Budget Resolutions and Economic Situation

Pat McFadden Excerpts

Monday 8th March 2021 Commons Chamber

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

It is a pleasure to wrap up this debate for the Opposition. Whatever is happening elsewhere on our television screens, I want to begin by thanking all the hon. and right hon. Members for contributing to this debate, whether they did so physically or virtually. We have had a very wide range of contributions over the past few hours, and hon. Members have raised a whole number of issues in relation to the Budget. These included the Government’s business support schemes, the importance of technology, the creative industries, tourism, International Women’s Day and the differential impact of the pandemic on women, green finance, the universal credit uplift and its impending cut-off, unemployment and youth unemployment, the 1% NHS pay offer, the levelling up funding and those still excluded from Government support.

The backdrop is of course one of the most difficult we have known. There is a pandemic that has killed over 120,000 people and given us a huge hit to our economy. I want to focus on the taxation aspects of the Budget, because on this particular issue this was no ordinary Budget. The Budget announced by the Chancellor last week marked a watershed in taxation policy on the part of the Conservative party. For years, we have heard the mantra that lower taxation rates would lead to increased revenue by stimulating more economic activity.

Indeed, that was the previous Chancellor’s justification for cutting corporation tax in the first place back in 2010. He partly funded it by cutting investment allowances for manufacturing businesses, and he continued to stick to that justification for years afterwards. In 2016, the then Chancellor, George Osborne, said:

“Not only have our corporation tax cuts given us the lowest corporation tax rate of all the advanced economies of the world, but we have seen a 20% increase in receipts from corporation tax”.—[Official Report, 4 July 2016; Vol. 612, c. 625.]

This was not just a single policy and not just a political argument; it was an article of faith. It was the core of the taxation ideology of the Conservative party. It goes way beyond the Osborne-Cameron years and right back to Thatcherism itself. This is a stance that has lasted not years, but decades. Its believers include the current Prime Minister himself who, when campaigning to be leader of his party, said that

“every time corporation tax has been cut in this country it has produced more revenue”.



With the changes announced in this Budget and the increase in rates, we do not just have a different policy; we have a different philosophy. It is all there in the Red Book, set out in table 2.1 on page 42, under the heading “Strengthening the public finances”. By raising corporation tax rates, the Government hope to bring in an extra £17.2 billion in a few years’ time. That is the claim; that is the estimate of the increased revenue that the increased rate will bring.

If there was any lingering doubt about the sea change that this represents in the thinking of the Conservative party, it was swept away by the Chancellor the day after the Budget. He used his post-Budget interview on the “Today” programme to bury the argument of his predecessors. He said:

“the vast majority, if not all, of that increase in corporate tax receipts is probably more likely due to the cyclical recovery in corporate profits, which took a real hammering in the last crisis”.

He went on to say:

“There was an idea that they”—

cuts in corporation tax—

“could help spur business investment. And what we’ve seen over the past few years is that we haven’t seen a step change in the level of capital investment that businesses are doing as a result of those corporation tax decreases.”

So there it is: Thatchernomics and Osbornenomics buried in full public view by Rishinomics—no more Laffer curves; no more pretending that tax cuts always magically lead to more revenues; no more tax bombshell posters; “Singapore-on-Sea” laid to rest by Budget 2021.

With a Budget set to bring the overall tax take back to levels not seen since the 1960s, the Conservatives have surrendered the mantle of claiming to be the party of low taxation. The old Conservative slogan was that it was the party of low taxation. The new slogan could be, “Tax on families up, tax on businesses up, but nurses’ pay down.” Let the Chancellor put his signature on that. This is the platform to which he has now signed up the whole Conservative party. This is the change that the Budget represents.

When we look at what the Budget predicts further ahead, UK economic growth after this year and next is projected to be just 1.6% or 1.7%. The Budget papers predict a long-term hit to growth of 3% from covid, on top of the 4% hit to growth as a result of the Prime Minister’s agreement with the European Union. The more that we can mitigate this damage to growth, the better it will be for prosperity, family finances and the public finances. That is the heart of the country’s challenge—how to get economic growth going. After the long, hard year that business has had, we need to let companies grow, breathe and get back on their feet, not weigh them down with ever growing debts, so why have the Government set their face so firmly against the proposals that came from business groups themselves to turn the covid debt burden into a contingent tax liability in the future, dependent on future performance?

Last week, the all-party parliamentary group on the Black Country economy heard alarming reports from manufacturing companies about the forest of red tape, cost increases and delays that they have faced in trying to export goods since the beginning of January. Those businesses represent the finest Black Country tradition of making things and selling them all over the world. There is an old saying in the Black Country: “If you can draw it, we can make it.” But those businesses now find themselves hobbled and hamstrung by the mountain of red tape involved in the Government’s Brexit arrangements.

I appreciate that some Government Members may not regret that—in fact, some of them may welcome it—but the hard-working businesses of this country deserve more than to be used as components in the Government’s ongoing grievance factory against the European Union. They deserve more than to be used as pawns in a battle of ill feeling that will not create a single job or export a single product. We know that the Prime Minister has dismissed business, but that attitude is no good to hard-working exporters and manufacturing companies. They deserve support for their efforts.

Covid has exposed deep inequalities in our country, from the pattern of those killed by it to the frontline workers who have kept the country going. It has imposed on us all a responsibility to build a better economy out of this: one that combines prosperity and security; and one that combines the wealth creation we need with a commitment to heal the divisions exposed by what we have been through. Under new leadership, that is exactly the approach that my party will support.

TV Licences for Over-75s

Pat McFadden Excerpts

Wednesday 8th May 2019 Commons Chamber

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

On giving a welfare policy to the BBC, a lot of footballing metaphors have been used in the past 24 hours, after Liverpool’s glorious result against Barcelona last night, but does my hon. Friend agree that in policy terms this is the equivalent of a hospital pass?

[Tom Watson]

It certainly is for this Minister, who happens to be answering today. But it is not as if she, or other Front Benchers, did not have notice, because during the passage of the Bill that enabled this my hon. Friend the Member for Cardiff West (Kevin Brennan) made that very point.

--- Later in debate ---

[Mr McFadden]

The right hon. Gentleman is implying that the BBC was happy with all this at the time, but in the press statement announcing the consultation, the BBC said:

“The BBC could copy the scheme… but we think it would fundamentally change the BBC because of the scale of service cuts we would need to make.”

That is not the statement of an organisation that thinks it can easily absorb this.

[Mr Whittingdale]

The agreement with the BBC was that it would have responsibility for maintaining or amending the licence fee concession. The right hon. Gentleman quoted the BBC’s view about the cost of maintaining the concession as it stands, and that view is understandable, since the cost next year will be £745 million, rising to £1.06 billion by 2029-30. I am not at all surprised that the hon. Member for West Bromwich East (Tom Watson) was unable to give any commitment that a future Labour Government would maintain the concession at the cost of the taxpayer, since that would be a £1 billion public expenditure pledge.

In recognition of that, the BBC has put forward three different options. It has talked about continuation, which, as the right hon. Member for Wolverhampton South East (Mr McFadden) said, it feels is not realistic, as that would amount to the current cost of BBC 2, BBC 3, BBC 4, the news channel, CBBC and CBeebies all put together. It has also suggested some amendment to the concession, or discontinuing it altogether. Each of the three possible amendments to the licence fee concession that the BBC has suggested has some attraction. It has talked about raising the age limit to 77 or 80, which to some extent would reflect the ageing population and maintain roughly the same proportion. A second possibility is to introduce a discounted fee, so that people over 75 would not have to pay the full cost.

--- Later in debate ---

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

It is a pleasure to follow my hon. Friend the Member for Crewe and Nantwich (Laura Smith), and I want to begin where she left off. I agree with her that free TV licences were introduced as a welfare policy. That is very much how it was seen at the time, alongside benefits such as free bus passes and free eye tests. The Government’s decision to pass responsibility for this on to the BBC in the knowledge that the BBC would be under this kind of pressure has two impacts. The first is on the BBC itself; the other is on the pensioners who receive the benefit at the moment.

Passing this responsibility on to the BBC is the policy equivalent of a hospital pass. The Government know that the BBC is under pressure. At the moment, the policy costs some £660 million a year, rising to more than £700 million in a couple of years’ time, and asking the BBC to fund this out of its own resources will leave it facing a cut of around one fifth of its budget. As has been said, that is the equivalent of the budgets for BBC Two, BBC Three, BBC Four, the BBC News channel and the children’s channels. This will have a major impact and major implications for our national public service broadcaster at the very moment when the broadcasting and entertainment environment is changing and the BBC is under more pressure than ever from Netflix, Amazon and other providers. The direct impact of this on the BBC is that it will be faced with the awful choice of cutting quality or hitting pensioners.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

rose—

[Mr McFadden]

I am not going to give way, if that is okay, because there is a lot of pressure on time and others want to speak.

The first impact of the policy will be on the BBC itself. The second impact will be on pensioners, and it will be a dual impact—financial and social. The House of Commons Library estimates that there are around 5,600 households in my constituency with someone who is 75 or over. Looking at the options in the BBC consultation, we see that if the free BBC TV licence were restricted to pension credit recipients, 3,390 of those households would lose out, to the tune of £154 a year. If the qualifying age were raised to 80, around 2,200 households would lose out.

It has been said that we should means-test and restrict the benefit to those on pension credit. We are asked, “After all, what about the very wealthy pensioner with a huge estate?” The problem is that, as with changes to any universal benefit, it will not be just the pensioner with a huge estate who loses out. It is estimated that some 40% of pensioners entitled to pension credit do not receive it. If we go down the road suggested, not only the pensioner with the huge wealth will lose out, but some of the poorest pensioners in my constituency and the other constituencies that have been mentioned in the debate.

Then there is the social and cultural impact of cutting much-needed entertainment and information. What is the Government’s justification? The Minister came close to saying in opening that the change was a consequence of the financial crisis and that the Government were ultimately asking pensioners, some of them the lowest-income pensioners in the country, to pay the cost of it 10 years on. That would be unjust and unfair to pensioners in my constituency.

The free TV licence is, after all, a benefit. The Government should fund it and keep the manifesto promise they made in 2017 to maintain it. They have told us that austerity is over. What better way to start proving that than by changing their minds about the TV licence fee?

The debate is not just a party political joust. Let me act for a moment as the Under-Secretary’s political adviser and give him some friendly advice. If the Government go down this road, they will incur the wrath and lasting anger of pensioners, who have come to expect and are used to this benefit after the 20 or so years of its existence. It will do the Government no good to claim at the next election, “It wasn’t us; it was the BBC.” There is no evading the responsibility for the decision. It comes from and is owned by the Government, and the Government will pay the political price if they proceed with this policy.

UK Telecoms: Huawei

Pat McFadden Excerpts

Thursday 25th April 2019 Commons Chamber

[Jeremy Wright]

On my hon. Friend’s last point, I entirely agree. It is important that we do not just discuss these matters with our partners, but have rather more complex and detailed technical discussions about the precise restrictions we may all seek to impose, and there is no lack of respect for what they say in this. Of course, many of our Five Eyes partners are operating under some difficulty, as Members of this House are, in that they do not know all of the decision making because some of it is not yet complete.

It is worth recognising that my hon. Friend is right that the concerns our partners have expressed are legitimate concerns. We listen very carefully to what they say, and we listen very carefully too to what our own security and intelligence agencies say. For reasons he will appreciate perhaps better than almost anyone else in this House, I do not intend to go into any detail about that, but I repeat my reassurance that we will act in full consideration of what they say, because it is an important and fundamental part of this review.

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

This leak is not only embarrassing, but, I am afraid, symptomatic of a wider breakdown of discipline and collective responsibility in the Government. This decision should be taking into account both our national security needs and our technological requirements for the future. Those should be the only two things under consideration by Ministers, not their own political share price or anything else. Can the Secretary of State assure the House that, in our altered post-Brexit geopolitical position, there is no question of future trade requirements or the urgency of a trade deal with China influencing national security judgments?

[Jeremy Wright]

I agree with what the right hon. Gentleman has said about the importance of this decision and the considerations that legitimately play a part. This decision will be taken by the Government as a whole, but the recommendations of this review have been produced by my Department in collaboration with the intelligence agencies, particularly the National Cyber Security Centre, as I have said. We have done that with the country’s security considerations pre-eminent among the issues that are discussed and will be put forward at that review. That will remain the case for as long as I lead this Department and have anything to say about it.

Russian Interference in UK Politics

Pat McFadden Excerpts

Thursday 21st December 2017 Commons Chamber

[Tom Brake]

I thank the right hon. Gentleman for that intervention. That is another aspect of this issue that I am not going to be able to dwell on at great length in the few minutes that remain.

Facebook is doing work on ad transparency, and I welcome that. Personally, I would be comfortable with having the equivalent of a “printed and published” on the political ads that I place on Facebook. Such measures would help people to understand who was actually promoting themselves. I wonder whether the Minister would support that suggestion.

There is also the issue of authentication. I and, I suspect, every Member here have a blue tick on Twitter, so we have been confirmed as being real people. Maybe Facebook should do something similar to authenticate people with Facebook accounts so that we know that everyone is a genuine person, rather than someone sitting in an office block on the outskirts of Moscow preparing fake accounts. I hope the Minister will agree with that point as well.

We need to resource our response appropriately, and I have concerns—I certainly had concerns when I was a Minister and had dealings with it—that the Electoral Commission does not, in fact, have the resources to deal with this issue. Dealing with activity abroad is clearly not within its remit, and it would not have any expertise to do that, so we need to hear how it can access that expertise. The Minister is nodding, so hopefully he will be able to clarify that issue. I hope he is confident that the Electoral Commission has the necessary resources and expertise, or can at least access them.

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

I agree with the right hon. Gentleman, and I ask him to emphasise the point about the resources that are needed to investigate. There is a danger that we are sidetracked into the social media side of this, when, ultimately, the more important thing is the money. Does he believe that the Electoral Commission is sufficiently equipped, resourced and empowered to properly follow the money and to ascertain where donations come from, whether the original donors really own that money and whether the agencies and the Electoral Commission need more powers to properly track the finance and the politics?