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Budget 2009

Volume 507: debated on Tuesday 16 March 2010

2. What recent assessment he has made of the effect on the economy of his Department’s policies introduced in Budget 2009. (322186)

Order. I think that the Chief Secretary was seeking to group this question with Question 12.

12. What recent assessment he has made of the effect on the economy of his Department’s policies introduced in Budget 2009. (322196)

In the past year more than 3.5 million people have been helped off benefits and back into work, while more than 300,000 people have been helped to stay in their homes and more than 160,000 businesses have been helped to defer more than £5 billion in taxes. Together, those measures have helped our economy return to growth.

Will my right hon. Friend join me in congratulating the partnership of Yorkshire Forward, the local authority, West Yorkshire MPs and local businesses, which has been so successful in saving the Halifax brand, as well as the maximum number of jobs in my constituency? Can he also tell the House what further he can do to support jobs in my constituency?

I am pleased that because of the measures that we have taken over the past year, unemployment in my hon. Friend’s constituency is not only lower than the UK average, but lower than the average for Yorkshire and the Humber. Thanks to the Government help that has been put in place, the partnerships to which she referred have now delivered more than 350 jobs to the local community. We have no plans to take away that support, which is helping to get people back into work. We still provide the young person’s guarantee which helps young people to obtain jobs when they have been out of work for six months, and extra help is also available to those aged over 25 who are in that position.

May I stress the importance of capital expenditure to the Merseyside and Cheshire area, and, in that context, the importance of a decision on the proposed Mersey gateway bridge, which will create hundreds of construction jobs and many thousands of jobs thereafter? Will my right hon. Friend talk to his colleagues in the Department for Transport about the need for an early decision?

I congratulate my hon. Friend on the consistency with which he has championed that project over the past few years. It will make a great deal of difference to the local economy: I understand that it is worth 4,000 or 5,000 jobs to his area. As he will know, the Government have brought forward some £3 billion of capital expenditure to help fight the effects of the recession. I understand that the Departments for Transport and for Communities and Local Government have received an inspector’s report on the bridge, and I will continue to press my colleagues for an early decision.

If last year’s Budget decisions were right, why did the Chief Secretary rule out a VAT increase last week only to rule it in again this morning? Will he clear up the confusion, and tell the British public categorically whether or not an increase in VAT is being considered?

The hon. Gentleman has been in the House long enough to know that tax decisions are matters for the Chancellor, who presents them to the House in both the pre-Budget report and the Budget.

We will not cut support for the economy this year, unlike the Conservative party. Once growth is locked in, we will take action to halve the deficit over the next four years. What we will not do is make the commitment made this morning by the shadow Business Secretary, the right hon. and learned Member for Rushcliffe (Mr. Clarke), to bring down the deficit to 3 per cent. by 2014-15—a step that would take another £20 billion out of public spending over the medium term.

Does my right hon. Friend share my concern about the impact of continuing low interest rates on people who rely on savings income, especially pensioners? What measures to support that group were taken in the last Budget?

Over the past year, steps have been taken not only to increase the basic state pension, but to increase the support available through pension credit. We have increased the disregard in the pensions system to put more money into pensioners’ pockets, and they will also have benefited from VAT cuts over the past year which have put about £1 billion into the pockets of consumers throughout the country.

At a time when economic confidence is crucial to Britain’s recovery, the assessment of the policies in the 2009 Budget that matters is not the Chief Secretary’s assessment or mine, but that of the international investors who have to buy our debt and the business men who will invest in that recovery. Their verdict is clear, and it is getting louder. It is summarised very neatly by the European Commission’s view that the Government’s plans are “not sufficiently ambitious” and that “additional fiscal tightening” is necessary. Is not the simple fact that the Government’s deficit reduction plan is not designed to restore confidence in markets, not designed to kick-start business investment and not designed in the long-term interests in the British economy, but designed to postpone the tough decisions until the other side of a general election?

The argument that the shadow Chief Secretary seeks to advance is one that he has rehearsed over the past year. In his opinion, it would be right to start to cut public spending now, before the recovery is locked in. If he is so interested in the views of business leaders and others, let me quote a couple. Richard Lambert has said:

“I think the Government is right to say that it would be a bad idea to slam on the brakes right now because the economy’s still… fragile.”

The Institute for Fiscal Studies has said:

“it doesn’t make sense to announce more tax increases or spending cuts that would take effect over the course of the coming year.”

That argument has been reinforced by the International Monetary Fund. If the hon. Gentleman does not wish to listen to those organisations, however, perhaps he will listen to his own economic adviser, Alan Budd, who has said:

“If you go too quickly, then there is a risk that the recovery will be snuffed out and we will go back into a recession. I mean, what do the Americans say? ‘Remember 1937.’”

I hope that the shadow Chief Secretary will heed that advice.

Order. May I say to both the Chief Secretary and the shadow Chief Secretary that what I do not want is for Back Benchers to be “snuffed out” by excessively prolonged exchanges between the Front Benches. Mr. Hammond, I know that your second question will be shorter than your first.

Yes, Mr. Speaker, and we hope it will elicit a shorter reply, too.

The fact is that the Chief Secretary is not listening. In particular, he is not listening to the people whose assessments really matter, such as Sir Martin Sorrell, who says:

“If Labour win we may well have a sterling crisis.”

I might also mention Fitch, which says that

“halving the deficit over four years is frankly too slow”,

and the CBI, which says that

“the Government has no credible plan.”

The truth is that whereas the Conservative party is willing to roll up its sleeves and take the tough decisions that are necessary for Britain’s future, Labour still has its head buried in the sand and is merely hoping that the problem will go away. When will the Chief Secretary start telling the British people the truth about the challenges that lie ahead?

We could carry on trading quotes from business leaders, but the International Monetary Fund, the Bank of England and respected economists such as the chief economist of UBS have all made it clear that this year would be the wrong year to start making cuts. The hon. Gentleman is, I think, reaffirming the argument made this morning by the shadow Business Secretary, which is that another £20 billion should be cut from public spending. Will the hon. Gentleman deny that today? [Interruption.] Will he issue a statement denying that today? It appears that the shadow Chancellor and the shadow Business Secretary are now auditioning for the same job, but the problem is that they are using a different script.