Budget Resolutions and Economic Situation

Rachel Hopkins Excerpts

Thursday 16th March 2023 Commons Chamber

[Rachel Hopkins (Luton South) (Lab)]

The Budget is an opportunity for a Government to demonstrate their priorities, and what we saw yesterday is a Conservative Government content to oversee the managed decline of the economy while dishing out a bung to the richest 1% and their pension pots, at the same time as working people continue to suffer. The Resolution Foundation has stated that 67% of the childcare and pension tax changes will go to the richest half of households. The policies in the Budget do not amass to a plan that commits to the serious long-term ambition that the UK economy needs, with no belief in the potential of the UK and no plan to tackle the declining living standards of my constituents. Quite simply, the House has been presented with a Budget that barely papers over the cracks of 13 years of failure and makes no attempt to tackle the systemic issues damaging our communities.

Despite the Chancellor’s claims yesterday, the Office for Budget Responsibility downgraded the UK’s long-term growth forecast and confirmed that the hit to living standards over the past two years is the largest since comparable records began. The UK is forecast to be the weakest economy in the G7 this year and the only country that will see negative growth, and we know that it is working people who will pay the price under the Conservative Government, with wages lower in real terms now than in 2010. That decline started with the Conservatives and the Liberal Democrats stripping our economy during the coalition years, which paved the way for the difficulties our communities now face.

This Budget represented a huge opportunity to break from 13 years of stagnation and unlock Britain’s potential, but that opportunity was well and truly ignored. The question for me is, where do yesterday’s announcements leave my Luton South constituents? Will they feel better off under this Tory Government in the months and years ahead? The answer is no. The average yearly wage in Luton is around £2,000 below the UK average. Not only does the Budget fail to take meaningful steps to close this gap; it also allows for more and more people to be forced into hardship. As the Resolution Foundation points out, the freeze to income tax thresholds since 2022-23 means that typical households will be £1,100 worse off by 2027-28, seeing their living standards continue to fall.

I know that many Conservative Members will point to employment levels, but they mask the surge in the number of people who are suffering in-work poverty, many of them relying on insecure contracts in the gig economy or multiple low-paid jobs. Low wages mean that people rely on universal credit and housing benefit to just about keep a roof over their heads. That is increasingly not enough, however, because the Government have frozen housing benefit for three years while rents have risen at their fastest rate in 16 years. Prosperous, thriving communities are not built on insecure, low-paid employment. Instead, pursuing decently paid and secure jobs with strong employment rights should be a key part of a Government agenda that prioritises creating a fairer society and a stronger economy.

What is in the Budget for the hard-working people of Luton South? Nothing but a continued squeeze on their living standards. Instead of sticking-plaster politics, we need an aspirational plan for the future. As the UK has the lowest business investment in the G7, the Conservative Government should be committed to working with businesses to encourage investment, not just giving out tax breaks and crossing their fingers. Indeed, the Institute for Fiscal Studies has criticised the Government’s lack of long-term certainty as “ridiculous”, and the Resolution Foundation has said that the measures will not increase business investment.

Small and medium-sized businesses in Luton South that have weathered the turbulence of the pandemic now need backing to return to firing on all cylinders. As the Federation of Small Businesses has said, however, yesterday’s measures are almost as though the Government think the small business community does not exist. The UK will benefit from the creation of good, well-paid, future- proof jobs in our communities only if the Government create the environment for businesses to grow.

With Luton’s historic connection to the automotive sector through the Vauxhall plant, we needed the Budget to include support to tackle the increased costs, and to facilitate the transition to manufacturing electric vehicles, all while rules of origin restrictions quickly approach. But Make UK has said that the Budget

“does little to tackle the real and immediate threat manufacturers face with rocketing energy bills”

and the Society of Motor Manufacturers and Traders has said that it includes

“little…that enables the UK to compete with the massive packages of support to power a green transition that are available elsewhere.”

Just look at Spain. Its Government have announced a huge investment into the electrification of automotive manufacturing. Without Government action, we will fail to meet our climate targets or reap the benefits of delivering net zero. The UK and Luton’s proud traditions of automotive manufacturing, and the supply chains, need backing.

We need to build a better Britain, and it is clear once again that Conservatives are just not up to the job. As I said at the beginning of my speech, a Budget is an opportunity for a Government to demonstrate their priorities, but these Conservative priorities are not on the side of my Luton South constituents. We know that a Labour Budget would be, and it would be underpinned by a focus on delivering the highest sustained growth in the G7, creating good jobs and growing productivity across our country. We are ready to deliver the transformative change that communities such as Luton and the UK deserve.