Finance (No. 3) Bill

Ian Murray Excerpts

Tuesday 26th April 2011 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

The hon. Member for Elmet and Rothwell (Alec Shelbrooke) has taken political propaganda to an all-time low this evening in trying to convince the Chamber that he has not eaten out on Labour’s chocolate and burgers, to use his words. That is a bit rich. None the less, I wish him well for his wedding, which is coming up shortly, and I hope that his battle with the bulge means that he will eventually fit into the dress come the big day.

I am delighted that the Chief Secretary to the Treasury is back in the Chamber, because I want to wish him a happy anniversary. It is exactly a year since the leader of the Liberal Democrats said in a TV interview with Jeremy Paxman:

“Do I think that these big, big cuts are merited or justified at a time when the economy is struggling to get to its feet? Clearly not.”

I wish the Chief Secretary a happy anniversary a year on from that bombshell from the Deputy Prime Minister. It is still the contention of Labour Members that the coalition Government are going too far, too fast, and that that approach is killing growth and causing rising unemployment in this country.

The Chancellor announced with a fanfare that this would be a Budget for growth that would add fuel to the economy. He gave his bold growth fanfare against the backdrop of the economy shrinking by 0.5% in quarter four, even though it was clearly on the road to recovery in quarters one and two of last year under the previous Government. On top of that came a huge embarrassment: the Chancellor’s trumpeted Budget for growth downgraded economic growth in every year of the economic cycle and predicted increased unemployment. The Chancellor’s own Office for Budget Responsibility concluded that the Government’s Budget for growth, which he said would “go for growth”, reduced the economic growth figures. Astonishingly, the hon. Member for North East Somerset (Jacob Rees-Mogg), who is still in his place, blames Labour and not the snow.

We cannot pay back any deficit with lower growth and more people out of work. The Government’s decisions contained in this Finance Bill do nothing to help hard-working ordinary people and families up and down the country. We have heard several times this evening about the potential decimation of the UK oil industry, which will cost yet more jobs.

[Dan Byles (North Warwickshire) (Con)]

Is the hon. Gentleman therefore opposed to the measures taken in the Budget to reduce fuel taxation on hard-working motorists?

--- Later in debate ---

[Ian Murray]

No one would ever deny that a 1p cut would help motorists, but there are certainly no petrol stations in Edinburgh South where fuel is now cheaper than it was before the Chancellor’s Budget. Indeed, money is being taken off the oil and gas industry, and billions of pounds in jobs and future research and development are being put in jeopardy for a 1p cut in fuel prices that nobody is actually seeing at the pump. The Government have to take that on board and act with ferocity.

I agree with the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin), who let the cat out of the bag during an Environmental Audit Committee hearing just before the Easter recess. He said that prior to the Budget, the Cabinet had discussed the fact that there was

“an immediate national crisis in the form of less growth and jobs than we needed”.

The Government’s response to that crisis was to produce a Budget that would make growth and unemployment levels worse—the “Dad’s Army”, “Don’t panic, Captain Mainwaring” approach to what they claimed was a “national crisis”.

Of course we need to get the deficit down, but by cutting too far and too fast, by hitting children, women and families the hardest and by following an ideology that attacks the economic drivers of this country, the Government risk a vicious circle of perpetual slower growth and fewer people in work. With fewer people paying tax, there will be more people drawing benefits and not spending hard-earned cash. The Government have presided over a set of decisions that have resulted in a collapse in living standards not seen since the 1920s.

On the subject of living standards, the Prime Minister promised to lead the most family-friendly Government ever. The Chancellor said, “We’re all in this together,” but changes to tax and benefits this month will hit those least able to pay—ordinary, hard-working people up and down the country—the hardest.

We have been through a global financial crisis, not a recession that was made in Britain. Like every other major economy in the world, the big challenge for us is how to get the deficit down. It cannot come down while confidence is low. VAT will cost a family with children an average extra £450 this year, draining much-needed funds from tight family budgets and potentially harming consumer confidence.

Of course, from this month, there are also cuts to the amount that parents can claim for child care; the freezing of child benefit for three years; the scrapping of the baby element of child tax credit; the setting of benefits on a permanently lower path, with a real-terms cut that means less generous benefits this year and every year in future; the cutting of the second income threshold for the family element of child tax credit; and the increasing of withdrawal rates for tax credits to 41%.—and of course the Liberal Democrats’ champion policy of increasing the tax threshold at the lower level is outstripped tenfold by the VAT increase and the change from the retail prices index to the consumer prices index for uprating tax thresholds, which will erode any threshold increase over time.

The message of this Finance Bill is not growth but the fact that the Government are giving with one hand and taking away with many other hands. They have demonstrated in the Budget and the Bill how out of touch they are. They do not get the fact that hard-working people are being hit by VAT and now face cuts to tax credits and child benefit too. They do not get the fact that communities throughout the country are being damaged by cuts to local services. Even the director of the Institute for Fiscal Studies said after the Budget that

“there is an awful lot of giving with one hand...and taking away with lots and lots of other hands.”

That was an independent commentator talking about what the Government are doing.

The Government often look overseas to build up their justification for this austerity Budget and the Bill, but we have only to look at Ireland to see what too far, too fast austerity measures produce—yes, Ireland, a country that the Chancellor declared had an austerity package that was something of a success story. I suspect that no one in Ireland would agree with him now.

Let us turn, as I might be expected to do, to the Conservatives’ bedfellows on praise for Ireland, the Scottish National party. The SNP held up Ireland as the foundation for their arc of prosperity and as the economic model that an independent Scotland should follow, but look what happened! The SNP not only no longer talk of independence, but they never talk about the arc of prosperity. If Scotland were independent, our banks and our economy would have collapsed, and Scotland would be worse off than Ireland, Greece and Portugal combined.

To be fair to the SNP, not only Ireland formed its arc of prosperity policy, but Iceland too—another economy shattered by the worldwide economic crisis. The Irish austerity measures went too far and too fast, and now the Chancellor and the Chief Secretary to the Treasury never mention Ireland, and neither does the SNP—they have changed indeed.

I could go on and savage the SNP’s 4.8p local income tax proposals, but I know that that is not to do with the Bill, which I shall finish by addressing. The Bill is driven by ideology—an ideology that some have developed in exchange for ministerial Mondeos. The Bill does not improve growth or reduce unemployment, and it continues to hit families and ordinary people the hardest. It kicks away the ladder of opportunity for our country’s young people. It is hurting but certainly not working. For those reasons alone, we should not give it a Second Reading.