Budget Resolutions and Economic Situation

Grahame Morris Excerpts

Thursday 16th March 2023 Commons Chamber

[Mel Stride]

Our policy and rules around sanctions have not been changed by the Budget, but it is important that where somebody can work and is offered support to work and decides to take benefits and not engage with the system, sanctions can under certain circumstances be appropriate. That is not to say that sometimes people will not have perfectly reasonable reasons for not engaging with the jobcentre, in which case no sanction will be applied. The hon. Gentleman seems so often to be suggesting that there is no scope or role for sanctions whatsoever within our benefit system, and that is not going to help the very people we are out to support.

This Budget will help break down the barriers stopping people moving into work or progressing within it, and it is most particularly a Budget for those who face the greatest employment challenges. It is a Budget for disabled people and those with health conditions, with new and extended employment support, better integration of work and health services, and, through our health and disability White Paper, the biggest reform to the health and disability benefits system for a decade. It is a Budget for older workers, with the removal of disincentives in the pensions tax system, and with more help to retrain and reskill and more tools to help people plan for the future.

[Grahame Morris (Easington) (Lab)]

I am fascinated by the Secretary of State’s contribution and the improvements in pensions, particularly for high earners, but did the Chancellor forget to mention the injustice to mineworkers and the opportunity presented to address that historical injustice through a fair share of the Mineworkers’ Pension Scheme to assist some of the people who are existing on meagre and modest pensions?

[Mel Stride]

I am very happy to engage in detail with the hon. Gentleman on the specific point he raises, but as to the general point of removing the pensions lifetime allowance, Labour has to decide exactly what its policy is. The right hon. Member for Leeds West (Rachel Reeves) tells us this afternoon that she is against the policy, but we know that it will mean that thousands upon thousands of additional highly skilled people working in the national health service will as a consequence stay in the national health service where we need them. The shadow Health Secretary, the hon. Member for Ilford North (Wes Streeting), who is in his place on the Front Bench, made exactly the same point not that long ago—[Interruption] —saying that a failure to act could cost lives. I say to the right hon. Lady: what is it? Political opportunism, or standing shoulder to shoulder with our national health service and the millions of people up and down the country who depend on it?

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[Grahame Morris (Easington) (Lab)]

It is a great honour to follow my hon. Friend the Member for Slough (Mr Dhesi) and his excellent speech. In the time that I have, I wonder if I might focus on one specific issue —council tax and its failings. I was very interested in the contribution of my hon. Friend the Member for Eltham (Clive Efford), when he spoke about the advantages of a wealth tax for those with more than £10 million in assets. It should not be discounted—I think there is a lot of merit in it. My hon. Friend the Member for Leeds East (Richard Burgon) has also advocated such a policy.

We heard a lot from the Chancellor yesterday. There were a lot of Es flying around— [Interruption.] I was paying attention, Madam Deputy Speaker. There are a couple of Es in levelling up, but unfortunately Easington did not get any levelling-up money. That is meant to be the Government’s priority.

It would be worthwhile for the Government to address the fundamental unfairness of council tax. I want to explore why replacing council tax with a proportional property tax should command the support of those on the Opposition and Government Benches. It is advocated by the Fairer Share campaign, which I recommend the Minister and other Members have a look at. Fair taxation is the foundation on which Labour can build a better Britain and help to secure the missions recently set out by the Leader of the Opposition. For the Conservatives, abolishing council tax in favour of a proportional property tax would demonstrate a long-term and systematic commitment to levelling up. It would help to alleviate and mitigate the cost of living crisis and deliver a tax cut—a council tax cut—to more than 75% of households in the country, and 100% of households in Easington.

The problem with council tax is very simple. In the days ahead, the majority of people will receive a council tax bill. At Prime Minister’s questions, a lot of political capital was made about Conservative councils being better than Labour councils, but the truth is that almost all councils, irrespective of their political colour, are facing huge pressures. Most people will face a council tax increase of about 5%. The County Councils Network reported in February that three in four councils will increase council tax by the maximum amount permitted. This is an issue that cuts across all parties. My county council, Durham County Council, is led by a Conservative-led coalition. It faces a £10.2 million deficit, despite raising council tax by the maximum—5%—and proposing cuts of £12.4 million.

The truth is that the system is broken. It is the poorest households that pay more and get less, while councils remain unable to fund vital services. Currently, households are taxed based not on their ability to pay, but on the 1991 valuation of their home and the area in which they live. That means that local authorities must impose tax levels on their residents to cover the costs of essential statutory services such as caring for looked-after children and adult social care regardless of the wealth, or lack of it, in those communities. For that reason, an £8 million townhouse in Westminster bizarrely, or perversely, ends up paying less council tax each year than somebody living in a £150,000 home in my constituency. The most affluent areas have other advantages, with Westminster City Council better placed to raise revenues through business rates, fees and charges such as car parking charges compared to poorer local authorities like mine.

This is the opposite of levelling up. It is widening the economic gap between London and the regions, as well as between the richest and poorest in society. The theme of the Budget yesterday was boosting employment, and the key to that aim is strengthening regional economies to sustain additional employment. A proportional property tax strengthens local economies and supports employment by cutting taxes in the regions by £6.5 billion. A huge annual economic stimulus of £6.5 billion would empower people to participate in their local economy. For the poorest communities such as mine, the average household saving could be as high as £900 a year.

The Government’s refusal to invest in our poorest communities will hold back regeneration, growth and employment. Rather than the Government’s tax and spend investment policy, a proportional property tax is much more efficient at allowing the poorest communities to keep more of their own money to spend and invest in their own local economy as they see fit. That might be a philosophy that the Conservatives could agree with.

The success of the levelling-up fund should be judged on the extent to which it narrows the economic divisions in our country. In fact, those divisions are widening and inequality is growing. The north-east region as a whole received just £108.5 million, compared with £210.5 million and £151.3 million allocated to the south-east and London respectively.

I am disappointed that the Chancellor said nothing in the Budget about the regressive council tax. I am proud that the Durham County Council Labour group is the first in the country to call for the introduction of a proportional property tax to replace the iniquitous council tax. It is a simple and fair tax applied equally, no matter whether someone lives in Peterlee, Pimlico, Belgravia, Blackhall, Horden, Hartlepool or Hounslow. The Government can deliver a tax cut to more than 18 million households, support regional economies and help levelling up. A proportional property tax is a levelling- up tax. I hope that both the Government and the Opposition will support it.

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[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Thank you, Madam Deputy Speaker, for calling me to close the Budget debate this evening. I begin by acknowledging all 28 speeches we have heard today, but I want to pay a particular tribute to my hon. Friend the Member for West Lancashire (Ashley Dalton) for her outstanding maiden speech. I thought she captured the history and pride of her constituents, but also their ambitions and aspirations, in a truly impressive way. I also want to refer to the fact that she is a graduate of the Jo Cox women in leadership scheme. For the shadow Chancellor and me—we were both asked to speak on the day Parliament was recalled following the loss of Jo—to be able to open and close this debate and see a graduate of that scheme take her place and give a maiden speech like that, of such quality, is truly one of the legacies that Jo deserves. I know the whole House will share that sentiment.

As we have heard, this Budget has come at a time of profound importance for the country. Many Members have said that too many of their constituents are not just struggling to afford the little things that make life worth living, but finding it a stretch to afford the basics. We see every public service squeezed to breaking point. Frankly, very little in this country is working as it should. At the same time, there is an urgent need to proceed with net zero, and win the prize of the jobs and industries that will sustain our economy for generations to come. Acknowledging these challenges is not talking Britain down; it is facing reality head-on.

Yet, after looking at those challenges, what was the Chancellor’s big idea yesterday? What was the rabbit out of the hat and the only thing we did not know was coming? It was that huge tax giveaway for thousands of the very highest earners, during a cost of living crisis. I think we have learned something in this debate today, because we have found out that the Government cannot even tell us how many doctors that will benefit. I do not think they are unwilling to tell us; I do not think they know. As my right hon. Friend the Member for East Ham (Sir Stephen Timms) said, they never seem to miss an opportunity to give something away to those at the top.

Most of all, we have had another Conservative Budget and another set of lost opportunities to rise to the challenges we face. Fundamentally, it is a Budget for growth that downgrades growth. Many Members have rightly highlighted that the cost of living crisis is dominating the lives of their constituents and the hard-working people who have seen their wages stall while prices have risen.

[Grahame Morris]

My hon. Friend is very kind to give way, and he is making an excellent speech, but can I just ask his opinion about left-behind areas? It is all very well for the high earners who are getting advantages with their pension pots, but does he see the benefits, particularly in former mining communities, of implementing the recommendation of the Business, Energy and Industrial Strategy Committee report and returning the investment fund and the full miners’ pension scheme surplus to retired miners and their widows, who are struggling with the cost of living crisis, not least with huge fuel bills?

[Jonathan Reynolds]

I am grateful to my hon. Friend for his question. He will know that he represents several members of my family, so I have personal knowledge of his constituency, and they think he is a very fine Member of Parliament. Because of my family and my personal heritage of growing up in County Durham and mining communities, I know the issues he talks about, particularly those around profit sharing and the surplus and reserves of the mineworkers’ pension scheme. There is a case to look at there, and I would be more than happy to engage with him on those issues for the benefit of his constituents and those of other Members in the Chamber.

We are seeing people cutting back on all they can, but still being left with too much month at the end of their money. The British public need only ask the following questions. Are they better off after 13 years of this Government? Are they safer? Are the public services they rely on working better than a decade ago? No, no, and no again. At the core of that failure is the hard truth that, over 13 years, the Government have turned the UK into the worst-performing major economy in the world. That failure is at the heart of what is hitting people’s pay packets and public services. As we have heard many times in the debate, the British economy is the only developed economy in the world that has still not recovered to its pre-pandemic size.