Budget Resolutions

Debate between John McDonnell and Diana Johnson

Thursday 12th March 2020 Commons Chamber

[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.