The amendment before the House declines to give the Finance Bill a Second Reading for simple reasons: because it will increase unemployment, it fails to tackle higher petrol prices, and it lets off the banks with their bonus tax being lower than it need be. The Bill will fail the British people and we will oppose it this evening.
We have had a good debate, in which we have brought out the differences between the Government and the Opposition on these key issues. There has been some agreement, for example, as the hon. Members for Watford (Richard Harrington) and for Elmet and Rothwell (Alec Shelbrooke) said, on the need to tackle the deficit. We do agree that we need to grow the economy and to reduce unemployment, and we should do those things in a fair and equitable manner.
However, the differences between the Government and the Opposition are wide and deep, and during the passage of this Bill they will be shown to be based on principle. The backdrop to the Bill is important and cannot be spoken about in isolation—indeed, hon. Members have not done that today. From January, VAT increases have cost families with children an average of £450 extra. As my hon. Friend Ian Murray has said, we face cuts to the amount parents can claim on child care. We face child benefit being frozen for three years and the scrapping of the baby element of child tax credits, which is worth £545 a year to people. Benefits are being set on a permanently lower path of inflation, and basic and 30-hour elements of the working tax credits are being frozen. The second income threshold for family elements of tax credit is being cut and the withdrawal rates for tax credits are being increased to 41%.
This Government are clearly determined to hit families hard, and this Budget and Finance Bill do nothing to take those issues forward in a positive way. The Government’s argument is that we need to tackle the deficit. We agree with that and we had a plan to tackle the deficit by cutting it over four years—the Department in which I was a Minister in the previous Government planned to save £1.4 billion. This Government’s measures go too far and are too deep, and they will increase the debt in this country considerably through the levels by which unemployment and benefit expenditure will increase.
The Labour Government had a plan to lower the debt, and before the worldwide crash our national debt was lower than that of America, France, Germany and Japan. The actions of the banks caused the recession and the deficit, and without the support of active government, from which this Government seek to withdraw, we would have faced even more unemployment and even more house repossessions. We are clear that these cuts are too deep and that they are being made too fast, as my hon. Friend Stella Creasy said.
If the Minister does not wish to agree with me, perhaps he will agree with the Member who said:
“If spending is cut too soon, it would undermine the much-needed recovery and cost jobs.”
He also said:
“Do I think that these big cuts are merited or justified at a time when the economy is struggling to get to its feet? Clearly not.”
Those things were said by the leader of the Liberal Democrats one year ago this very week. He called for no cuts in public spending. He wanted cuts to be not so deep and not so fast, but he has changed his tune now.
We accept that getting the deficit down is important, and what happens to jobs and growth in our economy is crucial. That is why when last year the economy started growing, unemployment was falling. But cuts in public spending are now hitting not only people in the public sector and families and people who need support; they are hitting the private sector and private sector businesses harder. I heard Anne Marie Morris say that she was concerned about the private sector. This morning, I visited businesses in Ipswich and I was told that because of the fear of public spending cuts and the actual public spending cuts people were not buying things in the shops any more. I was told that the cuts were too deep and too fast, and that they were damaging the growth in our economy as a whole.
Last year’s Budget should have contained a bank bonus tax creating more than 100,000 jobs, building 25,000 affordable homes, rescuing construction apprenticeships and boosting investment in businesses, but this Government have failed to take those actions. As well as cancelling the fuel duty rise—we did the same in government when oil prices were rising—the Government should have reversed the VAT rise on petrol, which adds £1.35 to the cost of filling a 50-litre tank. The 1p fuel duty cut in the Bill does not go anywhere near far enough towards offsetting the increase in VAT that the Chancellor imposed in January this year.
The Finance Bill contains no real plan for growth. In clause 10, the Government cut Labour’s proposed allowances for manufacturers by £75,000, using that money to give a corporation tax cut that disproportionately benefits the banks when we could have had more investment in research and development and tax relief for small businesses as a whole. On living standards, the rise in allowances given to people in the Bill is taken away by the VAT increase in January. The House of Commons Library has shown that families will be £1,700 a year worse off because of the Government’s tax and benefits changes.
We know that the Government have not done enough to help drivers. We have seen the planned fuel duty rise delayed, which Labour Governments did when world oil prices were rising, but the Chancellor has done nothing to help individuals by increasing VAT, which has added to the cost of filling up tanks with unleaded petrol over the past three months. The cut in fuel duty gives only 1p back, while the VAT rise has cost almost 3p per litre.
We know that this year there have been tax cuts for the banks. Labour said we wanted an additional bank levy from the Government this year and that we should have repeated the bank bonus tax and raised at least £2 billion so that the banks did not get a tax cut and so that funds were provided to invest in jobs, growth and housing. The Government have said no. In future years, the Government should increase the bank levy to ensure that the banks continue to pay their fair share of tax, so that taxpayers are not left to pick up the bill for the banking crisis.
Finally, clear concerns have been expressed by my hon. Friends the Members for Linlithgow and East Falkirk (Michael Connarty) and for Aberdeen North (Mr Doran) and by the hon. Members for Dundee East (Stewart Hosie), for Waveney (Peter Aldous) and for East Antrim (Sammy Wilson) about the investment proposals for North sea oil and the risks that the Government are taking. At the very last minute, with no consultation, the Government have made proposals to tax North sea oil still further. Oil and Gas UK has criticised the Government’s decision and uncertainty has been expressed from organisations across the board about this hasty move. The Government took the decision at the very last minute with no consultation and next Tuesday we will seek to discuss the matter in more detail and to ensure that we get further consultation.
The Government are cutting too far and too fast and the Finance Bill does nothing to help gain confidence, increase employment or secure the future for our society as a whole. The Government have implemented front-loaded cuts, which are hitting vital services and families, while giving the banks a tax cut. The Government need to think again about the devastating impact of their policies on our economy. We shall scrutinise the Bill in Committee and we shall undoubtedly welcome certain aspects of it in due course. Tonight, however, I ask my hon. Friends to vote for the amendment and against the Bill. The Bill will damage our economy, it does nothing for our society and I urge my hon. Friends to reject it.