Budget Statement

Baroness Browning Excerpts

Thursday 21st March 2013 Lords Chamber

[Baroness Browning]

My Lords, I sense that I am going to disappoint my noble friend Lord Dykes. I am not going to be gloomy, but I have to say to my noble friend on the Front Bench that my mood today is cautious for the following reasons. My noble friend was not in the House when I made my maiden speech in 2010. I am sure that other Members present recall it very well. That was a joke. At the time, with the help of a friendly app, I gave the account of how much the country’s debt was when I stood up and how much it had increased when I sat down. I do not have that app with me today, but I took a quick look at it yesterday, and I see that we are still escalating, at £500 per second.

My concern today is primarily about the debt. There have been some very good things in the Budget. I support things that others have mentioned today, particularly raising the personal tax threshold to £10,000, and for small business, the £2,000 threshold before NI is paid by employers. I support that even more so than corporation tax coming down. For a lot of very small businesses, it is not quite the same as other companies coming in from outside and choosing to invest here. For small businesses, anything that comes off the bottom line before you make a profit is particularly helpful.

The Chancellor said yesterday that the Budget was,

“for people who realise there are no easy answers to problems built up over many years”.—[Official Report, Commons, 20/3/13; col. 931.]

There has been a flavour today, and it is certainly more noticeable in the House of Commons, that whenever the inheritance from the Labour Government to the coalition Government is mentioned, a sort of groan goes around, as if we really should not mention the problems that we inherited. I use this opportunity to remind the House that a Labour Treasury Minister left that note in the drawer in the Treasury for the incoming Minister that said, “There is no money left”. In fact, that was only part of the story, because it was not only that there was no money left, but there was a huge debt: a debt of such proportions, and rising, that it brought together two political parties which historically had been opponents but which felt that there was a need to work together in order to address the seriousness of that problem.

Now that the Chancellor has come forward with the Budget, I hope that people across the House will recognise that these problems are bigger than many that we have faced in our lifetime. It is as serious as that. It is also important that the Chancellor continues to spell out the size of the problem and what that means. My noble friend Lord Marlesford mentioned Cyprus. I quite agree with the comments he made about the foolishness of what was said about top-slicing bank accounts. If anything was guaranteed to cause a run not only on Cypriot banks but on banks in other parts of Europe, that surely was the trigger. We will see what happens there. However, it is the case that when Governments lose control of the finances of countries, they have no hesitation in popping their hands into the personal assets of the population. We have seen these measures and their effects before.

I was very encouraged that the Chancellor made reference to the work of the Monetary Policy Committee. He said that the new remit,

“makes it clear that the committee may wish to issue explicit forward guidance, including using intermediate thresholds in order to influence expectations on the future path of interest rates”.—[Official Report, Commons, 20/3/13; col. 935.]

I know that my noble friend on the Front Bench is only too aware that, given the state of government borrowing, it will require an increase of just a few points in interest rates for that to give us very serious problems indeed.

I was not looking to the Chancellor to produce an all-singing, all-dancing giveaway Budget, taking lots of risks. He needed to be cautious. However, I have one or two concerns about some areas on which I hope my noble friend will be able to reassure me. I am indebted to an article I read in MoneyWeek which outlined the history of the state pension. The state pension was introduced in 1909. The article states:

“Men aged 70 and above could claim between 2 and 5 shillings per week from the government”.

However,

“because back then the average working man could only expect to live to 48 years of age”,

the Government were not being that generous. Here we are, over a century later, and yet the liability to the public purse on pensions has resulted in an estimated £5 trillion of pension promises. I am not for one minute suggesting that we ban the state pension. However, I am worried about the implementation of Dilnot in putting a cap on the cost of care for elderly people. I know that that is not a popular thing to say. We would all like to do it and I am sure that most noble Lords have been through that situation on a domestic front with elderly relatives. It is very difficult. However, I must say to my noble friend that, rather like the state pension when it was first introduced, I am not convinced that we have the money, and particularly that we do not have the money at this moment, to underwrite that type of benefit in order to preserve the properties of the property-owning democracy. That is a strange thing for a Conservative to say. However, that I have to think twice about this shows the serious position that I believe the finances of the country are in.

I am equally concerned not that the Chancellor introduced measures yesterday to increase the housing stock—we all recognise the problems of the housing shortage—but that the taxpayer, not the Government, will underwrite mortgages for properties up to £600,000 for people who are not able to get a mortgage in the normal way. We know that the money supply from the banks is poor at the moment, and that that is affecting people’s ability to obtain a mortgage, but, as others have said, that will need careful handling if we are not to see some of the problems that we saw over the pond in America with what happened with its housing bubble.