Income tax (charge)

Bobby Dean Excerpts

Thursday 31st October 2024 Commons Chamber

[Bobby Dean (Carshalton and Wallington) (LD)]

The first Budget of a new Government is always significant, but one can rarely have been set in such tricky circumstances. This one comes following a series of major shocks—some of them external and unpredictable, as Opposition Members have said, such as the covid pandemic and the energy crisis, but some of them down to policy decisions, such as the Brexit deal and the mini-Budget. It also sits in the long shadow of the financial crisis and over a decade’s worth of cuts to public services. Growth has been stubbornly sluggish, the cost of living has eroded people’s wages, and as tax as a proportion of our national income has ticked up, the capability of many to contribute more has diminished. The result of all of this is that our public services are under strain, our public finances are under strain and the British public are under strain. It is in that context that I try offer a constructive opposition to the Budget today—pointing out what I agree with, what I do not and where I think it can be better.

Healthcare is the biggest issue for my constituents, so I will start there. At first glance it looks like we have a big injection of cash into the NHS. That is a relief. I have previously warned about the counterproductive nature of further austerity, and I am cautiously optimistic that we might escape it in this area. But the rate at which the cash is being injected, alongside the speed at which it drops off, presents questions about how well it can be spent and what the hangover from this sugar rush might be. That requires further scrutiny.

On capital expenditure more broadly, I am glad that we are waking up to the real calculation that needs to be made by seeking to borrow to invest in vital infrastructure. I made my maiden speech on Second Reading of the Budget Responsibility Bill, and I took that opportunity to encourage a change to the fiscal rules. That is exactly the kind of geekery that you will get from me, Madam Deputy Speaker, now that I sit on the Treasury Committee. Next week, I will go into more detail on “persnuffles”—PSNFL, or public sector net financial liabilities—and so on, but I will spare the House of that today. Overall, I am pleased to see a move in that direction.

I say “overall” because in my maiden speech, I used the example of rebuilding my local hospital as the perfect no-brainer project that could be unlocked by greater willingness to borrow to invest—St Helier hospital is older than the NHS itself, and some parts of the estate are literally crumbling and desperately need investment in major works and a new building—so I was disappointed that we did not even receive greater assurances about the progression of that project. I hope that the Health Secretary will soon return to the Chamber with further announcements.

The other big gap in the Chancellor’s Budget was on social care. As my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) said yesterday, it is still undeniably

“the elephant in the…waiting room.”

Without addressing social care, any investment in the NHS will be fundamentally flawed. Billions of pounds will pour in, but it will be undermined by the failure to get people who would be better treated at home out of hospitals. Of course, that has a knock-on impact on local authorities. I fear that the £600 million put forward yesterday to support councils on social care will be spread too thinly, especially when factoring in the impact of the national minimum wage and employer NICs, so I ask the Government to consider extending the public sector exemption to the care sector. The Budget means that councils that are already on the brink are going to have to make some pretty unpalatable cutbacks just to survive. It means that the mismatch between what taxpayers pay and the local services they receive will get worse. I hope that we get much greater clarity next year on local government funding.

My final point on the NHS relates to its potential to get our economy going again. Far too many people are economically inactive because of ill health. That places a huge strain on our welfare budget, and if we are honest, we do not really have enough data on what is driving it. I am worried that the Labour Government think that it is because we have suddenly become a nation of shirkers. There was tough talk yesterday of carrying over the Tory plan to get more punitive on work capability assessments. Chasing down benefit cheats might go down well with some newspapers, but that kind of demonisation of the sick is both shameful and ineffective.

Let me point to just one example. My dad, a proud scaffolder for most of his life, has worked his socks off from Monday to Saturday every week, but he is now in his late 50s, and that kind of work is not easy. He started having trouble walking and has had to stop work, and it took months to get a diagnosis. When he finally found out that he had a hip problem, the NHS basically told him to come back in a year, because it could not treat him until then. He asked what he was supposed to do about work, and was told that he would have to sign off sick. Do Members think that my dad enjoys doing that? He hates it; he is a proud working man being denied the opportunity to work. If the NHS could fix him today, he would be back in work tomorrow. Here is my big bet: there are far more people like my dad than there are the benefit cheats that Labour focused on yesterday. So let us have some compassion and focus on what will really get people back into work.

Before I bring my remarks to a close, I will touch on two big elements that I plan to take up further on the Treasury Committee. The first is tax. I want the country to start a more honest conversation about tax. I know what some Labour Members will be thinking, but the Liberal Democrats set out in our manifesto £27 billion-worth of tax and spend proposals, because we knew that public services desperately needed the cash injection. The Labour manifesto proposed only £5 billion in tax rises, but yesterday we were presented with an increase of £40 billion. I am willing to accept that a black hole was left behind, but those numbers do not add up. The Conservatives proposed tax cuts in their manifesto, and at the previous Budget, but it turns out that they were not based on realistic figures either. Tax is always something to be “hit by” in politics—always deemed a punishment instead of a contribution. It leaves in tatters the debate about what a fair distribution of tax is, and trust in politics plummets as a result. We all need to do much better.

My other point is about growth. We have had months of hearing this Budget being pitched as one of growth, yet the OBR thinks that its effect will be broadly flat—at least over the forecast period. The conversation around how to achieve growth must get much more serious. Growth in GDP—a very specific measure—should not be the sole way in which we evaluate the country’s success, and someone who believes that it should must at least recognise that growth has not only a rate, but a direction, and it up to us, in this place, to set that direction.

Finally, I was advised recently that the key way to critique the Budget is to look out for the big numbers in the Red Book that the Chancellor did not mention. Well, I will save that, but I will highlight a small number that the Chancellor did not mention: £40 million to trial a kinship care allowance. I moved into the care of my grandparents as a teenager, and they would have been immensely grateful for that support, so I welcome the trial and hope that it is a roaring success.