Budget Resolutions and Economic Situation

Tom Harris Excerpts

Wednesday 19th March 2014 Commons Chamber

[Mr Tom Harris (Glasgow South) (Lab)]

May I say how glad I am that the hon. Member for Fareham (Mr Hoban) is still in his seat? I enjoyed his contribution and it had passed me by that he had left the Government and returned to the Back Benches—the curse of Harris strikes again; just about every Conservative Minister that I have any time for, like, or respect has somehow found their way back on to the Back Benches—[Interruption.] You’re welcome.

I begin by welcoming the good news not only in today’s Budget, but the wider economic news against which speeches are being made. Unemployment in my constituency has fallen to 4.8%—a total of 2,187 jobseeker’s allowance claimants—and it is important that Labour Members welcome good news when it arrives. It is good news for my constituents, and good news for the whole of Scotland and the UK that unemployment has taken such a large dip in the latest published figures, and we welcome that without a “but” at the end.

The Lib Dems are like a broken clock—they are right at least twice a day. [Interruption.] Yes, they are clearly keen to attend the debate; perhaps they scarpered when they saw me standing up. I know that raising the tax threshold to £10,500 is not a policy supported by those on the Labour Front Bench. That is a matter of some regret for me as it is a policy I have supported for some time, and fundamentally I think that the lowest paid should be taken out of tax altogether. One argument against raising the threshold is that it also benefits people higher up the income scale, but I support the policy not despite its tax-cutting effect on the better-off, but because of it. I do not think there is anything wrong with reducing the tax take of people further up the income scale, and I do not regard tax as an unalloyed good thing. I see tax as a necessary evil, and where we can reduce the tax burden, we should do so.

The Labour party introduced the national minimum wage—that is often forgotten in these enlightened days when we see the right hon. Member for Sutton Coldfield (Mr Mitchell), and even the Liberal Democrats, welcoming a big increase in the minimum wage. It is often forgotten that when it was introduced, only the Labour party supported it, and it was opposed by the Conservative party and the Liberal Democrats—[Interruption.] I wondered whether Scottish National party Members were going to say something, because there would be a riposte to any claims that the SNP supported the national minimum wage.

I believe that the national minimum wage must be entrenched in some way, and what better way of doing that than by instituting a change that means that someone who earns the minimum wage will not pay a penny in tax? That is the situation the Labour party should be pursuing, and such a policy would be welcomed throughout the country.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

I was one of those who opposed the national minimum wage, and I was wrong. It was introduced sensibly and modestly by the last Labour Government, to my surprise. The challenge for us all, however, is that those on the edge of the labour market can be priced out if future Governments are too ambitious about where it stands. That is the fear about entrenching it. Does the hon. Gentleman respect that point?

[Mr Harris]

Yes. I absolutely believe that when the minimum wage was introduced, it was set at the right level. It disappointed a lot of people who wanted it to be higher. There will always be those who want the minimum wage increased beyond what the market can sustain. The hon. Gentleman is absolutely right: it has to be generous, but it has to be moderate so that we do not have the negative effect of losing workers.

But what about help for ordinary working families? I am loth to use some of the more overused phrases that we are encouraged to use like “cost of living crisis”—trademark patent pending—but the fact is there is such a crisis. If average wages in real terms have dropped by £1,600—and I have yet to hear any Minister saying that is not the case—that is something of a crisis if not for people in this House then certainly for families and workers in my constituency. Yet despite the high number of headline-grabbing announcements, many of which I would support, there is absolutely nothing in what the Chancellor said that will address this urgent issue that faces the whole nation.

[Mr Redwood]

The hon. Gentleman is right that there has been quite a big fall in real wages, but will he accept that the biggest part of the fall occurred in 2008-10?

[Mr Harris]

I am, as always, very grateful to the right hon. Gentleman for intervening as I was just about to get on to the events of 2008-09. I want to address the deficit, because so many Government Members have raised it in the House whenever they have got the chance in a way that I find completely disingenuous, not worthy of an adult debate and not related to what actually happened in 2008-09.

An observer from Mars who tuned into what the Chancellor said today might have come to the wrong conclusion that when the right hon. Gentleman was in opposition he somehow opposed the last Labour Government’s spending plans. That is not the case: right up to November 2008 the official Conservative party policy was to support our spending plans. That either means that the Conservatives believe the deficit was created in the 18 months from that point until the general election, which frankly none of us believes, or that they are now saying something that is completely the opposite of what they were saying in opposition. I remember sitting on those Government Benches—in a couple of years’ time I hope to be back there—and I do not recall any Conservative Member, or indeed Liberal Democrat Member, calling for an end to spending on their local schools, their local hospitals, their local roads. The fact is that the deficit was almost entirely caused not by profligate spending by the Labour Government, but by a disastrous fall in tax revenue caused by an international recession—the deepest any of us have seen in our lives. That is the truth of the matter.

Conservatives and Liberal Democrats—and I have to say especially Liberal Democrats, who seem to get more incensed about this than anyone, even though they said not a word about it in opposition—stand up and demand all this nonsense about apologies for the deficit and for mistakes that were made. Of course all Governments make mistakes, but let us be honest with the British public about how the deficit was created. It was not created because new schools were built. It was created because of a recession that put a lot of people out of work and that cut off revenue to the Treasury. That is why we are where we are. It is not because of Labour’s spending plans.

There are some items in this Budget that I welcome, but I fear it will be most notable not for the issues it addresses, but for those issues it needs to address and, sadly, ignores.