Budget Resolutions and Economic Situation

Lindsay Hoyle Excerpts

Wednesday 19th March 2014 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

The Chancellor spoke for nearly an hour, but he did not mention one central fact—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think that the deputy Chief Whip knows better. We have not even got started. I hope that he will calm down.

[Edward Miliband]

The Chancellor spoke for nearly an hour, but he did not mention one central fact: the working people of Britain are worse off under the Tories. Living standards are down, month after month, year after year. In 2011, living standards, down; 2012, living standards, down; 2013, living standards, down. Since the election, working people’s living standards are £1,600 a year down. You are worse off under the Tories—[Interruption.]

[Mr Deputy Speaker]

Order. To be quite honest, I thought that the House was doing really well today. Courtesy was quite rightly shown to the Chancellor of the Exchequer. I expect the same courtesy to be shown to the Leader of the Opposition. I want to hear it, and your constituents want to hear it.

[Edward Miliband]

They do not want to talk about the falling living standards of people across this country, Mr Deputy Speaker.

The 2010 Tory manifesto promised an economy where people’s

“standard of living… rises steadily and sustainably”

but they have delivered exactly the opposite: standards of living falling sharply and steeply. Today the Chancellor simply reminded people of the gap between his rhetoric and the reality of people’s lives. Living standards have been falling for 44 out of 45 months under this Prime Minister, unmatched since records began. No amount of smoke and mirrors today can hide it. We already know the answer to the question that millions of people will be asking in 2015: “Are we better off now than we were five years ago?” The answer is no. They are worse off, much worse off—worse off under the Tories.

The Chancellor trumpeted the tax allowance today, but what he did not tell us is that it is the same old Tory trick. He did not tell us the rest of the story. He did not mention the 24 tax rises introduced since he became Chancellor. He forgot to mention that he put up VAT, taxed away child benefit, raised insurance tax and gave us the granny tax. It is a classic Tory con: give with one hand and take away far more with the other—same old Tories.

The Chancellor painted a picture of the country today that millions of people will simply not recognise. This is Cameron’s Britain 2014, with 350,000 people going to food banks, 400,000 disabled people paying the bedroom tax, 1 million more people paying 40p tax and 4.6 million families facing cuts to tax credits. But there is one group that is better off—much better off. We all know who they are: the Chancellor’s chums, the Prime Minister’s friends—[Interruption.] The Prime Minister rolls his eyes, because he does not want to talk about the millionaires’ tax cut. There was no mention of it in the Budget speech. They are the beneficiaries of this year’s millionaires’ tax cut.

If you are a City banker earning £5 million and feeling the squeeze, do not worry, because they feel your pain. This year that City banker was given a tax cut, and not just any tax cut. It is a tax cut worth £664 a day, £20,000 a month and more than £200,000 a year. So the Prime Minister chooses to afford a tax cut worth more than £200,000 a year for that banker, but he cannot afford a pay rise of £250 a year for a nurse. And these are the people who have the nerve to tell us that we are all in this together. It is Tory values and Tory choices—same old Tories. Of course, the leader of the Liberal Democrats is with them every step of the way. Day after day he claims that he does not support Tory policy, but day after day he votes for Tory policy.

Now, to listen to the Chancellor today, for a recovery that arrived three years later than he promised, he expects the country to be grateful. Back in 2010 he told us that by the end of 2014 the economy would have grown by nearly 12%. Today the figures show that it has been barely half that, and he wants the country to be grateful. Back in 2010 he said that the Government would clear the deficit in this Parliament, by 2014-15. Today he wants the country to be grateful because he says that he can do it by 2018-19. Three years ago he told us, in his 2011 Budget speech, that he would deliver an economy

“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

But what has actually happened since then to the rebalancing he promised? Manufacturing output has fallen by 1.3%, construction output has fallen by 4.2% and infrastructure investment is down by 11.3%. Every time he comes to this House he promises a rebalancing, and every time he fails. The Chancellor talked about housing today, but what has he actually delivered? The Government have overseen the lowest level of house building since the 1920s and rents have risen twice as fast as wages.

At the heart of the argument we will have over the next 14 months is this question: whose recovery is it under the Tories? Under them, it is a recovery for the few, not the many. Bankers’ pay in London is rising five times faster than that of the average worker. This recovery is not working for working people whose living standards are falling. It is not working for the millions of women who see the gap between men and women’s pay rising. It is not working for the low-paid people promised by the Chancellor—[Interruption.]

[Mr Deputy Speaker]

Order. Mr Williamson, you are in danger of exploding, which would be good neither for you, nor for the Chamber. Come on. Let us listen.

[Edward Miliband]

They do not want to talk about the low-paid workers promised a £7 minimum wage by the Chancellor but given just 19p more an hour. Under this Government it is an economy of the privileged, by the privileged and for the privileged.

Instead of admitting the truth about what is happening in most people’s lives today, the Government want to tell them the opposite. They tell people that their wages are rising when they are falling, just like they tell people that their energy bills are falling when they are rising. They tell people that they are better off, but everyone knows the truth. They can change the shape of the pound—it does not matter if it is square, round or oval—but if you are £1,600 a year worse off, you are still £1,600 a year worse off. You are worse off under the Tories.

They cannot deliver because of what they believe. His global race is a race to the bottom. It means people being forced to do two or even three jobs to make ends meet, not knowing how many hours they will get from one week to the next, and with no idea what the future holds for their kids. Low wages, low skills, insecure work—that is how they think Britain succeeds. That is why they are not the solution to the cost of living crisis. They are the problem.

We needed a Budget today that would have made the long-term changes that our economy needs, in housing, banking and energy. But they cannot do it. They will not stand up to the vested interests. They will not tackle developers sitting on land, even though they cannot solve the housing crisis without that. They will not force the banks to improve competition even though small businesses say they need it. They will not stand up to the energy companies and freeze energy bills, even though the public support it. Same old Tories. We know what their long-term plan is: more tax cuts for the richest, while everyone else gets squeezed. [Interruption.]

[Mr Deputy Speaker]

Order. This is getting totally out of hand and we certainly do not want any more pointing. I am worrying about the danger to Anne Milton’s hearing; the way she is shouting is not good for her or the Chamber. I want to hear the rest of the speech in peace. I certainly do not want all the muttering and challenges that have been running along the Benches. I will take it more seriously if I have to get up next time.

[Edward Miliband]

We know what their long-term plan is: more tax cuts for the richest while everyone else gets squeezed. What does the Chancellor say about the people dragged into paying 40p tax? He says that they should be happy and that it is good news for them. So this is the new Osborne tax theory: if you are in the middle, paying 40p, you should be pleased to pay more, but if you are at the top, paying 50p, you should be helped to pay less. Same old Tories.

It is no wonder that even their own side think they are totally out of touch. Even now, after all the embarrassment of the millionaires’ tax cut, they will not rule out going further. Maybe today we can get the straight answer that we have not had so far. Will the Chancellor rule out a further tax cut for millionaires to 40p? Just nod your head if you will rule it out. Come on, come on. Just nod your head. Maybe the Prime Minister would like to. Just nod your head. [Interruption.]

[Mr Deputy Speaker]

Order. There may be an influence of the wolves and the pack running around. That can be used in the zoo, but it will not be used in this Chamber.

[Edward Miliband]

It is very simple—all the Prime Minister needs to do is to nod his head if he is going to rule out cutting the 45p tax to 40p in the next Parliament. Just nod your head. Come on. There we have it. There they go again—they will not rule it out. Does that not say it all about them? They really do believe that the way you make the rich work harder is to make them richer and the way you make everyone else work harder is by making them poorer.

Just as they paint a picture of the country that working people will not recognise, so, too, themselves. The Prime Minister is an expert in rebranding. Remember the huskies, the bike and the tree? That was before they said, “Cut the green crap.” What is the latest rebranding from the Bullingdon club? It is beyond parody. What do this lot now call themselves? [Interruption.]

[Mr Deputy Speaker]

Order. Mr Williamson, I will not tell you again. I am sure your roast beef is ready for you—you might be better off eating a little raw meat than giving us the noise that we are getting in here.

[Edward Miliband]

What do this lot now call themselves? They call themselves the workers’ party. Who is writing the manifesto for this workers’ party? We have a helpful answer from one Conservative MP:

“There are six people writing the manifesto…five…went to Eton”.

By my count, more Etonians are writing the manifesto than there are women in the Cabinet—no girls allowed. This week, we have heard it right from the top. Here is what the Prime Minister’s former best friend—[Interruption.] They do not like to hear it do they, Mr Deputy Speaker? Here is what his best friend—[Interruption.]

[Mr Deputy Speaker]

Order. If Members wish to go outside and show people, they can do so by all means. I certainly do not need you to hold up papers all the way through. Quite seriously, respect is due to the Leader of the Opposition the same way it was given to the Chancellor. I want to hear him; if you do not, there is the door—please leave.

[Edward Miliband]

Here is what the Prime Minister’s former best friend, his closest ally, the Education Secretary, had to say about the Prime Minister’s inner circle. He said it was ridiculous, preposterous, unlike anywhere else in the world. They know they are in trouble when even the Education Secretary calls them a bunch of out-of-touch elitists. Where is the Education Secretary? I think he has been banished. Ah—he is hiding! He has been consigned to the naughty step by the Prime Minister. It is time we listened to Baroness Warsi and took the whole Eton mess out of Downing street.

We do not need a party for the privileged few; we need a party for the many. That is why a Labour Government will freeze energy bills, guarantee jobs for unemployed young people, cut business rates, reform the banks, get 200,000 homes built a year and abolish the bedroom tax. This is the Budget that confirms that people are worse off under the Tories—a worse-off Budget from an out-of-touch Chancellor. Britain can do better than them. Britain needs a Labour Government.

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. Before I bring in the next speaker, I announce an eight-minute limit.

--- Later in debate ---

[Mr Tyrie]

I do not know about the political agreement point, but of course the effects of the stabilisers operate on both the tax and the spending sides. I think the Government were right to do what they did.

The Government have also been right to see off calls fundamentally to alter fiscal policy by sharply relaxing deficit reduction and increasing public spending. One of the main reasons it was important that they did not listen to those calls is that credibility in fiscal policy is hard won. It is built up over time—over many years—and it can easily be squandered. The Government resisted that temptation.

I will say a few words about the historical context. Looking to the 1930s, when stagnation set in and the agony was prolonged, partly because automatic stabilisers were suppressed and partly because far from engaging in QE, the then coalition Government did exactly the opposite: they lengthened the maturity of the debt and sucked money out of the economy. That is why the 1930s were so painful.

Now that we have a recovery, some are complaining that it is not the one we ordered. They complain that the recovery is consumer-led or uneven across sectors, regions and income groups. Well, of course it is. All recoveries of any value trigger a reallocation of resources, and therefore all recoveries change the shape of the economy. A recovery rarely takes root where the jobs were lost or the firms failed; it was ever thus and it will be the same this time. As the Chancellor stressed in his speech, jobs are being created at a record rate, but we cannot expect those jobs to be in exactly the same places as the jobs lost in the downswing. I am confident that, as in all previous recoveries, if we can sustain this recovery—and even if it is uneven, as it will be—it will, in time, deepen and spread through the whole economy. The figures for previous upswings support that.

The crucial question now, though, will be whether we can sustain the deficit reduction plan. A threat to deficit reduction will come from siren voices who say, “With the recovery under way, we can go back to spending money we haven’t got.” We are already hearing that. We need to remind ourselves that we are still spending about £7 for every £6 we collect in tax. It is true that we are in better shape, but with a deficit of about 6.6% of GDP, as the Chancellor announced today, we will remain vulnerable to economic shocks unless we do more to tackle it.

Another risk to deficit reduction is one of simple arithmetic caused by ring-fencing—something that the Treasury Committee has flagged up on several occasions. It will become increasingly difficult to find cuts to an ever-shrinking share of non-ring-fenced departmental spending. In other words, with ring-fencing of nearly half departmental expenditure, finding these savings will get tougher year by year. The Chancellor has argued, rightly, that polling evidence shows that that ring-fencing reflects public preferences. I think that is true for health and education, but it is not supported in the area of overseas aid. Spending on aid has risen by over a third in real terms and will rise even more because it is linked to GDP. Politics always points to ever-more ring-fencing; economics to less. Eventually, ring-fencing will have to be revisited, however difficult it is for all political parties.

Perhaps I should say a little about the risks—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.