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I appreciate being called so early in the debate, Mr Deputy Speaker. In Northern Ireland we are in competition with neither the Conservative party nor the Liberal Democrats when it comes to elections, so I suppose I can afford to be a little more objective in my assessment of the Budget. As we know, the allies of the Conservative party in Northern Ireland have now abandoned them, and Naomi Long, who had some association with the Lib Dems, has abandoned them since coming to the House, so I hope that I can be objective on this.
The Chancellor made it clear in his speech today that his ambition for the Budget is that it should promote growth in the economy, and I wish him well in that. Coming from a part of the United Kingdom where growth has been most sluggish and, as a result, unemployment is rising faster than in any other part of the UK, I know that success for the Chancellor will mean success for our economy. It will reduce the deficit so that huge resources will not go simply on paying interest, put people back into work, increase living standards and, in the long run, provide funding for vital public services.
I wish the Chancellor well in that, but I think it is a little ironic that the Budget has been headlined as a Budget for growth, because one of its major statistical announcements is that growth forecasts have been downgraded once again. Indeed, the Chancellor optimistically indicated last June, and again in October, that the measures he would undertake would give us growth of around 2.5% or 2.3%, but in the six months since then we have had a 33% reduction in his forecast. There is a certain degree of irony in that, which is one of the reasons I believe that some of the criticisms that have come from the Opposition about the speed and depth of deficit reduction have some merit. I remember that when I used to teach economics I would say that there are always two sides to the economic growth coin. First, there is the question of how to increase the economy’s potential to produce more. If we do not increase potential, once demand goes up, all we get is inflation, or we will suck in imports.
The Chancellor outlined a number of measures today—I will not go through them all—some of which are contradictory. The measure that he held out as the beacon at the start of his speech was the decrease in corporation tax, which he argued will give firms the ability to keep more profits and, therefore, the opportunity to invest in new equipment, new markets or research and development. According to the Red Book, the decrease in corporation tax should put £1.075 billion into the coffers of companies over the next five years, so it could certainly be argued that the Chancellor has released resources for companies to invest if they choose to do so.
However, on the next page we see that, as a result of wanting to be a trendy green, or I suspect of looking for a stealth tax, he is imposing a carbon floor price. By 2015, all the additional revenue that firms will have from the decrease in corporation tax will be more than absorbed in the carbon price floor tax—£1.41 billion. On the surface, the measure appears to be a way of releasing resources to companies, but closer examination shows that companies will not be much better equipped.