Budget Resolutions
Drew Hendry Excerpts(1 month, 3 weeks ago)
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Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Traditionally, at this point I would thank the Chancellor for advance sight of his redacted statement, but having seen the statement, I realise that I was given an entirely different redacted document. Not to worry, as we have seen all the details in the press over the past day or so. Seeing the unredacted words would be nice, but it is not essential for this response.
I thank the Chancellor for his courtesy in staying in the Chamber, unlike some of his colleagues, to listen to the words of the third party. That does not happen all the time, but it is very good practice for those who might well be in the third party after the next election.
The Chancellor said that his autumn statement was a “statement for growth”, but what have we seen since then? Growth has gone down; it is has grown into recession. Today, the OBR says:
“Having steadily declined since early 2022, real GDP per person is forecast to trough at 1¼ per cent below its pre-pandemic peak in the first half of 2024.”
So that was not a statement for growth, and this is not a Budget for growth.
I start by welcoming some of the measures that the Chancellor has announced today. He at least addressed the non-dom status, which is a positive move forward, although he gave them the softest possible landing. He announced changes to child benefit that are very good. We must give credit to Paul Lewis for his campaigning on that issue. He tweeted today, as other members of the press have done, that he was tipped off by the Chancellor that the change was coming. The move on lifetime ISAs is welcome. The R&D support for the aerospace industry, although it is the smallest possible step that could have been taken, is welcome, as is any further investment in life sciences.
The Chancellor set a lot of store on productivity today—he is going to solve everything with productivity. Yet if we look back over the past 14 years, and indeed before that, we see that the UK has been exceptionally poor on productivity. The figures on productivity have not budged at all. [Interruption.] The Chancellor is saying, “What about Scotland?” He should look at the figures for Scotland over the past 14 years and then we can have that debate.
The Chancellor said that vacancies would be easy to fill through immigration, but his party, joined by the Labour party and now the Lib Dems, imposed Brexit and stopped free movement. Of course it would have been easy to fill vacancies with skilled people who want to do the jobs we have, including vital jobs in tourism, hospitality, the national health service, the care service and across many other sectors, if that possibility had not been taken away by decisions made in this place.
Economists who are looking at his national insurance cuts have said that the gains will be cancelled out, as they were last time, by the freeze on thresholds. There is very little for people on low incomes, and zero for 17.8 million people on less than £12,750 a year, so there is not a lot of sense in that measure. He boasted that he had taken over as Chancellor when inflation was at 11%, but we must remember that the Tory Government were in charge when inflation was at that level. The problem with inflation is their child. They also suggest that 4% is somehow a triumph, but 4% inflation means prices still go up. Let us face it, this is a last-ditch, tone-deaf approach to desperately try to recover in the polls. It is the embodiment of putting the Tory party before the people.
Where are the real measures that would have a real impact on the cost of living, which is what people need the most direct help with? For those living in fear of their energy bills, who are being told, once again, that their direct debits are increasing, slicing more off their take-home pay, none of this is more than cold comfort. For those staring in disbelief as they realise that their shopping bills are more than 25% higher than they were a couple of years ago, this will stick in their throats. For those trussed to their new, much higher mortgages and rents directly because of reckless decisions made in this place, the walls are closing in.
On public services, the Chancellor has failed people again. Paul Johnson of the Institute for Fiscal Studies has noted that the Chancellor would have to explain how public services, which are already on their knees, could possibly take more cuts. Let us not forget the £19 billion he slashed from public spending in the autumn statement. The IFS continued:
“The economic case for tax cuts is weak. The public finances remain in a poor position.”
The Chancellor today promoted a further £20 billion cut, according to the IFS. Public services have been left struggling after 14 years of underfunding, economic chaos and blunder, from mini-Budgets to Brexit, colossal wastes of hundreds of billions of pounds, fraud and cronyism. Public finances are now so pared to the bone that we can see the marrow. Is it any wonder that a growing number of English councils, whether run by the Tories, Labour or the Lib Dems, are now effectively bankrupt?
People in Scotland needed a Budget that delivered funding that would allow investment for our public services, including real investment in the NHS, that supports families with the cost of living, and that properly invests in green energy, not another austerity Chancellor taking an even bigger axe to investment than his predecessors.
When it comes to the election in Scotland, those people will have their say and make their choice. There is a clear choice between that and the SNP’s calls to invest in public services, the economy and our communities, in our town and city centres, in our manufacturing future and our rural areas, in our tourism industry, in our food and drink sector, and in the priorities and values they hold dear. Those will be the major dividing lines at the general election.
The Scottish Government are committed to protecting people from some of the worst Westminster policies and are making a real difference to the lives of people in Scotland, despite their limited powers. The Prime Minister may be under the impression that the cost of living crisis is easing, but that assessment will be a slap in the face for households across Scotland that are still facing the consequences of over a decade of Tory cuts and mismanagement of the economy. People will see straight through attempts by the Chancellor to make up for falling living standards, underfunded public services and wage stagnation with these poorly timed national insurance cuts, which will not improve overall standards of living for most households.
Leaving aside the Chancellor’s failure to deal with fiscal drag, which wipes out much of the benefit of the NI cuts, the vast inequality in benefits for the better-off and the geographical impact that means London benefits much more than anywhere else, he cannot escape the fact that the Government have now imposed the highest tax burden since the end of the second world war.
I want to tackle the issues of tax in Scotland. Our progressive moves in Scotland mean that not only do the majority of people pay less tax, but they also pay far lower council tax than in England. They are supported with free prescriptions, do not have to pay tuition fees and get the game-changing Scottish child payment and more. That is about doing what is right: investing in our people, not leaving them high and dry.
While the Tories cut public funding in England, the Scottish Government’s progressive approach to income tax has raised significant revenue to invest in public services in Scotland. The Scottish Government’s tax regime means that, on average, households in the lower half of the income distribution are £400 a year better off than they would be in the rest of the UK. Around 58% of households are better off under the Scottish tax and social security system than they would be in the rest of the UK. Taking a different, progressive course on income tax in Scotland means that the Scottish Fiscal Commission estimates that in 2024-25 the Scottish Government will have around £1.5 billion of additional revenues, compared to if they had followed UK Government tax policies.
The Scottish Government continue to reaffirm their social contract with the Scottish people, with people across Scotland reaping the benefits through free prescriptions, free university tuition, free school meals, free bus travel for under-22s and free dental care until 26, as well as publicly owned rail services, free childcare for two, three and four-year-olds, and seven additional welfare payments, including the revolutionary Scottish child payment.
Before I move on to other economic matters, the Chancellor mentioned freezing tax on Scotch whisky. As in the autumn statement, we say that is not enough. That industry is massive for Scotland. Scotch whisky is a massive export for both Scotland and the UK, yet it is still taxed at around 70%. We needed a cut in that tax today so that the industry could deliver its potential. The fact that that was not addressed in the Budget is a shame on the Government.
Austerity is an ever-decreasing circle. It is fiscal madness to pursue the same policies that have been failing so obviously for many years, yet none of the other parties can bear to face the truth: for an economy to grow, it needs proper investment; for public services to deliver, to free up the potential of our people, they need to be supported, not asset stripped and starved of resources.
The Chancellor mentioned £2.5 billion for digitisation of the NHS in order to get those so-called productivity gains. I wonder how much of that will go to private companies once the dust settles. He should have boosted NHS spending by £15 billion—to improve healthcare after the UK Government imposed real-terms cuts this year. He should have funded NHS pay properly so that it matched that of Scotland, where there have been no NHS strikes, and caught up with previous cuts. Where was the announcement on settling with the victims of the contaminated blood scandal? Missing!
Moving on to the economy, the Chancellor should have turbocharged investment in green energy, by investing at least £28 billion per year to compete in the global green energy goldrush and to secure sustained economic growth. Where else is the serious high-return growth supposed to come from? We have not heard it mentioned here today. We do not know where it is. That £28 billion is needed. Labour advisers have told the Labour party that that £28 billion is needed. Everybody knows that that £28 billion a year is needed, yet no one in the Labour party is willing to make the investment that is needed to protect it. This is the abandonment of the just transition. [Interruption.] We are hearing chuntering from the Labour Front Benchers. [Interruption.] Oh dear, imagine picking up on that one. Their big U-turn, their big abandonment of the just transition—[Interruption.] Well, it is a pretty big U-turn. I know that it is one of many, but it is also pretty big.
The fact that Labour Members are rattled shows how much they feel this. This abandonment of the just transition and the fantastic opportunity that it promises, by both the Tories and those in the shadows of the Labour party, is reckless and stupid. Not only will it be felt economically, but it ignores the desperate need to act on climate change. The failure to invest in this will hold Scotland back from reaching our green energy ambitions and will leave households vulnerable to future energy crises.
The Chancellor must finally match the level of ambition that we are seeing in other countries. The Government have been shown by the European Union, and by the United States with its Inflation Reduction Act 2022, that this issue needs to be taken seriously, yet they are sitting on their hands.
Scotland can be at the forefront of the green energy revolution thanks to our incredible natural resources in onshore and offshore wind, and in wave, tidal and hydro power. But with Labour and the Tories intent on pulling the rug from under industry’s feet, we risk seeing yet another generation of energy potential wasted by Westminster. The Chancellor must commit to investing properly in renewables and must decouple the price of gas from the price of electricity. We cannot ensure a just transition from oil and gas—for the people and communities who rely on them—if we squeeze the life out of the sector overnight.
We know that households across Scotland have been badly hit by the energy crisis, and that proper investment in renewables can reduce the bills for households. Citizens Advice Scotland has revealed that, in the past four years, it has seen the number of people requesting advice and support with energy bills increase by 14 times. Labour Members are again chuntering from a sedentary position, saying that I am going on for too long. I take that as a sign that they are not comfortable with what I am saying.
Drew Hendry
They are bored by the just transition! They are bored by the cost of energy that people have to pay. They are bored by all these things.
Hon. Members
Drew Hendry
Thank you, Madam Deputy Speaker. I can make more progress if I am not interrupted, so I do appreciate your advice on that.
Talking about advice, I want to return to Citizens Advice Scotland. It revealed that, in the past four years, it has seen the number of people requesting advice and support on energy bills increase by 14 times. That is a shocking increase. Proper investment in green energy can make sure that people in Scotland never have to face an energy crisis of this scale again.
As I have said, the Chancellor could have helped families with the cost of living by scrapping grossly unfair and unequal energy bill standing charges and using a £12 billion wealth tax to fund a £400 annual energy discount for households; reintroducing mortgage interest tax relief; capping supermarket food prices; and matching the Scottish child payment UK-wide. He could have boosted UK finances, but he chose not to do so. He could have introduced the long-overdue essentials guarantee while scrapping callous policies such as the two-child limit and the benefit cap. One of the most game-changing things he could have done is to finally give up on the failed experiment that has been Brexit, rejoin the EU single market and deliver economic growth.
The Chancellor must help businesses and introduce measures to support the tourism and hospitality industries. We know that businesses have faced a very challenging period with covid, Brexit and the increased costs from all sides, making life more difficult for people across Scotland. That is why the SNP is calling on the Chancellor to reduce the rate of VAT for the tourism and hospitality sector—it is not too late for him to do that; reinstate VAT-free shopping for international visitors; and implement VAT-free streets to support struggling town centres and high streets. If nothing is done to halt their decline and they continue to be ignored, as they have been for too long, communities will suffer and far more tax will be lost in the longer term than it would cost to provide them with some support.
The Government could choose to construct mini enterprise zones, working with devolved Governments and local authorities to agree on which sectors and areas are most in need of support. These sectors could benefit from reductions in VAT or from no VAT at all if the need is great enough. That could be tied to businesses agreeing to pay the real living wage. The chief executive of Marks & Spencer yesterday described operating under the current Government as
“like running up a downwards escalator with a rucksack on your back.”
If the Government can roll out freeports, then why not freeports for people? They could reduce alcohol duty for whisky and other spirits to support Scotland’s thriving whisky sector that adds £7.1 billion to the UK economy. Businesses in Scotland can no longer afford to be held back by the UK’s low-growth economy. The Chancellor should bring in measures to support businesses that have been left paying the price for the UK Government’s disastrous Brexit. It is clear that the SNP is the only party committed to rejoining the EU and giving Scottish businesses the chance to access goods and talent from our 27 closest neighbours.
The Scottish Government are committed to protecting the people of Scotland from some of the worst Westminster policies and are making a real difference to the lives of people in Scotland, despite their limited powers. The cut to the Scottish Government’s capital budget and financial transactions have meant that they have had to take some difficult decisions in this year’s budget, but they are still committed to delivering for the people of Scotland. The SNP fully support the £3.3 billion package the UK Government have delivered for Northern Ireland, and urge the Chancellor to make similar funding available—in line with the Barnett formula—to help the Scottish Government deal with the budget pressures they face.
The Scottish Government are freezing council tax—except in Tory, Liberal Democrat and some Labour councils where those councils think that people should pay more. The Scottish Government are also lifting 100,000 children out of poverty with measures such as the Scottish child payment; providing child winter heating payments to help mitigate additional heating costs for households with the most severely disabled children; providing free school meals to all children in years 1 to 5 and to all eligible children throughout the school; providing all babies in Scotland with the essentials needed for the first six months of a child’s life through the baby box; introducing 1,140 hours of funded early learning and childcare to all three and four-year-olds and eligible two-year-olds; and making bus travel free for 2 million people in Scotland, including all children and young people under the age of 22, eligible disabled people, and anyone aged 60 or over.
That is just a snapshot of some of the landmark policies that the Scottish Government have brought in, and all of them have been achieved against the backdrop of limited powers and being tied to a Westminster system that, as we have seen from today’s Budget, continues to do nothing for the people of Scotland.
Madam Deputy Speaker (Dame Rosie Winterton)
Just to emphasise what the Chairman of Ways and Means said, it would be helpful if colleagues confined their remarks to about six minutes, so that we can get everybody in with equal time.
I call the Father of the House.