Budget Resolutions

Liam Byrne Excerpts

Monday 1st November 2021 Commons Chamber

[Michael Gove]

We do not need to look into the crystal ball; we can just read the book. There are a number of Scottish National party MPs whose advocacy has ensured that they receive levelling-up funds in their constituencies. I congratulate the hon. Member for Edinburgh North and Leith (Deidre Brock) on securing £16 million for UK Government money for the Granton gasholder in her constituency. The hon. Members for Central Ayrshire (Dr Whitford), for Aberdeen North (Kirsty Blackman) and for Aberdeen South (Stephen Flynn)—and even the right hon. Member for Ross, Skye and Lochaber (Ian Blackford)—have managed to secure money from either the levelling-up fund or the community ownership fund in this Budget.

It is fantastic that we have Scottish National party MPs petitioning my right hon. Friend the Chancellor of the Exchequer to bypass the Scottish Government in order to spend UK Government money in their constituencies. [Hon. Members: “More! More!”] And indeed there will be more, because in the forthcoming community renewal fund allocations, more money will be going to constituencies represented by Scottish National party MPs. That is because, as the Chancellor of the Exchequer pointed out in his Budget speech, we are stronger, better and wealthier together. It is great that Scottish National party MPs are putting the UK Government’s money where the Scottish Government’s mouth isn’t.

Levelling up is about making opportunity more equal across our whole United Kingdom. It is a recognition, as the Prime Minister and the Chancellor of the Exchequer have said, that while talent is spread equally across the United Kingdom, opportunity is not. If levelling up is to succeed, yes, we need funds such as the levelling up fund, but we also need a systemic approach to how the Government support local government, other institutions and the private sector in order to spread prosperity.

One of the challenges that we face when it comes to levelling up is that the difference between the more economically successful areas of the United Kingdom and those that are less successful involves a kind of “Anna Karenina” challenge. In the first line of that novel, Tolstoy points out that all happy families are happy in a similar way, but each unhappy family is unhappy in its own way. We can apply that to communities that need more help. The challenges that Knowsley faces are different from the challenges that Grimsby faces. The challenges that Bury faces are different from those that Burnley faces. We need to recognise that while all the challenges faced in coastal towns, in satellite towns around our major cities and in rural areas have common features, they all deserve to be addressed in a unique way.

If we are going to improve economic productivity and wellbeing, we need to recognise—as the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for Harborough (Neil O’Brien), has pointed out—that for levelling up to succeed, we need to ensure that local leadership improves and that we build on the success of, for example, combined authority Mayors such as Andy Street and Ben Houchen. We also need to improve living standards where they are lower, and to improve public services, particularly where opportunity has fallen behind. We also need to play a part in helping to restore pride in place, so that communities feel in a genuine sense that they have taken back control.

The Budget succeeded in addressing many of these challenges by ensuring that the funding was there to focus on each of the ingredients that require to be in place if we are to have levelling up. One of the first and most important areas in which the Budget made provision for change was in education, particularly in further education and in skills. An additional £3.8 billion is being spent over the course of the spending review period. That is a real-terms increase for those 16 to 19-year-olds who are in full-time education, and there is additional money to ensure that our groundbreaking T-levels are more available. There will be additional hours for those in further and technical education to ensure that they get the very best tuition, and there will be skills boot camps to ensure that we can accelerate the move of people into the labour market.

There will also be eight new institutes of technology—prestige further education institutions concentrated in the areas that most need levelling up. On top of that, the multiplier programme will provide more than £500 million to improve adult numeracy across the United Kingdom. All of this comes together in a package to recognise that, as well as building on the success of our education reform programme in schools, we also ensure that adult, technical and vocational education at last receives the focus, attention and funds that it deserves.

As well as investing in skills, we are going to invest better in small and medium-sized enterprises, which are of course the engine room of our economy. That is why the Chancellor outlined plans for the British Business Bank to expand in order to ensure that SME finance is more readily available. Regional funds are being extended across the northern powerhouse. The existing success of the BBB’s Cornwall operation is being extended to cover the whole of the south-west, and there will be new branches of the bank opening in Scotland, Wales and Northern Ireland in order to build relationships with small businesses and to ensure that they have access to the debt and equity finance that they need.

Alongside that, there will be increased investment in research and development. An additional £20 billion will be spent over the spending review period, going up to hit our £22 billion target, and this research and development money will move outside the greater south-east, where so much research and development expenditure has been concentrated in the past, in order to ensure that, whether it is in Manchester or Newcastle, areas of university excellence that require additional investment to ensure the smarter diffusion of innovation into the economy are supported in the way that they should be.

On top of that, we have the global Britain investment fund: £1.4 billion that will ensure those sectors that are strong and growing in our economy get the additional inward investment they need to drive up economic growth. We know inward investment is often the route to higher productivity, and that is why there will be £1.4 billion specifically targeted on the automotive sector, on renewables and on life sciences.

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

Can the Secretary of State just explain to the House why, if the global Britain fund is forecast to be so successful, the Office for Budget Responsibility has downgraded our trade forecast?

[Michael Gove]

I will say two things. It is great to see the right hon. Gentleman in his place. When he left as Chief Secretary to the Treasury, he famously left a note saying that “there is no money” left; now, as he can see, there is significant money available to be allocated in all these areas. I recognise that he was speaking in jest and that those words should not be taken out of context.

More broadly, we face, as indeed every country faces, a global race for talent and a global appetite for additional investment. It is because of the global Britain investment fund, because of what we are doing in research and development and because of the way we are reforming UK Research and Innovation that we will be in a position to ensure that our economy is equipped to take advantage of the opportunities that Brexit brings, and the opportunities that the Chancellor of the Exchequer has outlined. I am confident that the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) will see our exporting ability and the inward investment routes into this country grow in years to come.

I should point out that at the beginning of my remarks, I said that the initially pessimistic view that was taken of our capacity to weather the covid storm has been gainsaid by the success of the Chancellor’s approach. Again, there is no need to look in the crystal ball; the right hon. Gentleman need only look at the book. The book and the record show the success of the Chancellor’s approach.

[Liam Byrne]

rose—

[Michael Gove]

I will try to make a little bit more progress.

It is also significant that, if we are to level up, we must ensure that we have appropriate investment not only in business itself, through the funds I have mentioned and the initiatives I have outlined, but in transport. We must ensure that the private sector is firing on all cylinders, and that means ensuring in particular that our great city regions have the transport networks required. That is why my right hon. Friend the Chancellor has devoted £5.7 billion over the course of the spending review period to supporting the ambitious plans put forward by metro Mayors and others to improve transport.

More than £1 billion has been allocated to the Mayor of the West Midlands Combined Authority, and more than £1 billion also to the Mayor of the Greater Manchester Combined Authority, Andy Burnham. Mr Burnham said last week—a point he made on Twitter and on broadcast; he was happy to comment on the spending review, unlike the hon. Member for Croydon North—that this was a “very positive first step.” He said:

“This feels like a breakthrough today…this is a big down payment”

on the infrastructure we need.

Mr Burnham welcomed that investment, and of course alongside it we had £830 million for West Yorkshire, £570 million for South Yorkshire, £710 million to improve transport in the greater Liverpool region and £300 million for Teesside. All those investments will help the Mayor of Greater Manchester, as he rightly wants to, ensure a Transport for London-style approach to the delivery of transport in that great region.

On top of that, as the Chairman of the Housing, Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), pointed out, we have £4.8 billion going to local government over the spending review period. This is necessarily an injection of cash to help local government ensure it can play its part in levelling up, and to ensure that it is supported by thriving businesses. We have also reformed business rates and moved towards a three-year evaluation, relief on improvements, including improvements that will help to deal effectively with climate change, and a 50% reduction for small businesses in the most affected sectors.

All that comes alongside a commitment to additional spending from my Department to help those most in need. We also have £630 million a year allocated over the next three years—that is £1.9 billion in total revenue—to help to deal with homelessness and to eliminate rough sleeping. There is also additional capital investment specifically targeting those who have problems with drug use and those who have been in custody, to ensure that we can help them into the accommodation they need to deal with the challenges they face. Overall spending in this area is 75% higher than pre-pandemic levels.

--- Later in debate ---

[Liam Byrne]

I want to clarify that point, because it is potentially quite significant. The characteristic of a Lawson-esque tax system is, of course, that capital is taxed at the same rate as income. Is that what the hon. Gentleman is advocating?

[John Penrose]

I am indeed advocating that all income should be taxed equally. It is a Lawson-esque idea; the right hon. Gentleman is absolutely right. The reason why it is so essential, and why Nigel Lawson had this right, is that the whole point of it is that it creates work incentives for everybody, because they know they are going to be treated fairly. It also means that we have a system that has legitimacy, because it does not matter who has the best lobbyists or the best campaigners; everybody knows we have a nice, simple, flat, straightforward tax system, and everybody knows where they stand. Nigel Lawson was right about this.

I hope that the Chancellor’s Budget speech last week was the first step in what I think will be a long and difficult but ultimately incredibly worthwhile journey in that respect. I hope that this is the beginning of something important, something exciting, and something that is ultimately fairer and more just but also economically far more literate, because it creates a situation where it always pays to work, it always pays to save and it always pays for people to try to get themselves out of benefits by taking extra hours if they possibly can. It creates a situation where those work incentives are always there.

--- Later in debate ---

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

It is shame that the hon. Member for Wimbledon (Stephen Hammond) is not in his place because he put his finger on the nub of the debate. A strategy for growth should have been at the Budget’s heart, yet the International Monetary Fund and Office for Budget Responsibility took one look at the Budget and downgraded our growth forecast. Our long-term growth is something like two thirds of what it used to be.

The IMF, which has looked out over the next four years, says that we in the UK, for all the Chancellor’s measures, will have the worst recovery from covid in the G7. It is not surprising. While other countries around the world invest in science-led growth, what did the Chancellor do last week? He chose that moment to defer science spending by two years.

While other countries around the world are going for trade, the OBR looked at the magnificent new global Britain fund that we have heard about and downgraded our trade forecast. The current account deficit, which has been about 3% to 3.5% for some years, is now forecast to be 4% to 5% or 5.5%. A red-tape Brexit has ensnared our traders in so much bureaucracy that exports to the EU will fall by 15%.

Because growth is bad, taxes are up—we have the largest tax rise since the 1950s. In a couple of years, the average family will pay £3,000 extra in tax, thanks to the Prime Minister. Taxes are going up, not fairly, but affecting ordinary working people and we therefore have flat living standards. This decade is now the worst for pay rises since the 1930s. Of course, because we have a Tory Government, the poorest will be hit hardest. What we have heard today about the universal credit taper cut making up for the removal of the £20 uplift is absolute nonsense. The poorest people in this country will be £280 worse off as a result of the Government’s decisions. That is the reality.

The net sum of the measures is a catastrophe for social mobility in this country. Once upon a time, the Conservative party boasted about its social mobility credentials; not any more. It now takes five generations for someone born in the poorest cohort in this country to rise up and make even average wages. The gap between private school and public school funding is now so big that it would take £55 billion to fix it. The Conservative party should never again be trusted on social mobility.

My final point is about the west midlands. The Mayor of the west midlands, my friend Andy Street, is down with covid at the moment. We wish him a speedy recovery. However, many of us were pretty sick when we looked at the settlement for the west midlands. The budgets for the levelling-up fund and the towns fund put together give us the fourth worst settlement in the country—£217 million behind the north-west. In the levelling-up fund announcement last week, £33 a head for the west midlands is the fifth worst settlement in the country. Our transport budget is a £1 billion less than we asked for—one of the worst per capita settlements in the country, as the West of England Mayor was quick to point out.

This was a Budget for anaemic growth, rising prices, rocketing taxes, record debt, red tape that ensnares our traders, flat living standards and increased poverty. After all the agony of loss that the country has been through, we deserve better.

--- Later in debate ---

[Helen Whately]

I will make a bit more progress.

I heard some Opposition Members say that rich people are not paying in enough. Well, I ask them to look at the Government’s distribution analysis and the analysis of the Resolution Foundation. These analyses say that the Government’s policies boost incomes for those on the lowest incomes, while those with the broadest shoulders—the better off—are the ones who will be paying the most. I also ask Opposition Members to acknowledge, as so many Government Members did, how both the increase to the national living wage by 6.6% and the changes to the universal credit taper rate will help millions of households on the lowest incomes. For example, a single parent of two children who works full-time will be £1,200 better off next year thanks to these changes.

[Liam Byrne]

I only intervene because I am sure that the Minister does not want to lead the House astray. The Resolution Foundation is very clear in its analysis that three quarters of the 4.4 million people on universal credit will be negatively affected and the bottom fifth of people will be £280 a year worse off as a result of the £20 uplift being stripped away. I am sure that she would want the record to reflect that.

[Helen Whately]

I stand by what I said: the Government’s distribution analysis and the Resolution Foundation analysis say that this Budget and spending review boost the incomes of those on the lowest incomes, and that those who are better off are paying in the most. The crucial point about the changes to the taper rate for universal credit is that it is about ensuring that people keep more of what they earn, and get the benefits and rewards of their hard work. The effect that it has is a tax cut for those on the lowest incomes.

There were times when I wondered whether Opposition Members were scrutinising the same Budget as Government Members. At many points, it felt as though they had missed the point. It was clear that the Opposition have no alternative plan. It was not clear whether they felt that we were spending too much or too little; what they would cut; what they would change; or where they would raise funds from. We on the Conservative Benches know that we are making the hard, responsible decisions, and setting ourselves up for the future.

I come to a serious point I want to make. Colleagues rightly pointed out that public spending is relatively high, and I share colleagues’ concerns about the size of the state at the moment. In fact, the Chancellor himself spoke about this last week. We on the Conservative Benches know that government should have limits. We want people to keep more of the rewards of their efforts, and we have said that, by the end of this Parliament, we want taxes to be going up, rather than down.