Budget Resolutions
Rachel Reeves Excerpts(2 months ago)
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Rachel Reeves (Leeds West) (Lab)
The stark reality of yesterday’s Budget is clear: taxes rising, living standards falling, growth stalling, and yet again the Tories making promises that they cannot deliver. They have failed on the economy, they are out of ideas and they are out of time.
Let me turn first to the most, and potentially only, remarkable bit of the Budget statement yesterday. After an hour and 10 minutes, the Chancellor of the Exchequer seemed to float an idea of getting rid of national insurance altogether. I was not quite sure what I had heard, but then Ministers started touring the TV and radio stations to say that that indeed was their intention. In what seems to have been a casual afterthought, the Chancellor has made a £46 billion unfunded commitment, leaving a gaping hole in the public finances, even bigger than the unfunded tax cuts announced in the Tory kamikaze mini-Budget just 18 months ago.
Let me ask the Secretary of State for Work and Pensions this: how does the Chancellor plan to pay for the £46 billion tax pledge made yesterday? To be more precise, what is the Chancellor’s assessment of the impact that £46 billion of tax cuts would have on borrowing, tax rises elsewhere or public spending, or has he simply managed to find the same magic money tree that his predecessor was so fond of? This is an omnishambles Budget from a desperate Tory party. Instead of recklessness, Labour will take a different approach: as Chancellor, I will never make a commitment without saying where the money will come from. That is the responsible approach.
Let us turn now to the other tax cuts that the Chancellor announced yesterday. Two years ago, when the current Prime Minister wanted to increase national insurance, we opposed it. Since then, I have consistently said that I want taxes on working people to be lower and so, just as we supported the last cut to national insurance, we support the measures announced in the Chamber yesterday to bring it down by a further 2p.
Let us be clear, however: the measures come in the context of a rising tax burden, the highest it has been in 70 years, and the tax burden is rising in each and every year of the forecast period. For every £10 that the Government are taking from families in higher tax under their plans, they are only giving £5 back. They are giving with one hand and taking twice as much with the other, and they expect people to be grateful.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Does my right hon. Friend agree that the Prime Minister’s tax plans will leave households on average £870 worse off under the Conservatives?
Rachel Reeves
My hon. Friend has done the maths and is absolutely right. Taking into account the changes to the tax threshold, the announcements yesterday and in November, and council tax, by the end of the forecast period the average family will be £870 worse off.
As the Resolution Foundation highlighted just this morning, the 8 million tax-paying pensioners will see their taxes increase by an average of £1,000. That is a collective £8 billion tax grab from our nation’s pensioners. As Paul Johnson, the director of the Institute for Fiscal Studies, said yesterday:
“This remains a parliament of record tax rises.”
That is the legacy of this Conservative Government.
The Tory Government’s pickpocketing has meant higher taxes on working people, leaving them with less money at a time when their daily lives are getting more expensive. Yesterday, the Chancellor said that a person on average earnings is £900 better off, but let us take a look at that claim. He has ignored not only his own stealth tax rises, with the tax thresholds and council tax, but the rising costs of energy bills, food, mortgages and rent. In fact, rather than being better off, as he claimed, household disposable income is set to fall by £200 per person over the course of this Parliament.
Peter Grant (Glenrothes) (SNP)
I completely agree that deliberately leaving tax thresholds untouched at a time when pay and prices are increasing is a stealth tax. It is a stealth tax when this Chancellor does it, but it was also a stealth tax when Gordon Brown did it.
Rachel Reeves
It is interesting to have an intervention from the SNP, which is increasing taxes on ordinary working people—I would probably just stay on the Bench.
This is the only Parliament on record in which living standards are set to be lower at its end than at its beginning. The Chancellor chose to ignore all those realities, but the truth is that ordinary families cannot ignore them. As people up and down the country know, the definition of being better off is having more money. Under the Tories, people have less. People feel worse off because they are worse off.
Let us look at economic growth. Growth is critical for our success as a nation, for our living standards and for provide sustainable funding for public services, but the Tories have failed there, too. The context of yesterday’s Budget is a Prime Minister who pledged growth but has delivered recession. This economy is now smaller than when the Prime Minister took up office. Instead of bouncing back, the UK’s GDP is bumping along the bottom this year.
In his statement, the Chancellor rightly elevated the true measure of success:
“not just higher GDP, but higher GDP per head.”—[Official Report, 6 March 2024; Vol. 746, c. 837.]
I agree with him that that is the most important yardstick, so how are the Tories doing against that measure? The reality is that GDP per capita is set to shrink, not grow, this year, having shrunk and not grown last year, too. GDP per capita is now expected to be lower at the end of this year than it was at the start of this Parliament. Yesterday, we learned that forecast GDP-per-capita growth has been revised down for four of the next five years—hardly the success that the Chancellor was looking for.
The Chancellor said that it was important not to follow a path that relied on net migration to provide growth and GDP, and I agree. Has the Secretary of State for Work and Pensions seen the chart on page 29 of the Office for Budget Responsibility economic and fiscal outlook, which shows that net migration has been revised up by 350,000 over the next five years? That is the exact opposite of what the Chancellor spoke about.
Our country has gone through a difficult time over these past few years. The origins of many of the crises we have faced are global: pandemic, war, and the energy crisis. Other countries have also experienced those shocks, but each time crisis has hit, Britain has found itself acutely exposed because of the choices of successive Conservative Governments: austerity that choked off investment, then Brexit without a plan, and then the Tories crashed the economy with their kamikaze Budget.
This Tory record of economic failure has held our country back for far too long. If the UK economy had grown at the average of the OECD rate since 2010, when the Conservatives came to office, it would now be £140 billion bigger than it is today. That is equivalent to £5,000 per household every year, and would mean an additional £50 billion in tax revenues to invest in our public services. Growth matters, but the Tories are incapable of delivering it. [Interruption.] The hon. Member for Newcastle-under-Lyme (Aaron Bell) says from a sedentary position that we are doing better than the G7. There are only two G7 countries in recession today: us and Japan. That is the Conservatives’ record, and they should be ashamed of it.
This is the 12th Tory plan for growth in 14 years, and we are still in recession. Twelve plans from five Prime Ministers and seven Chancellors, with none of them succeeding. We are trapped in a Tory doom loop of low growth and high taxes, and it is working people who are paying the price.
Richard Graham (Gloucester) (Con)
I am struggling a bit with the right hon. Lady’s figures. My own calculations suggest that this year, pensioners will see an increase of £900 from an 8.2% increase in the state pension as a result of the triple lock. In all, I think, pensioners will be getting £3,700 more than they were in 2010. That is a huge increase in their income, alongside all the help with the cost of living and winter fuel, yet the right hon. Lady was saying earlier that pensioners are going to be worse off. I do not follow her maths; can she help?
Rachel Reeves
Those numbers about pensioners who pay tax are from the Resolution Foundation. They were published this morning, so the hon. Gentleman can also look at them, but it is a fact that because the tax thresholds have been frozen, pensioners who pay tax are paying more tax than they were before. That is the legacy of this Government. This is not just about lines on a graph. It is about our high streets, it is about whether businesses grow, and it is about whether we can create secure, well-paid jobs in all parts of the country, with more money in the pockets of working people, because if an economy does not work for working people, it does not work at all.
When the Tories are not pickpocketing the taxpayer, they are pickpocketing Labour policies. Having spent years defending the indefensible, the Tories have belatedly listened to Labour and recognised the importance of closing the non-dom tax loophole. I believe that if people make Britain their home, they should pay their taxes here too. The Office for Budget Responsibility says that the steady state amount of revenue raised by the non-dom policy is £3 billion per year. I first called for that loophole to be closed when it entered the public consciousness two years ago that some people were not paying their fair share of taxes, meaning that we have missed out of £6 billion in tax revenue—money that could have been invested in our public services.
If any further proof were needed that Labour is winning the battle of ideas, it is our time-limited windfall tax on the oil and gas producers. Having originally opposed the creation of such a tax, the Tories were dragged kicking and screaming by Labour to create an energy profits levy. Even after yesterday’s announcement of a one-year extension, the Tories are still leaving gaping loopholes, meaning that many energy giants will still pay less in tax. Meanwhile, the SNP opposes our proper windfall tax while, just three weeks ago, it put up taxes on working people in Scotland—on teachers, nurses, and plumbers.
Rachel Reeves
I will happily take another intervention, if the hon. Gentleman wants to defend higher taxes on working people. Bring it on!
Peter Grant
Does the shadow Chancellor not understand that the SNP’s position is that there should not be a single windfall tax that punishes only north-east Scotland? A windfall tax should be applied to every sector that has profiteered from war, covid and price increases. Does she not understand that the SNP’s income tax policy means that low-paid workers—the people the Labour party is supposed to protect—pay less income tax in Scotland than they would in England, and that nurses and care workers are paid more in Scotland than in England? That is true, is it not?
Rachel Reeves
All I would say to the hon. Gentleman is: put that on your leaflet! The fact is that nurses, teachers and plumbers are paying more tax in Scotland. At the same time, the energy giants that are making huge profits from the windfalls of war will pay less tax under the SNP. That is its record, and it should be ashamed of it.
Labour is committed to investing more in our schools and hospitals. That was a priority before the Budget, and it remains a priority, because public services are on their knees after 14 years of Conservative failure. Labour believes in aspiration for all our children, and we will not stand by while the roof falls in on state education under the Tories. History is repeating itself: children are again being taught in portacabins, as they were when I was at school under a Tory Government. When the Tories undervalue our young people, they are squandering their potential and undermining our whole country’s future. That is why the next Labour Government will close the tax loopholes enjoyed by private schools. The money raised from ending their exemption from business rates and VAT will instead go where it is needed—to help the 93% of children in our state schools.
I will always be clear that all the policies in our manifesto will be fully costed and fully funded. Now that the Tories have U-turned on their policy on non-doms, which we welcome, we will do the necessary work to show how our plans will be paid for. We will set that out in an orderly and responsible way. Our public services are in a mess under the Conservatives, but a Labour Government will begin to turn them around, give an immediate injection of cash to our schools and our hospitals, and tackle Tory waste, through a serious plan to grow our economy and provide the sustainable finance that our public services need.
It takes some nerve for the Chancellor to wag his finger at local councils this week, when the Tories and the Prime Minister have squandered billions of pounds of taxpayers’ hard-earned money. Who has used excessive numbers of management consultants in central Government? The Tories. Who signed the cheques and lost an additional £10 billion through dodgy personal protective equipment contracts? The Tories. Who left the vaults open, so that organised criminal gangs could help themselves to £7 billion of public money through covid fraud? The Tories. Who made a costly mess of HS2? The Tories. Who handed £500 million to the Rwanda Government, and has nothing to show for it? The Tories.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Will my right hon. Friend give way?
Chi Onwurah
My right hon. Friend is absolutely right, because every area of Conservative spending has a dimension of waste or profligacy. Does she agree that the £15,000 of taxpayers’ money spent on settling the attack made by the Secretary of State for Science, Innovation and Technology on a British scientist—an entirely unfounded and defamatory attack—would have been so much better spent supporting British scientists to drive British economic growth?
Rachel Reeves
I think taxpayers will find it pretty grating to see their tax bill go up, when that money was spent so callously and casually. Meanwhile, the Chancellor failed to do the right thing yesterday, when he did not set out in the Budget compensation for those affected by the infected blood scandal or for wrongly accused sub-postmasters. That is an abdication of responsibility, and a betrayal of all those who have fought for justice for so many years, and it will not be forgiven.
I am under no illusion about the scale of the challenge that we may inherit, or the scale of the task of rebuilding our economy and country. Labour’s economic plan will take Britain from instability and short-termism to a mission-based Government, prioritising economic growth and security for families and our country—a Government built on the pillars of stability, investment and reform. Stability is brought about by iron discipline, guided by strong fiscal rules and robust economic institutions. Investment is brought about by working with the private sector, so that we can lead the industries of the future through a modern industrial strategy. A new national wealth fund will invest, alongside business, in our automotive sector, renewables-ready ports and the future of our steel industry. Reform starts with our planning system; we will take on vested interests to get Britain building again, support working people in developing the skills that they need to thrive in the changing world of work, and make work pay with a genuine living wage and a new deal for working people. Our economy needs change. Britain needs change.
The verdict on the Budget is in. There is no long-term plan for growth, and leading business organisations agree. The Institute of Directors said that the Budget
“fell short of delivering a comprehensive plan for sustainable growth.”
The British Retail Consortium said:
“the Chancellor has done little to promote growth and investment”.
The Trades Union Congress has highlighted that real pay is still below where it was in 2008. Whichever way we look at it, the Tories have failed on the economy. The damage is done. Nothing this week will compensate for the fact that people are worse off under the Tories. Taking £10 and handing back £5 is a swindle, not a giveaway. Working people pay more, pensioners pay more and homeowners continue to pay more. Reckless and desperate promises are repeated.
The lesson from the Budget is simple: the Conservatives cannot be trusted with the economy. The questions that people ask ahead of the next election are simple: are my family and I better off after 14 years of Conservative Government? Do our schools, hospitals, police and transport work better than when the Conservatives came to office 14 years ago? Frankly, does anything in our country work better than when the Conservatives came to power? The answer is a resounding no. If the Tories had any confidence in their plans and their record, they would name the date of the general election. It is time for the British people to give their verdict on 14 years of Tory failure. Only Labour can provide the change that our country so desperately needs.
Several hon. Members rose—
Budget Resolutions and Economic Situation
Rachel Reeves Excerpts(1 year, 1 month ago)
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Rachel Reeves (Leeds West) (Lab)
The reality of yesterday’s Budget is clear: long-term growth downgraded, household incomes falling, public services on their knees. Families are facing the biggest hit to living standards since records began. The only surprise was a huge handout to the richest 1% of pension savers. Yet again, working people and businesses—the key to our economic success—have been put at the bottom of the pile.
The questions people will be asking themselves after 13 years of Conservative Government are these. Am I and my family better off? Are our school, hospitals and transport systems working any better than 13 years ago? Frankly, is anything in Britain working better today than it did when the Conservatives came into office? The answer to those questions is a resounding no.
Labour believes that the tax burden must be shared fairly. That is why I have announced today that Labour will reverse the changes to tax-free pension allowances. It is the wrong priority, at the wrong time, for the wrong people. Instead, we would create a targeted scheme to encourage doctors to work overtime and not to retire early. That could be done at a fraction of the cost, as the British Medical Association has said.
The Government’s policy to give tax cuts to the wealthiest 1% is unravelling before our eyes. Paul Johnson, the director of the Institute for Fiscal Studies, says that even on the “optimistic” Office for Budget Responsibility costings, it will cost an eye-watering £100,000 per job retained. The Resolution Foundation said:
“The beneficiaries from these reforms stand to gain large amounts, and they are heavily concentrated among the very rich”.
It added that
“this giveaway could lead to inheritance tax ‘abuse’”.
Pensions expert John Ralfe has said that
“this is not about supporting a hard-pressed NHS, it is really a tax giveaway...for the very highest earners.”
Labour recognises the mess that the Government have got into with our NHS workforce planning, and we have called for changes to doctors’ pensions, but we will oppose this untargeted scheme for the wealthiest and we will put this measure to a vote in Parliament next week. I defy Conservative Members to vote in favour of a policy that they know will do absolutely nothing to lift the living standards of their constituents.
Last autumn we saw the Chancellor of the day announce reckless tax cuts to help the richest, too. Why does this keep happening? The reason why the Tories get the wrong answers is that they have the wrong priorities for our country and the wrong analysis of the economy. Wealth does not just trickle down from the top; it comes from the efforts of millions of working people and thousands of businesses. That is Labour’s approach to growth.
Theresa Villiers (Chipping Barnet) (Con)
The right hon. Lady denounces the abolition of the lifetime allowance, but it was actually something that never applied under Labour at all. If Labour is so concerned about its loss, why did it not introduce it in the first place?
Rachel Reeves
Gordon Brown introduced a lifetime allowance for pensions savings, as I am sure the right hon. Lady remembers. However, the point here is about priorities. For all our constituents, there is an average tax increase per household of £650, starting next month with the freezing of the tax thresholds and the increase in council tax. Yet yesterday, the only permanent tax cut provided in the Budget was for people who already have pensions savings of more than £1 million. I just do not believe that that is the priority for our constituents, and I think hon. Members right across the House, if they think about it, know that too.
Mr Deputy Speaker—is that what I call you?
Rachel Reeves
It is wonderful to see you in your place. We were told that this was a “Budget for growth”, but the documents published with this Budget confirm that the UK economy will shrink this year. The Chancellor expects us to cheer at the news that the economy will shrink a little bit less than he previously thought. Is that really what “good” looks like for the British economy?
The Office for Budget Responsibility also confirmed that we will have the weakest growth in the G7 this year and next year, and it saw growth downgraded for each of the last three years of the forecast period. All the while, the UK is the only G7 economy that is still smaller than it was before the global pandemic.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
This Budget will not do a great deal for my Slough constituents who are really struggling to make ends meet and pay their bills, apart from a big tax cut for the very richest in our society. My constituents will have the highest tax burden and the biggest drop in disposable income since the second world war inflicted on them. Does my right hon. Friend agree that this Budget will not actually help to solve the cost of living crisis?
Rachel Reeves
I have spent time in my hon. Friend’s Slough constituency talking to working people and businesses. On the most recent couple of visits there, I do not remember anyone saying, “The big priority for families and businesses in Slough is a tax cut for the 1%.” Instead, they were saying, “Let’s have a targeted scheme for the NHS, as Labour has called for, instead of this blanket approach for the top 1%.”
The Government have, to be fair, given us some growth: growth in stealth taxes, growth in mortgage costs and growth in NHS waiting lists. There is no plan for the future, just a Tory legacy of pain. It will take a Labour Government to spark and sustain growth, lift people’s living standards in every part of the country, meet the challenges of the future and achieve the change that our country desperately needs.
When I meet people in industry, I hear frustration from employers who cannot get and retain the staff that they need. It is a feeling the Tories know all too well, with three Prime Ministers in one year, and the current Chancellor the fourth in that role since just last summer. Yet somehow, it is the same Tory Government. It is a bit like Trigger’s broom in “Only Fools and Horses”, with its 17 new heads and 14 new handles, only much less useful.
After his five months as Chancellor, the right hon. Member for South West Surrey (Jeremy Hunt) might feel that he should qualify for a Conservative party long-service award. In fact, of the past three Chancellors, he is the first to deliver a Budget, although the last Chancellor did last long enough to deliver a mini-Budget that crashed our economy—an extreme experiment in ultra-Tory ideology, using Britain’s economy and people’s livelihoods as their laboratory. It must never happen again.
Alex Cunningham (Stockton North) (Lab)
Our country has some amazing assets and amazing opportunities to invest in the green industries of the future, but we see a lacklustre plan from the Tory Government to exploit them. Does my right hon. Friend agree that this Government of gimmicks have all but given up on leading the way and creating jobs and opportunities as we decarbonise our economy and, in reality, want to import everything from abroad? Surely it is time that they nicked our plan.
Rachel Reeves
I know that in my hon. Friend’s constituency, there are huge opportunities for the jobs and industries of the future—for example, in carbon capture and storage and in green hydrogen.
I will not be churlish: I must admit that there were some good ideas in the Budget yesterday—the ones that my colleagues and I have announced in the last few months, which we are happy to support. There was a fairer deal for people on prepayment meters who are paying a premium—we called for this last August. There was also preventing a fuel duty increase, a plan to help the over-50s back into work and better childcare provision for working parents. They were all called for by Labour and are now backed by the Tories. The truth is, however, that after 13 years of Tory Government, people will rightly ask, “Is that it? Is that really all they think it takes to reverse 13 years of low growth, falling living standards and crumbling public services?”
Of course, we welcome the freeze in energy prices—after all, we proposed it—but politics is about priorities. Labour first called for a windfall tax to help people with their bills 14 months ago. We were clear that keeping energy prices down was our top priority, and that it was wrong for oil and gas giants to profit from the windfalls of war at everyone else’s expense. Yet again, however, the Chancellor chose yesterday to leave billions of pounds of windfall profits on the table, which could be supporting families and businesses during this cost of living crisis. It is a question of who pays, and the Government are turning to the public and saying, “You.”
There seems to be a disconnect between what I heard from the Chancellor yesterday and the experiences of my constituents and many people across the country. The Tories claim that their plan is working, but the Resolution Foundation says that the typical household will be £1,100 worse off as a result of the Government’s policies over the period of just this Parliament. Is that really what success looks like to them?
The reality is that people are still weighed down by a prolonged cost of living crisis that is taking its toll. Debt advice organisations have faced a tidal wave of demand from people, but incredibly, the jobs of thousands of debt advisers are at risk. Let me be clear: more people are struggling not because they have forgotten how to budget, but because Tory Budgets are simply not working for them.
One of the biggest costs people face is their monthly mortgage or rent. The Chancellor said yesterday that the impact of the mini-Budget had disappeared—seriously? He should tell that to the family facing a £2,000 hike in their mortgage payment, as confirmed by the Office for Budget Responsibility yesterday. That means less money to spend on the local high street, meals out with the family or an annual holiday. That is the lasting damage that the Conservatives have done to the living standards of working people. The last thing that the country needed in the middle of a cost of living crisis was a Tory mortgage penalty.
Despite all the damage that the Tories have done, I am optimistic about the future for our country. I have had the privilege of seeing great innovation across Britain, from the development of battery operated trains at Hitachi in County Durham to hydrogen-powered engines at JCB in Staffordshire and pioneering research at Rolls-Royce into carbon neutral aviation. I know the potential that we have as a country. That is what Labour’s green prosperity plan is all about. It is a plan to decarbonise our economy, drive down bills and let British businesses and workers compete in the global race for the jobs and industries of the future.
Iain Stewart (Milton Keynes South) (Con)
The right hon. Lady rightly points to the great innovation, research and development that is happening in British companies. Does she not agree that the measures that the Chancellor announced to help to discount research and development will be a major boost to such industries?
Rachel Reeves
The problem is that last autumn, the Chancellor announced a scrapping of the R&D schemes, but then brought back something this week that we are supposed to cheer about. The plan that Labour has set out will rely on Government and business working and investing together.
As President Biden’s Inflation Reduction Act galvanises green energy in the United States and Governments from Europe to Asia and Australia respond, it is not enough here in Britain to cling to old ideas and old methods while other countries steal ahead in the global race. Our growth plans will be alongside a modern industrial strategy, reform of business rates, changes to the apprenticeship levy and measures to fix the broken Brexit deal in order to increase the order books for British industry. There is so much more that the Government could be doing to boost growth, create good jobs and get Britain’s economy firing on all cylinders, but I heard so little of that in the Chancellor’s Budget yesterday.
The verdict is in. The Federation of Small Businesses says that the Budget leaves “many feeling short-changed” and that
“the Government’s lack of support for small firms in critical areas is glaring.”
It says that
“trickledown economics here simply does not work.”
The British Chambers of Commerce highlights that, yet again, the Government
“failed to reform business rates”,
and the Society of Motor Manufacturers and Traders says:
“There is little that enables the UK to compete with massive packages of support to power a green transition that are available elsewhere.”
The Institute for Fiscal Studies describes capital expensing as “temporary tweaks”, concluding that:
“There’s no stability, no certainty, and no sense of a wider plan.”
As for working people, the TUC points out that:
“Real wages will not return to 2008 levels until 2026”
and that
“workers across the economy will have looked at this Budget and thought ‘was that it?’”.
This is a Government who are struggling to paper over the cracks after their 13 years of neglect and shoddy workmanship. The roof is leaking, the windows are rotten and the foundations are suffering from subsidence. The Tories are totally incapable of building the country and economy that we need.
Alex Cunningham
I am grateful to my right hon. Friend for giving way a second time, even though she would rather not. I wonder whether she has seen the comments from the Federation of Small Businesses, which said that, on investment in the labour market, the measures that small businesses were looking for are missing, and that the measures are well wide of the mark and irrelevant to the 5.5 million-strong small businesses in our communities.
Rachel Reeves
Small businesses are the backbone of our economy, and the words from the Federation of Small Businesses should have a chilling effect on those on the Government Front Bench.
Beyond the economy, growth rates and living standards, if we want any further evidence of the Government’s failure, just look at our public services. Public services play a crucial role in achieving a strong economy and a good society. They adapted during the pandemic and were critical to our response in the fight against covid, with people taking personal risks to keep others safe and supported. Thirteen years of Conservative Government has weakened our public services and devalued the people working in them. Labour would make choices in the national interest.
Yet again, the Budget failed to abolish non-dom tax status. As we know, non-doms have no bigger champion than in Downing Street, but Labour believes that those who make Britain their home should pay their taxes here. The non-dom rules are costing us £3 billion every year. Ending that tax exemption could fund the biggest expansion of the NHS workforce in a generation.
It is not just our NHS that has suffered. We have lost all kinds of community assets over the last 13 years, from libraries to Sure Start centres and youth clubs. Let us take one example: since 2010, 382 swimming pools have closed in England under the Tories. Yesterday, the Chancellor announced a £63 million package to keep the remaining ones open, but, at the same time, the Prime Minister has upgraded the local electricity network to heat his own swimming pool. I wonder whether he will be inviting the local kids who have lost their swimming pools to come and use his facilities.
This Government have no plan to clean up the mess they have made over 13 years. Each and every time they promise to solve a problem, they fail and the country pays the price. We need a Budget for growth, yet growth has been downgraded. We needed to raise living standards, yet household incomes are falling at their fastest rate since records began. We needed a proper windfall tax on the energy giants, but instead they continue to enjoy the windfalls of war. We needed a Budget for home ownership, yet mortgage costs have risen because of the Tories’ kamikaze mini-Budget last year. We needed a Budget with a plan to invest in our NHS workforce, but the Prime Minister and Chancellor chose to defend the non-doms instead.
The Tories have had their chance and they have blown it; they are out of ideas and they are out of time. We need a general election and a Labour Government to give our country its future back.
Mel Stride
I am very happy to engage in detail with the hon. Gentleman on the specific point he raises, but as to the general point of removing the pensions lifetime allowance, Labour has to decide exactly what its policy is. The right hon. Member for Leeds West (Rachel Reeves) tells us this afternoon that she is against the policy, but we know that it will mean that thousands upon thousands of additional highly skilled people working in the national health service will as a consequence stay in the national health service where we need them. The shadow Health Secretary, the hon. Member for Ilford North (Wes Streeting), who is in his place on the Front Bench, made exactly the same point not that long ago—[Interruption] —saying that a failure to act could cost lives. I say to the right hon. Lady: what is it? Political opportunism, or standing shoulder to shoulder with our national health service and the millions of people up and down the country who depend on it?
Rachel Reeves
My hon. Friend the Member for Ilford North (Wes Streeting) called for a targeted scheme for doctors. That would be at a fraction of the cost. Can the right hon. Gentleman tell me how many doctors will benefit from this scheme?
Mel Stride
I have made it very clear that thousands upon thousands will be affected. The right hon. Lady is adopting a completely perverse policy in view of the position taken by the shadow Health Secretary until quite recently, when political opportunism around this Budget reared its head. I say that we should stand up for the national health service and the millions of people who depend on it, and we should do what is right for them. That is the right thing to do.
This is also a Budget for parents, with a multibillion-pound extension to childcare support. I note and appreciate the right hon. Lady’s welcome for those proposals. They formed a major centrepiece of the Budget, and I am pleased that she has personally welcomed them.
Statutory Sick Pay and Protection for Workers
Rachel Reeves Excerpts(4 years, 1 month ago)
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Rachel Reeves (Leeds West) (Lab)
It is an honour to follow my right hon. Friend the Member for East Ham (Stephen Timms), who made a powerful speech, particularly about refugees and asylum seekers. Their plight, and the specific issues they face, have not been discussed nearly enough in the past few days and weeks.
At times of national and, as in this case, global crisis, only Governments have the resources to protect our society and our health, to protect the most vulnerable, to protect businesses and production, and to protect workers. Markets cannot do that; only the Government can. That is why the Government must step up to ensure that we protect all our citizens, to direct our national economy, to help and support the people who most need it, and to ensure that resources get to where they are most needed.
I will talk primarily about issues with statutory sick pay, but let me first say something about the reports in the newspapers today that some Harley Street clinics are offering coronavirus tests for £395. That means someone can get the test if they have the money, but someone who works in a GP surgery cannot get it. That is utterly unacceptable. The role of the Government is to intervene to ensure that resources go where they are most needed—not to the rich and powerful, but to the people delivering our frontline services, who need protection. I urge Ministers to do that.
The measures taken by the Chancellor yesterday were necessary and worth while to protect our economic infrastructure and to support the most severely hit sectors of our economy. They were also necessary to support businesses, which are not responsible for the collapse in demand they are experiencing. The same is true of workers—they are not responsible for the predicament they find themselves in—yet support for them was missing from the Chancellor’s statement yesterday. The Minister has said today—the Prime Minister has said it too—that everybody will be supported to do the right thing. We all want that, but I am afraid at the moment that is not the case. People are not being supported to do the right thing. For many people, the right thing is not to go to work—not to spread this virus, but to stay at home.
If we really want people to do the right thing, we need to support them to make that decision, so let me turn to statutory sick pay. This point has been well rehearsed in debate both today and yesterday, but it obviously needs to be made time and again, because so far the necessary measures have not been taken. Statutory sick pay is not enough for people to be able to support themselves and their family. The level of statutory sick pay is insufficient.
The ineligibility is also a huge problem. If people are self-employed or earn below the lower earnings limit, they are not able to get statutory sick pay. Some of the people who most need it are denied the support that the Government say is necessary. Other people may not be sick, but also need support. If they are self-isolating, they might not have symptoms or be sick, but the right thing to do is to stay at home. If we want people to stay at home, they need support.
Similarly, we will have a statement from the Secretary of State for Education later and if, as now seems inevitable, many parents will have to take time off work to look after their children, they will need support to do the right thing, although they will not be sick. Of course, many people also face redundancy because their businesses cannot employ them anymore. Or if they are self-employed, the work is just not coming in. At the moment, those people are not able to claim statutory sick pay, and they will have to wait in the queue for universal credit or ESA if they have the contributions. That is not supporting people to do the right thing.
Chris Stephens (Glasgow South West) (SNP)
Does the hon. Lady agree that as workers have had their shifts cancelled, or have been told that their hours will be reduced—many of them are on zero-hour contracts—they, too, need the support that she is rightly saying should be given to workers?
Rachel Reeves
The hon. Gentleman is right. For many people, if they have a temporary reduction in their work, they can draw on their savings, but many of the people I represent—and many of his constituents as well—do not have savings to draw on. The Resolution Foundation published evidence last week before the Budget—to try to influence the Budget—that showed that 60% of people on low and middle incomes have less than £100 of savings. They do not have the resources to draw on even temporarily for a short time to pay the rent or the mortgage, or to put food on the table.
We must offer more support. That is what other countries are doing. In Norway, full pay is given to those laid off for 20 days. The self-employed get 80% of their average income over the last three years. In Sweden, laid-off workers are guaranteed 90% of their income: the Government will pick up half of that and employers are expected to pick up the other half. In Denmark, the Danish state will pay 75% of the salaries of laid-off workers. That is the same in many other countries. If it is good enough in Denmark, Sweden, Norway and other countries in the European Union and elsewhere, it is frankly good enough for workers in this country too.
It is now urgent that the Government come to the House and tell us that support is not just available for business—although that is very welcome—but is available to workers as well. Unless that happens, people will not be able to self-isolate and stop the virus spreading. The health crisis will become an economic crisis and many people will pay the price for the virus. It does not need to be that way. Let us look at income replacement, and quickly, to ensure that help is available.
As important as helping people now is, if we put in place income replacement so that people are not laid off or made redundant, it will also support the economic recovery. The pandemic will pass—we must believe that and we know it is the case—but when it does, and people want to go out again and to start spending in shops, restaurants, bars, theatres and cafes and to travel on aeroplanes, we need to ensure that the economic fabric of our country is still intact. The best way to do that is to ensure that workers remain attached to the firms that have been employing then. Income replacement can help people now, but it can also ensure that our economy gets back on a sound footing when the crisis has passed. To build the economy we need to see after this, I urge the Government to introduce urgently a system of income replacement.
The issue of renters has also been mentioned by Front Benchers and others. There was support yesterday for people with mortgages, and that is very welcome, but many people, especially those in precarious work or on low pay, do not have mortgages—they rent privately or in the social sector. In my constituency, fewer than a third of homes are owner-occupied; the others are either in the private rented sector or the social rented sector, and we need to do much more to support those people as well, because if they are on statutory sick pay now, or have seen a fall in their incomes or are expecting to be made redundant, frankly they are not going to be able to pay their rent in the days and weeks ahead. It was welcome that the Prime Minister said there will be support for renters, but we need to see the detail of that, and we need to see that support coming directly to landlords and renters to ensure that nobody is penalised because they do not have the money to pay their rents right now. That requires support for local authorities, who are big letting agents, and big providers of social housing; the support needs to go to the housing associations too and also large landlords, and we should be working with local government to ensure that we are reaching and talking to the biggest letting agencies and estate agents to make sure that support is getting to the people on the ground.
Again, I cannot stress enough how important this is; this action is needed urgently. The representative of the hospitality sector said last night that we are staring at hundreds of thousands of redundancies in that sector alone, so income replacement and support for people in the rented sector is crucially important.
The support for mortgages is a three-month holiday, and I say again that I am not sure that that is the right approach in the private rented sector, because a three-month holiday on a person’s mortgage which can then be added to their mortgage debt is one thing, but if in three or four months’ time someone has four months’ worth of rent to pay, that is not going to be much good if they have found their incomes have not recovered by then. We therefore need to be sensitive about ensuring that the support is there for the period of time that it is needed for.
Finally, I want to say something about gas and electricity and broadband and television licences. These are all essential services for people, and they will be more essential in the weeks and days and months ahead as more people are having to stay at home. Broadband is now absolutely an essential service, because the only way that many people can get food delivered is by ordering online. Again I urge Ministers to say to the providers of those essential services that nobody should be cut off from those essential services as long as the pandemic lasts, because otherwise people will find themselves without the basic infrastructure to be able to stay in their homes.
This global pandemic has thrown into sharp relief some of the problems in our labour market and in our social security system, so when this is all over we cannot go back to business as usual. If people cannot survive on £94.25 statutory sick pay when there is a global pandemic, they cannot survive on £94.25 at any other time, so we need to look at the waiting time for universal credit and the level of statutory sick pay, and who is eligible for it, and also, frankly, how our labour market works. We have 1 million people on zero-hour contracts and we have almost 5 million people who are self-employed—some choose to be, but many have no choice—so we need to look at how our economy works and who it works for, because whether we are in the midst of a global pandemic or not, there are too many people in our country that our economy, our labour market and, frankly, our society do not work for.
Will Quince
I thank the hon. Gentleman for making that case. I know from my postbag and email account that a number of businesses and individuals affected, who are concerned on health grounds or who have concerns about their employment or financial status, will contact their Member of Parliament. We are not always the first port of call—we are sometimes the last—but we are one where people expect to be able to get a response quickly, so I will look at what further guidance and advice we can give to Members of this House and through local authorities. That point about getting the message out to local authorities may well have been heard, because the relevant Minister, the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Thornbury and Yate (Luke Hall) , is sitting on the Treasury Bench behind me.
The hon. Member for Newport West (Ruth Jones) raised the point about SSP and the rebate for employees, and whether that could be for more than two weeks. I understand the point she is making. The current Government advice is for people to self-isolate for seven days or for 14 days if in a household, so we feel that the two-week limit on rebates is a proportionate response. She also asked why SSP is not at the same rate as the living wage. The current system is designed to balance support for the individual with the costs to the employer. As the Minister for Disabled People, Health and Work mentioned at the beginning of this debate, we have put £1 billion into the welfare system to provide additional financial security for people, and people on low income can get a top-up, where applicable, through UC.
Numerous hon. Members, including the hon. Members for Sefton Central (Bill Esterson) and for Leeds West (Rachel Reeves), raised a point about the private rented sector. Today at Prime Minister’s questions, the Prime Minister did say that we will be bringing forward legislation to protect private renters from eviction, and the Ministry of Housing, Communities and Local Government is considering whether we need to go further on that point.
The right hon. Member for East Ham (Stephen Timms) and the hon. Member for Airdrie and Shotts (Neil Gray) both raised a point about the consultation on the lower earnings limit. Our immediate concern in dealing with the covid-19 outbreak is to ensure that a suitable financial safety net is in place, and the benefits system does provide that. We estimate that about 60% of people earning below the lower earnings limit are already in receipt of benefits. Our longer-term aim in that consultation was about preserving the link between the employer and the employee so that the individual receives appropriate support upon return to work. That is less relevant when most people are facing short periods away from work. I or the Minister for Disabled People, Health and Work would be happy to meet those Members at a later point to discuss that further.
Numerous hon. Members asked why the focus so far has been on businesses and has not just been about individuals. It is so important that organisations are able to carry on trading, which is why the initial focus of Her Majesty’s Treasury has been on supporting business and keeping people in work where it is sensible and appropriate, based on Government guidance, to do so. Ultimately, that protects so many individuals in our society, but of course we are also looking at other measures for workers.
The hon. Member for Newcastle upon Tyne Central (Chi Onwurah), the right hon. Member for East Ham and the hon. Member for Airdrie and Shotts all made the point about raising the level of statutory sick pay. We continue to look at other support for workers to see what best mechanisms are available. Thankfully, a period of absence is likely to be short—we believe between seven and 14 days—but we know that some may need extra support, as Members across the Chamber have said. We know that low-paid workers are likely to be receiving additional support through universal credit, for example, and the advantage of universal credit is that it will go up if income falls to the equivalent SSP level.
Rachel Reeves
I thank the hon. Gentleman for giving way and for addressing the points that hon. Members have made. It is true that people will not have to take that long off to self-isolate for their recovery, but overall, there is likely to be a suppression of demand in the economy for a longer period. The idea that people may be off work for only one or two weeks is fine if that is for health reasons, but if it is because their business is closed or there is just not work available, it is likely to be a lot longer. That is the point that many Members have been trying to make.
Will Quince
I thank the hon. Lady for making that point. I reassure Members that the Government are doing all they can to ensure that everybody is supported to do the right thing. It is crucial that everyone follows the Government guidance on self-isolation—that has been clear throughout the debate—to protect themselves and others. The measures that we have announced and will put forward in the emergency Bill will support people to do so.
To come directly to the hon. Lady’s point, the Chancellor has announced that in the coming days the Government will go much further to support people’s financial security, working with trade unions—another point made by the hon. Member for Stockport (Navendu Mishra)—and businesses to urgently develop new forms of employment support to help to protect people’s jobs and incomes through this period. I know that the hon. Lady would like to tempt me to go further but, as I think she will understand, that is somewhat above my pay grade. It is very important, however, that debates such as this take place, because it will have been heard by Her Majesty’s Treasury and will be taken in the spirit of working collaboratively on a cross-party basis. I certainly take those ideas on board, and if Members have further ideas about how we can better support some of the most vulnerable people in our society, my door is always open, and I would welcome them coming forward with those.
The right hon. Member for East Ham, the Chair of the Select Committee, raised the point about the habitual residence test. The test has operational procedures already in place to expedite confirmation of eligibility, but I will take this point away and give it further thought—I had not given it consideration before he raised it and I would be very happy to meet him to discuss it further.
We have a safety net that helps people facing hardship if they cannot work or are seeking work. Depending on their individual circumstances, employees can claim universal credit and/or new-style ESA or JSA. As the Prime Minister set out, the Government will keep everything under review. The package that was set out at the Budget and the new measures that were recently announced should give some reassurance that support will be provided to support jobs, income and businesses. As the Chancellor said, we will do “whatever it takes”.
We are in extraordinary times. The coronavirus pandemic is the most serious public health emergency that our nation has faced for a generation. Our policy is to protect lives and fight this virus with everything we have, and the Government have been clear in their approach: we will do whatever it takes to get the nation through these testing times. We will protect people, their jobs and businesses through this period to ensure that we keep as many people as safe as possible.
Question put and agreed to.
Resolved,
That this House has considered the matter of Statutory Sick Pay and protection available for all workers.