Budget Resolutions

Karin Smyth Excerpts

Tuesday 30th October 2018 Commons Chamber

[Matt Hancock]

The £20.5 billion is just for day-to-day running costs—the resource costs. Of course there is a capital budget, too, which includes £4 billion of taxpayers’ money. That goes towards ensuring that we can get the capital built. The critical point is that we have not only that £20.5 billion uplift in running costs but a capital budget. We will make further announcements on the allocation of the capital budget later in the autumn.

[Karin Smyth (Bristol South) (Lab)]

I am grateful to the Secretary of State for clarifying the £20.5 billion figure, which does not include training or capital. Of course, that contradicts the unhelpful briefing from Downing Street during the summer that it was something like £84 billion. Will he confirm that that £84 billion figure, which has been repeated in the media, is, as the Health Service Journal says, a fib, and that we are talking about £20.5 billion purely for resources in the NHS in England and Wales?

[Matt Hancock]

No. The £84 billion is the cash figure. The £20.5 billion is the real-terms increase by the end of the five years. If we add up all the extra money, we get £84 billion. It is there on page 36 of the Budget, if the hon. Lady wants to look. The biggest single cash increase comes next year, in 2019-20. It is all there in the Red Book.

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[Joan Ryan (Enfield North) (Lab)]

I thought I would start by picking out a few key points from the Office for Budget Responsibility report, which might have a slightly different emphasis from the points that the Chancellor would pick out. Let us start, on page 64, with household disposable income:

“Real household disposable income fell by 0.2 per cent in 2017”.

On page 65, the report says:

“We expect relatively weak growth in per capita real earnings and real disposable incomes… In 2019, real per capita disposable income growth is flat”.

On household saving and debt, on page 67, it says:

“We expect unsecured debt to rise steadily as a share of household disposable income”.

On household net lending and balance sheets, on page 70, it says:

“the ratio of household debt to income has risen steadily since the start of 2016…we expect the ratio of household debt to income to continue to rise steadily…with the ratio reaching just under 150 per cent by the start of 2024.”

On business investment and stockbuilding, on page 72, the report says:

“The latest data suggests business investment fell in both the first two quarters of this year…we expect a modest rise in business investment as a share of real GDP over the forecast period—less than would be typical at this stage of an economic cycle.”

On UK exports as a share of GDP, on page 77, it says:

“In August, the Government announced an ambition to increase the UK’s exports to 35% of GDP, but has not specified the date by which it believes that this can be achieved. The Government’s previous aspiration was to increase exports to £1 trillion by 2020—our forecast suggests that this will be missed by £320 billion. The Government is not on course to meet its current ambition in our forecast”.

On risks and uncertainties, on page 81, the report says:

“The outlook for productivity growth remains hugely uncertain.”

On page 83, it says:

“the probability of a cyclical downturn occurring sometime over our forecast horizon is…high”.

On assumptions regarding the UK’s exit from the EU, it says:

“we still have no meaningful basis for predicting a precise outcome upon which we could then condition our forecast.”

On page 91, it says:

“Real GDP Growth has been revised down in 2018”.

Now, the Chancellor, of course, would and did choose to cherry-pick a different set of headlines yesterday, but I think this is a more balanced picture than that presented by him.

I can assure the Chancellor of two things in relation to this Budget. First, the people of Enfield are sick and tired of austerity. Secondly, we have no confidence that the Government’s programme of austerity is coming to an end. The Government’s £1 billion cut to the Metropolitan police budget since 2010 has resulted in 230 police officers and police community support officers being removed from the streets of Enfield. Over the same period, violent crime has surged locally by 85%. Where was the Chancellor’s announcement to reverse those cuts, put more bobbies on the beat and help create safer neighbourhoods?

How can the Government have the cheek to say austerity is over, when they are still planning cuts of £1.3 billion to councils next year? By 2020, the Government will have slashed funding to Enfield Council by 60% in just a decade.

There is a better example in this Budget of the Government’s misguided priorities. The Chancellor announced more funding for potholes than for our schools. Pothole funding is welcome, but surely education should be a higher priority. Does the future of our children not matter? This is a slap in the face for many schools in my constituency, which are having serious problems paying for basic items such as pens and paper, let alone retaining and recruiting teachers.

Austerity is not coming to an end, and nor, as the Chancellor asserted, is the “economy working for everyone”. This year, we have seen household debt rise to its highest level on record. Over-indebtedness in Enfield is higher than the London and national averages, and we have more than 14,000 residents in real financial difficulty. One in three workers living locally does not earn a living wage, and the average worker is £800 a year worse off than they were a decade ago.

The Government’s abject failure to address the housing crisis means local families are struggling to cope with soaring rents and a lack of affordable homes, with our borough having the highest eviction rate and the second highest level of homelessness acceptances in the capital.

The last Labour Government lifted 1 million children out of poverty, but child poverty rates under the Conservatives are getting worse, not better. Some 34,000 children in Enfield are now living below the poverty line. This is a shameful record for the Government, and a record that could deteriorate still further as a result of their disastrous universal credit roll-out.

[Karin Smyth]

My right hon. Friend is making an excellent speech. Does she agree that the failure to say anything considerable in the Budget about early years support and education and Sure Start centres yesterday represented a glaring omission, and addressing those issues would have helped families in constituencies such as Bristol South and Enfield North?

[Joan Ryan]

My friend is absolutely right. In fact, in Enfield, we now see a real problem, as we do in many other parts of the country, with children not being ready for school at the age of five. This has a significant impact on their achievement throughout their school careers and on their future.

North Enfield Foodbank has said that food bank usage continues to increase, with Enfield having the fourth highest rate of food bank usage in London last year. The main reason for that increase is delays in the payment of benefits and changes to them.

The Chancellor said that the Government were

“delivering on the British people’s priorities, supporting our public services”—[Official Report, 29 October 2018; Vol. 648, c. 668.]

There is no public service or institution more important in our country than the national health service. Huge pressure has been placed on doctors’ surgeries. Well over half the residents who replied to my GP services survey said they had difficulty getting an appointment to see a doctor, and we know that, going forward, Enfield is short of 84 GPs to serve our growing population.

The Government’s chronic underfunding of our national health service since 2010 means that North Middlesex Hospital, like so many other hospitals across the country, is operating with a substantial financial deficit. NHS England is trying to deal with a deepening staff crisis, while hospitals are trying to recruit doctors and nurses. This is an impossible situation. We cannot square this circle. On public health, which warranted no mention whatever, we in Enfield are facing another £1 million cut by 2020, and everybody knows the link between poverty and health.

The Government have failed to address eight years of devastating cuts to our communities, and they are failing to deliver on the priorities of the British people. Austerity is not coming to an end. Yesterday’s Budget proves it. There is no hope here that I can take to the people of Enfield from this Conservative Government. I will not be supporting this Budget.

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[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I should like to highlight some of the facts and figures that the Chancellor missed yesterday before I move on to discuss some of the taxation and public spending measures. First, a record 8 million working people are now living in poverty. There are also 4 million children living in poverty, two thirds of whom are in working families. That number is going in the wrong direction. There are also 4 million sick and disabled people living in poverty—twice the number of non-disabled people. Our life expectancy is flatlining, and for women it is actually going backwards, but what do this Government do? They increase the state pension age. We also know that infant mortality has increased for the first time in 100 years, and that four in 1,000 babies will not reach their first birthday, compared with 2.8 per 1,000 in Europe.

Many epidemiologists have linked this reversal of the generations of health improvement with the austerity that this Government have wrought on the country as a whole and on people on the lowest incomes in particular. Resolution Foundation analysis published today and yesterday’s Budget book show that people on the lowest incomes will be hit disproportionately hard. The Government have not reduced inequalities. Have Ministers assessed the Budget’s impact on life expectancy? Will it continue to flatline, will it get worse or will it increase? I doubt they are able to say it is on the road to recovery.

On tax, I am pleased that small businesses, particularly those on the high street, will have their business rates reduced—that has been a particular issue for a number of my constituents—but what will that mean for councils’ revenue, and how will they be recompensed? My council has lost nearly half its budget from central Government. The digital services tax sounds great, but the OBR says it will affect around 30 tech giants, which will pay about £15 million each. How will that address the fundamental issue that, for example, in 2016, Google paid £36.4 million in corporation tax on declared UK sales of £1 billion, whereas according to its US accounts those sales were £6 billion?

On public spending, the Chancellor confirmed that the NHS would be given much-needed cash. That is welcome, but a range of think-tanks, from the King’s Fund to the Nuffield Trust, say it actually needs £30 billion by 2020. Again, the additional £2 billion for mental health crisis is welcome, but what about emphasising prevention? What about assessing the Government’s own policies on sanctions, work capability assessments and the personal independence payment process, which make the mental health of many claimants worse?

The £1 billion for social care is important, but it does not address the £2.5 billion funding gap since 2010 and does not help the 1.2 million people who need care but cannot get it. I worry that after the publication of the social care Green Paper, which is being consulted on, a new funding regime involving a social care insurance scheme will be announced. That would have disastrous implications for the NHS, as we see closer integration between the NHS and social care.

I could go on about the derisory figures for education and the fact that my local police force and our emergency services will receive nothing substantial, but I want to talk about homelessness, which is rising but was not mentioned in the Budget. We see rough sleepers on our streets in towns and cities up and down the country, but we hear nothing about the families who live in temporary accommodation or people who sofa-surf, as they are not deemed as having priority need for housing. That is the Government’s biggest shame. It epitomises their neglect of too many citizens and reflects not just their failure to ensure that enough houses are built for us all, with social and affordable homes as part of the mix, but their ill-thought-out social security policies, such as universal credit.

Universal credit has been a disaster from start to finish, and it has now been revealed to be driving homelessness. One shelter says UC is the reason why a third of its residents are in it. UC tenants of the housing association First Choice Homes in Oldham are in more than £2.5 million of rent arrears. Research suggests that nearly one in five people in Oldham struggles to pay a social rent. UC is part of that problem. Policy in Practice estimates that the changes to UC announced in the Budget will not have a significant effect. It says 345,000 more households will still be worse off and 29,000 will be no better off. Disabled people will still be worse off. People in employment will see some improvements, but self-employed people will see none at all.

[Karin Smyth]

My hon. Friend is a well-known expert in this area, which she has spoken up about many times. Does she agree that the Government’s inability to look at people in the round—particularly at their mental ill health, their disability, their poverty and their lack of access to work—drives some of the problems she highlights, including those with universal credit?

[Debbie Abrahams]

My hon. Friend hits the nail on the head. The human misery caused by such an inhumane policy cannot be underestimated.

L contacted my office recently after her UC was suddenly stopped because her son, B, has severe learning difficulties and L, who is the main carer, did not realise that he would have to make a separate claim once he had reached his 19th birthday. When the money stopped, L had nothing—she did not know why it had stopped and nobody contacted her. It was an absolute disaster for her, and she said:

“At times I just want to end it all…it’s just so hard and I get no support or respite.”

L is a candidate for the new mental health crisis fund that the Government have set out—a product of their universal credit policy. On top of this, the investment in UC does not offset other cuts to social security, with welfare spending set to fall in the next couple of years.

Most worrying are the cuts affecting disabled people, which have not been addressed in the Budget. In fact, according to the OBR, disabled people will be worse off. As the United Nations said last year, this Government are presiding over a “human catastrophe”. The Equality and Human Rights Commission estimates that families with a disabled adult and a disabled child will have lost 13% of their income—£5,500 a year—by 2022. This is on top of colossal cuts across other Departments. What about their help from the Chancellor? What about their bright future?

We have done a lot—the former Labour Government did a huge amount to improve life expectancy, and to lift disabled people and children out of poverty—but we need to do more. The inequalities in our society are getting worse, not better. These inequalities are socially reproduced, so they can be changed, and that should give us all hope. But political will is needed to tackle them, and I am afraid that this Government just do not have it in them.

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[Karin Smyth (Bristol South) (Lab)]

It is an absolute pleasure to follow my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), who made an excellent speech.

We have had the usual smoke and mirrors about the real money that is going into the NHS through this Budget, but I think that everybody outside the Chamber agrees that it is not enough to meet the increase in demand that we all know about. Equally as concerning, however, is the fact that the percentage of the NHS budget that will be part of public spending over the forthcoming years will rise to roughly one third of overall spending. That says an awful lot about what we are not spending money on, as well as what we are spending.

Sometime soon, we will have the 10-year plan. The taxpayers, whom the Secretary of State was so concerned about earlier, will have absolutely no say in that plan, the priorities or how the resources are allocated. It is a completely missed opportunity to treat the public as grown-ups in the debate about health funding so that they are clear about the cost of health services, the extent of spending and the quality that money can buy, and understand what they are prepared to pay for.

Let me speak briefly about VAT. Page 50 of the Red Book refers to some tinkering around the edges of VAT, but the Government make no mention of closing the loophole that has been exploited by some NHS trusts. I visited a Treasury Minister recently to talk about wholly owned companies saving VAT. The Treasury seems unconcerned about the loss of income from VAT on wholly owned companies, and the Department of Health and Social Care seems totally unconcerned about the competing fragmentation of our services. It would be really good if both Departments had a chat with each other, decided what the policy should be and sorted it out.

I want to concentrate now on the Budget. Bristol is a city of high employment, and also a city with high rates of ill health and disability. The greatest inequalities are in my constituency, with people living on average for 19 years in ill health. The Marmot review on health inequalities estimated that between £36 billion and £40 billion are lost in taxes, welfare payments and costs to the NHS through health inequalities. This is a huge opportunity for us to do better.

I want to touch on universal credit and social care. Some 5,900 of my constituents currently claim employment and support allowance and the Government intend, at some point, to migrate them on to universal credit. In successfully claiming ESA, my constituents have been subject to the work capability assessment. Many have been initially refused, but then have successfully appealed that decision on one or more occasion. They will have proved to the Department for Work and Pensions that their long-term disability or ill health means that they cannot work and need financial support. There is still no recognition or understanding that these constituents will never work again. They do not need incentives or sanctions to work. The DWP agrees that they cannot work, but universal credit offers them no benefit, only a loss of income. Surely it is time to halt the migration of anyone currently claiming ESA and allow new claimants with an illness or disability to claim that benefit. We need a proper rethink about how we support those who most need our help.

The problem on social care is well documented. We know how many people are losing support, but it is still a silent misery for thousands of families, because until someone goes into the system, they do not understand how bad it is. The King’s Fund said that public awareness of the system is very poor and that

“As long as the public view the issue from behind a veil of ignorance, it is easier for national politicians to trade on…rivals’ proposals”.

I do not want to trade on fear and misinformation; I want us to set a path for what we need. I would like the Budget to have helped, but it has not. The language needs to change. Spending on social care is not a drain, a time bomb, a burden or a threat to assets. It is an investment in people and in our future. Every business, every public service and every family is struggling to cope with social care, and investing in it is an infrastructure issue. It is essential to our prosperity.

The cycle of ill health, disability and poverty is well known, as is the problem of low productivity, and poor educational attainment does not help. Last month, one of my colleges came up with the Love Our Colleges campaign to talk about underfunding in further education and the need to bridge the skills gap. College funding has been cut by 30% since 2009 at the same time as costs have increased dramatically, including for pensions. At the same time, however, the number of adult courses has dropped by 62% and the number of health and social care courses by 68%. How can that be a priority when there is that level of disinvestment? This is a huge problem in Bristol South because we do not send youngsters to higher education—further education is the driver of prosperity for our people.

As I highlighted earlier, also not mentioned was the OECD report on early years education. There was nothing in the Budget about this, despite evidence that early years education is a driver of prosperity. Nursery schools, which are under the control of local authorities, were forgotten even in the Chancellor’s miserly throwaway comment. He has not given them anything. They do not even get the pittance he threw away in the Budget.

Finally, I want to say something about our police services. Some 75% of recorded incidents are currently non-crime and include missing persons reports and issues relating to people experiencing mental health crises, all of which are highly resource intensive. I am currently on the parliamentary police force scheme and spending a lot of time with our police force, so I have seen this at first hand. The police funding formula has not been updated for a decade and does not reflect current demand. The police and crime commissioner has been clear about this. In Avon and Somerset, we have a very good system for analysing demand and the associated resource needs, but we are still not getting the money, even though we have proved we need the resource.

In conclusion, the Government are ignoring all the data and evidence, and not linking up their policies in order to deliver the improved productivity that this country needs and which will drive prosperity for all our constituents.