Budget Resolutions

Baroness Laing of Elderslie Excerpts

Thursday 12th March 2020 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

I am very pleased to call Andy Carter to make his maiden speech.

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[Stephen Timms (East Ham) (Lab)]

It is a privilege to follow the hon. Member for Warrington South (Andy Carter) and to congratulate him on a warm and confident maiden speech. I welcome his generous tribute to Faisal Rashid, not only for his brief period in the House but his work as mayor and local councillor before that. The hon. Gentleman is right to highlight the potential of Daresbury science park in particular. The House will look forward to hearing much more from him in the years ahead.

The Financial Times pointed out this morning that yesterday marked the end of the Tory promise to eliminate the deficit. For a large part of the past decade, ending the deficit appeared to be the Tories’ raison d’être, but we cannot blame the current Chancellor for concluding yesterday that his Tory predecessors’ policies on the deficit had comprehensively failed and that the result has been, to quote the Chancellor yesterday,

“a decade-long slowdown in productivity.”—[Official Report, 11 March 2020; Vol. 673, c. 282.]

In what was a remarkable phrase, the Chancellor told us yesterday that his was a plan to “fund…our future prosperity.” I have never heard any Chancellor previously claim that we could spend our way to prosperity, but that is precisely what many Members on the Conservative Benches used to accuse Members on the Labour Benches of believing. It is now apparently official Tory policy. Repudiating past Tory policy is no bad thing, though, and I wish to welcome a number of the measures in the policy area of the Work and Pensions Committee, which I chair.

I warmly welcome the wider availability of statutory sick pay; the faster access to employment and support allowance; and the £500 million hardship fund for disbursement by local authorities, which recognises, as I suggested in my intervention earlier during the excellent speech of my right hon. Friend the Member for Hayes and Harlington (John McDonnell), the need for central Government funding to replicate what the old social fund used to do until it was abolished by the coalition.

I welcome the changes on universal credit. The suspension of the minimum income floor means that self-employed people whose income takes a hit will get at least some extra help from universal credit. The truth is, though, that the minimum income floor should not be there, and there is a strong case for making its suspension permanent.

I also welcome the reduction in the maximum rate of repayment of advances, and the longer period of repayment, although those measure will take effect only from October next year.

As my hon. Friend the Member for Croydon North (Steve Reed) said, the Budget did not address the fundamental problems with universal credit. Research by the Trussell Trust has found that people on universal credit are two and a half times more likely to need help from a food bank than people in otherwise similar circumstances who are still on the legacy benefits. That is a remarkable statistic that underlines the scale of the problems that universal credit is causing.

Even more startling is the article this month in The Lancet. I do hope that Ministers will weigh very carefully the dry academic prose in that article, which concludes that up to the end of 2018:

“An additional 63,674 unemployed people will have experienced levels of psychological distress that are clinically significant due to the introduction of Universal Credit”.

It goes on to suggest that over one third of them

“might reach the diagnostic threshold for depression.”

About one quarter of those ultimately expected to be on universal credit are on it at the moment. The Government say that the rest will be on it by the end of 2024. The Office for Budget Responsibility yesterday expressed its traditional and well-founded scepticism about that timetable, and suggested it is likely to take two years longer than the Department for Work and Pensions says. Given that the harm being caused by universal credit is so well documented, I do not think it is viable for the Government simply to press on.

What is it about universal credit that is causing such hardship? I think it is the delay—never before a feature of the social security system—of five weeks between applying for benefit and being entitled to payment. That is why the Select Committee has made it the subject of our first major inquiry. We want to work closely and constructively with Ministers and the Department to identify workable and affordable solutions to what is, incontrovertibly, a very serious problem.

I want to make one final point. One of yesterday’s Budget’s few revenue-raising measures was the increase in the immigration health surcharge. One might think that this is about increasing the charge to tourists coming to the UK to take advantage of the NHS, but it is not. It is a major burden being imposed on a large number of modestly paid working families, a large number of them in my constituency, and I cannot see how it can be justified. These are families who are settled in the UK, often with children who have been born in the UK, and who are on the 10-year pathway to indefinite leave. They are given leave to remain for two and a half years at a time. They are paying their taxes, like everybody else who uses public services, but every two and a half years they have to pay thousands, on top of their taxes, in visa charges, and now they will have to pay even more through this immigration health surcharge. They have already paid tax and national insurance. How can these swingeing additional charges be justified?

[Madam Deputy Speaker (Dame Eleanor Laing)]

It is a great pleasure to call, to make his maiden speech, Mr James Grundy.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. After the next speaker, I will reduce the time limit to six minutes.

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[Sarah Olney (Richmond Park) (LD)]

Of course the big topic of this Budget had to be the coronavirus. We are facing the gravest health crisis in a century, and the Government have no greater responsibility at this time than to plan their response. I am aware that at this very moment we could be standing on the edge of an escalation in our response to this crisis. I am conscious that some people think that even to address other topics at this time might be seen as an indulgence, so I welcome yesterday’s news that the Government have immediate and effective plans to re-fund the response to the coronavirus. I particularly welcome the news that statutory sick pay will be available to help people who would not otherwise be eligible. Supporting people who are required to self-isolate during this crisis is as essential to dealing with the social impacts of the virus as the additional funding available to the NHS will be to dealing with the health impacts.

However, while a short-term injection of funds to address the immediate crisis might be an appropriate response to the coronavirus, the Chancellor appears to have extended this approach to the whole of his Budget. It was a litany of short-term emergency measures. His speech yesterday left a whole wasteland of ungrasped nettles. If this Conservative Government, at the beginning of a five-year Parliament with a majority of 80, cannot bring themselves to make some tough choices to re-programme our economy to meet the challenges of climate change, and to reset the course of this nation’s economic journey as we leave the European Union, when on earth will they?

The impact of business rates on town centre businesses is a matter of enormous concern in my constituency. We are seeing increasing numbers of empty shops and shopping parades across Richmond and Kingston. Town-centre shops are not on a level playing field with online retailers, who are taking increasing market share with goods that are routinely sold at below cost price. Bricks-and-mortar retailers are further disadvantaged by having to pay punitive levels of business rates calculated on the value of property that they operate out of, with no regard to their level of turnover. Major reform of business rates to maintain our town centres at the heart of our communities is long overdue and has been called for on many occasions by Members from all parts of this House. In our 2019 manifesto, the Liberal Democrats called for a landlord tax to be paid by those who receive the proceeds from the underlying value of the property. This would relieve small businesses of the burden of taxation altogether. It is precisely the kind of radical reform that is urgently required to save our town centres. There was much press speculation that the Chancellor might announce a measure of that kind in the Budget. It is therefore a huge disappointment to find that he has once again ducked the issue.

While the scrapping of business rates for the coming year to mitigate the effects of the coronavirus is surely welcome, it does nothing to resolve the long-term problem. The bills will return again in 2021, when businesses will face not only the after-effects of the coronavirus but the expiry of the transition period in our exit from the European Union. A short-term crisis measure does nothing to help businesses plan for the long-term or to build up resilience for the mixture of unexpected and self-inflicted shocks to the economy. I welcome news of a review of business rates and look forward to hearing its outcome, but it is disappointing that more was not done to grasp this opportunity now.

I have read the forecasts from the Office for Budget Responsibility, and I note that its economic outlook is informed by the assumption that the UK will make an orderly transition to a new trading arrangement with the European Union. Its forecast under those conditions is for a 4% downturn in GDP over 15 years. I was therefore surprised to hear so little mention of Brexit in the Chancellor’s speech. I know that the Prime Minister’s éminence grise has banned the use of the word, but to have so little reference to the major economic upheaval of our time in the first Budget after our departure from the European Union is nothing short of astonishing.

I am more sceptical than most about the Conservative Government’s promises of a bright new rainbow-filled future, but I nevertheless thought that there would be some opportunity that they would wish to take advantage of. We have thrown off the shackles, we are free to determine our own future—and we are going to stop charging VAT on tampons! Grateful as I am—and I am sure I speak for the rest of the female population—to save on average about £1 every year on the cost of my sanitary protection, I am somewhat surprised to find that this is the limit of the Government’s plans for our post-Brexit future. Is that really it? If I sound incredulous, it is partly because legislation to cut VAT on sanitary products was agreed by the European Parliament in 2018 and would have come into effect in 2022.

I accept that negotiations are ongoing, but I would be grateful if the Government gave the House an update at the earliest opportunity of their plans for the talks next week in the light of the coronavirus and an estimate of how that will affect their plans to conclude the negotiations for the new free trade deal by the end of the year. I repeat the call that the Liberal Democrats have previously made: the negotiations should be halted and an extension to the transition period agreed, to account for the time that will surely be lost over the spring and into the summer in the efforts to manage the virus.

The OBR report references the fact that the major boost to Government income from this Budget is the reversal of the planned cut to corporation tax that was due to be implemented this year. The Liberal Democrats called for that reversal in their 2019 manifesto, and I am pleased to see that the Chancellor took up our suggestion. While we would not wish to see taxes on business set at a punitive or discouraging level, we believe that businesses should pay their fair share towards an equal society.

For the self-employed, the biggest missed opportunity of this Budget was the failure to address the enormous issues presented by the planned implementation of the IR35 legislation in the private sector. An uplift in the minimum income level for class 4 national insurance contributions is no consolation to those who face losing their livelihoods as organisations refuse to take on contractors or source their contracts from overseas, to avoid the unnecessary burden that the legislation will impose. It is not too late to halt the implementation and conduct a thorough review of the costs and benefits of this legislation.

For all of us, the largest nettle that goes ungrasped is our response to the climate emergency. The Chancellor announced funding for many new road schemes across the country but little for mitigating measures to reduce carbon emissions. The plans announced for carbon capture and storage are pitifully inadequate, and not enough is being done to invest in electrical vehicle charging infrastructure.

It is a particular shame that the issue of carbon emissions from domestic homes was not addressed, as the barrier to real change on that is the lack of funding. If we are to meet the Government’s net zero target by 2050, we need to start a comprehensive programme of retrofitting insulation to domestic homes and to install more efficient forms of domestic heating. Such a move would have a beneficial impact on domestic energy bills everywhere and, in particular, would alleviate fuel poverty in many homes. I want to reiterate the Liberal Democrats’ support for the Government in dealing with the coronavirus challenge in the months to come—[Interruption.]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Lady can finish her sentence.

[Sarah Olney]

Thank you. I appreciate that I have gone over my time, but I have waited a long time to speak.

In applying a crisis response to our longer-term issues, the Government are leaving a field of ungrasped nettles that will come back to sting us all when we are able, as we hope, to continue life as normal.

[Madam Deputy Speaker]

For the sake of clarity, all the Deputy Speakers have been very lenient with Members making maiden speeches. That leniency does not extend to others.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. I am afraid I must reduce the time limit to five minutes.