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Budget Resolutions and Economic Situation

We can all use different adjectives, but £15 billion is a significant cut in the current spend. If we decide, for example, not to have the Eurofighter programme or the like-to-like replacement of Trident, they will be significant and, in the two sectors to which they relate, savage cuts. However, we are clear that we will not cut things that will adversely affect the poor. We are not going to cut the sorts of investment that we need to get the economy going again. We have measured and balanced both the necessary cuts and the investment that we believe can be made, too. The manifesto that the public will see in the next few weeks will set out not only the expenditure savings that we expect to make—£15 billion first, with other expenditure cuts to be discussed later—but what we intend to spend more on, which is how we believe that we can get the productivity and the real sustainable growth that this country needs. Let me finish on the question of the deficit and the immediate response, because out there in the real world people know that that has to be faced up to. We will have a £400 pay rise cap for all public sector workers and a banking levy—a new tax, to deal with the Secretary of State's question about what new taxes we will introduce. We are clear that there needs to be a banking levy so that banks can pay for the financial support they have been receiving. We will scale back the homebuy schemes, reform—and therefore cut back on—the spend on prisons and cut back on the burdensome regulation of local authorities. We have a list of savings that is in the public domain—it is not secret and we have not tried to hide it at all. We then have to ensure that we have a fair tax system so that people are incentivised to work and employers are incentivised to take people on. There were some areas of policy that the Government addressed yesterday that half addressed the question but did not adequately address it. For example, small businesses— referred to by the hon. Member for Epping Forest (Mrs. Laing), who is no longer in her place—that have been having a hard time want changes in the business rates system. They want automatic rate relief rather than having to make claims. However, our view is that we need a different sort of business rates system based on the development value of the land and that gives local authorities the flexibility to give a less draconian rates bill to a small business than they give to a big business. We need to encourage the self-employed and the small businesses that employ most of the workers in the United Kingdom to blossom and flourish. That would make a difference and be a more sensible approach. We are also clear that we need policies that reduce the burden on individuals in their homes. That is why we have said that if we take people earning under £10,000 out of income tax altogether, that does not just help people who are of working age—it helps the pensioner who has a small income from their private pension, too. We calculate that just over 3.5 million people would benefit and that people would get an average £700 back in their pay packet or bank account every year. That is significant. Those are the sorts of changes that we should have heard but, as the Secretary of State knows, freezing personal allowances will mean that some of the poorest people will be in a more difficult economic position in the days ahead, when they need to be in a better position. The Government adopted one other policy from us as well as the mansion tax half-policy, and that was the green infrastructure bank. We welcome that. We believe that if we are to have the sustainable growth that Britain needs, we need new systems for raising the money and for spending that money, and a green infrastructure bank is a good thing. We believe that there ought to be much more support for regional banking as well as a decision to separate the banks into local banks, which lend to individuals and businesses, and the banks that want to play the international casinos, which should not be able to be supported by the public at all. We believe that there ought to be local stock exchanges in the regions of England, providing the ability to invest locally. In the Secretary of State's part of the country and elsewhere, there is a great desire to be economically prosperous as well as great ingenuity and great skill, ability and enterprise. We want Yorkshire and the Humber, the east and west midlands and the south-west, for example, to be able to invest in themselves so that they can prosper. Of course, some things are national schemes, such as high-speed rail schemes. That will need national investment, and we support it. We support changing the tax regime so that we tax aeroplanes according to the flights they make, not the passengers they carry. That would mean that there would be an incentive for people to move from planes to trains, which is a good thing. It is good for the environment, good for the economy and good for the Exchequer, too. We also believe that the Government need to invest in a whole new form of green growth as regards the energy sector. There is fantastic potential. One needs simply to go to the east coast of Scotland and talk to people in the oil and gas industries about the remaining work they can do in the North sea, or to talk to the people in the ports down the east coast—in Newcastle and Hull, in the Thames estuary or up on the east coast of Scotland—about the potential to build offshore wind turbines in the ports and to export them offshore to be the new wind farms of the future. We have fantastic potential in this country, but there need to be incentives for those things rather than disincentives. The Government could and should have signalled immediate action for growth in the economy in the year ahead as well as a long-term strategy. We believe that immediately after the general election, there could be investment in tens of thousands of green jobs by bringing the 250,000 homes that are empty back into use—that would probably produce 50,000 jobs. I saw a glass and glazing van going past me this morning. Huge additional numbers of people would be willing to work in the building industries, renovating and repairing. There could have been an incentive for that had the value added tax rules been changed so that there would be less VAT on repair and renovation. It would be an incentive to people to restore their homes. We believe that there could be an immediate scheme allowing people to have what we call an eco-cash back, so that they could put in some double glazing, replace their boiler or replace their inefficient, environmentally unfriendly fridge with a more environmentally friendly one. There could be schemes to get people to work in the first year of a new Government after the general election, such as one that ensured that all our schools were well insulated, saving energy on the one hand and creating jobs on the other. There is a whole programme of investment activities, which we have costed and believe could start now, that would put people in this country back to work. That could be part of our scheme—and Ministers have heard us enunciate it from these Benches—aimed at ensuring that every home in Britain that can manage it will become a warm home in the 10 years between 2012 and 2022. Establishing a fair and sustainable economy means delivering growth that lasts. It means delivering the necessary infrastructure now, and investing responsibly in the years after the election. It also means that there must be development in the future. We agree that it would be foolish not to continue to invest. The hon. Member for Luton, North (Kelvin Hopkins) hinted that it would be wrong to turn the tanker around suddenly, and that reducing, slashing and burning would be quite the wrong thing to do. We share that view, but there is a difference between my party and the others. We also believe that, while the green shoots may or may not be showing now, people need investment in the jobs that will produce more jobs. That is why the housing and construction industries, which will carry out the work involved in repairing homes and insulating factories, hospitals and schools, have such potential. People in our constituencies around the country say that they are ready to take on that work. With the right adjustments on the fiscal tiller, they can be incentivised to do so.