Finance (No. 2) Bill

Sheila Gilmore Excerpts

Monday 11th October 2010 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

In the course of the debate, yet again, we have heard an awful lot of myths and legends. One of the biggest of those is the notion that because the Opposition have a different view of the economy, we are deficit deniers. You do not have to be denying a deficit to hold a different view of how it arose and the background circumstances, and a different view of how we get out of the situation that we are in. That is quite reasonable.

It is healthy that we have politics within which there are different viewpoints. The proof of the pudding will be apparent in a few years. If you are right, I will have to eat my words. I do not believe that those on the Government Benches are right, but we cannot tell just by throwing words at each other. It is not correct to say that somehow the Opposition hold the view that there is no deficit. That would be plain nonsense.

There are other myths and legends that we have heard today. One, which we heard from the hon. Member for Northampton South (Mr Binley), is that the previous Government were guilty of not mending the roof when the sun shone. We hear that repeatedly. If building schools, hospitals and roads was not mending the roof, I do not know what it was. If by that Conservative Members mean that we should have saved the money and put it in a reserve somewhere, that may be a legitimate criticism, but to suggest that we were not investing in the country’s infrastructure is plain wrong.

The hon. Member for Northampton South also suggested that the economic crisis was entirely our fault because of light-touch regulation. I may have been asleep through the years of the Labour Government, but I always thought I heard Conservatives saying that there was too much regulation, that we were the party of red tape and regulation, and that we over-regulated not just financial services, but everything. We heard an excellent maiden speech from the hon. Member for Skipton and Ripon (Julian Smith). Although I disagreed with the entire political content, it was a good speech. The hon. Gentleman said that in his view there was too much regulation.

It is easy to say with hindsight that there should have been more regulation of the financial services industry, for example. I believe that there should have been, but when people say that we were over-regulating the economy, that is one of the myths and legends.

We are told that we do not want to leave our children and grandchildren in a big financial mess by not paying off debt, but equally, and perhaps more importantly, do we want to leave our children and grandchildren in the position that generations have been placed in by previous economic failures, by destroying jobs and creating long-term unemployment in various parts of the country? I do not want to leave that to my children and grandchildren.

We are allowed to differ and to hold different points of view and different economic theories. The difference is not about whether there is a deficit, but about how we got into the present situation and how we get out of it.

The previous Government managed to stop the rise in unemployment reaching the levels that had been predicted. That was the cause of economic stimulus. Far from the deficit spiralling, as we heard earlier from the hon. Member for Stratford-on-Avon (Nadhim Zahawi), the deficit did not rise as much as had been expected. Therefore, we were not in some sort of new crisis—that is what has been suggested—which justified an emergency Budget which had very little in it. The Finance (No.2) Act 2010 that we passed in a great hurry before the summer also had very little in it, and we lost an opportunity to make some important changes.

The public and private sectors are inextricably linked, and slashing jobs in the public sector will further reduce the tax-take, increase the demand on benefits and, in itself, increase, not decrease, public borrowing and the deficit. Equally, reducing our investment in infrastructure—not stopping it entirely, but reducing it more than we need to do—will ultimately put us in a more difficult position.

Just last week I visited two constituent households at their request. The problems that they asked to see me about had nothing to do with jobs; nevertheless, by no coincidence in both households there was a working-age construction worker who was desperate to work but could not find any in my city. One said that the last job on which he had worked was now a complete university building in the city, but we will not see much more of that kind of building by our educational institutions. He is very keen to work, but the jobs are simply not there.

[Alec Shelbrooke]

Everybody would like to see that investment, but, and this is the point that I tried to make in my speech, the previous Chancellor would also have cut the capital budget. I talk about deficit deniers because I do not understand how you can ask for capital investment to carry on when your shadow Front Benchers would, as I understand it, follow that plan to reduce the capital budget.

--- Later in debate ---

[Sheila Gilmore]

I thought I had covered that issue. We are not saying that there is no deficit or that there will be no reductions; we are saying that if you cut too far and too fast, you will worsen the current position.

[Gordon Birtwistle (Burnley) (LD)]

I am extremely interested in the fact that you admit that you would have cut the deficit, and I am extremely interested to know how you would do so.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Tempted as I am to answer the questions that are being posed about the deficit, I remind the House that the hon. Gentleman is not the only one in this debate currently blaming the Chair for everything, so I would be grateful if we could return to the convention, ensure that our language is correct and, if possible, keep me out of this argument—for now, anyway.

[Sheila Gilmore]

The whole matter is very much one of degree, not either/or. However, one other interesting difference between the Government and Opposition Front Benchers is that the Government frequently argue that high public spending and a big public sector act as a drain on, and kill off, the private sector. In the city of Edinburgh between 1997 and 2007, however, development and building—not just public sector building, but private sector building—flourished. In fact, the Royal Bank of Scotland built a huge corporate headquarters just outside the city during that period. The argument is that if we have a huge public sector, the private sector will shrink and disappear, and that, therefore, if we do the opposite, the private sector will suddenly rise up. I do not yet see, and doubt whether we will see, any great rise in the private sector. Where are the private residential houses and offices being built by the construction industry in my city? They simply are not there. They were at a time when, according to all the arguments that Government Members have put forward, they should not have been. If the public sector is so bad for the private sector, we should have had huge problems.

At this stage in the passage of a Finance Bill there are opportunities to do several things. We heard an interesting exposition of the importance to the film industry of tax reliefs and credits, so why did the Government decide not to go ahead with an equivalent tax credit for the video games industry? The city of Dundee, which is not far from where I live, suffered for many years after what happened to the old industries. It was a city of jam, jute and journalism, and it struggled for a long time, but the relatively recent expansion of the further and higher education sector in the city and the spin-offs in terms of the research and development have been very impressive. They have brought people back to a city that was losing its population, and they have encouraged young people who were educated there to stay there. Industries such as the video games industry, for which Dundee has become justly famous, have done that, yet for no good reason the coalition Government have stopped something that might have allowed the industry to develop and flourish. The opportunity exists in this legislation for the Government to reintroduce that opportunity, and I hope that they will do so.

I was at a briefing earlier today on the Robin Hood tax, a financial transaction tax that many organisations in this country advocate not only because they feel it right that the banks, which did so much to cause the financial crisis, should contribute, but because it is a way of raising funds to deal with poverty and deprivation here and elsewhere. That proposal could be included in the Bill. It is well worked out, and I hope that, even at this stage, the Government will be prepared to consider amending the legislation in order to include such matters.