Budget Resolutions and Economic Situation

Jim Shannon Excerpts

Wednesday 19th March 2014 Commons Chamber

[David Mowat]

I support that, and I just reiterate the words the Chancellor used: those who have the worst values in our society are being used to fund those who have the best values in our society. That just about sums it up.

[Jim Shannon (Strangford) (DUP)]

rose—

[David Mowat]

I have given way twice already, so I am sorry but I am not going to do so now.

I wish to say a little about the carbon price floor, because I was delighted that the Chancellor has acted on it. The action makes no difference to our commitments on the overall carbon reduction profile that this country has made, but it makes a great difference to the potential carbon leakage we are facing in our great energy-intensive industries, particularly in the north-west and north-east. Some 900,000 people work in energy-intensive industries in our country, and I sometimes think they are forgotten in our dialogue about energy prices. It is worth understanding that what the Chancellor has done is remove the straitjacket on costs, which would have put a great deal of those jobs at risk. For example, we have already lost primary aluminium smelting in this country—it has moved out of the UK—and we are losing marginal chemicals capacity from this country. I am surprised that a number of Opposition Members are not more exercised about this issue in general, given that they represent parts of the north-east, where there is heavy chemical manufacturing, and there are a lot of energy-intensive industries and a lot of jobs, because we cannot rebalance our economy back towards manufacturing if we have differentially high energy prices in this country. We just will not be able to do that—it will not happen.

This issue is not just about what is happening in the United States on shale gas and shale prices; it is also about what is happening on mainland Europe. It is an inconvenient truth—to use a known phrase—in this whole issue of carbonisation that we produce not only considerably less carbon per head than the EU average, but less carbon per capita. We produce 30% less carbon per head and carbon per capita than Germany, yet Germany is pursuing a policy of building unabated coal power stations at scale. We are being left behind in all that, and what the Chancellor has done on the framework is absolutely spot on and will make a difference to those 900,000 jobs. I predict that we will be revisiting this issue at the next Budget and certainly into the next Parliament, because there is a great deal of unfinished business in this area.

Before I leave the field of energy, may I say in passing that the infrastructure plan is very welcome? Two big parts of the national infrastructure plan are Hinkley Point C and Wylfa—together they make up about a quarter of it. They are both vital to our country and our economy. Both are currently under EU state aid investigation, which is holding up the projects. I have heard Ministers saying that they are confident that they will have that agreed, and I very much hope that is the case, because it would be a great paradox if those low-carbon projects, which are essential to our energy security and to our decarbonisation efforts, are held up within the EU at the same time as our EU partners are building unabated coal power stations at scale in countries such as Holland, Germany and Belgium.

I want to move on now to tax avoidance and tax evasion. The Red Book shows incremental revenue of £2 billion over the next two years from the anti-abuse legislation that we introduced. I very much welcome the Chancellor reducing the level of corporate avoidance of stamp duty from £2 million to £500,000. The closure of that tax loophole has brought in hundreds of millions of pounds. It is an example, as I said at the start of my remarks, of why income equality is so much better now than it was under the previous Government.

I also welcome the up-front taxation of tax schemes, which means that if people get involved in controversial schemes, they will not be saving tax and cash flow as they wait to go to tribunal. Her Majesty’s Revenue and Customs is also able to act more quickly than it has hitherto been able to do.

There were four tests today, and the Chancellor has passed them and any reasonable expectation of this Budget. I am happy to support it.

--- Later in debate ---

[Ms Margaret Ritchie (South Down) (SDLP)]

Following convention I shall refer to the hon. Member for Rochford and Southend East (James Duddridge) and say I agree with some of what he said, but I disagree with the vast proportion of his speech because it deals with the general principles of the Chancellor’s Budget.

From the Chancellor’s speech one would think that everything was rosy with the economy, but that is not the case. Many people, including those in Northern Ireland, are experiencing a very different reality—a reality that the current Government are almost completely out of touch with. Families are faced with rising food bills, sky-rocketing energy costs and stagnant wages. This is pushing more and more people into personal debt and we could be faced with a personal credit crisis as people over-extend credit cards and use payday loan companies to cover rising bills. The Governor of the Bank of England, Mark Carney, warned just yesterday that excessive borrowing was again posing a grave danger to the economy.

The employment figures announced today do not tell the full story, with a vast proportion of these new jobs coming from self-employment, temporary positions and zero-hours contracts. Many of these jobs are unstable and reflect not a true recovery, but a permanent low-wage economy. The figures are not geographically consistent. According to the Department of Enterprise, Trade and Investment in Northern Ireland, the local employment rate of 72% is the lowest of any region, and unemployment remains stubbornly high at 7.5%, compared with the UK average of 7.2%.

This is to say nothing of the tragedy of joblessness faced by our young people. Youth unemployment stands at nearly a million in the UK and more than 20,000 in Northern Ireland. About one in four of our young people cannot find a job, which will have a devastating impact on our economy and on their own lives in the coming years. Many have emigrated and many more face emigration. PricewaterhouseCoopers has said that this will cost the Northern Ireland economy £l billion by 2016. The Chancellor said nothing new today that makes me think he grasps the scale of the problem or is seeking the necessary remedies.

[Jim Shannon]

The Government have made concessions on the transferable tax allowance and on child care provision, but they have omitted to make any allowance for single-earner families where one of the parents goes to work and they forgo a second salary so that they can invest in the life of their children. There is provision for those at the higher level of taxation and provision for those at the lower level of taxation in respect of child care, but for those in between there is none. Does the hon. Lady agree that there is a shortfall in the Government’s child care provision for that section of the community?

[Ms Ritchie]

Yes, I agree. The Government need to make provision for that section of the population.

With respect to welfare, the supposed recovery is not a balanced one, as this Government continue to attack the most vulnerable and worst-off while giving handouts to those at the top. This political sleight of hand, blaming the poorest in society for the economic woes caused by the banking collapse, which has been repeated by the Chancellor in Budget after Budget, is deeply cynical and should not go unchallenged. The Government’s divisive rhetoric and continued draconian approach to welfare reform is of great concern. The current roll-out of universal credit is unravelling at an alarming rate, yet we are expected to accept even more of this misery for the worst-off in society. We have valid concerns about these measures in Northern Ireland, yet the British Government and the Department for Work and Pensions continue to try to force this issue through with threats and grandstanding.

Today, we hear of further attacks on the most vulnerable, with the introduction of a cap on welfare spending. I have great fears that this proposed cap will be used in an entirely pernicious manner, with little consideration given to need. As always with the Budget, the devil will be in the detail, and I will be fully pursuing this in subsequent weeks. In particular, concerns have been raised as to exactly what benefits will and will not be included in such a cap. I have since been informed that benefits such as disability living allowance, carer’s allowance and bereavement benefits—the very benefits that affect some of the most vulnerable in our society—will be impacted upon.

Although some elements of the Budget are to be welcomed, I have a concern in respect of one sector. The tourism sector is absolutely vital for our economy in Northern Ireland. The measure announced in relation to air passenger duty is extremely limited and will do nothing to lower the excessive rate of duty on flights within the UK and to Europe—such flights form the vast majority of those to and from Northern Ireland. We are still faced with the highest rates of APD and VAT on tourism products in the EU. Almost every EU state has some form of reduction in VAT for the tourism industry, and just last month I held a debate asking for the Treasury to consider introducing a similar scheme in the UK, which would provide an instant boost for the tourism industry and our tourism sector in Northern Ireland. It was notable during that debate that MPs from across the House supported my proposal, including many of the Chancellor’s own Back Benchers. The lack of movement on either of those issues was a glaring omission from today’s Budget.

We see Ireland as an island tourist market, but businesses in the north face a 20% rate of VAT, whereas the Irish Government have taken the sensible step of keeping their rate at 9% for tourism products. Regrettably, the only border for tourists moving between the south and the north is an economic one, brought about by the decisions of the UK Treasury. I ask the Chancellor again to take a hard look at a cut in the rate of VAT for tourism products, which would become budget-neutral after the first year, according to Professor Blake, who used the Treasury’s own economic model.

[Jim Shannon]

Will the hon. Lady give way?

[Ms Ritchie]

I am sorry, but I cannot give way again, as I am conscious that other Members wish to speak.

We are also seeking clarification on the aggregates credit levy scheme. I have had much correspondence with the Chancellor and Treasury Ministers on that issue, and I understand that we may be nearing a positive conclusion with the European Commission. So it would be helpful if we could get clarification on that issue, and on the whole area of the Barnett consequentials for flood defences, because I represent a coastal constituency whose coast has been undermined by the impact of climate change.

This was a political Budget from a political Chancellor, and it comes at the cost of the real economy. It will give little comfort to people who will continue to face low wages and high costs.