Budget Resolutions

Paul Blomfield Excerpts

Monday 11th March 2024 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

After last Wednesday’s Budget, I was caught up in chaos at St Pancras, with most of the lines north out of action. Whatever the real reason, it was interesting to hear people around me talking: “Here we go again. Everything’s broken.” That is a reflection of so much that is happening in the country.

It reflects the experience of shocking NHS waiting lists. Previous progress on cancer survival rates is now slipping—that is appalling. People are unable to get a dentist: as we heard at the Health Select Committee and as the shadow Health Secretary, my hon. Friend the Member for Ilford North (Wes Streeting), said in his storming critique of the Government, some people are resorting to pulling out their own teeth. Schools are crumbling: in Sheffield, an estimated £45 million is needed for essential repairs of our schools, but only £3.4 million is available. Buses cost more while services decline, youth services have been cut, and knife crime is rising. A failing welfare system has created a massive growth in food banks—what we once thought a temporary phenomenon are now part of the welfare landscape—and local government in particular has been starved of funds. Over the past 14 years, Sheffield City Council has lost around half of its funding from central Government in real terms: a total of £3.6 billion, equivalent to £315 million less for this year’s budget alone.

Last Wednesday’s Budget—the last, we all hope, of a dying Administration—was a chance to begin to repair broken Britain, but the Chancellor missed it. He ignored the crisis across our public services; he also ignored public opinion, which puts those services before tax cuts. These were not decisions made in the public interest: like so many decisions over the past 14 years, they were made to manage the warring factions inside his party, regardless of the damage to our economy. The Chancellor likes to make claims about growth rates using convenient snapshots of statistics, but if we compare the last quarter for which figures have been published—quarter 4 of 2023—with four years earlier, we can forget those claims about leading the G7. According to the House of Commons Library, UK growth for that quarter was 1%, well below that in the eurozone and well behind Japan, Canada and the US. The National Institute of Economic and Social Research puts the UK’s annual growth rate at around 1.2% since 2010, roughly half the 2.3% rate seen under most of the last Labour Government.

The shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), is therefore right to focus on growth. There is no benefit in increasingly taxing an ever-diminishing cake, but it was interesting to hear the Secretary of State, the right hon. and learned Member for South East Cambridgeshire (Lucy Frazer)—who is no longer in her place—boast that UK tax as a percentage of GDP is well behind most of Europe and behind half of the G7, which it is. However, she is at odds with her Chancellor: he was looking admiringly at the US, where tax as a percentage of GDP is far lower, at 26.5%. It is a reflection of the flaws in the Chancellor’s thinking that there is no evidence from the US that it is that tax yield that has driven growth; if there is a lesson to be learned from the States, it is probably from Biden’s Inflation Reduction Act. In addition, tax in the US does not cover much of the spending that it does in the UK. Americans might have more money in their pockets, but they have to spend it on services that are funded by tax here, from refuse collection to health. The US spends much more on health than we do: 14% of GDP, compared with 9% here.

There was space to increase revenue in the Budget, but not to increase taxes on working people. Indeed, this Budget left those who could least afford it as tax losers. According to the Resolution Foundation, workers earning below £27,000—just under the average earnings in South Yorkshire—will be up to £500 a year worse off because of the combined impacts since last August of the national insurance changes, which the Chancellor likes to talk about, and the threshold changes, which he likes to ignore. Instead, the Chancellor gave a capital gains tax handout to those selling second and third properties. His tax cuts hit those struggling most with the cost of living crisis, but they leave unprotected Government Departments worse off: less money for education, less for local government, and less for most Departments. There is not enough for the NHS to pay its staff the wages that they deserve.

There were choices. We could have had a Budget that focused on public services and investment in growth; we could have had one that used the opportunity to raise taxes from those who could afford it, beyond simple game-playing on non-doms. This Budget did not do those things. It failed the country, as this Government have for 14 years. It showed again why it is time for change, and time for a general election.