Speaking in the Finance Bill debatePosted: April 16, 2013
On Monday 15 April I spoke about the impact of the government’s economic policy during a debate on the Finance Bill.
Andy Sawford: Members have been addressing two questions in this debate: first, where we find ourselves and why; and, secondly, what we should do about it. In 2008, 63 consecutive quarters of economic growth in this country came to an end with the onset of a global recession that started in America and spread quickly across the world. The Conservatives and their supporters at the Daily Mail like to blame the previous Labour Government for the global crash. Was it Labour that was selling the sub-prime mortgages in America? Of course not.
The response to that unprecedented crisis was to take very significant action, first to arrest it and then to bring some relative stability. Crucially, the previous Government chose to invest in our economy to keep businesses growing and to keep people in work.
Jonathan Edwards: Does the hon. Gentleman acknowledge that economic performance prior to the crash was based on unsustainable personal debt bubbles and asset price bubbles, with personal debt in the UK equivalent to 100% of gross value added—far higher than in any other modern democracy?
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Andy Sawford: The previous Labour Government’s record of 63 consecutive quarters of growth is absolutely unarguable. Of course, lessons must be learned by Members in all parts of the House, including those in my own party, about the economy at the time, and I will go on to say a little more about that.
The alternative to investing in our economy to keep businesses going and to keep people in work was to go back to the experiences of the recessions in the early 1980s and early 1990s. Twice, 3 million people were unemployed, with the country being told that unemployment was a price worth paying. My own family know that it was not. They were impacted when the steelworks at Corby closed in 1980 and 10,000 people were put on the dole. People from communities such as mine, where the films “Brassed Off” and “Billy Elliot” seem more like documentaries, know the effects of unemployment and know that it is a personal tragedy for families and communities and is never a price worth paying. This year alone, 126 more people in my constituency are claiming employment and support allowance.
Let us not forget that the Tories supported the measures that we took in the recession—the same Tories who had warned against more regulation of the banks. Now they want to rewrite history. They are convincing people that our investment and the borrowing that underpinned it was more like a credit card debt than a mortgage. One of those is short term, bad debt and irresponsible; the other is about investing in our future. It is about the decisions that responsible businesses make to borrow to invest—the decisions that responsible Governments all around the world, and the UK Government, made in the depths of that last recession.
To win an election, the Prime Minister claimed that he would “balance the books” by 2015. In 2010 he told the CBI that his Government had a plan that would secure the credit rating. So what has happened— what did they do? They cancelled the future jobs fund, which was really helping to get people back to work in my constituency. I know that was happening in Northamptonshire because I was close to that work. They stopped the Building Schools for the Future project, scrapping plans for 715 schools to have improvements, including Lodge Park in my own constituency. That affected not only the students and their parents and families, and future opportunities to develop skills in the town, but the people who were going to build the new unit at the school. The children are now in mobile classrooms, which I am ashamed to see in one of the wealthiest countries in the world.
This Government took all the life and confidence out of an economy that was growing when they inherited it from the previous Labour Government. They stopped housing developments such as Priors Hall in my constituency, on which a lot of our economic future rested. Tata Steel laid off people in my constituency in 2011, and when I asked why I was told not only that it was about operating in a challenging global environment and about energy prices, but that all of the tubes from Corby went into infrastructure projects around the country which had been hugely affected by the stopping of road-building programmes and Building Schools for the Future.
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Andy Sawford: My hon. Friend is absolutely right. The story of the decision to close the steelworks in Corby in 1980 has now come full circle and been shown to be short-sighted, given that the steel is now coming from Port Talbot. Some of Tata’s steel is now coming from abroad, because it is so difficult for it to compete in this country. I called for measures in the Budget—I spoke about this in a recent Adjournment debate—to support the steel industry in the UK in order to mitigate the impact of high energy prices around the world. The contrast between this country and others is stark and instructive of this Government’s approach. Germany, where the economy is growing—it now has more than 3% growth—has a £5 billion mitigation package for energy intensive companies, while this country has a £250 million mitigation package and we are not even clear about its details.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): My hon. Friend led a strong Adjournment debate recently and I was proud to join him in it. Does he not find it extraordinary that the Business Secretary admitted in the New Statesman in March that
“the fiscal consolidation achieved through reduced capital spending has had economic consequences”?
It was not just Tata Steel that shed jobs in my constituency; Argos also did so and Aquascutum closed. Those companies were affected because nobody had any confidence and nobody was spending. That happened because the Government chose—they made a deliberate political choice—to talk our economy down. It was a political strategy without any real regard for the damaging effects it would have on our economy. When they got hold of the levers of power, they revealed their real purpose: an ideological attack on the state and on the poorest in our society.
The accumulative impact of the Government’s Budgets, including this one, will have an effect on individuals. The Institute for Fiscal Studies tells us that the average family will be £891 a year worse off, but that figure tells only part of the story. The other part is how the cuts to services will impact on all residents, particularly those who most rely on public services. Buses have been cut in my constituency, the ambulance station in Corby is due to close and children’s services, particularly for those with special educational needs and their families, have been decimated. Respite care has been lost and there are fewer police and police community support officers than when this Government came to office, and there is a real threat of cuts to my local hospital. The huge impact of those cuts to services on families means that they are worse off.
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The Government’s policies have impacted on those who most needed their help—the children plunged into poverty and the disabled people hit by the bedroom tax and the pernicious Atos reviews that this Government have failed to intervene in and stop. Those out of work and unemployed in my constituency have been stigmatised by this Government and left desperately chasing the few vacancies that exist.
The Government say that there are more people in work, but that is not true in my constituency. Moreover, what sorts of jobs are being created? They are part-time, low-paid jobs for underemployed people in my constituency —fragile employment for people working through agencies on zero-hour contracts and on the margins of the labour market, there to be exploited. And the Government say that that is okay.
Mr Russell Brown (Dumfries and Galloway) (Lab): In the last couple of weeks, I received an answer from the Cabinet Office on the private sector jobs that have been created. The Government now talk about 1.25 million private sector jobs and for a long time spoke about 1 million. Is my hon. Friend surprised to learn that, in fact, between June 2010 and September 2012, the figure is only 750,000?
Andy Sawford: I thank my hon. Friend for bringing the real figures to the House. He is right that the Government are grossly exaggerating the total number of private sector jobs that have been created and, crucially, the nature of those jobs.
Mel Stride (Central Devon) (Con): The hon. Gentleman is right to raise the huge problem of unemployment under all Governments. Is he aware that in his constituency, between 2005 and 2010—that is, under the last Government —the number of jobseeker’s allowance claimants rose by 103%, whereas the number has risen by just 8% for the duration of this Government?
Andy Sawford: If the hon. Gentleman is being honest, he knows that the figures that he is quoting reflect the impact of a huge global economic crash in 2008, which had a big impact on my constituency, not least because it is a manufacturing constituency. [Interruption.] The Economic Secretary is suggesting that because the figures go from 2005 to 2010, they reflect the Government’s record across the whole period. Government Members fail to say that the economy was growing for much of that time. We all acknowledge that a global crash happened in 2008 and that that caused unemployment. The critical thing is what we do about it.
Andy Sawford: My hon. Friend is right. Of course, unemployment is also higher in Corby. My constituents will think that Government Members have a cheek to raise those figures in the way they have today.
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They are talking about people who are trying desperately to find work and whose situation has been made worse, not better, by this Government. The Tories do not understand the lives of those people. They do not understand the margins of the labour market or the margins that many of the poorest in our society live on. They understand the marginal impact of their millionaires’ tax cut, which is about £100,000—after all, many of them will get it—but they do not understand the marginal impact of their policies on people who have very little to live on. Fourteen pounds may be half a bottle of claret to the Chancellor, but for people in my constituency, it means choices about food, heating, fuel and new shoes for the kids.
The Government’s Budget was a chance to get back on track after three wasted years in which the UK went back into recession and lost its credit rating. The best that the Chancellor could do was to say that he hoped that we would not have another quarter of negative growth. He has his fingers crossed that he does not become the triple-dip Chancellor. Borrowing is going up not just this year, but next year and the year after. We are now told that there will be deeper cuts to services and the living standards of people in this country. While George and his friends get a tax cut, my constituents are told that things will get worse. Since the Chancellor’s spending review in 2010, the UK has been 18th out of the G20 countries in terms of growth. It is worse than the USA, Germany, France and Turkey, but the Government refuse to change course and recognise that we will get on track only if we get our economy growing.
I was incredibly disappointed that in the Finance Bill the Government rejected our proposals to use the 4G receipts to fund house building, for a proper tax on bankers’ bonuses to fund a jobs guarantee for young people and to bring forward infrastructure investment. Only 14% of the 576 projects in the Government’s national infrastructure plan have started.
In their first three years, the Government spent £12.8 billion less on infrastructure than the previous Government had planned to spend. The Chancellor has been told by the International Monetary Fund, the CBI, Sir John Armitt, some of his Back Benchers, and Lord Heseltine that the Government should boost the economy with greater infrastructure spending. They make announcements such as that about the A14—part of which runs through my constituency—which is now not set to start until 2018. The electrification of east midlands trains to Corby was announced with great fanfare. What will fund it? It is the same amount of money in the next Parliament that the Government cut from what we would have spent on infrastructure in this Parliament to upgrade our railways.
In the previous Government’s plan for 2012-13, we were due to spend £48.4 billion this year on infrastructure. This Government say they will spend £41.7 billion on infrastructure. We were planning to halve the deficit during this Parliament, but this Government said that they wanted to go further and eliminate the structural deficit. What is the effect of that? They are spending £13 billion less on infrastructure—precisely what we need to get our economy growing—and £13 billion more on social security. It all sounds familiar to people in my constituency who remember that when Margaret Thatcher, the architect of this kind of trickle-down
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Reaganomics, came to office, 2 million people were on out-of-work benefits. When she left office, 6 million people were on out-of-work benefits and we see it all again. The rich are getting richer, the poor poorer, and many are paying the price of economic and social failure. Meanwhile, in countries such as America, which should be instructive to the Government if only they would raise their sights, the stimulus has been maintained and there has been growth of more than 4%.
What do I want now? If the Government will not listen to my hon. Friends as they present the way forward for our economy nationally, I want action locally. The south east midlands local enterprise partnership bid in my constituency is focused on housing, and at last money from the Government’s Get Britain Building fund has gone to meet some of the infrastructure gap, particularly as the council, and others, have had to renegotiate section 106 agreements, which became too expensive for developers to move forward. After three years, some of that money has just begun to trickle to my constituency. If the Government support the SEMLEP bid, there is a real opportunity to substantially reduce the gap in budgets for infrastructure, which we need now that we are renegotiating the section 106 agreements. We are not asking for additional money; we are asking for flexibility such as an increase in the borrowing cap.
I want help for local firms—I mentioned Tata Steel and I have invited the Minister to come and help—and I want targeted help for young unemployed people in my constituency. The City Minister, the right hon. Member for Tunbridge Wells (Greg Clark), for whom I have a great deal of time, has shown that, relative to his colleagues across Government, he is willing to take action and listen to local areas. He has taken action in cities around the UK to help fund social innovation. I would like the Government to talk to people in Corby about how we can help young people in the most difficult place in the country in which to get back to work.
I hope that the Government will listen and stop telling my constituents to stop whinging. They must stop stigmatising those most affected by their wasted three years, and stop trying to divide people at a time when we need the country to come together with a Government who are backing our workers and businesses to get Britain growing again.