Graeme Downie
Main Page: Graeme Downie (Labour - Dunfermline and Dollar)Department Debates - View all Graeme Downie's debates with the Cabinet Office
(3 weeks ago)
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Jeremy Hunt
I thank my hon. Friend for his intervention, but there was an even more basic difference between our Budget earlier this year and this one: as a result of measures in our Budget, the growth rate went up, whereas as a result of measures in Labour’s Budget, the growth rate went down.
Reducing the number of working-age people claiming health-related benefits back to pre-pandemic levels would save £34 billion a year. It would bring more people into the workforce and improve the wellbeing of the individuals concerned, but welfare reform was dropped from the King’s Speech, and yesterday’s Budget saw the welfare bill rise by an average of £13 billion a year. According to the OBR, increasing public sector productivity—another area that we did not hear much about—to pre-pandemic levels would raise £20 billion a year. We heard some warm words about that, but delivering it requires difficult negotiations with the unions.
That was too difficult for the Government, who cancelled plans to reduce the civil service to pre-pandemic levels, increased the salaries of train drivers by £10,000, and gave junior doctors a 22% pay rise—all without asking for a single productivity improvement in return. It was no strings for the unions, but no help for 2.5 million pensioners in poverty. The Government should be ashamed. Picking the pockets of businesses, which do not vote, is the easy path, but when it damages economic growth, the result is less money for the NHS, less money for schools and less money for the armed forces, which is why, in the end, Labour Governments always run out of money.
Graeme Downie (Dunfermline and Dollar) (Lab)
The right hon. Member was keen to quote the IFS earlier. Does he also agree with the IFS that
“it was not credible for Jeremy Hunt to claim that planned departmental spending limits would hold”
and there was
“no world in which 2 per cent rises would have happened and been sustained”?
Jeremy Hunt
I always listen to the IFS, and indeed to the Resolution Foundation, very carefully. I think that the IFS was right—[Interruption.] Let me answer the point, if I may. The IFS was right to say that it would be very challenging to hold to 1% spending assumptions, but in the Budget earlier this year I explained exactly how we would do that. I asked the NHS, “How are we going to improve efficiency so that we can live within tight spending limits?” The NHS said, “We need to overhaul the IT systems.” We gave the NHS £3.5 billion to do so, and in return it was able to deliver 2% productivity savings.
Jeremy Hunt
The hon. Member shakes his head, but yesterday the Chancellor said that she was going to roll that out to the whole of the public sector. I think that it is possible to do so; my concern is that doing so involves difficult decisions, and the track record of this Government is that when those decisions involve a conversation with the unions, they run a mile.
The final spurious claim from the Chancellor was that yesterday’s draconian measures were necessary because she had received the worst economic inheritance since world war two. Not a single independent economist supports that claim, and it is not hard to see why. Inflation is at 1.7%, around half what it was in 2010. Unemployment is at 4%, nearly half the 2010 level. If the public finances were in the same state today that they were in back in 2010, the deficit would now be £160 billion higher, which is the entire budget of the NHS. Instead, we left behind a deficit that had been halved, and was lower than that of France, Germany, Italy, Japan and the United States.
Sir Geoffrey Clifton-Brown
I thank the hon. Gentleman for his comments about my election, and the PAC looks forward to scrutinising all Government expenditure carefully. He has fallen into the same trap as everybody else. Unfortunately, the OBR said yesterday that it could not find the £22 billion black hole. I do not have the exact quote, but the Government were advised, “When in a black hole, stop digging.” I suggest gently to Labour Members that they stop digging, because it could not be found.
The Chancellor announced that she expects national insurance contributions to rise by a staggering £25 billion, although she promised in the election that they would not. During the election, she said that the measures would not be a tax on working people; clearly she believes that entrepreneurs, who spend their time, energy and talent forming new business, are different. They will be heavily taxed, and changing the employment rules will make it more difficult to employ extra people. A 15% national insurance tax and a savage cut to the threshold, down from £9,100 to £5,000, will harm any business in my constituency employing more than four people. It could be the difference between a business growing and providing more jobs and a business not surviving.
We must all remember that the private sector, and individuals who work hard and put their livelihoods on the line, take financial risks to boost productivity and provide the growth the country needs, and they must be nurtured if they are to succeed. Small businesses account for more than 90% of all businesses.
Graeme Downie
I ran a small business for at least 10 years. Does the hon. Gentleman welcome the increase in the Budget to the allowance on national insurance from £5,000 to £10,500, which will protect small businesses and help them grow?
Sir Geoffrey Clifton-Brown
I have run a business for a much longer time than that. There are many measures in the Budget that will be very deleterious, especially for the smallest businesses, and we will have to wait and see how they turn out.
The Budget will have serious implications for farmers and rural communities in my constituency. I refer to my entry in the Register of Members’ Financial Interests, as a farmer. I am incredibly disappointed that from 2026, agricultural property relief and business property relief will apply only to the first £1 million of assets. That will worry many in my farming community and those in many other constituencies. It will result in fewer farms to rent.
Equally damaging will be the cap on the amount that can be transferred to spouses for inheritance tax purposes. The purpose of that tax relief was to ensure that working farms that provide our food will not have to be split up after the death of a family member. Very few farms are valued under £1 million—basically only those of less than 100 acres are—and the rest will face a 20% tax. That will lead to the loss of jobs and livelihoods in the North Cotswolds and elsewhere. It will change the fabric of our countryside permanently. The structure and productivity of agriculture will change as more and more farms are split up and sold off as a result of this measure.
Sir John Whittingdale
Every country in the world faced enormous challenges. The record of the Conservative Government in tackling those challenges bears comparison with any other country. That cannot be diminished. I will say a little bit more about the NHS in particular as I move forward with my remarks.
I saw that Alastair Campbell tweeted in defence of this particular Budget. He said:
“It was a very Labour Budget”.
I would certainly agree with that. It put up spending massively, borrowing massively and tax massively—to that extent, it was a very Labour Budget. In the first 30 minutes of the Chancellor’s speech yesterday she did not actually make any announcements; she simply tried to justify some of the measures she was going to introduce by talking about the fictitious black hole. The shadow Chancellor, my right hon. Friend the Member for Godalming and Ash, has already adequately exposed why that is a fiction, and the Office for Budget Responsibility was unable to find any evidence for the figures that she quoted.
Let us be clear: tax and spend is a matter of choice. It was the choice of this Government to break all the promises that they made at the last election. It was their choice to break their manifesto commitments not to increase national insurance contributions. They said that they would not increase tax on working people, but in many areas the measures that they have introduced will have a significant impact on working people.
The denial that there was a tax bombshell to come is extraordinary, given that they subsequently announced a £40 billion one, which will result in the tax burden in this country rising steadily to what will be the highest ever on record. Yet this is a Government who took office saying that their priority would be to fuel growth. I can say to the Minister that he cannot fuel growth by punishing the businesses that will be responsible for creating the jobs and wealth of the future. The Office for Budget Responsibility’s forecast following the Budget shows that growth is forecast to fall steadily.
I want to speak about one or two of the tax choices that have been made—they, too, are a matter of choice. It was up to the Chancellor to decide how to raise the extra revenue. Even before the Budget, we already heard of one extremely damaging, painful decision—the withdrawal of the winter fuel allowance—to save money by taking it away from pensioners across the country. I have received many emails expressing great disappointment that the Chancellor pressed ahead with that measure and did nothing yesterday to reduce its impact.
It is primarily businesses that will pay the price in this Budget. The increase in employers’ national insurance contributions is estimated to cost them £25 billion, which represents £615 more for every single employee of a business over the threshold. What is the result? If the cost of employing people increases, that can have only two consequences: lower wages and fewer jobs. Each of those will hit working people. On top of that, businesses will face an increase in the national minimum wage. That will hit the businesses that are already finding it hardest to survive. It will impact on the care sector and the hospitality sector—already under enormous pressure. The decision to increase the national minimum wage for young adults by 16% will make it even harder for those people to find jobs.
Just 10 days ago the Government heralded the investment summit, which was supposed to persuade international investors that this was a country they should want to invest in. Yet a week later, we have higher capital gains tax and higher stamp duty, and a war declared on non-doms. Instead of investment coming into this country, already we are seeing the flight of people living here—the entrepreneurs on whom our future success depends are leaving in droves.
Graeme Downie
The right hon. Member mentioned people fleeing the country. Could he point to at least three examples of anyone at the investment summit now saying that they will withdraw that money?
Sir John Whittingdale
The investment summit announced a lot of investment for which the Conservative Government were actually responsible. Let us wait and see. The Budget was yesterday. Businesses will have to look very carefully at their plans, but I do not expect them to do so in a mere few hours. I am happy to have this debate with the hon. Gentleman again in a few weeks’ time once we have seen the impact of the measures that have been announced.
There are two specific measures that I want to touch on because they have a particular impact on my constituents. One of them, which has been mentioned a number of times in this debate, is the removal of agricultural property relief. The Country Land and Business Association estimates that that will affect 70,000 businesses. Family farms in particular will feel the impact worse. It is hardly surprising that the president of the National Farmers’ Union has said:
“This Budget not only threatens family farms but will also make producing food more expensive… The shameless breaking of those promises on Agricultural Property Relief will snatch away much of the next generation’s ability to carry on producing British food, plan for the future and shepherd the environment.”
This is a measure that the Labour party said it would not introduce, but it has broken that promise and is now proposing to introduce it, with enormous damage not just to farmers but to food security and our environment.
The second measure that I would like to touch on—[Interruption.] Madam Deputy Speaker, I see you have acquired Speaker’s cough. I will heed your warning, but I want to mention VAT on private schools. In my constituency I have three small independent schools: Heathcote school in Danbury, Elm Green in Littleborough and Malden Court school. The parents who send their children there are not rich; they make huge sacrifices. In Essex we are very fortunate to have really good grammar schools. Those parents make that sacrifice to help their children hopefully get into the grammars, but they will not be able to continue if there is 20% increase in fees as a result of the imposition of VAT. They will withdraw their children and those schools will be threatened with closure. The consequence is that the children will need to be placed in state schools, which are already under huge pressure. My constituency is growing rapidly, and there is enormous pressure on schools. This will simply make it worse. This policy is simply vindictive and will do enormous damage.
Very quickly, I note that the Minister for Secondary Care, the hon. Member for Bristol South (Karin Smyth) has come back into the Chamber, and she would be disappointed if I did not say that I welcome the hospital building programme in the Budget and the announcement of new money. However, once again I reiterate that a hospital in my constituency is threatened with closure. We have been promised a new one for 30 years or more, under both my Government and the Government before that. She was good enough to see my right hon. Friend the Member for Witham (Priti Patel) and me the other day, so that we could make the case. If she does hold this money, I hope that she might be able to direct some of it to my constituency.
This Budget is one of the worst I have heard in all my time in this place. It will do enormous damage. I am grateful for this opportunity to put that on the record.
Graeme Downie (Dunfermline and Dollar) (Lab)
I congratulate all those on this side of the House who have made their maiden speeches this afternoon. It has been absolutely fantastic to hear all those stories.
It has been a long 14 years since we had a Government and a Budget that will deliver for Scotland, the UK and working people. We have had 14 years of austerity, 14 years of chaos, seven Chancellors and 19 fiscal events, but not one of them delivered a thing. Opposition MP after Opposition MP—wherever they have gone—welcomed investment and said, “I want a new hospital; I want this and that,” but not one of them had an idea about how to pay for it. Yesterday, I was proud to sit and listen to a Chancellor who was being honest with the British people about the mess that was left, what we will spend, the improvements that we will make, and how we are going to pay for them.
That is what changed yesterday as we heard the first female Chancellor deliver the first Labour Budget in 14 years, and what a Budget it was. It boosted public investment by over £100 billion and maintained the fuel duty freeze and 5% cut, which are vital for families and small businesses in Dunfermline and Dollar, and across Scotland and the rest of the United Kingdom. Alongside that, the Budget supported the take-up of electric vehicles and abolished non-dom tax loopholes, raising £12.7 billion. It increased, extended and reformed the energy profits levy, as we promised to do, and kick-started GB Energy, which is headquartered in Aberdeen, to deliver the clean energy and green jobs that we will need in the future. Despite GB Energy being described by Conservative Members as a vanity project, it will deliver the infrastructure that this country needs, which they failed to deliver in 14 years.
We have increased the employment allowance for small businesses to £10,500. As someone who used to run a small business, I know how well that will be received. We have preserved the state triple lock on pensions, which will see over 12 million pensioners gain up to £475 next year. We have provided an uplift of £2.9 million for the defence budget, while maintaining £3 billion in annual support for Ukraine for as long as it takes.
As has been mentioned by my hon. Friends, this UK Labour Government will deliver a total of £47.7 billion in Scotland—the largest settlement in the history of devolution. That includes an additional £1.5 billion for the Scottish Government this financial year, and an additional £3.4 billion next year.
Andrew Rosindell
It is a bonanza of expenditure; a lot of money is being spent. The hon. Gentleman said earlier that he would explain how it will be paid for. Just for clarification, will he please explain where all this money is coming from and how we are going to pay off the debt in the long term?
Graeme Downie
I believe the Chancellor outlined all of that absolutely perfectly yesterday. I would never seek to improve on the performance of our fantastic Chancellor, from whom we heard just yesterday.
Whereas the rest of the UK has only had to endure 14 years of the Conservatives’ incompetence, we in Scotland have suffered even more. We have had 17 years of the SNP blaming the Tories for its own economic incompetence and decisions. We have had years of two failed Governments who have been content to play political games, rather than come to the help of the people of Scotland.
Frank McNally
My hon. Friend is making an excellent speech. Following yesterday’s Budget, there will be a significant increase in investment in further education, which is critical to delivering the skills revolution that we need. In Scotland, further education has been decimated by the SNP Government. Does he agree that they need to recognise the important steps taken by the Chancellor and follow suit?
Graeme Downie
My hon. Friend makes an excellent point. As I and other Members from Fife know, we are celebrating the 125-year anniversary of Fife College. I will attend a college dinner this week and I will make exactly that point to those attending. Further education is critical in providing the skills that Scotland needs, as I said yesterday during Scotland questions in relation to the defence sector. We need to ensure that the investment being provided by this Government is best used in Scotland to develop the skills that we need.
We have had years of two failed Governments but that time is coming to an end. It will truly end only in May 2026 when the people of Scotland have the opportunity to elect a Scottish Labour Government. But before the SNP exits stage right—although SNP Members seem to have exited the Chamber during this debate—I urge it to use the record funding wisely and start delivering for the people of Scotland.
The SNP Government must abandon their austerity programme of cuts to public services and a focus on their pet projects as they have gone along. They might be on their way out the door, but the least they owe the people of Scotland is not to leave the same kind of mess as their partners in constitutional distraction, the Tories, have left for the rest of the UK. That includes projects such as the Kincardine health centre in my constituency. Like the health centre mentioned by my hon. Friend the Member for Glenrothes and Mid Fife (Richard Baker), that has been delayed by more than a decade after being promised by the SNP.
Alongside the good news, we heard the Chancellor outline the mess and legacy left after 14 years of Conservative Government, who made announcements with no funds allocated. Among the empty promises from the Conservative Members was the £500 million of cultural funding promised to the city of Dunfermline in my constituency. While it is absolutely clear that the blame for that lies with the previous Government, it is none the less disappointing for the city of Dunfermline that the Government have been forced to consult on and review the funding. Dunfermline is an old city and the historic capital of Scotland, but it was officially awarded city status only in 2022. It is a growing city, which has the potential to be the driving force for the economy of Scotland. To achieve that, however, we need the right investment and support.
As the consultation on cultural funding is under way, prior to the Budget, I also wrote to the Chancellor of the Exchequer asking for assistance and support to find a small amount of investment for the port of Rosyth in my constituency to enable a new, regular passenger and freight service between Scotland and the continent. With major local employers such as Mowi and Amazon UK in the area, a ferry service to Europe would further strengthen their position as major contributors to the Fife economy and provide the option of more environmentally friendly logistics by removing truck journeys from the road.
Both the previous UK Conservative Government and the current SNP Scottish Government have talked about supporting that project, but neither have been willing to make the necessary investment. Having being failed by the previous Government promising money that they did not have, will Ministers meet me and others behind these plans to find ways of perhaps funding that commitment?
Yesterday, we truly turned the page on 14 years of Tory austerity and have given the UK and Scotland the chance to grow and succeed again. I will be the proudest Member of Parliament to support this Budget, which fixes the foundations of our country and sets us on a path to prosperity and growth in the future.