Budget Resolutions and Economic Situation

Barry Gardiner Excerpts

Wednesday 20th March 2013 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Socrates called it eudaemonia—living well. He thought of it as the ultimate arete or virtue. In some respects, that is what Budget day is all about: how we can allocate the nation’s resources so that more people can live well. However, when Socrates spoke of eudaemonia, he would never have confused it with prosperity. He thought of it as a state of human flourishing. The Chancellor clearly thinks of it as mere human affluence.

Well-being may be a function of economic activity, but if so, it is not a direct or simple one. One need only reflect that a specific loss of income is much more damaging to well-being than the corresponding gain is beneficial to it. The bedroom tax that reduces my constituents’ incomes has a far greater impact on their well-being negatively than a corresponding tax credit would have positively. That is because other concepts such as security, equality and justice really do matter. For human beings to live well—to flourish—we require all of those.

Our economy must therefore be structured to provide not just so-called flexibility of the labour force, but security of employment. It must minimise the inequality between the bankers’ million-pound bonuses and the savers at risk of losing part of their life savings to bail out Mediterranean countries. It must explain the justice of someone earning £150,000 still getting £1,200 per child in child care, when a mother in my constituency who cannot find more than 15 hours of work a week gets none.

A good Budget is not just about the distribution of national wealth; it is about the management of society’s resources to enable its citizens to flourish as one nation. On that measure, today’s Budget has failed. Today’s Budget is the Budget of a Chancellor who has painted himself into a corner and then run out of paint. He has been wedded to austerity so obstinately and for so long that when he finally is seduced by the noble Lord Heseltine to share an illicit tryst with growth, he lacks the wherewithal to invest properly.

This Chancellor has been wedded not to prudence, but to patience. Year on year, we have been told that the prospect of economic growth and recovery has receded once more over the horizon, always remaining just four years away. In 2010, he forecast that by today, the economy would have grown by 5.3%; it has grown by just 0.7%. In 2010, he forecast that his austerity plan would stop us going into a double-dip recession; we have been teetering on the brink of a triple dip. In 2010, he told us solemnly that austerity was the only way to avoid losing our triple A rating; we now know that it has helped us to lose it.

Believe no one else about this Chancellor. Judge him by his own words. Judge him by his own U-turns. Growth is lower, real wages are lower, public sector net borrowing is £212 billion more than he forecast and debt as a percentage of GDP is up to 76.8%, when he forecast that it would be 69.7%. The Government’s target of debt reduction by the end of this Parliament is now absolutely unachievable.

The real trouble with the Budget is not that it will fail to achieve its growth objective over the five-year cycle of the political process; it is that the five-year cycle itself bears scant relation to the cycles of the resources that we must manage if we are to create sustainable well-being for our citizens. The Chancellor has engaged in a civil war in this Government against any understanding of true stewardship of our natural resources. Oh yes, he can spot a domestic credit bubble in our housing market, but he is incapable of seeing the far greater danger of an annual global consumption of natural resources that it takes our planet one year and four months to replace. That is a credit bubble of terminal proportions not just for our economy, but for our species.

By the time a child born on this Budget day is eligible to vote, the world will require 45% more energy, 30% more fresh water and 50% more food. This child will be part of the generation that will see the global population move from 7 billion to 10 billion. How do we enable this child to flourish? Do we become the most selfish generation of the most selfish species in our planet’s history, or do we become the generation that understood that justice and sustainability are essentially the same thing? If we want peace in the world, we must create justice. If we want justice, we must live sustainably.

This Chancellor’s old mantra was cut, tax and grow, so what if he has changed it for Heseltine’s grow, tax and spend? If he has not learned that growth must be sustainable, it will all end up in the same mess. In a world of 7 billion people, growth can be sustainable only if it is predicated on advances that bring increased productivity and greater efficiency in the use of resource. For the world to continue to achieve a 3% per annum growth target and to maintain a trajectory that keeps carbon emissions below the 2° threshold, we must increase our productivity per tonne of carbon emitted 15 times over, yet this is the Chancellor who has fought tooth and nail to stop us having a decarbonisation target in the Energy Bill.

The Chancellor is oblivious to the argument, regardless of who makes it—friend or foe, politician or industry. Two weeks ago, six of the largest multinational investors in the UK infrastructure wrote to him. Mitsubishi, Alstom, Doosan, Gamesa, Vestas and Areva have interests that span gas, clean coal, carbon capture and storage, nuclear and renewables. They told the Chancellor of their strong support for the early introduction of the 2030 decarbonisation target and warned:

“We are already close to the point where lack of a post-2020 market driver will seriously undermine project pipelines.”

They explained that supply chain investment decisions depend on reasonable assurances from manufacturers that a production facility built this decade at a cost of millions will have an adequate market for its products well into the 2020s. They told him:

“Postponing the 2030 target decision until 2016 creates entirely avoidable political risk. This will slow growth in the low carbon sector, handicap the UK supply chain, reduce UK R and D and produce fewer new jobs.”

The hon. Member for Chichester (Mr Tyrie), who chairs the Treasury Committee, began the debate from the Back Benches with the extraordinary claim that low-carbon policies are exporting jobs and that green measures are adding 20% to our fuel bills. He should know that energy efficiency measures cost 15%, not 20%, of our energy bills and that the low-carbon sector has provided one third of all economic growth in the UK and is our fastest growing sector, creating thousands of new jobs. The Chancellor and his friends need to begin to recognise that green growth is the surest way through our economic problems, not the contributor to them. Fundamental to that is an understanding of sustainability. Last year, the EEF manufacturers’ body sounded a warning about the risk—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.