Budget Resolutions and Economic Situation — House of Commons, 2015-07-13
Topic: Macroeconomics
Stephen James McCabe (Labour, Centre-left): I congratulate the hon. Member for Erewash (Maggie Throup) on a witty, thoughtful and informed maiden speech There is a view that the Chancellor is riding high at present, and it is true that he has probably, for the time being, dished the ambitions of the Home Secretary and the hon. Member for Uxbridge and South Ruislip (Boris Johnson), but my advice to them is "Be patient." Gordon Brown used to say there are only two kinds of Chancellor—those who fail and those who get out in time. This Chancellor has already failed. He has failed to eliminate the deficit on time, failed to maintain our triple A credit rating, despite his dire warnings of the consequences, and succeeded in reducing debt by virtually doubling it As the Institute for Fiscal Studies points out, the key feature of the Chancellor’s true blue Budget is that it will leave 3 million families £1,000 per year worse off, on average. The cuts to sickness benefit will mean that a party that has routinely seemed comfortable seeing cancer sufferers and others declared fit for work will now institutionalise that problem by having all those unfit for work reclassified as potentially fit and therefore eligible only for the lowest level of benefit. That is a blatant attack on the sick, not the workshy As with the bedroom tax, and the poll tax before it, no amount of double-speak will change the minimum wage into the living wage. Traducing the concept of a living wage by confusing it with a 50p rise and excluding the under-25s does not wash. It is merely a crude attempt to distract attention from the impact of the cuts to working tax credits. It is putting politics before people and before the country This Budget does not address the problems of skills and productivity, and it may in fact exacerbate existing problems in some sectors. In high-tech, science-based businesses, the issue is not wages but skills, access to capital and the capacity to grow. These are the knowledge businesses of which we have too few. We needed a Budget to help and encourage them Turning maintenance grants into loans will do nothing to encourage young people to develop the skills we really need, but may frighten off a generation from poorer backgrounds and simply turn Government debt into personal indebtedness. This is the Osborne legacy At the other end of the scale, what impact do hon. Members think the combination of tax credits cuts and minimum wage rises will have on the care sector? It is a sector of low wages and immigrant labour, with mostly small businesses or groups such as Southern Cross. We will see further cost cutting, scandals, inquiries and receiverships. Of course, higher wages mean higher fees, and therefore extra demands on already decimated local authority budgets My contention is that the short-term political cunning of this Budget will fail because the key decisions are wrong. Inheritance tax is not the priority in an economy that needs better productivity. We should be rewarding effort, not inheritance. The stark picture in the OBR report is the forecast decline in our share of exports at a time when we have the largest current account deficit since modern records began, and research and development spend is now below the European average. Where are the measures to address those problems? How will this Budget help to achieve the Chancellor’s target of doubling exports by 2020? Perhaps that is another target that will be kicked into the long grass as the long-term plan sounds more and more like the never-ending story The problem with the Chancellor’s putting all his eggs in a basket designed to win the Tory leadership is that his interests do not coincide with the real needs of our economy. Our problems are not solely to do with welfare, inheritance tax or the public sector. The Chancellor should be addressing private sector under-investment, the failure of companies to grow and the failure to protect small companies. Too many of our small businesses are starved of capital Instead of our ideas growing as good, sound British businesses, technological advancements are being snaffled up by foreign conglomerates. Let us look at the Smith and Wright report "Losing Control", and what has happened to the British aerospace industry in the past few years—the majority of the companies have been taken over by foreign companies or private equity firms focused on short-term profit rather than medium-term growth. The lowering of corporation tax only makes the buying of ready-made UK technology even more attractive The Chancellor could have done a lot more, but he is too busy shoring up his friends and shoring up his leadership prospects. My advice is to beware the cheers now, because it could be a case of cheers today and gone tomorrow.