Budget Resolutions

John Hayes Excerpts

Monday 11th March 2024 Commons Chamber

[Wes Streeting]

The right hon. Member made a right and fair point earlier about the cuts to national insurance and what is happening to pensioners’ incomes at the moment, but the Government’s long-term plan is totally unfunded. They cannot tell us how they will fund it or when it will be delivered by. I am happy to give way if anyone wants to correct me on that, as I am sure the whole country would like an explanation on this £46 billion unfunded tax plan. We cannot have a situation where once again the Conservative party gets away with an entirely unfunded gimmick. We saw where that led our country before, and Labour will not play fast and loose with the public finances in the way that the Conservatives have—[Laughter.] It is no use laughing. I am amazed that Conservative Members still laugh when people’s mortgages are going up month after month. They still have the audacity to laugh at their recklessness and not take responsibility for their mistakes.

[Sir John Hayes (South Holland and The Deepings) (Con)]

The hon. Gentleman invited an intervention to clarify his position on national insurance. I wonder whether, rather than engaging in this knockabout, which I am rather enjoying—he is terribly good at it, by the way—he could answer the direct question from my right hon. Friend the Member for Gainsborough (Sir Edward Leigh). If Labour is going to support this change to national insurance, how does the hon. Gentleman reconcile that support with what he has just said? It is a straightforward question.

[Wes Streeting]

It is that we have once again won the argument. We have been arguing for some time that taxes on working people are too high. They have gone up time and again under this Conservative Government, and it is only because there is a general election around the corner that they have suddenly discovered a heart, and discovered Labour’s policy and raided our cabinet. Until now, the Conservatives have used working people as their first and last resort to raise money.

Whenever we have talked about fairer choices—whether on non-doms, on the oil and gas giants, on the carried profits loophole, or on the tax exemptions enjoyed by private schools—we get a howl of opposition from the Conservatives, telling us how difficult it is: “Oh, that won’t work, it won’t raise the revenue, it’s not fair, it’s so harsh on all these people.” They never say that about the people on low and middle incomes who are being absolutely clobbered. They never say that about the people who lie awake at night worrying about how they are going to pay their bills, do the shopping and pay their rent or their mortgage. Picking the pockets of working people is the first and last result of this Conservative Government, and it is only because there is an election around the corner and Labour is chomping at their heels that they have finally discovered the cost of living crisis.

--- Later in debate ---

[Sir John Hayes (South Holland and The Deepings) (Con)]

The endemic problems facing Britain in the 2020s are often compared to those of 50 years ago. As was the case in the 1970s, ours is a time of great economic uncertainty at home and abroad. Now as then, faith has been lost in the dominant, prevailing economic model. In the 1970s, rising inflation, industrial strife and stop-go economic cycles led many to question Keynesian economic thinking. The Blairite model of welfare capitalism, which embraces the false promise of globalisation and is personified these days by the hon. Member for Ilford North (Wes Streeting) and others, lost all credibility after the financial crisis of 2008.

In fact, there are many key differences between the economic context of the ’70s and that of today. The Britain of the 1970s was beset by an atmosphere of constant crisis; there was the three-day week and the winter of discontent. The number of days lost to industrial action in the last couple of years bears no relation to the dark days of blackouts and rubbish piled up on the streets. However, although our problems are superficially less severe, socioeconomic problems run deep.

The 1960s and ’70s were a time of great social mobility and rising living standards, but the harsh reality is that living standards have stalled since the 2008 financial crisis. The Resolution Foundation estimates that real wages will be just 2.4% higher in 2024 than in 2008. That compares with a 36% increase in the 16 years before that. Perhaps most troubling of all, although the ’70s saw a rise in new economic thinking that, for a time, reversed what many had seen as irreversible decline, much of our politics today is stuck in the New Labour paradigm, offering the same policy formula that was discredited the best part of 20 years ago. There is no better example of that than mass migration, which began under Mr Blair and has continued ever since.

Fifty years ago, serious thought was given to how Britain could lift itself from its economic malaise. Many of our economic ills were correctly diagnosed and successfully dealt with, but though every election since 2010—and most notably, the Brexit referendum—demonstrated the public appetite for a radically new approach, it often seems that the liberal political establishment cannot see what the people it represents know so well. The malaise goes far deeper, and the relief offered by the usual Treasury medicine of looser fiscal policy is just not enough. Nor is the assumption, from shadowy bodies such as the Office for Budget Responsibility and the Migration Advisory Committee, that any growth is good growth. It was welcome that the Chancellor recognised that when he spoke about per-capita growth, rather than growth as a whole, in his Budget speech.

As W.H. Auden might have put it, our times are an age of anxiety. Deeply ingrained and destructive uncertainty prevents many people from coming close to reaching their potential, or from even thinking beyond their day-to-day existence. A growing proportion of people on low incomes live in the least secure private rented sector, are employed in unskilled work on unfair terms, and pay for electricity and gas on prepay meters. As an adviser at the Citizens Advice Bureau told one journalist, each of these problems compounds the other:

“Your income’s not stable, your work’s not stable, your housing’s not stable. Everything’s built on sand.”

Surely we know that a foundation of certainty is necessary to build social solidarity.

Additionally, heartless banks have abandoned communities, so many people find themselves driven into the arms of payday loan companies with exorbitant interest rates, or even loan sharks. The consequent economic insecurity results in many dropping out of the economy altogether. An extraordinary 5.2 million people claim some form of out-of-work benefit. Although the impact of covid has increased that figure, growth in the disparity between officially registered unemployment and actual levels of economic inactivity is a long-term trend. The inevitable result has been the breakdown of families in hollowed-out communities, which is why the Chancellor’s changes to the taxation of child benefit should be welcomed across the House. All the evidence demonstrates that married parents are much more likely to stay together than cohabiting ones. Children raised in unstable families suffer from worse health, are more likely to be excluded from school, and are more likely to join a gang or end up not in education, employment or training.

[Alison Thewliss (Glasgow Central) (SNP)]

The right hon. Gentleman is all for families staying together. What impact does he think raising the minimum visa thresholds will have?

[Sir John Hayes]

It is vital that we support stable families, and I acknowledge that stable families come in different forms. I am simply quoting the facts. Stable marriages give children the best chances, and the Government are right to emphasise families. They should now emphasise marriage, too, to a greater degree. To be fair, the Chancellor said that the Government will review the policy further, with a view to making additional changes along the lines that I have described.

Over time, fewer people have chosen to become members of clubs or groups, to volunteer, to attend a church or to engage in any form of community activity. Unsurprisingly, there is a strong link between the strength of social fabric and inequality. Areas with the strongest communities tend to be very rural places, such as my constituency in Lincolnshire, or areas in London’s wealthy commuter belt, in the south of England, or the wealthier parts of Scotland. A macroeconomic solution to our problems must be accompanied by an equally strong macro-societal approach, focusing on the root causes of social breakdown and inequality, for state support is a sticking plaster, not a cure.

Whereas the success of supply reforms enabled the Thatcher Government of the 1980s to reduce Government spending to less than 35% of GDP by 1990, sluggish economic growth since the financial crisis has meant that the Government’s share of GDP is now more than 45%. Overall, Government spending is higher than at any time since the second world war. Critically, the Chancellor recognised that by beginning the process of cutting tax. We need to give people back more of the money they earn. When we do so, we will build social responsibility over time and enjoy greater social solidarity. That is why I warmly welcome, too, the Chancellor’s focus on skills. Apprenticeships and technical education must be at the heart of our post-18 education system, as I have argued throughout my time in Parliament, and they must be fully integrated into an economic strategy that supports the creation of highly skilled work.

The era of cheap money and unsustainable profits has done great damage to our economic base. British pension funds and insurance companies once owned 52% of the FTSE; now, they own just 4%. Far too much of the savings generated by hard-working British people are invested abroad or go towards unproductive ends. As such, the measures introduced by the Chancellor are welcome, but they can only be seen as the beginning of the long-overdue process of supporting productive investment in UK businesses. Economic and macro-societal policy should be designed to ensure that business practice works in harmony with the best aspects of human nature, not against them. It should tie economic profit to ethical and social purposes. Risk must be closely linked to profit, and the Government must do more to incentivise mutual ownership and profit-sharing models.

A co-operative economic order would reinforce social solidarity. An economy must work for everyone, not just a handful of people at the top, which is why, rather than glamorising faceless global conglomerates, we must back British business, particularly the self-employed, as the Chancellor did in the Budget, and small and medium-sized enterprises. We need a more introspective economy, shorter supply lines, more domestic manufacturing and British jobs for British workers. It is through fraternal economics, in which the nobility of labour is recognised and rewarded, and which reinforces our reciprocal communal obligations, that, by contrast with the flimsy ephemera of globalisation, we can seed substantial economic resilience and spawn social renewal.

[Several hon. Members rose—]