Summer Adjournment

Luciana Berger Excerpts

Tuesday 27th July 2010 Commons Chamber

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I wish to use this debate to highlight the devastating impact that the coalition Government’s cuts in public expenditure will have on the city of Liverpool and, in particular, on my constituents in Wavertree. The Government’s proposals for cuts of up to 40% in some Departments will jeopardise the economic recovery, unfairly punish those in the most deprived areas and, according to the Office for Budget Responsibility, put 600,000 public sector workers out of work.

Members in all parts of the House acknowledge the effect of the global recession on the country’s public finances, but the new Tory Government have ignored this approach and instead opted to pursue an agenda described by the Institute for Fiscal Studies as amounting to the longest and deepest period of public spending cuts since the second world war. Despite what the Government would have the public believe, these cuts are not inevitable. They are the result of the ideological choices that the Conservative-Liberal Government are making. Economists such as Nobel prize-winning Professor Joseph Stiglitz have warned that the Tory Government’s Budget and their other cuts will result at least in a slowing of the recovery and at worst in a double-dip recession.

Merseyside will bear the brunt of the Government’s cuts far more than other areas of the country, not least because in some parts of the region 60% of the work force rely on the public sector for their income. While some of the more ideologically driven Members on the Government Benches may demonise the public sector as a drag on the private sector, those of us with a more clear-headed view know the important relationship that exists between the public and private sectors. For every £1 that a local government worker earns in Liverpool, they spend 70p there. If that money stops, we will see small businesses close, a spiralling welfare bill and public services straining under the weight of underfunding and increased demand.

Jack Stopforth, chief executive of Liverpool chamber of commerce, has said that the Government are being “unbelievably naive” over the effect of job losses and clearly have

“no awareness of the link between public sector services and private sector supply chains”.

Despite that important relationship, the Government seem determined to further crush any project that would bring necessary jobs and investment to Merseyside. The withdrawal of funding for the Mersey gateway, which would bring 5,000 jobs, and the cancelling of Liverpool’s 26 Building Schools for the Future projects, which has already cost 1,000 jobs, are evidence of that. Today, the Northwest Development Agency has announced more than £52 million of cuts to 101 projects, many of which fall in Liverpool.

There have been a number of short-sighted cuts, particularly the decision not to introduce a tax relief for the video games industry. In 2009, the industry brought approximately £1 billion to the UK’s gross domestic product, and in my constituency and across Liverpool there are a number of video games developers including Genemation, Bizarre Creations, Magenta Software and Playbox. Sony Computer Entertainment, based at Wavertree technology park, employs more than 600 people, and introducing a games tax relief would protect and increase a figure of £415 million in new and saved tax receipts for the Treasury, far outweighing the £192 million that the relief would cost. Can the Deputy Leader of the House explain why the Red Book highlighted only the cost of the tax relief and not the net benefit?

Decisions such as that and the cancellation of the loan to Sheffield Forgemasters highlight the Government’s short-term thinking and strike at the very premise behind their strategy to pursue a private sector-led recovery. They seem adamant that the gap created by their public sector cuts will be filled by increased demand and job creation in the private sector. However, businesses in areas such as Liverpool rely more heavily than others on income from public sector workers.

Not only will the Government raise unemployment with their cuts, but they seem to want to punish those who are unfortunate enough to find themselves out of work. All of us in the House recognise the value of helping people off benefits and into work. That is important for self-esteem, well-being and the economy, and jobseekers should be supported, not castigated. The Government’s plans to freeze jobseeker’s allowance—[Interruption.] Oh, I will sit down. Sorry.