Michael Dugher: If this coalition fails us again, we will all pay the price

MANY Conservatives blamed the Lib Dems for their drubbing in the local elections while many Lib Dems blamed the Conservatives for their reverses.

George Osborne, on the other hand, simply blamed the “presentation” of the Budget (as if tax cuts for millionaires paid for by tax rises for millions of ordinary families and hard-pressed pensioners could have been “spun” any better).

However David Cameron and Nick Clegg have a chance in today’s Queen’s Speech to stop allocating blame for last week’s electoral defeat.

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Instead, they have an opportunity to begin taking responsibility for getting Britain back to growth and for easing the squeeze on middle and lower income people. The Government’s economic failure – incompetence combined with unfairness – was central to the verdict given by the public last week.

Writing in the Yorkshire Post in October 2010, I highlighted warnings that by cutting too deep and too fast, the Government risked killing Britain’s economic recovery (“Coalition runs the risk of triggering double-dip recession”).

Many others at the time argued that without jobs and growth, tax revenues to the Exchequer would drop, the Treasury would have to pay more in unemployment benefit, and the vital work of paying down the deficit would be much, much harder.

Sadly, these warnings went unheeded. Economic growth in 2010 was 2.1 per cent. Since then, the Government has choked off recovery and we are now in recession.

As a consequence, the Government are borrowing £150bn more than they planned.

Other countries chose to do things differently.  In America, President Obama decided to take a much more balanced approach and implemented a jobs plan to boost growth. 

As a result, the US has recovered all the output it lost in the global recession and has grown by up to 2.8 per cent. In the UK, the overall level of GDP is 4.3 per cent below our pre-crisis peak of 2008.  Compare this to the US, where the figure is 0.8 per cent above its high point. 

One of the terrible consequences of the UK’s failure on growth has been the massive increase in unemployment that we have witnessed in recent months.  Latest figures show that the number of people claiming Jobs Seekers’ Allowance in Yorkshire has risen to over 169,000 – a 12 per cent increase in the last year. 

The figures for youth unemployment are even more depressing: the number of 18-24 year olds in Yorkshire who have been out of work for more than 12 months has increased by 250 per cent in just one year.

And of course the wrong people are paying the price. Families are already feeling the squeeze with higher petrol prices, energy bills and the cost of living. But while millionaires from across the country were given a tax cut, the latest Government figures also show that over 96,000 families in Yorkshire are set to lose all of their Child Tax Credit or Working Tax Credit. This means that many will be better off on benefits than in work – that cannot be right.

That is why the Government must act quickly. For the Queen’s Speech, Labour has set out five Bills that offer practical ways to help people right now – to improve living standards for families, ensure security for pensioners and to get the economy moving to help pay down the deficit:

Firstly, we need a Finance Bill to reverse tax cuts for people earning over £150,000 a year to use that money to restore the cuts to tax credits and help pensioners on fixed incomes hit by the so-called “granny tax”.

We would bring forward long-term investment projects and cut VAT on home improvements to help the construction industry, reverse the damaging VAT rise to help families and pensioners, and give small businesses a one-year national insurance break if they take on extra workers.

Secondly, an Energy Bill to break up the dominance of the Big Six power companies and require them by law to offer four million elderly people the lowest tariff available.

Thirdly, a Transport Bill to stop train operators raising fares by more than one per cent above inflation and give local authorities more control over bus firms to stop hard-pressed commuters being fleeced.

Fourthly, a Consumer Bill, which would give new powers to the Financial Conduct Authority and Competition and Markets Authority to stop rip-off surcharges by banks, low-cost airlines and pension firms.

And lastly, a Jobs Bill, which would ensure money raised from a tax on bank bonuses is used to provide real jobs for more than 100,000 young people aged 18-24.

After the local election results, David Cameron wrote: “I get the message, loud and clear.” Today’s Queen’s Speech is a chance to prove he really does. If it’s just more of the same, then this week will be a major missed opportunity.

Already in recession, Britain risks a lost decade of economic stagnation, high unemployment, and more borrowing for failure. My fear is that it’s young people, families, pensioners and businesses throughout Yorkshire that will once again pay the price.

• Michael Dugher is Labour MP for Barnsley East and Shadow Minister without Portfolio.