The Economy

Anneliese Dodds Excerpts

Thursday 22nd March 2018 Commons Chamber

[Vicky Ford]

I agree with my council leader in so many ways, but the leader of Chelmsford City Council is not responsible for the education budget; that is covered within the Essex County Council area, where more frontline delivery of children’s services is happening every year.

On the issue of tax, it is vital to remember that it is this Government who have made sure that the wealthier pay the largest share of tax, and the top 1% of earners are paying more tax than ever before.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Does the hon. Lady not acknowledge, however, that ONS statistics show that the top decile pays less than the bottom decile? I believe she is talking only about income tax, which is very limited, and not the whole burden of tax.

[Vicky Ford]

I refer the hon. Lady back to what my right hon. Friend the Prime Minister said at Prime Minister’s questions yesterday, when she reaffirmed that the top 1% of earners are paying more tax than ever before.

Skills are absolutely vital to our future. I remember that under the last Labour Government over 1 million young people—those under the age of 25—were not in employment, education or training. It was completely shocking, but now youth unemployment is at all-time lows, and that is not by accident. In my constituency, 5,350 young people have started apprenticeships since 2010.

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[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is real pleasure to close this debate for the Opposition and, it is a pleasure, as always, to follow the words of the hon. Member for Chelmsford (Vicky Ford). Like me, she entered this Parliament from the European Parliament, and while I may not always agree with everything she says, I know that she says it with a great deal of sincerity.

I am sure that we will all remember, back in 2010, when George Osborne, in his first speech as Chancellor to the Conservative party conference, maintained that we are

“all in this together.”

As he put it:

“The public must know that the burden”—

of deficit reduction—

“is being fairly shared.”

But opinion polls show that the public know that the opposite has occurred over the past eight years. The Conservatives have failed to deal with the long-term problems of our economy, at the same time as peoples’ living standards continue to fall. The Government have failed time and again—four times, precisely—to be on track to meet their own deficit elimination targets. The figures presented in the spring statement last week were hailed by the Chancellor as a turning point and, if I may say so, we had the same hubristic performance from the Government Front Bench today.

Closer examination reveals a deeply disturbing picture—a “lean, mean” picture, to use the perhaps rather ill-chosen phrase of the hon. Member for Clacton (Giles Watling). Public sector borrowing is still higher than was forecast a year ago, and debt is over £700 billion higher than when the Conservatives came to power. It is not “talking Britain down” to point out that the UK is headed for lower-than-expected growth by 2020 and 2021, as noted by the OBR. Expectations are not being exceeded, as suggested by the hon. Member for Angus (Kirstene Hair), but dashed.

I note that the Chief Secretary to the Treasury did not mention economic growth once. Perhaps the Exchequer Secretary to the Treasury, the hon. Member for Newark (Robert Jenrick), will come on to that in his final remarks, and I hope so because the Opposition believe, and many economists agree, that a significant reason for the lower-than-expected growth is the UK’s lower-than-expected productivity rates, with productivity increases having been revised down for 2018, 2019, 2021 and 2022. In fact, in 2017, business investment—a core element of improving productivity—was half its average level between 2010 and 2015.

Last year, economic growth in Britain was the slowest in the G7, which is in contrast with the situation when Labour left office. I take up the suggestion of the hon. Member for Chelmsford to remember the situation when Labour left office, because I do not want to forget it. When Labour left office, the economy was growing rapidly, and the second quarter of 2010 saw the fastest growth since 2008. Our economy recovered after the crash under Labour, and we have had eight wasted years that have led to a lower trajectory of growth than under Labour. It is necessary to look at the facts and to discover how this Government have slowed our economy, particularly in international comparisons.

The Opposition are the real optimists. When we look at our economy’s performance and compare it with those of other OECD and G7 nations, we see that we are not fulfilling our potential. That is holding our citizens and our country back. We can do so much better. We do not want to just talk things up, as the hon. Member for Strangford (Jim Shannon) advocates; we want to make them better. That is the difference between our position and that of the Government.

The Government’s economic policies have clearly failed on their own terms, but in addition the pain of deficit reduction—to the extent that deficit reduction has occurred—has not been equally distributed. I return to that conference speech by George Osborne, painful as it may be for the Government. In that speech, he stated that he would impose a permanent tax on banks, and that he would stick with the 50p tax rate for the highest earners. This Conservative Government have done the opposite. Just a few weeks ago, Labour gave the Conservatives the chance to reverse their reduction in the banking levy, to release funds to fill the gaping hole in children’s services, and they refused. In an eloquent and well-informed speech, my hon. Friend the Member for Peterborough (Fiona Onasanya) drew attention to the enormous stress that is being placed on children’s services in Peterborough. She is a very strong advocate for those children in her area.

Overall, this Government will have cut taxes for the best-off and for profitable corporations to the tune of £70 billion over the course of this Parliament. The Government have also failed to tackle illicit financial flows vigorously enough, as the hon. Member for Glasgow Central (Alison Thewliss) said. I can reveal to the House today, as a result of my own work and research, that this Government have lost the eye-watering sum of £2.2 billion by failing to tackle the problem of Scottish limited partnerships. That is a problem that many of us have been raising for many months, but the Government have not got a grip on it, and furthermore, they have not dealt with it through fines. They have lost £2.2 billion.

Everyone, aside from the very best-off, has felt the pinch from this Government’s approach. As many have mentioned, real wages continue to fall. We have had a tiny tick up—the first for very many months—but overall we have had the longest squeeze in wages in this country since Napoleonic times. Indeed, we learned yesterday that, according to the Office for National Statistics, the average worker now brings home about £15 less a week than they did before the financial crisis. Nurses, teachers, police and other public sector workers had their pay frozen until recently. The cost of lifting the cap for the police had to be found from existing funds; and it remains to be seen whether decent pay for nurses will be at the expense of terms and conditions. Teachers and other public sector workers must struggle on as their wages become increasingly out of step with the cost of living.

All that, of course, is before even mentioning the omnishambles of this Government’s approach to Brexit. I have lost count of the number of business people I have spoken to who are incredulous at the Government’s lack of grip on the negotiation process, and their ideological decision to rule out potential membership of a customs union. But it is all right; we learned today from the right hon. Member for Wokingham (John Redwood), to whom I am most grateful, that we can solve all these problems with just “a bit of electronics”. So that is fine. Just a bit of electronics and it will all be fine.

[David Linden]

Sorted.

[Anneliese Dodds]

All sorted.

The worst impacts have been concentrated on the least well-off people. Earlier this month, the Equalities and Human Rights Commission published its report, “The cumulative impact of tax and welfare reforms”. The report showed, on the basis of the commission’s exhaustive research and modelling, that overall, changes to taxes, benefits, tax credits and universal credit announced since 2010 have been regressive, however measured. Those in the bottom two deciles have lost, on average, approximately 10% of their net income, with much smaller losses for those higher up the income distribution.

The hon. Member for Chelmsford is usually very accurate and committed to accuracy, but I regret having to say that perhaps she needs to look again at the latest figures around taxation. Indeed, the Prime Minister was wrong on this. I was in a television studio with the Chief Secretary to the Treasury when I heard what the Prime Minister said, and the Prime Minister was incorrect on this. The most recent ONS statistics show that the best-off people pay 34% of their gross income in tax, and the worst-off 10% pay 42% of their gross income in tax under this Government. That is the reality. Yes, those at the top may pay more income tax, but the overall tax burden is unequal and regressive, and this Government are doing nothing to deal with that.

Moreover, the analysis by the Equality and Human Rights Commission showed that the changes put in place by the Conservative and coalition Governments will have a disproportionately negative impact on several protected groups, including disabled people, certain ethnic minorities and women. Appallingly—I will finish on this—for households with at least one disabled adult and a disabled child the average annual cash losses are just over £6,500—more than 13% of average net income for those families has been lost since 2010. The hon. Member for Hitchin and Harpenden (Bim Afolami), who is no longer in his place, stated that his Government were focused on practically achieving the best outcomes for people. Perhaps he can tell me and other Opposition Members, and indeed his constituents, how that loss represents a good outcome for disabled people. To use the buzzword of the right hon. Member for Witham (Priti Patel), the economy has been reset—it has been reset in the wrong direction.

I note that this Government are also trying to reset their economic language. We did not hear this during the debate, but perhaps we will hear it in the Minister’s closing remarks. We no longer hear from the Government about poverty according to its usual definition, which traditionally, in Britain, has been relative poverty. Now they will talk only about absolute poverty, because they know that when we talk about relative poverty, the usual measure in this country and internationally, we see that we are sliding backwards.

That is the legacy of this Government: tax cuts for the best-off, and reduced incomes for disabled people and those on average and low salaries. Another approach is possible; and it is the approach that Labour has developed. It is one that we have costed, unlike the Government in relation to many of their current items of spending. We need to have a Britain that is growing sustainably at a rate comparable to that of other countries like ours, rather than lagging behind them. We need to have a Britain that halts the scourge of child poverty, which will soar by 1 million children under this Government unless checked. We need a Britain that truly enables the potential of everyone. That is ambition, and we would like the Government to start listening to it.

--- Later in debate ---

[Anneliese Dodds]

Does the Minister acknowledge that under his Government, record levels of in-work poverty are affecting children?

[Robert Jenrick]

I am surprised that the hon. Lady cannot bring herself to welcome what I have just described, even in her own constituency, where jobs and employment are booming—

[Anneliese Dodds]

Answer the question.

[Robert Jenrick]

I will come to the hon. Lady’s point.

It is not just important to us to create a country of working people; it is our mission to create a nation of well-paid people in secure and fulfilling careers. We are doing that by tackling the root causes of our low national productivity as no Government have done before. We are seeing some positive signs. Inflation is falling—it fell from 3% to 2.7% in February—and the OBR has said that it will keep falling, leading to real wage growth.

--- Later in debate ---

[Robert Jenrick]

Well, we have been investing in all parts of the United Kingdom, including the east midlands. We created the midlands engine, which I just mentioned and which is designed to unleash the economic potential of the midlands. In the west midlands, we have seen the huge potential that Andy Street has now given to a city that has been run by the Labour party for too long.

What are we doing to invest in new technology? As my hon. Friend the Member for Chelmsford (Vicky Ford) described, we are investing more in research and development than has been invested since the 1970s, when the statistics were first recorded, so we are probably investing more than has ever been invested in modern times. We have made the R&D tax credits more generous. We are investing in the enterprise investment scheme and the entrepreneurs’ relief that are so important to crowd in investment to the United Kingdom from all over the world. The Chancellor is today at the FinTech summit that the Treasury is hosting, with 600 investors from all over the world coming to the United Kingdom to see some of our most exciting business that are creating 60,000 new jobs in the FinTech sector alone.

What have we done to create a business environment? We have lowered capital gains tax and corporation tax, and committed to lowering it still further. Labour would reverse those changes. Our reductions in corporation tax have actually resulted in more tax revenue for the Treasury and more money for public services. That is prosperity over ideology.

[Anneliese Dodds]

I am sure that the Minister wants to be accurate on these matters. Therefore, perhaps he will slightly correct his suggestion that the increased revenue was due to the reduction in corporation tax. So many commentators—including, I believe, the IFS—have said that the increase in revenue is due to, for example, banks returning to profitability, and it should not be connected with the reduction in rate.

[Robert Jenrick]

In the Treasury we try to deal in facts, rather than in comments, and the effect of reducing corporation tax has been an increase in revenue.

The Chief Secretary and other Conservative Members have said that we must make the case once again for free markets—something we thought we might never have to do again. However, as Margaret Thatcher and, I think, Tony Benn—an unusual pairing—used to say, “There are no final victories in politics, and if you want to continue to win important arguments, you have to keep making them and restating them over and over again.” The case for free markets is threatened as never before by the hard-left, heirloom policies and personalities of Labour Front Benchers. As someone who used to work in the auction business, I can spot an antique a mile away.

The central battle on this conflicting vision of our society is being fought again. That matters for two reasons. First, just as our parents and grandparents paid the price for this ideology last time it was employed in this country, we do not want our children and grandchildren to pay the price for its resurrection today. Last time, it left us a weak country saddled with debt and high taxes, unable and unwilling to embrace new technology or to invest in public services—and working people paid the price.

Secondly, to paraphrase Robert Kennedy, living in a democracy is not merely about the absence of tyranny but the presence of freedom. A free market matters to us and our constituents not just because we have learned that it is the best way to run an economy but because it underpins all our other freedoms. That is why we will continue to defend it as we build an economy and a country that works for everyone.