Budget Resolutions

Mick Whitley Excerpts

Monday 11th March 2024 Commons Chamber

[Mick Whitley (Birkenhead) (Lab)]

When the Chancellor was handed the keys to No. 11 in autumn 2022, he was presented by his supporters on the Government Benches as a safe pair of hands who could be trusted to salvage the public finances from the wreckage of the Tory car crash mini-Budget. Some 18 months later, anyone who still harboured a belief that either he or his party could be trusted with this nation’s finances will have been thoroughly disabused of that by a Budget that put the short-term interests of his party before the long-term needs of the country.

The latest figures from the Office for National Statistics expose the scale of the economic challenges we face. The UK is in the depths of the most prolonged period of economic stagnation since the 1950s, with GDP per capita having fallen over the past seven quarters. For the first time in history, living standards are set to fall over the lifetime of a Parliament. Once again, Britain resembles the sick man of Europe, beset by chronic levels of under-investment and the second slowest growth of any G7 economy. The Chancellor has learned nothing at all from the past 14 years of Tory economic failure. He still clings to the debunked fantasy that if more money is put in the pockets of the most well-off, it will, as if by magic, trickle down to everyone else. He still refuses to recognise the reality that if we want to grow the economy, we need to invest.

If we are serious about securing sustained long-term economic growth, we should begin by supporting the incomes of Britain’s real wealth creators: working-class households, who have been hit hardest of all by the cost of living crisis. That means putting more money in the pockets of the lowest earners through targeted measures such as increasing universal credit and scrapping the two-child benefit limit. That money will then flow into our local economies and high streets. Instead, the Chancellor has delivered tax cuts that the Institute for Fiscal Studies has estimated will disproportionately benefit higher earners, while threatening to blow a hole in the balance sheet with a further £46 billion in unfunded tax cuts.

As a result of the blanket cut to national insurance, we as Members of Parliament on an annual salary of £86,000 will be £750 a year better off. Meanwhile, someone in my constituency earning just £19,000 will be left worse off than before, as a result of the freeze to income tax thresholds. If the Chancellor believes that this Budget will stave off the electoral oblivion his party faces in the looming general election, he is sorely mistaken. He has grossly misread the public mood. Polling by Ipsos and YouGov shows that even with the UK tax burden at its highest rate in 70 years, voters overwhelmingly prioritise higher spending on public services over tax cuts.

In Birkenhead, where the average person is nearly £18,000 worse off in real terms than when Labour was last in power, residents see their local NHS services at breaking point. Their local council, which has had its central Government grant cut by more than 85% since 2010, is teetering from crisis to crisis, year on year. Yet not a single additional penny was committed in last week’s Budget to spending on health, education or social security. The British public understand what this Government do not: we cannot cut our way to growth. They remember how the Tories’ ideologically driven austerity programme derailed the tentative but promising economic recovery secured by the last Labour Government in the wake of the financial crisis, dragged down economic growth year on year and led to the worst decade for economic growth since the industrial revolution. They recognise that, far from austerity II, what Britain needs now is to invest in its crumbling infrastructure and overstretched and underfunded public services.

I must issue a word of warning to my friends on the Opposition Front Bench. The shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), has been clear about the dire economic situation that a Labour Government will inherit if Labour wins the next general election. That is an indisputable fact, but the language that we have heard from the shadow Chancellor and the shadow Chief Secretary to the Treasury, my hon. Friend the Member for Bristol North West (Darren Jones), in recent days—that we have maxed out the credit card and there is no magic money tree—will ring hollow in the ears of many of my constituents, who have seen the profits of the super-rich and big corporations soar during the pandemic and the cost of living crisis, at the expense of their own standards of living. They remain unconvinced that public service reform alone is enough to deliver the quality public services that they deserve.

Despite outward appearances, Britain remains a wealthy country, but that wealth is more unequally distributed than ever. I fear that unless my party is prepared to revisit its opposition to a wealth tax and to commit itself to genuine progressive tax reform, Labour will never be able to accomplish any of what it sets out to do, or what millions of voters believe that it must do.