Covid-19 Pandemic: Fiscal Policies

Mary Kelly Foy Excerpts

Monday 17th July 2023 Commons Chamber

[Mary Kelly Foy (City of Durham) (Lab)]

The austerity programme has been one of the most damaging policies our country has seen in decades, and one statistic demonstrates its complete failure: there were more than 300,000 excess deaths between 2012 and 2019. More than 300,000 people died as a result of austerity—they were human beings, with families and friends. Like us, they had aspirations and dreams, but now they are gone, perhaps because of decisions made in Departments and in this House. That is an injustice; after all, the first duty of the British Government is to keep their citizens safe and the country secure. Were those 300,000 people kept safe? Evidently, they were not. That is the sort of statistic that future generations will read and wonder how on earth we could have allowed it to happen.

The subject of my debate is fiscal policies and the covid-19 pandemic, but what I want to get at is the extent to which austerity left us unprepared for the pandemic. I started with that statistic to present the situation in Britain prior to the outbreak of the virus. My speech will discuss healthcare, and the Minister may think, “What’s this got to do with the Treasury?”. I hope that I can convince him on that by saying that our health services require money from his Department, because what matters about cuts is their effects.

It is clear that the austerity programme hollowed out our welfare state, including the NHS. To be ready for a pandemic, we need a strong healthcare system, but we just did not have that in 2020. I was outraged by former Prime Minister David Cameron and former Chancellor George Osborne at the covid inquiry. They denied that their austerity programme had any impact on the pandemic, and it was especially chilling watching George Osborne. Their justification for austerity is at odds with scientific evidence and opinion, which I shall outline.

In their expert evidence to the covid-19 inquiry last month, Professor Clare Bambra and Professor Sir Michael Marmot stated that austerity policies post-2010 had an adverse effect on health inequalities; that health inequalities narrowed in the period of higher public expenditure, from about 2000 to 2010, but widened again post 2010—

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing this debate. She is right to say that covid has affected health, but it has also affected finance. Does she agree that covid-19 will have rippling effects upon finances for years to come, and that many people are now grappling with the reality of prices increasing at a greater rate than wages? Does she also agree that the Government must take hold of the financial market once again with a firm grasp and with a strategy to help families in my constituency and hers, and indeed across this great United Kingdom of Great Britain and Northern Ireland?

[Mary Kelly Foy]

I thank the hon. Gentleman for that intervention, and I will come on to that issue in my speech. He is completely right that there will be an ongoing impact on future generations not only from covid, but from the impact on the public purse.

The scientific research also found that between 2000 and 2010, geographical inequalities such as infant mortality rates and life expectancy were reduced, but they then increased after 2010. Why did that happen? It was about money. By 2019-20, after a series of austerity Budgets, health spending was about £50 billion below what it should have been had it matched previous Government commitments. This far surpasses the much-vaunted cash injection of £20 billion between 2019 and 2024 as part of the NHS long-term plan. That level was too little, too late for what was to come.

The results of austerity are not hard to find right across the NHS, with one of the more tangible measures being bed capacity. Between 2010-11 and 2019-20, the average daily total of available beds contracted by 8.3%—nearly 13,000 beds. Britain had less than half the number of critical care beds relative to its population than the average in OECD European Union nations.

Austerity also meant years of pay caps and pay freezes. In other words, there were pay cuts, in real terms, for NHS workers. They were earning thousands of pounds less in real terms in 2019 than in 2010.

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(Mike Wood.)

[Mary Kelly Foy]

Look at the situation with the Nightingale hospitals. They were a good idea in theory, but there were not enough workers available. It was like a sketch in “Yes Minister”—a hospital with no patients, only in this case there were no workers either.

Since the coalition Government’s Health and Social Care Act 2012, which threw all the pieces of the NHS up into the air, no single entity has been responsible for workforce planning. Consequently, staffing over the past decade has been poor and disjointed, and there has been a lack of the staffing projections needed to ensure we have enough health workers to meet demand. So work became more intense, with more turnover and more burnout. This was before the pandemic and should have been a warning signal to the Government.

Let us not forget the removal of the nurses’ bursaries in 2016, which led to a decline in nursing applications in the ensuing years. That has contributed to nursing numbers not keeping pace with demand. In the first quarter of 2019-20, the number of nursing vacancies increased to over 40,000. I know the Government U-turned on that, but why did it happen in the first place?

Staff shortages put enormous pressure on NHS workers. I do not want to be too sentimental, but I do not know how they did it during the pandemic. The demands put on those workers were enormous and the fortitude and resilience of NHS workers was remarkable. In addition, a lack of personal protective equipment caused them huge levels of stress, risking their mental and physical health. How about we start showing a bit of gratitude by giving them the pay rise they have asked for?

Public health, which is such a vital part of our defences, has been the victim of a toxic combination of austerity and ill thought through structural change. As a result, we went into the pandemic with public health services that were ill equipped to handle the arrival of covid.

As part of the coalition Government’s 2012 reforms, public health functions were separated from the NHS and put into local authorities, which I and other members of the health system welcomed. Between 2015 and 2020, the local authority public health grant fell by around a quarter in real terms. Between 2016 and 2019, Public Health England’s budget was cut by 12%. Restructuring of the workforce resulted in experience bleeding away. The number of people working in public health was not enough to meet demand. By 2021, England needed almost 60% more public health specialists to reach levels recommended by the Faculty of Public Health. The voice and influence of public health specialists has been increasingly stifled, and the value placed in their expertise diminished.

Britain was severely on the back foot when the pandemic hit us in early 2020. The NHS was operating without enough staff, there were not enough beds and our buildings were outdated. The failure to ensure that the NHS was properly staffed and resourced in the decade leading up to the pandemic meant that when the pandemic arrived, there was no capacity to meet the increase in demand.

Sickness absence from covid shrunk an already depleted workforce, and the need to separate groups of patients limited capacity further. That meant drastic measures such as pausing nearly all routine care in hospitals, redeploying staff and registering medical students early. There is no doubt that both staff and patients were put in harm’s way because of the historic underfunding, under-resourcing and austerity.

Can the Government say that they were not warned? No, they cannot. MPs, trade unions and even the United Nations all warned the Government. When the UN said that the results of the austerity experiment were “crystal clear”—that our social security net had been torn asunder by austerity—the Government said that they regretted the “overtly political tone” of the UN’s report. Cameron and Osborne’s project failed on its own terms: the books were not, as they often told us, balanced. In fact, we are all worse off because of their actions. History will not absolve them, because, with austerity, there is always a price to pay. Thousands of people are dead, and our welfare state was pushed to the brink. Austerity severely impacted our response to the pandemic, and it must never happen again. The Government have several fiscal events until the next election, and they can change things if they want to.

[The Economic Secretary to the Treasury (Andrew Griffith)]

I congratulate the hon. Member for City of Durham (Mary Kelly Foy) on securing this evening’s debate.

In debating the Government’s fiscal policies, as in so many things, it is all important to set out the context. When the Government were first elected, it was in the immediate wake of the global financial crisis. It was also after we inherited a situation that had led to the Labour Chief Secretary to the Treasury leaving a note—we all remember that note—that said, “There is, I am afraid, no money left.”

In the years preceding the covid-19 pandemic, the Government’s fiscal strategy—the only fiscal strategy—was to reduce the deficit and debt that Labour had left us. As a long-standing finance director myself before coming to this place, I know that Government need to live within their means and show responsibility when entrusted with people’s hard-earned money. That was the time to repair the nation’s finances—before a storm would strike. When the deficit reached 7.5% of GDP in 2008-09, Government decisions supported its reduction to 2.7% of GDP by 2019-20. That approach developed the financial buffers to help absorb the impact of future economic shocks, such as we saw in the pandemic. Yet despite that period, and rather belying what the hon. Lady said, we have still been able to provide departmental spending today that will be around £75 billion a year more, in real terms, by 2027 than in 2010.

It is no wonder, then, that at the time when we took that approach, it received the support of Parliament. It was in line with the recommendations then for best practice. For example, the 2017 fiscal risks report of the independent Office for Budget Responsibility said that

“the public finances need to be managed prudently during more favourable times to ensure that when these shocks do crystallise they do not put the public finances onto an unsustainable path.”

That was why, when the pandemic hit, we were well placed to borrow to provide quick, decisive and consistent support to households and businesses throughout the country, which at that time had significant support from Members on both sides of the House. Estimates from the International Monetary Fund showed that the UK’s discretionary fiscal expansion in response to covid-19—the support that we gave households—was one of the largest and most comprehensive financial support packages globally.

To fund that response, we had to borrow an additional £313 billion—a huge amount of money—across 2021 and 2022, but we could not have done that had we not made the difficult decisions. Had we not acted, the cost to the country would have been far higher. Members will remember the support that we provided, including the furlough scheme, which supported nearly 12 million jobs in total, holding our economy together in incredibly tough times. I note that some 420,000 of those jobs were in the north-east, and that since the pandemic has ended the north-east has had the third-highest increase in employee numbers relative to pre-pandemic levels. The economy in the north-east has been one of the fastest growing.

I also note that, as is sadly so often the case on such occasions, the hon. Member for City of Durham had no alternative plans to lay out. I do not know whether she agrees with the North of Tyne Mayor, Jamie Driscoll, who today said, in respect of the right hon. and learned Member for Holborn and St Pancras (Keir Starmer):

“You’ve U-turned on so many promises…in fact, a list of broken promises too long to repeat in this letter.”

I do not know whether she has seen the letter from Jamie Driscoll, or whether she agrees with the right hon. Member for Ashton-under-Lyne (Angela Rayner) or the right hon. and learned Member for Holborn and St Pancras on an issue like the two child policy. Our policy is clear. I do not think that it is appropriate for the Opposition to hold two policies simultaneously in respect of the two child policy.

When we look back on the pandemic, and on our fiscal approaches both during and in the run-up to it, the Government believe that we can be confident that we acted responsibly. We took difficult decisions on the back of the financial situation that we inherited, allowing us, when that terrible pandemic broke above our heads, to protect livelihoods up and down the country, and ensuring that we could afford to do so and could bounce back afterwards, as we have done subsequently. That was, and remains, sound, responsible fiscal policy.

I understand that not every Member of this House will agree with the decisions taken. I hope that the hon. Member for City of Durham will recognise that many people on both sides of this House did their best in those most difficult times.

[Mary Kelly Foy]

I am quite surprised and confused. I gave statistics about how many deaths there were, and specialists across the board, including the United Nations, have pointed out the damage done by the austerity programme. I have no idea why you mentioned the two child limit. It would have been really helpful if you had stuck to the point of my debate.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. The hon. Lady knows that she must not address the Minister directly.