Budget Resolutions and Economic Situation

Bill Esterson Excerpts

Wednesday 18th March 2015 Commons Chamber

[Mr Newmark]

I am trying to stick to Mr Deputy Speaker’s instruction to keep roughly to 10 minutes.

Time and again, Labour Members talk about borrowing. Page 22 of the Red Book shows us that public sector net borrowing is coming down annually. That is the point. Labour Members look at the gross figure, but the important thing is that we are bringing borrowing down annually. In 2015, it will go down to £90 billion. It will then go down to £75 billion next year. Hopefully, by 2018-19 we shall be in some sort of surplus.

It is also important to look at cyclically adjusted net borrowing, which is also decreasing—we will be showing a surplus in 2018-19. The borrowing figure has been and is a problem. Are Opposition Members right to point out that the gross figure is growing? Absolutely. The point is that we are tackling the deficit to bring down the annual amount of borrowing. That is what the Government have done very well.

[Bill Esterson (Sefton Central) (Lab)]

Will the hon. Gentleman give way?

[Mr Newmark]

No, I am not giving way.

I talked about the J-curve. Growth was slower to begin with, but the OBR is forecasting that growth will be much faster than originally predicted. In 2015, GDP growth goes to 2.5%. In 2016, it goes up another 2.3%, and 2.3% beyond that.

It is important to note, as the Chancellor did, that we have rebalanced growth—we have growth in the north as well as in the south. Has the north faced more pain than the south? Absolutely. The facts are there. The important thing is that we are now seeing balanced growth. The service sector is growing hugely, but the manufacturing sector is growing equally fast.

The OBR forecasts business investment growth—this is important—of 5.1% in 2015 and 7.5% in 2016. Hopefully, some of that will benefit Northern Ireland, to support what the hon. Member for East Antrim said.

The critical thing about growth is unemployment and employment. Unemployment has decreased from 7.8% to 5.7%. That has happened much faster than the Governor of the Bank of England projected when I sat on the Treasury Committee. Most importantly, for my constituents unemployment has dropped from 3.7% to 1.5%, and youth unemployment has dropped from 5.4% to 2.6%.

We have a record number of people in work: 30.9 million people in work is a remarkable figure, but even more remarkably, more men and more women are in work than ever before. Some 1.85 million new jobs have been created. I started the Million Jobs campaign to try to address the problem of youth unemployment. I was delighted that the Chancellor took our recommendation to abolish the jobs tax for young people. The Million Jobs campaign supported the abolition of national insurance for under-21s, which will kick in this year. I hope that one year the Chancellor will extend it to 24-year-olds. We are already beginning to see the benefits for the under-21s.

On taxation, I never imagined that we would do this—I thought at the time that it would be costly—but the personal allowance has gone from £6,500 to £10,600. That has meant that we have been able to benefit the average family to the tune of something like £905 per taxpayer. That is good news for taxpayers. Increasing the personal allowance to £12,500 in the next Parliament is a great ambition: it would take something like 4 million people out of tax altogether.

Raising the minimum wage from £6.70 to £8 an hour is another good and important move, because it stops the state subsidising the private sector, which is what has been happening as a result of a very low minimum wage. Raising the minimum wage will ultimately benefit taxpayers overall and ensure that businesses take on the responsibility to pay their own employees a fair wage.

On business tax, corporation tax coming down from 28% to 20% has not only encouraged people to set up businesses, but encouraged businesses to come across from continental Europe and set up in the United Kingdom. We now have the lowest corporation tax rate in the G8.

I have mentioned the abolition of national insurance for young people. It is also good news that the employment allowance is saving about £2,000 per business, because it encourages small businesses in particular, which live on the margin, to perhaps take on an extra one or two people.

The freezing of fuel duty has also benefited almost all our taxpayers: my constituents save about £10 every time they fill up their cars. Energy costs coming down will benefit the elderly in particular, so it is all good news on that front.

Most importantly—Opposition Members have been making this point for a while—when inflation was running higher than pay, people were in effect losing money; the ordinary, average earner was suffering. Now, however, pay is up about 2.1% and inflation at 0.9%, so real pay is going up.

As an ex-charities Minister, I am particularly pleased that an extra £75 million will be available for charities from the LIBOR fines. I certainly pushed for that and wrote to the Chancellor asking for support for Essex Air Ambulance, which is based in my constituency. I am delighted that the Budget will provide support from the extra LIBOR fine money for Essex Air Ambulance, because that means it will be able to provide an emergency support service 24 hours a day, seven days a week.

The Labour party was financially reckless in government, but its promises in opposition seem to be even more so. It has promised something like £20.7 billion in unfunded commitments, which is something like an extra £1,200 per household. Labour is indeed the party of tax and spend and borrowing. It has not changed and, if elected, it would still not change and it would damage this country.

What would a future Conservative Government do? They would be committed to raising the personal allowance to £12,500 by 2020; cutting tax for 30 million people; taking 1 million more people out of tax altogether by raising the personal allowance; balancing the books beyond the next Parliament; and reducing Government spending to 35.2% of GDP.

In conclusion, the Chancellor has delivered on his long-term economic plan. He has reduced spending, the deficit, taxes and unemployment. Compared with five years ago, he has also overseen reductions in inequality, child poverty and pensioner poverty and a smaller gender pay gap. In the words of Christine Lagarde, head of the International Monetary Fund,

“this is exactly the sort of result that we would like to see: more growth, less unemployment, a growth that is more inclusive, that is better shared, and a growth that is also sustainable and more balanced.”

This is a Budget that the Government can be proud of. The Government’s long-term economic plan is working, and we hope that on 7 May the electorate will not give the keys back to the guys who crashed the car.

--- Later in debate ---

[Bill Esterson (Sefton Central) (Lab)]

It is always interesting to enter the fantasy world of the hon. Member for Dover (Charlie Elphicke). He spoke of financial security and flexible work contracts, but, as we heard from my right hon. Friend the Member for Wentworth and Dearne (John Healey), the problem is a weakness in both employment and pay. That is one of the reasons why the deficit has not been paid off. The so-called long-term plan has been a failed plan. The Government promised to eradicate the deficit in one term, but they have failed to do so, and one of the reasons for that failure is the nature of the employment that the hon. Gentleman has just described.

A number of Conservative Members are following the Conservative campaign headquarters script very closely. They claim that the crisis became international on 1 May 2010, when, miraculously, it suddenly changed from what they describe as Labour’s crisis under the last Government to a euro crisis under this one. That is nonsense as well. We have been given a fantasy Budget by a fantasy Chancellor.

I am afraid that what is happening in my constituency is typical of what is happening all over the country: low pay, zero-hours contracts and part-time work. A third of my constituents who are in work are paid less than a living wage, and people have lost an average of £1,600 a year. There has been a recovery for a few at the top, with tax cuts for millionaires, but no sign of recovery for the majority. Just the other day, one of my constituents told me that he was struggling to make ends meet. He has not had a pay increase for years, and he struggles to afford his mortgage, the energy bills, transport, and all the other things that he and his family need. A lack of job security, as well as low pay, leaves many people feeling squeezed, and the position is the same all over the country.

Pensioners are feeling it too, with high energy prices. Added to that, we have a crisis in the NHS—people cannot get a GP appointment and there are huge delays at A and E—all on top of, and partly caused by, cuts to social care. Yet there is nothing in this Budget about the cuts to social care or the cuts to councils, nothing about what the future might look like for local government and nothing about our NHS. All we can conclude is that the Conservatives and their Liberal friends just want as small a state as possible, and that is what they have got in store for the people of this country if they win again. We have had a failure from this Government over five years and we do not need more failure over the next five as well.

What does business need? Many of my constituents either run or work in small businesses. They need a level playing field, proper skills and decent quality apprenticeships for the under-25s, not the over-26s who have benefited from what has happened under this Government. Young people need a proper choice between vocational and academic study and preparation for the wider world. We need a return to work experience and proper careers guidance in schools, something that has been removed by this Government. We have a Chancellor who did not mention what is in store for those in education. The 10% cut to education is not a sign of a long-term plan; I am afraid it is a sign of further failure from the Government, if they get in again.

The Institute for Fiscal Studies has told us that the holes in the Tory plans, even with the revisions today, can only be covered by further deep cuts to public spending, not least in the NHS, or by the usual Tory remedy, a rise in VAT. “Colossal cuts” in services is a phrase that the IFS has used, and the effect on the economy, certainly in my part of the world, will be to remove further spending power, as well as having an impact on living standards. We will see further cuts in services, which all has an impact, along with the VAT rise, on businesses and their ability to grow and create the good-quality jobs we need.

The Chancellor really has failed the people of this country over the last five years. Our constituents can do so much better than this Tory, top-down approach—the top-down reorganisation of the NHS and the failure of trickle-down economics, which helps a few at the top while the rest see their living standards fall. That has been the reality. What we need is a change of Government, because that Government will deliver success for working people. As we know, Britain succeeds when working people succeed, so let us help the majority of people in this country to succeed. Let us end the exploitation of zero-hours contracts, encourage living wage employers and have a proper rise in the minimum wage, because 20p just does not make up for the years when there was no increase.

Where was the announcement in the Budget about the exploitation of those in the care sector, such as the two women who looked after my mum in her final weeks and months? They did 25 hours in a weekend and were paid for only 10 hours. Like so many people up and down this country, they are completely undervalued, exploited and ripped off, yet we rely on them to look after the most vulnerable in our society.

What of those out of work? Self-employment is one of the options that the Government promote. The new enterprise allowance is great for those who have a business plan and know what they are doing, but the danger, I am afraid, is that it is pushing people into debt. That is what I have seen, sadly, for too many people who have gone down that route, having seen no other option because of the way the Department for Work and Pensions’ benefits system operates.

We need a change of approach. We need to see a better plan—a plan for the many, not the few; a plan that raises living standards, looks after pensioners, makes sure that businesses of all sizes can thrive, and ensures a decent society for us all. That is why we need a Labour Government to be elected on 7 May.