Income Tax (Charge)

Ed Miliband Excerpts

Thursday 28th October 2021 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

I will begin, if I may, by congratulating the Secretary of State for Business, Energy and Industrial Strategy, as it is the first time that we have faced each other across the Dispatch Box since the birth of his new baby. Many congratulations to him. If he needs some representation to make sure that he gets his paternity leave, I am available to help.

I will begin this debate on a point of consensus. We have a Government who have been in power for 11 years. They have been 11 years of low growth, stagnant wages and falling living standards. I am old enough to remember when this characterisation of our economy was seen as controversial, but at his party conference, the Prime Minister said:

“We have had…10 years of flatlining wages”.

The question at the heart of this debate is whether the Government truly recognise the error of their ways. Does the Budget help to tackle the deep inequalities we face, including the immediate cost of living crisis? Does it support our businesses so that they can deliver the good jobs and decent wages that we need? And does it create the long-term partnership between the public and private sectors to create the jobs of the future, in particular in zero carbon? I am afraid that the answer on all three counts is no.

Let me start with the immediate cost of living crisis facing so many families. Less than 24 hours since the Budget was delivered, it is unravelling because of the chasm between the claims of Ministers and the reality faced by working people. Listening to the Chancellor yesterday, it was clear that he is living on a totally different planet. He told us that he would deliver an age of optimism, but when we take off the Instagram filter, all he offers is an age of stagnation: low wages, low growth, high taxes—more lost Tory years. These are the facts that the Chancellor did not tell us yesterday, but they have emerged this morning.

This morning, the Resolution Foundation said:

“Real wages are set to fall again next year”.

The Institute for Fiscal Studies tells us that, over the next year, a median earner will find their take-home pay falling by £180 a year in real terms. Paul Johnson, the director of the IFS, says that the outlook for living standards is

“awful… High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade.”

In fact, the IFS estimates that, on the numbers published yesterday, real wages in 2026 will still be lower than they were in 2008. For all the boasts of the Chancellor, the Prime Minister and others, all that the British people are facing under their Government is squeezed wages and living standards, as far as the eye can see.

[Catherine West (Hornsey and Wood Green) (Lab)]

My right hon. Friend is making an excellent speech. Does he agree that, on top of the trend of low wages, it is doubly hurtful that working families will be faced with increasing electricity and gas bills, with no relief on that, rising food prices, and potentially a difficult Christmas, with possible supply shortages and a lack of supply of Christmas presents?

[Edward Miliband]

My hon. Friend is completely right and I will come to that point in a moment. The Government will no doubt have all kinds of excuses, but this is a sin of commission, not just omission, in the sense that the Government are actually doing things to make the problem worse.

The problem is that the Chancellor could not bring himself to admit any of this yesterday. Here is the issue: it is not just that he did not say any of this, but it is like the Government actually believe their own rhetoric, and the Budget is the result. Yesterday we saw raid upon raid on the living standards of working people: council tax hikes, hidden in the Budget document—not announced by the Chancellor; a stealth raid on the self-employed worth £1.7 billion over the coming five years—not announced by the Chancellor; and of course the national insurance hike on ordinary families confirmed.

Maybe I am a bit old fashioned in this respect, but let us remember that this is a direct breach of the promise that every Conservative Member made to their constituents at the general election. What did they call it in their manifesto? Alongside a picture of the Prime Minister—drawing on his long and unblemished record of truth telling and candour—it said:

“My Guarantee… We will not raise the rate of income tax, VAT or National Insurance.”

I look forward to them all explaining at the next general election why they have broken that promise. The hon. Member for North East Bedfordshire (Richard Fuller) is nodding. Perhaps he would like to explain why they have broken their promise.

[Richard Fuller (North East Bedfordshire) (Con)]

I have been goaded into intervening by the right hon. Gentleman, who asks a very direct question. I think the honesty will be that we will say that we wanted to protect the public finances, and that post covid, given the choice of either borrowing more money or asking those with the broadest shoulders to bear the burden to cover those costs, we decided that we should do the latter.

[Edward Miliband]

It is certainly not those with the broadest shoulders who are being affected, and I thought the reason that the Government raised taxes was for social care. It is yet another guarantee from the Prime Minister that is not worth the paper that it is written on.

The IFS tells us this morning that taxes will be £3,000 more per household than when the Prime Minister came to power. As my hon. Friend the Member for Leeds West (Rachel Reeves) said in her excellent speech yesterday, this is about the choices that the Government are making. Also buried in the Red Book is that the Chancellor saw fit to cut taxes on the banks by more than £1 billion because he was so worried about the burden they were facing, just like last year when he made the choice to cut stamp duty for second home owners because he was so worried about them. He was obviously less concerned about the burden of higher energy prices facing millions of British people, because he refused to cut VAT on fuel as he should have done.

In a way, the most shameful part of the Budget is the Chancellor’s refusal to reverse his £1,000 cut to universal credit, which hit 6 million families. For all the smoke and mirrors, this morning we know the truth about universal credit. According to the Resolution Foundation, three quarters of families on universal credit will be worse off, even after the changes to the taper. It says that the taper changes

“will be overshadowed by last month’s £6 billion cut to entitlement: three-quarters of families on UC will lose more from the £20 cut than they gain from the Budget changes. Even if we also take into account the…National Living Wage, the poorest fifth of households will still be an average of £280 a year worse off overall.”

The fact that Conservative Members were wildly cheering a policy yesterday that sees millions of working families far worse off shows, I am afraid, that they do not get it either.

[Alex Cunningham (Stockton North) (Lab)]

When I wander down Stockton High Street, I see the signs of poverty everywhere. I see young people with no hope on their faces and no hope of getting a job. I see people who probably have to shop in the charity shops because it is pretty obvious that they have not been able to buy any new clothes for a while. I see families going discount store to discount store to buy one item because it happens to be a couple of pence cheaper than it is elsewhere. Did my right hon. Friend see anything in the Budget to correct that?

[Edward Miliband]

My hon. Friend puts it incredibly well. That is why the boosterism of the Chancellor saying that it is an age of optimism will ring so hollow for so many people in our country.

You cannot build a new economy when you are hitting working families with a triple whammy of higher national insurance, higher prices and cuts to universal credit. That is more of the same. It is the Conservative economic model—year upon year upon year of stagnation for the British people.

Let me next come to the question of support for business in the Budget—the direct responsibility of the Business Secretary. Our businesses have been heroic during the covid crisis, closing their doors when asked and stepping up when they needed to. But while the economy may have reopened, the crisis is not over for so many of them. They face debts incurred during covid. They face the costs of the supply chain crisis. The Office for Budget Responsibility is very interesting on that, because of course there is a global dimension to it but there is definitely a British dimension too. They face the failure to plan for the changes arising as a result of Brexit—the OBR is very informative on this—and they face the energy price crisis.

Against this backdrop, I say gently to the Business Secretary that, as he will know, many of our businesses feel that the Government are engaged in finger pointing rather than finding solutions, with haulage firms told it is all their fault, when they warned the Government for months about the impending HGV crisis; those in the manufacturing industry—briefed against, not, to be fair, by him but by the Treasury—told that they are running their businesses badly because energy costs are soaring; and exporters tearing their hair out about the red tape of the trade agreement with the EU but told they just need to get their act together. What businesses want most of all, as he will know, is not to have a war with the Government but for their voice to be heard.

To be fair to the Business Secretary, a few weeks ago he did try to act to hear the voice of those facing the most acute short-term challenge—energy-intensive industries facing the energy price crisis. He knows that this is no ordinary situation. Our industries are facing not just the normal differential of price with our competitors but differentials far, far higher. I have met the Steel Council; he has met the Steel Council. He knows how tough it is. We know that he knows how tough it is because, to be fair, he told us two weeks ago how bad things were and said that he was talking to the Treasury. The Treasury was not very polite in return. He is chuckling from a sedentary position; I am on his side on this one. The next day, having obviously decided that he did not like being briefed against, he announced—I had my dealings with the Treasury when I was in government but I do not remember ever quite doing this—that he had made a formal request to the Treasury for support for energy-intensive industries. He was taking a stand.

That was on Monday 12 October, more than two weeks ago. On that day, a source told the BBC, rather encouragingly, that

“everyone in government understands the importance of this situation. We need to solve this quickly.”

It might have been the Prime Minister, who was on holiday at the time, or somebody else. That created a real expectation that this Budget would take action on this pressing issue that the Business Secretary has been publicly championing. So where is the help for our glass industry, our steel industry, our chemicals industry and our ceramics industry? These are some of the most important jobs in our country, valued in communities across all regions and nations of the UK. Does this not speak volumes about the Treasury’s—and, I am afraid, the Government’s—wanton disregard for some of the most foundational industries in our country?

[Alex Davies-Jones (Pontypridd) (Lab)]

It is also important that the House remembers that 3 million people have still been completely excluded and forgotten by this Government since March last year. There was nothing for them in yesterday’s Budget. They have been neglected yet again.

[Edward Miliband]

That is a very important point. The championing of ExcludedUK is a very important issue, and my hon. Friend is right to point it out.

This is about choices. Amazon gets help from the super-deduction, but our energy intensives are left out in the cold. I hope that in his reply, the Business Secretary will tell us where things stand for the energy-intensive industries, because they have been in touch with me saying, “What is going on? What is happening?” There is just complete silence from the Chancellor.

Let me talk about our high street businesses, because they face higher national insurance and business rates. I welcome some of the short-term measures in yesterday’s Budget, but it is not unfair to say that fundamental reform has been ducked yet again. The CBI said this in its Budget response yesterday:

“But the hard truth is that wholesale reform to unlock investment was rejected today. The Government missed the opportunity to truly reform a business rates system that diminishes Britain’s high streets and factories.”

I was quite mystified yesterday, because the Chancellor attacked the idea of fundamental reform of business rates, a system with a genuinely level playing field between traditional high streets and internet businesses. Four successive Tory manifestos have promised precisely that reform: 2010, 2015, 2017 and 2019.

When the Business Secretary was a humble Back Bencher—I think he was writing “Britannia Unchained” at this point—he was pamphleteering. I am not against pamphleteering; I have done some of it myself. He was a Back Bencher with his ideas, and he said we need

“a system that is fair for both traditional and internet companies.”

He is now the Business Secretary. Why does he not deliver it? He knows, because he talks to the business community a lot, that this is a massive issue for our high street businesses. They rightly say, “Look at the burden on us and look at the burden on tech businesses. Look at the unfairness.” That is why my hon. Friend the Member for Leeds West is so right to champion this issue.

The longer-term issue we face is how to create the growing economy that we need. Not for the first time, the Government talk a good game. We have the branding of the Budget. We know that the Chancellor is incredibly keen on branding, and his own personal branding more than anything. The Government are a bit of a sideline. It is more Rishi branding than Government branding, I think it is fair to say. There are some knowing looks from Members on the Government Benches. The Rishi branding of the Budget is the “plan for growth”. I have to say that a plan for growth that has growth of 1.3% at the end of the Parliament is not much of a plan. Growth will be just 1.7% when the economy returns to trend. That is woeful by historical standards. It is the biggest challenge we face as a country. This is an important point, because when people wonder how the Government manage to combine the highest taxes for 60 years and public services that are creaking, the terrible growth performance of our economy is a significant part of the answer.

[Wera Hobhouse (Bath) (LD)]

Did the right hon. Gentleman, like me, also miss any announcement that points to the transformation to the green economy and green jobs?

[Edward Miliband]

The hon. Lady is completely right about that. She anticipates my next point brilliantly; it is a useful segue. If we want to understand why growth is so anaemic, she is right that we need look no further than the Chancellor’s failure to seize the opportunities for green growth. This is an important point: the prudent and responsible economic call—I suspect the Business Secretary agrees—for economic growth is to invest at scale in the transition to a zero-carbon economy. Let us be honest, it is now a completely open secret that the problem is that the Chancellor is not a believer, and it showed yesterday. As we prepare to host the most important international summit ever on climate change, as delegates gather from all around the world, and as the eyes are on Britain, what did he unveil as his flagship measure yesterday? To cut air passenger duty for domestic flights. You literally could not make it up. People want good and affordable rail services, but the plan for rail seems to have been postponed again, and instead there will be 400,000 more domestic flights as a result of that decision. Once again, that shows that the Treasury is not signed up to the agenda.

I am such a nerd that I was reading the OBR report last night and there is an interesting and illuminating bit on, I think, page 176—Members can check—which says, in OBR language:

“the…costs involved in getting the rest of the way”—

to net zero—

“remain significant and their apportionment between businesses, households, and government…remains largely unclear. This leaves the costs associated with the transition to net zero as a major source of longer-term fiscal risk.”

Let me underline that point for the House. The July 2021 OBR report, which for the nerds among us is brilliant, and which I strongly recommend to Members as bedtime reading—Madam Deputy Speaker is laughing at me, or perhaps with me—warned of the danger of not acting on the climate and of debt climbing to eye-watering levels as a result. When my hon. Friend the Member for Leeds West said yesterday that debt would rise to 300%, I noticed a Conservative Member at the back look at his hon. Friend and say, “Oh that can’t be right,” but that is what it says. The interesting thing about that report is that it warns not just about the danger of not acting, but about the danger of delay. It says that delaying action on the climate by a decade will double the cost of the transition as we lock in high-carbon choices.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Does the right hon. Gentleman share my disappointment that the Budget had so little for the potentially huge industry for the UK of offshore floating wind energy? He talks about delay. If we delay, we will lose out to other countries in that race, and they will not show any mercy on that front.

[Edward Miliband]

The hon. Gentleman makes an important point. We have been successful in offshore wind generation, and it is right to acknowledge that. The ground was laid by the last Labour Government, but I will leave that to one side. We have been successful at generating the wind energy, but not the jobs. He is completely right that we have not delivered for many people when it comes to jobs.

As I was saying, not acting increases the cost, so the prudent responsible choice is to invest. I will mention some key sectors, because again, there has been a deafening silence. I come back to the steel industry, which is such a litmus test. It needs about £6 billion of investment to get to net zero by 2035. The view is shared on both sides of the House that it needs to get to net zero and that it is a foundational industry that we need and that is incredibly important to communities across the country. There are 20 demonstration projects around Europe but none here at the moment. It requires a partnership of the public and private sectors and needs both sides to invest. There is a crucial role for the Government in that.

We have set out a commitment of up to £3 billion over a decade to create that partnership with the steel industry so it can make the transition and we can keep those good jobs with good wages that are vital to many communities. It is a test of us as a House of Commons.

The Government talk about a £250 million clean steel fund, but even that has still not been delivered. I hope that it is still Government policy, but it seems to be in the balance and might have been got rid of. That is not good enough. The Treasury has to understand that unless we invest in steel, automotive and hydrogen, we will fall behind in the global race, as the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said.

[Dr Kieran Mullan (Crewe and Nantwich) (Con)]

You are clearly talking about the tension between the costs of going too late or too soon in terms of efficiencies. Do you agree that you might have more credibility—

[Dr Mullan]

My apologies, Madam Deputy Speaker. Does the right hon. Gentleman agree that he would have more credibility on the issue if he had not backed Labour’s 2030 net zero target, which even his own unions did not support? He has no credibility on that point.

[Edward Miliband]

That is definitely the Whips Office’s talking point. The reality is—[Interruption.] I will tell them: our last manifesto said that

“the substantial majority of our emissions reductions”

should happen by 2030, and that is absolutely right. We should be going faster and we should not be delaying. The interesting point is that delay is wrong not just for the climate, but economically. That is the brilliant platform on which my hon. Friend the Member for Leeds West, the green shadow Chancellor, is standing. We will fall behind if we do not act, and I suspect that, in his heart of hearts, the Business Secretary knows it.

[Paul Howell (Sedgefield) (Con)]

On the right hon. Gentleman’s comments about credibility, I have sat on two north-east Labour councils, Darlington Borough Council and Durham County Council. When the Conservatives were in charge in Darlington, Labour wanted the target to be 2030. When Labour was in charge in Durham, it wanted the target to be 2050. Is there consistency in Labour party policy or not?

[Edward Miliband]

It is completely consistent, yes.

Let me turn from industry to retrofit and insulation. Of all the things that were missing from the Budget and that I thought the Treasury would have been persuaded about, the one that is as close as we can get to a fiscal, economic, climate no-brainer is a proper 10-year retrofit and insulation plan. If we invest, we cut bills and carbon emissions, make ourselves less exposed to the international gas market, and create tens of thousands of jobs. I do not get why it has not happened. All we get are piecemeal schemes and no proper plan. I will not even go into the fiasco of the green homes grant—emissions from buildings are higher than they were in 2015.

[Alex Cunningham]

My right hon. Friend will recollect our discussions about the tremendous success of the warm zones project at the turn of the century. We went door to door, day in, day out, to install thousands of measures that saved consumers a tremendous amount as well as reducing emissions. Does he agree that we need that systematic approach if we are going to crack the problem?

[Edward Miliband]

I completely agree. I actually take a crumb of comfort from the Business Secretary, when he defends the sorry saga of the green homes grant, pointing to some of the money given to local authorities and what they did. That is what we need at scale—locally led, house by house, street by street. We are miles behind other countries.

On green investment, a philosophical difference is emerging. I worry that the Government will increasingly leave individuals and industries on their own to face the costs. I do not think that is true of the whole of Government, but the Treasury remains a fundamental block to the green investment that we need. There was a whole saga about its net zero review and the fact that it emphasises short-term costs rather than long-term gains. Frankly, that is a big problem for our country.

[Jamie Stone]

rose—

[Edward Miliband]

I will make some progress and finish.

Labour would deliver a climate investment pledge of £28 billion extra every year for the rest of the decade. That is an investment in bringing down energy bills; delivering affordable public transport and cleaner air; and backing British industries with a real plan for jobs and wages. That is what real action on the climate emergency and industrial strategy looks like.

Given the cost of living crisis, the immediate issues facing business, and the need for longer-term investment, this is not the Budget we require. It does not make choices to help working people; it hits working people. It cuts taxes for the banks but raises taxes for workers. It deserts key British industries and it fails to invest, as we need to, in the green transition. If the big challenge of the future is how we build an economic model that rights the wrongs of the past, this Government cannot be the answer and nor was this Budget.

--- Later in debate ---

[Kwasi Kwarteng]

That is a very direct question and, as I have said, conversations are ongoing. I speak to the CEO of Ofgem on a daily basis and we are always looking at the situation in terms of gas and electricity prices and how we can mitigate those risks.

[Edward Miliband]

The right hon. Gentleman was asked a very direct question, as he said, by my right hon. Friend the Member for East Ham (Stephen Timms). The right hon. Gentleman acknowledged two weeks ago the very difficult situation of the energy-intensive industries and said that he had submitted a formal request to the Treasury. What has happened?

[Hon. Members]

They are ignoring it.

--- Later in debate ---

[Kwasi Kwarteng]

We are not going to nationalise anything; that is very true.

[Edward Miliband]

It is hard to follow that response from the Secretary of State; he said, “a general context in which…something, something.” Can he just answer the question: when are we going to know what help is available for energy-intensive industries, if any, and what kind of help is it going to be?

[Kwasi Kwarteng]

All I would say to the right hon. Gentleman is watch this space and let’s see what happens.