Autumn Statement Resolutions

Matt Western Excerpts

Thursday 23rd November 2023 Commons Chamber

[Peter Grant (Glenrothes) (SNP)]

As with any major political announcement, the Government clearly had a whole series of long-term and short-term objectives for the autumn statement. I am pleased to confirm that the statement has already achieved what was probably the Government’s single biggest objective: it got good headlines right across the front pages of the right-wing press. They were not true headlines—they were completely untrue —but when did that worry the present Conservative Government? On the one hand, we have The Sun, The Times, the Daily Mail and the Daily Express—all bastions of responsible journalism—celebrating a tax-cutting Budget, and on the other hand, we have the BBC, Channel 4 news, Sky News, the Office for Budget Responsibility, the Institute for Fiscal Studies and the Resolution Foundation all saying that it is a tax-increasing Budget and we are heading for the highest tax burden any of us can remember. Who do we believe? That is a difficult question: who do we believe?

[Matt Western (Warwick and Leamington) (Lab)]

On that point, is it not a godsend that we do actually have something from the OBR this time, when 12 months ago we had nothing? That was a determined effort by the then Prime Minister and Chancellor not to have anything, so as to deceive the public.

[Peter Grant]

I do not know if I am allowed to repeat the verb that the hon. Member used—perhaps we should make it “persuade” the public, rather than “deceive” them, which I do not think we are allowed to say in this place—but I think the covid inquiry has blown that wide open. We have a Prime Minister who, as Chancellor, deliberately avoided asking for advice from the experts when he knew he was not going to like the advice he would get. It is barely a year since the Government Benches were full of people denouncing the idea of having an OBR because, in their words, “Economic forecasts are always wrong,” but as soon as economic forecasts begin to suggest that things may be improving, they suddenly want us all to believe them.

It is clear that by the end of this period of Tory rule, people will be paying more in tax in real terms than they were before. I am not against asking people to pay tax if they can see some benefit to the general welfare as a result, but that is not what is happening. We are looking at the largest reduction in real living standards since the 1950s. I did a quick check, and that is before either I or the Minister was even born. Perhaps there are one or two Members here who were alive at that time—I will not look at anyone in particular—but there are not very many. This is what has been described to us in Scotland as the “broad shoulders of the Union”. However, the broad shoulders of the Union have delivered the biggest reduction in real living standards in Scotland since before most of us were born.

While there are some aspects of this statement that we certainly welcome, the good bits do not go nearly far enough and the bad bits go far too far. I welcome the cut in national insurance, but let us not forget that that puts back into the pockets of workers only a quarter of the amount they are losing because tax thresholds have been frozen during a time of high inflation. When people have been getting 5% or 10% pay rises recently, it has not been a pay rise; it has just been trying to keep up with rising costs. Leaving the tax thresholds where they are means that somebody who in real terms is getting less top-line pay than they were two years ago is still having to pay more tax as a result.

The Chancellor boasted about the national insurance cut giving back, in his words, “nearly £450 per year” to average earners. Somehow he did not have time to mention that that drops to just £36 a year by the time we take account of the increases in real levels of income tax. Of course, as of this morning, it has been wiped out completely by the increase in fuel bills that we are all going to face next year. So this is not a giveaway budget; it is a pickpocket budget. It uses the classic pickpocket technique of using a nice thing to distract us—a tuppence cut in national insurance—while someone slips around the back and swipes the higher fuel bills, the higher income tax and higher everything else out of our back pocket at the same time.

We could have seen real action to address what is still the single biggest crisis affecting tens of millions of people on these islands, which is the very real panic people are in every week over the cost of living. We could have seen a continuation of the £400 energy bill rebate for households. We could have seen the Government funding a council tax freeze in the way the Scottish Government have done, meaning that Scotland now has the lowest—yes, the lowest—average council tax in the United Kingdom. They could have followed the SNP’s example and brought in a UK child payment similar to the game-changing Scottish child payment, lifting thousands of children out of poverty.

I welcome confirmation that benefits and pensions will not be cut in real terms. They are not increasing; they are being pegged in real terms, and that is all. However, the fact that that was under serious consideration until about 24 hours before the Chancellor’s statement tells us everything we need to know about where this Government’s values lie, and they do not lie in the same place as the values of Scotland. Alternatively, maybe there was never any danger of that cut being implemented, and they were just threatening it so they could make themselves look good when they announced no change. In the words of the Child Poverty Action Group:

“Struggling families have been worrying themselves sick for months about whether an unmanageable…cut was coming in order to provide the government with a rabbit-out-of-the-hat moment.”

Just as over the last few years we have seen the Tories wanting to punish homeless people for daring to be homeless and wanting to punish asylum seekers for daring to flee certain death, they are now planning to punish people who are ill and people with disabilities for daring to want to have a living at the same time as being ill or having a disability. We know what we should expect and what is coming next. The press were all trained to respond today, so we can expect an avalanche of rhetoric in the right-wing press denouncing anybody on disability benefits, in the same way that they have denounced migrants and asylum seekers for years and years. They denounced them as scroungers and fraudsters, all to give cover to a brutal and inhumane attack by a brutal and inhumane Government.

The party that last year demanded that all civil servants returned to full-time office working immediately, because working from home is not properly working, is now saying that people on disability-related benefits will face the choice between taking up a—non-existent—working from home vacancy or literally facing starvation. Yesterday, the Prime Minister either would not or could not tell us how many vacancies currently being advertised in DWP jobcentres would be suitable for home working, or maybe he just did not care enough to bother finding out. The answer, incidentally, is that about one in 20 of those vacancies might be suitable for home working, which is not nearly enough to get the number off benefits that the Chancellor claims to think is realistic.

More than 100 disability organisations have warned that the Government’s inhumane policy could lead to unnecessary deaths, and that is not a blank threat. Last year, a study by the Glasgow Centre for Population Health and Glasgow University found that over 300,000 deaths in Britain could be attributed to Government austerity policies. Austerity is not an economic necessity. Austerity is unnecessary, and those 300,000 deaths were unnecessary as well.

I welcome some of the measures announced to support small businesses. As I mentioned in an intervention, we still need to see real action to protect small subcontractors involved in big infrastructure projects, so that they do not go down if the main contractor goes down. A lot of small businesses have now stopped bidding for that kind of work because they are worried that it may put them out of business, rather than keep them in business.

It is disappointing that, yet again, there is no movement on the determined calls from the hospitality industry to reduce or abolish VAT on that sector, even temporarily. A few weeks ago, I lost yet another award-winning small business café in my constituency, because such people just cannot continue working eight hours a day and earning less than the legal minimum wage. It is a bit ironic that the Government who caused rampant inflation now expect us to cheer when they start to bring it down. It is a wee bit like an arsonist expecting a medal for helping to put out half the fire.

We welcome additional support for green industries, but look what is happening among our competitors. In the UK, the figure is £960 million in total by 2030—yes, very nice—but the equivalent figure in Germany is €4.1 billion and in France it is €500 million every year, according to the Institute for Public Policy Research.

What has happened to the hydrogen town announcements we were promised in March 2023? I have world-leading work going on in my constituency as part of the H100 project, which is a much smaller-scale project to assist in conversion from natural gas to hydrogen. That is a chance for Scotland, for Fife and for Methil to be at the centre of one of the world’s leading industries. Whether a bid from Fife or a bid from somewhere else is going to be successful we do not know, and we do not even know who has bid yet. That announcement was due in March, and it is now too late for that work to be done according to the original timetable. Can the Minister give us an update, or are the Government planning to just walk away from green hydrogen in the same way that they walked away from wave and tidal power in the 1980s and 1990s?

By comparison, despite the fact that the Scottish Government do not have anything like the borrowing power or indeed the legislative power of this place, and despite the fact that more and more of Scotland’s funding is having to go into the funding holes left by the policy failures of the UK Government, we now have 1.2 million people under the protection of a Scottish benefits system that explicitly on its home page puts “dignity, fairness and respect” at its heart. Those are not words that many people who use DWP services would use.

As I have said, the Scottish Government have frozen council tax, and are lifting children out of poverty with the Scottish child payment. They are providing support to mitigate the additional heating costs that households with very severely disabled children and young people face through the winter heating payment, and free school meals to all children in primary 1 to 5 and eligible children throughout school. Scotland has a much more widespread and more widely available bus concession scheme than the rest of the United Kingdom.

The Child Poverty Action Group has calculated that these policies mean that the cost of raising a child in SNP-governed Scotland is £27,000 less in total than for an equivalent family living under Tory rule in England. Is it any wonder that the Tories have no chance of being elected any time soon, or any time ever in Scotland? The Chancellor could have extended those benefits to hard-pressed families in England but he chose not to do it. It is not that he could not do it; it just was not important enough to him.

People in Scotland cannot afford to wait for a change in Government policy in Westminster to make things better. One of the features of this autumn statement is that things look bad enough just now, but they will get a million times worse immediately after the next election, so regardless of what the Opposition think they are going to be able to do if they win it, their hands will be tied. The warning to people in Scotland is, “You might think you’re voting for a change, but if you vote Labour, you’ll be voting for more of the same.”

We are calling on the UK Government to transfer to the Scottish Parliament permanently the powers to act on energy, employment, welfare and the economy, so that Scotland gets the policies it votes for and that it needs. We must reinstate the £400 energy bill rebate, and follow the example of other countries such as France in taking proper action to bring food prices down. Increasing food prices are not making life any easier for farmers; they are losing out. They are not making bigger profits; the supermarkets might be but the farmers certainly are not. The Government could boost people’s incomes by introducing a proper living wage that is actually enough to live on. They could also increase benefits in line with inflation and maybe a bit more, and match the Scottish child payment UK-wide.

Those policies represent our values; they represent the values of the Scottish National party, because they are the values of Scotland’s people. It is becoming increasingly clear that no Westminster Government will ever deliver to Scotland the policies it votes for. The only way to have a set of Government policies that embeds the values of Scotland’s people is to put those policies firmly into the hands of an independent Scottish Government.

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[Matt Western (Warwick and Leamington) (Lab)]

It is a pleasure to follow the right hon. Member for Suffolk Coastal (Dr Coffey)—

[John McDonnell (Hayes and Harlington) (Lab)]

Is it really? How generous.

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[Matt Western]

We use those terms, my friend.

I agree with the right hon. Lady on legislation about drivers of C1 vehicles. However, on Ofsted and whether local authorities could take on that responsibility, my authorities, Warwick District Council and Warwickshire County Council, have been stripped bare, and I fear that under yesterday’s announcement we will see a further decimation of our local services.

[John McDonnell]

Just to get it straight, the Local Government Association has said that there is a £4 billion gap in local council funding, so there is no room for manoeuvre on additional services to be provided directly by local councils.

[Matt Western]

My right hon. Friend is absolutely right. He and I, and I am sure all of us, know the immediate pressures that local authorities face, whether in addressing homelessness or in addressing social care, so it is not within their current capacity to absorb any more; in fact, they are shrinking by the month.

[Dr Coffey]

I understand what the hon. Member says about bandwidth. Of course, any additional duties, if the Government were minded to take that forward, should be accompanied by new burden funding.

[Matt Western]

I thank the right hon. Lady for that clarification. She is right but, as we saw through the pandemic, it was local authorities who did so much to make up for the failings of the over-centralised Government, who—through the covid-19 inquiry—we now understand were incapable of getting to grips with the pandemic in our communities. That is why local governance is so important. I will move on to my speech.

[Wera Hobhouse (Bath) (LD)]

On the delivery of net zero projects, does the hon. Member agree that local authorities are well placed to deliver on the ground and that, rather than having centralised delivery, it is much better for them to do that work?

[Matt Western]

I absolutely agree. We should take pride in our local authorities. They understand the landscape and the needs of communities, but they must be properly funded to deliver these essential services. I am afraid that, as with the reinforced autoclaved aerated concrete problem we see right now in our schools—two particular schools, Myton School and Aylesford School, in my constituency have RAAC—we see delays in rectifying problems because the Government have become so over-centralised.

If I may, I will move on to my speech—I am sure that everyone is waiting for it. I am afraid that, in the last 24 hours, we have seen holes beginning to appear in the Chancellor’s autumn statement. There are holes in the claims he made about lowering taxes, holes in its credibility and holes in the public finances, as my right hon. Friend the Member for Hayes and Harlington (John McDonnell) alluded to. For the public, the manifestation of that is probably most often seen and understood through the holes in our streets and on our roads. That is the reality of the decay we face across our country.

What surprises and disappoints me is the Government’s chutzpah and the claim that they are making long-term decisions when just five weeks ago the supposedly cautious Prime Minister and his Chancellor stated that it was “virtually impossible” to make tax cuts. It now seems that the Prime Minister realises not only that has he got an election coming up soon but that he does not have many options, so it is best just to spend some money and run. His five pledges, even, have wasted away—they have reappeared as five long-term decisions. What will we expect next month on his five promises to the country? It is yet another reset—I think we have had 11 already.

As I mentioned in an intervention, we are a year on from the kamikaze Budget, which cost the country an estimated £40 billion—[Interruption.] Forgive me, Madam Deputy Speaker; my voice is quite weak due to a chest infection. At the time, I asked the then Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), whether he had

“not just fired the starting gun on a run on the pound”.—[Official Report, 23 September 2022; Vol. 719, c. 964.]

He was utterly dismissive of my assertion, but of course that is entirely what happened, and that is what we saw on the financial markets within minutes of him speaking. Of course, that translated into higher interest rates, which in turn meant higher interest rates for mortgages, so this year we see 1.5 million households moving off their fixed rates and facing higher mortgage costs averaging a further £250 a month. Next year, we will see a similar number of households moving to higher mortgage costs. That comes at a real cost to households up and down the country.

The Prime Minister talks about inflation being a tax, which is a bizarre way of considering it, but we have to remind the public of why we have such high inflation— he may suggest that he has managed to halve it; he is claiming the success from it, although he did not seem to claim responsibility when it went up—and why we faced higher inflation than the majority of the major G7 nations. The truth is, we still face an inflation premium relative to the United States, Germany, France and all the other major nations purely because of what happened a year ago. That is costing our households and businesses. It is costing us all; and, indeed, it has massively damaged our reputation.

That comes on top of 13 years of austerity and failure, with people really feeling the costs on their lives of the austerity that the Government imposed on us. They see services collapsing around them and feel the fabric of society being weakened by successive Conservative Governments.

As we look at the economy and what was announced yesterday, I am reminded of a photograph that I saw a couple of days ago of the Chancellor and the Prime Minister at a further education college. I do not know whether hon. Members noticed how both of them were trying to hold a screwdriver, but it was almost as if they had never held one before. There is a real need to reskill this country, and we could start with some of the people in power. We have a former Prime Minister who, we are now told, could not understand graphs or data, and therefore struggled to interpret how we should react to the pandemic.

We now face a stagnant economy, as we are told by the OBR and all the balanced economic observers: it was flatlining at just above zero for the last quarter, and we are looking at absolute zero in the current quarter. But somehow the Chancellor wants us to applaud growth rates of 0.7% next year and, possibly, 1.4% in 2025—a huge downgrade on what was forecast earlier this year. The public are being duped by the claims the Government made yesterday that things are rosy and will be positive next year. The public know that they have suffered 13 years of mismanagement, in which the Government have failed to solve the productivity puzzle. I used to work in France, where the average worker is 20% more productive than the UK worker. Why is that? Is it down to employment legislation or the lack of investment incentive in this country? The harsh reality is that we all have to work much harder in order more or less to stand still versus the French.

The Chancellor quoted an aggregated growth figure in his statement, but any credible observer should have looked at growth per head, which is far weaker in the UK than in the US, Japan and Spain, and is fractionally ahead of France. In the real economy, people are feeling the impact of the last 13 years, and particularly the last couple of years. They have less money in their pocket, and the money is not going as far. They are suffering a real-term loss of income. We are told that next year their real-terms income will fall a further 1%. Energy costs now account for a much larger proportion of income, having increased by 50% over the last two years: gas has increased 60% in the two years since 2021, and electric is up 41%. Energy bills have increased an average of 51% versus 2021-22. This was not all necessary. We can talk about global energy price increases and inflationary pressures, but the UK suffered because we did not have the energy storage or resilience, particularly in low-cost onshore wind.

We also have some of the least efficient housing stock in Europe. People have to spend more to keep their homes warm, because their houses are inefficient. The houses built since 2016—1.2 million homes—should have been zero-carbon homes but, because all that legislation was torn up, they are not. Instead, they need more gas and electric, which means higher demand. Without that, total aggregate demand would have been brought down to a lower level.

Let me talk about the predicaments facing students. They face a much higher rate of inflation than the typical UK adult, but maintenance loans have not kept up with inflation. According to the House of Commons Library, there has been an 11% real-terms cut in maintenance loans. That equates to them being £1,200 worse off a year as a result of this Government.

I listened to the Chancellor on this morning’s media round. It was only a matter of time before being economic with the truth would give way to the truth about the economy. He was asked whether there were tax cuts when taxes continue to rise, and about his selective approach to cuts being undermined by stealth and concealed taxes, resulting effectively in higher rates of tax brought on by what economists refer to as fiscal drag. He was asked about the freezing of tax thresholds that will see 7 million people overall paying higher levels of tax: 4 million who have never previously been liable having to pay income tax, and 3 million who have moved from the lower to the higher threshold. His promises on lower taxes are empty, and the public will know that.

Let us not forget that this Conservative Government have imposed the highest tax burden in the post-war period, and the most regressive. The Conservatives like to present themselves as the party of lower taxes, but let us remember that when they came into power in 2010 the first thing they did was increase VAT, from 15% to 20% ultimately—33% up on the most regressive tax of all. There has been a whole raft of other stealth taxes, including on insurance. The public need to know that they face five years of further tax rises.

Let us be clear: the Chancellor is funding these tax cuts by tightening non-protected public services. Given the country’s experience over the past 13 years, the Government’s plans should ring alarm bells, because they sound remarkably like “Austerity II: the sequel.” Given the deep damage they exacted on our communities and our social fabric, that will come with a real social cost.

It would be churlish not to acknowledge a few welcome moves—plagiarism is the most sincere form of flattery. The NHS workforce plan was something that Labour proposed. Planning reform is welcome, but the Government do not seem as ambitious as the Labour party. Elsewhere, I welcome the expensing changes to encourage business investment, but I do not know why it could not have happened earlier, because we have not seen the scale of investment in the UK that we should have seen. On support for innovation and certain developments, I would like to see more, particularly on the role of universities.

The support for the UK automotive sector is particularly welcome for companies such as Jaguar Land Rover, Aston Martin and the myriad supply companies in my constituency. The Government talk about an advanced manufacturing plan, but where has it been for the last few years? They have not had any form of industrial strategy. In fact, the former Chancellor could not even bring himself to use those words when he was in post. I add my support for the Winser report and the rolling out of the grid. It is way too late, but we need to get on with it. It is essential that we electrify the UK economy.

Increasingly, this appears to be a Government without a cause. If they have a purpose, it is as a self-preservation society, as perhaps was exposed yesterday. At their heart is a weak Prime Minister. His King’s speech betrayed a lack of vision and substance; out of ideas and out of road. I am afraid that the public will be underwhelmed by this statement, and by a Government so utterly out of touch. As they say in examinations: compare and contrast the clear direction and purpose of the five missions forged by my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) with the soft, fluid aims of the current Prime Minister.

Overnight, analysis from independent think-tanks such as the Institute for Public Policy Research and the Resolution Foundation has underlined the inequality in the tax burden, where those on the lowest income and those least able are paying disproportionately more under the Conservatives. Overall, the average household faces a £4,500 increase in taxes in the period 2019 to 2028. The Prime Minister and the Chancellor may pat each other on the back, but in this Parliament alone they have presided over a £1,900 tax increase, according to the Resolution Foundation. After 13 years of failure, chaos and mayhem, when energy prices are rising astronomically and food prices dramatically, we now see changes to the tax threshold. The public are really hurting. I am afraid the Government just do not get it.

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[Gareth Davies]

As I have said, we know that families have suffered through a period of dramatic inflation. It peaked at 11%. We made a commitment at the start of this year to cut it in half and we met that commitment last week. The No. 1 thing we can do to make people feel better is bring down inflation. The provisions in the autumn statement will undoubtedly put money in the pockets of the people who need it most, but ultimately on this side of the House we believe in the dignity of work; we believe that the best route out of poverty is through a job, and the growth that we will boost through these measures will help achieve that.

We have made inflation our top priority and we have delivered on that commitment, as I just mentioned to the hon. Gentleman. I want to pick up, however, on one point raised throughout the debate, not least from the Opposition, who implied that the Government had done nothing to bring down inflation and that was nothing to do with this Government. I want to stress that the International Monetary Fund disagrees with them. The IMF has said that we have taken decisive action to bring down inflation, complementing the Bank of England. The Bank of England has the primary monetary policy tool of interest rates, but we in the Treasury and across Government have taken incredibly difficult decisions to ensure that we do not exacerbate inflation. We have also introduced measures such as the energy price guarantee, which essentially paid for half of people’s energy bills across the country. That, by the way, was referenced by the OBR as knocking 2% off headline inflation.

[Matt Western]

I welcome the hon. Gentleman to his place. He was talking about the Government having a role in inflation and responsibility for it, but he must accept that the decisions made a year ago with that kamikaze Budget fuelled inflation. That is why we have an inflation premium compared with other nations.

[Gareth Davies]

I am grateful that the hon. Gentleman raises that point, as I looked into it, and there is zero evidence for what he suggests. If he has evidence, he should provide it. We know that inflation was caused by two major factors, and I am happy to go through that in detail at another time. Global inflation was caused by global factors caused by the impact of a global pandemic. Supply chain shortages have caused prices to rise across the world, and then we had the war in mainland Europe, caused by Putin’s invasion of Ukraine, which caused energy prices to spike, and gas prices went up around the world. We in the UK are particularly dependent on gas, which is why inflation increased. It is also why we stepped in with the energy price guarantee to cut every constituent’s bills in half.