Autumn Statement Resolutions

Nicholas Brown Excerpts

Monday 21st November 2022 Commons Chamber

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

It is an experience to follow the hon. Member for South Dorset (Richard Drax). I cannot say that I agree with very much of what he said, except the challenge of unemployment, on which it is right that although we seem to have a fairly tight labour market at the moment, the warnings of emerging unemployment are there and require a response.

This has been an interesting debate. Conservative Members have fallen into one of two categories. Some have made constructive speeches broadly in defence of the Government’s approach and some made slightly naughty old-style monetarist criticisms of it. For a few minutes I was drawn back to the 1980s, when I first entered this place, when we were told that inflation was an evil that must be exterminated. Nobody told us that today, but we got the sense of purpose. On our side, the disagreement is predominantly, although not solely, about the distributive effect of the Government’s measures, and that will be the key theme of my short contribution to the debate.

The income tax personal allowance freezes mean an average earner will pay more than £500 more in income tax a year by 2027-28. Wages are still lower in real terms this year than they were in 2010. It is a widely held view on our side that those who have made extra profits because of the war should make an extra contribution to the public purse. The Government seem to accept the principle of that, but of course we would want to go further and probably wider.

The consequence of the downturn is the spectre of future unemployment. We are told that the present labour market is very tight and the Chancellor has set aside money to explore the reasons why unemployment remains tenaciously high. He is not the first Chancellor to have wanted to look at that and find a resolution. Like productivity, it is an intractable problem, and I make no criticism of the Government for wanting to re-examine the issue.

The Office for Budgetary Responsibility tells us to expect a further 500,000 people being jobless, with unemployment rising from 3.5% to 4.9% in autumn 2024. That seems counter-intuitive to the facts as we understand them today. I will put in a word for the north-east of England, as others have done. It speaks volumes that given all the pressure—and having been in government I understand it—that will have been brought to bear to get a resolution on the devolution deals in time for the autumn statement, the best that the Chief Secretary could do is tell us that the drawing together of the north-east devolution deal is subject to discussions between the local authorities. This is a very under-powered northern powerhouse, so much so that it can get the trains only as far as Manchester.

I welcome the Chancellor’s retaining of the triple lock on pensions. The parallel announcement for working age benefits is also welcome. Although it would come instinctively to a Labour Government, I understand the real discussion of different points of view that will have gone on in the Conservative Government. It will be no help to them if I say that I agree with the decision they have reached. Where people have other sources of income, as with universal credit, they will be caught by the non-indexation of the income tax threshold.

The Chancellor did not mention students, but one in 10 students is using food banks. That, at least, is the figure in Newcastle upon Tyne, where both universities’ student unions are operating their own food banks. With inflation, maintenance loans barely cover rent, and there is little left for food, transport and books. Let us assume that the graduates prosper, do well and eventually end up earning over £50,271, their marginal tax rate will be the 40% higher rate, plus the 12% national insurance plus the 9% graduate repayments. If they are hoping to afford a mortgage, they are being very optimistic.

Hanging over all of this, as I have mentioned, is the spectre of rising unemployment. When adjusted for inflation, incomes are going to fall by 7.1% over the two years from 2021-22 to 2022-23, taking incomes back to where they were in 2013. The OBR has said that real household disposable income per person will drop by 4.3% in 2022-23, and—this is a prediction, not a statement of fact—that will be followed by what is predicted to be the second largest fall in 2023-24, at 2.8%. This is a very grim prospect, indeed.

I am not quarrelling with the broad response the Government have chosen, but my quarrel is with the distributed effect. I think it would have been possible to take more from those who, corporately and individually, have more to give, and to have been a lot more restrained in what we are putting on the shoulders of our fellow citizens.