Catherine McKinnell
Main Page: Catherine McKinnell (Labour - Newcastle upon Tyne North)Department Debates - View all Catherine McKinnell's debates with the HM Treasury
(12 years, 1 month ago)
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Grahame M. Morris (Easington) (Lab)
It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my colleague, my hon. Friend the Member for Gateshead (Ian Mearns), on securing this debate, the importance of which is testified to by the number of Labour Members present.
The Budget will have few positive benefits for the economy of the north-east, and there is no discernible regional support within the measures set out in the Budget statement. There are cuts in corporation tax and cuts in tax for the wealthy, but there is no credible plan for what is really needed in the north-east: a stimulus for jobs and growth.
The often used line that we cannot spend our way out of a recession has been shown to be an ideological mantra that flies in the face of economic reality. What the Budget has given us is rocketing unemployment and plummeting growth in regions such as ours. The north-east has the highest rate of unemployment of any UK region, at 10.8% of the economically active population. That is mirrored in my constituency where, despite the good news we have had from Nissan, large numbers of private sector job losses are in the pipeline. We are haemorrhaging private sector jobs at an alarming rate.
Regional economies such as the north-east will not make any headway without investment in a comprehensive and lasting economic infrastructure. That can only be done by the courageous state and by Government intervention. The north-east continues to suffer from the unfinished business of transition from heavy industry. However, that transformation has stalled as a consequence of the coalition Government’s policies.
The evidence supports the fact that Labour and our regional development agency, One North East, were making progress in transforming the economic landscape. An analysis from PricewaterhouseCoopers shows that, for every £1 spent by our RDA, an average of at least £4.50 of economic output was achieved. That rose to an output of at least £6.40 when future benefits were assessed.
Ministers have sought to propagate the myth that money spent in the north-east under Labour was wasted, but that is not supported by the facts. Based on the gross value added per head indices, the rate of growth in the north-east went from being the lowest of any region during the 1990s to being the second highest during the past decade. The facts and figures were alluded to by my hon. Friend the Member for Gateshead, so I will not repeat them.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate my hon. Friend on his speech. Does he agree that another key role that One North East played in the region was to ensure that European regional development funding was drawn down and invested in the region? Some £329 million was made available, but £129 million remains un-invested directly because of the loss of One North East. No one is drawing down that funding and no regional funding can match that investment in the region.
Grahame M. Morris
Absolutely. I am grateful to my hon. Friend for putting that on the record. That was another vital element that the RDA contributed towards jobs and growth in the north-east, and it is sadly missed.
Although the Chancellor told us that the Budget is overall fiscally neutral, its impact by region, class or earnings is anything but. For example, VAT—a regressive form of taxation—remains at 20%, which hurts those who have no choice but to spend their wages on life’s basic essentials and depresses demand. The continuation of wage freezes throughout the public sector will make life even more difficult for ordinary people, as will the rise in fuel duty.
In his Budget, the Chancellor has failed the people whom I represent in Easington and in the north-east. There was the increase in VAT, the granny tax, the pasty tax, the philanthropy tax, increases in fuel duty and the loss of tax credits for modest earners. My right hon. Friend the Member for Doncaster North (Edward Miliband), the Leader of the Opposition, was right to call it a Budget for millionaires when what we need is a Budget for jobs and growth in the north-east.