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Comprehensive Spending Review

Last Wednesday, the Chancellor took a huge gamble on the future of the UK economy. The CSR statement, coupled with the June Budget, will take a staggering £80 billion out of our economy over the review period. Never before has any Chancellor cut so deeply and so quickly. The people who will pay the price for that squeeze on the state will not be the 18 or so millionaires who sit around the Cabinet table. No, the price for the Chancellor's gamble will be paid by people on council estates who will see rents rise dramatically, civil servants in my constituency who will lose their jobs and students who will see their debts treble. We all agree that the deficit needs to be reduced to a sustainable level, but that should not be at the risk of weakening an already fragile economic position, and it must be based on a strategy for growth and jobs—a strategy absent from the Chancellor's statement. The facts are that the Chancellor is hoping that export volumes will rise significantly over the period covered by the review. At the same time, according to the Chancellor's own figures, the economy will have to find an extra 2.5 million private sector jobs in the next five years. To put that into perspective, during the last recession the UK managed to create 1.2 million jobs between 1993 and 1999. To get anywhere near the target that the Government have set themselves will require investment and an export boom on a scale that has never been achieved before—a point underlined recently by many political and economic commentators, including the well respected Will Hutton. Although the £200 million to establish the elite research centres is certainly welcome and nothing new to us in south Yorkshire, where we already have the advanced manufacturing research centre, this investment is nowhere near enough, in the context of the sheer scale of the growth required, to rebalance the economy. It is also important to remember at this point that the Government have already failed a key test on the support that they are prepared to give the private sector. In June they withdrew a Government commitment to fund the £80 million loan to Sheffield Forgemasters. Although I will not go into the stupidity of that decision now, it is clear, as the Business Secretary said in the Select Committee recently, the nuclear reactor components at the heart of the proposed investment will now have to be manufactured abroad, and the UK will lose millions of pounds of exports to our international competitors. Surely that is not the way to go about rebalancing our economy. How will 40% of cuts in funding to the higher education sector help to rebalance the economy? All that will do is damage our economic future. Also in further education, the Government are abolishing the education maintenance allowance, which has been recognised by many as a success. The Institute for Fiscal Studies, which is so obviously a thorn in the side of the Deputy Prime Minister, said that since the allowance was introduced, attainment at GCSE and A-level by recipients of EMA has risen by five to seven percentage points, and by even more for those living in the most deprived neighbourhoods. That evidence is reinforced by college principals, who believe that many young people will not be able to stay in education and training without EMA, so why have the Government withdrawn a scheme which, in the great scale of things, costs relatively little and helps to give so many young people the skills desperately needed, if the Government are genuine about rebalancing the economy? It is clear that the Government believe that private sector growth will, over the period, pull our economy on an upwards trajectory. I hope the Government have got that right, but I fear not. I fear that in a few months they will come back to the Chamber to revise the figures as the economy goes into a death spiral, and they will tell us that they cannot deliver the £17 billion savings and the cuts that they announced last week. That will not be achievable because unemployment will rise. The CSR is bad for Britain and bad for our economy. They should think again.