Budget Resolutions and Economic Situation

Keir Starmer Excerpts

Wednesday 3rd March 2021 Commons Chamber

[Keir Starmer (Holborn and St Pancras) (Lab)]

After 11 months in this job, it is nice, finally, to be standing opposite the person actually making decisions in this Government. The trouble is that it is those decisions that have left us with the mess we find today: the worst economic crisis of any major economy in the last 12 months; unemployment at 5% and, as the Chancellor said, forecast to rise to 6.5%; and debt at over £2 trillion. I am sure this Budget will look better on Instagram. In fact, this week’s PR video cost the taxpayer so much I was half-expecting to see a line in the OBR forecast for it, but even the Chancellor’s film crew will struggle to put a positive spin on this.

After the decisions of the last year and the decade of neglect, we needed a Budget to fix the foundations of our economy to reward our key workers, to protect the NHS and to build a more secure and prosperous economy for the future. Instead, what we got was a Budget that papered over the cracks rather than rebuilding the foundations, a Budget that shows the Government do not understand what went wrong in the last decade or what is needed in the next. The Chancellor may think that this is time for a victory lap, but I am afraid this Budget will not feel so good for the millions of key workers who are having their pay frozen, the businesses swamped by debt, the families paying more in council tax and the millions of people who are out of work or worried about losing their job. Although the Chancellor spoke for almost an hour, we heard nothing about a long-term plan to fix social care. The Chancellor may have forgotten about it, but the Labour party never will.

The British people will rightly ask, why has Britain suffered a worse economic crisis than any major economy? The answer is staring us in the face. First are the Chancellor’s decisions in the last year. This is the Chancellor who blocked a circuit break in September. Ignoring the science, he told the British people to “live with” coronavirus and “live without fear”. A few weeks later, we were forced into an even longer and more painful lockdown. Whatever spin the Chancellor tries to put on the figures today, as a result of his decisions, we have suffered deeper economic damage and much worse outcomes.

That is nothing compared with the decade of political choices that meant that Britain went into this crisis with an economy built on insecurity and inequality. The Chancellor referred to the last 10 years. As a result of those 10 years, we have an economy in which 3.6 million people are in insecure work, wages have stagnated for a decade and over 4 million children are living in poverty. Critically, we went into this crisis with 100,000 unfilled posts in the NHS and after social care had been ignored and underfunded for a decade. Government Members voted for all that. Today’s Budget does not even recognise that, let alone rectify it.

It is clear that the Chancellor is now betting on a recovery fuelled by a consumer spending blitz. In fairness, if my next door neighbour was spending tens of thousands of pounds on redecorating their flat, I would probably do the same. [Laughter.] But the central problem in our economy is deep-rooted insecurity and inequality, and this Budget is not the answer to that. The Chancellor barely mentioned inequality, let alone try to address it.

Rather than the big transformative Budget we needed, this Budget simply papers over the cracks. If this had been a Budget for the long term, it would have had a plan—a plan to protect our NHS; a plan to fix social care. I can tell the House this: a Labour Budget would have had the NHS and care homes front and centre. But this Budget is almost silent on those questions. If this had been a Budget to rebuild the foundations, it would have fixed our broken social security system. Instead, the Chancellor has been dragged, kicking and screaming, into extending the £20 uplift in universal credit, but only for a few months—once again, deferring the problem. As a result, insecurity and the threat of losing £1,000 a year still hang over 6 million families. [Interruption.] They ask what we would do. We would keep the uplift until a new, fairer system could be put in place.

If this Budget was serious about rebuilding our shattered economy, it would have included a credible plan to tackle unemployment. The Chancellor said very little about the kickstart scheme, no doubt because—

[The Prime Minister (Boris Johnson)]

Rubbish.

[Keir Starmer]

The Prime Minister says, “Rubbish.” That is no doubt because the kickstart scheme is helping only one in 100 eligible young people—rubbish is the right word, Prime Minister. In six months, it has supported just 2,000 young people, yet youth unemployment is set to reach 1 million. Like so much of this Budget, the Chancellor’s offer is nowhere near the scale of the task.

Of course, the biggest challenge for this country is the climate emergency. The Chancellor just talked up his green credentials, but his Budget stops way short of what was needed or what is happening in other countries. This Budget should have included a major green stimulus, bringing forward billions of pounds of investment to create new jobs and new green infrastructure. Instead, the Government are trying to build a new coalmine, which we now learn might not even work for British Steel. If anything sums up this Government’s commitment to a green recovery and jobs for the future, it is building a coalmine that we cannot even use.

If the Government were serious about tackling insecurity and helping those most at risk from covid, this Budget would have fixed the broken system of statutory sick pay and, at the very least, filled the glaring holes in isolation payments. This is not difficult to fix. The Government should just make the £500 isolation payment available to everyone who needs it. That would be money well spent, and, a year into the pandemic, it is a disgrace that it is not made available.

If the Government were serious about fixing the broken housing market, they would have announced plans for a new generation of genuinely affordable council houses. Instead, 230,000 council homes have been lost since 2010, yet the Chancellor focused today on returning to subsidising 95% of mortgages. I know what Members are thinking: “I’ve heard that somewhere before.” Perhaps it was because the Prime Minister announced it five months ago in his conference speech? No, I do not think anybody heard that. I remember now: it is what Osborne and Cameron came up with in 2013. What did that do? It fuelled a housing bubble, pushed up prices, and made owning a home more difficult—so much for generation buy! I have been saying for weeks that this Budget will go backwards, but I did not expect the Chancellor to lift a failed policy from eight years ago.

This Budget fell far short of the transformative change that we need to turbo-charge our recovery for the decades to come. There was no credible plan to ease the burden of debt hanging over so many businesses, which is estimated at £70 billion. This Budget asks businesses to start paying that money back whether they are profitable or not. That affects millions of businesses. It will hold back growth, because businesses will have to pay back money they never wanted to borrow, instead of being able to invest in their futures and create jobs in their local areas. It is both unfair and economically illiterate.

This Budget also falls far short of what was needed to support the self-employed and freelancers, unless, of course, they are one of the Chancellor’s photographers. After a year of inaction, we will look at the details of what the Chancellor announced, but, from the figure of 600,000 that he mentioned, it certainly looks like millions will still be left out in the cold.

The Chancellor’s one nominally long-term policy was in his references to levelling up, but what does that actually look like? It is not the transformative shift in power, wealth and resources that we need to rebalance our economy. It is not the bold long-term plan that we need to upskill our economy, to tackle educational attainment or to raise life expectancy. It certainly is not a plan to focus Government resources on preventive services and early years. For the Chancellor, levelling up seems to mean moving some parts of the Treasury to Darlington, creating a few free ports, and re-announcing funding. That is not levelling up; it is giving up.

Instead of putting blind faith in free ports, the Chancellor would be better served by making sure that the Government’s Brexit deal actually works: for Britain’s manufacturers, now facing more red tape when they were promised less; for our financial services, still waiting for the Chancellor to make good on his promises; for the small businesses and fishing communities, whose goods and produce are now left unsold in warehouses; and for our artists and performers, who just want to be able to tour.

Turning to other parts of the statement, we will wait for the detail about the so-called super deduction, but it is unlikely to make up for the 10 years when the levels of investment growth have trailed so many other countries. Of course we welcome the creation of the national infrastructure bank, which is something for which we have called for years, although it would have been better if the Government had not sold off the Green Investment Bank in the first place. We also welcome the introduction of green saving bonds. I have to say what a good idea it is to introduce a new set of recovery bonds.

The trouble is that the scale of what the Chancellor announced today is nowhere near ambitious enough. The long-overdue commitments to extend furlough, business rate relief and the VAT cut on hospitality are welcome, but there is no excuse for holding the announcement of that support back until today, and of course we will look at the detail.

There are very few silver linings in this Budget. The IMF and the OECD have said that now is not the time for tax rises. We are in the middle of a once-in-300-years crisis. Our economy is still shut and our businesses are on life support, so it is right that corporation tax is not rising this year or next. In the long run, corporation tax should go up. The decade-long corporation tax experiment by this Government has failed, but no taxes should be raised in the teeth of this economic crisis, so it is extraordinary that the Chancellor is ploughing ahead with a £2 billion council tax rise affecting households across the country. Why is he doing that when every economist would tell him not to? Perhaps we find the answer in this week’s Sunday Times, which quoted a source saying that the Chancellor’s argument was:

“Let’s do it all now as far away from the election as possible.”

The Telegraph on 27 January reported:

“Raising taxes now means they can be reduced ahead of the next election, Rishi Sunak tells Tory MPs”.

The Mail in September reported that the Chancellor was to hike taxes and then lower them before the next election. Let me be crystal clear: the proper basis for making tax decisions is the economic cycle, not the electoral cycle.

Behind the spin, the videos and the photo ops, we all know that the Chancellor does not believe in an active and enterprising Government. We know he is itching to get back to his free market principles and to pull away support as quickly as he can. One day, these restrictions will end. One day we will all be able to take our masks off, and so will the Chancellor, and then we will see who he really is. This Budget sets it up perfectly, because this is a Budget that did not even attempt to rebuild the foundations of our economy or to secure the country’s long-term prosperity. Instead, it did the job the Chancellor always intended: a quick fix, papering over the cracks.

The Conservatives spent a decade weakening the foundations of our economy. Now they pretend they can rebuild it, but the truth is that they will not confront what went wrong in the past and they have no plan for the future.

[Madam Deputy Speaker (Dame Eleanor Laing)]

We now go by video link to the Chairman of the Treasury Committee.