Budget Resolutions and Economic Situation

Andrew Gwynne Excerpts

Tuesday 21st March 2023 Commons Chamber

[Andrew Gwynne (Denton and Reddish) (Lab)]

The Chancellor closed his Budget last week proclaiming that “the plan is working”. But as has been pointed out time and again, the OECD has confirmed that the UK will be the weakest economy in the G7 this year. Living standards have taken the biggest hit since comparable records began, and the average French family are now a tenth richer than their British counterparts. None of those figures scream to me that the plan is working. Instead, they speak of a sad truth: the Tories have mismanaged our economy and have catastrophically failed to level up and invest in our communities.

I will not pretend that the new devolution deal for Greater Manchester is not welcome. The Greater Manchester Combined Authority and the Mayor’s office have been working around the clock to secure the deal, and I am pleased that they have negotiated a settlement that will assist the ongoing work in the region. I am particularly pleased to see support for the integration of the Bee Network. Transport connectivity is key to growing the economy—something the Government would do well to consider before handing another six-month contract to the failing rail operator Avanti.

While positive, the devolution deal does not absolve the Government of their failure to level up. After all, the deals for Greater Manchester and the West Midlands only grant extra powers to 9% of the population. The other 91% remain tied to the economic disaster of successive Tory Governments in Westminster.

Let us take a moment to assess whether the levelling-up plan is working. Bloomberg’s 2023 levelling-up scorecard shows that since 2019 people across Denton and Reddish have seen their salaries, access to affordable housing, life expectancy and broadband coverage all fall or remain the same. The report also shows that overall Government spending has declined in my local area. The Government can talk about growing the economy until they are blue in the face, but those words feel particularly hollow to the people I represent and the communities in my constituency. They have less money in their pockets and they are struggling to put food on the table and heat their homes.

Those words also feel hollow to me. I have tried countless times to secure levelling-up investment both for Denton and for Reddish. Most recently, I backed Tameside Council’s levelling-up fund bid to transform Denton town centre. It would have enabled Tameside Council to significantly improve Denton Festival Hall, with a new neighbourhood hub for children’s services and new NHS primary care services. As with the earlier Stockport bid for Reddish, the Denton bid was rejected. That is just not good enough, not least because my town is plastered full of levelling-up posters with nothing to show for it.

It does not need to be that way. I want to see rapid investment in good jobs for the future, and better salaries and working conditions for the people I represent. I want to see more powers handed to local communities, an end to “The Hunger Games”-style bidding process and an investment that benefits working people instead. Labour is the party that has a plan to deliver that. The Tory Budget was nowhere near bold enough. Sadly, economic growth is just another slogan for this Government.

--- Later in debate ---

[Mr McFadden]

I am not going to give way; I am going to proceed.

One thing was not leaked, however, and that was the Chancellor’s plan to abolish the pensions lifetime allowance—a £1.2 billion policy that will benefit those with the biggest 1% of pension pots. Let us be clear: there is a problem facing doctors, and it has existed for years. In the run-up to the Budget, my hon. Friend the Member for Ilford North (Wes Streeting), the shadow Health Secretary, called for a special scheme to deal with the issue facing doctors, which is forcing some of them to retire early. That call was supported by the Chancellor when he was Chair of the Health and Social Care Committee. His report said:

“The government must act swiftly to reform the NHS pension scheme to prevent senior staff from reducing their hours and retiring early from the NHS.”

That is exactly what the shadow Health Secretary proposed.

[Andrew Gwynne]

Will my right hon. Friend give way?

[Mr McFadden]

I am going to proceed.

Such a scheme already exists for judges, but when the shadow Health Secretary made that call, he was attacked by the Tories, who said it was financial profligacy and unaffordable—and let us remember that that was only a scheme directed at the NHS. A Conservative spokesman said:

“Now they announce an expensive pensions policy without pointing to how they would fund it”,

adding that the shadow Health Secretary should think about the impact on the public finances. And what did the Tories do then? They said, “Wes, hold my beer.” Just days later, having denounced a smaller NHS scheme as being completely unaffordable, they proposed to abolish the entire lifetime allowance for everyone. According to the Tory argument, it is completely unaffordable for doctors alone, so we are going to propose it for everyone.

However, that was not always the Tories’ view. They used to think that,

“we must demonstrate that we are all in this together. When looking for savings, I think that it is fair to look at the tax relief that we give to the top 1%.”—[Official Report, 5 December 2012; Vol. 554, c. 878.]

Who was the ideologically suspect pinko who said that? Who was that anti-aspirational enemy of enterprise? It was, of course, George Osborne. That is how far they have moved. They used at least to claim we are were all in this together; now they do not even pretend.

Growth is the essential challenge facing the country. We need better growth to make the country more prosperous and its people better off. Right now, in the United States, growth is being driven by the Inflation Reduction Act sucking in investment in new technologies and the green transition, and creating jobs right across the country. Europe is responding with incentives of its own. What is the Government’s position? It is that this is “dangerous”, as the previous Business Secretary said. Other countries are on the pitch; they are using the power of government to crowd in private investment. That is exactly what we should be doing. This is not about the state doing it all; it is about setting a clear, long-term direction, and asking business and employees to be partners in making that work.

Those investments will happen somewhere. The question we pose is: why not in Britain? Why not in Britain when we have some of the best researchers in the world? Why not in Britain when we have a tradition of innovation and creativity that is second to none? Why not in Britain? Because we lack a Government with the ambition to make it happen. In the end, that is what was missing from this Budget.

The Chancellor and the Prime Minister want to project themselves as the adults in the room, but with the challenges that the country faces, that is not enough. It is not enough just not to be reckless and ideological; it is not enough just not to subject the country to another giant juvenile experiment with real-world consequences; it is not enough just not to degrade the idea of public office itself; it is not enough for them not to be their disastrous predecessors. The country deserves a lot more than that. It needs a Government who will break with, not continue, the last 13 years, and who will break with the whole pattern of low growth, high tax and creaking public services. That is what we need, and that is what we did not get from the Budget last week.

[The Chief Secretary to the Treasury (John Glen)]

What a privilege it is to close this four-day Budget debate on behalf of the Government. I thank the right hon. Member for Wolverhampton South East (Mr McFadden) for his remarks—for someone who moved from being the high disciple of Tony Blair to sitting in a Cabinet where there was “no money left”, I think there was a lot of cheek in his remarks.

This Budget takes our collective potential and unleashes it to deliver sustainable long-term growth. We are now able to direct our attention to the future because of the difficult decisions that we took in the autumn, when we cemented stability and the prudent management of the nation’s finances, taking responsible, necessary decisions for the good of the economy—for the vulnerable, for families and for communities up and down this country. Since then, debt-servicing costs are down, mortgage rates are lower and inflation has peaked. We are heading in the right direction. The OBR’s clear assessment is that because of the action taken in the autumn, combined with the actions announced by the Chancellor last week, we are on track to meet all the Prime Minister’s economic pledges.

As has been famously said before, inflation is taxation without legislation. It makes us all poorer. That is why we said that we will halve it this year. Indeed, the OBR says that we will do more than that.

[Andrew Gwynne]

Will the Minister give way?

[John Glen]

No, I will not.

Inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. If debt is left unchecked, it acts as a ceiling on our economic potential. That is why we are bringing it down. Under this Government, we will pay our own way.

On growth—the focus of the Budget—there were those who said that we would fall into recession in 2023, but last week the OBR said that we will not enter a recession this year. Instead, after this year, the UK economy will grow in every single year of the forecast period, including by 2.5% in 2025. As we look to the future, we are now rolling out the biggest employment package ever, we are overhauling incentives to get businesses growing, and we are unleashing our green energy sector while supporting families and businesses with bills in the short term. But, contrary to the characterisation in many Opposition speeches today, there is no complacency from this Government. There will be no let-up in our relentless focus on enabling growth.

The subject of today’s debate is halving inflation, reducing debt and growing the economy. During the course of the debate, we have heard some excellent speeches from right hon. and hon. Members on both sides of the House, and I would like to respond to some of them now. I will respond first to my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), one of my predecessors. Although he welcomed many measures in the Budget, he drew attention to the question of corporation tax. Let me draw his attention to the remarks of the Chancellor, who expressed his determination that the full expensing measure will be a permanent intervention of this Government.

I thank my right hon. Friend the Member for North West Hampshire (Kit Malthouse), my parliamentary neighbour, for his constructive suggestions about the simplification of childcare. I also draw his attention to the fact that this Government have committed £492 million over this year and next to ease the supply for those who will provide our child support.

I also want to refer to the speech from my hon. Friend the Member for South Cambridgeshire (Anthony Browne), who gave us a helpful contextualisation of the world economy and pointed out the fact that, contrary to what we heard in many Opposition speeches, since the Conservatives came to power in 2010 we have grown more than major countries such as France, Italy or Japan, and about the same as Europe’s largest economy, Germany. We have halved unemployment, cut inequality and reduced the number of workless households by 1 million. I also want to refer to my hon. Friend’s remarks on the pensions intervention. That was called for by many in the medical profession over many months, but our pension reforms benefit other experienced key workers as well as doctors, including headteachers, police chiefs, armed forces clinicians, senior armed forces personnel, air traffic controllers, prison governors, senior Government scientists, Government-employed vets and, yes, even senior people in the private sector who create jobs, sustaining growth across the economy.

I also thank my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), who had a characteristically clear understanding of how economic challenges will be met. He also mentioned the support of his local brain surgeon. Many more people working in the NHS are realising that within two weeks they will be able to continue working, knowing that their pensions are safe.

I thank my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) for his remarks on defence expenditure. I suspect that there will never be enough money for him on defence, but he shows a clear understanding of the extra commitment the Chancellor has made in the Budget to invest in continuing to support our efforts in Ukraine.

There were many other worthwhile contributions from Members on both sides of the House, and I think it is important that we recognise that one of the major themes of this Budget was levelling up across the whole United Kingdom. I welcome the contribution from my hon. Friend the Member for Barrow and Furness (Simon Fell), who drew attention to the value of the announcements on nuclear, particularly Great British Nuclear, and the transformation that will bring to his economy and to the country as a whole.