Finance (No. 2) Bill Debate

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Department: HM Treasury
Lord Livermore Portrait Lord Livermore (Lab)
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My Lords, it is a pleasure to take part in this debate on the Finance Bill. I begin by congratulating my noble friend Lady Hazarika on her genuinely brilliant maiden speech. Her experience, warmth and great humour were evident from her contribution. She will be a huge asset to your Lordships’ House, and I very much look forward to her future contributions to debates such as this. I join the noble Baroness, Lady Kramer, in paying tribute to the noble Baroness, Lady Vere, for her incredible command of the detail in such a complex brief, and particularly for her good spirit and kindness to me in all our exchanges across these Dispatch Boxes.

This Finance Bill follows the March Budget, which laid bare the Government’s record on the economy over 14 years: higher taxes, falling living standards and lower economic growth. Yet despite their record, the Government have now set off on some kind of victory lap, with the Chancellor and Prime Minister patting themselves on the back. But Ministers popping champagne corks will not sit well with families across Britain as they continue to struggle with the cost of living.

When the Prime Minister claims that the economy is “back to normal”, what the British people hear is a Government who are out of touch with the realities on the ground. When he claims that the economy has “turned a corner”, he should try telling that to the 6.4 million households who last year saw their rent increase or had to remortgage, or the 950,000 families whose mortgage deal is due to expire before the end of this year. When he claims that the plan is working, he will rightly be asked whether that is the same plan that means this will be the first Parliament ever with living standards lower at its end than at its start; a plan that means real household incomes will have fallen by £250 per person in that time; a plan that means our economy is now smaller per person than it was when the current Prime Minister entered office; and a plan that means our economy is now forecast by the OECD to grow by just 1% next year, weaker than every other G20 country except Russia.

The Government say that what the British economy now needs is more of the same—more of what they have delivered over the past 14 years: the highest tax burden for 70 years; the average household £870 worse off; national debt at its highest since the 1960s; families paying hundreds of pounds more every month on their mortgage bills; and economic growth on the floor. Now committed to delivering more of the same and having crashed the economy, the Government are intent on rerunning the disastrous Liz Truss experiment.

At the end of his Budget speech in March, the Chancellor announced a £46 billion unfunded plan to abolish national insurance contributions. Two months on, and despite countless opportunities to clarify their plans, there are still no answers from Ministers on how they will pay for it. What services will they cut? What other taxes will they put up? What changes will they make to pensions? Replacing national insurance revenues with higher rates of income tax would mean an income tax increase of 8%—a tax bombshell aimed squarely at Britain’s pensioners. Britain cannot afford to repeat that ill-fated experiment.

We have said consistently over the course of this Parliament that taxes on working people should be lower. Two years ago, when the current Prime Minister tried to increase national insurance, we opposed it. We supported the previous cut to national insurance, and we supported the measures announced in the Budget to bring it down by a further 2%, but those measures come in the context of a rising, not falling, tax burden. The tax burden is now set to rise every single year for the next five years, making this the biggest tax-raising Parliament since the Second World War. As Paul Johnson, the Director of the Institute for Fiscal Studies, said:

“This remains a Parliament of record tax rises”.

We are under no illusions about the scale of the challenge we may inherit if we are fortunate enough to form the next Government, nor the scale of the task in rebuilding our economy. Our plan is built on three pillars of stability, investment and reform: stability underpinned by strong fiscal rules and robust independent institutions—the Treasury, the Bank of England and the Office for Budget Responsibility; investment in partnership with business, embodied in a modern industrial strategy, and a new national wealth fund providing the catalytic investment to unlock private sector investment for our towns, cities and regions; and reform, starting with our planning system, the single biggest obstacle to growth in this country.

Rather than believing the Prime Minister’s claims that the British economy has turned a corner, the questions the British people will ask at this general election are simple. Do they and their families feel better off than they did 14 years ago? Do our hospitals, our schools and our police work better than 14 years ago? Frankly, is there anything in Britain that works better than when this Government came to office 14 years ago? The choice at this election is clear: five more years of chaos that will continue Britain on a path of economic decline or stability with a changed Labour Party that can offer hope and a long-term plan to make working people better off. It is time to turn the page to start a new chapter for Britain’s economy.