Budget Resolutions and Economic Situation

Debate between Rachel Reeves and Iain Stewart

Thursday 16th March 2023 Commons Chamber

[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.