Autumn Statement Resolutions

Jonathan Ashworth Excerpts

Monday 21st November 2022 Commons Chamber

[Jonathan Ashworth (Leicester South) (Lab/Co-op)]

It is a pleasure to respond to the Chief Secretary, I think for the first time, from the Dispatch Box.

The small print of last week’s autumn statement has now been studied and the verdict is clear: the British people are paying the price of Conservative economic failure. The disastrous Conservative Budget of two months ago, which was reckless and irresponsible in content—a Budget that we will never let them forget—led to markets taking fright; borrowing costs spiking; and the pound under pressure, which sparked a run on pension funds and sent mortgage costs soaring.

The British people are paying the price not just for that Budget but for 12 years of poor economic performance. Let us look at the record. The UK has grown by an average of 1.4% under the Conservatives, compared with 2.1% in the Labour years before that. If we had enjoyed the average growth rate of OECD countries over the past decade, British households would be £10,000 a year better off. We are the only G7 country that is still poorer than before the pandemic. Since the pandemic, the US has grown by 4.2% and the GDP of eurozone countries is 2.1% higher, but the UK economy is 0.4% smaller than at the start of the pandemic. Business investment is the lowest in the G7. Productivity is lower than in the US, France and Germany. Wages are squeezed, with the average worker earning less in real terms than they did 15 years ago. We see a growth gap, a wage gap, an investment gap and a productivity gap, leaving the Conservatives with a credibility gap.

[Catherine West (Hornsey and Wood Green) (Lab)]

Does my right hon. Friend agree that this is a particularly anxious time for those who are coming up to mortgage renewals? The context that he laid out is particularly scary for lots of households that are about to renegotiate their mortgage.

[Jonathan Ashworth]

It is a particularly terrifying time for many households. The tragedy for the British people is that they now face recession, with half a million predicted to lose their jobs while enduring the sharpest drop in living standards on record, equivalent to £1,700 per household. What we got last week was an autumn statement that piles more tax on the British people and reduces the money available for the public services that the British people rely on.

The test for the Chancellor was whether his proposals were fair and whether they grew the economy. Let me turn to specific measures announced and assess whether he met those tests. First, on fairness, the Tories call themselves the tax cutters, but at the next election the economy will be smaller and taxes higher than at the last election. The freeze to income tax thresholds—in effect, tax rises by stealth—means that millions more are pulled into paying higher tax. It means that average earners in Britain face a sting of £500 more. Council tax is set to increase by £100 for a typical band E property.

Hidden away in the Office for Budget Responsibility’s report, on page 53—curiously, the Chancellor and the Chief Secretary forgot to mention it, but it is there—fuel duty is predicted to rise by 23% [Interruption.] This is from the OBR. The assumption in the Government’s financial plans is that they will raise over £5 billion from fuel duty, which is set to rise by 23% in four months’ time—12p per litre—as a result of the statement. Are the Government not raising £5 billion from fuel duty next March? Is that right?

[John Glen]

As the right hon. Gentleman knows, that is an assumption made by the OBR. As the Government confirmed over the weekend, that is not Government policy.

[Jonathan Ashworth]

Where are the Government getting that £5.7 billion from, then, if not from putting 12p on a litre of fuel? Can the Chief Secretary tell us that? He is responsible for Government finances.

[John Glen]

The Government’s position is clear: the OBR has made assumptions but it has not made policy. In due course, the Government will set out our plans.

[Jonathan Ashworth]

I am afraid that the Government’s position is as clear as mud. The OBR says that the Government are raising £5.7 billion from fuel duty. If they are not raising £5.7 billion from fuel duty, they should tell us where that £5.7 billion is coming from. I thought that this lot had moved away from the reckless, irresponsible approach to the public finances, but it seems that with the Tories, nothing ever changes.

Let us be clear: people are paying not only more income tax, but more council tax, and we expect motorists to pay more for petrol and diesel. Never again can Conservative politicians stand in front of posters of double whammy boxing gloves or tax bombshells at election time, because the tax on working people combined with the wages that they are losing to the ravages of inflation mean that they are being squeezed until the pips squeak under this Conservative Government.

[John Redwood]

The right hon. Gentleman said that the Government were not proposing to spend enough by the end of the review period. They are proposing £200 billion a year more. How much more would Labour want to spend?

[Jonathan Ashworth]

I did not actually say that. I know that the right hon. Gentleman is disappointed with the Government’s plans and that the previous Budget, of which he was so much in favour, was decisively rejected by the money markets. That shows what happens when we allow the Conservatives to be irresponsible with the public finances.

I now turn to social security and pensions. In fairness, the Chancellor responded to our pressure and honoured the triple lock, which I welcome. I hope that the House will recall and accept that I always give credit where it is due and I always work on a cross-party basis when we agree on things. I always agreed with our man in the jungle, the right hon. Member for West Suffolk (Matt Hancock), when he wanted to put us into lockdowns. I never went as far as the new Chancellor on lockdowns—he wanted much more severe restrictions—but I was always prepared to work cross party with the Government, so I am pleased that they have honoured the triple lock.

The impact of freezing the personal tax allowance at £12,500 or so, however, is that half a million more pensioners will be pulled into paying tax. Over the coming years, it is predicted that, because of the freeze on the personal allowance, 2 million extra pensioners will be pulled into paying tax. So pensioners with little income beyond the state pension—those who have done the right thing and saved all their lives—will be paying more in tax under the Conservatives.

[Rob Roberts (Delyn) (Ind)]

When the Labour Government left office in 2010, the personal allowance was £6,475. Adjusted for inflation, that would be £10,200 today. Under this Government, it is still £12,570, which is significantly more than would have been the case under Labour adjusted for inflation.

[Jonathan Ashworth]

I take it from that that the hon. Gentleman supports pensioners paying more tax as a consequence of the decisions in the autumn statement.

On social security payments for working age adults, the Chancellor again, in fairness, listened to the arguments that were made and uprated benefits in line with inflation. That is important, because this year, those on benefits and pensioners have seen a real-terms cut. The Secretary of State for Work and Pensions said earlier today that it was important for payments to be increased to make up for the real-terms cuts that they have experienced this year.

As always, however, the devil is in the detail. The Chancellor has uprated the headline rates and we also understand that many of the additional allowances within the benefits system have been uprated, although we do not know that for certain; we are assuming that only because Martin Lewis tweeted it based on what the Treasury press office had told him. As far as we are aware, the Secretary of State has not confirmed it to Parliament—I just asked the Library and we still do not have an official confirmation—so when the Minister sums up, perhaps he can confirm that the different allowances and reliefs within universal credit will be uprated in line with inflation. I would welcome it if those allowances were uprated, but not all of them have been, have they? The local housing allowance rates, for example, are frozen at 2020 levels at a time when private rents are rising at record rates. The consequence is that rents will swallow up the increase in universal credit for many of the poorest families. That is why Shelter has concluded that the freeze means that

“The boost to benefits will be built on quicksand”

and has warned that homelessness will increase this winter.

[Anthony Browne (South Cambridgeshire) (Con)]

The right hon. Gentleman has welcomed every single increase in spending in the autumn statement, and in some cases, as he has just said, he wants spending to be increased even further, yet he has also attacked several of the tax rises. Will he explain whether he wants other taxes put up, spending cuts in other areas or more borrowing?

--- Later in debate ---

[Jonathan Ashworth]

We want to grow the economy so that there is more money to spend on public services. I am sure that the hon. Gentleman, who always listens carefully, will have heard me say a few moments ago that if our growth had been similar to the OECD average, households would be £10,000 better off and the Government would have the proceeds of growth to spend on our public services. The reason our public services are in such a dire state is the 12 years of poor economic performance under the Conservatives—that is the reality.

Let me come to another element of universal credit that has been frozen: the childcare payment. The former Leader of the House, the right hon. Member for South Northamptonshire (Dame Andrea Leadsom), is no longer in her place, but she made a similar point. It looks as if that payment has been frozen again, at £746 per month for a household with one child. That means that the childcare element will cover just half the average cost of childcare for a household with one child, when two thirds of families pay more for their childcare than they spend on rent or mortgages.

We know that many people want to work increased hours—this is the point made by the former Leader of the House—but cannot do so because of the lack of childcare support. But instead of fixing childcare support, the Chancellor is asking 600,000 people, who often have caring responsibilities, to undertake extra job-searching requirements, with threats to cut their benefits if they do not comply, even though the reason why they cannot work extra hours is that they cannot afford the extra childcare and the Government have frozen the childcare allowance again.

[Jim Shannon]

rose—

[Jonathan Ashworth]

I will give way to my fellow Leicester City fan.

[Jim Shannon]

The childcare issue is very important for my constituents, particularly teachers and nurses, who tell me that when they come to the end of the month, they have nothing left after paying their childcare bill. They want the tax-free childcare allowance to be increased. Does the shadow Secretary of State feel that that is what we should do to encourage them to work while ensuring that their childcare is covered?

[Jonathan Ashworth]

As always, the hon. Gentleman makes his point with force. The consequence of freezing the childcare element is that more parents working limited hours—it should not affect women more than men but does so disproportionately as they tend to do the childcare—will not be able to work extra hours because they will not be able to afford the extra childcare associated with working those extra hours.

[Alex Cunningham]

As I understand it, carers who are able to claim carer’s allowance can earn up to £132 a week, but the welcome increase in the national minimum wage means that many of them face a choice: they can either give up work or earn the extra money. Does my right hon. Friend agree that we need to extend the earnings limit for carers as well as for everybody else?

[Jonathan Ashworth]

My hon. Friend makes a point not dissimilar to that made by the former Leader of the House, the right hon. Member for South Northamptonshire. All these things need to be looked at in the round, and the wider implications of tweaks here and there need to be properly assessed when making decisions. If the Treasury Minister is prepared to meet the former Leader of the House to discuss the impact on those who need childcare, I hope that he will also be gracious enough to meet my hon. Friend to talk about the impact of the changes on carers.

Let me move on to the Government’s proposal for another round of energy support, this time targeted at those on means-tested benefits only. Again, because this is a flat rate, families with children—they spend more because they are larger families—will get proportionately less. It is worth noting that, even with the inflation-proofed uprating of benefits, which we welcome, we will still have 4 million children growing up in poverty, and we will still have 500,000 children destitute, hungry, ill-clad, cold and often without a decent bed to sleep in. Tackling these shameful levels of child poverty is surely the obligation this generation owes to the next, but we still have no child poverty strategy from this Government. Tackling these unfairnesses is also key to unlocking growth, because an economy with so much poverty and so much inequality is a weaker, less-productive economy, which leads to a greater burden of ill health, forcing more people out of work against their wishes.

That brings me to the health announcements made by the Chancellor. He is of course a former Health Secretary—the longest serving Health Secretary, in fact—and he made great play of the increase in health spending. However, he knows as well as I do, both from the many exchanges I had with him across the Dispatch Box over many years and through his time as the Chair of the Health and Social Care Committee, that what he announced was an increase in NHS England funding. As the Chancellor well knows, and he probably produced reports on this when he was at the Health and Social Care Committee, overall health spending includes public health, capital and training budgets, which means that the uplift is 1.2%. That is below the 2% of the Osborne years and well below the historic 4% uplifts that health services enjoyed historically. This is at a time when the typical wait for treatment in the health service has doubled from seven to 14 weeks, when 400,000 people are waiting beyond a year for treatment, which is enough to fill Wembley stadium four and a half times over, and when 7 million are on the waiting lists. This is not just miserable for patients; it holds our economy back.

[Anthony Browne]

Does my right hon. Friend agree not just that spending on the NHS is at the highest level in cash terms and real terms, but that as a proportion of GDP it has never been higher in this country? Our Government spend one of the highest rates of GDP on healthcare compared with other developed countries, and according to analysis in The Guardian, growth in spending on the NHS, adjusted for inflation, has increased by 35% since 2010.

[Jonathan Ashworth]

The hon. Gentleman has elevated me to be his right hon. Friend, and I am delighted to consider him a friend. Of course, we have an ageing and growing population, which is why the health services have always expected a higher uplift. The point I was making is that, in order to get the headlines and in the hope of giving people some good news in his otherwise quite miserable set of announcements, the Chancellor thought he was giving the NHS a huge uplift. However, if we look at public health, training and the other budgets, which, as we know—and as the Chancellor knows—is how health spending is properly measured, we will see that he is giving them a 1.2% uplift.

The reason why this is particularly significant, and why what is happening with the NHS is causing us such a problem, is that we now have 2.5 million people out of work for reasons of ill health. The OBR predicts that these figures will rise by another 1 million, costing £7.5 billion extra in sickness benefits. That is the OBR’s projection, and it is projecting that to be permanent, not to come down. The UK has seen the largest employment rate drop in the G7 since the pandemic because of rising numbers of people—the over-50s and those with long-term sickness—leaving the jobs market. Once people are out of work for sickness, that in itself can be bad for their health, and the lack of proper help and support leaves them trapped out of work. Only one in 10 disabled people or older people out of work is currently getting any help with employment support to return to work. When one looks at the case load for employment and support allowance, which is the old sickness benefit—obviously people are migrating to universal credit—one sees that only 4% of people come off sickness benefit or disability benefit and move into work each year. Those people should not be ignored and forgotten as they are at the moment. That is a dereliction of our responsibilities to those people, many of whom want help. Some have suggested that 700,000 want help. The Secretary of State has suggested that it could be as high as 1.7 million people who are economically inactive.

Offering no help to those people now undermines our economic performance, too, but instead of a plan to help people move into work, all we got was a review. We did not get a plan for our already overstretched jobcentres, which will be responding to an extra half a million unemployed and to 600,000 extra coming for interviews. We need action. Instead, the Secretary of State has launched a review: the Stride review. I could do the review for him—I can give him the Ashworth plan to get people back into work. We should be aiming for the highest employment in the G7 by using not threats and more sanctions or more humiliating assessment tests—we know too well that a letter from the DWP can fill people with dread—but a completely new approach. That is what we need.

First, the Government have actually underspent by £2 billion on their own employment schemes. Perhaps my old friend the Minister for Disabled People, Health and Work, the hon. Member for Corby (Tom Pursglove), can take this message back to his boss: the Secretary of State for Work and Pensions should stand up to the Treasury and, rather than hand back that £2 billion, refocus it on the economically inactive over the next few years. That could help an extra million people.

Secondly, when we know that mental health is a growing burden of sickness for those out of work, we should be doing more to better integrate jobcentres, employment services and the NHS. We should be building on individual placements and support. We should be building on the pilots where employment advisers have been located in “improving access to psychological therapies” services, and we should locate employment services alongside primary care and addiction services, too.

Thirdly, to help more disabled people into work, Access to Work should be made more flexible. The unacceptable waiting lists also need to be urgently tackled. Perhaps the Minister can tell us whether the Access to Work allowance was frozen or lifted in line with inflation in the autumn statement; that is not in the details of the Budget.

Fourthly, we should devolve more, and not use national contracting, which we know does not provide value for money. As we have seen in Greater Manchester, for every pound spent by the working well programme on getting people back into work, we get £1.75 back. Devolving more allows services to work better with adult education providers, which is vital when 9 million of our fellow citizens have poor literacy and poor numeracy. Older workers should be given more opportunities to access retraining and upskilling.

Finally, we need flexible working options, especially for those with caring responsibilities. So there we have it: a five-point plan to tackle inactivity. The Chief Secretary can take that back and implement the Ashworth plan. He is more than welcome to it. It is simply unacceptable to waste our most precious resource: the extraordinary skills and talents of ordinary people.

[Geraint Davies]

My right hon. Friend will be aware of the OECD reports that have shown conclusively that less inequality means greater growth. Is he aware of the report in the Financial Times showing that, for every extra pound spent on the health service, we get £4 of growth? Therefore, it is completely false economics for the Tories to be miserly in their real-terms giving to health if we want to grow the economy and get people back to work.

[Jonathan Ashworth]

In fairness, I have not seen the specific report that my hon. Friend references, but I have seen numerous reports saying that we will be spending £7.5 billion more on sickness benefits and that the Government have underspent by £2 billion on their own employment services. That money should be reallocated urgently to focus on those who are out of work for reasons of sickness and want help to get back into work. We do not need to wait for a review when we have a million vacancies in the economy and are predicted to be short of 2.5 million workers by 2030.

In conclusion, the autumn statement has failed both tests. It was unfair and, as the CBI said, it offered no plan for growth. The autumn statement was the day of reckoning for 12 years of economic failure—the highest tax burden for 70 years, and public services in a worse state. It is clear that this Government have failed to make amends for the past and cannot be trusted with the future. For all the figures in the statement, there is one inescapable fact: the hard-working people of Britain are poorer because of 12 years of the Conservatives.

[Mr Deputy Speaker (Mr Nigel Evans)]

As everybody can see, there is a lot of interest in this debate. I will try to manage without a time limit to begin with. If people could look at about eight minutes or thereabouts, we will get everybody in with roughly the same period of time. As I say, I will try it without the time limit first, but if that does not work, we will introduce one later on.