Budget Statement

Lord Davies of Oldham Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, this has been an excellent debate and several themes have come through so strongly that I do not need to add a great deal to the clear arguments that have been expressed, which I hope that the Minister will fully recognise in his response. The Motion under debate refers to,

“the economy in the light of the Budget”.

It is not a Budget that throws much light on the encircling gloom. It threw a few flickers, but the informed forecasts that followed, including that of the OBR, showed that the Chancellor and the nation are having to succumb to a pretty dark reality.

As a Financial Times headline put it:

“Grim outlook overshadows housing drive”.


The proposals on housing are of course welcome, and have been debated thoroughly this evening. I very much appreciated the contributions on housing of my noble friends Lord Darling and Lady Blackstone, who spoke with great authority on all the issues that confront the Chancellor in his attempt to increase the number of homes being made available. It is welcome that we are at least talking about some aspects of investment instead of the incessant cuts and austerity that we have had in previous Budgets.

The Chancellor does not call the housing market broken, which we all think it is; he calls it dysfunctional. If he succeeds in making it functional, we will not quibble about the term he uses. What has come through from this debate, however, is that we are highly unlikely to see any real achievement on housing in the near future. The aim is commendable enough—to build 300,000 houses a year—but, as my noble friend Lady Blackstone pointed out, this figure will not be reached until the middle of the next decade. The noble Lord, Lord Tugendhat, also emphasised the delay before such figures will be achieved. Not long ago, the Government promised to build 240,000 new starter homes. We do not have one of them yet, so I am not sure how much trust we can put in a promise which, in any case, is not due to be achieved until 2025.

All noble Lords who talked about stamp duty recognised that some will benefit; it is just that it will not be the aspiring house buyer, at whom this major thrust on housing was meant to be directed. The people who will benefit are those who already own houses, who will see prices increase. The stamp duty change is a gesture, but that is all—gesture politics with no real contribution to improving the housing position for those in real need.

We must recognise that housing sums up the colossally difficult problem that we face of generational inequality in our society. Reference has been made to the older generation and the fact that the triple lock provides all sorts of advantages for them, but the acute problem is for mums and dads who own their homes and watch their children come through their teenage years into maturity with no chance, unless the bank of mum and dad is large enough. Of course, for a large section of our population, that is not the case. Housing was a key feature of the budget, but the Government have an awful lot of work to do to convince this House that their proposals will achieve anything in a reasonable period.

Austerity is still to govern the lives of those of our fellow citizens on welfare. Universal credit is the creation of so much hardship in our society, on what is after all a limited rollout; it achieved from the Chancellor a small mitigation, which will cut people’s wait to receive their benefits. However, some people dependent on that benefit will still find themselves without resources and, if you are vulnerable, in rented accommodation and do not have resources to pay the rent, the implications are serious. None of us wants to see a Christmas period when not just young people are living on the streets and under the bridges along the Thames and so on, as they have no home to go to, but families with homes are ejected by ruthless landlords. Let us make no mistake: many recent indications show just how landlords regard the concept of universal credit with absolute contempt. They are not really prepared to give any form of credit or support to those people renting from them, who depend on that.

There was also an indication that the Chancellor recognised the problems of the National Health Service. The NHS is to receive £1.9 billion, less than half of what NHS professionals said they needed just to keep it going at the level of service it offers at present. There is a reference in the Budget to some new pay settlement for the NHS, but with no timescale or amount—and we do not know when that issue will be addressed. Yet for public services, the fact that pay has been held at such a ridiculously tight level for so long is causing real problems for recruitment and retention. We are talking about nurses, firemen and the police —services that we all depend on but are not prepared to finance adequately.

It is clear that aspects of the health service that we thought were a high priority can be ignored. Did anyone hear the phrase “mental health” expressed during the course of the Budget? Yet it was only eight or nine months ago that many of us were heartened by the fact that the Government seemed to have recognised that it was a crucial part of the health service that needed and would repay good investment in terms of increased public resources devoted to it. The Chancellor did not have a word to say about it; nor did he have a word to say on the issue of social care. How on earth could the Chancellor and the Government ignore social care, in circumstances where everyone concerned knows the level of crisis there? The right reverend Prelate the Bishop of Portsmouth was the first contributor to the debate on that issue, but he was succeeded by contributions from all over the House. I very much appreciated the contribution from the noble Baroness, Lady Eaton, who emphasised that the resources available to local authorities concerned about social care are utterly inadequate. So there are no new resources for social care, but—as my noble friend Lady Blackstone also emphasised—the estimate of the deficit is £2.5 billion. That is why local authorities cannot place their people in need in care homes: they do not have the resources to meet the costs. Yet the Budget ignored that.

One thing that the Budget might have ignored, but which became almost the only thing that counted the next day—many noble Lords have emphasised this—is the fact that all forecasters, including the OBR, have shown that the current direction of the economy is wrong and that all indicators presage a very difficult time ahead.

Not a single noble Lord this evening referred to the long-term economic plan. I have read the debate in the other place, and a very small number of Conservative Members did so. When it was created in 2010, no one ever suggested that the long term was a mere five years. In fact, it could not be five years as the Government are only half way towards their objective after five years, so of course it was extended to 2017-18. Now, of course, it is vaguely extended to the mid-2020s. The long-term economic plan may not be a plan at all but a vague aspiration, or perhaps a considerable con trick on the British public. The Government have failed on that crucial issue and the costs to our society will be enormous because, as the noble Lord, Lord Skidelsky, spelled out—as did a number of others—austerity has produced real hardship and does not solve the basic economic problems of the nation.

We have discussed productivity. We all recognise that productivity issues are difficult to analyse. We are always grateful when the noble Lord, Lord O’Neill, gives us the benefit of his insights but I derived from his optimistic speech that all the others are doing well and therefore may buoy us up. However, I did not detect much indication that the Government and the Chancellor have any ideas on how to improve our productivity, yet that is critical to the future of the nation.

Inevitably, Brexit hangs like a pall over this debate on the economy. We are all aware that if we crash out of the EU, the consequences could be very serious. We should remember that in the very early days of Brexit it was suggested that we would extend our role in the global economy, and that the first person we would win over as a friend would be “America First” President Trump. He and the Prime Minister were on very amicable terms. However, it has not looked like that in the last few days and we have not even begun to get near discussing trade with the American President, or indeed with anyone else. We are making limited progress in Brussels as difficulties arose today due to the proper anxieties of the Ulster Unionists. By heavens, if you are a member of the Government, you care a great deal about the uncertainties and anxieties of the Ulster Unionists; you have virtually no option but to do so. However, that difficulty in Brussels may be overcome and we may be moving towards a settlement which is not too disastrous for the country, although we are certainly paying the price for that in hard euros and are not at all sure where the negotiations on the trading relationships will get us.

This is a Government with a very considerable record—an almost unparalleled record of successive failures. They failed with their long-term economic plan; they are struggling to cope with the challenge of negotiating with the Europeans. I say to the noble Lord, Lord Dobbs, that if you are taking on 27 other countries in a negotiation you know that is going to be the number if you detach yourself from the list. There is no point in complaining that they seem to be united and able to deliver a pretty brusque response to some of our interests. I would have thought that was the nature of an international negotiation of such seriousness. We are going to find out the consequences, are we not?

Finally, at the end of the debates on the Budget in the House of Commons last week, the Government followed the very rare procedure of not moving the Motion which renders government proposals open to challenge by the Opposition in the concluding votes. This extraordinary step has been taken before, just after war broke out or when a general election was clearly in the offing, but this exceptional procedure was adopted by the Government because they sought to avoid crucial votes. You bet they want to avoid crucial votes on supply in the House of Commons. They look like a Government whose time is nearly up.