Budget (North-East)

Ian Swales Excerpts

Tuesday 17th April 2012 Westminster Hall

[Ian Swales (Redcar) (LD)]

It is a pleasure to speak in the debate and I congratulate the hon. Member for Gateshead (Ian Mearns) on securing it. Labour Members’ contributions will no doubt be selective so I will not repeat them; instead, I will say a few things that they probably will not.

The increase in the tax threshold that my hon. Friend the Member for Stockton South (James Wharton) mentioned has taken another 35,000 people out of paying tax in the north-east and given 940,000 workers a tax cut. Those workers, including people who are on the minimum wage, would be paying an extra £400 a year under Labour’s tax plans. It would not have been a Lib Dem priority to cut the 50% rate to 45%, but let us remember that Labour’s love affair with the 50% rate lasted for one month out of the 13 years it was in power. For the other 12 years and 11 months, the top rate was 40%. The rate remains 5 percentage points higher than that.

[Grahame M. Morris]

Does the hon. Gentleman recognise that, in my constituency of Easington, 1,400 families on modest incomes will lose all of their child tax credit, which is worth around £545 a year? In addition, 350 working couples in Easington who earn less than £17,000 a year will lose all of their working tax credit, which could be worth up to £3,870 a year, if they cannot increase the hours they work from 16 to 24.

[Ian Swales]

I am sure that the hon. Gentleman has his statistics correct.

I will go on to talk about high-rate tax. The Government have cut from £250,000 to £50,000 the amount of pension contribution that can be claimed against tax. They have put a new limit on reliefs, raised capital gains tax from 18% to 28%, put a new tax on expensive houses and clamped down on tax avoidance. Labour has opposed those measures and charged the rich less in tax.

Let us talk about business. As soon as the Budget was delivered, Glaxo announced £500 million of investment, including a new factory in Cumbria and new manufacturing facilities at Barnard Castle, Teesdale. That was a direct result of the Budget provisions on pharmaceutical patents. As AstraZeneca has also shown, that will lead to huge investment in—

[Helen Goodman]

The key factor was the patent box changes, which were initiated by the Labour Government in 2010.

[Ian Swales]

I am sure the Minister will respond to that.

Of course our region needs specific help. I welcome the extra £1 billion for the regional growth fund, which has already helped 93 companies in the north-east and is targeted specifically at regions such as ours. Last week’s announcement of help for up to 1,000 jobs in Wallsend in the offshore wind industry was especially welcome.

These occasions usually include a lament from the Opposition for the RDA. However, I shed few tears for an organisation that, in the two years before the general election, spent £148 million on 96 projects in which the directors had to declare an interest, spent nearly £400,000 on gagging orders for 12 staff, and, according to Experian, left Hartlepool, Middlesbrough, and Redcar and Cleveland as the three areas of the country, out of 324, least able to cope with austerity.

[Tom Blenkinsop]

Will the hon. Gentleman give way?

[Ian Swales]

I have given way twice already.

I congratulate the Tees Valley LEP on the excellent start it has made and I welcome the further £11 million in the Growing Places fund announced for north-east LEPs.

The press has picked up on certain items in the Budget, so I will finish with three questions to the Minister. I have spoken to the directors of Greggs. Will the so-called pasty tax not move rather than remove the anomalies? I do not relish asking the Greggs staff to feel the temperature of my sausage roll before deciding the price. Secondly, to those worried about charitable giving, tax relief on charitable contributions that would otherwise be taxed at 50% effectively means the Government will match donations pound for pound. Should that use of taxpayers’ money really be unlimited? Thirdly, how do the Opposition justify a situation in which young people on the minimum wage, who are trying to make their way in life, are paying £600 more in tax than their grannies who are on the same income? As we move towards a threshold of £10,000 for all, is that not a matter of fairness? Budgets cannot please all the people all the time, but help for business and the big reduction in tax for basic rate taxpayers means that this one has a lot going for it.

--- Later in debate ---

[Pat Glass (North West Durham) (Lab)]

I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing the debate, which has allowed so many hon. Members from the north-east to talk about the impact of the Government and the Budget on our region. It is disappointing that we have such a poor turnout among Government Members—one Tory MP and one Liberal Democrat MP. That is less than 50%. It is amazing to hear them speaking with one voice—“We are all Tories now”—and to hear the Liberal Democrat MP defending the 50p tax rate, the granny tax and tax cuts for the rich. Either the Liberal Democrat hon. Members have Stockholm syndrome, or they have no principles and never did. I think that we would all say yes to that.

The Prime Minister, before the 2010 election, talked a lot about the need to rebalance the economy from the south to the north and for the north-east to be less reliant on public sector jobs. However, if we have seen any rebalancing of the economy at all, it has been from the north to the south. Public spending cuts have had a massive impact on jobs in the north-east in particular. The north-east now has the highest unemployment rate of all the northern regions at 10.8% and has received higher than average cuts to local government grants and services. In my constituency, unemployment has doubled since 2010. The hon. Member for Stockton South (James Wharton) said that unemployment has fallen in the region. I do not know what he defines as the north-east region, but it certainly does not cover the area that I represent. Youth unemployment in my constituency is now dangerously high, and the Minister needs to be aware of that.

I can tell the Minister that despite a lack of growth in the economy generally since 2007, there have been some areas of real growth in the north-east. I visit companies in my constituency all the time, and there has been something of a renaissance in engineering and manufacturing, but at the high-level specialist bespoke end of the market. In those areas, manufacturers have told me that what they needed from the Budget was more highly skilled toolmakers and specialist engineers, to enable them to take on more of the work that is out there. The Government failed to deliver that in the Budget.

Chemical companies in my constituency have also told me that they have full order books but need more highly skilled chemical engineers to take on more of the work that is out there. The Government’s shabby excuse for an apprenticeship programme will not deliver the skills that those companies need. The Government again failed to deliver on that in the Budget. Other companies—good companies with good products—are struggling.

[Ian Swales]

Does the hon. Lady agree that nothing done three weeks ago will deliver a chemical engineer to a company tomorrow and that the previous Government’s failure to deliver the skills agenda over the past 10 years is the problem for manufacturers and engineers in the north-east?

[Pat Glass]

The Budget is a good opportunity and a good place to start, but if this is going to be done, now is the time to start. Did we see that? No, we did not.

Good companies with good products are struggling to get investment. They tell me that, despite the Government’s rhetoric, banks are refusing to invest in good companies that would give a good return. Banks still prefer to spend our money in the speculative markets, risking it, because that brings high rewards and gives bankers bonuses. The Government failed to do anything about that in the Budget.

I am on the doorstep all the time, knocking on doors. When people open their doors, I do not have to say anything: they tell me that the message from the Budget is that the Government are giving tax cuts to millionaires at the expense of pensioners. The Government do nothing and have been a disaster for the north-east region. If they cannot do something about that now, as my hon. Friend the Member for Gateshead said, they need to move over and allow a Government who are interested in the regions to take over.