Budget Resolutions and Economic Situation

Alison McGovern Excerpts

Monday 8th March 2021 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

I draw the attention of the House to my entry in the Register of Members’ Financial Interests. We just heard from the Secretary of State how very well the Government have done through this crisis, and he said how much we could look forward to the Government—to the Tories—uniting the country in times ahead. To use an old-fashioned northern expression, “I’ve heard ducks quack before”. The Secretary of State joined this House in 2015, so while I think I am right in saying that he is two years older than me, I have been around this Budget roundabout 13 times to his seven. That is nothing that I am proud of—I have spent my time in opposition and he has not—but, that said, he did work for David Cameron during 2012, so I am sure that he has experience enough to know the golden rule of Budgets: never tax anyone’s pasties.

Despite the exceptional context that the Secretary of State talks of, despite the many Budgets that he and I have heard in this House, the question at every Budget is the same. It is the question at the heart of all economics—who has what and is it fair, and what will this Budget do to change the prospects for the people of the United Kingdom? Every time the Chancellor gets to the Dispatch Box, that question is the same. So when I look back over those 13 Budgets that I have seen, I think, “What have the Tories done to make our country fairer?” They removed regional development agencies and slashed local authority funding, and now they complain that the economy is unbalanced. They ran down social security only to realise that when people with higher incomes needed it at the last minute, they had brought it to breaking point. They wasted years spending money on a costly reorganisation of our health service that they now say they want to reverse. Child poverty is high and rising. Food bank use is through the roof and we are staring down the barrel of an unemployment crisis. Economically, it has been a decade of misrule and now this Budget is on top of all that. Despite all that the Secretary of State says, I suspect that in the long term it will be neither use nor ornament at this time of economic peril, because this is a diabolical record, and I regret very much the choices that the Conservative party has made over the past decade. There is only one thing I regret more than its choices, and that is the failure of my party so far to replace it.

I have said that the economic questions remain the same year after year, but the economy moves on and, therefore, so must the answers. To make our economy and our country fairer, we need to understand the situation that we face. It is dire, as a result of both the pandemic and the pre-existing flaws arising from a decade of Conservative Government. Unemployment for young people has increased by 13% and 1.7 million people are currently unemployed, and the Bank of England predicts that this will continue to rise throughout this year. The Office for Budget Responsibility has warned that the scarring effect of the virus a year from now will be that the pandemic lowers output in the medium term by 3% relative to its pre-pandemic path, and that is after the existing problems created by our exit from the European Union. This is the backdrop to my 13th Budget and the Secretary of State’s seventh—a lost decade of growth, with us now facing economic challenges that surpass even the crisis of a decade ago.

So what do the Government do? Well, finally, we have long overdue confirmation of the extension to furlough and vital business support, yet there is still a planned cut to universal credit, just at the very time that unemployment is predicted to spike. Also, less spoken of are the £14 billion cuts planned to public services for the rest of the Parliament and a 4% hit to our economy, as I said, due to our exit from the European Union. That is before we get to the things that they appear to have forgotten, including that missing pay rise for our nurses and cleaners in the NHS and the long-term plan for social care that the Chancellor remembered the day after. There was really very little help on the employment front either. As we know, just 2,000 young people have started their kickstart apprenticeship, when the Tories promised us 120,000.

Businesses in the UK have been challenged over the past 12 months in unimaginable ways, from total shutdown to recreating themselves overnight. UK business organisations, along with those in our social economy, have by and large proved themselves to be brilliantly creative and dynamic as well as having a keen interest in the public health imperative that we have all had to focus on. This Budget does far too little to support those businesses that really need it and too little to plan for the future. If a Government did get the framework right, the innovation and creativity of UK businesses would be able to thrive.

This poor lack of innovation is exemplified nowhere more clearly than in our brilliant creative industries. In this Budget, the Government have fallen well short of creating an environment for growth for creative and cultural businesses, which altogether contributed £225 billion to the UK in 2018, accounting for 12% of the economy. It is the part of the economy for which the Secretary of State is supposed to be responsible. The culture recovery fund, which he trumpets, saves buildings, but it does not do enough to save jobs and support the growth that is needed in creative industries across the whole country. The Secretary of State gave the game away when he said that the fund is there to protect the “Crown jewels”. There is no need for me to add to the extensive commentary on the royal family today. However, the Secretary of State’s comments reveal an obsession with that which we have inherited, rather than the demonstrable opportunities in the next generation.

The adjustments made to the self-employment income support scheme were not good enough either. Bringing newer entrants to the industry into the scheme was welcome, but analysis by the Musicians’ Union suggests that around 23% of its members are still left out in the cold. I understand from Prospect trade union that, while the fifth round of the scheme may run from May to September, it only provides three months’ worth of support, which means that the effect is identical to the scheme running out at the end of July. This will affect many industries, but it is particularly acute in the creative industries, in which it may take until much later in the year for normal work patterns to resume and in which two thirds of people are self-employed.

This is all a mistake because the creative industries deserve to be taken seriously. In growth terms, as we said the day before the Budget, the creative industries were up 7.5% in 2018 on the previous year, meaning that growth in the sector is five times larger than growth in the UK economy as a whole. That is a huge amount of potential that the Government simply have not met. Instead, they decided to spend £25 billion of taxpayers’ money on a tax incentive for businesses to invest in plant and machinery. It is pretty obvious that many of our newer businesses simply will not be helped by that. It is no bad thing at all to invest, but we are facing an unemployment crisis, and many small businesses are struggling to stay afloat. I think it is fair to ask the Government whether this tax cut will really get the money where it needs to be. How they will ensure that money is not spent on investments that were already planned?

If the Government do finally agree on a fundamental change to our tax system, undoing much of the direction of travel of previous Chancellors—and has anyone checked if George Osborne is okay?—where is the proper review that is needed? There appears to be a view across the House that the losses and gains from the pandemic have been hugely unequal, so what steps have the Government taken to ensure that billions of pounds are not handed over to global logistics companies whose profits have already soared during the pandemic? Whether it is the culture recovery fund or this tax relief, there seems to be a pattern: the Tories handing cash to the already lucrative.

Worse still, what if some of the most important structural changes needed in our economy, which this Budget should be an opportunity to address, cannot be sorted out by these sorts of tax incentive? In fact, on International Women’s Day, could somebody explain to me how this tax cut for plant and machinery will unleash all women’s entrepreneurship? How does focusing on tax breaks for big firms solve the underlying structural issue of poor childcare, which is one of the biggest drags on the well-documented productivity problem in the UK? I worry that the Help to Grow scheme will be about as successful as kickstart and restart have been in reality.

It is not just that. The Government seem to be missing the point of the pandemic entirely: that a strong economy requires a healthy workforce. The Secretary of State seems not to realise that we need a comprehensive plan for public wellbeing. That means supporting public services properly and giving every person in the UK a chance to improve their quality of life.

We know that a healthy population is an important input to a strong economy. Labour councils are already leading the way, with Coventry City Council giving residents free and discounted access to cultural and leisure facilities. The council specifically argued that it was vital for women’s participation, and particularly for those from lower-income backgrounds. In the local elections, councillors are putting health and wellbeing right at the centre of their manifestos. For example, the Labour party in Lancashire launched a manifesto that includes free swimming for residents over the age of 50 and under the age of 16. Given all that we have been through, Labour in Lancashire is putting health and wellbeing at the heart of future economic prospects. To make our economy work well, we need DCMS to focus on a big, bold plan for national wellbeing, which is something that the Government have either forgotten or just do not understand.

Something else that has been forgotten is the fact that our economy is inextricably linked to the global economy. Not only have our financial services led the world, for good or ill, but so have our music, fashion, art and publishing industries. Creative industries exported £36 billion worldwide in 2018 because they are part of the modern services economy that the UK brings to the world. When pandemics hit, our open economy is going to be affected long after everyone is vaccinated at home, which is why, if we really want to rescue our economy, we need a much better plan than cutting aid to some of the world’s most vulnerable people.

It gets worse. In addition to the year of hell that the pandemic has been for many businesses is the underlying cause of the disruption and damage to our economy that will last long after the pandemic: our exit from the European Union. As I said before, our country may be an island economy, but it is also an integral part of the continent of Europe. The project of those on the hard right and the far right—to blame European politicians for every ill that this country has ever faced, just as the Prime Minister did for years in his Telegraph column, with little connection to reality—is having a real impact on our economy across the board. Organisations such as the Federation of Small Businesses highlight its impact on small firms, whose profits are being wiped out as a result of post-Brexit costs.

The creative industries about which the Secretary of State and I have spoken have been hit hugely by Brexit, as well as by covid. The Government show no show sign at all that they will fix the problems. Those in the fashion industry warn that restructuring is necessary due to the industry’s European and global supply chains and the disruption that our leaving the EU has caused, but where is the help? Musicians and performers are unable to tour freely in Europe—a vital stepping-stone for many emerging artists and a key part of a crucial industry. All that because the many are having to pay the price for the ideological obsession of the few.

As the journalist Rafael Behr wrote recently, Brexit has been turned into a “perpetual grievance” machine. Let me give an example. The Secretary of State got himself into hot water by asking the fashion roundtable to use its star quality to influence our European partners—whom the Conservative party has so successfully hacked off. Was that an honest acknowledgment that there just is not anyone in his Department who has star quality of their own? Or was it, on this International Women’s Day, an admission that the Tories see the fashion and creative industry not as a serious, leading industry that puts clothes on the backs of millions around the world but rather as a flighty and insubstantial part of our economy in which women are too busy doing the stitching to be consulted about the future of our economy? Is that how the Tories see us?

It is not lost on me that here we are, on International Women’s Day, debating the Budget—the money in people’s pockets and whether our kids have a decent life or not— and many of the speakers are men, as is often the case in this House. Who can say why that is? I can certainly tell the Secretary of State that I am not the only woman in the country who is a little bit fed up of the Prime Minister’s male-dominated Cabinet. We are fed up with the Chancellor of the Exchequer who, in his Budget, forgot to mention social care, in which thousands of women work. The Budget also does little or nothing for the creative industries, in which thousands of women also work and which the Secretary of State dismissed in such pathetic terms.

The women of this country are not very enamoured of the Prime Minister, but that was true long before this Budget. We do not want his patronising arms around the nation. We want work that pays as much as men’s, we want to share the care of our children and older people so that we can have the same status as men at work, and we want people to listen when we speak. And before anyone says anything, yes I know that the Tory party has had two women Prime Ministers while the Labour party has had none, to which I would say yes, that is a serious criticism and it should be taken seriously. That is why Labour women will keep fighting, forever and a day, for women to be elected to the highest offices of state, not in order to get one woman on a pedestal but to achieve for all women the systematic undoing of the assumptions and strictures that make us less than we are.

In the context of this debate, the assumption consistently revealed by the Tories is that the work women do, from care to creativity and culture, is worth less than the work men do. That assumption—that revealed preference, as the economists would say—is wrong, and it will be the priority of Labour Governments to undo it, alongside the many other aspects of this Government’s economic policy, which, after a lost decade of growth, is nowhere near up to setting our country on the right path. The winners from this Budget will be those who are already comfortable enough. The losers will be the small businesses whose prospects have been shut down temporarily by the pandemic or permanently by Brexit, the children struggling after a decade of disaster for family benefits, and every woman, man and child whose ambitions are not well served by a Tory Chancellor more interested in his own.