Budget Statement

Baroness Kramer Excerpts

Friday 12th March 2021 Lords Chamber

[Baroness Kramer (LD)]

First, I join in the very warm welcome to our five maiden speakers today. I also join in the reassurances that a two-minute speech is not our normal operating procedure. I hope they will not be discouraged from active participation in this House, because we need their voices and their views.

The first role of this Budget was to provide ongoing support to the economy through to the end of lockdown. It has done that to a significant degree, but with some key and rather cruel exceptions, which I shall discuss in a moment. However, this Budget also needed to deal with the consequences of both Brexit and Covid and set in place the framework and strategy for long-term economic recovery. In that it has very largely failed.

In the short term, the Chancellor used the Budget to extend key programmes to support businesses hurt by Covid, and that is welcome. However, I still do not understand why most of the 3.8 million freelancers and contractors—hairdressers, builders, workers in the creative industries, to which many of your Lordships referred—have been excluded from any help so far, and remain excluded. Only 600,000 have been brought into SEISS; the rest remained completely abandoned. The Federation of Small Businesses has come up with sound schemes that would allow the Government to help the 1 million or so directors of limited companies, who are in effect tiny sole traders. The Chancellor refuses to include them. Frankly, that seems petty and vicious to me and confirms that the Treasury has a vendetta against that group.

The extension until October of the £20 uplift in universal credit is needed and welcome, but I do not understand why this stops when we will have so many people out of work as redundancies mount. This last year has demonstrated that universal credit needs that uplift to be permanent to be humane. Only one legacy benefit—working tax credit—gets an uplift. There is nothing, as many of your Lordships have pointed out, for disabled people and carers on legacy benefits. These people are really suffering. As I understand the Government, they are willing to give short-term help to people who are likely to return to the workforce, but for others their standard is very close to destitution.

The Chancellor said that he would come clean on the bad news. He talked about taxes—though he ducked the impact of the 5% increases in council tax—but he did not talk about cutting public spending plans. Only after the Budget did most people see that the day-to-day spend on public services will be £16 billion less than planned pre-Covid. This is despite long NHS waiting lists, the crisis in social care, children being in need of catch-up education and local authorities being under huge pressure. Disgracefully, the Government have now called for a below-inflation wage increase for NHS staff. I hope they will note the voices all over this House calling for a very different approach and proper compensation.

Even the plans to support economic growth are pallid. I have talked before about the huge shortfall in investment in the green economy and the digital economy, especially when compared to our economic rivals. Much of the investment by the new infrastructure bank will not be green—the Green Investment Bank was sold off by the Conservatives. The breakthrough fund is tiny, at £375 million, as is £500 million for e-cars and batteries—Germany has allocated €7 billion just for green hydrogen and €2.5 billion for batteries and charging infrastructure; France has allocated €7 billion just for electric vehicles. We do not have a proper plan to grow the economy and get to net zero.

Why is the “super-deduction” tax scheme to get businesses to invest limited to plant and machinery? It is an analogue proposal in a digital age. It should not exclude intangible investments, which are the backbone of the digital age. Even the reskilling and upskilling schemes reannounced by the Chancellor are inadequate to the task, when we have a generation of young people thrown off course by Covid

Eye-catching is not a substitute for meaningful. The Government reannounced their plans for freeports. The primary impact of freeports—and I have heard this from all sides of the House—is to displace jobs from one area to another. I suppose that is meaningful if the Government’s primary plan is to boost their votes in particular seats at the expense of other areas, but it is not a growth policy. As for Brexit, this Budget ignores it. When a close working relationship with the EU is needed to assure the future of financial services and the role of UK businesses in EU supply chains, we get little more than confrontation.

Small businesses are the backbone of our economy and no recovery is possible unless they recover. They account for six in 10 private sector jobs and many are very fragile. The Budget gives them too little too late. The recovery loan fund provides help for some, but many small firms need a mechanism to get out of debt. My party has called for a revenue loss scheme that would cover the fixed expenses of small businesses during the period when they have been forced to close. With that in hand, recovery and growth become possible.

I recognise that the Government face a tough fiscal position, but every part of our economy needs a genuine industrial and growth strategy. That is not delivered by this Budget.