The Economy

I beg to move,"That this House notes that on 22 June 2010 the Chancellor announced his first Budget with a target to eliminate the structural deficit by 2015-16 through an additional £40 billion of spending cuts and tax rises, including a VAT rise; further notes that over the last six months the economy has not grown, in the last month retail sales fell by 1.4 per cent. and manufacturing output fell by 1.5 per cent. and despite a welcome recent fall in unemployment, the Office for Budget Responsibility predicts that future unemployment will be up to 200,000 higher than expected; believes the Government's policies to cut the deficit too far and too fast have led to slower growth, higher inflation and higher unemployment, which are creating a vicious circle, since the Government is now set to borrow £46 billion more than previously forecast; calls on the Government to adopt a more balanced deficit plan which, alongside tough decisions on tax and spending cuts, puts jobs first and will be a better way to get the deficit down over the longer term and avoid long-term damage to the economy; and, if the Government will not change course and halve the deficit over four years, demands that it should take a step in the right direction by temporarily cutting VAT to 17.5 per cent. until the economy returns to strong growth and by using funds raised from repeating the 2010 bank bonus tax to build 25,000 affordable homes and create 100,000 jobs for young people." A year ago today, in his first Budget statement to the House, the Chancellor of the Exchequer made a clear choice. He said that rapid deficit reduction was the overriding priority, and that it would involve fiscal tightening of such scale and severity that it would have to begin immediately. He said that the faster we cut, the better it would be for confidence. He said that there was no choice, and that the markets demanded this action. He also said that no alternative was possible and that anyone who said otherwise was a deficit denier. The Chancellor ignored the evidence that budget deficits had risen rapidly in every country after a global financial crisis caused by the irresponsible behaviour of banks around the world, claiming instead that the root cause of Britain's deficit was too much spending on the NHS, schools and the police. He ignored the evidence that Labour's balanced deficit reduction plan to support jobs and halve the deficit over four years was working, that the UK economy was already recovering, that tax rises and spending cuts had been pre-announced, and that we were over-achieving on our deficit reduction plan in line with the G20 commitment.