7.1 pm

Naomi Long (Belfast East) (Alliance): All of us who sat in the Chamber throughout last week’s Budget statement will be acutely aware of the context in which this debate is taking place. Global economic conditions remain extremely challenging and the impact on the UK economy has led to the downgrading of many of last year’s Budget predictions.

The people we represent, who listened to the statement outside this place, were realistic about the Budget, but they also hoped for measures that would encourage inward investment and growth; give businesses confidence and access to finance to create new jobs and help grow their export markets; ease the pressure on family budgets and small businesses alike; tackle inequality in society; and stimulate desperately needed growth.

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Although talk of an aspiration nation is great rhetoric and a worthy aim, it is the job of Government not only to ensure that people are encouraged to have aspirations, but, if there is to be real improvement, to create the context in which they have the opportunities and support to fulfil them.

In the brief time available I want to focus on a few aspects of the Budget, welcoming some of the positive measures and highlighting a number of areas where more could be done.

I commend the Government for upholding their commitment to spending 0.7% of gross national income on international development. Given the current economic climate, it is understandable, though regrettable, that, despite the fact that this allocation represents a small fraction of overall Government expenditure, it comes under continuing pressure. However, by standing by the commitment, the UK is showing leadership in the international community. Aid well spent is a powerful tool to tackle severe global poverty, to assist some of the poorest nations in becoming more self-sustaining and to support global justice, human rights and security. Moreover, although it is spent abroad, it also contributes to protecting our own national interest.

In that vein, I also welcome the fact that at the same time as the Treasury is seeking to tackle tax avoidance in the UK—which we all welcome—it has also committed to prioritising dealing with international tax avoidance by UK companies, which is depriving many nations from the transition from aid to trade. I hope that it will be robust in its actions.

I also welcome the increase in the personal tax allowance, which will lift many of those in the lowest paid employment out of tax altogether. If it were part of a package of measures to tackle poverty more comprehensively, it would be even more welcome. However, as I noted last year, as an anti-poverty measure it is neither the most effective nor the most targeted approach. Although the poorest working families will benefit, raising the personal allowance will also benefit many others.

In the time remaining, I want to comment briefly on measures that will impact on Northern Ireland in particular. I welcome the reduction in corporation tax, which is a particularly sensitive issue given our land border with the Republic of Ireland, where corporation tax is significantly lower at 12.5%. Although it would not be a silver bullet, the devolution of corporation tax has been identified by industry, the Northern Ireland Affairs Committee and the Northern Ireland Executive as an important tool in stimulating the economy and attracting inward investment. The UK-wide reduction, though modest, is a step in the right direction and will also lower the potential cost to the Northern Ireland Assembly should this tax power be devolved, as many of us wish. It is disappointing that that devolution was not announced in the Budget. I trust that the Prime Minister will have more positive news for the First and Deputy First Ministers when he meets them to discuss the matter tomorrow.

Mr Nigel Dodds (Belfast North) (DUP): The hon. Lady can be assured that virtually all the Northern Ireland Assembly parties support what she has just said. Does she agree that it is important that their meeting with the Prime Minister tomorrow has the endorsement of all major business groups, major community groups and people who are concerned about jobs and employment in Northern Ireland?

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Naomi Long: I agree entirely that they have that endorsement, and the Prime Minister’s Twitter feed today suggests that all of those sectors are engaged in lobbying activity.

Being geographically more remote adds to household bills and business costs. The cost of fuel, for example, is a particular pressure, with Northern Ireland consumers facing the highest petrol and diesel prices in the UK and some of the highest in Europe. This impacts on households, business and our international competitiveness, so I welcome the cancellation of the fuel duty increase that was planned for September. The cost of energy generation more widely is also greater in Northern Ireland and the exemption from the carbon price floor is a welcome measure for energy producers and consumers alike.

Regrettably, the Chancellor offered no good news on another significant cost of our peripherality—air passenger duty. I recognise the previous work done to devolve APD for direct long-haul flights from Northern Ireland, but if we are to support essential connectivity, reduce business costs and grow our inbound and outbound tourism sectors, both of which contribute significantly to the Northern Ireland and UK economy, the Treasury needs to look at the issue again. A recent report by PricewaterhouseCoopers, which has been referenced by the hon. Member for Crawley (Henry Smith), indicated that reducing or abolishing APD could stimulate growth and lead to the raising of more revenue, rather than less. The Treasury appears to have dismissed that analysis, but I urge it to do its own study on the impact of APD on growth.

There are many other issues that I would like to raise, but little further time to do so. In conclusion, talk of creating an aspiration nation is a good thing but, at a time when unemployment figures in Northern Ireland are at their highest for 15 years, taking action that will match aspiration with real opportunity is much more important. I remain to be convinced that this Budget will do that for the people whom I represent.

7.7 pm

Mr Edward Leigh (Gainsborough) (Con): I hope that the hon. Member for Belfast East (Naomi Long) will forgive me if I do not follow on from what she said, but she spoke a lot of sense about air passenger duty and I agree with her.

One of the most powerful points made by the right hon. Member for Leeds Central (Hilary Benn), who led for the Opposition, was when he mentioned somebody who visited his constituency surgery only last week who, after serving in a job for 30 years, had been made unemployed. As it happens, I had a similar case of somebody who had served for 30 years but who had now, through no fault of her own, been made unemployed, could not find a job and was in negative equity. That brings home to all of us the human nature of what we are dealing with. Although we may bandy statistics across the House, we are dealing with a desperate situation—for which, by the way, I do not blame the Chancellor—and we should put at the forefront of our minds the appalling human tragedy of ordinary people who are being put out of work and who cannot find work.

In my view, the best way to recreate the conditions in which people can find work is to create a balanced economy that can recreate confidence. Unfortunately,

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our public spending is unbalanced: half of our £730 billion or £750 billion budget is taken up by health and welfare, which are ring-fenced, and that puts enormous stresses and strains on all other budgets.

Despite the attempt by the right hon. Member for Neath (Mr Hain), with characteristic chutzpah, to rewrite history, I am not sure that it is possible to argue that austerity has caused this recession when, in fact, we are spending more than ever before—despite the fact that the figures were manipulated for this Budget—and borrowing more than ever before. The central thrust of the Labour party’s argument, which is that the problems have been caused by this Government, does not add up and the British people do not think that it adds up. They want more positive suggestions from the Labour party that show what it would do better in the face of the desperate international situation.

Richard Graham: Did my hon. Friend find it curious that the hon. Member for Coventry North West (Mr Robinson) seemed to be unclear about why our exports are effectively stagnant, when they had been expected to rise by 6%? Surely he must know that exports to the EU have fallen off a cliff while other exports have risen.

Mr Leigh: Absolutely. That shows the sort of difficulties in the Labour party’s arguments. If it is to form a Government, it must come up with a viable alternative.

I do not support cutting for the sake of cutting. If Tesco has a problem in its bread department, it sells bread more efficiently; it does not cut the number of loaves it sells. I agree about that, but the Labour party cannot give simplistic solutions based on more wasteful spending, nor can it constantly say that our problems would be solved if we restored the 50% tax band, when every study proves that it reduced revenues to the Treasury. As we know, the top 1% of earners pay 24% of all tax revenues. Labour has to come up with something more intellectual and rational if it is to convince the British people that it is ready for government.

The situation is dire. The incomes of 2007 will not be seen again until 2019. According to the Institute for Fiscal Studies, we will need a further £9 billion of cuts to public services after the next election. In 2015, there will be £70 billion more borrowing than was predicted in 2010. Any Budget giveaways—I accept that this Budget is politically astute—will be soaked up by inflation rising faster than wages. That point has already been made about the 1p cut in beer duty. One would have to drink five pints every night for seven nights to save 35p a week. I am not sure that will impress anybody. The cut in corporation tax is welcome, but that is only a small part of the total cost to business. Business rates have increased by 13% in three years and are the prime motivator against growth in the small business economy.

The problems that we face are difficult, complex and international. I am still firmly convinced that we need a strategy based on levelling taxation as much as is possible. The attempt to bring corporation tax more in line with small business tax is a first step. We should try to flatten all capital taxes and business taxes. We should then move on to income taxes and get rid of the plethora of allowances, which fuels an industry based on evasion and avoidance.

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At first sight, the excellent scheme that the Chancellor is trying to bring together to help with home loans is very good if it does not lead to a property bubble. However, it is a bit like somebody climbing a ladder with loads of our money, throwing it over the edge and saying, “May the fittest come and get it.” It is a bit like the person rushing towards the pool of Bethesda.

It would be much better to have a flatter, simpler form of taxation so that people make their own decisions and do not rely on Government handouts, and so that we do not have a huge industry based on evasion and avoidance.

We are creating a special child care allowance for people who want to put their children into child care. That is great, but why have we not fulfilled our pledge to introduce a married person’s tax allowance?

Fiona Bruce: Does my hon. Friend agree that we are out of line with international best practice in not recognising marriage in our income tax system?

Mr Leigh: We are out of line. I am quite prepared not to hold the Government to account on their solemn promise to bring in a married tax allowance if they get rid of the other allowances and restore universal child benefit and all the other things. They cannot have it both ways. They cannot make it tax and benefit advantageous for a mother—it is usually a mother—to go out to work if they do not help mothers who want to stay at home and add to the economy by looking after their own children. That is unfair and something has to be done about it.

We cannot carry on with Budgets that simply tweak things. We need a long-term strategy based on simplifying the tax system and on budgetary reform. We must remove as many of the allowances as possible. We must change the culture of constantly tweaking things with Budgets and instead look to the long term and create a more simplified and effective tax system.

7.15 pm

Sarah Champion (Rotherham) (Lab): Last Wednesday was my first Budget since entering the House and I had high expectations. [Laughter.] I know that shows my naivety. We all know how much our constituents are suffering financially as the economy continues to flatline, so I was expecting a Budget that would jump-start growth. I was hugely disappointed, and I believe that my disappointment was shared by the country.

We face the biggest housing crisis in a generation, but the Government’s housing and economic policies are making it worse. House building is crucial to this country, both to bring economic recovery and to get families on the housing ladder.

Henry Smith: Will the hon. Lady give way?

Sarah Champion: No, I am sorry.

Initially, I broadly welcomed the Government’s schemes to encourage people to buy new builds and to assist people with mortgage deposits. With the demise of building societies, banks have a virtual monopoly on mortgages. The percentage that is required for a deposit has been rising steadily, especially for first-time buyers. That has created an environment in which people who

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are more than able to pay for a mortgage cannot get one because the tens of thousands of pounds that they need for a deposit are unachievable.

However, I then started to consider the broader picture and the details of the schemes. First, it has been revealed that the Government’s mortgage scheme will not exclude people who are buying a second home. What about a third or a fourth home? How does that help people who are starting out? Not only are the Government pressing ahead with tax cuts for millionaires, it now seems that the mortgage scheme will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000. Secondly, what interest rate will be charged, or will it be an interest-free loan? Thirdly, is it right that the taxpayer will effectively be underwriting the banks? The state will be facilitating banks to make profits on these mortgages.

My main question is, where are all the new homes for people to buy? The Government’s schemes mean that more people will be trying to buy the same number of houses. That will just push up the cost of a house unless more homes are built. The Government announced an extra £225 million for affordable house building, but according to the OBR only £125 million will be spent before 2015. That figure is dwarfed by the £4 billion cut in the funding for affordable housing that the Chancellor made in his first Budget. That stopped a very successful affordable housing scheme in Rotherham that was run by Transform South Yorkshire.

House building is at its lowest rate since the 1920s and the situation is getting worse. Housing starts fell by 11% in 2012 to below 100,000. The impact of that is that the Government have put 80,000 construction workers out of work and construction output has fallen by 8.2%.

Labour has proposed some practical measures to address that problem. We called on the Chancellor to use the money raised from the 4G mobile auction to build thousands of affordable homes to stimulate the economy and tackle the housing crisis. To improve the housing stock, we recommended that VAT on home repairs, maintenance and improvements should be cut to just 5%. To help young people who want to get on to the property ladder, the CBI’s proposal of a housing individual savings account should be considered. We also advocate giving first-time buyers a stamp duty holiday on properties worth up to £250,000. Finally, I support Labour’s recommendation to bring forward long-term infrastructure investment in schools, roads and transport to get construction workers back to work and to strengthen our economy.

Those measures would boost growth, get builders back to work building the homes that we need, and create apprenticeships for young people. I urge the Government to look more closely at the details of their schemes and to find ways to build more affordable homes and genuinely help first-time buyers. We need action now to get Britain building and to kick-start our economy.

Mr Deputy Speaker (Mr Nigel Evans): I thank Sarah Champion for taking less time than she was allowed, which will mean that other Members can get in.

7.19 pm

Annette Brooke (Mid Dorset and North Poole) (LD): Overall, I think the Budget contains some helpful measures to help families with the cost of living, and it invests in

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the future of our economy within a responsible framework. As a Liberal Democrat, I am naturally proud of the rise in the personal allowance to £10,000 from April 2014—one year earlier than planned—which will give 24.5 million people a tax reduction of £700. I was also pleased at the introduction of the employment allowance, particularly for small and medium-sized enterprises. My constituents will certainly be pleased with the freeze in fuel duty, the scrapping of the beer duty escalator and the cut in duty on beer.

I wish to concentrate in my short speech on the overall £5.4 billion boost to housing, but I will make a slight digression to talk about child trust funds— I should declare that I am a grandparent with a granddaughter who has a child trust fund. I have received a number of representations on those funds recently, and I have been sent details from a campaign by Money Mail under the headline:

“The £34,000 curse of child trust funds: Six million children are barred from best savings deals”.

One could interpret that as stating that the next generation of young people might be deprived of a deposit for a house, and at the other end of the scale, for lower income people, there are clearly children with trust funds who are not receiving the levels of interest that they should in terms of equity. I wanted to raise that issue with my right hon. Friend the Chief Secretary to the Treasury who is sitting on the Front Bench.

The housing package is part of building a stronger economy and a fairer society, and includes a number of measures to support home ownership, new development and affordable housing. Over the past year or so, there has been agreement across the House that stimulating the construction sector is key to stimulating growth. It is a win-win situation with more jobs and more money created for our economy, without particularly sucking in imports. It is estimated that each extra home built each year creates jobs for three to four construction workers and those in associated industries, thereby improving business confidence.

During previous debates we have identified issues on the demand and supply sides of the housing market, and many have argued that the problem is not with planning as such. On the demand side, measures in the Budget have the potential to extend the supply of new houses, perhaps converting some of the hundreds of thousands of non-implemented planning applications into homes. Meeting the needs of those willing and able to buy, and the aspirations of those wishing to be home owners, is important, and will give this generation the same opportunities as my generation. At times tonight I have wondered whether the Labour party actually believes in encouraging home ownership.

Of course, home ownership is not the whole solution to our housing problem. I represent an area—Purbeck—that has a very high house-price-to-wages ratio and a high proportion of second homes. Although I am keen on the two schemes to stimulate mortgages, I am not keen on them subsidising second homes as that would make the situation in Purbeck and Dorset even worse. I like both schemes, however, because they involve first-time buyers and second steppers, and I think that we must put a shock through the whole market.

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But—and there is a but—I think we have to do a lot more. I like the buy to rent stimulus, but we need to increase the supply of affordable housing over and above what we want to do and have done already. In the next phase we ought to look at the capacity of councils to borrow money for building housing, at direct building by councils, and at supporting arm’s length management organisations, which is incredibly important. An ALMO in my constituency is ready to start building but cannot get the borrowing capacity.

7.24 pm

Graeme Morrice (Livingston) (Lab): I welcome the opportunity to speak in this important debate, because the Budget last week revealed the true scale of the Government’s economic failure. As the next election grows closer, the Chancellor faced a test. He needed to boost household incomes and help cut the cost of essentials, but neither of those was forthcoming and his Budget failed to do enough for low-income households.

With an eye fixed firmly on the next general election, the Chancellor is pinning his hopes on a housing boom. His make-or-break blueprint for rebuilding the economy is unlikely to make a difference to the nation’s finances, as the focus has clearly shifted towards manifesto writing, positioning and early electioneering ahead of 2015. More than ever, taxpayers will now underwrite the mortgages of hundreds of thousands of home buyers, and take stakes in newly built houses in a multi-billion pound attempt to stimulate the struggling economy. However, he risks causing another unsustainable boom in the housing market, putting billions of pounds of taxpayers’ money at risk and offering little hope to hard-pressed working families who are struggling to get on the housing ladder for the first time.

We face the biggest housing crisis in a generation, but the Government’s housing and economic policies will make it worse by stoking house prices rather than helping families find a home. The Government have insisted that homes sold through the right to buy scheme will be replaced with more affordable housing on a one-for-one basis, but the Budget included £4.5 billion of funding for housing, with only £225 million of that to be spent on affordable homes. If we do not tackle the fact that we are still not building enough homes, we will create another housing bubble that will continue to push house prices out of reach of the majority.

Not only is the Chancellor pressing ahead with a tax cut for millionaires, it now seems that his mortgage scheme will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000. Surely people struggling to get a mortgage, and those who want to own their first home, must be the priority for help, rather than the small number who can afford to buy a second home. If the Government concentrated at least some effort on collecting taxes from international corporations that operate in this country, and closing some of the loopholes in the tax system, there would be more money to go around.

With the coalition’s axe in full swing, I am appalled that the Government place so much effort on reforming the benefits system and punishing the sick and most vulnerable in our society, while those at the very top have seen their incomes rise as never before. The financial sector is at the heart of the economy. Huge, multi-million pound payouts to “banksters”, while citizens cannot

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even afford to feed themselves, undermine any efforts to break with the past and are a timely reminder that the country is being run by the rich for the rich. As the rest of the country faces austerity, just an hour after the Chancellor delivered his Budget speech, Barclays bank paid nine fat cat bosses £40 million in share payments. That makes a complete mockery of claims that banks are cleaning up their act when it comes to their bonus culture.

At exactly the same time as the bedroom tax comes into force, the Government are prepared to give 13,000 millionaires, including the Prime Minister and the Chancellor, a tax cut of £100,000—£3 billion in total a year—while more than half a million households that are home to a disabled person will lose £700. That is simply not right.

Mr Leigh: Does the hon. Gentleman not agree with the Mandelson-Blair approach that the way forward for the Labour party is not to worry about how public services are funded, but to let the rich go on funding those services through taxation? What is wrong with that?

Graeme Morrice: The hon. Gentleman clearly indicates how his Government have got their priorities wrong.

It is time for this Government to recognise what is very much evident: that they have got this horribly wrong and need to think again before it is too late. We need a lasting change of direction by the Government, to one that demonstrates compassion, puts ordinary people first, and recognises the right priorities, or —ideally—a change of Government itself.

7.29 pm

James Morris (Halesowen and Rowley Regis) (Con): Few things are as natural as the aspiration to own a home, but for too many of our constituents, the aspiration is too often out of reach. The high cost of housing is one of the most frequently raised issues at my surgery. The problem affects not only would-be first-time buyers, but many going through family breakdown. The deposit typically required for a mortgage on even a small starter home is higher than many working families’ annual income. Without parental support, raising that sort of money can be nearly impossible. The “help to buy” schemes announced last week will help to put home ownership back within the reach of hundreds of thousands of our constituents.

I am delighted that the Chancellor is extending right to buy further, so that council tenants can buy the homes in which their families live and local authorities will receive receipts from the sales, to be used to build new social housing. I am proud that, while under Conservative leadership, Dudley built some of the first new council housing in the area for a generation. Right-to-buy receipts, and the doubling of the affordable homes guarantee programme, will mean that more councils and housing associations will be able to build new social housing for local residents.

Last week’s jobs figures showed another increase in the number of people in work—the number in Halesowen and Rowley Regis is now the highest ever—but the fact remains that many people aspire more than anything else to a job that will give them more independence and create a better life for themselves and their families. I remember from when I was setting up my own small

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businesses that nothing was more rewarding than being able to offer somebody their first job, or to offer work to a person who had been unemployed for some time. Hon. Members know that Governments cannot magically create sustainable jobs, but they have a responsibility to do everything possible to avoid putting barriers in the way of those who can. Every £1 that we add to non-wage costs represents an additional barrier to small and medium-sized businesses taking on extra employees. That is why I am pleased that the Chancellor has launched his scheme. The £2,000 employment allowance is a direct boost for new jobs. It will help to bring more people into work and open up a new set of possibilities and aspirations.

Shortly before the Budget, I attended the launch of the youth budget in Parliament with a number of other right hon. and hon. Members, including the Chancellor. Fourteen to 18-year-olds from around the country came together to discuss young people’s priorities, which were drawn up following a national vote. That generation wants to get on, and the conclusion they came to in their youth budget could not have been clearer: they want the Government to bring down the deficit more quickly.

The House spends a lot of time talking about the economic effects of unsustainable deficits. The continuing turmoil in the eurozone is a current reminder of the dangers of failing to address the deficit. However, the young people gathered together for the youth budget remind us that, as well as being economically foolish, it is morally wrong for one generation to expect the next to pay for its overspending.

Members on both sides of the House will recognise that growth remains weaker than had been hoped for or expected, as it does in most other developed countries. There was much in the Budget and the Chancellor’s autumn statement that will help wealth creators to deliver the economic activity that we need to provide growth, but there is also much to help to make things that little bit easier for the millions of families who are working hard to get on and build a better life for themselves and their families. I believe that those who strive and those who aspire will see this Budget as a Budget for them.

7.34 pm

George Galloway (Bradford West) (Respect): That speech, much of this debate and this Budget demonstrate the parallel universe in which the governing class in this country is living. Earlier in the debate, nearly four hours ago—it feels like four days—we had the full vaudeville, music hall treatment. They chuntered and they chortled and they laughed—how they laughed!—until their tummies wobbled about the state we are in.

But there were some genuinely funny moments, the funniest of which was when the Secretary of State said that the Budget had sowed the seeds of growth and jobs in this bleak midwinter, which has now frozen out the spring. In the very month in which 4,000 grandmothers and grandfathers froze to death in Britain—froze to death in Britain, in 2013—and the very month in which millions of our citizens had to make a choice between eating and turning on their heating, the Secretary of State believes that this Budget sowed seeds for growth and jobs. No seeds can grow in this climate; hon. and right hon. Gentlemen on the Government Benches should know that.

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The truth is that this Budget, produced by a Cabinet of millionaires, governing in their own interests and the interests of a very narrow class, has lost the confidence of the country. Indeed, the political system and the political class as a whole have lost the confidence of the people, who see their own situation, with mass unemployment and poverty stalking the land. Bradford, my constituency, is an almost perfect example. Youth unemployment has tripled in two years; one in eight is unemployed; our child poverty statistics are the second worst in the country; our schools are the third worst in the country; our hospitals are the seventh worst in the country; our young people walk the shuttered-up streets without education, training or jobs; and the Government and others in the media cry surprise when the devil finds work for their idle hands.

The Government have done nothing for Bradford—the Budget does nothing for Bradford—because Bradford is entirely beyond their ken. [Interruption.] Do I know where Bradford is? I am the person who, just one year ago, won a landslide election result—a by-election of historic proportions. I defeated the Labour party and, the party of the hon. Member for Scarborough and Whitby (Mr Goodwill), precisely because it thinks that yah-boo politics of the type we have seen in the debate is sufficient to meet the gravity of this situation. He should come to his seat and join the debate.

Here is the truth of the matter: our country is in grave danger. It is a country on the slide, which cannot keep its pensioners warm in the winter time, but can fly around the world setting fire to other people’s countries, apparently at the drop of a hat. It is a country that cannot pay for its young people’s education without charging them £9,000 a year to take shelter from the economic winds and study at universities, thanks to the betrayal of the yellow Liberal Democrats.

I have only 15 seconds left. Do you know, Mr Deputy Speaker, how many times in this House just this afternoon the words “immigrant”, “foreigner”, “alien” and “foreign migrant” have been mentioned? There is no U-turn by the Government, but there is no deviation to the right so low that they will not make.

7.39 pm

Andrew George (St Ives) (LD): It is, of course, a pleasure to follow the hon. Member for Bradford West (George Galloway). His speech was an oratorical interlude that demonstrated his perspective on the world and suited his style: blacks, whites and no greys. Although he denies practising yah-boo politics, I am afraid to say that that was pretty much what we heard.

Today, we are concentrating primarily on housing, and I want to make a constructive contribution on the narrow issue of developing the construction industry, trying to kick-start the economy in the process and meeting desperate housing need. I welcome any intervention by the Government, including the Budget announcement on the promotion of home ownership for those seeking, in many cases in desperate circumstances, to get their first toe-hold on the housing ladder. In particular, I want to look at the special circumstances faced by many people living in rural areas.

My own part of the world is, of course, west Cornwall and the Isles of Scilly. Cornwall as a whole has seen the number of houses double in the past 40 years, yet

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housing problems for local people have become significantly worse. What we have learned in Cornwall applies to many other parts of the country that are attractive to wealthy people—we have many such places in Cornwall—who can afford second homes. On its own, building houses is not the problem. In places that are highly desirable to those with large wallets, something more sophisticated is required than merely heaving in a load more houses and turning the place into a developers’ paradise. There is a big mismatch between earnings levels and house prices in our area.

Mr Gregory Campbell (East Londonderry) (DUP): The hon. Gentleman’s area, like mine, has a number of second homes on coastal development routes. Does he agree that we need the Government to plug this massive loophole, so that people do not take advantage of what appears to be there at the moment and build large buy-to-let properties with a significant subsidy from the public purse?

Andrew George: I entirely agree. As the Government introduce their proposals, I hope that they will discount any chance of the loan guarantee being used to support the purchase of second homes, and that it will go only to families that otherwise would not be able to buy a first home of their own. After I was first elected in 1997, I campaigned against the policy that had been introduced by the Conservative Government of providing a 50% council tax discount for second homes. In that case, hundreds of millions of pounds were being used every year to subsidise the wealthy buying second homes, when thousands of local families could not afford their first. This Government are finishing off the job. I persuaded the previous Labour Government to remove as much as they possibly could of the second home council tax discount, and that was the right step forward.

Before I was elected to this House, I worked with housing associations and others to find a way of constructing a new lower rung on the housing ladder through shared equity and shared ownership schemes. The rural exceptions policy allowed exceptions to be made on the edges of villages and towns, where planning permission would not normally be granted, to meet local housing need. It allowed the schemes to go ahead and meant that the development price of land was significantly lower than would have been the case if they had been given unfettered permission to develop the land and build properties at prices that local people could not afford. The exceptions approach and shared ownership were clearly the way forward. The problem was that in rural areas only two lenders, Nationwide and Halifax, were prepared to put money into shared ownership developments.

A lot of lenders question whether they are prepared to put their money in and support local families who are trying to get on to the housing ladder. Such properties do not result in the level of default—the amount is 0.45% in shared ownership as a whole, which is significantly less than that for rural housing stock—that a lot of lenders pretend. If the Government are looking at ways to tighten the definition and develop their loan guarantee scheme so that it will apply to families who desperately need help, I urge them to look at the shared ownership sector. They should find ways to enable the situation to come to life, but not just on the first, initial purchase;

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they should try to ensure that on the second and subsequent purchase they can facilitate and work with housing associations so that these families can move on. The lack of confidence that this market can have a life of its own is holding it back.

I hope the Government will look at ways of having, in effect, a rural housing investment bank through this measure, and I hope that they will see this as a constructive contribution to the debate.

7.45 pm

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): I am glad I met a man from St Ives on this journey, because I agree with much of what the hon. Member for St Ives (Andrew George) said about shared ownership.

I suppose it is because I have been in this House too long—there is usually a chorus after any Member says that—and because I have heard a lot of Budget and autumn statements that I have become more cynical about them as time goes on, but I want to start by saying that, as co-chair of the associate parliamentary manufacturing group, I believe that some of the concessions and planned changes affecting manufacturing industry in the autumn statement and the Budget were good for manufacturing, and were welcomed by people in the sector.

The Budget was supposed to be about aspiration. I would like that aspiration to be lifted much higher. Our country is changing fast, and my irritation with Budgets and autumn statements is that there seems to be no time for politicians to get together in a sensible way and think strategically about policy making and the direction of our country. Our country is changing fast. The social and economic structure is changing rapidly and fundamentally within my lifetime. I was talking recently to students at Northampton university, and their knowledge of the social structure of Britain is amazing. I asked them what percentage of people worked in manufacturing and some of them said 30% or 40%. They had no idea that about 9.5% of people work in manufacturing; it is 10.5% in Huddersfield. Some 30% work in what people call public services—education, health and local government —and roughly 60% work in private services.

Working in early years or later years care in private services means earning minimum wage or minimum wage plus. Working in retail and distribution also means earning minimum wage. No one can live the good life on minimum wage. I came into politics so that my constituents could live the good life. We all know the good life: we can put food on the table and have a nice house or flat, whether it is rented or bought through a mortgage. We all know the essential ingredients for a good life, but many of the good jobs that provided it, including in manufacturing, for example, have gone. They have been replaced by minimum wage jobs in retail and distribution, and in caring for patients.

Universities, apprentices and education were mentioned only once in the Budget, and that is a real worry. I care passionately about giving young people jobs and opportunities, and 90% of firms do not take on apprentices. That is a real concern and it was not addressed enough in the Budget.

Manufacturing is important in our country. My vision is of a high-skilled, high-paid Britain, but at the moment many of our people are heading towards a low-skilled, low-paid economy. In fact, those two can live side by

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side, and as Lord Heseltine told us, there is a grotesque change in our country that should be worrying every Member—the way in which London and the south-east are sucking the life out of our great towns and cities. The Budget has not addressed that, but we must address it if we are to get strategic policy right. This Budget did not do enough in that direction.

Mr David Ward (Bradford East) (LD): Does the hon. Gentleman also agree that demographic changes and the rising numbers of young people in certain communities make it even more important to have specific policies targeted at them in order to get them into workplaces and apprenticeships?

Mr Sheerman: The hon. Gentleman knows of my passion for skills training and apprenticeships. We should abolish unemployment until the age of 25. The Netherlands did it, so why cannot we? There was not enough in the Budget to address youth unemployment. When I was a shadow Home Affairs Minister, I knew the importance of putting money into deterring young people from crime. If someone is not a criminal by the age of 25, they do not become one, so if we keep young people in employment, training or education until then, they never get into inter-generational worklessness.

Those are the sorts of bold policies I wanted in the Budget. I wanted higher aspiration and for my constituents to see us not lobbing insults at each other, but finding common cause to get the country ready for the 21st century and to make ours a society of high skills and high pay.

7.51 pm

Sir Bob Russell (Colchester) (LD): The announcement to help first-time home buyers is great, but the wording needs to be tight to prevent it from being misused as a licence for people to buy a second home or to add further to the buy-to-rent racket that has led to so much misery for those trapped in the private rented sector, while others have become property millionaires by sponging on funds from housing benefits paid for by taxpayers to help people who cannot afford to buy or who cannot get a council house. It would make more sense to spend this money on new council houses—or social housing as it is now known.

Next, there are mixed messages on alcohol tax and the coalition Government’s desire to tackle binge drinking and improve the health of the nation. One minute there is disagreement about whether there should be a minimum unit pricing of alcohol; then the Chancellor knocks 1p off the price of beer, rather than raising it by 3p, as would have happened under the ever-rising structure inherited from Labour. Thus the cost of a pint of beer has gone down by 4p on Labour’s pricing policy. This is not going to help tackle binge drinking or the growing health problems associated with excessive drinking.

We need a variable price structure to help traditional, community and village public houses, which would fit well with the coalition Government’s localism agenda and the last Government’s sustainable communities legislation. Tax on beer and lager should be raised significantly in the mega-pubs and to stop irresponsible discount pricing in supermarkets, but reduced in our neighbourhood public houses, which are closing at a rate of 18 a week, owing, in no small part, to the lack of

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a level playing field. It is these neighbourhood hostelries that, in the main, are less likely to cause antisocial problems. On 1 November last year, I told the House:

“We need to amend the tax levy on beer sold in our traditional public houses. We should have a tax-neutral approach to keep the Treasury happy and bring huge social benefits, including job retention and creation, rather than there being the loss of jobs that we continue to witness in the sector. Most publicans of neighbourhood and village public houses run responsible establishments. Their customers should be rewarded, not financially penalised because of the irresponsible marketing carried out by supermarkets and mega-drinking establishments.”—[Official Report, 1 November 2012; Vol. 552, c. 429.]

On tackling binge drinking and the often associated incidents of people being injured, deliberately or accidentally, from broken glasses or beer bottles, sometimes used as weapons in fights, I urge the Chancellor to give a tax discount to brewers who put their product in plastic bottles—more accurately polycarbonate bottles. Likewise, I urge him to encourage major drinks venues to use the same material for the glasses in which alcoholic drinks are served. This would dramatically reduce the number of people taken to hospital for injuries caused by broken beer bottles and glasses. I refer the House to the ten-minute rule Bill in the name of the hon. Member for Wrexham (Ian Lucas), which he brought in on 4 September last year. In his speech, he pointed out that according to the Home Office there are about 87,000 violent incidents involving glass every year. Just think how much it costs the NHS to deal with the vicious wounds inflicted.

I urge the Chancellor to introduce a levy on football television rights. There is already too much money sloshing around in professional football, and it is only going to get worse. The next television deal will bring in £5 billion to inflate still further the obscene payments to premiership footballers and a big creaming off by their parasitic agents. I suggest a 20% levy, which the Chancellor could ring-fence and direct to be spent, as a £1 billion Olympic legacy, on school and grass-roots sport.

Thank goodness we have not had a repeat of the pasty tax nonsense, although we are left with the unfairness of VAT being levied on the Subway toasted sandwich. I urge the Chancellor to try a little harder with his attempts to be the common man and axe the 20% tax on toasties and the like.

Finally, how about this for a new income stream? I am grateful to Mr Richard Spendlove, doyen of the BBC evening radio airways across the eastern counties, for this suggestion. He points out that people will pay a small fortune for so-called personalised or elite registration number plates for vehicles, so why not, he asks, re-issue all those abandoned and forgotten numbers from the early years of motoring? Whenever such live number plates come on the market, they can fetch as much as £4,300, which was the asking price yesterday for registration number 88 VR. Mr Spendlove suggests that the Driver and Vehicle Licensing Agency dusts down its records, identifies the tens of thousands of similar historic numbers that decades ago ended their days in the scrap yards of yesteryear and makes them available. The revenue generated could, I suggest, be used for road safety measures outside schools.

If the Chancellor wants to be popular, he should adopt all those suggestions.

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7.56 pm

Mr Michael Meacher (Oldham West and Royton) (Lab): To fill a Budget with populist gimmicks while wholly ignoring the economic fundamentals that are remorselessly driving this country into a semi-permanent stagnation is to degrade the high office of Chancellor. The home loans scheme has more than a whiff of sub-prime about it, luring those without the means to buy a house they cannot afford and thereby fuelling a housing bubble. The child care voucher is limited to where both parents are working and offers five times more to the richest fifth than the poorest fifth. And the penny off a pint of beer does not do much to compensate for the 9% cut in real wages that the OBR now expects by 2015 compared with 2009.

All this populist flannel misses the point. The real point is the total abandonment of any serious attempt in the Budget to tackle the fundamental problems of a desperately ailing economy. The tragedy for the people of this country is that during this depression we have Herbert Hoover at the controls, when the whole country is crying out for a Franklin Roosevelt. The harshly unrelenting facts of Britain’s inexorable decline speak for themselves. The OBR has been forced to halve the growth prediction this year, which it made only three months ago, from 1.2% to 0.6%. The deficit reduction—the ostensible aim of the whole brutal austerity machine—is going into reverse. The deficit now expected in 2014 is £120 billion—twice what it was expected to be just three years ago. By the time of the election in 2015, the Government will have been forced to borrow an extra £250 billion more than was forecast in 2010. With the plans in the Budget, any hope of the Chancellor’s achieving a firm and sustainable recovery is simply delusional.

The heart of any Budget is its macro-economic strategy. Uniquely, in this Budget, there was no credible strategy. The Chancellor’s policy is still so destructive and the failure so massive that it is difficult to avoid the conclusion that the real objective is not deficit reduction, but to dismantle the public sector and shrink the state. One simply has to ask, “Why is the Chancellor so wilfully blind to an alternative?”

An alternative must start from recognising that when the household and private sectors are deleveraging, there cannot be a recovery if the public sector does the same. It starts from recognising also that monetary policy alone—throwing £375 billion of quantitative easing at the banks, dropping interest rates to the floor and letting the exchange rate fall by 25%—cannot by itself produce growth; or, as Mark Carney would put it, not much “escape velocity” there. An alternative also starts from accepting that until the collapse in aggregate demand is tackled, there will be no recovery.

How can that be engineered and paid for? There has to be, initially, a public sector-driven investment programme in house building, infrastructure, energy, transport and low-carbon technology until such time as the private sector can take over. That can be paid for by borrowing £30 billion at the dirt-cheap interest rate of 0.5%, or £150 million a year, which would rapidly pay for itself by taking back into employment 1 million workers, whom it is currently costing the country £10 billion to keep on the dole. However, this does not have to involve any public borrowing at all. The nationalised banks, RBS and Lloyds, could be instructed to prioritise lending

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to key infrastructure manufacturing projects, or the ultra-rich—the 14,000 millionaires who are about to get a £2,000 a week tax give-away—could be capital gains taxed on the £155 billion of gains they have made over the last three years, according to

The Sunday Times

. Or, instead of hosing down the banks with another huge tranche of quantitative easing, the money could be diverted to direct investment in industry.

8.1 pm

Iain Stewart (Milton Keynes South) (Con): I very much welcome the opportunity to contribute to this Budget debate.

We have heard much in contributions from both sides of the House about the level of the housing supply and the building that is going on. I am happy to report that in Milton Keynes we are getting on with it. We have 28,000 housing permissions in place and the Government have intervened to unlock some of the developments that have been gummed up in the system for too long, thanks in part to our friend the great crested newt—which, for an endangered species, seems to appear with remarkable frequency whenever there is a planning application. Those housing developments are not part of the hated regional spatial strategy, but are now part of a locally decided and locally managed strategy, which is just one component of our successful growth strategy—not the old, blunt housing targets, but economic growth alongside housing growth and infrastructure planning.

I warmly welcome the measures in the Budget and earlier announcements that will underpin and enhance Milton Keynes’s position as the part of the country that will lead in the rebuilding of our economy. All right hon. and hon. Members will want to claim that their home area is the best and is leading the country, but I can cite three recent independent surveys that confirm that Milton Keynes is leading the way. In November, the Experian company ranked Milton Keynes as No. 1 in a survey of towns that will lead growth in this country. In each of the next four years, annual employment will grow by 2% and output will grow by 3%, and this is sustainable and balanced growth, not just in the retail and service sectors but in manufacturing and high-tech industries as well.

More recently, March’s economic outlook report by PricewaterhouseCoopers put Milton Keynes’s growth ahead of the UK average. Mike Robinson, partner at PwC, said that

“businesses should be encouraged to capitalise on the expected upturn in consumer spending and opportunities created by local infrastructure investment.”

Finally, just the other week the business location index—part of the inward investment guide to England—ranked Milton Keynes as the best place in Britain to do business, based on its scoring highly on economic, human resources, environmental and infrastructure indicators.

Companies House records show that more than 2,000 new businesses started up in Milton Keynes in the last year, up 10% on the year before. Our inward investment is booming. Milton Keynes is already home to 700 international companies, and that is growing. We have a winning formula that is based on our local factors and the UK’s competitive tax strategy. Our strong position will be underpinned and enhanced by the policies announced in the Budget and other measures. The city deal and the Heseltine proposal for a single

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pot of money to decentralise decision making will help, boosting our infrastructure, particularly with the east-west rail project, which will link Milton Keynes to Oxford and, ultimately, Cambridge and is forecast to generate 12,000 jobs in the local region.

Our apprenticeship schemes are doing well. We have already doubled the number of apprenticeships locally to 2,000—that will increase further—and not just in traditional sectors, but in accountancy, law and manufacturing. That will develop our skills base for the future and make us even more attractive to inward investors. Finally, the policies to help people buy their first home and go further up the housing ladder will ensure that our housing strategy is linked to what we need locally. Of course there are many challenges ahead, but Milton Keynes is doing well. This Budget gives us the tools to get on with the job.

Let me finish by referring to the contribution from the hon. Member for Bradford West (George Galloway). He criticised the Government for talking about sowing seeds in frozen weather. A horticulturalist will tell us that it is not only possible to sow seeds on frozen ground, but often desirable, because that can lead to the healthiest growth.

8.6 pm

Dr William McCrea (South Antrim) (DUP): I thank you, Mr Deputy Speaker, for giving me the opportunity to speak in this Budget debate.

Like all right hon. and hon. Members, we waited to hear the Chancellor’s proposals that would kick-start the economy, lifting it out of the despair in which it finds itself. The Secretary of State for Communities and Local Government opened today’s debate, outlining Government policy in the Budget for a house building programme. I appreciate that our constituents across the United Kingdom have difficultly getting on to the housing ladder. Having listened to my colleagues here in England, I can say that there is undoubtedly a social housing build problem, with affordable housing described as a national emergency.

Members of Parliament from Northern Ireland have difficulty offering proposals to resolve the housing problem, because housing is devolved to the Northern Ireland Assembly. However, the Chancellor has offered some hope to homebuyers in the Budget, with interest-free loans of up to 20% of the value of a new build property. I appreciate that there is some confusion about the proposal, but I trust that homebuyers seeking to get on the housing ladder will not be lost in the midst of a policy that seems not to have been thought out before being announced.

On Budget day, my hon. Friend the Member for East Antrim (Sammy Wilson) rightly welcomed a number of acceptable announcements. He endorsed the decision to protect Government front-line services in health and education. He also acknowledged that the Government had recognised the key role that capital infrastructure enhancement plays in stimulating economic growth. That is important not only for short-term economic growth, but for our country’s long-term prosperity. However, we face a serious problem, with little or no economic growth across the United Kingdom but, sadly, no sign of it changing in the near future. We need to stimulate our economy. The Secretary of State told the House today that we needed to give business a leg up.

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To do so, we need to bring confidence back into the business community. Businesses need to be sure that the Government have a plan to take us out of the mess we are in. No one can deny that there is a lack of confidence. As a result, those who have money are not spending or making the investments in industry that we need so much in our economy.

Anne Marie Morris (Newton Abbot) (Con): Has the hon. Gentleman read the latest report from the Federation of Small Businesses bureau, which says that the level of enthusiasm and belief that we are heading towards a recovery is higher than it ever has been? Confidence is at an all-time high.

Dr McCrea: I thank the hon. Lady for her remarks. I think that if we really went out into the community, we would still find a lack of confidence. If confidence were out there, those who have the money—and some certainly do—would be investing. We need to get those people to spend that money within our economy. On the other side, there is not only a lack of confidence, but a lack of finance. Small and medium-sized businesses are being starved and crippled by denial of finance.

I do not believe that we should talk down our economy, but we must be realistic about the economic situation in our United Kingdom. We want inward investment and we need to kick-start the economy. I would certainly like to see the Chancellor giving more encouragement. Many businesses are crying out for finance. They go along to the banks, but no matter how many times the Chancellor and even the Prime Minister have assured us that they are encouraging the banks to give them the money, that needed money is not getting into the coffers of SMEs. We have got to do more about that.

My constituents welcome the cancellation of the 3p increase in fuel duty, which would have been an additional tax burden not only on businesses, but on virtually every other person and family in our community.

Mr Gregory Campbell: Does my hon. Friend agree that if the Chancellor were in the business of freezing one duty and reducing another, it might have been more cost-effective and beneficial to the economy if he had frozen the beer duty and reduced the fuel duty?

Dr McCrea: I thank my hon. Friend for that suggestion. In fact, that suggestion would have been profitable for the economy, especially bearing in mind that we in Northern Ireland already pay higher fuel prices than any other region of the United Kingdom. We also welcome the low cost of borrowing from the banks over a sustained period, but I have to say that there is another side to that because we should have some sympathy for many pensioners and other savers who depend on savings to supplement their income. They are suffering greatly from the very low interest rates.

I acknowledge the reduction of corporation tax to 20%, ensuring a single rate for businesses in April 2015. In welcoming this step, however, I would ask the Chancellor when corporation tax is going to be devolved to the Northern Ireland Assembly, particularly bearing in mind the fact that we compete with the Irish Republic, which has a 12.5% rate. We want to be able to compete on a

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level playing field, or better, to bring inward investment into our Province. Northern Ireland’s population has a strong work ethic, but we need policies that will build confidence, bring that inward investment and help industries in the local community to invest in the future.

Air passenger duty is another issue. I believe it is detrimental to our economy. I acknowledge that APD exists for transatlantic flights from Northern Ireland, but we need to challenge this, so I call on the Chancellor to reconsider his position. There is anger, too, over the millionaires’ tax cuts, while at the same time there is the hurt over the bedroom tax. Where will our constituents find the houses for the downsizing? It is easy to talk about these imaginary houses, but that offers no relief to families that face turmoil in getting a roof over their heads.

8.13 pm

Oliver Colvile (Plymouth, Sutton and Devonport) (Con): Before I go any further, I should like to declare that I retain an interest in a small communications company, which I set up before I was elected to this place, that gives advice to developers on how to manage planning procedures and the planning system. For the last 20 years, I have been following the whole issue of development and planning.

I very much welcome the Chancellor’s proposals to introduce “help to buy”, which I hope will stimulate our economy as well. To my mind, however, the planning process is not the issue that has created many of the problems for development. We need to unlock credit availability and make mortgages much more available, especially for those first-time buyers who cannot raid the bank of mum and dad.

I am not going to pretend that I am an economist or that I necessarily understand banking regulation or the complexities that go with it, but I think that we cannot ignore the reasons why we are in this mess. To my mind, it was Bill Clinton and the American Administration who, wanting to encourage the less well off, especially among the Afro-Caribbean community in the United States, to buy their own homes, consequently created a sub-prime market in the 1990s. By weakening financial regulation, the US and British Governments created a new class of specialised mortgage lenders that subcontracted their liability. By failing to put up interest rates, the US Federal Reserve and the Bank of England allowed the housing market to overheat. That is why we created this major crash.

In 2001, when the Labour Government created a budget deficit, they continued to make our problems much more disastrous than they needed to be, and they failed to control public expenditure, adding to our financial woes. In addition, the Bank of England failed to manage our inflation target and our monetary framework. Not only the Treasury, but the Office for Budgetary Responsibility have some way to go because they have failed to get their forecasts right in the process.

As my hon. Friends know, the Bank of England is responsible for managing the inflation target, but it is the Treasury that actually sets that target in the first place. For the last two years, I have been banging on and asking how those criteria have been set, but I have failed to get a reply. Plainly, something has gone very wrong indeed. The Bank of England is consistently failing to hit its inflation target. In producing a Budget, monetary policy cannot be divorced from the economics.

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In the years before the credit crunch, monetary conditions were too loose. There was an asset price bubble, house prices rose very sharply and if the banking crises had not erupted, general inflation would have been an even more serious problem. The Bank of England accommodated a serious asset price bubble with a huge and unsustainable level of domestic household debt. People have rightly criticised bank and financial market regulation, but much less attention has been given to defective central banking and overly loose monetary conditions that made possible the household borrowing and financial leverage.

I believe that the time has now come when the role of the central banks should be scrutinised properly. We must learn the lessons, the limitations and the defects of the inflation target regime. There has been a serious lack of transparency in the way the Bank of England conducts monetary policy. The details of its forecasting model, the assumptions it uses and the forecasts it generates have not been publicly available. Its public documents have been disappointing in respect of their clarity and presentation, and I am afraid that the inflation report has failed. I am firmly of the view that we need a proper review of the inflation target, how it is set out and how the central bank conducts its business.

8.18 pm

Yasmin Qureshi (Bolton South East) (Lab): They say, “If you tell a big enough lie and repeat it constantly, people will believe it”—and that is what the Tory-led Government have done. We are constantly told that the last Labour Government left the biggest debt in the developed world. That is an odd thing to say when the Chancellor admitted to the Treasury Committee in 2011 that he did not even know that the UK had the lowest debt in the G7.

Of course the UK will have a higher debt and deficit than some other countries, and Government Members often make a comparison with Greece, but Greece has a totally different economy from ours; we are the sixth largest in the world. Of course our debt will be higher than Greece’s, but the real figure to look at—one that relates to economic competence—is the ratio of GDP to national debt.

Let me remind the House—I know Government Members have a collective amnesia about this—that in 1997, when the Labour Government came to power, the national debt was 42% of GDP; after 11 years of the Labour Government and before the global recession of 2008, the ratio of GDP to national debt was 35%. That is a reduction of 11%, and it was not achieved by a Government who were financially incompetent. In fact, that Government achieved an even greater reduction than the Conservatives.

The second claim that we hear is that Labour created the biggest deficit in the developed world by overspending. If that was the case, why did Germany, Japan, the United States and other similar economies have a problem? Why did they have banking crises? Why were they not in deficit? We know the answer. We know that there were global economic problems. We know that the financial crisis began in the United States with the sub-prime mortgages. In fact, it was a former Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), who took a bold initiative, saving our banking systems and, subsequently, saving half a million jobs as well.

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Those are not just my views. The International Monetary Fund concluded that

“the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It’s basic economics: when output falls the deficit increases.”

The deficit increase was not due to any of the actions taken by the Labour Government. In fact, all those actions made the economy better, and saved more jobs. In contrast, this Government’s policies over the past three years have done nothing to help the economy to grow.

Another reason for our financial loss was the fact that we are one of the main financial centres in the world. Given that there was a global banking crisis, of course we were likely to take the hit more than other countries. We should also bear in mind that up to 2008, while Labour was in power, the actual borrowing costs were low. Indeed, they are still low. That is because in the United Kingdom our bonds are strong and are performing well, because people know that the Bank of England is there to step in if there is any problem, and, of course, because over the last 300 years the UK has never defaulted on its debt. The Government try to blame austerity, saying, “We must introduce all these measures because we need to balance the books,” but the truth is that they are using austerity as a justification for downsizing the state, which, in ideological terms, the Conservative-led government have always wanted to do.

Even the Chancellor’s budget deficit programme is not working. Everyone knows that a budget deficit occurs when expenditure exceeds income, but one way of securing income is taxation, direct or indirect. When people are being laid off and are not working, they are paying no taxes. They are having to be supported by a benefits system, which is why—

Mr Deputy Speaker (Mr Nigel Evans): Order. I am terribly sorry, but the hon. Lady’s time is up.

8.23 pm

Paul Uppal (Wolverhampton South West) (Con): It is not normally my habit to comment on earlier speeches, and I had intended to stick to the main ethos of what I was going to say, but I feel that I must draw something to the attention of the hon. Member for Bolton South East (Yasmin Qureshi). She began by talking about GDP ratios. Let me gently remind her that during the early years of the last Labour Government, they stuck to Conservative spending principles. Does she remember golden economic rules, and the end of boom and bust?

Yasmin Qureshi: Will the hon. Gentleman give way?

Paul Uppal: I will gladly give way.

Yasmin Qureshi: Eleven years later, it was the Labour party that reduced the GDP ratio to 35%.

Paul Uppal: No; not 11 years later. [Interruption.] If Labour Members disagree, perhaps they will recall the views of Hamish McRae, the economist who writes for The Independent, who has commented on the issue at length. However, I digress.

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The essence of today’s debate concerns housing policy. I am glad that the Government have confirmed that they will make up to £12 billion of guarantees available to support more than £130 billion of mortgages for new-build and existing homes in January for three years. I also welcome the Chancellor’s commitment to realigning the Government’s policy on the private rented sector by increasing the £200 million build to rent fund to more than £1 billion, and providing a £225 million funding boost to support a further 15,000 affordable homes in England by 2015.

Members on both sides of the House have made various points, but it might be wise at this juncture to refer not to politicians, but to housing and property experts. I do not know whether anyone has taken the time to read this week’s edition of Estates Gazette, which is the bible when it comes to real estate and housing issues. According to Richard Threlfall, KPMG’s head of infrastructure, building and construction,

“the Chancellor has thrown the UK house building industry a new lifeline.”

Nick Jopling, executive director of property at Grainger plc and chairman of the Urban Land Institute’s UK Residential Council, added:

“Stimulating the housing market through further mortgage support…will help improve transactions and liquidity in the market, which has for some time been constrained.”

Stewart Baseley, executive chairman of the Home Builders Federation, said:

“A lack of affordable mortgage availability remains the biggest constraint on housing supply”.

He also said:

“Government must be praised for its attempts to stimulate activity”.

Gerry Hughes, senior director at GVA, said:

“We welcome the healthy five fold increase in the Build to Rent fund. This will undoubtedly assist a sector that is struggling severely.”

I will cut my quotations short at this point, but let me emphasise that those are not the views of politicians, but the views of property professionals.

I think that last week’s Budget statement was seminal in many respects, and that the opening line was crucial. The Chancellor said:

“This is a Budget for people who aspire to work hard and get on. It is a Budget for people who realise there are no easy answers to problems built up over many years—just the painstaking work of putting right what went so badly wrong.”—[Official Report, 20 March 2013; Vol. 560, c. 931.]

I believe that blue-collar workers out there, and the general population, understand the challenging economic climate, and agree that we need to tackle the deficit. The Chancellor stated that it had now been cut by one third, not one quarter, and that according to the Office for Budget Responsibility, we are on course to fulfil our fiscal mandate. However, tackling the deficit, although right and necessary, cannot be our only message. We need to reinforce and go further in regard to some of our flagship policies, taking low-paid workers out of tax and freezing fuel duty. Above all, blue-collar workers want to see more money in their wallets at the end of the month, and I believe that we are on course to achieve that. The Budget demonstrates that our priorities—the Government’s priorities—are in the right place.

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The Leader of the Opposition often comes to the Dispatch Box and accuses the Government of being “out of touch”. The Budget shows that we are on the side of workers, of families, of people who want to get on and make a better life for themselves. It shows that the Government have their priorities at heart—the right priorities. Our priorities are in the right place when a Budget raises the personal tax allowance to £10,000 from April 2014, which means a tax cut for 24 million people. As a result, some people will pay £700 less in income tax than they did in 2010, and 2.7 million will be taken out of tax altogether. Our priorities are in the right place when fuel duty is being frozen once again, which makes this the longest freeze for over 20 years. Pump prices will be 13p lower than they would have been as a result of Labour’s plans, leaving the average motorist with £170 more in his or her pocket. We are helping the aspirational workers, but we are also helping the entrepreneurs, the risk-takers and the employers. The small business man has faced, and still faces, numerous challenges. Things are not easy, but, as a Government, we can help to make things easier, and help to make those businesses succeed. The fall in fuel duty will help them, too, but more importantly the package of business reforms will make a real difference in the pockets of businesses up and down the backbone of this country.

We will cut the jobs tax for every business by £2,000 in 2014. We are taking people out of tax: 450,000 small businesses—one third of all employers—will pay no jobs tax at all. I hope the Chancellor takes similar steps to increase the allowance in future Budgets. Taking more small businesses out of paying the jobs tax will provide a greater incentive to take on more workers during the continuing long-term rebalancing of our economy.

In talking about entrepreneurs and employers, I would like to commend the Government for cutting corporation tax even further. Under the previous Government, business taxes were at 28%. Now we have the lowest rate in the G7, and next month it will fall to 23%. When it reaches 20% in April 2015, we will have the lowest rate in the G20. This is great news for people who wish to invest and bring jobs to this country.

This is a Budget for aspiration and ambition and for all those who wish to work hard.

8.29 pm

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): It is a pleasure to follow the hon. Member for Wolverhampton South West (Paul Uppal). He asked us about the debt to GDP percentage ratio. Looking at the 1996-97 financial year, after 10 years of a Labour Government we not only had a lower debt to GDP percentage ratio, but our deficit was lower.

Paul Uppal: I appreciate the hon. Gentleman’s response, but does he not accept that for the first half of that Labour Government they stuck to Conservative spending plans laid down by the previous Conservative Chancellor?

Jonathan Reynolds: In the rare years since the end of the second world war when there has been a surplus, not a deficit, it is Labour Governments who have traditionally delivered that. That proves we are much better at the national finances, as well as at providing for the people of this country.

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David Wright: Will my hon. Friend give way?

Jonathan Reynolds: I will; I am getting a lot of extra time, here.

David Wright: Does my hon. Friend recall that the Conservatives were wedded to our spending plans right up until the global recession hit? They have never explained which action they would not have taken to save the banks.

Jonathan Reynolds: My hon. Friend is absolutely right. Just last week, when listening to the Chancellor deliver his fourth Budget and its dreadful assessment of the state of the British economy, it was hard to believe that if everything had gone to plan for him and we had managed to pull off what he proposed in the emergency Budget, we would be well down the road to balancing the books and debt would be peaking this year as a percentage of GDP. Such a plan now seems nothing more than a fantasy.

Larry Summers, the distinguished American economist and Treasury Secretary under President Clinton, told a conference I attended last year about the response he gives when asked what one event would make him completely reassess everything he believes to be true about modern economics. He said that since 2010, his answer has been, “If the UK Government manage to bring about a rapid recovery through their deficit reduction plan.” I thought that was quite a bold statement when I first heard it, but of course, Mr Summers knew what he was talking about.

When the Chancellor took office in 2010 and first came to the House, he said we would have five years of pain to eradicate the deficit, but then we would have done it. Last week, he came back to the House to say that there will be another five years of pain, and then we will have eradicated the deficit—maybe. There has been almost no progress, but the pain for our constituents has been very real.

Stripping away all the partisanship in this Chamber, there are surely Government Members who thought last week, “What if we had done things slightly differently?” The truth behind all that misplaced rhetoric in 2010 about the UK being on the verge of bankruptcy or that we would be the next Greece, all but destroyed business and consumer confidence, before the measures in the emergency Budget were even on the statute book. When the Government’s agenda did bite, the combination of that, the collapse of confidence they had already fostered and the worsening eurozone produced an economic disaster. We all see the casualties of that every day in our constituencies. We needed more from this Budget.

There are three issues I would like to address in the brief time available to me, the first of which is manufacturing. I agree entirely with my hon. Friend the Member for Huddersfield (Mr Sheerman) that this Government have done some good things in that regard. I am pleased that there are Members on both sides of the House who, like me, are passionate about manufacturing, a sector in which a fifth of my constituents still work. However, the Budget speech made no mention of the “march of the makers”, and it did not address the two main issues that still remain: that such businesses cannot borrow money when they need to; and that they feel that the Government do not give them sufficient

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strategic direction, be it on renewable energy, High Speed 2, aviation policy or anything else. I hope the Chancellor has had time to read the excellent report by the former director of the Institute of Directors, Sir George Cox, on short-termism in the UK economy. I hope he will take on board its main recommendation: that we need to develop a coherent and workable modern industrial strategy if we are to remain competitive. I agree with Government Members when they say we are in a global race, but at the moment we do not even have a map of the course.

Secondly, despite the job creation record that Government Members like to emphasise, unemployment, particularly youth unemployment, is still a major problem. We know enough about the Work programme to know that it has not been a success. Due to the combination of a lack of jobs generally and an inadequate payments system, it has not had the impact it should have had. We had on the statute book a range of measures that were getting people back into work; the future jobs fund, for example, should never have been dropped. Much of the Government’s borrowing—they announced £245 billion on top of their 2010 figure—is paying for the costs of failure. It is not unreasonable to wonder what might have happened if we had invested a fraction of that sum in putting people back into work.

My third point is about the equity of the Government’s agenda and how things have been shared, because the lower down the income scale people are, the harder they have been hit. The contrast between the tax cut for millionaires in the next few days and the bedroom tax is startling. The latter is a tax on people struggling with their child’s disability, struggling with their own or their partner’s ill health, or struggling to be a good parent in the event of the breakdown of their relationship. The fact that it may lead to higher costs for the Exchequer, as families are forced to move into higher-cost private accommodation, flies in the face of all reason. On this measure, more than any other, we need another famous Budget U-turn.

Let me deal with some specific Budget measures. I welcome the concessions on fuel duty, which does have a real impact on household income, and the scrapping of the beer tax escalator, which will benefit real ale towns such as Stalybridge. The nod towards the Heseltine report is also good, but it could have gone so much further. Had the Government pursued the previous Government’s Total Place community budgeting reforms, they could have improved public services while saving billions of pounds. However, Lord Heseltine’s logic that regional leaders are best placed to determine spending which will lever in private sector investment is surely correct.

I also welcome the commitment to spend 0.7% of our GDP on international aid, and here I have the opportunity to qualify remarks that got me on to page 2 of The Sun a few weeks ago. I am a supporter of international aid, but we have to acknowledge that it is contentious to increase it when our constituents are facing hardship. I just want the focus to be on what aid will achieve, rather than simply patting ourselves on the back for what goes into it. That is a reasonable way to build support for aid among the British people.

There is no doubt that whoever was in charge right now would face difficult choices about where the pain that the British people face should lie. However, the deal we have to offer them is that the pain will be worth it,

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and that the distribution of that pain will be equitable and will show empathy with people’s lives. On all those criteria the Chancellor has failed, and it is surely time for a new approach.

8.36 pm

Richard Drax (South Dorset) (Con): In the short time I have—five minutes is a very short time—I will just rattle through a few points.

I welcome a large part of this Budget—it is very good news. It sounds more like a Conservative Budget, which is why the press have, on the whole, welcomed it; I believe that the Chancellor was transformed into a former Prime Minister, because there was a feeling that this is, at last, what the country needs. My question to our Front-Bench team, which they can perhaps answer later, is this: why has it taken nearly three years for us to do this? I suspect that their answer will be, “Because we are in a coalition.” I am a little tired of hearing that. I want a lot more blue narrative and less coalition narrative, because that is the way forward on sorting out our economy.

I welcome the reduction in taxes. Raising the income tax threshold to £10,000 is a wonderful way to go, but we should go further; how many constituents have we heard say, “If I do a bit more work, I will lose my benefits”? Let us give them income they have earned—let them keep it. Let us keep on that path, encouraging people back to work and off welfare. That is the right direction to take.

The beer escalator has gone—hurrah! A great friend of mine, who sadly had a heart attack, used to run the Hall and Woodhouse brewery in Blandford and before he died he said to me, “Richard, when you get into the House, please try to get rid of this beer escalator because we are losing thousands of jobs across the country as a consequence.” It is now gone—well done the coalition Government. I am absolutely delighted about that, and, in addition, 1p was taken off the pint of beer so we could all celebrate a bit on the night.

I am also delighted about the freezing of fuel duty. I am not going to be partisan and say that it would be much higher if we still had a Labour Government; it is frozen and that is good. But we should go much further and cut into that vast amount of tax that the Government take off the normal man and woman in this country, who, in many cases, simply cannot afford to fill up their car—the situation is ludicrous.

On the ceramics industry, I am delighted that the levy has been removed. May I put in a small request on behalf of the aggregate industry? A constituent of mine is paying £2 a tonne to take aggregate out of the ground, which is costing him £160,000 a year. That is a tax on a small family business employing 48 people in South Dorset that cannot afford that huge burden. Dare I say it—common sense must replace green taxes when jobs will be lost.

My concern is about the Government’s planned equitable loan, or mortgage guarantee—whatever we call it, those are the two arms of the new policy. I hope it works and that more houses are built as a result, but I am concerned that taxpayers’ money is being used to guarantee mortgages. If that goes wrong, we will not want to carry it with us in the years to come.

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As for solutions, as a Conservative I believe that the supply side must be boosted. We must cut taxes further. As I have mentioned, we must get more people back to work by raising the welfare threshold. I believe that that is working extremely well in Sweden, although it went much against public opinion. We are still spending more than we earn and although we lecture the Opposition about what they did, we are doing the same thing. We must live within our means. We cannot go on printing money. Billions of pounds are being printed because there is no charge on interest. That is an inflationary move and could lead in months or years to come to interest rates rising. If that happens, our constituents, businesses and councils will be bust. It is as simple as that. We must tell the country the truth. We are in a hole and we must stop spending money we simply do not have.

Lastly—how time flies—we must consider the ring-fencing of budgets. Surely austere times are not the time to ring-fence budgets. If any budget should be ring-fenced, it should be defence, in my view, but even the Ministry of Defence must be looked at. All budgets should be open to consideration and, if needs be, to being changed. On the whole, I welcome the Budget, but we have a lot further to go—and, please, may we have a lot more blue narrative in the future?

8.41 pm

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): The UK economy continues to bump along the bottom with little or no growth in GDP and the revised OBR figure of only 0.6% growth for this year was a dark cloud over the whole Budget. In Wales, the situation is bleak, with the Office for National Statistics reporting 8,000 fewer jobs in the Welsh economy in the three months up to January. The austerity strategy set out in the 2010 comprehensive spending review aimed at the elimination of the deficit by the end of the Parliament has failed. The fiscal position is considerably worse than that forecast three years ago and worse even than that forecast this time last year—and that is with nearly 80% of the cuts yet to be delivered. We estimate that up to another 50,000 public sector jobs will lost in Wales in the coming years, following the 24,000 already lost. The Budget noted that Wales will get £161 million towards capital spending, but that conveniently masks the fact that there has already been a 40% cut to the capital spend budget from the CSR and that the re-allocation announced last week would come from strained revenue budgets.

Plaid Cymru welcomes some of the measures announced in the Budget. We welcome the freeze in fuel duty, but argue that it would be much better to have a long- term solution based on a stabilising mechanism. The announcement on when the £10,000 income tax personal allowance will be reached is welcome, as that is a long-standing Plaid Cymru policy. The £3 billion in infrastructure spending is also to be welcomed although, admittedly, it is a fraction of what is needed and was more of a political gesture than a serious economic intervention. We support the announcement of the introduction of an allowance of £2,000 a year from April 2014 for all businesses and charities to be offset against their employers’ national insurance contributions, as it will give businesses incentives to take on extra workers. We also support the move to change the terms of reference of the Monetary Policy Committee of the Bank of England to include a growth target. That is

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potentially the most significant announcement of the Budget and, again, is something that we have long called for.

I have some concerns about the second-home subsidy, not least because it would fuel another house price boom and after the inevitable crash, there will be serious consequences for the public finances.

There are several measures that Plaid Cymru would have liked to have seen included in the Budget. We wanted the Government to use the Budget and subsequent Finance Bill to implement the recommendations of the UK Government’s Commission on Devolution in Wales. We would have wanted the Government immediately to set about devolving minor taxes as well the income tax-sharing arrangements. We want the Treasury to implement the findings of the Welsh Government-commissioned Morgan report on devolved business rates, to incentivise Welsh local authorities to develop their local economy and expand their tax base. I will be tabling amendments to that effect to the Finance Bill, to test the will of the House.

The precedent for devolving taxes via the Budget was set with the devolution of air passenger duty to Northern Ireland in last year’s Finance Bill. On Thursday evening, I was amazed to see a senior Labour Assembly Member on the ITV political programme “Sharp End” dismiss the Finance Bill as an appropriate legislative vehicle to implement Silk. It just shows how visionless Labour has become in my country.

The measures I have just outlined would immediately trigger the borrowing powers—[Interruption.] That is the policy of the Labour party; they want borrowing powers in Wales. How will we get them without devolving fiscal levers? That just shows that Labour Members have no ideas.

The measures I outlined would immediately trigger the borrowing powers agreed during the bilateral negotiations between the Welsh and UK Governments, and are essential if Wales is to invest in infrastructure and create the economic boost that is so badly needed. We also want Wales to receive powers over corporation tax, as advocated by Silk, if they are devolved to Northern Ireland. Today, I read with interest in the Financial Times about the unanimous lobby for those powers in Northern Ireland, and the strong letter sent to the Prime Minister by the Northern Ireland CBI.

The tax cut for those earning more than £3,000, due to come into force next week, should have been overturned in the Budget. The renewal of Trident should be scrapped, thus saving £100 billion over its lifetime. A financial transaction tax, which would raise up to £20 billion per annum according to the Institute for Public Policy Research, should have been introduced. Plaid Cymru would have liked to see a mansion tax on domestic properties.

The Chancellor is boxed in by his own rhetoric and has run out of ideas. It is clear that the Treasury’s only economic strategy is to build up the barricades and hope that the rock star central banker can use monetary policy to turn things around.

8.46 pm

Anne Marie Morris (Newton Abbot) (Con): I welcome the Budget. It is a Budget for business and I am pleased that it is particularly good for micro-businesses, which have done especially well.

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Today, we are talking principally about housing, where what the Government have done is commendable, but unless people have jobs and earn good salaries they will not be able to take up those good initiatives. The highlight is the employment allowance. The national insurance win is £2,000 off the employer’s NI bill. In my book, the Government could not have done anything better. That really plays to the agenda of micro-businesses. It enables them to get started. A very small business will be able to take on its first employee.

Many of the smallest businesses are run by women, so the reduction in child care costs in 2015, when 20% of the costs for the under-12s will be met by Government, is very welcome. For the first time, there is something that will help women running their own business; it will help the self-employed, not just those who are employed.

Many small businesses are in rural communities, and fuel is a huge issue. The fuel duty freeze is absolutely what this country needs. In September, petrol prices will stay the same and that is welcome. Clearly, we need to look at making fuel duty and the price of petrol predictable. Perhaps in a future Budget there will be an opportunity to look at a proper stabiliser, whereby when the price of fuel goes up, the tax comes down. Stability is vital, especially for small businesses. Likewise, a rural rebate on fuel duty would be welcome in some of our more out of the way communities.

The measure that will take corporation tax down to 20% faster and align it with the small companies rate is very welcome. I encourage the Chancellor and his team to look at what we could do to make that even easier for the very smallest companies. Perhaps he would support my all-party group working with the Office of Tax Simplification on the concept of a new flat tax for the smallest businesses, through the format of the business structure, so that whether it is a company, a sole trader or a partnership, there is a new mechanism. I appreciate that corporation tax as currently structured cannot fall below 20% because it would then be at the same rate as income tax, which would give rise to all sorts of problems, including people rushing to incorporate when it was not the right thing for them.

Here is another thought for the Chancellor for his next Budget: for the very smallest businesses, business rates can really cause a problem. I should like to see in the next Budget an extension of small business rate relief until the election, as that would be extraordinarily welcome. The Government could also look at trying to show those businesses that are paying business rates what they get for their money. The Chancellor and his team have been keen to enable those of us who pay income tax to see where that income tax is going, but the same argument ought to be true of business rates. Many business people say to me, “But I don’t get my bins emptied in the same way that I can see is the case if I pay council tax.” We should look at where those business rates go, and show the value for money that businesses obtain in paying them.

I had an interesting meeting last week with the valuation office. I asked it whether there was a way of making the valuation process fairer and, as I understood the explanation, it appears that the technology is there to enable revaluation to take place more frequently. A frustration that businesses share with me is that because of the time line—there is a five-year gap—there is a big difference between when the valuation is made and

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when people have to pay the new rate. I would not wish to underestimate the challenge, and I appreciate that the multiplier makes that not entirely straightforward.

That, for me, is the key to getting the country to move forward—helping our micro-businesses—and I welcome what the Chancellor’s team have introduced. I am delighted. Well done, and I hope that the Chancellor will perhaps take on board some of the thoughts that I have set out for the next Budget.

8.51 pm

Roberta Blackman-Woods (City of Durham) (Lab): I am very pleased to be able to participate in this debate, not least to demonstrate how little the Budget will do for the economy of the north-east. We need no further evidence of the failure of the Government’s economic policies than the forecast on growth and GDP outlined by the Office for Budget Responsibility.

In June 2010, the OBR forecast that growth in the UK would be 2.8%. In fact, as we know, it was minus 0.1 %. We have also recently heard that the growth forecast this year, bearing in mind that it is only March, has been cut in half from 1.2% to 0.6%. Given all of that, the Government needed to shake off their complacency and take responsibility for the flatlining economy that they have created. They should introduce measures that would support growth, both nationally and in areas that are suffering most under this incompetent Government, such as County Durham.

The number of job seekers in my Durham constituency has fallen by just 69 in a year, but it is still up by 450 since the general election. Some 25% of those claimants are young people, unable to take their first step on the career ladder. What is equally worrying is the types of jobs that have been created compared with those that have been lost. Information that I have received from the House of Commons Library shows that the new jobs that have been created are predominantly non-skilled or low-skilled. At the same time, the number of jobs in skilled trades and administration is falling—by 2,000 in the last period. That shows a worrying trend of downskilling the north-east economy, just as we need to up our game to compete with emerging economies internationally.

What did the Budget do to rectify that? Absolutely nothing. The North East chamber of commerce said:

“The Government has fallen short of providing the raft of measures that businesses and investors need in order to kick-start growth”.

Ed Cox, director of IPPR North, said:

“George Osborne has missed an opportunity today to enable the North to play its part in leading us out of our economic stagnation.”

We can look at two aspects of that, the first of which is housing in the north-east. Again, we heard a number of lip-service announcements made in the Budget. I am pleased that the Government finally seem to be waking up to the fact that there is a housing crisis, but they appear to be stoking demand for housing, rather than looking at how to increase supply urgently and drastically. The Chancellor—he is probably the only one who thinks this—says that the fundamental overhaul of planning laws is helping homes to be built and businesses to expand. I think that he is wrong on both counts. House

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building is falling and, as my right hon. Friend the Member for Leeds Central (Hilary Benn) said earlier, so is the speed with which planning decisions are being made. Research from the House of Commons Library confirms that no peacetime Government since the 1920s have presided over fewer housing completions than this Government have over the past two years. And it is getting worse; house starts fell in 2012 by 11% to below 100,000.

It does not get any better when we look at infrastructure. In their first three years, this Tory-led Government have spent £7.7 billion less in capital investment compared with the plans inherited from Labour, and over the course of this Parliament they are set to spend £2.1 billion less on capital investment than would have been spent under Labour’s plans. That has knock-on effects for constituencies such as mine, which are getting practically no investment whatsoever in the basic infrastructure to support either the housing that is urgently needed or the new roads and transport links that are necessary if we are to grow the economy.

It also does not get any better for families in my constituency. The measures in the Budget relating to child care will not come into effect until 2015. Families in my constituency need jobs, growth and hope now.

8.56 pm

Kwasi Kwarteng (Spelthorne) (Con): I am pleased to have the opportunity to contribute to this debate.

Last week’s Budget was a successful one politically. It worked because it identified that the cost of living affects all our constituents. I particularly welcome the fact that the Chancellor, by getting rid of the beer duty escalator and checking the fuel duty escalator put in by the previous Government, for example, recognised the rising cost of living for many of our constituents.

Before proceeding, I would like to refer to some of the remarks made by the right hon. Member for Edinburgh South West (Mr Darling), who, as we all know, was a prominent member of the previous Labour Government. He mentioned the fact that the OBR had consistently failed in its forecasts over the course of this Parliament. He also mentioned the fact that we are borrowing at record levels. That is all true. But what he did not mention, or make any apology for, was the share of responsibility that he and the previous Government must admit to in the creation of our largest peacetime deficit. People will look back on the period between 2001 and 2007 in this country as one of the most, if not the most, profligate and irresponsible periods in the management of our public finances.

David Wright: If that is the case, why did the Conservative party support the Labour Government’s spending plans throughout that period? The Conservatives stopped supporting the spending plans only just before the global financial crisis. Can the hon. Gentleman explain what action he would not have taken to save the banks?

Kwasi Kwarteng: I happen to be a balanced budget Conservative. Even at the time, before I was elected to this House, I completely disavowed any move to stick to Labour’s spending. I thought that it was a big mistake at the time and I am quite happy to say that in this House. I think that it was entirely a mistake to do what

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the Labour Government did and run deficits at a time when the economy was growing at 3%. It was absolute madness to run deficits at 3% of GDP when the economy itself was growing at 3%. Not even the most starry-eyed Keynesian has ever suggested that we should be running deficits while the economy was expanding. As a direct consequence of this irresponsible period, in 2010 we were left with the largest peacetime deficit and the highest deficit-to-GDP ratio of any of the OECD countries. That period of stewardship marks the ultimate disgrace of the Labour party in terms of managing the national economy. We have now reached the point where we are borrowing £100 billion a year and the national debt is going up, as people have mentioned. As a consequence of this high level of deficit financing, we are going to leave a national debt in years to come that is higher than it has been for generations.

What serious proposals have Labour Members come up with during this four-day debate? Their answer is simply to borrow more money and to spend more money. They would accelerate our downward path and we would end up, as one economic commentator has said, with Club Med levels of debt similar to those of Portugal and Greece—without, unfortunately, the good weather. That is what Labour Members are leading this country towards. Members of the public will be absolutely astounded that Labour Members have expressed not one shred of remorse, regret or acknowledgement. They live in a world in which they did nothing wrong. Everything has been blamed on the coalition Government, who have tried to clear up the appalling mess—[Interruption.] Labour Members are chuntering from sedentary positions. They do not like to hear the facts.

People up and down the country realise and acknowledge that the Labour Government were entirely irresponsible. What solutions have the Labour Members come up with? Absolutely none. It is embarrassing to listen to some of their speeches. They talk about more growth despite the fact that the eurozone is flat on its back. They talk about more investment despite the fact that we are borrowing more money than we ever have before. When one asks them where this money is going to come from, they repeat, “The bankers’ bonus tax”, as though that would pay for absolutely everything they wish for, although it has already been spent about 100 times. It is depressing to see Labour Members, who fancy themselves as the next Government—they are very confident, I notice—offering such poor, ill-thought-through and pathetic solutions to a grave national crisis. People watching this debate at home will be appalled, frankly, by the level of argument, contribution and solutions that Labour Members have contributed.

I welcome this Budget. In very difficult times, the Chancellor has identified weaknesses and has managed to alleviate some of the distress that we suffer.

9.3 pm

Fiona O’Donnell (East Lothian) (Lab): I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

It is a pleasure to follow the hon. Member for Spelthorne (Kwasi Kwarteng), who is now, we hear, a self-declared fan of a balanced Budget. No doubt his disappointment in his own Government has kept him out of the Chamber for the vast majority of today’s debate.

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I do not know if you noticed, Mr Deputy Speaker, but on the day of the Budget this Chamber was colder than I have ever felt it before. It was as though a cold, chilly winter breeze was rolling through the Chamber as an ailing, failing, flailing Chancellor came to the Dispatch Box—but it was all too little, too late. I am so pleased to see the Business Secretary in his seat, because he will agree with me—or I will agree with him, most humbly—that the mistake that this Government made was to choke off the recovery. Just as the snow across this country is choking off the green shoots of spring, so this Government, by cutting too quickly and too deeply, have choked off the recovery.

What really chilled me to the bone was when the Chancellor spoke about an aspirational Britain, because I am old enough to remember aspirational Britain the first time around. It was aspiration for some, but not for others.

This Government are out of touch. I apologise for being late for today’s opening speech, Mr Deputy Speaker, but as a trustee of my local food bank my time was being taken up by people who are aspiring to put food on their table, aspiring to heat their homes and aspiring to stay in their homes.

Kwasi Kwarteng: Will the hon. Lady give way?

Fiona O'Donnell: No, thank you.

When people look back on this Government, they will see five wasted years. The two greatest evils that they have committed are the bedroom tax and the cut for millionaires. They still have time to make more mistakes, but this country will never forgive them for those measures because they go to the heart of this Government.

I want to make some pleas on behalf of my constituency.

Martin Horwood (Cheltenham) (LD): Will the hon. Lady give way?

Fiona O'Donnell: No, thank you.

I want a more joined-up approach to government. Iberdrola is currently investing £10 billion in this country, but it is sitting on £3 billion because of the mess that is this Government’s energy policy. The coal-powered power station at Cockenzie in my constituency has closed and Iberdrola is not willing to invest until it gets some clarity from the Government. Some 1,000 construction jobs are on hold in my constituency, as are apprenticeships in a year when youth unemployment has risen by more than 7%. Will the Treasury team get together with the Department of Energy and Climate Change and get this in order, so that Iberdrola can invest in my constituency and the UK?

I pay tribute to my right hon. Friend the Member for Barking (Margaret Hodge) for the work that her Public Accounts Committee has done to let some sunshine on the disgraceful practice of tax avoidance in this country. I also praise the Government for meeting their commitment to spend 0.7% of our gross national income on development aid. I welcome that, but I want them to go further in the Finance Bill. There was outrage in this House and across the country at the practices of some companies headquartered overseas, and people in developing countries have the same right to be outraged if British companies do not pay their fair share of tax there. Will the Government

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take the opportunity provided by the Finance Bill to ensure clarity and transparency and that developing countries have the right to money that has been earned at the expense of their natural resources—the labour of their people—to be invested in their countries so that they can make their own choices? I hope that such a commitment will eventually be made.

The judgment on this Government has been set not by hon. Members, but by the Office for Budget Responsibility, the 200,000 children who will be in poverty at the end of this Government’s time in office who were not in poverty before, and the people who will be worse off in 2015 than they were in 2010. I urge the Government’s Front-Bench team to listen to the Opposition and to the people of this country, and to get their act together.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. I hope to be able to call Members who wish to speak, but to assist the House I should state that the winding up speeches will start no later than 9.36 pm.

9.8 pm

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Last Wednesday’s Budget was more of the same. In spite of failing every economic test they have set themselves, the Government have just carried on regardless. I want to recap their economic journey and absolute failure over the past three years.

After signs of a recovery at the end of 2010, the economy has been flatlining and we will be lucky if we escape a triple-dip recession. Growth has been downgraded at every turn. Amazingly, just over three months since the autumn statement, the Government have had to halve their growth forecast for this year to 0.6%. Borrowing is up £250 billion since 2010 and the deficit will not be eradicated by 2015 as promised. In spite of the Government telling us how important austerity was to economic confidence and low interest rates, they have lost the confidence of Moody’s credit rating agency, which downgraded our triple A status, and we have been put on notice by two other agencies.

The Government have tried, as has happened again this afternoon, to blame everybody except themselves. They told us that austerity was the only way, only to receive a very embarrassing rebuke from the chair of the Office for Budget Responsibility, who said that public spending cuts wiped 1.4% from growth last year. We only have to look at how we are doing on growth compared with the other G20 nations. We are 18th out of 20. What the Government have been saying is absolute rubbish.

I could go on. Inflation, whether using the consumer prices index or the retail prices index, is well above the Bank of England’s 2% target. The Government have tried to say that we have more employment than ever before, but the rate of employment is lower than in 2008. One in 10 people is underemployed. Whatever indicator we go by, the Chancellor and the coalition Government are clearly failing. The public are starting to see that as well, with earnings falling by 2% a year in real terms. A recent poll showed that four out of five people feel that austerity is not working.

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The Government are carrying on regardless. Is that really just down to economic incompetence? In the words of the Cambridge economist, Ha-Joon Chang,

“the coalition government isn’t as stupid or stubborn as it appears. It is sticking to its plan A because spending cuts are not about deficits but about rolling back the welfare state.”

If we look at this Budget, as with the other Budgets and autumn statements, we can see exactly what is happening.

The IFS analysis of the Budget shows that the Chancellor is funding some of his give-aways with underspends from across Whitehall Departments, including £2.2 billion of NHS savings. However, the IFS and others have shown that even with an increase in revenue from national insurance contributions, from 2015 we will need to make further public spending cuts or increase taxes to meet a £9 billion shortfall.

The housing measures are too little, too late. They reflect the Chancellor’s inability to sort out lending for mortgages, as well as for small businesses. Many people, including property developers, will welcome the measures, but I wonder what the impact will be on demand and on house prices at a time when earnings are still constrained. They have the potential to take us back to the financial conditions of 2008.

Most alarmingly, the Budget completely fails the anti-poverty test. The IFS, the Joseph Rowntree Foundation, the Child Poverty Action Group, the Resolution Foundation, the New Economics Foundation and others have concluded that the poorer people are, the worse off they will be following the Budget. Raising the personal allowance does little for the million lowest-paid workers, many of whom do not pay tax in any case. Some 682,000 working families who receive child tax credit earn less than £6,420. If next week’s welfare cuts are also taken into account, the lowest-earning taxpayers will receive an income boost of just 32p a week. Of course, that does not take into account the impact of the 20% VAT hike, the 26% rise in food prices or the 20% rise in energy prices.

The Chancellor’s distributional analysis shows that the cumulative impact of the tax, tax credit and benefit measures means a net reduction in income for the poorest 40% of households in the country. Although there is strong evidence that increasing the spending power of the poorest families is a way to boost the economy, the Government have failed to do that. This is about the Government’s choices and they have clearly failed.

9.13 pm

Mr Virendra Sharma (Ealing, Southall) (Lab): Thank you, Mr Deputy Speaker, for allowing me to speak in this crucial debate.

While this country faces the biggest housing crisis in a generation, the Government are using the Budget to help their millionaire friends buy second homes. Once again, the Chancellor of the Exchequer has left hard-working people who are on lower wages struggling and hurting. Building new homes is central to this country’s economic recovery and to getting hard-working families on the housing ladder, yet in Budget after Budget the Government have come up far short of the mark. In this Budget, the Chancellor introduced “help to buy”. Last year, he introduced NewBuy. It is clear that the policies that have been introduced to help people get on the property ladder have failed and that they are not the solutions that the country urgently needs to end the housing crisis.

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In my constituency of Ealing, Southall, families are desperately struggling to find suitable and affordable homes. Just last week I heard from a family who have been waiting more than a year to find a bigger and more suitable home for them and their three children. Sarah has been sharing a two-bedroom flat with her husband, her two sons—one of whom suffers from a severe form of Asperger’s—and her two-year-old daughter. They have been told that they will have to make do with their two-bedroom flat for the foreseeable future because no new housing is coming up.

More needs to be invested into building affordable homes to meet demand; that is a sound, logical and reasonable investment for the future of our housing market and economy. Building more housing is not only a solution to end this housing crisis, but an effective way of boosting growth. For every £1 invested by the public sector, 56p returns to the Treasury. Removing the cap on housing revenue account borrowing in London could add 0.5% to GDP—growth that is much needed. By investing in the capital’s housing infrastructure, more than 19,000 jobs would be created. Why will the Chancellor not invest in housing and growth?

Throughout the Budget the Government have repeated that they are committed to helping those who aspire to work hard and get on, to caring for families and helping them with the cost of living, and to creating more growth. Why, therefore, do they not commit to build more affordable homes, thereby creating more jobs and growth and allowing hard-working families to live in better conditions, rather than helping millionaires buy second homes through their slapdash flagship policy?

The Government had the opportunity to invest in housing, create more jobs and provide a decent living to all those working hard to achieve, and to allow children living in overcrowded accommodation to have a better education. If children have extra space in their house, they will get more education and an improved place in which to live; their health will be improved and they will be able to contribute more to society.

9.17 pm

Paul Blomfield (Sheffield Central) (Lab): It was good to see the Chancellor pop into the Chamber a few moments ago, although I wish he had been here a few moments before that to hear the hon. Member for Spelthorne (Kwasi Kwarteng) accuse him of “absolute madness” for saying in opposition that he would back Labour’s spending plans, right up to the world financial crisis in 2008. That was the case, however, and the truth is that it was not Labour’s spending, which repaired the damage of the Thatcher years, that caused sub-prime lending, the collapse of Lehman brothers or the world financial crisis.

Kwasi Kwarteng: Will the hon. Gentleman give way?

Paul Blomfield: No, I will not, simply because of time; I would love to otherwise.

That crisis created choices, and the Conservative-led Government have consistently made the wrong choices. The Liberal Democrats also have something to answer for because during the election they argued—rightly, and alongside Labour—that the post-2008 Tory austerity plans were wrong: wrong because they caused pain and wrong because they would damage the economy. They

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were elected on that basis; they have no mandate for this ideological assault on public spending and the welfare state.

The Secretary of State opened the debate by talking about housing. That is a good topic because it says a lot about this Government’s wider economic policy: wrong choices and missed opportunities, epitomised by the lack of investment in housing. The Government have cut direct support for affordable housing by 60%. The stagnating economy has limited private sector investment, and as my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) said, there was an 11% fall in housing starts last year.

The Secretary of State, who is currently checking his BlackBerry, attacked Labour’s record on housing. The Labour Government did not do enough, but let us set the record straight—[Interruption.] He should keep checking his BlackBerry. It is worth remembering that housing starts have been lower in every quarter since April to June 2010, the last quarter that Labour was in power.

The Chancellor claims he will solve the housing crisis with his latest right to buy scheme, but we have heard that before. Back in November 2011, we heard that the NewBuy scheme would help 100,000 people to buy their own homes. How many did it help? Only 1,500 people, just 1.5% of the target.

For many young families, the alternative would be social housing, but it is not. With nearly 5 million people on local authority waiting lists, the Homes and Communities Agency has reported that affordable housing starts collapsed in the last financial year by 68%. It has been estimated that as many as 60,000 extra homes would have been built had the Chancellor used the Budget to lift borrowing restrictions on councils and arm’s length management organisations. He could have done that, but he failed to do so.

Ideology and not practical policies drive the Government, so instead of helping with social housing, the Chancellor extended the right to buy, which is at the root of much of the problem of social housing supply. As private landlords win out, we lose vital social assets. When the Government extended the right-to-buy scheme in April 2012, the Secretary of State—he does well to smile—promised one-for-one replacement. How many have we seen? Three hundred and eighty-four new homes have been built to replace 3,495 sold, which is a 90% loss of socially rented stock.

Finally, the new homes bonus has an unfair impact. It is designed to incentivise local authorities to approve new housing development but is calculated on the value of property, which means that areas with low property values lose out. In my case, resources moved away from Yorkshire to wealthier areas, and from Labour councils to Conservative and Liberal Democrat councils. For example, it is estimated that Sheffield council lost more than £3.5 million as a consequence of the scheme. The Secretary of State might well smile, but people in Sheffield are not smiling.

As with the economy overall, so with housing: we need a plan B, and we need it now.

9.22 pm

Mr Iain McKenzie (Inverclyde) (Lab): The coalition Government have spent their time in office since 2010 telling us over and over again that they are trying to get

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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

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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 on 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.

Mr Deputy Speaker (Mr Nigel Evans): I thank Members for their co-operation. We now will get the last two Members in.

9.27 pm

Kate Green (Stretford and Urmston) (Lab): Not everything in the Budget is unwelcome, but the cumulative effect of this Budget and previous Budgets and spending reviews is dire. I am fearful that in some respects we will never escape their effects—family lives have been blighted and futures lost as a result.

I was startled at the total lack of ambition and vision for the economy expressed in the Budget. There were one or two welcome announcements—the employer national insurance break is welcome—but where is the strategy for improving the quality of jobs that is so necessary to improve our productivity and competitiveness? The rise in private sector employment that Ministers trumpet is, to a degree, illusory. It represents, in part, the fact that the working-age population has grown, so it is hardly surprising that more people are in work. It represents to a degree a re-characterisation of public sector jobs into the private sector. It is a reflection of wage cuts and freezes that mean that people are in work, but worse off, and that 80% of the increase in jobs is in involuntary part-time work.

As the hon. Member for Newton Abbot (Anne Marie Morris) said, business rates remain a serious burden. They have risen by 13% in the north-west in the past three years. There was deep disappointment in my region at the decision last year to delay the revaluation, and disappointment last week that there was nothing in the Budget to help in the meantime or to take the opportunity to use the period of the freeze to review totally the purpose and structure of the business rate.

As I said in an intervention, business will also be hit by the impact of welfare reform on household budgets. Work by the Centre for Local Economic Strategies has shown that for every £1 cut in social welfare reform, 63p is being lost to Stretford’s town centre economy, as people cut back on shopping, socialising and the use of taxis and local transport, while the loss to the local economy across the whole of Greater Manchester is

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estimated at £400 million. The business announcements in last week’s Budget will not put that money back into our local economy, and I am concerned by the warning of further restrictions on annually managed expenditure in the June spending review.

I am glad that the Government recognise the pressures on those trying to buy their own home, and I recognise that home ownership is the aspiration of many of my constituents, but the Government refuse to recognise that renting is a valid and, indeed, necessary option for many families. The support being offered to renters is minimal and the policies divisive. If it is right to offer a public subsidy to enable a young person to get a mortgage to buy their first home, why is it wrong to give a proper subsidy, via housing benefits, to another young person aged under 35 to rent a home of their own? Let us remember that both young people could be in work.

If it is right to provide a public subsidy to a young couple wanting to buy a new and perhaps larger home for a growing family, why is it wrong to subsidise the same family if they want to remain in social rented accommodation and also need more space as kids grow and develop? As my hon. Friend the Member for Inverclyde (Mr McKenzie) said, Government support to buy a home or get a mortgage will be of no use to those of my constituents who are either not working or in short-term insecure employment, which means that they are not attractive to mortgage lenders and have no choice but to rent.

Failure to support working families on the lowest incomes and those on out-of-work benefits feeds across to other policy areas. The child care announcements will benefit many better-off families, but as the Resolution Foundation pointed out, only 40% of those on universal credit will benefit from the maximum 85% rate, while those looking for work will not get any help at all when engaged in a job search. The same is true of the increase in the personal tax threshold, which is of no help to those on very low wages whose earnings are too low for them even to pay tax. The poor and the working poor have therefore once again totally missed out in the Budget, and as a result deprived families and communities will become more deprived.

Mr Speaker: I will call the Opposition Front-Bench speaker no later than 9.36 pm.