Autumn Statement 2022

Lord Tunnicliffe Excerpts

Tuesday 29th November 2022 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, this has been an excellent and very interesting debate. I will refrain from commenting on individual speeches because I realise that everyone wants to listen to the Minister at this time of night, not to me.

I welcome the noble Baroness, Lady Lea of Lymm, to your Lordships’ House. She made an excellent maiden speech.

I also welcome the Chancellor managing to deliver his Autumn Statement without sending the markets into freefall. That may be a very low bar, but it is one that his predecessor spectacularly failed to clear. September’s mini-Budget had disastrous consequences for families across the country, leading to higher mortgages and rents and dwindling consumer confidence.

The economic vandalism of the last Prime Minister and Chancellor has led to the current occupant of Downing Street piling further pressure on the public. Having promised tax cuts during this summer’s Conservative leadership contest, Mr Sunak has now reverted to form. He hiked taxes to the highest level in 70 years as Chancellor, and Jeremy Hunt has ratcheted up taxes still further.

There were two tests for the Government ahead of this Autumn Statement: would they make fair choices, and would they deliver the growth that our economy so badly needs? All the analysis we have seen since 17 November suggests that the Government have failed on both counts. As more and more people find themselves paying tax, some others were spared an increase to their bills: banks will see their surcharge fall from 8% to 3%; energy producers that exploit fossil fuels will continue to benefit from an investment allowance that allows them to minimise their exposure to the windfall tax; and non-dom status remains, as does the VAT exemption for private schools. All the while, living standards are projected to fall by a whopping 7% over the next two years.

The impact is that real household disposable income will be lower at the end of this Parliament than at the beginning. Yes, we have been through the pandemic and felt the consequences of war in Ukraine, but so have other countries. If this is truly a global phenomenon, how can it be that the UK is consistently outperformed by comparable economies? Could it be that our current economic woes are the result of a series of “economic own goals”, as suggested by Paul Johnson, director of the Institute for Fiscal Studies?

The UK is forecast to have the lowest growth in the G7 over the next two years. The Office for Budget Responsibility estimates average growth of 1.4%, which is well below the 2% average annual rate under the last Labour Government. The UK economy remains below its pre-pandemic level—we are the only G7 nation where that is the case—and is likely to remain so until the end of 2024. Meanwhile, real wages in 2022 are lower than when the Conservatives came to power in 2010. This country has not seen a similar period of wage stagnation since the Crimean War.

It did not have to be like this. Yes, there are issues which need to be addressed, but the British economy is fundamentally strong and should be firing on all cylinders. Many people find themselves asking what we have to show for 12 years of Conservative Party control of our economy. The answer: lots of pain for too little gain. We lag behind other countries on virtually all metrics that matter: current GDP, predicted growth, inflation and so on. The NHS and other vital public services are on their knees, despite the highest tax burden in 70 years. The Autumn Budget has increased that burden further still to plug the black hole opened by Liz Truss and Kwasi Kwarteng. Eleven fiscal rules have been broken in 12 years and the UK’s soaring debt interest payments, caused partly by that reckless mini-Budget, mean the goalposts have been moved. Even then, they may still be missed.

Against this backdrop, can we be surprised by the lack of enthusiasm for the Autumn Statement? There can be little surprise that the British Chambers of Commerce said it was

“unlikely to boost … business confidence.”

The Confederation of British Industry clearly agreed, arguing that

“businesses will think there’s more to be done on growth.”

The Institute of Directors said business leaders were “so dismayed” by the events of September that

“it was good to see joined-up working between the OBR and the Treasury this time round.”

These are hardly the endorsements that the Chancellor would have liked.

The UK needs a serious plan for growth if it is to break free of the doom loop of Conservative mismanagement. The Government have demonstrated that they are out of ideas, but the Labour Party is not. We have a plan for growth which enjoys the support of a growing number of businesses. We will scrap business rates and replace them with a fairer system that is fit for the digital economy. We will ensure brick-and-mortar high-street businesses are no longer at a disadvantage. We will publish a modern industrial strategy to support the sectors of the future. We will work in partnership with business to create jobs and improve skills, reflecting the IoD’s concerns that

“there remains a hole in government policy around how to address adult skills shortages.”

We will fix the gaping holes in the Government’s Brexit deal. That means working collaboratively with the EU to ensure that our businesses can export more abroad, while capitalising on opportunities to do things differently in certain sectors. Our green prosperity plan will create good jobs across the country. We will upskill communities as we accelerate our transition to clean energy and low-emission economic growth.

Most importantly, we will lead rather than react. It was Labour that proposed a windfall tax on energy firms; Labour that called for it to be extended when Mr Sunak’s scheme was first introduced. It was Labour that called for millions of homes to be insulated to improve housing standards and bring energy bills down. The Government finally announced a scheme of their own, but it will not start until 2025. Why are they not supporting plumbers and builders to do it now, as Labour would do? While Conservative MPs fight about onshore wind, Labour is clear that we will make Britain a clean energy superpower by 2030. This would cut families’ household bills and, crucially, boost our energy security.

The Autumn Budget was a chance for the Government to show whose side they are on. Many people up and down the country will have heard the Statement, looked at the detail and concluded: “Not ours.” Yes, the economic situation is tough, and we might not be able to achieve everything as quickly as we would like. However, fairer choices could and should have been made. Through no fault of their own, too many people are facing too difficult a time. This Autumn Statement did little to show that the Government get it or that they are on their side. Only Labour has a plan to end the Conservatives’ doom loop and get our economy firing on all cylinders.