Income tax (charge)

Debate between Baroness Laing of Elderslie and Peter Dowd

Tuesday 17th March 2020 Commons Chamber

[Peter Dowd]

In a moment.

It has to be said that the Government simply underestimated the challenge facing the country, but better late than never. However, many millions of people still have no financial certainty from the Government. People are worried about their livelihoods. The Government are responsible for our decaying social and physical infrastructure. They bear a huge responsibility for the parlous state of our public realm. While we will support measures to aid our economy, we will not settle for half measures, so we will look carefully at the Chancellor’s statement and at what he says later on.

The Government’s mantra of “levelling up” also completely misjudged the serious issues facing the country. The Government are not a new Government. They have been in power for 10 years. The 12 December election was not the start of year zero. They have spent 10 years systematically and consciously levelling down the country. For example, one of the Government’s fiscal rules identified 3% of GDP as an appropriate level of public sector net investment, but, Madam Deputy Speaker, if you were to look back at the last 10 years, the Government have underspent on infrastructure—far less than 3% of GDP—every single year. That was alluded to by Conservative Members.

The gap between what the Government spent and the 3% level over 10 years in office is £192 billion. That is the size of the hole the Government have spent 10 years digging, and if you were to sift through the hype, Madam Deputy Speaker, and note the fact that the Government’s headline figures on infrastructure double-count existing spending—one estimate has put the Government’s new capital spending at £143 billion, excluding depreciation—you would see that what the Government announced last week would not even fill the big hole they dug in the first place. Now, they appear to want to be congratulated on a pathetic attempt to rebuild what they spent 10 years destroying and dismantling.

The Resolution Foundation has pointed out that the UK has a very low level of Government capital stock at about 46% of GDP. That is three quarters of the advanced economy average of 63%, so the Government are levelling up from a very low base—a low base of their own creation.

Another problem with the Government’s levelling up agenda is that there is a series of one-off announcements without any coherent plan. For a start, the Government postponed their national infrastructure strategy. Again, they have cut skills funding in recent years. By the end of the last decade, spending on apprenticeships and work-based learning had fallen by a quarter since 2009-10 in real terms. That is according to the Institute for Fiscal Studies.

The Budget was disappointing in relation to climate action. The environmental justice commission set up by the Institute for Public Policy Research said that £33 billion of green investment was needed a year to get to the Government’s weak target of net zero emissions by 2050. But there is £27 billion for road building, although nothing for renewable energy sources such as wind and solar. We have heard excuses over the years that they inherited a poor economy, but they have been in power for 10 years and the responsibility for the poor performance of our economy in the past 10 years lies squarely at the Government’s door. They did not believe that public investment could boost the economy. In a speech in 2009, George Osborne said that

“fiscal policy is more or less powerless to affect output”.

He was wrong about that. Let us consider the statement that a

“large planned increase in public investment should boost potential output”.—[Official Report, 11 March 2020; Vol. 673, c. 282.]

Who said those words? It was the Chancellor, when citing the Office for Budget Responsibility. Other countries took a different approach from us and did invest, and they have recovered more quickly. We have had the slowest recovery for a century in this country, and we have had the Bank of England’s chief economist Andy Haldane describing a pay “disaster”.

On that point, let me deal with the issue of the so-called “jobs miracle”, so beloved of Conservative Members. What they fail to mention is that low pay, zero-hours contracts and insecure working conditions bankroll that act of God, meaning that 8 million people in working households are living in poverty. According to the Joseph Rowntree Foundation’s annual poverty report, seven in 10 children in poverty are now in a working family. I am not sure that God would like his name associated with that outcome.

The Office for National Statistics is reporting falling manufacturing output and zero growth in the three months to January because of “widespread weakness”—and that was before the outbreak of the coronavirus. The Government could have started in the Budget to invest in our public services, as well as our infrastructure, but they chose not to do so. As the IFS said last week, after this Budget spending on day-to-day services will still be well below what it was in 2010-11 per head—so much for levelling up. What we have is the Government putting off tackling areas in our economy where bold decisions are needed. The economic crisis facing the country as a result of the coronavirus simply proves their lack of foresight and planning. They have left our public services so depleted of capacity that many fear they will struggle to cope.

We have before us the so-called “Get it done” Chancellor, but he is more like the put-it-off Chancellor. He even put off his announcement today. What about social care—is he getting that done? No, he is having another review. He has put it off. What about the Green Book—is he getting that done? No, he is having another review. He is putting that off. What about the fiscal rules framework—is he getting it done? No, he is having another review. He is putting it off. What about the national investment plan—is he getting it done? No, he is having another review. He is putting it off. He cannot even decide when he is going to have a comprehensive spending review. In a footnote on page 30 of the Red Book, which I know all Conservative Members will have assiduously read, he says that he will

“keep the timing of the CSR under review”.

I hope you will bear with me here, Madam Deputy Speaker. In other words, he is even putting off the timing of the review of the review of the comprehensive review. So much for getting things done.

There is a great deal of not getting things done going on in No. 10 at the moment, contrary to the belief of the backslappers opposite. The word “review” is mentioned no fewer than 117 times in the Red Book, which has only 120 pages in it, including the blank ones. The Chancellor reminds me of the character in one of the less well-known Monty Python sketches: the self-satisfied president of the royal society for putting things on top of other things; we have a meaningless body of men gathered together for no good reason—that is the Cabinet. No wonder we have the lowest productivity levels of our G7 partners, and this is getting worse because the man in charge of getting things done is far too busy putting things off.

Let me give the Chancellor a word of advice. [Interruption.]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The House is being unfair to the hon. Gentleman. There is too much noise going on, and we must hear him.

[Peter Dowd]

Well, they are Tories.

Let me give the Chancellor a word of advice: I suggest that, for the sake of the country, he stops putting things off and gets things done by pulling his finger out.