Budget Resolutions and Economic Situation

Pat McFadden Excerpts

Tuesday 21st March 2023 Commons Chamber

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

Let me begin by paying tribute to all the right hon. and hon. Members who have taken part in this Budget debate, not only today, but throughout its four days. Today, many Members from across the House, including my right hon. Friend the Member for Walsall South (Valerie Vaz), and my hon. Friends the Members for Newcastle upon Tyne North (Catherine McKinnell), for Ilford South (Sam Tarry), for Bolton South East (Yasmin Qureshi) and for Leeds East (Richard Burgon), have raised the issue of the cost of living crisis. Other Members have spoken about individual measures in the Budget, such as investment allowances and devolution deals.

Some Members, such as my hon. Friend the Member for Vauxhall (Florence Eshalomi), called this Budget a missed chance, whereas others, such as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), talked about the number of Labour policies adopted by the Government in the Budget. My hon. Friend the Member for Lewisham East (Janet Daby) and the hon. Member for Newbury (Laura Farris) talked about childcare. The hon. Member for Basildon and Billericay (Mr Baron) rightly warned the Government against being left behind by the measures being taken in the US and the EU to ensure the green transition.

The right hon. Member for North West Hampshire (Kit Malthouse) urged us all to have more children. Perhaps when all other growth plans have failed, that is all that is left.

The Budget is a critical part of our economic and political framework, and I congratulate the Chancellor on surviving long enough in his post to deliver one. Here we are a few days later and he is still in his post. That is a rare achievement among Conservative Chancellors of modern times.

Outside this House—indeed, on the day that the Chancellor spoke—there is significant turbulence in the financial system. Even though we debate these measures, it is imperative that the Treasury and the regulators are alive to the risks elsewhere in the system and to what other risks may be there.

The Budget was billed by the Chancellor as a Budget for growth. He opened his statement last week by asking us to give thanks that, this year, the economy is expected to shrink, but just not by quite as much as was previously thought. A flatlining economy is now defined by the Government as success.

[Stephen Kinnock]

My right hon. Friend is making an excellent speech. The Secretary of State for Levelling Up, Housing and Communities said earlier that this was a Budget for growth and that it would deliver more economic prosperity, but the reality is that the OBR said that we will not see a rise in living standards for another decade. Does my right hon. Friend agree that the Government have had their chance?

[Mr McFadden]

My hon. Friend is absolutely right. After 13 years, there really is nowhere left to hide.

Despite the Budget being billed as a Budget for growth, the UK is still experiencing the slowest recovery from covid in the G7. All the countries that make up this group had to cope with the pandemic. All of them have suffered the consequences of Russia’s invasion of Ukraine, yet Britain’s recovery is the slowest.

What is it about Conservative stewardship of the United Kingdom that makes us stand out in this way? Is it the political chaos inflicted on the country by the Conservative party, which makes a Chancellor who gets to deliver a Budget such a rarity? Is it the fact that, since 2010, our productivity growth has been the second lowest in the G7? Is it the disastrous Tory mini-Budget last year, which they would like to bury under 10 feet of concrete, but which people will not forget? It caused borrowing costs to soar, put our pension system on life support and rocked international confidence in the UK economy. Is it the former Prime Minister’s Brexit deal, which was supposed to give us global Britain but instead gave us the problem of how to send a sandwich to Belfast?

It could be all those things, but whatever the reasons, the overriding fact for our constituents is that they are still living through the biggest fall in living standards in living memory. Their money goes less far, their incomes have been squeezed and they are living in a country that is poorer than it was four years ago.

[Alan Brown]

Will the right hon. Member give way?

[Mr McFadden]

I will give way one more time.

[Alan Brown]

The right hon. Member mentioned Brexit. Are not some of the issues related to Brexit associated with leaving the single market, leaving the customs union and not being part of freedom of movement? That has a big detrimental impact on the economy and Labour will not change any of that.

[Mr McFadden]

I understand why people regret the result. What I do not understand is why the response to that should be to erect even more trading barriers inside the United Kingdom, as the hon. Member wants to do.

Even if the fall in living standards is at its most severe this year and next, it is not just a short-term dip, because since the Government took office, real-terms wages have not risen and are not expected to get to their pre-2010 levels until 2026. That is what people feel in their lives—that year after year, it gets harder to make ends meet and harder to pay the bills. The question that people are asking themselves is the one that has been posed by the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves). Are my family and I better off? The answer is no. Are our public services in better shape now than when the Tories took office in 2010? Time after time, once again, the answer is no.

When he made his statement last week, I thought there was one significant thing about the way the Chancellor spoke: he was happy to own the whole 13 years that his party have been in office.

[The Chancellor of the Exchequer (Jeremy Hunt)]

I’m proud of it.

[Mr McFadden]

He confirms that now—he is proud of it. He obviously did not get the memo that says every time the Tories ditch a leader, they are supposed to pretend it is year zero. Not for him the pretence that this is a brand-new Government. Not for him the pretence that whatever was inflicted by his predecessors had nothing to do with him.

I welcome the Chancellor’s honesty about that, because that means the Tories can own the annual tax rises faced by every taxpayer over the coming years. They can own the 24 tax rises they have imposed in the last few years. They can own the NHS waiting lists of 7 million people. They can own the biggest drop in living standards on record. They can own all the waste and all the fraud. They can own the mortgage rate rises faced by hard-working families this year and next, which were driven up by their own reckless economic irresponsibility. They can own the whole cycle of low growth, increasing taxes, declining living standards and creaking public services. I am grateful to the Chancellor for his honesty and candour in embracing his party’s 13 years in power. That is a rare thing in politics these days and he deserves credit for it.

There were measures in this Budget that we liked and supported—those were the Labour bits. The extension of the energy price cap, the freeze in fuel duty, the investment allowances for industry and more help for childcare were all called for by Labour. Of course we welcome them, and we knew they were coming because most of the Budget was leaked in advance.

[Several hon. Members rose—]

[Mr McFadden]

I am not going to give way; I am going to proceed.

One thing was not leaked, however, and that was the Chancellor’s plan to abolish the pensions lifetime allowance—a £1.2 billion policy that will benefit those with the biggest 1% of pension pots. Let us be clear: there is a problem facing doctors, and it has existed for years. In the run-up to the Budget, my hon. Friend the Member for Ilford North (Wes Streeting), the shadow Health Secretary, called for a special scheme to deal with the issue facing doctors, which is forcing some of them to retire early. That call was supported by the Chancellor when he was Chair of the Health and Social Care Committee. His report said:

“The government must act swiftly to reform the NHS pension scheme to prevent senior staff from reducing their hours and retiring early from the NHS.”

That is exactly what the shadow Health Secretary proposed.

[Andrew Gwynne]

Will my right hon. Friend give way?

[Mr McFadden]

I am going to proceed.

Such a scheme already exists for judges, but when the shadow Health Secretary made that call, he was attacked by the Tories, who said it was financial profligacy and unaffordable—and let us remember that that was only a scheme directed at the NHS. A Conservative spokesman said:

“Now they announce an expensive pensions policy without pointing to how they would fund it”,

adding that the shadow Health Secretary should think about the impact on the public finances. And what did the Tories do then? They said, “Wes, hold my beer.” Just days later, having denounced a smaller NHS scheme as being completely unaffordable, they proposed to abolish the entire lifetime allowance for everyone. According to the Tory argument, it is completely unaffordable for doctors alone, so we are going to propose it for everyone.

However, that was not always the Tories’ view. They used to think that,

“we must demonstrate that we are all in this together. When looking for savings, I think that it is fair to look at the tax relief that we give to the top 1%.”—[Official Report, 5 December 2012; Vol. 554, c. 878.]

Who was the ideologically suspect pinko who said that? Who was that anti-aspirational enemy of enterprise? It was, of course, George Osborne. That is how far they have moved. They used at least to claim we are were all in this together; now they do not even pretend.

Growth is the essential challenge facing the country. We need better growth to make the country more prosperous and its people better off. Right now, in the United States, growth is being driven by the Inflation Reduction Act sucking in investment in new technologies and the green transition, and creating jobs right across the country. Europe is responding with incentives of its own. What is the Government’s position? It is that this is “dangerous”, as the previous Business Secretary said. Other countries are on the pitch; they are using the power of government to crowd in private investment. That is exactly what we should be doing. This is not about the state doing it all; it is about setting a clear, long-term direction, and asking business and employees to be partners in making that work.

Those investments will happen somewhere. The question we pose is: why not in Britain? Why not in Britain when we have some of the best researchers in the world? Why not in Britain when we have a tradition of innovation and creativity that is second to none? Why not in Britain? Because we lack a Government with the ambition to make it happen. In the end, that is what was missing from this Budget.

The Chancellor and the Prime Minister want to project themselves as the adults in the room, but with the challenges that the country faces, that is not enough. It is not enough just not to be reckless and ideological; it is not enough just not to subject the country to another giant juvenile experiment with real-world consequences; it is not enough just not to degrade the idea of public office itself; it is not enough for them not to be their disastrous predecessors. The country deserves a lot more than that. It needs a Government who will break with, not continue, the last 13 years, and who will break with the whole pattern of low growth, high tax and creaking public services. That is what we need, and that is what we did not get from the Budget last week.