Finance Bill

Gavin Shuker Excerpts

Tuesday 6th July 2010 Commons Chamber

[Mr Lammy]

The hon. Gentleman knows that this is robbing Peter to pay Paul—I am sure that his mother said that to him. One cannot give to people on the one hand and take a damn sight more in VAT on the other, and he knows it. I am talking about people such as the Uddin family, who live on the Broadwater Farm estate in my constituency. I am grateful to the TreeHouse charity for asking me to spend a Friday afternoon with a family in my constituency, dealing with the issue of autism. Because of the context of this Budget and the Finance Bill that flows from it, I was, of course, examining the wider issues that surround this family.

It was privilege to go to the Broadwater Farm estate, which I have known all my life, as I grew up and spent many years there. It was a privilege to go up the stairwell to the 15th floor to spend time with the Uddin family. In that two-bedroom flat was Mr Uddin and his wife, a family of five children and a niece. There were eight of them in this flat surviving on income support of £322 a week and struggling with a five-year-old autistic child. I was the bearer of bad news, because I had to explain to them that Mr Uddin, who cannot work as a result of an injury at work—he was a chef in an Indian restaurant and he had a serious back injury—would face a new medical test in order to get the disability living allowance that made up that £322. I had to explain to them that once again—I recalled this from my own background—their child benefit would be frozen. I had to explain to them that the price of living would go up because extra VAT would be whacked on their household goods and items such as school uniforms. I had to explain to them that the toddler element of the child tax credit and the element for their new five-week-old baby had been taken away. That was worth £1,000 to many families across the country. The Uddin family would be experiencing huge hardship as a consequence of this Budget.

It gets worse. What the Uddin family would dearly love of course is better housing. The prospect of better housing in London as a consequence of this Budget is dark indeed. That brings me on to the real test of what is progressive and what is fair. The cap on housing benefit will have the most pernicious effect in this city. Rents in London boroughs such as Islington, Camden and Westminster can run into the many hundreds of pounds, so there will inevitably be an exodus from zones 1 and 2 to zone 3. My constituency already has 20,000 on the housing list, more than 3,000 in temporary accommodation and, as I speak, more than 800 in emergency accommodation. It will become even more crowded. There will be no prospect of the Uddins moving anywhere, particularly when, as we would expect, Conservative local authorities in London continue to refuse to build. Guess what? Westminster council built just 200 affordable homes in the last year for which there are records. The Royal Borough of Kensington and Chelsea built just 100; Richmond built 127; Wandsworth just over 300. That is the record on affordable housing. It is very bleak indeed. The Mayor has made not one representation on the housing consequences of this Budget.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Does my right hon. Friend agree that beyond metropolitan areas such as London the Government’s decision to take away the regional spatial strategies that allowed councils to work together to deliver affordable housing will have a profound effect on the way in which we manage the problem of affordable housing?

[Mr Deputy Speaker]

Order. That was wide of the mark. May I ask hon. Members from time to time at least to mention things contained in the Finance Bill.

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[Gavin Shuker (Luton South) (Lab/Co-op)]

Thank you for calling me, Mr Speaker. I am constantly amazed by this Chamber. I had had ambitions to speak in this debate today, but I now discover that it is tomorrow—[Hon. Members: “No, it’s still today.”] Of course it is not tomorrow; it is still today. That is another surprise. I shall keep my remarks characteristically short.

We have been looking at two opposing risks in the debate today. The one that has been mentioned most by those on the Government Benches is that we would find ourselves in a debt crisis as a result of a lack of confidence in the cuts that we are making. I might have a different view from those on the Government Benches. The other risk is that we will cut too deeply and take out investment that would otherwise go into growing our economy. To remove the bulk of the structural deficit, as the Government have chosen to do, reflects one of those positions very strongly. However, it does not reflect the fact that we must walk a path between those two risks. We must find a way.

I was pleased to stand for Parliament on a manifesto commitment to reduce the deficit by half over four years of the next Parliament. That struck me as a good route to take between those two risks. To go further than that, as the Government are choosing to do, is ideological. We all have different ideologies—I understand that—but at a time when risk is such an important aspect of the debate, not to recognise that fact is deeply worrying. Today, we have been talking about VAT, capital gains tax and insurance tax. There is one other tax that I would like to talk about tonight.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

My hon. Friend makes the good point that those on the Government Benches are offering an alternative view on the Finance Bill. However, we have not heard very much from them for a considerable period of time. Does he think that they have run out of arguments to defend their position, or that we are actually winning the arguments and that they will vote with us in opposing the Bill’s Second Reading tonight?

[Gavin Shuker]

I thank my hon. Friend for that intervention.

I represent the east of England in my constituency of Luton South, and there is another tax that will have profound implications for my constituents. It is the change in national insurance. I am one of only two Opposition MPs representing the east of England and, as of Budget day, I represent part of what the Government now call the greater south-east. I am sure that hon. Members can imagine how delighted I was to receive that accolade but, having never heard of the greater south-east, and given that I live there, I decided that I should find out more about it.

I learned that, contrary to the coalition’s view that our area is so affluent that, even in the most serious downturn of the past 60 years, it needs no Government support, it houses some of the most deprived wards in our country. It should be recognised, as some on the Government Benches have chosen to do tonight, that the inequality within regions can be as great as the inequality between regions. For example, the Dallow ward in my constituency stands in stark contrast to Elstree, one of the most affluent wards in the country, through which I pass every day on my commute to Parliament. Both are in the greater south-east.

I have also learned that, of all the regions in this country, the greater south-east is the most likely to have vital infrastructure projects shelved. Given the VAT rise and the other measures in the Bill, this will have a really profound effect on the inhabitants of the region. Investment in infrastructure is a far better way of kick-starting economies than cheap, short fixes and making cost savings. Indeed, the independent Office for Budget Responsibility accepts that growth projections must be downgraded as a result of the coalition’s plans.

Most importantly for the people living in my constituency, I have learned that if an entrepreneur wanted to start a new business in the greater south-east, they would find themselves some £50,000 worse off than if they had started their business elsewhere. Let us be clear about the impact. For my constituents in Luton South, that means that moving just two stops up the train line or two junctions up the M1 would effectively give them a £50,000 golden hello for starting up. This Government would deprive our region and our town of new jobs and businesses, and fresh opportunities for growth.

Rising unemployment often hits the poorest and the youngest hardest. Indeed, my right hon. Friend the Member for Tottenham (Mr Lammy) spoke passionately about his experiences of growing up at a time when he faced a double whammy of weak growth and spending cuts, along with increased taxation, and he pointed at the profound effects on the local economy—not just in the short term, but in the long term as well. All things being equal, who would not want to establish their business within a few miles of their own home? Who would not want to employ people from within their own community?

These plans are a missile aimed at the heart of the recovery in the east and in Luton South. As glamorous as “the greater south-east” sounds, I simply have to tell Government Members that the continued membership of this region simply does not serve our constituents. Given a choice, I would like to continue to be a Member representing the east of England.

[Dr Thérèse Coffey]

Speaking as a fellow Member from the east of England, and one representing Suffolk Coastal, I am finding it difficult to understand the hon. Gentleman’s argument that we are disincentivising the growth of employment, given that we have reduced the threshold for employers’ national insurance. Surely that provides an incentive, not a disincentive. I would appreciate some further clarification on why we are disincentivising employment.

[Gavin Shuker]

I thank the hon. Lady for her intervention. I do not want to give a geography lesson here, but the point I am making is that there is disparity within a region, as some areas are more affluent than others. That applies locally as well as regionally, and some parts of regions are much closer to other regions. For example, in Luton South, we have a particular issue about bordering an area that will not be affected by the £50,000 incentive I mentioned for starting a business.

[Several hon. Members]

rose—

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[Gavin Shuker]

Thank you, Mr Speaker. In conclusion—

[Mr Kevan Jones]

Will my hon. Friend give way?

[Gavin Shuker]

Of course.

[Mr Jones]

One of the economic drivers in Luton is the success story of Luton airport. Does my hon. Friend agree with me that the Budget’s proposals to increase insurance premium tax from 17.5% to 20% is going to have a terrible effect on that success story, as Luton airport employs huge numbers of people in his constituency?

[Gavin Shuker]

I thank my hon. Friend for his characteristically timely intervention, rightly making the case that within these green pages tonight are a series of measures that will have a profound effect on each individual constituency. In Luton South, I could pick out the particular effect on the airport and I could talk more about our position within the UK. In each community and in each constituency, we will have to go back to our constituents and explain why we voted either for or against the measures in the Bill. I for one will vote against the Bill, and I would like to encourage Government Members from the east of England to do so as well. If they do, they can go back to their constituents with their heads held high and say that they stood up for their constituents and their region on a night like tonight.