Finance Bill

Lord Walney Excerpts

Tuesday 6th July 2010 Commons Chamber

[Barry Gardiner]

Thank you, Mr Speaker. I am tempted to take up the length of time that the hon. Lady mentioned, but I fear that the House needs to come to a close. A clear choice has been made by the Conservatives to cut an extra £40 billion on top of the £78 billion announced in March. They have made a clear choice to cut £11 billion out of tax credits and benefits. A clear choice has been made by the Liberal Democrats not just to drop the VAT bombshell that they warned of, but to act as navigators and pathfinders for the Conservatives to deliver it perfectly targeted. That regressive tax does the most damage to the poorest. It is regressive, not progressive.

“We will not have to raise VAT to deliver our promises”,

said the Deputy Prime Minister before the election. Indeed not—the Liberal Democrats will have to raise VAT to deliver the Tories’ promises. What an apology for a fig leaf.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

With regard to my hon. Friend's list of all the people who will not be able to avoid paying the increase in VAT, is he aware that many community halls in my constituency and across the country will also be forced to pay it as they are not able to claim exemption from VAT owing to the arrangements that they face?

[Barry Gardiner]

My hon. Friend is entirely right. That is a real problem for clubs and small businesses that are not able to reclaim VAT back. It is yet another tax on business.

--- Later in debate ---

[Chris Williamson]

I am very proud to have Rolls-Royce in the constituency adjacent to mine, Derby South. Indeed, many of my constituents work at Rolls-Royce, a company renowned for its excellence. My hon. Friend is right: the insurance tax rise is bound to have an impact. The cancellation of the loan to Sheffield Forgemasters will also have a big impact, because Rolls-Royce is seeking to diversify into the nuclear industry—to expand its operations in that regard—and was hoping to purchase equipment from Sheffield Forgemasters, but it will now be forced to look abroad. That is a direct result of the policies of Con-Dem Members, who should hang their heads in shame.

[John Woodcock]

Does my hon. Friend agree that this is not just about the double whammy facing Rolls-Royce? I agree with him wholeheartedly about the potentially catastrophic effect on the civil nuclear supply chain of cancelling the loan to Sheffield Forgemasters, but there is also the restriction on capital allowances, which will hit Rolls-Royce as it will hit BAE Systems in my constituency and many other manufacturers across the north of England and the whole country who will be affected through the potential loss of jobs and loss of ability to export.

[Chris Williamson]

My hon. Friend is right. Conservative Members are reverting to type. We saw what they did—I have outlined some of the implications—when they were last in power. The policies that they are pursuing now will have exactly the effect that he describes in undermining manufacturing, because they are the enemy of manufacturing industry in this country.

There is an alternative. Historical precedent proves that investing in the economy at a time of economic fragility is absolutely the right course of action. Government Members should look at their history books. We had a lecture from the hon. Member for North East Somerset (Jacob Rees-Mogg), who referred to the 1930s. I refer him and other Government Members to Roosevelt’s new deal. Roosevelt demonstrated that by using the power and instruments of the state to invest in the economy, Government could get the economy moving again and put people back to work. Do not forget that when Roosevelt came to power, 25% of the American people were out of work, and his new deal put them back into work. By contrast, in this country we were pursuing a deflationary policy that resulted in millions of people losing their jobs and remaining unemployed for many years.

Indeed, President Obama agrees. He wrote to all the G20 leaders—