Finance Bill

Stephen Doughty Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Catherine McKinnell]

Well, I am pleased that the Minister is engaging with the need to review his own Government’s spending plans so they can take stock of precisely how those plans are working to resolve the unemployment situation and the lack of economic growth in this country. If the Minister could provide some reassurance that his Government are focused on reducing the debt, that would be very helpful.

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

My hon. Friend was speaking about the spending review’s failure in respect of living standards, and that is crucial. Real wages are set to fall by 2.4% over this Parliament, meaning people will be worse off at the end of the Parliament than they were when this Government came to office. That is the real story: it is a spiral of lower wages, lower living standards and lower tax receipts, and then ultimately more debt, more borrowing and a higher benefits bill. Does my hon. Friend agree that that is the spiral we are in?

[Catherine McKinnell]

Yes. My hon. Friend makes a powerful point, and it highlights the complacency of this Government. They feel it is a case of “job done” as some jobs have been created in the private sector, but ultimately the reality families are facing is that they cannot afford to pay for heating and buy food and what they need for their children and their families because living standards are being so desperately squeezed.

--- Later in debate ---

[Catherine McKinnell]

That is another absolute failure in terms of the promises made by this Government that are simply not delivered. I hope that the Government will agree to undertake the review we are calling for today and that the House will, by voting with us, acknowledge that the economic plan the Government have so far pursued is failing and that they need to examine what last week’s spending review will deliver. I hope that there will be a recognition that they promised to rebuild, again as part of a “priority” programme, 261 schools and only one project has begun. It is devastating, not just for the children who need those new schools, but for the communities that need those jobs and the small businesses that need to supply the construction industry, which, as we know, has been brought to its knees by this Government’s failure to invest in infrastructure. Instead of investing in affordable homes, improving transport links and repairing Britain’s broken roads, which would give the country the short, medium and long-term returns that we are looking for, the Government are cutting capital spending in 2015. Announcing infrastructure projects for two years’ time will not create a single job today.

[Stephen Doughty]

My hon. Friend is making a crucial point about the impact on jobs. I had hoped that the spending review would consider jobs in the construction sector, where 84,000 jobs have been lost since the Tory Government came to power—that is, between the second quarter of 2010 and the first quarter of 2013. That is a shocking figure: 84,000 jobs have been lost when we should have seen 84,000 jobs created in the construction sector.

[Catherine McKinnell]

My hon. Friend makes his point very powerfully. It is a fact that a number of jobs have been lost in the construction industry that should have been created if the Government were taking not just our advice but that of the IMF and investing in infrastructure projects now. If they did so, tax receipts would improve this year and next year and we would not have to plan for failure in 2015, which is what the Chancellor came here to do last week.

--- Later in debate ---

[Chris Leslie]

Dare I say that my hon. Friend knows the answer to his question? I do not think it will make a blind bit of difference to the success—or otherwise—of the investment management community, and I have seen no evidence from the Government that this measure is the thing that will transform the economy at this time, or make a massive difference to jobs and growth in society at large.

Let me put this in context: £150 million is a lot of money. In fact, it is exactly the same amount that the Chancellor cut from young mothers when he abolished the health in pregnancy grant—hon. Members will remember from the Chancellor’s first Budget that the health in pregnancy grant was given to mums-to-be to ensure they ate healthily and had a little help at that time. That was slashed; that had to go because £150 million had to be saved, yet in next year’s Budget the Chancellor is introducing a £150 million tax cut for the investment management community. That is about the same amount of money as was cut from the child tax credit supplement for one and two-year-olds in that original Budget. In fact, it is about the same amount of money that the pasty tax and the caravan tax were supposed to save—I am sure the Minister will remember that from the ill-fated omnishambles 2012 Budget. All the hassle that fell on the Chancellor’s shoulders at that time was due to saving £150 million. In that context, this is a strange choice by a strange Chancellor.

[Stephen Doughty]

My hon. Friend is making a strong point. Does he, like me, think that people will be bemused by this measure when the Government voted recently against a reasonable motion on an international financial transaction tax? When people see those two things, as well as the bedroom tax, what will they make of this Government?