Economic Growth

Debbie Abrahams Excerpts

Tuesday 14th November 2023 Commons Chamber

[Jeremy Hunt]

I simply say that we did not just build on that reform but improved it massively more than Labour proposed, because we turned it into the national living wage, which is far more generous than the original minimum wage.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

According to the House of Commons Library, in 2022 the tax burden on the lowest income decile was 25.5%. On the top income decile, it was 12.5%. Is that fair?

[Jeremy Hunt]

Because we believe in a progressive tax system, we introduced the changes that I just outlined, which mean that people on the lowest legal wage are getting 25% more after tax. That is a significantly bigger increase than for people on higher deciles.

One of the main things the shadow Chancellor mentioned was her amendment on the OBR. I understand the political game of trying to draw attention to the mini-Budget, but she should know that the OBR is already legally required to publish two forecasts a year, as will happen under this Government at successive autumn statements and spring Budgets. Today’s proposal is dangerous because, despite what she says, it would hamper the Government when acting in an emergency, as we did in the pandemic. I will tell her why. Instead of taking decisive action, Governments would feel obliged to enter a 12-week process with the OBR in case the outcome of the independent process that she advocates made any crisis worse by highlighting a significant loosening of the fiscal rules.

What is most extraordinary about the amendment is that, at the same time that the shadow Chancellor tries to claim the mantle of fiscal responsibility in this House, only this morning she briefed the papers that she wants to unfreeze income tax thresholds—a £9 billion commitment—and make full expensing permanent, which is a £10 billion commitment. That is all without an OBR forecast in sight. That kind of irresponsibility from Labour is exactly why we set up the OBR in the first place.

This is an argument not just about jobs and work but about poverty. Labour tried to eradicate poverty by tinkering with the benefits system and Gordon Brown’s tax credits. We all remember the “poverty plus a pound” idea, whereby if someone just below the poverty threshold is given £1, they are somehow magically lifted out of destitution. Instead, the Conservative Government have reduced the numbers in absolute poverty after housing costs by 1.7 million people by making work pay and by reducing the number of children living in workless households, because they are five times more likely to be in absolute poverty than households in which the adults work. Making work pay is a moral duty and not just an economic necessity, as only Conservatives understand.

--- Later in debate ---

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

After 13 tortuous years, the policy programme in the King’s Speech reaffirms once more that this Conservative Government are out of ideas and out of time. Unfortunately, the resurrection of a former Prime Minister will not save them here. Given Lord Cameron’s disregard for standards in public life, which included dubious dealings during the covid pandemic on behalf of Lex Greensill, who is still being investigated by the Serious Fraud Office, it says a lot that the Prime Minister is prepared to appoint him despite that.

The Prime Minister needs to take responsibility for the consequences of 13 years of regressive economic policies and economic mismanagement, which have led to a flatlining economy and the misery that so many people are facing in this cost of living crisis. Over the past 13 years, we have seen inequalities widen, as covid has so cruelly exposed and amplified. Once again, we have seen the north-south health divide revealed, with 17% more covid deaths in the north than in the rest of England. Some here will recall the Black report in 1982, which was quickly followed by the health divide report in 1984, where for the first time the extent of the north-south health divide was revealed.

Some 40 years on, the same thing has been allowed to happen again under yet more Conservative Governments. It did not just happen; Professor Sir Michael Marmot warned us about this in 2010, 2016 and early 2020 in his various reports about the UK’s declining life expectancy, which was driven by socioeconomic inequalities. He made very sensible recommendations to address the situation but, again, where were those in this King’s Speech?

Worryingly, recent analysis found that a deprived area in the north of England had a higher level of covid deaths compared with an equally deprived area in the south; there was an “amplification of deprivation” effect. Contrary to levelling up the country, this Government have not learned any lessons from covid and why the north was worse affected than the south, or why people on the lowest incomes, those who were disabled and those who were from an ethnic minority community were more likely to get sick and die. As the Northern Health Science Alliance’s recent report shows, the implications of these regional health inequalities on the economy are vast. Before the pandemic, people in the north were living, on average, two years less than people in the rest of England. In addition to living shorter lives, they were living in poorer health for longer, were at increased risk of losing their job because of that ill health, and were put on lower wages if and when they returned to work.

The NHSA estimates that £13.2 billion a year would be added to regional GDP if the health of the population in the north was equivalent to that of the rest of England, as a result of improved productivity. The disproportionate ill health that people experience in the north reflects decades of under-investment there after the decline of many traditional industries, the ensuing poverty and inequality that accompanied that, and the fact that this has persisted over many generations. Where was the cross-departmental working to ensure health in all policies in the King’s Speech? Where is the joined-up working with the devolved nations and regions? Where are the fair funding formulae, not just for the NHS but for education, local authorities and public services as a whole?

Economic inactivity across the UK has stayed at about 21 % for a number of years, with a short blip in 2022, with covid. The Government’s response to that should not be to penalise people who are sick or disabled by withdrawing even more social security support, for example, through sanctions or cuts to universal credit, as was reported yesterday, but to provide the right type of support for people in the right way. I am calling on the Chancellor to ensure that he increases social security support by at least inflation. I also hope he listens to the many charities in this area, including the Joseph Rowntree Foundation, the Trussell Trust and the Child Poverty Action Group, and supports an essentials guarantee pegging UC to the cost of basic essentials. Without that, I fear that the 200 claimant deaths that the Department for Work and Pensions has investigated over the past three years, which we know are the tip of the iceberg, will increase.

The Prime Minister said he wanted to lead a compassionate Government; ensuring a compassionate social security system that will help to reduce the poverty and inequality that millions are experiencing is just one example of how he can do that. The absence of this compassion for our fellow citizens, and indeed for our brothers and sisters overseas, is revealing uncomfortable truths about the attitudes of some to our common humanity. We believe that as human beings we are all equal, with equal rights, as set out in the universal declaration of human rights. It is evident not just in the covid inquiry, but every day in foreign and domestic policy, and in the policy programme in this King’s Speech, which embeds rather than tackles inequality, that for this Government some people are more equal than others.