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Budget Resolutions and Economic Situation

It is a pleasure to follow the hon. Member for Uxbridge (Mr. Randall). Like me, he came to the House as a result of a by-election. I believe that his was towards the beginning of a Parliament, while mine was towards the end of this Parliament. This is my first Budget debate and I wish to pay tribute to those right hon. and hon. Members for whom this will be their last Budget debate. I thank my hon. Friend the Member for Leyton and Wanstead (Harry Cohen), my hon. Friend the Economic Secretary to the Treasury, who will speak later and the hon. Member for Macclesfield (Sir Nicholas Winterton), who made an exceptional speech. He had an alternative economic policy and a strategy for jobs and manufacturing—indeed everything that was missing from the speech by the shadow Chancellor. To coin a phrase used by the Leader of the Opposition, the shadow Chancellor today was an analogue shadow Chancellor for a digital debate. I also wish to thank my right hon. Friend the Member for West Dunbartonshire (John McFall), who spoke in the debate yesterday. It was a pleasure to listen to his valedictory speech. His work as a Minister and as a two-term Chair of the Treasury Committee has made a huge difference on issues such the regulation of credit and the banking sector and, on this side of the House, we will miss his contributions greatly. This is a good Budget for Glasgow, Scotland and the UK. It prepares us for the new jobs upon which our future economic prosperity will depend; it sets the country on a path of fiscal consolidation that will not be damaging to growth, employment or our social fabric; it protects vital investment in the front-line public services on which we rely; and in its fiscal measures it reflects a greater sense of fairness. A few weeks ago, I had the opportunity to read a book by the Nobel prize-winning economist, Joseph Stiglitz, entitled "Freefall". The book argues that economic growth in both the United States and Europe remains anaemic, and given forecasts for private sector growth, and in the absence of continued Government support, there is the risk of continued stagnation. He emphasises that growth is too weak in the private sector to return unemployment to normal levels soon. When Professor Stiglitz visited London recently, he said that this debate was really about the economics of Keynesianism against the economics of Hooverism, and there is further support for his arguments in the recent OECD economic outlook report published on 27 February. It states:""In the major advanced G-20 economies there will be a need for continued policy stimulus until private demand gathers sustainable momentum, as the recovery will remain sluggish and fragile"." It continues:""Fiscal policies need to remain supportive of economic activity in the near term, and the fiscal stimulus planned for 2010 should be implemented fully. The fiscal impulse should start to be withdrawn in 2011."" It concludes:""Unwinding stimulus too early could jeopardise progress in securing economic recovery"." I agree strongly with that approach. Let us look at what has been done in the 18 months since things went badly wrong for the economy in 2008: the Centre for Economic and Business Research has stated that quantitative easing has added about 2 to 3 per cent. to gross domestic product; the automatic stabilisers that have been introduced have given, and will give, a fiscal boost of 4 per cent. in the next tax year; and it is estimated that the fiscal stimulus in the 2008 pre-Budget report prevented GDP from falling by 0.5 per cent. in 2008-09. Furthermore, today, at its lunch-time seminar, the Institute for Fiscal Studies downgraded the structural deficit and said that it is now £67 billion rather than £73 billion. I support the Government's efforts to get the deficit down to 5.9 per cent. of GDP by 2014-15. Doing it that way is right and does not sacrifice jobs. Let us also consider the record of all the G7 nations: the UK has the most ambitious deficit reduction strategy. It is more ambitious than that of Germany, Canada, the United States, Japan, France and Italy. One of the key reasons why I stood for office was to tackle unemployment, and I am pleased that in the UK, at 7.8 per cent, unemployment is 2 per cent. lower than in the eurozone and 2 per cent. lower than in the United States. However, my constituency has suffered from an increase in unemployment in the past 12 months—it has risen by 901—so the measures on extending the jobs guarantee for 18 to 24-year-olds until 2012 are particularly important. Two weeks ago, I met about 20 young people in the Royal Strathclyde Blindcraft Industries factory in Springburn in my constituency. They had all come off the unemployment register thanks to future jobs fund investment, they were all learning a new set of skills in manufacturing and construction, and they had all had their lives turned around. They will be a great asset to Glasgow's economic future. Tomorrow I am hosting a jobs summit in my constituency, bringing together businesses, trade unions, CBI Scotland, the local chamber of commerce and public sector employers, as well as voluntary and third sector employers, because the challenge that we face in diversifying our economy is one that neither the private sector nor the Government can face alone. Rather, this must happen through the public and private sectors working together. That is why the role of the new green investment bank in driving future growth and employment in environmentally sustainable industries, with a £2 billion investment, is so crucial. I know that in Scotland, with offshore wind and investment in the digital and creative industries, the scheme will create thousands of new jobs. The Government therefore have a role in recalibrating our economy; they cannot simply stand aside and set a fiscal framework. A decent society needs an active, but not an overpowering state. If we maintain the current course, I hope that the UK will be able to match the levels of investment in research and development that countries such as South Korea, Germany and Sweden reached in previous decades; because it is through high-level manufacturing, the creative industries and low-carbon technology that we can permanently replace some of the output that was lost in the recession. My right hon. Friends the Prime Minister and the Secretary of State for Scotland recently visited the Allied Vehicles plant in my constituency, which is involved in manufacturing zero-carbon vehicles powered by electricity. I welcome the fact that the Budget increases capital allowances for forward-looking companies such as Allied Vehicles, which employs 350 people in an area of economic deprivation in Glasgow, North-East. I also welcome yesterday's publication of a document by the Treasury on progressing towards the 2020 target of abolishing child poverty, which puts the role of work and making work pay at centre stage. There are 500,000 children in this country who are out of poverty because of the policies followed by this Government, while around 9,500 families in my constituency benefit from child tax credit. The increase of £4 a week in child tax credit for families with a one or two-year-old child will help around 65,000 families in Scotland. Across the UK in 2007 and 2008, there were 700,000 children in low-income families where only one adult was in work, while 43 per cent. of children were in families described as "working poor". There is therefore much to be done, through increasing employment opportunities of the kind that will help families with child care responsibilities and ensuring that people are demonstrably better off in employment than on benefits. A rising minimum wage over the next five years would greatly assist in that too. This is a Budget that I hope will have the support of my colleagues on the Labour Benches on Tuesday, and I hope that all of us will argue for the support of the country for it in the coming months.