Budget Resolutions

Pat McFadden Excerpts

Thursday 12th March 2020 Commons Chamber

[John McDonnell]

The hon. Gentleman makes exactly the right point. Not everybody supported the cut in interest rates, but the most important statement from the Bank of England was about the mechanisms with regard to the banks and lending, and about making sure that liquidity continues.

The point I am making is that, when we are dealing with what is in effect a global crisis, individual solutions in individual countries are not as effective as global co-ordination. I will give an example. Whatever criticisms people may have had of Gordon Brown’s individual policies during the banking crisis—I was here then, and actually I was giving a running commentary from the Back Benches, which perhaps at times was not welcome—no one can question the international leadership that he showed. There was a focus on and determination in bringing people together, and he brought to this crisis a mechanism by which, through the different international bodies, world leaders met and agreed a global strategy. Whatever people think of the outcome or about the merits or demerits of quantitative easing and so on, it did send out a message, and the markets eventually stabilised. I regret that we have not seen such a political and diplomatic leadership commitment or, indeed, such managerial ability from the Prime Minister or the Chancellor as yet.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Before my right hon. Friend moves on from his point about a co-ordinated international response, one of the things put in place at that time, about which there has been a lack of discussion this time, is what to do for those countries that have very basic healthcare systems. This virus respects no borders. Is there not a need for co-ordinated international action to get help to countries where testing and treatment may be much more rudimentary than they are here?

[John McDonnell]

To give the Government their due, the Chancellor did announce a £150 million contribution to the IMF, so there is an element of financial involvement and engagement. However, it requires the co-ordination of policy to ensure that those resources are directed effectively and successfully to tackle the very issue that my right hon. Friend raised. I hope that will be a model for the future when other global issues have to be confronted. As in the past—and this has happened under various Governments and political leaders—the UK should now be playing a critical role in mobilising the international bodies we have, in particular the UN, to agree a global response to deal not just with the current wave of this pandemic, but with the possibility of subsequent waves.

--- Later in debate ---

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

It is a pleasure to follow the hon. Member for West Worcestershire (Harriett Baldwin).

This Budget is the Government’s attempt to make a turn in the road. Gone are the logic, the rhetoric and the assumptions that have driven UK spending policy for the past decade. If nothing else, it is testament to the Conservative party’s capacity for reinvention and its hunger for power. For the avoidance of doubt, that is not an insult.

In truth, the Chancellor had little choice but to change course, because the backdrop to the Budget was a flat economy and an anaemic forecast for future growth—that is even before the impact of the coronavirus. Growth estimates are down this year to just a little over 1%, and to around 7% over the next five years. Growth that weak is not levelling up but levelling down. Such weak economic growth leaves the Government no alternative but to fund their spending plans largely by borrowing money in a way that the Conservative party has for years derided as irresponsible and reckless.

Add to that the impact of the Brexit path the Government have chosen, which is the defining decision that now dare not speak its name. If the line has gone out from No. 10 not to talk about it, the OBR did not get the memo because it is there in black and white. The OBR estimates a potential loss of 4% of GDP over the next 15 years—lost output, lost income and lost tax revenue.

The Secretary of State for Business, Energy and Industrial Strategy claims this is the most business-friendly Government ever. In truth, this is the first Government in living memory to relegate economic prosperity to behind issues of sovereignty. That is not a claim from me; it is a policy set out by the Prime Minister and his chief Brexit negotiator.

In more ways than one, this Budget is just starting to fill a hole the Government have dug for themselves. If low interest rates allow them to borrow for investment, it was also true some years ago when they derided such suggestions. Of course, new investment in infrastructure is welcome and long overdue, certainly in places like the Black Country. We have too many derelict factory buildings, too much unused development land and too much unremediated land, all of it standing as a physical reminder of the lack of investment over the Tory years, but simply calling themselves a new Government cannot disguise the fact that they are amending an investment shortage that they decided on in the first place. As I said, they are just starting to fill a hole they dug themselves.

Carbon capture and storage has been announced and abandoned almost as many times as the A303 project at Stonehenge, but neither has been announced quite so often as the potholes fund—the Albert Hall should have been well and truly filled by now with those announcements.

We have heard a lot of this before, and it could and should have started years ago, but it would be complacent of my party to rest on those criticisms alone because this is a shift in fiscal strategy—there is no doubt about that—and responding to it will require more than reaching for the same slogans as before. There has been much talk in recent months about what constitutes a good Opposition. The first step is to oppose the Government and Conservative party we actually have in front of us, rather than the ones we wish were in front of us. When our opponent has adapted, we have to adapt, too. That is something we must do.

Infrastructure investment is definitely needed, but addressing regional inequality is about people and their life chances. Where they were born, where they live and what kind of family they come from, those things should not limit people’s opportunities and chances to make the most of their life.

Alongside the bricks and mortar, we need: a deep-seated effort to tackle educational inequality; good quality, affordable childcare to make sure parents can take up jobs; an early-years effort to tackle the appalling development gap that afflicts some children, even by the time they start school; second-chance skill training to equip people for a new labour market and to give them the tools they need to reach their full potential; and the support for social mobility needed to break through the charmed circles that still characterise too many of the professions and too many of the best jobs in this country. If there really is to be levelling up, it is about a lot more than tarmac and concrete; it is about people’s lives and the chances they have.

We are still in the early stages of the coronavirus response, and no one can be sure about its health and economic impacts. There is broad cross-party support for the measures announced by the Chancellor yesterday, although we will continue to press for there being no penalty for those who choose to do the right thing, whether they are self-employed, on a non-permanent contract or anything else of that nature.

That takes us so far, but this is a global pandemic and is now being defined as such. Where is the global leadership in tackling this? Where is the co-ordinated economic response? Where is the concerted effort from world leaders to act together to face a virus that respects no borders? It is hard to escape the conclusion that, had this virus erupted a decade ago, there would have been a will to have a much more international response. With this generation of leaders, with nationalism on the rise and with international institutions and actions having been so disparaged and derided, that will has so far not been there.

It is not too late. We could lead in calling for that effort. If we do not, we will have to hope that the retreat into national responses does not cost us dearly.

[Several hon. Members rose—]