Budget Resolutions

Helen Goodman Excerpts

Wednesday 22nd November 2017 Commons Chamber

[Rachel Reeves]

I am not making my own forecasts; I am taking those of the Office for Budget Responsibility. What people in St Albans, Mid Bedfordshire and Leeds West want is affordable housing and the ability to get on to the housing ladder, and that requires stable house prices and an increase in housing supply. According to the OBR, however, there will be no improvement in supply on the basis of the measures announced today, and house prices will be 0.3% higher than they would otherwise have been, so the measures will not have the desired effect. I understand that the hon. Lady wants her constituents to have those opportunities, but it does not sound as though her Chancellor’s Budget will enable them to do so. In fact, I think it will have the opposite effect.

[Helen Goodman (Bishop Auckland) (Lab)]

Will my hon. Friend give way?

[Rachel Reeves]

I will make a little more progress, if that is okay.

On page 128 of its document, the OBR says that after the stamp duty changes, on the basis of its analysis, prices paid by first-time buyers will be higher with the relief than without it. Thus, it argues, the main gainers from the policy will be people who already own their properties, not first-time buyers. That is a terrible indictment of these housing policies. If that was supposed to be the Budget’s fanfare announcement, I am afraid that it has ended up being a bit of a damp squib.

[Helen Goodman]

Does my hon. Friend agree that it is absurd to have a stamp duty limit for first-time buyers of £500,000, which implies they have an income of £150,000?

[Rachel Reeves]

Yes. The OBR’s earnings forecast shows that that is another impediment to many people getting on the housing ladder. Incomes need to keep pace with the rising cost of living, especially house prices, but the average earnings forecast suggests that it will be harder still for many people to get on the housing ladder.

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to follow the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and to take part in the Budget debate today. The British economy has two problems, the first of which is low productivity growth. A worker in France or Germany can go home on a Thursday night having produced X number of things and a British worker would have to continue until Friday night to have made the same amount of stuff. The second problem is the high level of uncertainty at the moment. As hon. Members probably know, the pound fell again after the Chancellor sat down.

The forecasts show that the situation is not getting better: GDP growth is down; productivity growth is down so far that in year 1 there is no productivity growth; and we will have £40 billion less to spend and/or to have in tax cuts at the end of the forecast period than we thought we would have this time last year. As a consequence, the forecasts are also showing average earnings falling. What did the Chancellor do to tackle this productivity problem? Obviously, it is a long-run problem and there are no instant solutions—nobody would be foolish enough to think that there were—but one thing that is worth noting is that the productivity problem has a regional dimension. The Institute for Public Policy Research has found that productivity outside the south-east is 44% lower than it is elsewhere. So when hon. Members talk about investing in the regions, we see that this is a matter of not just social justice, but economic efficiency. At the moment, the north-east gets £220 per head spent on transport, whereas London gets £1,940—almost 10 times as much. Why do the Government not re-order their investment projects and do HS3, linking Newcastle to Liverpool, before HS2?

When we look at what was in the Budget for the north-east, we see that we are talking about tiny sums: the figure for the north of Tyne devolution deal was £20 million a year; the money for the Tyne and Wear Metro will not be released until 2022, which is five years from now; the only new money for the Redcar steelworks was £5 million; and the Tees valley is being offered something that has no price tag at all—it is being invited to “enter discussions”! This is the situation for not just the north-east, as Midland Connect is getting £6 million. However, the London business rate retention, which is being piloted, is going to give London £7.5 billion. As for the stamp duty cut, the average house price in my constituency is £106,000, so people are not going to benefit from that cut. So this is another £650 million that is going to go to the wealthy parts of the country.

The second aspect of all this is skills. My constituency has an excellent further education college, Bishop Auckland College, which plays a vital role, but between 2009 and 2015 further education has been cut by 27% and adult education has been cut by 50%. The Chancellor announced extra money, but at £60 million it is 2% more—that is tiny compared with the massive cuts we have had. Brexit and the public’s desire to control immigration mean we must start investing more in our skills. There are regional disparities in this area, too. Of course people do not have jobs for life, but if we are to help them through this transition we must do more for adult education. The Association of Colleges produced a manifesto that contained some very sensible things. It said we should spend another £200 per student on 16 to 19-year-olds; that we should extend child benefit to people who are in further education, just as we do for people who are doing A-levels; and that we should spend some money on public transport for young people. In my constituency, a young person on a young saver’s ticket going from Cockfield to Bishop Auckland has a weekly bill of £31 and a young person going from Bishop Auckland to Darlington for their education has a bill of £45 a week. Those are substantial numbers.

The most disappointing thing is that the Chancellor has not won more battles on Brexit and has not been able to see off those people who want a cliff edge from 1 April 2019. We all thought when the Prime Minister made her Florence speech that the Chancellor had won this argument, and on this side of the House we were all extremely pleased, but it seems that that was not so. Business wants certainty now. It is nearly Christmas; Ministers need to get their skates on.

Ordered, That the debate be now adjourned.—(Andrew Stephenson.)

Debate to be resumed tomorrow.