Budget Resolutions and Economic Situation

John Healey Excerpts

Monday 21st March 2016 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

Indefensible, deeply unfair, distinctly political—my words for the Budget but also the words of the recently departed Secretary of State for Work and Pensions. It is Labour’s judgment of the Budget, but it is also the judgment of many fair-minded Government MPs and, most importantly, of the British people, the large majority of whom, when polled over the weekend, said the Government had got their priorities wrong.

If this is a political crisis, it is one of the Chancellor’s own making. It was the same failure of political judgment that led him to slash working tax credits, before being forced to backtrack, and the same failure of political judgment that led the ex-Secretary of State to say:

“It…looks like…it doesn’t matter because they don’t vote for us”.

The IFS and the Resolution Foundation both say that this is a starkly regressive Budget, with the rich getting the most and the poor getting the least. We saw a tycoon tax cut of over £3 billion benefiting the very richest; an income tax cut of £2 billion benefiting the better-off; and alongside that, a cut in disability benefits worth over £4 billion. Well, that was Wednesday; and today, five days later, we have heard from the Secretary of State for Work and Pensions that there will be no more welfare cuts. The Chancellor’s long-term economic plan—his long-term fiscal plan—therefore lasted just five days, and if we take the new Secretary of State for Work and Pensions at face value, the Chancellor of the Exchequer still has a £4.4 billion shortfall to meet his deficit plans.

While we are on policy confusion and fiscal chaos, the Secretary of State for Communities and Local Government, who opened this debate, told the House that none of the costs of the business rates cuts would come out of local government funding. All will be compensated for in full by section 31 grants. He tried to tell the House that line 15 on page 84 of the Red Book explained that, but it details the cuts to business rates, not the source of the compensation, and there is no other reference in the Red Book. That leaves the Chancellor of the Exchequer with a further, fresh fiscal shortfall of £6.7 billion over five years, or it means that the Secretary of State will have to find that money from savings in his own budget.

The Chancellor may have caused a political crisis for the Conservative party, but much more serious are the fiscal and economic problems he is causing for the country. These were laid bare in the Budget—downgraded growth, downgraded pay, downgraded productivity, and the Chancellor’s new fiscal mandate broken already, as the OBR confirmed that the debt-to-GDP ratio is rising, saying that there is only a 50:50 chance that he will hit his deficit target. Never mind omnishambles: this is the ultra-shambles Budget. It really comes to something when No. 10 Downing Street briefs over the weekend to play up the Conservative party’s splits on Europe because its splits on fiscal and social policy are even more damaging.

I do feel for the 27 hon. Members on both sides of the Chamber who have spoken, being limited first to five minutes, then to four and finally three minutes. To be quite honest, the loyalists were out in force on the Government Benches, although I would like to have heard more from the hon. Member for Hazel Grove (William Wragg) about his belief that local education authorities have an important role and how they have not been, as he said, all bad. I would like to have heard more from the hon. Member for Milton Keynes South (Iain Stewart) about the National Infrastructure Commission, a good idea—a Labour idea—that I am glad to see the Government are putting into practice.

I would like to have heard more from the hon. Member for Blackpool North and Cleveleys (Paul Maynard), who said, quite rightly, that we have to be ultra-careful not to write off those who cannot work. As he said, there is no hierarchy of human value. I would also like to have heard more from the hon. Member for North West Norfolk (Sir Henry Bellingham) about his deep opposition to mayors, imposed by the Chancellor as a condition of all devolution deals.

On our side of the Chamber, the House should have heard more from my hon. Friend the Member for Jarrow (Mr Hepburn). The Budget has fallen apart like the Chancellor’s reputation, he told us—quite right. I would like to have heard more from my hon. Friend the Member for Bury South (Mr Lewis), who warned the Chancellor about the flawed devolution deal for Greater Manchester, especially when it comes to skills, school improvement, social care and council funding; or from my hon. Friend the Member for Batley and Spen (Jo Cox). As she said, without the funding commitment to make them work, infrastructure announcements were actually re-announcements—quite right.

My hon. Friend the Member for Copeland (Mr Reed), who is no longer in his place, made an important point about how the Chancellor is unable to make his sums add up in this Budget. He is failing my hon. Friend’s constituents; he is failing the country. My right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) reinforced that, saying that this is a Budget that is failing the young generation and this is a Chancellor who is failing Britain’s youngest city, Birmingham.

My hon. Friend the Member for Halton (Derek Twigg) was quite right when he talked about the Chancellor’s creative accounting. My hon. Friend the Member for Harrow West (Mr Thomas) said that the Chancellor is making the challenges facing the public services in this country much more difficult to meet, and he was right. My hon. Friend the Member for Southampton, Test (Dr Whitehead) described this Budget as continuing the punishment of local government that we have seen over the last five years. My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) rightly said that when all schools are being forced to become academies, the House should be deeply concerned about pupils with special educational needs.

My hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) was dead right about the Chancellor’s failure to meet his own targets, and also about his failure on housing. The Secretary of State for Communities and Local Government, who opened the debate, clearly lacks the clout to be able to argue his Department’s case with the Chancellor, for the Budget had nothing to say about housing and did nothing to reverse six years of failure, from rising homelessness to falling home ownership. What a contrast with the Labour Government’s record! We more than halved homelessness. There were 1 million more home owners during our time in office, and 2 million were homes built.

When it came to housing, there was a huge hole in this Budget. There was nothing about new affordable homes to rent and buy, nothing about investment, and nothing about tackling the causes of rising homelessness. In particular, there was nothing to ease the housing pressures in London, where housing is the No. 1 issue. The Budget has completely exploded the claim of the wannabe Mayor, the hon. Member for Richmond Park (Zac Goldsmith), who has said “I can get a good deal from this Conservative Chancellor.” It makes more urgent, and more clear, the case for electing a Labour Mayor, my right hon. Friend the Member for Tooting (Sadiq Khan), who will be a Mayor for all Londoners.

This was billed as a Budget for the future. There was big talk of big infrastructure schemes, but the small print showed small sums, mostly for design and feasibility studies throughout the rest of the Parliament. I say to Members on both sides of the House, “Do not listen to what the Chancellor says; look at what he does.” In 2009-10, the last year of the last Labour Government, infrastructure investment was 3.2% of our wealth—3.2% of our GDP. In 2010-11, the Chancellor cut that to 2.5%. By the end of that first Parliament, the figure was 1.9%, and now the Chancellor is doing it again: at the end of this Parliament, it will be just 1.5%.

In truth, the Chancellor is too tightly bound by his own misjudged fiscal rules for the good of the country. His plan to achieve a £10 billion total budget surplus by 2019-20 will prevent him from doing what is needed most, and investing for the future: investing in good homes, good jobs, and good infrastructure projects. In the debate that followed the Chancellor’s statement, the right hon. Member for Chichester (Mr Tyrie), the Chairman of the Treasury Committee, said:

“He has altered his plans of only four months ago, and so long as the rule remains in place, he will have to do so again after the next fiscal event. That is…why the Treasury Committee concluded… that it was ‘not convinced that the surplus rule is credible in its current form.’”—[Official Report, 16 March 2016; Vol. 607, c. 976-77.]

We have fiscal policy without credibility, and a Chancellor without credibility. What we were given in this Budget was a downgraded economy from a diminished Chancellor who was speaking to a divided party and for a damaged Government. This is a black hole Budget: a Budget which, like the Chancellor, does not deserve support from any party in the House.