Budget Resolutions and Economic Situation

Debate between John McDonnell and Luciana Berger

Friday 20th March 2015 Commons Chamber

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I want to put on the record my acknowledgment for all their years of service to their constituents of the right hon. Member for Bexhill and Battle (Gregory Barker), the hon. Member for South Suffolk (Mr Yeo), the right hon. Members for Havant (Mr Willetts), for Somerton and Frome (Mr Heath) and for Uxbridge and South Ruislip (Sir John Randall), the hon. Member for Bury St Edmunds (Mr Ruffley), the right hon. Members for Banbury (Sir Tony Baldry), for South East Cambridgeshire (Sir James Paice) and for Hazel Grove (Sir Andrew Stunell), and the hon. Member for South Thanet (Laura Sandys).

[John McDonnell]

I apologise for intervening, but in my enthusiasm to attack the Government I failed to refer to the retirement of the right hon. Member for Uxbridge and South Ruislip (Sir John Randall), who has been an absolutely sterling colleague for me in Hillingdon and has served his constituents so well.

[Luciana Berger]

I thank my hon. Friend for his intervention. We have heard some wonderful valedictory speeches, and I wish all those right hon. and hon. Members well in their future endeavours.

We also heard some very impassioned speeches from my hon. Friends. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) told us about unemployment in the north-east, and said that there was more of a northern outhouse than a northern powerhouse. My hon. Friend the Member for Croydon North (Mr Reed) spoke about his local hospital having to declare a major incident, and about how the Budget has done nothing for the NHS. My hon. Friend the Member for Luton South (Gavin Shuker) helpfully shared with the House excerpts from the 2010 Red Book. We should all remember his point that the Chancellor’s actions during the past five years have been worse than doing nothing at all.

My hon. Friend the Member for Blaenau Gwent (Nick Smith) talked about the proliferation of food banks and charity shops, which have increased in number in his constituency since this Tory-led Government came to power. My hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) talked about the north-east, rising inequality and the deep and growing divide between the north and the south. My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) raised serious concerns about funding for health, which I will come on to, and the devastating cut of 24% in further education announced this week.

My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) talked about the impact of stagnant wages and particularly about the poverty that affects her constituency more than any other part of the country. That was echoed by my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) in relation to the challenges faced by her constituents in making ends meet, and with her very moving stories about overcrowding and the effects of the bedroom tax and escalating rents. My hon. Friend the Member for Hayes and Harlington (John McDonnell) rightly talked about HMRC’s lack of action in tackling tax avoidance and evasion properly, and the 43% cut in the number of people working for it. My hon. Friend the Member for Blaydon (Mr Anderson) spoke about the cuts to social care, and particularly the cuts to prison staff that have led to a very serious increase in the number of assaults.

I have to say that I found the Chancellor’s Budget speech curious. There were parts I could agree with, such as the devolution of business rates, although it is not clear why he stopped at Cambridge and Greater Manchester; there were parts that were audacious in the extreme, such as his recollection of his deficit reduction plan in 2010; and there were parts that made me wonder whether he and I inhabit the same country.

I was struck by the Chancellor’s assertion that households will be on average £900 better off compared with 2010, and that they will be more secure. It is almost as though he thinks that the very fact that he has decreed it means that it will be so. Should that fail to become the reality, he had a very handy new measure of living standards to fall back on. It is a flawed measure, because it includes income to universities and charities, but it is a measure all the same. Sadly for him—more sadly for families struggling to keep their heads above water—even his new cunningly crafted measure shows that living standards in the first quarter of 2015 have gone down, not up, compared with the first quarter of 2010.

That Budget measure and other more sensible ones demonstrate what we know to be true: it is harder now to make ends meet. Household incomes are down compared with 2010, as the IFS confirmed two weeks ago, and wages after inflation are down by more than £1,600 a year since 2010. I know that to be true because people tell me it all the time in my advice surgeries, in their e-mails and on the doorstep. The Chancellor may have decreed it, but, sadly, he has not made it so.

The welcome growth that we are finally witnessing in the UK economy has been a long time coming. With our economy still vulnerable, we warned in 2010 that the Chancellor’s decision to accelerate tax rises and spending cuts would hit confidence and choke off our economic recovery, and so it has proved. We have had the slowest recovery for 100 years. Growth is still lower than was forecast in 2010, and it is set to be slower this year and next year than it was last year. Productivity is down—UK output per hour has fallen to 17% below the rest of the G7, the largest gap since 1991—but the Chancellor did not once mention the word “productivity” during his speech. For working people, we have an economy in which too many workers suffer low pay or, worse, are on contracts with no guarantee of being paid at all.

Our economy may be growing, but it remains too unproductive, unbalanced and insecure. We needed a Budget that addressed those issues, and that established a proper British investment bank for small and medium-sized businesses and an independent national infrastructure commission, which would lead to a properly co-ordinated industrial strategy. The uplift on business rates awarded to Greater Manchester and Cambridge is welcome—it was Labour’s policy, after all—but why has the Chancellor stopped there? Why has he not gone further? Our plan is for more extensive devolution—£30 billion-worth—and for it to be countrywide, whether people choose to have an elected mayor or not. Every part of the country will benefit from Labour’s plans. For prosperity to be shared, it must be felt by the many, not the few.

The Tories seem hellbent on decimating the services relied on by the many. The NHS, also conspicuously absent from the Chancellor’s speech and already under real strain, will be an inevitable victim of his colossal programme of cuts. Be under no illusion: page 130 of the Office for Budget Responsibility’s “Economic and fiscal outlook” makes it clear that the Chancellor’s proposed spending cuts for the next three years will be deeper than those that have been made in the past five years. Massive cuts will be made to policing, local government and defence budgets. In the end, those Departments will not be able to deliver the scale of cuts required, and the axe will inevitably fall on the health service.

Our NHS is in no fit state for a white-knuckle ride. Already, more than half of nurses say that their ward is dangerously understaffed. Waiting lists are at their highest for six years, and one in four people are waiting a week or more to see their GP. In the past 12 months, more than 1 million people have waited more than four hours in A and E. The Tory care cuts of more than £3 billion have been the root cause of the A and E crisis during this Parliament. If they are allowed to do the same in the next Parliament, it will entrench the crisis, not only in A and E, but across the whole NHS.

A Labour plan and Budget would look different. Our plan will deliver a rise in living standards for the many and the stronger growth that we need. It is a fairer plan. We will reverse the tax cut for millionaires, introduce a mansion tax to fund the NHS and abolish the bedroom tax. We will build a truly national recovery, stop exploitative zero-hours contracts, raise the minimum wage and cut tuition fees to £6,000. Labour has a plan to build at least 200,000 homes a year by 2020, creating up to 230,000 construction jobs. Our plan will restore the link between the prosperity of the nation and the prosperity of the individual, protect the NHS and get the deficit down. In our plan, when the country succeeds and grows, its people will too.