DCSIMG

Rachel Reeves: My three tests for George Osborne as road to recovery gets longer and longer

Rachel Reeves.

Rachel Reeves.

When the Chancellor of the Exchequer stands up to deliver his Autumn Statement, he needs to take action to ensure jobs and growth are supported. He needs to pursue the long term reforms our economy desperately needs.

And he needs to demonstrate that as he puts up taxes and cuts spending, he does it in as fair a way as possible.

In October, David Cameron stood up in the House of Commons and claimed that 
“the good news will keep on coming”. Families and businesses in Yorkshire could have been forgiven for raising eyebrows at the Prime Minister’s optimism.

Yes, it is good news that, with the help of the Olympics, Britain had finally come out of a double-dip recession since the Second World War.

But the figures show that our flatlining economy is only the same size as a year ago. In the two years since the spending review we’ve had just 0.6 per 
cent growth – compared to 
the 4.6 per cent George Osborne said his plan would deliver. 
Over the same time, the American economy has grown 
by 3.9 per cent.

Long-term unemployment 
is rising, while business lending 
is falling. And the result of this slow growth and high unemployment is that government borrowing in the first half of this year has actually gone up.

In Yorkshire, unemployment has remained stubbornly high. There are still 250,000 people unemployed in Yorkshire and the unemployment rate is 9.1 per cent, compared to 7.8 per cent nationally.

In these circumstances, it demonstrates how out of touch David Cameron and George Osborne are to just sit back, cross their fingers and hope for the best. The good news, far from coming thick and fast, is few 
and far between for most 
families and businesses in Yorkshire right now.

So this Autumn Statement needs to be one of action, not complacency. The Labour Party has set out three tests for the Chancellor when he delivers his speech today.

First, we need a plan to create the jobs and growth that are vital to get the deficit down and catch up all the lost ground of the last two years.

We have suggested using 
funds from the 4G auction to build 100,000 affordable 
homes, bringing forward infrastructure investment, a temporary VAT cut and a bank bonus tax to fund a jobs guarantee for young people. 

Second, we need long-term reforms to strengthen our economy and ensure that other countries do not continue to race ahead of us.

This should include a British Investment Bank properly backed by the Treasury to 
boost lending to small and medium sized businesses, a long term plan to rebuild our infrastructure and radical reforms to separate retail and investment banking.

Plans to build infrastructure projects which have been announced so far have failed 
to become anything more 
than blueprints. Improvements to the M1 and the delivery of the Leeds Rail Growth Package, announced this time a year 
ago, are stalled, not creating 
the jobs and growth we desperately need.

Third, we need fairness underpinning the tough decisions that any government would be making in Britain today. Sustainable growth 
must be built on an economy that works for all working people, an economy that is balanced for all regions of the UK, and support to deal with the rising cost of living as income growth fails to keep pace.

That means cancelling the fuel duty rise in January, at least until next April, to help struggling motorists with the increasing cost of filling up the tank.

And it means rethinking the plan to give a tax cut to millionaires on the same day that taxes go up for millions of pensioners. 8,000 millionaires will get a staggering tax cut of £107,500 per year from the cut in the top rate of tax from 50p to 45p in the pound.

Just four per cent of all 
those set to benefit from the tax cut live in Yorkshire, 52 per cent live in London and the South East. But on the same day 363,000 pensioners in our county will lose £83 per year because of changes to the personal allowance.

The Government should abandon the £3bn top rate tax cut for people earning over £150,000. It is the wrong priority at a time when the economy remains weak.

If Labour was in government now, we would not be cutting
the top rate of tax or implementing the tax rise 
on pensioners.

We would postpone the increase in fuel duty which would be so crippling to families and small business, by cracking down on tax avoidance by employment agencies.

We need to build an economy where prosperity and burdens are fairly shared, and in which everyone has a stake.

I hope that Chancellor of the Exchequer will bear that in mind today, but I am yet to be convinced.

 

Comments

 
 

Back to the top of the page