Social Security

Meg Hillier Excerpts

Tuesday 10th September 2024 Commons Chamber

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Before I start, I want to thank the House for putting its confidence in me to chair the Treasury Committee for the term of this Parliament. I am the servant of this House, and I will question without fear or favour those who appear before us. I look forward to engaging with the new Members I have yet to get to know. I also declare an interest: my husband has been in receipt of the winter fuel allowance, but if the vote changes that today, he will no longer receive it. For his own vanity, I should add that it is the lower limit.

The decision that we are being asked to make today is a difficult one, but sadly it will not be the only difficult decision facing the new Labour Government. Before the general election, I had the privilege of chairing the Public Accounts Committee for nine years. In that role, I saw all of the impacts on public finances—current, past and future. When I heard my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves) talk about the challenges ahead and the dire consequences, I would say, “You think it’s that bad; I know it’s a lot worse.” We have heard of the Chuckle Brothers, but I described us as the Misery Sisters, because when she said it was bad, I said it was going to be worse. That is the reality. The chickens are coming home to roost on the spending of the previous Government.

We saw a number of problems, which I laid out in my last annual report as Chair of the Public Accounts Committee—factually accurate information. The NHS capital budget was raided to pay for day-to-day expenses, but the backlog of capital expenditure in the NHS was £10.2 billion in the year ending 2022.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

As I served with the hon. Lady on the PAC, I warmly congratulate her on her election as Chair of the Treasury Committee. The House has made a very good choice.

Members of the Rayleigh, Rochford and District Association for Voluntary Service, whom I met last Friday, were genuinely worried about this policy. In a nutshell, their argument was that if people on very modest incomes are now frightened to heat their homes, that could lead to illness for many of those people, who will then present themselves to hospital and increase the winter pressures on A&E. By that method, it would be a false economy. The game is not worth the candle. What does the hon. Lady, whom I respect, say to that?

[Dame Meg Hillier]

I thank the right hon. Gentleman, with whom I had the pleasure of serving on the Public Accounts Committee. That is an example of how the House works closely together; most people would not think that we would agree on many issues, but on that Committee we produced every report in tandem.

The right hon. Gentleman will know that the pressures on the NHS are legion, and that many of the same people who will be suffering this cut to their income—we will come on to some of the measures to ameliorate it—will be the same people queuing and waiting for a hospital appointment. I know too many pensioners who do not get that hip replacement if they cannot afford it, but many are cashing in their savings, when they have them, to pay for a hip replacement so they can have quality of life. That is not the NHS that the right hon. Gentleman or I want to see in this country, so we need to make choices. One choice that this Government are making is to ensure that we pull the NHS waiting lists back. I could digress into the NHS for a long time, but if he will forgive me, I will move on.

Looking at our schools estate, under the last Government the Department for Education asked the Treasury for capital funding for schools of £5.3 billion in 2020. It was allocated only £3.1 billion, so there is a big backlog there.

In the defence sector there are many examples, but I will pick just a couple. Not a single nuclear submarine that has come out of service has yet been decommissioned in this country. It will cost around £500 million in 2018 prices for a single one, amounting to nearly three quarters of a billion pounds in 2018 prices to complete all of those. It is getting to a critical point. These decisions have been delayed and deferred for too long—in this case, by Governments of all colours, not just the last Government—and there is a gap of at least £17 billion in the defence equipment plan over 10 years.

There is also a lack of transparency about local authority spending because of the crisis in local government audit, which was overseen by the last Government. Not enough was done to deal with it. I could go on: there is a long list of expensive things that this Government now need to put right because of neglect over a period of time.

[Several hon. Members rose—]

[Dame Meg Hillier]

Let me continue for a moment. There are budget challenges this year, and many decisions that were made in recent Budgets will hit the public finances in 2025, 2026 or beyond, because there was either huge optimism about the state of economic growth or a deferral of painful cuts. Different Members of the House will have their own views.

[Paul Holmes (Hamble Valley) (Con)]

I congratulate the hon. Member on the post to which she has been elected. She has just outlined a number of projects for which public money needs to be found. As the shadow Secretary of State outlined, the Government’s decision today will save £1.1 billion, and the replacements they are putting in place will cost £3 billion. How does that make economic sense, and how does it help the case that she is making?

[Dame Meg Hillier]

I give credit to the hon. Gentleman for his chutzpah in coming to the House today to say that it is this Government who have denuded pensioners of income. As my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) highlighted, the previous Government have a track record in that area, and there are 880,000 pensioners who, on the hon. Gentleman’s watch, deserved pension credit but did not get it. Those pensioners have lost out on £3,900 a year, in some cases for many years, because the last Government fell down on the job. They protected some pensioners, but not all. Where was the urgency then? These are crocodile tears when those people were suffering, but it is right that pensioners should get what they are entitled to, and pension credit is not being abolished by this Government. Rather, it is being promoted to make sure that the very poorest pensioners get that income.

One of the things that is absolutely apparent is that we cannot take this issue in isolation. We have a Budget coming on 30 October, and knowing what I knew a few months ago as Chair of the Public Accounts Committee and what I know today, I am not going to change my tune about the dire state of public finances. However, we face a second challenge: at the same time that our public finances are in that dire state, many of our citizens face the same challenges in their personal finances. This Labour Government are rightly committed to growth, but that will require an approach to taxation that helps ensure growth. We will therefore hear many arguments about the need for a taxation system that will underpin growth.

[Alicia Kearns (Rutland and Stamford) (Con)]

I thank my honourable friend for giving way. I call her “friend” because we have worked together very closely over the past few years, and I welcome her election—I would have supported her for that role.

The difficulty is that the public are not buying it. The Government cannot claim that they need to take this money from vulnerable pensioners—over 20,000 in my constituency will lose the support they are currently getting—and then reward train drivers who work four days a week on 70 grand a year. That is the difficulty, so how is my hon. Friend explaining that to her constituents? I have not been able to give an answer.

[Dame Meg Hillier]

I could speak forever about the challenges that the last Government left. I have spoken about the NHS, but let us take the dire state of our train services. The previous Government refused to engage and stop the strikes, which meant that anybody travelling had no certainty about whether they could get to everything from work to a family funeral. Lives were put in havoc, so it is absolutely right that we begin to set right the chaos that the last Government left. Yes, there is a cost to that, so the challenge for my right hon. Friend the Member for Leeds West and Pudsey and this Government is how we address that, making decisions that will build up the future of Britain in the way that we all want to see.

We also need to address the issue of taxation. The biggest challenge in our taxation system is that those who face the greatest financial challenges often face the biggest challenges of all, because the greatest cliff edges in our taxation and benefits system affect not those who are starting to earn and accumulate wealth, but those who are most financially challenged. For those at the margin, we keep coming across examples—this is not the only one—where the marginal costs of a slight improvement in income can drastically outweigh that improvement, whether that is tax thresholds being frozen or the issues we have seen with child benefit. There are many more examples, and the debate we are having today is one of those. The solution is not to duck or defer the need for tough choices, so, for the record, I will be voting with the Government. Equally for the record, though, I want this Government to commit to tackling those cliff edges, because that is what progressive policy—including taxation policy—looks like.

Like many Members of this House, I know from bitter experience that rushed laws tend to be bad laws, so I do not expect some Houdini-like solution to be announced from the Front Bench by my right hon. Friend the Member for Leicester West (Liz Kendall) in her closing speech. Instead, I expect and trust that she will consider removing those chains of poverty as a key mission for this Government in a thoughtful, carefully planned way; one that is tied up with the next Budget but goes way beyond it.

I also know, as will many Members, that there are technical challenges in making changes. Look at what has happened with child benefit: the limits on income are dragging many people into tax returns, where households of the same income did or did not receive child benefit depending on who was earning the money. That is a lesson in why changes need to be made in a sustainable way and according to a plan. My right hon. Friend on the Front Bench and her colleagues have a plan, but the winter fuel allowance, which we are discussing now, is a prime example of the problems that those cliff edges create. Addressing those problems in isolation, however, will leave in place all the other cliff edges; we need to look at challenging poverty in the round.

I was honoured to be chosen yesterday to be Chair of the Treasury Committee. I do not yet have Committee members—they are yet to be elected, as is the Chair of the Work and Pensions Committee—so I cannot speak for a Committee that does not yet exist on a cross-party basis, but I will be urging the Committee to consider this wider challenge of cliff edges as a matter of urgency. I look forward to working with Ministers to find some practical steps forward.

We have to make tough choices as a Government in-year, because one of the challenges is that the hole in the public finances is not just about the hole today. In previous Budgets, decisions were made to defer spending to later years, so the real challenge is now. Too often I have seen calls for efficiency savings and cuts in-year that end up being deferred. If we look at what happened to the defence equipment plan under the Conservative Government in 2010, we see that there was a desire to balance the books. In doing so, the Ministry of Defence deferred spending—moved it to the right—which left us with aircraft carriers without aircraft and a raft of other problems. Deferring decisions and spending does not solve things, and this Government and this Cabinet are making the tough choices to make those difficult decisions in-year, because that is financially literate and the right thing to do.

[Madam Deputy Speaker (Judith Cummins)]

I call the Father of the House.