Budget Resolutions and Economic Situation

Rebecca Long Bailey Excerpts

Monday 20th March 2023 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Today, the Resolution Foundation reported that workers in the UK are £11,000 worse off per year, after 15 years of almost completely unprecedented wage stagnation. It said:

“Nobody who is alive and working in the British economy today has ever seen anything like this… This is definitely not what normal looks like. This is what failure looks like”.

Far from being a global phenomenon, as the Government would have us believe, the UK is lagging behind comparable economies such as Germany. In 2008, the gap was more than £500 a year; now, it is more like £4,000. The UK is the only country in the G7 where pay is lower today than it was in 2008. It is the only economy in the G7 that is smaller now than pre-pandemic, and it has the lowest growth forecast for 2023 of any G7 nation.

Any responsible Government should have done two things at last week’s Budget. First, they should have insulated people from the cost of living crisis and tackled poverty pay in the process. Secondly, they should have invested in a comprehensive industrial strategy to reverse the decline in living standards. Neither happened. On a day when so many of Britain’s key workers were forced to strike over poverty pay, they were offered nothing. Instead of setting out how his Government would tackle widespread in-work poverty, or how the 7.1 million people on NHS waiting lists, many of whom want to go back to work, could receive the treatment that they need to do so, the Chancellor threatened more vigorous benefit sanctions.

The families struggling to afford energy bills were offered crumbs. The Government announced that energy bills would be kept at the same rate for just three months, but that is still a real-terms increase of 19%. There was no mention of making the windfall tax more robust, to provide much needed support, and there was no promise that bills would come down in line with falling wholesale prices. All the while, big oil and gas giants are still raking in billions of pounds in super-profits. The Chancellor ignored collapsing public services, too. Unprotected departments face 10% cuts to real day-to-day spending per capita by 2027-28.

On industrial strategy, to be fair to the Chancellor, he did utter the words “industrial strategy”, but they were a passing reference and that is where it ended. There was no extension of support for energy bills for businesses and no support for manufacturing, which is predicted to contract by 3.3% this year. There was no mention of the urgent support needed by our the steel industry, and nothing for SMEs. We heard about the full expensing scheme for larger businesses, which might have been meaningful if it sat alongside an actual industrial strategy. But in the absence of one, it is just another tax break for large companies.

On the vision for the future, which the Minister gave a nod to earlier, there was certainly a mention of AI, quantum computing and ARIA. All that is good, but the funding does not match the rhetoric. The reality is that, out of the 38 leading OECD nations, we are 27th in terms of our investment in research and development.

This Budget should have been a game changer. It should be have been bold, ambitious and dedicated to improving lives. It should have set out a clear industrial strategy, with an investment plan alongside it. It should have increased the living wage to £15 an hour, and seen a major improvement in benefits for the poorest and a pay deal for all public sector workers. It should have included a genuine tax on oil and gas companies, and the introduction of a wealth tax on the assets and profits of the super-rich, which could have easily funded a massive injection into our public services. Indeed, that is not a radical idea. Patriotic Millionaires and Tax Justice UK provided a wealth tax plan for the Government prior to the Budget, which would have raised over £50 billion a year for our public services.

Instead, we got a Budget that entrenches poverty and restricts our country’s potential. Off the back of the Budget, the Office for Budget Responsibility projected that living standards are expected to fall by 6% over the next two fiscal years. That is disgraceful. The only answer is a general election because we do not have a fiscally or socially responsible Government in office.