Below is the text of my speech for the Third Reading of the Finance Bill yesterday:
Mr Speaker
I am grateful for the opportunity to say a things in conclusion to our debate on the Panic Budget, sped through this place.
I think it is now clear to all that it’s a Budget born not of economic necessity, but of political anxiety
Anxiety that if the Liberal Democrat benches are allowed to see any more evidence of the damage this Budget is doing to confidence and growth that they will remember where they have buried their Keynesian tradition, disinter it and refuse the Chancellor their support
Mr Speaker
The great question this Budget and this Finance Bill should have answered was how do we lock in the recovery that LABOUR left.
Winning that recovery has dominated our final two years of office
Not since the 1945, has the world been hit by a recession of the scale that hit our shores in 2008.
The global economy shrank some 1% – for the first time since the war
The G7 economies shrank some 3%
World trade fell some 12%
What started as a collapse of confidence of Wall Street rapidly infected the world’s financial system and triggered a disastrous domino like the collapse of confidence in markets around the world.
No country – not least a country which is one of the world’s great trading nations – could be isolated from its effects and indeed we were not.
Yet on Friday, Mr Speaker we will be able to test the durability of the recovery Labour delivered.
Almost two years on from the oil price hitting $147 and the collapse of Lehmans…,
The ONS will publish growth figures for the second quarter of 2010, and we await them with interest.
But this much we already know:
The ONS tells us
Our economy has grown 0.7% since its low point
First quarter growth in 2010 was some £8 billion larger than the end of 2009
Output growing by £88 million a day
The NIESR has already estimated that output in the second quarter grew by 0.7%
That would be no mean achievement:
Especially when our neighbours are telling us how hard the business of recovery has become
In Q1, our growth reached 0.3%
In Germany it was lower (0.2%)
In France it was lower (0.1%)
In the Eurozone as a whole it was lower (0.2%)
Spain, Ireland, Greece are all forecast to see negative growth for the year.
So on this side of the House, we are proud to be the party of recovery
We are proud we brought together at the G20 a plan for global growth, which has now seen world growth revised up from 1.9% last year to 3.5% underpinned by a $1.1 trillion dollar support package agreed here in London
We are proud we stopped the British banking system collapsing in the face of its exposure to the freezing of the international credit system
And we are proud that we put in place the most comprehensive recovery plan here at home:
To protect people’s jobs from the axe
To protect people’s homes from repossession
To protect people’s employers from liquidation
LABOUR RECOVERIES VS TORY RECOVERIES
We need only compare this last recession to the 1990s to see the difference a Labour government can make
Unemployment is at half the level reached in the 1990s recession.
Repossessions are 40% lower than the level reached in the 1990s recession.
Company insolvencies are at one third of the rate reached in the 1990s recession.
DEFICIT REDUCTION
Now of course that action did not come cheap.
But when I listen to parties opposite I cannot quite make out whether they believe we should have done nothing and let the recession take its course,
OR that we should have invented some cut-price plan out of the worst recession for 60 years
Sometimes I feel they talk in the illusion that there was somewhere a kind of mythic Budget Bargain Basement where we could have found a Ryan Air style Recovery Plan, with no-frills but a sure-fire chance of success
I have to say to the parties opposite that to attempt recovery on the cheap would have been to fail to secure any recovery at all.
In life’s difficult moments, all advice is naturally welcome
But if we’d followed the Tories advice we’d have kissed good bye to the recovery
Not least because our banking system would have collapsed.
The cash points would have stopped
The dole queues would have spiralled
Repossessions would have spiked
And Britain’s small businesses would have been submerged beneath a wave of foreclosure, bankruptcy and liquidation.
Now, the price of dodging Doomsday wasn’t low
The deficit was bound to rise
When the shocks hit, we had the 2nd lowest debt in the G7.
Between 1997 and 2007 we cut public sector debt from 42.5% to 36%.
Over 10 years before the crisis UK borrowing averaged 1.4% of GDP – compared to 1.9% for the rest of the OECD.
As a result, even amidst the current expense our national debt will simply rise in line with every other major economy
Now the party opposite may feel the price of recovery was not a price worth paying – but I’m afraid the strategy the party opposite condemns has now delivered:
In March, my Rt Hon Friend the Shadow Chancellor told the House, the deficit this year was £13 billion better than expected for 2010/11.
In June the OBR said it was £8 billion better than that.
Since February some £123 billion has been knocked off the estimates for national debt – and that’s before we sell our shares in the banks
The government budget was underspent to the tune of £5 billion last year, according to Treasury figures in July.
Interest rates that were falling for months before the election down nearly ½% between late 2008 and April 2009.
And when we look at the savings to unemployment we see further savings still
THE PRICE OF UNEMPLOYMENT
Our policy to keep unemployment down
Not only was it a policy that worked well
Not only was it morally right
It was economically wise
The UK’s policy delivered unemployment around 2% lower than either America or the EU.
In the Budget in 2009, we had to assume unemployment would stay stuck at 2.44 million people.
A year later in Budget 2010 that forecast had fallen by 700,000 down to 1.74 million.
Over the 4 years, 2010-2013, that fall represented a £14 billion saving in unemployment benefit bills, and an incalculable saving in human misery.
So now, with that inherited recovery the House should ask
What action should be taken to speed up the recovery now underway?
How do we guarantee the recovery is certain?
How do we marshall investment in rebuilding an economy that is better balanced?
Instead of providing answers to any of this, the Budget and this Finance Bill
Slow the recovery down
Puts people on the dole
And offers a strategy for rebalancing our economy composed in equal measure of a wing and a prayer
THE GAMBLE
Nothing better illustrates the gambling instincts of the Government than the fast cuts to public sector jobs and the depression of consumer demand with VAT – a tax on confidence if ever there was one.
With the most breathtaking casualness, the Government is prepared to put our hardest fought recovery at instant risk.
With such an unlikely scenario for growth in his pocket, one would have thought the Chancellor might hedge his bets just a little.
You would have thought he might make sure the private sector was creating jobs at quite a pace before putting 800,000 public servants on the dole.
You would have thought he might have a little regard for cities like my own home town of Birmingham.
Birmingham already has unemployment that is high. If he cuts – say 9% of the 156,000 public sector workers before the private sector is back to health unemployment is going to rocket higher and higher to 14,000 people.
That story could be told all over the country.
With risks so great, you might think he would nurture domestic demand, not do his best to tax it back into recession.
Yet, this Finance Bill attacks domestic demand with such viciousness that the country is now hoarding its silver [at a pace not seen since the exit of the Roman Empire]
Britain’s families and businesses have now so little confidence about the future of the economy that rather than making the odd investment here and there, they have tucked away £130 billion in the bank as the household savings rate as tripled.
Britain is now saving money which is not being spent either in the shops or on building new factories or production lines.
The Budget’s effect has not restored confidence; it is draining confidence.
In June, the Bank of England says mortgage approvals fell
Last month, the index of consumer confidence fell
Yesterday, Right Move told us that house prices have been cut for the first time this year
[Today, the CBI has said today in its Quarterly Index of Confidence that confidence is not rising; it’s falling].
This Budget and this Finance Bill puts Britain into the recovery’s slow lane – and the greatest irony of all is that we all have to pay more as a result.
LABOUR’S DEFICIT REDUCTION PLAN
When Labour set out our comprehensive deficit reduction plan in March, we proposed:
A deficit reduction of £78 billion over the next four years. The OBR inconveniently told the Chancellor we were on course to deliver the plan.
£57 billion of discretionary action was required:
£19 billion in tax rises
£38 billion in spending cuts
And £21 deficit would be closed by the economy returning to growth – delivering higher tax receipts and lower benefit bills.
THE TORY CONTRAST
Now because this Budget hits growth so hard, £9 billion of extra tax is needed to make good the effect of lower growth
That is the price of slowing down the recovery.
The Lib Dems are very pleased with their increase in inheritance tax thresholds.
But they’ve been sold a pup. They could have had the whole increase they wanted if we didn’t have to pay for the cost of lost growth.
It is worth reflected a little on how much more taxes had to go up because growth was hit so hard.
The Budget scorecard says the Chancellor’s policy decisions OUGHT by rights to bring in an extra £8.2 billion in taxes in 2014-15
[Table 2.1, p.40]
But the OBR says just £3.1 billion comes through the door, because growth depressed so much
[Table c12, p.101]
The budget goes onto say that in total some £9 billion in extra tax increases and spending cuts are needed because of this go-slow budget [p.97 table C9]
The Government has almost halved the contribution of growth to closing the deficit.
The government may have lost its monetarists. But the have not lost their masochists
THE FAIRNESS TEST
Finally, Mr Speaker, we have heard a good deal about the basic failure in fairness this Finance Bill represents.
The Government was so embarrassed, perhaps some were even slightly ashamed, that the Budget was so regressive they only dared describe its effects
Flattered by Labour’s measures
And 3 years before the full horrors of the Budget take effect
We were not given a word from the Government benches about:
The £8 billion hit that our country’s pensioners would take
Nor the £70 million of irrecoverable VAT our charities would pay
We gave both the Conservatives and Liberal Democrats a chance to vote for an amendment to delay the VAT increase until a plan to compensate pensioners and to compensate charities was fully in place.
And they voted against it.
The public will draw only one conclusion.
That this Government simply does not care
If I’m not mistaken, the entire contribution of the Big Society Bank – which Labour created – will be wiped out by the VAT increase.
What a cruel con-trick to perform on Britain’s most deserving.
Yesterday the Prime Minister told us he wants to some ‘oomph’ into Britain’s communities. It is a phrase worthy of the Mayor of London.
I’m afraid this Budget tells us the only thing going into communities from this Government is the boot.
That is why we will campaign up and down the country for a proper plan for growth and jobs.
It is why we’ll campaign for proper protection from this Budget for our pensioners.
It’s while we’ll campaign for a proper compensation for our charities.
It’s why tonight we will [oppose] this Bill in a Division of the House.
Liam is the MP for Birmingham Hodge Hill, and Labour's Shadow Chief Secretary. 
