Budget Resolutions and Economic Situation — Amendment of the Law

Part of the debate – in the House of Commons at 9:22 pm on 25th March 2013.

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Photo of Iain McKenzie Iain McKenzie Labour, Inverclyde 9:22 pm, 25th March 2013

The coalition Government have spent their time in office since 2010 telling us over and over again that they are trying to get the country’s finances in order. We have had their austerity, their new taxes and their extreme cuts, and yet two years later, our borrowing is still growing at an alarming rate. Despite the Government’s austerity, the Chancellor is expected to add billions to the national debt over his five years in office. Since his spending review in 2010, the UK economy has grown by just 0.7%, compared with the 5.3% forecast at the time.

Last year, the UK economy went through a double-dip recession. The Government’s failure on deficit and debt reduction is colossal. Lack of growth has meant huge Government borrowing to pay for the cost of their economic failure. The Chancellor has failed the test he set for himself. The economy is flatlining, prices are rising a lot faster than wages, the deficit is going up, and the UK has lost its triple A credit rating. Instead of delivering a credible Budget that demands confidence in our economy, the Chancellor delivered a downgraded Budget with no plan for jobs and growth, and a Budget that hits hard-working households further.

A wiser Chancellor would have been less dogmatic about the rightness of his policies and so left room to manoeuvre when he saw them failing. However, last Wednesday’s Budget was the work of a Chancellor who is in a hole but continues to pretend that the only way forward is to keep digging. We needed bold and decisive action last week, and a Budget that would kick-start the economy and help millions of people up and down the country who have been struggling to cope financially. I wonder whether Government Members know what that means: it means broken Britain, it means businesses closing their doors, it means small communities struggling to create local growth, it means a choice between paying the bedroom tax and eating, and it means national failure at the hands of this Government.

In my constituency, more than 1,000 people are being referred to local food banks. Food banks in 21st-century Britain is the reality of this coalition. Instead of borrowing to help millionaires, the Government should be borrowing to help jobs and opportunities, and to stimulate economic growth across the country. The Chancellor could have brought forward infrastructure investment in schools, roads and transport to get construction workers back to work and to strengthen our economy for the future. Those measures would boost growth, get builders back to work, build the homes we desperately need and create apprenticeships for our young people.

Britain needs a radical Budget for homes, jobs and growth, not another false dawn. We face the biggest housing crisis in a generation and the Government’s housing and economic policies are just making it worse. House building is crucial to economic recovery. Helping families to get on to the housing ladder should be a priority for the Government, and that is why we have been calling for this action for more than two years. The Government’s record on housing offers little hope to hard-working families who are struggling to get on to the housing ladder. Under this Government, house building has fallen, rents have risen, home ownership is becoming a harder goal for young people to achieve and, most worrying of all, homelessness has risen. The Government failed to back Labour’s call to use the money raised from the 4G mobile spectrum auction to build 100,000 affordable homes to stimulate the economy and help tackle the ever-growing housing crisis. The

Chancellor could also improve existing housing stock by cutting VAT on home repairs, maintenance and improvements to 5%. I might add, however, that without a job it is impossible to buy a home or to improve it.

Next month’s planned tax cut for millionaires should be scrapped. When the Government came to power in 2010, the message was that we are all in this together. I wonder if my constituents who have lost their jobs and the millions who rely of food banks would agree that we are all in this together. What about the millionaires looking forward to a tax cut? Well, they are definitely in it all together.

Companies are not investing and people are not spending because they lack confidence in the UK economy. Economic confidence comes from believing that tomorrow will be better than today. The problem the Government have created is that the country no longer believes in a better tomorrow. In short, we desperately need a Labour Chancellor to deliver a Budget that supports hard-working families and struggling businesses. We need a Government who have a long-term plan for jobs and growth to build a better and fairer tomorrow.