Amendment of the Law

Eilidh Whiteford Excerpts

Monday 23rd March 2015 Commons Chamber

[Mr Darling]

The right hon. and learned Gentleman nods. They are pretty doubtful for one of two reasons: one is that a lot can change in that time, and the other is that the person presenting them has every intention of changing them as and when we get to that time. I do not believe for one moment that the Chancellor has changed his philosophy or beliefs from when he told the House last year that he wanted to reduce public spending to the lowest share in modern times—certainly since the welfare state and the national health service were introduced. All that has changed is that that was a political embarrassment last year, so he has simply shoved up the numbers at the end of the spending profile to be able to say, “Look, I’m not going to cause you any difficulties; public spending is going to rise, not decrease.” That is nonsense; the Tory view of public spending has not changed one jot.

Where I part company with many Government Members is that I do not think public spending is almost de facto a bad thing. It is extremely helpful to an economy in education and research and development, never mind the things an advanced economy demands in relation to the welfare state and pensions. So when we look at that profile, it is not credible, and I think it also conceals what the Conservatives would really like to do.

I want to say one thing about oil. I welcome what has been proposed. It is very sensible, because the oil taxation regime had to change, but I just remark in passing—and I am sorry only one nationalist has turned up to the debate—that the OBR forecasts are 47% below what it proposed just a year ago. North sea oil revenues are a 10th of what the nationalists told us they would have if they had an independent Scotland. This is another example of where pooling and sharing resources across the United Kingdom makes a massive difference. If Scotland had been independent today, it would have been faced with cuts that would make the austerity that is now being visited on the economy look like a Sunday afternoon tea party. They would have been substantial and damaging to the people of Scotland. That is why the nationalists have nothing to say about this; they have no one to blame for this problem but themselves.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Will the right hon. Gentleman give way?

[Mr Darling]

I have never actually met the hon. Lady, but I will certainly give way to her.

[Dr Whiteford]

I am grateful to the right hon. Gentleman for giving way. Would he accept that, over the past 30 years, oil revenues have contributed billions of pounds that have consistently bailed out Westminster’s bad economic management? Would he also accept that oil prices go up as well as down, and that the long-term trajectory of oil revenues is an upward one?

[Mr Darling]

I agree that oil prices go up and down, but when I said that last year during the referendum campaign, I was told that I was scaremongering, that I was talking Scotland down and that that could not possibly happen. The hon. Lady should listen to her former leader. He told us that the oil price would never drop below $113 a barrel, but look what happened a few months later.

In relation to the oil price, I would like to say in passing that whoever is Chancellor in the future will increasingly face a structural problem in the economy. North sea oil revenues are not going to return to where they have been for the past 30 years, income tax revenues are decreasing, corporation tax is proving more and more difficult to get, and the Government’s ability to collect money through fuel duties is steadily diminishing. This is all going to put more pressure on measures such as VAT. All Governments are going to have to face these facts, and the fall in oil prices brings them into sharp focus.

The current low levels of productivity are a matter of great concern. The Chancellor had a lot of fun comparing Yorkshire and France, but French workers are in fact more productive. That is not because our workers are lazy, or anything like that; it is simply because French firms have invested more. That is why certainty in public spending is important. It is also important that the Government should do those things that the private sector is not going to do. For example, I have increasing doubts about the ability of the private sector to provide us single handed with the energy generation that we are going to need. I am in favour of replacing our nuclear power plants, but the proposals for the next nuclear power station are heavily dependent on the French and Chinese Governments, and I worry about that. I speak as an advocate of the mixed economy, but I believe that we now need to ask ourselves whether we have reached a stage at which it might be cheaper and more effective for the Government to be doing more in that regard, rather than leaving it to the private sector.

On transport infrastructure, it will, I hope, be for the next Government finally to make a decision on additional expansion, whether at Heathrow or elsewhere in the south-east. Actually, none of those arguments has changed in the 10 years since the last White Paper was published on the subject. I also hope that the next Government will take advantage of the present ability to borrow very cheaply by borrowing to invest. I personally would spend more time on HS3 than on HS2, but I recognise that I might be in a minority in holding that view, on my own side and in the House as a whole. To be honest, there would be much more benefit, particularly to the northern part of England, in spending more money on the transport links there than in building a fast link between Birmingham and London. However, that is something that the next Government are going to have to deal with. I speak as a former Secretary of State for Transport. The Department for Transport’s record on announcing such plans is pretty good, but it is not quite so good when it comes to delivering. Indeed, many announcements were made last week, but I distinctly remember announcing the same things myself 10 years ago. Perhaps that illustrates the problem that all Governments face.

One of the profound issues that needs to be discussed as we go into the next election is what people expect the Government to do in regard to the provision of services such as education, health and pensions and what sort of society we want to live in. However, this Budget does not begin to address those questions, which is why I shall have no hesitation in supporting my hon. and right hon. Friends in the Division Lobby tonight.

--- Later in debate ---

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The thematic focus on jobs in this debate helps us to get to the heart of why last week’s Budget was a huge missed opportunity. The Government had a chance to move away from a cuts agenda that has stifled recovery, but they failed to take it. Instead, Scotland alone is looking at a further £12 billion of cuts over the next four years, which will hamper our economic recovery, damage our public services and harm our poorest communities and families.

Everyone welcomes the fact that finally the economy is recovering and unemployment is falling, but it has been a painfully slow process. It is the slowest recovery from recession in history. The OBR does not expect real wages to return to 2008 levels until the second quarter of 2016. On the most recent figures, the UK’s GDP per capita is still 1.8% below pre-recession levels and the current account deficit—a measure of our trade and income flows with the rest of the world—is worse than at any point in the UK’s history.

In 2010, the Chancellor said that the UK would run a surplus of £5 billion in the current structural budget this financial year. Instead, he now expects a structural current deficit of over £45 billion. In the six years to March 2016, the Chancellor’s borrowing target from 2010 is set to be missed by £150 billion. The austerity programme simply has not worked in the way he led us to expect.

If austerity has failed in economic terms, it has been a disaster for people, especially people on the lower half of the income spectrum. When we look at the cumulative winners and losers from the changes to the tax and benefits system over the past five years, we see that those who are trying to raise children have taken some of the heaviest hits to their incomes and living standards. The distributional analysis by the Institute for Fiscal Studies demonstrates that in every income group households with children have lost relative to those without children.

Given the rapid growth of child poverty levels, we should be particularly concerned about those in the lowest-income households. The Child Poverty Action Group points out that almost two thirds of the children who are growing up in poverty in the UK today have at least one parent in work. I have said before in the House that in-work poverty is one of the greatest challenges we face. The Budget offers little that will help those families. Indeed, measures such as the increase in the personal allowance tend to benefit higher-paid workers and higher-rate taxpayers far more than those in low-paid work. That is symptomatic of the wrong priorities that we have seen from this Government. On the Government’s own figures, the poorest 20% of households will be worse off by an equivalent of £466 a year. I am fortunate to represent a constituency in Aberdeenshire where unemployment is extremely low, yet in parts of Banff and Buchan, one in four children is growing up in poverty.

[Mr MacNeil]

Does my hon. Friend agree that the increase in VAT, which was proposed by the Liberals and the Tories, certainly did not help poor people, and that it is unforgiveable that Labour abstained on that vote?

[Dr Whiteford]

I agree with my hon. Friend that regressive taxation has played an important part in driving up child poverty. The pernicious combination of low pay and cuts to tax credits and child benefit has been the main driver of child poverty in our communities and of the increased pressure on parents to comply with the sometimes quite unreasonable and disproportionate conditionality in the system.

Child poverty has long-term consequences for the health, education and life chances of those who experience it. That is why it is short-sighted of the Government to short-change families and inflict yet more financial pain on those who are already carrying the can for the financial collapse.

I do not want to leave the topic of jobs without acknowledging the significance of the Budget announcements on the North sea fiscal regime. Many of the better-paid jobs in my constituency are in the energy sector. However, it is not just those who work directly in the oil and gas sector and its supply chain who depend on the industry, but myriad large and small local businesses, including retailers, hoteliers and service providers. The Government’s U-turn on the fiscal regime in the North sea, at long last, is very welcome, but it could have been done months ago when problems started appearing on the horizon—some of them predating the fall in oil prices. It has taken the Chancellor four years to reverse the tax increases he has imposed on the sector since 2011.

Will the Chief Secretary, who is back in his place, now accept that his supplementary charge was a mistake that has had a detrimental impact on our offshore energy sector and on the people who work in the industry, onshore and offshore? Will the Government provide assurances that their poor stewardship of our oil and gas resources will give way to a period of fiscal stability for the sector? Over the past five years, the one consistent chorus that I have heard from every part of the industry has been, “Stop shifting the goalposts on tax.” While we are still seeing announcements of job losses in the north-east, it is more important than ever that the industry can plan ahead with confidence.

There has been a cosy consensus around austerity that implies that it is inevitable, necessary and unavoidable, but there is nothing inevitable about it. The Chancellor had headroom in the Budget to make small increases in public spending, while still bringing down the deficit and debt. Such small increases would help to protect our public services and our social fabric, which has never looked so worn and fragile. Professor Simon Wren-Lewis of Oxford university argues that the Government’s austerity programme may have cost the UK economic growth equivalent to 5% of GDP. No doubt economists will argue the toss on the detail, but the huge loss of potential tax revenues that that represents helps to explain why the OBR’s 2010 forecasts on public borrowing have been £150 billion out over the past six years.

An alternative approach to deficit reduction could benefit the economy and expand the tax base, bringing real and sustainable economic growth. The benefits of that are simply not reflected in the Treasury’s modelling. The SNP leader, Nicola Sturgeon, has set out an alternative to the austerity agenda to support jobs and public services. I hope that in a few weeks’ time, an enhanced group of MPs will sit on these Benches and make that case. We will be a strong voice not just for the people of Scotland, but for everyone in the UK who wants a progressive alternative to this failed austerity project and this failed coalition Government.