail operator to raise car parking fees. That move is opposed by the West Yorkshire passenger transport executive and flies in the face of true devolution. Given that the Department decided to move trains from the north to the south and is retreating on its promise to devolve rail network responsibilities, is localism now a phrase without meaning as far as the Government are concerned?

We in the north believe that we need efficient, well-run railways with modern trains providing the capacity that a growing network needs. We need those trains so that our economy can compete with the south—we all know how big that challenge is—if we are to close the north-south gap. On the Northern franchise, however, the average age of the fleet is 23 years, which compares with a national average of 18 years. Many routes are still served by the Pacer railbuses, which make up about a quarter of the fleet. I will not name my source, but I was approached several years ago by someone who asked whether the Pacer trains might have a future in the new country of Kosovo, but the trains may still be required on those Northern Rail services if the Government do not get their finger out.

The Pacer trains cannot be made compliant with disability access regulations without extensive refurbishment, and the oldest units are 30 years old. Under the Disability Discrimination Act 2005 the trains will either have to be made compliant or be withdrawn before 1 January 2020. Ministers have already said that that is

“generally a matter for train operators.”

The train operators are having their arms tied behind their back by decisions made in DFT that do not give franchisees the security they need to secure deals with the rolling stock companies. Because of the shortage of diesel trains in the UK—this is the other big issue—Pacer trains, which are unsuitable, may have to remain in service for longer than they should.

Capital Gains Tax (Rates)

Debate between Angela Smith and Gordon Birtwistle

Wednesday 23rd June 2010 Commons Chamber

[Angela Smith (Penistone and Stocksbridge) (Lab)]

May I join those who have congratulated you on your election, Madam Deputy Speaker? If I may give the House an update on the score in the England match, it is still 1-0. I think it is no coincidence that I am surrounded by an unusually large number of Welsh and Scottish colleagues. Thank you, Madam Deputy Speaker, for allowing me to speak in this important Budget debate—the most important in more than 30 years.

Thirty years ago, in 1979, I was a young slip of a thing—only 17 or 18 years old—and I remember what I saw in the following years. I am not going to have a go at the record of the previous Tory Government, so those on the Government Benches can settle down. In areas such as South Yorkshire and northern Lincolnshire, we saw huge devastation of our economies. Those of us who know the Don valley—I know that the Economic Secretary knows it very well—from its origins up in the north of Sheffield and in Barnsley through to Doncaster will remember the devastation of that lunar landscape: that is the only term that could have been used at one point to describe the lower Don valley. We saw the flattening of Hatfield, where now we have the Meadowhall shopping centre, and the devastation—as in the valleys of Wales—caused to other south Yorkshire valleys such as the Dearne valley. Where there were the pits of Manvers, Wath and Cortonwood, we now have a Morrisons supermarket and a retail centre.

I well remember all that. I remember, too, the work that we have done since then to try to repair the damage. We have tried to diversify our economies in the north of England—in places such as south Yorkshire and northern Lincolnshire. To some extent we have succeeded. We have biosciences, sport and leisure, and retail—and we still have advanced manufacturing.

We were making progress, albeit very slowly, on reducing the gap in economic growth and prosperity between London and the south-east and places such as Yorkshire and the Humber, but what is happening now poses a new threat to our economy in the north. If we suffer significant damage yet again because of a return to recession, the fear is that that damage will be permanent and irreparable, and that we will be unable to move forward as we had previously hoped without even more funding—significant funding—from Government and Europe. That is the context to today’s debate. I agree with my hon. Friend the Member for Ogmore (Huw Irranca-Davies) that the impact of the Budget on individuals and communities must be at the forefront of our minds.

Unfortunately, the Budget is a wasted opportunity to help the British economy on the road to recovery. Instead of investment and the promise of future jobs, we have a Budget of cuts for the poorest and regressive tax increases—a Budget that risks our future. The race to austerity that the Government seem determined to follow belongs to a lesser-known branch of economics called ignorance economics, as Leslie Budd of the Open university calls it. As he correctly points out, although it is sensible to cut waste, the slashing of spending can do much more harm than good. That is what the Budget, with its massive cuts to public spending, will do.

Unprotected Departments could have real-terms cuts of 25% over the next four years. The key question is this: how many nurses, police officers, teachers and other civil servants will be thrown on to the scrap heap in the years and months to come? How fair is it that one of the significant cuts in the local government budget will be in the area-based grant? Sheffield Hallam is one of the richest constituencies in the country, and Sheffield Brightside one of the poorest. The gap has decreased in the past 13 years, but there is still a 14-year difference in life expectancy between those constituencies. The abolition of the area-based grant will hit Brightside, but it will not hit Hallam in any way at all. How can that be fair?

The pupil premium has been promised, but we are hearing that it will be based on the abolition of additional educational needs funding and vulnerable children’s grants. If we roll that funding up into a pupil premium, will it be distributed fairly, or will more of it go to the south of England at the expense of the north?

Although I welcome, and offer my support for, the increase in personal allowances from next April, it will be more than wiped out by the regressive increase in VAT to 20% from January next year. There is no rise in the personal allowances for over-65s, which will disappoint many of my older constituents—indeed, I received an e-mail on that subject just this morning. That gives the lie to the argument that the Budget is all about fairness. Although the confirmation of Labour’s policy of linking the state pension to average earnings is welcome—it builds on policies developed by the Labour Government—not increasing the personal allowance for pensioners in line with those for everyone else is just wrong.

It is obvious that the Prime Minister’s words before the election—never mind the Deputy Prime Minister’s words—that he had no plans for an increase in VAT were as worthless as similar words spoken back in 1979. I remember very clearly that in 1979 the Conservatives said they would not double VAT. The first thing they did on coming into office was increasing VAT from 8% to 15%. That was not quite double, but it might as well have been.

When there is a need to maintain demand in the economy, the Budget risks squeezing demand and creating a double-dip recession, which could be worse than the one that we recently experienced. Let us get rid of the myth that the public sector is bad and that only the private sector can get the economy growing again. The balance has to be right, as we in south Yorkshire know better than others; we know it all too well. However, the two sectors are interlinked. Private companies benefit from Government investment, which is why we brought forward the capital projects—to keep the economy moving and to keep construction workers in work. Ensuring that the private sector works with the public sector can give us growth.

Let us also demolish the myth that only by putting forward austerity measures will we see growth in the economy. The lessons of the 1930s show that not to be true. Although the 1929 crash dealt a massive blow to the global economy, it was the neo-liberal austerity budgets that followed that led to a vicious decline in international economic activity, leading to protectionism, a collapse in world trade and depression. My fear—it is shared, I think, by every Opposition Member—is that that is exactly where we will go. We have seen austerity measures introduced not just by the UK, but by Germany, Greece, Italy and Spain. The House ought to think carefully before going down that path. It was only after the new deal in America that growth started to return in the 1930s. Sadly, Government Members do not seem able to learn the lessons of that period in our history.

The current rhetoric from Government Members is, “Look at what Canada did!” It has been mentioned already by Labour Members that Canada’s actions in the 1990s to wipe out its sovereign debt were taken in a completely different context. Canada was able to reduce interest rates quickly, and had a route for its exports in a booming US economy, because the value of the Canadian dollar was allowed to fall. Interestingly, Canada once again has a large public debt and is not considering the reckless action that the Government are pursuing. Those options are not sensible or credible in the current situation.

Let us also bury the myth about Greece. The UK is not in the same position as Greece. In 300 years of national debt, the UK has never defaulted on its sovereign debt. The UK’s debt has a long time to run, with an average of 14 years to maturity—twice as long as most other European countries—which means that the UK needs to finance much less of its debt in any given year and, therefore, is much less sensitive to rising interest rates.

We hear from the Liberal Democrats that fairness is important, and yet they now say that it is right that public sector workers should see real cuts in wages, while capital gains tax rises by only 10% for higher rate taxpayers. They also say now that VAT should rise to 20%, which they once said would be totally unfair on the poor. The Liberal Democrat way now is that it is right to cut benefits by £11 billion for the poorest in our society. Where is the fairness in that? Members can use as many words as they like and whatever sophistry they like, but they will not persuade the British people of the credibility of their position if they say one thing one minute, and another thing the next, just because they have taken the reins of power.

Where is the fairness in freezing child benefit for the next three years—a benefit that is often the only one paid directly to women and mothers? When that is coupled with the reduction in tax credits, many of my constituents will see that this is not a fair Budget. It is a regressive Budget that I believe will get the reception is deserves.

[Gordon Birtwistle]

Does the hon. Lady agree that if the interest payments on our existing loans, which are approaching £40 billion a year, were half that amount, we would not be in our present situation, and we would be able to spend the money on the things that she is now suggesting?

[Angela Smith]

As I think I said earlier, equating the national economy to a household budget has already been declared by many respected economists to be ignorance economics. It has been discredited by respected economists throughout the world, including economists of the centre right in the United States who recognise the lessons of the 1930s and recognise that we need investment and public spending to bring back growth and jobs.

However, the question is whether the Budget is needed. According to the new body set up by the Government—the Office for Budget Responsibility, which I think we all support—the economy is in growth. OBR statements make it clear that the previous Government’s spending plans were credible and would have reduced the deficit gradually, over a four-year period. I believe, as I think everyone on the Labour Benches believes, that that was a sensible course forward. Therefore, it has to be said that the reason why the Government are pursuing this path is ideological dogma. They are cutting for the sake of cutting, in an ideological drive towards the small state. The language of the TaxPayers Alliance is alive and well in the corridors of power, but it is cloaked in the language of “Needs must”.

The prospect of a race to austerity is so worrying that President Obama’s Administration in the US have felt it necessary to write to the leaders of the G20 countries urging them to continue with the economic stimulus—something with which, as I have mentioned, many economists agree. Although the help for new start-up companies in the regions and the creation of regional development funds are welcome, those measures will be more than offset by the run-down of the regional development agencies, such as Yorkshire Forward, and the loss of no doubt thousands of public sector jobs. It has been said today in the Financial Times, but let me put it on the record, that the overall impact of the Budget, contrary to statements made yesterday, will be a 60% reduction in capital investment by the Government by 2016.

Let us not think for a minute that this is a Budget for investment. The Government have fallen at the first hurdle on that idea. With the £80 million loan to Sheffield Forgemasters, they had the chance to show that they were interested in investing in growth and exports, in state-of-the-art technologies and in UK manufacturing. However, they chose not to do that. The loan would have earned a 3.5% interest rate, and would have involved Westinghouse taking a stake in the company and giving a guarantee of forward orders. It would also have transformed Forgemasters into a major player in the nuclear castings sector. The loan was secured against the company and would have been part of a total package worth around £140 million, with £80 million from the Government on a loan basis.

That would have meant £140 million for Sheffield and UK manufacturing, allowing for the purchase of a 15,000-tonne press capable of making the pressure vessels at the centre of a nuclear power plant. To put things into perspective, the only other company in the world currently making forgings of a sufficient size for the international market is Japan Steel Works, which has recently tripled its capacity in order to make 10 pressure vessels a year. However, 11 new nuclear power stations were commissioned around the world last year, and the pace is accelerating, with 55 reactors in planning at the end of 2009 and more than 30 licence applications under active discussion in the US. Not only that, but with only one company in South Korea and two companies in China now intending to enter the business of making such forgings, any future project for building new nuclear power stations in the UK will have to import pressure vessels.

As my right hon. Friend the Member for South Shields (David Miliband) said last week on hearing the announcements, the champagne corks will indeed be popping in Japan and South Korea. The investment was not, as the Deputy Prime Minister would have us believe, set up in the dying days of the previous Government. I would testify anywhere, in any court in the land, that those negotiations had been going on for more than two and a half years, and they went through the most rigorous scrutiny possible. The scheme would not only have given value for money; it would have been of major strategic importance to the economic future of advanced manufacturing in the UK. Again as my right hon. Friend said, pulling the plug on that loan is a piece of gratuitous economic vandalism—but then again, what should one expect from a Tory party that almost completely destroyed steel making in south Yorkshire in the 1980s?

We heard a lot in the previous speech, by the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), about the importance to the economy of an export-led recovery. I completely agree with what he said, so why did his Government not put the money into Sheffield Forgemasters, as that was all about exports, the future of UK manufacturing and the rebalancing of the UK economy? They turned down the chance to help this economy to recover. They failed the challenge on grounds of—[Interruption.] Well, tell me what the grounds were—ideology, dogma, pressure from Sheffield Forgemasters’ competitors to say no? We would like to hear about them.

If this is an example of the Government’s investment strategy, we should all be worried. For a relatively small loan that carried a commercial rate of interest, the UK would have had a company capable of being at the forefront of the supply chain for the nuclear power industry. It would have created jobs not only in south Yorkshire, but throughout the country. It would have led to high-value exports and secured the future of high-value steelmaking in the UK. Crucially, I know from working with Corus, Forgemasters and Fox Wire in my constituency how important it is for UK steel to stay ahead of the game when it comes to skills and advanced technologies. We cannot compete with China and the rest of the Asian economy on low-value steel casting and steel forging, yet we are giving that advantage to our foreign competitors.

It is also of interest to note that on the day the plug was pulled on the Forgemasters loan, the Department for Business, Innovation and Skills confirmed the building of a research ship for £75 million. There is nothing wrong with that investment, and I will support it, but the ship will be built in Spain because there are no longer any British yards capable of building it. The Tory Government of the 1980s decided that investment in shipbuilding was a waste of resources.

We should add to all this the fact that this Government have pulled the future jobs fund and slashed university places by 10,000. The hon. Member for Bournemouth East (Mr Ellwood) mentioned earlier that he had a relatively elderly constituency. Well, I have a lot of young people in my constituency, and they are worried about whether they will get the places they are looking for in the university system over the next five years or so.