Budget Resolutions

Debate between Liam Byrne and Emily Darlington

Wednesday 30th October 2024 Commons Chamber

[Liam Byrne]

Let us be really clear about what has been bequeathed to this Government. The right hon. Gentleman is right that back in 2010, at the height of the financial crash, the deficit went up. What happens in a financial crash is that the economy has a heart attack: spending continues, because to cut spending would be to deepen a recession and turn it into a depression, tax receipts fall off a cliff, and the role of Government is to sustain a country through that kind of crisis. The deficit rose to £154.4 billion, yet today how much interest do we pay on the debt we have been bequeathed? We pay £104 billion in interest alone, which is almost the entirety of the deficit we had back in 2010.

It is important for the House to recognise that that happened because Mr Osborne chose a balance that was different. He chose to load his austerity programme on public spending cuts. Actually, he eventually arrived at the same settlement that Labour proposed in 2010, but he took four or five years to get there and he put the economy into recession. If memory serves me correctly, he blamed it on some light snow. That austerity programme was followed by a Brexit that was bungled, and then the chaos of the former Prime Minister.

[Emily Darlington (Milton Keynes Central) (Lab)]

Does my right hon. Friend recall that the previous Labour Government oversaw the fastest economic recovery from the international incident? The economy was back in growth by the time of the election because of investments like over £20 billion for research and development, so our economy could compete in the race to the top, not the race to the bottom that we saw under the previous Government?

[Liam Byrne]

Correct. In a way, that is the point that I am gently trying to make to the House, with a very brief and, everyone will be pleased to hear, soon-to-conclude lesson in the fiscal consolidation of the last 14 years.

Austerity, a bungled Brexit and chaos left us with a growth rate that fell from an average of 3% in the Labour years down to 1.6% over the last 14 years. We had tax forecasts that failed time and time and time and time again; living standards that simply did not rise in the last Parliament; productivity growth that collapsed from about 2% a year to about 0.5% a year; inequality that soared; and, as I have just rehearsed, debt that multiplied to an extraordinary £2.7 trillion.

In the old days, we used to have debates about whether the roof had been fixed while the sun was shining. The reality is that for the last 14 years, the Conservative party has been trying to patch the roof by ripping out the foundations of our economy. That approach has drawn to a close today. We have only got through the last 14 years because of the ingenuity, fortitude, kindness and compassion of the people we represent. Those people deserve a better approach and that is what they got from the Chancellor today. We have an approach that Alistair Darling would have well appreciated: a Budget balanced not simply in the numbers, but in the balance of interests.

If we look at the numbers in the Red Book, we can see the guts of that different approach. Everybody knows—we might as well be honest in the House today—that the original sin of the British economy is a failure in the investment rate. Over the last 14 years, the approach to trying to stimulate development has relied on tax cut after tax cut after tax cut after tax cut. Today, the Chancellor has ended the insanity of trying the same thing over and over again, expecting different results.

The capital investment delivered by this Budget will see £104 billion extra being surged into the economy. The Chancellor was absolutely right. Last week, at the annual meetings of the International Monetary Fund and the World Bank, we heard a clear message from the IMF that unless we raise the fixed rate of investment in our economy, we are not going to improve living standards or the growth rate, and we are not going to pay down the debt, so the Chancellor’s approach is extremely welcome.

The Budget forecast shows that over the forecast period, we will now see the rate of fixed investment increase in our economy by between 6% and 7%. That is still probably not enough to catch up with our competitors, but it is a hell of a good start and, crucially, it is a departure from the failed economic philosophy for stimulating investment of the last 14 years. After 14 years of failure, it was time to try something new, and that is what the Chancellor has given us today.

That allows us to strike a new bargain with business. We can say to the business community, “Look, we will put £104 billion extra of capital investment into the economy. We will make sure you have the roads, the railway systems and the digital infrastructure that you need for your markets to function. We will make sure you have a workforce that is actually healthy and well, fit for work and well-trained. We will make sure there is investment in the skills you need in your business, and we will make sure your workers stand a hope in hell of getting a home somewhere near their work. We will make sure there is investment in research and development.” Why? Because if we put all of that together, we will have the greatest entrepreneurs in the world.

Our entrepreneurs have been making history by inventing the future since the age of the industrial revolution, but they need good people, good ideas and access to capital markets, which they do not have today. This Budget begins to make that available.