Budget Resolutions and Economic Situation

Debate between Lilian Greenwood and Lord Beamish

Friday 22nd March 2013 Commons Chamber

[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.

Finance Bill

Debate between Lilian Greenwood and Lord Beamish

Tuesday 6th July 2010 Commons Chamber

[Mr Jones]

That is a very good point. The Budget offers no help whatsoever for the small businesses to which my hon. Friend referred. However, it is not just small businesses that are affected. Some supermarkets are very wary about the increase because of what they fear will happen to their businesses. The finance director of Tesco has called on the Government to freeze VAT at 17.5% because, he says, the economy is very fragile, saying:

“The recovery is happening but it’s fragile and therefore the balance is important”.

He says VAT

“is going to be part of the austerity package but it is a question of when you do it. The best thing would be to wait a bit.”

Let me also give Sainsbury’s a mention. According to Eye Spy MP, the Chief Secretary has been shopping there and buying Quavers. I am not sure whether they were intended to sustain him during tonight’s debate. Justin King, the chief executive of Sainsbury’s,

“warned the incoming UK government to refrain from increasing VAT amid speculation it could be an option considered by”

the coalition Government.

As has been pointed out, the VAT increase will have a real effect on retail business large and small. As for the consumer viewpoint, Mike O’Connor, chief executive of Consumer Focus, has said:

“Thousands of the things we buy every day are going to get more expensive. The VAT rise will hit the poorest consumers hardest as people who earn least already spend proportionately more of their income on VAT and it will be even more important for consumers to shop around for the best bargains.”

[Lilian Greenwood (Nottingham South) (Lab)]

Will not many of the poorest families be doubly hard hit? Not only will they face rising prices as a result of the VAT increase, but at the same time their benefits will be uprated in line with the consumer prices index rather than as previously with the retail prices index.

[Mr Jones]

There will indeed be a double effect on those families. It is all very well saying that people can shop around, but in my constituency—a rural constituency but, as I said in my maiden speech, one with urban problems—they cannot do that when they have no access to a car and the only option is public transport. Those are the communities who will be hit hardest, and I am sure that they exist in all constituencies. The new hon. Member for North East Cambridgeshire, for instance, spoke of the pockets of deprivation in his own constituency. Those rural poor families will be hit harder than most.