Budget Resolutions and Economic Situation

Stephen Doughty Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr Byrne]

We have unemployment rising and debt that is £245 billion higher than forecast. The hon. Gentleman should be ashamed of that record.

We needed a Budget to get unemployment down and we did not get one. I hoped to see a Budget that delivered for those who are out of work, but what did we get instead? The conclusion of the OBR was clear that the impact of the Budget on growth would be so significant that it would amount to precisely zero. That is what the Secretary of State has managed to negotiate from the Chancellor. He has been turned over, stitched up and done like a kipper yet again.

Any sensible Secretary of State, faced with a collapsing Work programme and rising unemployment, would surely ask for more help today, not tomorrow. People out of work need help today, not in the years to come. What did we see instead? The OBR has weighed up the efforts of the Secretary of State and the Chancellor and it has concluded that what is in hand is going so well that unemployment will not go down next year, but up—and that is against the projections set out in the 2010 Budget. Next year the International Labour Organisation measure of unemployment is expected to rise from 7.9% to 8%, and the claimant count is set to rise by another 50,000. What is even worse is that the OBR says that the welfare bill will not go down either—it will go up, including for housing benefit. Spending on social security benefits will now be £21 billion higher than the Chancellor first planned.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My right hon. Friend is making a strong point. There is no more striking indictment than the fact that in my constituency the number of those claiming for more than 12 months has risen against the previous year by 22.6%. That long-term unemployment—the loss of hope, talent and potential—is a striking indictment of the Government.

--- Later in debate ---

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to follow the excellent speeches by my hon. Friends the Members for Lewisham East (Heidi Alexander), for Walthamstow (Stella Creasy), and for Stoke-on-Trent Central (Tristram Hunt).

This is truly a triple D-rated Budget that leaves us in more debt than ever before, at risk of a triple dip, and with our credit rating downgraded. It is a Budget once again characterised by unfairness, incompetence and political game playing instead of the national interest. It is unfair, because millions of people face declining living standards while millionaires get a tax cut; it is incompetent, because the Chancellor and the Secretary of State for Business, Innovation and Skills cannot even clarify the details of the spare homes subsidy; and political game playing has seen the Chancellor play fast and loose with departmental spending to even greater political exposure in the short term, regardless of the consequences for front-line services, our international commitments or, indeed, the growth of our economy.

It is not just Opposition Members who say that—it is the Office for Budget Responsibility, which has confirmed that by 2015, people will be worse off than they were in 2010, with real wages set to fall by 2.4% over this Parliament; it is the Institute for Fiscal Studies, which only yesterday accused the Chancellor of “wasting the time” of Whitehall officials and creating “real economic costs” for the country; and, indeed, the Home Secretary, who hit the nail on the head only a couple of weeks ago, when she said:

“It’s not enough to cut budgets and hope for the best.”

I shall focus on page 70 of the Red Book, which details those £7.6 billion-worth of revenue underspends, and £2.1 billion of capital underspends in Government Departments—a staggering £9.8 billion in total. All of that was apparently done so that the Chancellor could present the illusion of a tiny drop in public sector net borrowing and make up for other accounting errors such as the 4G auction, which raised £1 billion less than he promised in the autumn statement. The consequences are serious. Opposition Members have rightly demanded to know which services, which spending, which projects and which promises have been delayed or cancelled by Departments ranging from the Department of Health to the Home Office. We need answers, and we need them now.

To take a Department in which I was proud to work, in 2010, the Prime Minister and the Chancellor categorically promised us that they would

“not balance the budget on the back of the world’s poor”.

It appears, however, that that is precisely what they have done this year, with the Department for International Development underspending by a staggering £0.5 billion, which amounts to 8% of its total revenue budget settlement for this year. That might represent a failure to pay our dues to the UN, or make our contribution to the World Bank. Indeed, the Chief Secretary seemed to suggest in TV interviews that some of the world’s poorest countries might not be ready to receive our funding. I very much hope that that proves to be untrue, because I am pretty sure that children who need vital vaccines, education or food are ready to receive our help.

[Michael Ellis (Northampton North) (Con)]

Is it not rather churlish of the hon. Gentleman to make such references, as the Government have been considerably more generous than the Labour Government were in 13 years in office in affirming a 0.7% rate of gross domestic product for international development, which is more generous than almost any other country, yet the hon. Gentleman stands up and—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure that the hon. Gentleman is hoping to speak later. He must save something to tell the House.

[Stephen Doughty]

The hon. Gentleman has clearly not looked at the record, because in fact we tripled the aid budget, made a commitment to the 0.7% target and, indeed, made a commitment to a law on 0.7%, which this Government have done, too, but have not put into practice.

The Government will get full credit from me if they meet the 0.7% aid target, but given the revelations on the underspend and the fantasy figures elsewhere in the Budget, why should we accept their assurances? There is another serious consequence of the underspend. We already know the stark facts that the OBR has halved its growth forecast for this year, and downgraded its forecast for next year. Since the comprehensive spending review in 2010, the UK economy has grown by just 0.7%, compared with 5.3% predicted at the time. The economy shrank 0.3% in the last quarter, and we now face the stark prospect—although I seriously hope not— of a triple-dip recession, which is why this forced underspending is deeply irresponsible, as by itself it could further hasten a slip into a triple dip, particularly in the absence of serious measures in the Budget to promote growth.

It is our constituents who will face the consequences, the unfairness and the hardship over the coming months, such as the nearly one in 10 young people locally in Cardiff South and Penarth who now have to claim jobseeker’s allowance and to do so, as I mentioned earlier, for longer. The number of those claiming for 12 months or more is up by 22.6%. Each month of that is another month of frustration, anger, hardship, wasted talent and wasted value. Others affected are the constituents whom I met in the east of Cardiff, who have lost their jobs in the construction industry because of this Government’s failure to deliver infrastructure or housing, the disabled couple in Grangetown who fear the bedroom tax, while they see millionaires offered a spare home subsidy and a tax cut worth £100,000, and the hundreds of people fighting for every job vacancy—other hon. Members have described the situation—such as those fighting for a job vacancy in Penarth and in other local businesses.

There could not be a starker representation of the Chancellor’s and the Prime Minister’s Britain than the staggering rise of food banks, which have seen an eye-watering 198% increase in use in Wales in just the past year. No wonder the Prime Minister wants to keep the cameras away on his visit. The reasons for people in Wales having to use food banks say it all: 43% of people going to a food bank say they are doing it because of benefit delays or changes, 25% are doing it because they are on low income, and 10% are doing it because they are in debt. So we see debt rising at the top and debt rising at the bottom. That is life in Tory and Lib Dem Britain.

This Government could have driven forward decisions on infrastructure instead of leaving only seven out of 576 projects completed. They could have used the funds from the 4G auction to pay for new housing. They could have delivered a VAT cut that would have done far more for hard-pressed consumers than small duty cuts, however welcome. They could have invested in jobs and training for our young people, as the Labour Welsh Government have done with Jobs Growth Wales and investment in new apprentices.

As we look outside at the snow today—which, I regret, may mean that I am unable to stay for the closing speeches—and we wonder where the spring is, many of my constituents will be asking the same question on hearing this Budget: when are the sun and the warmth coming back to the economy, faced as they are with the cold wind of this no-change Budget and this no-change Chancellor?