Budget Resolutions
Debate between Nicholas Brown and Desmond Swayne(3 years ago)
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Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
It is a pleasure and indeed an honour to follow the right hon. Member for Maidenhead (Mrs May) in this debate. I am not sure that either of us would have thought that we would find ourselves doing this, but we do, and I have to say that I agreed with a great deal of what she had to say. I certainly agreed with far more than is probably good for me nowadays, but I did and I will say so in my speech.
I have been a Member of this place since 1983 and have heard a great deal of just about every Budget speech. The style has changed rather a lot. There was a time when we used to get a long lecture about monetarism and the money supply—the whole theory would be explained to us, with special emphasis on M4. I may have got this wrong, but the present Chancellor’s heart seems to still be with that school of thought, but to his credit he has realised the extraordinary nature of the circumstances that currently confront us and taken what for him, and I guess the Prime Minister as well, has been a philosophically broader view.
The current circumstances are quite mind-boggling. We have not done this voluntarily, and I do not blame the Government for it, but we have borrowing at a peacetime record now. It stands at some £320 billion, which is the equivalent of 14.9% of GDP. Government debt has increased now to about 96% of GDP. Spending, I acknowledge, is falling, but it is still at what for us is a high level and what for the Conservative party must be a very high and worrying level, surpassing anything that we have seen in peacetime.
As well as the national finances being under great strain, the finances of my constituents are too. I welcome some of the measures in the Chancellor’s speech, including the capital funding for the national health service to try to clear the backlog. Whether it is enough, it is certainly more than we were going to get, so I welcome it on those terms. I am very sceptical as to whether the funding for the announced changes will find its way later into the social care budgets. The cost of that—we all see this is necessary, and it is necessary now and not in a few years’ time—will end up with local government. As we work through the details of the Budget—the ones that were not leaked to the newspapers in advance—I think that we will find that local government will be forced, particularly in metropolitan areas, to pick up the burden.
I join the right hon. Lady in welcoming the long overdue—from my point of view—addressing of the taper on the universal credit interface with increased work earnings. Universal credit affects some 9,000 households in east Newcastle, and 35% are in employment so will almost certainly come up against the clawback of 63% as it was and 55% as it is now. It is not as big a deal as it sounds, but it is going in the right direction. It is welcome. The problem of the interface between benefits to people who are in work is not a new one, and my view is that more thought needs to be given to this to find a more equitable solution. The marginal tax rate is still quite high. It was 75% on the old clawback when national insurance and other taxes are added in, and it will be something of that order even with the Government’s announcement, but that does not stop me welcoming it. I do.
Discretionary incomes, particularly those of the poor, are under significant pressure and I regret the fact that the present Government have decided to break their manifesto promise and take more from those who do not really have it, with their 1.25% increase in national insurance. I can see why the Government—a Conservative Government—see the need to raise tax, but there were other ways of doing it and I would like a lot more reassurance that these were explored properly before we arrived at the solution that the Government have arrived at.
Mention has been made of the inflationary pressures that are now loose in the economy. I take this very seriously—
Sir Desmond Swayne (New Forest West) (Con)
May I take the right hon. Gentleman back to those halcyon days when he enjoyed lectures on monetarism and remind him that inflation is always and everywhere a monetary phenomenon? There is no such thing as cost-push inflation.
Mr Brown
If the right hon. Gentleman would let me make a little more progress, I was going to quote Mrs Thatcher with approval; I rather thought that would catch his interest. What he says is essentially correct, and when these issues were more contentious, it was recognised very vigorously indeed by the then Conservative Prime Minister, Mrs Thatcher, who once said that
“inflation is the biggest destroyer of all—of industry, of jobs, of savings, and of society”,
briefly acknowledging, untypically for her, that there was such a thing as society—perhaps her better known quote.
Although I seem to have lost my copy of the 1987 Conservative manifesto, I have a memory that it contained the memorable phrase, “Inflation is an evil and must be exterminated”. I commend that point of view to the present Government if inflationary forces are unleashed again, given all the other problems we have to face up to at the moment. The victims are my constituents: the poorest and those who are least able to find the extra money—or, indeed, to find the goods to buy, given the way in which the distribution sector is currently challenged. These higher priced products could only be purchased if people found a supermarket that was still selling them and that had not been disrupted by a lack of delivery and HGV drivers. Retailers’ stock levels are at their lowest—or reportedly at their lowest; I cannot claim personally to have done a stock check—since I entered the House in 1983.
We know that inflation will hit our constituents hard. The situation with gas prices needs a response from the state, at least temporarily. My preference would have been Labour’s proposal to remove VAT from fuel bills, at least temporarily—for, say, six months. The Government could do more, and I urge them to, to help our more vulnerable constituents through this winter. That brings me, inevitably, to covid.
The R rate is reportedly now more than 1 and is said to be as high as 1.2. I understand that the Government’s underlying assumption is that the booster vaccine will provide a countervailing policy and that that will be enough to bring the rate back down. But if it is not, the Government need seriously to focus on whatever plan B actually is, because putting the country through a lockdown or some other set of restrictive policies again in the current circumstances will have a devastating effect on our hopes for a recovery.
I will finish soon, because I know that other Members want to get in. It is a fact that, in 2014, 27% of children in my constituency lived in poverty, and the latest child poverty figure that I have for my constituency is 38%. The adjustments that have been made and announced—pre-announced, if you will—in this year’s Budget do not serve to relieve that burden on the bulk of my constituents. All 12 local authorities in the north-east of England are in the top 20 of those that have seen the highest increases in child poverty rates.
The Government used to say that the way through this situation was to increase economic activity through the northern powerhouse. The Chancellor did not mention the northern powerhouse in his address at all, unless the Government have renamed it Teesside. However, the thrust of the argument is still clear and I would like it to succeed; I would like properly paid, well-resourced jobs to be brought to the region, and for them to endure. It is not a quarrel between the parties that we want to drive up the living standards of our constituents in our region. We can make much more common cause here in Parliament on the details of the issue. I tried to tackle that when I was the Regional Minister, with some success—I am not going to say with anything else!
One of the galling announcements in the Chancellor’s statement was the reference to family hubs. What happened to Sure Start? What was wrong with that? If the incoming Conservative Government had thought it was a poor initiative that could have been configured differently, why did they not just pick it up and configure it differently, and shape it like they say they now want to shape the family hubs? The underpinning reasons for the policy are wholly justified. It did deliver results. The Government are right to have found their way to it now, but they should have got there 10 or 11 years ago.
Finally, the greatest question facing our country and the world at large is climate change, and the prospects seem absolutely terrifying. I wish the Government well with COP26 and taking the issues forward internationally. Are we going to get there? I share the concerns and worries of, frankly, every thinking Member of this House. It is essential to the community that I represent that the Government do get there and that we are able to carry international partners with us. The Government’s proposals include industrial jobs—jobs that we could do in the north-east of England and projects that our communities could bid for. We want to play our full part in taking a green industrial strategy forward.