Rob Marris
Main Page: Rob Marris (Labour - Wolverhampton South West)
Mr Rees-Mogg
That really depends on how we measure our cloth. I am in favour of measuring my cloth in imperial measures—that is to say, pounds and ounces, inches and feet and so on, and therefore of using sterling as my base for measuring things. If we do that, our international assets have gone up enormously, because any dollar assets we hold are worth 15% more in pounds. That is more income coming in, and that helps reduce the current account deficit; it is good news for the British economy. Our exporters are 15% more competitive. That deals with any tariffs that may be imposed—if any are imposed. What is more, we are at the front of the queue for a trade deal with the strongest and biggest economy in the world, so, actually, post-Brexit we are fighting fit. The Chancellor of the Exchequer said that he would ensure that we were fighting fit, and we are. We are open for business with the world. With the continuing cuts in corporation tax, we are showing that we are absolutely willing to compete with anybody in attracting capital investment and that we are ready to do business in a way that investors will like.
Rob Marris (Wolverhampton South West) (Lab)
May I sound for the hon. Gentleman two notes of caution? First, he has just said that post-Brexit we are fighting fit. May I remind him that we have not even triggered article 50 yet? We are a member state of the European Union and are likely to remain so for the next two years and two weeks. Secondly, he prays in aid the Red Book, but I cannot see in it—perhaps he can tell me otherwise—any forecasts caveated with a statement that when we do Brexit, the situation may change for the better or for the worse. There are no caveats at all.
Mr Rees-Mogg
The forecasts are taken from the OBR and if the hon. Gentleman looks at its rather thicker report, he will see its comments in relation to Brexit and trade deals. The OBR is still rather negative on trade deals and I think that it is wrong. I have the greatest respect for the OBR, because it is the one body that during the Brexit campaign behaved properly and within its remit and did not dabble its fingers into the politics of the Brexit debate. Its view is cautious on trade. It thinks that over the next 10 years, post-Brexit, our trade position will be less good. I happen to think that that is wrong.
Mr Rees-Mogg
That was broadly the point I was making—the OBR is quite cautious. I was not disputing that it is cautious, but I am not cautious. I am sorry to say that, much though I respect the OBR and much though I think it does its work diligently, it got it hopelessly wrong a year ago and had to raise its forecasts for GDP growth consistently, because it did not manage to get them right. It revised down the November autumn statement and has had to revise back up again now. I think it is a terrible mistake, though earlier I quoted holy scripture, to take forecasts from these people as holy writ. They are not.
This comes down to a question of judgment, both political and economic. The political judgment is on whether this Government are going to be competent to negotiate well and effectively. I have complete confidence that they will do that—that they will be able to negotiate in the councils of Europe more effectively than anybody else could on our behalf. The economic judgment is on the balance between what we get from the European Union and what we can do with the rest of the world. I expect that, if we trade more freely with the rest of the world, that will more than compensate for the risks that we may take in having harder terms of trade with the European Union.
Having taken up the challenge from the hon. Members for Hackney South and Shoreditch (Meg Hillier) and for Nottingham East (Chris Leslie), who both wanted a Government view on Brexit—I cannot claim to speak for the Government, but I can at least say something about Brexit—I want to go through some of the details. This Budget has some very good news about the deficit. Although £51.8 billion, the deficit for this year, is still a very large amount of money, as a percentage of GDP we are now back within the norms of the types of deficits that Governments can run with. That is not to say that I think having a deficit is a good thing in principle, but GDP growth is near 2.6% and this is about remaining steady with total debt and GDP. If we go no further than that, it is an amount that can be lived with. That is important, because although there is more to be done, the vast bulk of what was necessary to live within our means has now been done.
I want to make some little points about certain areas of concern. I would encourage the Government not to proceed with the personal injury discount rate reduction to minus 0.75%. The idea that awards against the Government should be calculated with a negative time cost of money is wrong. It would be better and cheaper for the Government to underwrite annual payments, rather than making lump-sum payments with a discount rate of a negative kind—[Interruption.] The hon. Member for Wolverhampton South West (Rob Marris) mutters that I do not understand this. I do understand it, and I know that the Government are obliged by law to do this, but they have the ability to introduce new laws in this House and can often do that as part of the Finance Bill.
Rob Marris
I will tell the hon. Gentleman what I was chuntering on about. He talks about periodic payments. They are called structured settlements, and in order to calculate the future value, we have to use a discount rate. That is what it is all about.
Mr Rees-Mogg
We can set rates in a different way. We can set them, then adjust them for inflation at a lower initial rate, rather than having a payment based on a capital sum. Reducing the rate from 2.5% to minus 0.75% is a mistake and will result in an undue cost to the Exchequer.
I also have concerns about the probate tax. I see that it is likely to be judged by the national statistics people as a tax rather than as a charge, and I do not think it right that the Government should introduce stealth taxes. Probate charges should relate to the cost of the probate work, which is broadly irrelevant to the size of the estate. There might be some more work for bigger estates, but the difference will not necessarily be as large as has been proposed.
The biggest issue is national insurance contributions. I see the logic in what the Government want to do, because there is an unfairness between self-employment and employment, but the question is not so much one of revenue as of whether having a structure in the economy that encourages self-employment is beneficial overall, and whether that is a price worth paying. If we look at what has happened since 2008, we can see that unemployment in this country remained so low as we went through a deep and challenging session partly because of the great flexibility within our labour market. Part of that flexibility comes from self-employment, because employers do not have to take on all the risks of full employment, with all the benefits such as holiday and sickness pay that that entails. That means that the self-employed are a major contributor to the flexibility of the economy.
I very much doubt that increasing the national insurance contributions for the self-employed by 1% and subsequently 2% will fundamentally change the balance, but in economics, things often happen at the margins rather than being an easily identifiable inflection point when we are starting out. I would therefore be cautious about this change, and I urge the Government to look at the whole question of the relationship between national insurance and income tax in the round. National insurance represents about £130 billion of revenue. It is an enormously important source of funding for what the Government wish to do, but its relationship to income tax creates confusion and distortion within the system. This is just one of those distortions, and I am not sure that making a minor change at the edges is the right way to go about changing the relationship in taxation between the self-employed and the ordinarily employed. Those are the three minor cautions that I would offer on the Budget, but I remember a Conservative party slogan, “Britain’s on the right track, don’t turn back”, and that seems to me to be where we are.
Sammy Wilson (East Antrim) (DUP)
The Chancellor started his Budget speech in an appropriate way by making a confession. He said that the commentators, including himself, his predecessor and many others in this House, had got it wrong when it came to the growth of the UK economy. In fact, he started by saying that the economy had “continued to confound the commentators with robust growth” since the historic vote to leave the European Union and that that growth was predicted to continue over the next number of years.
Several Members have already said that the Chancellor made no mention of Brexit, but many Members still feel that Brexit has been properly mentioned only if it is referred to in negative terms. They do not want to hear the good news that Brexit and the decision to leave the EU has not and will not destroy our economy. The Chancellor pointed out at the start of his statement that the Budget was designed to prepare the United Kingdom for a brighter future and to provide a stable platform for the negotiations. While I do not agree with everything in the Budget, we must accept that the spending on infrastructure development, innovation, research and development, and education, including the changes to technical education, is designed to make our economy more competitive and to enable us to take the opportunities that will be presented when we are free of the EU and therefore able to make trade deals with countries across the world. It is wrong to say that the Budget did not mention, does not cater for, or does not acknowledge the challenges that we will face when we leave the EU.
There are several things in the Budget that I particularly welcome. I will not go into all of them in detail in the short time available to me, but we have raised “Making tax digital” with the Treasury on a number of occasions, and the line in Westminster Hall debates has been much harder than what was announced today. I am glad that the Chancellor accepts that the strategy was going to create huge problems for many small businesses. I trust that the arguments for extending and delaying its introduction for one year will apply in future years because, as has been pointed out, many businesses do not have the necessary facilities or even access to the internet. They rely on accountants and would have found it either impossible or costly to meet the requirement.
I welcome the extra £200 million for innovative broadband initiatives. In rural areas such as my constituency, despite BT’s monopoly and the money that it has received, we still do not have proper broadband coverage. Indeed, innovation is sometimes stifled by BT’s monopoly and its control of the network. I hope that we will see innovation there.
I also welcome the £120 million that will be available to the Northern Ireland Executive. However, the attitude that Sinn Féin has adopted over the past couple of days means that anybody—including the Secretary of State for Northern Ireland—who does not accede to what they want is accused of waffle; their members then walk out. If we do not get the Assembly up and running, will the money be held? I fear that it may be some time before the Executive are in a position to spend that money, so will interest be added to it?
The forecast for growth still heavily depends on consumer spending, which depends on consumer borrowing. By 2021, consumer borrowing will reach 153% of household income, and I have a problem with the Government here. I understand that they have to control public spending and borrowing, but why is it okay for growth to be fuelled by high levels of consumer debt? In fact, consumer debt is twice the level of Government debt as a percentage of GDP. Why is it okay for consumers to continue borrowing to fuel growth, but not for the Government to accept that there may be arguments, in a low-interest-rate regime, for marginal increases in spending on the plenty of good infrastructure projects that could provide a good return for the economy through increased productivity?
Rob Marris
As the hon. Gentleman may be aware, according to the Library briefing paper, an OECD working paper in 2012 found that
“when household debt levels rise above trend the likelihood of a recession increases.”
The International Monetary Fund found that recessions preceded by large increases in household debt were “more severe and protracted.” There are real dangers here.
Sammy Wilson
There are real dangers. Consumer spending is a huge component of GDP, and of course we need buoyant consumer spending, which is one reason why the constant talking down of the economy is not good for future economic growth. At the same time, we have to recognise that focused public investment in the economy is, first, affordable and, secondly, desirable, yet the Chancellor seems to be resistant to undertaking such investment.
Rob Marris (Wolverhampton South West) (Lab)
In his response to the Budget, the Leader of the Opposition set out an impressive list of spending commitments. Unfortunately, he ran out of time, so he was unable to spend much time on macroeconomic matters, wealth creation or setting out an alternative economic strategy.
The context of the Budget is that there are some good things in the economy. Growth has been better than many of us had expected, and better than most people forecast before the Brexit vote, were it to be a Brexit vote. The unemployment figures are singularly impressive: 2.6 million more jobs in the past seven years, one in five of them on zero-hours contracts, and the majority of those working part time do not wish to work full time. Inflation is up, and most economists say that a little bit of inflation is a good thing. The Government are prepared, quite rightly, to guarantee the triple lock on pensions only until 2020, because of their concern about intergenerational imbalance.
On the other side of the balance sheet, however, we have economic positives bought on a sea of debt. The Government have been spending money for the past seven years like a drunken sailor. The national debt has gone up almost 70% in the past seven years. We are still running a huge deficit on current expenditure, and the Government forecast that we will continue to do so. The Government have been sweating the infrastructure for the past seven years, so it is wearing out. We only need to look at all the potholes around the United Kingdom to see that.
The Government keep saying, “We are trying to cut debt for the benefit of the next generation,” when in fact they have loaded debt on the next generation—not only the national debt, which is up 70%, as I said, but student loans, which are a massive burden on the next generation, and of course the failure to address the market failure in housing across the United Kingdom has meant that the cost of renting or buying has shot up massively in the past seven years. Who does that hit the hardest? The next generation. It is nonsense to talk about lifting the economic burden on the next generation, because we have market failure.
The hon. Member for East Antrim (Sammy Wilson) said—to use my phrase, not his—that when we look at Brexit, we need to look at the silver linings: the things that we can do differently when we leave the European Union. There are some positives, and I say that as someone who thought we should remain in the European Union. We are not going to do so. Outside the European Union, we can adopt a more collectivist approach. We can have a bigger role for the state in our country. For example, we could have a state investment bank. In appropriate circumstances, the state could take equity stakes in our enterprises and could own patents—not just financing research and development, but owning patents—as a source of collective wealth for us in the future. The Budget does not address the imbalances of wealth and power in our society, which is what Labour Members want to use the economic levers of the state to do.
On wealth creation, which I mentioned earlier, we welcome the spending on productivity announced in the autumn statement and rehashed again today, but the state ought to take a stake in some of that investment in STEM matters. Similarly, on broadband, the Chancellor glibly trotted out his encouragement for 5G today, which sounds great. There is not yet even a standard on 5G, but the Government keep banging on about it.
I welcome cutting down the number of skills qualifications from 13,000 or so to 15, because some of them, frankly, are Mickey Mouse qualifications. That continues the Government’s drive—their fetish—about having 3 million more apprenticeships. For many years, our country has been bad at workforce planning, as we can see in the NHS. Workforce planning in relation to skills for the future will be made worse by the Chancellor appropriating to himself powers over schools. We will have a worse school system in England, which will make skills provision and workforce planning worse.
The Budget totally failed to mention housing once not only in relation to its cost but as a driver of economic growth and an investment for the future. We should allow councils to borrow to build council houses—a state-owned asset that provides a return for us all for the future, as well as better lives for people. We should look at rebalancing the economy away from London and the south-east, as was mentioned by my hon. Friend the Member for Kingston upon Hull North (Diana Johnson), and we could do that with much better and targeted infrastructure spending.
On the taxation side, there were—as ever—many missed opportunities in this Budget. There will be fewer HMRC staff in fewer offices, which will increase the likelihood of tax avoidance continuing. We need stronger measures on financial wrongdoing—we have not had any—so that those doing wrong in the City go to prison; prison is the big disincentive. For example, wrongdoing in Mitie’s accounts has just been uncovered, which the Financial Reporting Council did nothing about.
We have missed the opportunity to address the whole structure—for the future, in a digital age—of taxation on businesses. We keep banging on about corporation tax, but the Chancellor should be investigating a turnover tax on business. Such a tax lessens the chance of tax avoidance. If it was done the right way, the Government could do away with business rates and corporation tax. If they wanted to be really inventive, they could even do away with employer’s national insurance contributions—a tax on job creation—and have a turnover tax, which is much fairer and taxes virtual companies, as well as bricks-and-mortar companies. It is not just me saying that from left field—I tell hon. Members that I am from left field—but the Federation of Small Businesses, which has floated the idea of a turnover tax in relation to business rates. We ought to align taxation for simplification purposes, so that instead of playing around—as the Chancellor did, with £2,500 or £5,000 on some dividend tax break—we should align the rate of tax on dividends with that on capital gains tax and income tax.
We should split up the banks that are too big to fail. The Chancellor has ducked that one; in fact, he is going into reverse and weakening financial protections for us all. The Government should have announced that they were abandoning the private finance initiative. They are still investing in these disastrous projects. These are missed opportunities for thinking big about the future, while in the context of Brexit—the whole world is going to change—the Chancellor is still looking backwards. He did not even mention Brexit because he just does not know what to do: he is a rabbit in the headlights.
Mr Carmichael
That was the point I was making about Uber and other companies that take on people as nominally self-employed agents, when to all intents and purposes they are employees. That must be tackled, but this Chancellor seems to have no great enthusiasm for tackling the big corporates. The change will not hurt them; it will hurt the small sole traders who are working in their own right, rather than as agents of a bigger corporate.
Rob Marris
The right hon. Gentleman talked earlier about waking up tomorrow and having another look at the Budget; may I suggest that he does that with regard to this issue? According to the Chancellor’s figures—I do not know whether they are accurate—the increase will raise £146 million a year, and national insurance tax breaks for the self-employed are £5 billion a year. Proportionally, on the Chancellor’s figures, that is not a big increase.
Mr Clive Betts (Sheffield South East) (Lab)
I want to address two issues, social care and business rates, which are related to inquiries undertaken by the Select Committee on Communities and Local Government.
On social care, the Chancellor mentioned the rising number of elderly people in this country. People are living longer, which is obviously to be welcomed. What he did not say, of course, is that cuts to local council budgets mean that they have reduced spending on social care by 7%, despite prioritising it since 2010. He did not mention the extra costs of the minimum wage or the Care Act 2014, or the fact that councils are now, in the words of the Comptroller and Auditor General, Amyas Morse, moving from doing more for less to doing “less for less”.
When our cross-party Committee looked at the issue, we had a range of forecasts for the gap in next year’s social care funding. Age UK believes that more than 1 million people in this country should be receiving social care but are not. That range of forecasts led the Committee to say that we need £1.5 billion to bridge the gap next year. Although I welcome the fact that the Chancellor recognises that more needs to be done, I am disappointed that the more he has identified is not sufficient to deal with the problem.
I am also disappointed that the Chancellor has not taken up another of our suggestions: that we ask the National Audit Office to undertake a review of the funding gap for the rest of this spending round. I do not believe that the extra £500 million that has been allocated for the next two years is sufficient, given that the Local Government Association says that the total gap in local government funding will be £5 billion by the end of this Parliament. We need the NAO to conduct an independent review.
I am pleased that the Government are prepared to undertake a long-term review of spending for social care, but I am disappointed that the Chancellor has, at the beginning, effectively ruled out one of the options. There are clearly a limited number of ways to raise money to fund social care properly in the long term. The money could be raised from general taxation, from people’s direct contributions to the care they receive, from a new system of discrete taxation through increased national insurance contributions, as happens in Germany, or from an increase in the tax on people’s estates when they die. The Chancellor ruled out the last of those options, even though people might be taxed on their estate, depending on whether they end up in residential care. That is an arbitrary tax. It depends on whether someone ends up in social care because they have dementia, for example, or whether they die of a heart attack without having needed that kind of care at all. The way in which someone’s life ends can determine whether their house and other assets make a contribution to the Treasury.
Judith Cummins (Bradford South) (Lab)
The Budget is remarkable for what it fails to mention. I listened carefully to the Chancellor’s statement, and was really worried not to hear a single mention of policing. Funding increases for the police were a staple of previous Budgets. Under the previous Labour Government, we witnessed strong investment in the police; consequently, in many areas crime fell to the lowest levels in generations. Sadly, that investment in the determined fight against crime now appears to be consigned to the past.
With a funding crisis in the NHS, adult social care, local government and many other areas of the public sector, the police are one more victim of this Government. The police should be fighting crime, not fighting for funding. The Chancellor has offered no respite to the culture of cuts that has gripped every police force in the country. The police have faced multi-year budget cuts, which has meant plummeting numbers of frontline officers.
West Yorkshire police, which serve my constituency, Bradford South, have not been immune to the cuts. Since 2010, their budget has been cut by nearly a third, which amounts to £147 million. The Government think the police can weather the cuts by trimming budgets, tackling waste and shrinking the back office, all with no impact on frontline services. This is nonsense. The challenges can be met only through frontline cuts, so further frontline reductions in policing are now unavoidable.
West Yorkshire police have 2,000 fewer officers and support staff. They are under-resourced and understaffed. Let us be clear about this: fewer police officers means that people are less safe, and people feel less safe.
Rob Marris
Does my hon. Friend agree that the work of the police is made even more difficult by the funding cuts and chaos in the prisons? That has meant that rehabilitation in prisons has plummeted, so criminals are coming out of prison and starting to commit crime again. The underfunding of prisons makes it harder for the police.
Judith Cummins
I absolutely agree with my hon. Friend.
Neighbourhood policing has arguably suffered the most. It is the basic building block of our police service, underpinning all the work the police do. It provides the first point of contact, and the bobbies on the beat are the eyes and ears that inform how the police work. It is the frontline—the most visible and important aspect of our police service.
Policing in this country is done by consent, central to which is trust. Without the trust and confidence of local people, the police cannot police. Cuts to neighbourhood policing impact directly on that trust and confidence. Without trust, the police lose local intelligence and a feel for the communities they serve. The gaining of trust does not happen overnight; it takes months, sometimes years, to develop. This familiarity allows police officers to detect if something is amiss or out of the ordinary. Knowing their communities well informs their judgment, which means that they are well placed to detect crime and to tackle it swiftly and effectively. As neighbourhood policing is eroded by wave after wave of cuts, trust is undermined, as is the idea of policing by consent.
Bradford is a complex city with complex challenges, and we need a police service that is equipped to meet them. The police in Bradford are determined to meet those challenges and maintain that trust. They are reaching out to communities—they have a target of making sure that every child in the district knows a police officer by name.
One complex challenge the police face in my constituency relates to the availability and use of firearms. Incidents involving firearms have risen substantially—by a third—over the past four years. To their credit, West Yorkshire police are rising to that challenge. Their efforts have been commendable, but diminishing resources impede their ability to get those weapons off the streets of Bradford. Adequate funding as well as strong local intelligence are vital in tackling this.
The demands on police resources go beyond everyday crime. The landscape of policing in Bradford has altered radically. Modern policing means that our police officers spend a great deal of time and public money on increasingly complex, costly and time-consuming things such as safeguarding issues, missing persons, issues relating to mental health, child sexual exploitation, human trafficking, domestic violence, and abuse of the elderly, to name but a few. Those are officer and money-intensive issues that cannot and should not be ignored.
Our police are being asked to do more and more, but are being given less and less with which to do it. West Yorkshire police are committed to dealing with and meeting these challenges, but strong commitment is not enough. To meet these new, complex and costly challenges, they need officers and they need to invest in those officers. Without investment, the service will be ill equipped to tackle the emerging demands on its resources. As budgets continue to contract, I fear that the absence of investment will mean that the communities that the police serve—and indeed that we serve here in this House—will be less safe than they should be.
Ordered, That the debate be now adjourned.—(Christopher Pincher.)
Debate to be resumed tomorrow.