David Wright
Main Page: David Wright (Labour - Telford)Department Debates - View all David Wright's debates with the HM Treasury
Charter for Budget Responsibility
David Wright Excerpts(9 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls
I will give way in a moment, but I want to deal in a bit more detail with the interesting point that has been raised. What is clear not just from the Chancellor’s speech, but from his whole chancellorship, is that—unlike the former Chancellor—he has never really gripped the actual economics of what happens in our economy. He understands slogans, but he does not understand how the economy actually works. Let me explain it.
We all know that the Chancellor flatlined the economy for two or three years after 2010. Now, although the economy has recovered, growth has returned and unemployment has come down, the fact is jobs have been created in low-paid, often insecure work. There is lower productivity in our economy, many people are trapped in part-time employment and zero-hours contracts, and, as a result, tax revenues have not come in.
According to the OBR, income tax receipts are a cumulative £68 billion lower than the Chancellor’s 2010 forecast, and national insurance contributions are a cumulative £27 billion lower than he planned. His fiscal failure in this Parliament—which he could not deny when we asked him about it earlier—has occurred not because he has failed to deliver spending cuts or because he has not raised VAT, but because of the underlying way in which the economy works. Because more people are in low-paid work and wages are stagnating, the tax revenues have not come in. It is clear from the Chancellor’s speech that he does not understand the economics of the matter, but that is the truth. I know that the former Chancellor understands it.
David Wright (Telford) (Lab)
Is it not also the case that many people who are in work are receiving benefits, and is that not a symptom of the low-wage economy? Given that we are discussing budget responsibility, is my right hon. Friend as concerned as I am about the fact that the Chancellor promised an unfunded tax cut at the Conservative party conference, but is talking about consolidation today?