The Economy

Seema Malhotra Excerpts

Wednesday 18th November 2015 Commons Chamber

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I acknowledge all the speeches made during our debate on the Government’s record on the economy. Among Conservative Members, the hon. Members for Cheltenham (Alex Chalk), for Eastleigh (Mims Davies), for Fareham (Suella Fernandes) and for Dudley South (Mike Wood) all have more than 3,000 families in their constituencies currently receiving working tax credits who will not have been reassured by their contributions today.

The hon. Member for Dundee East (Stewart Hosie) raised a range of issues about the unfairness of tax credits. My hon. Friend the Member for Sefton Central (Bill Esterson) spoke about the Chancellor changing his mind on his own fiscal target and the slowest recovery on record, as well as about concerns expressed by the business community. We heard a very passionate speech by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on the devastating impact on families—thousands of jobs have been lost—of the Government’s lack of support for the steel industry and their lack of response to the steel industry’s five asks.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) talked about the impact of the Government’s policies on Wales. My hon. Friend the Member for Islwyn (Chris Evans) spoke about the demise of the green industry. My hon. Friend the Member for Swansea West (Geraint Davies) talked very eloquently about the business case for our economy of stronger investment in Britain. In the final Back-Bench speech, my hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) spoke about the impact of the Government’s policies on women and young people.

This has been an important debate, as we move into the final week before the publication of the spending review and the autumn statement. Given the repeated calls from the police, the shadow Chancellor, the shadow Home Secretary and the Leader of the Opposition warning about the scale of potential cuts to the police service and the impact of those cuts at this time, it is a shame that the Chancellor has so far not committed to funding the policing we need, including the community policing that generates vital intelligence on the frontline.

What we have seen from the Chancellor is a record of failure in building the productive economy that we need. He has failed to meet his own deficit target, borrowing £200 billion more than he planned in the last Parliament. He has failed on productivity, with the gap between UK productivity per hour worked and that of the rest of the G7 being 20 percentage points last year, the widest productivity gap since 1991. He has failed on infrastructure investment, about which the British Chambers of Commerce recently stated:

“Britain’s infrastructure investment remains woefully inadequate”.

Progress on the Chancellor’s flagship infrastructure pipeline has stalled, with just 9% of its projects having started.

We know that British businesses still cannot access the finances that they need, with lending having fallen in nearly every month since 2011 and the latest figures showing an annual fall in lending to SMEs of 0.9%. Manufacturing is struggling, and Britain’s export market share is falling relentlessly. The Government’s target of doubling exports to £1 trillion by 2020 is now being met with ridicule. There is no better example of the Chancellor’s failure to support manufacturing than his inaction on the British steel industry. That high-tech, high-skill, high-paid industry is now in crisis, with thousands of jobs already lost and tens of thousands at risk.

We have seen that public services are not safe in the Government’s hands. In the NHS, waiting lists have increased by almost 1 million on their watch. The impending care crisis will heap even further pressure on our hospitals. The Government have failed to address the housing crisis. Local government is set to see a new wave of cuts to local services, leading to the closure of children’s services and putting social care under huge pressure. The proposed public health cuts could mean cuts to school nurses, sexual health services and other essential services—the vital prevention work that saves so much through early intervention.

The Chancellor’s policies are hurting not helping Britain’s businesses and working families. The tax credit cuts are yet another example of the Chancellor making the wrong choices. He is hurting not helping the people of Britain and holding back the British economy instead of building a better future. Last weekend, Labour campaigners went out across the country campaigning for a full and fair reversal of the Chancellor’s proposed tax credit cuts; standing up for the working families in their constituencies; and spreading the word that the Tories’ plans will make working families poorer, while making a few thousand families richer by cutting inheritance tax for the most wealthy.

It is not just those working families who will lose out. Millions of pounds will be lost to local economies as that money is sucked out from next April. That is cash that local people need to pay their rent or mortgages and their fuel and food bills. The Trussell Trust has warned today that the tax credit cuts will lead to a substantial rise in food bank use.

The hon. Member for Stevenage (Stephen McPartland), who last week boycotted a meeting in his constituency with a Tory Treasury Minister because the Minister thought it would be okay to turn up and refuse to discuss the burning issue of tax credits, has shown, through the publication of House of Commons figures, that child tax credits will be cut for many families—something that the Prime Minister denied at the time of the election. Only last week, the distinguished Financial Times columnist Martin Wolf said that this was “bad policy, dishonestly presented.”

In his 2011 Budget, the Chancellor promised to rebalance our economy. What has happened? Manufacturing employment has decreased by 10% since he has been Chancellor. He is hurting not helping our renewable energy industries. The Chancellor’s Britain is out of touch with other nations. This is the only country cutting the support for renewables in favour of non-renewables. The Chancellor is hurting not helping Britain by cutting research and development investment. The last Labour Government had a target to increase private and public sector R and D to 2.5% of GDP by 2014. The latest official figures show that it is at 1.67%, which is behind the OECD and EU averages.

Even the British Chambers of Commerce is calling on the Chancellor to change his latest fiscal charter and deficit target so that spending on infrastructure is not included. A wide range of economists are starting to speak up against the Chancellor’s economic choices, saying why they are wrong for Britain.

Labour’s starting point is that we need to do much more to ensure that there is a prosperous and secure future, with a fair deal for everyone and a chance for all to get on. That means the state working in partnership with the private sector to invest for the growth and jobs of the future. If people are to be able to access those jobs, we must get our education system right. Schools should not be struggling to recruit and retain teachers, and we must recognise that cuts in further education are a false economy because people leave education even less equipped to succeed. The best way to build jobs for the future, rebalance our economy and spread prosperity is to invest in skills, infrastructure and technology. We must invest in the support that companies need to take a good idea from being local to being global. That is the kind of economic ambition that Britain needs, backed up by practical help to make British people more prosperous and secure.

The Labour party is committed to balancing the books, but to doing so in a fair way by building a bigger and stronger economy based on investing in our future. Creating better skilled, better paid jobs is good for British workers and, when they spend their money, good for British businesses. It also means higher tax receipts for the Treasury. The Chancellor’s interventions may appear to be good politics, but all too often they turn out to be wrong economics. His policies are hurting, not helping Britain’s businesses and working families, and his short-term cuts will prove a false economy for British taxpayers. Labour will offer a real alternative, with positive choices to support Britain’s businesses and workers and equip people for the jobs of the future. The Chancellor’s short-term choices will leave our economy more vulnerable. There is an alternative, in the long-term interests of Britain, and I urge hon. Members to vote with us in the Aye Lobby today.