Income tax (charge)

Patrick Grady Excerpts

Monday 16th March 2020 Commons Chamber

[Peter Grant (Glenrothes) (SNP)]

I commend the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) for his comments, and thank him for the measured tone in which he delivered them. It has been noticeable over the last few days that things have been a bit more calm and sensible here even when we have disagreed politically; perhaps we could keep that going after the public health crisis has passed.

I noted that the right hon. Gentleman could not resist having a wee dig at the Scottish National party Government for not having done up his bit of trunk road yet. Obviously I cannot speak for the Scottish Government, whose spending decisions are made in the Scottish Parliament, but I have had a quick look at the Scottish Parliament’s website, and I have the contact details of the MSP for Dumfriesshire, which I can pass on to the right hon. Gentleman later. He is some chap by the name of Oliver Mundell. [Laughter.] I do not know whether he is still holding surgeries, but I can probably find his phone number for the right hon. Gentleman.

I am pleased to be able to speak on behalf of the SNP today. Our position is a bit different from those of many other parties, in that we will be keeping out of many of the detailed discussions about which health trusts and local authorities receive funding, because we have a devolved national Parliament to make those decisions on our behalf. As the previous three speakers made clear, although today’s debate is about the funding of public services, we cannot ignore the rapidly changing public health challenge that faces all four nations in the United Kingdom—and, now, the majority of nations in the world.

The statement that will be made later by the Secretary of State for Health and Social Care will be the right occasion for detailed questioning about the Government’s approach to those health challenges, but I want to consider some of the significant, and even potentially fundamental, changes that the economy will undergo as a result of them. The right hon. Member for Dumfriesshire, Clydesdale and Tweeddale—the former Secretary of State for Scotland—commented on the permanent change that the foot and mouth outbreak made to the economy of rural Scotland 20 years ago. This is much bigger, and its impact on the economy throughout these islands will be much bigger, and will probably be permanent.

My hon. Friends who spoke in last week’s debates will have specified which of the Government’s emergency actions we fully support—and there are a great many of them—as well as some instances in which we would like to see more being done, and a few in which we think that the action is simply going in the wrong direction. I hope that, at all times, the discussion of those matters can be kept as civilised and as temperate as it has been over the last few days. The situation has changed significantly since my colleagues made those comments on Wednesday and Thursday last week, and it has changed significantly since the Chancellor’s Budget speech. It is vital for the Government’s response to those changes to be not only sufficiently robust, but sufficiently flexible.

I am encouraged by the degree of co-operation on the part of the UK Government—through Cobra, for example—in agreeing on our combined and shared response to the public health issues, and I hope that we can see a similar degree of proper engagement when it comes to how to deal with the economic challenges. It must be said that, on those matters, the UK Government have not always engaged positively and constructively with the devolved nations in the past.

Let me give just one apparently small example of the way in which the coronavirus outbreak is already affecting my constituency. Like many other constituencies—perhaps most—we are blessed with a huge number of brilliant, independently owned cafés and restaurants. “Restaurants” sounds quite grand, but I am talking about places that can hold, at the most, 20 or 30 people who come in for a plate of soup and a bacon roll for their lunch. Their collective contribution to my communities and to all our communities, not just economically but socially, is impossible to measure. Several of them have changed hands recently or have been established for less than a year, while others have been on the go for decades. Obviously, I am not privy to any of their individual financial affairs, but I doubt that any of them would survive for two, three or four months without any customers—if that is how some people are interpreting Government advice, that is what those businesses would have to put up with. Clearly, it is not as bad as that, but it is an indication of the fact that those small businesses will need some severe Government intervention, and some of them will need it very soon indeed. I am happy to support them as much as I can.

[Patrick Grady (Glasgow North) (SNP)]

There are various examples of that happening. The Hug and Pint, a fantastic little venue on Great Western Road in Glasgow North, has had to announce that it is going to close tomorrow. It has set up a crowdfunding campaign, as have various enterprises on the folk music scene in Scotland. Will my hon. Friend commend those initiatives to try to encourage business? People would have been going there in other circumstances for a pint anyway, so perhaps they can spare that money to help some of those small businesses through the most difficult period.

[Peter Grant]

My hon. Friend makes a valid point. That is sometimes an indication of how important many of these businesses are in their local communities. Neighbours do not just see them as a business and they will support them. The difficulty is that, if neighbours, customers and clients lose their jobs and suddenly find that they have to get by on a wholly inadequate social security system, they will not be able to afford to put £4 or £5 over the bar in the local community-owned pub, whether or not they get a couple of pints in return.

I support many of these businesses as best I can—some of them are very co-operative, allowing me to hold advice surgeries on their premises—but if I do what a lot of colleagues are doing and begin to cancel surgeries, and if I do not go to the local coffee shop and sit for an hour or so talking to people, no one else will do that. By making that decision—I understand why people want me to make it—I might well be hastening the time when many of these valuable businesses can no longer continue. If they close temporarily now, some of them will not reopen.

It is not just cafés, catering and hospitality businesses—the same goes for locally owned hairdressers, bakers, craft shops, one or two-person printers and many other businesses. Independent retail businesses may be small individually, but cumulatively, they represent the financial wellbeing of a vast number of people on these islands, many of whom stand to lose not just their job and livelihood but the very home in which they live. For many of these establishments—I am thinking especially of small bed-and-breakfast businesses and guesthouses—their business is their house. Many others have mortgaged their house to finance the business. They stand to lose everything apart from the clothes they stand up in if things go wrong, and they will need help quickly.

I welcome the emergency measures that the Chancellor announced last week, but I do not think that they go far enough. I fear that a great many small and valued businesses in my constituency, and in all our constituencies, will close and never reopen. At the other end of the scale, we have heard severe warnings from some of the biggest and most iconic transport operators in the UK and elsewhere. British Airways, for example, has warned that its survival is not guaranteed if it gets it wrong.

This morning, my journey to Edinburgh airport was the quietest that I can remember in five years as an MP; I do not come down on the train all the time. The car park where I usually struggle to find a space was deserted—you could have played five-a-side football without bumping into a car. The flight on which I often struggle to get a seat was 30% full. That is not sustainable. What I prefer to do when it is realistic is come down on the train. If I had done that, I would have seen another drop in business, although I do not know whether it is as big. Train operators are struggling as well.

Hotel bookings in London and many other places have crashed. Comparing prices on hotel websites with what they were three or four weeks ago, I see they are a half or a quarter the price, or even less. Those businesses cannot survive that, and there are tens of thousands—perhaps hundreds of thousands—of jobs at stake. It is not about bailing out the billionaires who own those high-profile businesses. It is about protecting the rights of tens of thousands of workers whose livelihoods are on the line.

Despite the torrent of platitudes from the Government, and despite the welcome measures announced last week, many of those hundreds of thousands of people face being thrown on to the mercy of a social security system that was utterly unfit for purpose before this crisis, and will be even more unfit to deal with the challenges that it will face. While the changes that have been announced are welcome, we need a lot more, and we are going to need them an awful lot quicker.

Detailed spending plans for Government Departments are going to be published, but there are worrying indications that the Budget is stretching public finances to the absolute limit. Page 5 of the report from the Office for Budget Responsibility says that public sector debt is likely to increase by £125 billion in four years’ time. That is assuming 20% of the promised capital spend does not happen. We cannot rely on economic growth to make the debt less painful to repay in five or 10 years’ time than it would be now, because Brexit is going to slow our economic growth by at least 4%, even if we get a good deal. The OBR commented that

“Public finances are more vulnerable to adverse inflation and interest rate surprises than they were”.

It strikes me that the fundamental problem of the Blair-Brown Government was that, in effect, we had a Chancellor of the Exchequer who by instinct was a Keynesian but who tried to do Thatcherite economics, and it failed. Now we have a Government packed full of Thatcherites and they are having a wee shot at Keynesianism, and I do not think that will work either.

As my hon. Friends have highlighted, the OBR also warns us that its

“forecast assumes an orderly move to a new trading arrangement”,

first with the European Union and then with the rest of the world. Given that the minds of the UK Government and of all our current and potential trading partners are, quite understandably, fully occupied by covid-19 and will be until after the June 2020 deadline by which the Government say they need to have at least the basics of a trade agreement in place, surely the Government will now finally admit that enshrining the end of the transition period—December 2020—in law was an act of criminal recklessness. They might not have known what crisis was going to happen in the intervening period, but it did not take a genius to work out that something might go wrong.

Although the Government announcements on public spending have been welcomed in many quarters, and rightly so, if we look at the hard facts behind those announcements, we find that the long-term sustainability of our public services is, if anything, less secure after the Budget than it was before. That is not helped by an illogical and immoral approach to immigration, which will contribute to a 0.3% drop in GDP over four years. Ludicrously, that immigration, or rather anti-immigration, policy takes more money out of the public purse, because even the lower-paid migrant workers—the ones the current Secretary of State for Scotland was so shamefully contemptuous of last week, accusing them of coming here to work on low wages just to take advantage of our benefits and our services—pay three times as much in taxes as they take in benefits. So by deliberately stopping them coming here, by deliberately stopping them earning and paying their taxes, the UK Government are deliberately creating an additional black hole of £1 billion to £1.5 billion in our public finances.

Today, I heard the head of Scottish Care, who represents Scotland’s private sector care providers—and yes, I have issues relating to some of the private care providers in Scotland—say how moved he was by so many workers in the sector offering to move away from their families and become residents in care homes or hospitals for several weeks, just to make sure that the people they care for do not lose out if several members of staff have to phone in sick. They are the very workers whom the Government regard as burdens on our public services. As for the idea that hard-working, low-paid NHS workers should have to pay an extra flat-rate tax of £624 a head just for the privilege of continuing to work in our NHS, I cannot describe it in language that you would allow, Mr Deputy Speaker, because there is no parliamentary language robust enough to properly describe the sheer immorality of that proposal.

The Government will want to make a big noise about the new capital spending they announced—as I said, we will see when it actually happens—but we need to remember the very low baseline they are starting from. The National Education Union has pointed out that, in England, 3,731 schools need immediate repair and a further 9,972 will need significant work within two years at most, but the Treasury figures in the Red Book show that the Department for Education’s capital budget next year will be £100 million less than it is this year. How is that going to help? In contrast, the Scottish Government have replaced or substantially upgraded 928 schools since the Scottish National party came to power, and I am delighted that two thirds of all pupils attending secondary school in my constituency do so in schools that are less than seven years old. In Scotland, teacher numbers have increased for the fourth year in a row—[Interruption.] I hear muttering from the usual suspects on the Tory Benches. In Scotland, there are 7,485 teachers per 100,000 pupils; in England, the equivalent figure is 5,545.

I want to look at what the Government’s priorities appear to be. Working-age benefits are going up by 1.7%. If that was 1.7% on top of a similar increase every year for the past five or six years, it would not be too bad, but it is 1.7% on top of nothing for far too long. How can we defend a 1.7% increase in working-age benefits when MPs are getting 3%? I will not defend that to my constituents and I defy anyone in here to try to defend it to theirs. Perhaps one emergency step the Government need to take is temporarily to put Parliament back in charge of MPs’ pay rises and have this place unanimously agree that we are not taking a pay rise this year unless it is going to be at least matched by that for the lowest-paid workers in our society.

The new financial year starts in 16 days’ time. The Scottish Government, if they are lucky perhaps, have only just had confirmation of the full Barnett consequentials of this Budget—I am not convinced they have even got that yet. When we look at the potential impacts on the devolved finances of the covid-19 emergency, and we try to disentangle what additional funding is coming to the Scottish Government and what additional funding is not additional at all, as it has already been announced, it becomes quite difficult. I suggest to the Minister that this indicates that the current financial settlement—the fiscal settlement between the UK Government and the devolved Governments—needs to be completely revised, because it simply does not give the Scottish Government the flexibility they need to respond to this crisis in the same way as the UK Government need to be able to respond.

I saw a comment recently that pointed out that it is sad that it has taken a public emergency and a public crisis to force the Government to do some of the things they should have been doing previously. Even now, in responding to a public crisis, they have not acknowledged the tens of millions of private crises that have been going on in these islands in the past few years under this Administration. Far too many people are still living in poverty and that number will increase significantly as a result of the coronavirus crisis. It is essential that the Government look at their spending and taxation plans, initially to make sure that as many as possible of those whose domestic finances are severely disrupted by this crisis are back on their feet financially as soon as possible. The Government then have to acknowledge that we are starting from a position where far too many people on these islands are living in poverty or close to it, and that for that to happen in the fifth, sixth or seventh biggest economy in the world, depending who you believe, is utterly shameful. For any Government to be presiding over those levels of poverty 10 years after coming into office is something they cannot be proud about.