Budget Statement

Baroness Brinton Excerpts

Thursday 16th March 2023 Lords Chamber

[Baroness Brinton (LD) [V]]

My Lords, I declare my interest as a vice-president of the Local Government Association and a vice-chair of the All-Party Parliamentary Group on Adult Social Care. It is a pleasure to follow the noble Lord, Lord Eatwell, and I also look forward to hearing the maiden speech of the noble Baroness, Lady Moyo.

The Chancellor says the OBR projection is now that Britain will avoid a “technical recession”, but ONS data shows that the UK is the only major economy in the G7 that is still smaller than it was pre pandemic. The OBR has confirmed that, after yesterday’s Budget, living standards will fall faster than any time since the 1950s, and it is evident that living standards in 2028 will be worse than in pre-pandemic years. This Conservative Government have made the British people poorer.

So, frankly, it was embarrassing yesterday to see the Conservative Government celebrate an economy that has shrunk in size on their watch and is lagging way behind our international competitors. The cost of living crisis is hitting millions of Britain’s families and pensioners, but this Budget has failed them miserably. People are desperate for real help, especially a cut in their energy bills, but all the Chancellor could offer was empty words and more unfair tax hikes—unless you are in the top 1%.

The abolition of the lifetime pension tax allowance may help a number of medical consultants, but the real problem here is that the Conservative Government have failed to act on this for years, and by now the NHS has lost far too many senior staff as a result. While it is welcome that this may encourage NHS consultants to work longer, it does nothing for our heroic nurses and other healthcare staff on low pay, who have been working to exhaustion in crumbling hospitals. That many nurses have had to access food banks should be shameful to this Government.

The Chancellor announced the four pillars of his industrial strategy—economy, enterprise, employment and education—but, within 24 hours, commentators and many people and organisations are raising serious concerns about the proposals. Why, yet again, is there no impact assessment for the Budget, as required under the Equality Act 2010? It is particularly egregious because the Government rightly ask for impact assessments in many other areas that they fund—for example, international development or even their own departments—but will not do it for their own Budget proposals. We note that the Chancellor has spent two-thirds of the windfall from the economic dip not being quite as bad as had been feared on a series of headlines, but he has failed to reduce the cost of living crisis that is hitting millions of Britain’s families and pensioners. This is why we need an impact assessment.

The Chancellor announced a harsher regime on benefits that will affect some of the most vulnerable in our society: those too unwell to work but not classified as disabled; black and ethnic-minority people; young people not in education, employment or training—the NEETs—who are often from a low socioeconomic background; and those in work but on very low pay, who are really struggling at the moment.

From these Benches, we wanted to see household energy bills cut by £500 by taking the energy price guarantee down from £2,500 to below £2,000. We wanted to extend energy support for businesses, especially local businesses, including farmers and rural communities, to keep food prices from rising and to help shops and pubs on our high streets to stay open. We also wanted to put in place a proper windfall tax so that oil and gas giants pay their fair share.

This is because the OBR says we are only half way through this period of severe cost and inflation increases and resulting pressures on the economy. It has confirmed that living standards will fall by 6% over the next two years, and we know from the last year that vulnerable communities will be worst affected. For example, Black Voice notes that 40% of black people have no access to a car, compared with 17% of white people.

Data also shows that bus and rail costs have risen disproportionately compared with fuel duty and vehicle fuel costs over the last five years. We know that bus users in rural areas are paying much higher prices, just as they watch their local bus services disappear because councils cannot afford to support them. Once again, the most vulnerable are affected.

We on these Benches believe that R&D tax credits for business are effective. However, yesterday’s announcement about the 40% intensity threshold for innovation, at a time when all types of businesses are focusing on surviving and coming out of this economic downturn, raises concern. High tech and innovation are vital for business, as I know better than most, but all businesses need to grow.

Four decades ago, I managed the new Cambridge research fund, which was the first UK seed corn investment fund for high-tech companies coming out of universities. In those early days, we learned one key fact: tech businesses are not understood well by mainstream banks and their investors. The lead time to market, and profit, is often slower than for less innovative businesses and far too many do not make it. Those elements still hold true. Can the Minister say how long the Government believe it will take before UK business sees a rate of return on these new, highly strategic R&D tax credits and why they made the decision not to fund those businesses just outside that innovation threshold, because now is also a crucial time for them to invest?

We also know that many businesses across the country are really struggling with their energy costs. Some have already had to close because their costs have gone up by such a large amount. This includes social care providers; as an aside, why was there absolutely no mention of social care in the Budget yesterday? The Government have delayed the reforms they proposed last year. They are vital but there was no news.

Methodist Homes, which has 88 care homes and 69 retirement living schemes, has found that its energy costs have risen from £5 million to £18.6 million in less than two years. Yet the support it received from the Government has reduced this burden only by less than £1 million. Social care settings were not included in the energy and trade-intensive industry support scheme, despite the fact that they run many medical appliances and cannot simply turn the thermostat down. Methodist Homes says:

“We were hoping for support in this Budget and are disappointed that our sector has been overlooked. The scale of the impact of the energy bill hikes should not be underestimated: without significant support on energy bills to the sector, we believe there is a risk of market failure and subsequent reduced provision for older and vulnerable people, with a devastating knock-on effect on peoples’ lives and patient flow in the NHS.”


What advice would the Treasury give to the many social care providers today, and what help can they receive to prevent this possible market failure and the crisis for our elderly in having nowhere to go that closures would create?

The Government’s priority of getting people back into work to really start the economy going again seems logical, at face value, but the details of how this will work are key. With 6.7 million people economically inactive, the Chancellor proposes a number of remedies.

On the childcare and nursery announcement about providing £4 billion to fund an extra 30 hours a week free for one and two year-olds, the Chancellor is also going to relax the ratio of staff to children in nurseries to help address staffing issues. In coalition, the Liberal Democrats pushed the Conservatives to start the investment for three to four year-olds, but we wanted it to go further and cover one to two year-olds too; the Conservatives disagreed. Let us be clear that, despite the Government claiming today the entire credit for the current system, the push inside the coalition for this was from Jo Swinson MP and we always said that it needed to be expanded. Our 2019 manifesto set this out and was derided at the time by the current Government.

There are holes in yesterday’s announcement regarding the proper funding of a scheme that is free to parents and does not penalise nurseries. First, the Government announced some funding, but it is not the full funding that is necessary. Since 2015, this Government have not increased the grant to nurseries in line with their actual costs. That is also why some nurseries are going out of business now.

Secondly, we have always wanted a workforce plan to professionalise and retain nursery staff and to increase the number of staff with a positive recruitment campaign. We know that effective early years free childcare and nursery support pays dividends in later education and employment. If these two issues are not fully supported now, it risks making the problems facing parents and childcare providers even worse, and many parents will find they cannot get access to the nursery places they need. Relaxing staff-to-child ratios simply is not the answer. Children’s safety should be our number one priority, rather than being reduced to a cost-cutting measure. All these key practical issues could be solved if the Government reversed the tax cuts of £4 billion a year that they have given to the big banks, on top of what they are offering now.

The proposal to abolish the work capability assessment and create enhanced universal credit for disabled people sounds attractive in theory. The WCA was—is—a flawed process and disabled people found themselves in the hands of assessors who did not understand, I am afraid sometimes deliberately, the barriers their disability presents to entering the workplace. However, the new system relies entirely on personal independence payments assessments working; they do not.

Assessors often underplay the impact of a person’s disability when they write up their recommendation. Worse, there is considerable evidence that some lie in the face of the evidence. How do we know this? An extraordinarily high percentage of disabled people whose PIP applications are rejected win on appeal, so the system is already failing. The mandatory review stage, internally in DWP, overturns only 12% of PIP cases but at the next stage, external tribunal, applicants have an astonishing 70% success rate. Are the Government planning to reform the PIP assessment process to ensure that these appalling practices cease and that people who generally need PIP support and who will get this new help will win, right at the start? By the way, there is a substantial bill to the state in fighting these appeals, and therefore to the taxpayer. Fighting appeals costs the DWP a shocking £50 million per year and if the PIP process is not sorted out, the new process will not work either.

The Government’s proposal to help those who are ill but not disabled back into work is interesting. But what happens to someone in a village who has a bad back, confirmed by their GP, and is offered a job in a town with no bus service from that village? They cannot get to that job on a bicycle. Can the Minister say if they will be sanctioned, or the doctor’s advice will take priority? DWP’s history on this is not good. We know that sanctions often do not work. There are far too many stories of despair at the draconian rules, and suicide.

Public services and their staff appear to have been almost ignored in the Budget—but then, they do not begin with an E. The Budget plans for an increase of around 1% per annum for public services over the next three years, but with promises already made for the NHS and social care—which, by the way, include the breaking news in the last half-hour of a deal for the nurses and ambulance workers—that is nowhere near what is needed for the NHS, given where inflation is.

It is not the NHS alone. All our councils, as well as police, fire and water, will struggle to deliver their statutory duties, let alone retain staff, if there is virtually no new money to pay for increases. The workforces are all struggling. There are record vacancies, particularly in the NHS and social care. We also saw a total failure to invest in fixing crumbling hospitals and supporting local health services, as well as public health. This shows that the Conservatives do not understand that you cannot get Britain back to work without fixing the real crisis in our NHS and social care.

Some good news over the last couple of months has given the Chancellor a bit of headroom, although economists are arguing that his is a high-risk strategy, given the volatility of the economy and global politics at the moment. Instead of supporting the most vulnerable—including ensuring that our public services can survive on more than 1%—and helping to kickstart the recovery that Britain so badly needs, the Chancellor chose to use the debt and deficit ratios for a number of temporary spending commitments now. The Government believe those will look good on election leaflets. The reality is that the Chancellor has built in a number of future policy liabilities, not just for next year but for the next Parliament. This will ensure that local government, the NHS and government departments all struggle even more to deliver core statutory services. It is not just a shame; it is shameful.