Budget Resolutions and Economic Situation

Mark Hendrick Excerpts

Friday 23rd March 2012 Commons Chamber

[Mark Hendrick (Preston) (Lab/Co-op)]

The Budget was an opportunity to give hope to those who have seen their household budgets squeezed and their livelihoods destroyed by the Government’s economic policies. On Wednesday, however, we saw the Government’s priorities. They were to help the few, not the many; to help the millionaires, not the millions. The Government chose ideology, not fairness. The impact of the Tory-led Government’s austerity measures is plain to see: with rising prices, squeezed living standards and soaring unemployment, this is a return to the Thatcher years of the 1980s.

In Preston, unemployment has risen month by month. In February 2012, 3,733 people were claiming jobseeker’s allowance, which is double the figure under the Labour Government. We have seen an increase of 439 from February 2011—a 13% increase in a year—and an increase of 169 since January 2012, which represents a 5% increase in just one month. The most striking figure is the increase in long-term youth unemployment, and I fear that that will be the hallmark of this Government. Long-term youth unemployment in Preston has tripled in the last year.

This problem is not unique to my constituency; it is endemic across the country. Young people and families are the victims of the Government’s reckless austerity measures, which I fear will lead to a lost generation of young people. I ask the Minister and other Government Members how it can be fair that 14,000 people earning £1 million or more are getting a tax cut of over £40,000 a year when a family with children earning just £20,000 will lose £253 a year from this April. That is on top of the VAT rise, which is costing families an average of £450 per year. The Government’s priorities are clear: tax cuts for the few while others wallow in the mess created by the Government. To repeat a comment picked up on by the hon. Member for Cleethorpes (Martin Vickers): these are the same old Tories.

This Budget is a tax raid on pensioners. In Preston, there are 5,894 people aged between 60 and 64. A large proportion of them will be the victims of the Chancellor’s decision to freeze personal allowance for pensioners, with those turning 65 next year set to lose up to £322. There are currently 16,622 pensioners in Preston, and a considerable percentage of them will have to pay this granny tax, along with 480,000 other income tax paying pensioners in the north-west of England. The economy in the north-west is already suffering.

The Budget also does nothing to help manufacturing. The Prime Minister and the Chancellor have made it clear that they envisage the rebalancing of our economy through manufacturing. For Preston and Lancashire, manufacturing is not only our heritage but our future. As a Lancashire MP, I am proud of the work that BAE Systems and the BAE work force have done over the generations. As we know, however, BAE has lost the contest for preferred partner with the Indian Government owing to the lack of activism on the part of this Government. In January, it was announced that French defence firm Dassault would be the Indian Government’s preferred partner for the building of their fighter jets, instead of BAE Systems with its Typhoon. In the White Paper “National Security Through Technology”, the Government have made it clear that they will no longer give British companies preferred status. If the British Government will not give that preferred status, why should the Indian Government give it to companies such as BAE? It beggars belief that the Government do not support British industry, but the Budget illustrates that fact.

The Budget shows no plans to support the nuclear industry. I hope the Government will look again at providing support to ensure that the Westinghouse AP1000 nuclear reactor is secured at Wylfa in Anglesey. This project would not only generate jobs in Anglesey, but create a Westinghouse service-based business with more than 200 jobs located in central Lancashire. This should have been the Budget for jobs and growth. Instead, it was a battle of pure politics between the coalition partners, with the winners being the millionaires and the victims the ordinary hard-working people. If this Government were to have any credibility on jobs and growth, they should have used the Budget to support companies such as BAE Systems and Westinghouse at the Springfields plant near my constituency.

The Budget included announcements on transport. Preston is a major hub for Lancashire, connecting Lancashire to Scotland, London, Liverpool and Manchester. I welcome the fact that the Government are looking to add to the trans-Pennine rail route by upgrading and electrifying the Manchester to Preston line. Why, however, are the HS2 plans so timid? The Transport Secretary and her team should not be so timid in pushing forward HS2, which would provide greater capacity and reduce journey times between major cities. Instead of legislating for the first phase of the new high-speed line from London to Birmingham, taking forward HS2 as one project, beginning construction in the north as well as the south, would have been the answer to solving the nation’s rail problems—instead of just looking after the south.

Labour Members remember the famous phrase, “We’re all in this together.” With youth unemployment at record highs and pensioners having had their money snatched by the Chancellor, there is nothing to excuse the callous and scandalous closure of the Remploy factory in Preston and others across the country. Where were the measures in this Budget to help the disabled? The systematic attacks on disabled people—whether it be through the removal of benefits or the closure of the Remploy factories—show that this Government have no shame about victimising the most vulnerable in our society.

This Budget provided a chance for a stimulus to jobs and growth in our country, and a chance to show the British people that the Government were on the side of ordinary hard-working families. Yet again, the country has been let down. This Budget will be celebrated by the few, but it will hurt the many.

--- Later in debate ---

[Matthew Hancock]

I compliment UKTI on the turnaround it is undergoing under Lord Green, the exceptional new trade Minister, who has vast experience and extensive contacts across the world. I commend the work he is doing both in the Department for Business, Innovation and Skills and with the Foreign Office, which is putting resources into the effort to increase our trade with the rest of the world, which has languished for so long.

I shall focus now on certain measures that I believe should be taken. Some of them might be controversial in the short term, but in the long term they will all prove to be beneficial and will change views. We must better inform people about the taxes they pay and the effects of those taxes. We also need a simpler and more attractive tax regime, to ensure that people want to create jobs in our country and international companies want to expand here.

We also need an active industrial policy. That is considered a controversial proposal by some of my party colleagues, but my argument is that the Government already put their imprint on the different sectors of the economy. Our financial services regulations are different from our pharmaceutical regulations, for instance. Also, Government decisions on where to put the roads that Opposition Members are happy to welcome has an impact on the rates of development in different parts of our country, and the development of High Speed 2 will, we hope, reduce the north-south divide. The Government have a sector-by-sector stamp, therefore, so we should use the power of Government where it can be a positive force, rather than simply say, “Government must get out of the way.”

[Mark Hendrick]

The last Labour Government produced a defence industrial strategy, drafted by Lord Drayson, which included a development strategy for the industry. The current “National Security through Technology” paper says British companies should not necessarily be given priority in defence procurement, however. What does the hon. Gentleman think about that?

[Matthew Hancock]

Lord Drayson was an unusually good Labour Minister—I would favourably compare him with almost all the others. The defence strategy does, indeed, recognise the need to take into account the interests of our defence industries. That is an important part of the strategy, but not necessarily always the decisive factor.

Returning to the issue of tax, the Government should give a receipt to taxpayers. My hon. Friend the Member for Ipswich (Ben Gummer)—another great Suffolk man—has pioneered that approach. We as individuals would not spend much money without asking for a receipt in return. For most people, their tax bill is the biggest item of expenditure, so such a receipt would be very important. It would also educate the public on the impact of their taxes.

We also need to know the impact of our taxes for policy making. It is extraordinary that the Labour party ignores the behavioural impact of high taxes. It is hardly surprising that it managed to mess up the public finances so comprehensively if it denies, as the shadow Chancellor does, the impact of high taxes on incentives and the amount of future tax money the Exchequer receives.

Secondly, we need a simple and attractive tax system, especially on corporation tax. All taxes are, eventually, paid by individuals, but it is companies that make so many decisions about where to locate jobs. So although a high corporation tax still falls on individuals, it puts companies off expanding or coming to Britain. By having an attractive corporation tax rate, we can attract companies to this country. Ultimately, the corporation tax would still be paid by UK residents, whether it was paid indirectly involving the companies or in any other way the tax is raised.