Budget Resolutions and Economic Situation

Roger Gale Excerpts

Tuesday 21st March 2023 Commons Chamber

[Mr Deputy Speaker (Sir Roger Gale)]

Order. The right hon. Gentleman is giving way. That is his prerogative, but it has not escaped the notice of the Chair that the right hon. Member for Islington North came in late.

[Jeremy Corbyn]

I missed the first two minutes of the speech, and I apologise. Following on from the point that was raised by the hon. Member for Westmorland and Lonsdale (Tim Farron), the issue of the private rented sector is devastating in inner-city areas such as mine, where private rents are now going up—the worst I have heard is an 80% increase—because of the end of restrictions on them. Will the Secretary of State take some action to bring about a rent freeze in the private rented sector? It is devastating, particularly for young people looking for flats in London, to try to find anywhere to live. They are spending a vast proportion of their income on rent, which is simply wrong and not fair. We need rent control in the private rented sector.

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[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

Order. Looking around the Chamber, it is obvious that more than 50 Members wish to speak in this debate. I will therefore put down a marker now that with effect after the Front-Bench speeches there will be a fixed time limit of five minutes, which may well drop to four minutes in the course of the afternoon. I call Ed Miliband.

--- Later in debate ---

[Edward Miliband]

The hon. Gentleman is wrong. If he can be patient, I will give him the answer. First, the Library staff told me, “Well, certainly not under any Government since the second world war.” I asked them to go back further, and they went back to the first world war, but they said, “No, not since the first world war.” They had to go all the way back to 1855 to find that happening—before the foundation of the Labour party, I say to the hon. Gentleman. For all the enormous challenges that Governments have faced over 168 years, this Government stand out for their failure to deliver what I think all sides can agree the British people have the right to expect—rising standards of living. Throw in the highest tax burden since the 1950s, public services that are crumbling in so many areas and debt that is up, and it is no wonder that the British people are asking what they have to show for 13 years of this lot. They are being paid less and taxed more for worse quality services. Conservative Members may not like it, but it is the truth—it is their record, it is their legacy.

That takes me to the second part of my speech. Why has this happened? It is because the Government have had the wrong priorities and they have failed on growth. Let us talk about the priorities in this Budget. I welcome the fact that the Government followed our plan to stop energy bills rising even further. But let us be clear—I think this feeling is shared on both sides of the House—that £2,500 energy bills are not a cause for celebration. They are double what they were 18 months ago. The energy bills crisis is absolutely not over for families and businesses up and down this country.

Of course, when we proposed the windfall tax the Government resisted it tooth and nail. Then they were dragged kicking and screaming to do it. But here’s the thing: as they did so, they introduced a massive tax break for the very fossil fuel companies whose windfalls of war they were supposed to be taxing. It was not mentioned in the Budget, it was not even in the published OBR documents—it was in an annex—that the total cost of that loophole is £11.4 billion over the coming years. That is a tax break for companies making record profits and paying out record amounts in dividends and share buy-backs—a tax break not available to any other sector of the economy, including renewables. Think how those billions of pounds could have helped to tackle the cost of living crisis. By the Government’s choices we know their priorities, and it is not the British people.

Let us take the issue of the abolition of the pension tax relief lifetime allowance, on which we will force a vote this evening. It may interest the House to hear what a former Chancellor said about why we have a lifetime allowance. He said that

“we must demonstrate that we are all in this together. When looking for savings, I think that it is fair to look at the tax relief that we give to the top 1%.”—[Official Report, 5 December 2012; Vol. 554, c. 878.]

Who was that? Not Gordon Brown. Not Alistair Darling. It was George Osborne, in the autumn statement of 2012. Remember him? But we do not need to go back that far. I have been doing my research. What about the Budget of March 2021? I wonder who was Chancellor then—he might have gone on to higher things. The then Chancellor froze the lifetime pensions allowance for five years and said:

“It is a tax policy that is progressive and fair”.—[Official Report, 3 March 2021; Vol. 690, c. 256.]

That was the current Prime Minister. Let me explain why he said that. The reason we have a lifetime limit on tax-free pension saving is to provide some cap on the amount of pensions tax relief for the most wealthy in our society. The average pension pot in this country is £60,000. The change the Chancellor is making to abolish the lifetime limit of over £1 million is therefore about people with a pension pot 17 times the average. The Minister nods from a sedentary position—[Interruption.] He says it is all surgeons: I will come to that in a moment.

According to the Resolution Foundation, this change will give a benefit of almost £250,000 to someone with a £2 million pension. If Members vote for this Budget measure tonight, they will be voting for a tax cut of almost £250,000 for people with a £2 million pension pot. That might be the right priority for the Government: it is not the right priority for us.

The Minister for Health and Secondary Care claims, and the Chancellor says, that they are doing this for the doctors. But according to the Resolution Foundation, five in six people with the largest pension pots, who will benefit from this change, are not doctors. They are not in medicine at all. In fact—get this—one in five of the people who will benefit are in banking and finance and nothing to do with the medical profession. There could have been a bespoke scheme at a fraction of the cost, just like there is for the judges.

We have been told by Treasury Ministers that this is the “politics of envy”. No, it is not, it is about fairness. Even George Osborne agrees with that, and when you are beaten by George Osborne on fairness, you know you are losing the argument. The other argument that Government Members have been making is that Labour is somehow creating problems by opposing this measure. Let us get this straight: the Government come along with a £1 billion tax cut for the very richest in our society when everyone is struggling and they blame us! The truth is that it says so much about them, because here’s the thing: they did not even get that it would be controversial. That is how out of touch they are.

There should have been different tax choices in the Budget to fund our schools, cut NHS waiting lists and level up our country. The Government could have ended non-dom status, but they will not do that. They could have ended the tax breaks for private schools to help fund our state schools, but they will not do that either. In preparing for this debate, Mr Deputy Speaker, I came across a brilliant article for that proposal set out in 2017 in The Times, entitled “Put VAT on school fees”. It was written by a participant in today’s debate and I think it is worth quoting. The author said this:

“to my continuing surprise, we still consider the education of the children of plutocrats and oligarchs to be a charitable activity.”

I am not sure that we on the Opposition Front Bench would go that far, but there you go. [Laughter.] He went on to say:

“The prime minister, quite rightly, wants to end burning injustice...We could scarcely find a better way of doing that than ending tax advantages for the global super-rich and instead extending them to the vulnerable and voiceless. What better way to make next month’s budget a budget for social justice?”

Now, the House may be wondering who wrote that article. It was none other than the Levelling Up Secretary! I am a generous person, so I will give way to him and he can tell us whether he still believes what he wrote six years ago. Does he agree with himself? Why so uncharacteristically bashful? Why this sudden bout of monastic silence? It is so uncharacteristic. I would love for him to tell us: did he make the argument in Government in the run-up to the Budget, or did he just not bother to make the argument because he did not think he had a hope of persuading the people in charge? I think it is probably the latter, because, let us be honest, there is zero evidence that this Government will make the necessary choices. He knows it and the country knows it. The Government have the wrong priorities, which is why people are sick and tired of them.

Let us talk about the third part of the Budget, because it does not just have the wrong priorities for now, but for the future too. I want to come on to the energy transformation that the country needs. If we want to get energy bills down, there is a simple answer: going all in on a green energy sprint. We know that wind and solar are many times cheaper than fossil fuels, but the problem is that we have a Government who do not get it. The Levelling Up Secretary is a case in point. When he should be blocking coalmines he waves them through, as he has done in Cumbria. By the way, it will interest the House to know that he said it is carbon neutral, good for the climate and good for the environment. People may wonder. We have been going around the world lecturing people about getting off coal, so how have we suddenly got a coalmine that is good for the environment? Well, the answer is that in the calculations he made, he does not count the burning of the coal, just the mining of it. That is like saying tobacco does not damage your health if you do not take into account the smoking of it. He can correct me if I am wrong, but that is correct, isn’t it? Yes, it is correct.

The Levelling Up Secretary should support onshore wind, but he blocks it. The onshore wind ban is very important. It is symbolic. The Government have their fifth energy re-set coming next week, I believe, so I look forward to that. It is the fifth one in two and a half years—a sure sign that the policy is not going well. The onshore wind ban brought in by David Cameron raised bills—this is really important—by £160 for every family in the country. It did seem like good news, because the Levelling Up Secretary made some positive noises and promised things would change in December, but all the evidence is that yet again the Government will resile from taking the right position. This month, RenewableUK expressed its bitter disappointment, saying that

“Ministers are doing almost nothing to lift the draconian ban”.

The Energy Secretary, who is not here, calls onshore wind an “eyesore”. It makes me nostalgic, believe it or not, for the brief period when the right hon. Member for North East Somerset (Mr Rees-Mogg) was Business Secretary. He was an unlikely climate warrior but his proposal to bring onshore wind rules in line with other infrastructure was better than the position under the current Government. It is harder today to build an onshore wind farm—a unique category in the planning system in England, whereby, basically, if one person objects, it cannot be built—than it is to build an incinerator. That does not make any sense. Why not go for the proposal from the right hon. Member for North East Somerset? That is my injunction to the Secretary of State.

The Government have failed not just on onshore wind, but on energy efficiency. In 2010 there were 1.7 million home upgrades. Last year there were 128,000, and there was no new money in the Budget. At that rate, it will take a century to bring all homes up to an energy performance certificate C rating.

But the biggest long-term failure of the Budget is the lack of a coherent plan to compete with President Biden’s Inflation Reduction Act. This is really serious. Talk to any business today and they will say that this is a massive competitive challenge for the UK. On offshore wind, we are doing well on generation—lots of people say that it was started by the last Labour Government—but not on delivering the jobs in offshore wind. Denmark has three times as many jobs in wind energy as us, with about a tenth of the population. Then look at other areas. My hon. Friend the Member for Aberavon (Stephen Kinnock) spoke eloquently about steel: there are already 23 clean steel demonstration plants across Europe. How many are there in the UK? None. Across Europe, 40 gigafactories are expected to open by 2030. In the UK only one is certain. Alarmingly—this is the consequence of the onshore wind policy—the number of jobs in solar and onshore wind has actually fallen over the last five years in Britain because of the blockages in the system. That is why the Institute of Directors said just days before the Budget:

“The UK deserves nothing less than its own version of the Inflation Reduction Act”.

And the CBI pointed out our failure on spending.

I was very disappointed by the Budget. It was the moment to turn it around. It turns out there was no new money for carbon capture, but the promise of £1 billion some time in the future. I am old enough to remember when there was a £1 billion carbon capture and storage plan. It was announced 15 years ago by the last Labour Government, but was cancelled by this Government. The other boast was a reheated announcement of a competition for small modular reactors. We are in favour of new nuclear, but a reannouncement from 2015 will not make it happen.

There was warm praise for Lord Heseltine, which I agree with. I remember Lord Heseltine saying he would intervene before breakfast, lunch and dinner, and then wake up the next morning and intervene again before breakfast. That is not the character of this Government. What was the Government’s reaction to President Biden’s Inflation Reduction Act? The Energy Secretary called it “dangerous”, the Business Secretary said it was “protectionist”, and the Chancellor did not support it. As if crying foul is going to stop the race. It will not stop the race; it will leave us behind. I do not believe that the Government get what a modern industrial policy looks like. We needed a new national wealth fund to invest in the industries of the future. We needed GB Energy, a proper publicly owned energy generation company, to invest in all forms of low carbon generation. We need a sprint for zero-carbon power by 2030. We need a plan to insulate 19 million cold, draughty homes. We got none of that from this Budget, but that is what a Labour Government would do.

In their failure to grasp the future, the Government show why it is high time they were consigned to the past. After 13 years of their failure, the last thing we need is another five years. They have the wrong priorities. They have no proper plan for the future. They cannot provide the leadership the country needs. It is time for change.

[Mr Deputy Speaker (Sir Roger Gale)]

Five-minute limit. I call Simon Clarke.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

The shadow Secretary of State, the right hon. Member for Doncaster North (Edward Miliband), said in his speech that by their choices you will know their priorities. He was absolutely right. The Chancellor showed last week that his priorities are the priorities of Teesside. The Secretary of State for Levelling Up, Housing and Communities, my right hon. Friend the Member for Surrey Heath (Michael Gove) said in his speech that he would take anyone who wanted on a tour of Teesside to see our freeport and the fantastic progress being made there. Many Opposition Members would benefit from such a tour, because they would see the transformative impact of the carbon capture and storage investment that the Chancellor reaffirmed last week.

Contrary to what the shadow Secretary of State said in his closing remarks, Net Zero Teesside is a reality. It is going up as we speak, backed by Shell, Equinor and BP—real companies investing in a real project that is transformational not just for the industries of the future, but our existing industrial base in steel, chemicals, plastics and all those industries which emit carbon dioxide as an intrinsic part of their production, not just in terms of the emissions released as part of energy generation, but as a by-product. That is why carbon capture is so vital. That is why it was so welcome that it was backed strongly in the Budget last week. We had a welcome decision on new nuclear and its classification as a sustainable technology, which is absolutely right and vital for the future. I welcome warmly the position to keep Hartlepool nuclear power station producing for two more years.

Critically, there was direct investment in our communities—£20 million secured by my hon. Friend the Member for Redcar (Jacob Young) for Eston Square, which my right hon. Friend the Secretary of State rightly celebrated in his remarks. That follows the £15 million for Guisborough in my constituency, the £6 million for Loftus and the £36 million for the Middlesbrough town deal. That is investment in the economic drivers of growth and in the communities that need it. By the time we go to the polls in 2024, the Government’s levelling up plan will have transformed people’s lives—that is a good sign.

There was much else to welcome in the Budget including, critically, the announcements on childcare—something that the group Next Gen Tories has been campaigning hard for. We all know across this House that the cost of childcare is unsustainably high and deeply unfair. The campaign group Pregnant Then Screwed has reported that for two thirds of families, childcare costs are as much as their mortgage. That is totally unjust and clearly an obstacle not just for the economy but for our having the children we need as a society. It is right that the Chancellor has taken bold action to address it.

I also welcome the abolition of the lifetime allowance on pensions, which will have a major impact on our retaining the doctors we need. The response of the British Medical Association says a lot more than that of shadow Front Benchers, who we have seen in complete chaos, with the shadow Chancellor and the shadow Health Secretary utterly at odds about this important measure.

As we heard from my right hon. Friend the Secretary of State, there is bold action on worklessness. The OBR estimates that 110,000 more people will be supported into the workplace by 2027-28. That is exactly what we need—the combination of challenge and support that people across the country want from the welfare state and our excellent jobcentres. It is an absolute scandal that too many people have their lives written off as economically inactive owing to health conditions, when they could work. There is all the support and ingenuity that can be deployed available to help with that vital process. All that was to be welcomed in the Budget.

There were some aspects of the Budget that I wish had been different. I have made no secret of my deep concern about the decisions surrounding the future of our corporation tax increase. I think that we have seen the consequences already with the decision of AstraZeneca to choose the Republic of Ireland over the UK for its next investment. I welcome the offsetting benefits of the full expensing that the Chancellor announced. If that is to work, it is vital that it is a permanent decision rather than simply a temporary relief, otherwise it will have a distorting effect on business investment. I very much hope that the Chancellor will make that permanent if the headroom is there to enable it, as he said he would. That will be vital to ensure that the measure is a success.

It will not surprise Members across the House that I believe that we need to do more on the generators of growth more generally. I point out the importance of housing, which my right hon. Friend the Secretary of State mentioned. In the end, the only sustainable way to improve our economic activity in this space—and the social justice of our housing debate—is to build more homes, addressing the challenges of nimbyism and nutrient neutrality. I hope and believe that there will be more progress on that in the months ahead.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the Scottish National party spokesperson. No time limit.