Budget Resolutions and Economic Situation

Jessica Morden Excerpts

Monday 20th March 2023 Commons Chamber

[Jessica Morden (Newport East) (Lab)]

The Chancellor’s statement last week, which was the first proper Budget in 17 long and chaotic months, reflected the unacceptable reality of 13 years of Conservative failure, with growth downgraded, wages lower now in real terms than they were in 2010, the highest tax burden on households since the second world war and, over the last two years, the biggest hit to living standards since records began. Constituents reflect this, such as the resident in Newport East who said to me last week:

“Last year for my gas I was topping up £20 a week, now it’s over double that. I’m not sure what I am supposed to do. I cannot afford to live.”

Last week’s Budget said nothing to her, and nothing to all those struggling with the cost of living crisis or the £11,000 hit since 2010 due to stagnant wages, which was so ably outlined earlier by my hon. Friend the Member for Manchester Central (Lucy Powell). There was no redress for my constituent whose plans for retirement this year were ruined by last autumn’s disastrous mini-Budget, which wiped out a substantial amount of her pension. Politics may have moved on, but our constituents are still paying for the economic carnage caused by the Conservative party in that mini-Budget, including homeowners, with average interest rates on outstanding mortgages now twice as high as forecast two years ago.

It is notable that the Chancellor did find time for one permanent tax cut in the Budget—the £1 billion tax reduction for the richest 1% of earners via changes to pension allowances. It is an outrageous tax giveaway for the rich, while millions of older people on modest incomes will find themselves paying more tax because of the six-year freeze on personal allowances. It is a clear reminder that whichever Tory Chancellor sits in No. 11 Downing Street—and we have had a few in recent years—the same skewed sense of priorities remains.

One of the themes of today’s debate is innovation, which is at the core of our steel industry, including at Llanwern steelworks in my constituency of Newport East. That the word “steel” did not feature once in the Chancellor’s statement or the Budget document itself speaks volumes. It proves that, despite the Chancellor fleetingly using the phrase “industrial strategy” last week, this Government do not have one. We have a Business Secretary who, when asked whether Britain should offer steelmaking capacity in the future, carelessly said that “nothing is ever a given”, and we have a Chancellor —well, a succession of Chancellors—unwilling to go as far as European counterparts in supporting our steel sector on the crucial issue of decarbonisation. The German and French Governments have already spent billions of euros and committed even more towards greening their domestic steel sectors, while there have been other ambitious investments in green steel in Canada, Belgium and Sweden. UK Steel highlights that a lack of similar capital funding for decarbonisation in Britain is making our steel industry unattractive for investors. We will await further details from the support pledge for carbon capture, utilisation and storage. There was no information last week on where or when this will be spent, but we clearly need an improvement on the current infrastructure fund.

On industrial energy costs, Make UK has noted that the Budget does little to tackle the real and very immediate threat that manufacturers face with rocketing energy bills far higher than their European competitors. It is no surprise that UK steelmakers will stump up a whopping 63% more than their German counterparts for electricity in 2023. The recent announcements at Liberty Steel show just how serious this issue is.

I mentioned the impact of energy costs on steel businesses, but the same is true in other sectors, including hospitality. At last week’s meeting of the all-party parliamentary group on hospitality, events and major food and drink businesses in Wales, we heard from hoteliers and publicans how their businesses have been effectively locked into contracts agreed at a time of very high energy costs last year, before the fall in wholesale prices. They want the Government to make it easier for customers to withdraw from expensive energy contracts signed during the chaos of 2022.

Rising energy prices are also having an acute impact on the hospice and home care sector, as my hon. Friend the Member for Enfield, Southgate (Bambos Charalambous) mentioned. Many hospices are facing up to fivefold increases in their energy costs. For these vital facilities, reducing energy consumption is simply not an option. Hospice UK recently met Ministers to put those points across. It called for increased support beyond the energy bills discount scheme, but that call appears not to have been heard. I ask Ministers to look at that again with the sector.

Finally, the Budget confirmed that the 2023-24 settlement for Wales is £900 million lower in real terms than was projected at the time of the 2021 spending review, with no extra funding made available for health, social services or local government. There is a derisory £1 million extra in capital funding for Wales in 2024-25. The Welsh Government are right to point out that while the UK Tory Government talked up a Budget for growth, in reality they have shown no interest in building a way out of the current financial crisis. We deserve better than a Government that will keep on bumping us along a path of managed decline.