Budget Resolutions and Economic Situation

Steve Reed Excerpts

Friday 22nd March 2013 Commons Chamber

[Steve Reed (Croydon North) (Lab)]

The people of Croydon North were looking to the Chancellor to kick-start the economy with the Budget. With long-term unemployment up again, they need more jobs. With homelessness and overcrowding on the rise, they need more affordable homes. With more children living in poverty, they need action to cut the cost of living. But we saw almost none of this. We will not get more jobs in Croydon North until the Chancellor abandons his failed economic policy, which has prevented the economy from growing.

The OBR has halved this year’s growth forecast, and when the UK’s triple A rating was humiliatingly downgraded, the ratings agency Moody’s cited subdued prospects for growth as a key reason. Growth will come when people start spending again, and we are more likely to get people spending if we put money back in the pockets of people on average and lower incomes. Labour’s proposed temporary VAT cut, which would help to do precisely that, is far more sensible than the Government’s tax cut for millionaires in just over two weeks. The wealthy are more likely to save that money or, if they do spend it, to spend it on expensive imports, but as my hon. Friend the Member for North Durham (Mr Jones) said, people who earn less are more likely to spend it in local shops, on everyday goods that sustain local businesses and help the local economy to grow. They do not have enough of a surplus to save, so they end up re-circulating the money in the economy.

Growth will come when the Chancellor starts to invest in decent affordable and social housing. First, however, he cut the affordable house building budget by 60%, and then he refused to intervene early enough as the housing market froze. Housing starts last year fell by 11%, and more than 500,000 people are on the council housing waiting lists in London alone.

As well as boosting new build supply—which he also needs to do—why does the Chancellor not support projects such as the one run by London Youth, which puts unemployed people back to work by training them to bring empty and derelict homes back into use? It creates jobs and homes, as well as saving money in the longer term, but it needs funding to get going on a wider scale.

Growth will come when the Chancellor starts to invest in public infrastructure—the kind of schemes that generate jobs and boost business confidence, so that the private sector starts to invest as well. I saw that effect time and time again when I led a council in south London. In Brixton, we showed how a partnership between public sector landowners and small businesses can regenerate a once declining market in spectacular style, creating jobs, bringing in investment and helping to make the town centre what it is now—one of the fastest growth areas anywhere in London. As co-chair of the Vauxhall-Nine Elms regeneration partnership—which extends all the way from Vauxhall Cross to Battersea power station—we showed how the public sector can lever in private sector investment, in a project that has become the biggest generator of new jobs and new homes anywhere in the country. The Government need to support local government to forge more partnerships like that and offer funding for public sector infrastructure that can get schemes going in areas where land values as not as high as they are on the south bank of the Thames, and I hope very much that they will carry out the Heseltine proposals, including providing adequate funding, so that this can work.

The reason so many people are living on benefits is not that they are skivers or shirkers, as the Chancellor likes to tell us, but that they do not have the opportunities that people such as him took for granted when they were growing up. I meet people in Croydon North week in and week out who are desperate for a job so that they can make more of their lives. I met a young mum on the steps of a supermarket in South Norwood who burst into tears when she told me that she and her husband, both in low-paid work, could no longer make ends meet because of the rising cost of housing, heating and child care, all of which have been made worse by the Government’s decision to clobber them with the strivers tax and a hike in VAT. She told me that they had done everything the Government had asked them to—worked hard for qualifications, got themselves jobs and bought a modest home—but now they felt desperate and abandoned by a Government who do not seem to care. This Government do not offer them aspiration, only desperation.

Such people are victims of the Chancellor’s failed economic policies. It is not just growth that is down and borrowing that is up; hope is down and despair is up. Year after year, the Chancellor fails to meet his own targets. That is because what he is doing is hurting, but it is not working; yet instead of recognising his failings, he tried to distract attention by demonising and blaming the very people who are the victims of his failure. It is time to change course, because people in Croydon North, like everywhere else, deserve better than this.