Budget Resolutions

Liam Byrne Excerpts

Wednesday 11th March 2020 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

It is a joy to follow the hon. Member for Grantham and Stamford (Gareth Davies), who has reminded us that his constituency was the home of the man who discovered gravity and of the woman who discovered how to defy political gravity, to rise to the highest office of state in our country and become one of our best known and greatest Prime Ministers.

The Chancellor came to his position at a very difficult time. He had to bring forward a Budget today that would calm many of the concerns of businesses, workers and people across the United Kingdom because of the impact of the coronavirus. He has brought forward measures to make sure that businesses have sufficient cash flow at a time of disruption and to support workers who may well be asked to make a public sacrifice by staying away from work and should not be penalised for it. There is also, of course, the co-ordination with the Bank of England to try to stabilise the situation.

The Chancellor tried to give the impression that it was quite an expansionary Budget, but when we look at terms of it, we can see that it is not really expansionary at all. Much of it was made up of past announcements, and some of it of announcements for the next five years. It is about raising spending to a certain level, rather than by a certain level. When one looks at the overall increase in total managed expenditure of around 1.8%, one can see that, given some of the things that we are facing, it is actually quite a modest Budget, with modest expenditure.

However, I welcome a number of policies that have been introduced in the Budget. I will probably get a lot of criticism now from those who share the climate hysteria that seems to have gripped this House. The pressure was on the Chancellor to impose additional costs on ordinary people who drive their cars, on businesses that rely on fuel, and on consumers who require that their food be delivered to the shops in the cheapest way possible. I am glad that he did not increase fuel duty because, of course, that would have been an imposition on the very people whom some Members of this House today have said they want to defend. They have also said that they do not want to see their standard of living affected, but those kinds of taxes would have had an impact on those people.

I am also pleased that the Chancellor has not increased the tax on red diesel for farmers. I know that many farmers in East Antrim, for whom fuel is a substantial but inescapable cost, will welcome the fact that they will not now have an additional tax imposed on it.

Having said that, this Government will still be dipping into the pockets of the people of the United Kingdom to the tune of £18 billion next year in various green taxes. The carbon tax that the Chancellor proposes to impose on gas will impact severely on energy bills. We still produce a lot of our energy, and people still have to heat their homes using gas. That carbon tax will substantially increase those people’s bills, especially when one remembers that 20% of electricity bills at present are taken up with various green levies and green costs. On top of that, some of the bill is made up of infrastructure costs, which are incurred only because of the move towards more wind energy and so on. The tax on gas will have an impact on many people, especially in places such as Northern Ireland, where we rely heavily on gas for electricity generation.

My second point relates to the Government’s announcement that they want to disperse jobs outside London. We had asked the Government to consider that during the confidence and supply arrangement that we had during the previous Administration. Of course, there has been a degree of centralisation: we have lost jobs from HMRC and the Driver and Vehicle Licensing Agency. If the Government are sincere about levelling up the economic growth across the United Kingdom, it is important that jobs are dispersed from the south-east of England to other parts of the United Kingdom, including to places such as Northern Ireland.

There was no mention in the Budget of air passenger duty—at a time when connectivity is so important and when we had discussions following the Flybe episode. So many airports across the United Kingdom depend on connectivity. We know the cost of air passenger duty on internal connectivity across the United Kingdom. Although I understand that the Chancellor could not have made a decision in this Budget because the review of air passenger duty and aviation taxes is ongoing, I hope that there will be some announcement in the future, so that places such as Northern Ireland that are heavily reliant on air transport see that additional cost—about £4.8 billion a year—reduced and are given some reliefs.

The announcements on infrastructure spending are important. I welcome the expenditure on roads and infrastructure projects across the United Kingdom. The one thing that I have some concern about, though, is that the Government are proposing to spend £110 billion on infrastructure projects by the end of this Parliament, but—as we have seen with the Heathrow expansion decision—these projects are under threat from the challenges we face due to commitments made in the Paris agreement and the Climate Change Act 2008. I believe that those who are determined to prevent the infrastructure developments that are necessary to make this country work will use the courts to try to stop many infrastructure projects that the Government are proposing. That is because all of those projects—roads, housebuilding, airport expansion, railways—will have some impact on CO₂ emissions, through concrete production, steelmaking, the building process and so on.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

The broad criticism that has been levelled at this Budget is that we surely needed a plan to decarbonise the transport system and it is not yet clear from today’s presentation whether we got that.

[Sammy Wilson]

The right hon. Gentleman has missed my point. All decarbonisation—whether we decarbonise energy, transport or what we eat—has an implication for people’s jobs, living costs and so on, and we have to ask what the country’s priority should be. Do we really want to impose the sort of burdens that those kinds of priorities put on the people of the United Kingdom? We cannot say that we want to protect jobs, to keep standards of living up and costs of living down, and to give people the freedom to go on their holidays and to eat what they want, and at the same time say, “But let’s absorb ourselves in this carbon obsession”, which affects all those things. Members cannot have it both ways. At some stage, we will need to have a discussion about where our priorities ought to lie.

I welcome the additional money for the Northern Ireland Executive, but I repeat that there has been an increase in expenditure in this Budget of 1.8%, which the Executive will find difficult to live with given the commitments that were made in the agreement that was put in place to get the Assembly back up and running. The Executive are going to have to set priorities.

I agree with the right hon. Member for Maidenhead (Mrs May) that if money is being given to devolved Parliaments to ensure the spread of prosperity across the United Kingdom, the approach has to be co-ordinated and there needs to be some oversight of how that money is spent. I was a Member of the Northern Ireland Assembly for a long time, and of course people jealously guard their freedom to make those kinds of choices, but it is important that the money is delivered not simply as part of a block grant for Administrations to spend on whatever happens to be the priority that week, rather than on the long-term prosperity of the country.

Overall, I welcome the Budget, although it is a modest one. It appears to spend an awful lot more money, but it represents only a 1.8% increase in overall Government expenditure. The Chancellor has made a decision to live within his resources, but there will be some consequences.

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[Sir Edward Davey (Kingston and Surbiton) (LD)]

The World Health Organisation pronounced today that the coronavirus is now a pandemic, so it is not surprising that the Bank of England and the Government have together issued a big joint package of economic stimulus, which is to be welcomed. The question is: is it the right size? The truth is that we do not know. The levels of uncertainty are extremely high, and we will need to keep this under review. I hope that the Government stand ready to come back to the House if the economic downturn that will be caused by coronavirus spirals further.

I particularly hope that the Government will keep under review the support for people on low incomes who have to self-isolate. People working in the gig economy, people on zero-hours contracts and the self-employed are particularly vulnerable, and the Government need to ensure that the measures they have announced today go far enough. It would be completely wrong if we gave tens of billions of pounds to the banks during the 2008 financial crisis but were now not able to look after people working hard on low incomes. That has to be a priority.

When I look at this Budget today, I am deeply alarmed: I am alarmed by the growth figures. I have looked at Budgets over 30 years, and I have rarely seen a Budget where the growth forecast for the British economy for the whole forecasting period is less than 2%—and that is before coronavirus is taken into account. This year, with poor world economic growth, it is 1.1%, before coronavirus, but at the end of this forecasting period, in 2023 it is just 1.3%, and in 2024 it is just 1.4%. That is a disastrous performance.

These figures are from the independent Office for Budget Responsibility, and the of course the question is: what is lying behind those figures? If it is a forecast for four or five years’ time, it is not the coronavirus and it is not the world economy; it is something that is going wrong in our economy, and it is the Government who must take the blame. So what is it? When we read the OBR report, and I have been flicking through it, it suggests that—guess what?—it is the impact of Brexit and the Government’s new immigration system.

The Conservative party may not like the fact, but it is there in the OBR report. On page 8, it says that the UK’s output has already fallen by 2%, thanks to the Brexit uncertainty, and the future loss will be at least 4% of national income. This will hit the living standards of all our constituents. That is why productivity performance is down, and when our small companies are faced with a barrage of red tape at the borders, not surprisingly exports will go down and we will see small companies go to the wall. I do not see in these Budget proposals anything to help those small businesses.

[Liam Byrne]

The growth figures the right hon. Gentleman quite rightly draws the House’s attention to are after the Government have chucked in a £174 billion fiscal stimulus and the Bank of England has slashed interest rates to an all-time low. I would draw his attention to the fact that productivity in our economy is now absolutely broken, and that surely is a damning indictment of the economic strategy of the last few years.

[Sir Edward Davey]

The right hon. Gentleman is absolutely right. It is the failure to invest in skills and the failure to realise that Brexit is going to damage productivity, while the attack on immigration, which is important for so many parts of our economy, will hit that too.

I worry about the self-employed and small businesses. They are suffering from the unfair business rates and they are suffering from things such as IR35. The Government are completely silently on IR35 today. They promise a reform of business rates. Liberal Democrats have been arguing for that for several years, with a well-thought-through proposal using land value tax, but the Government seem to be going to kick this into the long grass. That is not good enough when our small businesses are under such pressure.

The other issue I find disappointing is climate change. The Government have been trying to pretend that this Budget is going to take action on climate change. Let us look at it. With a fuel duty freeze again and £27 billion on 4,000 miles of road, that does not sound like a green transport policy to me. Then they announce, as though it is going to make any difference, £1 billion on green transport measures. This is completely absurd. The transport sector is the biggest sector for our emissions, and we need a completely different green transport strategy if we are to be serious about the climate. We need to make sure that we are not expanding airports, but that we are really investing in the electric vehicle infrastructure and giving incentives for electric vehicles, and this Budget does nothing for that.

If there is a real area on which we need to see significant Government expenditure, it is refurbishing the housing stock. We all know that that is where a huge amount of the emissions come from, and we all know that that is where there are easy wins that will reduce our constituents’ fuel bills, tackle fuel poverty and create jobs in every community. Why are the Government not doing that? They should of course bring back the zero- carbon homes laws that we passed and the Conservatives abolished, but, no, they are not keen on real action on climate change.

Then there is the Government’s announcement on carbon capture and storage. I was the Secretary of State for Energy and Climate Change when we were pushing this, and there was a £1 billion set-up fund, with a competition with two projects, with several billions of pounds running forward. We were the world leaders because we have a comparative advantage with our amazing engineers, with the North sea in which to store a lot of the emissions, and with our oil and gas industry and the skills from it.

Instead of exploiting that, what happened in 2015, when the former Chancellor, George Osborne, had his way? He cut that project overnight, not even telling Shell, which had shelled out £30 million. It was a disgraceful act against climate action. We need CCS, not just to green our power sector, but to green our heat sector and our industry. We could be world leaders, but that was a disastrous policy. The idea that these projects, which the Red Book claims will take the next 10 years, are a replacement for the level of ambition that we once had, is frankly shocking. The Government have failed very badly on the green agenda.

Finally, I wish to talk about the care sector. We need a care revolution in this country, not just in care for the elderly, but in care for adults with learning disabilities, which makes up the biggest, and fastest rising part of local authority expenditure. I speak as a father of a disabled child who cannot walk or talk—he only said “daddy” two years ago, and he is 12—and I worry about what will happen to him when my wife and I are gone. Obviously, I am trying to ensure that I make provision for my son, but I am lucky enough to be able to do that. Hundreds of thousands of parents of special needs children will not be able to make such provision, and the state will have to work out how we care properly for those adults, who will be of working age for many years.

We have not even begun to debate that issue. Instead, we have a care sector on its knees. Care homes are closing and there are shortages of care staff. That is partly because of Brexit—I say that because it is true—partly because of immigration restrictions, and partly because of the Government’s failure to address issues of social care. The “Interim NHS People Plan” stated that dealing with the nursing shortage is the single biggest and most urgent need for us to address, yet the Government have not done that. Social care, whether directly in the NHS or through local authorities, is one of the massive issues facing our country. We must debate it and get a grip on it, but this Budget does not do anything. It is an astounding omission.

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[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

It is a pleasure to speak in this Budget debate. I am only sorry that the former Chancellor and the former Prime Minister are not in their places, because I wanted to tell them how much I enjoyed the comedy of their remarks. I wanted to underline how extraordinary it sounded to Opposition Members that the Conservative party was now boasting about its credentials for fiscal management.

We have had a £174 billion fiscal loosening to deliver a rate of growth over the forecast period that is well below the trend rate of growth that we are used to in this country. As the OBR made crystal clear in its publications earlier today, the Chancellor was on course last year to achieve a balanced budget in the medium term. Now in the medium term, the deficit is forecast to stretch to £60 billion. We therefore have this massive, great fiscal loosening—before the impact of coronavirus is factored in—to deliver a trend rate of growth that is anaemic.

As the Government somehow managed to avoid saying, this Budget is also not only unsustainable but deeply unfair. That is not my analysis; that is the Treasury’s analysis. When we look at the decile analysis of how this Budget actually affects our constituents—surprise, surprise—the richest 10% are hit by about 150 quid a head, but the bottom deciles are hit by between £250 and £350 a head. Even as the Government give away £174 billion, they find a way to ensure that the bulk of the burdens, such as there are, is actually paid by the poorest in our society. What that means in constituencies like mine is that when I go into the Kingfisher food bank in Shard End or when I talk to the teams running the Aston and Nechells food bank, they tell me that demand is going through the roof yet again. Well before the summer holidays, we now have food banks running out of food once more. That is why it is so disappointing to see a Budget that not only punishes the poor but does nothing to remedy the terrible injustices of the universal credit regime that is greatly punishing the poorest people in our country. The Government really should have taken the time to address that.

I will speak briefly today, because there is so little in the Budget for the people of the west midlands. As you know, Mr Deputy Speaker, we have a Tory Mayor in our region who has boasted for some time of his special influence in No. 11 and No. 10 Downing Street. If only we saw any evidence for that. We already have the second- worst funding deal of any metro Mayor, and this is a Mayor who promised that we would be the fastest-growing region of the country. In fact, we are the slowest. He promised that youth unemployment would be wiped out. In fact, unemployment is going up. He promised that we would be building homes, which is something the Prime Minister celebrated today. In fact, the number of homes for social rent built last year fell by 19%, and is down by 80% since 2010. This is a Mayor who is not delivering for the people of the west midlands. We should have had a Budget that made good his failures, but we did not get the Budget we need.

Officials in my region tell me that our Mayor has made some £2 billion-worth of promises. The only problem is that there is a £1.2 billion black hole in his budget. On top of that, there is a £900 million hole in funding for the transport schemes we have been promised. There are also question marks about the £4.6 billion-worth of programmes and projects that are now rated by the combined authority as either amber or red. This is an absolute shambles. The Chancellor boasts of his intention to level up. We should have had a Budget from him that actually fills the black hole in the budget of our Tory Mayor in the west midlands, and we did not get it.

Let me give some simple examples. The levelling up fund promises £4.2 billion over five years, but it does not start until 2022 and it has to be shared by at least eight different mayoralties. That means our share may be, at best, something like £100 million, which comes nowhere near the £1.9 billion black hole that still exists in the budget of the west midlands after today’s transport announcements on new bus routes and, indeed, the metro line that I have campaigned for in my constituency for some years.

Only 20% of the tramline is funded. It is literally a tram to nowhere, because our Mayor failed to persuade his colleagues in No. 10 and No. 11 to sign the cheques that were promised.

[Sir Edward Leigh]

Will the right hon. Gentleman give way?

[Liam Byrne]

I will in a moment.

We cannot build the new homes we need unless we start investing in remedial work on brownfield land, but the £400 million, at best, has to be spread between eight mayoralties. That means we might have about £50 million coming into the west midlands, but our brownfield fund is £100 million short. The money we may get tomorrow, the day after or in the coming years will not come close to remedying the budget gaps we have today.

This Government have sought today to persuade us of their fiscal credentials, while avoiding the blunt truth that, by the end of the forecast period, they will have doubled the national debt, failed to deliver the growth we had in the past and failed to deliver for regions like mine in the west midlands.

[Mr Mark Harper (Forest of Dean) (Con)]

It is a great pleasure to follow the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), because I did not spot in his remarks his declaration of interest as the opponent of the fantastic Andy Street in the west midlands mayoral contest, which coloured his remarks—

[Liam Byrne]

It is not a financial interest.

[Mr Harper]

I was teasing. It is also a great pleasure because one would not know from listening to the right hon. Gentleman’s remarks and criticism of our economic record that he was, of course, the outgoing Chief Secretary to the Treasury who had to write the note reminding us all that there was “no money”. [Interruption.] I hear the groans from Labour Members, but it is worth reminding them that the difficult decisions we had to take from 2010 onwards were all because we were left an unsustainable budget deficit, the highest in the developed world, and it had to be dealt with.

[Liam Byrne]

The right hon. Gentleman is a sophisticated thinker, so I will give him a sophisticated intervention. The judgment that had to be made in 2010 was how we closed the deficit. We said that one third of it should be closed by spending cuts and two thirds of it by taxes. The former Chancellor George Osborne changed that judgment, seeking to close 90% of the deficit with spending cuts. That slowed the economy and meant that instead of having falling debt by 2016 we still had rising debt. The judgments were wrong, which is why things went off track.

[Mr Harper]

I fundamentally do not agree with the right hon. Gentleman on that, and I will come on to say a little about tax in my remarks. I do not agree with him because the tax burden is very high and was then. I forget which Opposition Member alleged this, but we have never said that the financial policies of the Labour party in government caused the financial crisis, as that was a much more complicated problem. Our criticism of the Labour Government, particularly under Gordon Brown as Chancellor, was that they assumed when they made their spending judgments that there would be perpetual economic growth and that there would never be a downturn. The root problem is that they were spending too much money, assuming that the tax revenues would continue forever, and when the financial crisis happened and the tax revenues fell, we were spending too much money. That had to be dealt with and we had to make the necessary decisions.

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[Liam Byrne]

I just want to say that the Conservative party backed our spending plans up until November 2009.

[Mr Harper]

I do not agree with that either. We had to make some difficult decisions when the crash happened and they were the right decisions. As the Chancellor set out today, because we made those difficult decisions and put the economy in good shape, we are well positioned to deal with the challenge facing the country and the challenge of tackling the coronavirus.