Autumn Statement Resolutions

Debate between Wera Hobhouse and Matt Western

Thursday 23rd November 2023 Commons Chamber

[Matt Western]

I thank the right hon. Lady for that clarification. She is right but, as we saw through the pandemic, it was local authorities who did so much to make up for the failings of the over-centralised Government, who—through the covid-19 inquiry—we now understand were incapable of getting to grips with the pandemic in our communities. That is why local governance is so important. I will move on to my speech.

[Wera Hobhouse (Bath) (LD)]

On the delivery of net zero projects, does the hon. Member agree that local authorities are well placed to deliver on the ground and that, rather than having centralised delivery, it is much better for them to do that work?

[Matt Western]

I absolutely agree. We should take pride in our local authorities. They understand the landscape and the needs of communities, but they must be properly funded to deliver these essential services. I am afraid that, as with the reinforced autoclaved aerated concrete problem we see right now in our schools—two particular schools, Myton School and Aylesford School, in my constituency have RAAC—we see delays in rectifying problems because the Government have become so over-centralised.

If I may, I will move on to my speech—I am sure that everyone is waiting for it. I am afraid that, in the last 24 hours, we have seen holes beginning to appear in the Chancellor’s autumn statement. There are holes in the claims he made about lowering taxes, holes in its credibility and holes in the public finances, as my right hon. Friend the Member for Hayes and Harlington (John McDonnell) alluded to. For the public, the manifestation of that is probably most often seen and understood through the holes in our streets and on our roads. That is the reality of the decay we face across our country.

What surprises and disappoints me is the Government’s chutzpah and the claim that they are making long-term decisions when just five weeks ago the supposedly cautious Prime Minister and his Chancellor stated that it was “virtually impossible” to make tax cuts. It now seems that the Prime Minister realises not only that has he got an election coming up soon but that he does not have many options, so it is best just to spend some money and run. His five pledges, even, have wasted away—they have reappeared as five long-term decisions. What will we expect next month on his five promises to the country? It is yet another reset—I think we have had 11 already.

As I mentioned in an intervention, we are a year on from the kamikaze Budget, which cost the country an estimated £40 billion—[Interruption.] Forgive me, Madam Deputy Speaker; my voice is quite weak due to a chest infection. At the time, I asked the then Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), whether he had

“not just fired the starting gun on a run on the pound”.—[Official Report, 23 September 2022; Vol. 719, c. 964.]

He was utterly dismissive of my assertion, but of course that is entirely what happened, and that is what we saw on the financial markets within minutes of him speaking. Of course, that translated into higher interest rates, which in turn meant higher interest rates for mortgages, so this year we see 1.5 million households moving off their fixed rates and facing higher mortgage costs averaging a further £250 a month. Next year, we will see a similar number of households moving to higher mortgage costs. That comes at a real cost to households up and down the country.

The Prime Minister talks about inflation being a tax, which is a bizarre way of considering it, but we have to remind the public of why we have such high inflation— he may suggest that he has managed to halve it; he is claiming the success from it, although he did not seem to claim responsibility when it went up—and why we faced higher inflation than the majority of the major G7 nations. The truth is, we still face an inflation premium relative to the United States, Germany, France and all the other major nations purely because of what happened a year ago. That is costing our households and businesses. It is costing us all; and, indeed, it has massively damaged our reputation.

That comes on top of 13 years of austerity and failure, with people really feeling the costs on their lives of the austerity that the Government imposed on us. They see services collapsing around them and feel the fabric of society being weakened by successive Conservative Governments.

As we look at the economy and what was announced yesterday, I am reminded of a photograph that I saw a couple of days ago of the Chancellor and the Prime Minister at a further education college. I do not know whether hon. Members noticed how both of them were trying to hold a screwdriver, but it was almost as if they had never held one before. There is a real need to reskill this country, and we could start with some of the people in power. We have a former Prime Minister who, we are now told, could not understand graphs or data, and therefore struggled to interpret how we should react to the pandemic.

We now face a stagnant economy, as we are told by the OBR and all the balanced economic observers: it was flatlining at just above zero for the last quarter, and we are looking at absolute zero in the current quarter. But somehow the Chancellor wants us to applaud growth rates of 0.7% next year and, possibly, 1.4% in 2025—a huge downgrade on what was forecast earlier this year. The public are being duped by the claims the Government made yesterday that things are rosy and will be positive next year. The public know that they have suffered 13 years of mismanagement, in which the Government have failed to solve the productivity puzzle. I used to work in France, where the average worker is 20% more productive than the UK worker. Why is that? Is it down to employment legislation or the lack of investment incentive in this country? The harsh reality is that we all have to work much harder in order more or less to stand still versus the French.

The Chancellor quoted an aggregated growth figure in his statement, but any credible observer should have looked at growth per head, which is far weaker in the UK than in the US, Japan and Spain, and is fractionally ahead of France. In the real economy, people are feeling the impact of the last 13 years, and particularly the last couple of years. They have less money in their pocket, and the money is not going as far. They are suffering a real-term loss of income. We are told that next year their real-terms income will fall a further 1%. Energy costs now account for a much larger proportion of income, having increased by 50% over the last two years: gas has increased 60% in the two years since 2021, and electric is up 41%. Energy bills have increased an average of 51% versus 2021-22. This was not all necessary. We can talk about global energy price increases and inflationary pressures, but the UK suffered because we did not have the energy storage or resilience, particularly in low-cost onshore wind.

We also have some of the least efficient housing stock in Europe. People have to spend more to keep their homes warm, because their houses are inefficient. The houses built since 2016—1.2 million homes—should have been zero-carbon homes but, because all that legislation was torn up, they are not. Instead, they need more gas and electric, which means higher demand. Without that, total aggregate demand would have been brought down to a lower level.

Let me talk about the predicaments facing students. They face a much higher rate of inflation than the typical UK adult, but maintenance loans have not kept up with inflation. According to the House of Commons Library, there has been an 11% real-terms cut in maintenance loans. That equates to them being £1,200 worse off a year as a result of this Government.

I listened to the Chancellor on this morning’s media round. It was only a matter of time before being economic with the truth would give way to the truth about the economy. He was asked whether there were tax cuts when taxes continue to rise, and about his selective approach to cuts being undermined by stealth and concealed taxes, resulting effectively in higher rates of tax brought on by what economists refer to as fiscal drag. He was asked about the freezing of tax thresholds that will see 7 million people overall paying higher levels of tax: 4 million who have never previously been liable having to pay income tax, and 3 million who have moved from the lower to the higher threshold. His promises on lower taxes are empty, and the public will know that.

Let us not forget that this Conservative Government have imposed the highest tax burden in the post-war period, and the most regressive. The Conservatives like to present themselves as the party of lower taxes, but let us remember that when they came into power in 2010 the first thing they did was increase VAT, from 15% to 20% ultimately—33% up on the most regressive tax of all. There has been a whole raft of other stealth taxes, including on insurance. The public need to know that they face five years of further tax rises.

Let us be clear: the Chancellor is funding these tax cuts by tightening non-protected public services. Given the country’s experience over the past 13 years, the Government’s plans should ring alarm bells, because they sound remarkably like “Austerity II: the sequel.” Given the deep damage they exacted on our communities and our social fabric, that will come with a real social cost.

It would be churlish not to acknowledge a few welcome moves—plagiarism is the most sincere form of flattery. The NHS workforce plan was something that Labour proposed. Planning reform is welcome, but the Government do not seem as ambitious as the Labour party. Elsewhere, I welcome the expensing changes to encourage business investment, but I do not know why it could not have happened earlier, because we have not seen the scale of investment in the UK that we should have seen. On support for innovation and certain developments, I would like to see more, particularly on the role of universities.

The support for the UK automotive sector is particularly welcome for companies such as Jaguar Land Rover, Aston Martin and the myriad supply companies in my constituency. The Government talk about an advanced manufacturing plan, but where has it been for the last few years? They have not had any form of industrial strategy. In fact, the former Chancellor could not even bring himself to use those words when he was in post. I add my support for the Winser report and the rolling out of the grid. It is way too late, but we need to get on with it. It is essential that we electrify the UK economy.

Increasingly, this appears to be a Government without a cause. If they have a purpose, it is as a self-preservation society, as perhaps was exposed yesterday. At their heart is a weak Prime Minister. His King’s speech betrayed a lack of vision and substance; out of ideas and out of road. I am afraid that the public will be underwhelmed by this statement, and by a Government so utterly out of touch. As they say in examinations: compare and contrast the clear direction and purpose of the five missions forged by my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) with the soft, fluid aims of the current Prime Minister.

Overnight, analysis from independent think-tanks such as the Institute for Public Policy Research and the Resolution Foundation has underlined the inequality in the tax burden, where those on the lowest income and those least able are paying disproportionately more under the Conservatives. Overall, the average household faces a £4,500 increase in taxes in the period 2019 to 2028. The Prime Minister and the Chancellor may pat each other on the back, but in this Parliament alone they have presided over a £1,900 tax increase, according to the Resolution Foundation. After 13 years of failure, chaos and mayhem, when energy prices are rising astronomically and food prices dramatically, we now see changes to the tax threshold. The public are really hurting. I am afraid the Government just do not get it.