Budget Resolutions and Economic Situation

Emma Reynolds Excerpts

Wednesday 20th March 2013 Commons Chamber

[Emma Reynolds (Wolverhampton North East) (Lab)]

It is an honour and pleasure to follow my hon. Friend the Member for Kingston upon Hull North (Diana Johnson). I want to start my speech by welcoming one element of the Budget, but then I want to set out why I think it fails three key tests of economic competence, fairness and equality. Let me start with the positives.

As the chair of the all-party group on aerospace, I welcome the announcement made earlier this week, and in the Budget today, that the Government, alongside industry, are creating the aerospace technology institute, which will support investment in vital areas of R and D. Aerospace is a long-term industry, and it takes 15 years to develop a product. It is crucial that long-term sustained investment and cross-party support is in place, so I welcome today’s announcement. Another important factor for the industry is our continued membership of the European Union. If the UK were to leave the EU, it would be disastrous for the aerospace industry, and many other industries throughout the country.

In addition to the aerospace cluster in Wolverhampton, there is another chink of light and optimism on which I want to comment. Jaguar Land Rover has already committed to substantial investment on the edge of Wolverhampton and has just announced that it will almost double that investment, which is a real shot in the arm for the city and will create 1,400 jobs directly and many more in the supply chain and wider economy. That demonstrates the strategic foresight of the regional policy and the regional development policy during our time in government. Had it not been for Advantage West Midlands investing in and decontaminating that site and designating it as a strategic investment site, the Jaguar Land Rover investment, and the many other investments in that site, would not be benefiting constituents in the city.

That said, however, I remain deeply concerned about the local economy in Wolverhampton. The Government’s economic policies fail three key tests. Will they kick-start the economy? Will those with the broadest shoulders bear the greatest burden? Will their economic policies lead to a more equal society? First, it is clear to me and many millions of people that the Government are failing the test of economic competence. They destroyed consumer and business confidence, sucked demand out of the economy and failed to tackle the crisis in living standards. I welcome some of the announcements—for example, on the cancellation of the beer duty escalator and the fuel duty—but this is simply too little, too late.

Inflation is high and rising, wages are falling in real terms and, as a result, firms do not have the confidence to invest and are sitting on big surpluses. There is no growth, very little investment and exports are disappointing. I know that Government Members moan about the eurozone, but France and Germany are outperforming our economy. In the past two years, Germany’s has grown by 3.6% and France’s by 1.5%. The Government have choked off the recovery, the economy is stuck in a rut and the Government seem powerless to do anything about it. This bizarre notion of expansionary fiscal contraction has not worked. They need to think again, but unfortunately they are not.

The changes to take place in 11 days demonstrate that the Budget will fail the fairness test. Some of the poorest people in Wolverhampton, many of whom want to move to smaller council properties, will lose, on average, £728 a year. The Government have ignored the fact that there is very little alternative accommodation available and that the ties people have to their local communities are incredibly important. Many other changes will entrench the inequalities not only in Wolverhampton, but in the rest of the country. In Wolverhampton, for every mile someone travels from the west of the city to the east, they lose a year in life expectancy. The difference between the poorest street in my constituency and the richest street in the country is incredibly stark, but the gap will only get wider, because the Government were incredibly arrogant in last year’s Budget in cutting taxes for the richest people in the country, essentially giving 13,000 millionaires a 100% tax cut.

The third test is of inequality. It is not just that deepening inequality is a bad thing in and of itself—one reason I came into politics was that I wanted to live in a more equal society—but Richard Wilkinson has compellingly argued that unequal societies also perform worse than more equal societies on many other fronts. For example, they have better life expectancies, less childhood obesity and lower crime levels. For that reason, the Government’s economic policies are bad not only in respect of unequal outcomes, but for the quality of life of everyone in the country and for our future.

I regret to say that the Government’s economic policies fail the tests of economic competence—more of the same simply will not work—of fairness and of whether they will create a better and less unequal society. I am very disappointed with the Budget.

Ordered, That the debate be now adjourned.—(Karen Bradley.)

Debate to be resumed tomorrow.