Budget Resolutions and Economic Situation

Debate between Liam Byrne and James Duddridge

Friday 22nd March 2013 Commons Chamber

[Mr Byrne]

The chief economist to the IMF has been clear that a different fiscal strategy is needed. Indeed, the Secretary of State for Business, Innovation and Skills hinted that what was needed at the moment was a whacking great boost in capital spending, and the Deputy Prime Minister has admitted that the Government cut capital spending far too fast. That is why we have set out clear, costed plans to increase capital spending and change course.

The Chancellor and the Prime Minister bear responsibility for that catastrophic failure and the failure of their fiscal plans, but, let us be honest, they have been aided and abetted by the Secretary of State for Work and Pensions, who has proved incapable of translating his fabled welfare revolution into practice. There could not have been a worse curtain-raiser to Budget day on Wednesday than the unemployment figures that we saw at 9.30 am. Halfway through this Parliament, unemployment is higher than it was at the general election—and it is not going down, it is going up. [Interruption.] I do not know where Government Members were on Wednesday. Unemployment rose on Wednesday. Youth unemployment went up by 50,000 on Wednesday. Unemployment among women went up, not down, on Wednesday. Government Members would do well to live in the real world for once.

[James Duddridge]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will happily give way to the hon. Gentleman. Will he admit that unemployment rose—

[Mr Byrne]

I am grateful to you, Mr Speaker, but I am happy to give way.

[James Duddridge]

I thank the right hon. Gentleman for giving way. I thought he had already given way, which is why I started. I apologise to you, Mr Speaker, and to the right hon. Gentleman who has been kind to give way. The only point I wanted to make was that since 2010 employment has increased. Yes, in my constituency there was a short period last month when unemployment was reported to have gone up, but even on a year-on-year basis employment has gone up and unemployment has gone down for both men and women.

[Mr Byrne]

Unemployment is 50,000 higher than it was at the general election. Those are the facts and the hon. Gentleman cannot deny them.

--- Later in debate ---

[James Duddridge (Rochford and Southend East) (Con)]

Thank you for calling me, Mr Deputy Speaker. [Interruption.] In my rush to speak, I almost ended up advertising an election leaflet for the Conservative party. It was not intentionally aimed at Opposition Members.

I would like to focus on two quite technical issues that have not been raised but are worth raising, and then turn to some issues affecting Rochford and Southend East, the constituency I have the honour of representing. The first issue is the change to shares and stamp duty on shares on AIM—the alternative investment market. Although the change will not make the front page of the Southend Echo this morning, it will help the longer-term regeneration of small and medium-sized enterprises. However, this is not just about aspiring individuals for an aspiring nation; it is also about aspiring businesses that want a step up. Floating more companies on AIM and raising equity is essential. Reducing stamp duty on AIM, which represents only 6% of shares, is a step in the right direction that will allow small and medium-sized companies in Southend and elsewhere to raise equity, rather than having to rely on banks, which we all know have their own set of problems.

The Government have taken a step in the right direction. I hope that in future Budgets they will consider extending the decision to the other 94% of shares, to allow greater participation by small and medium-sized companies. That would also improve the liquidity of the London financial markets, which, although liquid enough to support basic transactions, will benefit from greater liquidity, which would mean cheaper financing for small and medium-sized enterprises, allowing them to grow further.

The second thing I would to note—again, it will not make the front page of the Southend Echo tomorrow, although I think a number of families will appreciate it when they start to benefit from it—is the change to the child trust fund regulations. The previous Government gave away £250 that could be put in a child trust fund—either a cash fund or an equity fund. This Government did not think that was affordable and introduced junior individual savings accounts. As all those changes were unwrapped, some anomalies emerged. Most people did not put in more money, which was what the previous Government desired; rather, most people’s children had just the £250. Firms are putting up their charging rates disproportionately—for what is, in the case of equities, essentially an index tracker—and people are locked into the funds.

To be frank, I feel a degree of sympathy for the financial services companies involved, because 1.5% on £250 plus a bit of growth does not even pay for the stamp on the statement at the end of the year. However, measures in the Budget will mean that such funds can be converted into junior ISAs. I have not seen the detail—I am not sure whether it has come out of the Treasury—but I would also encourage the Treasury, as well as looking at actual transfers, to consider allowing people, if they choose, to leave the fund to one side and still open a junior ISA. At the moment, people cannot have both open at the same time.

Those are two quite detailed, technical points in the Budget. I should apologise, Mr Deputy Speaker, for being unfamiliar with the process, but I think that at the beginning of my speech I should have drawn Members’ attention to the Register of Members’ Financial Interests and some work that I do outside the House.

My constituents in Rochford and Southend East talk to me about the cost of fuel—not only individuals, but businesses. In the run-up to the Budget, staff at Churchill’s sandwich bar, where I always get my panini on a Friday—it is very good and I recommend it to all hon. Members who visit my constituency—told me about the fuel cost not just for the business but for their suppliers. The cost made a difference to individuals, even within a sandwich business. When we leverage that up to show the costs to our constituents of other goods with greater transportation costs, we can see that the Budget will not just help aspiring companies. A van driver could save up to £340 a year, a haulier more than £5,000. Those are big numbers and this will assist people.

I welcome the non-increase in beer duty—the reduction by 1p. That will not transform the economic outlook of the United Kingdom, but it is a nice hat-tip to the direction that the Government would like to take in future as we do more for hard-working families.

The £10,000 personal allowance is enormously significant, particularly for young mums looking to get back to work. It provides clarity about the lack of bureaucracy in taxation and all of the first £10,000 will go into their pockets, rather than into tax. There is a barrier to entry to work, not only because of the growth of the economy but because of confusion about the interaction between the benefits system, which has been overly complex, and the taxation system, which has dragged in far too many people too early and too low down the salary scales.

I have been disappointed by the tone of the debate. I am a great fan of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). It is important to be candid when writing and it is an excellent idea to tell people what one wants, although the details about the cappuccino and so on might have gone a little over the top. The infamous letter that said, “Dear chief secretary, I’m afraid there’s no money left. Kind regards and good luck, Liam,” was not the total picture—even though in humour it is good to be brief. There is no money left and they maxed out the nation’s corporate credit card. I will give way to the right hon. Gentleman if he wants to apologise.

[Mr Byrne]

I am grateful to the hon. Gentleman for offering me that opportunity. He will know that I also left a Budget, drafted with my right hon. Friend the Member for Edinburgh South West (Mr Darling), who was Chancellor at the time, that would have halved the deficit over four years as opposed to putting the total debt burden of this country up by £245 billion, which is what his Government have secured.

[James Duddridge]

I am grateful to the right hon. Gentleman for that intervention and for the extra minute of time he has given me. If that was truly the sentiment and he felt that that was the case, why did he not leave that in a note? He left a candid note that gave half the picture.

The truth is that the previous Government ran down the economy. It is as if the nation were a family, and two individuals within that family had been given responsibility for the finance and budget for 10 years each. One spends and borrows and enjoys the good times, and the other has to clear up the mess.