Budget Resolutions

Angela Eagle Excerpts

Thursday 9th March 2017 Commons Chamber

[John McDonnell]

I always respect the hon. Gentleman’s interventions because he seeks to find solutions.

[Ms Angela Eagle (Wallasey) (Lab)]

Death tax.

[John McDonnell]

Exactly. It is exactly as my hon. Friend says from a sedentary position. The Labour party tried the bipartisan approach. Hon. Members worked in good faith to seek a long-term resolution to this matter. They looked at a range of options, but halfway through the discussions we were, to be frank, betrayed. Instead of a bipartisan approach, it became a political campaign of the worst order. That was a betrayal of confidence. It will take a lot, to be frank, to regain that confidence to enable us to take a bipartisan approach. We are willing to have discussions with anybody anywhere, but the treatment last time went beyond political knockabout. It was an undermining and a betrayal not just of the Labour party but of frail elderly people and their families who desperately need a solution.

Families are imploding as a result of the lack of social care, because of the burden they are suffering. The Women’s Budget Group conducted an analysis of the Budget last year and this year. It identified two groups of people who have been hit hardest by austerity measures: younger women with children, and older women. Initially, I could not understand why, but the WBG explained that unfortunately in our culture the burden of care still falls on women. Retired women fill the gap when social care is no longer provided. We are always willing to talk to anyone to find a practical solution, but it is against the backdrop of betrayal and bad faith in the past.

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[Ms Angela Eagle]

In the Liverpool city region, we are meant to welcome £30 million a year over the next 30 years, which is £900 million. We have lost more than £1 billion in direct funding cuts to our five local authorities. Half a billion pounds in European funding has been granted for the last two rounds, but there is no guarantee of anything in future. Does my right hon. Friend agree that that is a problem for our regional development and funding in trying to grow our economies from the bottom up?

[John McDonnell]

I know how hard my hon. Friend has fought on these issues, and I congratulate her. She has a grassroots understanding of the consequences of that lack of funding, and of the implications for her region and city. The consequences of the lack of investment are staggering, but it also undermines confidence in the private sector to match fund and invest. That is what we are seeing, even at the first stage, and yet, as my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) said, we heard in the Chancellor’s statement not a word of assurance to anybody, whether council leaders, business investors or workers. I found that disgraceful.

It is interesting that, prior to the Budget, the Chancellor and allies floated the idea that he was garnering a £60 billion fighting fund to deal with Brexit. It is not a fighting fund; it is a failure fund. He is having to put aside cash to deal with the consequences of what he knows will be a Tory Brexit failure. That is what the failure fund is for.

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[Ms Angela Eagle]

Obviously it is important to get the deficit down. The Government said that they would eliminate it by 2015, two years ago, and now the Budget document makes it clear that it may not be eliminated by 2025. Is that the Secretary of State’s definition of success—being 10 years late with a five-year plan?

[Sajid Javid]

We have heard no apology from the hon. Lady for the fact that during the 13 years in which Labour was in power, there was an almost threefold increase in the national debt and the country was left with a larger budget deficit than any other major advanced economy.

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[Ms Angela Eagle (Wallasey) (Lab)]

It is a pleasure to follow the hon. Member for Richmond (Yorks) (Rishi Sunak), whose constituency is in my home county, Yorkshire. The last time I was in his neck of the woods, it was not to go to a pub—as many of my hon. Friends seem to have done—but to fight the by-election that his predecessor fought and won. I remember wandering forlornly through a village in the constituency, door-knocking with my much-missed colleague, Mo Mowlam. We did the entire village and found not a single Labour voter, so I think the hon. Gentleman is probably fairly safely ensconced in Richmond (Yorks), pending an electoral earthquake—although, of course, they do happen.

I was disappointed by the Chancellor’s statement yesterday. His first Budget did not rise nearly seriously enough to the challenges faced by our country in these times of great volatility and change, which we must now confront together. We needed a wider and bolder vision. We needed radical reform to rebuild our prosperity in a post-Brexit world and a sustainable plan to deal with our ageing population and all the pressure that that brings. We needed a recognition that we must recast our tax and benefit systems to deal with the world to come, rather than the world as it was when Beveridge produced his blueprint for a welfare state, 75 years ago.

Instead, we got a Budget that made no mention of the greatest challenges facing us today. There was no mention whatsoever of climate change. There was no mention of rising poverty and inequality, or of public expenditure cuts stretching to the far horizon. Perhaps most surprisingly of all, there was no serious mention of Brexit. This was an occasion on which the Chancellor ought to have set out a bold reforming vision for the UK. But he did not. He left the grimmest news unspoken; perhaps he hoped that nobody would notice.

On living standards, the Office for Budget Responsibility revealed something that millions of people in this country already know: real pay levels have not yet returned to their pre-2008 peak. The autumn statement revised down the forecast for real earnings by £1,000 by 2020, and the Budget will do nothing to change that. That means that workers are facing 13 wasted years of lost earnings and stagnating pay under this Government. To make matters worse, the Government’s flagship promise of a £9 so-called living wage, which in itself was never going to be enough, has been revised down to £8.75.

The modest growth in our economy, which is at historic lows, has translated into real earnings stagnation for the vast majority of people. The fact that more than half the 13.5 million people in this country who are now living in poverty are in work is not a problem the Chancellor was troubled enough to mention in his speech, but it is an indictment of his Government’s record, and it is one of the most serious social problems facing Britain today.

The Budget papers reveal that consumer debt is once more exceeding its pre-crisis peak; it is this unsecured debt that is driving what modest growth there is in the economy. The Bank of England is right to be worried about it, but it did not trouble our Chancellor enough for him to refer to it at all in his Budget statement. These facts alone show just how much the Prime Minister’s just about managing families are being made to shoulder the burden of a painfully slow recovery from the financial crash, yet there was simply not enough help announced for them yesterday.

On infrastructure and investment, the perfunctory re-announcement of the £23 billion in the rather grandly named national productivity investment fund is to be welcomed, although it has been announced many times before. But, at 2.6% of GDP, it remains far lower than the levels of infrastructure investment achieved by the previous Labour Government, and well below the OECD average. That is going to put us at a continuing long-term disadvantage in a global race in which we are more isolated and at risk than ever before, after the Brexit vote.

On investment generally, the OBR forecasts that Brexit and the uncertainties surrounding it are likely to depress private investment going forward, and uncertainty about trade arrangements will hit exports and inward investment, too, offsetting any beneficial trading effect of the depreciation of sterling. This is not a credible platform from which to launch any serious attempt to prepare our economy for the challenges of a post-Brexit world and enable us to secure our prosperity for the future.

This is a Budget that continues to hit the poorest the hardest. The Red Book demonstrates that the cuts to public services just go on and on into the future. We are told that the target for eliminating the deficit, which was originally meant to be achieved in 2015, might now not be accomplished until 2025—a 10-year delay on the original five-year plan. The Budget documents reveal a massive 20% cut in the funding allocated to local government next year, down from £8.2 billion to £6.5 billion. That puts at risk services for the most vulnerable and threatens to rip our social fabric apart.

There is an 8% per-head cut in education funding, which will threaten to bankrupt some schools—certainly in my constituency—while the extra funds announced for education are ring-fenced for the Prime Minister’s grammar schools vanity project. Once again, some people are being left behind while a chosen few, in certain chosen areas, get all the advantages. Also unmentioned by the Chancellor in his statement yesterday was a 6% real-terms cut in non-pension-related spending on social security, which will hit the most vulnerable the hardest.

The pressures of our changing demography make it clear that there must be urgent and radical reform of our system of social care, and in social justice more broadly. The changes to our labour market, which are happening on a global, national and local level, along with the profound implications of rapid technological change, make it imperative that we reform our tax and benefit system to make it fit for the future. We must be willing to look again at the tax base in order to guarantee real security for everyone in our society.

In both those areas, though, the Government have been caught out by their cynical electioneering attacks on Labour and their even more cynical election promises to the people. After participating in cross-party talks following the Dilnot report on adult social care and agreeing a joint approach to the challenges we face, in 2010 the Tories cynically produced propaganda posters condemning what they called “Labour’s death tax”. Thus, for short-term, cynical electoral gain, they equally cynically ruled out the changes we need to make as a nation so that social care can be put on a sustainable footing for the future.

The Tories did the same with what they called “Labour’s tax on jobs”—proposed changes to national insurance contributions. In 2015, they even produced the Tory “tax lock”, a pledge that it has since emerged was manufactured to fill a hole in the general election grid. It was described by the No. 10 adviser who thought it up as

“the dumbest economic policy that anyone could make”.

[Stephen Doughty]

My hon. Friend mentioned previous claims by the Conservatives. I have the advert that they put out during the last election, which made clear that any rise in national insurance would be

“costing jobs and hitting hardworking taxpayers”.

What has changed?

[Ms Eagle]

Exactly. My hon. Friend will agree that, with their cynical use of short-term advantage and the way they have electioneered on it, their pledges and the way they have campaigned, the Conservatives have actually made it much harder for us to make the reforms that we as a society need to make to our tax and benefit system and our social care system. That is the ultimate in irresponsibility.

Yesterday, the Chancellor tore up the tax lock. He can dance on the head of a pin and claim that the lock did not apply to class 4 national insurance contributions all he likes, but that was not on the side of the bus and no one will believe a Tory election promise ever again. The Chancellor has learned a tough lesson: if he wants to be for the just about managing, he needs all the tools of government available to him. He cannot tax-lock himself out of all his options and end up having to plug the gap in social care by taxing the self-employed. The Government have been hoist by their own cynical petard.

We are willing to work with the Government on both the challenges that I have mentioned—social care and how to arrest the alarming rise in self-employment, which brings precariousness for far too many people. Self-employment is often just apparent self-employment, and it is quite often very low paid and precarious. We need to ensure that the self-employed are properly protected and have proper access to the protections that employees take for granted.

[Seema Malhotra]

As usual, my hon. Friend is holding us spellbound with an excellent speech. The former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), in a sense blamed the Tory manifesto for being wrong more than he blamed the policy that the Government introduced yesterday and the way that they did so. Does she agree that those are both problems that the Government clearly need to learn from?

[Ms Eagle]

I agree. We saw a cynical dash from the Conservatives to make short-term promises to get elected, and we saw them campaign even more cynically on those promises in the hope that when they had to be broken nobody would notice. But the Government’s actions are making it much harder for us to have cross-party support on anything, and they have also made it very difficult for anyone to believe any single one of their manifesto pledges again. The Government have increased distrust of politics. That is the legacy of their behaviour on social reform and tax reform, which are vital if we are to prosper in the future.

[Stephen Doughty]

My hon. Friend is being generous in giving way. She talks about mistrust having been created. Does she agree that people out there often say to us that they do not feel that politicians in this place—the Government—actually understand the realities of life? Life for the self-employed, in particular, is often very difficult. They have many costs on top of those we would normally expect. They need increased insurance, find it difficult to get a mortgage and have to pay out for additional things. This Government simply do not understand the reality of life for self-employed people.

[Ms Eagle]

That may be the generous interpretation, but there are other interpretations that involve the cynicism I have talked about. This is the issue: if the Government really wanted to make a reasonable reform to the tax system and national insurance contributions to take away the current tax incentive for people to self-incorporate or real employers to force people into becoming apparently self-employed, they would not have made such a reform. They would have said, “We’re going to introduce these new benefits for the self-employed and take away the tax advantages and disadvantages of being self-employed, and finally we will bring forward a much more stable tax base and tax system.” That could be supported, but it looks like the Government have changed national insurance contributions to fill a fiscal hole in social policy. That is a grubby way to behave, and it is in breach of the Conservatives’ election manifesto. That is not the way in which the Chancellor should have made this change. He may learn, but in this Budget all we got was green Hammond rotten eggs.

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[Ms Angela Eagle]

Just to reassure the hon. Gentleman, I suspect that I would have been even more offended if he had agreed more with me than with his hon. Friend.

[Mr Raab]

It is good to at least start on a point of consensus.

When I hear the leader of the Labour party or the shadow Chancellor talking about the economy, I sometimes feel that there is a parallel universe. I listened carefully to the right hon. Member for Hayes and Harlington (John McDonnell) on “The Andrew Marr Show”. He explained that the economy was not growing fast enough. In fact, the British economy was the second fastest growing in the G7 last year, as it is this year, despite all the doom and gloom around Brexit. He needs to look at the economic facts.

The right hon. Gentleman went on to say that real wages are falling, which hon. Members have returned to on several occasions. I will talk about cost of living pressures, but the official figures are crystal clear. Real wages have been rising since September 2014 and, according to official data, are set to continue rising. [Interruption.] If the hon. Member for Heywood and Middleton (Liz McInnes) wants to intervene, I would welcome that, but otherwise she should go and check the facts. The raw truth is that employment is at a record level, real wages have been rising since 2014, income inequality—I know that she, like me, cares about that—is at its lowest in 30 years, the FTSE is at a record level, and there has been a fresh wave of investment since the referendum, including, most recently, the commitment by James Dyson.

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[Barbara Keeley (Worsley and Eccles South) (Lab)]

We have heard a wide range of speeches this afternoon, including from the hon. Members for Kirkcaldy and Cowdenbeath (Roger Mullin), for Richmond (Yorks) (Rishi Sunak), for Esher and Walton (Mr Raab), for Harrow East (Bob Blackman) and for Peterborough (Mr Jackson), and from the right hon. Member for North Norfolk (Norman Lamb), who is no longer here. We also heard excellent speeches from my hon. Friends the Members for Wallasey (Ms Eagle), for Croydon North (Mr Reed), for Bristol East (Kerry McCarthy), for Ilford North (Wes Streeting), for West Bromwich West (Mr Bailey), for Feltham and Heston (Seema Malhotra) and for Cardiff South and Penarth (Stephen Doughty) and from my right hon. Friend the Member for Leicester East (Keith Vaz).

I shall mainly talk about social care, but I want to mention the absence of any Budget help for the 1950s-born women struggling without their state pensions owing to the 1995 and 2011 Pensions Acts. Their demonstration and lobbying here yesterday were wonderful. I am also sad that the Chancellor could not find £10 million for the children’s funeral fund, which was campaigned for so ably by my hon. Friend the Member for Swansea East (Carolyn Harris). Despite cuts from central Government, my local authority has recently announced that it will waive fees for child burials, but all the weight of that should not be put on councils.

I had hoped that this Budget would finally announce a Government funding commitment to start to put the social care sector on a stable footing. The Chancellor said that everyone should be able to

“enjoy security and dignity in old age.”—[Official Report, 8 March 2017; Vol. 622, c. 820.]

However, despite his rhetoric, it is clear that his Budget did not match up to that aim. As we have heard, the King’s Fund has put the current funding gap for social care at around £2 billion. Yesterday, the Chancellor announced additional funding of £2 billion over three years, of which only £1 billion will be available this year. That is half of what is needed to deal with the immediate crisis. The Care and Support Alliance commented that that the funding will

“keep the wolf from the door”

but no more. There has been much discussion about the future and what will happen to that extra funding, but we must bear it in mind that post-Budget figures for adult social care show a 2.1% cut between 2016-17 and 2019-20, showing that funding is still being cut in this Parliament.

Along with council leaders, social care providers and health leaders, the Opposition have been warning this Government for many months about the perilous state of the social care sector. Indeed, the King’s Fund recently said that adult social care is

“rapidly becoming little more than a threadbare safety net for the poorest and most needy older and disabled people.”

Last week, the care company Mitie offloaded its two homecare businesses for £2, which is a clear demonstration of the fragility of the current care market. That company, which had provided care and support to 10,000 people and employed 6,000 staff, was reduced to being worth only £2. It has taken until now for the Government to heed the many warnings, and they were wrong to wait so long to act, just as they were wrong to cut local government budgets by around 40% since 2010, which has led to cuts of £5.5 billion from adult social care budgets by the end of this financial year.

[Ms Angela Eagle]

Does my hon. Friend also recognise that the cuts to benefits, particularly to housing benefit, will have a huge effect on extra care? Large numbers of people are very happy, well looked after and protected in those arrangements, but they cannot pay for them if housing benefit goes. Moving those people into nursing care will cost far more a week. That is another ticking time bomb.

[Barbara Keeley]

My hon. Friend is right about extra care housing.

The Chancellor was wrong not to make any extra funding available for social care in the autumn statement. Instead, Ministers chose to continue putting the burden of funding social care on councils and council tax payers. The local government finance settlement compounded the mess by recycling money from the new homes bonus to create the adult social care grant. That rather inept settlement made a third of councils worse off, including my own Salford City Council, which loses an extra £2 million from budgets this year.

One council that did not lose out from the settlement was Surrey County Council, which will gain £9 million extra from the adult social care grant. Perhaps that should not surprise us, given that the settlement was made when Surrey was in the middle of a long, drawn out and clearly highly successful lobby of Ministers to get more funding for just that council’s social care.

Last night, Surrey County Council released many documents and texts revealing the extraordinary level of access that that one council enjoyed with Ministers and their advisers. My local authority recently asked for a meeting with the Secretary of State for Communities and Local Government to discuss our difficult financial situation and the loss of funding for social care. We were given a 30-minute meeting with one of the Under-Secretaries of State. However, the leader of Surrey County Council was given meetings with the Secretary of State on 12 October, 19 October and 9 January. There were a number of further meetings with the Secretary of State to discuss Surrey County Council’s funding situation involving the Chancellor, the Secretary of State for Health and other Surrey MPs. There was also a substantial stream of letters, emails and texts, some of which may make surprising reading. Some frustration was expressed about the Communities Secretary, with one Surrey MP saying:

“Sajid led me to understand before Christmas that he would be trying very hard…to help Surrey out with the worst of its (Government-dictated) financial dilemma.”

And he said that if the Secretary of State was

“imprudent enough not to have £40m hidden under the Department sofa for just this sort of emergency/problem”

and if all the Secretary of State’s local government money really is allocated, he

“still has the option of adjusting all other Council settlements down very slightly in order to accommodate the £31m needed for Surrey—and I think he should be encouraged to do this.”

In January that Surrey MP wrote that he was

“losing hope re getting help from Government this time, we still need to kick up such a fuss that Ministers and Civil Servants really do remember at the very least ‘they will need to treat us better next time.’”

I think that refers to the new funding formula. All this about a council that the Chancellor himself told in a letter in December:

“Surrey’s core spending power in 2016/17 decreased by 1% compared to an average reduction of 2% for shire counties as a whole”.

And the Chancellor said that over the lifetime of this Parliament

“Surrey’s spending power is forecast to increase by 1.5% compared to a flat cash settlement for local government as a whole”.

It seems that Ministers were not ready to listen to most council leaders, care providers, local authorities and their own regulator about the fragile state of social care funding, but it is clear from all the correspondence—I recommend that hon. Members read that correspondence, as it is very interesting—that relying on council tax and business rates to fund social care will never give us the fair and stable funding system that we need.

As I said earlier, there will still be cuts of 2.1% to social care up to 2019-20, so what we have in this Budget is a sticking plaster or a stopgap announcement that will not give older and vulnerable people the “security and dignity” in old age that the Chancellor claims. And it will not enable us to deal with the continuing demographic challenges that we face. The number of people aged 75 and over is projected to nearly double by 2039. That ought to be something to celebrate, but instead the Government have created fear and uncertainty for older people by failing to address the health and care challenges raised by those demographic changes. The Chancellor said that the Government intend to produce a Green Paper in the autumn on long-term funding options, and there has been some discussion of that in this debate, but given that we have already had the Barker review and the Dilnot commission, there are fears that the Government could be kicking this issue, once again, into the long grass.

I hope that the Government are not doing that, because cuts to social care budgets hit not only people who need care, but the 6.5 million unpaid family carers. Carers UK tells us that an estimated 1.6 million people currently provide 50 hours or more of care per week, which is an increase of a third since 2001. Some 2 million people have given up work at some point to care for loved ones, and 3 million carers have had to reduce their working hours. That is not good for their finances, with many falling into poverty as time goes on.

As people live longer with disabilities and long-term health conditions, more of us will find ourselves having to take on a caring role. Sadly, this Budget offered nothing to carers, just as it offered nothing to women born in the 1950s and nothing to families who were bereaved after losing children. There was nothing in it for carers, no extra support and no sign that this Government value the important work that they do. I say to the Minister that £120 million would deliver a three-hour respite break each week for 40,000 carers who are providing full-time care; instead, as we know, the Government have chosen to prioritise cuts to inheritance tax and corporation tax, and to ignore the increased burden on unpaid family carers.

The Government have also failed to recognise that the social care crisis is not just about older people. The Chancellor talked about the impact that the £2 billion over three years will have on delayed discharges, but, as councils have reminded us this week, other groups of people need social care, including those with learning disabilities. About a third of councils’ annual social care spending—some £5 billion—goes on supporting adults with learning disabilities. Surrey MPs must now understand that fact, after all the correspondence from their council leader, who spent a lot of time trying to make clear to them what an issue that was for councils.

We had an excellent debate in Westminster Hall earlier in the week on social care in Liverpool, when we heard that Liverpool had lost almost 60% of its grant since 2010 and that that will reach cuts of 68% by 2020. Cuts to social care there have meant that funding for care packages had to be cut, so whereas 14,000 people were receiving one now only 9,000 are—5,000 people are no longer getting a care package. Surrey, which has had so much attention, did not have cuts at that level; its cuts were only 28%. Indeed, social care spending in Surrey has increased from £273 million to £367 million.

I want to make an observation about the new allocations for the £2 billion that the Government have announced. I observe—that is all I can do, because the figures have only just arrived—that the allocations are £1 billion for year one, two thirds of a billion for year two, and one third of a billion for year three. In that, Surrey’s allocation goes up in year two; it is one of only six councils on the whole list that gets a bigger allocation out of a smaller amount of money. I do not know, and it is impossible to see here in the Chamber, what the formula is, but that position is very worrying.

Disturbingly, this important matter of funding social care has been tarnished by the offering of sweetheart deals and the making of gentlemen’s agreements. It seems, from reading the correspondence, that all of that was done to escape the political heat for some right hon. and hon. Members facing the reality of what cuts to council funding have done to social care in their local authority area. That is what this is all about: threats of what will happen to constituencies and areas if the cuts go on.

Social care should not ever be consigned to becoming a threadbare safety net. We also should not have a Communities Secretary who can hold more than seven meetings with Surrey County Council or Surrey MPs to discuss their funding, yet who will not meet a cross-party delegation from Salford City Council and has no time in his diary to meet the leader of Hull City Council. I hope the Communities Secretary will start to listen to councils other than Surrey County Council, whose leader emphasised in letters that we have seen that it has the largest Conservative group in the country. He should also listen to leaders from Hull, Croydon, Salford, Manchester, Liverpool, Durham and Newcastle. He needs to understand from them what is needed throughout the country to save social care from crisis.