The Economy

Baroness Ritchie of Downpatrick Excerpts

Thursday 4th June 2015 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I congratulate you on your re-election, Madam Deputy Speaker, and your colleagues. I also congratulate all those Members on both sides of the House who made their maiden speeches today. I welcome the opportunity to speak in this debate on the Queen’s Speech, which focuses on the future and, in particular, the economy.

Given the grand claims we have heard from the Government, both before the general election and since, about a long-term economic plan that is working, one would be forgiven for thinking that the UK was in the midst of some kind of economic miracle. The truth, however, is that we are not experiencing any kind of economic miracle and that the recovery, such as it is, remains fragile. We still have record debt, notwithstanding the fact that the Chancellor announced today that Departments will be expected to make further savings through asset sales and that the Government are to sell off their stake in Royal Mail, which I regret and which will have an impact on the delivery of postal services to people across the UK.

We still have that record debt, which despite years of austerity is still rising, and there has not been sufficient growth to improve the fundamental economic ratios. The Government point to their record on job creation, which looks superficially impressive. Record numbers of people are at work, but in fact many of the new jobs are insecure and low paid and many people are doing more work, simply running to stand still. Those people are not feeling better off because they are not becoming better off. The new jobs are not driving economic growth or strengthening the economy because they are low value added and low productivity. Mark Carney, the Governor of the Bank of England, has recently highlighted the fundamental importance of raising productivity and diplomatically reminded us of the real Government failure in this area of economic policy.

The productivity failure is symptomatic of the wider failure to use more imaginatively the economic levers available to Governments. Instead of focusing on austerity and cuts, the Government could do more to stimulate economic activity in sectors that can yield an immediate contribution to growth and prosperity. The necessary stimulus can come from greater fiscal creativity and the smarter application of taxation. One such area is the labour-intensive industry of tourism. I firmly believe that the Chancellor and his Front-Bench Treasury team should give longer and deeper consideration to lowering VAT on tourism for all the UK.

Tourism is the principal economic driver in my constituency. Only last week, we hosted the Irish Open, which attracted 20,000 visitors each day. They came not only to witness our great golfers from the island of Ireland, Britain and elsewhere, including the guy from Denmark who won, but to get outside and sample our local hospitality—our restaurants, eateries and the rest of our tourism offering. But if tourism is to be more successful, the Government need to lower VAT. Northern Ireland—my constituency in particular—has a land border with the south of Ireland, whose VAT rate has been 9% for years, notwithstanding its austerity measures. Our VAT is 20%. It has become increasingly difficult to be competitive in such a world. I ask the Government and hon. Members to give the issue due consideration because fiscal flexibility will help achieve better economic prosperity for difficult regions.