Budget Changes

John McDonnell Excerpts

Monday 21st March 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on changes to the Budget.

[The Financial Secretary to the Treasury (Mr David Gauke)]

Immediately after this urgent question the Prime Minister will make a statement, and following that the Secretary of State for Work and Pensions will set out the Government’s position on personal independence payments and the welfare cap. For the rest of the day the debate on the Budget will continue, and tomorrow it will conclude with the Chancellor of the Exchequer responding. The House will therefore have three opportunities to discuss these issues before voting on the Budget tomorrow. I am grateful for the opportunity to talk about how this Government, through our long-term economic plan, are creating growth, generating employment, cutting the deficit, and securing long-term prosperity for the people of this country.

The Budget delivered last week by my right hon. Friend the Chancellor of the Exchequer set out how we are taking more people out of income tax, supporting small businesses, encouraging investment, tackling tax avoidance, helping young people to save, and investing in our education system, all while restoring the public finances. That is what the British people voted for last May, and that is what we are delivering.

[John McDonnell]

Thank you, Mr Speaker, for granting this urgent question. I asked it because the Budget process is in absolute chaos. It is unprecedented for a Government to have withdrawn a large part of the Budget and accepted two Opposition amendments before we have even reached the third day, and from what we have heard from the Chief Secretary to the Treasury today, we are little wiser. I have some sympathy for the hon. Gentleman, who has been sent out yet again to defend the indefensible, while the Chancellor insults this House by his refusal to attend.

This whole debacle started two weeks ago when the Government announced cuts of up to £150 a week in personal independence payments to disabled people. By the day of the Budget last week, we discovered that those cuts to disabled people had been forced through by the Chancellor to pay for cuts in capital gains tax for the wealthiest 5% in our society, and for cuts in corporation tax. I agree with the former Work and Pensions Secretary: such cuts are not defensible when placed in a Budget that benefits high earners.

How can the Chancellor any longer suggest that we are “all in this together”, when the Institute for Fiscal Studies confirmed today that poorer working age households with children will be the hardest hit? Will the Minister rule out any further cuts to support for people with disabilities in the lifetime of this Parliament? Over 600,000 disabled people and their families have been caused considerable distress over the last week, and they need the reassurance that their benefits are safe. If the PIP cuts are not going ahead, the money required from the Department for Work and Pensions still sits in the Red Book.

Will the Chief Secretary tell us which other vulnerable groups the Chancellor is considering targeting for cuts? If the Chancellor halts the attack on disabled people, a £4.4 billion black hole is created in the Budget. Add to this the billions of unidentified cuts, and the amendments on the tampon tax and solar power that we have won today, and within five days an enormous hole has appeared in the Budget. Is not the prudent thing for the Chancellor to do to withdraw this Budget and start again? I say that this is no way to deliver a Budget and no way to manage an economy.

[Mr Gauke]

First, may I thank the shadow Chancellor for promoting me to Chief Secretary to the Treasury? Secondly, may I just make this point about disability benefits? There is no question of this Government cutting disability benefits to the level we inherited in 2010. Spending on disability benefits has gone up by £3 billion in real terms. Thirdly, does the shadow Chancellor really want to talk about fiscal black holes? Does he really want to do that? [Interruption.]

Last week the Chancellor of the Exchequer reported on an economy set to grow faster than any other major advanced economy in the world. With wages up, the deficit cut by almost two thirds and 1,000 more people in work every single day, our economic plan is delivering for Britain. It is a Budget that continues this economic recovery, a Budget that takes us into surplus by the end of this Parliament, a Budget that backs British businesses, protecting jobs in difficult economic times, a Budget that helps more people buy their first home or save for their retirement, a Budget that builds our young people’s skills and invests in educating the next generation, and a Budget that helps to close the gaps between rich and poor and between north and south, because we believe in helping people to succeed wherever they come from. Since 2010, inequality is down, child poverty is down, pensioner poverty is down, the gender pay gap is smaller than ever, while the richest—[Interruption.]