Christopher Pincher
Main Page: Christopher Pincher (Independent - Tamworth)Department Debates - View all Christopher Pincher's debates with the HM Treasury
(13 years, 5 months ago)
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Ed Balls (Morley and Outwood) (Lab/Co-op)
I beg to move,
That this House notes that on 22 June 2010 the Chancellor announced his first Budget with a target to eliminate the structural deficit by 2015-16 through an additional £40 billion of spending cuts and tax rises, including a VAT rise; further notes that over the last six months the economy has not grown, in the last month retail sales fell by 1.4 per cent. and manufacturing output fell by 1.5 per cent. and despite a welcome recent fall in unemployment, the Office for Budget Responsibility predicts that future unemployment will be up to 200,000 higher than expected; believes the Government’s policies to cut the deficit too far and too fast have led to slower growth, higher inflation and higher unemployment, which are creating a vicious circle, since the Government is now set to borrow £46 billion more than previously forecast; calls on the Government to adopt a more balanced deficit plan which, alongside tough decisions on tax and spending cuts, puts jobs first and will be a better way to get the deficit down over the longer term and avoid long-term damage to the economy; and, if the Government will not change course and halve the deficit over four years, demands that it should take a step in the right direction by temporarily cutting VAT to 17.5 per cent. until the economy returns to strong growth and by using funds raised from repeating the 2010 bank bonus tax to build 25,000 affordable homes and create 100,000 jobs for young people.
A year ago today, in his first Budget statement to the House, the Chancellor of the Exchequer made a clear choice. He said that rapid deficit reduction was the overriding priority, and that it would involve fiscal tightening of such scale and severity that it would have to begin immediately. He said that the faster we cut, the better it would be for confidence. He said that there was no choice, and that the markets demanded this action. He also said that no alternative was possible and that anyone who said otherwise was a deficit denier.
The Chancellor ignored the evidence that budget deficits had risen rapidly in every country after a global financial crisis caused by the irresponsible behaviour of banks around the world, claiming instead that the root cause of Britain’s deficit was too much spending on the NHS, schools and the police. He ignored the evidence that Labour’s balanced deficit reduction plan to support jobs and halve the deficit over four years was working, that the UK economy was already recovering, that tax rises and spending cuts had been pre-announced, and that we were over-achieving on our deficit reduction plan in line with the G20 commitment.
Ed Balls
The former Labour Chancellor is not in the shadow Cabinet, as the hon. Gentleman will know—[Interruption.] He chose not to stand for the shadow Cabinet. We voted against the VAT rise earlier this year. The Leader of the Opposition said some months ago that it should be reversed. I repeated that claim last week and what I know, as it happened last week, is that when I go to speak to my leader, he understands the issues and backs me up, which is more than could be said for the Education Secretary, the Health Secretary, the Environment Secretary, the Lord Chancellor—and, I fear, quite possibly for the Chancellor of the Exchequer, too, if things carry on as they are.
Christopher Pincher
I am grateful to the right hon. Gentleman for giving way. He says he talks to his leader, so will he tell us when he released this information about the VAT cut to his leader—was it before he told the shadow Cabinet or did he treat his leader like just any other member of it?
Ed Balls
I have to say that that is a ridiculous question. At a time when the economy has flatlined, confidence is down and our borrowing is up, is it surprising that I am asked questions like that? Of course I discussed all aspects of my speech with the Leader of the Opposition some days before I gave it. We agreed on this strategy because we think this VAT rise is a mistake. Families in the hon. Gentleman’s constituency are being hit by having to pay £450 more in VAT, so one would have thought that he would be backing rather than opposing our plan to give them some help.
Ed Balls
I am not giving way to the hon. Gentleman again now; I might do later.
The reason why the VAT cut is needed now is that things are getting worse, not better. In recent weeks, we have seen manufacturing output and job vacancies falling and the biggest fall in retail sales for more than a year. The Chancellor likes to boast that a net 370,00 jobs have been created in the last 12 months; what he does not like saying is that 70% of those extra jobs were created in the six months before the spending review and only 29% in the six months after it. That is why his Budget forecasts of a year ago have gone so badly awry.
The Office for Budget Responsibility forecasts for growth have been downgraded three times. Unemployment is now forecast to be 200,000 higher, while inflation is forecasted to be well above target this year and next year. The result of this stalled recovery, higher unemployment and higher inflation is that the Government are now forecast to borrow a further £46 billion more than was forecast in last year’s spending review. Public borrowing in the first two months of this year is higher than it was in the first two months of last year.
Ed Balls
I do my politics on the record. I am not going to comment on that kind of trash. [Interruption.] In view of all the Cabinet Ministers who have been briefed against in recent weeks by the Treasury—the Defence Secretary, the Health Secretary, the Lord Chancellor—perhaps the Chancellor should take a leaf out of my book on how to do things.
It is the contention of Labour Members that the Chancellor is wreaking long-term, as well as short-term, damage on British investment, incomes and employment. We know from the downgraded OBR forecast that our economy is already £5.6 billion worse off than it would have been if the Chancellor had got it right. The danger is that these policies will have a long-term impact, leading to a return of the long-term unemployment of the 1980s, a new lost generation of jobless young people and a permanent dent in our nation’s prosperity.
Ed Balls
I am sure that was one of the proposals in the so-called strategy in the Chancellor’s Budget.
As I have said, there is growing concern in the business community. There is even concern in the Conservative fraternity. As my friends on The Daily Telegraph said in a recent editorial:
“These figures should be giving George Osborne some sleepless nights.”
They should indeed be giving the Chancellor sleepless nights at No. 11.
Ed Balls
Give me five minutes.
The Chancellor has clearly been paying some attention. There is no plan B yet, but there has been a change in the rhetoric. Now the Chancellor says that the economy is “choppy”, but that
“Changing course would be a disaster for our credibility”
and would lead to a Greek crisis here in Britain—a Greek crisis that the Chancellor now absurdly claims he has narrowly avoided in the past.
Ed Balls
Well, at least that was not an animal noise.
Something has been puzzling me in recent months. Why does this Chancellor have such a love of the nautical metaphor? Navigating through choppy waters, steering a steady course, sailing into strong global head winds—where does he find all those boating metaphors? But this, of course, is the Chancellor who likes to spend his summers gossiping on the yachts of his friends.
I have said many times in the past year that the Chancellor must learn the lessons of history if he is to avoid repeating the mistakes of history. I am sorry to have to raise that rather unfortunate episode in his history again. I know that it is a bit irritating for Members, even a bit annoying, but the Prime Minister said that I was the most annoying person in politics, and I must live up to my reputation.
As a matter of fact, my reign at the top table did not last very long. A few days later, The Sunday Times conducted a poll asking the public who was the most annoying person in British politics. It turned out that the Prime Minister is just as annoying as me, it turned out that the Chancellor of the Exchequer is more annoying than me, and it turned out that the Deputy Prime Minister is more annoying than all of us. But who is the most annoying person in British politics today? It is still Lord Mandelson, the Chancellor’s yachting partner.
I know Lord Mandelson well. He is a good friend of mine. [Laughter.] He is, actually, and I know that he will agree with me on this. If the Chancellor and his friend the Prime Minister have found us annoying so far, they should bear in mind that this is only the beginning; and when the Chancellor boasts that he narrowly avoided a summer Greek crisis, we know what he is really remembering.
Christopher Pincher
A man is known by his friends, and I think the shadow Chancellor has just proved that.
The right hon. Gentleman has talked a fair amount about the newspapers that he reads, such as The Daily Telegraph, The Times and the Eastern Daily Press. It must be very interesting for the shadow Home Secretary in the evenings. Perhaps he has also read the Tamworth Herald, which has revealed that unemployment in Tamworth has fallen to the lowest level since 2008 and that investment has been made in Tamworth by Ocado and BMW. If the right hon. Gentleman thinks that we are doing so badly, how does he explain those developments?