Budget Resolutions and Economic Situation — House of Commons, 2015-07-13
Topic: Macroeconomics
Harry Harpham (Labour, Centre-left): Last week the Chancellor tried to paint himself as a champion of working people. In reality, we got a Budget that does nothing to tackle the underlying problems of low productivity and low wages that over the past five years the Chancellor has failed to address. We had an old-fashioned Tory attack on the incomes of low earners, and a gaping hole where measures to increase productivity should have been. Much has been made of the fact that this was the first Tory Budget for 18 years, but that is only partly true: the Chancellor has been presiding over the economy for half a decade now. During that time, our growth has been among the slowest in the G20 advanced economies, and was revised downwards by the OBR last week from 3% to 2.4%. Our poor growth is a symptom of our poor productivity, and it means depressed wages for far too many of our citizens. It means lower tax returns and higher borrowing. We cannot provide people with financial security unless we provide strong growth If we are going to tackle the productivity gap that is holding back growth, we need firm and decisive action from the Government, but that has been lacking over the last five years—and the Budget sees no improvement. The OBR has revised forecast productivity down for the next four years, and the Chancellor is set to fall short of his target of increasing exports to £1 trillion by 2020 by £367 billion. We need real investment in infrastructure, skills and research, and development to boost productivity The Chancellor is very good at announcements, but the Government’s record on delivery is poor. Just ask my constituents—they have been waiting nearly two years for the midland main line to London to be electrified, only to be told that work is being halted. So much for the northern powerhouse Despite the increase in apprenticeships, too often they are focused on low-end skills and employers are still complaining that they cannot find people with the skills they need. Likewise, the replacement of maintenance grants with loans for students from the poorest backgrounds is a further example of the Government jeopardising productivity. They may say that most students will not be dissuaded from going into higher education, and that may be so, but there are young people for whom it will matter, and the Budget has let them down When it comes to low wages, the Chancellor has outdone himself with the barefaced cheek of what he proposes. He stood at the Dispatch Box and, bold as brass, trumpeted his so-called national living wage. It is nothing of the sort. At best, it is a welcome increase to the national minimum wage, but to call it a living wage is an insult to those who will be paid it. Although it will be around £9 an hour by 2020, the Resolution Foundation has calculated that by then the real living wage will be £10 an hour. If that was not bad enough, young people will not even get the imitation living wage. An hour’s work deserves an hour’s pay, and it is wrong to suggest that the efforts of a 24-year-old have less value than those of a 25-year-old All of that is before we take the cuts to tax credits into account. Nearly 12,000 families in my constituency receive tax credits, and I have been inundated with letters and emails from families who stand to lose out from the cuts. Tax credits are a lifeline that make low-paid work a viable option for thousands of families in my constituency, but the Chancellor is cutting that lifeline. The so-called living wage will not make up the shortfall, and the end result will be that thousands of poor working families will become even poorer. Families in my constituency will not be fooled by the rhetoric. They know an attack on their livelihoods when they see one On housing, the Chancellor shirked his responsibility to start delivering the 200,000 new starter homes that the Tory manifesto promised. In the first half of this year, first-time buyers spent on average £12,500 more for homes than in the same period last year, an increase of 8%. The average deposit they had to put down has gone up by 5%. With the Government’s poor record on house building, it is hardly surprising that for many people the chance of owning their own home is sliding ever further away I agree with the Chancellor when he says that we need to tackle low pay and productivity. I only wish that he had announced a Budget that did so.