Amendment of the Law

Part of the debate – in the House of Commons at 8:20 pm on 29th March 2011.

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Photo of Jonathan Reynolds Jonathan Reynolds Opposition Assistant Whip (Commons) 8:20 pm, 29th March 2011

I apologise to the House for my brief absence from the debate, which was caused by my attendance at a meeting that I had requested in a previous debate. After I intervened on Stephen Barclay, he said that I had not been here for the duration, so I would like to make that clear for the record.

I believe that a major focus of the Budget should have been the inclusion of measures that would boost growth, stimulate the economy and increase employment opportunities as a result, but what we have seen yet again from the Government is a set of ideologically driven and politically based measures, rather than anything based on practical economics. Fundamental to the Government’s entire approach is the belief that cutting the deficit deeply and quickly will stimulate growth in our economy. The very cornerstone of this approach is wrong. A year ago a Member of this House responded to the previous Labour Government’s Budget by declaring:

“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.

The Member who said that is now the Secretary of State for Business, Innovation and Skills.

It seems that the Office for Budget Responsibility agrees with the Business Secretary. It has shown that growth is down for this year and next year. This revision of the figures is a sad reflection of the fact that the Government have got it wrong. It appears that the Government do not realise that if the economy is not growing, thousands more people will lose their jobs, fewer people pay tax, more people claim benefits and it becomes harder to get the deficit down. That is what we mean by cutting too fast and too deep, and I think that it is reasonable for us, as the Opposition, to ask the Government what their plan B is if the downward trend continues.

The lack of growth is the central story of the Budget, but the Chancellor did announce some measures aimed at mitigating this and they are worthy of consideration. Enterprise zones look interesting, but we will need more details of their resources. As a Greater Manchester Member, I am willing to give them a cautious welcome, given our inclusion in the initial list of zones, but I heed the comments of my hon. Friends the Members for Rochdale (Simon Danczuk) and for Livingston (Graeme Morrice) about the problems the zones might cause.

I had been hoping to hear more about improved resources for the regional growth funds, which seem to have modest budgets for what is expected of them. I worry that with the loss of the regional development agencies we in the north-west have lost more from this Government than we have so far gained. The Northwest Regional Development Agency was not a perfect institution, but research shows that it brought to the region more than £5 for every £1 it invested. I am not certain that local enterprise partnerships, which have more restricted powers and limited coverage, will be able to match that success.

I also welcome the Chancellor’s comments on manufacturing. I represent a part of the world where manufacturing is still very important and am often frustrated by comments in the House to the effect that there is almost no manufacturing industry left in the UK. Such comments are very misplaced. The UK is a world leader in a number of high-value manufacturing sectors, including pharmaceuticals, life sciences, advanced engineering and aerospace. Although we cannot deny that the number of people employed in manufacturing has been in steady decline for 30 years—people in my area know that only too well—the British Chambers of Commerce states that output and value have risen throughout that time, hitting an all-time high in 2007. Manufacturing will never return to the share of the economy it had in the 1980s, but there is a real potential for growth. There was an excellent meeting of the associate parliamentary manufacturing group this morning, where we looked at finance for small and medium-sized enterprises. I hope that the Government will engage with the group and look at some of its work.

I also note with interest the measures in the Budget that are designed to make the planning process simpler. I welcome any changes that would stimulate economic growth, but the biggest barriers to growth in some areas come from a lack of powers for local authorities to deal with planning blight. I have been working with local businesses in Stalybridge. I am passionate about retaining our town centre and the sense of identity it gives our community. Traders tell me how their businesses are often affected by the number of empty and unsightly properties around them. In some cases, these are large buildings with absentee owners who are unwilling to sell in the present economic climate, yet their very presence deters new investment from coming into the area. In one specific case, a consortium is interested in buying a building that is falling down, but complying with the legislation to use compulsory purchase orders and the powers to force a sale are difficult for local authorities. Piloting the relaxation of some of those regulations would be welcome, and I would be very pleased to see such developments.

I also want to say something about investment in infrastructure. I welcome the £85 million investment that the Government have promised in the Budget for a link between the Victoria and Piccadilly railway stations in Manchester, which will have a positive impact on journey times. I sincerely hope that in due course the Government will support the rest of the northern hub proposals, which would have a significant impact on economic growth in the area. In particular, I think there is a lot of scope to boost growth by improving transport links between the north-west and Yorkshire regions, and with that in mind I hope the Government will reinstate the planned Mottram-to-Tintwistle bypass through my constituency.

In many of the speeches made in the response to the Budget, Members have highlighted the impact of the Government’s agenda on the poorest and most vulnerable people in our society. I will never abrogate my responsibilities to speak for these people and I endorse what has been said, but I also want to speak for the thousands of my constituents who may not be the most vulnerable but who are still struggling to get by. These working and middle-class people are the backbone of Britain, and right now they are finding life hard. Rising fuel prices, the increase in VAT and changes to tax thresholds, particularly the changes to indexation, will increase the pressure. Next year, families with incomes as low as £26,000 will lose their tax credits entirely, and the year after l.5 million families will lose all their child benefit, which will be deeply felt.

For many of my constituents, the decisions taken by this Government are really hurting. With revised figures pointing to lower growth, higher borrowing and higher unemployment, there is no evidence that their approach is working. Is the Budget so ideological that the Government cannot see the danger signs staring us in the face? What we really need instead is practical and pragmatic economic leadership.