Income Tax (Charge)

Mel Stride Excerpts

Monday 4th November 2024 Commons Chamber

[Mel Stride (Central Devon) (Con)]

The Labour party pledged at the last election to usher in a new form of politics based on transparency and integrity. When pressed, Labour Members ruled out a large number of tax rises. One of these taxes, as the Labour manifesto explicitly stated, was national insurance:

“we will not increase National Insurance”.

Yet, only a few short weeks later, what has happened in this Budget? Employers’ national insurance contributions have been raised, which is a direct breach of the Labour manifesto. Do not take my word for it—Paul Johnson, the head of the Institute for Fiscal Studies, has said exactly the same.

Of course, despite being at the scene of the crime, the Government have since hidden behind their alibi that, somehow, putting up employers’ national insurance contributions will have no impact on working people, but that is simply untrue.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Will the right hon. Gentleman give way?

[Sir Edward Leigh (Gainsborough) (Con)]

Will my right hon. Friend give way?

[Mel Stride]

My right hon. Friend is a sensible man to give way to, and I will do so in a moment.

The Chief Secretary to the Treasury recently admitted on Sky that putting up national insurance for employers will directly impact working people—of course it will. The Office for Budget Responsibility lays out in black and white that the consequence will be over 50,000 fewer jobs, with about 70% of the cost of this increase in taxation ultimately being borne by those who work, through lower wages. Are these not working people?

The Secretary of State mentioned her youth guarantee and the importance of youth. I simply observe that youth unemployment fell by over 40% under the previous Government, whereas it rose by over 40% under the last Labour Government. That is how successful the Labour party is.

Of course, because both the rate and the threshold have been increased, the national insurance increase will disproportionately impact those on lower wages, including the youngest workers.

[Sir Edward Leigh]

I warmly congratulate the new shadow Chancellor on his appointment. It is richly deserved, given his tremendous work as Secretary of State for Work and Pensions in getting people back to work.

In opening this debate, the Secretary of State said that she is only attacking wealthy people. My right hon. Friend the Member for Central Devon (Mel Stride) is talking about working people, so will he emphasise that our party stands four-square behind working farmers? These people, with only 250 acres, just want to pass on their business to their son, but they are being cruelly attacked by this Government.

[Mel Stride]

My right hon. Friend is right that this is another broken promise. At the general election, the now Secretary of State for Environment, Food and Rural Affairs gave an unequivocal guarantee to farmers across the country that there was no question of farms being brought into inheritance tax. There is a good reason for the exemptions and relief, because if inheritance tax is levied on family farms that are passed down to another generation, those farms will have to be broken up, with parts sold off to pay the tax.

I am glad that my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) mentioned this, because the OBR has said that, by 2030, this measure will raise the princely sum of £520 million, which is enough to run the national health service for just one day. Has a more modest sum ever raised so much misery? I think not.

The Chancellor assured us that she will not fiddle the figures by changing the fiscal targets, yet we have seen the fiscal targets changed to allow this Government to borrow an additional £140 billion.

This is not a good time for the Secretary of State to talk about pensioners, but she mentioned them at the end of her speech. They were so badly let down by the means-testing of the winter fuel payment, and they were not told in advance to expect anything like it. Ten million pensioners across the country will lose up to £300 as a consequence of this measure. The Government claim that only the wealthiest, only the millionaires, will be affected, but two thirds of pensioners below the poverty line will have this benefit removed.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I am grateful to the new shadow Chancellor for giving way. I could be wrong, but was he not the Secretary of State who took through the legislation to suspend the triple lock—the one and only time it has been suspended—which has since cost pensioners £500 a year every year?

[Mel Stride]

We fought for the “triple lock plus” in our manifesto, which would have spared millions of pensioners from being dragged into income tax, many for the first time, under this Government’s arrangements. There were, as the hon. Gentleman knows, particular circumstances in October 2022, including inflation surging above 11%.

What are the broad effects of this Budget? The tax burden will rise to the highest level in the history of our country—higher than in 1948, when we first started to collect the data. We will be borrowing a staggering £140 billion over the next five years. What are the consequences of that, apart from passing on debt to future generations, who will have to pay it by way of higher taxation in the future? It is the crowding-out of private business investment, which this Government say they are eager to drive up.

If we look at OBR’s forecast from the spring Budget last year and for inflation in every year under this Budget, it is higher in every single year. Why? Because there has been a huge fiscal splurge, particularly in the first two years of the forecast, that will require a monetary response, so interest rates will stay higher for longer. That will mean, the OBR estimates, an extra 0.25% on mortgages—or over £400 extra for the average family, up and down the country. According to the OBR’s forecast, wages will stagnate across the period, with lower real household disposable income than under the spring forecast, when the Conservative party was in government.

I am surprised that the Secretary of State raised the subject of living standards. The Joseph Rowntree Foundation estimates:

“The average family will be £770 worse off in real terms by October 2029 compared with today.”

I am also surprised that she raised the issue of poverty. When we were in government, we faced so many lectures from Labour Members, while we were bringing poverty down—the number of pensioners in absolute poverty fell by 200,000.

[Natasha Irons (Croydon East) (Lab)]

What about children?

[Mel Stride]

The number of children in poverty fell by 100,000 in total. I will come to the record of this Government in a moment, but first I give way to the Secretary of State.

[Liz Kendall]

Figures from the Department that the right hon. Gentleman used to be responsible for show clearly that 700,000 more children now live in relative poverty after housing costs. Does he accept that? Yes or no?

[Mel Stride]

As the right hon. Lady knows full well, it is accepted that the key measure is absolute poverty after housing costs. She cannot flit between one measure and another when it suits her. The reality is that it is projected that 100,00 more children and 300,000 more adults will be in poverty as a consequence of the Budget.

[Neil Coyle]

On that point, will the right hon. Gentleman give way?

[Mel Stride]

How can I finally resist the hon. Gentleman, who is just itching to make some point about integrity? The Floor is his.

[Neil Coyle]

The shadow Chancellor raises the issue of integrity and he talks about poverty. Many disabled people live in poverty. When he was Secretary of State for Work and Pensions, he told the House that there would be no investigation into the Department for Work and Pensions for unlawful treatment of disabled people. Does he owe this House, or does he owe disabled people, an apology?

[Mel Stride]

I stand by our record when I was Secretary of State for Work and Pensions, particularly on the support that the Department gave to the disabled, not least the results that we achieved in encouraging and helping them into work, which is the best possible outcome.

When there has been such a perpetration of deceit, there must be the alibi—the smokescreen—which is, of course, the fictitious, confected black hole of £22 billion. Labour Members rubbed their hands in glee when the OBR said it would be looking into the matter. It reported back, on the day of the Budget, and what did it find? It found that it was not able to legitimise that black hole of £22 billion, and came up with a figure for in-year fiscal pressure that was below half that. It observed that if it had been focused on that figure at the time of the spring Budget, conversations would have been held, and it is conceivable that the number would have been smaller still.

From our experience in government, we know that it is quite normal practice to manage in-year fiscal pressures, and to net off the underspends against the overspends. In reality, this black hole is “a dead parrot”. It has ceased to be. If it was not nailed to its perch, it would be “pushing up the daisies”. Far from being just “shagged out” after a prolonged squark, Madam Deputy Speaker, it is dead: the black hole is “an ex-parrot”.

[Luke Murphy (Basingstoke) (Lab)]

I am grateful to the shadow Chancellor for giving way. Based on his performance, everyone on the Government Benches heartily welcomes his promotion. Does he accept that the OBR says in the letter he mentions that its forecast would have been “materially different”?

[Mel Stride]

I have just explained exactly what the OBR said. It said that it does not legitimise the black hole—the £22 billion, which has been repeated yet again from the Government Front Bench.

Opportunities were missed in this Budget, not least around driving up productivity. We know that Labour Governments spend money. We know that Labour Governments tax people a lot—that is what they do. What they do not do is spend the money with any strings attached. There has been a 14% pay rise for train drivers and 22% for junior doctors, but not one suggestion that there might be improvements in productivity to accompany that spending. That is unlike the Conservative party when we were in office: under my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt), we had a very clear, fully funded plan for the national health service and a long-term workforce plan to drive up productivity.

Let me come to the issue of welfare. It is gratifying to hear the Secretary of State confirm that the Labour party is going ahead with some of the more important reforms that we brought forward, such as that to the work capability assessment.

[The Minister for Employment (Alison McGovern)]

indicated dissent.

[Mel Stride]

The Minister for Employment shakes her head, but my understanding is that while the Government may say they will make some changes, they are quite happy to take the savings that are baked into the OBR’s forecast. The Secretary of State is right to clamp down on fraud, but it is important that she does not misrepresent the fact that the approach she is taking is exactly the same as the approach we were bringing forward to do that.

The reality is that some DWP budgets are growing to an extent that they need to be arrested in order for us to have a successful economy. If we were able to hold the number of people of working age with a health or disability component to their benefit at the level it is now for the next five years, there would be a saving of about £14 billion; if we were able to get it back to where it was before the pandemic, over £30 billion would be saved. When the Conservative party was in government, we had a clear plan to begin to address that issue. We have heard nothing from the Government about how they will tackle that fundamental fact.

What we have had from the Government on welfare expenditure is the announcement that the welfare cap will be set, at the end of the scorecard period, at 5% above the OBR’s forecast for spending on those benefits. That is not a restraint; that is permission—an invitation—to spend ever more on welfare without hitting the cap. The Government have no plan and the taxpayer will continue to pay for it.

So what do we have to show for this Budget? Compared with the spring: lower growth, lower living standards, lower wages, higher taxes, higher borrowing, and increased interest rates and mortgages. This is a Budget of broken promises, and when the dust has finally settled and this lot have gone, as we step over the fallen—the former farmers, the pensioners, the one-time businesspeople, the poor and the vulnerable—there we will find the shattered remains of the working people of this country, betrayed by a party that lied to them, and they will never forget it.

[Several hon. Members rose—]