Nusrat Ghani
Main Page: Nusrat Ghani (Conservative - Sussex Weald)(1 day, 16 hours ago)
Commons ChamberOn the day that the Prime Minister took office, he said that he wanted to restore trust to British politics with action, not words. Today, his actions speak for themselves, with a Budget that contains broken promise after broken promise and reveals the simple truth that the Prime Minister and the Chancellor have not been straight with the British people. Time and again, we Conservatives warned that a Labour Government would tax, borrow and spend far beyond what they were telling the country, and time and again they denied they had such plans. Today, the truth has come out—proof that Labour planned to do this all along. Today’s Budget sees the fiscal rules fiddled, borrowing increased by billions of pounds, inflation-busting handouts for the trade unions—[Interruption.]
Order. Just as we respected the Chancellor and heard her speak, we will hear the Leader of the Opposition.
Britain’s poorest pensioners squeezed, welfare spending out of control and a spree of tax rises that the Government promised the working people of this country they would not do. National insurance—up. Capital gains tax—up. Inheritance tax—up. Energy taxes —up. Business rates—up. First time buyer’s stamp duty—up. Pensions tax—up. They have fiddled the figures. [Interruption.]
Order. The public will also want to hear what the Leader of the Opposition has to say. Those who I see shouting will not be called to speak later on. Simmer.
Labour Members do not like it, but this is the truth: they have fiddled the figures and raised tax to record levels. They have broken their promises, and it is the working people of this country who will pay the price.
The Chancellor and Prime Minister have tried to say that they had no choice, but let us be in no doubt: their misleading claims about the state of the economy are nothing but a cynical political device. Today’s situation is a world away from the genuinely bleak legacy that we Conservatives inherited from the last Labour Government. The Chancellor forgot to point out that borrowing was £1 in every £4 that they spent, with debt rising every year and unemployment at 8%. I understand the Chancellor’s shameless political motivations and why it suits her to cook up a false justification for her agenda, but today, the OBR has declined to back up her claims of a fictional £22 billion black hole. It appears nowhere in its report. It is deeply disappointing that she has sought to politicise the independent OBR, which should be above party politics.
As the Chancellor now knows, her playing politics has done real damage to our economy. She talked about being a Bank of England economist, but the Bank of England’s former chief economist has said that Labour’s approach has generated fear, foreboding and uncertainty among consumers, businesses and investors. The rhetoric of this Chancellor and this Prime Minister is damaging the British economy for political purposes.
We need only to look at the facts to see that the Chancellor’s claims about her economic inheritance are nonsense. Labour inherited an economy with inflation back at its 2% target, mortgage rates cut and unemployment low. When we left office, the United Kingdom was the fastest growing advanced economy in the world. When it comes to the public finances, not once has the Chancellor acknowledged that we took the right decision to spend half a trillion pounds to protect the British people from the impact of covid and Putin’s war. Let me remind the House that not only did the Labour party support all those interventions, it wanted us to go even further. When I made the tough choices to fix the public finances afterwards, the Prime Minister and Chancellor opportunistically opposed me every step of the way, so I will take no lectures from those two about difficult decisions. But because of the decisions we made, the Chancellor inherited lower borrowing than France, America, Italy and Japan, and the second-lowest debt in the entire G7. Any which way you look at it, Labour’s claims about its inheritance are purely ludicrous. These are her choices, so stop blaming everyone else and take responsibility for them. [Interruption.]
Let me turn to the substance of those choices. During the election, the Chancellor repeatedly promised that her plans were fully funded. Only a few weeks ago, the Prime Minister said the Budget would “balance the books”, but this Budget does no such thing and reveals that they have not been straight with the British people. [Interruption.]
Order. I can see you even when you are hiding behind another colleague. Yelling across the Chamber is not on. The public—our constituents—are watching. I know emotions are high and I expect some noise, but I will definitely call you out.
Today, the Chancellor has launched an enormous borrowing spree, saddling our children and grandchildren with billions upon billions of pounds of more debt, pushing up interest rates, leaving our economy more exposed to future shocks and leading the OBR today to now forecast higher inflation in every year of the forecast. Her decision to let borrowing rip makes a total nonsense of her claims on the state of the public finances. If they truly were in such a dire state, as she has said, what we should have seen today is a significant reduction in borrowing to repair them, not the splurge she has just unleashed. Instead, what we see is borrowing higher in every year of the forecast and debt higher in every year of the forecast.
Now, the Chancellor has tried to cover up that splurge by fiddling the fiscal rules. According to the Institute for Fiscal Studies, the new measure will not actually even be a constraint on the amount she can borrow. It says it is:
“hard to escape the suspicion”
that the Government are attracted to this change
“by the fact that it would allow for significantly more borrowing…without any need for tough choices elsewhere.”
“Fiscal fiddling” is what it has called it. The Chancellor herself actually agrees. She specifically told the British people she would not change the debt target. She said she was
“not going to fiddle the figures”
to get better results, but that is exactly what she has done. She has gone back on her word and fiddled the figures so she can borrow billions more—broken promise after broken promise, and working people will pay the price.
The reason the Chancellor has increased borrowing and increased taxes is because she has totally failed to grip public spending. First, she has no meaningful plan to deliver the £20 billion-worth of savings available if the public sector simply returned to its pre-pandemic levels of productivity. Instead, one of the first things the Chancellor did was to hand out inflation-busting pay rises to the unions without getting any productivity-enhancing reforms in return. The Chancellor also scrapped her predecessor’s plan to get the civil service back to its pre-pandemic numbers. She does not seem to think that the civil service can be reduced by a single person.
And the Chancellor has no plan to control welfare spending. Yet if we simply got working age welfare spending on people with a disability or health condition back to pre-covid levels, that would free up £30 billion-worth of savings. Whether it is scrapping our plans to shrink the civil service or their failure to control welfare spending, this is not her inheritance, these are her choices. The result: higher spending, higher borrowing, higher taxes. It is broken promise after broken promise, and working people paying the price.
Let me turn next to growth, and remind the Prime Minister and Chancellor that they did, in fact, inherit the fastest-growing economy in the G7. That is testament to the last Government boosting investment by introducing full expensing, increasing the labour supply by expanding childcare, reforming welfare and cutting tax on work—all decisions the OBR said would increase growth. The Chancellor has said that growing the economy is the Government’s No. 1 priority. The Prime Minister even said that higher growth would come “very quickly”.
To be fair, the Prime Minister and Chancellor have had a rapid impact on growth. As their plans for the economy became clear, survey after survey showed business confidence plummeting. No wonder the Government’s own assessment says their French-style labour laws will impose a £5 billion—[Interruption.] Labour Members will be explaining it to the businesses in their constituencies that their labour laws, by their own assessment, will impose a £5 billion direct cost on business, disproportionately hitting smaller businesses. As business group after business group has pointed out, the tax rises on jobs and enterprise in today’s Budget will “hobble growth”—a “poll tax on business” is what they have called it. Despite the record-breaking tax rises, despite fiddling the figures and despite letting borrowing soar, today the OBR has forecast that growth will be lower under this Government than it was forecast to be under the Conservatives. That is the change they have wrought.
This is what happens when the Labour party is led by people who have no experience of business and enterprise: relentlessly talking down our economy, delivering a tidal wave of anti-business regulations, destroying our flexible labour market and raising taxes to the highest level in our country’s history. It is the classic Labour agenda: higher taxes, higher borrowing, no plan for growth, and working people paying the price.
During the election campaign, the Prime Minister specifically said there would be no tax surprises under Labour. The Chancellor went even further, saying she wanted to bring taxes down. Each time they made those promises, we warned that they were not telling the truth. Today, the Chancellor and Prime Minister have done what they were always planning to do, but chose to keep hidden from the British people. Far from reducing taxes, as a result of today’s Budget never in the history of our country have taxes been higher than they are under this Labour Government. They specifically promised that they would not raise tax on working people. The Chancellor said:
“Labour will not put up your income tax, national insurance or VAT.”
Just this month, the Prime Minister gave an “absolute commitment” to not raising tax on working people. What does today’s Budget do? It raises tax on working people by increasing national insurance and breaking Labour’s promise.
As the independent Institute for Fiscal Studies has said, this is a straightforward breach of Labour’s manifesto, because, as the Office for Budget Responsibility has made clear, this tax rise is “passed through entirely” to working people. Even since the Chancellor started speaking, the IFS has already confirmed that the vast majority of this tax increase will hit working people through lower pay. However, we do not need to take it from the IFS or even the OBR; we can take it from the Chancellor herself. She has previously described her tax rise as a “jobs tax” which
“takes money out of people’s pockets”.—[Official Report, 19 October 2021; Vol. 701, c. 675.]
And not only that—the Chancellor also said that the problem with national insurance
“is that it is a tax purely on people who go to work and those who employ them”.
Far from protecting working people, she is literally raising the only major tax that exclusively hits working people.
But it does not stop there. Businesses on the British high street: your taxes are going up. Businesses investing in British energy: your taxes are going up. The small business owner looking to reap the rewards of years spent growing a business and creating jobs: your taxes are going up. The young couple saving to buy their first home: your taxes are going up. The family—[Interruption.]
Order. Mr Streeting, you promised me this morning. Let us try and keep our promises.
On a point of order, Madam Deputy Speaker.
It had better be a genuine, relevant point of order.
I wonder if you could give me some advice, Madam Deputy Speaker, because I fear that the Chancellor may have inadvertently failed to declare an interest. She spoke a great deal about working people during her speech. Is she a working person, and should she declare that? Or maybe she isn’t.
That was not a relevant point of order, and it will be noted in case the hon. Gentleman wishes to put forward any further points of order. I now call the Chair of the Treasury Committee.
It seems that the Chair of the Public Accounts Committee—this is something the hon. Gentleman and I have in common—hears promises made by Governments of different colours who do not always deliver as they should. He is absolutely right. In fact, the National Audit Office, at my request, pulled together a document looking at compensation schemes. They are often put together differently—although these particular schemes have now been set—and some do not deliver as well as others. Windrush is also in that mix. This is important, and perhaps the hon. Gentleman is offering his services to the Chancellor to ensure that that money gets out of the door. Of course, his Committee will be examining these programmes as time goes on.
It gives me great pleasure to respond to the Budget today and to welcome a Labour Chancellor to her place. I wish her well, and I wish the Labour Government well, of course. I want to see these results on the ground in my constituency. As I say, the Chancellor will appear in front of our Committee, without fear or favour, over the coming years and we will be challenging her and her Ministers to make sure that they stick to the promises that she has laid out today.
We now come to the leader of the Liberal Democrats, Sir Ed Davey.
It is a pleasure to follow the Chair of the Treasury Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), and I wish her all the best in her new role, especially given her promise to scrutinise this Budget very, very closely. I join her in noting that this is an historic day. This is the first Budget to be presented by a female Chancellor, and I congratulate the right hon. Member for Leeds West and Pudsey (Rachel Reeves). I am sure that she is blazing the trail for the women and girls who are watching our proceedings today.
There can be no doubt about the enormous task facing the Chancellor. After years of chaos and decline under the Conservatives, their appalling economic legacy, set out so clearly in the figures today, is being felt by people across the United Kingdom. People were looking to this Budget for a clean break with those failures of the past few years, and for a sense of hope and urgency and the promise of a fair deal, but I fear that the Budget will not deliver all that. The Conservatives left behind an enormous mess in our NHS, but I am afraid it will not be fixed unless the Government fix social care, too. The cost of living crisis will not be solved by hitting families, pensioners, family farms and struggling small businesses, and our economy will not grow strongly again unless we repair our broken relationship with Europe. Liberal Democrats will continue to stand up for our constituents and press the Government to be far bolder and act much faster on people’s priorities.
Having said that, let me recognise that there were some good things in the Budget. I welcome the Chancellor’s decision to move away from the Conservatives’ broken fiscal rules to allow the capital investment that our country so desperately needs. I was genuinely surprised that there was no recognition from the Leader of the Opposition of the difference between capital and current spending, which is at the heart of this change. I welcome the promise of full compensation for the victims of the contaminated blood scandal and the Horizon scandal, and I hope that that can be delivered quickly.
I also welcome the extra investment in our NHS. Fixing the crisis in our NHS is literally a matter of life and death. It is also essential for growing our economy, by getting people off waiting lists and getting them fit and healthy and back into work. The Conservatives left the health service on its knees. We on the Liberal Democrat Benches have consistently argued for more investment across the NHS—in hospital buildings, extra GPs, cancer nurses, new radiotherapy machines and much more—so I am glad that the Government and the Chancellor have been listening.
However, people have heard bold promises of extra GPs and new hospitals before. The Conservatives made similar promises on the NHS and then broke them, so what we need now is a guarantee that this Government will deliver. I can assure the Chancellor that Liberal Democrats will hold the Government to account on their NHS plans, and I hope that the Budget document sets out in full the answers to some obvious questions. When will the funding be in place for desperately needed hospital projects, and when will those projects be completed? When will the Government be able to guarantee that people can see a GP or an NHS dentist when they need one? When will all cancer patients be able to start treatment within the 62-day target and not have to wait for months? When will people know once more that when they call an ambulance it will be there within minutes, not hours?
Above all, as I have said before, I worry that despite the welcome extra investment announced today, the Government will not be able to fix the NHS because they are ignoring the elephant in the NHS waiting room: the crisis in social care. We all know how bad it is. Hundreds of thousands of people are waiting for care, and many are stranded in hospital beds because the care is not in place for them to leave hospital. That is bad for them, bad for their loved ones and bad for the NHS. I am afraid that today’s announcement on social care just will not touch the sides. It is only a standstill in a crisis. Unless we finally tackle this problem and agree a long-term solution for social care, we will never end the crisis in our health service, so I urge the Government once again to start cross-party talks on care without further delay and to take action now.
Any solution must involve paying care workers properly to fill the 130,000 care worker vacancies, so that elderly and disabled people can get the care they need. The Government’s plan for a fair pay agreement is a step in the right direction, but it is nowhere near enough, so will the Chancellor look at our plans for a special higher minimum wage for carers? And we must not forget the vital role of unpaid family carers—the heroes keeping the entire system afloat. I strongly welcome the Chancellor’s decision to raise the earnings limit for carer’s allowance. It is a good first step, but as she accepted in her speech, on its own it will not end the repayments scandal or fix the system. Will she confirm whether the earnings limit will, in future, be pegged to at least 16 hours a week at the minimum wage? Although I am glad that the review will look again at getting rid of the cliff edge for carer’s allowance and the earnings limit, I hope she and her colleagues will consider a broader review to give family carers the support they deserve.
The Conservative cost of living crisis has hit family carers particularly hard, but they are not alone. Practically no one has been left untouched by rising bills, higher mortgage payments and soaring food prices. Our small businesses and the self-employed have experienced a crisis of their own, having had to deal with the pandemic and now spiking energy prices and other input costs. The Conservatives only added to that pain by hitting struggling families with stealth tax rises, by betraying pensioners when they broke the triple lock, and by raising national insurance for our small businesses.
I welcome the increase in the national minimum wage as it addresses the cost of living, although I urge the Chancellor to extend this higher wage to apprentices, too. However, it is concerning to see the Chancellor repeat a number of the Conservatives’ past mistakes. Raising employers’ national insurance is a tax on jobs and people. The OBR report published today shows that the Budget will reduce real household incomes and worsen the health and care crisis by hitting thousands of small care providers. Hitting family homes with changes to inheritance tax will not help, and cutting winter fuel payments will leave millions of vulnerable pensioners worried sick this winter.
Instead of adopting Liberal Democrat proposals to raise the money we need, such as by reversing Conservative tax cuts for the big banks or by asking the social media giants to pay a bit more, the Chancellor has chosen unfair tax hikes that will hurt small and medium-sized businesses, which are the engines of our economy. They have already paid too high a price for Conservative economic failures, and forcing them to pay even more simply is not right.
Another Conservative mess that I fear this Budget will not begin to clean up is the crisis in local council funding. Year after year, the previous Government slashed funding while asking councils to do more and more. The result has been nothing short of a disaster. Spiralling social care costs are a huge part of this, which is yet another reason why reform is so vital.
There is another black hole in council budgets due to the broken system for special educational needs and disabilities. The extra £1 billion announced by the Chancellor is therefore welcome, and I pay tribute to my colleagues, not least my hon. Friend the Member for Twickenham (Munira Wilson), who have campaigned so hard on this. However, I fear that the crisis in SEND budgets left by the Conservatives is much bigger.
Last week, the National Audit Office laid bare the sheer scale of the problem, with half of children waiting more than the 20-week limit for an education, health and care plan, and with 43% of councils at risk of bankruptcy. The severity of the crisis left by the Conservatives speaks for itself, so we need to act with even greater urgency to tackle it. We will press the Government to give the House a clear timeline for reform, because neither children, parents nor councils can wait any longer.
The Chancellor has said that her main objective is economic growth, and she is right. We all agree that we need to get our economy growing strongly again to create jobs and opportunities for everyone, and to raise the money that our public services need, but we need a real plan to do that and not just stop things getting worse or return to business as usual. We need to build the economy of the future—one that is genuinely innovative, prosperous and fair.
Part of that is about fixing the health and care crisis, which will be crucial, as will managing the public finances responsibly and giving businesses the certainty and stability they need to invest in our economy. We must also invest in cheap, clean, renewable power to drive a strong recovery, to bring down energy bills and to create secure, well-paid jobs. I welcome the steps that the Government have taken so far, but we must do more to back small businesses. They are the beating heart of our local economies, so I urge the Chancellor to go beyond today’s announcement on business rates by making an historic change to overhaul the broken business rates system that is destroying our high streets and town centres. Tinkering around the edges is simply not good enough any longer.
One final crucial ingredient of growth is fixing our broken relationship with Europe. Removing the Conservatives’ trade barriers would be a massive boost for British jobs, British business and the British economy. By ruling out important steps such as a youth mobility scheme or key long-term goals such as membership of the single market, the Government are trying to grow our economy with one arm tied behind their back.
In July, the British people kicked out of office one of the most damaging Governments in our country’s history. On the Conservatives’ watch, we saw living standards fall, the economy stagnate and public services decline. Although no Government would have an easy time turning that around, people were looking to this Budget for hope and a genuinely new direction. They were looking for urgent action to fix the health and care crisis, for a break from the previous Government’s tax mistakes, for a plan to grow our economy and to rescue local councils that are on the brink, and for a fair deal.
Yes, the Chancellor had to make big, difficult decisions, but I fear that she has got too many of them wrong. We needed a different Budget to repair the damage done to our country and to give people the fair deal they deserve. For our constituents, Liberal Democrat Members will push the Government to do far more for our economy, for the NHS and for care—those are the things that the Liberal Democrats will always champion.
I call the Chair of the Business and Trade Committee, which is my old Select Committee.
I agree 100%, but I say gently to right hon. and hon. Members across the House that that is not free. If we want to ensure that there are good transport links and digital links, that the workforce is healthy, well and trained, and that there is a rich ecosystem of ideas, the money has to come from somewhere. The sensible decisions that have been made to increase borrowing in order to fund a higher level of fixed capital investment are wise. Investment in public services is wise too. I very much hope that that will benefit the hon. Lady’s constituency.
An increase in investment on the scale we have seen today will improve the profitability of businesses in this country. The Business and Trade Committee looks forward to scrutinising the detail and ensuring the Government have got the balance right, because, goodness knows, it is hard enough to get the balance right in a Budget, never mind translating it into legislation. That bargain for business has to consist of two sides: on the one hand, we will create a better business environment through higher capital investment, but on the other we have to give workers a pay rise.
The labour share of income in this country has fallen precipitously since the 1950s. If the labour share of national income was as high today as it was in 1955, on average a worker would be receiving a pay packet this year that was over £7,000 bigger. That is why we have to get the balance right between ensuring that businesses are more profitable and ensuring that workers are getting their share of national income. Getting the balance right is difficult. Like my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), the Chair of the Treasury Committee, my Committee and I will scrutinise that in detail. We will begin that work when we see the Secretary of State for Business and Trade in front of our Committee in just a couple of weeks’ time.
My final point is about where I wanted the Chancellor to go further. Among the worst of her inheritance is the yawning gulf in inequality that scars our country. We have a moral emergency in Britain: sales of superyachts, luxury cars and big mansions are at an all-time high, but, at exactly the same time, the queues for food banks have never been greater. There is no mystery to that. Over the past 14 years, the combination of easy money and low taxes on capital income has meant that the top 1% in our country—the luckiest 1%—are 41 times richer than everybody else. Did they work 41 times harder? Are they 41 times cleverer? Did they win the lottery? Well, in a way they did, because £850 billion-worth of quantitative easing held interest rates in our country down by about 1%. That triggered three quarters of the rise in asset prices that we have seen over the past 14 years. Of course, people in the top 1% will own assets and will have seen a windfall gain, yet the rate of tax they pay on those capital gains is just half the top rate of marginal tax.
I am sorry that the Leader of the Opposition is no longer in his place to hear me say this, but he did a good thing a couple of years ago, which was to publish his tax return. I am sure that all hon. Members will have read it—it does not take long, as it is only a page long. It declares an income of £2 million and a tax rate of 23%. At a time when so many people in our country are paying a top marginal rate of more than 47%, I do not think that it is morally right that those with broader shoulders are paying much lower tax rates. I would have liked to have seen the Chancellor go further on capital gains tax.
I welcome the changes to the non-dom and inheritance tax regimes, but I would have proposed other changes as well. If we had truly restored fairness to the tax system, we could have raised money to increase the national wealth fund and opened the opportunity, for the first time, of paying dividends into a universal savings account for every young person in this country. That would have helped them get a foot on the housing ladder, repay their student debt, invest in their training, or kickstart savings for their pension. That would have helped us to create a universal basic capital system in this country. We will need a system like that if we are to fix the scandalous inequalities of wealth that now bedevil our country. None the less, I accept that the Chancellor had to put first things first today. She had to fix the foundations, because, as all of us in this House know, if we get that job done well, the best years for this country truly lie ahead of us.
Order. The hon. Lady has made it very clear that she is not giving way, so please allow her to continue.
Thank you, Madam Deputy Speaker. Anyone who has ever worked in business knows that they need to increase the productivity of their business, and investment in that business is linked to its profitability, profits that will fall as a result of the measures that have been imposed on business today. When we work out the numbers, I think those measures will equate to about 4p on corporation tax. This is a Budget of broken promises that will end up giving the British people less growth. Members do not have to listen to me to hear that: they can listen to the Office for Budget Responsibility, which forecasts a short-term boost to growth but a longer-term reduction in the sustainable growth rate of the British economy thanks to the measures that the Chancellor outlined today.
In the months since the Chancellor took office, we have seen the evidence. We have already seen businesses shutting at double the rate they were a year ago. We are already seeing a plunge in business confidence, and we have heard the former chief economist of the Bank of England say that the socialist narrative we have had since the election has generated
“fear and foreboding and uncertainty”.
This is a Budget of broken promises—a straightforward breach of promises to the British public—and it is a dreadful day for the British economy.
When we go through Hansard, I am sure we will see that the hon. Member did not mean to accuse another hon. Member of lying—changing that term to “misleading” would have been far more appropriate. No doubt the hon. Member agrees with me.
On a point of order, Madam Deputy Speaker. I referred to the Prime Minister’s words on national television, and I was quoting him directly, but if I have inadvertently misled the House, I apologise.
Thank you so much. That was an absolutely appropriate way to respond.
It is a pleasure to follow the hon. Member for West Worcestershire (Dame Harriett Baldwin). I well remember one of her very early speeches when we both came to this place, in which she gave a lecture to this House about the benefits of the Laffer curve. Having also listened to the right hon. Member for Gainsborough (Sir Edward Leigh), I am pleased to report that although Milton Friedman, Keith Joseph and Mrs Thatcher may be long gone, their ideas will live on as long as those two Members sit on the Conservative Benches.
I pay tribute to my hon. Friend the Member for Gower (Tonia Antoniazzi) for a great speech standing up for her farmers in her rural constituency. I think she faces, as Chair of the Northern Ireland Affairs Committee, the same problems that we face in Wales. We in Wales are too heavily dependent on the public sector and there is a lack of entrepreneurship, which are similar problems to those faced in Northern Ireland, but I can think of no greater champion to stand up for Northern Ireland than my hon. Friend.
Things have changed since the last time I spoke in this House. I was the Member for Islwyn, and I am now the Member for Caerphilly. If you, Madam Deputy Speaker, and the House will indulge me for a moment, I want to pay tribute to my predecessor as the Member of Parliament for Caerphilly, Wayne David, who was a doughty champion for his constituency. He absolutely loved this place, and he was one of our great Welsh parliamentarians.
I am sure Wayne David would join me in welcoming today the first speech by a Labour Chancellor for 14 years, and the very first by a female Labour Chancellor at that. For those of us who came in in 2010, it was a long haul in opposition, and I am delighted to be standing here today on the Government Benches.
“Britain has lived for too long on borrowed time, borrowed money, borrowed ideas. We live in too troubled a world to be able to promise that in a matter of months, or even in a couple of years, that we shall enter the promised land. The route is long and hard.”
Those words were spoken by Prime Minister James Callaghan at the Labour party conference in Blackpool almost 50 years ago, in 1976. His analysis laid the blame for Britain’s problems at the door of high Government debt, high taxation and low productivity.
The economic ills we suffer today have come upon us over several decades. They will not go away in days, weeks or months, but they must go away. Great as our tax burden is, it has not kept pace with public spending. For decades, we have piled deficit upon deficit, mortgaging our future and our children’s future for the political gain of the present. To continue this long trend is to guarantee moving towards tremendous social, cultural, political and economic upheavals. We face handing over a toxic legacy to our children and our children’s children. That is how serious the current crisis we face is. Our challenge, in this place in this time, is breaking the cycles that mean those words of Callaghan still reflect acutely on the situation we face today.
We need to get away from two myths that are peddled about the British economy. First, there are those who believe that sweeping tax cuts will, as we have heard from Opposition Members, turbocharge the economy without any adverse effect on public services. They cite the 1980s as a global age, but taxes could be cut when the Government were able to rely on North sea oil money and the privatisation of industries. In 2024, that is not an option. A tax cut would only come at the price of cutting public services. It is a lesson we should have learned from the infamous fiscal event of September 2022. The experience of most people we speak to, whether they are trying to book a medical appointment or simply renew a passport, is poor. That position is intolerable.
The second myth is that, if we chuck enough money at a problem, somehow that will solve it. As someone who served on the Public Accounts Committee for five years under my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), who is now the Chairman of the Treasury Committee, I find that a laughable idea. Take the Ajax programme, which was meant to provide a new armoured vehicle for our Army. It was initially meant to be delivered in 2017, but it is now 2024, and it is still not complete. Meanwhile, north of £3 billion of public money has been wasted. Both soldiers and the public purse have suffered the consequences of a wasteful mess that created unsuitable, unsafe and largely unusable vehicles. The National Audit Office called it “flawed from the start”, and noted that it was suffering from problems that plague other defence programmes. The programme is even yet to be delivered, and it faces the threat of being obsolete, despite the mammoth cost to the taxpayer. We cannot allow a system in which regular mistakes are the norm, and are simply part of the culture. We cannot have civil servants shrugging their shoulders and saying, “That’s the way it is.” They are spending public money.
An estimated £7.3 billion was lost to fraud related to covid-19 schemes from 2020 to 2022, according to the National Audit Office. Some £2.9 billion was spent on personal protective equipment that was deemed unusable for frontline services. I welcome the Chancellor’s announcement about the covid corruption commissioner, but the fraud should not have happened in the first place.
Most recently, hundreds of millions of pounds went down the drain for the failed Rwanda scheme. Whatever we think about such schemes, what message does that give to those who are working hard to pay into the system every month, and who are asked for more and more of their hard-earned money in taxes? Ronald Reagan—yes, I am quoting somebody from the right wing—once said:
“Government is not the solution to our problem; government is the problem.”
I believe that bad government is the real problem. The Government cannot do everything, but they can do some things well—the rise in the minimum wage announced today is one such example. However, we cannot go on this way; there is no future in giving Departments more and more money if it is only going to be wasted. If there is a black hole in a Department’s budget, the system created that, and more money will not change wasteful practices. There needs to be fundamental reform in the way we manage major projects.
The Chancellor announced some productive measures today, but if we do not stop money leaking out of Government through wastefulness and mistakes, we are failing the taxpayer. We must be strict with ourselves when it comes to projects and Government spending. We need the chair of the Office for Value for Money, announced in July, to report annually to the House. They must be tasked with several questions about each project: is it on time, and is it delivering value for money? If not, if necessary we have to be ruthless. We either take the decision to carry on with projects that are doomed to lose money, or we take a step back—do less but do it better, and start creating more things that we can export abroad.
As the Chancellor recognised in her speech, we cannot borrow indefinitely, and we cannot keep asking hard-working people for more and more, while Governments make costly errors and ask the taxpayer to pick up the bill. Investment to rebuild is necessary, and the Government are right to protect the most vulnerable from shouldering an increased burden. However, it is time for a root and branch reform of the civil service, with a realistic economic policy that considers the state of the public finances as they are, not as we wish or hope they were. I am hopeful that the Budget has done that today.
If we do not act now, in 50 years’ time will future generations be speaking of the same ailments? If they are, it means simply that we have failed and have effected no real change in our time in this place. Callaghan raised these problems 50 years ago. It is our duty to ensure that we do not spend another 50 years stuck in that same place.