Jo Swinson
Main Page: Jo Swinson (Liberal Democrat - East Dunbartonshire)Department Debates - View all Jo Swinson's debates with the HM Treasury
(7 years ago)
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Jo Swinson (East Dunbartonshire) (LD)
The British economy today faces three key challenges. First, we have low productivity, with the associated wage stagnation that comes with it, and of course the reduced tax receipts. Secondly, we have high public sector debt. We must recognise the constraints that that places on what is possible economically, and be honest about some of the hard choices that need to be made. Thirdly, there is Brexit, which has already been described as the elephant in the room. We see the uncertainty it is creating for businesses and investment in the country, its impact on our economy, and the opportunity cost of all the energy and money being spent on preparing for it that could otherwise be directed elsewhere.
The Chancellor is a serious man. We had significant differences in coalition but in recent months he has appeared to be one of the few voices of reason in the Cabinet on Brexit. He had an unenviable task coming to the House today, given the picture of higher inflation, lower growth, lower productivity and high levels of debt. It really is bleak. The economy will be £45 billion smaller in 2021 than had been projected just in March this year, so his attempts to paint a cheerful vision of the future were rather less successful than his jokes. The truth is, as the Chancellor knows, that this Budget, the next one, the Budget after that and all future Budgets are made all the more difficult because of Brexit and the extreme approach to it that this Government are pursuing. Making it clear that an exit from the single market and the customs union is a red line for the Government—this is aided and abetted by the Labour Front-Bench team—imperils the future of the UK economy, and the Chancellor knows it.
The right hon. Member for Loughborough (Nicky Morgan) rightly said that there is no pot of gold at the end of the Brexit rainbow, although the more appropriate metaphor is that of a thunderstorm. We learned today that the cost of Brexit preparations is not just the £700 million already allocated but a further £3 billion, which is more than the extra money that could be found for the NHS, and that tells its own story. We need to add to that the exit bill, and who knows what that will be—£20 billion, £30 billion, £40 billion? In addition, there is the overall hit to the economy, which the OECD has suggested could be £40 billion. It is no surprise that these figures were not stuck on the side of a bus in the referendum campaign.
To promote the health of our economy we have long needed to use the advantage of low borrowing rates to increase investment in the economy, so I welcome some of the measures set out today to unlock new house building. However, they are not ambitious enough. As ever in Budgets, the devil is in the detail. The headline figure touted was £44 billion, but only £15 billion of that was new and just £6 billion of it was extra for increasing the housing supply. As my hon. Friend the Member for Bath (Wera Hobhouse) said, there was next to no help for extra social housing, which of course is badly needed as part of the mix.
On the NHS, Simon Stevens had asked for £4 billion next year, but the Chancellor’s response does not come close. The new revenue peaks at £1.9 billion next year and then drops to £1.1 billion. As I say, Liberal Democrat Members appreciate that hard choices need to be made, and if we want to resource our NHS and social care properly we need to look at how to find the funds. That is why we have proposed an increase in income tax of one penny in the pound specifically for the NHS and social care. It is worth noting that social care was something the Chancellor did not even think worth mentioning in his remarks.
Jo Swinson
Next year, £1.9 billion, so the Chancellor has fallen significantly short. I am sure the Foreign Secretary will be beating a path to his door to try to make that bus happen—or perhaps not.
On social care, we need serious responses and serious cross-party work to find long-term solutions instead of the half-baked policies, cooked up in secret, that the Government offered at the last election. On taxation, there was a missed opportunity not only to increase income tax in the way my party has suggested to fund the NHS, but to increase capital gains tax and corporation tax. Instead of this race to the bottom of trying to get to 17%, we could keep that a competitive rate of 20% and get the additional funding that that would generate.
The Chancellor was right to say that international action is needed to create fairer taxation, but he failed to address the role of the overseas territories. We should require them to comply with UK standards on transparency, or companies registered there should be prevented from doing business in the UK. In the spirit of being transparent, I ought to be transparent about the fact that my husband works for Transparency International UK. In the context of rocketing executive pay, it is impossible to escape the contrasts between the rich, who can hide their assets and avoid tax, those on middle incomes in both the public and private sectors, who are facing real-terms pay cuts, and the poor, many of whom, whether they are working or not, rely on benefits to make ends meet.
The right hon. Member for Ross, Skye and Lochaber (Ian Blackford) mentioned the £12 billion of cuts to benefits that are still to come—£12 billion of cuts that the Liberal Democrats blocked in the coalition. The rise in the income tax threshold, although welcome, contrasts with the continued freeze in benefits. That was bad enough last year or the year before, but in the face of inflation of 3% it will cause real hardship. We see some changes to universal credit, but the wider problems have been ignored, not least the £3 billion of cuts that were introduced in 2015. Universal credit needs to be paused while the problems are ironed out. There is merit in having a simpler system, but using the new system to make deep cuts fools no one and undermines the important principles that underlie universal credit.
On the environment, I welcome the consideration of new charges on single-use plastics—a Lib Dem idea—but there is precious little else to demonstrate that the Government appreciate the scale of the climate threat we face. They have scrapped rules for zero-carbon homes, cut subsidies for solar and renewable heat, privatised the green investment bank and scrapped the Department of Energy and Climate Change. Today, we saw no new resource for tidal, waste from energy or carbon capture and storage. The Government do not have a strong record on the environment.
On a positive note, I welcome a couple of things in the Budget. I welcome the investment in technology, such as artificial intelligence, driverless cars and geospatial data. I was going to make the point that ethics need to be at the heart of how we proceed, because whether we can do something is not the same as whether we should do something. I was therefore delighted to read on page 45 of the Red Book that the Government intend to establish a centre for data ethics and innovation. That is urgently needed and we should lead the way in that area. On that issue, I say well done to the Government and I look forward to exploring it further with Ministers.
I also welcome the national retraining scheme, in particular the partnership with the CBI and the TUC to make that work, with the focus on digital and construction skills in the first instance. However, I would say, particularly in the context of the automation challenge to our workforce, that we should be looking more at the care sector. There are certain things that robots will not be able to do in the near, or indeed the distant, future. One such thing is caring and human empathy. We also face a demographic time bomb, so we need to be upskilling and investing in the care sector to change it from a low-status profession to one that we recognise as high-skilled. We should therefore ensure that it is properly resourced.
In conclusion, our country faces big challenges and opportunities. There is a bleak economic outlook, low productivity, the threat of climate change, the pace of technological change and the impact of automation on work. Those challenges are enough to keep any Government awake at night. They need attention, innovation and new ideas. Instead, we have a Government obsessed and consumed by Brexit, and they are not even doing that competently. The economic picture outlined by the Chancellor today makes it clearer than ever that we need an exit from Brexit.