Debate resumed (Order, 3 March).
Question again proposed,
That income tax is charged for the tax year 2021–22.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
Yesterday, we saw in black and white the impact of this Government’s mishandling of the coronavirus crisis, right there at the front of the Office for Budget Responsibility’s report: the UK has suffered the worst economic crisis of any major economy. The Chancellor has tried to dismiss that damning fact as a mere accounting quirk, but the OBR was clear: even when all G7 countries are measured in the same way, the UK’s economic crisis has still been the worst.
Perhaps it is understandable why the Chancellor wishes to muddy the waters on this point, because the OBR is scathing in its assessment of the reasons why we have had such a severe crisis, and he has played a leading role. In its words, the primary reason is:
“simply that the UK has experienced higher rates of infection, hospitalisations, and deaths from the virus than other countries.”
The Government were too slow into lockdown not once, but three times. The Labour party urged the Government last autumn to listen to the scientific advice and bring in a short circuit-breaker over half-term to contain the virus, but the Chancellor allegedly overruled the scientists and insisted that a lockdown was not needed. When it came, it was longer and more severe. As the OBR notes:
“The UK has spent longer in stricter lockdowns than other advanced economies”.
The fact is that the Chancellor just does not get it. He thinks that we can separate out the health crisis from the economic crisis and trade one off against the other, but failing to get on top of the public health crisis only makes the impact on jobs and businesses worse. The OBR was clear on that point:
“a greater prevalence of the virus also raises voluntary social distancing which…account for around half of the total decline in economic activity associated with the pandemic.”
It is a damning report card. Coronavirus may have closed large parts of our economy, but this Government crashed it.
Yesterday’s Budget was an opportunity for the Chancellor to make amends, to end the irresponsible decision making that has defined the past year, and to reverse the economic mismanagement that has defined the past 10 years. It should have been a Budget to rebuild the foundations, but it merely papered over the cracks. After the year that we have just had, it should have put the NHS and social care system front and centre, rewarded our key-worker heroes, and set out a plan to strengthen a system too often horribly exposed by the virus. But incredibly, the Chancellor made just a single mention of the NHS and said nothing whatever about social care. Worse still, despite saying that he would be honest with the country about the challenges that we face, he buried a planned cut of £30 billion in resource spending for the Department of Health and Social Care in the fine print of the Red Book.
We know that, when it comes to the pressures on our NHS, this coming year will look different from the last—thank goodness—but it is extraordinary to think that there will be no ongoing costs, either as a result of the pandemic or of the backlog and waiting times that have built up. More than 4.5 million people are currently on the waiting list for treatment—the highest number on record. The Government are burying their heads in the sand, and it will be our NHS staff who feel the pressure from that denial of reality. Those cuts are an appalling reward for workers who have given absolutely everything over the past year to help our country through this crisis. It is hard to think of a greater long-term challenge than that of social care and yet, despite being almost two years on from the Prime Minister saying that he had a plan to fix the crisis in social care once and for all, this Chancellor and this Government had absolutely nothing to say about it.
As for health, so for education: the Government have planned zero additional covid-related spending for schools this coming year. It is extraordinary to believe that there will be no extra costs for our schools as they try to support a generation of schoolchildren who have missed such a chunk of their education.
That sums up this Budget: nothing to say on the biggest issues the country is facing; out of touch with what people are going through right now; and absolutely no plan for what to do next.
Let us take the jobs crisis. The Department for Work and Pensions should be straining every sinew to help get people into work, yet the kickstart programme that the Secretary of State oversees is helping just one in every 100 eligible young people. The restart programme for the long-term unemployed has not even begun and will not be operating at full capacity until this time next year, by which time unemployment is expected to have hit over 2 million. This Budget should have been a moment to get a grip on these failing schemes, to supercharge them so that they were doing everything possible to help those who have lost their jobs, and to give people a genuine jobs promise, as Labour has urged. But what did we get? We got tinkering around the edges with traineeships and apprenticeships, when we know that £330 million of apprenticeship levy funding is still sitting unspent, and a two-year programme to pilot the use of new technologies to help people find work. That is not a plan. That does not come near the scale of the response needed to help the 1.7 million people who were already out of work, or the hundreds of thousands more who risk losing their jobs in the months to come. Can the Secretary of State honestly look me in the eye and say that this amounts to a plan for jobs?
Moreover, where will the new jobs come from? With the hosting of COP26 this year and the eyes of the world upon us, the UK has an enormous opportunity to show how an active Government making smart investments can help us emerge from the economic crisis and meet our net zero ambitions at the same time. Labour has called for £30 billion of investment to be accelerated into the next 18 months to support the creation of 400,000 new green jobs, but, unbelievably, yesterday’s Budget took us backwards. The Government have actually cut half a billion pounds of capital investment from their plans for the coming year, and the green homes grant, the flagship programme of the Chancellor’s summer statement last year, seems to have disappeared from the face of the earth, after more than 75% of its funding was cut and it was found to have been costing jobs.
We needed a plan both to create the jobs of the future and to put in place employment programmes worthy of their name, to help get people into work. We got neither. So instead, the OBR predicts that we are on course to see unemployment rise to 6.5%, with more than 2 million people out of work. What is the Secretary of State choosing to do, just at the moment that the furlough scheme is set to end and joblessness peaks? She is going to cut £20 a week from social security, right when people need it most. She is going to take our out-of-work support back to the lowest level since the 1990s—to cut the lifeline. Is she happy with the Chancellor’s decision to extend the uplift to universal credit by only six months? Does she believe that that is in the best interests of people in this country, both in and out of work, who rely on that money? Is she happy with the decision to give those on working tax credit a lump sum of £500 and then nothing further? I ask, because she has previously said that there were big downsides to a one-off payment, and that previous experience is that,
“a steady sum of money would probably be more beneficial to claimants and customers”.
While we are focusing on the holes that the right hon. Lady’s Government have torn in our safety net, can she explain why her Government have chosen to cut statutory sick pay in real terms next year? It was already at one of the lowest levels in Europe, and her colleague the Health Secretary has already admitted he could not live on it. It has quite clearly acted as a major barrier to people’s self-isolating when required, as the Government tacitly admitted by bringing in a whole new payments system, with its own problems. So why on earth would the Government cut that support back even further in the middle of a pandemic?
Sadly, that is of a piece with the Government’s failure to understand what so many people are going through right now. The cut to universal credit that looms in six months’ time is just one part of a triple hammer blow that the Government are hitting families with this year. They have also frozen the pay of our key workers for everyone earning above £18,000—a real-terms pay cut—and they are forcing councils across the country to hike council tax by up to 5%.
The Labour party is clear on this: this Budget was not the time for tax rises. That view is shared by a range of economic experts, from the International Monetary Fund and the OECD internationally, to the CBI here in the UK. A triple hammer blow of tax rises and pay freezes now and a social security cut later in the year is not only incredibly unfair on families who have gone through so much, but economically illiterate. It means that those families will be forced to tighten their belts, to spend less in small businesses and on their high streets, and the recovery will take longer. Of course, that has all taken place while we have seen waste and mismanagement from the Government on an industrial scale—from £22 billion on a test and trace system that has not worked for months, to procurement rules being suspended, and those who have political connections being 10 times more likely to win contracts than those who have not.
Despite that profligacy for some, there is the prospect of further pain to come for others, with the Chancellor’s decisions yesterday combining with others since the start of the pandemic to mean £14 billion-worth of cuts to planned public service spending starting next year, rising to £16.5 billion after that.
The Chancellor promised “openness” and “honesty” at this Budget. Well, let me ask the Secretary of State for some openness and honesty now. Where are those cuts going to fall? Will they be felt in fewer police officers, fewer further education opportunities for young people, poorer quality social care for the elderly? What action will the Government take to protect people when their income tax personal allowance is frozen next year, especially once the right hon. Lady’s Department has taken away £20 a year from social security, when many of those in the public sector will have seen their pay frozen, when many other people’s wages are continuing to stagnate, and when council tax has, of course, increased? Will her Government be ready to look at this issue again in the next Budget if required? Why are her Government scheduling the freezing of the personal allowance to take place before increases in corporation tax?
People have a right to know what is waiting over the horizon, because it looks an awful lot like what has come before. It looks an awful lot like a return to a failed economic model that saw us end up with 3.6 million people in insecure work, 4 million children living in poverty, and one in four families with less than £100 in savings. That economic model failed even by its own measures. Severe and repeated cuts to our public services did not result in the Government meeting a single one of their legally binding fiscal targets. They did not stop national debt rising and nearly doubling before the pandemic hit.
We cannot go back to that broken model, with its crumbling foundations. The British people will not accept it. That is why the Budget should have been a moment to lay the foundations for the long term, with a relentless focus on supporting new jobs across the entire UK, supporting our high streets to thrive, protecting family finances, and backing our key worker heroes, but here the Government were singularly lacking in ambition. Labour had called on the Government to support the creation of 100,000 new businesses over the next five years, to harness the UK’s entrepreneurial spirit and set us on the path for growth. Instead, we got a so-called super allowance for investment.
We all want to see more investment in this country, not least because the Conservatives took us into this crisis with the lowest level in the whole of the G7, but the fact is that the new allowance is just the necessary consequence of the Conservative party finally acknowledging that its 10-year experiment with slashing corporation tax until we were an international outlier has failed. Two years ago, the Prime Minister said that
“every time corporation tax has been cut in this country it has produced more revenue”.
Yesterday’s Red Book told a more accurate story, predicting that the new rate would bring in £17.2 billion a year by the end of the forecast period. That is a damning indictment of a core tenet of Conservative economic policy making for the last 10 years. The fact is that by moving the rate back up in two years’ time, aligning us with our international peers, as Labour has long called for, the Chancellor has created a cliff edge that might otherwise have prompted firms to delay investment and further damage the recovery. Action to incentivise and protect investment right now is essential; it is not innovative.
The Chancellor’s grand plan for our future recovery had two further planks, of course: the levelling-up fund and freeports. On the first, we have once again seen the Government’s true colours. They have ridden roughshod over the principle of devolution by taking away control from Wales and Scotland to determine how money can best be spent in their nations, and devised a rating system that miraculously sees the Chancellor’s own constituency, and that of the Communities Secretary, placed at the front of the queue for funding. What people right across this country need is investment in their communities, based on local need, guaranteeing local opportunities and jobs and involving local businesses in the supply chain—not largesse handed out at the whim of Conservative Ministers in Whitehall.
Eight freeports do not add up to a grand plan for our economic future. They are not the silver bullet that the Chancellor would like them to be. There is a strong chance that they do not create new economic activity overall, but instead just move it around, which might be good news for those within a freeport area, but could be bad news for those who live nearby and see local economic activity drain away, and with it jobs and opportunities. We risk more regional economic inequality, which has already risen after 10 years of Conservative Government. On the subject of inequality, yet again the Government failed to provide an equality impact assessment alongside the Budget.
The British people deserve better than this. They deserved a Budget to put our country on the road to recovery; a Budget to rebuild the foundations of our economy; a Budget with the NHS and social care at its heart; a Budget that protected the finances of families across the country who have sacrificed so much over the last 12 months; and a Budget with a relentless focus on jobs, getting people back into work and supporting the jobs of the future—not a Budget from a Chancellor without a plan who has learned nothing from the last year, nor the last decade, and who did nothing more than paper over the cracks, with nothing more to offer than the same tired policies that have led to us suffering the worst economic crisis of any major economy.
It is a pleasure to respond to the hon. Member for Oxford East (Anneliese Dodds) in this Budget debate. I think it is fair to say that, since the start of the pandemic, our priority as a Government has been to protect the lives and livelihoods of people right across this country. That is why my right hon. Friends the Prime Minister and the Chancellor, over the last year and again in this Budget, have taken unprecedented steps to support British people and businesses, including help for those who need it most. That includes further measures using our fiscal firepower to revitalise our economy, get people back into existing jobs and encourage investment to help create new jobs.
Let us remind ourselves of the steps we have already taken. Through the furlough scheme, we have supported more than 11 million jobs. This unprecedented cushion of support has helped millions of people to stay connected to their employers who could otherwise have been made redundant. Through the self-employment income support scheme, we have helped more than 2.5 million self-employed workers with grants and business loans, as well as targeted support for those on benefits.
Not everyone was fortunate enough to be furloughed, though, and through the £20 a week increase to universal credit, we ensured that those who faced a drop in earnings or were newly out of work received extra support during this difficult period. I am proud of our swift action at the start of the pandemic and throughout to support an extra 3 million people through universal credit and other benefits. That has been thanks to the hugely dedicated staff of the Department for Work and Pensions, which I consider to be the Department of Wonderful People, who delivered that support competently and compassionately.
The Secretary of State will have seen the evidence that disabled people have seen a big increase in their grocery costs during the pandemic, and yet people claiming employment and support allowance have had no extra help at all. Why have they not been supported?
As the right hon. Gentleman will be aware, and as the Chancellor has said repeatedly, there was a specific reflection at the time of introducing the extra £20 a week uplift to recognise the issues regarding people who were newly unemployed. I am conscious that the right hon. Gentleman’s Select Committee is undertaking an inquiry on people with disability and employment, and we will provide evidence in due course, when we can perhaps discuss that matter further.
I would like to reinforce what my right hon. Friend said about the fantastic work of her departmental officials. The fact that her Department has not been in the headlines much over the last months is due to the efficiency of her officials. When some of those officials are looking for a transfer, might she recommend that they go to the Driver and Vehicle Licensing Agency, to try to imbue that department with some efficiency?
I am grateful to my hon. Friend for highlighting the really good work undertaken by officials. I would also like to thank my ministerial team, because we have worked together to do this. Indeed, arm’s length bodies such as the Health and Safety Executive have also done really good work in trying to ensure that workplaces are safe, helping employers to ensure that that is the case and minimising the transmission of this wretched coronavirus that we have endured. I will bear in mind his thoughts, but I do not think it is in the interests of the DWP to take on the DVLA as well.
Last week, the Prime Minister set out the road map that will lead us out of lockdown and back to the way of life that we are all eager to enjoy. As we all play our part in controlling coronavirus, and after a particularly wretched winter, we are ratcheting up for what I hope will be a spectacular summer. But we know that recovery will not be instantaneous for everyone, which is why the Prime Minister said explicitly that we would not just pull the rug out from under people’s feet as we start to see light at the end of the tunnel. That is why yesterday my right hon. Friend the Chancellor set out targeted measures in the Budget that would deliver on that commitment to help people and businesses through these next few months as we open the economy and deliver on our plan for jobs, helping people who are still impacted by coronavirus to get back into work.
First, to support low-income households we will extend the temporary £20 increase to universal credit for a further six months, on a monthly basis, taking it well beyond the end of this national lockdown. Working tax credits are administered by Her Majesty’s Revenue and Customs, and claimants will receive a one-off covid support payment of £500—this is largely driven by the way that system works operationally. That is in addition to all the other Government support for people on low incomes, be that support with some of the most expensive bits of the cost of living, through things such as the increase to the local housing allowance, which is going to be preserved in cash terms, or with other elements, such as through council tax support.
The clear intention is that this is an extension of six months, because that will take this well beyond the aspect of the national lockdown. I was particularly making the point about monthly payments because I have always been clear that this is about UC continuing on a monthly, rather than one-off, basis, and that would be the preferred approach. I am pleased that the Chancellor has agreed with me on that and on making sure we keep that regular payment uplift for the next six months.
Secondly, we have self-employed people on UC, and in addition to the further help through our self-employment income support scheme we will suspend the minimum income floor for a further three months. That means that hundreds of thousands of people will continue to receive financial support based on their current actual earnings, rather than on the assumed amounts we would normally undertake through the gainfully self-employed test.
Thirdly, the further extensions of the furlough scheme to the end of September represent a huge investment in people, keeping them connected to their current jobs and employers. I urge employers and employees to take full advantage of this additional time of furlough to get ready to return to work, and do the training and refresher courses, so they are ready to hit the ground running as their business fully reopens. Taken together, I believe that these temporary extensions will provide essential support as we move along the road map, restart the economy and transition to our full recovery.
Thanks partly to the extension of the furlough scheme, the OBR is now expecting a better jobs outlook than it was in its November forecast, with unemployment now expected to peak at 6.5% at the end of this year, instead of 7.5%, which was its previous forecast. Although that represents a third of a million fewer people than the OBR previously forecast, I fully recognise that the OBR is still predicting that, sadly, unemployment will rise by a further half a million people compared with now. As we have always said, we cannot, sadly, save every existing job, but my right hon. Friend the Chancellor set out yesterday extraordinary measures of support to help businesses stay in business and to create new jobs. The supercharged super-deduction on capital investment is exactly the kind of initiative that can stimulate businesses to invest here in Britain, leading to brand new jobs.
I am very conscious of what the hon. Member for Oxford East said, which is why we have undertaken significant work across government on our labour market sector plans in working through the opportunities we can create, not only by resurrecting some businesses and sectors that have been temporarily affected by the lockdowns but to bring in new jobs. I particularly commend initiatives such as the freeports, which we know will be creating tens of thousands of extra jobs right around the country. I was delighted that Freeport East was successful, as it covers the ports of Felixstowe and Harwich, one of which is in my constituency. It was a great pleasure to work with businesses across Essex and Suffolk to make that happen, particularly with the creation of a green hydrogen energy hub. That is really important investment that will be coming now thanks to the freeport initiative, and I know that the same will be happening right across the country. I can see people in this Chamber, such as my hon. Friend the Member for Thurrock (Jackie Doyle-Price), whose constituents will benefit from her ports coming together to be a freeport.
Perhaps I could advise the House that this affects not only the ports in my constituency; it is also a partnership with the Ford plant in Dagenham. My right hon. Friend will be aware that there are employment challenges in that borough—it has a very high unemployment rate compared with the rest of London—and the freeport initiative opens up the opportunity for Ford to breathe life back into that site, given the redundant diesel technology that it currently produces. That will attract new investment from a global player. Should that not be welcome?
My hon. Friend is absolutely right, and I know how much of a champion she has been for the people of Thurrock and the surrounding areas in making sure that they have that opportunity. Indeed, there are opportunities right around the country. We will hear contributions later from Members for the north-east, who will be championing, and are delighted by, not only the freeport in Teesside but the Treasury North campus in Darlington. I am sure that the Leader of the Opposition’s campaign director, who is now in the other place, will also be thrilled that Treasury North will be in Darlington.
Right across the country we are laying the platform for businesses to create jobs, and my Department is ready and primed—indeed, we are already delivering—as we put our foot to the floor, our pedal to the metal, on our plan for jobs. Over this year, as our economy starts to recover, my priority, and that of the Government, is getting people back into work, investing in skills and training, and helping people to get up the career ladder and increase their income.
We came into this pandemic with record high employment. That was down to successive Conservative Governments since 2010 focusing on supporting people in moving to and progressing in work, including by reforming the welfare system through universal credit, which is a conservative benefit. Unlike the legacy benefits, whereby people would often be worse off working under tax credits and similar, universal credit is a benefit that always makes sure that work pays.
I am truly astonished that the Opposition continue to want to scrap universal credit, when it has clearly done its job of getting money into people’s pockets within days of their making a claim when newly unemployed, and remembering that 40% of UC recipients are working and it automatically puts extra money into people’s pockets when their hours are reduced, never mind the £20 uplift for covid.
We know that we have a huge task ahead of us, but I am confident that we will deliver, fuelled by the firepower of our plan for jobs. Just as we have had the jabs army putting vaccines into people’s arms, we now have the jobs army of our work coaches, with an extra 13,500 recruited to bolster our support to help get people back into work.
In the jobs market, sadly it is the hopes and prospects of our young people that have been affected more than most. That is why we launched kickstart, a scheme that helps to give young people that first key step on the jobs ladder and offers employers effectively free access to the next generation of talent, as long as they provide an additional real job and job support.
I am concerned that the hon. Member for Oxford East and the Opposition are giving kickstart a bit of a kicking. Instead of slamming it, they should be supporting it. The Chancellor and I launched kickstart in September, the first young people started their jobs in November, and since then I am pleased to be able to share with the House that around 4,000 young people have now started a job, with 30,000 vacancies to be filled in the next month, and there are more in the pipeline. More than 140,000 jobs have already been approved, with agreed funding, which is more than the 105,000 that the future jobs fund of the last Labour Government created over its entire lifetime—and we have achieved it more quickly.
This is not, however, a tit-for-tat on numbers; this is about real people and helping them with their lives, right here, right now. Take Cerys, for example, who is 19 and had sadly lost her job in catering last year. With the help of her work coach, Cerys has started a kickstart job with Northam Care Trust in North Devon as a care worker. In her own words, this has changed her life. With the ongoing interest from employers and our making it even easier for them to join kickstart with direct applications through DWP, I am confident that by the end of this year, we will have helped a quarter of a million young people become kickstarters, setting them up for a great future.
With kickstart getting into the fast lane, the rest of our plan for jobs is also firing on all cylinders. Recognising that some sectors may continue to struggle, we have doubled the number of places on our sector-based work academy programme—SWAP—scheme to 80,000 this coming year. SWAPs help jobseekers to upskill, retrain and find a route into a new sector with a guaranteed interview for a real job. We are also supporting people in their job searches through our job entry targeted support—JETS—scheme and our job-finding support digital offer, which is now operating across Great Britain, helping those who need only light-touch support.
These schemes are working for people in every constituency. Take Marius from north London. He recently lost his job in the hospitality industry after 15 years and was worried about his future prospects. His local jobcentre referred him to a SWAP, and, after completing just a two-week course to build skills and experience, he was offered a job in the care sector.
This summer, as we restart the economy, businesses will get their restart grants, and we will also restart people’s careers. The new £2.9 billion restart scheme will provide intensive help to over 1 million jobseekers who, sadly, have been out of work for over a year. But we are also helping our jobs army with further assistance by considering new tools to help them diagnose people’s skills and help transform their lives. As part of the Budget, we are investing just over £1 million to pilot the use of new innovative technologies, such as artificial intelligence tools, to match jobseekers’ skills to vacancies they may not otherwise have considered. Work coaches and test sites will start signposting claimants to these services from August.
Also in this Budget, we have brought forward some measures that we know will help people still on low incomes. In particular, we are bringing forward to next month a measure that will allow universal credit claimants who request a new advance to help them with their budgeting to spread the phasing of that support over 24 months rather than 12. That will allow them to retain, on average, £30 more per month up front. We are also bringing forward a reduction in the maximum amount that can be deducted from a claimant’s standard allowance for debts such as rent or utility bills, from 30% to 25%. We expect that that will allow more than 350,000 families with the highest levels of debt to retain up to £300 extra per year.
On top of these measures, we are going further to help some of the most disadvantaged and vulnerable in society. We had already agreed to have exemptions on the shared accommodation rate for care leavers and people who have been in homeless hostels from 2023, but I am pleased to say—this is thanks particularly to the Minister for Welfare Delivery, my hon. Friend the Member for Colchester (Will Quince), who is here in the Chamber today—that we are bringing forward those exemptions by two and a half years, so that we will provide additional housing support for care leavers up to the age of 25, and for younger claimants who have spent at least three months in a homeless hostel, from next month. That will give them the stability and the foundation to take on the opportunities that work can provide, and will provide, to help them build their future.
We have also added a further £59 million of support for local welfare provision, so that the covid winter grant scheme will be extended into the Easter period, helping the most vulnerable families with the cost of food and bills.
My right hon. Friend the Financial Secretary to the Treasury will respond to some of the questions asked by the hon. Member for Oxford East, but it is fair to point out to the House that, among public services, we have already allocated an extra £55 billion of support; we have already initiated, or we are preparing for, the catch-up summer for children; and we will continue to invest in our public services. We are already increasing the number of nurses. We are increasing the number of police officers. I think the public pay uplift is for those people with salaries below £24,000, not the figure to which the hon. Lady referred. We are also making sure that the national living wage rises above inflation from next month.
The hon. Lady also pointed out aspects of statutory sick pay. She will be aware that that is the minimum rate required to be paid by employers; many pay a lot more than that. However, in recognising that universal credit supports people on low incomes, the Department of Health and Social Care introduced the self-isolation payment of £500 in order to help people who need to self-isolate and would otherwise be deprived, perhaps, of a lot more of their usual income. That is a sensible approach that we have taken.
It is important to say that, of course, in order to help control coronavirus infections, we had already changed the rules so that workers could receive statutory sick pay from day one rather than the eighth day of being off work, as well as extending it to people who are self-isolating rather than just sick themselves, so we have already taken measures in that regard to help others. In addition, I think it is an estimated £3 billion of extra support that has gone to local authorities next year to help manage the impact of covid-19 across their services and on their income. Of that, half is non-ring-fenced to ensure that they can adjust to what is needed.
The hon. Lady referred to some of the extra support that will be going in to support towns and other places around the country, with the new town deals that are coming, the community ownership fund—which is particularly interesting—to help communities to buy local assets such as pubs and theatres, and opening up as we get ready for the UK shared prosperity fund. We are already setting the scene with the community renewal funds and the levelling-up funds. I think those measures should be welcome.
Let us not pretend otherwise: as we reflect on 2020 as a wretched year when many people have lost family members, lost friends and lost colleagues, there is no doubt that the British spirit has been tested, but the response has been remarkable and, frankly, typical of the Britain I love. Our focus, with the successful vaccine roll-out, should be on giving hope and confidence to millions of families and businesses that there genuinely is light at the end of the tunnel. While the focus has rightly been on the jabs army, we are mobilising our jobs army to help people to get back into work as we speed towards our recovery.
This Budget builds on what is already one of the most generous and comprehensive economic packages in the world to provide further support and protection. We are ratcheting up our support. We will be super-charging skills. We will rebuild, revitalise and regenerate our economy and level up across the country. I am really looking forward on 21 June to toasting the victory of the vaccine over the virus, when we will get back to normal, building back better and building back fairer, with a brighter future for Britain.
Before I introduce Alison Thewliss, who is joining us remotely, I have some practical notes for those who are also joining remotely. Whatever device you are using, you should have a band at the bottom of it that informs you of the time limit. Currently there is a six-minute time limit on Back-Bench speeches from speaker No. 4, who is the person following Alison Thewliss. Just to the side of that, there is a timer. Because the time limit is six minutes, which is a luxury in recent times, please try to resist the temptation to stretch it beyond that, as you will not be allowed to do so. If your speech happens to be in front of the timer, then please use another timing device. For those who are joining us physically, the timer will be shown in the usual manner.
It is just under a year since I stood up and made a speech in response to the 2020 Budget in a Chamber packed to the gunnels with MPs. The notion of delivering a Budget speech from my front room was absolutely unthinkable, along with many things we have adapted to over this past year, when we have seen economic shocks as well as personal and social ones. Phrases we rarely, if ever, used before are now in constant use: face coverings, social distancing, extended households, and furlough.
I appreciate that the Government had to move quickly to provide support in a rapidly changing and deadly pandemic. Choices were constrained by the circumstances, and large sums of money were rapidly moved to protect businesses from the worst economic crash any of us, we hope, are likely to see in our lifetimes. There is great hope on the horizon with the advancement of the vaccination scheme, but we cannot tell how long this crisis will last. The Chancellor and the Prime Minister have form in telling the public it will all be over by the summer, then by the autumn, by Christmas and by spring, so we need to caw canny with what lies ahead.
As I have said consistently, arbitrary cut-off dates in the support schemes are deeply unhelpful. The last cut-off for furlough planned for last year resulted in people losing their jobs as employers just could not manage the additional costs. Six months on, the only thing that has changed for businesses is an additional burden of debt and bills, with VAT deferrals coming back online soon. Businesses’ income has not increased, and adding to their employers’ costs is not risk-free. We on the SNP Benches support an extension to the furlough scheme for as long as it is necessary, in all countries of the UK. We also support the extension to the self-employment income support scheme, as announced by the Chancellor, but it does not go nearly far enough, leaving millions of people still locked out of covid support. The cliff edge in the fifth SEISS grant for those above or beneath the 30% drop in turnover seems incredibly unfair and incredibly steep. The Chancellor said yesterday that he will do “whatever it takes” to rescue our economy. He said that a year ago too and it is cold comfort to those who are yet to see a penny piece in support from his Government. The excluded have been mentioned over 1,000 times in Parliament by the gaps in support all-party group and reports from the Treasury Committee and the Business, Energy and Industrial Strategy Committee. Solutions have been offered to this Government and it is unacceptable that the Chancellor continues to ignore these cries for help.
The Chancellor made much of the Office for Budget Responsibility’s forecasts of a quicker than anticipated recovery, but it struck me that the key considerations of the OBR’s forecasts should not necessarily be the forecasted numbers themselves, but the uncertainty around those numbers. It is that uncertainty that the Chancellor needs to respond to. The OBR has been clear on the unrealistic nature of the Government’s spending plans. The Treasury envisages only a 2% increase in spending after five years. That was already planned pre-pandemic and does not really capture the potential legacy costs of covid for our public services. The UK Government are planning further cuts of £3 billion to departmental budgets on top of the £12 billion cuts announced in November. The OBR describes the Government’s ability to meet those cuts while dealing with the pandemic as
“a significant source of uncertainty”.
I cannot stress enough how much I feel that the Chancellor cutting his way out of the crisis is the wrong way to go. The Chancellor said that once we are on the way to recovery we will need to begin fixing the public finances, but I object to that characterisation of the issue. Public finances are not something that get broken and need to be fixed; they should meet the needs of our population, not the other way around.
All countries around the world have stretched every sinew to save lives in this pandemic. As we see from the US and our European neighbours, the Chancellor ought to use the powers that he has open to him to stimulate growth and provide an investment-led recovery. The Scottish Government have outlined an ambitious five-year infrastructure plan with a particular focus on affordable housing. They are managing to do that even with a 5% cut to their capital budget. The Chancellor had an opportunity to reverse that and refused to do so yesterday. We have called on the Chancellor to provide a £98 billion fiscal stimulus to kickstart this investment-led recovery, with investment focused on creating jobs, boosting incomes and a green recovery. Instead, it looks like the Tories are returning to form and pursuing a contractionary policy against all better judgment. That approach did not help us to recover quickly from the 2008 recession and it certainly will not help us now. The risks of a long-term return to austerity are clear: we face stagnant productivity and years of lost growth. Public services have been cut to the bone. There is no doubt that without the previous 10 years of austerity our public services would have been in a much better position to deal with the impact of the pandemic.
The OBR’s analysis of the Budget explicitly cites
“higher rates of infection, hospitalisations, and deaths”
in the UK as a driver of economy inactivity. Its figures are stark. The UK’s GDP fell 9.9%, the worst in the G7. One in five UK residents contracted coronavirus. One in 150 were hospitalised. One in 550 died—the fourth-highest mortality rate in the world. Under this Government, the pandemic has hit the UK’s economy harder than other major economies and yet the Chancellor continues to underfund our precious NHS, which is expected to return to its pre-covid spending plans after March 2022.
We in the SNP are calling for the Chancellor to look to Scotland for inspiration. The Chancellor should match the Scottish Government’s £500 thank you payments to the NHS. He should prioritise a pay rise for health and care staff, and increase NHS funding to Scottish levels per head, which would deliver an extra £35 billion for the NHS in England and an extra £4 billion for NHS Scotland in Barnett consequentials. We need to shockproof our NHS for the future and make sure that those who have served on the frontline of this pandemic know how much we value their contribution.
Throughout the pandemic, the voluntary sector has been instrumental in ensuring our communities are resilient enough to weather the many emerging challenges, including food security, tackling rough sleeping, combating loneliness, improving digital connectivity or finding safe places for those experiencing domestic abuse. Increasing gift aid temporarily from 20% to 25%, making it easier to claim for small donations, would be a real boost to the sector. I ask the Government to consider that for the upcoming Finance Bill.
A choice has been made in this Budget not to place the burden of the debt on those who can afford it the most. The Treasury said that this is not the time for new fiscal rules, but instead announced the intention to start a consultation at the end of the month. They have kicked the can further down the road. I think the Chancellor has done that for two reasons. First, by doing it outside the Budget process he will avoid the fiscal analysis and proper scrutiny a Budget would face. Secondly, he is giving high earners enough time to shift savings into ISAs or other tax-free schemes. We are already seeing financial advice cropping up on how people can avoid the coming tax hikes.
The Chancellor’s message of fairness rings hollow if he is only buying time to protect himself from scrutiny and to give high earners a head start to hoard their wealth. Instead, we have seen a stealth tax rise for ordinary earners. The personal allowance, after which people start to pay income tax, will rise from £12,500 to £12,570 from 6 April, but will then be frozen until 2026 rather than rising with inflation. That is a tax rise in real terms—the OBR says that it will bring 1.3 million people into the taxation system, with households that earn least the hardest hit.
I want the Chancellor to bring forward measures to tackle child poverty and boost household incomes. As page 14 of the Red Book recognises:
“The economic impact of restrictions has not been felt equally. Staff in the hardest hit, largely consumer-facing sectors, such as hospitality, are more likely to be young, female, from an ethnic minority, and lower paid.”
But the UK Government have done nothing in the Budget to tackle the problem they have identified.
Conditionality in universal credit is forcing people out to work and putting their health at risk unnecessarily. The Government could establish a real—not a pretendy—living wage at the real Living Wage Foundation rate. They could end no recourse to public funds, increase statutory sick pay and match the Scottish child payment throughout the UK. They could ditch the Tory public sector pay freeze and make the £20 uplift to universal credit permanent.
The Chancellor could extend support to those on legacy benefits, including many people who are disabled and carers, who have been completely forgotten by the Tories. He could scrap the benefit cap and remove the two-child limit and the pernicious rape clause, which forces so many families into poverty and increasing numbers of women into making heartbreaking choices like terminating a third pregnancy. What a cruel, wicked Government this is.
As things stand, we face a six-month cut-off date for the uplift to universal credit that will coincide with the end of furlough, the end of mortgage payment holidays and a likely peak in unemployment. The Chancellor has accepted that the uplift is a lifeline for families through the pandemic, so why does he plan to rip it away at the worst possible time? If nothing else, I expected the Chancellor to understand the importance of the social security system as a safety net that allows for a flexible labour market. If he wants people to be able to retrain and equip themselves to face a post-pandemic world, he needs to provide the support to enable that.
We are seeing the Tories shy away from redistributive policies during the worst recession that we are likely to see in our lifetimes. History is reporting itself yet again, as we in Scotland watch with horror a Tory Government that we did not vote for trying again to balance the books on the backs of those who can afford it the least.
It is often the case that the people most affected by austerity policies are women. During the pandemic, women have shouldered the disproportionate burden of caring duties and are more likely to have switched to part-time work, and they are more likely to struggle in the scramble for jobs when things start to open back up again. They are more likely to have already been impacted by the welfare reform before the pandemic began. I had hoped to see some commitment from the Chancellor on the disproportionate economic impact that women have felt over the past year, but there was not even as much as a patronising pat on the head for mums in his speech yesterday.
It is undeniable that our labour market is heavily segregated by gender, and some of the sectors that are dominated by women have been the most affected by covid restrictions. For example, the childcare sector employs mostly women and is vital for ensuring that many more women can go back to work. It has been struck by lockdown restrictions to the extent that the Institute for Fiscal Studies has questioned the sector’s long-term sustainability as demand changes and unemployment increases after the furlough.
The hair and beauty industry is also a large employer of women and is heavily supported by women’s money. I have met staff from salons in my constituency, as have, I am sure, many others in the House. Hundreds of jobs for women are on the line if the Government provide no support. Chopping VAT for the sector, as demanded by the Save Our Salons campaign, would be a real boost to a sector where it is feared that many will not survive this crisis.
My colleagues and I have previously asked the Treasury to look at VAT reductions for specific sectors or economic areas. We have called for and welcomed the VAT cut for hospitality and tourism, and would have preferred the 5% rate cut to last longer so that the sector could really see its benefit. That is particularly true for the music and events sector, which has not been able to sell many tickets this past year.
VAT cuts for repairs to buildings would help to end the scourge of derelict buildings in my constituency and many others, and encourage investment in our built environment rather than demolishing and rebuilding. VAT cuts could also be used to boost investment in energy efficiency measures, thereby contributing to our net zero ambitions.
The Tories long claimed that all sorts of things would be possible after Brexit, but now that we have left the EU, Budgets are coming and going with no regard to those issues. Not only have Scotland’s industries suffered after Brexit, but we are not even seeing the promised targeted tax cuts, which could lead to real benefits in our economy.
I am sure I was not the only one to notice that the Budget made scant mention of Brexit, which will be of little consolation to Scotland’s shellfish industries and the countless others affected by delays to exports and charges applied to imports. The OBR did not miss this, though, and says that
“we now expect the temporary near-term disruption to EU-UK goods trade to reduce GDP by 0.5 per cent in the first quarter of this year. This reflects both that exports appear to have been hit harder than imports and that the trade disruption will affect UK supply chains.”
It does not rule out further disruption either, as well as a long-run loss of productivity of 4%.
The SNP has called on the Chancellor to mitigate some of the damage done by Boris’s botched deal by providing a Brexit compensation package for Scotland in line with the EU’s €1.5 billion for Ireland. Scotland’s community stands to be battered further by some of the impacts of Brexit. We have seen the end of EU structural funding, and the threat of a shared prosperity fund controlled from Whitehall, bypassing our democratically elected Scottish Parliament. There are madcap money-spinning schemes such as the Boris bridge through the Beaufort’s dyke munitions dump, rather than schemes that our communities want and need, with local jobs focused on a green and sustainable recovery.
Scotland’s ambitions to grow our tax base and maintain the long-term funding for public services are massively undermined by the hostile environment for immigration. Brexit and the pandemic have conspired to stop people moving to Scotland. The Tories are actively and brutally cutting migration to satisfy their own arbitrary targets, and Scotland’s economy will suffer for it. I was absolutely furious to hear the Chancellor talk about attracting in highly skilled IT professionals, as outlined on page 62 of the Red Book, because he seems to forget that there are already many people here whom the Home Secretary has tried to deport for the heinous practice of making a legitimate amendment to their tax returns. Highly qualified migrants, many of whom work in IT already and who have made their home here, have been treated abysmally by this Government. Having heard how their friends and relatives have been treated, bankrupted and made to feel like criminals, many will not want to come here. The rule 322(5) scandal is still affecting people today, including my constituents. I urge the Chancellor to listen to organisations such as the Migrants’ Rights Network, and fix this injustice once and for all.
On a whole host of issues, the economic illiteracy of this UK Tory Government knows no bounds. Further polling out this morning shows that 71% of people in Scotland believe that we would fare better outwith the UK, with 53% already backing independence. We face a choice of two futures in Scotland, and I hope that soon we will have the opportunity to take matters into our own hands.
I have declared my interests in the Register of Members’ Financial Interests.
I welcome the extension of help to individuals and companies. All the time people cannot go to work or businesses cannot trade and all the time that there are pandemic regulations and social distancing that impede people going about their normal business, it is vital that the Government offer alternative income and support. I am pleased that the Government came up with a big response originally, and it is necessary to carry it on for as long as these restrictive measures remain in place.
I also welcome the fact that the OBR has decided that we will be borrowing £39 billion less in the current year than in its recent November forecast. I think that serves as a reminder or a warning to all those trying to debate the economy based on a set of figures; these are very uncertain times. It is difficult for the official forecasters to come up with accurate figures, and we should be especially suspicious of ideas based on what the deficit might be in a couple of years’ time. This deficit will fall very rapidly. Assuming the great success of the vaccines continues, and assuming that we can relax and get people back to normal work and normal business within a few weeks or months, we will then see the deficit come down because so much of the deficit has been caused by the special pandemic measures.
The figures confirm that around £250 billion of extra spending in 2020-21 was the direct result of the special pandemic measures, and that there will be another large figure in the first part of 2021-22. We want to see the end of all those special expenditures—because people have better-paid jobs to go back to, businesses are trading successfully, and there is turnover and profit coming back to our small and large businesses—and so much of that expenditure was a poor substitute for being able to do the thing itself. There was of course some loss of tax revenue, and again, we would expect to see tax revenue rise quite rapidly as soon as people can trade properly again, as soon as there are more transactions in the economy, and as soon as we are making more goods and providing more services to each other, as I am sure we will.
So the Chancellor is right to say that the crucial step to getting the economy back to health, the deficit down and the numbers back into shape is to promote a recovery. He is right to want more investment in our economy. The public sector numbers show public sector investment going up, and it is very important that good projects are chosen that will have a good payback. It is very important, too, that the tax incentives are correctly honed so that we get the boost in private sector investment that we want.
The Chancellor is also right not to rush out any new fiscal rules. We will need a new set of rules in due course, however, and they must be geared to a faster growth policy and a policy about levelling up and investing in great projects around the United Kingdom. That must be linked to sensible discipline on public finances and, above all, to keeping the good control of inflation that we have had for a number of years now. It is reassuring that the OBR and the Bank of England are very confident that inflation will remain low, which gives us a bit more flexibility, but we need to watch that inflation situation.
I note that the OBR thinks the balance of payments is going to be weak for two or three years, and that provides an opportunity. In the post-Brexit world there are huge opportunities that we can exploit more easily in import substitution. Why do we not, for example, with our great green policies, plant many more trees and make sure there is much more sustainable husbandry of trees so that we replace many of the timber imports? And while we are about it, can we replace the pelleted timber coming in to produce power at Drax with home-produced sustainable timber?
We should also put in sufficient electricity capacity, because if we want an electrical revolution we will need a lot more capacity, and while we are doing that we should get rid of the imported electricity through the interconnector, which we rely on more and more for no particular reason. We used to be able to have all our own power provided in the UK with a decent margin and I suggest we return to that.
We can do a lot more on food and fish, too. I urge the relevant Ministers and Departments to promote food and fish, and also to make sure that the grant schemes and regulations that are now under our control are used to increase our capacity so that we start to substitute many of the items that are coming in.
A recovery needs more orders and more investment in capacity; it requires excitement over new products and services and the restoration of old products and services. That must be the single thing that most motivates all the relevant Ministries and Government policy, because the only way to get this very big deficit down is to have more revenue and less expenditure, and the only legitimate expenditure to cut is all the spending we have been doing as a poor substitute for a decent economy with well-paid jobs and successful businesses.
So I say, let’s go for growth; let’s do everything we can to promote more things being made and grown and sold within the United Kingdom. There are huge opportunities, and that will be good economics.
I expected the right hon. Member for Wokingham (John Redwood) to complain about the fact that this was a massively tax-raising Budget. I am not sure whether, perhaps in a coded way, he was doing so, but it did reverse policies on income tax thresholds and corporation tax rates that have been central to Tory policy for 10 years.
We all understand the reason why the Chancellor made these announcements, but I must say it was unedifying to watch him yesterday hand out funding on such a brazenly party political basis. However, the real criticism of yesterday, as my hon. Friend the Member for Oxford East (Anneliese Dodds) spelled out in her opening speech today, is the absence of vision. The Financial Times says this morning that
“the needed long-term vision for a country facing an uncertain future is absent.”
We need much better than that.
I want to focus on points of particular interest to the Select Committee on Work and Pensions. I am relieved that the £20 uplift to universal credit will not be scrapped this month. That should have been announced weeks ago; I have no doubt that the Secretary of State for Work and Pensions was doing her level best to achieve that, but it should not have been left until yesterday. However, the uplift is going to be scrapped in September. Tax rises are being delayed until next year, because, as the Chancellor recognised, we will not have a proper recovery until then. Why then is the universal credit cut not also being deferred for 12 months, as the Select Committee recommended? A total of £20 a week is to be cut from unemployment benefit in September, just as furlough ends and unemployment reaches its peak. The House of Commons Library tells me that the only precedent for that is the 10% cut in unemployment benefit introduced by the National Government in 1931.
There is no additional support in the Budget for people claiming legacy benefits. The Government should not simply ignore the needs of all those who, because of Government policy, claim benefits relying on outdated computer systems. Disabled people, above all, have lost out. They have seen big cost rises in the pandemic—I hope the Secretary of State, having told the Committee that she had not seen evidence of that, has now seen the clear evidence—through not being able to shop around as normal, but they have had no extra help. That is unforgiveable.
The previous Work and Pensions Committee welcomed the commitment in 2019 to new statistics for measuring poverty based on work by the Social Metrics Commission. That has ground to a halt. The Secretary of State said last month that she has no plans to restart it. Baroness Stroud, the Social Metrics Commission chair, told the Committee that
“we are going into Budgets and Spending Reviews and we are spending £200 billion, but we have no sense at all as to the impact on poverty.”
The Committee has commissioned me to write to the Prime Minister to ask for an assurance that the Government remain committed to this work, and, if they are, for a timetable to restart it.
The DWP is investigating historic underpayments of the state pension to some married women, to widows and to people over 80, which were first highlighted by the former Pensions Minister Steve Webb. The OBR Economic and fiscal outlook report says that
“it will cost around £3 billion over the six years to 2025-26 to address these underpayments, with costs peaking at £0.7 billion”
in the coming financial year. Those are eye-watering numbers, which we look forward to hearing more about.
The Chancellor announced yesterday, as the hon. Member for Glasgow Central (Alison Thewliss) rightly reminded us, a new highly skilled migrants scheme. For that to work, problems faced by existing highly skilled migrants need to be addressed. Many have been left high and dry in the pandemic by the “no recourse to public funds” condition, as research published today by the Joint Council for the Welfare of Immigrants points out. As the hon. Lady correctly said, large numbers have been refused visa renewal on spurious grounds of historical tax discrepancies, long since corrected and sorted out. A new scheme will require a welcoming, not a hostile, environment, and that will require a major change at the Home Office.
I welcome bringing forward to April the increase in the period over which universal credit advances will be recovered to 24 months, and the reduction, as the Secretary mentioned, of the maximum rate of deductions to 25% of the standard allowance. The Committee had recommended that that should be done “no later than April”, so I particularly welcome that. We also called for the cap on deductions to be reduced further, to 10%. The minimum income floor for self-employed people claiming universal credit will be suspended for a further three months until the end of July. Where is the evaluation of the minimum income floor first announced in 2018? The Red Book announced investment to tackle “welfare fraud and error.” Fraud and error is at the highest level ever recorded for a DWP benefit with universal credit. It will be very interesting for the Committee to see exactly how that new investment will be spent.
Much has been said in the press about a perception that this Budget would be focused on the north. It may make a predetermined headline work, but it does not reflect the package of measures that will help every corner of our country, including my home county of Devon.
I joined a conference call with local hoteliers in East Devon last night, hosted by the excellent Sidmouth Town Council. The extension of the furlough scheme will help keep staff on the books as the hospitality industry reopens its doors in May with restrictions still in place. Much praise was heaped on the new restart grants, providing up to £18,000 to hospitality businesses. That will give hotels, pubs and restaurants across East Devon a welcome boost before the tourism season kicks in.
When they fling open their doors, the support continues with a suitably Conservative flavour by keeping taxes low to help businesses thrive. The extension of the VAT cut to 5% for hospitality, accommodation and attractions is something I have been calling for over several months, alongside further business rates relief. Both those measures are game changers for an industry hit really hard by the pandemic. I am glad that my calls to extend that support were heard and delivered in this Budget. East Devon’s economy is heavily reliant on hospitality, and the feedback from the industry is positive. I look forward to visiting many businesses across the constituency as they reopen.
While the support for the hospitality industry is nationwide, it will particularly benefit Devon, and the whole county will reap the benefits of several other announcements too. I fought hard to secure support for regional airports after the huge loss of Flybe and the impact of the pandemic. Only one flight landed at Exeter airport in my constituency today, which is not a huge surprise in the circumstances, but the past year has been a bitter blow to the aviation industry. The airport support scheme that I campaigned for will be extended for six months, as work continues on the long-awaited aviation recovery plan. It will take the aviation sector longer than most to recover from the crisis, and taxes, including air passenger duty, need urgent reform to help the industry back on its feet.
On the ground, more than £40 million of funding was included in the Budget to reinstate passenger services on the Exeter to Okehampton railway line. That will encourage more sustainable journeys across Devon and improve connectivity across the county and the city of Exeter, which I am proud to represent.
Another warmly welcomed announcement for Devon was a freeport, which will help to create thousands of jobs across our county. Businesses in Devon will benefit from more generous tax relief, simplified customs procedures and wider Government support, bringing investment, trade and jobs, which will help regenerate our county and our region. Meanwhile, the new future fund presents opportunities for businesses across Devon, including some based at the Exeter science park in my constituency. This £375 million fund will invest in highly innovative companies working in life sciences, quantum computing or clean technology.
The “rabbit out of a hat” Budget bonus was undoubtedly the new super deduction, which will cut companies’ tax bills by 25p for every £1 they invest in new equipment. To put that into perspective, it is worth around £25 billion to UK companies and will kickstart an investment-led recovery—exactly what our country needs.
It is not just our economy that will benefit from this Budget. Devon is home to many veterans, and I am proud to have the Royal Marines commando training centre in Lympstone. Those who risk their lives to protect our nation deserve our support. I was really pleased to see an extra £10 million invested in the Armed Forces Covenant Fund Trust, which will deliver projects to support veterans’ mental health.
There is continued extra support for the lowest paid and most vulnerable on universal credit, and the national living wage will rise again in April. We are also helping people back into work with our plan for jobs. Some 140,000 kickstart job placements have been approved in the first six months of the scheme, with many of those in Devon. Whether it is support for sectors hit hard by the pandemic or investment and new opportunities across my home county, this Budget delivers for Devon and our whole nation in exceptionally difficult circumstances.
I speak today as a Member of Parliament representing an area of the country that the Chancellor seems to have forgotten exists. It is not just my constituency that he has forgotten about, or, even worse, chosen to ignore; it is Wearside and Northumberland too. I was particularly anxious, listening to the Chancellor speak yesterday, because I knew that he was going to make an important announcement. The announcement I was hoping for would create over 30,000 new jobs across Tyneside, Northumberland and Wearside and provide a further 31,000 jobs in construction. It would realise £2.7 billion in new regional private sector investment and £2.1 billion in additional UK exports over 10 years. It would drive innovation, boost trade and support our world-leading clean energy, advanced manufacturing and automotive clusters. It would mean that our part of the north-east could achieve its full economic potential through investment, trade and jobs.
As it turns out, it was the final announcement that the Chancellor made in his Budget—the announcement of eight new freeports. I hoped to hear that there would be a north-east of England freeport, but my hopes were dashed. I do congratulate the eight new freeports that the Chancellor listed, particularly the one on Teesside, which has fared very well in the Chancellor’s Budget. Like all areas of the north-east region, Teesside has seen many of its industries disappear and its people have suffered economic and social hardship over many years.
Although the establishment of freeports is somewhat controversial, like many of my north-east colleagues, I knew that the bid submitted for the north-east of England freeport was one that we could commit to supporting as Labour MPs and as a cross-party group. The bid was submitted by a business and public sector partnership that included the seven local and two combined authorities, the north-east local enterprise partnership, the universities, Nissan and the ports of Sunderland and Tyne. I firmly believe that it more than met the Government’s vision for the new freeports.
As if it was not enough to reject that bid, the Chancellor added insult to injury, as he also forgot about our part of the north-east when it came to his announcement on support for the offshore wind industry. It is good to see that Teesside again, and Humberside will get funding, but what about the Tyne? Our Labour council, under the leadership of our Labour elected Mayor, Norma Redfearn, has continuously worked to regenerate our coast and our towns as well as our riverside, with considerable success. Five years ago, the council worked hard to help bring to the Tyne, Smulders’ new facility for the production and assembly of foundations for the offshore wind farm. At its peak, it employed more than 400 highly skilled workers, and the company’s only ask of the Government now is that they help to create a level playing field in that very competitive market.
What news has the Chancellor for our other offshore industries on the Tyne, such as Shepherd Offshore, which at the start of the year bought the former Swan Hunter site to expand its offshore wind business? That is a good news story, when so many of our local businesses have taken a battering during the pandemic and lockdowns.
The Chancellor said:
“Our future…demands a different economic geography.”—[Official Report, 3 March 2021; Vol. 690, c. 260.]
It is clear from his Budget statement that anywhere north of the Tees does not figure in that new economic geography. He may have erased our area from his economic plans, but (Inaudible) I and my north-east parliamentary colleagues will be fighting hard for our corner of the United Kingdom, to get it firmly on that new economic map.
It is a privilege to be able to participate in this debate on the Budget, which is in a sense rather like an economic Olympics because so many records have been broken. The tax burden in 2025-26 will be 35% of GDP—the highest in over 50 years. The public sector net debt will reach 109.7% of GDP in 2023-24, which will be the highest in 60 years, and we know that the deficit in the current year, at 16.9% of GDP, is the highest in 75 years. As Allister Heath in The Daily Telegraph has reminded us today, it is the first time that there has been an increase in corporation tax since Denis Healey’s “pips squeak” Budget of 1974—47 years ago.
Let us also not forget that the proposed increase from 19 pence in the pound to 25 pence in the pound is an increase of more than 30% in corporation tax. The fact that 65 out of every 100 people questioned like the increase in corporation tax illustrates the extent of the economic illiteracy that sadly abounds. If that is really what the public want, the right hon. Member for Islington North (Jeremy Corbyn) would have won the general election with a landslide with his promise of an even larger corporation tax rate of 26 pence in the pound.
The Office for Budget Responsibility believes that the consequence of the changes in corporation tax will be an increase in the cost of capital and reduced business investments, and that that will, in turn, lead to lower productivity and lower wages. The question that I hope the Minister will answer later is why the Chancellor did not listen to people such as Sir Paul Marshall, an extraordinarily successful wealth creator, who sits on the Government’s Industrial Strategy Council. He has argued for a post-Brexit corporation tax strategy that is globally competitive and attracts inward investment. He calls it an aspiration to create a “Dublin-on-Thames”.
That is a reference to the success of Ireland, with its headline corporation tax rate of just 12.5%. Apple, Boston Scientific, Dell, Facebook, Ingersoll Rand, Merck, Oracle and Pfizer are all international companies that have put their headquarters in Ireland or that book their revenues through that country because of the Irish policy of attracting inward investment by having very low levels of corporation tax. Arthur Laffer popularised supply-side economics by drawing diagrams on napkins, one of which I have at home. The Laffer curve suggests that that works. When we had corporation tax at 28% in 2010, it delivered a yield of £43 billion, but when it was reduced to 20% in 2018-19, that yield had risen to as high as £57 billion. That is the supply-side effect—the Laffer curve—operating effectively.
This morning, the Chancellor of the Exchequer was challenged on the radio about why he believes that the dynamic effect of lower taxes no longer applies. I have to say, the Chancellor equivocated in his answers. He said that higher yields from lower taxes are more likely due to cyclical effects. He also said that there had not been the step change in capital investment due to lower corporation tax over the last three years, but he omitted to make any reference to the uncertainty over Brexit.
The Government say that they have to ask the taxpayer to pay to repair the damage caused by the economic car crash of the pandemic, but as everyone ought to know, those seeking compensation for such crashes have a duty to mitigate their loss. My concern is that the Government are not mitigating their loss. Why should taxpayers pick up the cost of accommodating, as the Chancellor put it, the “most cautious approach” to restoring social and economic freedom? UKHospitality estimates that the costs of not reopening to hospitality on 1 April is £9 billion, and that does not include such things as weddings and so on.
My concern, which I hope will be addressed in the Minister’s response to the debate, is this. Allister Heath in The Daily Telegraph today said:
“This was an avoidably bad Budget that will haunt the Tories for years to come.”
The key word is “avoidably”. One way in which we could have avoided this Budget would have been to create the end of the public health emergency and, as a result, restore economic and social freedom. The public health emergency is officially open, but it does not seem to have been recognised yet by the Treasury.
As we know, the context of the Budget yesterday was a debilitating global pandemic. It was also the last Budget before the UK hosts the COP26 climate conference. It was therefore arguably the most critical Budget since the second world war. I say “critical” because my friends, my family and my community matter to me, and having a viable future for them and myself matters to me. I saw so many of them struggling before the pandemic because of this Government, and now even more are struggling because of this Government.
What the people of this country needed from the Chancellor’s Budget yesterday was so much more than simply a reaction to the crisis at hand. What the people of this country needed was a strategy that would support all people and businesses struggling amid the pandemic, tackle the rising epidemic of inequality and debt, initiate a massive programme of decarbonisation, invest in local authorities and public services—the backbone of the successful part of the pandemic response—and rebuild our town and city centres as the vibrant hubs of sustainable communities and community activity. By those measures, the Chancellor’s Budget has failed on every single metric.
What I have seen in the pandemic is the best of the British people and the worst of this Conservative Government. In my constituency of Norwich South, I have seen care and compassion in the face of adversity, and I have seen the power of collective action in public services such as our NHS and schools, which stepped up to carry this country through extreme circumstances. In this Conservative Government, I have seen corruption and cronyism as well as indifference to growing inequality and climate change. That is ingrained in the detail of this Budget, which is going to punish the public and our public services, instead of taking the transformative action needed to support the livelihoods of all people and businesses, not just today but for generations to come.
What we needed from the Budget was a massive green economic stimulus on the scale of that in the United States, if not larger. We did not get it. Instead, we got the decision to freeze fossil fuel duty. What we needed was investment in the very public services that have seen us through this pandemic, such as our NHS, which is delivering a world-leading vaccine roll-out, and our schools, which have set up virtual learning under extreme pressure and with their resources cut to the bone. We did not get it. Instead, the Chancellor buried a £30 billion cut to the health and social care budget while local authorities such as Norwich face a collective £10 billion black hole that will mean yet more cuts to vital jobs and services. What we needed was a remedy to the crisis in our privatised and failing social care system. We did not get it. Instead, we got platitudes about needing a cross-party consensus.
The Conservatives have had 10 years to sort this out. We got nothing on our broken social security system, and nothing on statutory sick pay so low that it has helped to fuel this pandemic. A nothing Budget from a nothing Government with nothing of worth to say about the future of this country. As my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) said in his Budget response:
“That is not levelling up; it is giving up.”—[Official Report, 3 March 2021; Vol. 690, c. 265.]
The Chancellor said he would do “whatever it takes”, so why did he do nothing for those in rent arrears and nothing to deal with the inequality and the 4 million children living in poverty? He paid only lip service to tackling mass youth unemployment. He told the people of this country he was being honest with them, so why did he choose to hide billions of pounds of cuts to our frontline NHS services?
We came into this pandemic with an economy akin to a dilapidated house built on collapsing foundations. Ten years of Conservative austerity have delivered the UK’s worst decade for improvements in living standards in 200 years, and now our house has been hit by an earthquake and turned to rubble with 130,000 dead because the Government failed to invest in resilient foundations. So why on earth does the Chancellor now want to rebuild the same rubbish house on the same shaky foundations? If he wanted to protect the livelihoods of people and businesses in this country and in my city of Norwich, he could and should have made different choices yesterday. It is far better to invest in new design with stronger foundations.
The Chancellor must listen to the public consensus forming on the back of the pandemic, provide support for a universal basic income and universal services and prioritise our health and wellbeing over GDP, with direct intervention to make society fairer. He could have taken the public’s lead yesterday. He could have forgiven the debts of people in rent arrears and students burdened by high interest rates. We got none of that yesterday. Now 130,000 people are dead and the UK has the highest per capita death rate from covid-19 in the world.
This Budget will entrench inequality and it failed to tackle the climate crisis. It will be the job of those of us on this side of the House to remind the public in the years to come that these were the choices of this Government and this Chancellor.
Unlike the hon. Member for Norwich South (Clive Lewis), I think that this was a Budget that put in place the genesis of a strong recovery. It is one that supports people and businesses through the pandemic, and puts the economy in the best possible position to bounce back strongly in the second half of this year. Every vaccination is boosting the chances of a vigorous recovery with strong job creation. I put on record my thanks to everyone who is helping with the blistering pace of vaccination roll-out across the country, and say, “Please, when you’re offered your vaccination, have one right away.”
The Chancellor’s Budget also began the process of repairing our public finances. The Treasury Committee report, which we put out this week, on tax after coronavirus stated that the public finances are on an unsustainable path and even a strong recovery may not be enough to bring current spending back into balance. Every expert we heard from some said that the economy still needs both loose monetary and fiscal policy now, but it is right that the Budget put in place fiscal tightening that comes down the road. It is not right away, but it needs to be there for the year after next.
There are some really innovative measures in the Budget. The super deduction on capital investment is a huge signal to business and should shift the long-standing under-investment by businesses in our economy. The future fund breakthrough will tackle another challenge: the difficulty that small businesses find scaling up capital to go from being a small business to being a big, high-growth businesses. The Help to Grow initiative offers business education, and will help the long-standing challenge in our country of low productivity in the small business sector. The Budget gives the great entrepreneurs and business owners in this country the very best chance to rebound from the lockdown.
We all know that economic forecasts are bound to be wrong, and I hope that the OBR’s forecasts will prove to be far too pessimistic; however, I was also struck by one of the Chancellor’s phrases about the sensitivity of the UK Government debt to interest rates. He said that a 1% increase in rates would add £25 billion to current spending because of the size of the debt. That is a truly startling statistic. It reminded me of a phrase from James Carville, the US political strategist of the 1990s, who said that, when he died, he wanted
“to come back as the bond market”
because it intimidates everyone.
Rates are low today because the Bank of England is buying £895 billion through quantitative easing. The Bank of England is doing that because of the deflationary shock in the economy, but that could change. The Bank is independent. It is possible that the economic rebound leads it to conclude that current rates are too low to keep inflation under control. I am a fiscal conservative above all. A budget deficit is simply a tax increase or a spending cut that we are not prepared to do today, but are prepared to pass on to another generation.
I know I sound a bit like Cassandra, but I worry about the bond market and that it might decide to reprice. I am probably one of the few MPs in this House who traded bonds during the markets of 1994. I assure Members that yields can rise very fast, which is why personally I would have preferred to see a lower budget deficit next year—not the 10% planned and the £234 billion deficit budgeted for. There are measures that could have been implemented, such as freezing income tax allowances immediately, reactivating the fair fuel stabiliser, widening the sugar tax to tackle obesity, adding a small surcharge on online deliveries, and raising the cost of carbon.
All those things would have been practical, and I think we could have brought the public with us. Given the unpredictable character of the bond market, it could have been a prudent decision. It would also have meant that the big cut to the UK aid budget would not be needed. As the Chancellor knows, I personally am ashamed that we are breaking our manifesto pledge to the world’s poorest. I would be interested to hear from the Minister when the vote on this measure is likely to come before the House because, as things stand and given that we have 0.7% in statute, the Government are currently planning to break the law next year, and I am sure they will want to rectify that before long and test the opinion of the House.
I am confident that this Budget puts in place the best conditions for a strong recovery for jobs and the livelihoods of the British people. I add that note of warning that we should not be bouncing back on the backs of the world’s very poorest. As a former bond vigilante myself, I add that further message of caution that the Chancellor may need to take some further tax measures next year if the growth rebound alone is not bringing the current budget deficit down fast enough.
The Chancellor’s Budget is one of missed opportunities. In his speech yesterday, he made no mention of increases for public sector workers who have made such sacrifices and paid such heavy costs to protect us all in this time of crisis. The Chancellor also missed the opportunity to recognise and reward those on the frontline of the pandemic who have given so much. I am referring to the NHS staff and emergency or blue light services who have kept us safe.
I will illustrate the dangers and difficulties with just one example from the police service, but similar examples can be found across the NHS and all of the emergency services. At the peak of the pandemic, one in three police officers in England and Wales reported that they had been threatened by someone they believed had covid who said they would breathe or cough on them. Almost a quarter reported that a member of the public had attempted to do so. The very least that the Chancellor could have done, even as a token gesture on behalf of the public, was to recognise their dedication, professionalism and courage by matching the Scottish Government payment of £500 to NHS workers and extending it to include all emergency workers.
While I welcome the new measures of support for up to 600,000 self-employed people, the Chancellor missed the opportunity to include the 2.4 million people who have been and continue to be excluded from any Government support. I also welcome the provision of £40 million for the care and support of those affected by thalidomide, but the Chancellor missed the opportunity to support families affected by the less well known, but equally damaging drug Primodos, which over a number of decades has caused a range of devastating birth defects in thousands of children, leaving them with serious deformities and disabilities, including missing limbs, cleft palates, brain damage and damage to internal organs. At this point, I take a moment to pay tribute to Mrs Marie Lyon, who has worked tirelessly and led the campaign for justice for those tragically affected by Primodos for more than 40 years.
The Chancellor also missed the opportunity to significantly reduce poverty among older women and to right a significant Government injustice with the plight of the 3.8 million WASPI women—Women Against State Pension Inequality—including 6,800 in my constituency of Ayr, Carrick and Cumnock. They have seen a loss of up to six years of their state pension entitlement without proper notice or time to make alternative arrangements.
On behalf of those women, I ask the Chancellor to consider two issues that would at least help some of those affected by this state-inflicted injustice. The Chancellor should give WASPI women early access to pension credit and give those due to reach state pension age this year early access to their pensions. That would not by any means resolve the issue, but would go some way to redressing the cruel injustice suffered by these women.
In conclusion, the Chancellor has the option to review these missed opportunities and transform them into positive outcomes that recognise the contribution of the NHS and the emergency services during the pandemic and address the lack of support for significant sections of our communities, and I urge him to do so.
As chair of the all-party parliamentary group on debt and personal finance, I welcome many of the measures to alleviate people’s income problems during this time. However, the question remains: what happens when the support ends and millions of people potentially face a cliff edge?
Although some people have been able to increase their savings and have paid off debt, poorer households always suffer disproportionately during hard times, and the pandemic has widened that gap. People on lower incomes pay more for essential products—including energy, credit and insurance, to name just three—and are also likely to pay more to access their cash. I will return to that shortly.
I welcome the retention of the £20 weekly uplift to universal credit, but I believe it should be made permanent and extended to legacy benefit payments. The pandemic has raised awareness of the relatively low level of benefits, and it is not just charities and faith groups that believe that the amount should be increased; it is also the general public. There are other issues, including the five-week wait, the two-child limit and the benefit cap, and I also urge that loans be converted to grants, because paying back from an already low income causes great hardship.
The level of the self-isolation payment of statutory sick pay has also caused problems. Many people are unable to afford to self-isolate in order to limit the spread of the coronavirus. They want to do the right thing, but they have to balance that with the cost to their family, and that can prove to be an impossible decision.
I am pleased that the Chancellor has brought in and is going to pilot the no-interest loan scheme. I will follow it with great interest and I hope that it will be implemented as soon as possible. However, there are many people who will have little or no chance of paying any loan in the medium or long term and who are already deeply in a spiral of debt. More research should be done on the effects of this on individuals and families, and on ways in which they could be helped, which may include debt write-offs. These are unprecedented times and we will need unprecedented solutions.
I also believe that private renters have been disproportionately hit. They need a targeted financial package to help them pay off arrears built up during the first lockdown. It would help people stay in their homes and keep away the human and financial cost that evictions would bring.
In his last Budget statement, the Chancellor promised to protect access to cash by introducing legislation. We now hear that he believes that the matter is best dealt with by the Financial Conduct Authority. If I may mix my metaphors, he is both washing his hands of it and kicking it into the long grass. A considerable minority of the public prefer to use cash. It is impossible for them to overspend if they use just the money in their purse. On Monday, we learned that half of Britain’s cash machines could close unless banks are forced to support them. The Chancellor must step in and show the Government’s commitment to cash by forcing the banks to pledge to a five-year deal to allow the Post Office to invest in its banking service and to allow Link to manage its national network.
The pandemic was like an earthquake, disrupting the finances of millions of people. What we now have to do is ensure that it is not followed by a tsunami of debt that will engulf the most vulnerable.
I think yesterday’s hugely important Budget has been warmly welcomed across the country. Many dozens of constituents have already written to me in support of the measures outlined yesterday. Of course, the difficult backdrop that we have faced over the past year sets the tone. This once-in-a-lifetime event has been incredibly difficult, but with last week’s road map and yesterday’s Budget, underpinned by our world-leading vaccine programme, it is clear that we have a plan to get out of this very difficult situation. We are walking towards normality, but rightly maintaining a cautious eye for obstacles.
Yesterday, we provided certainty for 11,500 of my constituents in Bolsover who are on the furlough scheme, and 2,500 self-employed people know that they will continue to get support as the economy opens up. Crucially—this is incredibly welcome—that has been extended to those people who are newly self-employed. They have struggled so much and I have spoken to so many of them. Individuals were supported by the freeze in fuel duty, which will help massively with the cost of living; there was help for people who want to get on the housing market; and, of course, I warmly welcome the temporary universal credit uplift continuing until we are out of the woods.
More than 600 businesses in my constituency have benefited from the various grants administered on the Government’s behalf by Bolsover District Council and North East Derbyshire District Council. May I take a moment to pay tribute to all the staff at both those councils, who have helped many businesses and helped to roll out these schemes incredibly quickly and efficiently? I have spoken to these staff on a continued basis and found them nothing but helpful.
For the most impacted sectors and those that have struggled so much to trade in the past few months, be they in hospitality, personal care or non-essential retail, there were so many wonderful things in yesterday’s Budget, from the restart grants through to the extension of the VAT cut, business rates holidays extensions and the new recovery loans. For pubs, and probably every single Member of Parliament and person in the country, the freeze in alcohol duty is incredibly warmly welcome—I think we all want to get back to the pub.
The heart and soul of our communities are our entrepreneurs, who put everything into their business and have had such a stressful year. I think in particular of Nikki Clifford, who runs a beauty business in Clowne, in my constituency, and of how she has struggled over the past year and done everything by the book. Yesterday showed that we have got their backs. We are talking about £400 billion of support overall—an unprecedented backing to deal with an unprecedented situation.
Yesterday’s Budget was also, however, about restructuring our economy, laying the groundwork for a higher-skilled, more innovative and greener economy. I massively welcome the super deduction, which will give a turbo-charge to business investment across the country and lead us to a greener future. Locally, we had the great news of the Clay Cross towns deal, which will help many of my constituents, but the biggest and best announcement was on the East Midlands freeport, which is a game changer for our region. That major economic project will create 60,000 direct jobs and new industries, and give a massive shot in the arm for the supply chain and for firms across the region, including in Bolsover. It is a triumph of working together, involving MPs, council leaders, the local enterprise partnership and various private companies. In my final few moments, let me pay tribute to Elizabeth Fagan at D2N2 and Barry Lewis, the leader of Derbyshire County Council for their invaluable leadership on this scheme.
I would like to begin my remarks by welcoming the Chancellor’s announcement that the national infrastructure bank will be based in Leeds. Although that is good news for the Leeds economy, and for jobs in the city and its region, the Government really need to provide clarity on how they will ensure that the bank cannot be used to fund highly polluting projects and that it will fund only renewable-energy based infrastructure that will boost green jobs and ensure it directly addresses the imbalances between the north and the south in that sector. Sadly, yet again, there was no new investment for green recoveries in key industries, including automotive, aerospace and steel. After the mishandling of the pandemic and the economic disaster that accompanied it, a £30 billion green economic recovery fund is now vital in order to create at least 400,000 secure jobs in clean industries.
It is also disappointing that the green homes grant did not feature in the Chancellor’s remarks yesterday. With more than two thirds of homeowners said to be interested in the grant, the Government have squandered the chance to send a message to the world that we are a leading force in the battle against climate change. If they were serious about global Britain, they would start by throwing their weight behind initiatives that lower people’s bills and save the planet at the same time. We have an unprecedented opportunity in this country for a post-covid green revolution, which could generate thousands of jobs across the whole of the United Kingdom, but, once again, this Government have offered more of the same short-term ﬁxes; it is business as usual and it is simply not good enough.
While it is most welcome that the furlough scheme is to be extended, we should not have had to wait for Budget day to give businesses the certainty that they needed months ago. Our bars, pubs and restaurants are particularly dependent on the furlough scheme, and to leave them in this kind of purgatory is unacceptable, as people’s livelihoods are on the line.
Before the pandemic, the night-time economy was the UK’s fifth largest sector. It contributed £66 billion per annum to the economy, equalling 6% of the UK total, and provided 1.3 million jobs alongside a vast supply chain and a number of creative freelancers, sole traders and skilled workers. With no meaningful expansion to eligibility to access the culture recovery fund, and no action on spiralling commercial rent arrears, businesses have made it clear that the loan solutions outlined by the Chancellor simply will not save those hospitality businesses that are already overburdened with debt.
Sadly, many jobs in our hospitality sector will have been lost already, but it is not too late to act. I urge the Chancellor to listen to the needs of the businesses that are the beating heart of the Leeds economy, as well as so many other large cities’ economies.
Following the last decade of cuts to our public services and a crippling lack of investment, the very foundations of our economy have been weakened. Yet again, this Budget does nothing to resolve the concerns of those working in two or even three jobs just to make ends meet, and it does nothing to solve the housing crisis. The pandemic has shown us what happens when we do not properly fund our NHS. We simply cannot afford to make the same mistakes again, whether in social care or housing, or on the climate emergency.
How can we trust this Government on the economy? They spent £22 billion on a test and trace system that did not work for months, £2 billion on outsourced contracts that did not deliver, and £7,000 a day on management consultants. After the past year, the NHS and social care should have been at the very heart of the Budget. There are no plans for jobs, no plans to tackle the climate emergency and no plans for the future. The people of our country have sacrificed so much over the last year. They deserve far better than this wretched Government.
This Budget provides the right balance, reflecting both the need to continue to protect those struggling the most and the recognition that, with the phenomenal success of our vaccination programme, the Government are right to focus on building back better, stronger, fairer and greener.
In Stoke-on-Trent, we have high hopes for the coming year, and last Friday we launched our city prospectus, “Powering up Stoke-on-Trent”. The Potteries has a proud heritage of pots and pits, and a bright future of advanced manufacturing, digital and creative industries, tourism and many other industries that are drawn to our geographical location and agile workforce. However, we cannot ignore the health inequalities that are a challenge to living productive lives and to productivity at work. Our residents have the lowest average life expectancy and poorest health in the region. Stoke-on-Trent is the national litmus test for the Government’s levelling-up agenda, and we believe that new opportunities should be available to all in our community.
Between February and November last year, the number of people on universal credit doubled, so the £20 uplift has been a lifeline for many, and I am glad that the Chancellor has recognised the need to keep it on for the next six months while investing in the comprehensive plan for jobs. Yet the Opposition are still talking about replacing universal credit, a crisis-tested system that is working well, which suggests that the leader of the Labour party is not so very different from the last one—ideology first; what works later. I will always support pro-work benefits and the widest range of measures to address the urgent and immediate challenges during these difficult times.
As brownfield sites across my constituency are repurposed for modern housing and new employment opportunities, confidence and aspiration grow in our local communities. I welcome the Treasury and the Department for Work and Pensions providing essential pathways out of unemployment and poverty, with both universal credit and the implementation of the Chancellor’s plan for jobs.
In addition to the kickstart scheme and extra work coaches, I welcome the additional investment in apprenticeships and traineeships, the new restart grant scheme, and the lifelong skills guarantee, which will ensure more opportunities for new and higher paid jobs, while the Help to Grow scheme will give small businesses the tools to flourish and create more jobs.
I thank the Chancellor for listening to my plea for support for capacity building in Stoke-on-Trent, with the allocation of £150,000 to help us develop bids for the levelling-up fund. I look forward to this fund unlocking major regeneration proposals in our prospectus, such as the East-West site in the city centre, which provides a mixed-use development including residential, leisure, an arena and a conference centre, as well as a possible tram service connecting the city centre. Our designation as a priority place for the community renewal fund recognises our city’s desire to grow our social infrastructure and empower our community to take ownership of unused or at-risk community assets.
Stoke-on-Trent is a city that is powering up. Before the pandemic hit, our city was on the up, and the pandemic has not stopped our ambitions. This Budget will create the right levels of confidence and the economic recovery that we all wish to see and encourage investment in our cities and regions. Stoke-on-Trent is a bellwether city for the success of levelling up, and my message today is: we are open for business.
Yesterday I was fortunate enough to have my first dose of the Oxford vaccine. I had it in a pharmacy that is just yards away from the house where I lived as a child. Davey’s Chemist, one of a number in Merseyside owned by Mary Davey, is at the heart of the community. In fact, I managed to have a quick chat with her after my jab because she happened to be in the pharmacy. The vaccination centre is being run efficiently, effectively, professionally and personably. How she and her staff managed to set it up so quickly and smoothly, I really do not know, but they did. It took hard work, effort, commitment and dedication, and I was impressed but not surprised, because pharmacies get on with it. They were asked to do a job. They said yes and delivered, and despite the stresses and strains on the pharmacy sector, they deliver time after time. So I was disappointed to find that there was not, as far as I can tell, anything in the Budget statement that in any way sent a message of support to the pharmacy sector, let alone any practical or financial support for it. A key sector in the fight against covid through the vaccination programme has been cut adrift, yet the Government still ask a sector that is under strain to pull out all the stops.
As a member of the all-party parliamentary pharmacy group, chaired by the hon. Member for Thurrock (Jackie Doyle-Price), I want to highlight some of the concerns and recommendations identified in the APPG’s report of December 2020 and the themes brought out in it that are affecting the sector. First, the Government should review the response from pharmacies during the pandemic and re-evaluate a clear vision of what we need from these undervalued frontline healthcare workers.
Secondly, the NHS and Government should enable pharmacists to do more by giving this vital sector additional resources for training and support. Thirdly, a reassessment by finance teams in the Department of Health and Social Care and the NHS of the value of pharmacies would be welcome. Fourthly, the Government should write off the advance payments as an immediate way of providing relief. In addition, they should re-evaluate the financial implications of asking pharmacies to pay back the—
The Treasury team’s ability to be dynamic in a quickly changing environment has saved many people up and down the country, including in my constituency, from financial ruin and job loss. The previously predicted job losses have not materialised, and credit must partly lie with the Government’s unprecedented support. The covid debt burden of £407 billion, with the largest borrowing levels outside wartime, is significant. I would argue that we are fighting and winning a world war against an invisible enemy: the covid-19 pandemic. There may be an argument similarly to use a war bond as a way of financing this significant debt, and I will leave that thought with my Treasury colleagues.
This pandemic has not been fair, and this Government have continued to be pragmatic and target support broadly in the right areas. Support like universal credit has succeeded, and I commend the Secretary of State for Work and Pensions for its successful implementation, especially with the significant increase in demand during the pandemic. It is a sign of its success that no one has really mentioned it. The scary predictions of job losses at the start of the pandemic have not materialised, but I know my right hon. Friend will continue to focus on getting the 700,000 people who have lost their job through no fault of their own back into work. We must continue to provide the tools to allow our people to get back on their own two feet.
When I spoke to my constituents, they were clear that they wanted two things from yesterday’s Budget, namely certainty and financial prudence. This Budget has done both, with certainty about VAT cuts and the furlough extension, so that businesses are best placed to ride the wave of our recovery. The restart grants and business rates holidays are also well worth mentioning. This does not mean a magic forest of money trees, and the honesty shown by the Chancellor gives all people the respect they deserve by not hiding difficult financial decisions. Outside of business support, I welcome the extension to the stamp duty holiday and the new mortgage guarantee for homebuyers. As a recent first-time buyer myself, I know how life-changing home ownership can be. It is right that we give more people the opportunity to buy if they choose. The proactive policies mean that generation rent will quickly become generation homeowner.
May I take this opportunity to add to the Treasury’s homework? Things I would like the Treasury to look at in future include the wholesale reform of business rates, as this will be critical to ensuring our businesses do not all leave our city centres and high streets and revert to an online-only or virtual presence. That, in my humble view, is not a legacy we would be proud of. Covid-19 has accelerated the change in our working and buying habits. I urge the Chancellor to grasp this opportunity for tax reform to ensure that all businesses have a level playing field.
There are some who have benefited from the new rules and guidance offered during these difficult times, but some have chosen to take advantage instead of doing the right thing. Specifically, I would query why blue-chip and cash-rich companies are delaying payment of commercial rent. It is worth noting that savers up and down the country have a vested interest, as many pension funds are the ultimate landlord. This is not a victimless act and may be a ticking time bomb we should be looking to defuse before it is too late.
I applaud the Chancellor’s approach to supporting wealth creators, as this will accelerate our recovery and ensure sustainability. I thank the Government for being so proactive and reactive to the pandemic.
The Budget was an opportunity to repair our economy and provide the support needed by so many. Instead, it is just a sticking plaster that will continue to leave many of my constituents behind.
For example, I represent a large number of enterprising self-employed people working across multiple sectors, but many have been completely excluded from support for nearly a year. While the Budget means the newly self-employed in 2019-20 will no longer be excluded, those changes could have been made months ago to help to protect livelihoods. Meanwhile, those who previously earned more than £50,000 a year or who operate through limited companies remain completely excluded from support. When I asked the Chancellor in November, ahead of the second lockdown, what he would be doing to fix those gaps in support, he made it clear it was a deliberate policy decision to exclude them, which, frankly, is shocking. The cliff edge of £50,000, rather than a tapered approach, has caused considerable issues in constituencies like mine. One of my constituents, a talented musician who earned over £50,000 before the pandemic, told me: “Raising a young family of four in London as the main earner when work stopped in March caught us in a very compromised position. Now, a year later, we are deep in £30,000-worth of debt. In January, I paid over £14,000 for my tax bill despite receiving no money from the self-employed income support scheme, which, had I not been excluded, would have alleviated a level of anxiety and stress I did not realise was possible. As the months tick by, we become increasingly desperate and I have had to sell a number of my instruments.”
Meanwhile, another constituent of mine has received no support because she is a limited company director. She now faces having to wind up her successful business of eight years amidst the demands of home schooling and caring for her elderly, shielding mother. These are real-life issues affecting my constituents and the Budget does nothing to help and support them. It is clear that the Chancellor’s decision to exclude certain people is having a huge and lasting impact on families. The Government should be fixing this rather than ignoring the matter.
I also represent a large number of independent businesses. Sadly, support to date has not been enough to see many of them through the crisis. The much-loved Alexandra pub in Penge is a brilliant, independent community pub that is a very special place to many, myself included. It is reduced to having to crowdfund, otherwise it faces permanent closure. The news of restart grants is welcome, but for many viable businesses this has come too late in the day, and for others, they may not be able to wait until April to apply for the grant.
We needed an ambitious Budget that sought to support all those who have fallen through the cracks and to rebuild the foundations of our economy for the long-term. Instead, we have a Budget that continues to exclude many from support and only offers a return to the same insecure economy that allowed this virus to cause so much damage in the first place.
Yesterday’s Budget came at a critical time for our country. The Chancellor placed a strong emphasis on jobs and livelihoods, announcing schemes and programmes to help people get back into work. Simultaneously, the Budget focused on keeping businesses alive, with a forward view of getting them working again, introducing restart grants—something that I had previously raised with the Chancellor—providing additional discretionary funding to ensure that businesses have the vital capital needed to kickstart operations, as well as further funding to support their employees until they are back at work.
I have previously discussed social mobility and the issue of people staying in low-paid employment in my constituency with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies) who shared with me the ABC concept of improving social mobility: any job, better job, career. To that end, we are using advanced town deal Government funding to establish a careers and skills hub with Loughborough College, which will be the vessel for skills, courses and training, delivering apprenticeships, traineeships, kickstart, and the lifetime skills guarantee. Working with work coaches and youth workers from Jobcentre Plus and the Department of Wonderful People, of course, it will help local young people looking for their first employment help and the unemployed of any age, giving them the ability to get back into work. It will also help the already employed who are looking to upskill or reskill, so that they can advance in their careers. My own life skills project, working with Barclays, Communities that Work and East Midlands Housing, will support the unemployed and low earners in work to gain additional skills locally, feeding local people into the hub.
The careers and skills hub will run alongside the Government-funded T-level centre at Loughborough College, which will also help to provide local residents with the skills needed by local businesses, leading to better-paid jobs. In addition, we hope to gain funding for an institute of technology shortly as well as to secure the £25 million of town deal funding to provide the infrastructure for businesses, jobs and growth in the town. This is a shining example of local organisations and experts capitalising on a matrix of support from the Government, creating a foundation for skills and enterprise and increasing social mobility at a local level.
Speaking of job creation and growth, I was delighted by the announcement yesterday that our bid for a freeport at East Midlands Airport was successful. This will create a centre for business and promote jobs and growth not only at the site itself, which is easily accessible to my constituents, but in local business clusters in my constituency, such as the science and life science businesses at Charnwood Campus and the Science and Enterprise Park. What a massive opportunity for the whole region and, importantly, what great news for Loughborough.
I call on businesses thinking of expanding or even starting up to please consider coming to Loughborough. Not only is it a fantastic place in which to live and work but it has the infrastructure and highly skilled workers that they need to succeed.
Over the past year, more people than ever before will have come into contact with our social security system. In March 2020, around 3 million people were on universal credit; in January, it was 6 million. They will have discovered that what is billed as society’s safety net is, in fact, full of fairly large holes. That has been the experience of my constituents in North East Fife, and it will be the same for hundreds of thousands of people throughout the UK.
A year ago, Liberal Democrats welcomed the Chancellor’s move to help to fix the net via the £20-a-week uplift in universal credit—that money was needed even before the pandemic began—but as time went on, it became clear that further support was not going to come. We called for an uplift to legacy benefits, which are disproportionately received by people with disabilities, but after initially being told that the universal credit uplift was a first step because its computer system was easier to change than the systems operating legacy benefits, it turned out that no uplift would be forthcoming.
We asked for extra support for unpaid carers—a group of people who are under-appreciated, overworked and absolutely need our further support—yet rather than the £20 a week that they need at the very least, the increase the Chancellor is giving in the Budget is a derisory 5p a day.
The decision to create another cliff edge by ending the universal credit uplift in six months means taking away £1,000 a year from those who need it the most. Freezing the personal allowance is a stealth tax that simply means that the poorest will pay an increasing proportion of their income in tax as many begin to make the transition from universal credit to employment as the economy recovers.
Last week, my team and I undertook a virtual visit to the jobcentre in Cupar. It was great to meet the fantastic team there, who have coped brilliantly with the required changes to working practices and are clearly making a difference to many who access their support. Despite that North East Fife team’s efforts, I have real concerns about how the Government plan to get people back into work.
Take-up of the kickstart scheme has so far been sluggish. To some extent, that is understandable, given the current restrictions, but when the scheme was launched I asked the Government to reconsider the requirement for businesses to be able to participate directly only if they had 30-plus vacancies, and although I am pleased that they eventually changed that decision, the initial decision prevented businesses in my constituency from moving forward more quickly with the scheme. The pandemic has hit the job prospects of those aged 18 to 24 most heavily; kickstart needs to succeed.
Tourism and hospitality are two key sectors in North East Fife, and I have previously raised in this place many examples of small businesses that are struggling because of covid-19 and lack of support. I welcome the continued 5% VAT rate for hospitality, which many Members from all parties called for, along with the furlough extension, but the reality is that the Budget offers very little for the cafés, shops and sports clubs at the heart of the local economy. Hairdressers such as Alex Thaddeus in Cupar also need a VAT reduction, which the hair and beauty industry has called for. The data tells us that women are also paying a disproportionate economic price during the pandemic.
The furlough extension is useful, but when I have spoken to businesses such as the Ship Inn and the Dory in the East Neuk, they tell me that it now comes with costs—it is not the same scheme that it was a year ago. That means that the small business owners who are currently unable to open face painful choices—accruing more debt, laying off staff or, indeed, closing altogether.
Many Members have raised the self-employed. I can think of many constituents who have found themselves excluded. Beneath the Chancellor’s rhetoric, there is no real change to the self-employment support; it is just that more people qualify now because they have 2019-20 tax returns.
Some of the Scottish Government’s support schemes are problematic. There are Barnett consequentials sitting on the desk of the Cabinet Secretary for Finance right now, and in Scotland we have been in harder lockdown for most of the past year. Just this morning, I spoke to my team regarding bed-and-breakfasts such as Lillian May in Newport-on-Tay, which is still waiting—and has been since December—for Fife Council to get further guidance from the Scottish Government on the administration of funding for bed and breakfasts.
Over the past year we have seen state intervention on a scale not dreamed possible by a Conservative Government. However, this perfectly reflects our approach. Our core belief is that the state should intervene only when necessary, and it has certainly been necessary this year. The state should help when help is needed, but otherwise it should not interfere and should let people get on with their lives.
Economically speaking, the only way for us to grow and build back better is for our private sector businesses to pull the economy back to health, creating jobs and wealth for all. I therefore welcome the six-month extension to the universal credit uplift, the extended furlough scheme, the self-employment extensions and the inclusion of the newly self-employed. The super-deduction on investment in plant and machinery will rocket-boost capital spending and make inroads into the productivity conundrum. If I had a request, it would be to extend it to other businesses, such as farmers. I particularly like the support for our hard-hit hospitality and leisure businesses, and to do all this while supporting a green industrial revolution is just amazing.
As our smaller businesses are the real engine, I also commend the Help to Grow scheme and digital skills support, which will deliver opportunities for better growth. All our lives have changed dramatically over the past year, some financially or emotionally; some will revert as the lockdown eases, but some will take many years to recover—if, indeed, they ever do.
The support offered comes in many guises. The short-term financial support I have already touched on, but livelihoods are about more than that; they are about a belief in a better future, about believing that society is fair, and I see key levers for that. The restart programme, the kickstart scheme, the Prime Minister’s lifetime skills guarantee, the £3,000 incentive for all hires and £126 million to triple the number of traineeships are all building blocks that give people a hand-up and the opportunity to grow or retrain.
Members representing constituencies such as mine in Sedgefield were elected on a promise of levelling up well before covid-19 arrived, and to do so requires Government intervention to create the stimulus for change. A key part of that is opportunity. Decisions like a freeport for Teesside and funding for new port infrastructure to build offshore wind projects are transformational for the Tees valley, and I hope that the Chancellor and his colleague the Transport Secretary will continue to recognise the importance of local infrastructure to support access to the jobs created and educational opportunities. Ferryhill station, the Leamside line and the Dar-link northern bypass are critical for the people and businesses of Sedgefield to share in this opportunity.
I welcome the opening of the levelling-up fund and look forward to utilising that for the benefit of the people of Sedgefield. When it comes to levelling up and supporting left-behind communities, I could not be further from the Leader of the Opposition’s comments yesterday. In my maiden speech, my suggestion that the Treasury could relocate to Sedgefield was met with some humour. But for those who do not know, the Sedgefield constituency wraps around Darlington town, with the long-held Conservative wards of Hurworth, Sadberge and Heighington and Coniscliffe, so that is close enough for me. I have been delighted to campaign for that with my Conservative colleagues along the Tees valley, in particular the Tees Valley Mayor, Ben Houchen, who has been indefatigable.
This is a transformative step for Sedgefield; it delivers opportunities for careers that were previously only found in London. It is important to have decision makers based outside of cities. For the Labour leader to say yesterday that moving those Departments from his London-focused world to Darlington was “giving up” was an insult to the people of our area. I look forward to the local Labour politicians in Durham, Darlington and the Tees valley distancing themselves from those comments—or maybe they will toe the party line and wait for the electorate to speak for them. I await May with interest.
It is clearly only the Conservative party, through this Prime Minister and this northern Chancellor, who care about and will deliver for the north-east.
Listening to the Chancellor yesterday, I was surprised by the tone that he took. He seems to have forgotten that his Government’s shambolic handling of the covid pandemic has seen the UK suffer both the worst death toll in Europe and the worst economic crisis of any major economy. As we move towards recovery, I share the concerns of many of my constituents, who feel that the confused policy making of the last year means that this is not a Government who can be trusted to deliver the recovery that the UK needs.
Following the financial crisis, the Tories responded with austerity. Labour warned against cutting too far and too fast, and we ended up with soaring rates of poverty, threadbare health and social care services and one of the most unequal economies in the western world—a situation that no doubt exacerbated the impact of the covid pandemic. Now the Government’s failure to recognise the role that poverty and inequality play in holding our nation back means that they are once again risking the economy. In particular, it is noteworthy that, despite countless charitable organisations arguing that the £20 universal credit top-up should be made permanent, the Chancellor could commit to it for only a further six months. Indeed, there are almost 16,000 individuals in Coventry North East who could do with that extra £20 per week, yet this Government seem determined to find a way to take it off them. The Chancellor has said that the increase is only temporary and that it is unaffordable in the longer term. Yet we only have to look at how easily and freely they hand out Government contracts to their friends and close associates to see that when it comes to the question of affordability, it helps to be a personal friend of a Minister. Sadly, for the 16,000 recipients of universal credit in Coventry North East, this means that this much needed increase may soon be ripped away from them. With many of those people already on furlough or in insecure work, there is a real danger that when this is taken away from them, they will become even more dependent on the state for support, which is not what anybody wants.
A society that is built on shaky foundations will not be able to tackle the challenges this country faces, nor take advantage of the opportunities we are presented with. The Government’s plan for the post-pandemic recovery does nothing to tackle the poverty and inequality that resulted in the worst death toll in Europe and the worst economic crisis of any major economy. We all want a strong and resilient country, but unless the Government start to take these issues seriously, they will once again leave us vulnerable to the future challenges we will inevitably face.
It is a pleasure to speak in the second day of the Budget debate.
This Budget has one overriding aim—to kick-start our economy, which shrank by 10% last year. We are now set to borrow a peacetime record of £355 billion this year. This is jaw-dropping, I agree, as is the fact that 700,000 people have lost their jobs since the pandemic started. The Government’s primary duty is to do what they can to help the people and our economy. On the face of it, such huge borrowing does not look Conservative in any way, but it is. What is proposed by the Chancellor is pragmatic, sensible and bold. He has accepted the reality of the situation and has taken realistic action to remedy the problem. Needs must, and such action is crucial now. This is a very Conservative approach. Such pragmatism is why the Conservative party has been the most successful political party in history. Conservatives are not ideologically driven to the extent that they do not adapt to a situation that requires change, and that is certainly the case at the moment.
Now is not the right time to hammer the economy or the people, who are already on their knees. Today is the time to succour and support our recovery after the traumas we have had to sustain over the past year or so. That is our top priority. Luckily, borrowing is at its cheapest rate ever, and we should use that situation as a tool to help us in the recovery. I totally support this rather canny Budget. I agree with the Government that they are determined to do their best for everyone in the country—everyone, whether in Northern Ireland, Scotland, Wales or England.
Let me turn to a few matters coming directly from the Budget that I am very pleased to mention. I like the fact that the furlough scheme has been extended to September. I am also delighted that the benefits for the self-employed have been extended. I am particularly happy that about 600,000 more people who are self-employed will be able to claim assistance. This has been a matter of great concern in my constituency, where a large number of people determine their living very much on their individual wits and hard work. Some of them have had a really hard time. Far too many of my constituents have fallen through the gaps in the support that has been extended to date. Lots of them have been unable to demonstrate, in particular, that they were self-employed on their tax returns, and I hope this anomaly has now been resolved. It is also good news that the £20 uplift in universal credit, worth £1,000 a year, has been extended. It saddens me, though, that the Budget does not seem to help leaseholders with the remedial costs of cladding. I reckon the Government are going to do something about that in due course, but it is not part of the Budget; in a way I wish it was.
In truth, I consider this to be a very professional, necessary Budget in these extraordinary times, and I am delighted to say I fully support it.
It is a pleasure to speak in this debate. Pandemics by their very nature offer an opportunity for reflection about the sort of society we want to develop for the future. If the aftermath of this dreadful pandemic is not an opportunity for a reset, when will there ever be one? It is not as if the structural or economic deficiencies of the British state are not obvious to all, with chronic geographical, sectoral and individual wealth polarisation and an over-reliance on one economic sector.
I welcome the Chancellor’s commitment to underpinning public health strategies with economic support, and extending furlough to September seems sensible. However, if for whatever reason the Welsh Government are required to implement a different strategy to control the virus—for instance, as the result of a new autumn wave—will measures such as furlough be extended, or does the unionist talk about the broad shoulders of the British state only apply to Wales if it also benefits England?
On corporation tax, I support the proposed increase to 25%. The Washington-based thinktank the Tax Foundation estimates that the global average corporation tax rate is just over 25%. France and Germany have rates of 30%, and the Biden Administration have announced plans to increase the rate in the US from 21% to 28%. Therefore, it is difficult to make the case that a 25% rate in the UK would be uncompetitive. Of Biden’s three-year $1.4 trillion extra taxation plan, according to Moody’s Analytics, well over half—$822 billion—comes from corporate taxation. Equally important is the Biden Administration’s determination to target firms that offshore jobs and those that shift profits overseas.
The Chancellor’s income tax proposals are far too timid. He should have followed the new US Administration by increasing income tax directly on incomes above $400,000—about £300,000—by introducing a new pandemic tax band. However, the redistributive zeal required to tackle the UK’s inequalities should also look at taxation on held personal wealth, as is the case in Norway, Switzerland, and Spain.
I hope the Treasury’s tax day on 23 March will signal a full-scale review of how wealth in the UK can be taxed more fairly and justly in the long term. It will also be an opportunity to finally introduce much needed reforms of capital gains tax and to investigate the possibility of varying corporation tax within the UK. This would be one way to help redirect investment to those less productive parts of the British state. Considering that only three of the UK’s regions and nations are in surplus, this might be one way to address the geographical wealth disparities that exist in a far more coherent manner, I suspect, than sporadic freeports.
It is also imperative that the UK find an answer to the question of how to tax the digital world. I appreciate that the G7 will be a key forum to discuss a global digital tax regime, and I welcome the tentative first steps taken by the UK Government with the introduction of the digital services tax. However, now is time for the UK to go further and faster, leading by example and setting global standards. This is crucial, given the pandemic-induced shift to online retail, with online sales accounting for a record 35% of total retail spending in January 2021, up from 20% in February 2020.
The political choice facing electors as we emerge from this pandemic is between the forces that want to return to the old normal and those that believe the pandemic must result in the creation of a new economy that works for all, not just for the select few. The Chancellor nailed his colours to the mast in the Budget as the former. I will be arguing forcefully for the latter as a key part of a prospectus for an independent Wales.
Thank you, Madam Deputy Speaker—[Interruption.] Gosh, I am really sorry, Madam Deputy Speaker; we have building work going on in the house at the moment.
The pandemic has shown us the impact of a decade of austerity forced on us by Conservative Governments. We have seen that a cocktail of poverty pay, job insecurity and cutting public services to the bone has resulted in one of the worst death rates and the worst recessions in the world. This was not inevitable and the Budget was the Chancellor’s opportunity to put it right with a programme that meets the scale of the challenges we face. Instead, this Budget is filled with half-measures and wrong priorities.
There is a rise in corporation tax in 2024 but a huge £25 billion giveaway to big businesses before that. The wealth of British billionaires has already soared by a third in the last year. The Government talk of a green industrial revolution but they are slashing green homes grants, freezing fossil fuel duty and continuing to back coal mining. There is a lot of talk about looking after Brits, but the Chancellor did not mention the NHS once in his speech. He had no plan for the crisis in social care and he is freezing public sector wages instead of giving our key workers the pay rise that they deserve.
The Chancellor has taken the rhetoric of Labour’s policies but none of the substance. The centrepiece of yesterday’s Budget was the switch to fiscal austerity in April 2023, which will involve around £68 billion of spending cuts and tax rises until 2026. Make no mistake, this Budget has paved the way for more misery, more austerity and more hardship just over the horizon.
Today, the Joseph Rowntree Foundation and the Resolution Foundation said that the cliff-edge cut in universal credit will bring down incomes to levels that we have not seen since the early 1990s. It is set to plunge 500,000 people into poverty. Does the Minister consider those people, including many of my constituents in Nottingham East, to be collateral damage?
We all want a secure job, healthcare we can rely on and a good home in a community that we can be proud of, but poverty pay, underfunded hospitals and catastrophic climate change threaten our lives and our futures. This Budget should have tackled the root of these problems—our rigged economic system—but instead, it rearranges the deckchairs on the Titanic. We need a permanent transfer of wealth and power from billionaires profiting from the pandemic to workers who have got us through it, but this Government do not want to tackle a broken economy that works for their super-rich friends instead of for my constituents. They have failed catastrophically during the pandemic and this Budget shows that they will fail to deliver the recovery that we need.
It is a pleasure to follow the hon. Member for Nottingham East (Nadia Whittome). The Budget obviously has to be set against the situation in which we found ourselves in recovering from the pandemic, and the Chancellor and his team are to be congratulated on ensuring that we have balanced the position between encouraging industry and commerce to reopen but, at the same time, supporting people who are going through the pandemic in a difficult fashion. I strongly support all the measures that the Chancellor announced in the Budget.
There are four areas, however, that need to be explored yet further. On the position on remediating cladding, when the Secretary of State for Housing, Communities and Local Government announced the new scheme for dealing with high-rise blocks, it was said at the same time that the loan scheme would be announced by the Chancellor during the Budget process. At the moment, we have not heard that, and clearly, a large number of leaseholders will want to know the details. Personally, I take the strong view that leaseholders should not have to contribute a penny and I reserve my position on where we stand until we hear the details of the loan scheme. So, clearly, that is a matter of concern.
The estimate of the number of private tenants in rent arrears has soared during the pandemic and, clearly, a day of reckoning is coming. It is not clear what the Government’s strategy will be to ensure that those rent arrears are cleared to the benefit of either tenants or, indeed, landlords who depend on that income for their ability to finance themselves. That needs further explanation, and I hope that my right hon. Friend the Financial Secretary to the Treasury will be able to answer that during the wind-up to the debate.
Another vital issue is pensions. The Chancellor has chosen to freeze the lifetime allowance. There are concerns in a number of professions, including our medical professions. Doctors are saying that they have saved all the money that they can under the lifetime arrangements, so there is no incentive for them to continue working. That is a potential loss of skills that we can ill afford, particularly at a time when we are approaching a need for more doctors, nurses and medical professionals in our national health service.
Equally, of course, I am disappointed that the Chancellor has not announced any more funding to compensate the victims of the Equitable Life scandal. The reality is that those individuals saved for their retirement and intended to ensure that they had a decent income. They have been short-changed, I am afraid, as a result of the compensation scheme by the Government thus far. I look forward to the Chancellor coming forward with further funding. At the moment, £2.6 billion is owed. It is quite clear that the Chancellor has been able to find funding when it is necessary. These people are among the most vulnerable in our society and deserve our backing and support.
Equally challenging, I think, is the fact that our economy and savings regime have been shown to be extremely fragile. The pandemic has revealed that many people do not have money saved up to support themselves through difficult times. In future Budgets, I hope the Chancellor will bring forward incentives for people to save, not only for a rainy day but for their retirement and when they will need it next. In summary I strongly applaud what he and his team have been able to do to get us out of the pandemic, get employment back and get the economy working once again.
The Budget should be judged on one key issue: whether it improves the living standards of the vast majority of people in this country. On that, I am afraid, it has failed, with a pay freeze for key workers, the poorest families facing universal credit cuts, 1 million lower-paid workers having to now pay income tax, and council tax rises. Living standards have faced an assault over the past decade, and that is set to continue. Average wages will be no higher in 2026 than in 2008: almost two lost decades.
The Government’s disastrous handling of the virus has caused one of the world’s deepest economic collapses, yet they expect the vast majority to pay for it—including through further cuts to public services of £15 billion per year compared with last year’s plans. Despite the need to treat a huge backlog and to fund ongoing vaccine and test and trace schemes, the Government would also cut the national health service budget back to pre-pandemic levels. That will also mean an axe to unprotected areas, such as local government, which is already cut to the bone.
The Government may counter that they are fixing the economy and that a higher tide will lift all boats. That is simply a lie. The Budget will see Britain continuing as a low-growth—just 1.7%—economy once the end-of-lockdown boost wears off. We have low growth, falling living standards and hollowed-out public services. For most people, I am afraid that it will feel very similar to the last decade, but it does not have to be. This should have been the Budget to invest massively in growth, in tackling inequality, in jobs, in tackling the climate crisis, in rebuilding our public services, in social housing and in moving us to a high-skill, high-wage economy.
Instead, public investment will remain pathetically low, and the main stimulus is a £25 billion corporate handout that may bring business investment forward but, as the Government’s figures show, will not increase overall investment levels. Those funds should instead have gone into a huge state investment programme also funded by record low borrowing costs and taxes on the super-rich, starting with a 50% rate on those on over £125,000. That could spur a shift to net-zero with a green new deal, build modern transport and infrastructure fit for the 21st century, lead to a mass house building programme, and renew our public services, all boosting growth, which is the best way to pay off the debt, but also creating decent jobs and helping to rebuild communities left behind for far, far too long.
That should have been the legacy coming out of this crisis, and that is what we on this side of the House will need to fight for.
There is much to welcome in the Chancellor’s Budget. The extension of the furlough scheme, the business rates holiday, his long overdue new support for the self-employed, and the £300 million for the culture recovery fund are a step in the right direction. These measures will help some of my constituents get through the next few months of this crisis, but what about the longer term? I wanted to see a Budget that puts us firmly on the road to recovery and rights the wrongs of the last decade by rebuilding our economic foundations, but this Budget just papers over the cracks with short-term giveaways.
There was no pay rise for the key workers who have cared for us through this pandemic, including the hard-working staff at St Thomas’ Hospital in my constituency, who cared so diligently for the Prime Minister when he was ill; no recovery plan for our NHS after a decade of cuts; no mention of schools or teachers, who have worked tirelessly to educate our children in such challenging circumstances; and no mention of help for the thousands of leaseholders paying extortionate costs for temporary safety measures while still living in unsafe buildings.
The Chancellor assumes that household spending will help fuel growth, but not everyone has managed to save through this pandemic. In September, unemployment will rise when furlough ends, and without the £20 uplift to universal credit the poorest households in my constituency in Vauxhall will be facing a significant fall in income in the second half of this year.
This Budget was full of missed opportunities. The pandemic has exposed structural vulnerabilities and inequalities, and this Budget was an opportunity to reflect on how our economy works, what we value most and what our priorities should be as we start to recover from this nightmare. The Chancellor missed an opportunity to help the co-operative movement in leading a recovery to a fairer and more inclusive economy. He should have shown real ambition by committing to double the size of the co-operative sector to help build a fairer and more resilient community.
This Budget offers none of the ambitions, values or vision that my constituents in Vauxhall had hoped for and needed to see, and it fails to answer some of the bigger questions about protecting household incomes and coping with the squeeze on our public services. The Chancellor had an opportunity to push the reset button with this Budget; he must explain why he did not take it.
It was a real pity that the hon. Member for Bootle (Peter Dowd) was cut off in his prime earlier as he was embarking on a very good defence of our pharmacy sector and its contribution, and I want to associate myself with his comments. There is a real issue with regard to the moneys advanced to pharmacies to deal with the consequences of the pandemic; it now needs to be clawed back and that is going to hit our pharmacists, who have been at the front end of the fight against the pandemic. I just remind Ministers to get together with the NHS to come up with a solution to this. Notwithstanding the fact that pharmacists are independent providers, they are very much part of our NHS and should be treated as part of the NHS family. I hope that the House will indulge me in finishing the hon. Gentleman’s speech off for him.
I commend the Treasury team and my right hon. Friend the Chancellor for the Budget presented yesterday. It has to be said that they were not dealt the best set of cards to start with. As Conservatives, we know that everything has to be paid for by taxpayers, whether they are the taxpayers of today or the taxpayers of tomorrow, and we have to balance our responsibilities to all taxpayers when we make these decisions.
Notwithstanding that, the Budget showed great imagination. It took it on the chin that we need to continue the support until we really can release the restrictions that we are working under. It also laid some foundations to encourage investment—particularly imaginative ones, I would add. In that regard, let me celebrate the fact that the Thames freeport has been given the go-ahead by the Chancellor. Clearly, that will benefit my constituents, but it takes in not just the port of Tilbury but that at London Gateway, the Ford site at Dagenham and what used to be the Petroplus oil refinery in Stanford-le-Hope.
Far from the freeport just displacing activity from elsewhere in the economy, the Ford site and the Petroplus site are redundant industries. Ford manufactures diesel engines for export, and Petroplus, where, clearly, the demand came from petrol-fuelled cars, went into receivership a few years ago. That land is ripe for development, and this is a perfect opportunity to encourage inward investment from overseas to take advantage of the freeport policy. I very much look forward to seeing Ford’s plans to use the Dagenham site, which has been with us for so many decades, to invest in new technology to deliver autonomous vehicles and electric vehicles, because that is the future. This very action will do so much to facilitate that and to breathe economic growth into an area of east London that really deserves it.
It has been very tiresome hearing Opposition Members say, “Oh, all the help’s going to Tory-held seats.” I just remind them that Barking and Dagenham are very much not Tory-held seats, and that Tilbury, which I represent, is the poorest of the 100 poorest towns. I am really grateful that this Government are showing faith in Tilbury and making those investments. Let me also say to those on the Opposition Benches that they could have done it when they were in power, but they chose not to. The Government are doing the right thing, and I commend the Budget to the House.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
I represent one of the most deprived constituencies in the country. My constituents have suffered thanks to both the Government’s mismanagement of this pandemic and the decade of brutal austerity that preceded it. Their incomes have been slashed, their jobs thrown on the scrapheap, and their hopes for the future dashed by poverty.
Instead of laying the foundations for an economic recovery by investing in the high-skilled green jobs of the future, the Chancellor presented a Budget that barely papers over the cracks. Secure and well-paid work is the catalyst of any economic recovery, but successive Conservative Chancellors have done nothing to address the scourge of precarious employment and low pay.
When presented with the opportunity to rectify the mistakes of his predecessors and ensure that work really does pay, the Chancellor refused to do so. While Ministers shed crocodile tears for the one in 10 British workers who have been told to accept worse pay and conditions or face the sack, the Government have done nothing to crack down on the use of deplorable fire and rehire tactics.
We need to be putting money in the pockets of consumers, yet the Chancellor plans to freeze the pay of over 2 million key workers, force councils in the poorest parts of the country to raise council tax by up to 5%, and plunge up to 1 million universal credit claimants into poverty by cutting the £20 uplift at the very moment that unemployment is set to peak. That is not just economically illiterate; it is downright cruel.
Yesterday the Chancellor had a real chance to secure economic prosperity and tackle the existential threat of climate breakdown by creating thousands of high-quality green jobs. He spurned that chance and exposed the Prime Minister’s pledge of a green jobs revolution as a sham. By investing in electric vehicle production at the Vauxhall car plant, guaranteeing funding for the Mersey tidal project and the north-west hydrogen cluster and putting the green homes grant back on track, we could create vital jobs in a region that has been devastated by decades of economic vandalism and Government neglect. But the Budget contains a meagre £20 million for floating offshore wind production and no new investment for a green recovery in the automotive, steel or aerospace sectors.
The Government’s national infrastructure bank will provide less than half the funding we received through the European Investment Bank and falls far short of the £30 billion recovery package that Labour is calling for. This makes a mockery of the promise to level up towns like Birkenhead and leaves the UK far behind our European friends in the year that we are due to host COP26. The Government’s shambolic handling of the covid-19 pandemic has plunged the UK into the deepest recession of any advanced economy. The Chancellor’s failure of ambition, foresight and leadership means that the road to recovery will be uncertain, but the path into hardship for many is a certainty.
I refer to my entry in the Register of Members’ Financial Interests.
It was an impressive and assured performance by the Chancellor. Rightly, it was a no-harm Budget, aimed at steering us through treacherous waters, a light hand on the tiller essential. It has been heartbreaking for me and, I am sure, all colleagues to hear from so many businesses of their dire circumstances. They are run by men and women who have worked hard and taken risks, often having to mortgage their homes, all to make a living for themselves, their families and, of course, their staff. It is this industrious activity that pays for the public sector, not least the NHS and our schools. To raise taxes now would be the straw that broke the camel’s back, so I applaud the Chancellor for not listening to one or two commentators who used to frequent this place.
The Chancellor’s upbeat speech rightly called on enterprise and innovation to reignite our economy, both internally and from abroad. Global Britain requires low taxes, less state and a lithe public sector. Bureaucracy and red tape still afflict progress, but now that we are out of the EU, there is no excuse not to pursue Conservative values and philosophy, and that includes low taxes.
“Levelling up” is an expression frequently used by the Government, and nowhere is that more needed or deserved than South Dorset. At or near the bottom of every source of funding for decades, it is our turn to be nurtured. I shall soon be presenting a business plan to the Prime Minister and Treasury drawn up by business leaders in my seat. To ensure that we attract businesses and investors, we need help to improve our infrastructure. Our over-reliance on tourism and hospitality does little to boost incomes and raise living standards.
I also compliment the Chancellor on extending help to those who are struggling, many through no fault of their own. However, this staggering level of borrowing cannot go on forever. The way out of this financial meltdown is to work our way out. The Chancellor is right to warn that repairing our finances will take the work of many Governments over many years, and that is not taking into account the dual spectres of inflation and rising interest rates. One or both could easily put the ship on the rocks.
Nothing is more important now than to support and nurture the private sector. I welcome the extension of the business rates holiday, the VAT cut, the new restart grants and the recovery loan scheme. However, it should be noted that some businesses will not be able to repay the loans that they have already taken out. On a positive note, the Budget will give reassurance to business, with restrictions lifting and the economy reopening. Let me repeat: we must never forget that it is the tax paid by these businesses that funds our NHS, schools and more besides. The country getting back to work is crucial, and the sooner the better.
With an eye-watering debt of £2.8 trillion, the Chancellor is right to promote growth, growth and more growth. That is not a licence to splurge money now and hike taxes later. The former is necessary in the short term but clearly cannot go on indefinitely. Cutting this support is going to cause pain. Dishing out money is easy, but taking it away is another matter. That is why everything must be done to support those in the private sector, because it is they, not the politicians, who create the jobs. We create an infrastructure within which business thrives. My concluding message to the Chancellor is this: watch the spending and do everything you can to help those who generate our prosperity and jobs.
The Chancellor has claimed that the hard choices made by his predecessors over the last 10 years have served our economy well going into this current crisis. A decade-long squeeze on living standards, the rise in insecure and precarious work, and beleaguered public services have in every sense made his unenviable task every bit harder than it needed to be. Our economy has been shown to be particularly vulnerable and less resilient than other comparable economies of similar size, and the much deeper contraction in our own demonstrates exactly that. Alongside this, chaotic decision making and the poor timing of restrictions, all to appease Tory Back Benchers, meant that there were very real economic consequences to the Government kicking the can down the road—that is, until they eventually ran out of road.
The eye-watering sums being spent by the Treasury mean that, for the time being, the taps are on, and the Chancellor is right when he says that we need an investment-led, jobs-rich recovery. While the measures embarked on last year and this year may have just averted devastation for many, I remain unconvinced that the measures announced yesterday will secure a recovery that, crucially, all our people can share in.
The think-tanks are alive with the chatter of levelling up, and yes, there were piecemeal announcements about moving part of the Treasury to Darlington, about the investment bank in Leeds and about the collection of freeports across the land, including one in my own city of Liverpool. But despite the odd headline to help fill Tory election leaflets in marginal seats across the north, it is the poverty of ambition that will perpetuate the poverty that we see in our towns day in and day out. I have to ask: do Conservative Members think that moving the odd civil servant out of London or a one-off fund to help a struggling high street in the midlands will match the requisite scale of ambition to address the deep underlying structural inequalities that exist in modern British society between people and places and between my own north-west region and the south-east of England? If we do not fundamentally address those inequalities of opportunity and outcome, the levelling-up rhetoric will remain exactly that: rhetoric.
There was very little in yesterday’s Budget in respect of targeted sectoral support for our manufacturing base, despite the potential job losses for skilled workers at Vauxhall in Ellesmere Port. There was even less on public sector spending, as the public sector workers who have kept this country going during the pandemic once again get only insulting claps from this Government and are again bracing themselves for the continuation of pay freezes. And disgracefully, there was not a jot on social care.
Priorities are the bedrock of our politics, and it is those priorities that tell us what life looks like for people, their families and their communities. While we remain a society defined by spiralling household debt, insecure work and fire and rehire tactics, and a nation where it is normal to hand over vast amounts of your income to your landlord; where life expectancy is falling in parts of the country and the retirement age continues to rise; where the forgotten and excluded are ignored again; where the queues at food banks are getting ever longer; where children are going hungry and where our elderly are selling their homes to cover the cost of their care, we will never be the happy, confident, outward-looking nation the Government claim to be building. Importantly, this tells us that the priorities of this Tory Government are the wrong ones.
It is always interesting to get a lecture on economic probity from a member of the Liverpool Labour party.
I will start by saying that I am chuffed to bits. I am very pleased indeed. I might not have got my bid for HS4 between Heywood and Middleton, but there is still time for that, and this is a very good Budget indeed. The past year and a bit has been exceptionally challenging for the country as a whole, but now we are on the path back to normality. We are looking forward to a future, and we have a Budget that supports our ambition to get the country back on its feet.
Yesterday, the Chancellor laid out a fiscal plan not just to help larger companies and the structures of our economy but to support SMEs, the self-employed and those in low-wage employment. We want to get our high streets and local businesses back on track soon and nowhere can that be more true than in Heywood and Middleton.
I am pleased to see that the uplift in universal credit remains until October. I thank the DWP and its team for the inestimable amount of support they have given my constituents and many others who face very real hardship as a result of the difficult but necessary decisions the Government had to take to combat the pandemic. Universal credit has been one of the quiet success stories of the pandemic response. Without its flexibility and agility, many would have found themselves in a precarious position as a result of a legacy benefit system that was still far too complex and clunky to cope.
Because of the importance of safeguarding livelihoods, I also welcome the extension of the furlough scheme and the self-employed income support scheme as part of a package of measures to get people back to work safely. The vast majority of people sat at home on these schemes want to get back to their jobs and their normal lives, and allowing the scheme to run until the end of September will give businesses the headroom they need to get their workforce back safely.
There are a large number of announcements for businesses and job creation in the Budget, one of the most unprecedented being the super deduction, which does exactly what it says on the tin—it is actually super. For companies in Heywood and Middleton, it will be one of the biggest tax cuts in their history and it will get them investing, creating jobs and driving our economic recovery.
Reopening the economy will also need to take account of the fact that some jobs and businesses simply have not been able to survive the economic uncertainties of the pandemic. So, with the launch the restart scheme, hundreds of thousands of long-term unemployed people will be supported back into work. The doubling of the number of work coaches, the introduction of the lifetime skills guarantee to fund level 3 qualifications for all adults and the launch of kickstart to help 250,000 young people into jobs will provide a comprehensive framework for our future prosperity. I welcome the doubling of the incentive payment to SMEs to take on apprentices of any age to £3,000 and the £126 million to triple the number of traineeships next year. With excellent further education providers such as Hopwood Hall College and Rochdale Sixth Form College supporting my constituents, I am confident that they will be well placed to take up these opportunities.
It takes vision and courage to respond to a world crisis with optimism and ambition. The right hon. and learned Member for Holborn and St Pancras (Keir Starmer), the Leader of the Opposition, responded with nothing but doom, gloom and a comedy routine that was, ironically, the least funny bit of a pretty poor performance. Rubbishing freeports, deriding world-leading employment support and talking down the north—maybe it is just the way he tells them, Madam Deputy Speaker.
Thank you, Madam Deputy Speaker. I would like to focus my brief remarks on how the Chancellor could deliver growth in south London.
Over many years, as house prices have risen in inner London, people have moved to outer London where house prices are marginally more affordable. Croydon exemplifies that shift. We love having new people, but we are now an outer-London borough with inner-London costs. As our demographics have shifted, so has the need to fund more social care, health services and education.
We have now reached the worrying situation where Croydon receives £200 less per person compared with some inner boroughs, even though it faces the same and in many cases higher levels of deprivation. Other boroughs often place looked-after children in Croydon. We have a high number of unaccompanied asylum seekers, whom we support. We have a lot of old people’s homes. We welcome them all, but we do not receive the funding to support them.
The first item on my list for the Chancellor is that we need a level playing field, so that we can tackle the challenges we face and give every area the same chance. Funding for local authorities must be rebalanced and we must be supported to deal with the additional costs other areas do not have. Of course, the chronic overall underfunding of local government must stop and we must have proper funding for our services.
Secondly, a quick look at major transport and capital investment shows that south London has actually missed out for decades. We know London is a wonderful area. West London has a well-established economy. North London has seen several recent infrastructure developments, such as the hugely successful King’s Cross development and the start of High Speed 2. The Olympics signalled a shift east for some of our economy on the back of the growth of the stadium, housing and businesses there.
What is south London’s equivalent investment? Many parts do not have the Tube, we do not have bike infrastructure and I cannot remember the last time the Government invested significantly in our transport system. I therefore ask the Chancellor to look at investing in our transport system. East Croydon station and the Windmill bridge outside it require major transformation to keep moving the hundreds of thousands of people who every day travel through East Croydon from the south coast to London. Of course, the number of people using the train has slowed during covid, but it will go back up again and that funding will have to be found, so I ask the Chancellor to do that. Perhaps he can also support our call to move Croydon to zone 4. That could be funded by the rail companies in the new bidding rounds. We need all kinds of infrastructure. Either we should have a Transport for London supported by the Chancellor, or he should give more powers to the Mayor of London so that we can do these things ourselves.
Thirdly, we have high streets that are really struggling. Westfield was due to come to Croydon and build the largest shopping centre in Europe, but because of the insecurities of the high street now, and the unfairness between the business rates paid by our physical businesses and those paid by our online businesses, that has not happened. The insecurity of Brexit did not help. So we need the Chancellor to speed up, review and reform the business rates system, so we can have a level playing field. We want to grow our high streets in Croydon and we will, but we need him to create the climate in which that can happen.
Fourthly, we have the very best, talented people in south London, particularly in Croydon, but Croydon College, a wonderful resource, has had its funding cut by a third. We have to invest in skills and education. Finally, small businesses are the backbone of Croydon and south London, and we need to do more and go further to support them as we build back after covid. It is time for south London to be invested in. I hope the Chancellor will support us.
Thank you, Madam Deputy Speaker. Yesterday’s Budget had to support people and businesses through this moment of crisis, begin to fix the public finances and build our future economy. The Government’s support for employees and businesses has been nothing short of monumental—we all know that. It has saved millions of people from losing their jobs and prevented hundreds of thousands of businesses from going bust—businesses that are now up and running and able to repay that support as they drive our economic recovery.
My right hon. Friend the Secretary of State for Work and Pensions described just some of the myriad support that her Department continues to provide to people in need of additional support. In my constituency, I have seen the kickstart scheme being adopted by local employers, who are keen to take advantage of the support for new employment for young people. I have to refer to my entry in the Register of Members’ Financial Interests, because my former business has also joined the kickstart programme. It has done so because kickstart is a great programme that works for business and for young people at risk of long-term unemployment alike. I have visited my local jobcentre in Fakenham and seen the plans to double the number of job coaches across the country, in order to get people who have lost their job back to work as soon as possible. I welcome the Chancellor’s decision to continue his massive support for employment, the self-employed and business right through to September, some months after we should be fully out of lockdown and all our businesses should be back up and running. This Chancellor is focused on jobs above all else and he is absolutely right to take that approach.
However, the immediate recovery is only the first challenge. The Chancellor also needs to lay the ground for our fiscal recovery and the structure of our future prosperity. The British people understand and accept that the massive payments from the Treasury over the last year have to be paid back. The Chancellor acknowledged that that will be a long task, for many Budgets, but it is right that he should be frank with us about the scale of the challenge and where we have to start. Nobody normal likes tax rises, but we get it. Our incomes have been supported by tax money over the last year, so a gradual clawback via the freezing of income tax thresholds is a fair way to start the job; it is a sensible, gradual approach, where the better-off pay more. Likewise, businesses accept that it is fair to start to repay the huge support they have received. The increase in corporation tax on profits of larger companies starts in two years’ time, after a huge boost to investment through the £25 billion super deduction tax cut. It makes sense.
This is a Budget for recovery and growth. The former Labour Member for Birkenhead, now Lord Field, said yesterday
“To be successful in politics, you have to ride two political horses simultaneously. Rishi has done a budget for the hour and made the possibility of long-term prosperity...Best budget in my 42 years in politics.”
He was not wrong.
Yesterday, my right hon. Friend the Chancellor delivered a Budget that responded to the continuing needs of this country, navigating our route out of lockdown and supporting growth and those in need. I do not mind telling the House that yesterday for me was a very good day—the kind of day you will always remember. Everyone in this House comes here for a reason and a motivation. Mine has always been that the Labour party has always let the north down, and that the north-east, where I was born, raised and educated, and where I grew a business, could achieve so much more, given just half a chance. I know that that belief and vision are shared completely by our Chancellor.
Yesterday, my right hon. Friend helped to realise not just my hopes, dreams and ambitions for Darlington, but those of our council, our Tees Valley Mayor and, most importantly, the community I serve. A child growing up in Darlington, attending a local school and gaining a degree from a local university can now aspire to a career in the civil service and achieve that without having to leave their hometown. Indeed, thanks to the lifetime skills announcements, there will be people in Darlington who left school at 16 and never studied again who can gain a level 3 qualification and secure employment at Her Majesty’s Treasury. That is levelling up. That is putting opportunity in a town in the north-east of England that Governments of the past have overlooked. The Chancellor has listened, understood and taken action, making a real difference to the town I represent that will last beyond a generation.
The announcement of the freeport for Teesside will also have a long-lasting impact for Darlington. I know, too, that the employed, the unemployed, the self-employed and the employers of my constituency will welcome everything that my right hon. Friend announced yesterday, continuing and extending the support to our nation.
Yesterday, the Leader of the Opposition said that delivering Treasury jobs to Darlington was giving up. What an insult. What a lack of understanding. Labour has not learned. It no longer understands, and no amount of fake Union Jack waving or consultants dressing them in smart suits will teach them that the British people have rightly given up on them.
Yesterday, this Tory Government and this northern Chancellor achieved more in one Budget for my region than 13 years of Labour ever did. To celebrate this amazing news for Darlington, I am looking forward to welcoming Sir Humphrey to the town he will affectionately call Darlo.
This was a Budget for politics, not economics—a way of polishing the Chancellor’s image and that of his party. In the real world, key workers face the real-terms cut of a pay freeze. Households face a council tax hike, and businesses with zero revenues face loan repayments when they needed an overhaul of business rates.
The OBR has confirmed that the UK had the worst economic performance of any major country and that the approach to the public health crisis made the economic crisis worse. We have had longer lockdowns because of delays going into lockdown; £22 billion on the failed outsourcing of test and trace; cronyism in contracting for unusable personal protective equipment; hopelessly inadequate self-isolation payments and sick pay; delays in announcing and extending furlough and self-employment support; and repeatedly slow decision making by the Government. Those things have played their part in the scale of the dual health and economic crises we face.
Shamefully, yesterday’s Budget offered precious little to the millions of people—owner-managers, pregnant women and freelancers—excluded from support throughout, including Alison Powell in my constituency, who was denied support because her tax return showed £10 more income in employment than while self-employed. Meanwhile, countless others who filed tax returns for 2019-20 had to wait a whole year to qualify for any support. Unfortunately, previous Conservative announcements have not matched the price of the headlines: only 13 jobs are created by kickstart each day, while 292 are lost; just 2,500 homes benefit from green housing grants, against the stated target of 600,000; and self-isolation payments are denied to seven out of eight people. It is no wonder that only three in 10 people self-isolate when asked to do so. Work on rail for the north has been announced 60 times, and 60 times it has been forgotten.
Will the announcements from yesterday deliver on Conservative promises? Will they be more than headline-grabbing gimmicks, which will be quickly forgotten when the Chancellor’s shiny caravan of self-promotion moves on? The country needed a Budget for jobs and recovery. The planet needed investment in low-carbon industries. Instead, the Government showed their lack of commitment by scrapping the industrial strategy council. The Chancellor is ambitious, yes, but he is ambitious for himself. Yesterday’s Budget promises may have given the Chancellor’s brand a short-term boost, but the lack of long-term investment does not match the scale of the challenge that we face.
Yesterday, the Chancellor gave us a Peterborough Budget. It was exactly what my city needs to restart and to grow. There are no easy decisions in a pandemic, but this Budget is the basis of a swift and sustained recovery, and, as the Chancellor has said, the recovery will be swifter and more sustained than had previously been thought. That is great news for the country, yet, as I am sure you will understand, Madam Deputy Speaker, I am keenest on great news for Peterborough and that news came when the Chancellor spoke about the new levelling-up fund.
Even before the Budget, my city has benefited enormously from this Conservative Government: £16 million for our new science and technical university and research hub; £23 million from the towns fund to revitalise our city centre; extra police officers patrolling the streets of Bretton, Dogsthorpe, Ravensthorpe and beyond; and all the additional funding for Peterborough City Council to tackle covid-19 while getting tough on fly-tipping and antisocial behaviour. In other words, there was enough to be satisfied with. Regrettably for Ministers, though, I am never fully satisfied. I am always asking for more because I know the scale of Peterborough’s potential.
The Chancellor gets my requests regularly. Before this week, we knew that there would be a £4.8 billion levelling-up fund, but what we did not know was where it would be spent. I am thrilled that Peterborough is at the top of this bidding list in priority category 1.
The reality was a Budget that put Peterborough first: the restart grants to help businesses reopen and get our economy moving; the extensions to the furlough scheme and the top-up of universal credit; additional help for the self-employed; and further help for businesses on business rates and VAT. I had written to the Chancellor about that, too, noting how it would give my local businesses the shot in the arm that they so desperately need and they are delighted.
Perhaps it is at the pumps that my constituents will be most grateful. Thanks to successive Conservative Chancellors, we are saving a fortune when we fill up our tanks, with a 10-year freeze on fuel duty. The beer freeze means that we also save when our glasses are filled at the pump. I know to whom I shall raise my first post-lockdown pint; it is to a Chancellor who is delivering for my city.
Yesterday’s Budget was littered with betrayals. Public services were betrayed: unbelievably, there was nothing additional to fund the NHS and social care, but, worse, hidden in the small print was a plan to take a further £4 billion from Government Department budgets every year. Workers were betrayed: there was nothing to raise the lowest level of sick pay in the OECD and, despicably, no pay rise for nurses and care workers, after everything they have done for us in this crisis. They are exhausted, and some even feel suicidal.
Then there is Salford—betrayed. As the 18th most deprived area in the UK, rather than a package of support we saw the Chancellor handing over 90% of new town funds cash to Conservative seats, some affluent. For those facing financial hardship, there was again betrayal. Extending the £20 universal credit uplift and furlough schemes is certainly welcome, but to remove that support just as unemployment is likely to spike is economically and morally bankrupt. Further, the burgeoning household debt crisis was ignored. Those still facing devastating costs as a result of the building safety crisis were ignored, and more than 2 million remain excluded from any covid support at all.
Finally, on climate change, there was gross betrayal. I must admit that I was intrigued when the Government stole our green industrial revolution tagline, and I secretly hoped that they would adopt Labour’s programme too. It would have been to all of our benefits, with 1.9% invested each year on energy and homes alone, which would have provided over £800 billion across the UK by 2030, and 850,000 new jobs. That would have been a true green recovery, but so far in comparison we have seen pitiful levels of investment. Yesterday, we saw a paltry £12 billion for a new green infrastructure bank, the green recovery bonds, shiny retail savings products, and some distant report into carbon offsetting, all amounting to very little.
If the Government were serious about tackling climate change, they would grab the opportunity to reverse decades of de-industrialisation with a bold green regional investment strategy. Instead, they have betrayed us in the fight against climate change, betrayed our recovery and betrayed our financial security.
Just to be on the safe side, I will refer to my entry in the Register of Members’ Financial Interests. Nobody starts a business with anything other than a dream of what they want to achieve. Many leave a secure job to start a job in something that they adore, to start their own business and to grow it into something that may change their lives and those of many others over the years.
This past year, the pandemic has hit us in a way that has not so much dashed many of those dreams but paused them. The Budget has shown a deep understanding of how small businesses run, and the need to support them through furlough schemes and different initiatives that will enable them to restart and kickstart in the coming weeks and months and for the next few years so that those dreams become a reality.
One of the truths of the past few months has been the brilliant initiative of the kickstart scheme itself. I was very fortunate recently to have a Zoom meeting with Chris Luff and Saffron from our local Watford and West Herts chamber of commerce. They put me in front of a bunch of inspirational young people who are all part of a new kickstart scheme that they are running. They told me not just about the economics and the finances, and all the stuff that we like to talk about in this place, but their dreams, how it was changing their lives, and how it was giving them hope for their futures.
The Budget gives us the opportunity to look not just inward, but outward. I have seen the hope around education. During the past year, we have seen through such things as the Oak Academy the ability to use education to teach people not just the facts but how to inspire themselves to be better and to be different. One of the bits in the Budget that was not picked up on massively was the investment in infrastructure and skills—business skills and business leadership.
I am sure you will be too young, Madam Deputy Speaker, to remember the adverts that used to talk about teaching the world to sing, but I think that global Britain will be able simply to teach the world. Our ability to invest in business leadership, to invest in our young people and, as we have proven in the Budget, to deliver on that means that we can export those skills around the world. We can export leadership around the world, and I am really proud that we can look on yesterday as a way to look forward. The Prime Minister gave an excellent speech on the road map to recovery, but this Budget is not just for the next six months or the next year; this is a Budget for decades to come, and I back it wholeheartedly.
The extension of the £20 uplift to universal credit is welcome, but why is it to be snatched away in September? What will have changed by then for the nearly 5,000 universal credit claimants in Arfon—a number that has doubled in a year; for the 47,000 households in Wales that depend on universal credit; or for the 53,000 children in Wales who have benefited from this modest increase? Their needs will be the same and they will have become accustomed to being better able to meet those needs—although providing a decent standard of living for children, even on the enhanced level of universal credit, is a huge challenge.
It is not the poverty that blights the lives of so many children that will have changed; rather, it is the Chancellor and this Government’s chosen policy—their response, which denies people’s real lived experience and deliberately increases poverty. That is the charge against them: generating, not alleviating, poverty. I have listened to the Chancellor and his friends trying to justify this cut to the incomes of the very poorest and trying to avoid the question, and I have not heard a single half-plausible answer, other than that the modest improvement to universal credit was always meant to be temporary and so is temporary.
The justification is: “The poor will always be with us”. Well, I reject that contention, as do so many other people—those who depend on universal credit; those who have had to claim it for the first time and are appalled by the meanness of the system; and those who have seen their friends and relatives lose their jobs through no fault of their own and whose families are now experiencing poverty as the deliberate policy of this Government. The ancient ploy of deliberately imposing poverty on the workless has never been justified, and that is even more true now, when circumstances throw people on the mercy of an inadequate system. We are all victims of covid-19, but some are more victimised than others.
Over the past year we have seen this Government rectifying their many failures, one after another, with one policy reversal after another, with catastrophic consequences not only for their credibility but, more importantly, for those who suffer from the initial policy decisions. The decision to cut universal credit is just one such failure. I have no care for this Government’s credibility—they are already busted in my eyes; what concerns me is not their credibility but the welfare of families and children throughout the UK. My one call today, then, is for the Chancellor not to punish poor people, and certainly not to punish their poor children.
I was very pleased with the Budget yesterday. I signed a few letters, with colleagues, to call for various things, with a sort of 70% or 80% success rate. Universal credit has been extended for another six months and fuel duty has been frozen for the 10th year in a row. I called for beer duty to be cut; I do not think it was cut, but it was frozen, and there is other support for hospitality, which is very much welcome.
We heard a lot yesterday about levelling-up and what it means for the north of England and the midlands, but we also saw yesterday a demonstration from the Government that when they talk about levelling-up, they are not just talking about the midlands and the north of England. My own constituency of Ipswich has pockets of real deprivation; what did we get yesterday? We got the maximum £25 million from the towns deal fund, for 11 projects that will be a key boost for our town. What else did we get? We got Freeport East. Some 6,000 of my constituents are employed either directly or indirectly by the port of Felixstowe, so the success of that port matters for my constituency and for my constituents.
Let me look at the town deal and what it means in terms of skills and jobs. The health and social care academy, which the town deal will fund through £2 million to £3 million via the University of Suffolk, will train the next generation of nurses and social care workers in our town. The maritime skills academy will be on the Island site in Ipswich, where we have some of world’s most elegant yachts, which are made in Ipswich and exported around the world. With this academy, they will now be made and developed by craftsmen trained in Ipswich and from Ipswich. That is very much to be welcomed. There has been a bit of a hoo-hah and debate about these town deals over the last day. In some senses, Labour politicians in other parts of the country are a little bit bitter that they have not got a town deal like Ipswich has—for £25 million—but what is slightly surprising is the reaction of Ipswich Labour party, who surely, you would think, would be jumping for joy at the fact that it got this £25 million. I remember when the Secretary of State for Housing, Communities and Local Government visited Ipswich before the general election and the town deal was dismissed as an election bribe that would never happen. I am glad to see that the leader of Ipswich Borough Council has now changed his ways and welcomes it, but it is a shame that not all of his councillor colleagues do, and they continue, even after yesterday’s news, to refer to it as a bribe and negatively.
The reality is that there are parts of the town that long supported the Labour party, but felt let down by it—I am talking about areas such as Chantry and Gainsborough. It was myself and my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) who actually fought for a town deal to include a project to be entirely about investing in those communities—investing in local shopping parades in Chantry and Gainsborough and investing in keeping community assets. This is a Budget for the country and it is also a Budget for Ipswich, and it is to be welcomed.
When people ask me why I became an MP, I explain that I got tired of shouting at the radio. This morning, I found myself shouting at the Chancellor on Radio 4, so this afternoon, I am speaking up for my constituents, because the Government’s decisions are failing them. They have been failing them for more than a decade and it has to change. After all the pain and sacrifice of the last year, we cannot afford to go back to austerity and insecurity.
As the shadow Chancellor, my hon. Friend the Member for Oxford East (Anneliese Dodds), said in opening the debate, the OBR has confirmed that this Government’s failure on the covid crisis has left our country facing the worst economic crisis of any major economy. They have been too slow to act, they have wasted billions of pounds of taxpayers’ money on contracts with their cronies that did not even deliver, and they have failed to put in place the financial support that is needed to help people to self-isolate.
Now, instead of putting the UK on the road to recovery and fixing the mistakes of the past, they are repeating them. There is nothing in the Budget for the NHS, even though we know that extra resources are desperately needed to tackle the waiting lists that have grown during the pandemic. There was not even a mention of social care in yesterday’s speech, and the Chancellor’s claim that he is pursuing cross-party consensus is not credible. There was no extra money to help children to catch up on lost schooling, and we know what that means: widening inequalities, hitting kids from low-income families hardest. Yes, there was finally that uplift in universal credit, but the Chancellor is still not helping those on legacy benefits and the cliff-edge cut will hit precisely when unemployment is expected to peak.
And there is worse to come. Now is not the time to raise taxes or cut household spending power, but that is precisely what the Chancellor is doing, forcing councils to implement a 5% hike in council tax, freezing the pay of key workers, taking money out of people’s pockets, cutting the money that they have to spend with local businesses and on our high streets, damaging the recovery. There are further tax rises to come next year alongside £14 billion of cuts to public services.
Local government has already been hit by 10 years of cuts. Adult social care makes up nearly half of Nottingham City Council’s budget. Demand for services is rising and, in more deprived cities such as ours, the social care precept leaves a growing gap. Will the Chancellor apologise to my constituents who have seen their much-needed local services under threat, the families who rely on Summerwood day centre, those who use John Carroll leisure centre and those whose local bus service is set to disappear? Where is the investment that we need to support the recovery and set us up for a successful green future? It simply is not there.
This a terrible Budget. It is a shocking indictment. None of it was inevitable; it is the result of Tory mismanagement. I will not shout, but it makes me want to scream.
This Budget is a missed opportunity. There is no vision, no long-term economic plan and no Biden boost. While I welcome the extension of furlough and the universal credit uplift, yesterday’s announcement simply shunts the cliff edge down the line and does nothing to tackle the fundamental problems that families and business face. The Chancellor has failed to build the bridge to the future that the economy needs. Businesses such as the Edinburgh Beer Factory, a brewery in my constituency, will see their costs balloon before demand returns. They need tapered reliefs and long-term solutions.
I welcome the increase in corporation tax, because businesses in profit can most afford to pay up. In Scotland, we have provided certainty and stability to business with a further 12-month extension of 100% non-domestic rates relief for retail, hospitality, leisure and aviation. The Chancellor has failed to do the same in England, and he needs to up his game for English business. Where is the promised online tax? Many high street retailers are frustrated when they see how companies such as Amazon and Apple have benefited from the pandemic, but still somehow seem to avoid taxation. The way retail is operating now has completely changed, and we need to think about how we tax the new reality. Too much focus on business rates for revenue raising could prevent the much-needed revival for small businesses on our high streets and in our city centres.
Some of Edinburgh’s biggest financial services employers operate in my constituency, and there was a vibrant community of independent local businesses serving their offices. One of these is the Wee Coffee Bar, run by my constituent Sharon Miller. Yet with most offices closed, footfall in our business district has dropped to almost zero, and successful popular businesses such as Sharon’s are struggling to make ends meet. Lockdown has had a big impact on our mental health and wellbeing. Hot Yoga Edinburgh, owned by Allison Harrison, adapted to the best of her ability to meet online needs, but she is suffering real financial hardship as the cost of rent and other overheads exceed the money coming in. She needs the certainty of longer-term support and a credible plan for the recovery of our business districts to help her stay afloat.
Many of my self-employed constituents, including creatives, freelancers and company directors, remain excluded from covid support, and as in so many aspects of this pandemic, women are disproportionately affected. This crisis offered us the opportunity to change our economy and invest for the future. An independent Scotland would take this opportunity and carefully plan a way forward. Constrained in this Union, we are locked into more of the same from this Chancellor for the time being.
The Chancellor rightly set this Budget in the context of the economic damage of covid-19, but he failed to mention the bigger impact from his Government’s Brexit deal. That is perhaps unsurprising because the former was beyond their control, while the latter is of their creation. Hidden in the figures is an admission that Brexit will hit GDP by 0.5% in the first quarter alone, and the OBR has of course said that there will be a long-run hit of 4%. These are the inevitable consequences of erecting barriers to trade with our biggest economic partner, but the Chancellor should do what he promised and
“be honest with the country about the challenges we face”.—[Official Report, 3 March 2021; Vol. 690, c. 256.]
Last month, the CBI, the Institute of Directors, Make UK, the Federation of Small Businesses and the British Chambers of Commerce warned the Government to remove obstacles to trade or face a “significant loss of business”. Frankly, it is time that they listened and acted.
A startling omission yesterday was the NHS. We need a proper inquiry into the Government’s handling of the pandemic to understand why we have one of the highest death rates in the world. However, one factor is clear: a decade of running our health service on a knife edge, expecting maximum delivery from minimum funding, left us with too few nurses, doctors and beds. The crisis demanded capacity we lacked, and catching up on the treatment backlog will demand more. But instead of the funding that was needed, the Chancellor is proposing a £30 billion cut. What an insult to the NHS staff he was so happy to be photographed clapping! It is a cut for the system that has stretched them to the limit, and no money for the sort of pay rise they deserve, while other key workers on whom we have depended face a pay freeze.
Social care was also forgotten yesterday. On taking office, the Prime Minister promised that
“we will fix the crisis in social care once and for all with a clear plan we have prepared”.
In this Budget and in his interviews this morning, his would-be successor, the Chancellor, has acknowledged there is no plan. So much for honesty with the British people. We do need that plan, and we need it soon.
The Chancellor did of course bow to pressure on maintaining the universal credit uplift. It should continue beyond October and it should be extended to legacy benefits. The Disability Benefits Consortium says that costs for 95% of disabled people have increased during the pandemic. The Budget gave nothing to them or to others who have been affected, letting down the most vulnerable.
Beneath the Chancellor’s expensive PR that is the real signature on the Budget. It fails too many people, and it lacks the ambition that the country needs.
I am grateful for the opportunity to speak on the second day of this debate.
Our country had high hopes for this Budget at a time when we need it most; not only are we experiencing a pandemic crisis but we are still in a climate crisis, and the Government seem to have forgotten this. After a year of economic devastation, the gap between richest and poorest in our society has become wider. We needed long-term investment in our public services and our communities, but the Government were silent on the matter.
Yesterday’s Budget statement will provide relief to some, but it is a grave disappointment to others. The Budget promised no emergency funding for the NHS to clear backlogs and reduce waiting times. There was no mention of mental ill health support post-pandemic, no support for social care after the sector has faced severe challenges during the pandemic in both children’s and adult services, no mention of green home grants, and only a £20 million spend on floating offshore wind technology, when Labour has called for £30 billion of capital spend to be brought forward to power a green recovery and support over 400,000 jobs. There was no help for our teachers and no additional investment to help children and young people catch up on the lost months of education; and no rise in statutory sick pay, which is so low that people are falling into severe debt and some are considering working because they cannot afford not to.
I wonder if the Secretary of State for Housing, Communities and Local Government and the Chancellor and their offices communicate and work together, because on 12 February the Housing Secretary announced £3.5 billion to fully fund the cost of addressing unsafe cladding in the tallest buildings. Details were promised in the Budget. What happened to this information? Did the Chancellor miss out reading a page of his notes? I was hoping to see a fairer approach from the Government, to protect leaseholders living in buildings under 11 metres in height with fire defects and unsafe cladding, to protect them from costs when the problems are no fault of their own. Instead, there was no such information. I ask the Chancellor again to consider this and to be fair to leaseholders and their families, as no one wishes to live in a home with negative equity.
The success of the Government, or indeed any Government, will be achieved when the need for food banks decreases, but under this Government it seems that they are here to stay.
This Budget also lets down our local authorities, and through them all our communities. My borough of Lewisham is having to make a further £28 million in cuts; hard-working and caring Labour councillors will receive the blame for cutting services, but their hand has been forced by a 63% reduction in Government funding since 2010. The whole country needs rebuilding, but for this to happen we need to build our local councils.
Cutting through the fanfare, this Budget was devoid of imagination and substance. It may see Britain through to the end of the Prime Minister’s road map, but it does not come close to addressing the social, economic and climate crisis we face.
From this Budget, we can assume that the Conservatives intend to increase poverty, rather than end it. The Joseph Rowntree Foundation says that the Chancellor has created “a perfect storm” by planning to cut universal credit just as unemployment peaks, while he has also continued the Conservatives’ hostile environment for disabled people by ignoring legacy benefits. I dread to think what it will be like for the families who will be forced to use food banks because of his cruelty.
What was there for Durham’s NHS workers, teachers, prison staff and the rest of our public-sector key workers? There were a few claps and a pay freeze. That is not levelling-up; that is a slap in the face.
I cannot have been the only one who was shocked by the absence of any reference to our NHS and social care from the Budget speech. These sectors have been stretched to breaking point, held together only by the determination of those who staff them, yet instead of a recovery plan the Chancellor chose to slash NHS spending, with no strategy to tackle the backlog or the mental health crisis.
The Chancellor also seems to be clueless when it comes to the challenges facing our communities over the coming years, with a £14 billion cut to public services over this Parliament. In Durham, our council and schools have led the way in their pandemic support for residents, but they simply cannot continue on minimal funding. The Government’s council tax rise serves only to deflect blame for Tory cuts while making our local communities pay for the crisis. Durham’s public sector is desperate to lead our local recovery. The Chancellor just needs to give it the resources to do so.
The Chancellor’s remedy for businesses seems to be to help them to limp along until after the pandemic and then leave them at the mercy of the upcoming economic crisis. Durham’s high streets were struggling before the pandemic started. Where is our fightback strategy? This Chancellor is no friend of the independent businesses that are the heartbeat of our high streets.
This Budget called for vision and ambition that met the challenges of the pandemic head on with a bold plan for our recovery—a Budget that learned the lessons of a decade of austerity, deregulation and the eradication of workers’ rights. Instead, the Chancellor came up short yet again. Rather than rebuild, we got a sticking plaster designed to tide us over. Our health services were ignored, our key workers abandoned, our environment forgotten and our economy failed. Britain needs and deserves better.
In common with so much of what we have seen from this Government during their handling of the pandemic, this was a Budget for selected beneficiaries. Carefully picked groups are going to do well, but it was quite clearly not a Budget for the nation as a whole.
We could have had, for example, a bold move on business rates. Real reform in this area to level the playing field between high street and digital retail has been long overdue. Consumer behaviour is changing, and that change has been accelerated by the pandemic. What is the long-term future for our town centres? How will our communities thrive without the retail businesses that traditionally provide the heart of our towns? We need to lower the barriers to entry to retail and other town centre businesses, and invite new entrepreneurs to try new ideas.
But instead of business rates reform or devolution of power to local authorities, which could have allowed for real change across the whole country, a select few high streets, mostly in Tory-supporting constituencies, get a cash bung. The Chancellor’s bold new plan is for a super deduction that will enable cash-rich firms to get an extremely generous tax deduction on expenditure on plant and machinery across the next two years before being hit with a corporation tax hike. I can tell the Chancellor that after 12 months of little to no trading, many firms in my constituency simply do not have the cash in the bank to make these kinds of investments. Many of them will be burdened by a great deal of debt and unable to take on any more, and will face a long, slow road back towards profitability. Demoralised and exhausted after the effects of the past year, their reward will be a huge hike in corporation tax rates. I am concerned that many will consider it not worth their while. It would have been better to have a windfall tax now on the companies that have continued to prosper during the pandemic and then cut rates again in a few years to encourage those who are rebuilding. Again, only a select number of businesses will benefit from these changes.
We need to see policy for real stimulation and growth in the green economy. We know that we need to transition from carbon-emitting industries if we are to achieve net zero, so we must grasp the nettle of investment in green jobs. There is real opportunity for growth there, but the private sector is waiting for Government strategy and policy to set a direction. The Chancellor could have set that direction yesterday with promises to invest in green technology or to come up with a bold new plan for retrofitting to replace the green homes grant, but he did not.
What is the Chancellor’s plan for investing in sectors that will create jobs in the future? It is freeports, in selected sites, yet there is little evidence that they create economic activity rather than displace it. Again, we see the benefits concentrated in preferred areas of the country rather than a strategy for the country as a whole. The one advantage of freeports, of course, is that they can avoid customs duties and paperwork, currently creating such a barrier to trading thanks to the Government’s terrible deal with the EU. I find it extraordinary that the Chancellor made no mention of how he plans to offset the OBR’s projected 4% hit to the UK’s GDP as a result of leaving the EU. The Chancellor is bringing forward planned economic activity or concentrating it in specific areas of the country rather than investing in new sources of wealth and future jobs. This Budget ignores the real needs of our economy, both for the immediate challenges of the pandemic and for its long-term future.
I am not sure that people will think the Chancellor is being straight about stealth taxes, resulting in the largest tax burden since 1969; that they will applaud pension taxes, as doctors leave the NHS or cut their hours; or that they will support a 50p rise for statutory sick pay. Almost 2.5 million excluded self-employed are still going to be left high and dry. In response to my survey, 85% of constituents said that they wanted help for those excluded.
The support schemes sound impressive, but they involve complex applications and administration. The fear is that they will not reach the right people in time. Small businesses need easy access and affordable help, especially with rent and cash flow, which are real impediments to survival.
My constituency has large numbers of young unemployed and many self-employed people at risk. Some 94% of my Selly Oak constituents said in response to my Budget survey that they wanted action on unemployment to be a priority. How will that happen unless programmes are simplified and better targeted? We need training for the young unemployed—not sluggish, dead-end schemes—as well as rapid reskilling for those who lose their livelihoods and joined-up training.
Why does the super deduction policy take no account of whether investment would have occurred anyway, the areas that will benefit, or if it might end up costing rather than saving jobs? It would be better to tie it to research and development. We could have a targeted plan to shift support to parts of the country other than Oxford, Cambridge, London and the south-east. The number of R&D jobs in London and the south-east is already three times greater than in the midlands, not because it is more creative, but because it has access to greater funding. If the Chancellor wants electric cars built in the midlands, new jobs in climate change adaptation, machine learning in medical technology and food security, he needs to direct resources to those areas that can deliver. If the uplift in public R&D was linked to a targeted policy and focused on projects outside the golden triangle, that could mean a further £9 billion boost.
The Chancellor could also establish a fresh round of technology institutes, build on the Catapult network by announcing long-term funding, and expand university enterprise zones. That is how to level up, and that is how to create new jobs and a thriving economy.
Yesterday’s Budget needed to do two things: first, support communities and businesses through the economic crisis created by the pandemic; and secondly, outline a comprehensive strategy to kick-start the UK’s recovery. However, the Chancellor failed to deliver on both counts.
All I can draw out from the Chancellor’s Budget speech is that, rather than meaning redistributing wealth and investment and giving working class people a real stake in their economy, “levelling up” seems to mean moving part of the Treasury to Darlington, creating a few freeports and rehashing old funding. It is smoke and mirrors to cement the status quo—policies that fail to provide a vision for a more prosperous, fairer society and that will not improve people’s day-to-day lives.
There is nothing for the NHS, social care, schools or local council services, and no meaningful plan to tackle the housing crisis. Rather than levelling up living standards, the Budget has downgraded them, with a public sector pay freeze, forcing councils to increase council tax, and announcing a £20-a-week cut to universal credit in six months’ time.
My Luton South constituents needed to see plans for a more secure, equal and sustainable future, with the Chancellor committing to a new green economy based on full employment and a strong public sector. By choosing to adopt a half-baked, unambitious version of Labour’s commitment to a green investment bank, the Chancellor failed fully to comprehend the scale of the climate emergency we face. The funding made available to the bank offers only a fraction of that recommended by the National Infrastructure Commission, and no new investment has been announced for green recoveries in key industries such as automotive and aerospace.
The free market is incapable of addressing the climate crisis—in fact, I would say that it was market failure that created the crisis—so policies that weaken the state’s role in the market, such as the super deduction tax, only reduce the Government’s ability to incentivise and direct investment towards a green transition. Instead, the UK needs an innovative, Government-led industrial strategy that stimulates green growth and job creation, ensuring that the transition is equitable and that everyone has the opportunity to have a well-paid, skilled job—something that the market is incapable of delivering.
Last week, Unite the union highlighted seven shovel-ready projects that would help the UK to develop as a modern manufacturing nation. Investing in those projects would have wide-ranging benefits. For example, building gigafactories and rapid charging infrastructure would help Vauxhall in Luton South transition to manufacturing electric vehicles. Labour has repeatedly called for a £30 billion green economic recovery to create 400,000 secure, unionised jobs in clean industries. We must not return to the same insecure, unequal, unsustainable economy that preceded the pandemic.
I am grateful to be called to close the second day of the Budget debate. Budget debates are, in my view, one of the very best parts of our parliamentary process. They are a chance to talk about the big picture—a chance to raise the things that must be said—and nearly 50 Members of Parliament have done so in this debate today. To be able to speak and vote on the measures in any Budget is a great privilege and responsibility for us all, and in closing the debate, I will talk about what I believe the Chancellor needed to do and reference the many good speeches we have heard.
However, we need to start with the big picture. What the Chancellor presented yesterday was a Budget of high taxes, high unemployment and low growth. I do not think that is in dispute. In fact, if the forecasts are right, the historically low levels of growth we saw going into this crisis are now the norm. That, combined with our serious productivity and business investment problem and the challenges caused by our leaving the single market, shows that the scale of the challenge is very significant indeed.
That means that there were two things I wanted most of all from this Budget. First, I wanted to see a clear road map to economic recovery, with a relentless focus on jobs, jobs and jobs again; and secondly, I wanted to see some recognition from the Chancellor that the terrible impact of the pandemic on the UK has been partly due to the state the country was in going into the crisis. Whether on NHS capacity, insecure work or child poverty, this crisis has taken the fraying social fabric of the UK and torn it apart. My hon. Friend the Member for Coventry North East (Colleen Fletcher) made that point very well.
The objective for us all should be to promise not to return to the country we had going into the pandemic, but to do better than that—to promise opportunity, prosperity and resilience far greater than we had in the decade leading into covid. After all, is that not what previous generations who sat on these Benches did after the crises that they faced? They turned their crises into a better future.
The starting point in any debate about protecting the British people in this crisis has to be a recognition of the inequality in how the pandemic has been felt. Yes, we have all been affected by covid in some way, but a person who, for instance, has been able to work from home on full pay, perhaps with a study and a garden, has been in a fundamentally easier position than those who have had no income for over a year. Men and women have been affected differently, with the majority of home schooling falling on women, and different parts of the country have been hit worse than others. That is why I was genuinely disappointed with the ambition, the scope and the policies of the Chancellor yesterday. The Budget did not have that big vision that we needed. I will address that and say what I would have preferred to see.
I will start with jobs. At least the Chancellor saw sense, listened to Labour and the unions and business, and did the right thing by extending the furlough scheme. It is remarkable to me that the Chancellor originally thought it could end last year. But even with furlough mitigating the rise in unemployment, a forecast of unemployment at 6.5% is very high. That means over 2 million people out of work. While furlough protects those in work, we need to do more for the 1.7 million already unemployed. We have lost 700,000 jobs in this crisis. We have lost 700,000 jobs in this crisis. Long-term unemployment is nearly half a million. Half of all disabled people are out of work. Kickstart is not delivering, and restart has not started. Crucially, even if kickstart worked as well as Ministers hope, the scale of the challenge is already greater than the full capacity of the scheme.
I wanted the Government to live up to their rhetoric and offer young people a real guarantee. Young people have suffered so much in the crisis, so let us take the action needed and make sure that no young person is out of work or education for longer than six months. We should promise young people an offer of education, employment or training and link those jobs and training to the challenges the country faces on social care, the NHS, schools and climate change. Time spent on furlough should count towards that limit, so that we do not see the long-term scarring that we know comes from periods of sustained economic inactivity. We could use the money already allocated to employment programmes. We could reform the apprenticeship levy to complement that and spend the money this year and next, when it will be most needed.
That brings me on to universal credit, which many Members have understandably mentioned. Cutting universal credit and working tax credit by £1,000 this year would have been unthinkable and unforgivable, and I make no apologies for how hard we have fought the Government on this issue. The Chancellor could and should have done the right thing and the responsible thing many months ago, yet, as with free school meals, the Government have once again been dragged kicking and screaming to do the right thing. But what we heard yesterday was a half-measure—a £500 cut this year, with £1,000 cut the year after that.
Because of the way that Ministers have behaved, 6 million families have faced months of uncertainty about whether they would continue to get the support they need to cover the costs of the pandemic. These people deserve certainty, and all the Chancellor has done is inflict another cliff edge. On 1 October this year, furlough will end, the self-employment income support scheme will end and universal credit will go down to its lowest level in real terms in 30 years. How can that be right?
What is going on with working tax credit, which the Government are instead offering as a £500 lump sum? The Secretary of State for Work and Pensions was absolutely right when she said to the Work and Pensions Committee earlier this year,
“Previous experience would be that a steady sum of money would probably be more beneficial to claimants”
than one-off lump sums. I believe she reiterated that position in her introductory speech. She is right, but the Chancellor was not listening.
I have to raise again the plight of those people on legacy benefits such as jobseeker’s allowance and employment and support allowance, which my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Work and Pensions Committee, did so very well in his speech. These people never had the uplift to begin with. The Government said that it was because it would take too long to do, and as the crisis has gone on, the Government have chosen to ignore them. They know it is not possible for many of those people to transfer on to universal credit because they might be worse off due to the design of universal credit. That is appalling.
What we needed was for the Chancellor to take his own advice on honesty, because the honest take on this situation is that we do not have a social security system that is fit for purpose. That is why keeping the uplift is so contentious. It is why those people on legacy benefits feel so strongly. It is why the excluded exist, and it is why the Government had to make so many changes to the system at the beginning of the crisis.
Although, hopefully, we will not have another pandemic, the impact of technology and trade adjustments on the labour market will become only more acute, and the sooner the Government recognise that, the better. The decision to lift the rate of universal credit was an admission that the level of support was not good enough to help families through this crisis. The uplift should remain until it is finally replaced with a system that provides genuine security for all. The Secretary of State said in opening that she is frustrated by that position. If the Government have been able to accept our arguments on corporation tax, a national investment bank and the minimum wage, perhaps in time they will accept this argument too.
This was a Budget that did not address the challenges facing our country today and offered very little for the future. That focus on the future should have run through the whole Budget, but it simply was not there. There was nothing on schools or education at all, even though, like so many, I have sleepless nights worrying about my children and how they will ever catch up from what they have lost. There was nothing serious for town centres, which are already grappling with changes and facing huge challenges as retail moves more and more online. There was nothing on the future of work and how we harness the change in working patterns to spread prosperity across the country. There was nothing even for our incredible NHS except a £30 billion cut from April this year and no mention of how we will get through the huge backlog of surgeries and check-ups or deal with the impending mental health crisis.
It is not enough. It is not good enough, and it is not the future that British people deserve as the reward for their sacrifice and hard work. I put it to the Government that they cannot fix the problem that the country faces, because they are the ones responsible for creating so many of those problems in the first place. That is why this Budget fails to protect the jobs, the livelihoods and the wellbeing of the British people to the degree that they deserve.
The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) was absolutely right to highlight the second day of a Budget debate as a moment when we can discuss these bigger issues. I join him in thanking nearly 50 colleagues for their contributions, but I am afraid I disagree with him on some of his diagnosis; perhaps, in the course of my remarks, I can explain why.
The hon. Gentleman claimed that the Budget had no ambition. You do not have to listen to me or the Chancellor, Madam Deputy Speaker, if you want to know whether the Chancellor’s Budget had ambition; you can simply listen to the Resolution Foundation, which said:
“This was a big, policy focused, budget. It rightly sought to boost the recovery before turning to fix the public finances, in both cases with a large (potentially too large) focus on Britain’s firms.”
That, I think, is pretty clear. It also said:
“Continuing furlough to September will reduce the rise in unemployment ahead, with the Office for Budget Responsibility (OBR) expecting it to peak at just 6.5 per cent (down from 7.5 per cent). If realised, this would be”—
I am quoting—
“by far the lowest unemployment peak in any recent recession, despite this being the deepest downturn for 300 years.”
That would include the Labour recession of 2008. So we can only hope and pray that these measures may have something like that effect, but to suggest that they are short of ambition is quite wrong.
If I may, let me just remind the House of the scale of what we are attempting. There are three great themes to the Budget. The first is the need to support people and businesses through this crisis; the second is the need to begin to fix the public finances; and the third is the need to lay the foundations of our future economy. Those are all big issues. As the hon. Member for Stalybridge and Hyde rightly pointed out, those are big matters which we are grappling with, and gripping, from the Dispatch Box and from the Chancellor’s own Budget.
Let us just touch on those. Supporting businesses and people—that would be extending furlough to the end of September. It would be the further grants we have made to the self-employed: the restart grants, a new set of grants designed to help the retail, hospitality, leisure and personal care businesses—I emphasise personal care businesses, such is the very important role they play in our economy—to get going again. The business rates holiday, which has been extended for three months before tapering for another nine months. Extending the VAT cut to 5% for a further six months before tapering it for another six. Continuing our stamp duty cut. Extending universal credit and working tax credits by six months. More money for apprenticeships. New recovery loans. A large package for the arts, culture and sports.
That is one component of this Budget, but of course, as the Chancellor has rightly emphasised, we must engage with the work of fixing the public finances, and that is why we are asking the largest and most profitable firms to pay more in two years’ time by increasing corporation tax. But of course we are giving at the same time, in the shorter run, a super-deduction. I think that is a very thoughtful policy. What that essentially says to those businesses—something like £100 billion is held on corporate balance sheets at the moment in the UK—is that we need to get away from the patterns of underinvestment by business, and this is a way of attempting to move corporate Britain in that direction. It may succeed, it may fail, but it is a very worthwhile attempt to kick-start that business investment that will be foundational, not just to recovery from the pandemic but to our long-term prosperity. Of course we have taken a variety of other measures to support the public finances and then to build the future economy.
The suggestion was made by some colleagues across this Chamber that the Budget was a piecemeal effort; that could not be further from the truth. Forty-five new town deals. The £150 million community ownership fund. The freeports in England. The infrastructure bank. I have been very closely involved with the infrastructure bank, and I can tell you that it will potentially be a very significant institution. It has, of course, its starting capital, but it also has firepower of up to £40 billion. That is not a trivial amount of money, and placing it in Leeds could not be a more emphatic demonstration of the Government’s commitment to levelling up, as the move by not just the Treasury but other Government Departments—the Department for International Trade, BEIS and the MHCLG—to join in a new campus in Darlington has been. As my hon. Friend the Member for Darlington (Peter Gibson) said, that will transform that town, but it also sends a much wider signal: “By their fruits shall ye know them.”
It is all very well talking about these things. Those towns and areas could have been supported by the Labour party over decades and they were not. This Government are stepping forward to make that difference. Of course, the difference will not be just in the investment—the pounds, shillings and pence that are spent there. It will be in the lifting of expectations, the career opportunities, and the possibility of framing a new narrative based on different assumptions about how the world works than just those to be found in London. That is profoundly exciting and important.
Of course, we are talking also about the levelling-up fund, Help to Grow, and a very important development on future breakthrough. I love the fact that we will support not just levelling up but our green investment through the UK infrastructure bank. That will be a very important part of the picture. Let me turn to some of the comments made by colleagues, because they were very well taken. There are many areas where I am not sure that I always agree with my right hon. Friend the Member for Wokingham (John Redwood), but when he said, “Go for growth,” he was absolutely right to emphasise the growth aspects of the Budget.
My hon. Friend the Member for East Devon (Simon Jupp) pointed out, rightly, that the Budget delivered for Devon. He was absolutely spot on about that. I disagreed with my hon. Friend the Member for Christchurch (Sir Christopher Chope) about corporation tax. He needs to understand, if I may say so, that the rise in corporation tax was the result of many aspects of things. What is noticeable about it, though, is that it did not trigger an enormous increase in business investment. That is one of the reasons why we have adopted this slightly different approach.
I agree very much with the words of my hon. Friend the Member for Bolsover (Mark Fletcher), who pointed out the importance of the start-up grants that will support beauty and personal care businesses. He was absolutely right about that. He mentioned the town deal and the east midlands freeport, and rightly so. I agree with the hon. Member for Leeds North East (Fabian Hamilton), who said he was pro our UK infrastructure bank being located in Leeds. He was right to say that. That was not by any means the picture taken by the hon. Member for Leeds East (Richard Burgon), who also spoke, but I think that the hon. Member for Leeds North East was right in saying that.
The point that my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) made in praising the Chancellor’s honesty and directness when engaging with us struck a chord with me. I think it strikes a chord with many people across the House and in the wider public. My hon. Friend the Member for Loughborough (Jane Hunt) pointed out the importance of skills—absolutely right. My hon. Friend the Member for Sedgefield (Paul Howell) pointed out the value of the super-deduction plan. Again, I thoroughly agree with him.
It was nice to hear my great friend, my hon. Friend the Member for Thurrock (Jackie Doyle-Price), talk about the importance of her Thames freeport. That is right. I was surprised that the hon. Member for Liverpool, Wavertree (Paula Barker) did not welcome the Liverpool city region freeport, which I think will be a tremendous boost to that area. I think she was wrong to say that. I think it will be widely welcomed, particularly as it gets up and running. I share the view of my hon. Friend the Member for Thurrock on that.
I respected very much the hon. Member for Croydon Central (Sarah Jones) as she sang the glories of Croydon. That was a beautiful moment in our debate. I very much liked the possibility that you, Madam Deputy Speaker, might, as my hon. Friend the Member for Watford (Dean Russell) invited you, teach the world to sing. I look forward to that very much. Perhaps in a future debate we can be treated to a yodelling intro in the style of the late New Seekers—or am I betraying my age?
My hon. Friend the Member for Ipswich (Tom Hunt) was absolutely right. He pointed to the town deal that existed for Ipswich. He pointed to Freeport East, and said, or implied—I am sure he would say—that this is a Government who do what they say. I am very pleased that, in that regard at least, we have been able to deliver for him in a way that we have delivered for many other places across the country that historically have been ignored.
Let me end by thanking hon. Members for their comments. We are trying to do something big here. We are trying to respond to the big issues that the hon. Member for Stalybridge and Hyde rightly flagged. He is wrong about what he claims are cliff edges. There is, in each of the cases I have described, a tapering effect in the major reliefs, which is designed to return us to something akin to normality if we can follow the road map and get out of the position we are in. The fact of the matter is that, as the Resolution Foundation pointed out, we are in the worst crisis, the deepest downturn, for 300 years. That is not a fact we can ignore, and it is a fact that it is incumbent on us, across the House and in this Government, to address.
Ordered, That the debate be now adjourned.—(Tom Pursglove.)
Debate to be resumed on Monday 8 March.
On a point of order, Madam Deputy Speaker. Earlier today, the International Trade Secretary announced that the UK Government and the US Administration have reached an agreement to suspend tariffs on UK products, including Scotch whisky and cashmere. Moray is home to more Scotch whisky distilleries than any other constituencies, and Johnstons of Elgin, which produces outstanding cashmere products. I wonder if there is a way I can put on record how well that decision and announcement have been received in Moray, in Scotland and across the UK, and ask whether the Government have made any representations to Mr Speaker to come to this House to explain what will be done over the next few weeks to get rid of those tariffs not just for four months, but completely.
I can understand why the hon. Gentleman wishes to draw attention to his delight at that announcement and indeed to the great attributes of his constituency. I could tell that many Members showed enthusiasm and their fondness for the products of the distilleries he mentioned. Personally, I am much more of a fan—indeed, an enormous fan—of Johnstons of Elgin.
The hon. Gentleman asks how he might take the matter further here in the House. First of all, obviously, he has succeeded in drawing attention to it through his point of order, which, although not a point of order for the Chair, contained a question to which I can give him a very simple answer. The debate on the Budget continues, as the Whip has just announced, on Monday, and then on Tuesday. On Tuesday 9 March, the title of the debate is “Investment-led recovery and levelling up”. I expect that that debate will be led by the Secretary of State for Business, Energy and Industrial Strategy. That would be an appropriate time, if not for the hon. Gentleman then for some of his colleagues, to raise the matters he wishes to draw to the attention of a wider public.