Budget Resolutions

Debate between Christopher Chope and Jackie Doyle-Price

Thursday 7th March 2024 Commons Chamber

[Dame Jackie Doyle-Price]

I acknowledge that there have been cuts to local authority budgets, but the root of this is that so much local authority funding comes from the centre. Where is the accountability? As far as local electors are concerned, the council can spend only what it is given. Given the cuts, it is incumbent on councils to make sensible decisions. They cannot have their cake and eat it. They have to live within their means.

Given the rainbow coalition that the hon. Member for Easington (Grahame Morris) has just described, I suspect that there is an awful lot of playing to the gallery. We expect our councillors to be more mature.

[Sir Christopher Chope]

Does my hon. Friend agree that one of the problems is that we gave local authorities a power of general competence, and that we should have concentrated their mind on the things that they really have to do?

[Dame Jackie Doyle-Price]

Yes, I agree. With hindsight, that was a big mistake. It was done with the best of intentions. Given that local authorities were in a new set of circumstances, there was a desire to give them freedom to be more relevant and to have fewer constraints, but it has given licence to risky behaviour. We will see further consequences of that in due course.

Clearly, we would all like to be in a much better place with regard to the strength and growth rate of our economy and the state of our public finances, but we need to reflect that the last 15 years have been challenging. We have had three significant shocks that have cumulatively made us poorer than we would like to be—that is just a fact. The 2008 financial crisis had to be managed, and we have had the consequences of the pandemic; one way or another, we locked down our economy for the best part of two years, which has clearly had a massive impact on growth. The billions that we spent on keeping people in their jobs still have to be paid for. There is also Ukraine. Not only do we need to support the people of Ukraine, but we need to address the consequences for energy prices.

Returning to the need for responsible leadership, we should level with the public about what these things mean. The public are not stupid, and they are not deceived by spin and rhetoric. They know that these shocks have consequences. If we do not treat people with the respect that they deserve by levelling with them, they will show us the same lack of respect. They understand that this all needs to be paid for. If we do not face up to that, we will end up compounding the challenges created by those political choices.

I return to the financial crisis. Clearly, there was a need for a massive intervention to prevent the whole banking system collapsing, but we got addicted to quantitative easing. The correction that should have taken place following that financial crisis never happened, because, guess what, we do not want middle-class people who vote to have a reduction in the value of their property. By sticking with that policy, we ended up with interest rates that were artificially low for a very long time, which completely distorted asset class prices. That meant that everyone put all their investments into property, which has contributed to massive inter- generational unfairness, because people cannot now afford to buy a house. Does that not just show the short-termism and the failure to get real, explain things to the public and make long-term financial decisions that will do the most to grow this country? We all bemoan the lack of growth in our economy but if we have generated a system where there is more profit to be made by investing in housing than in business and wealth creation, this is where we end up. We all need to make a determined effort to be more long-term in our decision making and not just pursue the retail benefits of going up a few percentage points in the opinion polls.

We spent billions during lockdown to keep people in their jobs, but, again, that has to be repaid by the taxpayer. People do understand that; they know that nothing can be made for free. We also need to address the wider consequences of what we did in lockdown, because there is a longer-term impact on our nation’s productivity. We were all psychologically damaged by being taken out of social circulation for two years, and we have ended up with work practices that are not always the most efficient. Worst of all, we have an expectation that the state will deal with every problem. Again, we need to get back to having the leadership that says, “We’ve all, collectively, got to fix this problem.” Fighting covid is the equivalent of fighting a war. After the second world war, everyone knew that there was going to be a massive effort to get our country back together again. We have pretended, never more so than on public services, that the situation is easier than it is.

I hear over and over again about underfunding, but what does that mean? If there is not enough money to deliver what people are expecting, we have to be honest about that and cut our cloth; we have to recognise that nothing can be delivered without being paid for, so we must either increase taxes or look at what we are delivering. We all want to get to a position where we are much richer and can pay for a lot more, but concessions will have to be made before we get to that place after the shock we have had to deal with.

We also need to have a much more honest debate about what we should be spending our money on. The situation in Ukraine clearly illustrates the need to spend more on defence. Since 1989, we have taken our eye off the ball, but we now face a more challenging and unstable world. To keep our energy prices low and stable, the best measure is to invest in defence at an increased rate.

The two biggest challenges that face us are perhaps not the focus of mature debate or leadership by this place. First, there is no doubt that the public think we have too much immigration, on which we have become dependent as a source of cheap labour. From 2006, the UK’s openness to immigration from eastern Europe had a very positive effect on growth, but it was “growth” as in the overall quantum. The impact on individual productivity, earnings and GDP per capita was poor, because earnings were depressed. Overall, the resentment towards immigration comes from a lot of those people who found their earnings diminished as a consequence. We think about the “Auf Wiedersehen, Pet” generation of builders and labourers who earned lots of money by going overseas. Post-2006, they found that their earnings were depleted because people here were choosing to employ Lithuanians and Poles, because that was cheaper labour. Naturally, they will have a clear view that immigration has reduced their earnings.