Budget Resolutions and Economic Situation

Thérèse Coffey Excerpts

Friday 23rd March 2012 Commons Chamber

[Gregg McClymont]

Thank you, Madam Deputy Speaker. Hon. Gentlemen on the Conservative Benches are becoming rather vexed, and one does not have to wonder why, given the message that they are sending out to the electorate with this tax cut, which will cost more than £3 billion at a time, as the Government emphasise, of austerity.

The hon. Member for Watford (Richard Harrington) suggests that empirical evidence shows that the 50p tax does not raise any money, but there is no empirical evidence in the document presented by the Government. There is a series of estimates, based on a view of behavioural change, itself based on a view of human behaviour, which one would have thought would have at least been challenged by the financial crisis and all that it brought.

This Government are taking a gamble that the £3 billion that they would have had in the bank—in their coffers—will be almost cancelled out by millionaires from Monte Carlo and Caribbean boltholes rushing back to show their patriotism to this country by paying a slightly lower rate of tax. Those are not my words, but the words of the Business Secretary in a previous incarnation. This tax cut for millionaires is the wrong priority for this country at this time.

We have a crisis of employment—a crisis of youth unemployment, with 1 million in the UK and one in four in Scotland now unemployed. What we need are measures to get young people back into work, but how long are they meant to wait, to take the argument of Government Members? A national insurance holiday for small and medium-sized enterprises—that is what we need. A bank bonus tax to create 150,000 jobs for young people—that is what we need. A temporary VAT cut to stimulate the economy and help out hard-pressed motorists—that is what we need. And a VAT cut for home repairs and maintenance to stimulate that important sector of the economy—that is what we need.

Then we have the granny tax. Under the guise of simplification the Government have brought in a stealth tax on more than 4 million pensioners. Some 700,000 people turning 65 years old will lose more than £300 per year—[Interruption.] Someone shouts, “No one will pay more,” and there is a debate to be had about sharing burdens.

[Dr Thérèse Coffey]

Will the hon. Gentleman give way?

[Gregg McClymont]

I am afraid that I have no more time to do so.

There is a debate to be had about sharing burdens across the generations, but to begin it with a stealth tax described as a “simplification” is surely not the way to encourage a healthy, long-term debate about that kind of distribution.

I finish on this point: wrong priorities, wrong values, wrong Government.

--- Later in debate ---

[Roberta Blackman-Woods]

Alas, I do not have a cable car, but that is a great idea for a new business in my constituency, although where it would take people from and to, I am not exactly sure.

There is no support for transport, despite the fact that business leaders in the north-east have expressed concern that a failure to invest in the region’s transport network could stifle long-term growth. They have made a point that without the right transport and energy supply infrastructure, the region could struggle to realise its full potential. I hope the Minister will take on board these matters in her comments.

What do we know from the analysis of the Budget so far? I have with me an extract from the Financial Times, which concludes that that it is a Budget “without economic significance”. It also says that the Government have absolutely no plans in place to change the unhappy outcome of the slump, and that includes, critically, no plans for the north-east of England. What we do know is that the unemployment figures for the north-east are much higher than those for the south-east: 10.6% in the north-east, compared with 6.6% in the south-east. IPPR North has said that it is the largest gap since the labour force survey began. One might have expected the Red Book reforms to prioritise the north-east in support of economic growth, but in fact there is only one mention of the north-east in its many pages dealing with growth, compared with seven mentions for London. I want to see economic growth in London. It is our capital city and it is important that it is supported. However, that does not excuse giving no attention to the north-east apart from one mention of Newcastle. County Durham is not mentioned at all.

[Dr Thérèse Coffey]

Does the hon. Lady accept that from the growing places fund, the north-east has been allocated more than £10 million, which is far more than is going into my region?

[Roberta Blackman-Woods]

I will deal shortly with some of the measures that have been made available for the north-east.

Many measures in the Budget will have a negative impact on people’s income, including that of 8,000 families in County Durham, who will lose out from the changes in tax credits. There is no action to tackle youth unemployment, despite the fact that it is much higher by several percentage points in the north-east than elsewhere in the country. The Government should have set out a coherent strategy in the Budget to get the north-east economy back on track. Instead we have a measure to reduce regional pay, taking £78 million out of the north-east’s economy. There is no evidence to support the contention that the current position inflates public sector salaries or acts as a disincentive to the private sector.

Business leaders have been calling for some sort of holistic strategy, which we simply do not have. I say to the hon. Member for Suffolk Coastal (Dr Coffey) that there have been several small measures, but they are outside any coherent framework. Seventy-three per cent. of successful bids from the first two rounds of the regional growth fund, including 40% from the first round, have not yet been signed off. They are therefore not delivering anything for the north-east, and £14.25 million of the regional growth fund supports only 91 jobs. I emphasise to the hon. Lady and her colleagues that that is a drop in the ocean compared with what is needed.

We also have enterprise zones and local enterprise partnerships. In doing research for my speech today, I had to try to determine what was happening through two enterprise zones, two LEPs, two regional growth fund allocations, the business enterprise network in the north-east and the chamber of commerce. It is difficult to get a flavour of what is happening in the region, in great contrast with the position under the regional development agency, when it was easy to monitor the impact of what was happening with investment and jobs in the north-east. It is now extremely difficult to get that information.

Without a coherent framework and an overall strategy, the economy of the region is simply not growing and not enough investment is going into key sectors for economic growth, including those that had been identified under the RDA. It is not only me making that point; our business leaders say that, of all the policies the Chancellor could have introduced in the Budget that would have had an impact on the north-east, measures on investment allowance and employment taxes would have been the most important. They say also that, although the target to double UK exports is commendable, there is absolutely no detail on how it will be achieved. Rather, Government Members have today given us a complete fantasy land, where they somehow think that the measures in the Budget are going to deliver growth for the north-east. But there is simply no plan.

We want instead to see measures to create jobs for young people, a tax on bankers’ bonuses which would create 5,500 jobs for 16 to 24-year-olds in the north-east and a temporary reversal of the Government’s VAT increase which would put £450 back into family budgets. Labour would give 58,000 small businesses in the region a tax break if they took on extra workers. That is the challenge I throw down to the Government today.

--- Later in debate ---

[Sarah Newton]

I definitely agree that the framework is a big step forward, and protecting our precious marine environment, which supports the whole fishing industry and ecosystem of parts of the UK, is important, but we need to balance that with our economic growth, stability and jobs, which is really important too.

The Budget reports on the review that was set in train in the autumn statement in order to analyse the implementation in the UK of the EU habitats directive, to which I think my hon. Friend was referring, and which can create so many problems for our port operators. In reading through that review, I think there is a great deal to be welcomed. It has engaged with a range of stakeholders, all of whom acknowledged that the implementation of the habitats directive caused considerable problems for our ports operators, and many positive measures have been put in place in terms of collecting data.

Many disputes about planning applications arise because there are no accurate data, and a lot of work is going to be put into that area, and into ensuring that the various regulatory bodies—ultimately, the Marine Management Organisation will make the licensing decisions for our ports, but many are involved—engage earlier and more constructively with ports operators, which should make them more confident that proposals for development can go forward.

[Dr Thérèse Coffey]

My hon. Friend and I have made common cause in trying to help those matters along, as we share similar issues. I understand that she welcomes much that was in the review, but does she share my concern that it missed the opportunity to look at certain regulations and determine whether we should have them at all? Indeed, the review’s terms of reference included looking through that and making appropriate representations to the Commission.

[Sarah Newton]

My hon. Friend makes a good point. I think that the review is a work in progress. The review team did not have much time, but I think they managed to cover a lot of ground. Certainly, if we look at the terms of reference the Chancellor gave them, we will see that there are things that subsequently have been passed over to the Law Commission for its consideration. I was somewhat perturbed to read in a footnote in the review document that the Government would consider the Law Commission’s recommendations “in due course”. I would like reassurance from the Chancellor that he will ensure, through the all-departmental working group he set up, that regulations are not standing in the way of economic growth and development of our ports, that this “in due course” is acted on speedily, because in due course without reform we will not have the ports to enable us to import our energy or the food and other vital materials we need. I would like to see that “in due course” in the footnote turned into something a little more urgent.

I think that eventually representations will have to be made at an EU level. Interestingly, the review showed that other European countries with ports have had experiences similar to ours when interpreting and implementing the habitats review. I am sure that all Members with ports in their constituencies or an interest in ensuring that Britain returns to being the great trading nation it always has been will want to watch these things and help the Government constructively to tackle these issues.

With regard to other vital infrastructure, a number of colleagues, including my hon. Friends the Members for Bedford (Richard Fuller) and for Camborne and Redruth (George Eustice), mentioned that for those of us living in the more remote parts of the UK a lot of transport is by road, so fuel prices and levies on fuel are of great significance to us. All the goods and services and the great things that are manufactured in Cornwall need to be able to get to market in the rest of the country. Although I was disappointed that fuel levies will go up in August by 3p, I understand why, given the huge mess that the Government are trying to sort out and the economic legacy they were left. That is something we have to bear.

One thing I would like the Minister to consider is a recent precedent. We have heard from colleagues today about the extent to which we believe fuel companies are profiteering from customers in our parts of the world, where the price at the pump is 3p, 4p, or 5p more than it is in other parts of the country. The Office of Fair Trading has the task of looking at whether there is a proper competitive market working in the region. The Department for Energy and Climate Change recently referred the fuel oil market to the OFT, because the winter before last many of us experienced the most appalling hikes in the price of fuel oil, which many people in remote, rural areas use to heat their homes. After the referral to the OFT, some very good work it did and the implementation of measures, we saw no repeat of such hikes last winter. With that recent precedent in mind, I think that the OFT could play a useful role in ensuring that our regional fuel markets are working efficiently. Based on that, hopefully we could see real pressure to reduce the profiteering that I believe is going on at the pump so that people in constituencies further away from the south-east of England will not feel the full impact of the 3p rise.

I welcome the measures in the Budget to support infrastructure. The investment in rail will affect not only HS2 but places such as Cornwall, and the connectedness of the remoter regions of the UK is vital to our economic future. I very much support and commend the Government’s single-minded focus on making sure that we have an infrastructure that is fit to get Britain working and Britain back to work.