Budget Responsibility Bill

Alan Mak Excerpts

2nd reading
Tuesday 30th July 2024 Commons Chamber

[Alan Mak (Havant) (Con)]

I begin, Madam Deputy Speaker, by congratulating you on your election and wishing you well in the Chair, as well as congratulating the new ministerial team, who I hope will enjoy their time at the Treasury as much as I did. I also congratulate all hon. Members across the House who made their maiden speech in today’s debate: the hon. Members for Glasgow North (Martin Rhodes), for East Renfrewshire (Blair McDougall), for Southend West and Leigh (David Burton-Sampson), for Carshalton and Wallington (Bobby Dean), for Chichester (Jess Brown-Fuller), for Falkirk (Euan Stainbank), for Peterborough (Andrew Pakes), for Maidenhead (Mr Reynolds), for West Ham and Beckton (James Asser), for Ynys Môn (Llinos Medi), for Kettering (Rosie Wrighting), for Wirral West (Matthew Patrick), and for Earley and Woodley (Yuan Yang). All spoke very well, with eloquence and passion, and we on the Conservative Benches wish them well for the rest of their time in this House.

In contrast to those positive, uplifting maiden speeches, we have also heard Labour Ministers talking the country down, claiming to have inherited the worst set of circumstances since the second world war. Frankly, Labour’s approach is more OTT than OBR. To prove Labour wrong, we do not have to go as far back as 1945: we only have to revisit 2010. When we took over from Labour, unemployment was at 8%; the Conservatives nearly halved it to 4.4%. In 2010, the deficit was 10.3% of GDP, thanks to Labour’s reckless borrowing; it is now 4.4%, and is forecast to fall to 1.2% in the coming years. In 2010, inflation was 3.4%; today, it is back at 2%, the Bank of England’s target. Let us not forget that the final years of the last Labour Government saw Britain experience the deepest recession since quarterly data started being published—in fact, Labour Britain was in recession for longer than any other G7 country at the time, and we were the last to exit. That is why in 2010, Labour left us with that infamous note saying, “There’s no money left”. In contrast, this month we left Labour with the fastest-growing economy in the G7, low inflation, low unemployment and 12 months of consecutive wage growth.

We Conservatives believe in sound public finances, fiscal responsibility and independent forecasts as the foundations of economic stability. That is why it was a Conservative Government who created the OBR in the first place, and it is why we are keen to safeguard its reputation for independence and focus. In that context, this Labour Bill feels more like gimmickry than government. It is clear that the Bill is really designed for one purpose and one purpose alone: to distract everyone ahead of Labour’s tax rises in the autumn Budget. Is it any wonder that the IFS says that Labour’s fiscal lock proposal is “largely performative”, or that even the Resolution Foundation describes the policy’s impact as “relatively small”?

When the Conservatives created the OBR, our legislation recognised that for it to be effective and respected, it had to maintain a delicate balance between independence and accountability. Independent forecasts, free from Treasury interference, would give the public more confidence in them, avoiding the scenario that happened under the last Labour Government where their growth forecasts were out by as much as £13 billion on average. At the same time, elected politicians accountable to this House would retain control over fiscal decisions, because those are ultimately political judgments that should not be delegated to unelected bodies.

However, today’s Bill challenges the delicate balance that we left in place. In fact, the most recent independent review of the OBR, carried out by the OECD, specifically warns against what it describes as “mission creep”. Presciently, the OECD says that attempts to expand the OBR’s current remit risk drawing the organisation into areas where it does not currently have sufficient capacity or expertise, creating confusion about its role, and diluting its effectiveness. We on the Conservative Benches agree: the OBR should not be dragged into making actual or perceived political judgments, giving unelected officials the ability to essentially veto or shape decisions that are in substance political.

Quite frankly, the Bill and Labour’s proposals are full of unanswered questions, which need answering today and throughout the Bill’s passage. For example, is the OBR really equipped to decide what counts as a spending emergency? Should the OBR really be empowered to reasonably disagree with Ministers, who are elected, ignore their opinions and strike out on its own? The Bill gives the OBR more powers; but what measures will the Government introduce to make the OBR more accountable to the House and its Members?

Can the Government explain why their fiscal lock completely ignores policies with large, indirect fiscal impacts but whose up-front costs do not reach the GDP threshold, such as Labour’s new open-door immigration policy, or their watering down of laws that protect us from French-style strikes? Why has the Chancellor announced over £25 billon of spending in 25 days without an OBR forecast? Despite claiming a black hole in the public finances, Labour has already spent £8.3 billion of taxpayers’ money on a public energy company, £7.3 billion on a national wealth fund and around £10 billion on inflation-busting public sector pay deals without asking for any improvements in productivity in return. Do they have a forecast for any of that spending, or has the fag packet been thrown away?

When the Minister gets to his feet, can he confirm that there will be no more tax rises beyond those already included in Labour’s manifesto? Having already taken away the winter fuel allowance from millions of pensioners, will he rule out tax rises on people’s pensions, capital gains and council tax?

It was a Conservative Government who created the OBR to end Labour’s culture of inaccurate, politicised forecasts. The OBR has established itself as a fixture of the economic and political landscape, and we support it. But we have significant concerns about the Bill, and believe it will benefit from further scrutiny and improvement by the whole House at its next stage, so we do not oppose that additional scrutiny.

The Bill reveals the true fears and underlying motives of this Labour Government. It is an admission, and a confirmation, that one of the first laws they bring forward, after 14 years in opposition, is designed to save Ministers from their own Back Benchers’ spending demands, and stop themselves from crashing the economy, as they have done on so many occasions before. The Bill shows that they have finally realised what everyone else already knew: this country can never trust Labour with our economy.