A chance for Chancellor of the Exchequer to see our town’s potential

George Osborne at the Hartlepool Heerema site.
George Osborne at the Hartlepool Heerema site.

IT is important that the Chancellor of the Exchequer, George Osborne, visited Hartlepool this week to announce the creation of 200 jobs at Heerema.

He will have been able to see for himself the enormous potential the town has in the field of energy and manufacturing.

This country needs to play to its strengths if it is to compete in the fiercely competitive environment of the 21st global economy; manufacturing and specialist fabrication in the offshore industry is certainly one of our strengths.

Hartlepool, with its infrastructure and skills, should be at the forefront of any such investment from the Government.

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The Chancellor has said that such investment and job opportunities are possible because of tax changes he has made to make it easier for oil and gas producers in the North Sea to carry out work.

Well, let’s not get the bunting out for Mr Osborne just yet. He is just correcting a huge error he made in his Budget from a couple of years ago.

He raised taxes for small and medium-sized oil and gas producers in the North Sea, which led to huge uncertainty in the industry, loss of confidence and a big drop in investment.

Following the Chancellor’s decision, drilling for oil and gas fell by over half in the subsequent year, reflecting the uncertainty, indecision and shelving of drilling plans.

This meant that fewer people were employed by the likes of Heerema. This was despite the high oil price at that time, which would have helped our balance of payments and the Chancellor’s tax receipts, meaning that he could have perhaps been able to pay down the deficit a bit faster.

In contrast, drilling operations in Norwegian and Dutch waters have been consistently applied, meaning that those nations have had a steady flow, not just of oil and gas, but employment, investment and taxes.

Since that time, however, we as a country have slipped further into recession. The Chancellor has made further errors of judgment with the disastrous Budget of earlier this year, with the pasty tax, granny tax and caravan tax.

It is a bit like somebody smashing a window, having to repair it and then expecting plaudits and medals for being responsible for the repair.

It could be that George Osborne’s visit to Hartlepool could be one of the last engagements he does as Chancellor of the Exchequer.

Speculation is mounting that George Osborne is seen as the weak link in the Government and may be replaced with somebody who is seen as more competent, like William Hague. Such reshuffle gossip may interest political anoraks but doesn’t tend to bother normal, real people.

This reshuffle, however, and the question of what the Prime Minister does with the Chancellor, will have a profound impact upon every single person, household and business.

The fact is that, by the Chancellor’s own priorities, his economic policy has failed.

His determination to cut the deficit fast has not worked. By cutting demand, the Chancellor has choked off recovery in the private sector.

Reduced spending from people and profits from companies has meant that the Government has less in tax receipts from the likes of VAT, Income Tax and Corporation Tax. However, rising unemployment has meant that it has to pay out more in benefits.

That has meant that, last month, at a time of the year when the Treasury normally has a healthy surplus, it had to borrow £600m extra. The Chancellor has had to admit that his deficit programme is not working.

George Osborne told the Hartlepool Mail that he is working “flat out” to help the economy and reduce youth unemployment in the town and elsewhere.

But it’s clear the policy is not working. If he is working flat out, he’s obviously not up to the job.

To change course to a more credible economic policy and to ease businesses and households who are really struggling, the Prime Minister should recognise this and sack the Chancellor.