Budget Resolutions and Economic Situation

Debate between Tristram Hunt and Lord Beamish

Friday 22nd March 2013 Commons Chamber

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

It is a great pleasure to follow my hon. Friend the Member for Lewisham East (Heidi Alexander). I can only apologise for breaking the gender/London cabal by heading to north Staffordshire and being a male Member of Parliament.

It would be nothing less than churlish not to begin with the keynote policy of this week’s Budget: the climate change levy exemption for the ceramics industry in my constituency and also the steel industry. There is satisfaction at the highest level in the city and among our industrialists for this welcome tax break. Only last night, at the opening of Hanley’s wonderful new bus station, designed by Grimshaw Associates, which is like the inside of a whale—[Interruption]—from Victorian prints—grizzled Labour councillors and old potters were full of admiration for this welcome policy. It will make a genuine difference to the bottom line of companies. They will now be able to hire more people, invest in kit, innovate and design.

[Mr Kevan Jones]

My hon. Friend is being modest by not paying credit to his campaign for this move. Does he think the people of Stoke-on-Trent should perhaps think of erecting a statute or making a memorial mug to mark his valiant efforts?

[Tristram Hunt]

I am grateful for my hon. Friend’s interjection. I would also pay tribute to my hon. Friends the Members for Stoke-on-Trent South (Robert Flello), for Stoke-on-Trent North (Joan Walley) and for Newcastle-under-Lyme (Paul Farrelly).

[Mr Jones]

Three more mugs.

[Tristram Hunt]

I hope the kilns are firing up as we speak.

I hope this change is part of a broader shift on energy-intensive industries. I think we have realised that we can no longer tax such businesses out of production in the UK. It does no good for our economy or our manufacturing base if we export these jobs. The production then goes abroad, where environmental controls are less rigorous and pollution is often greater, so we increase global carbon emissions and also lose worthwhile jobs. We have already lost the aluminium industry in this country thanks to cumulative taxation and we do not want to see the glass, paper, steel or ceramics industries go the same way.

I also welcomed the new tax regime for shale gas in the Budget. I regard shale as a potentially important new energy source that we need to see exploited in an environmentally sound manner. We are seeing it exploited right around the world. The technology behind it is improving at every stage. People have rightly expressed fears about contamination of water supplies, which are beginning to be addressed, but shale has a potentially paradigm-shifting capacity. What we have seen in America will not necessarily occur in the UK. It is absolutely right that we begin to explore shale—just as the Chinese and other European countries are—both onshore and, potentially, offshore. We need the technology and innovation to do that and we need a suitable taxation system.

Those involved in shale gas production need to take the communities with them and to have a social licence to produce it, but I urge Ministers to think more creatively. The great loss from North sea oil was that unlike Norway we did not create a sovereign wealth fund out of our oil riches. If we gain riches from shale, should we not consider a sovereign wealth fund? I will leave Ministers to mull on that idea.

While I am focused on industry and energy, let me highlight a contemporary crisis affecting industry here and now. As we speak, gas storage in this country is under 10% and this morning the Bacton gas connection to Belgium broke down. The price of gas hit £1.25 per therm when it is usually about 60p per therm. There is a real danger that kilns will have to close in north Staffordshire and that brickworks will close down, and I do not think that there is the necessary urgency from Ministers in Department of Energy and Climate Change or the Department for Business, Innovation and Skills about what is happening with the gas supply. That points towards a broader issue about gas storage: if we want rebalancing and want our industries to improve, we must ensure that we have a much greater system of gas storage in this country.

I am proud to represent an industrial constituency and I welcome some of the pre-Budget announcements on an industrial strategy, particularly that about the aerospace technology institute. I also welcome the adoption of 81 out of 89 of Lord Heseltine’s recommendations, particularly those on a single local growth fund. That is exactly the devolution of funding we want to see and a rightful acknowledgement that those in town halls often know a great deal more than those in Whitehall. As the Financial Secretary is on the Front Bench, let me say that we look forward to the upcoming announcements on city deals. I know that Stoke-on-Trent and Staffordshire have been working very hard to ensure that the Treasury is happy with what they are doing. It is quite right that the Government have allocated an extra £3 billion for infrastructure.

Behind all that must lie the acknowledgement that it is all too little, too late. The spending on infrastructure should have happened at the beginning of the Parliament, not more than halfway through it. As the Deputy Prime Minister has said, the Government should have not come to power and unleashed such capital spending cuts. The local growth fund could have been managed by regional development agencies, but the Government came in and abolished them. They are now realising that local enterprise partnerships often do not have the capacity and co-ordination to deliver the resources we are asking of them.

We should not have had to wait until the second half of a Parliament for an industrial strategy. In 2007-08, when we were in government, we were beginning to develop a credible industrial strategy that the Government should have continued rather than ripping it up in that terrible June Budget and beginning again. Over the past few years, we have seen a textbook example of how not to manage a recession, which will be taught in universities across the world. This is a catch-up Budget that is trying to undo the mistakes embedded in our economy three years ago.

The austerity agenda has spectacularly failed. Growth has collapsed, debt has mushroomed and the deficit at the end of the Parliament is expected to be £96 billion, five times more than the £20 billion the Chancellor expected at the beginning. As my hon. Friend the Member for Walthamstow (Stella Creasy) suggested, any board member who came to a board with such figures would be sent packing. As the shadow Chancellor warned in his celebrated Bloomberg lecture, that is the product of slashing spending, sucking demand out of the economy, the rhetoric of doom and gloom and the undermining of confidence. That is being borne witness to by the remarkable collapse in sterling, which is a sign of weakness, not strength, and by the collapse and loss of our credit rating. The austerity is not working, and, as my hon. Friend the Member for Lewisham East (Heidi Alexander) said, it is just hurting.

As the IMF chief economist suggests, we need a plan B. We need a VAT cut, a house building strategy and concentration on vocational skills and infrastructure. We need a different model, because this one simply is not working. Although I am happy to welcome the micro-element of this Budget in the context of the climate change levy, the macro-element fails spectacularly.