Budget Resolutions and Economic Situation

Debate between Nick Smith and Nick de Bois

Friday 22nd March 2013 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

I am pleased to be called to speak today and to follow the hon. Member for Braintree (Mr Newmark).

I shall concentrate my remarks on the need for infrastructure investment. As the economy continues to flatline, the roads and railways—the arteries of industry—are surely the key to a healthier tomorrow. A strong infrastructure will secure more jobs, hasten the end of austerity and underpin our future competitiveness. Let us listen to the IMF, the CBI, the British Chambers of Commerce, the Government’s own Business Secretary and even the Mayor of London. They are all onside for Labour’s policy of infrastructure investment. Yet Wednesday’s Budget confirmed that the Chancellor still does not have a growth plan that is fit for purpose.

In my constituency unemployment rose again last month and now stands at 3,640, and 1,250 people have been unemployed for more than a year.

[Nick de Bois]

If the hon. Gentleman thinks there is no plan for growth, can he explain why the Federation of Small Businesses

“believes this”—

the employers allowance—

“will give small firms the confidence to create thousands of new jobs in the private sector”?

When the federation was arguing only for a national insurance contributions holiday, it predicted that that would provide 45,000 jobs. It has yet to imagine how many more this measure will create. That is growth in my book.

[Nick Smith]

We want a plan B that will build houses. What the Budget measure favoured by the hon. Gentleman will deliver is a millionaires’ tax break.

In Blaenau Gwent we have 11 people chasing every job vacancy. There is 24% worklessness and 18.2% youth unemployment. That is in spite of the 4,000 jobs created by Jobs Growth Wales, which is part-funded by the European social fund and the Welsh Labour Government. So in Blaenau Gwent we know that life has got much tougher. Unemployment has not fallen there as it has done in southern England. Facing high energy, food and fuel prices, nearly 1,700 local families in Blaenau Gwent will be hit, and hit hard, by the bedroom tax next month. Food and fuel poverty will continue to blight young lives. Cuts to local services, from which the council cannot escape, will also hit us hard.

What these families need is an active Government pulling out all the stops to get our economy moving and create jobs. But in their first three years the Tory-led Government have spent £12.8 billion less in capital investment, compared to the plans inherited from Labour. The Government’s own “infrastructure pipeline” shows that only seven of the 576 projects—just seven—are completed or operational, and just 18% of the projects listed are said to have started or to be “in construction”. In the Budget the Chancellor did announce an extra £3 billion a year for infrastructure from 2015-16. He said this would get growth flowing to every part of Britain, but by now we are all used to the Chancellor’s hyperbole—fine words, but no follow-through.

My constituents want to know why the Government are not funding shovel-ready projects right now, which could get our people back to work. The British Chambers of Commerce asked the same question. It identified road maintenance as something we could do right away. We want homes and schools, too. As the National Audit Office said in its “Planning for Economic Infrastructure” report, investment may shape new patterns of demand. That is what I want for the south Wales valleys. It is an area of great potential, but we need the support to realise our talents. Road and rail investment would provide that support.

The re-opening of the Ebbw Vale to Cardiff line in 2008 is striking proof of that statement. It has been so successful that we now need funds to redouble the line, as the train frequency cannot meet demand. The Department for Transport told the Public Accounts Committee, of which I am a member, that it is looking to invest to support growth. Where? In areas of high demand, where more capacity can be delivered, and where there are schemes that can be implemented. Redoubling of the Ebbw Vale to Cardiff line meets all these criteria. I would also like to see electrification of the London to Swansea line and the complementary electrification of the valleys lines accelerated.

Much work has been done over the past year to secure a major private sector-led infrastructure project in Blaenau Gwent—a world-class motor sport and leisure facility. The developers estimate that it could create significant long-term sustainable employment for over 12,000 people. That would make a massive difference in the valleys in south Wales. The £200 million scheme would be one of the largest capital investment programmes in our region for more than 40 years. But what the developers are looking for now is the right tax-based incentive. I want the Treasury to be bold in its thinking and see how it can create the right framework to attract private investment.

Lord Heseltine was commissioned by the Government to recommend policies that leave no stone unturned in the pursuit of growth. Lord Heseltine understands that economies with a number of vibrant cities and city regions are more successful than those where the capital is dominant. The Chancellor endorses Lord Heseltine’s plan for a single pot of funding for local enterprise, but history will judge this promise—yet another post-election promise—on whether it helped the rich once again get richer.

So will the Chancellor continue to endorse this flatlining two-lane economy, or will he get the whole country in the fast lane to recovery? The Office for Budget Responsibility has said the Budget will

“have no impact on the level of GDP at the end of the forecast horizon”—

in other words, it will not provide the short-term growth that we all desperately need. The sad truth is that my constituents’ hopes for some brave new thinking from the Chancellor have been dashed. Those without jobs want the chance to work and to help the economy grow. George Osborne’s action on infrastructure has failed to meet the scale and urgency of the need. Instead, we get another downgraded Budget from a downgraded Chancellor.