Budget Resolutions and Economic Situation

Sheila Gilmore Excerpts

Wednesday 18th March 2015 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the hon. Gentleman give way?

[Mr Newmark]

I am trying to stick to Mr Deputy Speaker’s instruction to keep roughly to 10 minutes.

Time and again, Labour Members talk about borrowing. Page 22 of the Red Book shows us that public sector net borrowing is coming down annually. That is the point. Labour Members look at the gross figure, but the important thing is that we are bringing borrowing down annually. In 2015, it will go down to £90 billion. It will then go down to £75 billion next year. Hopefully, by 2018-19 we shall be in some sort of surplus.

It is also important to look at cyclically adjusted net borrowing, which is also decreasing—we will be showing a surplus in 2018-19. The borrowing figure has been and is a problem. Are Opposition Members right to point out that the gross figure is growing? Absolutely. The point is that we are tackling the deficit to bring down the annual amount of borrowing. That is what the Government have done very well.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

In June 2010, we were told that we had to have an emergency Budget. Even at that stage, one of the strange things about that was that many of the measures were so un-emergency that they did not have to come in until the following January. To a large extent, the emergency Budget was a political statement about where the incoming Government wanted to go. Today’s Budget is a political statement as well, from a Government who are trying to convey the impression that they have solved the country’s economic problems and that there will be no need for many more harsh decisions or much more austerity as they want people to think it is safe to vote for them. It is therefore a highly political Budget.

Not only is this a political Budget but the Chancellor, optimistically I would suggest, seems to be planning not just for the election that is about to happen but for 2020. His predictions for spending show severe cuts in the first part of the next Parliament then a sudden uplift towards the end, just before another general election. Even the OBR says that that is very strange and that this is a “rollercoaster” of spending. It is not justified, I would suggest, by anything other than its politics.

The people of this country deserve something better than a Budget that will, as the Chancellor hopes, make people feel good when a lot of the underlying issues have not been resolved. Some of those people were badly affected by some of the things we were told were absolutely essential back in 2010 and will find it pretty galling to be told now that things are perhaps better when they are still suffering. At that time, we were told that we would have to cut disability benefits by 20%—people wonder why the disabled in this country are so angry, so upset and so worried. That was the prospectus put before them then.

One of the main things the Chancellor wanted to talk about today was the tax threshold, but we have to ask over and over again what that means for the low-paid. Between 17% and 20% of people in employment are already earning below the tax threshold and further rises in it do absolutely nothing for them. What is the Government’s proposal to help those low-paid people? There does not appear to be anything and there is a considerable fear that those low-paid earners will end up paying for this constant increase in the tax threshold, perhaps through a VAT increase, which they will have to pay for even though they gain no benefit from it. Even if people fully endorse the argument about the tax threshold, there should be provision for the low-paid as well so that at the very least they are provided for.

That point and some of the speeches we have heard show the fundamental differences between the Government and the Labour Opposition. Members have said how important it is that people can keep hold of their own money. Tax is basically a bad word for them and they want as little of it as possible. The problem is that that has consequences that are felt in the real world. If taxation is reduced, spending must be reduced unless taxation is being increased somewhere else, which brings us back to the question of VAT. If we want a society in which we provide good quality services and in which people are not anxious about things such as how their parents will be cared for or how they will encounter the care system in their old age, it has to be paid for. If anyone believes that the answer is to cut taxes they should be open and honest and say what impact that will have on services.

[Adam Afriyie (Windsor) (Con)]

Does the hon. Lady not recognise that when certain taxes are cut, the overall take by the Exchequer increases, as has been demonstrated over the past five years?

[Sheila Gilmore]

We have heard the argument that if we reduce taxes, we get more revenue in. Of course, it is usually heard in relation to the 50p rate of tax, but that was a very poor example. It hardly had any effect, and so many people made their own arrangements before and after the announcement was made on reducing the rate again that we cannot tell what really happened.

It is important that we should have a discussion about the kind of values we want and the kind of society we want to live in. There has been a similar debate north of the border, where we have a Government who are trying to suggest that, although they do not necessarily want to cut taxes, it is possible to have fantastic services without ever putting up taxes. That will also leave the public confused about what can really be achieved.

[Geraint Davies]

Does my hon. Friend accept that if the Government consistently put up tax allowances while putting wages down, tax revenues are going to fall? Does she agree that that is why we are nearly bankrupt?

[Sheila Gilmore]

Tax revenues have been falling, and the whole issue about low wages is extremely important.

We have had discussions in the House about zero-hours contracts. I think it was the hon. Member for Dover (Charlie Elphicke) who said today that Labour had done nothing about them for 13 years. I was not a Member of this House at that time, but I was a local councillor for much of that period and I met people constantly in that role. In all honesty, I do not recall people raising the issue in the way that they have been doing more recently.

Zero-hours contracts are a growing phenomenon, and they are still under-reported. I mention them on some of the literature that I give out when I am door-knocking, and a couple of the people I have spoken to in the past few days have looked at that literature and said, “What are zero-hours contracts?” When I explained, they said, “Oh yes, that’s what my son had when he was working for a pizza house.” Another man said, “Oh yes, that’s what happened to my son. The other day, he called and asked me to pick him up from work because he had gone in, only to be told to go home again because there was not enough work for him. They could do that under the terms of his contract.” Those people might not have known the term “zero-hours contract”, but they certainly recognised the conditions involved.

These issues are a matter of concern for young people. Unemployment is not falling as it should be. It is still, in the words of most commentators, “stubbornly high”, and we need to do something to address the problem. Also, earnings for younger people have not risen. The Government are proud of saying that average household incomes are beginning to rise again. Those in the oldest age group have done the best, and people in the middle are beginning to do a bit better, but young people are still doing significantly less well. That is a serious matter and we should be giving it greater consideration.

Many young people have a string of temporary jobs. They are in and out of jobs even when there is work available, which is very frustrating. One constituent told me that her son had worked for Royal Mail for three months at Christmas. He knew that it was a temporary job and he was told that there was no further work afterwards. He signed up with an agency that handled temping work, and he was phoned up a few weeks after Christmas and asked whether he was interested in a “call-on job”—a zero-hours contract, effectively—with Royal Mail, no less. So apparently there was no proper job on offer, but Royal Mail had none the less asked the agency to take on someone on those terms. How much better would it be for that young man if he could get a proper job that paid him a proper wage and in which he could learn a skill? We must do something for our young people. We must not sit back in apparent complacency and say that there is not a problem.