Budget Resolutions and Economic Situation

Roger Mullin Excerpts

Wednesday 8th July 2015 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

I think this is the first time I have spoken while you have been in the Chair, Madam Deputy Speaker, and given your generosity, I am glad you have taken the Chair. I wish you all the best for the future and look forward to your future generosity—and that is the end of my crawling.

I congratulate the two Members who have made their maiden speeches today, but I say to the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) that he need not have this Jimmy-no-friends paranoia about this place. We in the DUP are the cousins of Scottish Members. Only 20 miles of water separates my constituency from Scotland, and although we do not share their desire to break up the Union, nevertheless we regard them as cousins, so he should not feel loathed by everyone in the House.

We welcome many of the aspirations in the Budget. We welcome the Government’s commitment to growth and balanced growth across the United Kingdom. We welcome the measure designed to increase productivity, because that is one way to raise living standards for those in work. We welcome the commitment to making work pay, because I do not want my constituents confined to a life of no work without the dignity and esteem it gives them. It is important, therefore, that we make work pay and get people into jobs. Also, given the threats to the United Kingdom, and indeed the world in many theatres of war, and given the demands we make upon our armed forces, we also welcome the 2% commitment on defence spending.

I have a number of concerns, however, about the Budget. While I hope the Chancellor is right in his growth forecasts, he himself raised several warnings about the situation in Europe and Greece and the potential impact on a major export market and about the situation in China. Yet despite that, part of the growth forecast in the Budget is based on exports growing on average over the next five years by seven times more than they grew this year. If that is one of the components of economic growth, we have to say that there is a huge risk factor. The Budget is also based on consumer spending being the main driver of growth. Of course, consumer spending is the main part of GDP, but, against a period of wages not growing and so on, that increase in consumer spending can be achieved only through increased borrowing, and we have seen in the past the impact on the economy of unsustainable domestic and private borrowing.

So there are warning signs, and even when it comes to some of the incentives for industry to grow—a number of Members have mentioned this today—there is no great mention of what we do about energy prices. It really does not matter whether we are talking about what people would call old industries—whether steel manufacturing or whatever—or even the modern data-processing industries, all of them are huge energy consumers. Yet the environmental taxes, which are one of the things that have been driving up energy prices, are set to grow over the next five years by three times, from £5.6 billion to £16.1 billion. There are therefore a number of factors in this Budget that cause concerns about the Chancellor’s predictions.

There is another concern I have. I welcome the fact that the Government believe that

“the only way to secure a truly national recovery is through a fundamental rebalancing of the British economy based on investment across the regions…driven by the private sector, and further devolution to increase local decision making.”

That is a great sentiment, but for Northern Ireland I see nothing new here. The Chancellor has said that he is committed to the delivery of the Stormont House agreement. The Stormont House agreement is now nearly nine months old. It has not been delivered on—I have to say, that is not the fault of the Government, but the fault of the Social Democratic and Labour party and Sinn Féin in Northern Ireland—but if that is what the Chancellor is relying on, then there is nothing new in this Budget. Indeed, the growth in Government investment, which is one of the potential drivers, is set to fall by 50% over the period of this Budget. Already we know that in Northern Ireland that means there will be a cut in capital expenditure for this year and subsequent years, the details and timing of which the Treasury is still to tell us, including in negotiations with the Department of Finance in Northern Ireland. So there are worrying factors about this Budget.

The other issue I suppose I have some concern about is the proposed change in tax credits. It is one thing to say that we want to shift the burden of paying for workers from the state to employers—and that is good—but there is no point in saying that we will make the state reductions immediate, but then rely on employers to fill the gap in the longer term. All that does is leave people poorer. Given that we are usually talking about the low paid or unemployed, there is another downward factor. Taking £1 off them probably has a downward multiplier of about fives times, because they tend to spend all their money on things that are produced locally and in local shops. They do not spend it on expensive imported luxury goods, so this change could have a downward effect on the local economy. I would like to hear from the Chancellor what assessment he has made of the impact the change is likely to have in the short term. In the long term it may well shift the burden to employers, but in the short term I suspect it will shift it to the worker. That is morally not right, and it is economically not right either.

I welcome the decrease in corporation tax rates. Once we get around to delivering on that part of the Stormont House agreement in Northern Ireland, it may well make the delivery of the corporation tax reduction that we have proposed in the Northern Ireland Assembly that much cheaper. Indeed, it may even enable us to lower the tax to 10%, and thus to become more competitive with our neighbours in the Irish Republic.

I am, however, very concerned about the welfare reform changes. We do not disagree with all of them, but we disagree with some of them fundamentally. While we support a reduction in the cap, I think that Members representing the north of England, Scotland and Wales ought to be concerned about the proposal to operate a different cap in areas outside London. I believe that it is the first step towards a regionalisation of benefits that would be detrimental to many of us who represent poorer regions of the United Kingdom. Once that foot is in the door, the door will be pushed further. Had there been a universal reduction in the cap, along with the rationale that the Government have given, we might have considered supporting it, as we did in the last Parliament, but we certainly cannot support this.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Is the hon. Gentleman aware that, at about the time of the referendum in Scotland, the Secretary of State for Work and Pensions gave a guarantee that there would be no different regional rate?

[Sammy Wilson]

I was not aware of that commitment, but I do see the danger in the proposal that is before us today. Even some Conservative Members who represent less well-off areas that are heavily dependent on welfare payments ought to be concerned about it.

I want to send a message to people in Northern Ireland, and also to the Chancellor. I believe that the additional welfare reform changes which must be implemented at Stormont will continue to be resisted by Sinn Féin and the SDLP, which, unfortunately, have a blocking mechanism. That may bring an end to the Stormont Assembly, because we will be left with an unsustainable budget. There will probably be another gap of £300 million to £400 million. My message to the Government is this: they cannot continue to pussyfoot around with those who refuse to do the job that they are meant to do in Northern Ireland, which is to introduce legislation which, in any case, they promised to introduce more than seven months ago. The Labour party agrees with us about that, and so does the Conservative party. If no action is taken, I believe that it will be essential for the Government to step in and save the devolved Assembly.

--- Later in debate ---

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I am afraid that I have to start by disappointing you somewhat, Madam Deputy Speaker—and no doubt the whole House—but because of a throat infection, I am unlikely to last 10 minutes.

I will come on to say a few words on productivity, but I was stunned by the comments made by the hon. Member for North East Somerset (Mr Rees-Mogg) earlier this afternoon. He talked about the Budget being a highly moral one, with a great moral imperative behind it. His comments reminded me that today is the 131st anniversary of the formation of the National Society for the Prevention of Cruelty to Children, the very day the Government are bringing in a Budget that attacks tax credits for children.

I was going to leave my remarks on that there, but I will refer to something my hon. Friend the Member for Glasgow Central (Alison Thewliss) raised. I will re-read, for those who were absent at the time, a small sentence on page 88 of the Government’s Budget. It read thus:

“The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape”.

Where is the morality in that? What on earth is moral about dragging women in to talk about the fact that they may have been raped, so they can get some decent treatment from the benefit system? What can possibly be moral about that? I appeal to the Government: for goodness’ sake, they may seek savings in many other parts of welfare, but they should not punish children and not force women, who have gone through the trauma of rape, to have to justify themselves to the taxman.

I shall move on now to productivity. The Government make great play that they have a plan for productivity, but any search for it in the Red Book will be in vain. Let me pick up on one or two matters that have been referred to by Members who are no longer in their place. Mention was made of science. Why is science and research important? If we are to stimulate investment, innovation and enterprise, one of the key things we need is the production of knowledge. In 2010, the Government chose to freeze the budget—or ring-fence it, as they grandly called it—for science and research at £4.6 billion a year. By the time we got to the Budget of March 2015, it had degraded in value by £900 million in the succeeding five years, yet they still proclaimed in the Budget that they had ring-fenced the budget for science and research. When I received the Red Book for today’s Budget, one of the first things I did was to search for the core budget for science. Surprisingly, the table produced in the March Budget is entirely missing. There is no comment about the retention, even in cash terms, of the core science and research budget. Perhaps that was a slip, but surely it cannot be justified in any way by any Government who claim they have a strategy for productivity.

Let me pick up one other matter—I am pleased that my throat is holding out. Mention has been made of a return to the 1950s by the bringing back of a levy for apprenticeships. Of course I welcome employers making a bigger contribution towards skills and development, but the problem in terms of productivity is not a general one about access to apprenticeships. We have had a structural weakness in the UK for more than 20 years in intermediate and higher intermediate skills—in other words, the technicians in science laboratories and the manufacturing sector, for example. I am not so much talking about the people at what might be traditionally called the pure craft end or at the higher professional end; OECD figures tell us that we have a worse record on producing higher intermediate skills than most of our competitors. I see no mention of that in either this Budget or the March Budget, so what are the Government going to do about it?

Madam Deputy Speaker, I feel myself in need of a Macallan 12-year-old, because of my throat, so I shall have to leave it there.