(1 year, 8 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Science, Innovation and Technology (Michelle Donelan)
Last week, my right hon. Friend the Chancellor of the Exchequer delivered a Budget that gets straight to work in addressing the Prime Minister’s five priorities, which are of course the people’s priorities. We on the Conservative Benches are putting the country firmly on a path to halve inflation, grow the economy, reduce debt, cut waiting lists and stop the boats. [Interruption.] Opposition Members do not like that, not just because they do not have a plan to address the priorities themselves, but because they do not recognise the things that matter to the British people in the first place: strong, financially stable families; public services that innovate and pioneer new technologies; high-paying, high-quality jobs for our children; strong borders; and a respect for British law and our way of life.
It is because we on the Conservative Benches focus on the priorities of the entire country that the British economy is getting back on track. Ten-year gilt rates, debt-servicing costs, mortgage rates—all of them are falling, and inflation has already peaked. Despite continuing global instability, the Office for Budget Responsibility reported just last week that inflation in the UK will have fallen from 10.7% in the final quarter of last year to 2.9% by the end of 2023. Thanks to this Government’s responsive and responsible approach, we will have more money for public services benefiting British families right now, and less of a burden on our children and grandchildren. Our plan to deliver on the Prime Minister’s priorities is already starting to work. We have restored stability, and now it is time for the next part of our plan.
Michelle Donelan
It may have escaped the hon. Member, but we have had a global pandemic and a war in Ukraine.
We are using these firm foundations to build long-term sustainability and healthy growth—growth that will bring security, prosperity and opportunity to British businesses and British people. To get that growth, we are on a trajectory of innovation in every part of our economy. Since the industrial revolution, our country’s willingness to rethink and reimagine has led to the inventions of the telephone, the TV, the world wide web and much more. That is why, under this Government, our tech sector has already become third in the world to reach a value of $1 trillion, behind only the US and China. We are ranked fourth above China, Germany and Japan in the global innovation index, we are second in the global talent index and we have four of the world’s top 10 universities.
I could go on, but we are not a Government who are focused on where we were or where we are; we are a Government who are focused on the future. That is why we have set up the Department for Science, Innovation and Technology with one single mission—making Britain a science and technology superpower. It has been just six weeks since we became the new Department, and we have already published the UK science and technology framework, setting out our vision for science and technology. We have responded to the second largest bank failure in the US, and this Government helped facilitate a deal to save the UK arm of Silicon Valley Bank, protecting thousands of important jobs in the life sciences and tech companies, and safeguarding them in the long-term.
In the Budget, we announced a staggering £2.5 billion of funding for the quantum technologies that we anticipate will revolutionise everything from healthcare to farming. That built on the announcement we made of £370 million of new moneys for things such as technology missions, which will set Britain up to lead on artificial intelligence, quantum technologies, bioengineering and much more. These things matter, because the British public rightly expect Britain to be leading in the technologies of the future and for these technologies to deliver real tangible benefits to their local communities and their families.
Geraint Davies (Swansea West) (Lab/Co-op)
The Secretary of State will know, because I have told her before, that there are 1,000 jobs across universities in Wales that are about just to end because of the sudden end of EU structural funding. The Government promised that not a penny less would go to Wales for those jobs in 260 projects that are generating green growth in high-tech areas. Will she keep those jobs going by providing bridge funding for the next year?
Michelle Donelan
The hon. Member has already raised that with me, and I have already said that I will meet him to discuss it. The Government have of course launched the shared prosperity fund, and we will ensure that spending on research and development outside the south-east is increased by 40% by 2030.
Sir Desmond Swayne (New Forest West) (Con)
How are we going to get vital private sector investment into the industries the Secretary of State is so rightly concentrated on when so many of our own institutions are concentrating on Government debt, effectively crowding out this highly vibrant sector?
Michelle Donelan
My right hon. Friend is quite right. That is one of the key pillars in our science and technology framework. This should be a partnership with industry. We have already begun that journey, working with the likes of the Schmidt Foundation, and I look forward to updating the House on our further collaboration with industry.
Let us look at something like Alzheimer’s disease, an illness that is projected to impact one in three people born this year in their lifetime. Many people here today or watching the debate will know at first hand the devastating impact that that illness can cause, yet there is hope, through the extraordinary opportunities for progress made possible by quantum technology. British researchers are already in the building stages of quantum sensors that can map the human brain in a way that is unimaginable to us at the moment.
Sir Chris Bryant (Rhondda) (Lab)
My father has dementia and is in a care home—he has been during covid—so I know that it is really important to make significant advances in this field. One of the difficulties for business that are trying to take great scientific and medical ideas into the market is that it is much more costly if we have a different regulatory regime in this country from the rest of Europe. Will the Secretary of State ensure that we align our regulatory regime in this field with the rest of Europe, rather than diverge from it?
Michelle Donelan
The Chancellor, at the same time as delivering the Budget, published the Vallance review of the regulation of new and emerging technologies. That is all about how we can support the incubation of technologies, and how we should have a lighter touch to regulation in the first stages and then synergise with the rest of the world later on. I invite the hon. Member to read that very useful document.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Will the Secretary of State give way?
Michelle Donelan
I will make some progress, because I am getting nowhere and I have already been very generous.
We announced an extraordinary £2.5 billion in the Budget for quantum technology over the next decade. We did more than fund a crucial strand of scientific discovery; we laid the building blocks for a future where early diagnosis and prevention of these kinds of diseases gives us more time with the ones we love and cherish.
Emma Hardy
I thank the Secretary of State for giving way. It really is welcome news that we are doing advanced research and using AI and technology. Will she look again at the rules for animal testing and the use of live animals in experimentation? Surely, as we develop our AI research and the technology side of research, we should be moving away from the barbaric and cruel use of animals.
Michelle Donelan
We are supporting and accelerating advances in biomedical science and technologies to reduce reliance on animals in research. I pledge to write to the hon. Member with further details on that rather than hold the House up any longer.
This is the power of innovation when we are bold enough to unleash it: we already rank second in the world to the US for the number of quantum companies. On top of that, the quantum technologies mission, which I announced a few weeks ago, dedicates £70 million in this spending review period to accelerate quantum technologies. Building on the success of the 10-year national quantum technologies programme from 2014, the new strategy sets out our vision and plan to further establish the UK as a world leader by 2033. We want these technologies out of the lab and into our lives, because we know what they mean to families and communities in every part of our country.
The same goes for the limitless possibilities before us in the world of artificial intelligence. My vision for an AI-enabled Britain is one where NHS heroes are able to save lives using AI technologies that were unimaginable a few decades ago. I want our police, our transport networks, our climate scientists and many more to be empowered by AI technologies that will make Britain the smartest, healthiest, safest and happiest place to live and work.
Jim Shannon (Strangford) (DUP)
On saving lives, will the Secretary of State give way?
Jim Shannon
I very much welcome what the Secretary of State has said, and there are clearly many positives in the Budget, but the British Heart Foundation contacted me to say that cardiac care is time-critical, and that delays to vital tests, procedures and operations can lead to otherwise preventable heart attacks. At the end of January there were 370,000 heart patients waiting for elective care. What will be done to save those people’s lives?
Michelle Donelan
We are talking today about investing in the technologies that can progress our healthcare system and about our use of green technology so we can get to work in a cleaner, greener way. Our technologies can progress our society in so many different ways. I am happy to meet the hon. Member to discuss that in detail, but it might be more of a question for the Department of Health and Social Care.
That is why the Government’s commitment to AI goes much further than just warm words. Over five years ago, we identified AI as one of the four grand challenges in the industrial strategy, investing £1 billion in the AI sector deal in 2019. In 2021, we set out our ambitions in the national AI strategy—ambitions which the AI action plan shows we are determined to deliver. In the last decade, we have also invested over £2.5 billion in AI.
Dr Luke Evans (Bosworth) (Con)
On the Secretary of State’s new role in the new Department, one key thing we need to look at is keeping regulation updated with advancements. Already, things such as ChatGPT mean that people can get their homework done, generate images and make apps using a computer. Can we take the example of the Medicines and Healthcare Products Regulatory Agency, which learnt, through the vaccine, to do the research and put the regulation in place, so we do not find ourselves, with the Online Harms Bill, where we found 10 years ago when the internet was brought through? Is there an opportunity for her to put regulation in place to ensure we move it along as the technology develops?
Michelle Donelan
I absolutely agree. That is exactly why the Prime Minister announced, just days ago, the establishment of a large language model taskforce to look at that and to ensure we can gain sovereignty in this particular area. Over the coming weeks, we will also publish the AI White Paper.
Earlier this month, I announced £110 million for AI technology missions. That funding, which we anticipate will be matched by equal private investment, will support the science behind some of the most important AI technologies of the future. We will also realise some of AI’s transformative applications, from reducing greenhouse gas emissions to increasing productivity in sectors such as agriculture, construction and transport.
Success in AI requires the UK to be a hub of the best and brightest AI minds in the world. We have already backed AI with £8 million to bring top talent into the UK. That is coming on top of £117 million in existing funding to create hundreds of new PhDs in AI research. In the Budget, the Chancellor took a further step forward with the announcement of the Manchester prize, which will back those harnessing the immense power of AI to break new ground.
The Chancellor also announced a staggering £900 million in funding for an exascale super-computer and a dedicated AI research resource, making the UK one of only a handful of countries in the world to have such a powerful computing facility. We are creating thousands of high-quality jobs and ensuring that the UK is going to be the home of the Al technologies that will directly help to address the priorities of the British public. These are not just jobs that will power our future; every single job will create these exciting fields—opportunities that will release the potential of thousands of talented people up and down the country.
Stewart Malcolm McDonald (Glasgow South) (SNP)
The Manchester-based physicist and Nobel prize winner Andre Geim has said that the top researchers around the world and in the UK are either not coming or looking to get out because living standards are so low; they can earn far better wages elsewhere. Does the Secretary of State not agree that all these aspirations, great though they are, will never be met so long as living standards in the UK fall well below those in other western European countries?
Michelle Donelan
I cannot believe the hon. Member is insisting on talking down our great nation. We are already attracting these people to our country. That is why we are third in the world when it comes to AI. That is why we are boosting that supply as well as growing our own talent.
The right skills, the right investment and the right infrastructure: these are the ingredients of a science and technology superpower, and perhaps nowhere is that more true than in our world-class research sector. In January, we launched the Advanced Research & Invention Agency, or ARIA—a new independent research body custom built to fund high-risk, high-reward scientific research, backed by £800 million in funding.
Tim Loughton (East Worthing and Shoreham) (Con)
I am so pleased that the Secretary of State is placing great emphasis on AI. When I was a child growing up on a farm, AI stood for artificial insemination—a somewhat messier affair than what we know it as today.
Far from what the hon. Member for Glasgow South (Stewart Malcolm McDonald) was saying about the standard of living in this country, many international investors do come to London because of the quality of life. The disincentive is that we do not reward risk enough and it is still too difficult to raise money on the London capital markets for some of these emerging industries. It is great that the Government are putting in seed funding, but we also need to make it much easier and more attractive for private business to put their money where their mouth is.
Michelle Donelan
I completely agree with my hon. Friend’s latter point; obviously, when I was referring to AI, I was not talking about what he described to start with. We will continue to work across Government to ensure that we are attracting companies to locate in the UK and create British jobs.
With unique freedoms, ARIA will be able to empower extraordinary people who have a radical vision for a positive approach and positive change for our country. We are a nation of inventors—from the toaster to the television and from tarmac to teabags, we have never been short of good ideas. This rich history of invention and extraordinary research must, of course, be backed to ensure that it continues and that we continue to grow our economy.
As I have emphasised, it is vital that everyone, no matter where they live, has the opportunity to play their part in Britain’s innovation economy. That is why the Chancellor announced the creation of 12 investment zones, to supercharge growth in some of the most exciting areas of the economy, from digital and tech to life sciences and advanced manufacturing. The zones will be clustered around a university or research institution and bring growth to areas that have traditionally underperformed economically. Each new zone will be backed by £80 million of investment over five years.
We have also established the Innovation Accelerator programme, investing £110 million into 26 transformative R&D projects to accelerate the growth of three high-potential innovation clusters—from new health and medical technologies in Birmingham, to productivity-enhancing AI in Manchester and the development of quantum technologies for cleaner and more efficient manufacturing in Glasgow. By bringing universities, local leaders and businesses together, those projects will drive regional economic growth and provide a vital boost to the Government’s levelling-up agenda.
The Chancellor also rightly paid special attention to regulation in the Budget. Smarter, pro-innovation regulation will ensure that we continue to attract and grow the most promising start-ups and scale-ups. Once again, the Budget put the money where it counts. We announced £10 million of extra funding in the next two years for the Medicines and Healthcare products Regulatory Agency, helping it to become the most innovative healthcare regulator in the world, to support our life sciences sector and our NHS—and most importantly, to save lives.
The Chancellor also accepted all nine recommendations of the Vallance review on regulating digital technologies, to ensure that we have a coherent, agile and flexible regulatory approach. We need to minimise undue burdens on businesses and grow the economy. That includes the creation of AI sandboxes, which will support the innovative regulatory approaches that we need to drive forward the responsible and safe development of artificial intelligence. We will take that forward in our forthcoming AI White Paper, which will set out our proportionate and pro-innovation approach to regulating AI—designed to make sure that the UK is the best place in the world to develop and deploy AI.
Finally, the Chancellor shares my view that international collaboration has a critical role to play in ensuring that Britain can continue to deliver world-leading research. We welcome the EU’s recent openness to discussions on Horizon association, following two years of unfortunate delay. On 14 March, just last week, I met Pedro Serrano, the EU’s ambassador to the UK, to discuss collaboration on science and research, including the Horizon Europe programme. The Government will continue to back our research community, which is why we have extended the Horizon guarantee and are clear that we will not let our researchers wait another two years for certainty.
This Government are unashamedly pro-growth and pro-business. Even after the corporation tax rise this April, we will have the lowest headline rate in the G7. Only 10% of companies will pay the full 25% rate. It is particularly vital that we support the businesses that are investing in research and development and bringing those science and technology benefits to the British public. That is why loss-making SMEs for which qualifying R&D expenditure constitutes at least 40% of total expenditure will now be able to claim a higher payable credit rate of 14.5% for qualifying R&D expenditure. Our life sciences and tech sectors are expected to be among some of the main beneficiaries of the changes, enabling those crucial companies to drive sustainable growth and jobs in the years to come.
This is not just about giving growth a short-term boost: we have a long-term plan for building an economy fit for the future. That is why the Chancellor also announced that the capital allowances super-deduction will be replaced with full expensing of capital allowances for three years, with a move to make that permanent as soon as possible. That will ensure that the UK’s capital allowances regime is world-leading, as the only major European economy to have such a policy.
Before I conclude, I pay tribute to the millions of people who work in our science, innovation and technology sectors, who are working to change our lives for the better every single day. Budgets are not about Government but about real people who have real families and real jobs that they have to think about. They are looking to this place today, and they want to see that we know what matters to them and are prepared to invest in the things that deliver on our country’s priorities. They want more time with their loved ones. They want to be able to travel safer, faster and cleaner than the generation before us. They want higher-quality jobs, stronger borders, and cleaner and greener towns and cities. These are the things that motivate us to become a science and technology superpower. It is not about status or achieving goals for their own sake, but about making British people happier, healthier, smarter and more prosperous. This is a Budget that puts those priorities at the heart of Government and delivers. I commend it to the House.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I think we will start with a time limit of six minutes, and see how we go from there. In the meantime, I call the shadow Secretary of State.
Lucy Powell (Manchester Central) (Lab/Co-op)
It is a pleasure to open the debate on science and technology, as one of the few Members in this place probably with a science degree. You might be aware, Madam Deputy Speaker, that I studied chemistry at Somerville, like another well-known female politician very popular on the Government Benches. I hope that is where the similarities end, although we both have a reputation for, how shall I put it, getting our own way.
Science, technology and innovation are close to my heart. I welcome the new focus—not before time—on these issues, which I will come to. Even with the new Department and a few mentions in the Budget, we are still miles behind where we need to be in exploiting the potential of the UK as a science and tech superpower.
First, let me address the Budget overall. Having had a few days to digest and analyse, the verdict on the Budget is in. It is not a
“sustainable plan for long-term economic expansion”.
Those are not my words but those of The Daily Telegraph. The Federation of Small Businesses was no more complimentary, saying that its members would feel “short-changed” by the “meagre” Budget. The Institute for Fiscal Studies labelled Britain a high-tax economy, with households feeling “continuing pain”.
The public view is that it is a Budget not for them, but for a tiny few—a growing theme after 13 years in office. No wonder most now trust Labour over the Conservatives when it comes to the economy. That is the verdict, because this is a Budget divorced from most people’s reality—or as we have just heard, from anybody’s reality. There was no mention in the Chancellor’s speech that this Parliament is set to see the biggest fall in living standards ever recorded—the biggest fall by a country mile, according to the Resolution Foundation. That means families worse off and prices going through the roof, as wages fall through the floor.
New research for the BBC, out today, shows that the average British worker is now £11,000 a year worse off than they should be, after 13 years of a Conservative Government. That is the reality for most people. The reason for that cannot be passed off as global forces, as it is relative too—middle-income Britons are now 10% worse off than the French and 20% worse off than their German equivalents. When holidaying Brits return to the continent in force this summer, they will feel like the poor man of Europe once again. That is the record of this Government; no wonder they hardly mentioned it.
It was a Budget divorced from the realities of most businesses, too. Nothing for them on their unaffordable, rising costs; nothing on business rate reform; and very little to boost their immediate workforce challenges either. Small businesses were offered thin gruel. Perhaps that was what the former Prime Minister meant when he said something quite unparliamentary about business.
It was a Budget utterly divorced from the realities facing our public services too, with hardly even a mention of the NHS or care. Yet we have 7 million patients stuck on waiting lists, A&E waiting times at an all-time high, social care in crisis, putting extra pressure our hospitals, and a chronic workforce emergency.
Dr Luke Evans
Does the hon. Lady welcome the statement by the British Medical Association about the changes to pensions, which will get senior doctors back to work? The chair of the BMA pensions committee said in the media that the changes had the immediate effect of getting people back to work, which means the NHS workforce will be strengthened.
Lucy Powell
I will come on to say something about that, but as my husband is an A&E consultant I am all too familiar with these issues. As the IFS said, it was a golden
“sledgehammer to crack a very small nut”.
The realities facing our public services are not addressed in this Budget.
It is another Tory Budget so divorced from reality that it exposes, once again, who the party in government is really for—tax cuts for the wealthiest, tax hikes for the rest. The last Tory Budget had a cut to the 45p top rate of tax; this Budget has a pension tax cut for the top 1%. Government Members might groan and wail, but that is the reality.
Wealth managers already see the Budget as a bonanza, and not only a huge tax break for the super-wealthy but an inheritance tax wheeze for the super-rich too, with one wealth adviser describing it as
“a great opportunity for tax-free growth.”
Tim Loughton
The hon. Lady has been quoting experts and the newspapers. Will she now admit that the figures that her colleague, the shadow Chancellor, gave about the benefit that the pension changes will bring was grossly miscalculated? A quote that appeared in the Financial Times said it was
“based on a muddled understanding of how the pension tax rules operate”.
Will she apologise for the calculations in the Labour press release or are they just muddled?
Lucy Powell
I will not apologise for those figures, and in the next part of my speech I will explain that the figures are perhaps worse than previously thought. There are issues for doctors, but only 16% of those who will benefit from this massive boon are doctors, and that is before all the speculators dive into this new wheeze. That is the political choice that this Chancellor and this Government have made—trickle-down economics, and tax perks for the tiny few. That is the record that they just will not be able to dodge.
Lucy Powell
I will not give way again. Government Members have plenty of time to give speeches.
It is a Budget divorced from the reality of who caused this economic crisis. It was the Conservative party that crashed the economy, sending markets into freefall and interest rates sky high, resulting in a Tory mortgage penalty for millions of homeowners. The Government want to blame others, but their record is falling living standards, a stagnant economy, falling house prices and the worst growth forecast in the G7—all stats the Chancellor failed to mention.
Andrew Bridgen (North West Leicestershire) (Ind)
The hon. Lady is very unhappy about this Government’s pension changes. Would a future Labour Government reverse them immediately?
Lucy Powell
We have already said that we will, but we will make sure that there is a fix for doctors who need it.
Let us move on to the realities in science, tech and innovation. Technology is moving at breakneck speed and changing the way we live, work and play in ways that we cannot even imagine yet. Not only can we search the entire world’s knowledge from devices in our back pockets or communicate with anyone anywhere at any time, but AI and computer programmes can increasingly perform roles better than humans. An AI bot could probably have written me a better speech than the one I have made today—perhaps the Secretary of State might want to look at that the next time she is giving a speech.
The choice facing countries, companies and citizens is either to harness those changes and keep up with them or to fall behind. That is why a huge global race is going on to develop and adopt the technologies of the future and seize the opportunities of the digital revolution. The UK has led industrial revolutions before, and we can lead this one. We have world-leading universities and research, a global appeal with the English language, and digitally savvy consumers. We have a competitive advantage in life sciences, professional and financial services, healthcare and creative industries, all helping to attract fintech and the best talent.
However, there are also some worrying signs. Our universities and research are not translating enough into commercial success for UK companies. We have a productivity problem because not enough of the economy is adopting the latest technologies. We have been slow to bring in digital regulation, so our world-leading position is being lost. Our public services could be cutting-edge and more efficient, but they have not seized the data and digital opportunities. Companies start up in the UK but do not scale up to compete in a global market: Arm’s recent decision to be listed in the US, not the UK, gave us yet more evidence of that. That is the story of Britain: we invented the silicon chip, but not silicon valley. That is why we need a Government who are up to the challenge of the tech revolution, not a slow-moving analogue Government divorced from the reality of what it takes to win the race.
The announcements in the Budget pale in comparison with some of our international competitors. The Government announced new money for AI research, but we are already lagging far behind Canada, the US, France, Italy and others. For context, the EU is looking at a £7 billion project to support computer innovation across Europe. Even when the Government’s new supercomputer to support AI is up and running, it will have capacity equivalent to only 10% of what a single American company already has today. That does not sound like winning the global race to me, although I do think the Government showed excellent judgment in choosing the name of the new AI research challenge—“Manchester”, for those who were not watching.
It is the same story with 5G infrastructure, which is so critical to the digital revolution: while the Government have invested £200 million in early-stage trials, Germany is investing billions and South Korea has already got a third of the country on 5G. The quantum strategy and funding are welcome, but Germany, which until recently was governed by a quantum chemist, invested the same amount over half the time and started two years ago, again putting Britain behind in the race.
It is not just about investment. The UK should be at the forefront of regulation around new technologies, making sure that we are the first to set the rules of the game and are helping to attract businesses looking for certainty and a supportive regulatory framework, so that it is our values shaping how new technology develops, rather than those choices being made in China or elsewhere. The mess over TikTok was just the latest example of the Government dragging their feet. We saw the same thing with Huawei: the Government failed to invest in our sovereign capabilities and then failed to predict the security concerns, resulting in a chaotic and expensive unpicking of Huawei’s role in our national infrastructure.
We now have a chance to get ahead of the curve in technologies and to help to secure our national resilience, so where is the regulation of digital markets that has been promised for years? Where is the semiconductor strategy? Where is the media Bill to protect and promote British broadcasters in the streaming age? Where is the commitment on Horizon? It is the elephant in the room. The ongoing uncertainty is costing collaboration opportunities, research projects and jobs across the country.
While the Budget featured at least nods in the direction of the most advanced companies and technologies—in which regard we are already doing relatively well—there was nothing at all to bring up the long tail and answer the UK’s great productivity challenge. No wonder growth forecasts were down. This is another case of trickle-down thinking and a Government divorced from what constitutes the real problem.
Technology should be a great leveller, but that will not happen by accident. We need to plan to ensure that the benefits of the digital economy are not concentrated only in London and the south-east, and that we take advantage of our great potential ingenuity and creativity in the rest of the UK. We need to boost tech adoption. We have one of the worst long tails of companies, particularly small and medium-sized enterprises, that are not taking advantage of digitalisation and the latest technologies, and their productivity is suffering.
We need to harness data for the public good. Proposals in the Data Protection and Digital Information Bill are nothing more than tinkering with the General Data Protection Regulation, while the huge potential for data to transform our public services, empower citizens and put the UK at the forefront of open data is being left on the table. We need serious action on skills so that young people are not just endangered by social media but have the entrepreneurial and creative skills that the AI economy will need, and the current workforce are not made redundant by robots but are able to secure the new jobs of the future. We need to boost our digital infrastructure so that everyone has fast, reliable and affordable connections and we are at the leading edge of industrial 5G and the next generation of connectivity.
It is Labour that is leading the way in tackling the big challenges that our country faces. Because of our ambitious plans for skills, start-ups, growth, industrial strategy, the digital economy and devolution, businesses are flocking to Labour. [Hon. Members: “No they’re not.”] Oh yes, they are. John Allan, the chairman of Tesco, said recently that Labour was
“the only team on the field”
when it came to growth. Kasim Kutay, of the life sciences firm Novo, says that Labour is the only party that has
“demonstrated an understanding of the challenges facing the UK”.
Apparently, however, it is not just business leaders who like Labour’s plans. We have proposed GB Energy, and the Conservatives have proposed GB Nuclear. We said “windfall tax”, and they said “energy profits levy”. We said, “We need a bold plan to fix childcare”, and they seemed to like that one too. Where Labour leads, the Conservatives follow. They do say, do they not, that imitation is the sincerest form of flattery? But the truth is that the Conservatives are not up to the job. They are divorced from reality. They crashed the economy, they are responsible for the biggest fall in living standards that we have ever seen, and they are losing the global race for jobs of the future. They are out of road and out of ideas, so instead of pinching our ideas, why do they not just make way?
Damian Collins (Folkestone and Hythe) (Con)
It is, as always, a pleasure to follow the Shadow Secretary of State, although I could not help noticing that she seemed to spend longer making general political points about the Budget than actually addressing issues relating to the Department for Science, Innovation and Technology. [Interruption.] The hon. Lady says “So?” from a sedentary position, and she is perfectly entitled to do so—the Budget debate is a general debate during which Members can bring up topics relating to any subject, not just the one that is slated for the day—but I mention that because I think this is an area of Government activity in which the Government have an incredibly strong record over many years.
That is demonstrated by the fact that investors and businesses recognise the UK as a global hub—a leading centre in Europe and in the world. When we talk to tech investors working in hubs in Berlin or Barcelona or Tel Aviv, we hear that they regard London as the primary centre where they go to raise funds to grow and scale their businesses. As the Secretary of State said, we have the leading research institutions in the world: four of the world’s top 10 universities are based here. Our university clusters are driving innovation and growth in the sector, which is why we are so well regarded and respected. Our strategy for making the UK a world centre for tech and innovation is based on three key areas: driving growth in the economy, having a pro-competition strategy, and setting high standards.
When it comes to growth in the tech sector, we should look at investment not just in London and the south-east but across the UK, and at the way in which tech sectors have emerged and developed over the last decade. A good demonstration of that, as the shadow Secretary of State knows, is that we can jump on the Metro or the tram in Manchester and see the emergence of Salford Quays as one of Europe’s leading centres for creative industries and technology. When I was Chairman of the Select Committee, we visited Dundee. Dundee and Edinburgh are leading centres for the video games industry.
In Birmingham, within a stone’s throw of where the Birmingham hub for high-speed rail will be, we can see institutions such as Birmingham City University with its fantastic STEAMhouse centre for tech skills, where AI training courses are being delivered. That is over the road from the Greater Birmingham and Solihull Institute of Technology, a centre for advanced engineering, which is down the road from Fazeley Studios, which has become an important hub for the broadcasting and creative industries in Birmingham. Many of the buildings on those sites did not exist a decade ago, and the idea that this would be a major cluster for the tech sector and the broadcasting and creative industries was not something that people would have envisaged in 2010, but it is a reality today as a consequence of policies that have been put in place by this Government. That is why the Chancellor was right to recognise in the Budget the strategic significance of investment in research and development, and also in the strategic hubs and clusters of businesses that are so important for driving the sector.
The UK will be a leader in digital competition, and that is one of the reasons we need to support British businesses throughout their life cycle; not just in the R&D phase when they are growing, but when they seek to scale as well. If emerging businesses are to scale in tech marketplaces, we need to ensure that they can compete fairly alongside the tech giants whose services they rely on to reach their customers. Many app developers cannot reach their customers without using products and platforms designed by Meta. Most businesses require Amazon services either for cloud storage or for selling. Most businesses also require a good ranking on Google to reach their customers. They should be able to do so fairly. There are only two app store markets: Google and Apple. Those two monopolies exist alongside each other. Any developer needs to use those stores to reach customers, just as any customer needs to use them to access the products they want. It is important that customers and businesses are treated fairly, and the digital markets, competition and consumer Bill, which will come forward soon, will be vital to securing that.
Standards are one of the most important aspects of the UK’s leadership. One of the best examples of standards, certainly for AI, is the Online Safety Bill. It is world-leading legislation that will effectively cover the regulation of the AI-driven recommendation tools that drive the experience of social media. AI is an enabling technology. It draws on data to make recommendations and decisions on behalf of users to improve that user experience. However, like any other form of technology, it requires the right standards and safety regulations around it to ensure that it is delivering. New chat tools have been mentioned. AI-driven chat boxes are new in their technology, but the principles behind them are not new. We have also seen that with technologies such as autocomplete on Google, where online tools guess and make assumptions about what people want to see or what responses they want. We need to ensure that they are making sensible, reasonable recommendations and not directing people towards harmful content or hate speech, or driving people into isolated groups and communities.
There need to be standards that underpin the way that AI works and the recommendations it makes to users who engage with those tools. That is why the Government were right to recommend and support the creation of a UK AI sandbox, where companies can trial, and demonstrate trials of, new technologies before they are rolled out. This is common and standard in most other industries. The European Union is developing an AI sandbox, and it is right that we should do the same here. It is also right that we should build on the work of AI standards being developed at the Alan Turing Institute, to set a standards-based framework for the applications of AI in the future.
Carol Monaghan (Glasgow North West) (SNP)
I cannot remember ever speaking in a Budget debate dedicated entirely to science, so it is a real pleasure. Like the hon. Member for Manchester Central (Lucy Powell), I have a science degree, although mine is of a different flavour, being in physics. It is nice to speak in this debate as the SNP spokesperson.
A flourishing research and development landscape will produce major economic benefits, so the focus on science should be a positive. The problem is that this Government are not creating an environment conducive to flourishing research and development. First and foremost, they have to convince those working in the sector that they are valued. They have to consider the push and pull factors for a career in science. The Secretary of State talked about financially stable families, but she has to recognise that the wages and job insecurity mean that many cannot afford to stay in the sector, so they leave for other occupations.
I will now digress a little. A number of years ago, I visited a hydroelectric museum in the Alps. It is more than 150 years since we started developing hydroelectric as a means of generating electricity. The museum had an interesting display that said hydroelectric power would have been developed to a far greater extent if not for the discovery of oil. We saw oil stifling innovation, particularly in renewable sources, 150 years ago, and now we have the nuclear revival.
Rather than investing properly in renewable technologies, this Government are happy to throw billions at what they consider to be an easy source of energy. Proper action on decarbonisation would mean revising grid connection charges that see Scottish renewable producers paying, on average, £7.36 per megawatt-hour to access the grid, whereas producers in England pay, on average, 49p per megawatt-hour. Worse still, producers in Germany, the Netherlands and Luxembourg pay absolutely nothing. The Budget was an opportunity to address this inequality, to encourage greater energy innovation and, ultimately, to lower energy bills for my constituents and for constituents across the UK. Instead, we are repeating the mistakes of the past by taking the easy but expensive and environmentally unfriendly route.
Nuclear is environmentally unfriendly. The mining of uranium is a dirty process, as a lot of acid is used to extract it from rocks. There is then the storage of used fuel rods. For the Government to classify nuclear power as environmentally sustainable, with the same investment incentives as renewable energy, is a sinister attempt to pull the wool over the public’s eyes, and it shows a lack of real commitment to renewables.
As chair of the all-party parliamentary group on photonics and quantum, I am pleased to see a continued focus on quantum technologies. The creation of the quantum hubs in 2014, to which the Secretary of State referred, enabled the UK to place itself at the centre of this technology, and a number of Scottish universities—notably, Glasgow, Strathclyde, Edinburgh and Heriot-Watt—played a key role. But the sector requires sustained support and proper vision.
I was recently made aware of an ambitious proposal made by a group at Glasgow University, in collaboration with universities across the UK, to secure commercial leadership in the manufacturing of quantum hardware, which is crucial for its penetration into volume applications. A national institute for quantum integration would deliver nano-fabrication facilities for the integration of this hardware. The Secretary of State said, in her statement two weeks ago on the science and technology framework, that she will have
“a ruthlessly outcome-focused approach to this new Department.”—[Official Report, 7 March 2023; Vol. 729, c. 182.]
I would love to hear her thoughts on a national institute for quantum integration absolutely focused on outcomes.
With quantum, as with other technologies that are critical to national security, the issue is rarely starting up; it is almost always scaling up. There does not seem to be much commitment at all to supporting the scaling up of small and medium-sized enterprises. To scale up, some companies will potentially need to move out, which means that some are looking to other places around the world in order to develop their technologies. Of course, we are still waiting for the semiconductor strategy, something that would support the development of quantum, photonics and the wider technology sectors. Perhaps the Secretary of State will prioritise that.
It was disappointing to hear, yet again, that investment in carbon capture and storage is not coming to the Scottish Acorn project. We need such clusters across the UK, in every part of it. The Acorn project is perfectly situated and the proposals are mature enough to merit Government funding; this should not be a phase 2, with something in the future, perhaps, if we are lucky.
Carol Monaghan
That would be substantial if it were coming to Scotland, so when will we see action on the Scottish cluster?
The Chancellor also made a song and dance last week about R&D tax credits. That system has been grossly mismanaged and therefore abused in the past. I would like more detail on how the new system will provide more value for money for both taxpayers and genuine researchers. How will it be managed? What checks and balances will be taking place? We need to make sure, once again, that the mistakes of the past are not repeated.
The ambitions of the Secretary of State, and indeed the Prime Minister, in science are laudable. However, they fail to mention the key issue: the people. That issue cannot be solved by cash alone. Supposed commitments to science clash entirely with this Government’s hostile environment on immigration, and the lack of progress on association to Horizon is having a huge impact. While the Secretary of State dithers about whether association represents value for money, researchers are leaving the UK for better opportunities abroad, where they can develop rich collaborations and enjoy freedom of movement.
In response to last week’s Budget, Sir Adrian Smith, president of the Royal Society, said:
“After a prolonged period of uncertainty, the Government urgently needs to deliver on its pledge to associate to Horizon Europe, and set out a longer-term, cross-party plan for science. This is vital to restore confidence among global research talent and investors that they should build their futures in the UK.”
Stephen Phipson, the head of Make UK, said that Horizon had
“always been one of those areas of the EU budget where the UK gets more out than it puts in”.
A number of other notable organisations in the UK —including the CBI, the British Heart Foundation, the Russell Group, the University Alliance and Cancer Research UK—and in EU R&D sectors have signed a joint statement to the UK Government, urging rapid progress on association to EU programmes, including Horizon Europe, Copernicus and Euratom.
However, there were worrying reports last week that the Prime Minister is unconvinced on Horizon, with the Financial Times reporting that “senior colleagues” said the Prime Minister was “sceptical” about the value of Horizon Europe and the cost of participation. Researchers need to know where the UK is headed. Is the dithering on Horizon a deliberate attempt to kick the can down the road? More than anything, Horizon is about people; there is no monetary replacement for this. So will this Government keep blaming the EU while projects and collaborations are lost?
However, there are areas where money is important and where I would have wanted to see action in the Budget. We heard from the Secretary of State about financially stable families. Let us assume that I am a quantum researcher from somewhere in the EU, I am at the top of my field and I have an invitation to join a team at one of the UK quantum hubs. I will, first, have to apply for my global talent visa, at a cost of £623, and that will also cost me £623 for my spouse and for each of my children. I have two children under 18, so my costs are now £2,492. I have to pay the annual health surcharge for myself, my spouse and my children, so that is £624 for myself and my spouse. There is great news, as children get a discount and so it is only £470 for each of them. We are now at £4,680 for me to come here under the global talent scheme, although that assumes that I have only two children—I know the Government like to pretend that people do not have any more than two children, but many of us do.
As an EU researcher, I have many options, so why would I put myself through the hassle of such an immigration regime? That is hardly how we attract the brightest and best. If the Government are serious about science, those fees have to be dropped. It would not be costly and it would have great benefits.
Alison Thewliss (Glasgow Central) (SNP)
My hon. Friend is making excellent points about the cost involved in people coming to our city to work and share their talents. Is she as concerned as I am about stories from constituents of mine who have been here already and have been asked to take on a job with a promotion, but who have almost lost that opportunity because of Home Office delays?
Carol Monaghan
I do share those concerns. I have heard stories about individuals who were invited here and who were hoping to come, but the delays meant that that opportunity was lost. These people have been asked to come to the UK because of their particular skills. We are losing talent time and again.
While we are at it, international students seem to be a target again. The return of the post-study work visa took a lot of effort on the part of Members—from both sides of the House, it has to be said—but there is now news that the Home Secretary is talking about cutting it again. Many people who work in science first came here as international students and on the promise of a post-study work visa. There must be no change to the current system.
A commitment to research and development means a commitment to people, to international collaboration and to developing an immigration environment that supports companies, research groups and individuals to contribute. Ultimately, if that cannot happen in the UK, the powers should be given to Scotland. We will develop an immigration system that works for our science sector.
Tim Loughton (East Worthing and Shoreham) (Con)
I support the Budget. More importantly, the markets seem to support it as well. Stability and balance are the hallmarks of what the Chancellor has achieved, and I congratulate him on that.
Mr David Davis (Haltemprice and Howden) (Con)
Will my hon. Friend give way?
Tim Loughton
If my right hon. Friend will forgive me, so many other people want to speak that it would be unfair if I took interventions.
With six minutes, and with a Budget containing so many measures, it is difficult to know what to speak about, but I want to speak briefly about children, the environment and booze—not necessarily at the same time. I very much welcome the Secretary of State’s opening remarks and her concentration on the importance of AI. Even though some of us may not fully understand all of its implications, it is absolutely where we need to grow our economy.
The £20 billion of investment in carbon capture is huge and vital. It is a vital component of our target to get to net zero. We cannot get everything not to release carbon, but we can have ways of mitigating emissions to bring us to our net zero target—hopefully sooner than 2050. It is slightly churlish of the hon. Member for Glasgow North West (Carol Monaghan), who spoke for the SNP, to say that if something is not in Scotland it does not really count. Climate change is no respecter of any border, let alone that between England and Scotland.
I absolutely welcome the Budget’s huge implications for investment in R&D, which is really important. I also absolutely welcome the freezing of fuel duty for the 13th year in a row, which will mean £200 to the average driver.
There are lots of little things in the Budget that will have a big impact, such as the help for swimming pools and leisure centres, which were hit badly during the pandemic and have now been hit by energy costs. That will be a lifeline and it will help the health of our constituents. The measure on energy prepayment meters was long overdue; it was absurd and immoral that those least able to pay should be penalised and pay that much more for using prepayment meters. Thirty million pounds has been allocated for additional veterans’ services, and there is £10 million to help with suicide prevention—a hidden illness that has a huge impact on many of our constituents and their families.
If I may talk briefly about children, I remain concerned —as I would, being a former children’s Minister—that all the emphasis has been on adult social care and not enough has been on children’s social care, where it is estimated there is still a shortfall of some £1.6 billion. We need to do something about that, because over 80% of our interventions on children in the care system and those coming into the care system are late interventions rather than preventive early interventions, which is a big change from what went on some years before.
We need to invest in our social worker workforce. This afternoon, I have been hosting the Social Worker of the Year awards, and some of the most remarkable social workers from around the country have been to Parliament to receive their awards. They are the fourth emergency service and we need much better workforce planning, as we do in the NHS, to make sure that we not only recruit more social workers, but keep them. It is a false economy not to be doing that.
I welcome the many good measures on children, particularly on children in care, but will the Chancellor consider what we can do to provide free bus travel for all care leavers aged between 18 and 25, for whom the cost of a bus fare to get to work or education is prohibitive? Will he also consider a national programme to allow care leavers to access a rent deposit as part of their benefits, since they find it harder than many to access accommodation?
On childcare, which was one of the most significant parts of the Budget, I absolutely support the measures that were announced. As Coram Family and Childcare puts it,
“the introduction of 30 hours childcare for children from 9 months old to three years old…will make a huge difference for families currently struggling with high costs”.
I welcome that, but there are question marks around sufficiency and shortages in the childcare available; currently only half of local authorities have sufficient childcare for children aged under two and less than half have enough childcare for parents working full time. With these generous measures on childcare, there is more we need to do to make sure that people with the appropriate skills are there to provide it.
I welcome the wraparound childcare available through schools from 8 am to 6 pm, which will make a real difference to parents’ ability to go to jobs and make a meaningful contribution. However, there is a problem in that only 25% of local authorities have enough after-school childcare for children aged five to 11 and the figure is even lower for those aged 12 to 14. Again, there are serious question marks about capacity, which I am sure the Chancellor will answer.
There is more I could say about children but, turning to the environment, insulating homes reduces energy waste and keeps people warmer, while lowering bills permanently. We need further public investment in insulating fuel-poor homes, and we need to create new tax incentives for owner-occupiers to do more to improve the energy efficiency of their homes—as is the case in other European countries, where it is reflected in council tax banding and other up-front fees.
Finally, on beer, the Chancellor’s measures to ensure that tax on draught beer sold in pubs does not increase are great and will save the sector around £70 million a year. However, the British Beer and Pub Association, which is already seeing its members hit by an energy crisis and the weight of debt build-up over years, says that there is a 10% increase in the duty on non-draught beers—60% of all beer sales. Can we aim for a level playing field for our beer and pub industry, which has been particularly hit during the energy crisis and the pandemic? What is in the Budget is really good, but we could do a little bit more.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
It is a pleasure to speak in the debate today, but, while I do not wish to be unkind, it was a little less of a pleasure to listen to the Secretary of State open the debate. I notice that she is leaving the Chamber. Listening to her assertions about economic growth and the record of this Government, I had to wonder what planet she was on.
The reality is that, despite the assertions made from the Dispatch Box by the Secretary of State today and the Chancellor last week, the OBR has downgraded the UK’s long-term growth forecasts, with downgrades in all of the last three years of the forecast period. The OECD has confirmed that we will be the weakest economy in the G7 this year, no other G20 economy other than Russia is forecast to shrink this year, and our economy is still smaller than it was prior to the pandemic.
All that has a huge impact on the finances of families in Birmingham, Ladywood and all over the country. The hit to living standards over the past two years is the largest since comparable records began. Wages are lower in real terms than 13 years ago and real weekly wages are expected to remain below their 2008 levels until at least 2026. I believe that a little more humility was needed at the Dispatch Box today, because the measures taken by this Government over the past 13 years—in particular since the so-called kamikaze Budget last November—have car-crashed the finances of families and households all over our country, with no end in sight.
Given how deeply the cost of living crisis is hitting families all over our country and given the headline rates of economic growth, it is shocking that the only permanent tax cut the Government announced was the £1 billion tax cut for the richest 1% of earners. The pension changes announced by the Chancellor last week mean that for higher earners with a pension pot of £2 million, that tax cut is worth almost £250,000.
That measure is supposed to be about getting people back to work—older doctors in particular. Labour agrees that targeted measures are needed to deal with the NHS crisis and to make sure that doctors are not leaving the profession in the numbers they currently are, but the way the Government have gone about making these changes will cost them £70,000 for every single person returning to the labour market—and that is if the Government even manage to hit the number of people they say will return to the labour market as a result. There have been warnings, including from a former Pensions Minister in the coalition Government, that some people will retire early as a result of those measures, so in fact some people will now leave the labour market who were not originally planning on it.
Labour’s priority would have been to take targeted measures to help doctors, given the acute crisis in the NHS labour market, not the golden
“sledgehammer to crack a very small nut”,
as the IFS calls it, announced by this Government. It is the wrong priority at the wrong time.
The burden of tax must be shared fairly; making a permanent tax change that benefits the 1% with the biggest pension pots is unfair and wrong and, in government, we will reverse it. I also wonder why the Government are still leaving more than £10 billion on the table with the windfall tax. If they closed down the holes and had a proper windfall tax, we could bring in billions of pounds more, which could help ordinary families if that money was put towards easing the pressure of the cost of living crisis.
We heard a lot about the people’s priorities from the Dispatch Box today. The people’s priorities are easing the cost of living crisis and measures that pay for that easing by asking those with the broadest shoulders to pay more and those profiting from the war in Ukraine to give that money back to the taxpayer so that we can help families in our countries. That is what was needed and that is what the Government have singularly failed to deliver.
If I may say something about the west midlands, I noted with interest the trailblazer devolution deals announced for both the Greater Manchester area and the West Midlands Combined Authority. That particular deal is welcome, although I worry about the very asymmetric way the Government have approached devolution in our country. We need a nationwide approach to an economic devolution settlement that has some coherence to it, not a “Hunger Games”-style system where areas fight it out over relatively small pots of money, while other areas that are already a little further ahead get more powers and more money. While the deal is welcome to west midlands MPs such as myself, I do not think it is an approach that helps people all over our country.
While I very much hope that both that deal and the levelling-up zone in the East Birmingham-North Solihull corridor are a success, they must ultimately be judged by whether they turn around the deep-scarring problem of high unemployment in Birmingham, which in the last decade or so has shown no signs of coming down. My constituency has the highest rate of unemployment in the country; Birmingham, Perry Barr is second, Birmingham, Hodge Hill is third, Birmingham, Erdington is fourth, Birmingham, Hall Green is sixth, Birmingham, Yardley is ninth and Birmingham, Northfield is 13th. The trailblazer deal, with all the powers within it and the greater financial devolution it entails, has to result in a step change. It must be a game changer on unemployment rates across Birmingham and the wider west midlands area if it is to be judged a success.
Mr David Davis (Haltemprice and Howden) (Con)
I draw the attention of the House to my entry in the Register of Members’ Financial Interests.
Like two of the previous speakers, I am also a science graduate, although I do not compare myself with the Conservative party’s most famous science graduate. I had intended to make my speech essentially about science and technology, because they are massively important and, as the hon. Member for Manchester Central (Lucy Powell) pointed out, we have fantastic competitive advantages in those fields. That will be a major part of growth.
Since last Tuesday, however, dramatic events have unfolded in the banking sector—particularly over the weekend. Back in 2009-10, the then Chair of the Treasury Committee, Lord McFall, asked me to chair the Future of Banking Commission. The last week has, unfortunately, brought back some memories. One of the characteristic problems of the banking sector is its short memory, particularly when it is Wall Street that we are talking about. I hope that the House will indulge me if I remind it of the lessons of the major banking crashes of the past half century.
Back in 1933, after the great depression, the Americans passed the Glass-Steagall Act, which separated banks out into risky investment banks and straightforward commercial banks. That gave us about seven decades of stability until 1999, when President Clinton—under pressure from unwise and greedy Wall Street lobbyists—essentially removed Glass-Steagall. What followed was the collapse of several banks, including Lehman Brothers—probably precipitated by the new mark-to-market rules—in the great crisis that we saw in 2008.
In 2009, because of the crash, America passed Dodd-Frank, which required banks with more than $50 billion in assets to be subject to tight regulation. Again, under pressure from Wall Street, President Trump relaxed those regulations in 2019. I talk about Wall Street, but the whole world followed. Of course, after that relaxation, banks assumed that they had an infinite period of low interest rates and that they could borrow ad nauseam. When global interest rates sharply increased by three, four or five times, the shock destabilised a number of those banks. One such bank was Silicon Valley Bank, which had been taken out of regulation by the Trump changes.
There is a lesson for us in all that. It has caused an instability in the financial system. Chancellors, central bank governors, financial secretaries in the States and regulators have no chance but to claim that the system is robust. I am not so sure. We will not know for a while whether it is actually robust, because of the complexity of the system. Of the three major banks that have failed so far, each has failed for different reasons, and we have no clear insight into what risks other banks have taken, partly because of the deregulation under Trump and his predecessors. In that respect, we in this country are probably in a better place than either the Americans or the Europeans, but I am keeping my fingers crossed as I say that so as not to tempt fate.
There is one lesson that we should learn. A big issue on which the world is hanging at the moment is whether the takeover of Credit Suisse by UBS is a success. I draw people’s minds back to Lloyds taking over HBOS, which was done under pressure from the Government of the day—from Gordon Brown—and Lloyds itself nearly collapsing the very next year. I hope that UBS will not do the same. The point of this story is that we are in a period of extraordinary global financial instability.
I am a low-tax Tory—I would have loved the Chancellor to have had a lower-tax strategy—but I have to say that the events of the past week have demonstrated that a very small-c conservative strategy is wise under these circumstances. The more confident the markets in the Government, the better our prospects for the future. That said, I would be completely unsurprised if we had to have another Budget in the autumn owing to the nature of the transitions and changes that are now happening.
If that happens, I would ask the Chancellor, “Could you please look again at bringing back your super-deduction?” That will attract investment here in a way that will not happen with the 25% rate. I would ask, “Will you look at doing away with IR35 and at other concerns that will improve prospects for small businesses?” In my view, it will be incredibly difficult for the banks to get right the balance between inflation and growth now that their hands are tied by the instability of the banking sector. My one line to the Chancellor is this: please look, for the next Budget, at much more growth.
Madam Deputy Speaker (Dame Rosie Winterton)
We are in the middle of a debate, so I hope that it is a good one.
Tim Loughton
Given my references to children in care, I forgot, in my haste, to declare my interest as chairman of a safeguarding board.
Madam Deputy Speaker
That counts; fair enough. I am grateful to the hon. Gentleman for putting that on the record.
Wayne David (Caerphilly) (Lab)
I think it is fair to say that there are few surprises in the Budget. Many of the announcements were expected, and quite a few of them were borrowed from the Labour party, but a significant rabbit was pulled out of the hat—and it was a really big one. It was announced that there will be a £1 billion tax cut for the richest 1% through changes to tax allowances. Someone with a £2 million pension pot will now get a tax cut of more than a quarter of a million pounds when they take their tax-free lump sum. Moreover, there will be no limit on how much the rich can put into their pension pots tax-free. That is not all: they will be able to pass that on to their heirs tax-free through the creation of a local inheritance law.
I am told that a competition is now under way in my Caerphilly constituency to find out whether anyone at all will benefit from those tax allowance changes. The odds are that not one single individual there will. The justification for that generous tax cut is that it will encourage people into work. Frankly, it is unlikely that that will happen judging by the reaction from a large number of commentators. As has already been said in the debate, if the measure is aimed specifically at doctors, why not have a proposal that is tailor-made for them?
If the Government really want to get people into work, I urge them to tackle economic inactivity effectively. Figures in the 2021 census indicated that of the 10 local authority areas in Wales and England with the highest levels of economic inactivity, five were in the south Wales valleys—because individuals are sick or disabled. Blaenau Gwent has the highest proportion—36.1%—of working-age residents who are economically inactive. Then, there is Merthyr Tydfil and the Caerphilly County Borough Council area, where the figure stands at 34%. The legacy of coalmining and heavy industry generally has much to answer for, but it is fair to say that in those areas there is a chronic lack of well-paid jobs and chronic ill health. The responsibility for that situation lies squarely with central Government.
Unfortunately, the measures in the Budget will do little, if anything at all, to tackle those issues. What they will do is make the rich richer and reinforce the trends that we have seen over the last 13 years. It is worth pointing out, though, that, if anything, the gap between the rich and the poor is growing. There were 147 billionaires in this country in 2020, for example; now, there are 177. At the same time, as the OBR has confirmed, there has been a huge fall in living standards over the last two years—the worst figures since comparable records began.
The crisis in living standards has had a hugely negative impact on my constituents. Like so many people across the country, my constituents are facing huge levels of inflation, as well as significant increases in their energy bills. The real hardship is manifested in a host of different ways, but I will cite just one for the moment: food banks.
Citizens Advice has recorded that between April and September 2020, 23,905 emergency food parcels were distributed in south-east Wales alone, which includes my Caerphilly constituency, and that 34% of those who accessed Citizens Advice and requested a food bank parcel were in work but facing real financial difficulties. This is in-work poverty. Unfortunately, the Government are doing little about it.
My local authority, Caerphilly County Borough Council, through its “Newsline”, is giving clear advice to people on how to claim the benefits they are entitled to and how to relieve the suffering they are going through. For many people, this Budget offers little at all, if anything. My conclusion is unavoidable and straightforward: we need a Labour Government who put people first, and we need that Government as soon as humanly possible.
Kate Kniveton (Burton) (Con)
I rise in support of the Chancellor’s spring Budget and today’s debate, focused on technology and science. On this topic, I am delighted to represent a constituency that offers huge potential to help us harness British ingenuity and make us a science and technology superpower. This Budget takes important steps towards achieving that goal, and my constituency of Burton and Uttoxeter in the heart of the north midlands manufacturing corridor is key to unlocking the vital growth that this country needs. I refer Members to my entry in the Register of Members’ Financial Interests.
In Staffordshire, we have world-class businesses along the corridor driving the hydrogen technology revolution, including JCB in my constituency. We also have Toyota, Alstom and Rolls-Royce nearby. These technologies will play a vital role in contributing to our net-zero goals and advancing our manufacturing industries. The recent announcement that JCB has become the first construction equipment company to develop a fully working hydrogen internal combustion engine is a fantastic development that has the potential to transform the way we power heavy machinery, but these companies, and others along the corridor, want to do more. There is so much potential ready to be unlocked, but the infrastructure to support these industries is not matching the pace of their technological breakthroughs.
The Chancellor and Government colleagues have heard me banging on about my role as project champion for the north midlands manufacturing corridor and the importance of upgrading the A50/A500, and I make no apology for that. Delays along the A50/A500 corridor are costing the economy £8 million each year. Without improvements, increasing congestion could threaten growth and hold back investment. The Government, as they strive for growth in these sectors, need to upgrade this vital corridor as a priority. These improvements could create more than 12,000 jobs, generate £12 million for the economy and further solidify the UK as a global leader in the development of hydrogen technology.
I urge the Chancellor to look at the work of Staffordshire County Council, Midlands Connect and the Midlands Engine in supporting the creation of a hydrogen technologies valley investment zone in Staffordshire around this vital corridor. Major investment will enable the area to be a centre for innovation, design, manufacturing and the export of hydrogen products. This investment in Staffordshire—in Burton, Uttoxeter and surrounding areas—will mean economic growth, job creation and improved transport links, allowing these businesses to keep showing why they are world-class and helping establish us as a science and technology superpower. I fully support the Chancellor’s Budget. It is only by embracing innovation and investing in our future that we can build a stronger, more prosperous Britain for generations to come.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
This was a business-as-usual Budget, but after 13 years of economic failure, what my constituents desperately need is change. In the north-east of England, wages in real terms are on average 3% lower today than when Labour left office in 2010. I would like the House to think about that for a moment. Over 13 years of Conservative Government, my constituents have got poorer. Politicians are often asked if we know the price of a loaf of bread, so let me take that as an example. In May 2010, it was £1.16. In January this year, it was £1.39, a rise of 20%. How about a pint of milk? In May 2010, it cost 44p. In January this year, it was 69p, a rise of 57%. Prices have gone up, and wages have not kept pace.
Last Friday, I visited Atkinson Road Primary Academy in my constituency and heard from the absolutely wonderful students there. Over their entire lives, they have seen their parents, their aunts, their uncles, their brothers and their sisters all getting poorer. There are Conservative Members of Parliament representing seats in the north-east, and I ask them this: did they set out to make people poorer, or did it just happen through incompetence and arrogance?
It did not have to be this way. If the Conservatives had mirrored Labour’s rate of growth, workers in the north-east would be £11,000 a year richer. What a difference that would make. We would not have half the children of Newcastle growing up in poverty and we would not have 100,000 people in the north-east forced to use food banks. Tory MPs and Government Ministers are offering the public budgeting advice when they have constructed an economy where the majority of people do not benefit from the wealth that innovation creates.
In addition to lower wages, £300 million-worth of cuts to Newcastle City Council mean our city has poorer public services. On Newcastle’s streets, lone women are left stranded at 11 pm because we have lost 15% of our region’s bus services in a single year. Of those buses we have left, just a fifth turn up on time. Businesses cannot open, because their workforce are delayed on different bus services. Across the board, and across our country, people are paying more for shoddy services. Regulated train fares have seen the highest increase since 2013 and, with the scrapping of HS2’s eastern leg, northern communities are paying the price for broken Tory promises. More than 7 million people are waiting for NHS treatment, often in pain and discomfort. Do not even think about trying to get an NHS dental appointment. In December, the north-east saw the longest wait times for accident and emergency, at four hours. The longer the Conservatives are in power, the longer people wait.
In a statement last week, the Chancellor tried to claim that inflation was the root cause of strikes. Perhaps he forgot that it was his party, and this Government, who crashed the economy and left working people to pay for their mess. This Budget was a chance for the Government to unlock Britain’s promise and potential—a chance to reverse 13 years of low growth, low productivity and low wages, and a chance to spread and deliver opportunities to people in Newcastle Central. What did we get? Just a handout for the richest 1% and their pension pots.
The Chancellor likes to talk about making the UK a science superpower, yet he failed to mention Horizon Europe in the Budget. At €90 billion, it is the world’s largest science funding programme, but his Government have left our scientists out of it. At the same time, research and development tax credit policy is changing almost as fast as Chancellors, but with even less preparation. The Chancellor gave back only a fraction of the £4.5 billion he took from innovative small and medium enterprises in the autumn statement. The Federation of Small Businesses has, in its own words, been “left feeling mystified” by the changes.
The great businesses of Newcastle Central deserve a Government they can partner with to deliver jobs, growth and innovation. Fantastic life sciences start-ups and scale-ups, such as AMLo Biosciences, LightOx and NunaBio, and long-established innovative manufacturers, such as Spincraft, all deserve better. Labour will secure the highest sustained growth in the G7 through our long-term industrial strategy. A Labour Government will unleash the potential of the north-east. This Government just starve it.
Andrew Bridgen (North West Leicestershire) (Ind)
I remind the Chamber of my entry in the Register of Members’ Financial Interests. For 22 years before coming to this place, I was the managing director and chairman of a food processing company. I am also a qualified transport manager, and I remain the equal largest shareholder in that company.
First, I want to highlight an aspect of the Budget that is of particular interest to my constituency of North West Leicestershire, which is fuel duty. The level of fuel duty is of immense importance to my constituents, given two facts: the first is that public transport is extremely limited—in fact, my constituency does not have access to any main line railway station, or any railway station at all. The second is that, since North West Leicestershire is the centre of the population of the UK, with good communication links with the M42 and the M1, a third of all jobs in North West Leicestershire are in distribution or are logistics-related. As such, the freeze on fuel duty that was first put in place in 2011 has been extremely significant to the huge economic growth we have seen in North West Leicestershire.
To think tanks such as the Social Market Foundation that complain that the Treasury has forgone money to benefit the rich, I say, “Why do you think we should penalise my constituents who have to use a car to get to work?” The fuel duty freeze is the right thing to do to maintain economic growth, and my constituents will certainly support it—and not just my constituents. We already have 1.2 jobs for everyone of working age in North West Leicestershire, so a lot of people have to travel in from surrounding constituencies to work in my constituency. I am sure those people will be very grateful for the tax freeze as well.
With regard to the lack of a railway station, I cannot help but give a push for the reopening of the Ivanhoe line, which Network Rail said would be the most beneficial reopening of a railway line that it currently has on the books. That line would link the great town of Burton upon Trent with Leicester, and would pass through North West Leicestershire and South Derbyshire, benefiting all of our constituents. It has cross-party support, including from the Members from Leicester.
Turning to energy and science, I would like to mention an energy source that I have been promoting for some time, which is small modular nuclear reactors. Only in November last year, I said to the Secretary of State that renewables cannot be relied on to provide all our energy needs, due to their intermittent nature. It is clear that we need to add more reliable baseload capacity, and nuclear is the favourite for that. Hundreds of my constituents work at Rolls-Royce, and many of them work on the development of small modular reactors. Therefore, I very much welcome the announcement in the Budget of a competition through Great British Nuclear to build small modular reactors in the UK, and the inclusion of nuclear energy in the green zero carbon taxonomy. I am sure that my skilled worker constituents at Rolls-Royce in Derby will step up to the mark, and that we will see reliable baseload energy produced from that source sooner, rather than later.
Next, I turn to investment zones, and I note that the Treasury has identified the proposed east midlands mayoral combined county authority to deliver that policy. I feel that I have to point out that the ongoing issue we have in Leicestershire, and indeed in Leicester, is the veto being exercised by the current Mayor of Leicester, which is preventing Leicester and Leicestershire from joining that authority and creating that critical mass in the east midlands. That has particular relevance to the topic of the debate, as Leicester is home to the National Space Centre and has many space and science-related companies around it. Indeed, my own constituency of North West Leicestershire is home to a space company in the form of Zeeko, which makes ultra-precision polishing solutions for the optics for satellite cameras. Quite honestly, it would be an outrage if our county and the city of Leicester were to miss out on an opportunity to be involved in this situation because of the intransigence of the city Mayor. I wish all those in the city seeking to abolish the mayoralty very well in the May elections.
Energy security and scientific innovation are key to the future of the UK’s economy and stimulating economic growth. There are many measures in this Budget that will help us to maintain and improve our place in the world when it comes to science, and this Government have demonstrated their commitment to that goal. In the area of energy and security, this Government are being realistic, and it is clear that nuclear has a significant part to play in achieving that goal in the future. Picking up on some points that have been made by the Opposition, I would add that the relationship between business and our excellent research establishments—our universities—has certainly improved, but more progress needs to be made. If we could harness all the innovations in research that we have at our great universities, we would be really accelerating our economic growth. We must work towards that endlessly.
Stewart Malcolm McDonald (Glasgow South) (SNP)
Thank you, Madam Deputy Speaker. It is a sign that God is shining on the House to see you back in the Chair—healthy and feisty as ever, I am sure. You will recall that, when I joined the House in May 2015, Conservative Members would regularly cheer the Chancellor and various Front-Bench Ministers when they uttered the words “long-term economic plan”. That was the No. 1 talking point of the Cameron Government, but of course, as we have seen since that Government left office, the Conservative party had no such thing. Indeed, it is somewhat telling that, in last week’s Budget, the Chancellor stood at the Dispatch Box, content to let the applause wash over him because
“the UK will not now enter a technical recession this year.”—[Official Report, 15 March 2023; Vol. 729, c. 833.]
Such is the mess that the Conservative party has created that it is managing to celebrate a slightly lower level of decline for the economy.
The Chancellor’s myopia is what worries me most, because he stood at the Dispatch Box like a sailor patching a leaky tap, not quite matching the moment in the way that one would expect from Britain’s Finance Minister. By stark contrast, the United States steams ahead with almost $400 billion of green subsidies to rewire its economy for the 21st century in the shape of the Inflation Reduction Act. The short-sightedness of this year’s Budget has instead condemned the United Kingdom to another year of falling living standards and slow economic decay. Closer to home, the European Union also announced bold and strategic plans in the shape of the Net Zero Industry Act, which will similarly mobilise billions and billions of euros to reshape the economy of the world’s largest single market so that it can produce at least 40% of the technology it needs in order to achieve its own climate and energy targets. While two of the world’s major economic powers set out plans to meet the moment, this Government instead celebrate—I quote again—that
“the UK will not now enter a technical recession this year.”
Rather than championing a bold economic plan to improve living and working conditions, the Chancellor—clearly unable to meet the moment—settled for tax breaks for research and development, urging us to cheer on his efforts to turn the UK into a life science superpower. While that aim is entirely laudable, and one that every single Member of the House could undoubtedly sign up to, the Chancellor needs to engage with the reality here in this country. As I mentioned earlier, the gulf between ambition and reality was summed up by the Manchester-based Nobel prize winner Andre Geim when he said that the reason that researchers are not staying in the UK or being attracted to the UK is the low living standards here. They can come here and suffer higher costs and lower salaries, or go elsewhere for better opportunities.
That neatly sums up the running theme of this Conservative Government, who seem oblivious to the fact that firms and institutions are made up of human beings—human beings who need modern public services, a healthy public realm, and a Government who can offer them the prospect of a bright future. What the reality looks like has been mentioned in this debate: to quote Torsten Bell from the Resolution Foundation,
“the worst parliament on record for living standards. By a country mile.”
The numbers were laid bare in today’s Financial Times. The Office for Budget Responsibility is predicting that UK households’ real income per person will still be below pre-pandemic levels in 2027-28, meaning hardly any improvement in living standards for the better part of 20 years. Jumana Saleheen, the chief economist at Vanguard Europe, has said that, on three key measures of living standards—household income, gross domestic product per capita, and real wages—
“we’ve seen stagnation over the last 15 years.”
According to the Office for National Statistics, average UK real household income is broadly unchanged since 2007. Paul Johnson, the director of the Institute for Fiscal Studies, has said:
“We are in the middle of a decade in which incomes are barely rising at all, with very feeble growth for two…decades.”
UK wages adjusted for inflation increased by 23% in the eight years to 2008, but fell by 5% in the following eight years, again according to the ONS.
Having the ambition to be a life science superpower is one thing. It is perfectly laudable, and all of us can agree and sign up to it. However, so long as we have living standards in this country that are grossly behind our western European counterparts—we have higher costs, higher prices, lower wages and a public realm that physically just does not work, if we are completely honest—the Government can completely forget being a superpower in anything other than a brain drain. If anything that Ministers have said from the Dispatch Box is to mean anything, they need to fix the living standards problem every household is dealing with.
Brendan Clarke-Smith (Bassetlaw) (Con)
I expected to spend longer talking about corporation tax following this Budget, but I will not talk much about that today. When we look at the rates elsewhere, we would all like to see it lower as a long-term ambition, but there is a lot of really good stuff in this Budget to offset that. In particular, there are the tax reliefs for R&D we have heard about. I would say that small and medium-sized enterprises getting £27 from HMRC for every £100 of R&D investment is a really excellent policy.
Locally, we very much feel that we have a great chance to become the superpower we have heard about recently, because Bassetlaw will be the home of the STEP—spherical tokamak for energy production—fusion project. It is something we are incredibly proud of, and for our future energy generation, it is something we can take out to the world. We will have the world’s first commercial STEP fusion energy plant, which will be built at the home of one of the last coal-fired power stations, so this is very much about changing from old technology to new. It is about the billions this will generate, as well as the growth, the jobs and the apprentices we are going to get as we go from fossil to fusion.
Sir Edward Leigh (Gainsborough) (Con)
And it is 5 miles from the town of Gainsborough.
Brendan Clarke-Smith
Yes, of course, and Gainsborough is a very important town to us locally. It fits within our local economy, and I am sure this project will benefit my right hon. Friend’s town as well. I know he is very passionate about this subject, and at the moment he is campaigning for further involvement in and recognition of this project for his constituency.
We know we are going to get an investment zone in the east midlands, and I think this would be an excellent site for one. My hon. Friend the Member for Don Valley (Nick Fletcher), who is in his place, has been campaigning every single day for at least the last six months an investment zone at Doncaster Sheffield airport, which would be another really great site. Neighbouring zones will of course all work together for growth in our regions. We do not just draw a line around our region; we work together and interact, and Yorkshire is incredibly important to us.
Just last week, for Open Doors week, I visited Europe’s largest concrete facility, Laing O’Rourke in Worksop, which is a centre of excellence for modern construction. It makes pre-cast components, and it is actually manufacturing a lot of the parts for Everton football club’s new stadium. I was going to make a few jokes about it being probably the best ground in the championship next season, but there is a lot of competition in the premier league right now, and I think I will stick to Notts County jokes before I upset anybody. There is also a £28 million privately funded carbon capture and power generation plant in Rhodesia in my constituency. Such companies want to invest in this country because of this Conservative Government, who are pro-growth and pro-business.
To top it off, the icing on the cake for Bassetlaw was to find out about the levelling-up partnership that we are going to be part of. This is worth £400 million for 20 different places in this country, and we are very proud to be one of them. We have had £20 million announced for Worksop town centre, which is going to be transformative as we move more from retail to leisure, get people going back into our town centre and get a bit of pride back into our town centre. This partnership also helps other towns that have missed out or have perhaps been neglected by a Labour council, such as Retford. There is lots to be done there, too, and we have great links on the east coast main line. It is a wonderful town with a lot of great facilities and great people, and the drive is there to go forward and grow.
How does this Budget affect the average, everyday person? We talk about these figures—millions and billions—all the time, but for me the Budget comes down to individuals and families, and what we are going to do for them. With our blue-collar offering, there is quite a lot we can be very pleased with. As a former children’s Minister, I think the childcare proposals for those from nine months on that have been outlined can be absolutely transformative and really help parents. I have had parents say to me that they would like it to happen straight away, but I think we all realise that there are capacity issues, and the sector is of course going to need some time to adapt. I know there are arguments both ways on ratios—some people like them, some do not—but it is as much about flexibility for nurseries as it is about money. To give an example, one time when I took my young child along to the nursery, I and many other parents had to wait because a member of staff was stuck in traffic. I think the nursery was one child over the ratio level, and we had to wait until the member of staff got there. We are giving nurseries flexibility in that kind of situation, and of course it is optional, which is great.
The freeze on fuel duty is really great for working people. What is not so great are ultra low emission zones. Many people are having to drive through them and pay exorbitant amounts of money just to drop their children off at school. It is very much a tax on the white van man—if someone wants to go into Sheffield, they are going to be charged. People think this is just about London, but it is not. It penalises working people. [Interruption.] My hon. Friend the Member for Heywood and Middleton (Chris Clarkson) is mentioning Manchester, and I know people are very concerned about it there. This is something we need to stop: we should not be taxing people to go to work.
Finally, people will be really pleased with the action on energy prepayment meters. We have given a huge amount of support for people’s energy bills, but we all know that those on meters are sometimes the most vulnerable in our society, and those who struggle the most are paying a penalty. It is absolutely right that we have done something to change that. With all Budgets, a lot of people like to use the word “but”; I prefer to use the word “and” for the things we would like to see in the future. I think this is a good Budget, and there is lots of good stuff in it. It is a great Budget for Bassetlaw, and I commend it.
Mary Glindon (North Tyneside) (Lab)
I am sorry that I cannot be as enthusiastic about the Budget as the hon. Member for Bassetlaw (Brendan Clarke-Smith), but it is good to see somebody so upbeat about something.
Personally, I am very disappointed with the Budget. I had expected more from a Chancellor who had been a Secretary of State for Health, and subsequently Chair of its scrutiny Committee, with responsibility for one of our biggest and most treasured public institutions—the NHS. There was nothing in this Budget to address the staff crisis in the health service, and no mention of the long-awaited workforce plan. While the controversial decision to remove the lifetime pension allowance may or may not encourage senior doctors to put off retirement, there was no confirmation of a pay award for the health workers, or the thousands of other skilled and hard-working public sector workers across the board, who have had no option but to take strike action after 13 years of pay cuts and a fall in real wages. The OBR confirms they will fall again this year. Paul Nowak, the general secretary of the TUC, in commenting on the Budget, was right to say:
“The Chancellor spoke about a high-wage and high-skills economy but did nothing to deliver it. The UK is still in the longest pay squeeze for more than 200 years. And our public services are still run-down and understaffed.”
Childcare is important to the Budget and the economy, not just in North Tyneside but across the country. It is a massive issue for parents in North Tyneside and for nursery providers, and we know it will be a priority for an incoming Labour Government. The Chancellor’s increase in funding for childcare is welcome, but the two-year phasing in programme does nothing to solve the immediate need. Where does that leave families struggling to find and fund adequate childcare now? How does it help the childcare providers struggling to pay ever-increasing overheads and meet salaries for existing staff, when the increase in Government funding for free childcare places still falls far short of the hourly rate of pay for those staff? That is not to mention the problems attracting new recruits to the profession; the salary hardly seems appropriate for years of training and the prospect of working long hours when people can earn more money working in unskilled jobs.
Save the Children says that we also need a strategy for investing in skills development for childcare workers. High-quality childcare must be about enabling every child to have the best start in life. That does not seem to be a priority for the Government. Reducing the ratio of adults to children, for example, just sends out the wrong signal.
Our seven local authorities, including North Tyneside, have welcomed the north-east devolution deal, which will bring £4.2 billion of investment into our region over 30 years and see additional powers transferred from Whitehall to local people. However, the Chancellor did not mention the all-important trailblazer status that was agreed with the Secretary of State at the signing of the north-east authority agreement.
North Tyneside itself was short-changed in the Chancellor’s Budget. The council will get £500,000 in pothole funding, but that is only £1 of every £8 the Government have cut from the pothole budget since 2021. North Tyneside will not receive any of the regeneration funding that has been announced and will still have to bid as a lower-priority area in the next round of the levelling-up fund. While I congratulate South Tyneside Council on its new levelling-up partnership funding, I am concerned—and, I confess, a little jealous—that there is no such funding for North Tyneside.
I continue to be worried about the future of small businesses in North Tyneside. The Federation of Small Businesses says that the Chancellor missed the chance to bring in measures that could have jump-started a new era of growth and productivity. For years, small business have been the backbone of the economy. The Chancellor would do well to listen to the FSB.
With the cost of living crisis still bearing down on households in North Tyneside and across the UK, the Chancellor provided little comfort other than extending the energy price guarantee for a further three months and a few more crumbs from the table. For my constituents and people across the country, times have always been hard under the Tories, and that will continue while they remain in power. It is time for Labour to take the reins.
Mr William Wragg (Hazel Grove) (Con)
On the earlier theme, it is important that I declare that I do not have a science degree, but it would impress the shadow Secretary of State, the hon. Member for Manchester Central (Lucy Powell), to know that my degree, being as it is, does indeed come from the University of Manchester.
I put in to speak in the debate less on the allocated subject matter and more in the forlorn belief that the best time to speak in a Budget debate is after a set of Sunday newspapers, because they often allow the detail to percolate through. To the credit of my right hon. Friend the Chancellor of the Exchequer, very little seems to have come up in them to trip him up.
We have had all sorts of talk this afternoon of macroeconomic forces, my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) spoke of banking crises across the world, and we have heard a great deal about artificial intelligence—presuming that is what “AI” stands for—but, in the age-old Back-Bench tradition, I want to talk about very parochial matters.
I know that the House will have noted with great enthusiasm and interest, on page 72 of the magnificent Budget document, the announcement of a new community hub in Stockport—the Marple leisure hub. There was some bashfulness at the talk of swimming pools during the speech by my right hon. Friend the Chancellor of the Exchequer. I am not fussed about swimming pools in Richmond, Yorkshire, or indeed about general donations from the Treasury to keep the pool temperature in different leisure centres toasty warm; what I am concerned about is the success—finally—in securing the Marple leisure hub.
The hub will be a magnificent boost for Marple and surrounding districts in my constituency. It will deliver a gym, a fitness studio, a new library, a community space and a five-lane swimming pool. When I saw the artist’s plan at an earlier stage, I noted that there were only four lanes, but we have achieved five—a massive 25% productivity increase, delivered overnight by my right hon. Friend the Chancellor of the Exchequer. I am absolutely enthused. The artist’s impression even has an inflatable flamingo. What could go wrong?
In all seriousness, I am very pleased that that levelling-up bid was successful for my constituency. I should pay credit—those on the Opposition Benches may enjoy this—to the then Labour minority-led Stockport Council, which agreed with me that that was the right bid for the Hazel Grove constituency. It will not surprise the House—I cannot spot any Liberal Democrats in the Chamber—that a few more have claimed credit for it who had, it is fair to say, very little to do with it. I will tone down my language for the sake of Hansard, but success has many parents and failure has fewer—let us put it that way.
I have been quite cheerful so far—those on the Treasury Bench must think, “What on earth has happened?”—but in the time remaining to me I will speak briefly about something else that lurks in the Budget document: Greater Manchester devolution. I am a contrarian. I can see many colleagues from Greater Manchester on the Opposition Benches. They must rejoice when the Mayor is given further powers and the ability to exercise them—
Mr Wragg
Indeed, indeed. Whether he exercises them wisely is a matter for debate—I think even some Opposition Members would concede that point.
All I ask is that the Government pay attention to those of us who have the great honour to represent parts of Greater Manchester. Having been to a so-called briefing meeting with my right hon. Friend the Secretary of State for the Department for Levelling Up and whatever else it is called these days, I was somewhat perturbed and worried that I was, in the words of his WhatsApp message to the former Health Secretary, my right hon. Friend the Member for West Suffolk (Matt Hancock), simply in a therapy session, whereby our concerns would be heard but no action would be forthcoming.
In the spirit of cheerfulness, I simply say to the Government that if I and my colleagues from Greater Manchester are simply to be subjected to therapy sessions, then I shall make sure that I turn up at Delegated Legislation Committees in the same cheerful vein to argue against aspects of this so-called deal. I urge the Government to pay attention to Greater Manchester Conservative MPs—indeed, to any Member of Parliament from Greater Manchester—when they bring forward this tranche of powers that have no legitimacy and very little demand.
Mike Kane (Wythenshawe and Sale East) (Lab)
It is a pleasure to follow the hon. Member for Hazel Grove (Mr Wragg). I look forward to catching up once again at our annual meet-up at the carnival in July, and I wish him all the best with his therapy.
The Secretary of State mentioned the great British invention of tarmac. John Loudon McAdam was a Scottish engineer in the 17th and 18th centuries who added coal tar to stone surfaces. That became tarmac, or “tarmacadam”—that is where the name comes from. I thought it was an odd reference for the Secretary of State to make, though, as we cannot get enough money for our crumbling roads and the potholes that we all face.
Every day, I hear residents and businesses in Wythenshawe and Sale East talk about the harsh realities of the cost of living at the moment: old-age pensioners are afraid to put on their heating; more and more working families are using food banks; nurses, teachers and firefighters are struggling with household bills as costs go up and their pay stays the same; people are unable to meet private rents or manage rising mortgage rates; and local businesses are closing down because of overheads.
Last Wednesday, the Chancellor had a chance to show that he is on the side of Britain’s people and businesses with a Budget that offered real support and serious solutions, but that is not the Budget we got. Instead, what the Chancellor offered was a Budget that did worse than deny people’s realities: it insulted them, with a £1 billion pension cut for the richest 1%; a stealth tax freezing income tax levels, meaning workers will see their pay squeezed further; and an overarching message that the Government’s plan was working and the economy was not that bad, at the same time as the OECD announced that the UK will be the only—the only—G7 economy to shrink this year.
Where the Chancellor came closest to offering real support, he did so by stealing ideas from others, yet bungled the detail. The hon. Member for Bassetlaw (Brendan Clarke-Smith) mentioned the expansion of free childcare. Sadly, we will not see that crucial support to help parents get back into work introduced in full until September 2025. As it stands, the subsidy from childcare providers is so high that it threatens to put them out of business.
I welcome the extension of the help with energy bills. The Government again capitulated to what Labour and campaign groups have been calling for, for months. But with an extension of just three months and more limited support, what we are seeing is more sticking-plaster politics. Where is the investment in green energy, which is the only way we will achieve true energy security? Then there was more of the same, with recycled ideas and empty promises from the many Tory Chancellors and Prime Ministers of the past. To level up, the Chancellor announced plans for the Truss-Kwarteng “investment zones”. Forget HS2, Northern Powerhouse Rail or solid regeneration projects for Wythenshawe town centre and Sale town centre, all of which have been delayed or denied by the Government. Instead, they think these low-tax, reduced regulation, potential Canary Wharfs will generate jobs and skills in left-behind communities. These are far from the serious solutions that Britain needs. What the Chancellor put forward is a Budget that denies reality, delivers little and borrows heavily; a Budget from a Government who are out of touch, out of ideas and quickly running out of time.
Under this Government, people are getting poorer. People are being supported into work, but getting paid less and taxed more, while public services struggle to cope—all the hallmarks of an economy in managed decline. Our people and businesses deserve more. We need a Budget that delivers for people, communities and businesses like those in Wythenshawe and Sale East: 1,600 homes for Wythenshawe town centre, if we had got our levelling up bid; 250 homes for Sale town centre; investment to regenerate Wythenshawe hospital, but with the hospital building programme stuck in the muck we could build 1,000 homes on that site with the right release of investment; an HS2 station near my constituency and an extended Metrolink loop line; a station on the mid-Cheshire line; scrapping business rates; and a proper plan to address skills gaps that are holding back our small and large businesses.
What we need is a Budget that acknowledges reality and the scale of the challenge head-on, but meets them with the hope, ambition and determination needed to get Britain back on the path to growth. But for that style of Budget, it seems we will have to wait longer still.
Maggie Throup (Erewash) (Con)
I would like to add my name to the growing list of Members with a science degree. My hon. Friend the Member for Hazel Grove (Mr Wragg) will be pleased to hear that it is from the University of Manchester.
Since I was last able to make a contribution to a Budget debate from the Back Benches, the economic outlook, both at home and abroad, has shifted dramatically. The aftermath of the pandemic, compounded by the effects of the war in Ukraine, has left many of the world’s leading economies battling a combination of high inflation and mounting debt.
My right hon. Friend the Chancellor is to be commended for the measures he has brought forward to meet the target of halving inflation by the end of the year, to continue to support people with record high energy bills and, crucially, to avoid a recession. That is not just my assessment, but one reflected in the feedback I received on the doorsteps from my constituents across Erewash this weekend as we were out canvassing. They described the Chancellor’s statement as measured, confident and logical.
I want to focus on tech, and specifically the support for the Medicines and Healthcare Products Regulatory Agency. Everyone will remember the important role the MHRA played during the pandemic. It was the first medicines regulator to authorise a vaccine against covid-19. Its worldwide reputation is second to none. Many other regulators quickly followed in its footsteps in authorising vaccines, as they trusted its decisions. It was not just the fact that it was first on so many occasions in approving new vaccines—including the bivalent vaccine, effective against the original Wuhan strain and omicron—but the way it did it.
Traditionally, the different stages of clinical trials are carried out sequentially, but whether it was a vaccine or a therapeutic, the acceptance that regulation could be made on data generated by stages of clinical trials carried out in parallel was a real and significant breakthrough. Yes, on most occasions the MHRA was first to authorise a vaccine from the variety of suppliers available, but on some occasions it was able to base its approval on Food and Drug Administration or European Medicines Agency approval.
That type of linked-up working for a wider range of medicines is now being facilitated by the allocation of funding in the Budget. As has been acknowledged by Dr June Raine, the MHRA’s chief executive, the £10 million funding will be used to fund its ongoing innovation work and accelerate the development of groundbreaking global recognition routes. That will undoubtedly give UK patients faster access to the most cutting-edge medical products in the world.
A few weeks ago, I was invited by the former chief executive of the British Bankers Association and one of my predecessors as the Member of Parliament for Erewash, Angela Knight, to speak to a delegation of senior business leaders, during which we discussed the importance of public health and the value of health tech to the economy. It is estimated that the private sector alone loses over 100 million workdays each year to sickness absences, greatly impacting on productivity and hindering wealth creation.
To fully capitalise on the creation of new investment zones, as well as the expansion of UK civil nuclear, led by Derby-based Rolls-Royce, we must ask ourselves: how do we keep the UK workforce healthier for longer? The answer is through a combination of targeted public health measures aimed at prevention, such as tackling obesity and reducing levels of smoking, together with innovative health tech partnerships, such as the one signed by the Government and Moderna to invest in mRNA research and development and build a state-of-the-art vaccine manufacturing centre here in Britain.
Returning to the targeted public health measures announced in the Budget, I especially welcome the £60 million for public swimming pools. I trust it will be distributed fairly to ensure that swimming pools such as those at West Park leisure centre in Long Eaton and Victoria leisure centre in Ilkeston can continue to be used by my constituents to support both their physical and mental health.
This Budget is designed to inspire confidence in the British economy and will continue to provide the stability that has so often been the watchword of the Conservative Government led by my right hon. Friend the Prime Minister. My constituents stand to benefit greatly from the measures introduced to curb inflation, help with the cost of living—we heard about many aspects of that, including the change to prepayment meters and protecting energy payments—and safeguard vital public services. I am sure that many of my constituents will raise a glass or two to the Chancellor for again backing the British pub. I therefore look forward to backing the Budget in the Lobby tomorrow evening.
Dan Carden (Liverpool, Walton) (Lab)
May I, too, welcome you back to the Chair, Madam Deputy Speaker? It is good to see you there.
I want to use the couple of minutes I have to pass comment on this year’s spring Budget to try to convey some of the reality that my constituents are living through and how these economic measures affect their lives. That is important, because it is the 13th spring Budget delivered by a Conservative Chancellor. The test is simple: how are the people I represent doing after 13 consecutive Budgets from a Conservative Government? Are the communities that I represent thriving? Is life a little easier? Are they earning more and maybe working a little less? Real wages across every region of the UK are lower now than when the Conservatives came to power in 2010. Are schools being properly resourced to help give children the best start in life? Are hospitals functioning and well staffed? Are the buses and trains affordable and running on time? Obviously, my constituents would answer a resounding no.
What about the question of whether society is more equal than when the Conservatives came to power? Today, half of all UK wealth is held by the top 10% and the lion’s share of it by the top 1%. Think of the circumstances in which this Prime Minister and Chancellor came to their positions: their predecessors lasted 49 and 38 days respectively, and the fallout from their disastrous mini-budget cost the country £30 billion. Necessarily, by simple contrast, that makes the current incumbents look uber-competent. That, with a couple of major macroeconomic developments such as the halving of gas prices over the last six months, makes the economic forecasts slightly less catastrophic than might have been case just last year. All that can be spun to tell quite a good story and there are certainly press barons willing to print that up.
If the Prime Minister promises to cut inflation by half and declining energy costs make that a reality—it was quite a safe bet when the promise was made—should my constituents really be grateful? They are still worse off, although by a little less than they once thought they might be. I ask Government Front Benchers: is that the scale of expectation that the public should now have? Is it the best that the Conservative party can offer to the country?
This Budget is one of continuing, long-term managed decline: of people’s wages; of the public services that people rely on; of social security; of security at work, where low-paid, insecure contracts are now the norm; of local authority budgets—another £50 million has been cut from Liverpool this year; of investment, with the UK having the lowest business investment in the G7; and of disposable income, with people working simply to pay the bills. Most tragically of all, there is the managed decline of people’s living standards: the longest fall in living standards on record. It is the managed decline of people’s hopes, dreams and ambitions, and our collective capacity to realise them. As Martin Wolf of the Financial Times has said, we are heading into
“a lost decade...coming on top of a very poor previous decade”.
My time as an MP has been characterised by a constant struggle to prevent the worst from happening to my constituents—whether that is fighting to save local fire stations or care homes from closure, trying to stop vulnerable people from having their support taken away, or giving solidarity to workers whose jobs, pay and conditions are under threat. We are sick of just trying to prevent the worst. We are sick of managed decline. We want to unlock the potential of our people and give communities the power and the resources to focus on what they can achieve.
The latest Prime Minister and Chancellor could have taken the opportunity to change approach. Instead, we have a business-as-usual Budget from a Conservative Government out of ideas and out of time. We need nothing less than national renewal—a new deal for working people; a bold, clean energy transition; an investment-led economy, based on making, not taking; and wealth, power and opportunity spread to every region and every community. Only then can we reclaim the future and look forward, once again, to a brighter tomorrow.
Sir Edward Leigh (Gainsborough) (Con)
I am delighted to follow my hon. Friend the Member for Bassetlaw (Brendan Clarke-Smith) in praising the Government for bringing a nuclear fusion site to West Burton. As I have already said, it is not 5 miles from Gainsborough—indeed, Gainsborough is the closest town. I very much hope that the Minister will support my campaign to rename the site the “Gainsborough West Burton” site.
Gainsborough was at the heart of the industrial revolution in the 19th century, bringing in new products. This site is a chance for us to go with the flow through a brand new technology. We want to create apprenticeships and to involve the whole region. I really want to make that clear. Gainsborough is an industrial town with traditionally high levels of employment. I am delighted that the Government have given us £10 million in levelling-up funds. We are grateful to the Secretary of State for Levelling Up, Housing and Communities for giving that to Gainsborough South West ward—the 27th most deprived ward in the entire country.
However, there is no point one hand of the Government giving us £10 million in levelling up if the other hand is potentially taking £300 million of investment away from my constituency. As I mentioned in Home Office questions today, we have developed a wonderful deal for RAF Scampton—home of the Dambusters and the Red Arrows—creating heritage, a spaceport, a hotel and industry. The whole thing is at risk because the Home Office is now marching in and threatening to put 1,500 migrants there. This has nothing to do with the fact that they are migrants or not migrants; it is about the fact that we cannot develop the site, which is relatively developed now, if it is held by the Home Office for two years. Levelling up is at the heart of this Budget. We must have co-ordinated government—co-ordination between the Home Office, the Ministry of Defence and the Department for Levelling Up, Housing and Communities.
I want to make a more general point. Thatcherites such as myself are always banging on about the need for tax cuts. There is no point in our doing that if we are not controlling public spending. Of course I regret that corporation tax is going up, but I recognise that the public finances are in a state of crisis. I really encourage Ministers on the Front Bench to redouble their efforts to ensure that there is efficiency and economy in our public services; I speak as a former Chairman of the Public Accounts Committee.
There is still grotesque waste throughout the public sector. I am now on the sponsor board of the restoration and renewal programme: hundreds of millions of pounds have been wasted on doing nothing to renovate the building where we are now—years wasted! It is a small point, but I read in the newspapers that we are already spending about £100 million on the covid inquiry, hiring hundreds of lawyers. Right through the public sector, we rely on the Chief Secretary of the Treasury to ensure that we get good value for money.
One of the ways in which we will eventually make the public sector work better is through more of a sense of self-reliance. I do not want to make further points about the triple lock, because I will get into trouble if I criticise it in any shape or form—it is very politically difficult—but the Government must have a strategy to deal with it. The ideas developed by Peter Lilley when he was Secretary of State are exciting and interesting.
We cannot just go on having a national health service that consumes an ever larger proportion of national income but is riddled with waste and incompetence and delivers worse and worse outcomes. We have to be prepared and have the political courage to learn from countries such as Australia, France and New Zealand, which have a mix of public and private provision that ensures that they have what are frankly much better health services because they are unleashing people’s enthusiasm to invest in their health. The previous Conservative Government gave tax relief for private health insurance, and we should not dismiss that.
I want to make one more point. Of course we all welcome the extra provision for childcare, but it is a massive extension of the state. It is desirable in itself—I am entirely in favour of mothers who want to work being allowed and encouraged to do so even when their babies are as young as nine months—but we must also support mothers who want to stay at home. The marriage tax allowance was introduced by Nigel Lawson. It was allowed to wither on the vine, and was then reintroduced by George Osborne in 2015, but it is not well-advertised or taken up. It is fairly derisory, and amounts to only about £1,700. If a couple earns £70,000, they are £7,000 worse off as far as the taxman is concerned if the mother stays at home looking after a child and the husband goes to work.
The marriage tax allowance is not just for married couples but for couples in a civil partnership. The Government should be neutral about the fact that, often, it is in the interests of the child and the mother, where the mother wants to do so, for her to be allowed by the tax regime to stay at home and not to be forced by the tax regime or by her personal circumstances to go out and work. A Conservative Government believe in choice, and that is what I want to impress on the Government.
Bambos Charalambous (Enfield, Southgate) (Lab)
It is a pleasure to see you back in the Chair, Madam Deputy Speaker.
Politics is about priorities. At a time when people in my constituency are struggling with the cost of living, this Budget was an opportunity for the Government to put working people first and to get us on the pathway to growth, making everyone—not just the wealthy—better off. From speaking to my constituents, it is clear that the cost of living should be the priority right now. One constituent wrote to me recently:
“I have had enough of constantly struggling every day, day after day for months and years.”
My constituent is not alone. Recent polling from 38 Degrees found that in Enfield Southgate, 40% of people have not been able to afford to turn the heating on when cold in the past month.
As people are forced to choose between heating and eating, I am pleased that the Government have followed Labour’s calls to freeze energy bills for another three months, and for prepayment meter charges to be brought in line with direct debit payments. However, the cost of living crisis is not over, and inequality is growing. For people struggling with sky-high bills, rents and mortgages, I fear that the help included in this Budget will not really touch the sides. Some 31% of my constituents are worried about having to use a food bank in the next year. Charities, food banks and community organisations such as the great Cooking Champions in Enfield, which provides groceries and cooked meals for those in need, face all-time-high demand, and 26% of people in Enfield Southgate have missed rent payments in the last six months as housing insecurity compounds cost of living pressures.
The Chancellor stood at the Dispatch Box last week and talked about the difficult decisions that the Government took in the autumn to deliver stability. While he and the Conservatives may dance around the issue, people in Enfield Southgate will not forget why those difficult decisions were needed, as the fallout from the Government’s disastrous mini-Budget, fuelled by an ideological fixation on failed trickle-down economics, drags on to this day. In my constituency, families face mortgage hikes of more than £6,000. That is the devastating, real-life impact of the Conservatives’ economic mismanagement—a Tory mortgage penalty in the middle of a cost of living crisis.
In that context, I return to priorities. This Budget was an opportunity to tackle the long-term challenges that we face with the cost of living, and to begin the clean-up after 13 years of Conservative failure on the economy. Instead, while family incomes and living standards fall to record lows and working people face the highest tax burden in 70 years, the Chancellor made it his priority to spend £1 billion on an untargeted tax cut for the richest 1% and their pension pots, in the midst of a cost of living crisis. That shows what side the Tories are on.
There are three issues that I would like to raise that were not covered in this Budget fully. First, the windfall tax was not mentioned last week, despite oil and gas giants continuing to rake in record profits at our expense. Last year, Shell reported the highest profits in its 115-year history and one of the largest profits in UK corporate history, while BP made profits of £23 billion in the same year, up from £10.6 billion. It is outrageous that the people of Enfield Southgate are struggling to pay their energy bills as oil and gas giants line their pockets. All the while, the Government sit idly by, leaving £10.4 billion on the table through holes in their half-baked energy profits levy. We needed a proper windfall tax on the oil and gas giants’ unearned profits of war—billions of pounds that could help families and businesses across the UK through the cost of living crisis.
For renters, there was nothing from the Chancellor, despite rents in London increasing 17.8% on average last year. Every week, more constituents come to me with housing issues, from families facing eviction to people struggling to meet unaffordable rent rises. It is an incredibly worrying time for many, and this Budget did nothing to help them or to solve the housing crisis that has engulfed our country since the Conservatives took office. In Enfield, under this Government’s watch, funding for the council has been cut by 60%. Quite simply, how can councils tackle fundamental issues such as housing insecurity and shortages if the Tory Government in Westminster refuse to properly fund local government?
Finally, I would like to mention hospices because, although there is brief respite from the energy price guarantee freeze, long-term problems remain for hospices up and down the country. I welcome the announcement of more money for charities and hospices such as North London Hospice in Enfield, but the Treasury must release the money quickly to enable hospices to meet their energy bill demands as they struggle to maintain essential clinical services for some of the most vulnerable people in our community, in the face of unprecedented price rises and funding challenges.
Last week, the Chancellor said that “the plan is working”. If the plan is papering over the cracks of 13 years of decline, I might agree, but this Budget should have been a game changer. The people of Enfield Southgate deserve better than a tired Tory Government with the wrong priorities and nobody left to blame. It is time that they stepped aside and let a Labour Government take over and deal with the real priorities that matter to the people.
Virginia Crosbie (Ynys Môn) (Con)
It is wonderful to see you in your rightful place, Madam Deputy Speaker.
This Budget is an example of how this Conservative Government are investing in Britain and in levelling up communities across the country, including in my constituency. The £20 million for the breakwater refurbishment in Holyhead will help to support the redevelopment of the second busiest roll-on roll-off port in the UK. The support offered to individuals and households, in particular for childcare, will open new opportunities for the working-age population in my constituency, but it is the nuclear energy announcements that I believe will have the greatest long-term impact on the people and economy of Ynys Môn. It is nuclear that I have consistently campaigned on and championed. I was delighted that my constituency was mentioned in the Chancellor’s speech.
Earlier this month, I wrote a letter to the Prime Minister, co-signed by 57 right hon. and hon. Friends. In that letter, I asked the Prime Minister to push ahead with a bold new programme of nuclear power construction under the aegis of Great British Nuclear and to make new nuclear energy part of the green taxonomy. Great British Nuclear and the vision of our British energy security strategy would enable this country to make enormous strides toward energy independence, net zero and a more prosperous and balanced economy.
Every single nuclear power station online in Britain today was connected to the grid under a Conservative Government. The stations that we approve and build today will give the United Kingdom secure, reliable energy for at least 80 years. They will stand as this Government’s green legacy to our children and our children’s children. By announcing the intention to include nuclear in our green taxonomy, we open the gates to investment that was not previously accessible, and demonstrate to the world that we are committed to new nuclear. By backing small modular reactors through a competitive process, we will derive best value and drive our nuclear energy production forward in innovative ways that can tackle both national and local demand.
Ynys Môn is one of Rolls-Royce’s four potential SMR sites. I have taken around the island SMR companies, such Last Energy and GE Hitachi, with a view to investing on Ynys Môn. But it is the outcome of all these words that my constituents are most interested in. This Budget paves the way for regenerating Wylfa—currently the site of a nuclear power plant undergoing decommissioning. I hope, soon, to see spades in the ground for the UK’s next new nuclear construction.
In case you have not heard, Madam Deputy Speaker, alongside these exciting developments, Ynys Môn is awaiting the outcome of its bid to become a freeport and I have an Anglesey freeport jacket especially for you. The freeport would be the last piece of the puzzle that would allow us to unleash the full potential of Ynys Môn. A freeport would work hand in hand with these nuclear announcements and make Ynys Môn a thriving, successful and economically productive part of the UK. Together, new nuclear and an Anglesey freeport would unleash our potential and make us roar.
The impact on Ynys Môn of such a step change in its fortunes would be huge—the culmination of decades of “nearly theres” for my constituents. It would bring employment, investment and the opportunity for local people to work locally. My dad had to leave Wales to find work. He could not afford to have his family in Wales. I have come back to ensure that other people do not have to leave and there is good-quality employment, right there on Ynys Môn.
The choice for our young people on Ynys Môn will no longer be to stay in their communities on low-paid and often seasonal work, or to leave in search of a career, like my father. They will be able to stay local, train local, work local and contribute local. That is what this Conservative Government and levelling up are all about. Diolch yn fawr.
Dame Nia Griffith (Llanelli) (Lab)
It is good to see you back, Madam Deputy Speaker.
Today, the United Nations Intergovernmental Panel on Climate Change climate science report reminds us that we are not doing enough to tackle climate change. While we continue to have a clear moral obligation to prioritise reaching net zero, we are now at a critical time for companies to invest in the technologies for the future. If the UK Government do not provide the appropriate conditions and incentives for multinational companies to choose to site their new production lines in the UK, they will go elsewhere. There will be not just one factory closure, but multiple factory closures. We will lose critical mass and a whole generation of investment. That would be a tragedy, when we think back to our role in the industrial revolution and about the world-class research and development that takes place in the UK’s great universities and leading manufacturers.
The US Inflation Reduction Act and the European Union green deal industrial plan pose real challenges for the UK. Sadly, this Chancellor’s Budget was an extremely disappointing response to what is going on elsewhere. It prompted the CEO of the Society of Motor Manufacturers and Traders to say of it:
“There is little, however, that enables the UK to compete with the massive packages of support to power a green transition that are available elsewhere.”
That is particularly galling as we do have the ideas to invest in innovation and research and development, and, at the same time, we have a desperate need for the Government to create growth. Just last week, the OECD report, “A Fragile Recovery”, repeated that Britain’s economy will have the worst performance of any advanced country this year. That is a disgrace this Tory Government should be ashamed of.
The investment needs to be comprehensive. For example, the automotive transformation fund needs not just to support the development of batteries and electrical components, but to be available to companies such as those in my constituency investing in the development of lighter bodywork parts, which are essential for improved electric vehicles.
That is why we need a bold investment programme, such as the one Labour proposes of some £28 billion a year, so we can lead the green revolution, and develop, manufacture and export goods from our proposed export hubs, rather than find ourselves left behind in the green technological race, with factory lines shutting down as the manufacture of current models is phased out and our manufacturing base disappearing, leaving us ever more dependent on imports and exposed to the vagaries of world markets.
Time and again, from way before the current energy crisis, we have raised the issue of uncompetitive energy costs in industry and business. If the UK had invested considerably more in renewables, we would have been much less reliant on imported gas and in a much better position to control our energy prices. Yet this Tory Government have wasted so many years, dragging their feet on investment in renewables, with their absurd ideological ban on onshore wind in England—a ban there was absolutely no need for. We have just had a begrudging, half-hearted reversal of that ban, with no real enthusiasm and no renewed drive to accelerate the roll-out of this, the cheapest and easiest form of renewable energy to produce. And what did we hear in the autumn? Measures to curtail solar panel expansion investment. What will the Government now do to give a real boost to the transition to renewables?
We recently witnessed the fiasco where wind energy was being generated in Scotland, but because of lack of grid capacity, it could not be transmitted to England, where consumers needed it. So there is work to be done for the national grid just to catch up with the present, never mind prepare for the future.
I know the Climate Change Minister in the Welsh Government, Julie James MS, is mindful of the likely quantities of energy that will be generated by offshore wind in the Celtic sea. She has raised with the UK Government the vital work that is needed to the national grid to ensure that energy can be transported from where it is generated to where it is needed. Yet when I have mentioned that here in this place, I have been met with looks of incredulity from some Members of the Government Front Bench. So I ask again: given the huge potential for increasing output from both onshore and offshore wind, please can the Minister responding to the debate set out in detail what talks Ministers have had with National Grid about ensuring grid capacity will be able to transmit power from where it is generated to where it is needed? How do the Government intend to accelerate the development of the national grid?
I turn to the Horizon programme, the EU programme that UK universities have particularly benefited from in the past, as they have been seen as attractive partners for other European countries. There was an abject failure by this Government in their Brexit negotiations not to come to a cordial agreement with the EU whereby we could, albeit from outside the EU, have collaborated on Horizon or similar programmes. Investors are now coming to the end of current programmes and unable to plan for the future.
The UK Government keep trying to blame the EU for the delays to the Horizon association, but they should be taking responsibility for their actions in breaking their manifesto promise to broker an association. In summing up, can the Minister update us on negotiations for the UK to have Horizon associate status, and ensure that our universities can benefit and compete with the best in the world?
Sir Robert Syms (Poole) (Con)
I draw attention to my entry in the Register of Members’ Financial Interests. I am in the parliamentary pension fund and I may be affected by the lifetime allowance changes.
Listening to the debate today, one would be forgiven for forgetting the fact that we had the worst public health emergency for 100 years, in which the Government had to take actions to lock the economy down. I had my disagreements with my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), but you cannot say his motives were bad. He was trying to save lives and to get through a pandemic. We did not know whether the disease was going to be deadly, mild or what. That cost a lot of money and had a big impact on many businesses. If several million people are sent to sit at home for months on end while the Bank of England is printing money, it should not be a surprise if, at the end of that, inflation is high and living standards are under some challenge. The only people who could be surprised about the fact that the last 12 or 18 months have been difficult economically are those who did not think that there would be any consequences to lockdown. There were consequences. We are getting through them and things are improving, but that means there have to be some tough and difficult decisions on issues such as tax.
On the Government Benches, sometimes we do not like to put up taxes, but sometimes it is necessary. If we look at what the Government have done, we see that they have a plan, which is working. Between now and the next general election, there will probably be five statements or Budgets. We are at stage 2, so there are another three to go. In November, there were predictions of a recession—quite a big recession, actually—in the early part of this year, a rise in unemployment and a black hole in public spending. They have all sort of disappeared, which means the Government have stabilised the situation.
The Government have been trying to ensure that more people can get back into the labour force, with changes to childcare. They have protected a lot of capital budgets through their decisions, and their main objective in the Budget is to keep the economy growing. I understand why people quote the International Monetary Fund, but its predictions, which are always educated guesses, were produced before the German economy went into a recession at the end of last year. At the moment, neither the French nor the German economy is performing as well as the British economy.
The truth of the matter is that we have a spike in inflation, which should come down quite rapidly this year. There will be a crossover point, somewhere around May, June or July, at which inflation will fall below the rate of pay increases. We will then start to have an increase in living standards from this summer onwards, and some of the squeezes that families are facing will be reversed. If the public finances improve as we grow, I hope that my right hon. Friends on the Treasury Bench will be able to cut taxation. There is a lot to be said for the Budget, which is one further step in the direction of sensible economics and nursing our economy and our public and individual finances back to health, so I support what the Prime Minister and the Chancellor are doing.
I was pleased by what my hon. Friend the Member for Ynys Môn (Virginia Crosbie) said about nuclear, particularly small modular. It is very important that we get on with that because, as always, we need a balanced range with not just renewables and gas but nuclear power.
I am generally pleased with what the Budget has done: I think that the outlook has measurably improved. We can still see some fragility in the world economy, certainly when we look at Switzerland or the United States, so we have to take a cautious approach, but I am sure that if we do so and nurse the economy back to health, our nation will be rather the better for it in 12 or 18 months’ time.
I say to the Opposition: if we are right, we will beat you, and if you are right, you will beat us. I keep hearing about these 13 years of misery, but we won an election in 2015, we won an election in 2017 and we won an election in 2019. We may well win the election in 2024, but it will really be determined by whether the Treasury team get it right. My view is that they probably are getting it right; the Opposition’s difficulty is that they have to sit there and watch us getting it right. I think it is going to be an interesting 18 months.
The hospitality sector in Bournemouth and Poole thinks that VAT is too high. The Isan Thai restaurant in Poole and the Lakeside restaurant in Poole would like to see it reduced when we can afford it, not least because many restaurants do not pay VAT on food, so the real rate of VAT at 20%, when they do not have many offsets, is quite a painful thing to pay. I told them that I would raise that point in this debate.
I think we are going in the right direction. I think we will see an improvement as we go through the year, and it will fundamentally change the politics of our country.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr iawn, Madam Ddirprwy Lefarydd. May I say that it really is a pleasure to see you back here? It makes something different about this place.
Communities across Wales are experiencing the biggest fall in living standards since records began. People will have looked to the Budget for a long-term economic plan to fix the structural issues impoverishing our economy, yet with incomes still set to be lower than their pre-pandemic levels by 2028, this Budget clearly does not go far enough. The UK Government must go further with investment in research and innovation, and must recognise the importance of our universities in unlocking Wales’s economic potential.
Universities attract investment, ensure that our industries have access to skilled graduates, and provide the foundation for the research ecosystems that enable innovation. In response to the covid pandemic, for example, Bangor University developed a much-praised process for testing waste water for the virus, which could detect the emergence of new variants, and it is now exploring other ways in which waste water can be used to improve people’s health and guide future healthcare policy. Yet Bangor tells me it is concerned that it was not able to bid successfully to provide that service in England, even though it is still doing so for the Welsh Government. It is a matter of concern if there is a two-system approach to university investments from this Government.
Despite the many such examples of research excellence, the Budget failed to address the looming cliff edge that Welsh universities face. In April, 60 research projects and 1,000 skilled jobs across Wales will be put at risk when EU structural funding comes to an end. Once they are lost, there is a real risk that most of those research projects will not return and progress towards both net zero and skills targets will be hindered. Welsh universities desperately need £71 million in bridge funding to enable those projects to continue for 12 months and to provide time to develop a more strategic approach to future funding. Ensuring that the UK Government do not overlook research excellence in Wales when initiating new contracts or national facilities will be critical to enabling Wales to continue to deliver the impacts of world-class research and to support the industries of the future.
One of those industries, of course, is renewable energy, which has the potential to create well-paid jobs, reduce our dependence on hydrocarbons and guarantee energy security. With significant generation opportunities along the Welsh coastline in both marine renewables and offshore wind, Wales has real potential to become a world leader in the manufacture of components and in exporting skills and expertise to a growing global market.
The development of marine energy is currently being hindered by the slow route to market for projects. Contracts for difference could play a key role in the development of this technology, so I was disappointed to learn that ringfenced support for tidal stream has been halved from £20 million in the last round to £10 million in the latest. With pre-consented demonstration zones in Wales, such as Morlais in Ynys Môn, depending on securing funding through the scheme to deploy, will the Government explain their rationale for halving the support and set out what steps they are taking to support Wales’s first mover advantage in this technology?
I would like to set out how the nuclear licensed site at Trawsfynydd, which is entirely in public ownership, could be best used in future. Proposals for a national medical isotope centre in Trawsfynydd, known as Project ARTHUR, could be central to the UK Government’s aim of becoming a science and innovation superpower. Despite the importance of medical isotopes as a key pillar of cancer care and as a diagnostic tool, there are real fears about the security of supply because many of the isotope-producing reactors across the globe will be decommissioned in the next decade.
We therefore face the nightmare scenario of having to ration radioisotopes. We cannot leave it to the market to sort this out. It is about more than the rewards from long-term economic growth and long-term security; it necessitates action now. Bangor University argues strongly that securing an accessible supply of radioisotopes for the UK must be at the heart of expanding UK research and development capabilities in this field. Will the Minister therefore update the House as to what progress has been made on the medical radionuclide innovation programme, and on what recent discussions they have had with the Welsh Government about bringing Project ARTHUR to fruition?
Finally, Trawsfynydd is widely recognised as the lead location for the first SMR in the UK, not least because it has the UK’s first site-specific development body up and running in the form of Welsh Government-supported Cwmni Egino. Identifying technologies by the end of this year is therefore critical, as is acknowledging the need to hit the ground running with projects that actually have a chance of being ready for approval within the decade.
There have been many fine words about the need for nuclear to play its part in the energy mix, but since I became a Member of Parliament in 2015 we have been going round in circles discussing the need to move ahead. We have sites identified; Trawsfynydd is the most advanced in terms of decommissioning and is a publicly owned site. With Cwmni Egino as a lead method of bringing forward development, will the Minister consider it—certainly for Traws and possibly also for Wylfa—as being ahead of the game in comparison with Great British Nuclear and a perfect model for innovation? Bringing forward this activity is so critical to the economic development of north-west Wales. I am sure that the Minister will mention GBN in her wind-up, so will she acknowledge that Cwmni Egino and Trawsfynydd are key to successful strategic planning towards net zero?
Bob Seely (Isle of Wight) (Con)
It is great to see you in the Chair, Madam Deputy Speaker.
Like my hon. Friend the Member for Hazel Grove (Mr Wragg), I will be ultra-parochial: I am going to talk specifically about the funding model in my constituency in relation to public services, and what the Treasury says or does not say about it. The issue, which I will bring up in my Prime Minister’s question on Wednesday and in my meeting with the relevant Minister in the next couple of weeks, is the funding of public services on the Isle of Wight.
Isle of Wight Council is the only island authority in the United Kingdom that does not receive a permanent, consistent uplift in its funding that reflects the additional cost of providing services on an island separated by sea from the mainland and without a fixed link. The “Fair funding review” of 2017, which was signed off by the current Prime Minister when he was in a different job, made clear that it recognised the additional costs associated with providing Government services on the Isle of Wight. It set those costs at a fairly high level, estimating them to be the equivalent of an extra 35 miles for ferry passengers on foot and about 70 miles—the distance from London to Peterborough—for those travelling in a car or lorry.
Since 1989, there have been six major studies of the impact of separation by sea on fair funding and public services on the Island. I shall refer briefly to two of them, the University of Portsmouth model of 2016 and a study commissioned last year by the Government, working with me, to examine the funding settlement for the Island. The University of Portsmouth, in an excellent study for which I thank its academics, confirmed that three separate economic factors were at play in making the provision of local services on the Island more expensive. The first was the lack of spill-over of public goods between the mainland and the Island, the second was the so-called Island premium—the higher prices charged by suppliers on the Island as opposed to the mainland—and the third was the additional costs to the Island that result from physical and perceived dislocation.
Two years ago, backing up and building on that report, the Government—at my request—spent about £50,000 on commissioning LG Futures, a respected local government think-tank, to review the evidence for the “additional costs” argument in relation to the provision of public services on the Island. The Government worked through with the council and me the parameters of what the review—which they had committed to and commissioned—would be investigating. It confirmed the accuracy of every relevant study of the funding of public services on the Island: it confirmed that it cost more to deliver public services there, for the reasons outlined by the University of Portsmouth.
In many ways I am delighted by what has been happening in the past few years, and I want Ministers to hear that. We have had a much better deal from the Government in recent years. Since I became the Member of Parliament for the Island, we have got more than £120 million of additional Government funding, including about £48 million for St Mary’s Hospital—and that does not include the £10 million for the new diagnostics centre, which is wonderful news. We have received £50 million to upgrade the railway and the Ryde railway pier. The work on the pier is under way, as is the work at St Mary’s. We have got £20 million for Isle of Wight College, and £6 million to support shipbuilding in East Cowes. All that provides much better life opportunities and life chances for Islanders, which are what I am here to try to deliver.
However, when it comes to the provision of local government services via Isle of Wight Council, we are lagging behind other islands in the UK, and our need—which has been confirmed by all coherent and responsible academic research into the Island—backs up our argument. I shall be meeting the relevant Minister in the next couple of weeks to discuss that, because the Government have, I am delighted to say, reopened the case for looking at Isle of Wight funding. The Secretary of State for Levelling Up, Housing and Communities will come to the Island in May to talk to the Islands Forum, which I helped to establish along with others, including council leaders in Orkney and, I believe, Wales. I also hope to talk to the Prime Minister about the issue in due course.
I ask Ministers, including those at the Department for Levelling Up, Housing and Communities and the Treasury, to look at a fair funding formula for the Island, because this is one of the outstanding issues that have still not been resolved in our efforts to secure a better deal. We have gone a long way towards delivering that better deal for health, shipbuilding, transport and Isle of Wight College, but a fairer funding settlement that takes account of the fact that the Isle of Wight is an island is still eluding us. I should be extremely grateful if Ministers could work with me on that to solve the issue this year.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
It is good to see you back, Madam Deputy Speaker.
This Budget has been described as being “slightly better” than the previous Prime Minister’s Budget, which crashed the economy. At least during the delivery of this Budget statement we were not watching on our phones as the pound plummeted, but what a low bar to reach above. Nothing says “clutching at straws” like the staged cheering of a “pothole fund”, whose very existence tells us that routine road maintenance has been starved of funds—another example of the managed decline that we have seen after 13 long years of Conservative rule.
This Budget is weak and unambitious. It is a sticking plaster, an attempt to fix mistakes that consecutive Conservative chancellors have made, and it does nothing to address the real problems that people face. What does it give us? We find ourselves facing the biggest drop in living standards on record. The average French family is now a tenth richer and the average German family a fifth richer than their British counterparts. Wages are now lower in real terms than they were 13 years ago. This stalling wage growth has left British workers £11,000 a year worse off. Taxes as a share of GDP are at a 30-year high, which is the equivalent of every household paying £4,600 more tax each year than in 2019-20. The OECD has said that the UK economy is the weakest in the G7. The only other country that is set to have a lower rate of growth and more contraction of its economy is Russia.
Why is this? The Government want to point to international factors such as covid and Ukraine, but those factors do not explain away the unique situation that the UK is facing. Yes, the Conservatives’ Brexit deal has had an impact, but these roots go far deeper. The roots of our economic difficulties go back to austerity in 2010, and the utter chaos and dysfunction at the heart of Government since 2016. The British people are literally paying the price for the internal wars within the Conservative party. Let us be honest: the Conservative party has no strategy and no plan to grow our economy, because the Conservative party no longer knows who it is or what it stands for. We are seeing that again this week as the soap opera continues, and the headlines about what the former Prime Minister did hit the newspapers instead of a real analysis of what is happening to the cost of living crisis.
We see another example when we look at the Conservatives’ desperate attempt to form an economic plan. In January 2020 the Department for Business, Energy and Industrial Strategy introduced an industrial strategy that promised five foundations of productivity. That lasted only a year. In the spring of 2021 the Budget abolished the industrial strategy and replaced it with “Build Back Better: our plan for growth”, which contained three core pillars of growth. That lasted less than a year. In February 2022 the Chancellor—now the Prime Minister—abolished the pillars and the foundations, and introduced three priorities for growth. That lasted seven months. In September 2022 the Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), left out the pillars, foundations and priorities in favour of a growth plan—the less said about that, the better. It lasted four months. In January 2023 the new Chancellor brought back the pillars, but managed to increase their number from three to four. So far, that has lasted three months. What an utter farce! No wonder business investment is the lowest in the G7. There have been five plans for growth in one Parliament, and as a result of this incompetence GDP has fallen by 0.2%.
Who are the winners? As usual, the richest 1% gain from a Conservative Budget via the changes to pensions, at a cost of £.1 billion for the rest of the taxpayers. As for the ludicrous claim that this is all about helping the doctors, I gently suggest that if the Government want to help the doctors and get more of them back working for the NHS, they should go and talk to the junior doctors who are currently on strike.
Who are the other winners? Let us have a look at those. Research and development “claim farms” are exploiting the low level of scrutiny of tax reliefs. R&D relief is the largest co-operative tax relief, predicted to cost more than £9 billion by 2026-27. A recent report from the charity TaxWatch revealed that highly profitable finance companies are claiming millions in relief. Boundary-pushing is rife. Fraud and error in R&D totalled more than £1.1 billion in the last three years, and our HMRC is too under-resourced even to look at it properly. The Government were prepared to chase people who were accidentally overpaid in benefits and pensions more than companies that were exploiting the system.
This Budget is a continuation of the pattern of managed decline, and it makes me so angry that our brilliant country is being let down in this way. It is a Budget from a tired, fractious, divided and desperate Government, focused so much on the enemies within and not enough on the real struggles that people out there are facing. It is a Budget with nothing to say on social care, NHS waiting lists or the millions without access to NHS dentists. It is a Budget that fails to learn the lessons of the past, with the only growth we see being in claim farms in R&D relief and in the very richest in society. Our country can be and will be so much better than this when we consign these farcical plans for pillars, foundations and priorities to the past and get in a new Labour Government who will put working people first.
Miriam Cates (Penistone and Stocksbridge) (Con)
I am delighted that the Chancellor has set aside £4 billion to help families with young children. I am less delighted with how he is choosing to spend it. I am referring to the massive expansion of the 30-hour childcare scheme to include babies from the age of nine months. The stated aim of this policy is to get parents back into work and to grow the economy, but unfortunately it will probably fail on both counts. It will not get parents back into work, and the evidence of that comes from the current 30-hour offer for three and four-year-olds, which has had limited success, with only 40% of eligible families using their full entitlement. That is not surprising, because it is not free and it is inflexible, being restricted to only 38 weeks a year and between 9 am and 3 pm—not many jobs fit those requirements.
Polling shows that a great many parents would understandably prefer to look after their children themselves. A recent IFS study showed that free childcare does not have a significant impact on parents’ childcare and work decisions. If these are the problems with the three to four-year-old offer, they will be even more acute with the nine months to two years offer. We are also forgetting that families in this country keep so little of what they earn that it is often not worth going back to work even if the childcare is cheaper.
The Treasury and others keep repeating the mantra that British parents face the highest childcare costs in the western world. That is not actually true. The absolute costs of childcare in the UK are similar to those in other countries. The problem is that British families’ childcare costs are a higher proportion of families’ net income than in comparable countries. So the problem is not the childcare costs; it is the low net income. That is the result of taking so much money off parents in tax, in comparison with other countries, combined with meagre child benefits, also in comparison with other countries.
The root of this problem is our unique individual taxation system, which does not recognise households with children and results in British families paying three, four, five, or even 10 times the amount of tax as families in other countries. It particularly penalises single-earner households or households with a large difference in earnings between the two partners. Under this policy, for example, a mother might return to work because the childcare costs are now reduced. She might earn a £20,000 gross salary, out of which she has to pay taxation, national insurance, pension contributions, student loan repayments and travel costs, while her universal credit and childcare top-ups could be withdrawn. Out of her gross salary of a little under £1,700 a month, she will be lucky to keep £290. That is an effective tax rate of nearly 80%. Some people will return to work for that, but many will not because of what they are losing in time with their children, so I do not expect take-up to be high.
Will this policy grow the economy? It might increase GDP if more people return to the employment market, but what does it mean in real terms for real people’s lives? Will GDP per capita grow? I think that is highly unlikely, because when mothers return to work it creates more low-paying jobs in childcare and elderly care—important but low-paying jobs—which increases the gender pay gap. This has happened in Denmark, for example, which has three times the gender pay gap that we have here in the UK.
I do not believe the policy will see mums flooding back to work and I do not think it will grow the economy in meaningful terms, but even if I am wrong, I still believe it is the wrong policy because it is the wrong policy for children. What is best for baby in the early years? The bond between mother and child is probably the strongest human relationship there is. This is not just a soppy feeling; it is a highly evolved survival mechanism, and strong attachment in the early years pays dividends in later life. There are many great people in the childcare sector, but no one replaces mummy.
It is heartbreaking when mothers feel they have no choice but to leave their babies in childcare from a very young age because of the financial imperative. Yes, there is a cost of living problem, and many women want to work for all sorts of reasons and should absolutely be supported to do so, but the issue for many families is not the cost of childcare per se, any more than it is the cost of food or energy; it is the inability to live on one income when children are young. This is what separates many women from their children: not choice, but tragic necessity.
The Treasury thinks the answer to our financial challenges is to send more mothers to work. I think the answer is to support all families in the early years to give parents a choice. We have £4 billion for this new policy and £4 billion for existing policies, so why not use this to fund a move to household taxation and to increase child benefits? Why not spend that £6,500 a year per child in a different way, to give parents the choice of how they spend it, perhaps on formal childcare, on informal childcare or on spending fewer hours in the workplace?
Elite feminism might say that motherhood is drudgery and inferior to paid work outside the home, but that is only true if we believe that status and meaning derive principally from our salary and status in the workplace. “I wish I’d spent more time in the office instead of with my small children”, said no one on their deathbed ever. Those making these policies think of women with high-flying, highly paid careers, and of course those women should be supported to stay in work and maintain their careers, but that is not most women. Most women have jobs, not careers. As Dan Hitchens wrote in UnHerd last week, those advocating for these policies
“assume that taking your little one to Wriggle and Rhyme at the public library is an unutterable burden, whereas stacking shelves or updating spreadsheets is a liberation of the human spirit.”
It is fundamentally un-Conservative to spend £4 billion separating parents from their babies in the pursuit of marginal gains to GDP. We offer tax breaks and incentives to reduce costs for companies investing in the economy. Why not offer the same to families nurturing the source of our future economic success? I commend the amount of money being spent on the early years, but please can it be used to offer parents a choice and babies the best start in life?
Mr Deputy Speaker (Mr Nigel Evans)
Order. I remind the House that the wind-ups will start no later than 9.40 pm, and that everybody who has taken part in the debate will be expected to be present for them.
Cat Smith (Lancaster and Fleetwood) (Lab)
I will keep my comments tightly focused on how I see the Budget impacting my constituents. When I hear from them in advice surgeries, I hear that their lives are not better now than they were 13 years ago. In fact, wages are lower now than they were then. It was telling that when the Chancellor stood up and delivered his Budget statement, it was against the backdrop of quite widely supported industrial action across many different sectors, so if he wants to see a high-wage, high-growth economy, perhaps the best place to start would be to give our public sector workers the pay rise they deserve.
I was pleased that a lot of emphasis in the Budget was on education. However, I want to make a few points about where I think the Chancellor may have been getting it slightly wrong. My constituency has two universities in it—Lancaster University and the University of Cumbria—but the Budget did not mention students. I am currently surveying students across my constituency, and I am hearing from them how they are struggling with the cost of living crisis. There was nothing in the Budget for students facing the cost of living crisis. Many of them are working two or three jobs in order to be able to live and to pay their rent. Many of them are in the private rented sector, but there was nothing in the Budget to improve conditions for people who are privately renting.
Looking at education for younger children, I am privileged and lucky to have so many wonderful rural primary schools in my constituency. I recently visited Scorton Primary School, whose headteacher is struggling because there is no school hall, which means that there is no space for the children to eat lunch, so they have to eat at their desks. There is no school kitchen, so the school lunches are brought in by taxi. The idea that a primary school such as Scorton is going to be able to make a decision to provide the wraparound childcare offer proposed by the Chancellor, when the school budget is so tight that it is having to look at making savings elsewhere, is frankly for the birds.
I also saw children from another fantastic primary school my constituency, Abbeystead Primary School. I was visiting it as part of a visit with a company called Broadband for the Rural North, which I am sure you are familiar with, Mr Deputy Speaker. I am delighted that its representatives are coming to Westminster in a few weeks’ time and I am glad that you will be able to meet them with me. This community benefit society was sick of waiting for the big players to deliver fibre broadband to our rural communities, and it decided in 2012 that it could wait no longer. Starting in Quernmore, a village I am sure many Members have not heard of, it started something big. It is now rolling out superfast broadband, including to very isolated farmhouses, which just goes to show that the standard size does not fit all.
I found the Budget to be quite deaf to a lot of rural issues. When it comes to things such as transport, I feel that my constituency is losing out. HS2 suddenly will not reach the north of England, and the money we have been promised to fix potholes is a fraction of what was taken away by the cut to the roads budget. Active transport has also been cut, even though it is good for both people and the planet. It is something about which many of my constituents feel incredibly strongly, but there was no mention of it in the Budget.
I spoke about the issues of poverty on a recent visit to North Lancashire citizens advice bureau. Poverty was not mentioned at all in the Budget, but it affects a growing number of our constituents. For people who are on the brink of homelessness, who are unable to feed their children or who are in constant fear of being evicted by their landlord during these cycles of poverty, there was nothing in the Budget to reassure them that they will be any better off.
Instead, people on universal credit were promised more sanctions. There is no evidence that sanctions have any impact on encouraging people. All they do is make life more difficult when people know they do not have the money, so they have to rely on food banks. I give credit to all the volunteers who work in food banks across my constituency, but why do we have to have food banks? Why are they now so accepted? I find it shocking. I support my local food banks, I ran the London marathon for them and I will do what I can to support my community, but food banks should not exist. It feels like they are now an established part of our society’s structure. We fundraise for them all over the place, and we have donation boxes in all our supermarkets, but I find it completely unacceptable that we have normalised poverty in that way. Poverty was not mentioned in the Budget. Frankly, I feel incredibly let down.
I would have liked to say more about childcare. Frankly, if we are increasingly to rely on private childminders without new state provision, prices will be pushed up and demand will outstrip supply, which could create a huge childcare crisis for many parents. People are already having to put their child’s name down before they are born in order to be confident of getting a nursery place. Without that supply, it is difficult to know how working parents will be able to rely on this measure.
Investment zones have been heralded as levelling up all parts of the United Kingdom, but how can the Government suggest they are doing that when there are only 12 new investment zones? There is nothing for Lancashire, as we do not fall into any of the zones.
Frankly, this is a sticking-plaster Budget that does nothing to address the needs of my constituents and does nothing to address poverty in this country. I think it is a terrible Budget, and I hope the Chancellor will look again at his priorities.
Jack Brereton (Stoke-on-Trent South) (Con)
This Budget is about cementing stability in the economy after the turmoil of the pandemic, the lockdowns and Putin’s illegal invasion of Ukraine. Halving inflation is rightly the Government’s No. 1 priority, and we are forecast not just to meet that goal but to surpass it significantly this year, driving down costs for families and businesses.
The actions the Budget takes to maintain the energy price guarantee for a further three months, to remove the prepayment meter premium charge, to maintain the 5p cut in fuel duty, to significantly extend free childcare and to freeze the duty on a pub pint with a Brexit pub guarantee are all being delivered because this Government understand the need for immediate measures to help tackle the cost of living. And this Government understand that, to expand the economy with non-inflationary growth, we need to increase our productive capacity.
I am glad to confirm to the Chancellor that Stoke-on-Trent is exactly the kind of high-potential regional city with the capacity to expand an excellent science and technology base, including our world-leading local ceramics sector and a burgeoning new digital gaming sector, spurred on by our investment in gigabit digital connectivity.
I am delighted that the Budget confirms Stoke-on-Trent’s much anticipated levelling-up partnership. This new partnership will help unblock the barriers to the levelling up of opportunities and productivity, delivering the improvements our city needs. It unlocks access to part of a £400 million fund, on top of the wider investment we have already secured, including the £56 million levelling-up fund investment that is now being delivered, which will see the repurposing of the historical Crown works in my constituency.
I am also excited by the unique partnership secured by Stoke-on-Trent City Council, under the excellent leadership of Councillor Abi Brown, with Homes England. It is fantastic news that 3,000 homes will be delivered and that the city’s economy will gain £400 million from unlocking this new development, particularly on more challenging derelict brownfield sites. Stoke-on-Trent has a strong record of delivering housing and, with Government support, delivered more than the average London borough last year, with 100% on brownfield sites.
I also welcome the significant extension of tax relief for firms investing in plant and machinery. That will make a big difference to manufacturers, incentivising them to invest more in improved energy-efficiency measures and increased productivity. It will mean a tax cut of up to 25p for every £1 that a company invests, putting £25 billion back into the economy over the next three years.
I am pleased to say that, since 2010, the gross value added of the ceramics sector has doubled in real terms, but it is not easy sailing and the sector is not always neatly compatible with the support schemes that are set up to help industry. I am thinking especially of the 97% of the ceramics industry that are SMEs, which have often not had the capacity to secure support, or have been excluded from the scale of support seen in other sectors. The ceramics sector is vital to our future economy, with almost every sector having supply chain links. There are advanced ceramic components in high-tech materials that are securing the future, from healthcare to aerospace. It is a sector with huge growth potential, and in which UK industry must take a global lead.
Ceramics works alongside other advanced manufacturing in Stoke-on-Trent. I look forward to seeing Goodwin International in the supply chain for small modular reactors, for example. This will help with decarbonisation. It is a hugely welcome step for nuclear now to be on a level playing field with renewables when it comes to investment incentives.
The ceramics sector itself has, so far, invested £600 million in decarbonisation, becoming more gas-efficient by recycling heat, and so on, but there are sadly no immediate viable options to convert the entire sector from gas to electric or hydrogen in the next decade. This reality needs to be acknowledged. It is certainly better for firms to be gas firing efficiently in the UK, and working on further decarbonisation improvements, than offshoring production to countries with lesser environmental protections.
It is also imperative that the Restoring Your Railway fund leads to tangible results, including a restored Meir station, which could be open as early as 2024 with Government support, and a reopened Stoke-Leek line to serve deprived neighbourhoods with notably low rates of car ownership and to support better access to jobs and skills.
Without local transport network improvements, HS2 will only ever be of limited benefit. For far too much of Stoke-on-Trent and Staffordshire, the current plans for phase 2 mean huge amounts of pain for very little gain. I welcome the pause because phase 2, as currently proposed, would be likely to result in the further diminishing of rail capacity, all at the cost of providing superfast HS2 services that do not connect to the places to which people want to go. It is important that we use this opportunity to consider whether the money for phase 2 could be better invested in upgrading the existing network and further enhancing the local network, as through the Restoring Your Railway fund.
The Budget is another step in the right direction for unleashing further innovation from our excellent advanced manufacturing base. It maintains the momentum for levelling Stoke-on-Trent back up to where it belongs, as a world leader in industry, science and technology.
Stephen Morgan (Portsmouth South) (Lab)
This Budget is quite easy to characterise. Under the Tories we have had a lost decade, and under this Government we are sadly looking at another. Since the Conservatives came to office in 2010, we have seen stagnant living standards, stretched public services, falling investment and the complete absence of a long-term, coherent vision for our country. The real question we need to ask ourselves tonight is, “Will the Budget change any of this?” The answer is a resounding no.
According to the OBR, real incomes are forecast to fall almost to where they were a decade ago, which is the shocking legacy of those sitting on the Conservative Benches. What is more, the hit to living standards over the past two years is the largest since records began. Last week, the Chancellor lauded Britain’s negative growth forecast this year as if it were something to be celebrated. Of course, the Government will blame it on external factors, but the reality is that the UK will be the weakest economy in the G7 this year and the only one with negative growth.
When we talk about a lost decade, it is easy to think of that in an abstract way, but we should remember the reality of it for the people of this country. It means more Portsmouth families struggling to heat their homes; more local businesses battling just to survive; more children in my city hungry and in poverty; more patients at the Queen Alexandra Hospital in pain and stuck on ever-growing waiting lists; and more Portsmouth people struggling to make ends meet.
The real tragedy is that our country has so much to offer. I see that at first hand in Portsmouth, a city fizzing full of potential. It just needs a bit of support to unlock it. This Budget represented a chance for the Government to do that, but instead they have decided to continue papering over the cracks of 13 years of economic failure. Portsmouth and the country were crying out for a long-term plan last week, yet in the midst of a cost of living crisis the only rabbit the Chancellor pulled out of his hat was a handout for the richest 1% and their pension pots.
Judging by this Budget, one would be forgiven for thinking that the crisis facing our NHS had been solved. Sadly, that is certainly not the case. Thirteen years of Conservative mismanagement has left the NHS without the doctors and nurses it needs, and patients are paying the price. People in Portsmouth are finding it impossible to get a GP or dentist appointment, or an operation, when they need one, and nothing the Chancellor said last week will help. It is true that the longer the Conservatives are in power, the longer patients have to wait.
From hearing the Chancellor’s comments last week, one would also be forgiven for thinking that the climate crisis was over, but the sad reality is that the UK is being left behind in the global race for green good jobs. Our investment in green energies and industries is now five times less than that of Germany, and roughly half that of France and the USA. We urgently need a Government who understand the scale of this problem and can make Britain a clean energy superpower, to create jobs, cut bills, boost energy security and accelerate our economy to net zero.
To be fair, not everything in this Budget was bad; I am thinking, in particular, of the policies the Government decided to take from Labour. I was pleased to see the cap on energy bills extended and the scrapping of the extra charges for those on prepayment energy meters. It is now time for the Government to copy at least one more of Labour’s policies. According to the OBR, the Government left £10.4 billion on the table through holes in the windfall tax. It is simply not right that oil and gas companies continue to enjoy astronomical profits at the expense of working people. There are no more excuses; the Government need finally to bring in a proper windfall tax.
In conclusion, in every town and city in our country, in every community, there is so much on offer, but 13 years of Tory economic mismanagement has left us lagging behind. Our country was crying out for a long-term plan this week, but instead we saw a Budget without any ambition and without any vision for Portsmouth or for Britain. It is time we had a Government who deliver on the potential in a way that Portsmouth and our country deserve.
Aaron Bell (Newcastle-under-Lyme) (Con)
It is a pleasure to follow the hon. Member for Portsmouth South (Stephen Morgan). I welcome the Budget from this Chancellor, as it is a sensible, forward-looking Budget that will give us the economic stability we need. It will continue to protect my constituents and all of our constituents from the global headwinds referred to by my neighbour, my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton), as we have done throughout the Parliament. Through covid, the war in Ukraine and the energy price crisis, we have been looking after our constituents and protecting them from the worst ravages of inflation. The Budget also offers a viable plan to energise growth, not least in science and technology, the theme of today’s debate, to which I will turn in a moment.
Before I do so, I wish to welcome a few of the specific measures the Chancellor announced last Wednesday, starting with the extension of 30 hours’ childcare all the way down, ultimately, to those as young as nine months. That will be welcomed by my constituents. It offers young families choice—the choice I want to see. It is not about compulsion or forcing anybody to go back into work; it offers people the choice to do that, just as we have done in relation to a higher age. We continue to bring that further down. So many schools in my constituency have a nursery attached to the reception, and this works well for getting children introduced to that concept, as and when the parents are ready for that.
I also welcome the extension of the energy price guarantee, at £2,500, for a further three months. We heard from the forecasts that inflation would fall this year and I very much hope that will continue. Obviously, it depends on global oil and gas prices, which are what caused inflation to rise in the first place. As it falls, people will start to feel the benefits and we will see bills fall below that level later in the year. I also welcome, as my hon. Friend the Member for Stoke-on-Trent South did, the fixing of the prepayment meter premium that a number of my constituents have suffered from.
In a constituency such as mine, so many people rely on their cars to get to work, so I welcome the freeze in fuel duty and the extension of the 5p cut that I and others lobbied for last year. It has saved drivers, on average, £200 since we introduced that cut and it is the right thing to do for constituencies such as mine.
I had some concerns about the corporation tax rise, but they have been broadly tempered by the full expensing announcement. I am a former deputy chair of the Backbench Treasury Committee, along with my hon. Friend the Member for South Cambridgeshire (Anthony Browne) and Baroness Noakes. We did a lot of thinking about this and put those cases to the Prime Minister when he was Chancellor, as we have to other Ministers since, including the Financial Secretary, who is in her place. Full expensing is a positive move. It is vital that we put in place measures enabling businesses to thrive. In the autumn statement, my right hon. Friend the Chancellor also announced major reforms to business rates. That work needs to be continued. It will make a huge difference to Newcastle-under-Lyme’s high street, so let us get on with it.
On the £200 million to deal with potholes across the country, with £4.5 million of that for Staffordshire, the county council can be assured that I will be lobbying to make sure that Newcastle-under-Lyme gets its fair share of that. We need to make sure that, when that work is done, it is done better than it has been by Amey in the past. The swimming pool support fund of £60 million will be welcomed by Newcastle-under-Lyme Borough Council, under the leadership of Simon Tagg, to keep costs and prices low, at Jubilee2, in particular.
On science and technology, I welcome the certainty on Horizon that the Secretary of State gave earlier. Contrary to some of the claims from the Opposition, the EU has been responsible for the delays in agreeing this, because it wanted to use Horizon as a negotiating chip. Now that we have the Windsor framework, I think we can look forward, but the Opposition cheered on the EU in that complaint, just as they did throughout Brexit.
It is vital that we invest in the technologies and jobs of the future, so I welcome the £370 million of Government investment that the Secretary of State announced the other week. I also welcome the private investment we are seeing, for example, with Moderna’s £150 million investment in a vaccine centre in the UK, and all the various investments I see at the Keele science park in my constituency and the Keele medical school, on the same campus. It would be a great location for a new dental school, which I have been championing, along with my hon. Friend the Member for Stoke-on-Trent South.
The Select Committee on Science and Technology, on which I am proud to sit, has been all over the country looking at how we recover from covid and how we raise both public and private investment. However, it is important to note that we have a vibrant sector already. The UK tech sector is No.1 in Europe, No. 3 in the world and last year it raised more than France and Germany combined.
I come to the lifetime allowance. As my hon. Friend the Member for Hazel Grove (Mr Wragg) said, it is a long-running tradition that sometimes a Budget is well received on the day but falls apart afterwards. This is the first time I can recall that happening to the Opposition, with their cynical, shameless opportunism. We delivered the exact policy they called for—I have heard this a few times on the Opposition side—the exact one that the shadow Health Secretary called for in The Guardian, the exact one that doctors in Newcastle-under-Lyme asked us for. However, the politics of envy overtook the Opposition and the shadow Chancellor took a decision to denounce it, even as the British Medical Association was welcoming it.
We heard that Labour would like to keep the policy just for doctors, but the reality is that the cap is pushing all sorts of workers into early retirement—headteachers, police chiefs, senior armed forces personnel, senior armed forces clinicians, air traffic controllers and prison governors, and many in the private sector, too, who would be getting less generous pensions than some of those in the public sector, from the same notional size of pension pot. These public servants will be getting generous pensions, but those pensions will be taxed, in many cases at 40%. I believe, contrary to the politics of envy, that it is vital that we retain their services for longer in the workplace, because that experience means more productivity and more growth for this country. Of course, while they stay in the workplace, they will be paying more income tax—it is a net gain for the country overall. Labour’s policy would damage productivity and growth and contribute to a crisis in public sector retirement. To be honest, I would not be surprised if Labour quietly scrapped it before the election as it realises that the politics of envy will not work.
In conclusion, I really welcome the Government’s Budget. I welcome what the Chancellor has said and what the Budget will do for places such as Newcastle-under-Lyme as we continue to level up and to get the benefits of Government spending. I commend the Budget to the House.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to follow the hon. Member for Newcastle-under-Lyme (Aaron Bell), although I gently remind him that it was the UK that left Horizon Europe, not the other way round.
We can, however, probably agree that innovation and science are critical to building strong and resilient national and regional economies, and our universities play a key role in fuelling that vital innovation. I could cite many examples, but I would particularly pick out the Whittle Laboratory at Cambridge, which is spearheading cutting-edge work on improving the aerothermal performance of turbomachines. Those machines are the principal technology in the world’s energy-conversion processes, and improving their efficiency is key to reducing the environmental impact of power generation and aviation.
London Economics recently calculated—it said this in a report launched on the estate this evening—that Cambridge University’s net total impact on the UK economy is a staggering £29.8 billion annually, supporting more than 86,000 jobs across the UK. A high percentage of that economic impact is generated by companies spun out from, or closely associated with, the university. That has been made possible by the university’s long-term strategy of investment in innovation and commercialisation activities over decades.
However, universities and businesses cannot do these things alone. There is a vital role for Government in creating the right environment and culture for innovation and entrepreneurialism to flourish. That includes a strategic vision, stability, sustained investment and a tax regime that incentivises innovation and knowledge creation. However, I am afraid that the Government have fallen well short on those criteria in recent years. We have had nine changes of Science Minister in five years, and 26 months of Horizon uncertainty. The UK has lost out on investment and research projects across the country. Scientists have left international projects or have been told to relocate. The Royal Society—this point was also raised in a recent review by Paul Nurse—has strongly urged the Government to deliver on their pledge to associate to Horizon Europe, as that is vital to restoring the confidence of global research talent and investors in building their futures here in the UK.
Frankly, the Government have not put their money where their mouth is. Despite repeated promises to UK scientists that funding has been set aside and ringfenced for UK research and development, £1.6 billion that was previously earmarked for Horizon Europe association, or the alternative, has been taken back by the Treasury, and the science community is deeply disappointed by that substantial loss.
As for the tax regime, we witnessed a complete botch of the R&D tax credit system only a few months ago in the autumn statement. Leading experts queued up to express their exasperation that such a backward move would hinder growth for the early-stage and research-intensive tech companies that are key to the UK’s future. According to auditor BDO, it would have meant support for loss-making companies dropping from an effective 33.4% subsidy to an 18.6% subsidy.
The Government did try to clear up the mess in last week’s Budget, but all the damage has by no means been repaired. SMEs and start-ups are still worse off than they would have been before the changes that were made in the autumn. The Government are still cutting support for R&D in start-ups and small businesses—to the tune of £2 billion over the next five years, according to one estimate.
Further, the justification for the cuts—fraud and misuse —has not been addressed, and the high bar of 40% R&D expenditure leaves thousands of small firms out of scope. Start-ups spending below the threshold would, on average, receive £100,000 less in support under the new scheme—equivalent to a 30% to 40% reduction in funding. The threshold will also penalise companies that are scaling up as they begin to spend money on more mainstream business expenses.
The funding gap between early and late-stage businesses is simply too large. The bottom line is that most start-ups will still find it much harder to claim R&D tax credits than they would have before the Government took over. In the words of Russ Shaw, CBE, founder of Global Tech Advocates, the R&D tax rebates are “short-sighted” and will “simply not suffice”.
I am afraid that this partial, half-hearted U-turn has not convinced our leading entrepreneurs and knowledge creators that the Government are serious about science and innovation or about the economic growth it stimulates. Indeed, the OBR has confirmed that the UK will be the weakest economy in the G7 this year and the only one that will see negative growth. No other G20 economy, apart from Russia, is forecast to shrink this year.
This Budget was the chance to repair some of the damage and to give us a fighting chance in the global race for advancement in science and technology. Instead, I am afraid that we have had more tinkering and short-termism. Now, more than ever, we need a Government who are firmly committed to generating a green, tech-driven recovery for the nation and to unlocking our potential as a real science and innovation superpower.
James Sunderland (Bracknell) (Con)
I rise to support last week’s excellent Budget, but also to provide some context about why it is so important for my constituency and why our local offer is so good.
As we know, Bracknell Forest is the silicon valley of the Thames valley. It has a strong and vibrant economy and can boast a number of world-class companies. Some 150 international companies have their offices in Bracknell, including Syngenta, 3M, Fujitsu, Honda, Waitrose, Panasonic, Hitachi, Dell and many others. Why is that important? Bracknell can act as a template for what can be achieved elsewhere in the country, because business and the way we live personally are integrated so well. It is also home to fantastic infrastructure and businesses, and it is vital that those companies remain in Bracknell as we go forward.
Well, so what? Last week, the Chancellor announced the delivery of 12 new investment zones in the west midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, the east midlands, Teesside and Liverpool, with at least one in each of Scotland, Wales and Northern Ireland. That totals 11, and my contention is that Berkshire—Bracknell—could be a perfect candidate for the 12th. With the Minister in her place, I am going to push for that and to state the case right now.
To qualify for £80 million of support for a range of interventions, including skills, infrastructure, tax relief and business rates retention, each area will need to successfully identify where it can offer
“a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters.”—[Official Report, 15 March 2023; Vol. 729, c. 838.]
Well, guess what? We have lots of innovation clusters right now in Bracknell. We have a close tie-up locally with Reading University. We also have Syngenta at Jealott's Hill, which is hopefully about to become a global hub for agricultural R&D, with huge investment and 3,000 jobs. It is a no-brainer—we have all the ingredients locally to make a really good case.
Bracknell has full employment. It has one of the best-performing healthcare trusts in the country. Forty of 40 schools are rated good or outstanding. We have fantastic leisure facilities and open spaces. We have one of the top five average incomes of any borough in the country. We also have the Lexicon shopping centre. What more do we need? However, the important thing is that Bracknell is run by a Conservative council, and that council is absolutely focused on local investment, technology, infrastructure and full employment. The offer is really good locally.
Bracknell is a hub for R&D, and more than 200 organisations contribute to R&D in the constituency, in addition to the companies that are based there. Last week’s Budget labelled economic growth as its core objective, and it achieves that for many of Bracknell’s companies, especially in R&D. The Budget also promotes strong economic growth, exciting new job opportunities and stable local economies.
To prove the point, if a qualifying small or medium-sized business spends 40% or more of its total expenditure on R&D, it will be able to claim a credit worth £27 for every £100 spent. That is a huge tax rebate. When I talked to a boss of one of our Formula 1 teams based in the UK a couple of weeks ago, he told me that that is worth millions of pounds to him every year. It is worth millions of pounds to SMEs right across the UK. The UK has to be a place for R&D, for AI, for investment, for tech, for innovation—and we have just the place in Bracknell.
Before I finish, I have some concerns to raise. First, the way the R&D tax credits work is they are a net credit after tax. In other words, credit is taxed at the prevailing rate of corporation tax; if CT goes from 19% to 25%, the value of the credit goes down. My plea to the Minister is to please leave corporation tax as low as it can be, for the benefit of all of us.
Secondly, the type of business that will benefit in Bracknell will be life sciences businesses. Given the significant up-front development and—almost by definition —research costs, the challenge for these businesses locally is that pre-revenue and pre-profit tax credits may be of limited value, even if carried forward. Therefore, we need additional incentivisation to improve that.
Thirdly, we need a suitably qualified high-tech workforce to carry out R&D. We have that in Bracknell. Alongside tax credits, we need to ensure the availability of skilled labour. I cannot stress enough that in parts of the country, particularly the south-east and Berkshire, where we are lucky enough to have full employment, we need to do more to generate more labour. Therefore, the schemes announced last week to bring the over-50s and other people back into the workplace are absolutely brilliant.
I commend the Budget. It will entice people back into work and incentivise more R&D, which can only benefit Berkshire and Bracknell and elsewhere across the UK. Finally, why not an investment hub in Bracknell too?
Ruth Jones (Newport West) (Lab)
I am grateful for the chance to speak in this Budget debate and to give voice to the concerns of the many people in Newport West who are finding it tough and wanted a proper plan for growth and opportunity.
The Chancellor’s Budget could have been a unique opportunity to unlock Britain’s promise and potential and to break away, finally, from over a decade of decline and decay. Instead, the Tories have decided to continue papering over the cracks of 13 years of Conservative economic failure. That was exemplified by a handout to the pension pots of the richest 1%, with no regard for the livelihoods and wellbeing of my constituents in Newport West or others around the country who want and need real change and real investment in their communities.
Growth was downgraded in this Tory Budget, but Labour will not allow us to keep bumping along this path of managed decline. I welcome our mission to secure the highest sustained growth in the G7, as set out by my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer). That way, we will create the good jobs and productivity growth across every part of our country that our people are crying out for. Let us be clear: where this Conservative Government have basically given up and thrown in the towel, Labour will build a better Britain.
Despite all the claims from the Chancellor, the OBR downgraded the UK’s long-term growth forecast, with downgrades in all the last three years of the forecast period. The OECD has now confirmed that the UK will be the weakest economy in the G7 this year—a ringing endorsement of 13 years of Tory government. The OBR also confirms that the hit to living standards over the past two years is the largest since comparable records began. Let us just think about that for a minute. It means that the average French family are now one tenth richer than their British counterparts, while the average German family are one fifth richer.
Wages are now lower in real terms than they were 13 years ago. The independent OBR has confirmed that real wages fell last year and will fall further this year. That will mean that, under this Conservative Government, real weekly wages are now expected to remain below 2008 levels until 2026.
This Government have let down the people of Newport West, Wales and our United Kingdom. This Budget was a wasted opportunity that delivered a tax cut for the richest and nothing for the many. It continued a Conservative agenda of delay and decline. The only way forward is to change course, to deliver for our people and to move forward with a Labour Government, and the sooner the better.
I want to conclude by talking about real people who have been directly affected by this Government’s careless attitude to financial matters. Dawn Jones is a 76-year-old pensioner living alone in Newport West. She had to take out a retirement plan mortgage some years ago and was making interest-only payments of £200 per month. However, thanks to the previous Prime Minister and Chancellor crushing the economy, she is now paying over £500 per month. She is a pensioner. How can she afford that?
Dawn is now at her wits’ end wondering how she will make the repayments. She cannot afford to put the heating on and has been having to wear three or four layers of clothing throughout the winter. When it got really cold she had to use hot water bottles. She finishes her heartrending email by saying:
“The Tories do not live in the real world, they have no idea how most of us live.”
I completely agree with Dawn.
Nick Fletcher (Don Valley) (Con)
We are speaking today about science and technology, but I want to speak first about some of the important issues raised in the Budget, starting with the pension changes. They were made to get Mr and Mrs Jones’s hip replacements done, or to get someone’s tumour removed. They will get the consultant in the operating theatre and each of us on the road to recovery when we need it—and they will do it immediately. If the change had been made on a sector-specific basis, I believe it could have taken much longer. We were all young and struggling once, but young doctors’ future is bright—so bright that they will complain in 20 years’ time that they want to put more than £1 million in their pensions—so I suggest that they get off the picket line, ask for a sensible pay rise and start to earn their stripes.
On childcare, I am a social conservative, so I believe that the best people to look after the children are mum, dad, nana, grandad—family. I know that it is tough for many out there; I know that some have no choice. I am judging no one on their choices or the position that they find themselves in. I also know that the Chancellor wants to help, but I think that part of the £4 billion could be used to provide some choice for parents by giving them the option to stay at home or go to work.
I am sure that we all think we have important jobs—especially in this place—but we should never devalue the job of being a great parent. When I was bringing my children up, I was always told, “Spend time with your kids when they’re young, or you’ll be forced to spend time with them when they’re older”, meaning in the headmaster’s office, with the social worker, with the police or with the judge if they stray. We do not want that for any child, so let us do all that we can to embrace family life. It works, and it is proven, so let us do it.
Doncaster is not necessarily the first place that someone thinks of when they think of science and technology, but it needs to be if levelling up is ever going to work, and I think that it is close—really close. If we are helped by the Government, we have an opportunity to get Boeing in Doncaster, to get hybrid air vehicles in Doncaster, to get the advanced manufacturing and research centre in Doncaster.
Somehow, along the way, Doncaster and South Yorkshire lost their industry—mainly because of strikes. I grew up with strikes and saw the damage that they did. I saw the jobs go. That is why I am no supporter of strikes. But we now have an opportunity to be leaders again. In the centenary year of the Flying Scotsman being built in Doncaster, how great would it be to have the University of Sheffield Advanced Manufacturing Research Centre open a new innovation site in Don Valley?
Although 2022 was not a good year for Doncaster, with the loss of our airport, maybe 2023 will be the start of a new revolution. Who knows? Maybe we can get not only Boeing aircraft flying in and out of our airport when we get it open again, but Boeing manufacturing in Doncaster. The investment zones announced for South Yorkshire will benefit from £80 million of tax breaks and should entice the investment that we need.
Why can Doncaster not be part of the nuclear story through SMRs? Why can Don Valley not be part of the carbon capture story? Those industries will all benefit from this Budget, and I want them all in Doncaster. “Growth” and “investment” are the words of this Budget, and I want them there. If we can land that, the children of Doncaster will have a future—a future where quality jobs are available right where they live, in a city where they can bring up their families and their parents can help with childcare, and they can reciprocate later in life by looking after their ageing parents. That would mean an end to fractured families with hundreds of miles separating them.
There was lots in this Budget that the Opposition have tried to denounce, but we all know that the Conservative side of the House earns and the Labour side spends. The Conservative side understands its people and where they work; it understands the value of work; it understands the balance between achieving net zero and killing our towns and cities in a competition of who wants to be the greenest; it understands the value of education, skills and increased productivity, rather than just opening our borders.
No one has shouted loudly enough for Doncaster. The people have only ever heard that they are left behind and deprived, and that it is always the Tories’ fault. Well, they do not hear that rubbish from me; they hear only that if they try, try, try, they cannot help but achieve, achieve, achieve. Excuses will always get us nowhere. Excuses over the last 60 years from a Labour-run authority have got Doncaster nowhere—look at what happened to our airport, and all the excuses from the authority on why it could not use its devolved powers.
Things are changing. Doncaster is great because its people are great, but it could do so much better. Yes, our city could be so much better, and under this Government, it will be better. With this Budget, we will get through the cost of living crisis, get a future for our next generation, and make saving our planet work for us, not against us. The future is now bright for the first time in 60 years, but that is only because we have a Conservative from Doncaster in this place, and it would be even brighter with two more. I will vote for the Budget. I thank the Government for the £20 million and the new direction that the levelling-up partnership will bring to my city, Doncaster.
Mike Amesbury (Weaver Vale) (Lab)
It is a pleasure to follow the hon. Member for Don Valley (Nick Fletcher) and to disagree with nearly every word uttered from his lips. It is clear to working people and hard-pressed families in my Weaver Vale constituency that last week’s Budget offered them little in the midst of this cost of living crisis, and that point has been echoed right across these Opposition Benches.
We have to ask ourselves the fundamental questions. Thirteen years on, are people in our constituencies better off? Are houses—genuinely affordable houses and social houses—being built? Are schools being resourced adequately? Are they being rebuilt? Are the 40 wonderful hospitals that the Government claim they are going to build being built? The answer to all those questions is no, no, and no. After 13 years, we have sticking-plaster politics. We have no growth and taxation at a 70-year high. People in my constituency and in others up and down the land look at their mortgage bills, particularly those who are remortgaging, and they think there is a nearly £2,000 tax upon their hard-pressed shoulders.
I spoke to many of my constituents over the weekend, asking, “What did you think of the Budget?” It was the chatter in cafés and on the buses—the buses that run, of course; the buses that have not been cut. I asked, “Do you feel helped?” They said no. They decried that huge tax giveaway to less than 1% in our society, including very wealthy pensioners. In fact, it is a great way to avoid inheritance tax. That is well documented by people more in the know than I am.
Was it a Budget for people? Was it a Budget for growth? Was it a Budget to turbocharge the green economy? Again the answer is no, no, no. It was a failure, and that failure we can measure not just in figures, but in people’s purses and wallets, which are empty. People have referred to food banks. Food banks are a growth industry, and that is shameful. My good friend and colleague, my hon. Friend the Member for Lancaster and Fleetwood (Cat Smith), who is no longer in her place, spoke about that. Our mission in this place should be to ensure that we do not see food banks and that people, particularly those on the Government side, do not use them as a photo opportunity, standing in front of them with a great big smile on their face. It is shameful.
Was it a Budget that increased people’s wages? I think there was only one passing reference to people’s wages. As Members have pointed out, the figures are there to see. The OBR says that wages are expected to fall by 5.7% over the next two years—the largest fall since records began. Is that something to be proud of? Absolutely not, and it is a fact. It is not me, a Labour politician, saying that; it is the OBR, set up by the very Government we face today. It is simply not good enough.
What about public services in the Chancellor’s Budget? Did it re-resource our local authorities to fill the potholes? Absolutely not. More importantly, what about adult social care and children’s social care? Did it talk about the most vulnerable in our society? Absolutely not. There was hardly a word in that regard. From our postbags, Members from all parts of the House are aware of the people who cannot get operations, including elective surgery and serious operations for cancer. More than 7 million are now waiting. Did the Budget deal with that? Absolutely not—it is a resounding no, yet again.
In conclusion, I look forward to the day when the people get an opportunity to deliver hope and to look forward to something better, and when the next generation can get higher wages and better opportunities. The only way that will happen is if this Government step aside, sooner rather than later, face the wonderful electorate, and we get rid of every last one of them.
Paul Blomfield (Sheffield Central) (Lab)
There was an extraordinary omission in last Wednesday’s Budget: absolutely nothing to deal with the crisis in our public services, which is nowhere clearer than in health and social care. Every year, I hold an annual community consultation, giving my constituents the opportunity to say what priorities I should be taking up in this place and what the Government should be focused on. Over the 13 years that this Government have been in power, health and care has been a growing concern, and this year almost one in three said that it was by far the biggest issue for them—but clearly not for the Chancellor.
Is it any surprise? NHS staff morale is falling with the value of their pay. Ambulances are taking up to 15 hours to reach critically ill patients, with more than 500 deaths recorded last year when an ambulance did not arrive on time. Some 1.6 million people waited more than 12 hours in A&E, with waiting times linked to 23,000 excess deaths. There is a backlog of over 7 million patients for elective care, and the worst delays on record for cancer patients needing urgent treatment. So many people are struggling to get a GP appointment, and GPs themselves are struggling under pressure. There were 4.6 million—that is 9%—more appointments last December and January than in the same months in the winter before the pandemic, but the number of fully qualified GPs to deal with those appointments dropped by 2,077 since 2015, or 7%.
Then there are the difficulties that many face in getting any NHS dental treatment at all. Across England, 50% of NHS practices have reduced their NHS commitment, and 75% are planning to reduce or further cut their contracts. Patients are facing not simply the frustration of a search for a NHS dentist, but the pain of not finding one, and some are resorting to shocking, desperate DIY measures. Perhaps most shocking of all, children are unable to see a dentist. Three years ago, 58% of children saw an NHS dentist during the year. That was not good enough, but last year the figure fell to 47%. It is no surprise that in 2021 hospitals in England carried out almost 180 operations a day on children to remove rotten teeth. Last July the Government tweaked the dental contract, but according to my local dental committee, without more money we will simply see the slide towards the death of NHS dental provision continue.
Alongside the crisis in the NHS, and fuelling it in part, is the crisis in social care. How we all remember the pledge of the new Prime Minister back in July 2019 on the steps of Downing Street:
“we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve.”
Of course, like so many of his pledges, it was no such thing at all. Although the structure within which people make payments for the care they receive is hugely important, the crisis in social care goes deeper than that: it is about the way in which we provide services. There are so many in the care sector who work so hard, and we saw their extraordinary commitment during the pandemic, but they work with one hand tied behind their back.
There is a massive staff shortage, with 165,000 unfilled posts in adult social care in England last year, up 52% on the previous year. Pay is obviously a key factor, and it is a poor reflection of the way in which this country values those looking after our most vulnerable that care workers are struggling on a minimum wage because of the way in which local authorities have been starved of funds. Domiciliary care workers are restricted to 15-minute visits, reducing the value of that interaction with people desperately in need of care—some of our most vulnerable —to a quick, functional task. We need a fundamental paradigm shift in social care, with care workers paid, trained and supported properly—more like nursing.
The Budget also failed to recognise the support that is needed by the army of 10.6 million unpaid carers who play such a vital role. The right to carer’s leave is an important step, and I welcome the fact that it is being taken by the Government, but for many that leave needs to be paid in order to be meaningful. Carer’s allowances need urgent reform, as one in six carers are facing debt as a result of their role. Opportunities for respite care need improving, and there also needs to be proper support for young carers, some of whom came to Parliament last week and set out their objectives in a letter to the Prime Minister on Young Carers Action Day.
I recognise that addressing all of this comes at a cost, but we need an honest debate about what we need in health and care and how we fund it, stopping some of the political football around it. Rather than some of the attack lines—on one side, the “death tax”; on the other side, the “dementia tax”—we need a real debate about how we fund what the people of this country want in health and social care, and we can fund the services we need. We could start by scrapping the pension tax handout to the richest 1%, which would bring in £1 billion. We could align capital gains tax with the rates applied to income, making the system fairer and raising an extra £16 billion a year. We could scrap the gaps in inheritance tax, which benefit the wealthiest, raising an extra £4 billion a year. A wealth tax of just 1% on individual wealth above £10 million would raise £10 billion from the wealthiest 0.04% of the population. There are ways the Chancellor could have begun to address the challenge, but he did not even recognise the need to. Above everything, this Budget fails on that.
Jessica Morden (Newport East) (Lab)
The Chancellor’s statement last week, which was the first proper Budget in 17 long and chaotic months, reflected the unacceptable reality of 13 years of Conservative failure, with growth downgraded, wages lower now in real terms than they were in 2010, the highest tax burden on households since the second world war and, over the last two years, the biggest hit to living standards since records began. Constituents reflect this, such as the resident in Newport East who said to me last week:
“Last year for my gas I was topping up £20 a week, now it’s over double that. I’m not sure what I am supposed to do. I cannot afford to live.”
Last week’s Budget said nothing to her, and nothing to all those struggling with the cost of living crisis or the £11,000 hit since 2010 due to stagnant wages, which was so ably outlined earlier by my hon. Friend the Member for Manchester Central (Lucy Powell). There was no redress for my constituent whose plans for retirement this year were ruined by last autumn’s disastrous mini-Budget, which wiped out a substantial amount of her pension. Politics may have moved on, but our constituents are still paying for the economic carnage caused by the Conservative party in that mini-Budget, including homeowners, with average interest rates on outstanding mortgages now twice as high as forecast two years ago.
It is notable that the Chancellor did find time for one permanent tax cut in the Budget—the £1 billion tax reduction for the richest 1% of earners via changes to pension allowances. It is an outrageous tax giveaway for the rich, while millions of older people on modest incomes will find themselves paying more tax because of the six-year freeze on personal allowances. It is a clear reminder that whichever Tory Chancellor sits in No. 11 Downing Street—and we have had a few in recent years—the same skewed sense of priorities remains.
One of the themes of today’s debate is innovation, which is at the core of our steel industry, including at Llanwern steelworks in my constituency of Newport East. That the word “steel” did not feature once in the Chancellor’s statement or the Budget document itself speaks volumes. It proves that, despite the Chancellor fleetingly using the phrase “industrial strategy” last week, this Government do not have one. We have a Business Secretary who, when asked whether Britain should offer steelmaking capacity in the future, carelessly said that “nothing is ever a given”, and we have a Chancellor —well, a succession of Chancellors—unwilling to go as far as European counterparts in supporting our steel sector on the crucial issue of decarbonisation. The German and French Governments have already spent billions of euros and committed even more towards greening their domestic steel sectors, while there have been other ambitious investments in green steel in Canada, Belgium and Sweden. UK Steel highlights that a lack of similar capital funding for decarbonisation in Britain is making our steel industry unattractive for investors. We will await further details from the support pledge for carbon capture, utilisation and storage. There was no information last week on where or when this will be spent, but we clearly need an improvement on the current infrastructure fund.
On industrial energy costs, Make UK has noted that the Budget does little to tackle the real and very immediate threat that manufacturers face with rocketing energy bills far higher than their European competitors. It is no surprise that UK steelmakers will stump up a whopping 63% more than their German counterparts for electricity in 2023. The recent announcements at Liberty Steel show just how serious this issue is.
I mentioned the impact of energy costs on steel businesses, but the same is true in other sectors, including hospitality. At last week’s meeting of the all-party parliamentary group on hospitality, events and major food and drink businesses in Wales, we heard from hoteliers and publicans how their businesses have been effectively locked into contracts agreed at a time of very high energy costs last year, before the fall in wholesale prices. They want the Government to make it easier for customers to withdraw from expensive energy contracts signed during the chaos of 2022.
Rising energy prices are also having an acute impact on the hospice and home care sector, as my hon. Friend the Member for Enfield, Southgate (Bambos Charalambous) mentioned. Many hospices are facing up to fivefold increases in their energy costs. For these vital facilities, reducing energy consumption is simply not an option. Hospice UK recently met Ministers to put those points across. It called for increased support beyond the energy bills discount scheme, but that call appears not to have been heard. I ask Ministers to look at that again with the sector.
Finally, the Budget confirmed that the 2023-24 settlement for Wales is £900 million lower in real terms than was projected at the time of the 2021 spending review, with no extra funding made available for health, social services or local government. There is a derisory £1 million extra in capital funding for Wales in 2024-25. The Welsh Government are right to point out that while the UK Tory Government talked up a Budget for growth, in reality they have shown no interest in building a way out of the current financial crisis. We deserve better than a Government that will keep on bumping us along a path of managed decline.
Helen Hayes (Dulwich and West Norwood) (Lab)
In his Budget speech, the Chancellor explained that the economic outlook is not quite as bad as it might have been and heralded that as a cause for celebration. He claimed that his plan is delivering the country from the difficulties we are facing, as if those difficulties were nothing to do with him or the Government of which he is a part. We must be clear: the current situation is dire, and responsibility for it rests squarely with the party that has been in power for the past 13 years.
According to the OECD, we have the weakest economy in the G7; we are the only country that will see negative growth. We are seeing the biggest decline in living standards since records began. The covid-19 pandemic and the war in Ukraine have had global impacts, but here in the UK they have exposed the underlying weaknesses in our economy and public services, which are the consequences of more than a decade of government by the Conservative party.
Along the way, this Government have inflicted entirely new damage of their own making. It was Conservative Members who voted for a Prime Minister who was content to send inflation and mortgage bills spiralling and the economy into freefall, completely unnecessarily, in pursuit of her right-wing economic dogma. This Government have neglected public servants, so many of whom have been at the frontline of the covid-19 pandemic—nurses, doctors, railway workers, teachers, paramedics, postal workers—who are now so demoralised, underpaid and burned out that we are seeing the biggest wave of industrial action since the 1980s.
The challenges we face are the result of the Conservatives’ political decisions and priorities. The state of our country is their record—and it is a shameful record of crumbling public services, struggling high streets, falling wages, increasing poverty and deprivation, and declining mental and physical health. This Budget tells us that the Conservatives’ priorities are all wrong and they do not know how to fix what they have broken.
The state of our economy is deeply linked to our response to the climate crisis. Household energy bills have increased because of our dependence on fossil fuels. Yet the Conservatives have wasted a decade failing to invest in onshore wind, crashing the market for domestic solar, and comprehensively failing to deliver a retrofit programme to insulate homes and decarbonise domestic heat.
A fair taxation system is another foundation of a strong economy, yet this Chancellor’s priority, in the context of a biting cost of living crisis, is a £1 billion tax cut for fewer than the richest 1% of earners—not a specific fix to incentivise doctors to remain in work longer, but a tax giveaway in which someone with a pension pot of £2 million will get a tax cut of almost a quarter of a million pounds. The Government have implemented a poorly designed windfall tax that fails to maximise funding to protect households from the energy crisis.
We have the most expensive childcare in Europe, with some families across the country paying far more than their rent or mortgage, and parents, especially women, increasingly deciding that work does not pay. Yet for all the Chancellor’s fanfare about childcare, there is no acceptance by the Government that the current system is broken. Nurseries and childminders are leaving in their droves and staff are leaving. Additional funding is welcome, but without a plan to expand the early years education workforce and reform the complex and confusing hours-based model of funding, it will not make the critical difference that families need.
The Budget ignored completely the biggest issue facing my constituents in Dulwich and West Norwood: the shortage of genuinely affordable social housing. There was not a single commitment to boost the supply of social housing or to improve the quality of existing housing. The rabbit in the Chancellor’s hat could have been the investment to retrofit 19 million homes, or to end non-dom tax status to double the number of training places for doctors and fund free breakfast clubs for every primary school in the country. It could have been a pledge to reform business rates to level the playing field for struggling town centre businesses. It could have been investment in onshore wind and solar. Instead, the Chancellor chose a tax cut for the rich and a packet of sticking plasters for the gaping wounds his party has inflicted on our country.
The Conservatives are out of touch and out of ideas. It is clear from the Budget that it is time for them to make way for a Labour Government who can begin the process of rebuilding our country, investing in green skills for a strong economy, building the childcare system families need, tackling the housing crisis, supporting small businesses and investing in an NHS workforce for the 21st century. The next general election cannot come soon enough.
Bell Ribeiro-Addy (Streatham) (Lab)
Just because, unlike the previous Budget, this one has not unravelled in about 20 minutes and led to panic selling in financial markets, the Government should not think that they have vastly redeemed themselves. We now know that the Chancellor’s flagship childcare policies will see nurseries going out of business. The fuel duty levy freeze makes a mockery of any commitment to net zero emissions targets. The removal of the cap on pension pots will affect hardly any consultant doctors at all. Instead, it is a general giveaway to very high earners, and one that protects them from inheritance tax to boot. Most egregiously of all there is a £29 billion handout to businesses, the same businesses that are already swimming in profits because of price gouging and profiteering. We know that this policy will not boost investment, because it has been tried before and failed.
All that has a context. The context is the worst fall in living standards in living memory and a wave of industrial disputes that the Government provoked. The response from Ministers is to claim there is no money left or that paying public sector workers would be inflationary, but it is the price gouging and profiteering by firms that is inflationary. That is not just something you hear me say on a picket line, Mr Deputy Speaker; the Bank for International Settlements research says it, too. This is the central bank for central banks, and no one has ever been stupid enough to claim that it is a left-wing or radical body.
The Chancellor’s policy choice was very simple: to reward those who are responsible for inflation with a multibillion pound handout of taxpayers’ money, and to punish those struggling with that inflation with derisory and insulting pay offers. The Chancellor decided that there was £29 billion left for the profiteers, but, remarkably, that there was no money left for inflation-matching pay rises. The sheroes and heroes of the pandemic are meant to get by on claps. He is a Robin Hood in reverse, stealing from the poor and low-paid, and giving to fat cats, their shareholders and the rich.
This is simply repeating the austerity policy that has hobbled the economy ever since 2010. The Resolution Foundation says that the policy has left British workers £11,000 worse off on average. The Office for Budget Responsibility is very clear about the damage the Budget will do to living standards. It says there will be a record fall in living standards over the two years to the end of March 2024 and that real household disposable income per person is on course to fall by 5.7% over the next two years—the biggest two-year drop since records began in 1956.
There was also nothing in the Budget to address the crisis in public services. In fact, spending on public services as a proportion of GDP is expected to decline in each of the next five years. In a stagnating economy, that means real hardship for millions. There are only even more cuts for local authority services, too.
Government Members may be interested to know that I believe we have seen exponential growth in two areas: privatisation and deregulation. That is warmed-over Thatcherite nonsense. If they believe that Thatcherism worked, they are as deluded as some Members have pointed out today. We are going to see life expectancy falling, poverty growing, child hunger rising and an increase in the number of food banks. This Budget will only ensure that those inequalities continue to grow.
Steven Bonnar (Coatbridge, Chryston and Bellshill) (SNP)
In his Budget statement, the Chancellor set out his four Es that make up the priorities for economic growth and the direction of the Government: enterprise, education, employment and everywhere—he must have been running out of ideas when he got to that last one. Given that the Tories do not speak for Scotland, but speak at it—they have done since the 1950s—I thought I would set out my own four Es in response to the Chancellor’s statement.
The first E is for Europe. It is crucial that we understand the impact that the lack of European co-operation continues to have on the science and technological sector. Brexit—a word that many now dare not mention on either side of the House—has seen Scottish and UK universities lose almost £1 billion in funding since we left the European Union. That has undoubtedly harmed our research and development potential and strangled the ambition of those looking to make their mark in that sector.
Employment opportunities at world-leading projects such as Horizon Europe have been decimated, with 115 grants having been torpedoed in the past year alone. Nineteen of our top highly skilled researchers say that they would seek a move to the EU in pursuit of funding assurances that are not forthcoming in the United Kingdom. That puts Scotland’s research and development position at a disadvantage, and scientists look towards our friends and neighbours in Europe as the science superpower.
Scotland punches way above its weight in science and research, accounting for 12% of the UK research output. Although the Scottish Government are committed to delivering for science in Scotland, several of the key levers of power remain reserved to this place. Recent UCAS data highlights the devastating impact that Brexit is having on the numbers of new EU students choosing to come to study in Scotland, with a 73% decrease since 2019. There has also been a 64% decrease in the number of EU students securing places across the United Kingdom. That is a consequence of Brexit and we must reckon with the harm that Brexit is continuing to do to our communities in Scotland and the limits on the Scottish Government’s ability to militate against those harms. If we want our science sector to thrive and excel, we cannot rely on this Tory Government’s methodology and direction, which are so deeply rooted in isolation.
Next, we have E for essential. What I have already said alone proves that it is essential for Scotland to retake its place within the European community, but when we examine the most cutting-edge work across the three priority technology areas, we see that the UK represents only around a quarter of the level that would be expected to support the Government’s so-called science superpower narrative. A smattering of tax cuts here and there or lukewarm commitments to funding are simply not enough.
For the UK Government truly to make the UK a science and innovation superpower, it is essential that they rethink their understanding of how science is pushed forward. It is essential that the Tories abandon their isolationist agenda and return the UK to European research networks, which foster scientific development both here at home and further afield. That is essential for many reasons—none more so than the fact that scientific progress is not driven forward by isolation and national competition, but through international co-operation and collaboration. The European Union knows that, and the Tories have repeatedly proven themselves to be ignorant of it.
In the SNP, we have consistently stood behind Scottish science, research and development, and we will continue to do so, but we are held back by the lack of control over areas such as foreign policy and immigration. It is essential that Scotland’s Government have the powers they need at their disposal. That makes independence essential.
Thirdly, E is for energy. The pinnacle of science is understanding and building upon its merits and enhancing the renewable energy sector for future generations. Instead of utilising time, skills, and research into that practice, this Tory Government are set to take the easy route out, reclassifying nuclear power as sustainable. In Scotland, we have no need and no desire for nuclear power. How can we allow such action simply to be forced upon us, when the negative impacts of nuclear power can last not for months but for years upon years? We can solve the energy crisis with the array of energy resources that we already have to offer, and with a proper wealth tax and a proper windfall tax. It really is that simple.
The Chancellor’s fourth and final E was for everywhere. The destruction caused by 13 years of persistent Tory government that Scotland did not vote for is everywhere and it is evident for us all to see. This will continue only if Scotland remains without the powers that our independence will give us.
Since I am coming to the end of my speech, my final E is for ending: ending the stagnation of our science and innovation sectors, allowing Scotland to bring world-renowned excellence to the heart of the science sector; ending the lack of Tory ambition to deal with the climate emergency; ending the dehumanisation of refugees and asylum seekers; and, finally, ending this unequal and involuntary Union.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Today, the Resolution Foundation reported that workers in the UK are £11,000 worse off per year, after 15 years of almost completely unprecedented wage stagnation. It said:
“Nobody who is alive and working in the British economy today has ever seen anything like this… This is definitely not what normal looks like. This is what failure looks like”.
Far from being a global phenomenon, as the Government would have us believe, the UK is lagging behind comparable economies such as Germany. In 2008, the gap was more than £500 a year; now, it is more like £4,000. The UK is the only country in the G7 where pay is lower today than it was in 2008. It is the only economy in the G7 that is smaller now than pre-pandemic, and it has the lowest growth forecast for 2023 of any G7 nation.
Any responsible Government should have done two things at last week’s Budget. First, they should have insulated people from the cost of living crisis and tackled poverty pay in the process. Secondly, they should have invested in a comprehensive industrial strategy to reverse the decline in living standards. Neither happened. On a day when so many of Britain’s key workers were forced to strike over poverty pay, they were offered nothing. Instead of setting out how his Government would tackle widespread in-work poverty, or how the 7.1 million people on NHS waiting lists, many of whom want to go back to work, could receive the treatment that they need to do so, the Chancellor threatened more vigorous benefit sanctions.
The families struggling to afford energy bills were offered crumbs. The Government announced that energy bills would be kept at the same rate for just three months, but that is still a real-terms increase of 19%. There was no mention of making the windfall tax more robust, to provide much needed support, and there was no promise that bills would come down in line with falling wholesale prices. All the while, big oil and gas giants are still raking in billions of pounds in super-profits. The Chancellor ignored collapsing public services, too. Unprotected departments face 10% cuts to real day-to-day spending per capita by 2027-28.
On industrial strategy, to be fair to the Chancellor, he did utter the words “industrial strategy”, but they were a passing reference and that is where it ended. There was no extension of support for energy bills for businesses and no support for manufacturing, which is predicted to contract by 3.3% this year. There was no mention of the urgent support needed by our the steel industry, and nothing for SMEs. We heard about the full expensing scheme for larger businesses, which might have been meaningful if it sat alongside an actual industrial strategy. But in the absence of one, it is just another tax break for large companies.
On the vision for the future, which the Minister gave a nod to earlier, there was certainly a mention of AI, quantum computing and ARIA. All that is good, but the funding does not match the rhetoric. The reality is that, out of the 38 leading OECD nations, we are 27th in terms of our investment in research and development.
This Budget should have been a game changer. It should be have been bold, ambitious and dedicated to improving lives. It should have set out a clear industrial strategy, with an investment plan alongside it. It should have increased the living wage to £15 an hour, and seen a major improvement in benefits for the poorest and a pay deal for all public sector workers. It should have included a genuine tax on oil and gas companies, and the introduction of a wealth tax on the assets and profits of the super-rich, which could have easily funded a massive injection into our public services. Indeed, that is not a radical idea. Patriotic Millionaires and Tax Justice UK provided a wealth tax plan for the Government prior to the Budget, which would have raised over £50 billion a year for our public services.
Instead, we got a Budget that entrenches poverty and restricts our country’s potential. Off the back of the Budget, the Office for Budget Responsibility projected that living standards are expected to fall by 6% over the next two fiscal years. That is disgraceful. The only answer is a general election because we do not have a fiscally or socially responsible Government in office.
David Linden (Glasgow East) (SNP)
As outgoing chair of the Scotch whisky all-party parliamentary group, I was interested that there was a lot of trumpeting of draught and draught relief in the Budget. Unfortunately for the Scotch whisky industry, the only thing that is blowing in now is a very cold draught as they see the 10.1% increase on duty. That represents another 97p added to the cost of a bottle of whisky.
Some Conservative Members will find that almost something in the abstract, but in a constituency such as mine, where there are roughly 400 direct supply-chain jobs connected to the Scotch whisky industry, that is hugely significant. It ill behoves a Conservative Government who made massive promises to the Scotch whisky industry about the fairness of the taxation system to hand out that 10.1% increase, but at the same time turn around and talk about tax cuts, for example, when it comes to draught beer and some wines. I will leave that for the Government to reflect on, specifically in relation to resolution 36.
Over the course of the Budget debate, there has been a lot of talk about taxation and pensions taxation. As someone who sits on the Select Committee on Work and Pensions and takes an interest in these issues, the vast majority of the commentary about that, particularly from the Government Benches, has been completely ill-thought out. It seems to me that many Members of the Government have no ability to tell the difference between the tapered allowance and the lifetime allowance.
The reality is that the Government’s cover story on abolishing the lifetime allowance altogether is that they are trying to tackle some of the shortages of clinicians and doctors in the national health service. In reality, 86%, I think it is, of people who will benefit from the lifetime allowance are not doctors or clinicians in the national health service. It strikes me as being an incredibly expensive policy, something that the OBR’s blue book refers to in its Budget commentary.
On the crisis that we have in terms of the workforce and the general issues that we have around economic inactivity, particularly among 16 to 25-year-olds and the over- 55s, there are some good things that can be done, particularly around childcare. There will be some big supply and demand issues when it comes to childcare, but that is something for the Government to work through. But tinkering with—not even tinkering with, but abolishing—the lifetime allowance and giving that massive giveaway, equating to some £900 million, according to the blue book, is a very expensive policy that will do nothing when it comes to retention of nurses in the NHS or in any of the other sectors that are experiencing workforce shortages.
One reason why the Government are having this big debate about economic inactivity is that the hostile immigration policies they pursue means they are left with a situation where they have lifted up the drawbridge and do not have people coming to these islands. Without inward net migration, we have a falling population, so do not be surprised when we have these situations. But the answer is not a massive giveaway of the kind we can see in Budget resolution 18 on the lifetime allowance.
This all has an impact on my constituents on the streets, whether they are in Easterhouse, Shettleston or Parkhead. The week before the Budget, my hon. Friend the Member for Aberdeen South (Stephen Flynn) and I went to visit Tollcross advice centre. For me, it is all about whether the Budget passes the Bernie test. Bernie is one of the staff at Tollcross advice centre. She told us quite clearly that the biggest issue that people come about is energy bills, yet this Government are scrapping the £400 energy rebate. Bernie and so many other people across my constituency find it utterly unfathomable that they live in a country that is energy-rich, yet they are having these sky-high energy bills. They wonder why. The problem, unfortunately, is that for Bernie and for so many people the Government have the wrong priorities: they are giving away almost £1 billion in tax cuts while many of my constituents have to experience high energy bills.
Finally, I want to say something about economic inactivity. The Government often talk about their plan for jobs, but it seems to me as a member of the Work and Pensions Committee that the Government’s interest is just in putting people into any old job. That is cost-inefficient for a lot of employers, who train up someone who, three or four months later, leaves. The answer is not moving things like the automatic earnings threshold in universal credit. It is not about sanctioning people, which is what this Government seem to be moving far more towards. The Government have said that this Budget is about being a science superpower, but the Red Book put in front of us last week shows the reality: we are moving closer to being a sanctions superpower. That is not something that my constituents in Glasgow East will tolerate—and the best way they can get rid of it is with independence.
Justin Madders (Ellesmere Port and Neston) (Lab)
When we are the only economy in the G7 that is still smaller than it was pre-pandemic, it is not unreasonable to expect greater urgency from the Government when dealing with turning that around, but I came away from last week’s Budget thinking, “Is that it?”
The Opposition recognise that this is not a moment for tweaking the current, failed approach to the economy. When the major tax change announced is a tax cut for the richest 1% that is badged as a plan to help the NHS, we have embarrassing levels of spin that would make even the hardiest spin doctor blush, as well as making real doctors cringe at the thought of being used as a cover for a tax giveaway for the richest. It is a telling sign of how low expectations have got that last week we had the absurd spectacle of the Chancellor standing up at the start of his speech and telling us we would not be going into a recession this year, as if that were some kind of triumph. It does not get much better beyond this year, either: over the entire Parliament, growth is forecast to be just 0.5% a year on average, which is way below historical standards.
What makes all this worse is that we have sky-high inflation right now. As we have heard, real wage growth has been non-existent since 2010, and real wages are projected to be 5% less at the beginning of 2025 than at the start of 2019. Before Conservative Members use the pandemic as an excuse, we must not forget that that is part of an 18-year pay squeeze. The OBR has forecast that real wages will not return to their 2008 level until 2026. That really is a dramatic statistic that shows how badly we have all done under this Government.
If wages had continued to increase at their pre-2008 rate, every single one of us would have been £233 a week better off today, and that gap would grow to £304 a week by 2027. As we have heard, the Resolution Foundation has put a figure of £11,000 a year on what 15 years of wage stagnation has cost every family in this country. That should really give us a warning about the direction we are travelling in. By the end of this decade, average incomes will lag behind those in Poland if we carry on as we are.
We are paying more for worsening public services and earning less in the process. This is hitting the majority of people really hard. There should be an OBR forecast of how many more people are expected to use food banks, but in its absence I will quote our local citizens advice bureau:
“The scale and size of the crisis is unlike anything we’ve seen and it’s affecting people we haven’t helped with crisis support before with this being nearly 50% higher than 2021 and more than double the numbers we helped in 2020.”
The number of people it has helped who are in employment has also doubled since 2020, which tells us everything we need to know about how wages have not kept up with costs and how our economy is stagnating.
Last year, we in Cheshire did think briefly that it would be recognised that areas outside the city regions might need some special attention when it was announced during the September “fiscal event” that Ellesmere Port’s industrial area would be one of 40 investment zones, but last week we mysteriously disappeared from the list of investment zones, with no explanation, no apology, and no refund for the time and money that had been wasted in preparation for something that will not now happen. For us, as for so many areas, last week’s announcement came as a crushing blow. In fact, it has been estimated that local authorities spent some £12.5 million on preparing bids that are now completely redundant. What a waste of resources, when local authorities are already stretched. So far, no official rationale has been offered for the removal of support from us, and there has certainly been no offer of an alternative scheme or support. We are being treated with contempt. It is particularly galling that, when we look at the areas that have been chosen, it looks as if we are being punished because we do not have and do not want an elected Mayor.
Only two weeks ago, during a Westminster Hall debate, three Cheshire Members asked for a meeting with the Parliamentary Secretary, Cabinet Office, the hon. Member for Brentwood and Ongar (Alex Burghart), so that we could try to make progress with our devolution plans. Needless to say, we have not received a response, and now we learn that we are to be consigned to the devolution dustbin because we will not dance to the Government’s tune and give them an elected Mayor. That is not what devolution is about. It is a diktat from the top, and the Government ought to be ashamed of themselves for attempting to bully areas into accepting a Mayor when there is no public appetite for one.
I want to say a few words about access to cash, as I was unable to attend a Westminster Hall debate on the subject earlier today because I was in the Chamber. As we know, millions of adults rely on cash to a great extent in their daily lives, and many of them are vulnerable or disabled. I know from talking to constituents that it is getting harder and harder to put cash into bank accounts. That means that lots of businesses cannot accept cash because the branches in which they used to put the cash have gone. We need to get the banking hubs up and running in every town and city in the country, and to ensure that businesses are required to accept cash.
Let me end by quoting the words of a disabled constituent who, because she is on legacy benefits, has missed out on thousands of pounds of extra help already, but whose situation is becoming steadily worse. She told me:
“I am out of pocket now by well over £400 a month—due to mortgage payments, energy costs, food costs and petrol. I’ve had to sell furniture to cover this cost! Does this government think this is acceptable?... And what happens next month?...How am I supposed to live?”
I do not know what will happen to my constituent next month, or the month after that, or what will happen to the many other constituents in the same position. That uncertainty and anxiety should weigh very heavily on the shoulders of Conservative Members.
Geraint Davies (Swansea West) (Lab/Co-op)
This is a terrible Budget from a busted-flush Government. We have heard from the other side, “Give them another chance—the new Tory dynamic duo of Rishi and Jezza.” They certainly talk the talk on growth, debt, inflation and the NHS, but do they walk the walk? The answer is no.
We have seen stagnant growth for 13 years, with no real prospect of it being any better than the worst in the G7 in the year to come. Let us compare that with what happened under a Labour Government. In 10 years we saw the economy grow by 40%, and we used the money to double investment in health and education and lift a million children and a million pensioners out of poverty. With that level of growth—that trend growth—we would have been £11,000 better off in terms of average wages. The Prime Minister says “That’s not my fault”, but during much of the time during which we have seen this decay and mismanagement, he was the Chancellor.
What about debt? Since the last Labour Government, debt as a share of the economy has doubled from 45% of the economy to 90%. That is an appalling record, and an indictment of this Government’s failed austerity platform. As for inflation, the Government’s ambition is to halve it from 10% to 5%. According to the forecasts it will be 3%, so it should not be that difficult. People seem to think this will reduce prices. Obviously, if inflation is 10% and then becomes 5%, prices will have gone up by 15%; and if the Government are offering workers at the Driver and Vehicle Licensing Agency in Swansea 2%—in fact, a 13% pay cut—it is no wonder that they are on strike. This Government are busy causing strikes left, right and centre. If the RMT’s original bid of 7%, from before it went on strike, had been accepted, we would not be in the position where now the workers are—deservedly, in fact—getting 14%. We have had this disruption and chaos because of Tory mismanagement, because the Government will not negotiate. They just create strikes.
We are told that we have to live within our means. That is all very well for the Chancellor, who is a millionaire, or indeed for the Prime Minister, who is a billionaire. He has his hedge fund Theleme, which appreciated from £7 billion to £39 billion after the Government decided to buy the Moderna vaccine as recommended by the then Health Secretary, who has since made his money in the jungle.
What about waiting lists? We have waiting lists of 7 million people—are we going to get those down under this Government? We know that the cost of treating someone with low nourishment is something like £7,000 compared with £2,000 for someone who is properly fed, yet in Britain today one in four people are in food poverty. The inequality created by this Government is making the health service worse, not better, and the billion pound that they have put into pension fund tax relief will not make it better. The workers are being blamed, of course, for inciting pay demands, but wage growth is in fact down now, year on year, from 6% to 5.7%, at a time when inflation is well over that.
Who else is going to pay? Of course, homeowners have to pay. They have to help bring down inflation. How? By bringing down the price of houses by 8%. So new homeowners will see mortgage rates double or triple from 2% to 6% at a time when the value of their houses is going down—and they are supposed to be the growth creators of the future. The Bank of England’s base rate has gone from 0.1% in November 2021 to 4% now. The economy has gone out of control under Tory mismanagement.
And what about businesses? The Government talk about businesses, but we now have record insolvencies. They are up 30% since 2020. Material prices and energy prices are going up, borrowing costs are going up and demand is weak, so businesses are struggling.
We have heard about R&D in this debate, and as I have mentioned, in Wales 1,000 university staff at the cutting edge of developing green growth initiatives are being sacked because the promise of us getting “not a penny less” after the withdrawal of the EU structural funding has been broken by this Government. We are talking about losing innovative projects to turn waste plastic into nanocarbon tubes for electric vehicles. We are talking about converting steel slag heaps back into raw materials such as iron ore. We are talking about work with Tata Steel on cladding for homes that stores solar energy as well as absorbing it. On infrastructure, Wales has had just a 1.5% share of rail enhancement for decades for 5% of the population—we are not even getting our 5% for HS2.
There has been profiteering—we have seen the oil companies and the retail companies making profits out of the Ukraine war and the pandemic respectively, and we have seen natural monopolies such as the water companies profiteering. It is not good enough. The Tories are saying, “Trust us again”, even after the inflation, after the debt, after the lack of growth, after one in four have been living in poverty and after a 15% cut in trade. No, no, no! We want a stronger, fairer, greener future, and that will only come with a Labour Government. Let us have an election, put the country out of its misery and build a better future with the Labour party.
Mr Deputy Speaker (Mr Nigel Evans)
Could Members who have taken part in today’s debate please make their way to the Chamber, as this will be the 43rd and final contribution from the Back Benches?
Jim Shannon (Strangford) (DUP)
Thank you for calling me, Mr Deputy Speaker. I think I am the Duracell bunny; I seem to go on longer than anybody else. I have been here since 25 past 2, so that gives you an idea of how long we have been here, and I will be here for the Adjournment debate as well.
May I begin by thanking the Chancellor for his and his team’s hard work? I do not underestimate the blood and sweat that goes into the decision-making process. Before I highlight the issues on which I would like clarity and further consideration, I want to make it clear that I know there is not a money tree—at least, I am not aware of one—that we can shake to satisfy us all. However, there are needs, and needs must be met.
I am thankful that fuel duty has been frozen. However, it should be remembered that things are still difficult for public transport providers. They are putting prices up, and commuters are feeling the difference. The Chancellor has rightly focused on getting people into work, but we need to make sure work is worth their while.
It is always good to give examples, and a mother came to see me last week to get her driving licence signed. She works two jobs, and she spoke about the expense of all the extras at school. Swimming and trips add up, so she took a second job delivering Chinese meals in the evenings. She relies on her tips to pay for those extras. Women in the UK should not have to work all day and into the evening to provide a basic standard of living. I asked her to look into universal credit as a top-up—we advise people on the benefits to which they are entitled—and she said, “Jim, it’s just too much hassle. I prefer to work and know that what I have is mine, rather than worrying that I will get a bill because I have done something wrong.” It seems wrong to me that those who work the hardest receive no help and are living hand to mouth, afraid to ask for help.
I welcome some of the good things the Government have done, such as the pothole plan, from which the Barnett consequential will help us in Northern Ireland. I also welcome the help for SMEs, which have ingenuity, positivity and ability. SMEs are so important to my constituency.
The Financial Secretary to the Treasury is in her place, and she knows I am like a dog with a bone on child benefit, but it is important to keep at it. The responses I have received during debates on the child benefit threshold do not satisfy me, and they certainly do not satisfy my struggling constituents. People who work hard for a living, earning not a penny of benefits other than their child benefit payment, do not understand why the threshold has been frozen for 10 years, why it does not include the family income rather than a single income, and why it does not matter whether a family has one child or 10, as others have mentioned. It is not right and cannot be right that the threshold is the same, and with respect, it must be made right.
People who were once comfortable on their wage are now struggling to meet the rising costs of their mortgage, their car payments, their student loan repayments and everything else, but they are afraid to accept a modest pay rise because they are frightened of losing child benefit or having to pay a large tax bill. I know that was never the Government’s intention, and I urge the Minister, for the sake of the squeezed middle class, to allow my constituents to see the benefit of their education and hard work, rather than wondering what the point is of working for all those years only to find themselves struggling. This needs to be changed, and it needs to be changed now.
The hon. Member for Swansea West (Geraint Davies) spoke about health issues, and the British Heart Foundation has contacted me to say that, despite the unwavering efforts of NHS staff, the pandemic has caused huge disruption to every aspect of cardiovascular care. That care is time critical, as delays to vital tests, procedures and operations can lead to preventable heart attacks, avoidable hospital admissions, disability from heart failure or even premature death. At the end of January, 370,000 heart patients were waiting for elective care. My goodness, what a massive number of people—we need to address that. That includes people waiting for echocardiograms, initial appointments with specialists and surgery. The British Heart Foundation has said it is disappointing not to see anything further announced in the Budget to address the urgent NHS backlog challenges. I ask the Minister and the Chancellor to take that on board.
Official NHS England statistics do not go far enough in providing information about sub-specialisms and demographic workforce information, including retirement rates. Planning intelligently for the future is impossible if we do not know where we are today, so I ask the Government to develop a robust, integrated process for collecting, compiling and sharing workforce data at specialty level. Alongside that, the integrated care system planners must be resourced with the appropriate training and support to understand and utilise that information.
I support the BHF in its calls for this funding. I know everyone has a wish list, but my wish is a simple one. It is a cry for investment in the things we need to help the people who slog away, morning, noon and night, for the quality of life that they were able to provide for their children five years ago, whether it is piano lessons or dance lessons. They are stressed and worried, and ultimately they have less money to put into the local economy. The squeezed middle class spends locally, helping the wee shops, dance studios and restaurants nearby. This needs to be addressed, and the Chancellor and the Minister can make the calls that make a difference. Let us make a difference in this Budget for all our people.
James Murray (Ealing North) (Lab/Co-op)
Thank you, Mr Deputy Speaker, for the chance to close today’s Budget debate on behalf of the Opposition. We have heard powerful speeches from many of my hon. Friends about the Government’s Budget and economic record. The impact on our constituents of the Tories’ failure on the economy and public services was laid bare by many Members, including my hon. Friends the Members for Birmingham, Ladywood (Shabana Mahmood), for Caerphilly (Wayne David), for Liverpool, Walton (Dan Carden), for Enfield, Southgate (Bambos Charalambous), for Newport West (Ruth Jones), for Weaver Vale (Mike Amesbury), for Sheffield Central (Paul Blomfield), for Streatham (Bell Ribeiro-Addy), for Salford and Eccles (Rebecca Long Bailey) and for Swansea West (Geraint Davies).
Critical questions were raised about the delivery of the Government’s announcement on childcare, including by my hon. Friends the Members for North Tyneside (Mary Glindon), for Wythenshawe and Sale East (Mike Kane) and for Lancaster and Fleetwood (Cat Smith). The total lack of an effective and ambitious plan for growth from the Government was underlined by many Members, including my hon. Friends the Members for Newcastle upon Tyne Central (Chi Onwurah), for Llanelli (Dame Nia Griffith), for Kingston upon Hull West and Hessle (Emma Hardy), for Portsmouth South (Stephen Morgan), for Cambridge (Daniel Zeichner), for Newport East (Jessica Morden), for Dulwich and West Norwood (Helen Hayes) and for Ellesmere Port and Neston (Justin Madders).
All my hon. Friends have been clear that last week our country needed a Budget with a plan to end 13 years of economic failure. Families, businesses and our public services needed a plan to grow the economy, but instead what is the reality we face? Ours is the only G7 economy forecast to shrink this year; our long-term growth forecasts have been downgraded; and we are suffering the worst falls in household incomes in a century. The shocking impact of the Conservatives’ economic failure is laid bare by the fact that wages are not expected to return to their 2008 level in real terms until 2026. Across the UK, people and businesses rightly want better. They want to get on with making our country better off, but they are being held back by a Government who are out of energy and out of ideas.
The only good ideas in the Budget were the ones that Labour has been calling for for months. We were glad that in the Budget the Chancellor followed our lead by committing to extending the energy price cap, ending the unfair premium for people on prepayment meters, cancelling the planned fuel duty increase, helping the over-50s back into work and improving childcare for working people. All those announcements are ideas that Labour has been calling for and the Conservatives have finally caught up with. The Tories did not adopt all our ideas, though. The Prime Minister and Chancellor are still stubbornly refusing to close loopholes in the windfall tax to pay for the extension of the energy price cap. Billions of pounds of oil and gas giants’ windfall profits are being left on the table, as working people are once again made to foot the bill.
Again, we have another fiscal event where the Prime Minister and Chancellor decide to turn a blind eye to the non-dom tax status, which lives to see another day. We know that some residents of Downing Street are very familiar with non-dom status and may be keen to see it continue, but Labour believes that those who make Britain their home should pay their taxes here. The non-dom rules are costing us more than £3 billion every year, and it is wrong to let an outdated, unfair loophole continue when ending it could fund the biggest expansion of the NHS workforce in a generation.
I have so far spoken about Labour ideas, some of which the Government copied and others of which they chose not to. To be fair, the Budget did include at least one idea that was not ours and that, to be honest, surprised us all. That idea was the Budget’s one permanent tax cut: a £1 billion bung to the richest 1% and their pension pots. In the middle of a cost of living crisis, and just weeks before stealth tax rises hit working people across the country, it is astonishing that the Conservatives could possibly see this as the right way to spend public money. This handout, given through changes to tax-free pension allowances, is the wrong priority, at the wrong time, for the wrong people. What we needed was a fair fix for doctors’ pensions, to get them back in work. What we got was a tax giveaway for tens of thousands of the very top earners. Why on earth did the Government not design a targeted scheme to encourage doctors to work overtime and not to retire early? That could be done at a fraction of the cost, as the British Medical Association has made clear.
Furthermore, we know that reforming NHS doctors’ pensions is not a new idea. It was identified in a report by the Health and Social Care Committee in July last year, which said:
“The Government must act swiftly to reform the NHS pension scheme to prevent senior staff from reducing their hours and retiring early from the NHS.”
I would not assume that every member of the Government had read the Committee’s report, but I would assume that the Chair of the Committee certainly did, and he is of course now the Chancellor. In his Budget, the Chancellor is happy to take good ideas from Labour—it is just a shame he did not take a good idea on doctors’ pensions from himself.
A sure indication of a policy’s weak foundations is when Ministers are not even able to get the facts straight. We saw that yesterday in reported comments by the Chancellor of the Duchy of Lancaster, who claimed that
“it tends to be a lot of public sector workers who are hit by this cap”.
However, the reality seems rather different. The post-Budget report published by the Resolution Foundation made it clear that
“more than half of those with the largest pension pots”
are
“actually in the private sector.”
Pensions expert John Ralfe went further, saying that
“this is not about supporting a hard-pressed NHS, it is really a tax giveaway for tens of thousands of the very highest earners”.
Ahead of the vote that we will be pushing on this measure tomorrow, I therefore urge the Minister to come clean over its impact on the NHS. How many NHS doctors will benefit from this policy, and what proportion of its total beneficiaries do they comprise? How many NHS doctors are expected to return to work as a result of this policy? If the Minister and her colleagues are asking fellow Conservatives to follow them down the path the Government have chosen, they should at the very least not let them do so in the dark.
Today we have debated many of the individual measures in last week’s Budget, but when we take a step back from individual measures, it is clear that perhaps the most serious failure of this Budget is to leave us on the Conservatives’ path of managed decline. As the Resolution Foundation pithily summed it up in its report the day after the Budget,
“the UK’s underlying challenges remain largely unaddressed. We are investing too little and growing too slowly; our citizens’ living standards are stagnant; and we are asking them to pay higher taxes while cutting public services.”
The only way to get us out of this Conservative doom loop is to support businesses and get the economy growing, and that is what Labour’s green prosperity plan is all about. It is a plan that sees the challenge of climate change as an opportunity to grow our economy. It is a plan to make sure that British businesses and workers benefit from the jobs and industries of the future.
The world economy is changing, and we need to make sure Britain is ahead of the game in terms of not just our transition to zero-carbon energy and the green industries of the future but, as my hon. Friend the Member for Manchester Central (Lucy Powell) set out earlier, the global race on technology. As the shadow Secretary of State said, the Conservatives are divorced from the reality of what it will take to win that global race, and they are leaving us lagging behind in the race for the industries of the future. Ministers are letting businesses down by missing the chance to make the UK a leader in regulations for new technologies, and they are letting people down by failing to put in place the training that will allow everyone to benefit from the opportunities of the future.
When I meet businesses across the country, they are clear that they need a Government who will support them through the headwinds we face and who will work with them to succeed in the economy of the future. They want stability and certainty above all else, but instead we have seen corporation tax change almost every year since 2010, and this Budget delivers the fifth major change in capital expensing in just two years. As Paul Johnson of the Institute for Fiscal Studies said in response to the latest temporary tweak to the tax regime for businesses:
“There’s no stability, no certainty, and no sense of a wider plan.”
The truth is that the Conservatives cannot provide stability or certainty. They have grown so riven by division, so used to looking inward and so ready to put party before country that they are incapable of providing the stability and certainty that people and businesses across the UK need. The Conservatives may know that we need to grow the economy—even the last Prime Minister seemed to realise that—but they are incapable of coming up with or delivering the plan we need to make it happen.
We need to grow the economy, yet ours is the only one in the G7 forecast to shrink this year. We need strong growth in the future, yet the UK’s forecasts have been downgraded. We need fairer taxes for working people, yet stealth tax rises are going ahead next month. We need investment in the NHS, yet the Government are protecting non-doms instead. And we need support for British businesses to grow, yet all we see is the US and Europe pulling ahead. The Conservatives have had 13 years and they have failed. Now they need to stop failing the British people. It is time for a general election and time for a new Government to put our country back on the right track.
The Financial Secretary to the Treasury (Victoria Atkins)
I thank colleagues across the House for a spirited debate, in which we discussed some profoundly serious issues facing our constituents and our country. Although there may be very different ideas across this Chamber on how to deal with those issues, I am sure that Opposition Members will accede, in an air of understanding how important this is to our democracy, that while we may have different ideas, we all fundamentally want the same thing: to look after our constituents and this great country.
I particularly want to thank all right hon. and hon. Members who have revealed to us their expertise in science. I commend my hon. Friend the Member for Hazel Grove (Mr Wragg) on his frankly ingenious use of the phrases “levelling up” and “productivity increase” when it comes to the number of swimming pool lanes in the Marple leisure hub. I also suspect he is the first colleague to get “inflatable flamingo” into Hansard.
The Government have a bold and ambitious plan to grow our economy, which will be driven in part by our taking a seat at the table of science and innovation superpowers. It is a plan for the future, not just in the realm of science and technology, but of our economy altogether. Just as we can improve people’s lives through science, innovation and technology, as my right hon. Friend the Secretary of State outlined at the start of the debate, we can also create highly paid and rewarding jobs across the UK, and we plan to do exactly that through our levelling-up work and our investment zones.
Of course, the way taxes are levied will be an important part of our success. As the Minister responsible for the tax system, I have asked my officials to keep three objectives in mind: making tax fairer, making tax simpler and making tax supportive of growth. By creating the right incentives through tax, we will harness British ingenuity to make us a science superpower.
We have heard a lot of statistics in this debate. In an effort to share the goodwill and cheer everybody up a bit, I thought I would give some more statistics, to put just a little colour and context on some of the stats we have heard. Since 2010 we have grown more than major economies such as France, Italy and Japan, and about the same as Europe’s largest economy, Germany. On growth, last year we had the highest growth of any G7 economy.
While Opposition Members understandably like to focus on the bad news that this year we are not meeting the hopes we all have in respect of growth, it is important to draw out the OECD’s fuller forecast, which is that cumulative growth between 2022 and 2024 inclusive for the United Kingdom is predicted to be higher than for Germany, Japan or the United States. The World Bank says that, out of all of the big European countries, we are the best place to do business. Surely the Labour party does not disagree with that. Global CEOs say that, apart from America and China, we are the best country in which to invest.
That is precisely why we have announced the full expensing policy, which will support the corporation tax policy and the annual investment allowance for smaller businesses. We have the world’s third trillion-dollar technology economy, after the United States and China. We have built the largest film and TV industry in Europe—again, we had some good news for that industry last week with the tax reliefs that the Chancellor announced. In terms of the personal, a disadvantaged pupil is 85% more likely to go to university now than they were a decade ago.
We have also built the largest life sciences sector in Europe, something my right hon. and hon. Friends representing Cambridgeshire are particularly keen to emphasise every time we meet. The Government recognise the value of small and medium-sized enterprises to the wider R&D ecosystem of the UK and the hugely important role that research and development and innovation plays for the economy and for society.
Even in extremely challenging fiscal circumstances, we must prioritise R&D, and indeed we are prioritising it. That is why we are introducing an enhanced credit whereby, if a small or medium-sized business spends 40% or more of its total expenditure on R&D, it will be able to claim a credit worth £27 for every £100 spent, something welcomed by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton).
Emma Hardy
Does the Minister share the concerns that I set out earlier about the fraud involved in the R&D tax relief, which equates to more than £1 billion being lost in fraudulent investments that HMRC is yet to be able to fully claw back for the taxpayer?
Victoria Atkins
Not only do I agree with the hon. Lady, but I am going even further than the changes that we have made to the R&D scheme. She will see in the Finance Bill some practical measures to help small businesses ensure that they are not inadvertently—or indeed, sometimes fraudulently—dragged into that scheme. I do not want a pub restaurant claiming that discovering avocado is a research and development issue, so we are absolutely clamping down on that. I know that other hon. Members around the House raised that as well.
To put a little context on the R&D changes, they mean that an eligible cancer drug company spending £2 million on research and development will receive more than half a million back to help it to deliver breakthrough treatments. Of course, R&D is not confined just to life sciences and the tech sector; it is also, as my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) righty set out, even present in the ceramics industry. I very much look forward to the things he mentioned coming into fruition.
My hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell), the hon. Member for Llanelli (Dame Nia Griffith)—I apologise for my pronunciation of her constituency—and others mentioned Horizon. The latest update that I can give the House is that, of course, we have expanded the Horizon guarantee until the end of June this year. I am delighted to say that my right hon. Friend the Secretary of State and my hon. Friend the Science Minister met the EU ambassador only last week to continue our discussions about that scheme.
In relation to corporation tax, of course, we have one of the most supportive business tax regimes in the world. We have the lowest corporation tax in the G7. The UK’s research and development expenditure credit offers the joint highest uncapped headline rate of R&D tax relief support in the G7 for large companies, and the Government’s announcement of full expensing for businesses from 1 April this year will make a huge difference to businesses.
As my hon. Friend the Member for Poole (Sir Robert Syms) noted, that tax cut, which is worth an average of £9 billion a year for every year that it is in place, is focused only on those businesses that invest. That is targeted help for the businesses that will invest in our country—I hope, having noted his comments about the super-deduction, that my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) will welcome that.
I genuinely think that the confirmation of the 12 investment zones is one of the most exciting parts of the Budget. Each investment zone will drive innovation and growth in one of our key future sectors—including life sciences, advanced manufacturing, green industries, digital and technology, and creative industries—and, importantly, will be aligned to local economic strengths, with a total investment of £80 million over five years.
My hon. Friends the Members for Don Valley (Nick Fletcher) and for Bracknell (James Sunderland) both put up strong, heartfelt arguments in favour of their areas. I am afraid that I cannot make decisions at the Dispatch Box, but I wish them well in that.
Another exciting development is for my hon. Friend the Member for Ynys Môn (Virginia Crosbie), who is developing a real reputation for representing her constituency and the need for nuclear. We are delighted that Great British Nuclear will launch the first stage competition for small modular reactors, which is expected to attract the best designs from domestic and international vendors. I know that she will watch that carefully
My hon. Friend the Member for Erewash (Maggie Throup), who brings to the Chamber her expertise not just as a former science graduate but, importantly, as a former Health Minister, welcomed the announcements made last week on medicines and medical technology regulation. The MHRA has some exciting developments coming down the road, including being able to set up new approval processes for the most cutting-edge medicines and devices to ensure that we continue to be a global centre for their development, and a new system that will allow rapid, often near-automatic sign-off for medicines and technologies approved by other highly respected and trusted medicine regulatory bodies around the world.
On pensions, Opposition Members have appeared not to support the Government’s efforts to get more doctors back into the NHS. A fact: the Royal College of Surgeons of England has reported that 69% of respondents to its survey said that they were cutting their hours because of pensions rules. Another fact: the chair of the Association of Police and Crime Commissioners says that this is a “game changer” for keeping police chiefs fighting crime. Another fact: the Association of School and College Leaders said:
“It is in the national interest”.
I take some guidance from the shadow Health Secretary, the hon. Member for Ilford North (Wes Streeting), who said that it will “inevitably save lives” to make these changes. That is why we are doing it. We can introduce it in two weeks’ time, and I very much hope that Opposition Members will support it.
Childcare is another massive policy, but I am very pleased—