As you know, Mr Speaker, I took the time to pay my tribute to Baroness Thatcher last week. I asked whether she had lived up to her own terms of reference and brought harmony where there was discord and hope where there was despair. I came to the conclusion that she had not, and that she had created a more divided and unequal Britain. Given the contents of the latest Budget, I fear that that is the kind of Britain we are now hurtling towards again.
A man who came to my surgery on Friday told me that he had £20 a week to spend after paying his utility bills and bus fares. At that rate of disposable income, he could take 10,000 years to get to the alleged cost of Margaret Thatcher’s funeral. When the empty bedroom tax hits, he will be down to £2 a day, so he would have to keep going for 15,000 years. In the Budget, the very poorest are being squeezed hardest to give some money to the squeezed middle to encourage them to vote Conservative, while millionaires are being given tax breaks when the top 10% in Britain have seen their average income go up by 11% over the last two years alone, simply through the machinery of the marketplace.
There were a few bright spots in the Budget. There were the mortgage deposit schemes, but according to people in the financial world, there is a real risk that they will generate the sort of sub-prime debt and irresponsible lending that banks are not supposed to be engaged in if we are not to encounter a problem, as we did in 2008. There was the 1p beer give-away. There was rejoicing in Swansea, because outside one pub, a sign said, “Buy 299 pints of beer and get one free.” People were very excited about that. However, the general situation is that we have no growth, as people have mentioned. The problem is the debt to GDP ratio. Debt as a proportion of the value of the economy was 55% in 2010, and it will be 85% in 2015. There are two ways of sorting that out: to increase GDP—the size of the economy—as Labour did in the 11 years from 1997 to 2008 when it went up by about 40%; and/or to attack the debt.
The total focus is on attacking the debt. In 2010, when the Chancellor announced that he was cutting half a million jobs, what happened? People, particularly in the public service, stopped spending. The savings rate went up, consumer demand went down, growth was flattened, so debt as a proportion of GDP is rising, and more and more people are doing less work. We hear about the extra million jobs, but they are producing no overall extra output, so average productivity is down.
We need to invest. People make a big joke about that. They say, “You’ve got to borrow to pay off your loans,” but there is a difference between investing in productive capability—in skills, infrastructure and marketing and in super-connectivity; I mentioned earlier that Swansea had put in a bid for super-connected city status—which would help the economy to grow, and simply spending and borrowing to pay people to do nothing and keep them on the dole. That was the old problem for the Tories pre-1997 and we are going back to that situation.
In other countries, there is enormous investment in research and development, particularly in emerging economies such as Brazil, China and India. When we study the behaviour of multinational companies, we see that they are drawn to R and D clusters, not just to ever-decreasing levels of corporation tax. Obviously that is part of the criteria, but reducing corporation tax from 21% to 20% and reducing the yield by 5% does not make much sense. The money would be better spent on super-connectivity for all our smaller cities, including Swansea. In Swansea, there is massive investment by the European Investment Bank in a second campus, which is creating an R and D cluster that is attracting the involvement of companies such as BP, Tata and Boots. That will create real international global value.
Aside from that, the focus has been on clobbering the poor. If money is cut for people who are already poor, growth will be cut overall. If cuts affect better-off people who are saving, they are not investing their earnings in the local economy either.
The bedroom tax is a cruel inefficiency. Housing benefit has doubled in the last 10 years, but 70% of the increase was caused by private sector rent growth. People are being put into the private sector because not enough council and social housing is being built. In Wales, 29,000 families are affected, but there are only 400 empty single-bedroom units of accommodation, so there is nowhere for them to go. Two thirds of the people affected are disabled. In Swansea, moving someone from a three-bedroom council house to a two-bedroom private sector
house would cost 50% more, so housing benefit will go up again. A lot of these measures are counter-productive and destructive, but that particular one encourages people to have more children, even if they were not going to, to fill up the rooms. Meanwhile, the overall benefit cap encourages families to break up so that there are two units that can come up to the £400 threshold. The policy has not been thought out, and we are seeing an awful return to a Dickensian view of the worthy and unworthy poor, the shirkers and the workers, and the strivers and the skivers.
We need to refocus on growth, capacity, exports and jobs. Jobs and growth are the only things that are going to pull us back on the right track to balance the books and make Britain strong again. We want a Britain that cares and a future that works—a one nation strong and united, not a weak nation divided by the Conservatives.
9.45 pm