Labour MPs in the northwest are all concerned that the actions of this government are reinforcing the divide between the north and south. In particular, the changes to local government grants are hitting poorer areas in the north far harder than the more affluent areas in the south that are represented by members of the cabinet.
The forthcoming budget gives the chancellor the opportunity to make sure that the areas we represent are given the support that they need, and I have therefore written to George Osborne – incidentally, a fellow northwest MP – setting out the three key areas we would like to see him focus on to help the northwest:
1) Make sure the northwest gets a fair share. We’re still waiting for BIS to set out their growth plans, but I understand that the chancellor is considering creating ‘Enterprise Zones’ to encourage businesses to invest in less well-off communities. It’s important that any such investment is for the long-term and not just a gimmick. Some of our areas in the northwest are in urgent need of investment and jobs, and I hope that the chancellor will make sure that these ‘zones’ are targeted at the areas that need help the most.
2) Create a climate for the growth of new industries. Part of the reason that the effects of the global economic crisis were so pronounced in the UK was because we were so reliant on the financial services sector in London and the southeast. The best way to rebalance our economy – both in terms of types of jobs and geographically – is to invest in growth sectors that will form the basis of the new economy. The northwest is home to a number of creative businesses such as those in the video gaming industry and I hope that he will consider a games tax relief – which will result in an increased tax take over this parliament – to give SMEs and start-ups the opportunity to grow.
3) Reverse the VAT rise on fuel. The 2.5 per cent increase to 20 per cent VAT on fuel that we saw in January costs almost 3p a litre. That means hard working families are having to spend more money on fuel, and significantly reduces their disposable income driving down living standards. I know that fuel prices are hitting people right across the country but in areas such as the northwest, where average wages are lower than elsewhere, increases to regressive taxes such as VAT have a disproportionate effect. Under the Labour government we regularly saw planned fuel duty rises postponed when prices were high. I hope that instead of pontificating about an unworkable fuel duty stabiliser the government will consider taking real action to help people now.
By acting on these three areas the chancellor can demonstrate that the government’s rhetoric about ending the north-south divide is more than just hot air. Failure to do so will reinforce the growing impression that this government has not learnt from the lessons of the 1980s and will leave our poorest communities to struggle alone. People across the northwest will be watching closely on Wednesday to see which path the chancellor chooses.