Jobs and Growth

Mark Pritchard Excerpts

Thursday 17th May 2012 Commons Chamber

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

I beg to move an amendment, at the end of the Question to add:

‘but regrets that whilst the UK economy is in recession, long-term unemployment is at its highest level since 1996 and one million young people are out of work the Gracious Speech contains no measures to address this crisis; notes that Britain will pay a long-term price for a prolonged period of slow growth and high unemployment; further notes that France, Germany and the Eurozone as a whole are not in recession while in the USA, where the Government has to date taken a more balanced approach to support economic recovery, the economy is now one per cent bigger than before the global financial crisis, while the UK economy is now 4.3 per cent smaller; recognises the criticism expressed by business leaders that your Government has not come forward with an adequate plan to boost economic growth; believes that cutting spending and raising taxes too far and too fast is self-defeating as slow growth and higher unemployment means that your Government is now set to borrow £150 billion more than planned; and calls on your Government to introduce a fair and balanced deficit plan, with measures to stimulate economic growth and job creation which are essential to get the deficit down, including a tax on bank bonuses to fund a guaranteed job for every young person out of work for more than a year, a temporary cut in VAT, a national insurance holiday for small firms taking on extra workers, and bringing forward infrastructure investment to strengthen the economy for the long-term.’.

It is a great honour to open the final day of this Queen’s Speech debate, and to do so in this very special diamond jubilee year. But I have to say how disappointing it is, with our economy now pushed into recession, the eurozone crisis deepening, and businesses and families up and down the country crying out for a plan for jobs and growth, that we are today debating what is widely regarded to be a disappointing and directionless Queen’s Speech programme from a Tory-led coalition that has, frankly, lost its way.

What a change this is from two years ago. When the Chancellor of the Exchequer spoke in the debate on the Government’s first Queen’s Speech, four weeks after the general election and two weeks before his first Budget, he was bursting with hubris. He was so sure of himself that, when the then shadow Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), and many other hon. Members on this side of the House asked whether the Chancellor planned to bring forward immediate and deep tax rises and said that spending cuts might choke off the recovery, the Chancellor dismissed those concerns out of hand. He was confident that his plan would

“deal with our debts, set our country on a brighter economic course and show that we are all in this together.”—[Official Report, 8 June 2010; Vol. 511, c. 206.]

What a difference two years makes.

“We are all in this together”: we do not hear that line any more—not from a Chancellor whose Budget decisions have hit middle and lower-income families harder than those on the highest incomes. His Budget decisions have hit women harder than men and families with children harder still. The Institute for Fiscal Studies confirms that his Budgets have been regressive and will see child poverty rise. Last month’s omnishambles of a Budget included decisions to raise taxes on caravans, charity donations, church repairs, pensioners, pasties and petrol, but to have a top-rate tax cut only for the richest—a £3 billion tax cut, which will give 14,000 of the richest people in our society earning over £1 million an average tax cut of £40,000 a year. Millions are paying more in tax to pay for a tax cut for millionaires. No wonder the Chancellor and the Prime Minister can no longer bring themselves to say that “We are all in this together”.

Let me remind the Chancellor of what the chair of the Conservative Association in Harlow said last week:

“The voters are disillusioned with Cameron himself. They don’t like the fact that he did not keep the 50p tax. People feel he is not working for them.”

Apparently, the Chancellor was advised precisely not to cut the top rate by his own Downing street pollster, Mr Andrew Cooper. Let me say to the Chancellor that, in my experience, disregarding the wise advice of someone called Cooper can be a very dangerous course to take.

[Mark Pritchard (The Wrekin) (Con)]

Given the right hon. Gentleman’s closeness to the new French President Mr Hollande and given that the shadow Chancellor mentioned the top rate of tax, does he think that the dash for growth will be enhanced or hindered by the introduction of a 75p top rate?

[Ed Balls]

I do not think that introducing a 75p tax rate in Britain would be the right thing to do at all. That is not our policy, but I do not think that cutting the top rate from 50p to 45p will be good for jobs, growth or fairness either.

--- Later in debate ---

[Mark Pritchard (The Wrekin) (Con)]

I welcome the measures set out in the Queen’s Speech to address jobs and growth, particularly the banking reform Bill and the enterprise and regulatory reform Bill. I also welcome the rise in employment announced yesterday, and I hope we will see a rise in full-time as well as part-time employment next month.

The Government are doing a lot to address long-term unemployment among the young—a problem that beleaguered and bedevilled the previous Government—but I agree with the right hon. Member for South Shields (David Miliband) that far more needs to be done. The Government have done a lot on apprenticeships, which is to be welcomed. I congratulate the Government overall on trying to rebalance the economy. We should have more people in our economy creating wealth rather than spending it, so we need to get the balance right between private sector and public sector employment.

It is questionable whether the current tax regime for business will be sufficient to grow the economy in the way that all hon. Members would like. I welcome the Government’s announcement on corporation tax, but my view is that it might not be enough to create the growth the country needs. Perhaps they need to look again at the corporation tax rate and the timetable for introducing it. I would like to see a 20p corporation tax rate introduced from April next year, and the higher rate—not the alternative rate—to be reduced from 40p to 36p from April next year.

That would affect revenue in the short term—some might say that that will add to the deficit—but in the medium term, and quite quickly, as people are rewarded for their risk, entrepreneurship, creativity and innovation, and as the economy grows on the back of that, revenues for the Exchequer would increase. We need more courage and less timidity in the Government’s tax plans and strategy.

I would like the business rate freeze extended for small businesses and our struggling high streets. I welcome the fact that the Government have extended it again for this year, but we must look again and probably extend it to the following year.

The Chancellor rightly mentioned the eurozone—I am moving away from my notes, which is quite dangerous. I have spoken out before on the International Monetary Fund. Whatever has been said, there is absolutely no doubt that some IMF contributions have been used as a back-door bail-out for the euro. Why do I say that? What is the evidence? Three eurozone countries have received bilateral loans from the IMF because their economies are failing, and they are failing in part because of their membership of the euro. A one-size-fits-all monetary policy for the whole of Europe was always a political project. It cannot be right to apply an interest rate in Germany reflecting the unique circumstances of the German economy to the unique and particular circumstances of, for example, the Portuguese economy or—perhaps more on our minds today—the Greek economy. That is the fundamental point. The euro is a political project that has gone horribly wrong, as many people warned that it would. We have heard a lot about new, bigger firewalls, but those will not deal with the underlying structural problems of a lack of competitiveness in Europe and the failed political dream—or, some might say, nightmare—that is the euro.

Finally, the European Investment Bank, although an important institution, should not be used as a new, indirect bail-out mechanism for a failing euro or eurozone. We are one of the four largest contributors to the EIB. Yes, it is important, but it should not be used as a back-door mechanism to save a failing euro. We want the euro to succeed. At the moment, we need to address the underlying problem.