Budget Resolutions

Ian Blackford Excerpts

Wednesday 6th March 2024 Commons Chamber

[Harriett Baldwin]

I wholeheartedly endorse what my right hon. Friend said. She is right to highlight the importance of investment in childcare in helping female employment growth, which has been remarkably strong in the past 14 years. I am confident that the measures announced will allow us to make further progress with the increasingly non-inflationary growth capacity of the UK economy.

Other measures announced today will help on the growth front. Cutting national insurance is also a smart way to help growth. It not only puts more money in working people’s pockets—27 million people across this country will see an extra £900 a year in their bank account—but will make work more attractive. We have heard from the Office for Budget Responsibility that cutting national insurance has the biggest marginal impact on bringing people back into work; the figure from the last cut was 94,000. It will be interesting to see whether the OBR continues to expect this to have a significant impact. It is a really smart way to cut taxes for working people—and the measure is UK-wide, so the effect will be felt in Scotland as well.

I turn to the issue of debt falling. We can see that the bond markets have stabilised, and OBR numbers confirm progress on debt. I draw the House’s attention to a report that our Committee recently published on the Bank of England and its quantitative tightening. It is selling £100 billion of gilts into the market this year, and it has acknowledged that that increases the cost to the Exchequer of borrowing by between a tenth and a quarter of a percentage point. Our Committee wanted to flag up the impact that that could have, and to send a message to the independent Bank of England about some of the ways in which quantitative tightening has an impact on the real economy. As a cross-party Committee, we were obviously never going to agree on the level or scope of taxes, but one thing we have unanimity—

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

rose—

[Harriett Baldwin]

Does the right hon. Gentleman wish to intervene on the fact that the rate of tax is higher in Scotland?

[Ian Blackford]

I wish to raise a point about quantitative easing, which the hon. Lady mentioned. Obviously, there will be a very significant supply of gilts in the coming period, which will have an impact on yields. That will influence what the Bank of England does on the interest rate cycle, and crucially, it will make it difficult to see any material growth in the money supply, particularly in M4, in the coming period. That will have an impact on growth, given where we are.

--- Later in debate ---

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

Today is very much a missed opportunity. Much has been said by colleagues, particularly on the Government Benches, about levels of debt and tax, but the fundamental issue, going back to the financial crisis in 2008-09, has been a failure to deliver sustainable economic growth. We heard much from the Chancellor today about growth and productivity, but when we dive into the detail, it simply does not add up.

As my right hon. Friend the Member for Dundee East (Stewart Hosie) said, the starting point is GDP per capita. In many respects, the starting point for today’s debate should be what has been happening over the past couple of years. If we take the period since March 2022, GDP per capita has fallen by as much as 1.5%. Indeed, the OBR tells us that household incomes will not get back to the pre-pandemic level until 2025. The harsh reality for all our constituents is that they are poorer.

We have heard all the brouhaha today about cutting tax, and we have had some criticism of the OBR, but we need a set of forecasts on which to base the decisions that we take. According to the OBR forecast for the next five-year period, the average GDP growth per annum is one and two-thirds per cent.—the same level as it forecast last November. For all the changes that have taken place, there is zero movement on the needle on expectation of economic growth.

I hope that we have a more detailed discussion on these matters. Members have touched on the issue of growth and, I would say, the issue of productive potential in the UK. Let us have a debate about where that productive potential is and how we grow the economy, because, quite simply, I do not see that in what the Government have come forward with today.

These things are based on the OBR book, as has been talked about, but let us look at the detail. The headroom that the Government have is—let us be honest—limited and is based on an assumption that the fuel price escalator takes place every year from now. Well, it has not taken place since 2011. In that sense, what the Government have told us today about their headroom is an absolute fantasy.

Tax as a percentage of GDP is going to hit 37.1% at the end of the forecast period. We hear many Tory MPs say that tax is coming down. No, it is not; all that is happening is that some of the tax increases are being ameliorated. Fiscal drag has been much talked about, but the forecast is that the fiscal drag from the failure to increase tax bands will result in a £40 billion tax take, so let us have some honesty about what is going on. Where is the plan for growth? Where is the plan for an industrial strategy? I am glad that my colleagues in the Scottish Government are taking this issue seriously—we will have an industrial council.

Much has been said about Labour’s plans—now backtracked on—for £28 billion of green investment, but we need to recognise the scale of the opportunity to decarbonise the economy and create jobs. Let me take the example of green energy in Scotland. We can increase our green energy output fivefold and create up to 235,000 jobs. If we do not do that, other countries will make that investment and benefit from the opportunities in green energy. We need to grasp those opportunities and ensure that we can transition the economy. We need to ensure that we are creating the circumstances whereby people want to come and invest here.

Let me turn to public spending. Again, in real terms, public spending per capita over the next few years will be flat. Of course, that comes after many years of constraint on our public services. Taking into account the investment going into the ringfenced areas, notably the NHS, between now and 2028 the real-terms decline in public spending will be 2.3%. What is 2.3%? It is about £20 billion. We often hear people say that austerity has not happened. My goodness! Look at our constituents and the cuts that are taking place. Look at local authorities in England and the challenges they face. The Government are taking out £20 billion over the next few years. What is taking place is absolutely shocking. [Interruption.] I hear somebody chuntering from a sedentary position about Scotland, but at least we have tried to ameliorate some of the effects of the cuts. We have invested in the child payment to drive people out of poverty.

The harsh reality of this Budget is that there is no hope for people in Scotland. It is more of the same: low growth, no increase in productivity, no vision and no investment in the green economy. I say to voters in Scotland that, come the general election—bring it on!—they will have a choice: a Government in Scotland who have a focus on investing in an industrial strategy for delivering the new green jobs for the next generation; or more of the same from broken Britain and more pressure on public services. That is the choice that people in Scotland will face on the back of this Budget.