Budget Resolutions

Ian Blackford Excerpts

1st reading: House of Commons
Tuesday 14th March 2017 Commons Chamber

[George Kerevan (East Lothian) (SNP)]

This was a dull Budget, although I do not necessarily say that as a criticism, because it was meant to be dull. The Chancellor did most of his heavy lifting in the autumn statement, in which he amassed a war chest by borrowing more than £120 billion. The criticism of the Budget is that rather than using that war chest now to raise productivity and improve education, he has put it aside because he does not know what will happen after the Brexit deal is done.

The Secretary of State for Education made a reasonable fist of trying to explain the new T-levels. If her explanation had lasted for two or three minutes, I would have believed her, but after half an hour, I began to think that she was arguing a little bit too hard, as if she did not really believe it herself. The T-levels were one of the more innovative parts of the Budget—I do not demur from that—but if we want a technical education of the standard that exists in Germany or the Netherlands, we must have the schools, and the workshops, computers and machinery in those schools, to do the teaching. In fact, the equipment in the schools has to be better than what people will find in the factory after they have graduated. The way to raise productivity is by training in schools at the highest and most advanced technological level.

If the money that the Budget gave to increasing selective education had been put into technical schools in line with the investment that takes place in Germany and the Netherlands, I might just have believed what the Government said. However, the T-levels are yet another blind by a Government who want to pursue selective academic education for a very narrow stream of people, which will not solve the problem of productivity.

The one significant change in the Budget that had the biggest impact was the rise in national insurance for the self-employed, so let us try to connect that to the whole question of educational productivity. Rather than Members listening to me, let us take the evidence of two companies: a construction and investment company called Chiswell; and a building company called Castlemead. Does anyone know who these companies are? They are both owned by the Chancellor of the Exchequer. To give him his due, he put those companies into a blind trust in 2010. He is an honourable man, so there is no question of him influencing these companies at the moment, unlike certain Presidents of the United States who we might mention.

It is interesting to see what these companies are thinking about the economy, productivity and skills. The 2016 accounts of Castlemead say that the building industry is

“suffering from supply bottlenecks, particularly of skilled tradespeople, driving up costs.”

What does the building company Chiswell say? It states:

“The scarcity of good quality and committed subcontractors is still an issue”.

The company is considering going back into house building. Of course, this skills and supply bottleneck is largely seen among the self-employed. To sum up, the Federation of Master Builders says that 60% of SME construction firms are struggling to hire bricklayers and carpenters.

The Secretary of State claims that the increase in technical training will help to supply some of this much-needed skill demanded by Chiswell and Castlemead. At the same time, however, the Chancellor is removing the incentive to work and to take up training because he is raising the taxes of the very workers whom his companies say they need. In other words, the Chancellor is so short-sighted that he is hurting not only his own businesses but, sadly, everybody else’s.

This is not just a dull Budget because, at its heart, there is a ticking timebomb. The OBR forecast about what happens next is interesting, as it relates to whether the money will be there to provide the training about which the Secretary of State has spoken. The Chancellor was concerned to tell us that, under his chancellorship, growth has been very strong in the past 12 months. Growth in this country has been powered by consumer borrowing. If we drill into this, we find that the OBR says that in 2016 the savings ratio in the UK hit a historical low—it has gone to zero and below. People are dissaving. If people are not saving, ultimately the funds are not there to finance the investment that will raise productivity. Moreover, because saving has collapsed, the OBR does not think that there is a potential for consumer borrowing and consumer expenditure to continue to carry the economy. The OBR predicts a downturn in the availability of consumer funds over the next 12 months, so the dissaving cannot continue.

Most of the boost to consumer spending last year was a hangover from 2015, when inflation was fairly low. As real incomes were rising—a rare occurrence in the previous 10 years—people felt that they were a bit better off. However, now that inflation is rising, because the pound has tanked, we can expect consumer borrowing to disappear, so how will the economy meet its growth targets? The OBR says that the borrowing will be replaced by a rise in business investment. When I asked the OBR officials who appeared before the Treasury Committee yesterday why they thought that—where was the evidence that business investment would rise?—they had a wonderful answer, which quite took my breath away: “Business investment has been so low for so long that it is bound to go up some time.” [Laughter.] That was what they said; Members can go and read the transcript.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Things can only get better.

[George Kerevan]

Indeed, but I will believe that when I see it, and I will believe that pigs can fly.

[Ian Blackford]

May I amplify the point that my hon. Friend is making? On page 7 of its book, the OBR states that investment intentions have been put on hold, but when we turn the page, we find that business investment is forecast to grow by between 3.7% and 4.2% between 2018 and 2021. It simply does not add up, does it?

[George Kerevan]

Not only does it not add up, but it means that we will not have the investment in plant and machinery that will raise productivity. We will miss our productivity targets yet again. Since the Chancellor has amassed his war chest, he should be using it. He should not wait for two or three years to see what happens after Brexit—no general does that. What is needed is investment now. Let us get on with the T-levels. Let us invest in English schools. I think that that would be a good thing to do, but it is not what the Budget says.

[George Kerevan]

I accept that proposition but, having spent 25 years of my life teaching in further education, I know that £300 million for the whole of England and Wales becomes a tiny amount when we drill down to all the individual institutions. Can the Government not confront reality? If we want the productivity levels of Germany, we should not be talking about £300 million; we should be talking about £30 billion. If the Government do not want to spend £30 billion, that is fine, but they should not pretend that small amounts of money somehow solve the problem.

[Ian Blackford]

I learned a lot from my hon. Friend because about 35 years ago he was my economics lecturer.

We have delegated responsibility to the Bank of England through the quantitative easing programme, and that has led to a lack of balance. We have seen £435 billion of QE that simply has not worked, but we have not seen enough fiscal responsibility from the Government to create the circumstances that will deliver sustainable growth.

[George Kerevan]

My hon. Friend is right. However, it is important to pin the blame where it is deserved, because perhaps the Chancellor gets too much of it. The blame actually lies in Downing Street with the Prime Minister. When she launched her bid for leadership of the Conservative party on 30 June 2016, she said:

“If before 2020 there is a choice between further spending cuts, more borrowing and tax rises, the priority must be to avoid tax increases since they would disrupt consumption, employment and investment.”

Yet now we have a Budget that will raise the taxes of the self-employed and entrepreneurs—the people whose motivation is required for growth in the economy and an increase in productivity. It is the Prime Minister who has reneged on her leadership promise; the Chancellor is only doing her bidding.

This Budget claims to address the questions of education and productivity, but it is actually about selectivity and privilege for the narrow few. Let me tell the House what it has not done. For the first time in 100 years, the millennial generation is earning less than its parents. The Budget does not deal with that, because the Chancellor has sat on his war chest. Home ownership among middle earners is falling for the first time in 50 years. Mrs Thatcher would be turning in her grave if she heard that that was happening under a Conservative Government. By 2020-21—the end of the forecast period—average incomes will be a fifth less than they would have been if growth had continued at pre-crisis levels. There will be £5,000 less for every household.

The Conservative Government have not delivered a return to wealth for the ordinary person. The Chancellor’s freeze on universal credit and housing benefits means that one person in seven will have a lower real income in five years’ time. This is a Budget that does not address the real issues of inequality in this country. It is a Budget for inertia and complacency, and I will vote against it.

--- Later in debate ---

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

This Budget was a missed opportunity to help deliver confidence and growth. The OBR has stated that the future is uncertain and that any central forecast is most unlikely to be fulfilled, which is a damning statement as it is ultimately the Government’s responsibility to create certainty.

Brexit approaches us like an enormous black cloud threatening stormy weather, which is perhaps not all the Chancellor’s fault. After all, the Prime Minister sets the direction. As the storm approaches, in the modern parlance of giving names to impending storms, we should call it Storm Theresa. This Budget was another missed opportunity to deal with the unfairness of the steep rise in women’s pensionable age over too short a timeframe. That from a Budget delivered on International Women’s Day. The irony is not lost on the WASPI women.

As thousands of WASPI women demonstrated outside Parliament, making such a tremendous noise that we could hear them clearly in this building, the only man who apparently could not hear was the Chancellor—deaf to the legitimate demands of the WASPI women and desperately hoping that their calls for fairness and equality would go away. Well their calls will not go away. Like the message communicated last week, the volume is going to be turned up. The campaign is gathering momentum and the Government will have to listen.

Some 245 Members of Parliament have lodged petitions asking for action on the WASPI women. There was a debate in Westminster Hall on 9 February, and the Chair accepted the challenge that the House had not considered the effect of state pension changes on working class women after a woeful and disrespectful response from the Under-Secretary of State for Welfare Delivery, the hon. Member for Romsey and Southampton North (Caroline Nokes). The fact that, following the challenge to the determination of the motion, the matter has not come back to the Chamber for determination is disgraceful. We will continue to pursue the matter.

Of course, the debate followed a Division in this Chamber on 1 December 2016 in which the House divided by 106 votes to two against the motion that this House had considered the acceleration of the state pension age for women born in the 1950s. There has been no Government response to that vote. The Government are choosing to ignore the message that this House delivered.

In all our discussions on the Women Against State Pension Inequality Campaign, the focus has been on the 2.6 million women who are supposedly affected—the Government have continually referred to that number—but a freedom of information request that came to light last Friday now alleges that the actual number is not 2.6 million but 3.48 million women. If those reports are accurate, nearly 1 million more women than originally thought are set to miss out on their pension entitlement. It is absolutely outrageous if that is the case, and I ask the Minister to give us clarity on that matter in his summing up.

What is the figure, and why the discrepancy? Why at this stage do the Government not appear to know the exact number of women affected by the changes? We have had the farce of it taking successive Governments 14 years to communicate formally with any of the women affected, and this latest twist adds insult to injury. If the reports are true, how did the Government get the figures wrong? We need answers from them today.

The UK Government must recognise that pensions ought to be a contract, not a benefit. The Budget presented an opportunity for them to live up to that contract. It is clear that delivering fair pensions is not a high priority for the Government. With inflation spikes forecast, the Budget was completely devoid of any mitigating measures to future-proof pensioner incomes. We need a clear commitment that the triple lock will remain in place beyond 2020 and that mitigation will be put in place for the WASPI women. The SNP has already published a paper that explains how the Government can push back the timescales for increasing the pensionable age for women, at a cost of £8 billion in this Parliament. That is affordable, given the £30 billion surplus in the national insurance fund. Why did the Government not take that opportunity in the Budget? What is it going to take for them to act?

There is talk of another referendum on Scottish independence; I wish to make it clear that pensioners in Scotland would get justice and fair pensions from an SNP Government—things that are sadly lacking from the UK Tory Government. The OBR’s economic and fiscal outlook is a damning indictment of Government policy over the past few years and demonstrates the lack of vision from the Government on our economic future.