Budget Resolutions

David Morris Excerpts

1st reading: House of Commons
Thursday 1st November 2018 Commons Chamber

[James Brokenshire]

There has been a recognition of the important step that has been taken in the Budget with the additional funding provided for adult and children social care and how that will make a difference. I will of course look carefully to the future in discussions I will have, through the spending review, on long-term financial support for our local government sector, the innovation and real value I see in local government—what it delivers for our local communities—and I will remain a proud champion for local government. But, as I said, local authorities also have a huge role to play in helping us to build the decent, affordable, secure homes that families and communities so desperately need and deserve. As the Prime Minister has said, this is our biggest domestic priority.

[David Morris (Morecambe and Lunesdale) (Con)]

Does not my right hon. Friend agree that more money has gone into services over the years and into communities, but these accusations of cuts are directly as a result of Labour’s great recession?

[James Brokenshire]

As I said at the outset of my speech, we have had to make those difficult decisions and I know so many people have contributed to this—the British public up and down the country. This Budget is indicating how we are now turning things around and looking positively at what our country can be and what it can do, and how we should be optimistic about our future.

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[Neil Gray]

The hon. Gentleman will see what we do later this evening. He will also see what we do with our reasoned amendment to the Finance Bill, which will be coming next week.

The Resolution Foundation has done a cumulative analysis of all the tax and social security decisions from 2015 to 2023. It shows that the people in the first five income deciles—the five poorest groups of people in the UK—are set to lose out by between £100 and £500 a year, on average and in real terms. Of course, some families will continue to get hammered to an even greater extent, as I have already pointed out. The top income deciles, however, will all see an increase in their incomes. So when the Chancellor chose to bring forward a tax cut that disproportionately benefits higher earners the most—instead of stopping the benefit freeze, which is the single biggest cash grab from low-income families, or stopping the most draconian cut to universal credit, which is the disgusting two-child cap, which targets children with austerity—it was clear that his priorities were skewed. He keeps up an income squeeze on the many to pay for the biggest tax cuts for the few. That might have been a line from the shadow Chancellor, but of course Labour is supporting this disgrace.

The tax shambles that Labour has got itself into was compounded yesterday by Scottish Labour putting out a statement asking the Scottish Government to do the exact opposite of what the Labour Front-Bench team here wants to do on tax. For Scottish Labour, it is the old Groucho Marx line: “Those are my principles and if you don’t like them, well, I have some more in London.” Of course, the Scottish Government are already plotting a different, progressive path on taxation, leaving 70% of all taxpayers paying less this year than in 2017-18. I am confident that that will continue in next week’s budget.

Let me return to the impact that Tory austerity is having on families. The OBR has warned that unsecured debt has risen as a share of household income. In other words, people are relying more on loans and credit cards to stay afloat. We know that from the evidence that the Trussell Trust and Citizens Advice have provided about food bank use and people seeking help. The OBR falls just short of saying that the growth outlook is dependent on an unsustainable debt-fuelled increase in consumption, but even its need to mention that in the report should be a warning to the Government and their Front-Bench team. Their squeeze on living standards and family incomes is pushing people into debt, and that has not just social but economic consequences.

Most fundamentally, we should struggle to believe that any of the Budget will be delivered anyway. The OBR has struggled to do its analysis because the Government failed to provide the figures in time. I wonder why that was the case. The Chancellor himself essentially said that his Budget was a wish list—and a wish list that is entirely contingent on Brexit. The OBR’s blue book quotes studies from the Centre for European Reform and the Centre for Economic Policy Research that say that, by the middle of 2018, the UK economy was 2% to 2.5% smaller than it would have been had it not been for the Brexit referendum. In other words, the Brexit referendum itself almost halved the already slow annual economic growth enjoyed by the UK. I doubled checked this with the Library, and UK annual GDP is around £2 trillion, so 2% to 2.5% of that is worth £40 billion to £50 billion. That is £40 billion to £50 billion lost from the UK economy thanks to David Cameron’s failed Brexit gamble and the Vote Leave campaign that broke the rules. The Schadenfreude for the Prime Minister, who claimed that austerity was over, is further compounded by the fact that the estimated cost of ending austerity ranged from £19 billion for the IFS to £31 billion for the Resolution Foundation. Had there been no Brexit, the Chancellor could have ended austerity while staying within his own fiscal rules and still had enough money to fix the roof while the sun was shining.

On Monday, the Chancellor let us all believe that the space he had to loosen the Tories’ vice-like grip on the financial purse strings was down to austerity economics. Let us have a little look at what the Chancellor did not say on Monday and provide bit of the cautionary detail referred to by the right hon. and learned Member for Rushcliffe. Many Tories point to cuts to corporation tax as the reason for greater-than-expected tax receipts. Sadly for them, that does not appear to be the case. Last year, the IFS discussed recent trends in corporation tax receipts and said:

“Weak investment post Brexit is forecast to boost receipts in the short run because it is expected that firms will make less use of tax-deductible capital allowances.”

Analysis in the Financial Times in April last year made basically the same point:

“Companies can offset some of their investments against their profits to reduce their tax bill. The idea is to give them a tax incentive to make more investment. For this reason the OBR has a rule of thumb that a 1 per cent increase in business investment leads to £50m less in tax receipts…But business investment fell by 2 per cent in 2016, according to the ONS. This was good news for the public finances, which received more in corporation tax revenue, despite being bad news for the overall economy.”

[David Morris]

rose—

[Neil Gray]

I am just about to wind up.

Business investment has continued to slow since 2016. The Office for National Statistics said it was down 0.5% in quarter 1 of this year and down 0.7% in quarter 2. What does the ONS reckon is a factor in that? Business investment is being held back because of Brexit. Of course, business investment is doing rather better in Scotland, with FSB Scotland’s quarter 1 2018 report quoting increases in business investment of 1.1% quarter on quarter. Perhaps that is the reason that the Chancellor has held back nearly £16 billion in fiscal headroom and refused to end austerity in this Budget. As the right hon. and learned Member for Rushcliffe said, the Chancellor knows that the fiscal position he has found himself in is neither intentional nor necessarily one to aspire to, because it is at least partially down to weak business investment. More austerity is not the answer. Austerity has failed and continues to fail, and as we know the Chancellor has little intention of ever creating that mythical Budget surplus.

As ever, this Budget is about choices; to govern is to choose after all. The Chancellor chose not to end austerity. Most departmental budgets are set to get hammered in the spending review. The Chancellor chose not to properly fix universal credit. Billions of pounds of cuts to low-income families will continue. The Chancellor chose not to use nearly £16 billion that he had spare; he has presumably squirreled that away as a further Brexit down payment. However, the Chancellor chose to bring forward a multi-billion pound tax cut which will disproportionately benefit those on higher incomes the most.

Now people in Scotland have their chance to choose. Can we really afford to keep ourselves aligned to this austerity-driven Brexit Britain, which is driving up poverty through this Government’s paucity of ambition for our people and isolating us from the rest of the world, or will we choose to regain the powers of independence and the power to choose the future for ourselves?

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[Edward Miliband (Doncaster North) (Lab)]

I am glad to follow the right hon. Member for Putney (Justine Greening). I want to focus on housing, which was where she ended her remarks. In particular, I want to focus on what the Secretary of State said in his opening speech, which is that this is the biggest domestic policy priority for the Government.

We should begin with a moment of candour. If we are looking across the piece at policy failures of Governments of both parties, we can see that this is the biggest single failure over the last generation. I am proud of some of the things that the previous Labour Government did, but we did not build enough homes, and this Government have not done so either.

I am serving on a social housing commission run by Shelter. It comprises residents of Grenfell Tower and people from across the political spectrum, such as Baroness Warsi and Lord O’Neill from the other place, and is precisely designed to try to fashion a new cross-party consensus on these issues.

Reading the Budget, I was encouraged by some of the measures in it. It mentions the broken housing market, to which the Secretary of State also referred today. I must confess that I am old enough to remember when such talk was part of living in a Marxist universe, but it is genuinely good that things have changed. It is a positive step that the Government have lifted the local authority borrowing cap, and indeed that they are providing housing associations with some money to build. They say that their measure on council house building will mean that 10,000 council homes are built each year, and that the housing association measure will lead to 13,000 being built over three years. The question at the heart of any analysis of this Budget on housing is: is that enough? I argue that it is not nearly enough.

Let me provide some context to this. The Secretary of State said that he wanted to be like Macmillan. Indeed, I think all of us can praise what Harold Macmillan’s Government did. Let me tell the House about the scale of building in that era. The 1951 to 1955 Government built an average of 193,000 social homes each and every year. That is more than this Government have built in the last seven years. Each and every year, the 1955 to 1964 Government built 116,000 homes, the 1964 to 1970 Government built 143,000 homes, and the 1970 to 1979 era saw the building of 116,000 homes. We are way off that.

[David Morris]

Does the right hon. Gentleman not agree that the Macmillan era was post-war, when Britain was bombed out and we had the Marshall fund to back us up?

[Edward Miliband]

I will get to the question of funding and whether it is an investment in the future. The figures I have read out are actually flattering to the era since 1979. I am genuinely saying that this a cross-party failure, because under the right to buy we have sold off 2 million homes since 1979—far more than we have built.

The question is, what do we do? My argument is that this is not just about a change in policy. It is actually about a change in the whole philosophy on social housing. I argue that there are three principles that have been in effect since ’79 and need to be replaced. These principles were brought in by the ’79 Government, but have not fundamentally changed.

The first principle is that the market will provide; the market will build. We know from experience, despite the many efforts of different Governments, that the structural barriers in the market such as developers, incentives to build for the high end of the market and the cost of land mean that the market will not provide sufficient housing at the scale and speed required. There is no historical evidence to suggest otherwise. Indeed, the figures show that it is not in the private sector that the failure to build is most pronounced compared with the 1970s; it is actually in the social housing sector.

The thing that we have all missed is that the social housing sector is the bedrock of an effectively functioning housing market. In other words, it does not just benefit those who live in social homes. It benefits everybody, because it is more likely to keep prices down and avoids some of the problems that we see in the private rented sector. The Government have to be fair and recognise—at least at the level of principle—that saying the market will build will not cut it any more, and that the Government need to play a substantial role when it comes to building.

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[David Morris (Morecambe and Lunesdale) (Con)]

Morecambe has had more money given under this Conservative-led Government since 2010 than it has ever seen before. We have had delivered, by a Conservative-led Government and a Conservative county council, £130 million for a link road, £11 million for sea wall defences, £4 million recently for a bridge upgrade, and a collective package of upgrades to schools and NHS services that has tipped over into well over £1 billion-worth of spending in my area. That is not to be sniffed at, and it has been happening for years. Recently the Chancellor decided to award Morecambe £100,000 for a feasibility study for a new Eden project—Eden Project North—to be built there on a marine basis. That would be a huge game-changer for Morecambe. It would solve all the problems that Morecambe has, and there are very few of them left to go. This shows Government intention to invest in a seaside community that was on its uppers under a Labour Government.

My people in Morecambe are very proud of their town, and they are really happy about what this Government have done. We have 3.3 million more people in work. The UK economy has grown in 22 consecutive quarters since the great Labour recession. Some £7.2 billion has been given to first-time buyers through the Help to Buy equity loan scheme—that cannot be a bad thing—and 94,000 social housing tenants have been helped to buy their homes since 2010, which is more than in the Labour years.

There are more people in work and earning a living wage in Morecambe than Lancaster. Jobcentre workers told me recently that 87% of steady full-time jobs are now in Morecambe, compared with 72% in Lancaster. That was the other way around for many generations. We have had a port upgrade in Heysham, where I live, because the port accepts that Brexit is not a problem and that we will be getting more trade.

Universal credit was rolled out in Morecambe two years ago, and it has been very successful. Gary Knowles, the local Department for Work and Pensions manager, and his excellent team at the jobcentre have a very low percentage of problems, given the high demand from applicants who want to sign up for UC in the Morecambe area. The minimum income floor does not apply for a 12-month period under UC, and that now applies to the self-employed. As a former self-employed man, I should know what that means. The Government have given an additional £1.7 billion to increase the work allowance by £1,000 a year, which will mean an extra £630 per year for 2 million households.

I turn to the high street, and at this point I have to refer to my interest: I used to be a shopkeeper. Shops have always been sprouting up out of town, and there is a reason for that—the shops in town centres are too small for the capacity of businesses. However, niche businesses do flourish there. This Government have looked at that and lowered the rates so that shops can flourish. Again, that cannot be a bad thing.

This Conservative Government have never let Morecambe down, and this Conservative MP has never let Morecambe down. Things have got better under this Conservative MP than they ever did under the Labour Government, when money was flowing out of the coffers and my town went down the pan. Morecambe is open for business and getting better, and during my tenure we will show what the north-west is made of.