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Budget Resolutions and Economic Situation

I am pleased to follow the hon. Member for Stafford (Jeremy Lefroy), who made some valid points. The focus of last week's Budget should have been on encouraging business and consumer confidence, because the failure of this Government is above all the failure to facilitate demand in our economy. On the contrary, their policy has led to a lack of demand in the following ways and policy areas. The first has been by reducing public expenditure on capital projects, which is especially telling in those parts of the UK that depend significantly on the public sector rather than the private sector for investment. The effect is especially evident in the construction industry, which is still in dire straits because of the lack of demand from either the public sector or the private sector. In addition—we must not forget this—this Government, of the Tories and the Liberal Democrats, have increased taxes on consumer spending by increasing VAT, which has reduced the income going to local businesses. When people spend money, that difference between 17.5% and 20% is taken out of the local economy. It does not go into local businesses; it goes straight to the Exchequer. Again, that is money being taken out of the economy. The Government are also reducing employee confidence, because they repeatedly talk about reducing jobs in the public sector, which diminishes demand—for example, by affecting the decision to move house, which has an impact on the housing economy and developments in the construction sector. In all those ways, the Government are cutting demand at the very time we need demand in the economy to facilitate work for our young people. Indeed, we hear a roaring silence from the Government about our young people, who were barely mentioned in the Budget. The problem is that we have seen all this before. In the 1980s, when I was politically forged, I saw all that happening in the north-east, where I was brought up. For example, we saw 3 million unemployed, twice. [Interruption.] I am sorry that those on the Government Front Bench find that amusing, but that is what happened. A generation claiming benefits are still suffering the consequences of the Tory Government of the '80s, and now we are seeing it again. That is why I feel passionate and angry about what this Government are doing—because what those policies did was drive people on to the dole, which at that time was paid for by two things: privatisations and North sea oil. We remember Harold Macmillan saying that the family silver cannot be sold off twice, and privatisation means it has now been sold. North sea oil returns are diminishing, so the Government are simply running out of money because they are not facilitating growth in the economy. One of the major reasons for that is that people and businesses cannot borrow money. The root cause of this difficulty is the incredible centralisation in the banking sector, to which I referred to earlier, which prevents businesses across the country from accessing demand. Again, we go back to the 1980s. Then we saw the demutualisation of great institutions such as the Northern Rock building society. It was based in the north-east where I was brought up, but it ended up a horrific behemoth in the mid-west of America, losing money and going out of business as a result of the American sub-prime mortgage crisis. The result is that a local organisation that had provided homes and jobs for local people was there no more. We need to go back much further than the last Labour Government to understand why all this happened. It happened because of what happened in the 1980s, as I have explained. We need a radical change of course.