Finance (No. 3) Bill

Steve Rotheram Excerpts

Tuesday 3rd May 2011 Commons Chamber

[Alison McGovern]

Thank you, Mr Hoyle. It would be testing your patience not to stick to the amendment, as I shall endeavour to do for the rest of my remarks.

All Members will realise that the average family, the average couple and the average pensioner are facing a more and more difficult situation as the money coming in has to be stretched even further, and with prices going up in the shops. That is people’s experience. The impact of taxation on fuel prices and its role in driving up inflation and driving down living standards requires investigation and careful thought. This is not just my view or that of just some economist: when I looked into the possible causes of rising inflation in the UK, the first person I thought might have the answer was the Governor of the Bank of England, who, in his letter to the Chancellor about why the Bank had not met the inflation target, cited the VAT rise as one of the inflationary pressures facing the country.

As I said, I am not some inflation hawk who holds to a 1980s antediluvian economic philosophy that inflation is necessarily bad. Some countries have had relatively high inflation as well as growth. However, the important thing about taxation and fuel prices, and their role in inflation, is that it is possible to build in inflationary expectations in the long term through some of these measures. I wonder whether the Government have really thought about what they are doing in not combating some of the issues related to rising prices that we have seen.

There is also an obvious link with people’s worry about the lack of investment at this time. There is no doubt that investment means jobs today and productivity tomorrow, and therefore a more effective economy that enables people to have a better standard of living at less cost. That has to be the aim. At the moment, the Government are balancing the books using VAT and extremely flat taxes that do not pay regard to people’s income. They are asking people in my constituency on relatively modest incomes to pay the same higher prices at the fuel pumps as people in the Chancellor’s constituency down the road in Tatton, who by and large—not universally—are a bit wealthier. That is not fair.

We have to consider carefully whether the increased taxation on fuel resulting from the VAT rise is having a negative impact on the economy in a wide-ranging sense. It is not only about whether fuel prices are up—obviously that could be the result of several things—but, most especially, about what that is doing to inflationary expectations. We need to consider whether it is having a damaging impact on the broader economy, and whether it is a disincentive to growth and productivity improvements in the UK. We also need to consider what it is doing to the living standards of people such as those whom I represent in Wirral and Merseyside who have seen living standards fall severely in the past two years.

[Steve Rotheram (Liverpool, Walton) (Lab)]

I am sure that my hon. Friend would agree with the old adage, “You can’t fool all the people all the time”, but that is exactly what the Chancellor tried to do with his 1p tax cut to fuel duty. However, is it not the case that since the Budget, petrol prices have gone up several times more than that 1p tax bribe, and that the VAT increase in fuel duty is causing damage to motorists and businesses—

[The Chairman]

Order. Interventions must be short.

[Steve Rotheram]

It was short.

[The Chairman]

Order. I am ruling that interventions must be short and letting the Committee know that we will be taking only short interventions.

Amendment of the Law

Steve Rotheram Excerpts

Monday 28th March 2011 Commons Chamber

[Mr Pickles]

There is one in Teesside and an additional one within the northern area. In truth, it is up to the local enterprise partnerships to put the thing together. [Interruption.] The hon. Lady wants to control everything from here, but I have to say that she was not very successful in doing so. What is wrong with an approach in which rather than us down here in Whitehall telling the people of the north-east what to do, the people of the north-east tell us how they will do things?

We are taking measures to help get the house building industry firing on all cylinders. Every new home supports four jobs in house building and two more in related industries. The availability of new homes helps people move around the country for work. Getting the housing industry moving again is key to restoring growth. Under the new Government, house building starts are up 23% and construction orders for new private housing are up 50% compared with Labour’s last year. But we need to go much further. There are about 200,000 granted planning permissions out there in the country, but the homes are not being built.

The answer is not targets; it is addressing the root causes. First, there is a tight mortgage market, so we will introduce a new form of support that will help first-time buyers get a foot on the ladder: a 20% equity loan, co-funded by Government and developers. That will put ownership within the grasp of 10,000 first-time buyers. We will reform the stamp duty land tax rules on bulk purchases of new homes to boost equity investment. We will help to reduce the sector’s reliance on mortgage funding.

Secondly, there is the problem that elements of the planning system are holding up the building of new homes. Let us go back to the 200,000 granted planning permissions. It is fair for councils to agree a contribution to the area where developers are planning to build to ensure that the development is sustainable, perhaps by providing a new park or playground, or by paying for road widening. However, what looked like a reasonable request three or four years ago may no longer look quite so reasonable if it stops necessary development happening altogether. If those commitments make it simply too expensive to build, we need to be realistic. Councils should not compromise on the essentials to make a development acceptable to the local area, but unrealistic agreements negotiated in the boom times should be reviewed to help new developments move forward quickly.

[Steve Rotheram (Liverpool, Walton) (Lab)]

I am grateful that the Secretary of State mentioned Liverpool, but what is happening with Liverpool Waters is nothing to do with his Government. I read a statement that said, “Pickles was always happy and obedient, and would often roll over and have his tummy tickled.” Although the statement was about the dog called Pickles who found the World cup in 1966, does it not describe exactly what he did when negotiating his Department’s budget?

[Mr Pickles]

I suspect that when the hon. Gentleman was putting that question together in front of his shaving mirror, it seemed more of a tummy tickler than it actually was.

Amendment of the Law

Steve Rotheram Excerpts

Thursday 24th March 2011 Commons Chamber

[Vince Cable]

Yes, indeed. There is clearly a close link between the level of the budget deficit and interest rates, both long-term interest rates in the markets and short-term interest rates set by the Bank of England. That is why maintaining a monetary policy that is supportive of growth—which is what we are doing—requires fiscal discipline.

Let me now deal with how we can achieve sustainable, balanced growth, and what “sustainable, balanced growth” actually means.

[Steve Rotheram (Liverpool, Walton) (Lab)]

It has taken the Secretary of State 20 minutes to reach this stage.

[Vince Cable]

I have been dealing with a great many interventions from members of the hon. Gentleman’s party. I am always happy to do that.

I must begin by acknowledging that the task is a massive one, although there are some encouraging signs. Manufacturing is growing at its fastest pace for 16 years, the car industry is growing by 12% a year, and we are seeing a real-terms growth of 5.5% in exports. However, when it comes to rebalancing the economy, I do not pretend that we are anywhere other than at the beginning of a very long march. It is a long march because we inherited a structure that was horribly unbalanced and unsustainable.

Let me remind Opposition Members of some of the things that we inherited, quite apart from the deficit. There was a hollowed-out manufacturing sector that, under the last decade of Labour government, declined by more than the manufacturing sector in any other western country, from 21% to 12% of GDP. Exports were growing at half the rate of growth of world trade. As we were reminded by the shadow Chancellor himself, household debt was running at 170% of GDP, a higher rate than in any country in the world as far as our statistics can establish. We had a property bubble that was more extreme than that in the United States, and banks were encouraged to grow until their balance sheets amounted to more than 400% of the British economy. We had grotesquely distorted pay structures and lending behaviour, and a financial vulnerability of Irish and Icelandic proportions.

Oral Answers to Questions

Steve Rotheram Excerpts

Tuesday 8th February 2011 Commons Chamber

[Danny Alexander]

As the hon. Gentleman implies, a vast number of PFI contracts were negotiated under the previous Government. If he, in common with any other hon. Members, has examples of low value for money PFI contracts or other concerns, I would be happy to look at them, as I said at the previous Treasury questions. Since then, no hon. Member except my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) has come forward with such examples. I therefore look forward to hearing from the hon. Gentleman.

[Steve Rotheram (Liverpool, Walton) (Lab)]

14. What recent assessment he has made of the progress of the work of the Independent Commission on Banking.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Government set up the Independent Commission on Banking to consider reforms to the banking sector. We welcome the progress that the commission has made, and look forward to receiving its report in September 2011.

[Steve Rotheram]

If the banking commission recommends breaking up the big banks, will the Government judge the Vickers report on its own merits, or will they put the value of their shareholding in the nationalised banks first?

[Mr Hoban]

The commission that has been set up is independent. It is looking at the structure of banking in the UK, and its impact on the wider economy and competition, and we await the outcome of its findings later this year.

Budget Resolutions and Economic Situation

Steve Rotheram Excerpts

Tuesday 22nd June 2010 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

I have registered in the appropriate place my interest as the director of a small business.

I congratulate the hon. Member for South Northamptonshire (Andrea Leadsom) on her maiden speech. She made some interesting points about the banking system and the need to break up the bigger banks into small banks. Perhaps she will agree that no bank should be too big to fail, as that was one cause of the many problems that we have seen recently.

I should like to discuss the Budget’s likely impact on jobs, businesses and, in particular, my constituency. The Chancellor said that he had a plan to reduce the deficit, yet the Office for Budget Responsibility said that the deficit would have been halved under Labour’s plans. Our plan was to cut spending, but only when the economy was strong enough, and Tory and Lib Dem Members seem to have forgotten a simple rule of economics: the role of government is to intervene in a recession when the private sector is struggling. The evidence from history shows that that works time and again. The time to cut the deficit is once the recovery is strong enough, not when the private sector is still on its knees after the deepest recession since 1931, apart from the one following the war.

The OBR, by the way, is staffed by the same people who wrote the Treasury forecasts. The Tories and Lib Dems have made much of the lower growth rate predicted by the OBR had Labour’s approach continued, but in reality the OBR prediction factored in the market’s reactions on interest rates, which in turn allowed for the £6 billion of spending cuts that the coalition planned. The Financial Times commented that the OBR did not note any fundamental skeletons in the Treasury, so it had taken account of the changes since March’s Budget.

The Chancellor has adopted a programme of austerity. After the war, rationing continued under a programme of austerity. We really were all in it together, unless people bought on the black market, which of course the rich were able to do. For most people, however, it did not matter whether they had money or not, because of rationing: they could not buy things because they were not available. It was austerity based on scarcity. This time it is different. In this kind of recession, austerity hurts only those who are on low or middle incomes.

The increase in VAT will hit people on low incomes, and it will hit small businesses. When Labour cut the VAT rate, we saw a stimulus to the economy. The increase that the Chancellor announced today will have the opposite effect. The cap on housing benefit will also hit those at the bottom most, and reforms to benefits will not provide incentives for people to go into work. Removing tax credits for middle-income families removes a big incentive for many to work, particularly in the south, where middle incomes provide barely enough to get by.

The scale of the cuts is 25% for most Departments. That is a hell of a lot of cuts. It means the loss of front-line jobs, and many people in Sefton, and elsewhere on Merseyside, will suffer as a result.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Does my hon. Friend agree that the real result of today’s Budget announcement will be huge increases in unemployment, which will have a devastating effect on the areas that we represent on Merseyside? That is something that we both predicted before the election, as did our friends on the Liberal Democrat Benches, who now seem to be siding with their friends in government.

[Bill Esterson]

I am grateful to my hon. Friend, who is absolutely right. Before the election, in his constituency and mine, the Lib Dems made much of their opposition to cuts in the current year, saying that it would increase unemployment, hit those on low and middle incomes, and increase homelessness and business failures. They were right to say so. When they changed their tune after the election, they did so purely for opportunistic reasons, not because they are interested in representing the people in the sorts of communities that my hon. Friend and I represent.

Banking Reform

Steve Rotheram Excerpts

Thursday 17th June 2010 Commons Chamber

[Mr Hoban]

I hope that the Opposition will welcome the measures, but their views were not very clear from what the shadow Treasury spokesman said. In the past three or four years, when we have debated the reform of parts of the banking regulation sector, the problem has been that the then Government were unable to engage in the fundamental debate about whether the architecture was right. They failed to address that question, and that led to a new Government addressing that question and putting things right for the first time.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Will the Minister invite hon. and right hon. Members who are interested in the future of Liverpool football club to a meeting with RBS officials fully to scrutinise the deal that props up its leveraged buy-out by two American business men?

[Mr Hoban]

The board and management of RBS are responsible for its day-to-day commercial activities.