Budget Resolutions and Economic Situation

Anthony Browne Excerpts

Wednesday 15th March 2023 Commons Chamber

[Matt Western (Warwick and Leamington) (Lab)]

Mr Deputy Speaker, you probably did not hear an interview I did with BBC Coventry and Warwickshire Radio back in 2021. I was talking about the pandemic. I said that inflation was something we should be concerned about and that it could potentially rise to 7%. I had been talking to local businesses, such as the Box Factory, Vitsoe and Picturesque picture frames, which were seeing huge rises in the price of glass, cardboard and so on.

Spin forward a couple of weeks and the then Prime Minister, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), said on Sky News that people’s fears about inflation were unfounded. I am not sure where the then Prime Minister had his head at that time—whether it was in an ice bucket or in the sand—but his Chancellor should have pointed out to him what was going on. It was really clear to businesses in my constituency what was going on, and that was long before Russia’s illegal invasion. It was not just the fact that the price of gas was going to increase from that point, but we had no energy storage. It was rather like going into the pandemic when we had no personal protective equipment.

Spin forward 12 months and we had a new Prime Minister, a new Chancellor and the kamikaze Budget. Straight after that statement, the right hon. Member for Spelthorne (Kwasi Kwarteng) said, in answer to my question, that I was fearmongering when I said there would be a run on the pound. What happened next? The Bank of England was left to bail out this Conservative Government. In any other organisation, the directors would have been sacked long before this point of 13 years if the shareholders had been able to have their say.

Now we find ourselves on, I think, a fourth Chancellor. We hear that things are getting better versus last October. Well, one would hope that they are, given where we were. If we stand back and look at where we are, we have the lowest growth in the G7—even sanctioned Russia might be ahead of us now. The World Bank describes us as having the weakest economy. The medium-term forecast does not look good. Inflation is one of the highest in the G20. It is not rocket science how we seem to have got here.

There are some positives in the Budget. In particular, I applaud the idea of enterprise zones around universities. Those investment zones will be a very good thing and I would welcome more of them, because I believe they can be dynamos of a new economy. On the cost of living, I certainly welcome the extension of the energy price guarantee and parity on charges for prepayment meters with those who pay by direct debit. That is long overdue.

However, on the impact on real wages, we have heard that real household incomes will fall by 5.7% over the next two years, the worst performance since records began 60 years ago. Compare that to France, where the average French family will be 10% richer than those of us in the UK. In Germany, they will be 20% richer. Both are working approximately 20% less than us. That is the social scandal of our time. At the same time, mortgages in the wake of last year’s kamikaze budget have increased by, on average, £2,000 on a variable rate mortgage. Given the frozen income tax thresholds that the Chancellor previously announced, we have a £500 increase for those on the basic rate and a £1,000 increase for those on a higher rate.

I welcome some of the moves on childcare, but our proposals are a lot better. A nursery provider in my constituency texted me earlier to say that the funding equates to 26p per child per hour, and will not make a blind bit of difference. On pensions, I do not understand who will be the great beneficiary. What percentage of the population will benefit from going from £1.06 million to £1.8 million? It sounds like the super-wealthy in our society—a big win for the wealthiest, and perhaps more help for bankers but less for ordinary folk. It will do nothing to get retired consultants back into the NHS. It is too late.

[Anthony Browne (South Cambridgeshire) (Con)]

Will the hon. Member give way?

[Matt Western]

I will not, because we are short of time. Corporation tax is rising to 25% from 19%. George Osborne told us that we had to reduce it from 29%, which would ensure increased revenues because people would be keener to pay it at a lower rate. That does not seem to have transpired. Let us compare that to France and the US, which have much higher levels than us today. How much tax revenue have we lost from corporation tax since 2014?

The lack of a coherent industrial strategy is striking. I want to focus on the automotive sector. We have just one small gigafactory in the UK, versus five in Germany and five more planned. Labour has gone on record to say that we want to build them. Those investment decisions are ebbing away from us. Ford has divested out of Dunton. Tesla had the opportunity to come to the UK but said that it would not because of Brexit. We need companies such as Northvolt and others to come and invest in the UK. Mike Hawes of SMMT said:

“There is little that enables the UK to compete with massive packages of support to power a green transition that are available elsewhere.”

Make UK echoes that. Our energy bills are approximately 100% higher than the average of those major European nations.

Small businesses have been ignored once again. The owner of a pub in Warwick has been in touch to say that he will have to close, because he cannot afford it. Another in Leamington has said, “That’s it. We’re going to close in April. There was just nothing for us.” The Federation of Small Businesses supports that, saying that it believes that all small businesses have been short-changed by the Budget—a point backed up by the chamber of commerce. I heard nothing for the self-employed, but maybe I am mistaken.

This has been another Budget with next to no mention of a proper coherent industrial strategy. We have heard a lot about potholes, but the Government cut £400 million from the highways maintenance pothole budget, and then they announce, miraculously, a £200 million budget today. It all seems a little Paul Daniels to me. Ordinary people and small businesses have been left short-changed by the Chancellor’s announcements. Somehow, the major promise from today’s Budget is a pensions bonanza for the very wealthy. Therein lies the truth of this Budget: it is for the very few.