Budget Resolutions and Economic Situation

Lilian Greenwood Excerpts

Friday 22nd March 2013 Commons Chamber

[Lilian Greenwood (Nottingham South) (Lab)]

I begin by congratulating the Chancellor on getting something right. For months Nottingham beer drinkers, local pubs and our excellent local breweries have been pressing for a review of the tax on beer, and I have raised it with Treasury Ministers on numerous occasions. I am delighted that the Chancellor has taken the decision to cut the price of a pint. I know that the Prime Minister has promised to take action to tackle multi-buy offers on alcoholic drinks. It is not at all clear how he intends to do that, now that his Home Secretary has turned him over on minimum unit pricing, but he has allowed the Chancellor to offer this buy-300-pints-get-one-free deal.

Unfortunately there was not much else to cheer in the Chancellor’s drown-your-sorrows Budget, because he did nothing to address the real challenges facing our economy. He seems oblivious to the need for bold action to kick-start the economy and so create the jobs that we badly need in Nottingham. Yesterday on Radio 4 the Chancellor blamed his dismal economic failure on the difficult conditions he has faced as has tried to plot a course towards the peak of growth. But, as any mountaineer knows, there is no such thing as the wrong weather, only the wrong clothes. The Chancellor should have looked at the forecasts and planned for what was coming, rather than adopting a disastrous austerity programme which left the UK to slow down, turn around and start heading back downhill—not once, but twice, with the threat of a triple dip looming.

As the hon. Member for Wycombe (Steve Baker), who is no longer in his place, said earlier, the country is awash with misery. Forecast growth has been halved for 2013 and downgraded for next year too. Borrowing is £245 billion higher than planned. The deficit has barely shifted from last year and will not shift in the 12 months ahead. It has stayed where it is thanks only to some last-minute manipulations which the IFS said “wasted Whitehall time and created real economic costs”.

Unemployment is heading back up, with an extra 99 people in my constituency back on the dole in the past month. Inflation is running well above wage rises, and even those in Nottingham South who do have a job are struggling to make ends meet. For those unable to find work or who are sick or disabled, things are even worse, as they face cuts to services, cuts to council tax support, and the unfair and unworkable bedroom tax, which will leave more than 1,500 of my constituents with nowhere to go. Families are turning to food banks as they struggle to cope with the impact of higher VAT, cuts to tax credits and the freeze on child benefit. The Chancellor promises help with child care, not now when it is needed, but in two and a half years’ time. Families in Nottingham cannot wait for a Labour Government to sort out the economic mess that he has created; they need real help now, not more of the same failing policies.

My constituents are particularly worried by the Chancellor’s shocking complacency when it comes to tackling unemployment. They understand that when young people are out of work, without opportunities, it leaves scars that can last the whole of their working lives. That is why we are calling on the Government to act. We support measures to help small businesses take on extra workers. The employment allowance is welcome, but it will not even begin for another 12 months. Young people in my constituency should not have to spend another year on the dole waiting for the Chancellor to act. They need jobs and opportunities now. It cannot possibly be right to cut taxes for the highest earners in the country, but do nothing for young people trapped on benefits. That is why Labour is calling for a tax on bankers’ bonuses, to fund more than 100,000 jobs for young people—jobs on proper wages with proper training opportunities.

My constituents expect someone to take a job when they are offered one, but they know that under this Government there just are not the jobs that we need, and that is why the benefits bill is going up. Now we have shocking evidence of what we suspected previously: the Government plan to cut that benefit spending and massage the unemployment figures by applying a disgraceful sanctions regime. That is exactly why we need an independent review.

Nottingham needed a plan for jobs and growth on Wednesday. What we got was a “more of the same” Budget from a downgraded Chancellor. We needed real help for families on middle and low incomes: we got more of the same failing policies and a huge tax cut for millionaires. The plan has failed completely. Families, pensioners and businesses are paying the price. Nottingham and the country deserve better.

--- Later in debate ---

[Mr Jones]

Following that logic, the hon. Gentleman cannot argue, as his party has continually done since the last election, that a mess was left by the last Labour Government. The situation was due to the economic downturn.

We are now three years into plan A, and who is to blame now? We have slightly moved away from the Labour party—now it is all Europe’s fault.

[Lilian Greenwood]

Does my hon. Friend remember that when the Chancellor was in opposition, he specifically said in September 2007:

“The result of adopting these spending totals is that under a Conservative government there will be real increases in spending on public services, year after year”?

He and his party agreed with our plans.

[Mr Jones]

I totally agree. In defence, for example, the Conservatives called for a larger Navy and larger Army and more expenditure. What have we seen? Cuts, cuts and more cuts.

This morning we again had the nonsense from the Secretary of State for Work and Pensions that somehow if the austerity plan does not continue we will end up like Cyprus—it used to be Greece. The right hon. Gentleman conveniently ignores the fact that the wonderful triple A rating, so coveted as the great prize, has now been lost. We need to lay the blame for the country’s problems with this Government.

We used to hear the nonsense about Labour being irresponsible, and not having mended the roof while the sun was shining, but the house has no roof now. All we have seen in the Budget is tinkering at the edges. It is a little like suggesting to someone who has lost the roof that new double glazing should be put in. The important point, which has been made by several colleagues, is about demand in the economy. The way to get the economy going is to stimulate demand, and capital expenditure is one way of doing so. I welcome the announcement of £3 billion of additional capital expenditure, but it is only from 2015, and we need it now.

My hon. Friend the Member for Hyndburn (Graham Jones) rightly referred to the effects of the downturn for housing on other sectors. The emergency Budget slashed housing spending and capital expenditure on schools and so on, and that meant that demand went out of the economy. We are now spending £7.7 billion less than the Labour Government would have spent in the same period. There is an idea that this is somebody else’s fault, but it is not. Deflating the economy and taking demand out of it, while telling everybody that it is in dire straits, will depress demand not only for housing but in other sectors.

The housing proposals in this Budget are very ideological. Am I opposed to encouraging people to buy their own homes? No, I am not. However, it is nonsense to think that someone living in my constituency who has a low-paid job in local government, and is having their pay cut in real terms because of the cap, is going to save up the deposit for a mortgage. It would have been better if the Budget had provided a massive injection of resources into affordable housing and housing for rent. If my local housing provider, Derwentside Homes, was given the ability to borrow money to build new houses, it could do it now. That would provide the housing that we need.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

We have had a well-attended and at times lively debate on the Budget, and I will begin by thanking my hon. Friends for their contributions. My hon. Friend the Member for Rochford and Southend East (James Duddridge) spoke about the steps taken in the Budget to help businesses and ensure growth, and he rightly highlighted measures relating to stamp duty for shares on the alternative investment market. My hon. Friend the Member for Braintree (Mr Newmark) highlighted the extension of capital gains tax policy for seed enterprise investment schemes, and I thank him for his excellent work in promoting those schemes. They are an excellent opportunity to enable start-up businesses to expand, and for investors to find good investment opportunities to help grow jobs in this country.

I thank my right hon. Friend the Member for Sutton and Cheam (Paul Burstow), who I know had to depart early. He highlighted the further substantial progress that the Government have made on the personal allowance, benefiting millions of taxpayers and taking many others out of income tax altogether—a contrast to the record that we inherited. He also highlighted the work on social care reform that the Government have progressed, again in contrast with our predecessors. I know that my right hon. Friend was heavily involved in that process.

My hon. Friend the Member for Enfield North (Nick de Bois) highlighted specific matters relating to community investment tax relief. I know that he has had discussions with the Treasury about his ideas, and we welcome his engagement. My hon. Friend the Member for Wycombe (Steve Baker) dealt with monetary policy—an issue in which he takes a close interest—and we are grateful for his views. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) highlighted the progress that the Government have already made in dealing with the mess that we inherited, and particularly the fact that we have reduced borrowing by a third since we have been in office.

My hon. Friend the Member for Northampton North (Michael Ellis) highlighted to the House the expression, “There is no money left”, although I have forgotten for the moment who coined that phrase—[Interruption.] I am told that it was Winston Churchill. I was thinking of someone else, although there are certain physical similarities. I also thank my hon. Friend the Member for Hendon (Dr Offord) for highlighting some of the long-standing housing issues in Hendon that he is seeking to address.

[Lilian Greenwood]

Will the Minister give way?

[Mr Gauke]

I was about to come to the contributions by Labour Members, but I shall give way to the hon. Lady on that point.

[Lilian Greenwood]

The Minister mentioned housing. Is he as shocked as I am by figures that the Government have released today that show a 12% increase in the number of households with children accepted as homeless in the last year; an 11% increase in those living in temporary accommodation; and a 29% increase in the number of families living in bed and breakfasts? Is that not a disgraceful indictment of this Government?

[Mr Gauke]

If the hon. Lady is concerned about people on waiting lists or living in overcrowded conditions, she might want to think about what we could do about too many people who have got spare rooms.

We heard a number of speeches from the Labour party, and two points about the fiscal situation were consistently raised. First was the concern that borrowing is higher than we had wanted and expected it to be—borrowing is too high and debt is increasing too fast. We then had a number of speeches that called for more spending and said that we should not worry quite so much about borrowing and should be prepared to borrow more. Remarkably, a number of speeches made both points at the same time, but the reality is that the Labour party believes that the right approach to our current difficulties in the economy is to borrow more. The proposals from the shadow Chancellor involved £33 billion more spending.

The most interesting point in the entire debate was when the hon. Member for Glasgow North East (Mr Bain) called for more spending in a particular area, and my hon. Friend the Member for Battersea (Jane Ellison) intervened to ask how he would do that in a fiscally neutral way. At that point the hon. Gentleman paused and said, “Well, we are on a different path.” He is an articulate and eloquent speaker, but rather than say what that path was, he refused to answer. Labour Members are on the path that dare not speak its name. Their path is simply more borrowing.