Budget Resolutions

Debate between Rachel Reeves and Richard Graham

Thursday 7th March 2024 Commons Chamber

[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.

National Insurance Contributions Increase

Debate between Rachel Reeves and Richard Graham

Tuesday 8th March 2022 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend for bringing that to the House’s attention. It is exactly why Labour said that the warm home discount should be expanded to ensure that the money goes to the people who need it, not the landlords.

At the same time as the Government are asking hard-working British people to pay more in tax, they are writing off billions of pounds in fraud. Ordinary people are paying for this Government’s waste. The Chancellor repeatedly ignored warnings about the holes in his covid business support schemes, resulting in £4.3 billion of public money being written off. That does not even include the amounts lost to bounce back loan fraud, including taxpayer cash handed out to drug dealers and organised criminals. That fraud currently stands at £4.7 billion, so that is £9 billion and counting handed to fraudsters. Then there is the colossal Government waste during the pandemic, with £8.7 billion lost on unusable personal protective equipment, all paid for by the taxpayer. Billions has been spent on crony contracts that have not delivered, and every single cheque has been signed by the Chancellor.

[Richard Graham (Gloucester) (Con)]

rose—

[Rachel Reeves]

Let me just finish this point. Yesterday, we saw a whole new meaning to burning through money. After wasting billions on unusable PPE, the Government are literally burning it to get rid of it—putting taxpayers’ money through the furnace. The Conservatives’ promise to get value for money for taxpayers has gone up in flames. Taxpayers do not want to keep picking up the price of these dodgy contracts, fraud and waste. I will be very interested to hear the hon. Gentleman’s views on that.

[Richard Graham]

I am grateful to the hon. Lady. The difficulty is that this is a debate about the national insurance contributions increase; it is not a debate about her wide range of thoughts on all sorts of other aspects of the economy. The problem with this particular debate is that this additional tax, which is hypothecated exclusively for health and care, will make a huge difference to millions of people across the country, including in Leeds, who have been waiting for elective surgery, want to see social care resolved and need the extra funds for it to happen. In addition, it is progressive, because the top 14% of taxpayers will pay half of the revenue raised. Surely she would approve of that.

[Rachel Reeves]

The hon. Gentleman knows that the average household in Gloucester will be £1,299 worse off because of the double whammy of tax increases and price increases. I think they would be pretty concerned about the amount of taxpayers’ money that is being written off in fraud and waste—money that is being burned by the Government.

Despite waste and fraud costing more than this year’s national insurance contribution rise will raise, the Prime Minister says that the tax rise is necessary. That is the great deceit. On the steps of Downing Street in 2019, he claimed to have a plan for social care. Yet almost three years on, we know that the Government’s approach to social care will not stop people selling their home to pay for care, it will not deliver a penny more to improve care today, and it will not add a single minute of care and support for those who need it. Even then, NHS waiting lists are set to rise even further for the next two years. The Government will not fix the problems with our social care sector or our NHS. Never before have taxpayers been asked to pay so much and got so little in return.

It is time for the Chancellor to urgently change direction. The national insurance tax rise was wrong in September and it is even worse in March. It is the wrong tax at the wrong time: the cost of living is higher, inflation is out of control, wages are not keeping up, energy bills are going through the roof and family finances are stretched, yet the Chancellor refuses to back our windfall tax plans to help.

The Chancellor has not turned up today, but my message to the Minister is that he must turn up to the spring Budget with a plan to make a difference to the cost of living. The Chancellor’s tax rise should not go ahead. MPs can send the strongest signal today by backing our calls to cancel the national insurance tax increase next month. They know full well that our country believes that it is time to change course.

The Conservative Government are not doing enough to cushion the blows. In fact, when it comes to the tax rise, they are piling on the pressure and making matters worse. They must think again and back Labour’s motion today.

Amendment of the Law

Debate between Rachel Reeves and Richard Graham

Monday 23rd March 2015 Commons Chamber

[Rachel Reeves]

We have said that there should be a cap on fees and charges—not just for the annuities products, but for the new drawdown products. We think it should be at the same level as the Government have set out, but then reduced over time. In that way, we will ensure that savers get value for money. Unless we do that, more people will be ripped off. Unfortunately, despite all the Government’s rhetoric, they have not taken action to protect people’s retirement incomes.

What we have heard from the Secretary of State today is the same complacency and self-congratulation. Yes, of course we welcome any fall in unemployment, but it was this Government who allowed unemployment to soar to record levels in the first place, peaking three years ago in February 2012 at 1.7 million. Under this Government, the number of long-term unemployed, abandoned to a life on the dole, has risen by 49%. That is why Labour will have a compulsory jobs guarantee.

[Richard Graham (Gloucester) (Con)]

The hon. Lady made a number of comments about the prices and charges that should be levied on pensions. Will she confirm that the price cap that has been levied on auto- enrolment pensions is, in fact, half that of the amount levied on stakeholder pensions when her Government were in power?

[Rachel Reeves]

We introduced a cap on charges for stakeholder pensions and the automatic enrolment brought in policies for which Labour had already legislated. We are proud of automatic enrolment, but we disagree with the changes that this Government introduced, which mean fewer people are benefiting from automatic enrolment —1.5 million fewer, two thirds of them women. That is a real lost opportunity to ensure that those people who should be saving are actually saving.

What this Secretary of State and the Government he speaks for simply do not understand is that their failure to make work pay and to deliver a recovery that raises living standards for all is the root cause of their failure to control social security spending and balance the books as they promised. They have spent £25 billion more than they planned and their receipts from income tax and national insurance have, as has been pointed out, fallen short of forecasts by a staggering £97 billion over the life of this Parliament.

It is because of that failure that, in order to deliver his objective of a large surplus in the next Parliament, the Chancellor has now committed to even deeper spending cuts over the next three years than we have seen over the past five years. The Office for Budget Responsibility confirms that these plans will mean

“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years”,

and

“a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.

My right hon. Friend the Member for Morley and Outwood (Ed Balls)and my hon. Friend the Member for Nottingham East (Chris Leslie) have highlighted the threat this poses to police, defence and social care. Is it not the truth that the Chancellor’s extreme fiscal plan can be delivered only by putting our NHS at risk or imposing yet another Tory rise in VAT? Although it is hard to see how this Government can make the extra £12 billion-worth of cuts to social security spending when they have failed to deliver any savings in social security so far, these cuts could not be delivered without inflicting unimaginable hardship on low-paid workers, children in poverty, disabled people or carers.

So for this Government, this empty Budget will be a fitting epitaph. What of this Secretary of State who wanted to take his place in history as the compassionate Conservative who reformed welfare? His time is up and his record is clear: major reforms undelivered or descending into costly chaos; food banks in every town and child poverty back on the rise; more and more spending on in-work benefits as more and more working people find their wages do not cover the rent. No wonder the OBR says that the Government are guilty of “optimism bias”.

Banking (Responsibility and Reform)

Debate between Rachel Reeves and Richard Graham

Tuesday 7th February 2012 Commons Chamber

[Rachel Reeves]

I am disappointed that the Chief Secretary to the Treasury has not been willing to explain the Government’s failure to follow through on the Walker review’s recommendations on transparency and high pay. I am disappointed that the Chancellor has not been willing to explain why they oppose the inclusion of ordinary workers on remuneration committees. I am also disappointed that no Cabinet Minister has been willing to come to the House to defend the tax cut that this Government are giving to banks this year.

People up and down the country are amazed when they read about individuals receiving bonuses in a single year that amount to more money than most people will see in their entire working life, especially at a time when families are struggling to make ends meet, when small businesses are finding it hard to access finance, when people are finding it hard to get a job, and when many young people are struggling to get their first job.

The “Oxford English Dictionary” tells us that a bonus is

“a sum of money added to a person’s wages as a reward for good performance”.

It goes on to say that a bonus is

“an extra and unexpected advantage”.

It is clear, however, that for a few, bonuses have come to be expected, an automatic part of their pay. Whatever their performance or that of their businesses, bonuses can be cashed, year in and year out. That seems to be the case even when the share price is falling, even when thousands of jobs are being lost and even when lending targets to small businesses are not being met. And this is happening in an industry that is significantly supported by us, the taxpayers, and that risks rapidly losing the trust and confidence of those it is supposed to serve, because of the actions of a few at the top.

Let me speak plainly. Labour Members recognise the importance of the financial services sector to our economy. A high proportion of jobs in my constituency are directly or indirectly dependent on the continued success of Leeds as a financial hub. Private sector employers whom I meet tell me time after time of the critical importance of bank finance to their ability to grow and employ more people.

The financial services industry is, and must remain, a strong part of the British economy. It offers an opportunity for Britain to play a positive role in the global economy and it plays a critical part in supporting the small businesses that could be and should be the driving force of our economic recovery. That makes it all the more important that Members are not afraid to approach the banking sector as a critical friend—not afraid to deliver home truths or the views and perspectives of the people we represent.

In expressing public concerns about excessive bonuses, we must remember that the vast majority of people who work in banks earn modest salaries. Those I know in Leeds are on salaries of £20,000 or £30,000 a year, and they find these six or seven-figure bonuses as shocking and alien as the rest of us do—especially a few years after failures in the banking sector brought the global economy to its knees.

These are the concerns we have heard in contributions to today’s debate. It must be a matter of regret that throughout this afternoon, save for the Education Secretary, no Cabinet member has been here to hear them. It is a shame that no Cabinet members were present to hear the passionate speeches by, for example, my hon. Friend the Member for Scunthorpe (Nic Dakin), whose constituents are fearful this evening for their jobs. It is a shame that no Cabinet Minister is going to respond to the concerns expressed in the passionate speeches of my hon. Friends the Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann), for Edinburgh East (Sheila Gilmore) and for Bolton South East (Yasmin Qureshi) or of the hon. Member for Brighton, Pavilion (Caroline Lucas). Those Members spoke about the increasing disconnection between a small number of people at the top of the banking sector and the experiences and values of the rest of the country. This disconnect must be repaired if we are to strengthen the national purpose and shared interest that we need to get through these tough economic times.

It is a shame, too, that no Cabinet member will respond to the contributions about struggling businesses—especially to the thoughtful contributions of my hon. Friend the Member for West Bromwich West (Mr Bailey), who spoke about the dysfunctional relationship between banks and industry, which grossly impedes our ability to grow out of the recession, and of my right hon. Friend the Member for Oldham West and Royton (Mr Meacher), who forcefully rebutted an intervention suggesting that the banks are lending. That suggestion was totally out of touch with the experience of small businesses in all our constituencies. The reality is that many businesses are being refused the loans they need to tide them over or to keep people in work. We all need a banking sector that lends, supports small businesses and acts as a sector that we can trust and rely on.

We also heard contributions from the hon. Members for Halesowen and Rowley Regis (James Morris) and for Bristol West (Stephen Williams), which I thought added important dimensions to today’s debate. I want to pick up on the contribution by the hon. Member for Nuneaton (Mr Jones), as he would not let me intervene when I tried to do so earlier. Both he and the hon. Member for Stourbridge (Margot James) seem to disagree with the decision of the RBS chief executive to hand back his bonus, when I had thought that every Member of every party would welcome that. The fact is that the chief executive of RBS earns a salary in excess of £1 million a year—46 times more than the average worker. That should be reward enough for doing his job; he should not be getting a bonus of £963,000 on top of that when few others could expect to earn that sort of salary in a lifetime.

[Richard Graham (Gloucester) (Con)]

Will the hon. Lady explain the Opposition’s policy on creating growth in the financial sector? We have heard a great deal of criticism about everything, about how dreadful bonuses are and all the rest of it. That is fine, but what is Labour’s policy for growth, for being creative and for going forward?

[Rachel Reeves]

We have argued a five-point plan for jobs and growth—to put money in the pockets of ordinary families with a VAT cut and a national insurance holiday for small businesses that are struggling to take on new workers. Those are the sort of policies that will get the economy moving again and will protect jobs in all our constituencies.

We should welcome the RBS chief executive’s decision to hand back his bonus. The reality is that, over the last year, the RBS share price has fallen, it failed to meet its lending targets and it laid off workers. As I said, I would have thought a salary in excess of £1 million reward enough.

Today’s debate, however, is not about one man or one bonus or one bank; it is about the need for an overhaul of the way in which bonuses and pay are structured. As my hon. Friend the shadow Business Secretary has spelled out and as many contributions have highlighted, issues of pay and performance—of individuals and of the banking industry as a whole—cannot be separated.

Banks need to show that they recognise the need to change, the need to reform their business models, the need to rebuild their relationships with small businesses and customers and, most of all, the need to restore public trust. The British people deserve a banking system that they can believe in and respect—a banking system that inspires trust and is seen as a responsible custodian of our earnings, our savings, and our pensions. I know that the majority of people who work in banks at all levels also want to feel proud of the job they do, so today’s debate is about beginning to restore that trust and integrity.

Opposition Members have set out clear, constructive proposals in three key areas: transparency, accountability and fairness. [Interruption.]On transparency, the Labour Government legislated for the implementation of David Walker’s recommendations on high pay, including for rules to disclose the numbers of employees paid over £1million a year. [Interruption.]

Youth Unemployment

Debate between Rachel Reeves and Richard Graham

Wednesday 9th November 2011 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

It is right that we should have the chance to debate youth unemployment today, as our economy continues to flatline and unemployment is rising. It is just a shame that neither the Secretary of State for Work and Pensions nor a single member of the Treasury Front-Bench team has bothered to turn up. How complacent and out of touch this Government are.

The last time we debated the economy in this House was on the day when new figures showed that youth unemployment had reached a 17-year high, with 991,000 young people out of work. Next week we shall have an update on those numbers, but in the last few weeks the Government have done nothing to address the national youth unemployment crisis. It is almost two years since this country moved out of recession, yet the prospects for unemployment and youth unemployment are gloomier than ever. Labour has set out a five-point plan for jobs and growth, and called on the Government to introduce an alternative to their plans, which are hurting but not working. Businesses up and down the country are seeing demand hit. Young people out of work and facing trebled tuition fees are seeing the impact. Families struggling with high VAT and rising energy prices are feeling the impact. All are still waiting for a plan for jobs and growth from this Government. We are all waiting for some leadership from this out-of-touch Government on a jobs and growth plan internationally as well. Every day of waiting is a day wasted, with potential going untapped and opportunities squandered.

[Richard Graham]

I congratulate the hon. Lady on her appointment. Can she explain to me how it was that during the 13 years of Labour Government, 5,600 private sector jobs were destroyed in my constituency of Gloucester?

[Rachel Reeves]

What I do know is that in the hon. Gentleman’s constituency, as in mine, youth unemployment and long-term youth unemployment is going up on this Government’s watch.

There has rightly been concern from all parts of the House today about youth unemployment. My hon. Friend the Member for Hartlepool (Mr Wright), whose constituency has the highest youth unemployment in the country, rightly talked about the impact on his constituents. My hon. Friend the Member for North West Durham (Pat Glass) gave a passionate speech about youth unemployment and its effect in the north-east, as did my hon. Friend the Member for Wansbeck (Ian Lavery), who talked about people in his constituency being hammered by this Government’s policies. My hon. Friend the Member for West Bromwich West (Mr Bailey), in whose constituency long-term youth unemployment has risen by 106% in just nine months, was right to talk about the need for a national insurance holiday for small businesses. My hon. Friend the Member for Halton (Derek Twigg), in whose constituency long-term youth unemployment has gone up by 81% in nine months, raised the prospect of Royal Bank of Scotland bonuses of £500 million this year, with no tax on bank bonuses to fund youth jobs—a policy proposed by the Labour party.

Post Office Card Account

Debate between Rachel Reeves and Richard Graham

Tuesday 24th May 2011 Westminster Hall

[Richard Graham]

The hon. Lady has mentioned—with, I think, approval—the remarks of Billy Hayes from the CWU about this Government’s approach. Does her party support Billy Hayes’s mantra of no cuts?

[Rachel Reeves]

That is outside the domain of today’s debate. I quoted what Billy Hayes said about taking the green giro account away from the post office network. I do not think that he supports that. I think that he would have preferred to have kept it in the post office network. That is the context in which I quoted his comment that the Government’s policy is

“about as joined-up as spaghetti”.

[Richard Graham]

What does the hon. Lady estimate would have been the cost to Government of re-awarding the green giro contract, and how would her party have funded that?

[Rachel Reeves]

As the hon. Member for Truro and Falmouth has said, it would be good to see the Government working on a more joined-up basis. Savings for one area of government put costs on another area of government, and this is a prime example of that. It also goes against the commitments in both the Conservative and the Liberal Democrat manifestos. They would have put more services into post offices, but awarding the green giro account to PayPoint goes against those principles.

[Rachel Reeves]

As I have said, the Labour Government did not get everything right in relation to post offices. The Labour party is using the period of our policy review process to look at a large number of our policies. I return to the point, however, that both the Liberal Democrat and Conservative manifestos made it clear that those parties were committed to giving more services to post offices, not to removing them. That is why the decision on the green giro was so disappointing, because it went against those commitments.

To return to another point that I made earlier in response to the Minister’s question, although POCA was put out to tender, the previous Labour Government recognised the public concern, ended that process and gave POCA to the Post Office. That decision was welcomed by our constituents and by post offices up and down the country.

[Richard Graham]

Will the hon. Lady give way?

[Rachel Reeves]

I will, but we need to get to the Minister’s remarks, so this will be the last intervention that I will take.

[Richard Graham]

I am grateful to the hon. Lady for her generosity. It is worth highlighting the fact that the commitment in my party’s manifesto was to maintain the post office network. The commitment by this Government to provide £1.35 billion to make sure that Post Office Limited maintains that network is the single most important example of expenditure to maintain a post office service that I can think of over the past 15 years. Does she not agree?

[Rachel Reeves]

The Conservative manifesto said:

“Nothing underlines the powerlessness that many communities feel more than the loss of essential services, like post offices”.

We all know, however, that removing services such as the green giro from post offices makes it harder for them to be viable in the long term. The Government may be giving money in one way, but they are taking money away from post offices by removing from them services such as the green giro.

Today’s debate has been consensual, with representatives from all parties saying that they want to support their local post offices. We should welcome that consensus and try to work together to support post offices and the people who use them in all our communities. That has been the tone of my remarks. I have admitted that Labour did not always get things right, and it would be good to hear other Members say that not everything that their parties are doing is right in representing the people whom we are here to serve—our constituents.

In conclusion, we have heard useful and interesting contributions from Members who represent both urban and rural areas, who know first hand how important post offices are in their communities. I have set out what I think are the key questions surrounding POCA and some wider questions that the Government must answer on the future of postal services.

I have already quoted the Conservative manifesto, but the Lib Dems also promised a post bank as a central plank of their efforts to keep post offices open. People who rely on the post office are keen to know what is happening now that those two parties are in government. They are keen to hear whether the coalition partners are making POCA part of realising their pre-election promises, both up to and beyond 2015.

The post office is at the heart of communities up and down the country. In an era of falling trust in financial services, the Post Office remains a beacon of hope for restoring trust. I welcome this debate—I congratulate the hon. Member for Truro and Falmouth again on securing it—as an opportunity to lend support to POCA and post offices, and to emphasise that decisions about POCA should be made with the intention of making sure that the post office is a viable and vibrant part of our communities in both urban and rural areas, offering services that pensioners, families and the most vulnerable in society rely on.