Finance (No. 2) Bill

As this is the third Finance Bill that we have debated in the House this year, one could say that Finance Bills are a bit like buses: you wait for one to come along and three arrive at once. Even though this is a dry and technical Bill, it does have some merits. My primary concern is the failure to put in place a plan for growth. Throughout this debate, we must remember that economists cannot predict the future. History is littered with economic theories that have failed, and I am sure that everyone in this House would agree that only time will tell how the economy will pan out. However, we can deal only in facts. There is no doubt that the economy is at a very dangerous crossroads. In the past, economic recovery following a large-scale financial crisis has inevitably been slow. It is vitally important that we make the correct decisions now on growth, jobs, the deficit and public spending. Yes, dealing with the deficit is absolutely key to future economic policy, and there is no doubt that we must cut waste where it is found. That is not deficit denial; it is the truth. I am deeply concerned about statements made by the Prime Minister and the Chancellor of the Exchequer that seem to imply that deficit reduction is the beginning and the end of economic recovery. To me, it is vitally important that we have a credible and medium-term plan to reduce the deficit based on a careful balance between employment, spending and taxation—but only once growth is fully secured and over a longer period than the Government are currently planning. Simply put, hitting growth will make it more difficult to pay down the deficit because it means less revenue for the Exchequer. That is not deficit denial; it is just plain common sense. We face fundamental questions. Is it right to be cutting millions of pounds from public services and taking millions of pounds out of family budgets this financial year and the next? What will that do to jobs and growth? Ultimately, what will it mean for the deficit? There seems to be a growing consensus in the House today that says that the deficit is the only issue that matters in economic policy, that the measures to reduce it are unavoidable, and that there is no alternative. Adopting the consensus view may be the easy and safe thing to do, but it does not make one right or credible. We did that in the '30s and were faced with the great depression. The leader of my party, Ramsay McDonald, fell out with his parliamentary party over cuts, and we saw what happened then. Of course, the impact of immediate cuts to public spending on jobs and the recession has not yet fed through. Even though polls tell us that the public support deficit reduction when they are told that it will come from cutting waste in public spending, I wonder how they will view it when a local hospital is not being built or a school is in desperate need of repair and there is no money to pay for it. To attempt to repair the damage of such an event and return the national debt to its previous levels in just a few years is not only dangerously incredible in the eyes of financial markets but places an intolerable burden on current users of public services. Even halving the deficit, as Labour Members propose, would represent comfortably the biggest and fastest cut in the deficit since the period after the second world war, but without the peace dividend to fund it. By far the biggest influence on deficit reduction and the balance between taxation and spending is economic growth and the number of taxpayers in jobs paying their fair share. That is why the priority must be growth and jobs. It disappoints me that the Government have seen fit to cancel support for industries of the future such as the games industry. The Labour Government set out plans to support the industry in March, the new Government axed them in June, and the result was job losses in Scotland in August. That is what happens when a Government cut at any cost. The industry sustains thousands of highly skilled jobs that we simply cannot risk losing if we are to secure economic recovery and protect jobs. The industry, which contributed £1 billion to the UK economy last year, is competing with significant incentives from countries such as Canada, which are trying to entice companies to relocate their jobs. To me, cutting support for industry and highly skilled jobs is wrong at this time. I believe that the Government should urgently rethink that decision. The UK's creative industries will be essential to rebalancing our economy away from dependence on financial services. The Government's decisions do not seem well thought out, and the video games industry has issued warnings about the long-term implications. The Association for Interactive Entertainment has already said that, with the absence of tax breaks, it is essential that the Government work with the industry to address the skills gap and better access to research and development initiatives. It is therefore of the utmost importance that an assessment of the impact on the creative industries is made. Perhaps most worrying, the scrapping of tax relief, which puts the future of the computer games industry at risk, took place without industry consultation or discussion. Many hon. Members have mentioned regional development agencies and their benefit to the economy. They, too, were scrapped without consulting business. That sets a dangerous precedent, and I urge the Government to think carefully about formulating policy in that way in future. I have tried to keep my comments brief because other people want to speak, but now is the time for a careful and considered discussion of reforming tax and benefits in this country. I hope that we can do that through the Bill. Although I am happy about elements of it, I trust that the Government and the Opposition will now engage in that discussion.