Budget Statement

Lord Tunnicliffe Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Tunnicliffe (Lab)]

My Lords, I, too, thank the right reverend Prelate the Bishop of Newcastle for her speech and her contribution to our Chamber over the years. I particularly liked her focus on education as a key issue for our society to regard. I wish her well for the future. We are probably forgetting what our Chamber was like when we had only male bishops. Everything from the reading of the psalm to the breadth of speeches has improved as a result of our women bishops.

As ever, I also admire the detailed response to the debate from the noble Baroness, Lady Kramer. Unfortunately, I am not so skilled, so I just marked every speaker as favourable, neutral or unfavourable. I hate to share with the Minister that I came out with 20 unfavourable, three neutral and three favourable, so I wish him luck.

Despite the Chancellor’s upbeat delivery during last week’s Autumn Budget Statement, the reality facing many low-income and middle-income households is far from optimistic. In recent years, we have become accustomed to single-year spending decisions, rather than the usual multi-year settlements. Committing to certain courses of action was deemed too complicated, but the Chancellor’s new fiscal rules have afforded him the luxury of a longer-term view. This spending review contains caveats, especially on issues including overseas aid spending, but it at least gives us, especially those responsible for planning and delivering public services, an idea of what is to come.

The detail of the Red Book fails to live up to the cheerful tone adopted by Mr Sunak. Following last week’s Statement in the other place, the Resolution Foundation promptly warned that millions are facing a “grim reality”. The Institute for Fiscal Studies sees “real pain” arising from the double whammy of high inflation and personal tax increases. Wider circumstances, including the ongoing energy crisis, mean that the cost of living is likely to skyrocket in the coming months. Despite this, we saw no meaningful measures to support crucial parts of the industry in the long term or to help bill payers in the short term.

The change to the universal credit taper rate, which is expected by 1 December, will provide some assistance to certain households. However, its impact will be felt differently depending on an individual’s circumstances. Some will recoup what they have lost through the withdrawal of the £20 weekly uplift, where others will just lose out. A single unemployed person aged over 25 will go from £411 per month to £324. I do not know many people in this House who could contemplate living on £324 a month. It is a matter of £20 a week. Most people in this House—perhaps not all—losing £20 a week would not notice it. I certainly would not. However, we always have to bring our minds back to the fact that these policies will have a real, serious impact on real people. This is an unkind and, indeed, almost vicious move. The concept that if you threaten people with getting poorer, they are more likely to work, is simply unrealistic, unfair and cruel.

We welcome the increase to the national living wage, but it falls short of Labour’s commitment to at least £10 per hour. Working families must also wait until April and the actual benefit—if there is one, given rising costs—will be marginal.

Overall, households will be paying an astounding £3,000 a year more in tax than when Boris Johnson became Prime Minister, yet many of our public services are simply not up to scratch.

A Budget provides an unparalleled opportunity to examine an Administration’s priorities. While the Prime Minister may present himself as being on the side of ordinary people, last week showed that he is anything but. Taxes on working people are going up to the highest level in 70 years, while allowances or loopholes amounting to billions of pounds have been put in place for bankers and large corporations.

The fine print of the Red Book and its supplementary documents reveal some hidden hits to working people. Next April, many families will find themselves subject to yet another council tax bombshell, while there will also be a £1.7 billion stealth raid on the self-employed over the next five years.

Even in the cases where the Government wants us to think it has seen the light, the reality is very different. We welcome the speed with which the Government are amending the universal credit taper rate, but even this supposed concession gives rise to several questions. Recently, both Houses were asked to fast-track legislation for the health and social care levy—a further burden on working people—with minimal scrutiny on the basis that the Budget would come too late to allow HMRC to update its systems. How could HMRC have been deemed unable to implement its changes between November and April, yet the Department for Work and Pensions can make and publicise fundamental changes to the benefits system within four weeks?

We should also remember that the Government’s supposed generosity on universal credit was never their plan. Ministers insisted on scrapping the weekly £20 uplift despite overwhelming evidence of the severe hardship it would cause. They refuse to do anything about the five-week wait, even though that also pushes people into financial difficulty.

The Chancellor was almost gloating when noting that the cut from 63% to 55% equated to “the rate originally envisaged” by Iain Duncan Smith. Therein lies the problem. The idea behind universal credit was a good one. However, reducing the share of earnings that went into claimants’ pockets repeatedly came top of the list of cuts during the Conservatives’ austerity programme.

As we discussed during a debate secured by the noble Lord, Lord Bird, last week, poverty is neither new nor inevitable. It is, in many senses, a policy choice. Why, then, has it taken until now for us to see change? Ultimately and sadly, only two things secure action from No. 10: political benefit and disquiet on the Back Benches. The recent NHS levy Bill was rushed through to ensure minimal opposition from Back-Bench Conservative MPs, while the revised taper rate is a response to unease at the end of the £20 uplift. We have also seen it with sewage in recent times, with Ministers miraculously acknowledging public health and environmental concerns—not when they were raised in March 2020 but when 22 Back-Benchers rebelled and more threatened to.

The Office for Budget Responsibility’s analysis demonstrates what Labour has been saying for months: that the UK took the hardest economic hit during the Covid-19 pandemic and is seeing the slowest recovery among the G7 nations. Even departmental spending settlements are not all they seem to be. Yes, there has been a loosening of the purse strings, but the shadow of austerity still looms large over Whitehall. The Resolution Foundation notes that despite increases in budgets, only a third of the post-2010 cuts to unprotected departments’ real-terms per-person spending will be reversed by 2024-25.

Ultimately, this Budget fails Labour’s key tests, and according to recent YouGov figures, it falls short of the public’s expectations too. It hammers working people while giving banks a tax cut. It offers no concerted plan to shift the tax burden from working families to those with the broadest shoulders. It contains little to tackle the worsening cost-of-living crisis, nor puts the UK on the path to strong, sustained growth. There is nothing to cushion the blow of higher energy prices over the winter months. The OBR says that pay increases will be cancelled out by spiralling inflation and tax rises, probably in late 2023. Changes to universal credit will benefit only a third of claimants, leaving others facing difficult winters.

This Autumn Budget was an opportunity to tax fairly, spend wisely and grow our economy in a way that helps the environment and supports British business. As we have so often seen, the Government have ducked the challenge. Instead, they have prioritised narrow corporate interests and the management of internal party politics. This is no way of doing business and, regrettably, the people of this country will be worse off as a result.