Income Tax (Charge)

Jonathan Reynolds Excerpts

Thursday 4th March 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I am grateful to be called to close the second day of the Budget debate. Budget debates are, in my view, one of the very best parts of our parliamentary process. They are a chance to talk about the big picture—a chance to raise the things that must be said—and nearly 50 Members of Parliament have done so in this debate today. To be able to speak and vote on the measures in any Budget is a great privilege and responsibility for us all, and in closing the debate, I will talk about what I believe the Chancellor needed to do and reference the many good speeches we have heard.

However, we need to start with the big picture. What the Chancellor presented yesterday was a Budget of high taxes, high unemployment and low growth. I do not think that is in dispute. In fact, if the forecasts are right, the historically low levels of growth we saw going into this crisis are now the norm. That, combined with our serious productivity and business investment problem and the challenges caused by our leaving the single market, shows that the scale of the challenge is very significant indeed.

That means that there were two things I wanted most of all from this Budget. First, I wanted to see a clear road map to economic recovery, with a relentless focus on jobs, jobs and jobs again; and secondly, I wanted to see some recognition from the Chancellor that the terrible impact of the pandemic on the UK has been partly due to the state the country was in going into the crisis. Whether on NHS capacity, insecure work or child poverty, this crisis has taken the fraying social fabric of the UK and torn it apart. My hon. Friend the Member for Coventry North East (Colleen Fletcher) made that point very well.

The objective for us all should be to promise not to return to the country we had going into the pandemic, but to do better than that—to promise opportunity, prosperity and resilience far greater than we had in the decade leading into covid. After all, is that not what previous generations who sat on these Benches did after the crises that they faced? They turned their crises into a better future.

The starting point in any debate about protecting the British people in this crisis has to be a recognition of the inequality in how the pandemic has been felt. Yes, we have all been affected by covid in some way, but a person who, for instance, has been able to work from home on full pay, perhaps with a study and a garden, has been in a fundamentally easier position than those who have had no income for over a year. Men and women have been affected differently, with the majority of home schooling falling on women, and different parts of the country have been hit worse than others. That is why I was genuinely disappointed with the ambition, the scope and the policies of the Chancellor yesterday. The Budget did not have that big vision that we needed. I will address that and say what I would have preferred to see.

I will start with jobs. At least the Chancellor saw sense, listened to Labour and the unions and business, and did the right thing by extending the furlough scheme. It is remarkable to me that the Chancellor originally thought it could end last year. But even with furlough mitigating the rise in unemployment, a forecast of unemployment at 6.5% is very high. That means over 2 million people out of work. While furlough protects those in work, we need to do more for the 1.7 million already unemployed. We have lost 700,000 jobs in this crisis. Long-term unemployment is nearly half a million. Half of all disabled people are out of work. Kickstart is not delivering, and restart has not started. Crucially, even if kickstart worked as well as Ministers hope, the scale of the challenge is already greater than the full capacity of the scheme.

I wanted the Government to live up to their rhetoric and offer young people a real guarantee. Young people have suffered so much in the crisis, so let us take the action needed and make sure that no young person is out of work or education for longer than six months. We should promise young people an offer of education, employment or training and link those jobs and training to the challenges the country faces on social care, the NHS, schools and climate change. Time spent on furlough should count towards that limit, so that we do not see the long-term scarring that we know comes from periods of sustained economic inactivity. We could use the money already allocated to employment programmes. We could reform the apprenticeship levy to complement that and spend the money this year and next, when it will be most needed.

That brings me on to universal credit, which many Members have understandably mentioned. Cutting universal credit and working tax credit by £1,000 this year would have been unthinkable and unforgivable, and I make no apologies for how hard we have fought the Government on this issue. The Chancellor could and should have done the right thing and the responsible thing many months ago, yet, as with free school meals, the Government have once again been dragged kicking and screaming to do the right thing. But what we heard yesterday was a half-measure—a £500 cut this year, with £1,000 cut the year after that.

Because of the way that Ministers have behaved, 6 million families have faced months of uncertainty about whether they would continue to get the support they need to cover the costs of the pandemic. These people deserve certainty, and all the Chancellor has done is inflict another cliff edge. On 1 October this year, furlough will end, the self-employment income support scheme will end and universal credit will go down to its lowest level in real terms in 30 years. How can that be right?

What is going on with working tax credit, which the Government are instead offering as a £500 lump sum? The Secretary of State for Work and Pensions was absolutely right when she said to the Work and Pensions Committee earlier this year,

“Previous experience would be that a steady sum of money would probably be more beneficial to claimants”

than one-off lump sums. I believe she reiterated that position in her introductory speech. She is right, but the Chancellor was not listening.

I have to raise again the plight of those people on legacy benefits such as jobseeker’s allowance and employment and support allowance, which my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Work and Pensions Committee, did so very well in his speech. These people never had the uplift to begin with. The Government said that it was because it would take too long to do, and as the crisis has gone on, the Government have chosen to ignore them. They know it is not possible for many of those people to transfer on to universal credit because they might be worse off due to the design of universal credit. That is appalling.

What we needed was for the Chancellor to take his own advice on honesty, because the honest take on this situation is that we do not have a social security system that is fit for purpose. That is why keeping the uplift is so contentious. It is why those people on legacy benefits feel so strongly. It is why the excluded exist, and it is why the Government had to make so many changes to the system at the beginning of the crisis.

Although, hopefully, we will not have another pandemic, the impact of technology and trade adjustments on the labour market will become only more acute, and the sooner the Government recognise that, the better. The decision to lift the rate of universal credit was an admission that the level of support was not good enough to help families through this crisis. The uplift should remain until it is finally replaced with a system that provides genuine security for all. The Secretary of State said in opening that she is frustrated by that position. If the Government have been able to accept our arguments on corporation tax, a national investment bank and the minimum wage, perhaps in time they will accept this argument too.

This was a Budget that did not address the challenges facing our country today and offered very little for the future. That focus on the future should have run through the whole Budget, but it simply was not there. There was nothing on schools or education at all, even though, like so many, I have sleepless nights worrying about my children and how they will ever catch up from what they have lost. There was nothing serious for town centres, which are already grappling with changes and facing huge challenges as retail moves more and more online. There was nothing on the future of work and how we harness the change in working patterns to spread prosperity across the country. There was nothing even for our incredible NHS except a £30 billion cut from April this year and no mention of how we will get through the huge backlog of surgeries and check-ups or deal with the impending mental health crisis.

It is not enough. It is not good enough, and it is not the future that British people deserve as the reward for their sacrifice and hard work. I put it to the Government that they cannot fix the problem that the country faces, because they are the ones responsible for creating so many of those problems in the first place. That is why this Budget fails to protect the jobs, the livelihoods and the wellbeing of the British people to the degree that they deserve.