Budget Resolutions

Emily Thornberry Excerpts

Monday 27th November 2017 Commons Chamber

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I am delighted to join the Foreign Secretary in congratulating Prince Henry of Wales and Meghan Markle on their forthcoming marriage. However, I was disappointed that the Foreign Secretary did not feel it appropriate to acknowledge a recent sad event. I want to ensure that all of us in the House join in sending our thoughts to the families of all of the hundreds killed, including 27 children, and injured in Friday’s horrific terrorist attack on al-Rawda mosque in north Sinai. It is a brutal reminder that by far the biggest targets and the highest number of victims of jihadi terrorists are people of the Muslim faith, and that the inhuman evil that is Daesh, which worships no gods but death and publicity, must be wiped from the face of the earth.

For reasons lost in the past, Budget debates have often been the occasion for some degree of light-hearted exchange over the years. However, not least in the light of the events in Egypt and the serious situation in which we currently find ourselves as a country economically, diplomatically and militarily, I do not believe that levity is in order today. Especially when it comes to the Foreign Secretary, all the jokes have worn just a bit thin of late.

I am nevertheless glad that the Foreign Secretary is leading today’s debate. Back in March he acknowledged how rare that was, because never under David Cameron’s Government did a Foreign Secretary lead a Budget debate. In the first two Budgets under the new Prime Minister and Chancellor, however, the Foreign Secretary has been given that honour. Perhaps this is their way of dipping his hands in the blood, as the economic impact of his Brexit plan becomes ever clearer, or perhaps, to be slightly less Shakespearian, it is their way of rubbing the nose of a wild, carefree puppy in the mess he has made.

[Sir Hugo Swire (East Devon) (Con)]

Will the right hon. Lady join me and the rest of the House in welcoming the announcement of two major pharmaceutical investments in the UK?

[Emily Thornberry]

Of course I welcome that, but I am concerned that we still have no answer from the Government on what will happen to the European body that currently regulates pharmaceutical trade across Europe. With no answer on that, it is difficult to be able to look at a long-term plan in that regard.

I was talking about the mess. We saw that mess last week in the Office for Budget Responsibility’s latest projections. Growth in the UK, which was already projected to be the lowest of all major economies, has now been cut again, in one of the biggest downgrades in our economic history. The truth is that it could be much worse. Let us face the reality. The OBR’s forecasts last week were still based on an optimistic assumption of Brexit.

The OBR said:

“Given the legal requirement for the OBR to produce its forecasts on the basis of current Government policy, we once again asked the Government to provide us with any detail on post-EU exit UK policies in relation to trade, migration and EU finances.”

Let us note two points about the OBR’s language, because Robert Chote is not one to use his words loosely. He said that he had “once again” asked the Treasury for its Brexit plan—presumably, he has been making that request for many months now. What he asked for was very simple but very shocking: he asked the Treasury for “any detail” about its plan. What did the Treasury do in response? According to the OBR, the Treasury sent it a copy of the Prime Minister’s Florence speech. How utterly pathetic. That was followed up with a bunch of documents full of aspirations and pipe dreams, with no detail and of no practical worth.

The OBR was left to conclude:

“We were not provided with any information that is not in the public domain.”

In other words, the organisation whose legal responsibility it is to forecast the future state of the British economy asked the Government what their plan was for Brexit and was treated just as dismissively as every Member of this House has been treated for the past 17 months. As a result, the OBR concluded:

“Given the uncertainty regarding how the Government will respond to the choices and trade-offs it faces during the negotiations, we still have no meaningful basis on which to form a judgment as to the final outcome and upon which we can then condition our forecast”.

Seventeen months on from the referendum, the OBR still has “no meaningful basis” on which to make a forecast about what Brexit will mean, either because the Government refuse to tell them, or because the Government cannot decide what kind of Brexit they want.

However, let us be absolutely clear about one thing: as dreadful as the OBR’s forecast for growth and the public finances is, it still assumes that there will be a deal on future trading arrangements between Britain and the EU. It has not even attempted to look at the consequences of a no-deal outcome on trade, employment and growth. Therefore, when the Economic Secretary to the Treasury responds at the end of the debate, will he address one specific question? The Government have said that they will conduct precautionary preparations for the prospect of a no-deal, cliff-edge Brexit. Can he please reassure the House that, as part of those preparations, the OBR will be asked to assess the likely economic and fiscal impact and to publish that paper as soon as possible, so that Parliament and the British public can fully understand the costs of that scenario?

[Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)]

Will the right hon. Lady give way?

[Emily Thornberry]

I will of course give way to the right hon. Gentleman, but I wonder whether we could do it this way: if he has a question for me, I have a question for him. Of the 32 taxes listed in the Red Book’s table of current receipts, which one is forecast to take in less money year on year over the next six years?

[Mr Duncan Smith]

rose—

[Mr Duncan Smith]

If the right hon. Lady wants me to become her adviser, I am very happy to do so, although of course that has a cost attached: I would advise her to leave her position at once. Can she answer a very simple question? During the election, her party made it very clear that it would have Britain leave the customs union and be outside the single market, and it said that again after the election. Then her party began to drift, and the other day the hon. Member for Brent North (Barry Gardiner), now sitting on her right-hand side, said, “Actually, we could remain in the customs union and the single market.” While she is interrogating the Government, perhaps she would like to make clear what her party’s position is on leaving the European Union.

[Emily Thornberry]

It is such a shame that during those 20 seconds or so the right hon. Gentleman did not answer the question. The answer is on page 82 of the Red Book—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I stopped people shouting at the Foreign Secretary, and I will stop people shouting at the right hon. Lady. Listen to her answer.

--- Later in debate ---

[Emily Thornberry]

The table on page 82 shows that only one of the 32 taxes listed will fall, and that is the bank levy. That tells us all we need to know about the Government’s priorities in the Budget.

As for what the Government’s plans are and what they are doing to the country, let me turn to the substance of the Budget and today’s theme of global Britain. In recent years the Treasury has taken great pleasure in writing a section of the Red Book entitled “The Global Economy”, which is usually used to trumpet the fact that Britain’s economy was the envy of the western world.

[Mr Duncan Smith]

Will the right hon. Lady give way?

[Emily Thornberry]

I am not going to.

In 2016 that section of the Red Book ran to a full 10 paragraphs, beginning with the boast that:

“Britain is forecast to grow faster than any other major advanced economy”.

Well, what a difference a year makes. Now that section runs to just one measly paragraph, on page 13, and it does not state how much Britain will grow compared with the rest of the world. For that comparison, we must turn to the OBR, which has stated:

“The pattern of strengthening growth across the other major advanced economies this year contrasts with the slower pace of growth in the UK.”

While it has slashed its forecast for UK growth up to 2022, it has upgraded its forecast for the rest of the world. George Osborne used to boast in every Budget that Britain was winning “the global race.” We now have a Government lagging along at the back of the global field and falling ever further behind. So much for global Britain.

If anyone thinks that growth figures are just numbers on a spreadsheet with no real-world implications, they should turn to two areas where the downgrading of Britain’s growth is already having direct and immediate effects: our spending on defence and on development.

[Toby Perkins (Chesterfield) (Lab)]

Is my right hon. Friend aware that in the past 35 minutes the Secretary of State for Exiting the EU has written to the Select Committee to say that the reports being provided are not complete and do not actually contain anything that might be commercially sensitive, thus adding very strongly to the point she is making? The Government are taking on the most significant economic challenge the country has faced since the second world war without a modicum of the basic detail they need to take on the task. Does it not shame the Government and Parliament that we are facing this kind of catastrophe without any serious information?

[Emily Thornberry]

My hon. Friend makes a very serious and important point. It is a shame that such an important and serious contribution is met by laughter on the Government Benches.

Let me turn to defence. It is not often that I find myself in agreement with the right hon. Members for Mid Sussex (Sir Nicholas Soames) and for Bournemouth East (Mr Ellwood), but I absolutely agree with them that the Government’s proposals to reduce the size of our Army to below the 70,000 mark, a cut of 12,000 from current plans, is nothing short of a scandal. Nor would it be acceptable to cut still further our naval capabilities by taking the amphibious ships, HMS Albion and HMS Bulwark, out of service.

We all heard the International Trade Secretary say yesterday that the Government would attempt to reach “some sort of compromise” on these cuts. Well, I have to say to the Government that there is no basis for compromise here. We should not even be having this discussion. Our armed forces are stretched to the limit as it is and they cannot take another round of cuts, so when we hear from the City Minister later on this, who himself served with such distinction as a young man in the Royal Regiment of Fusiliers, I hope he will make it clear, on behalf of the Treasury, that there will be no cuts in the size of the Army and no cuts in the Navy’s amphibious assault ships.

[Sir Edward Leigh]

I have already made my point about the armed forces, and in that sense I agree with the right hon. Lady, but does she not realise that the cost of the national debt in interest alone is the equivalent every year of 10 Queen Elizabeth aircraft carriers? I am sure she would agree with me that the way to solve the problems with the MOD budget is not to increase the national debt.

[Emily Thornberry]

The national debt, as I understand it, has more than doubled under this Government, so we take no lessons from them. Surely it is important to borrow to invest in order to grow our economy. It is, essentially, a different attitude to economics.

Let us hope the Minister goes further and corrects one major omission from the Budget on the issue of spending. On the Labour Benches, we welcomed last week’s guarantee that the increase in nurses’ pay would be funded through additional money from the Treasury with no cuts elsewhere to the NHS budget. We will hold the Government to that guarantee. Can we have the same assurances over the much needed and long-overdue increases in paying for our armed forces? It would be entirely wrong and self-defeating if those increases were to be paid for by further cuts in personnel, equipment or living conditions, so I hope the City Minister will be able to give us an assurance on that.

[Grahame Morris (Easington) (Lab)]

Does my right hon. Friend believe that the Government are doing enough, as set out in the Budget, to tackle tax avoiders and tax evaders, some of whom are resident in British overseas territories and dependencies, to ensure that the Treasury has enough resource to pay nurses and others?

[Emily Thornberry]

My hon. Friend makes a very important point. Studies have been made, have they not, of the amount that each tax inspector can bring in to HMRC? Cutting back on the number of people is simply counterproductive.

[Dr Julian Lewis (New Forest East) (Con)]

rose—

[Emily Thornberry]

I will give way to the Chair of the Defence Committee.

[Dr Lewis]

In the past, it has been possible to make common cause between the Government and Labour Benches on the need to secure the future of the nuclear deterrent. Can we now make common cause on a recognition that the bare minimum of 2% of GDP is simply not enough, bearing in mind the fact that for several years after the cold war, in 1995-96, after we had taken the peace dividend, we were still spending 3%, not 2%, of GDP on defence?

[Emily Thornberry]

I am grateful to the right hon. Gentleman for that question and I will come on to answer it if he will give me a moment.

Beside the specific proposals, there is a wider point of principle on defence spending, which takes us back to the question of falling growth. We on the Labour Benches have long argued that the way the Government meet the target to spend 2% of GDP on defence is wholly inadequate. Defence spending should mean spending on defence, not on Ministry of Defence pensions, as the right hon. Gentleman and the Select Committee have pointed out, or on any other items that the Government simply lump in to meet the target. We need to ensure, at a time when growth is being downgraded—we are dangerously close to a period of falling GDP—that the Government do not use that as an excuse to cut the armed forces budget, in effect treating the 2% figure not as a target but as a cap. If anyone thinks that is a fictional risk, let us take a look at the budget for international development.

I am told this is different but I believe it is not. The Budget speech in March this year was one of the first I can recall since coming to this House, under Chancellors from different parties, that made no mention of international development and our obligations to the poorest in the world. I believed at the time that it was a temporary aberration, but sadly it happened again last week. This time, the omission was far more serious. Say what you like about George Osborne—and I am sure the Foreign Secretary frequently does—at least when he used to cut the international development budget and keep it capped at 0.7% of GDP, he would stand in front of this House and announce that decision publicly. It is a disgrace, by contrast, that the Chancellor last week chose to cut £900 million from the overseas aid budget over the next two years but did not think it worth mentioning in his speech, let alone detailing exactly which projects and programmes will be cut in the world’s poorest countries as a result of the Government’s failure on growth.

[Sir Hugo Swire]

Will the right hon. Lady give way?

[Emily Thornberry]

I gave way to the right hon. Gentleman once before. I am sure he will be able to cover any points he wants to make in his speech.

Across the world, this is a precarious time for investment in international development. The US Congress is battling to limit Donald Trump’s proposed cuts to foreign aid and the global fight against malaria, but still the only question is the size of the eventual cuts, not whether they will go ahead. Closer to home, the EU’s proposed 2018 budget includes a 6% cut in development spending, a cut that dwarfs any proposed increase in spending on humanitarian aid.

[Ms Ghani]

I am a little bit concerned that the right hon. Lady might be misleading the House. The 0.7% figure is enshrined in law, and surely she recognises the extra funding placed not only with the World Service but the British Council, which does a huge amount of work on human rights and education, and deals with some of the trickiest countries around the world. We should not dismiss this country’s commitment to international development.

[Emily Thornberry]

I simply refer the hon. Lady to the Red Book, where she will see that there is less money being spent on international development. It is a great worry to us all and I know it will be a great worry to her. I therefore hope she will join us in speaking to the Chancellor about our responsibilities, because we are at a time of great difficulty internationally. As I have been attempting to outline, there are cuts not only from the United States but the EU. If we are, in effect, spending less money, too, at such a precarious time, that should cause us all concern. It was extraordinary that the Chancellor of the Exchequer chose not to mention it at all in his speech.

[Dr Roberta Blackman-Woods (City of Durham) (Lab)]

Does my right hon. Friend agree that what the Government and the Conservative party do not recognise is that the commitment is to 0.7% of GDP, so when GDP falls, as we learned it did in the Budget, the amount of money going to international aid also falls? The Chancellor should have made that clear last week. [Interruption]

[Emily Thornberry]

So in conclusion, here we are debating Britain’s place in the world, in respect of a Budget that could not bring itself to mention how we are ranked globally on growth; here we are debating defence, in respect of a Budget that did not once mention defence spending or armed forces pay or disclose the Government’s secret plans to cut the size of our Army to below 70,000; here we are debating international development, in respect of a Budget that is scandalously silent on the issue, even while raiding almost £1 billion from its budget.

If that is what the Government mean by “global Britain”, I would hate to see their vision of isolation. We might see it soon enough, however, because there is one thing that sums up the Budget and the giant mess the Government have got us into: the great flourish with which the Chancellor turned, for approval, to the Foreign Secretary and announced that he would be spending £3.7 billion on preparing for a no deal Brexit—£3.7 billion of taxpayers’ money just to prepare for failure. That is exactly 100 times what the Foreign Secretary wasted on his ludicrous vanity project, the garden bridge, and 110 times what the Chancellor set aside to help the NHS cope with the upcoming winter crisis.

That is the price we are all now paying—literally—for a Government who have spent the 17 months since the referendum fighting among themselves and fighting for position, instead of fighting to get the best deal for Britain—17 months in which, as the OBR report said, we have been given absolutely no detail of the Government’s plan for trade, migration or EU finances; 17 months during which the prospect of no deal has gone from a straw man used to threaten the EU in negotiations to a realistic and increasingly inevitable outcome. And all this is because of the Government’s utter failure to agree on what they want and the Prime Minister’s total inability to show any leadership, whether to her Cabinet or her Back Benches. That is why we are in this mess, why our growth figures are in the global toilet, and why we are wasting £3.7 billion preparing for failure and short-changing the NHS, threatening to cut the Army and raiding the budget for the poorest in the world to pay for it.

The Government are not turning us into a global Britain; they are turning us into a global laughing stock—a global example of bad government, hopeless leadership and a useless Budget. For all their talk of a global Britain, the Government are driving the country at breakneck speed off a cliff, at the bottom of which lies ever greater isolation and ever deeper economic misery. The Budget was one of the Government’s final chances to apply the brakes, but instead they are spending £3.7 billion simply greasing the wheels. It might have saved the Chancellor his job, but it was a shameful dereliction of his duty.

[Several hon. Members rose—]