Budget Resolutions and Economic Situation
Debate between Caroline Lucas and John Denham(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Denham
I am tempted merely to say, “I rest my case.” Throughout the 2010 election campaign, the right hon. Gentleman and all members of the Liberal Democrats said how disastrous it would be to adopt the policies that they later supported. He makes precisely my point. He adopted a position that was absolutely factually wrong and damaging to the country for the political convenience and advantage of the Liberal Democrats—he sanctioned with his own words what happened later.
The Government’s strategy on cutting too far and too fast was bad enough—it shattered confidence and took demand out of the economy—but it was compounded by catastrophic failures in policy. Because the Government convinced themselves that the only thing that needed to be done was cutting the deficit fast, they abandoned many of the tools available to them to stimulate growth. It was interesting today to hear of a single pot for cities to bid for from the Government who, within two months of coming to office, abolished the regional development agencies and the whole development infrastructure. They recognise, three years later, that that was a disastrous mistake, as Lord Heseltine has told them, but at the time, they did not believe that getting rid of those strategies mattered.
The Government also created massive uncertainty in the wider economy. The truth is that there is no absolute shortage of money that could be used to rebuild the British economy. The cash balances of giant companies are huge, but they will not invest, because there is so little business confidence in Britain as a place for investment.
The responsibility for that goes much wider than the Government, because Conservative and Liberal Democrat Back Benchers have spent three years creating uncertainty about wind power, nuclear power, HS2 and the future of airports policy. For everywhere that business might look to invest in this country, Conservative and Liberal Democrat MPs have, for the narrowest of marginal constituency political interests, conspired to create the maximum business uncertainty. It is therefore unfair to blame all the uncertainty on the Chancellor’s misguided policies. Much of it comes from a misunderstanding by Conservatives and Liberal Democrats of what needs to be done—long-term investment and long-term certainty in Government policy to create investment.
For example, such uncertainty is why investment in renewable energy—the Chancellor mentioned green investment—halved between 2009 and 2011. That is a conscious, clear effect of chaos in Government policy and the narrow interests of Conservatives and Liberal Democrat Back Benchers. For all those reasons, unnecessary damage has been done to investment in our economy.
Mr Denham
I will not give way because my speech is time limited—I would give way if I had more time.
The Chancellor did not mention a number of things in his speech. For example, he did not mention the march of the makers. Whatever happened to that and our desire to build up an advanced manufacturing industry to lead the way in exports? Perhaps the march of the makers was in an early draft of the Budget speech, but last month’s worst industrial output figures for 20 years probably put paid to the idea of mentioning it today.
There are areas of success—the Government have wisely continued the Labour Government’s policies for the motor industry and reaped the rewards for the country as a whole—but, in too many areas, there has been no coherent policy. In my part of the country, the leisure boat industry, including well known global companies such as Sunseeker and Oyster Yachts and many smaller manufacturers, is a small but world-leading industry. To foster such an industry, we need coherence in Government policy, but what do we find? We find that the banks are not lending coherently as they once did to businesses in the luxury yacht and leisure boat industry; that it is hard for dealers to get finance to trade up and down in the second-hand vessels that need to be sold; and that the Home Office makes it impossible for wealthy buyers from Russia, China or elsewhere to get into the country to see the boats on sale at our boat shows. There is a complete lack of interest in vast parts of the Government in successful strategies to promote successful parts of the economy.
My final point is to agree broadly with the Chancellor on one point. He said that
“unless we fire up the aspirations of the British people…we are going to be out-smarted, out-competed and out-performed by others in the world who are prepared to work harder for success than we are.”
I agree with him in this sense: a country in a disastrous economic position such as ours will recover only if there is a shared patriotic commitment to rebuilding our country, and a shared case in which everybody in the country feels that they have a stake and a role, and that they will benefit from success. That is why the millionaires’ tax cut and other divisive policies that have been pursued against the poorest in our country are so damaging. Those policies are not only socially unfair and morally reprehensible, but because they divide our country and make it clear that there is no common cause and nothing to be gained from pulling together, they undermine the effort needed to build a one nation economy that genuinely works for all people in this country.
That is the problem once again. The political rhetoric cannot be faulted, but the policies needed are entirely missing.
Amendment of the Law
Debate between Caroline Lucas and John Denham(12 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Caroline Lucas (Brighton, Pavilion) (Green)
Would the right hon. Gentleman add a fourth test to the three that he has set out, which is whether or not this Budget takes us in a more sustainable direction? On that measure, the Chancellor started by saying that oil prices are of great concern, but what he has now done is to give a huge tax break for more oil drilling.
Mr Denham
I am happy to include that test. One of the missed opportunities will turn out to be in the low-carbon economy that will dominate the global economy in the 21st century.
Things have turned out so much worse than in the heady days of the new Chancellor’s optimism when he told us in his first speech that the economy was set to grow steadily; that unemployment would fall year on year; that the deficit would drop like a stone, yet front-line services would be protected; that the private sector would expand magically, more than filling the space left by public services; that the banks would lend; and that the whole tiresome infrastructure of regional investment, job guarantees for young people and a coherent planning system could simply be swept away. Well, the Chancellor, the Deputy Prime Minister, the Prime Minister and the whole coalition were wrong.
The spending cuts, drawing billions out of the economy, were too far and too fast. The Government’s gloomy talk first unnerved and depressed consumers; then the VAT hike took money from them when we needed them to spend. Now the cuts are really beginning to bite. The Government were so cocksure and complacent that they strung together, purely for cynical political purposes, a series of half-baked, ineffective measures that were more or less abandoned as soon as the last press release had been issued: the national insurance holiday; the regional growth fund that does not pay out any money for months or years; the business growth fund with few investments; the special support for exporters with a handful of users; the Work programme that does not work; Project Merlin; and the youth contract that has not even started two years after the future jobs fund was scrapped. Any right hon. or hon. Member who gets excited by any measures announced in a press release for this Budget should remember what happened to the last lot.
Opportunities were missed—to tax bank bonuses, to fund real jobs for young people, to cut VAT for families, to cut national insurance contributions for small businesses taking on staff, to bring forward infrastructure spending. But what did we get? Just a feasibility study on Monday of this week, two years after the need was first identified. No, the short-term measures have failed, and we have seen no change.
Fairness has been well debated today. Let us remember one point—in April, families with children, taking into account the personal allowances and all the other changes, will be £530 worse off on average. When we look at next year’s personal allowances, I am sure it will also be clear, when the dust has settled and the IFS has done the figures that take into account all the other changes, that those families will still be worse off. Hon. Members should look at the Red Book and see which families are going to pay a higher proportion of their income, and it is those on low incomes.
This Government have been mired in unfairness from the beginning. We should remember that one of their first actions was to cancel changes to pension tax relief, which would have brought in £1.6 billion from the very highest earners in this country. We did not hear the Chancellor reminding us of the things he has already done to tilt the system to those best able to get through the next few years. I believe that the Government will pay the price for that.
The truth is that it is not a matter of whether stamp duty brings in more money or whether the anti-avoidance measures—the Government should tackle avoidance in any case—bring in more money. The challenge for this Government and this Budget was to devote every single available penny to raising the incomes of hard-pressed low and middle-income families and to get the economy growing. There was no justification for singling out the highest rate of income tax on earnings over £150,000 a year. The average person in work in my constituency will have to work for seven and a half years to earn £150,000. To single out that higher-earning group and to cut their tax was wrong.
This was not the fairness in tough times that the country needed, but the other failure in the Budget was the failure to lay the foundations for the economy that we need in the future. The truth is that despite the pressure on the public finances, there is no shortage of money to rebuild the economy. UK companies are cash-rich. Sovereign wealth funds are out there. There are pension funds, closer to home, with money to invest.