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National Insurance Contributions Bill

I have not seen that academic work, but I will be interested to read it in due course. I remain fairly convinced that spending capital funds on school building actually generates a lot of employment, certainly in my area. The cuts in school spending programmes will have a damaging effect on local employment in Luton. We can debate that in another economic seminar, perhaps, and we shall see. Nevertheless, the measures in the Bill pale into insignificance compared with the overall level of cuts that will be imposed. Some have suggested that the VAT rise alone will cause 250,000 jobs to be lost, which is a staggering figure and surprised me greatly. In Committee, the Exchequer Secretary leapt on the fact that I was giving lukewarm support to a measure of tax relief, which is not normally my politics. However, it was lukewarm—I said that the Opposition had decided to acquiesce in what the Government were proposing, but that our Front Benchers had tabled substantial amendments. I still believe that tax reliefs are the wrong way to go. They tend not to be as reflationary as direct spending on jobs, particularly in areas where manual workers on relatively low wages tend to spend all their money, which is then circulated in the economy, causing the multiplier effect that the hon. Member for Wimbledon (Stephen Hammond) mentioned. Tax reliefs tend to go at least partly, and sometimes substantially, into savings and have less of a reflationary effect, so I prefer direct spending to help job creation. The Chartered Institute of Personnel and Development has suggested that there might be as many as 900,000 job losses in the private sector, which is a vast number. Added to the nearly half a million jobs being lost directly through public expenditure cuts, we are talking about 1.5 million jobs being lost. The Bill will go only a tiny way towards countering those massive losses. Indeed, the effect of those job losses, added to the 2.5 million people already unemployed, means that nearly 4 million people will be unemployed, which is a staggering figure. That will be deflationary, because people will become frightened of losing their jobs and stop spending in the shops.