John Bercow
Main Page: John Bercow (Speaker - Buckingham)Department Debates - View all John Bercow's debates with the HM Treasury
(14 years, 4 months ago)
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Mr Speaker
Order. I apologise for interrupting the hon. Gentleman, but a very large number of private conversations are taking place and there is a substantial hubbub in the Chamber. It is as though, after the first 53 minutes of his speech, the attention of the House has wandered a little. However, I know that a hushed atmosphere will be resumed and the House will want to hang upon his every word.
Mr John Denham (Southampton, Itchen) (Lab)
On a point of order, Mr Speaker. At about 4pm today I was rung by a reporter from The Daily Telegraph, Mr Christopher Hope, and asked to comment on the reply to a written question that he said would be answered tomorrow. I assumed that the question had been answered and would be reported in Hansard tomorrow. However, when I checked with the Library, it confirmed that no answer had been received. I have also checked with the hon. Member for Perth and North Perthshire (Pete Wishart), who tabled the question. He had checked his pigeon hole at about 4pm, and at that time he had not received a reply. At 7pm, the Library told me that the question had still not been answered.
Is it in order for the Secretary of State for Communities and Local Government or his agents to give a parliamentary answer to the press before making it available to the hon. Member who asked the question or, indeed, to the whole House? What remedies can we have for those Ministers who have such low regard for this House and its Members?
Mr Speaker
I am grateful to the right hon. Gentleman for his point of order and for advance notice of it. It is, of course, essential that answers are given, first, to the Member concerned, although it sometimes happens that answers go innocently astray. Ministers on the Treasury Bench and the Government Whip have heard the point of order and will no doubt ensure that the Department discovers what took place. When that is ascertained, and it should not take long to do so, I would like to be informed. I am grateful to the right hon. Gentleman for putting a serious matter on the record.
Just before I call Mr Andrew George, I simply point out to the House that a very large number of Members are still seeking to catch my eye, and I know that Members will regard it as most helpful, with no reference to any particular speech that the House has heard, if I remind it that the Finance Bill is a relatively narrow Bill of, I think, 11 clauses and five schedules. It is approximately 30 pages, and the thrust of it depends upon, and is relevant to, I think, seven resolutions of the House. I thought that that might give it a bit of context and reference.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I am most grateful to the hon. Gentleman for giving way, and I admire his mea culpa—is it St Sebastian, the man who stands there with all the arrows? Certainly the hon. Gentleman has portrayed that for us this evening. However, with respect, the issue is not simply VAT. In his opening remarks he said he supported the Budget and the Finance Bill because we are all in this together, but we are not.
No one sitting in this Chamber or within the environs of this Chamber is in danger of losing their home because of the changes that his Government are bringing in with regard to housing benefit, but 303 of my constituents are in danger of losing precisely that. They are not alone in London or the country at large. The hon. Gentleman gave a very good mea culpa on VAT, but the complicity of his party with what the Conservatives are going to do to our country is not absolved, however long his sentence.
Mr Speaker
Order. May I just say to the hon. Lady that I could listen to her, almost without interruption, for some hours, but that shorter interventions would be helpful? It is always a pleasure to listen to her fantastic enunciation.
Andrew George
I think that we are all competing in sentence length—perhaps the hour is causing us to use sub-clauses. [Interruption.] I know that I am not the most articulate Member—I have a speech impediment; please bear with me.
The hon. Member for Hampstead and Kilburn (Glenda Jackson) made a decent point. If she listened carefully to my opening remarks, she would realise that my reference to the “we’re all in it together” theme was intended to criticise us all for being in it together by missing the point and making tribal remarks about the other side, but not being in it together with the country at large, which will suffer through some of the Budget measures. She made further points about my keeping narrowly to the subject of VAT. Interventions in my speech have been only about VAT, and I wished to make a brief contribution, which turned out to be much longer than I expected, on VAT. It is important, having commenced on that path, to continue on it and examine that provision in isolation. I know that it cannot be taken in isolation by the families, businesses and charities that it will affect. However, I still believe that it is important to consider it on its own.
The other issues, such as housing benefit, that the hon. Lady mentioned, are not in the Bill. I hope that the House will have a good opportunity to debate public sector spending and benefits, including disability benefit issues, which were announced in the Budget and clearly need to be debated later, with all the facts made available to us. We currently have a translucent position with regard to the evidence before us.
Mr Speaker
Order. I think that I should say to the House that, although I cannot possibly predict such matters, it may well be that at some stage I shall be asked to grant a closure. One of the factors in the decision making of the occupant of the Chair faced with such a request is the extent to which contributions continue to be pithy and relate to the terms of the Bill. I say no more than that.
Gregg McClymont
Indeed, they assent. My own view is that the political rhetoric is at odds with the economic reality, and I shall tell them why. Several colleagues have noted that the average maturity of British sovereign debt is 14 years—
Mr Speaker
Order. I am listening to the speech by the hon. Gentleman with the closest interest, and it certainly has the manner of an economic treatise, which is of some interest, but I am just trying to fathom to which part of the Bill his comments relate. I have not yet found it, but I have a feeling that he is about to demonstrate it to me.
Gregg McClymont
Thank you for that guidance, Mr Speaker. As I suggested at the outset, everything in the Finance Bill depends on a view about confidence in the economy, and I was suggesting that the Government’s confidence in their own prescription is misplaced. However, I shall try to follow your advice and move on.
Government debt is still at historically low levels. It is edging towards 70% of GDP, but for 60 of the past 100 years, Government debt was at that level or higher, and that undermines the claims for an historic level of debt. It is true that those debts were incurred fighting two world wars, but the recent and more modest expansion of the national debt also happened in exceptional circumstances. I hope that Government Members will not forget the scale of the crisis that the world economy recently suffered. In 2009, global GDP shrank by 2.4%, the first decline since world war two, and the Budget must be considered in that context of global depression.
The political obsession with debt is dangerous and has distorted the Government’s economic priorities as set out in the Bill. Our public deficit is just one of many causes for concern about our future economic performance, and that is why Labour had a plan to restrain public spending when the recovery was secured. Labour led Britain out of recession last year through stronger growth and lower unemployment, supported by an active industrial policy and global co-operation. This Government, by contrast, offer us nothing but scaremongering about the national debt and competitive deflation with our economic partners.
What of job creation? In oral questions last week, the Secretary of State for Energy and Climate Change compared the previous Government’s target of 1.2 million new green jobs to the sector targets that Gosplan set in the Soviet Union. The Opposition might have had plans and targets for job creation, but the Government have targets for the destruction of jobs. That is what we learned from the Treasury leak last week, and that is where an obsession with public debt leaves us.
I should like to address one final superstition—that austerity inspires confidence among the bond markets that finance our debts and the consumers who drive demand and growth. That belief suits the Chancellor’s purposes admirably, as he and his colleagues have done much to undermine confidence in our economy and public finances. They style themselves as the remedy for a moral panic of their own making but, as I have suggested, there is little hard evidence to support what they say. The hard-headed realists on the Government Benches want to sacrifice real services and real jobs here and now, on the basis of what they think the markets might desire of them later. We may yet find that those gods are as inscrutable as they are insatiable. There is a fine line between confidence based on reduced deficits and confidence based on growth. It suggests that markets that smile on austerity now may punish us for low growth later.
In my opinion, the coalition Government and their policies have had little discernible impact on international confidence in the British economy. More important has been the lack of confidence in the eurozone; relatively speaking, confidence in our economy has grown. But the scaremongering about the public finances has already had a clear negative impact on the confidence of ordinary men, women and businesses, on whom the country’s recovery rests.
To conclude, the Budget has little to do with progressive or necessary austerity; it is acutely political in intention. The long-term objective is to reduce the financial burden on those who tend to vote Conservative by reducing the size of the public sector. That is the context in which the Conservative claim that the public deficit is the biggest threat to recovery must be understood. The Budget is profoundly political and not unavoidable. It reflects the superstition, self-interest and party interest of the modern Conservative party. I, for one, will not be supporting it.
Ian Lavery (Wansbeck) (Lab)
Thank you, Mr Speaker, for allowing me to participate in this debate on the Second Reading of the Finance Bill.
One thing that is certain is that all parties agree that the deficit exists; we disagree only about how we would seek to reduce it, and how quickly or otherwise. Having now seen the detail of the Budget, and having like other Members been drip-fed even more bad news on a daily basis, I feel that the Budget and the subsequent cuts represent a most draconian, vicious and bitter attack on the hard-working people of the UK.
This has been described as the worst Budget in living memory, and I must say that I agree with that sentiment. This unprecedented attack by the coalition—the Tories and the Liberal Democrats—seems to be relished by many on their Benches. There appears to be something of a perverse glee among many of them when they see this attack on the people of this country. Only the wealthy and the well-off seem to have escaped the far-reaching measures forced upon the nation by the slash-and-burn, patched-up coalition Government.
If I may, I wish to introduce a more human side to the debate on the Finance Bill and the Budget. Tonight we have heard a million and one different figures, and I am sure that most of them are accurate, but we have not heard too much about the human side and the impact that the figures in the Bill will have on ordinary working people. In my constituency, 53% of the people work in the public sector—the highest proportion in the country. We should not treat those people as social outcasts, yet that appears to be happening. We have people in integral employment in the public sector—doctors, nurses, firemen, policemen, paramedics, prison officers, teachers, lecturers, classroom assistants, council workers, refuse collectors, street cleaners, chief executives and administrators among many more. Those are all valued occupations—essential jobs for the economy, including that in my constituency.
Let us consider the police. Today, they have been on the front line, chasing an armed murderer only 10 miles from where I live. We should be proud of those police officers and not look to cut their numbers. Today, they are protecting the public; tomorrow, they could face unemployment because of the cuts. Let us consider the firemen. They are the only ones running towards an explosion, or towards a fire in which people are trapped, while the general public run away. We should be proud of them. They are on the front line today, but they face unemployment tomorrow.
We must stop treating people as mere statistics. They are real people, with real lives. They have real families and real mortgages and, like many of us, they have aims and ambitions. Most of them chose a career path when they left school of serving their communities in the public sector. Should they be punished for that through the Bill and the Budget? They should not. They never expected to be unreasonably attacked through Government policy.
Why on earth the Government have attempted to divide public and private sector workers, driving a wedge between them as if they are different sorts of people, in different classes, and creating some second-class citizens is beyond me, unless it is a case of divide and rule. They have not only imposed a two-year pay freeze, but attacked pensions. “Pay more while you work, get less when you retire” seems to be the policy.
Let us consider the figures from my constituency. An average public sector worker in the NHS in Wansbeck can expect a pension of some £6,000 per annum. A local authority worker can expect a pension of £4,000 per annum. That is frankly disgraceful and unacceptable. It is also unashamed vindictiveness towards hard-working people.
The attack on the hard-working people of the public and private sectors through an attempt to dilute safety and health legislation is also worrying. Some on the other side of the House claim that it is burdensome, yet we have some of the best safety and health legislation in the world. When Lord Young of Graffham is being asked to reform safety and health laws and clearly states—
Mr Speaker
Order. The hon. Gentleman is addressing the House with great force and eloquence. A few moments ago, I was waiting for a specific reference to the Bill and he made it, for which the House was indebted to him. However, he is now talking about health and safety and wider reviews, and there is the difficulty that those matters do not appertain to the Bill, to which I know he will now revert with his customary force and eloquence.
Ian Lavery
Thank you very much for that, Mr Speaker —I understand. Whether or not health and safety and other such issues are part of the Bill or the Budget, they are integral to the people whom we represent.
To top it all off, those hard-working people are expected to accept the reduction in their pensions and pay cuts without any voice. It is reported that the Government are looking to tighten what are already the worst anti-trade union laws in the western world, to prevent people from having the democratic right to oppose the cuts in the Bill and the Budget. With pay cuts, pension cuts, benefit cuts, employment rights eroded, and health and safety laws diluted, their futures are in tatters. Who says that we are in this together? I invite the Chancellor and the Prime Minister to visit my constituency, to explain to the people of Wansbeck, including the 53% who may lose their jobs, how on earth we are in this together. What about the young and the future jobs fund and university places? What about the lack of job opportunities and the abolition of the regional development agencies? With the cutting of benefits, what future do the young people have as a result of the Bill?
Disabled people will be affected. What about the tax on disabled benefits? In my constituency, benefits for disablement and incapacity, including disability living allowance, are extremely important, because Wansbeck is a heavily industrialised area. The child trust funds are to be abolished—
Mr Speaker
Order. I am genuinely trying to be helpful to individual Members and to the House. It is open to the hon. Gentleman, and to other hon. Members who speak, to say something about corporation tax, capital gains tax, value added tax, insurance premium tax, income tax, etc.
Ian Lavery
Thanks for that, Mr Speaker. Every Member who has sat in the Chamber for as long as I have today is probably as fed up as I am about VAT and everything else. I accept everything you say, Mr Speaker, but I must say that I am just trying to change things, because we are talking about the cuts and the impact they will have on ordinary people. That is the only thing I am trying to get across. I understand quite clearly that I am probably stretching the limits of the debate—
Mr Speaker
Order. I am extremely grateful to the hon. Gentleman and I know he is doing his best to heed my advice—not altogether successfully—but from his last sentence, I suggest that he could delete the word “probably”. He was not following my advice, but I know that he will now do so. There are other matters to address if he wishes to do so.
Ian Lavery
Once again, Mr Speaker, thank you very much for your indulgence. I conclude not by mentioning VAT or anything of that nature, but by suggesting once again that it is not fair to say that we are in this together, because we certainly are not.
Mr Speaker
Order. May I gently say to the hon. Gentleman that I do not have a party? Some people have known that for some time.
Helen Goodman
In order to achieve that difference in the debt to GDP ratio four years hence, we will see cuts of 25% across most Departments, four times greater than those that Geoffrey Howe tried to impose on the country in the early 1980s. Even so, the tax burden will also rise by £33 billion. We have to question the judgment of a Government who are taking that amount of money out of the British economy.
Another issue is whether the Budget will promote growth. It is clear that in overall terms it will not do so. That is clear from the revisions to the forecasts made by the OBR, which show that growth is down and unemployment is up. Given the huge cuts proposed in the public sector—we heard about the first slice yesterday to the Building Schools for the Future programme—not only will the number of public sector jobs be reduced, but the knock-on effect will be significant increases in job losses in the private sector. The Government’s contention that 2 million private sector jobs can be created is just not credible. That is far more than was achieved in the 1990s when interest rates were cut aggressively and the pound depreciated by 25%. In those years, it took seven years for employment to grow by 1 million. Obviously, interest rates cannot be cut aggressively in the current situation, and it is highly unlikely we will see a depreciation of the pound against the euro, given that the European economies—our largest market—are in the state they are in. Under the Labour Government, 2.5 million jobs were created over 13 years, but that included extra jobs in the public sector, a housing boom and huge increases in financial services. The Government are now putting forward a prospectus that is simply not tenable. The argument that we have to attend to the level of the deficit because private sector investment is being crowded out by the public sector is also not credible, given that the economy has 4% spare capacity.
I turn to the measures in the Bill. On corporation tax, the coalition Government are cutting the rates—this is a long-standing pattern with the Tories—while cutting the allowances. What will that do for growth? How will that enable the economy to be rebalanced in the way the Secretary of State for Business, Innovation and Skills says is so important? Cutting allowances for investment is bad for manufacturing. The small and medium-sized firms in my constituency, where there is a lot of engineering and small manufacturing, provide several examples demonstrating what the problems are. Over the past month, I have visited two firms that make packaging, which means they supply the retail industry. Obviously, if shops are not doing very well, those firms are not doing very well. Clearly, they need a lot of big machinery to make the packaging, and if they are to continue to have the new, up-to-date machinery to do that, they need investment allowances.
Not so long ago, I visited a building and joinery firm that also has a lot of expensive machinery that it needs to keep up to date, and it also needs these investment allowances. Its contracts are largely dependent on the public sector and on schools and police stations being refurbished, so these cuts in the public sector will have huge knock-on effects in the private sector. Let us take a final example: a chemicals firm making sealant for aircraft. How will it fare with cuts to the defence budget, which is one of the budgets not being protected? Once again we have a complete picture that is totally incoherent. What the Government offer in practice and what they say they want to achieve are two completely different things.
Many hon. Members have commented on the unfairness of the low level of the bank levy and on the fact that the banks will gain more from the corporation tax cuts than they will lose from the increase in the bank levy. However, no one has asked why the bank levy is only being introduced from 1 January 2011. I would like Treasury Ministers to explain why there is a delay in the introduction of the bank levy. Surely that gives the banks a lot of time to move their assets around and avoid this tax, at which, as we all know, the financial services are particularly adept.
Mr Speaker
Order. Before he continues, let me say to the hon. Gentleman that the issue of regional similarities—or, indeed, for that matter, disparities—is a matter of interest, but it is not relevant to the matters in the Bill. The hon. Gentleman is rightly passionate about his own area, but I know that he will want to relate his remarks to the Bill. He has a considerable choice between corporation tax, capital gains tax, value added tax, insurance premium tax, pensions, income tax and no fewer than five schedules, the second of which has five parts. I think that that will keep him happy.
Mr Speaker
Order. Before the hon. Gentleman responds to that intervention and resumes his speech, I remind him that he is perfectly entitled to talk about vulnerability if he so wishes, but he must relate it to the matters within the Bill and he has an extensive choice from which to select.
Barry Gardiner
Thank you, Mr Speaker. I am tempted to take up the length of time that the hon. Lady mentioned, but I fear that the House needs to come to a close. A clear choice has been made by the Conservatives to cut an extra £40 billion on top of the £78 billion announced in March. They have made a clear choice to cut £11 billion out of tax credits and benefits. A clear choice has been made by the Liberal Democrats not just to drop the VAT bombshell that they warned of, but to act as navigators and pathfinders for the Conservatives to deliver it perfectly targeted. That regressive tax does the most damage to the poorest. It is regressive, not progressive.
“We will not have to raise VAT to deliver our promises”,
said the Deputy Prime Minister before the election. Indeed not—the Liberal Democrats will have to raise VAT to deliver the Tories’ promises. What an apology for a fig leaf.
Barry Gardiner
My hon. Friend is entirely correct. I believe that the point may have been made earlier. [Interruption.]
Mr Speaker
Order. Before the hon. Gentleman continues, may I gently say to the right hon. Member for Uxbridge and South Ruislip (Mr Randall) that we do not need sedentary interventions from him and we do not want to get into a general debate about the merits or otherwise of Randalls as a department store, interesting though that may be?
Barry Gardiner
Mr Speaker, I will forgo that offer, tempting though it may be. However, I will try to respond to my hon. Friend the Member for North Durham (Mr Jones), who is entirely correct to say that retailers will also suffer from this measure. Large retail operations, such as supermarkets, will particularly suffer because they have huge costs to meet in changing their tills over to cope with the VAT changes.
We made our choices too. They were hard choices, but they were not regressive choices, and they protected the poorest and the vulnerable. We chose to raise duty on cider to the same level as that on other alcohol. The Liberal Democrats opposed that choice in March—in fact, it was the only choice that they opposed then. Their choice is to reverse that duty in this Finance Bill, to put 8% less duty on cider and to increase VAT by 2.5%; scrumpy today, child poverty tomorrow is the Liberal Democrats’ great rallying cry for the 21st century. This is their tax priority for the new politics of collaboration. Albus Dumbledore was right: it is not our abilities in life but our choices that tell us who we really are. My choice is to oppose this pernicious Bill.
Stephen Pound (Ealing North) (Lab)
Does my hon. Friend agree that implicit within the Budget, the decapitation of Building Schools for the Future has resulted in the private sector not being able to mop up a pool of labour? That private sector has in fact been shot in the back of the head, driven out into the country and dumped in a lay-by.
Mr Speaker
Order. I would not want the hon. Member for Pontypridd (Owen Smith), who has made an auspicious start, to stray from the path of virtue. May I just say to him that it is a good rule of thumb to listen with great interest and enthusiasm to the hon. Member for Ealing North (Stephen Pound), but to recognise that sometimes his interventions have absolutely nothing to do with the matter under discussion?
Owen Smith
In this instance, I beg to differ. My hon. Friend’s intervention absolutely speaks to the case, because the philosophical underpinnings of what we hear from Government Members is that somehow we have a great dichotomy in our economy. The public sector is bad, of course—non-jobs, as I heard one Local Government Minister describe them recently. Well, many people in my constituency and elsewhere across the country rely on such jobs to feed their families. Private sector is, of course, good, and the thing that we all want to encourage. The construction industry is a wonderful example of the symbiosis between the two parts of our economy. If you cut one the other will bleed, and we will see £50 billion cut from the construction industry. The construction industry accounts for 10% of GDP, and that £50 billion will have a big impact right across the economy. So I think that private and public are linked.
The theory that we are testing now is the one that we have allegedly seen work in Canada and Sweden, whereby the Government make cuts and the economy flourishes. In those countries we saw a long-term reduction in spending on public sector vital services.
The other key lesson from those other examples of deficit reductions is that the conditions need to be right. Investor and consumer confidence have to be growing, and there has to be evidence of underemployed private sector capital. Exporters must be ready to grow and foreign markets must be ready to buy. Get it wrong and cut too deep when the conditions are unfavourable, and we have on our hands not a success story, but depression and bankruptcy. The historical examples of such failed experiments form a long and ignoble list, and Government Members would do well to read the history books and learn from them.
Stephen Pound
On that exact point about the Canadian experiment, does my hon. Friend agree that the conditions that prevailed in Canada—a massively economically expanding neighbour, in the same free trade association, to the south—are not remotely met here. Any comparison between this country and Canada, or even the Swedish model, are specious and possibly even mendacious.
Mr Speaker
Order. I am trying to help the hon. Member for Pontypridd and other hon. Members. I feel sure that is only a matter of seconds before he says something about corporation tax, capital gains tax, value added tax, insurance premium tax, pensions, income tax or any of the five schedules to the Bill.
Mr Speaker
Order. I have set the hon. Gentleman a bit of a test, and I want to hear him.
Owen Smith
I welcome your guidance, Mr Speaker. Many Labour Members have tried to say this key thing today, but I will try to encapsulate it. There are various items and taxation measures listed in the Bill.
Owen Smith
I thank my hon. Friend for that intervention. He is entirely correct that my Pontypridd constituency will be badly affected—[Interruption.] Sorry, I cannot make out the mumblings coming from those on the Government Benches. Equally, however, if the growth projections from the OBR and the Treasury leak were likely to offset the impact of those VAT increases, and if people were more likely to be in work in my constituency as a result of the measures in the Bill and the Budget more generally, I would be less concerned about the VAT rises.
Some specific comments have been made about the VAT rises and other measures in the Bill. Only this week, 125 chief finance officers of some of Britain’s biggest companies reported that their confidence in growth was at a 12-month low, with two thirds of them warning explicitly that the measures in the Bill would damage their companies and risk a double dip recession—hardly creating the conditions for them to employ more people. In manufacturing, Deloitte’s global manufacturing competitiveness index also anticipates decline, and in the service sector, the purchasing managers index—an established barometer of health in that sector, as the right hon. Member for Uxbridge and South Ruislip (Mr Randall) will know—reported last month the largest drop in business confidence in the last 14 years of its history.
Where are we going to grow, and how are we going to export? Government Members have cited other parts of the world where we should look for our examples. The US has sometimes been mentioned, and it was an engine of growth in the last century, but the statistics there offer us no comfort, with non-farm payroll reporting last week just 83,000 private sector jobs created. That is important because the Government expect us to believe that through the measures in the Finance Bill they will create 2.5 million jobs in the five-year period following the Budget. I have been researching that important and bold claim, and I received an answer from the House of Commons Library suggesting that only once in any five-year period since 1970 has the British economy created more than 2.5 million private sector jobs, the period in question being 1980-85. That was a statistical anomaly, however—the result of wholesale privatisation. Perhaps that points us to a secret or hidden agenda in the Government’s plans—another major round of privatisations.
My suspicions about that may be shared by someone who was, until recently, one of the Government’s allies— Sir Alan Budd, formerly of the Office for Budget Responsibility. I have no idea whether his hasty exit from the OBR is prompted by unhappiness about the new office perhaps having its integrity compromised, but I point Members to an interview that he gave a couple of years ago, which is of relevance to the Bill. He was asked whether he felt any discomfort when he was advising the Thatcher Government that perhaps some of the decisions he was making as an economist—[Interruption.]
Mr Speaker
Order. I am sorry to have to interrupt the hon. Gentleman. I know that the hour is relatively late—not exceptionally late, but relatively so—but far too many private conversations are taking place in the Chamber, which is very discourteous to the Member addressing the House. If people do not want to listen to the speeches—I address this to all Members—they are under absolutely no obligation whatever to stay in the Chamber, and we will manage without them. But if they are going to stay in the Chamber, they will show some basic courtesy and respect.
Chris Williamson
My hon. Friend is right. Conservative Members are reverting to type. We saw what they did—I have outlined some of the implications—when they were last in power. The policies that they are pursuing now will have exactly the effect that he describes in undermining manufacturing, because they are the enemy of manufacturing industry in this country.
There is an alternative. Historical precedent proves that investing in the economy at a time of economic fragility is absolutely the right course of action. Government Members should look at their history books. We had a lecture from the hon. Member for North East Somerset (Jacob Rees-Mogg), who referred to the 1930s. I refer him and other Government Members to Roosevelt’s new deal. Roosevelt demonstrated that by using the power and instruments of the state to invest in the economy, Government could get the economy moving again and put people back to work. Do not forget that when Roosevelt came to power, 25% of the American people were out of work, and his new deal put them back into work. By contrast, in this country we were pursuing a deflationary policy that resulted in millions of people losing their jobs and remaining unemployed for many years.
Indeed, President Obama agrees. He wrote to all the G20 leaders—
Mr Speaker
Order. May I gently say to the hon. Gentleman that we cannot have a general discourse on the merits of the policies of respective American presidents, however strongly he and others feel about those matters? I am sure that it is only a matter of seconds before he returns to the substance of the Bill.
Chris Williamson
Thank you, Mr Speaker. I merely wanted to make a brief reference to President Obama’s letter. I think that Government Members are familiar with it. I referred to it in a previous speech, and I will therefore move on.
From the historical precedents to which I have referred, and indeed the precedent of the Attlee Government in 1945, it is clear that by investing in our economy and not taking the course of action that the Government are taking in relation to VAT, corporation tax and the insurance premium tax, we can secure greater opportunity for recovery. If we can put people back to work by investing in our economy, that will ensure that the tax take is increased.
Mr Speaker
Order. Members are not helping the hon. Lady. May I say to her that it is entirely understandable that she looks behind her, but that she must face the House?
Lilian Greenwood
Does my hon. Friend share my concern about the impact that the VAT increase will have on the retail sector? I understand from a recent report that 77% of retailers felt that it would have a negative, quite negative or very negative impact on their sales, potentially leading to a 1.6% reduction in retail staff, 47,000 employees losing their jobs and more than 9,000 stores closing—
Chris Williamson
I agree with my hon. Friend. We have seen a retail-led regeneration of the city centre in Derby, and the increase in VAT will certainly have a negative impact. Already retailers are struggling in the difficult economic circumstances with which they are confronted, and clearly an increase in VAT is bound to have a negative impact.
What we wanted to achieve, and what we believe is the right way forward, is the creation of an economic virtuous cycle through investment in our economy. That would lead to more jobs, which would increase tax and national insurance income, which in turn would lead to the opportunity for more investment, and so on. The Government are pursuing a course of action that will lead to an economic vicious circle. The cuts in investment will result in more unemployment and a reduction in the tax take, resulting in more cuts and more unemployment, and so on. The VAT increase will clearly hit the poorest people in our community. The Treasury figures say that, as do the Institute for Fiscal Studies and the National Institute of Economic and Social Research.
What I find astounding is the breathtaking hypocrisy of the Liberal Democrats. On 7 April the Deputy Prime Minister said:
“Our plans do not require a rise in VAT. The Tory plans do. Their tax promises on marriage and jobs may sound appealing. But they come with a secret VAT bombshell close behind.”
It is little wonder that support for the Liberal Democrats in the latest YouGov opinion poll has slumped to 15%. Furthermore, another YouGov poll last month showed that 48% of Liberal Democrat voters were going to abandon the party as a direct result of its supporting the Tories on the issue. Even the Prime Minister said last year that VAT was regressive and hit the poorest hardest. He went on:
“It does, I absolutely promise you.”
The Chancellor of the Exchequer told The Times on 10 April that the Tories had no plans to increase VAT this year.
The Chancellor keeps telling us that we are all in it together, but there is a world of difference between the impact on privileged former Bullingdon club members, such as the Chancellor and the Prime Minister, and the families on modest incomes in my constituency who will have their tax credits cut—[Interruption.]
Mr Speaker
Order. A rather unseemly exchange is going on between the hon. Member for Nottingham East (Chris Leslie) and the Minister of State, Foreign and Commonwealth Office, the hon. Member for Taunton Deane (Mr Browne). I would not want to find that, as a result of excessive noise, I miss out on what I am sure is coming soon, namely the peroration of the hon. Member for Derby North (Chris Williamson).
Chris Williamson
There is an even bigger difference between those privileged former Bullingdon club members and the people whom they will throw on the dole—the tens of thousands, if not hundreds of thousands, and possibly millions of people who will be thrown out of work as a direct consequence of their policies.
The Chief Secretary concluded his remarks today by saying that the Budget was tough but fair.
Mr Speaker
Order. The fact that there is a generally convivial spirit is good, but the House must come to order because, as I said, we must shortly hear the hon. Gentleman’s peroration.
Chris Williamson
I agree with the hon. Gentleman that he is cynical.
How is it fair to increase VAT when the Chief Secretary said that he would not do that? How is it fair to hit the poorest the hardest? How is it fair to cut tax credits from families on modest incomes or to scrap child trust funds, which give young people a nest egg? How is it fair to slash free school meals? How is it fair to short-change pensioners through the failure to operate tax allowances? How is it fair to blame public sector workers for the deficit and the national debt, when international bankers are at fault? Let us remember that Conservative Members resisted any additional regulation of those bankers, many of whom have more in common with Government Members than they have with Opposition Members. How is it fair to chop benefits, including the swingeing cuts to which my hon. Friends referred, for some of the poorest and most vulnerable people in the country? The shameful Finance Bill is the antithesis of fairness. That is why Labour Members will vote against Second Reading.