Budget Resolutions
Debate between Drew Hendry and Chris Leslie
Chris Leslie
The Brexit analysis that should be in the Budget should take into account the drivers that produce economic growth. Brexit will affect consumers, as we know—the Chancellor did not touch on those issues. It will affect business investment—he did not touch on some of those issues. Trade will obviously be affected and, of course, public sector investment and public service expenditure will be radically affected by it. The reason I keep banging on about the impact on the financial services sector is that it generates £67 billion of revenue for our Exchequer. I need that in my constituency of Nottingham East to pay for the schools, hospitals and vital public services, and the Economic Secretary knows that. Brexit therefore has to be at the centre of our analysis and our policy expectations, and I am astonished that the Government are trying to skirt around it. They do not want to talk about it; they are hoping that it will just disappear.
Labour Members have to acknowledge that there is no magic money tree to deal with all the issues that lie ahead. We know that debt is very high and that borrowing is high. In fact, the Chancellor did not talk about the fact that he is projecting borrowing actually to rise—to go up—in the next financial year from £51 billion to £58 billion. We have to be very prudent and careful with taxpayers’ money. That is absolutely the case, and the OBR predicts real problems over the next 20, 30 or 40 years, because of the ageing population and health expenditure questions.
Just as there is no magic money tree, however, there is also no such thing as the “Have your cake and eat it” world outside the single market. I have to say to those on the fringes of politics and the hard Brexiteers who think they can continue our economic relationship with the 27 other European Union countries with no economic effect whatsoever that they are living in cloud cuckoo land. We should be doing all we can to salvage our relationship with the single market and to preserve the frictionless tariff-free trade that very much serves as the cornerstone of many of our industries, particularly manufacturing ones such as the car industry.
The other big issue I want to talk about is self-employment. There are 5 million self-employed people in this country, and I have 5,100 self-employed people in Nottingham East. They will have seen the Chancellor’s decision to break the solemn manifesto promise made at the last general election, when the Conservatives promised that there would be no increase in national insurance contributions. They have ripped up that promise. I feel that people will see the increase in national insurance contributions for the self-employed—it is not a 1% increase; it is going up to 11%—as a betrayal of the offer or promise that was made by the Conservatives at the last general election.
Those 5 million self-employed people have a number of disadvantages, relative to those with stable salaried employment contracts, that make their lives more precarious. These are the entrepreneurs who generate much of the wealth and prosperity that this country needs. As my hon. Friend the Member for Leeds West said, they do not necessarily have the opportunities of holiday pay and sick pay that exist in full-time salaried employment. They are less likely to be able to save for the long term and often do not have the company pensions and so forth that exist in other forms of employment. They face enormous risks if they fall ill, given the poor insurance coverage for loss of earnings. The self-employed also find it much harder to get a mortgage because their income is far less predictable than is the case for those on stable salaried contracts.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The hon. Gentleman is making a telling point about the self-employed. Is the change not also an attack on rural communities, where many people are not able to access employment and have to be self-employed?
Chris Leslie
That is exactly right.
The self-employed do not have the same security, which is why we have had the discrepancy in the levels of taxation historically. Nearly half of those who are self-employed in the UK are on low pay, compared with a fifth of those in employment. Social Market Foundation research suggests that 1.7 million self-employed people earn less than the national living wage, yet the Government’s new universal credit rules will cap self-employed recipients on the assumption that they receive the living wage over a standard working week, which is not necessarily the case in seasonal work and elsewhere.
The self-employed, who work longer despite earning less, and twice as many of whom work 50 hours each week than those in employment, will be paying a significant price. If they take home £27,000 of profit, they will be hit by an extra £30 a month because of this decision. I say to my hon. Friends that another change that the Chancellor announced—cutting the dividend allowance to just £2,000—is also a hit on the self-employed because the dividend allowance is part of how they derive their income.
It is a double whammy for the self-employed, who are hit by a broken promise from the Conservatives—they said they would not increase national insurance and they are doing so—and hit again by the cut in the dividend allowance. That will harm those running small businesses by really hitting their incomes and devalue the trust that should exist in politics. When politicians make a promise, they ought to be able to keep it. This erodes the trust that people have in the words of Ministers. I say on behalf of my 5,100 self-employed constituents in Nottingham East and the 5 million self-employed people nationwide, they will not forget this betrayal.