Budget Resolutions
Debate between Jonathan Edwards and Angela Eagle(4 years, 1 month ago)
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Ms Angela Eagle (Wallasey) (Lab)
It is a pleasure to follow the Father of the House. I agree with his view that we are on the cusp of a very major change in the tax base, and it is important that we debate what the nature of that change should be.
We are living in very uncertain times. We are on our third Conservative Prime Minister in four years, and this Budget was presented by the fourth Conservative Chancellor in as many years—a Chancellor who has been in place for barely a month and who had to agree to play second fiddle to Dominic Cummings as the price of his sudden elevation.
No Budget was delivered last year, and the Office for Budget Responsibility last published an official forecast nearly a year ago. To make up for that, we are now told to expect that 2020 will be a year of two Budgets and a spending review, so what the Chancellor announced today may be only the first in a trilogy of fiscal events this year.
This Government of Brexit obsessives have deliberately chosen to inflict a high level of uncertainty and disruption on our future trade arrangements. There is still the prospect of an effective no-deal cliff edge at the end of 2020 should the talks with the EU go badly. The Bank of England’s own assessment points to an 8.25% hit to GDP by 2024 in the event of a sudden, unmanaged WTO outcome to the talks, yet the Chancellor barely, if at all, mentioned Brexit in his hour-long speech.
If that were not enough, the country is now facing an immediate and massive threat caused by the rapid advance of coronavirus across the globe. In his evidence to the Treasury Committee last week, the outgoing Governor of the Bank of England said that coronavirus is likely to have a large but temporary effect on the global economy. Today, announcing an emergency interest rate cut of half a percentage point and an offer to banks of four years of cheap funding to ensure they continue to lend, the Bank of England noted a “marked deterioration” in the outcome of already weak economic growth in the coming months. With the persistence of historically low interest rates since 2008, the efficacy of monetary policy is now questionable. That makes the Chancellor’s fiscal adjustment and supply-side response in today’s Budget crucial in mitigating the coronavirus crisis.
Clearly, fiscal policy needed to be looser, temporarily at least, to protect otherwise viable businesses from being destroyed by the short-term abnormal supply and demand shock, so I welcome the Chancellor’s fiscal stimulus package, which he costs at £30 billion. We all hope he has done enough, and we all trust that he will return with more if the situation demands.
Jonathan Edwards
I echo the hon. Lady’s comments. The announcements on support for small businesses are welcome, but I have been contacted by many small businesses in my constituency that are worried about extra charges due to the new Financial Conduct Authority regime for overdrafts. The Treasury needs to look at this before the regime comes into force in May.
Ms Eagle
I certainly hope the banks will recognise the Government’s generosity to them on lending and buffers and will pass that on to the hon. Gentleman’s constituents, as well as mine.
Climate change and the commitment to reach net zero carbon by 2050 also pose a major challenge, and the effect of being unprepared has been tragically evident in the flooding experienced this winter. This Budget offered an opportunity to address the need to introduce transformative policies to get us on the path to net zero before it is too late, but I do not see an awful lot of detail. I welcome the increase in expenditure on flood defences, which would have been even better had it not been preceded by major cuts in expenditure on flood defences. I look forward to the Treasury’s net zero review, which needs to outline the path forward to net zero, but I am puzzled about agriculture being excluded from the announcement on red diesel. Agriculture is the major sector that uses red diesel, so that needs more detailed scrutiny.
The UK economy remains weak in the face of these formidable challenges. The Office for National Statistics has just revealed that the UK economy did not grow at all in the last quarter of 2019, and annual growth of 1.4% last year is one of the weakest on record. The OBR’s forecast for this year was put together before the larger effects of coronavirus were taken into account. Its forecast for expenditure, excluding those effects, is an anaemic 1.1%.
The OECD recently said it expects coronavirus to cut global growth in half. If that is true, it puts us down to about 0.6% for the year, which is one of the worst performances we could expect to see. Monday showed that, even now, the markets are pricing in a recession, so there are vulnerabilities in growth.
There are also vulnerabilities in the UK labour market, in which 3.7 million people are in insecure jobs and have not seen real wages rise in 12 years. Inequality is rising, and one in five workers are earning less than the real living wage. Child poverty is soaring and is set to reach 5 million by 2024 due to the ongoing cuts to benefits and family support, of which there was no mention whatsoever in the entirety of the Chancellor’s speech.
Nearly 1 million workers are on zero-hours contracts, and 2 million are not earning enough to qualify for statutory sick pay. Those in the gig economy and the self-employed are similarly vulnerable to a loss of income so, as far as they go, I welcome the Chancellor’s announcements on statutory sick pay and support for those who self-isolate, but I am extremely sceptical about his announcement that those who work on zero-hours contracts will apparently be expected to apply for employment and support allowance in order to be compensated for doing the right thing. That is likely to be highly inadequate, and we need to return to that issue. I suspect the answer will be statutory sick pay for all from day one.
The lack of rights at work is a barrier in the fight against coronavirus, and it prevents a desperately needed transformation in productivity and investment in skills. The fight against in-work poverty barely features in this Government’s thinking. Recent analysis by the Resolution Foundation has shown that the poorest fifth of the population have experienced a 7% fall in their disposable household income in the past two years, as a direct result of choices this Government have made, which were not reversed by the Chancellor. A decade of swingeing cuts has decimated public services. Public sector workers have had to do more with less, and be rewarded by suffering a real-terms fall in pay and conditions. The NHS has 17,000 fewer beds. There are 43,000 nursing vacancies and 10,000 doctor vacancies in the NHS that we are expecting to deal with the coronavirus crisis. There is a £6.3 billion shortfall in the resources needed for social care. We can welcome the first new investment in a decade, but we have to be clear that it barely begins to restore what has been taken away.
We also have to remember that infrastructure spending, although welcome, does not deal with the current expenditure squeeze, which is ongoing. My local authority, Wirral Council, has £635 less per household to spend than it did in 2010. Merseyside police has seen £136 million of cuts since 2010, so the £28 million extra pledged in the spending review is welcome, but £5 million of it has to come from council tax increases and it will not restore what has been lost. We see the same in area after area: the Government trying to take credit, as though they were a new Government entirely, and distancing themselves from the Governments of the right hon. Member for Maidenhead (Mrs May) and her predecessor, who did all this cutting in the first place.
They say that imitation is the sincerest form of flattery. Today’s overspun announcements of a £600 billion investment programme are welcomed in the self-same Tory tabloids that denounced Labour’s manifesto plans to invest £500 billion as “ruinous Marxist nonsense.” Apparently, £100 billion extra is acceptable if it is the Tories doing it. Let’s face it: we have heard it all before. Let us wait to see what they deliver before we pat them on the back. We must never forget that the Government would not have to allocate £2.5 billion to fix 50 million potholes had they not neglected our roads system with their ruinous austerity policies in the first place.
The Conservative manifesto promised no increases to income tax, which was not mentioned today, national insurance or VAT, and the Chancellor’s fiscal rules, which he is apparently reviewing, give him only minimum headroom for any non-investment spending. His choice, therefore, is to find tax increases elsewhere or increase borrowing, which proves that the extreme cuts that have been inflicted on our society were not necessary in the first place and that the misery they have unleashed has been needlessly cruel. Starting to put right some of the damage they have done is welcome, but we will not forget the suffering and hardship they have caused, especially to the poorest in society. We will not forget the soaring levels of child poverty the Government have chosen to inflict, and the waste of potential and life opportunities that this indifference implies. We will not forget the attacks on the most vulnerable and the Government’s neglect of social care. We will continue to hold them to account for it at this and future Budgets.
UK Steel Industry
Debate between Jonathan Edwards and Angela Eagle(8 years, 2 months ago)
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Jonathan Edwards
I am grateful to the hon. Lady, who has been extremely generous in giving way, and I am more than happy to support the motion. Is she aware of the work of the devolved Government of Wallonia in Belgium, who have a strategy to protect their steel industry, encompassing an investment fund, an innovative research plant and clear protective measures for steelworkers? Should the Labour Welsh Government pursue a similar strategy?
Ms Eagle
The hon. Gentleman has pointed out that, in some places in Europe, there may exist an industrial strategy, and we could do with one in this country.
Far from fighting for the UK’s interests, as they would have us believe they are doing, the Government are actually a leading part of a group of EU countries that have moved to block reform of the lesser duty rule. Let us look at the record to date. The European Commission proposed strengthening trade defence instruments in April 2013 to protect Europe from Chinese dumping. That was endorsed by the European Parliament in February 2014. It was then blocked in the Trade Council in November 2014. It was the UK Government who successfully assembled a group of 15 other EU countries to oppose that crucial reform. The Government objected primarily to the abolition of the lesser duty rule and to giving the Commission the ability to initiate anti-dumping proceedings on its own. Perhaps the Business Secretary will let us know whether today’s apparent agreement changes that stance? If it did, that would be most welcome, and it would certainly be a departure from the recent past.
When the Business Secretary was asked, in evidence to the Business, Innovation and Skills Committee recently, about the Government’s blocking of reform, he said:
“If duties are applied that are disproportionate, it would have an impact, in Britain and elsewhere”.
However, Chinese dumping is having a devastating impact in Britain now. We do not need disproportionate tariffs; we need tariffs that will be effective and duties that will prevent the damage caused by illegal dumping. The Government should be arguing for such duties, not conniving with 15 other EU countries to block them.
On granting market economy status to China as part of its ongoing acceptance into the World Trade Organisation, the Chinese Government regard this as an automatic thing, but it certainly should not be. In fact, as many in this House will know, this status is granted only when the economic conditions in the country concerned have developed in such a way that it can be shown that prices and costs are genuine and can therefore be used to determine trade defence disputes. China currently meets only one of the five criteria required for this status to be granted, and yet the UK Government support granting market economy status to China as early as the end of this year.
Why is this? We already know that the Chancellor continues to be almost embarrassingly desperate to be China’s new best friend, but he must not pursue his infatuation so far that it excuses its unfair trade practices. Granting market economy status to China in the absence of important safeguards would significantly diminish the capacity of the EU to guard against Chinese dumping, which has the potential to destroy the UK steel industry, so it must not be granted until the criteria are objectively met. Will the Secretary of State tell us more about why the Government appear to have made their mind up already on this important issue in advance of the forthcoming assessment by the EU Commission? Surely they are not so intent on cosying up to China that they have left all judgment behind.
The Opposition motion calls on the Government to publish a full industrial strategy that is designed to support and grow our manufacturing sector, not just stand by as it is threatened by unfair competition. This should include a proactive procurement policy committed to using British steel wherever possible for publicly funded infrastructure projects and supporting industrial supply chains across the UK. Nothing less will do. In the forthcoming Budget, Labour would support the Government doing more on business rates and exempting new industrial equipment. An industrial strategy must be forward-looking and support our wider industrial base and its supply chains. That is why Labour would also support the Government in going further to develop a materials catapult to drive early-stage investment in this crucial area—an idea that has support from industry and business organisations such as the CBI. Labour Members certainly support it, and I hope that come the Budget we will hear from the Government that they support it too.
The Government are always keen on asserting that they have changed the procurement rules as one of the five steel industry asks that the Minister for Small Business, Industry and Enterprise blithely asserted during the recent urgent question on 18 January had all somehow been delivered. However, these new rules do not seem to be having any impact on actual outcomes. There is no sign that these modest technical changes are making any difference to the awarding of Government contracts to help our domestic industry. Perhaps that is because the new guidance merely states that steel requirements should be “openly advertised” to allow UK firms to compete. Britain’s steel industry needs a real champion in Government, but the Minister excuses the omission of British steel in projects like Hinkley Point C by claiming wrongly that UK steel does “not have this capacity”. I am beginning to worry about her connection with reality, especially after her appearance on “Pienaar’s Politics” yesterday when she claimed that there is no Tory infighting over the European Union and denied that the Prime Minister had attacked the Mayor of London in a speech last week. I do not know which planet she is on, but it is clearly not the same one that the rest of us inhabit.
The Conservatives have left our economy insufficiently resilient to global threats and not in a high enough state of readiness to seize on future opportunities. If they are to lay solid foundations for our future prosperity as a nation, they have to support our foundation industries. Decisions taken now will chart our economic fortunes for the decades to come. The UK steel industry does not need warm words from this Government: it needs effective action. Our steel communities need it, our economy needs it, and Labour Members demand it.