Budget Resolutions

Matt Western Excerpts

Thursday 7th March 2024 Commons Chamber

[Mel Stride]

My point is that the externalities that I referred to, such as covid and the war between Ukraine and Russia, have impacted economies around the world. Relative to other economies, and looking at the OBR’s forecast over the next five years, we will have a growth record that is up there and better than many of our major competitors, including countries such as Germany.

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

To clarify a point that perhaps I have misunderstood, what is the growth per capita record for the last seven quarters?

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[Matt Western]

Does the hon. Gentleman agree that not enough appropriate sheltered housing has been built over the past 14 years? Given the ageing population, surely we should be making greater provision.

[Sir Christopher Chope]

My constituency has an enormous amount of sheltered housing and housing specifically for pensioners. A lot of it is vacant—it has been built, but it is not occupied at the moment. I am not giving a plug for Churchill or any of the other housing developers, but I do not think that issue is really the key. The key is knocking some heads together and getting them to realise that when somebody is ready to leave hospital, they do so and that there are significant penalties if they do not.

There are lots of other examples of where we have a productivity crisis. It is worth recalling that Sir Roy Griffiths, who was brought in by Margaret Thatcher in 1985 to try to introduce greater efficiency into the health service, said

“if Florence Nightingale were carrying her lamp through the corridors of the NHS today she would almost certainly be searching for the people in charge”.

One could bring that up to date now and say that today Florence Nightingale would almost certainly be looking for anyone willing to get to grips with low productivity in the NHS. I hope that the Government will get a lot more serious about the issue than they have been hitherto.

My final point is about the dynamism that comes to the economy if we reduce taxes and encourage growth through that means. In his speech, the Chancellor made passing reference to Arthur Laffer and his curve. Some of my hon. Friends may have been present at a previous dinner organised by the Centre for Policy Studies at which the speaker was Dr Laffer himself; I still treasure a napkin that has his handwritten curve on it. Why are we not applying the principles of his curve more widely?

In his aside about Laffer, in the context of reducing capital gains tax from 28% to 24%, the Chancellor was more or less saying, “Well, at last my officials are waking up to the importance of this.” But who is in charge? If the Chancellor of the Exchequer and the Prime Minister believe in the virtues of the Laffer curve and the dynamism that comes from a low tax, low regulation economy, surely they should be getting a grip on that rather than leaving it to anonymous officialdom.

I hope that we will be able to make more progress on these key issues and demonstrate to the public that there is indeed a big chasm between the two parties vying to form the next Government. We believe in the virtues of low taxes promoting enterprise and increasing productivity, particularly in the public sector. The other lot are beholden, particularly to the unions, which takes me back to where I started off in politics: when I was first elected to Wandsworth Borough Council, 50 years ago this week.

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[Rushanara Ali]

For a start, the former Prime Minister could certainly donate her earnings to the millions of children now living in poverty—poverty that was worsened by her crashing the economy. The parents of children in my constituency are having to work even more to make ends meet, particularly to pay their mortgages, which in some cases have doubled. That is the consequence of the rot that she and her Chancellor caused by crashing the economy.

[Matt Western]

On a more serious note, reports allege that, ahead of that mini-Budget, the then Chancellor briefed certain hedge fund managers and they made significant financial gains off the back of it. Surely there should be some comeback on that

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[Damian Collins (Folkestone and Hythe) (Con)]

The Chancellor of the Exchequer made one announcement in the Budget statement that has not been referred to today but is relevant given the contributions made so far: the Government will sell the last of their remaining stake in NatWest bank, formerly the Royal Bank of Scotland Group. Of course, we all remember that the Royal Bank of Scotland Group, once the world’s largest bank, ran out of money and would have collapsed if not for a complete Government bail-out. It would have gone down and taken with it the livelihoods, jobs and mortgages of millions of people in this country, having an effect on the entire banking system. It has taken us nearly 16 years to get to a position in which the Government can sell their stake in the bank and return it to fully private ownership.

That is an important benchmark, because it is easy to pretend—as a number of hon. Members have tried to do—that 2010, when the Conservative party was elected, was a year zero and there were no issues from the past that we had to deal with. We came into government on the back of that banking crisis. Both parties acknowledged that the bail-out of the banks was necessary, inevitable and the right thing to do, but it came with a cost attached. It came with the recognition that the huge amount of increased Government debt required to take that stake in the banks would at some point have to be paid back, and that the massive shock to the global economy and our economy and the recession it created would lead to consolidations in public spending.

However, it was the Conservative party—working in coalition at the time—that had to put those plans in place. We inherited no detailed plan from the Labour party; no difficult political decisions were made about where spending would be cut or how debt would be repaid. That was entirely left to the Conservative party to do, and that is what we did. We fixed the roof when we had the chance to do so, and because we controlled debt and got it falling again, when the next shock came in the form of the covid pandemic—nothing anyone could have predicted or known about—we were in a position to respond. We could increase borrowing again to make the necessary decisions to protect people’s jobs and homes, create the furlough scheme and give the economy the support it needed. We could make those decisions because we had regained international trust in the British economy and in our Government, and we could borrow money to do so.

[Matt Western]

Will the hon. Gentleman give way?

[Damian Collins]

I will in a moment.

Yes, borrowing has gone up, and taxes have gone up to pay for it. That is an inevitable consequence of those two massive global events that took place: one under the last Labour Government; and one under the Conservative Government in the shape of the covid pandemic. I do not remember the Labour party ever criticising the furlough scheme or the support that was put in place, or suggesting that it should not have been done.

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[Damian Collins]

No, I did not say that at all. What I said was that we picked up the pieces of an international banking crisis, with no plan from the previous Government for how that would be paid for. It was entirely down to the Conservative party to find that money. The criticism was that the previous Labour Government were increasing borrowing before the banking crisis hit. They were already borrowing for political reasons—to sustain spending they could not afford—and then had to bail out the banks on top of that. If Members are going to criticise the past 14 years of Government, let us start where the problem started, which was before we came into power. We were required to pick up the pieces of the mess we inherited.

There are big things that happen, which require responsible Governments to take big, responsible decisions. That sometimes means that they have to put up taxes in order to pay for borrowing to get through a crisis. Let us not pretend that that is not the case, but the question is whether Governments have a serious, credible plan and whether they are prepared to be honest with the British people about what that plan entails. On the back of the pandemic, we have had to put up taxes and borrowing to pay for that. We have done that, and we are now at a decision point. As the economy recovers and the OBR projects that debt will fall, what can we do? What path should we go down? As the Chancellor has set out, the priority of this Government is to recognise that because taxes had to go up to pay for the pandemic, we want to reduce taxes when we can. We want to lift that burden from the British people and start to reduce taxes.

If any hon. Members want to come in at this point, I am happy to give way.

[Matt Western]

I will, because I was trying to intervene a few moments ago, as the hon. Gentleman will hopefully recall. My point was simply going to be that during the mid-2010s, there was a fantastic opportunity to invest in our infrastructure—repairing our schools and so on—when interest rates were at a record long-term low, and that opportunity was missed. Does the hon. Gentleman not regret that?

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

It is a pleasure to follow the hon. Member for Folkestone and Hythe (Damian Collins). I absolutely concur with his points about the creative sector; it is one of the absolute gems of the UK, and we need the concerted efforts of those not just in the Government but across the House, and the support of our universities and colleges, to ensure we have the stream of investment to deliver talent. I echo his points on nuclear development, and particularly on the work of Rolls-Royce.

If the public were listening yesterday to the last-chance Chancellor, they would be forgiven for assuming that they have never had it so good. The Chancellor conveniently forgot to mention the kamikaze Budget in September 2022, when the right hon. Members for South West Norfolk (Elizabeth Truss), and for Spelthorne (Kwasi Kwarteng), crashed the economy, forced up borrowing rates and caused mortgage market mayhem, leaving average mortgage payments £240 a month higher, and businesses struggling with higher rates of interest. The Chancellor now seems to think that we are seeing Lamontian “green shoots”, ignoring the economic wreckage wreaked by the Government’s own vain ideological vandalism after an economic experiment that cost the UK £30 billion. When I say “Lamontian”, I am of course recalling the damage of a previous Conservative Government in the early 1990s.

In his first Budget 16 months ago, the Chancellor promised a “Budget for growth”. Call me a stickler for detail, but what did we get? A recession. The Prime Minister may try to blame covid and Russia’s illegal invasion of Ukraine, but the truth is that our growth is the lowest in the G7, and there is absolutely no reason why the UK should be more affected than any of those nations. Meanwhile, Mayor Andy Street is presiding over the worst-performing region for growth in the United Kingdom. There is a pattern emerging.

I asked the Secretary of State for Work and Pensions about this earlier, and it seems that he confirmed that, nationally, we have had seven consecutive quarters of negative growth per capita—in other words, output per individual—which is further contributing to 14 years of failure, including a decade of decay. That is underlined by the fact that real incomes will be lower at the end of this Parliament than at the start. The Joseph Rowntree Foundation has found that households’ average earnings at the start of this year were £2,400 a year lower than at the start of 2021. In the 12 months to September, more people in England were made homeless than bought their first home, and the years of austerity have led to 4.2 million children living in relative poverty.

Yesterday, the Chancellor announced this year’s spring Budget, with a plan to “grow the economy”. Instead, we got a Budget of what I would view as deception, delusion and dithering. The Chancellor did not address any of the urgent issues facing the country right now. It was as though he was rearranging the deckchairs on the Titanic. There was nothing on reinforced autoclaved aerated concrete in schools, hospitals and our universities, nothing on dentistry, nothing on the contaminated blood scandal, and nothing on the Post Office Horizon scandal.

Yesterday’s Budget was more an act of smoke and mirrors. The Chancellor claimed that GDP had risen, that growth was on the up, and that taxes were falling, because he wants to set October 2022 as year zero. However, the public know differently, because they have seen 24 tax rises and are feeling the highest tax burden since world war two. The Resolution Foundation has found that tax rises of around £20 billion were introduced in the last year, and that the Government have a further £17 billion of tax rises set to come into effect immediately after the general election. Meanwhile, unprotected Departments such as the Home Office, the Ministry of Justice and DLUHC—local government—will, by 2028-29, face a real per capita spending cut of around 18%. Likewise, the Ministry of Defence will face major cuts.

The Government must be honest about their mistakes. They have to be realistic about the state our country is in, and they must address these issues with long-term solutions. Instead, what they presented us with yesterday was, to put it simply, weak. It was weak on energy prices, which continue to dominate household bills. The Chancellor’s extension of the windfall tax to 2029 fails to address the fact that 6.5 million households, including tens of thousands in my constituency, were living in fuel poverty in October 2023. Meanwhile, British Gas’s profits increased tenfold to £750 million last year. I am afraid that the Government are not doing enough.

The Budget was weak on the housing system, which is broken. The Chancellor offered nothing for those on low incomes in the shape of social rent properties, which are so needed in areas such as Warwick, Leamington, Whitnash and the villages in my constituency. The Government are yet to meet their target to build 300,000 new homes in England. Meanwhile, the Chancellor’s solution was to scrap tax breaks for owners of holiday let properties. I agree with that, but it is not enough. Despite the OBR forecasting that real household disposable income per head will fall by 1.5% in 2024, the Chancellor has offered an extension of just six months to the household support fund. That is not enough. The private rental sector is breaking, and people are broken.

The Government are weak on finding long-term solutions to these issues. Overnight we learned that the Chancellor has offered £46 billion of unfunded tax cuts. Once again, the Conservatives are gambling with the public finances and economic stability. They cannot make these promises lightly; we saw the impact of that 15 or 16 months ago.

The Government are weak on supporting the needs of motorists. A paltry £50 a year in potential saved fuel duty pales in comparison with the Government’s insurance premium tax take, based on the astronomic increases in insurance premiums. The insurance premium tax was another tax introduced by a Conservative Government. Meanwhile, 23,000 car drivers a year are making insurance claims for damage from Government potholes. More parochially, I was interested to hear that Warwickshire County Council will receive a devolution deal, though no detail was provided on what that means for the leadership of our area. That is of concern, because the county council is already unable to fulfil its obligations. I will follow that proposal closely.

Elsewhere in his speech, the Chancellor claimed that the Government are doing a great deal for small businesses, yet last year the Office for National Statistics reported that more than 27,000 more businesses closed than opened in the UK. The Federation of Small Businesses’ latest quarterly survey shows that a greater proportion of small businesses expect their performance to worsen over the coming year than expect it to improve. The Chancellor’s increase in the threshold at which small businesses have to register for VAT does not compensate for the seven years for which the threshold has been frozen. Again, it is not enough.

Business investment is faltering. Interest rates are sticky, at a base of 5.25%, although they are likely to fall, just marginally, later this year. That ensures that the UK’s already woeful productivity remains worse than that of all our major competitors. For years, successive Conservative Governments have rejected the need for an industrial strategy. Although I welcome the Chancellor’s investment in life sciences yesterday, the Government are failing to harness the extraordinary power and innovation of our higher education sector. Labour will do better.

Despite all that, the Conservatives still claim that they have done a good job. It concerns me that they may believe that. We have suffered 14 years of them putting their party first and our country second. We have suffered 24 tax rises, while ordinary people struggle to pay their mortgage, put food on the table, get GP appointments and register with non-existent NHS dentists. They are struggling in Rishi’s recession—a Prime Minister who floats loftily above us in his chopper, burning up taxpayers’ money, contactless with the people below. I am afraid that the public view this Government as out of touch, out of ideas and in denial about how they have let our economy go into recession, our schools, hospitals, universities and infrastructure crumble, and our people suffer. They do not feel the cost of that failure, but the rest of us do.

The people want change. They have lost confidence in the Conservatives and they look to Labour—a changed party—to bring stability, strategy and sense to the governance of this country. The country is scarred by 14 years of failure that have spawned a decade of decay. Labour will reduce NHS waiting times and introduce emergency dental appointments and free breakfast clubs. It will establish GB Energy for cheaper, cleaner renewable energy, an industrial strategy council and a national wealth fund, and it will close the energy windfall tax loopholes. That is what the country needs and the public want. They want to see their doctor. They want an NHS dentist in their community. They want their schools to be fully open, and they want their roads resurfaced.

The public will see through the Government’s attempt to steal Labour’s clothes; evidently, they do not quite fit the Prime Minister. First, they borrowed our suggestion for a furlough scheme. Then it was our NHS workforce plan, followed by a watered-down version of our windfall tax. Now, they are hijacking our non-dom tax. However, they remain silent on climate change and the need for a green new deal. We need a plan, a project and an ambition. Let us look to what Biden is doing in the US, and the growth that the US is enjoying of 5%; it is right up there with China and India. Where are we? Flatlining at 0%.

The Government have had more resets than my broadband router, and are even more unreliable. The public are disconnected and tuned out. They do not want to wait a minute longer. For the sake of the great British people, let us have a general election, and may it be on 2 May.

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[Nigel Huddleston]

As the hon. Lady knows, there are always tax information and impact notes—impact assessments —as part of the budgetary process.

My hon. Friend the Member for Folkestone and Hythe, in his very strong contribution, reminded us of not only the context in which we took power in 2010, which was far from the golden legacy that the Opposition received in 1997 when they took power, but the challenges that we have faced in power over the last few years. He was also very enthusiastic, as I am, about the opportunities and progress of the creative industries. That is exactly why we have focused on them, and provided more support measures in the Budget, following on from several measures over the last few years. The creative industries are vital to our economy and future growth, growing on average at about double the normal pace of the economy.

I have to call out the comments of the hon. Member for Warwick and Leamington (Matt Western) regarding the West Midlands Mayor, Andy Street, who has done so much to grow and attract investment in the west midlands. I gently remind the hon. Gentleman that the Labour council is not without its problems in Birmingham.

[Matt Western]

Will the Minister give way?

[Nigel Huddleston]

I will happily follow up with the hon. Gentleman, but not now.

My hon. Friend the Member for The Cotswolds mentioned VAT RES, which I was absolutely expecting. He made some really important points in many areas. I will happily follow up with him regarding VAT RES. The Government are considering the OBR’s findings about VAT RES, in the context of the wider public finances, but the Chancellor has expressed that he is always happy to receive further representations.

The hon. Member for Halifax (Holly Lynch) mentioned several areas, including SEND, which other colleagues mentioned as well. We know that it is a really important part of the education system and our overall social provision. The Government are investing an initial £105 million over the next four years in building new special free schools, and 20 successful alternative provision free schools as well.

I am aware of the time, so I will conclude my comments. I genuinely thank all Members for their contributions. There have been some extremely interesting contributions today. The hon. Member for Leicester West (Liz Kendall) outlined her vision of a clear choice, which I think we might be hearing quite a lot over the coming months. I do believe that there is a clear choice this year: sustainable economic recovery, sound finances, lower taxes, more productive public services, support for businesses and households, optimism, confidence and opportunity for all with the Conservatives, or reckless spending, unfunded promises, higher taxes, pessimism and negativity from the Labour party, with no hope, no clue and no plan. We have a plan, it is working, and I encourage everyone to stick to the Conservatives, and not to risk a Labour Government.

Ordered, That the debate be now adjourned.— (Mr Mohindra.)

Debate to be resumed on Monday 11 March.