Budget Resolutions
Debate between Chi Onwurah and Danny Kruger(8 months ago)
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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
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.