Budget Resolutions

Angus Brendan MacNeil Excerpts

Tuesday 12th March 2024 Commons Chamber

[Darren Jones]

I would like the hon. Gentleman to explain that to the public. Given that the Conservative party makes promises at every single election and fails to deliver them, I think the public have the same question in mind.

Moving on to the confusion about this being a tax-cutting Budget, the Budget documents confirm that the United Kingdom has the highest tax burden in 70 years, and that burden rises each and every year for the next five years under the Conservatives, so overall, taxes are going up, not down. Figures from the Office for Budget Responsibility show that for every 10p extra in tax paid by working people, the Conservatives give only 5p back. That is why the public see the measures as a pre-election giveaway by the Conservatives—but it is no giveaway at all, given that successive Conservative Chancellors have taken double what they now promise to give back.

This is bad news, and not just for those already paying taxes. Tax thresholds are being frozen for the next five years, which will increase the tax take overall by an additional £40 billion, so 3.7 million people, including pensioners, who are not paying tax at all will do so by 2028-29 under the Conservatives. The tax burden is going up; Conservative Ministers are taking more in tax than they say they will give back; and more people will pay tax after this Budget, so I have to ask: why are Conservative Ministers calling this a tax-cutting Budget at all?

May I gently point out that the Scottish National party is just as bad? In Scotland, the SNP has increased taxes on working people, so that even the low paid pay more in tax in Scotland than they would in England, yet the SNP campaigns against the windfall tax on the big oil and gas companies. Are SNP Members really putting oil and gas company tax cuts ahead of tax cuts for working people?

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (Ind)]

rose—

[Darren Jones]

I was waiting for an intervention from the SNP. Is the hon. Gentleman an SNP Member?

[Angus Brendan MacNeil]

I am not in the SNP, but I do like a bit of accuracy and proof. The reality is that those earning under £28,000 are not paying more tax. The hon. Gentleman’s reference is a straight lift from an article in the Holyrood magazine. It was a very good article otherwise, but on that little bit, it was not very accurate at all.

[Darren Jones]

I read the article on the BBC, which I can assure the hon. Gentleman is a pretty reliable source of information. If the SNP wants to tell teachers and nurses earning £28,000 a year that they are high earners, I encourage it to do so in the general election coming up this year.

Labour first called for a windfall tax on the profits of oil and gas companies in January 2022. The Conservatives finally agreed to introduce the energy profits levy in May that year, though there were significant holes in the Government’s approach. Since then, Labour Members have been pressing Ministers to close them. Ahead of the general election, we have set out our plans for an energy profits levy if we win. We will increase the levy to the same rate of tax as in Norway, end the windfall tax investment allowances, and maintain the levy until the end of the next Parliament, with a statutory sunset clause, if there continue to be windfall profits. We have set out our plans now to give those operating in the North sea as much certainty as possible when making future investment decisions. To give further certainty, I can put on record today that we fully support an energy security investment mechanism, and we will therefore support Budget resolution 18 today.

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[Andrew Jones (Harrogate and Knaresborough) (Con)]

As this is day four of our Budget debate, much has already been said, so I will restrict my remarks to a few general comments before addressing some specific areas.

This has been a much more wide-ranging Budget than most commentators have noted, but the most positive thing that jumped out at me from all the data is the upgrading of growth forecasts. I completely recognise that economic forecasting has not been easy with all the uncertainty from the pandemic and the war in Ukraine, but I think our economy is stronger than most forecasters estimate and is regularly underestimated.

The upward revisions to the OBR forecast are large, too, with growth up by 0.5 percentage points in the months since the autumn statement. The recently published business surveys are also heading in the right direction, all indicating increasing confidence. Indeed, the main message I receive from businesses in Harrogate and Knaresborough is how hard it is to fill vacancies. The local unemployment rate, announced today, is 1.9%, which is a remarkably low figure, but it is matched in other parts of our country.

The growth in employment is a key reason our economy has been resilient. There are over 4 million more people on payrolls than there were in 2010, which is a significant achievement. Unemployment has been halved, and there are 1 million more businesses in the UK than in 2010.

As my right hon. Friend the Chief Secretary to the Treasury said in her opening remarks, the UK’s growth has outperformed that of the other major European economies—Germany, France and Italy—and is set to do so for the next five years, but our productivity has lagged badly. Indeed, the “Economic Indicators” report published by the House of Commons Library last month shows that UK productivity lags German productivity by 16%, which is a very significant gap, yet we are still outgrowing Germany. That raises the question of what the impact would be on growth if we kept what is driving our economy while addressing the productivity gap.

I am, therefore, pleased to see the Budget’s focus on productivity in both the private and public sectors, which I pursued as a Minister, particularly in the Treasury—once a Treasury Minister always a Treasury Minister—but we should define what it is. Productivity is not about working harder; it is about working smarter so that there is more output from each hour worked, not more hours worked.

The best way to drive productivity is with investment. Another encouraging stat in the Budget is that business investment has risen to 10.6% of GDP and is continuing to grow, which is very positive. It is how our future wealth will be created, and it is also a 14% increase compared with the level of investment under Labour. With GDP growth creating a bigger economy and investment taking a bigger slice, the budget involved is measured in the tens of billions. The permanent expensing announced in the autumn statement is a huge factor, and I strongly welcome the commitment to extending it to leasing. This is all about making the UK more competitive and an even better place to invest and grow a business.

One area that has not received the attention it deserves over a number of years is public sector productivity The delivery of good public services requires several components. One of them is budget, as the total amount spent matters, but it is not just the total amount spent. It is also about how well the money is spent.

There have been huge increases in public spending, so we need to ensure transparency and accountability. We also need to ensure that funds are directed to where there is the greatest return and the greatest need, and that taxpayers achieve value for their money. There is plenty to be done on that, particularly on infrastructure, where the Government are investing so heavily—that is a different speech, but I refer the House to the excellent work of the all-party parliamentary group on infrastructure, which I coincidentally chair.

It also requires the Government to make the right policy choices. For example, there is a less than 2% difference in per pupil funding between England and Wales, but English schools are rising up the international league tables for maths and science, and we are the best in the west for reading. Wales is sadly going down the league tables, and it is now ranked in the mid-30s. The financial difference is a world away from the ranking difference, and it comes down to policy choices.

[Angus Brendan MacNeil]

The hon. Gentleman is talking about education outcomes. I do not know whether he saw “Newsnight” last night, but a teacher in the city of Paisley in Scotland linked bad behaviour in the classroom to hunger. The teacher also spoke about the difficulty of getting good educational outcomes amid poverty. Is it not a fact that Department for Work and Pensions policies that keep families in poverty, including the two-child cap, add considerably to the problems in Wales? It is a matter of poverty, not education.

[Andrew Jones]

I did not see “Newsnight” last night, as I was here until very late. I was working away, as ever. Our benefits system has not held back the educational progress being made in England so, without having seen the programme, I suspect that other factors are involved.

The productivity of our public services remains below pre-pandemic levels, which suggests that the full value of budget increases is not being realised. It was, therefore, good to hear the announcement of a public sector productivity plan in the Budget. This important initiative has the potential to be a game changer. The National Audit Office suggests that a 5% increase in productivity is equivalent to a £20 billion budget increase.

The Budget detailed investment to upgrade IT in both the justice system and the NHS. The Chancellor revealed that 13 million hours are lost by doctors and nurses to outdated IT. The sheer scale of that is phenomenal, but not in a good way.

Governments of all colours have struggled with NHS IT for years, but the world is digitising. AI will change things even further and faster, and it is right to embrace these changes and secure the benefits they will bring. It is not just about the systems but about the processes used, and there is an attitudinal element as well. We have to think about how output will be achieved. In the world of government in the UK we tend to measure, then trumpet, inputs rather than outputs. That does not happen in the private sector. Moving that thinking into the policy and delivery teams so that they think more about outputs is critical in the longer term.

The most encouraging parts of the Budget tackle investment and productivity. Progress on those will create more wealth and better health for our future, which is why I will be supporting this Budget.

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[Angus Brendan MacNeil (Na h-Eileanan an Iar) (Ind)]

Tapadh leibh, Mr Deputy Speaker. I am using Gaelic like Cillian Murphy did at the Oscars—the Celtic tongue is everywhere these days. May I also welcome members of the Inter-Parliamentary Union, who are watching our proceedings?

I will start with a quote:

“I don’t want to rule or conquer anyone. I should like to help everyone—if possible—Jew, gentile, black man, white. We all want to help one another. Human beings are like that. We want to live by each other’s happiness, not by each other’s misery.”

That is from the last speech of Charlie Chaplin’s film, “The Great Dictator”, filmed in 1940. Too often nowadays, 84 years later, we are seeing the misery of others among us in the UK, where food banks and child poverty are far too commonplace. The hon. Member for Rochdale (George Galloway), who is no longer in his place, mentioned two wards in his area where 50% of children live in poverty. He also mentioned his predecessor, which was very worthy.

Young people in our countries cannot get houses. Their rents drain their savings for a deposit and leave them trapped. On “Newsnight” last night, a teacher in Paisley, Scotland said that there was a link between pupil behaviour in the classroom and hunger and perhaps even nutrition. How can we make society more productive when educational outcomes are blighted by DWP policy and spending choices?

The roots of this go back to 2008—perhaps not the crash but certainly the response to it and the fixation of then Chancellor George Osborne on austerity. He really did misunderstand the debt to GDP ratio. He thought only of debt, leaving the UK like a farmer saving money on seeds in spring, not investing, and then wondering why there was no harvest in the autumn. He had a short-term political slogan, which some here might remember: “long-term economic plan”. As ever, however, there was no plan. This is the autumn, there was no investment and the harvest is scarce.

The Resolution Foundation pointed out in December that the average worker in the UK is earning £10,700 less than their equivalent in a host of developed countries in Europe, North America, New Zealand and Australia. This has been compounded by Brexit taking GDP down by about 5%, and talks of a trans-Pacific partnership gave nothing back because that is trade with paperwork and bureaucracy and only a 0.2% to 0.8% gain in GDP. Members talk of people keeping their hard-earned cash, but it is harder-earned cash as a result of some of the choices that have been made in the UK. Filling out forms does not productivity make.

In Iceland, the crash was over by 2013, which was 11 years ago. I am chair of the all-party parliamentary group on Iceland and have met the Central Bank of Iceland several times. It now complains of too much growth in its economy and its head banker has his head in his hands. Things are so different in the UK. Ireland seems similar to Iceland, as do Norway and Denmark. The countries surrounding Scotland are very different. Their populations will grow by 2050, but if Scotland is still in the UK, its population will decline. My constituency will experience that decline most of all. It is unnecessary and will be as a result not of destiny but of choices. It is not about geography or demographics; it is about policy.

In “The Guardian” last week, Gary Stevenson, a former City trader, wrote that

“the budget is for ordinary people. The mega-rich look on and laugh…traders know the rich will get richer and the poor will get poorer.”

The blight is all over society. Sky News reported over autumn that parents were stealing infant formula milk, such was their desperation. Reports are being written and commissioned on food insecurity in what is known as a G7 country.

The basic facts about the UK’s finances are that it has borrowed every year bar 11 since 1945, and has not paid back much of that money; it has been in surplus for only 11 years, and has paid back about 1.7% of the debt attributed to it. Those are the facts, but maybe they do not tell the whole story, because the world has not ended. However, they undermine the fiscal rules that various parties and Oppositions have, which are not actually necessary and are causing the misery of others. In my view, the UK has had two pivotal moments that have led us to this point—moments of quantitative easing, or if you like, the printing of money. As the American economist J. K. Galbraith said, the process by which money is created

“is so simple that the mind is repelled.”

Those moments were, of course, after the crash and around the pandemic.

The problem is that rather than people being helped with their mortgage, as they were in Iceland—that would perhaps be called flood-up economics, the opposite of trickle-down economics because it works—in the UK, the poor have lost out hugely, and the rich have accumulated the money that was created by the Government on a whim. As Gary Stevenson said in his article in The Guardian last week:

“The next year, 2011, I placed a bet. It was a bet that the hundreds of billions of pounds of economic stimulus being poured into the UK and US economies would not reach the people who needed it. It would settle in the pockets of the richest, who would use it to buy the homes of the poor, and the economy would never recover. That year, I was Citibank’s most profitable trader in the world. They paid me $2m and asked me to do it again. It was around about then I realised the whole economic system wasn’t working.”

That is why we are where we are, and why the Budget is what it is—nothing very huge, and quite delusional, as has been said before. It also explains why councils and devolved Governments are short of money.

It is worth remarking that devolution only works one way in the UK. We get told in Scotland that we have two Governments, but devolution does not work like that. It works depending on England’s needs: when England’s one Government decide that they need to spend on something, there are consequentials for Wales, Scotland and Northern Ireland. If Wales needs money for health, England, Scotland and Northern Ireland do not receive consequentials. That is a fundamental problem with the UK. I would also say to the SNP, and to the SNP Government in Edinburgh, that there is so much they could do to change the situation. They have the power in their hands to call an unscheduled Holyrood election whenever they want, and put the matter of independence before the people. If they did so, I am confident that Scotland would choose to leave all I have described; we would be an independent country and could have a different demographic outlook, particularly for Na h-Eileanan an Iar. These matters are very important, and Holyrood should think about doing that and doing it soon.

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[Bim Afolami]

I thank the hon. Gentleman for that point. If he looks in the Red Book, he will see that the forecast for the next spending review period is that real-terms spending on public services—the whole House should hear this, because I have heard lots of discussion from Opposition Members about cuts and slashing—will go up every year by 1% in addition to inflation. We are building on a stable foundation for that growth. Against the backdrop of economic uncertainty, business investment—one of the chronic difficulties for our economy for generations—grew last year, and will be about 11% of our GDP this year.

At the Budget, we outlined next steps on the autumn statement’s £4.5 billion funding package for strategic manufacturing, which many Members mentioned, particularly the hon. Member for Birmingham, Edgbaston (Preet Kaur Gill). That delivers the next stage of expansion for our high-growth industries.

To complement that, we are committed to ensuring the UK has the most attractive investment tax regime of any G7 or large European country. We have the lowest corporation tax rate in the G7. At the autumn statement, to complement that support for business and for growth, we announced that we would introduce permanent full expensing, which allows companies to claim, in the first year, 100% capital allowances on qualifying investments. At this Budget, the Chancellor confirmed that draft legislation on extending full expensing further to assets for leasing will be published shortly. I am very glad that my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) and the hon. Member for Gordon (Richard Thomson) supported that investment.

The theme of today’s debate—improving productivity—was barely mentioned by Opposition Members. I echo what the Chief Secretary to the Treasury, my right hon. Friend the Member for Sevenoaks (Laura Trott), said in her opening speech: when it comes to our public services, what the public care about is whether their services improve. That means focusing on outcomes, not just inputs. Opposition Members are very, very fond of talking about inputs and how there are apparently there are all these cuts—this slashing and burning of public services—but they are not very fond of talking about our productivity plan and how we are investing to improve outcomes. I will tell you a secret, Mr Deputy Speaker: the reason they are not fond of it is that they know it would upset their union paymasters. That is why they do not want to talk about it. They do not believe in better public services, which would mean better value for money for the taxpayer, because they do not believe in better value for money. They do not believe in better support for frontline workers to actually do their jobs properly because they just want more money for their union paymasters. They do not believe in better results. They talk the talk but refuse to walk the walk, because they do not understand what it is to take any tough decisions.

I agree with something that the hon. Member for Ilford South (Sam Tarry) said. He said that we cannot cut our way to prosperity, and I agree. That is why we are investing in our productivity plan and investing comprehensively in the NHS, as my hon. Friend the Member for Watford (Dean Russell) set out compassionately and powerfully.

[Angus Brendan MacNeil]

Will the Minister give way?

[Bim Afolami]

I will make some progress, and then I will give way.

From upgrading computer systems to using artificial intelligence to automate tasks, we will upgrade the NHS’s technology for the 21st century. That is only part of our programme of reform to bring the whole of Government into the digital era and generate productivity improvements, including through structural investment—and what a win it would be. The National Audit Office and the Office for Budget Responsibility, bodies that Opposition Members are always terribly keen to quote—[Interruption.] They should listen to what they have said about productivity and outcomes. The OBR says:

“Raising public sector productivity by 5 per cent”,

which will bring us back to where we were before the pandemic,

“would be the equivalent of around £20 billion extra in funding”.

That is why we are doing it. That is why the work that my right hon. Friend the Chief Secretary is doing is so important.

Before I conclude, I think we can all agree, including Opposition Back Benchers, that it is impossible to know where the Labour party stands on anything these days. We used to know where it stood. The sad thing about the one concrete plan that it did have is that there was a document listing all the projects under the £28 billion and going through every constituency. That was the only plan they had, but they have dropped it. They should talk to the right hon. Member for Doncaster North (Edward Miliband) as to whether he is happy about that.

Labour Members are confused and I feel sorry for them. [Interruption.] The hon. Member for Hampstead and Kilburn (Tulip Siddiq) is chuntering from a sedentary position, but I am coming to her next, don’t worry. Labour is so confused that, by the way she was going on, one would think that she was a disciple of Peter Thorneycroft and Nigel Lawson. She was so keen on low taxes and sound money that I almost wanted to invite her to join us on the Government Benches. But then I remembered something: in one of her first acts as a Labour MP, she decided to mount the barricades and nominate the right hon. Member for Islington North (Jeremy Corbyn) for leadership of the Labour party. I wonder whether she has told the Leader of the Opposition that that is where her heart lies.

Look, I do not want to be mean spirited—it does not suit me very well. It might surprise you, Mr Deputy Speaker, to learn that I actually rather admire the right hon. Member for Islington North. He believes in things and has ideas, unlike the shadow Treasury team, who do not even have the semblance of a coherent plan or any beliefs at all, as it turns out.

We know that this will not bother the shadow Chancellor. Where is she, by the way? She is probably too busy on her smoked salmon offensive in the City of London, pretending to love bankers, to have time to think of any new ideas.