Budget Resolutions and Economic Situation — House of Commons, 2015-07-08
Topic: Macroeconomics
Samuel Wilson (Democratic Unionist Party, Right): I think this is the first time I have spoken while you have been in the Chair, Madam Deputy Speaker, and given your generosity, I am glad you have taken the Chair. I wish you all the best for the future and look forward to your future generosity—and that is the end of my crawling I congratulate the two Members who have made their maiden speeches today, but I say to the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) that he need not have this Jimmy-no-friends paranoia about this place. We in the DUP are the cousins of Scottish Members. Only 20 miles of water separates my constituency from Scotland, and although we do not share their desire to break up the Union, nevertheless we regard them as cousins, so he should not feel loathed by everyone in the House We welcome many of the aspirations in the Budget. We welcome the Government’s commitment to growth and balanced growth across the United Kingdom. We welcome the measure designed to increase productivity, because that is one way to raise living standards for those in work. We welcome the commitment to making work pay, because I do not want my constituents confined to a life of no work without the dignity and esteem it gives them. It is important, therefore, that we make work pay and get people into jobs. Also, given the threats to the United Kingdom, and indeed the world in many theatres of war, and given the demands we make upon our armed forces, we also welcome the 2% commitment on defence spending I have a number of concerns, however, about the Budget. While I hope the Chancellor is right in his growth forecasts, he himself raised several warnings about the situation in Europe and Greece and the potential impact on a major export market and about the situation in China. Yet despite that, part of the growth forecast in the Budget is based on exports growing on average over the next five years by seven times more than they grew this year. If that is one of the components of economic growth, we have to say that there is a huge risk factor. The Budget is also based on consumer spending being the main driver of growth. Of course, consumer spending is the main part of GDP, but, against a period of wages not growing and so on, that increase in consumer spending can be achieved only through increased borrowing, and we have seen in the past the impact on the economy of unsustainable domestic and private borrowing So there are warning signs, and even when it comes to some of the incentives for industry to grow—a number of Members have mentioned this today—there is no great mention of what we do about energy prices. It really does not matter whether we are talking about what people would call old industries—whether steel manufacturing or whatever—or even the modern data-processing industries, all of them are huge energy consumers. Yet the environmental taxes, which are one of the things that have been driving up energy prices, are set to grow over the next five years by three times, from £5.6 billion to £16.1 billion. There are therefore a number of factors in this Budget that cause concerns about the Chancellor’s predictions There is another concern I have. I welcome the fact that the Government believe that "the only way to secure a truly national recovery is through a fundamental rebalancing of the British economy based on investment across the regions…driven by the private sector, and further devolution to increase local decision making." That is a great sentiment, but for Northern Ireland I see nothing new here. The Chancellor has said that he is committed to the delivery of the Stormont House agreement. The Stormont House agreement is now nearly nine months old. It has not been delivered on—I have to say, that is not the fault of the Government, but the fault of the Social Democratic and Labour party and Sinn Féin in Northern Ireland—but if that is what the Chancellor is relying on, then there is nothing new in this Budget. Indeed, the growth in Government investment, which is one of the potential drivers, is set to fall by 50% over the period of this Budget. Already we know that in Northern Ireland that means there will be a cut in capital expenditure for this year and subsequent years, the details and timing of which the Treasury is still to tell us, including in negotiations with the Department of Finance in Northern Ireland. So there are worrying factors about this Budget The other issue I suppose I have some concern about is the proposed change in tax credits. It is one thing to say that we want to shift the burden of paying for workers from the state to employers—and that is good—but there is no point in saying that we will make the state reductions immediate, but then rely on employers to fill the gap in the longer term. All that does is leave people poorer. Given that we are usually talking about the low paid or unemployed, there is another downward factor. Taking £1 off them probably has a downward multiplier of about fives times, because they tend to spend all their money on things that are produced locally and in local shops. They do not spend it on expensive imported luxury goods, so this change could have a downward effect on the local economy. I would like to hear from the Chancellor what assessment he has made of the impact the change is likely to have in the short term. In the long term it may well shift the burden to employers, but in the short term I suspect it will shift it to the worker. That is morally not right, and it is economically not right either. I welcome the decrease in corporation tax rates. Once we get around to delivering on that part of the Stormont House agreement in Northern Ireland, it may well make the delivery of the corporation tax reduction that we have proposed in the Northern Ireland Assembly that much cheaper. Indeed, it may even enable us to lower the tax to 10%, and thus to become more competitive with our neighbours in the Irish Republic I am, however, very concerned about the welfare reform changes. We do not disagree with all of them, but we disagree with some of them fundamentally. While we support a reduction in the cap, I think that Members representing the north of England, Scotland and Wales ought to be concerned about the proposal to operate a different cap in areas outside London. I believe that it is the first step towards a regionalisation of benefits that would be detrimental to many of us who represent poorer regions of the United Kingdom. Once that foot is in the door, the door will be pushed further. Had there been a universal reduction in the cap, along with the rationale that the Government have given, we might have considered supporting it, as we did in the last Parliament, but we certainly cannot support this.