Consolidated Fund (Apppropriation) Bill
Toby Perkins (Chesterfield, Labour)
Chris Heaton-Harris was true to his word. His speech was fairly brief, but it could have been a good deal briefer, because he completely failed to understand that the Bill is simply a return to the ideological and illogical Tory mistakes of the past. It reflects a Budget that spoke throughout of the Tory obsession with public sector cuts and the mistaken belief that public sector shrinkage automatically leads to private sector growth. In fact, the Tory belief seems to be that our economy is balanced on a see-saw-that as soon as the public sector goes down the private sector goes up, and vice versa. I speak as someone who for the past five years has run a small business, and who for seven years before that worked in the private sector for one of the fastest-growing companies in the UK.
As an internet-based sports retailer from 2004 to the general election, I relied on customers from all four corners of the country and every aspect of our diverse economy. I sold to businesses and to business people, for sure, but I sold also to schools, school teachers, universities, armed forces teams and individuals, such as doctors, council workers and police officers. The VAT rise in the Bill would have taken 2.5% straight off the bottom line of my business and would inevitably have led to higher prices; it would absolutely have had to. It means not just higher prices for pensioners, the disabled and people on benefits, those who are already likely to be struggling because of cuts to their housing benefits, but a double whammy-less money and higher prices.
So far we have heard a great deal from the Con-Dem Government about the private sector's role in the recovery, but more revealing has been what we have not heard. We have not heard how the private sector will play a role in reducing the large number of people who claim sickness-related benefits when getting back to work; how cutting manufacturing allowances to fund a corporation tax cut that will help businesses only in January 2013 at the earliest is going to help our manufacturing industries and help us to grow our way out of recession; or how the retail sector will contribute to our growth when the Government's policies will take money out of customers' pockets.
I know the impact that those measures could have, because if the Government take money out of the pockets of people, particularly the poor and public sector workers, they take it out of the private sector, too. They take it out of the pockets of the shop owner who would have sold a teacher a new television; they take it out of the pocket of the plumber who would have fitted a new bathroom for a social worker who, now, does not have the confidence to make that purchase; and they take it out of the pocket of the double glazing firm that was about to install a new conservatory at a doctor's house. The idea that the private sector will flourish because of this Bill is ludicrous.
The economy is not out of the woods. The Bill stifles growth, it is bad for business and it is bad for those who rely on the public services. The Government got the answer wrong not only by failing to understand the impact on the private sector of the cuts in public sector spending, but on every level with their decisions on taxation and investment. Tory Members have admitted that this is an ideological Budget, rooted in Thatcher's economic catastrophes. The Budget means that huge global banks will pay less tax, while the very poorest people in our society-benefit recipients and pensioners-will be worse off. The Exchequer Secretary to the Treasury was unable to provide me with any way in which the Bill will compensate pensioners, the unemployed or those who do not have children for the fact that, under the VAT rise, they will pay hundreds of pounds more a year.
To hear the Conservative party propose such measures is no surprise. Conservatives have always set out to protect privilege and wealth, as anyone who has ever studied history will know. It is what they have always done, and that is why Simon Hughes said:
"I have always been concerned that Conservatives first look after their own and have presided over widening inequalities and not a more just society."
That is what he has always said. Once I held out hope for the Liberal Democrats, but hearing them suddenly claim that VAT is a progressive tax, that we need dramatic cuts now and that we should not be too harsh on the bankers, it is as if the recent general election was so painful for them that they cannot bear to remember what they spent a month arguing.
The Tory cuts philosophy was the wrong decision at the wrong time, but even if we accepted that their cuts programme had to go faster and further than they had ever let on during the election, and even if we believed that Labour's responsible deficit reduction programme for halving the deficit in four years was not enough, we would find that the decisions in the Bill still do not make sense.
The Exchequer Secretary to the Treasury argued that the Government had been left without a choice, but, as my hon. Friend Mr Umunna revealed, there were alternatives. The capital gains tax rise was less than half that promised in the Liberal Democrat manifesto, and corporation tax was already at its lowest point for a long time and 5% less than it was in 1996-97. If there are tough decisions to be taken, and ordinary people and so many good businesses are struggling so badly, why choose to make life even more prosperous for those businesses that are already flourishing and, in some cases, contributing very little to growth?.
The previous Labour Government were securing growth to protect hard-pressed people against losing their homes, and when we realise that in this recession about 30,000 fewer people lost their homes than did so in past Tory recessions, we see just how easily the Tories would have cut people adrift. When we see that 500,000 fewer people lost their jobs than would have done so if we had followed Tory advice, we know that throughout this country there are people who can walk into work with their heads held high, knowing that when the crisis struck they had a Government who said, "Yes, we care."
The measures that the Labour Government took are working. The predictions that the current shadow Chancellor made in his last Budget were, if anything, pessimistic. The borrowing requirement is down by £8 billion and there was a Government underspend of £5 billion. That is why even right-wing analysts such as Fraser Nelson of T he Spectator have been forced to admit that the Office for Budget Responsibility did not demonstrate that measures in the Budget were inevitable, and, as Tory Members have admitted before, that it is an ideological Bill which reflects the warped view of life held by so many Government Members who have never had to struggle for anything in their lives-many of them millionaires the day they were born. Their first reaction to a crisis made in the City is to put social workers, school teachers, special needs assistants and carers on the dole; to tell people to put on a thicker jumper and holiday in this country; to cut the value of the money in people's pockets and introduce an arbitrary tax that will hit the poorest hardest; and to do nothing-absolutely nothing-to create the jobs that might help the poor to work their way out of poverty.