Rachel Reeves: Osborne must take responsibility for his failure and change direction now

Chancellor of the Exchequer George Osborne speaks in the House of Commons. PA
Chancellor of the Exchequer George Osborne speaks in the House of Commons. PA
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THE Government’s reckless gamble with the economy has failed, as was made clear by the Chancellor in his Autumn Statement.

People across Yorkshire are worried about the future, and with long-term youth unemployment up 66 per cent since January in Leeds West alone, it is no surprise. The Chancellor is doing nothing to reassure families and businesses that he understands the scale of the challenge.

At the time of the election, the economy was starting to recover: unemployment was on the way down, growth on the way up.

But now, almost two years since the UK emerged from the recession caused by the global financial crisis, the economy is flatlining, unemployment is at a 17-year high and more than one million young people are out of work.

First the Chancellor blamed the snow for the bad numbers, then he blamed the Royal wedding and now he blames the Eurozone. His excuses are out of touch from the reality on the ground.

It’s time the Chancellor took responsibility for his reckless policies which have cut spending and raised taxes too far and too fast, choking off the recovery.

The Government will now have to borrow a staggering £158bn more than planned: the price for economic failure and the higher unemployment and benefits bill their failed plan has created. And the Prime Minister will now break his promise to balance the books by 2015. Trying to cut spending and raise taxes faster than any other country has backfired. All this pain, but for no gain.

Yet the Chancellor is sticking to his failed plan – even though the independent International Monetary Fund has warned that if the economy continues to underperform and stagnate, as we now know it will, the Government should slow the pace of cuts and tax rises.

The measures George Osborne announced this week simply give with one hand while taking away with the other. The cuts to tax credits for working families of up to £320 came on top of a VAT rise which is already costing an average family £450 a year. Child poverty is now set to increase by 100,000. But the Government has refused to repeat the tax on bank bonuses. The Chancellor said we were all in this together, but once again with this Tory-led government it is families, women and children who are being hit the hardest.

Families who I speak to in Leeds West are facing the biggest squeeze in incomes for a generation while small businesses are struggling to fill order books. They want support from the Government and a coherent plan for jobs.

Earlier this month I visited a factory in Sheffield with Ed Balls, my neighbouring MP in Leeds and Labour’s Shadow Chancellor. They were showcasing an apprenticeship scheme which has been introduced by Sheffield City Council to tackle youth unemployment.

It is an example of a local council doing what it can to tackle youth unemployment, after the government scrapped the Future Jobs Fund. Nick Clegg’s youth jobs programme is only a fraction of the size of the scheme scrapped by the government more than a year ago.

The Government, like Sheffield City Council, should be doing what it can to make sure that the scars of recessions past don’t come back to haunt this generation.

If we’re to get the deficit down we need more people in work paying taxes, not on the dole claiming benefits. This is why Labour have put forward a five-point plan for jobs and growth.

As an alternative to the Government’s failed austerity-only package, Labour would create 10,000 jobs for young people in Yorkshire, and build 1,000 new homes, funded by a £2bn tax on bankers’ bonuses.

Second, we would genuinely bring forward “shovel-ready” investment projects that could make a difference to jobs now and strengthen our economy for the future, such as new school buildings. While the Government cancelled Labour’s Building Schools for the Future programme, scrapping 83 schools projects here in Yorkshire, we say they could get projects back on track, providing children with fit-for-purpose schools and boosting private sector construction jobs.

Third, we would temporarily reverse the Tory-led government’s VAT rise. This would put £450 a year in the pockets of families with children, or £275 for the average pensioner household. Families struggling with the basics – mortgage, rent, bills, childcare and getting to and from work – will see their money last longer and it would be a boost to our struggling high streets too.

Fourth, we would cut VAT on home improvements to five per cent for a year, helping homeowners who otherwise cannot afford repairs to their homes, and improving our communities by bringing empty properties back into use.

And fifth, we would give the 150,000 small firms in Yorkshire and the Humber a national insurance break if they take on extra workers – using the hundreds of millions of pounds left over from one of the government’s failed schemes.

In Leeds, in Yorkshire and across the country, businesses and families need more support from the Government in these difficult times. There is now no question that Plan A has failed. The Government need to change course, and they must do so now.

There is a better way – a real plan for jobs and growth to get our economy here in Yorkshire moving again and help get the deficit down in a steadier and more balanced way too.