Budget Resolutions

Chi Onwurah Excerpts

Thursday 7th March 2024 Commons Chamber

[Rachel Reeves]

All I would say to the hon. Gentleman is: put that on your leaflet! The fact is that nurses, teachers and plumbers are paying more tax in Scotland. At the same time, the energy giants that are making huge profits from the windfalls of war will pay less tax under the SNP. That is its record, and it should be ashamed of it.

Labour is committed to investing more in our schools and hospitals. That was a priority before the Budget, and it remains a priority, because public services are on their knees after 14 years of Conservative failure. Labour believes in aspiration for all our children, and we will not stand by while the roof falls in on state education under the Tories. History is repeating itself: children are again being taught in portacabins, as they were when I was at school under a Tory Government. When the Tories undervalue our young people, they are squandering their potential and undermining our whole country’s future. That is why the next Labour Government will close the tax loopholes enjoyed by private schools. The money raised from ending their exemption from business rates and VAT will instead go where it is needed—to help the 93% of children in our state schools.

I will always be clear that all the policies in our manifesto will be fully costed and fully funded. Now that the Tories have U-turned on their policy on non-doms, which we welcome, we will do the necessary work to show how our plans will be paid for. We will set that out in an orderly and responsible way. Our public services are in a mess under the Conservatives, but a Labour Government will begin to turn them around, give an immediate injection of cash to our schools and our hospitals, and tackle Tory waste, through a serious plan to grow our economy and provide the sustainable finance that our public services need.

It takes some nerve for the Chancellor to wag his finger at local councils this week, when the Tories and the Prime Minister have squandered billions of pounds of taxpayers’ hard-earned money. Who has used excessive numbers of management consultants in central Government? The Tories. Who signed the cheques and lost an additional £10 billion through dodgy personal protective equipment contracts? The Tories. Who left the vaults open, so that organised criminal gangs could help themselves to £7 billion of public money through covid fraud? The Tories. Who made a costly mess of HS2? The Tories. Who handed £500 million to the Rwanda Government, and has nothing to show for it? The Tories.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Will my right hon. Friend give way?

[Rachel Reeves]

Maybe my hon. Friend has another example.

[Chi Onwurah]

My right hon. Friend is absolutely right, because every area of Conservative spending has a dimension of waste or profligacy. Does she agree that the £15,000 of taxpayers’ money spent on settling the attack made by the Secretary of State for Science, Innovation and Technology on a British scientist—an entirely unfounded and defamatory attack—would have been so much better spent supporting British scientists to drive British economic growth?

[Rachel Reeves]

I think taxpayers will find it pretty grating to see their tax bill go up, when that money was spent so callously and casually. Meanwhile, the Chancellor failed to do the right thing yesterday, when he did not set out in the Budget compensation for those affected by the infected blood scandal or for wrongly accused sub-postmasters. That is an abdication of responsibility, and a betrayal of all those who have fought for justice for so many years, and it will not be forgiven.

I am under no illusion about the scale of the challenge that we may inherit, or the scale of the task of rebuilding our economy and country. Labour’s economic plan will take Britain from instability and short-termism to a mission-based Government, prioritising economic growth and security for families and our country—a Government built on the pillars of stability, investment and reform. Stability is brought about by iron discipline, guided by strong fiscal rules and robust economic institutions. Investment is brought about by working with the private sector, so that we can lead the industries of the future through a modern industrial strategy. A new national wealth fund will invest, alongside business, in our automotive sector, renewables-ready ports and the future of our steel industry. Reform starts with our planning system; we will take on vested interests to get Britain building again, support working people in developing the skills that they need to thrive in the changing world of work, and make work pay with a genuine living wage and a new deal for working people. Our economy needs change. Britain needs change.

The verdict on the Budget is in. There is no long-term plan for growth, and leading business organisations agree. The Institute of Directors said that the Budget

“fell short of delivering a comprehensive plan for sustainable growth.”

The British Retail Consortium said:

“the Chancellor has done little to promote growth and investment”.

The Trades Union Congress has highlighted that real pay is still below where it was in 2008. Whichever way we look at it, the Tories have failed on the economy. The damage is done. Nothing this week will compensate for the fact that people are worse off under the Tories. Taking £10 and handing back £5 is a swindle, not a giveaway. Working people pay more, pensioners pay more and homeowners continue to pay more. Reckless and desperate promises are repeated.

The lesson from the Budget is simple: the Conservatives cannot be trusted with the economy. The questions that people ask ahead of the next election are simple: are my family and I better off after 14 years of Conservative Government? Do our schools, hospitals, police and transport work better than when the Conservatives came to office 14 years ago? Frankly, does anything in our country work better than when the Conservatives came to power? The answer is a resounding no. If the Tories had any confidence in their plans and their record, they would name the date of the general election. It is time for the British people to give their verdict on 14 years of Tory failure. Only Labour can provide the change that our country so desperately needs.

--- Later in debate ---

[Rachel Maclean (Redditch) (Con)]

rose—

[Chi Onwurah]

rose—

[Mel Stride]

I am being asked to conclude, so I think I need to do that. [Interruption.] I have been pretty generous in giving way to just about everybody who has sought to catch my eye.

This is a Budget that rewards work and will grow the economy. It comes on the back of a once-in-a-century challenge that this Government have met. We have turned the corner, and this Budget takes us further still. It rewards work with lower taxes, it delivers growth, it makes work pay, and it ensures a brighter future for us all.

--- Later in debate ---

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Thank you, Madam Deputy Speaker; I shall of course be guided by you.

It is now almost 14 years since I first had the immense honour and privilege of being elected to the best job in the world—Member of Parliament for Newcastle Central —but over those 14 years it has been heartbreaking and outrageous in equal measure to see the consequences for my constituents of Tory economic failure. First, we had austerity: the cruel gutting of communities, public services and jobs, which dampened growth instead of driving it. Tory austerity is why the Resolution Foundation tells us that the average wage will not return to its 2008 level until 2026.

We then had covid: a global pandemic, but one that disproportionately impacted the very communities—the poor, the black and minoritised, the unwell and infirm, and the disabled and disadvantaged—which austerity had undermined and weakened, while straining our NHS to breaking point, yet members of the Conservative Government saw it as an opportunity to help their mates get rich. My hon. Friends in the Opposition have destroyed the fake Tory fig leaf that everything was rosy before covid.

Then we had a cost of living crisis made in Downing Street, with energy and food prices, mortgages, rents and transport costs all soaring. The Budget was the Tories’ last chance to try to repair the damage they had done and stop the rot, and what did we get? More of the same failed economic policy that has plunged us into recession.

My constituents work incredibly hard to provide for themselves and their families, and local businesses are also working hard through the Tory economic gloom. We can see that in our fantastic start-ups, spin outs and scale-ups and Newcastle’s world-renowned hospitality sector, which offers so many from all over the world a great Geordie welcome as well as adding £361 million of gross value added each year to my constituency. I note that UKHospitality said that the Budget offered little for this sector with so much growth potential.

Labour Members believe that work should pay; the Tories’ broken economic model increasingly means that, too often, it does not. The average person in the north-east is £11,500 worse off since 2010 than if the economy had grown at the rate it did under Labour. Shamefully, child poverty across the north-east of England has climbed by more than a third since 2014-15 according to the End Child Poverty coalition. Increasingly, those children’s parents are in work. The North East Child Poverty Commission found that the proportion of north-east children in poverty who are from working families has risen from 56% to 67%—more than 10 percentage points—in under a decade. I put on record my gratitude to both those organisations and to other researchers for their work. I only wish that the Government would take their evidence as seriously as it demands.

Madam Deputy Speaker, I would like to wish you and all women, as well as our allies, a happy International Women’s Day for tomorrow. I also want to highlight the particular struggles of women in my region. Our economic troubles and the running down of public services have meant that many Geordie women face spiralling problems with debt, poverty and housing and are struggling to access mental and physical healthcare. In its recent report, Changing Lives, a charity working with vulnerable women in the north-east, found that

“women living in the North East are more likely to live shorter lives, to spend a larger proportion of time living in poor health, and to die prematurely from preventable diseases.”

At-risk women in the north-east are 1.7 times more likely to die early as a result of suicide, addiction or domestic murder, compared with the average for England and Wales.

That is just a disgrace—a Tory disgrace—and it perfectly demonstrates the human cost of bad government. If we had had Labour’s workforce plan in place, the NHS back on its feet and able to provide consistent, high-quality care and productivity improvements, Labour’s new deal for working people to give people security in work, and action on housing, poverty and bills, the difference that that would have made would have been life-changing and lifesaving.

I was disappointed to hear nothing in the Budget about the Government’s approach to the loan charge scandal. A constituent who retired after a lifetime of hard work is being bombarded with letters from HMRC threatening him with retrospective demands and a possible bill of £50,000—we can imagine how he is enjoying his retirement. The issue absolutely needs an independent review.

The Chancellor and the Government have failed my constituents, failed to make work pay and failed to get the economy growing. The tax burden is at a 70-year high, so I of course welcome the cut to national insurance contributions. However, Rishi’s tax double take means that households will be £870 worse off on average.

I also welcome the new devolution deal for the north-east, but my constituents would be much better off if the Conservatives got the basics right in our economy, providing the vital change we need in housing, energy, industrial strategy, transport and so on. The North East Mayor, who will be elected in May, will have a difficult job to fix the Tory’s mess. Fortunately, Kim McGuinness, our excellent Labour candidate, is determined to hand power to our communities and to create real opportunity for everyone who lives in the north-east, and a Labour Government would be the partner she needs.

This Budget has been determined by politics and by attempts to manage Tory divisions and to desperately save the skin of Tory Members, instead of doing the responsible thing. Look at the way the Government have adopted some of the Opposition’s proposals on non-dom tax regimes—not as part of a long-term plan, but because they have been bounced into it.

My constituents do not care about Tory infighting; they are sick of it. They want to see real action to kick-start our economy through stability, reform and investment. That is what Labour is offering. Our industrial strategy would bring together our excellent universities across the north-east, our skilled workforce and our deep capital markets to turbocharge growth in constituencies such as mine. In fact, we have a plan for the life sciences —“A Prescription for Growth”, which I highly recommend —to help grow the economy and get the NHS back on its feet.

Labour would support businesses in Newcastle through our plans on business rates, skills and the planning system and would get Britain building again. We would bring bills down by switching on Great British Energy, a new British company that will create new, high-paid jobs across the north, reduce bills and leave us less dependent on tyrants such as Putin.

This morning on Radio 4’s “Today” programme, the presenter interviewing the Chancellor set out just some of the facts and figures that demonstrate Tory economic failure. The Chancellor responded by saying that such a characterisation was unworthy of the BBC—well, he had just been called “the fiscal drag queen”, which clearly annoyed him, but that is no excuse for saying that facts, figures and evidence are unworthy of our national broadcaster. The Government would do better in reminding their Ministers—in particular the Secretary of State for Science, Innovation and Technology, whose libel bill the taxpayer has just paid—that facts matter.

Labour’s evidence-based, mission-driven Government would give the people of Newcastle upon Tyne Central our future back. Yet again, this Budget will only hold them back. We need a general election, and a change of Government.

[Danny Kruger (Devizes) (Con)]

I have enjoyed the debate, which has been useful; we have heard important contributions from both sides and I welcome the constructive tone. However, I do think that the comments just made by the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) reflect a Labour party committed to ever-increasing public spending while simultaneously complaining about the high tax burden that the country labours under. That comes without any commitments to reduce taxes further than we are—in fact, the party just makes ever-increasing spending commitments.

[Chi Onwurah]

Will the hon. Gentleman give way?

[Danny Kruger]

I am very happy to.

[Chi Onwurah]

When did I ask for increased spending? Will he clarify that now, for the benefit of the House?

[Danny Kruger]

Well, we heard repeated complaints about the underfunding of services and the requirement for improvements. That is what the hon. Lady believes in. If she is happy to say that she does not believe in additional spending, I will be delighted to hear it.

[Chi Onwurah]

I thank the hon. Member for giving way again. As he knows, we have set out our spending commitments, and crumbling services are a consequence of the Tories’ absolute failure to give growth to our country and our fantastic businesses, which can drive economic growth across our country.

[Danny Kruger]

We have made repeated investments in public services, but I recognise that there are all sorts of problems across our country. On the subject of crumbling, there is also a major hole in the Labour party’s public finance plans following yesterday’s Budget. We look forward to seeing how it will plug the new hole in its plans.

I made the remarks because I think there is a common recognition across the House that improvements need to be made to our economy. There have been significant challenges to the UK in recent years. I was pleased to hear yesterday that significant improvements are now under way: inflation is falling, wages are rising, mortgage rates are starting to come down and debt is on track to fall. All that is welcome.

I also very much welcome the combination of the autumn statement and yesterday’s Budget, which together have seen cuts to national insurance totalling £20 billion, benefiting the average worker by over £900, and a tax cut of around £650 for the average self-employed person. I recognise the points about fiscal drag; we have to acknowledge the reality there. But given that the thresholds have not been raised, the tax reductions are welcome.

I particularly welcome the changes promised for the high-income child benefit charge by the raising of thresholds and halving of the rate at which child benefit is withdrawn. That important step will benefit some families by an average £1,260. That is welcome, as is the commitment to end the unfairness on single-earner families altogether by April 2026. I welcome those significant developments.

I particularly welcome the extension to the household support fund. I have been calling for that on behalf of Wiltshire Council, to which I pay tribute for its really good work in supporting households in need with essentials such as food and utilities. That extension is a really important development. The Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), made the interesting suggestion that the household support fund should be made permanent. I recognise that there are voices on my side of the House who think that it is only a sticking plaster measure during these difficult times. I actually agree with the Chair of the Select Committee: it is important to ensure that local authorities have discretionary funding that they can use. They should be accountable to their local residents for how they use that money. I would like to see the money raised locally as well, but the principle of a discretionary fund for local government is important.

There are obviously still significant concerns about the state of the economy, and I am somewhat concerned by the obeisance and genuflection that the Chancellor feels obliged to make towards the Office for Budget Responsibility. I recognise that he would have liked to have done more in the Budget if the OBR had allowed him. It is the wrong way round to outsource responsibility for fiscal forecasting to an unaccountable body in this way. It is wrong that he regards the only measure of the Budget’s success to be whether the OBR gives it a green light. Fundamentally, we are restricting the reforms that we need to make in this country.

I come to a broader concern. I welcome the Budget, and all its measures are good and helpful, but there remain profound and powerful structural problems with the model of our economy, all of which started before we came into power. It is a cross-party responsibility. The Liberal Democrats, the Conservatives and Labour are all responsible for the structure of the economy under which we operate in this country, and I will describe it briefly in the following terms. We have had cheap money and decades of artificially low interest rates, followed by money printing from the Bank of England that went on too long, creating chronic asset inequality in our country. Essentially, there has been a transfer of wealth from poor to rich. We have had cheap labour, creating low wages, and we have pressure on housing, public services and community cohesion that has been caused by importing millions of people from abroad to work for low wages in our economy. We have an economy built on cheap imports: we burden our own producers with costs while we import cheap products from abroad that are made to lower standards. I regret all these conditions in our economy.

The result is huge geographic inequality, a long tail of unproductive businesses and, I am afraid, too low real-terms wage growth. I suggest that all this is endemic to the economy, which was made by Labour and the 2008 financial crisis, but which has not been sufficiently addressed over the last decade and a half by the Conservative Government. We fixed the damage that was done to the public finances under Labour—imagine what the party would have done if it had been in power after 2010—but we did not change the economic model.

I am glad the Budget indicates that the Government are committing to reforms in the right direction. I particularly welcome the recognition that debt will fall during the next Parliament if we are in charge—it is impossible to see how the Opposition will get debt falling without policies to drive growth and improve public sector output. That is a good commitment. I also welcome the commitment to improve public sector productivity, and my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown) made some very important points about the way in which we need to improve output and efficiency in the NHS. I particularly welcome the Government’s focus on improving private saving and investment.

I want to quickly mention the Wiltshire economy. In my wonderfully beautiful, traditional and old-fashioned- looking county, we have some of the most hi-tech businesses in the UK producing really innovative products for the global economy. A highly positive story is developing in Wiltshire, led by the agritech sector. One of the great benefits of our new Brexit freedoms is that we can liberalise and enhance the opportunities for biotech and agritech, but we need more, and I will quickly run through what they are.

First, I welcome the minor uplift of £5,000 in the VAT threshold for businesses. I regret that we could not do more, and I particularly regret that the reason we could not do more is, as I understand it, due to the Windsor framework. We are effectively tied into the EU’s VAT regime, because we do not want to diverge from Northern Ireland in GB—quite rightly—but I regret that we could not raise the VAT threshold to significantly more than £90,000. We should find a way to make that possible.

Secondly—other hon. Members have made this point powerfully—we need to grow our rates of house building significantly. I would like to see more new towns being created. I would also like to see land reform to get the cost of land out of the price of housing, which seems to be the fundamental blocker, particularly on housing in rural areas. We should greatly enhance and expand community land trusts, which have such a useful role to play not just in urban settings but in rural settings, to create low-cost, affordable housing for local families.

We also need to reform the labour market. Today’s debate on enhancing the world of work is so timely and relevant to the reforms that the Government are trying to bring about. I welcome all that the Secretary of State for Work and Pensions, whom I met this week, is doing to get more people into work. We have a chronic problem with economic inactivity. Significantly, millions of people are not able to contribute to the economy and to their own prosperity. There are major disincentives to work and train, fuelled by our high-migration economy, which is simply a subsidy to employers at the expense of working people.

It is very good that the Government are focusing on GDP per capita, which is the fundamental measure, despite the poor record of GDP per capita in recent years, as Opposition Members have pointed out. There are many reasons for that poor record, but the primary reason is the high rate of migration. Low-paid workers have driven down contributions and income per capita. I welcome the work that the Government are doing to get people off benefits and into employment, particularly through the WorkWell programme.

I finish with a plea on behalf of Wiltshire and the whole country. More than anything, I regret the Budget’s slow and frankly insignificant uplift in defence spending. It is a good thing that more money is now going into the defence budget, and I welcome the commitments that have been made in recent Budgets, but the increase of less than 1% in the defence budget yesterday was disappointing, given the current global crisis and the historical underfunding of our armed forces under many Governments. I am proud to represent the British Army’s largest garrison, on Salisbury plain. It would be a great thing for the nation and for Wiltshire to see the significant investment in the Army that will be necessary for our security. It would also boost our economy.