Budget Resolutions

John McDonnell Excerpts

Thursday 12th March 2020 Commons Chamber

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

As we face the coronavirus crisis, it is vital that we demonstrate to the people of our country that we are meeting it head-on and that we will defeat it—and we will. As I have said elsewhere, this is no time for partisan political knockabout or, for that matter, publicity stunts. We have lives to save, so we must all work together. We will work with the Government and parties across the House to protect our people and to contribute to the worldwide effort to overcome the outbreak of this virus.

We welcome the Government’s package of measures announced yesterday. We must ensure, though, that alongside the medical and scientific strategy to contain, mitigate and halt the spread of the virus, the economic strategy is equally comprehensive. We agree with the Government that the NHS must receive whatever resources it needs. I pay tribute to and thank our NHS staff, who, as always, are rising to this challenge with their usual professionalism and dedication. We acknowledge that they are doing so at a time when they are already under extreme pressures, but we offer them our thanks.

The other key service that we need to support in this emergency is social care. It is unclear from Government statements so far what additional support is being provided to social care. Social care is already in crisis in this country. Before this virus outbreak, 1.5 million people were not receiving the care they need. There are more than 120,000 staff vacancies, and many of the private providers have been on the financial edge for some time. The majority of those who receive social care are older, disabled and vulnerable people—the very people who are most at risk from coronavirus infection. We have an £8 billion funding gap in social care budgets as the result of 10 years of austerity. Providers and local authorities are already stretched to breaking point in many areas, so we need to know how much additional support is being provided specifically for social care and what contingency plans are in place if individual providers are unable to cope. Like our support with regard to NHS funding, the Government will have our support to bring forward the resources, whatever it takes.

A large section of our care workforce is now under threat from the Government’s recently announced immigration policy. Some Members may have seen the GMB union calculation that the Government’s immigration policy will cost the care sector up to 500,000 staff. Without foreign careworkers, our care system would collapse. The message to the Home Secretary is clear: do not put our social care system at risk. Pragmatism must override ideology and policy at this stage.

Social care in this country largely falls on the shoulders of family members, and in our culture it is still usually the older women in our families. The pension age for many of those women was increased without proper consultation or notification. They were effectively robbed of many years of their pension, and this Government—despite all the Prime Minister’s promises before the election —have refused to compensate them. I met the WASPI women last week, and it is no wonder they are still angry. We may well look at what support can be given to individual carers within families as they cope with this crisis.

If any good is to come out of this developing tragedy, it must be the lessons we learn from it. It is overwhelmingly clear now that no Government can inflict a decade of cuts and austerity on our public services, such as the NHS and care services, without impacting on their resilience in a time of crisis. Ten years of cuts and a failure to invest in services mean that we are extremely ill-prepared for dealing with this type of large-scale health risk to our community.

We know that the NHS is already under pressure—intense pressure—as a result of underfunding and understaffing. Some 17,000 beds have been cut. Bed occupancy levels were at 94% last week, and critical care bed occupancy was at 80%—those are the beds we rely upon in episodes like coronavirus. The NHS is short of 100,000 staff, including more than 40,000 nurses and thousands of doctors. We have to recognise that the NHS needs to be put on a longer-term stable footing, with secure financial backing for the long term. Just as we have over the coronavirus outbreak, we must listen to the clinicians and the experts when it comes to what is needed. It should not take a crisis to secure for the NHS the resources it needs.

I turn to support for individuals and businesses. We welcome many of the Government’s measures set out by the Chancellor yesterday. The Budget stated that statutory sick pay will be paid from the first day of sickness absence and that people will be compensated for self-isolation, but we need more clarity. The Government guidance appears to exclude workers on zero-hours contracts, part-time workers and people earning below the lower earnings limit of £118 per week, saying that they are ineligible for statutory sick pay and are advised to make a claim for universal credit. Can we be absolutely clear who will be covered by statutory sick pay and who will not?

Sick pay is currently set at the low rate of £94.25 a week—that is about £18 a day. Average pre-tax earnings are £511 per week in nominal terms. Without lifting statutory sick pay, the financially secure will err on the side of caution and self-isolate, and all but the most financially secure will be asked to take a significant pay cut in order to self-isolate. That leaves people inevitably choosing between health and hardship.

For those being directed by Government to universal credit, I ask: what, if anything, has been done to reduce the five-week delay in receiving universal credit and to ensure the staffing resources in the Department for Work and Pensions to cope with the volume of demand? The suggestion is that these low-paid workers apply for universal credit, which then becomes a loan. That will push many low-paid workers into debt, which will cause significant hardship for some.

The Chancellor announced yesterday a £500 million fund for councils to administer. Could the Secretary of State clarify how much that means for each local authority and how it will be distributed? Will hard-stretched local authorities receive support for delivering that scheme? Councils are also being asked to administer £2.2 billion of funding to support businesses in meeting their ongoing business costs. Could we be clear about what resourcing councils will be given as they are asked to take on these responsibilities, after 10 years—to be frank, as a result of the cuts that have taken place—of local authorities often being hollowed out of the staffing resources they need?

[Stephen Timms (East Ham) (Lab)]

My right hon. Friend is making some powerful points. Does he agree with me that the announcement of the £500 million fund is a recognition, belatedly, by the Government that we do need something to do the job that the social fund, funded by the Government, used to do?

[John McDonnell]

That is an extremely important point. For those of us who remember the social fund, it was a resource that many of our constituents fell back on in times of need. It did give them the support they needed, and in many ways it was administered relatively well. It got resources to the people with needs, and it did so with minimal costs.

The Government urgently need to provide the certainty that the public deserve on all these matters. Our worry is that, because this package does not at the moment appear to be comprehensive, it ultimately will not make us all safer, and it may put people at risk, as especially those in low-income groups may have to make the very difficult choice, as I have said, between health and hardship.

Although it has been reported that there has been some communication between Finance Ministers internationally, it is certainly not clear whether it is of the scale or depth of co-ordination in, for example, the crisis in 2007-08. As a result, whatever statements have been made have not had the effect of steadying markets or reassuring people more generally that, basically, there is an internationally agreed strategy to address the economic consequences of this emergency.

[Bim Afolami (Hitchin and Harpenden) (Con)]

Does the right hon. Gentleman agree that the co-ordinated action that has taken place between the Treasury and the Bank of England could now be used as a model to show our international friends and partners how to do it, so that we can build on what we have already done?

[John McDonnell]

That is an extremely valid point. The co-ordination between the Bank of England and the Treasury is an example of what could be followed elsewhere, and it is being followed in some areas. However, the issue for me is that we can develop a United Kingdom strategy or an individual country strategy, but we are dealing with a virus that respects no borders. It is a global contagion now—a pandemic—so there needs to be international co-operation. What demonstrated the lack of international co-operation was the Fed cutting rates one week and the Bank of England cutting rates the following week, and the Fed cut had no impact whatsoever.

[Bim Afolami]

I agree with much of what the right hon. Gentleman says, but does that not show—because this is such a new phenomenon and such a new difficulty, and every country is struggling to find a policy response to it—that we may not have used the right tools? What the Treasury, the Bank of England and all our international partners are now having to do is to figure out what the right tools are, and we have to work together to try to figure that out.

[John McDonnell]

The hon. Gentleman makes exactly the right point. Not everybody supported the cut in interest rates, but the most important statement from the Bank of England was about the mechanisms with regard to the banks and lending, and about making sure that liquidity continues.

The point I am making is that, when we are dealing with what is in effect a global crisis, individual solutions in individual countries are not as effective as global co-ordination. I will give an example. Whatever criticisms people may have had of Gordon Brown’s individual policies during the banking crisis—I was here then, and actually I was giving a running commentary from the Back Benches, which perhaps at times was not welcome—no one can question the international leadership that he showed. There was a focus on and determination in bringing people together, and he brought to this crisis a mechanism by which, through the different international bodies, world leaders met and agreed a global strategy. Whatever people think of the outcome or about the merits or demerits of quantitative easing and so on, it did send out a message, and the markets eventually stabilised. I regret that we have not seen such a political and diplomatic leadership commitment or, indeed, such managerial ability from the Prime Minister or the Chancellor as yet.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Before my right hon. Friend moves on from his point about a co-ordinated international response, one of the things put in place at that time, about which there has been a lack of discussion this time, is what to do for those countries that have very basic healthcare systems. This virus respects no borders. Is there not a need for co-ordinated international action to get help to countries where testing and treatment may be much more rudimentary than they are here?

[John McDonnell]

To give the Government their due, the Chancellor did announce a £150 million contribution to the IMF, so there is an element of financial involvement and engagement. However, it requires the co-ordination of policy to ensure that those resources are directed effectively and successfully to tackle the very issue that my right hon. Friend raised. I hope that will be a model for the future when other global issues have to be confronted. As in the past—and this has happened under various Governments and political leaders—the UK should now be playing a critical role in mobilising the international bodies we have, in particular the UN, to agree a global response to deal not just with the current wave of this pandemic, but with the possibility of subsequent waves.

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

The right hon. Gentleman is right about the need for collaboration, and he is also right about needing alacrity and the response to a dynamic set of circumstances requiring leadership. Can the Commonwealth play an active role here? He talked about an international body, and it is of course a body in which we play a pivotal part, and that would very much be in tune with what he has proposed.

[John McDonnell]

I fully concur with the right hon. Gentleman. The various international vehicles that we could mobilise are available to us, and we just need to do it now. It needs to be done at a senior level, in a way that sends out a message of determination across the globe to people and families, but also to the markets. We need to ensure that this medical crisis does not create the long-term recession that some are predicting as a result of its global implications. I will now move on from the coronavirus.

In addition to the coronavirus, we face other emergencies, and we must not lose sight of the two other crises that we face. One is the crisis in our public services—it is a social emergency—with the levels of poverty and inequality in our society. The other is of course the existential threat of climate change. I have to say that yesterday’s Budget failed to address the social emergency. We have discussed it on the Floor of this House before, but this social emergency sees 4.5 million of our children living in poverty, with 70% of those children living in households where an adult is in work. We have—I do not know how else to describe it—a crisis of in-work poverty that perhaps we have not seen for generations in this country.

I have to say that there was nothing in the Budget to relieve the hardships inflicted on our community by universal credit, the bedroom tax and, especially for disabled people, the brutality of the work capability assessments undertaken against them. In fact, the Government’s own table accompanying the Budget shows that the bottom 10% fare the worst as a result of tax decisions made in this Budget and the last spending round, which cannot be right. It cannot be right. It states that the bulk of the benefits are flowing to higher paid households. Yesterday some people were saying that this could have been a Labour Budget, but whoever said that was not looking hard enough at who wins and who loses in it. I believe that not one family will be lifted out of in-work poverty because of yesterday’s announcements. Yesterday we again heard the Government’s aspiration to get the national living wage to two thirds of median earnings, but that is not a real living wage; it is an aspiration for four or five years’ time. Some may also have seen the small print, which says, “if economic conditions allow”.

Worryingly, there is nothing of any substance in the Budget to tackle the long-term crises in our public services. Let us take the justice system, for example. In prisons there has been

“a sharp rise in deaths, violence, self-harm”

and suicides, which can all be

“linked to cuts”.

That is not my statement; it comes from the Institute for Government. The House of Commons Justice Committee has pointed to a £1.2 billion gap in justice funding, so the small sums in this Budget, such as £175 million for prison maintenance, just will not cut it. Not one prison officer will be safer on the landings because of this Budget, yet in some of our prisons, those people put their lives at risk on a daily basis.

On domestic violence, according to Women’s Aid, 10 domestic abuse victims are turned away from women’s refuges every day because of a lack of space. This Budget needed to commit £173 million to ensure that no survivor is turned away. It has not done that, and without that funding, the measures in the Domestic Abuse Bill simply cannot be delivered. Not one women’s refuge can feel assured that it will get the funding it needs from this Budget.

The National Education Union said that class sizes are rising, subjects are being dropped, and inadequate pay is making the education staffing crisis worse, but there will be few teachers from whom the pressure will be lifted as a result of this Budget.

On housing, the sums earmarked for rough sleeping are totally inadequate, and we know that at least £1 billion is needed to reverse cuts in homelessness services. Yesterday, the Chancellor said that he would end homelessness, but we heard that from the Prime Minister who, when he was Mayor of London, said that rough sleeping would be ended in London by the 2012 Olympics. Rough sleeping doubled during the Prime Minister’s second term as Mayor.

It goes on: not one library will be reopened as a result of yesterday’s Budget. Not one youth centre will reopen; not one Sure Start centre.

[Bim Afolami]

Forgive me if I have misunderstood the right hon. Gentleman, but I think that £13 million is going into community libraries across the country, and that will make a big difference. Will he address that point?

[John McDonnell]

I just say to the hon. Gentleman that that sum is minuscule in comparison with the cuts that have gone on. This will not be some immense revitalisation of our library services—far from it. Indeed, a lot of that will be swallowed up by the deficits that local authorities have developed by trying to maintain their existing services. I doubt there will be any new libraries; this might perhaps allow some existing libraries to keep their heads above water, but even that is difficult to envisage.

[Dame Diana Johnson (Kingston upon Hull North) (Lab)]

May I take my right hon. Friend back to the issue of domestic abuse? We all welcome the abolition of the tampon tax, which was championed by the former Member for Dewsbury, Paula Sherriff, but the funding raised from that—£393 million—was put towards services combating violence against women and girls. Does my right hon. Friend have any indication of how that gap in funding will be met for those vital services?

[John McDonnell]

We have had no indication about that, but I am pleased that my hon. Friend raised the issue, and perhaps we will get a response from the Government in due course. I congratulate her and Paula Sherriff. That long campaign paid off, which shows what tenacity can do, even in this House.

Let us get this Budget into context. The Institute for Fiscal Studies stated that £54 billion of day-to-day spending was needed, outside health and social care, to return to levels of per head expenditure in 2010. Not only does the Budget not meet that target, it goes nowhere near it. Why have the Government not gone further?

People need to understand what Conservatism is in this country, and what it means. For me, it means that the Conservative party will say or do anything it can to gain and retain power—anything except shift real power and wealth to working people. Just look at what the Government did yesterday on taxation, by choosing to keep entrepreneurs’ relief largely intact. That is a tax relief for 5,000 individuals who make an average of £350,000 each. There was a U-turn on the tax for foreign buyers of UK property. The surcharge is reducing from 3% to 2%, which reduces the amount of money earmarked— what for? For rough sleeping. So much for “the people’s priorities”.

This social emergency has been created by a fundamental failure of economic policy. It was interesting to hear the Chancellor, and others, tell us time and again how this country’s economic fundamentals are currently so sound. We warned them that austerity would damage the economy, and 10 years later, the verdict is clear. The statistics speak for themselves. Yesterday, the Office for National Statistics reported that prior to the coronavirus outbreak, growth in the three months to January was 0.0%. Manufacturing output was down by 1.2% over the same period, because of what the ONS described as “widespread weakness”. Productivity growth over the last 10 years has been at a dismal 0.3% average, and on pay growth, the slowest economic recovery for a century has been described by the chief economist at the Bank of England as a “pay disaster”.

In the Budget, there is a 0.4% downgrade for gross domestic product this year, even before calculating the impact of coronavirus. We have the weakest official growth outlook on record, according to the Resolution Foundation, with pay growth weakening in every year of the forecast—an outlook that will hit every household by £600 a year. Of course the Conservatives have failed to tackle in this Budget any long-standing challenges at the heart of our tax system, such as how we treat capital alongside income fairly, how local councils can have stable funding, or how we rationalise the long list of tax reliefs that provide opportunities for tax avoidance and evasion.

The Tories have not scrambled together this Budget because good economic performance made it possible. Yes, they have plagiarised some of Labour’s ideas, from rewriting the Green Book to bringing some of the railways back into public ownership, but that was only because they were forced to do that as a result of their own economic failures.

This week’s Budget shows that Tory tendency again, this time on infrastructure. A gimmicky grab-bag of projects was announced, while yet again the Government put off publishing the national infrastructure strategy. Even those announcements are disappointing. There is no commitment to deliver funding for the full northern powerhouse rail project, and four fifths of the £500 million investment in electric vehicle charging infrastructure is a reannouncement from 2017. The pothole fund is a repeat of a policy that was announced at least twice by the right hon. Member for Maidenhead (Mrs May), and will be enough to repair about a quarter of the potholes.

There is an overall infrastructure pledge that goes only halfway to filling up the £192 billion infrastructure hole that the Tories created by underinvesting between 2010 and 2020. Again, the Tories have given us very little detail on who will build this infrastructure and who gains from this investment. On broadband, for example, their £5 billion investment will be a subsidy to private providers such as Virgin. There is no sense in this Budget that the Tories have any understanding of the skills investment that is needed to ensure that infrastructure can be delivered by those most in need of upgrading their skills and of being able to have a decent standard of living as a result.

Let us not forget the third emergency we are facing today. Future generations will never forgive this Government for their failure to address climate change in this Budget. Infrastructure investment, if properly planned, could have been an opportunity to shift the tracks on which this economy runs towards a zero-carbon future. The Government have missed that opportunity. The Institute for Public Policy Research’s environmental justice commission said that £33 billion a year in green investment was needed for the Government to achieve only their weak target of net zero emissions by 2050. The Chancellor has fallen woefully short of that target. Instead, the Chancellor has opted for £27 billion to be spent roads, which currently contribute 90% of the UK’s transport emissions. They have committed less than one fifth of that to buses and cycling. Fuel duty is still frozen, with no effective assistance to encourage the shift from cars dependent on fossil fuel to less polluting cars and public transport. There is no new support for renewable energy sources such as wind and solar. In the year when we host COP26, this Budget will be seen as a betrayal of future generations.

What are the lessons we must learn from this Budget? It should not take a medical crisis before a Government wake up to funding the NHS adequately. It should not take a collapse in the economy and the threat of recession to force a Government to invest. It should not take our children going on strike to force a Government to take climate change seriously. Our community has experienced 10 years of immense suffering under austerity for nothing—for the pursuit of ideology; a political and economic experiment that has failed. This Budget should have been the most significant since the second world war. It should have been a turning point. As time has allowed scrutiny of this Budget in the past 18 hours or so, it has become clear that it has failed. It does not come close to reversing the damage of the past 10 years of austerity.

I give this final warning to the Government and to all of us. If we sow the seeds of disappointment and disillusionment, it could stir up a form of politics that none of us wishes our country to experience. We need the Government to recognise that they have a responsibility to bring forward—it may now be in autumn—a Budget that tackles our social emergency, our crisis in public services, the levels of poverty and inequality in our society, and the existential threat of climate change. The Opposition will do everything we can to ensure that the Government listen and bring that Budget forward.

[Several hon. Members rose—]