Pre-Budget Report

Part of the debate – in the House of Commons at 5:16 pm on 7 January 2010.

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Photo of Phil Wilson Phil Wilson Labour, Sedgefield 5:16, 7 January 2010

This is a general debate on the pre-Budget report, but it is a good opportunity for Members in all parts of the House to get various points across on a very important issue.

For me, the PBR was about whose side the Government are on. I believe that the Chancellor proved in his statement that they are on the side of the people from hard-working families who were left behind in previous recessions because unemployment was seen as a price worth paying. This Government do not believe that it should be the function of financial markets to make money out of other people's misery. The PBR was about making choices and naming priorities. The Government's whole economic strategy, since the global economic crisis started in autumn 2008, has been to be on the side of the people.

In my constituency, unemployment currently stands at 2,361. Yes, it has gone up during the recession, but it is still half what it was during the 1980s, when 5,500 people in my constituency were out of work-40 per cent. of them, or more than 2,000, for more than 12 months. Today, about 88,000 people in the north-east are out of work; in the 1990s, at the height of the recession, the figure was more than 100,000, and in the 1980s it was more than 200,000. Today, 1.5 million people are on jobseeker's allowance; in the 1980s, more than 3 million were claiming the equivalent benefit. Today, youth unemployment, if we strip out those young people who are in full-time studies, stands at 9 per cent.; in the 1990s, it was 12 per cent., and in the 1980s it was 13 per cent. Some people expected home repossessions to go through the roof; they have not, but they did in the 1990s. People thought that businesses would go to the wall more rapidly, but they have not, unlike in the 1990s. Today, 70 per cent. of people who are out of work find a job within six months, and the future jobs fund will guarantee that every 18 to 24-year-old receives training after six months. A package of £5 billion is being spent to ensure that our young people get through the downturn. Some people would not have spent that money because they believed the recession should have been allowed to take its course, but surely this initiative is underpinning the economy by helping consumption, which in itself helps to create growth.

However, things are still tough. It was right that the Government intervened to introduce the fiscal stimulus, which has prevented the economy from entering a second great depression; the rest of the world is doing something similar. We are able to borrow money to aid the recovery because before the global economic crisis our debt levels were lower than those of a lot of our competitors. In the Fiscal Responsibility Bill, the Government have said that over four years they intend to cut the deficit by 50 per cent. from 12.6 to 5.5 per cent. They have identified billions of pounds of savings through "smarter Government" reforms. There is a new 50 per cent. tax band, an increase in national insurance, and a payroll tax on bank bonuses. Because of the fiscal stimulus measures taken by the Government, growth will also enter into the equation eventually.

The Tories lack the political judgment that is needed in tough times. They were wrong on the recession and they are wrong on the recovery. To me, that is a fundamental dividing line between the Government and the Opposition. The Conservatives are the only main political party that aspires to government in any of the 186 states of the Iinternational Monatary Fund that actually believes the fiscal stimulus was a mistake.

The Opposition want to do away with dividing lines, and they have started to say that the Government are using class war. That is not the right attitude to take, and in a democracy it is the wrong way to approach politics. The success of this Government is based on a broad coalition of beliefs in the country and it cuts across so-called class divides, which is why in a few months' time we will win the next election. The other reason is that my constituents are deeply concerned about what would be taken away from them if ever the Tories got into government.

In all my years of political involvement, the only evidence of class war that I have ever experienced was the division created within, and the ultimate closure of, the communities that I grew up in by the Conservative Government during the 1980s. Communities were closed and left behind. To me, the backdrop of "Billy Elliot" is not just a west end show; it is something I lived through. I will never believe the Leader of the Opposition when he purports to be a progressive Conservative until he apologises for the callous behaviour of his predecessors. Class war should remain back in the 1980s-I actually agree with Mr. Lilley about that.

Since then we have had 13 years of a Labour Government, and now we have something called the "progressive Conservatives" because the Opposition know that to stand any chance of getting elected, they have to prove that they have moved on and been reincarnated into a more cuddly version of their former selves. But they have not changed. We now see dividing lines that they interpret as class war. I do not really care whether the Leader of the Opposition went to Eton; my predecessor went to Fettes college, which was seen as being the Eton of Scotland. However, I must say that as a parent I would be really disappointed if I spent all that money on my children's education and they still turned out to be Tory MPs. At least my predecessor obviously learned something.

I understand that there are something like 15 Etonians on the Conservative Front Bench. What would they say if there were 15 Members on the Government Front Bench at any one time who had attended, let us say, Sedgefield comprehensive school or Wellfield community school in my constituency-two perfectly good schools with excellent teachers and pupils-or any other state school, for that matter? What would be the reaction of some? That it was a conspiracy and that the old school network had penetrated the highest echelons of the establishment. Surely that should not be allowed to happen.

I want people from all backgrounds, including from all state schools, to be given the opportunity that has been the preserve of the few for so long. That is why this Government have invested so much in education and the Opposition have opposed it. Any pupil of any school should be allowed to aspire to serve in government, and the broader their experience the better. That is aspiration, and it is what the PBR is intended to underpin.

For me, the PBR is symbolic of the Government's intent, and the Opposition's criticism of the report's fundamentals also speaks volumes. I am not surprised that they want to do away with any talk of dividing lines and are trying to say that it is about class war, because they are on the wrong side of the argument. For all their efforts, they have not changed. They are not progressive Conservatives at all-how can a person be? They can be either progressive or conservative. A progressive would have voted for the creation of the NHS; a conservative would have voted against it. A progressive would have voted in favour of the minimum wage; a conservative would have voted against it. A progressive would vote for investment in health and education; a conservative would vote against it. In this House, I am pleased to be on the side of the progressive. A progressive looks for consensus and acts accordingly. A conservative, in the country's hour of need, makes it his priority to cut tax for the 3,000 largest estates. In this recession, who is looking after the concerns of the many and who is looking after the vested interests of the few?

I wish to say one thing about bankers and bonuses. I read a report in The Times on 4 January stating that Deutsche Bank, which incidentally lost $10 billion during the credit crunch, wants to spread its UK tax across the pot that it holds globally because, as its chief executive officer said, it would be

"unfair to treat the UK bankers differently".

He wants all his bankers around the world who are due bonuses to do some of the heavy lifting. Basically, that gives us an opportunity. The Government should be acting internationally to ensure that bankers are treated the same all around the world. The problem we have is a global challenge. Economies acting in concert should consider a Tobin tax. Even if we do not have a Tobin tax, we need to create mechanisms that help to stabilise international transactions, so that financial planning is a long-term objective and transactions are not used as a means of short-term gain.

While hundreds of thousands of our constituents pay the price for the bankers' failures, the Opposition do not think twice about filling their election coffers with millions of pounds from the City, including from Stanley Fink, the supposed godfather of hedge funds, who has given £1 million to the Tory party. In fact, on the way to half the cash raised by the Tories has come from the City. It is no wonder that one of their priorities is to cut tax for 3,000 large estates. So much for progressive conservatism.

I want to say one last thing about how we get out of this recession and about the Tories' approach to the PBR. They basically want to create a quango rather than have Parliament oversee how we get ourselves through this time and pay down the debt in the next four years. Ultimately, that is about what kind of society we want. We want a good society, governed by smart government. The only way that we are ever going to achieve that is through this PBR and this Government acting with the people to ensure that we elect a Labour Government in a few weeks' time.