The Growth Plan

Rushanara Ali Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

I am grateful to my hon. Friend, whose policy prescriptions are always interesting and valuable. I have only been in post for two and a half weeks, but I should be happy to discuss with him how we can simplify our tax system.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

We know that inflation is way off target, and today’s announcement of £45 billion of tax cuts will make that worse. It will force the Bank of England to continue consistently to raise mortgage rates, which will hammer homeowners and mortgage holders. The Chancellor has not published the OBR analysis. Is it not time he did, and is not his reason for not publishing it the fact that it reveals that he has broken the fiscal rules for which he voted and will not achieve the growth target that he set himself?

[Kwasi Kwarteng]

As I reminded my right hon. Friend the Member for Central Devon (Mel Stride), and as I said in my statement, the OBR will be coming up with a forecast, certainly before the end of the calendar year, and I shall be very interested to see and hear what it has to say.

Delivery of Public Services

Rushanara Ali Excerpts

Tuesday 28th June 2022 Commons Chamber

[Mr McFadden]

To govern is to take responsibility, and the problem with saying that it is all about the post-pandemic situation is that waiting lists had almost doubled before the pandemic. I could give the hon. Member the figures again, but I do not want to read them out twice.

It is not just about the NHS. There are also delays at our ports. We have seen long queues of lorries—the delays are well known—and increased costs and bureaucracy for exporters.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does my right hon. Friend agree that, when the last Labour Government left office in 2010, satisfaction in the national health service was among the highest in the world and that through reform programmes, disruption and cuts in funding the Government have created problems in the NHS? They need to get a grip.

We also have chaos in the courts. I see that in my constituency, where the family courts are really struggling with long waiting lists because of shortages of judges and lawyers. We also have passport queues and disruption across the country. The Government have lost control and need to get a grip.

[Mr McFadden]

My hon. Friend is absolutely right. I remember seeing the driving down of waiting times and waiting lists in government, and never at any point did anyone say, “We can take our foot off the gas” because there might have been problems in Germany or somewhere else. We took responsibility for the system that we were running.

As I said, there have been large queues at the ports. The Government do not need to rerun the Brexit argument—Ministers should have realised that we can leave only once—but there are things that they could do. They could at least seek a veterinary agreement with the EU—even New Zealand has one—which would be a better deal for our farmers and our food industry and may cut the bureaucracy and delays at our ports.

Let us take the asylum system, which is of significant concern to our constituents. The number of cases taking more than six months to decide has been up every quarter since the Home Secretary took office, and the backlog has tripled in the last three years. That matters because delays cost money and leave everyone in limbo.

--- Later in debate ---

[Rushanara Ali]

The Chief Secretary mentions ways of putting money into people’s pockets. Will he explain how he will recover the £26.8 billion that the Treasury has lost to fraudsters and error, and the £11 billion lost by failing to insure against interest rate rises? If the Government could recover that money, or if they had not wasted it through fraud and mismanagement, there would be billions of pounds in the public purse to support our constituents right now. Instead, it has been lost through incompetence.

[Mr Clarke]

I respect the hon. Lady from our days of old on the Treasury Committee, and I completely share her commitment to managing public money responsibly, but I gently disagree with those numbers. Clearly some fraud has been perpetrated during the pandemic, and we are managing it actively; indeed, in July, the new public sector fraud authority will go live, backed by some £25 million of additional funding, which is a welcome step. However, sometimes the figures cited in fraud debates capture items such as the write-down in value of the personal protective equipment that was purchased at an absolute premium at the height of the pandemic and that subsequently became worth much less in an era of much greater supply. We should be careful to take the issue seriously, but should not convey the impression that things are as bleak as the hon. Lady makes out.

[Rushanara Ali]

Will the Minister give way again?

[Mr Clarke]

I am going to make some progress at this point.

The Chancellor has also announced his intention to cut the basic rate of income tax from 20p to 19p in the pound from 2024. This will be the first income tax cut for 16 years, and it will be a £5 billion tax cut for 30 million people. The Chancellor has also said that he will set out his support for businesses in more detail in the autumn Budget.

Crucially, everything that we have done has been done responsibly, reflecting our continued commitment to strong and sustainable public finances. In direct contrast, the Labour leadership has so far promised £99.5 billion of day-to-day spending commitments—

--- Later in debate ---

[Rushanara Ali]

It is rather rich for the Minister to lecture the Opposition about funding when he has not even been able to tell us how much will be lost in fraud on his watch. His own counter-fraud Minister, after he resigned, said that it had been

“happy days if you were a crook”.

That is what his Government are doing—dishing out money to crooks. Perhaps the Minister could answer my earlier question: how much money has been lost to fraud and incompetence, and how will he recover that money?

[Mr Clarke]

We have set out a very clear plan to recover that money, and we have provided regular periodic updates on the progress that we are making against fraud, but we do not accept Lord Agnew’s characterisation of the situation. We continue to pursue this, and obviously the authorities reserve the right to pursue individuals and companies wherever it is clear that wrongdoing has occurred.

As a Minister, I am proud to be part of a Government who support people through difficult times, but that needs to go hand in hand with fiscal responsibility. The support that we are providing is timely, temporary, and targeted at those who need it most to avoid pushing up prices and interest rates further.

The motion lists a number of other issues, including passports, driving licences, GP and hospital appointments, court dates, and airports. Let me take each of those in turn.

Owing to covid-19, more than 5 million people delayed applying for British passports. Following the return of unrestricted international travel, there has been unprecedented demand for new passports, with 9.5 million applications forecast for this year. That compares with 4 million applications in 2020 and 5 million in 2021. Since April 2021, 650 additional staff have been brought in, with a further 550 arriving over the summer, and those numbers are starting to tell: more passport applications are being processed than ever before. In fact, between March and May alone, the Passport Office completed the processing of some 3 million applications. Since April 2021, people have been advised to allow up to 10 weeks to receive their passports, and 98.5% of applications have hit that target. For the small percentage of customers whose applications take longer than 10 weeks, and who are due to travel within a fortnight, there is an expedited service, at no additional cost, to ensure that they obtain their passports in time.

I am encouraged by the hard work of employees at the Driver and Vehicle Licensing Agency to clear the backlog in the processing of driving licence applications and waiting times for driving tests which built up throughout the pandemic and last year’s industrial action. I am confident that the DVLA remains on track to reduce waiting times further over the course of this year.

On NHS waiting lists, I want to take this chance to thank the NHS for the commitment with which it is tackling the backlog that built up during the pandemic. This Government are already instituting one of the largest catch-up programmes in the history of the NHS, spending more than £8 billion between this financial year and 2024-25 to tackle the backlog so that the NHS in England can deliver some 30% more activity in 2024-25 compared with pre-pandemic levels.

Dormant Assets Bill [Lords]

Rushanara Ali Excerpts

2nd reading
Monday 6th December 2021 Commons Chamber

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

May I start by declaring an interest as co-chair of the all-party parliamentary group on philanthropy and social investment and also chair of a national charity that has benefited from dormant assets funding, as well as the many organisations that the all-party group represents?

Since the last Labour Government introduced the Dormant Bank and Building Society Accounts Act 2008, with cross-party support, more than £800 million has been distributed to good causes. The four organisations that have been involved with the distribution—Big Society Capital, Fair4All Finance, Youth Futures Foundation and Access, the Foundation for Social Investment—have a proven track record and an evidence-based approach to investment and support to charities and social enterprises across the country.

It is vital that this Bill builds on the work and the evidence underpinning the allocation of funding. It is also vital that we look at some of the things that these organisations have achieved. Big Society Capital alone has used the £425 million of dormant assets to bring in another additional £2.5 billion of social investment from other investors, so it is vital that we ensure that that is built on and that there is not a power grab by Ministers to allocate funding to their favoured causes. I hope that the Minister will assure us that the consultation will be meaningful and not an attempt to take away the proper accountability, scrutiny and good governance that underpins the current allocation of funding, through these agencies, to good causes in our constituencies up and down the country.

Since 2019, the Youth Futures Foundation, which has a fund of £90 million, has started to allocate funding to young people. I have seen how the charity that I chair has benefited; 70% of the beneficiaries are from working-class and ethnic minority backgrounds in different parts of the country. Many other organisations up and down the country are also doing really great work with young people. Youth Futures Foundation has distributed nearly £19 million to 143 civil society organisations engaging about 18,000 people during the pandemic, and there is much more to do for those who face disadvantage and discrimination. As I have said, the work of Big Society Capital has meant that organisations have been able to build a social economy in their areas, which has had benefits in a wide range of fields such as tackling homelessness and building new social businesses across the country.

Let us build on the achievements reached under the last Labour Government and the cross-party consensus that has underpinned the work of these multiple organisations. I hope that the Government will ensure that lessons are learnt from the scandal of the towns fund. There have been big concerns about funding being allocated when Ministers have more control over it and there is less accountability; funding must not be dictated by political favouritism. Likewise, we hear the scandals of the personal protective equipment contracts, with separate pathways for those who have close connections with the ruling party. We must ensure that we do not fall into those traps, because there is a great deal of cross-party consensus on supporting organisations in our constituencies up and down the country.

During the pandemic, we have seen how vital it is to support charities. I have been fortunate to be able to work with colleagues in the Conservative party, as well as Liberal Democrats, SNP Members and others, through my all-party parliamentary group. I hope that Ministers will take heed of the representation that has been made and ensure that, rather than the duty to consult just being paid lip service to, there is proper protection and good governance in the future allocation of the dormant assets funds, and that they do not just dish out money to their pet causes, dictated by political considerations rather than what is in the interests of community organisations and charities across our constituencies and our country.

[Several hon. Members rose—]

Treasury

Rushanara Ali Excerpts

Friday 19th November 2021 Ministerial Corrections

The following is an extract from the Second Reading debate on the Finance (No. 2) Bill on 16 November 2021.

[Rushanara Ali]

The Minister mentioned fairness a few times, and also the challenges facing the country. Why have her Government decided to give banks a reduction in the surcharge taxes they pay, which will cost the taxpayer £1 billion a year, when increasing numbers of our constituents are going hungry because of the failure to support them in the challenges they have faced over the last 18 months?

[Lucy Frazer]

I am grateful for the opportunity to answer that question, because the hon. Lady talked about a reduction in the amount banks are paying but that is not accurate: the banks will actually be paying a higher rate than previously. The hon. Lady might have noted that I referenced in my speech the fact that corporation tax was going up to 25%, and banks will be paying a higher rate than everybody else, who will be paying 25%; the banks will now be paying 28%, not the 27% they are currently paying. We are also ensuring that we have a competitive operating environment for these banks, because the banking sector not only contributes to the economy but employs 1 million people.

[Official Report, 16 November 2021, Vol. 703, c. 496.]

Letter of correction from the Financial Secretary to the Treasury:

An error has been identified in my response to the hon. Member for Bethnal Green and Bow (Rushanara Ali).

The correct information should have been:

Finance (No. 2) Bill

Rushanara Ali Excerpts

2nd reading
Tuesday 16th November 2021 Commons Chamber

[Lucy Frazer]

I am grateful to the hon. Member for that question because I appreciate, since being in this role, that the loan charge is an issue that has affected many people across the country and that many MPs feel very strongly about. I have spent quite a considerable amount of time already talking about this issue not to only the chief executive officer of Her Majesty’s Revenue and Customs, but to officials. I have also had the opportunity to meet HMRC officials who are dealing with the vulnerable people who may be subject to the loan charge and to ask questions about how they are treating them.

The hon. Member makes a really good point, because the real perpetrators in relation to the loan charge are those who offer these schemes and getting people on low pay into them. An issue I have raised directly with HMRC is how we can further prosecute and bring these people to justice. Unfortunately, I understand that many of them are located offshore, but we will be doing everything we can to ensure that those who are responsible for promoting this are brought to justice.

This Bill deals with those who try to get out of paying tax, but it also creates a simpler and easier system. Its measures make capital gains tax easier to navigate, doubling the window for reporting and for paying CGT on residential property from 30 days to 60 days. This will give people longer to work out what they owe and make it less likely that they will make a mistake. For businesses, we are creating a simpler tax system through reforms to basis periods, leading to a simpler, fairer and more transparent set of rules for the allocation of trading income to tax years.

There is no doubt that the pandemic has cast a long shadow over this country and our finances, but just as our wartime predecessors rebuilt from the blitz, now is the time to open a new chapter in our national story—one of economic growth and renewal, and with it, transformed lives.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Minister mentioned fairness a few times, and also the challenges facing the country. Why have her Government decided to give banks a reduction in the surcharge taxes they pay, which will cost the taxpayer £1 billion a year, when increasing numbers of our constituents are going hungry because of the failure to support them in the challenges they have faced over the last 18 months?

[Lucy Frazer]

I am grateful for the opportunity to answer that question, because the hon. Lady talked about a reduction in the amount banks are paying but that is not accurate: the banks will actually be paying a higher rate than previously. The hon. Lady might have noted that I referenced in my speech the fact that corporation tax was going up to 25%, and banks will be paying a higher rate than everybody else, who will be paying 25%; the banks will now be paying 28%, not the 27% they are currently paying. We are also ensuring that we have a competitive operating environment for these banks, because the banking sector not only contributes to the economy but employs 1 million people.[Official Report, 19 November 2021, Vol. 703, c. 5MC.]

The hon. Lady also said people were going hungry, but it is important to recognise what this Finance Bill and Budget do for those on the lowest pay. I have talked about the universal credit taper rate, bringing in an additional £1,000 for those in work who will benefit from it. We have also increased the national living wage, which will benefit people by an average of £1,000. There are a number of other measures, too, that benefit people who are not in work.

[Rushanara Ali]

But the reality is that there has been a UC cut, and the taper rate reduction, which is welcome, will help only a third of the 6 million affected. What about the 4 million others? This is not a fair Budget and it is wrong for this Government to treat the British people in this way given what they have faced in the pandemic over the last 18 months.

[Lucy Frazer]

The UC taper sends out a message that it is important to get into work and that work pays. We on the Government side of the House believe that the way to help people is to get them into work and into good jobs so they can support themselves, and we have a number of schemes to help those on UC to get into work. It is also important that when they are in work, they are paid well for it.

The hon. Lady also asked about those who are not in work, and I remind her of all the measures we have put in place for them, because not everybody can work. Before the Budget the Chancellor announced half a billion pounds for the most vulnerable—millions of vulnerable people will benefit from that. There are also more than 2 million people benefiting from the warm home discount and all the people who benefit from the council tax rebates we help them with. So it is right that we support the most vulnerable, but the UC credit taper is about making work pay.

We will invest in people, in businesses and in public services, just as we are doing with the 40 new hospitals, the 20,000 new police officers and the extra money we are providing to schools.

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[James Murray (Ealing North) (Lab/Co-op)]

I beg to move the amendment in my name and those of hon. and right hon. Friends including the Leader of the Opposition and the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves):

That this House declines to give a Second Reading to the Finance (No. 2) Bill because it does nothing to help people who are struggling with the rising costs of living, who are being hit by the cut to universal credit, or who are facing a rise in National Insurance Contributions and a freeze in the Income Tax Personal Allowance from next April, because it nonetheless cuts taxes for banking companies and derives from a Budget that will see the tax burden rise to its highest level in 70 years and announced cuts in air passenger duty for UK domestic flights, and because it fails to set out a plan to grow the UK’s economy, fundamentally reform business rates, and create better jobs for the future.

I am grateful to have the opportunity to set out the view of the Opposition on the Second Reading of the Bill, which comes at a time when people across the UK are seeing the cost of living, from electricity to food prices, going up and up; when businesses are trying to get back on their feet after 18 months of struggle; and when our country needs leadership to build a new net zero economy with jobs for the future. Yet let us look at what the Government are doing: putting up taxes on working people while cutting them for banks; giving up on fundamental reforms to business rates that would give our high streets the backing they need; and failing to invest in the new jobs of the future that would turn the challenge of net zero into an opportunity for our country’s economy to grow.

The truth is the Tories will never put working people first. I stood here two months ago arguing that the Government were wrong to hike up taxes on working people with their national insurance rise when those with the broadest shoulders should be paying more, and yet what we have before us today is a tax cut for banks. That tells us everything we need to know about the Tories when in power. They do not seem to care whether something is fair for people in this country, except of course when they think something is unfair to one of their own, and then they simply change the rules to suit themselves. The British people are seeing through the Government’s approach: people are seeing that this Government are more concerned with protecting themselves than with protecting the economy and people’s quality of life.

The foundation of any Government’s approach to the economy must be a plan for growth. With a growing economy, we have the chance to create new jobs with better wages and conditions in every part of the country, but without growth it gets ever harder to meet the challenges we face. Let us look at the record of this Government. As the shadow Chancellor my hon. Friend the Member for Leeds West told the Chancellor right after the Budget, it is clear what direction we are going in under the Conservatives. In the first decade of this century, despite the financial crisis, Labour grew the economy by 2.3% a year. In the last decade to 2019, however, even before the pandemic, the Tories grew the economy at just 1.8% a year. In the future, things look even worse. The Office for Budget Responsibility has said that by the end of this Parliament the UK economy will be growing by just 1.3% a year. This low growth is hitting people in their pockets: data from the Office for National Statistics show that average yearly wage growth has fallen from 1.6% in the decade to 2010 to 0.5% in the decade since 2010. We do not have much to look forward to, either, with the Institute for Fiscal Studies saying that over the next five years, real household disposable income is expected to grow by just 0.8% a year, well below the historical average.

Low growth is becoming a hallmark of the Tories in power. What they fail to realise is that with the right investment, the challenges we face can become opportunities for growth. In no part of our lives is that more evident than our response to climate change. Labour has said that we would invest an additional £28 billion every year for the rest of this decade in transforming our economy—from new jobs building batteries for electric vehicles, to manufacturing and maintaining wind turbines, and finally insulating our homes to get energy bills down. With investment on the scale we need, and with Labour’s pledge to buy, make and sell more in Britain, we would turn an urgent, critical response to the climate emergency into an opportunity for new jobs with decent pay and conditions in every part of our country.

In every part of our country, too, we see shops and high streets struggling to get back on their feet after the last 18 months. We should turn their urgent need for support into a chance to fundamentally overhaul the system of business rates, which has had its day. Business on high streets across the country know that the business rates system is broken and that fundamental change is long overdue. We know that, too, which is why we have pledged to scrap business rates and replace them with a new system of business taxation fit for the 21st century, which would incentivise investment, reward businesses moving into empty premises and encourage environmental improvements. Crucially, under our new system, no public services or local authorities would lose out, and online businesses would pay a fairer share.

We thought the Conservatives also knew that change on that scale was needed. We thought they might understand the need for an overhaul of the system, as their 2019 manifesto promised to reduce business rates through

“a fundamental review of the system.”

We thought they might even have meant it: in 2020, the Treasury began a consultation on what it said would be the fundamental review that its Ministers had promised. Yet in last month’s Budget, the Chancellor decided to ditch any prospect of fundamental reform under this Government.

Measures in the Budget for next year may be welcome, but no matter how the Chancellor tries to spin it, the promise of fundamental reform from this Government is over. As the chief executive of the British Retail Consortium put it, what the Government have offered

“falls far short of the truly fundamental reform that is needed and was promised”.

That manifesto promise of a fundamental reform of business rates has been broken, just as the promise not to raise national insurance was broken a month before.

We have a Government who are breaking their promises and failing to set out a plan to grow the UK’s economy and create better jobs for the future. Growing our economy would mean more jobs and higher tax revenues to invest in public services, but if the UK economy had grown at the same rate as other advanced economies over the last decade, we could have had £30 billion more to invest in public services without needing to raise taxes. Yet under the Tories, lower growth means that taxes need to go up. Last month’s Budget saw taxation rise to its highest level for 70 years.

Crucially, the decisions about who should shoulder the burden of tax rises tell us everything we need to know about the Tories when they are in power. The Tories are making life harder for half the population through their personal allowance freeze, for all working people through their national insurance tax rise, and for struggling families through their cut to universal credit, yet they are making life easier for bankers by cutting taxes on banking companies, and for frequent flyers by cutting air passenger duty on domestic flights. A banker flying between London and Leeds is getting a double tax cut, but someone working in the airport where that flight lands is getting a double tax rise.

[Rushanara Ali]

Does my hon. Friend agree that it is scandalous that the Government have only just agreed to restore schools expenditure to its 2010 level, despite a shortfall of £10 billion for catch-up notwithstanding requests from the former catch-up tsar? If we are serious about improving productivity in this country, we need to invest in our kids and in skills. Government expenditure falls far too short, and that will damage the future of our economy.

[James Murray]

As my hon. Friend rightly points out, investing in education is critical to the future of our country and the next generation. We heard the Minister say how uncomfortable she feels talking about cuts, but that is the reality of 11 years of Conservative government. No matter how they try to massage the announcements they are making now, the truth is that if we compare 2021 with 2010, we can see the impact that 11 years of the Tories has had on our public services.

At a time when working people are facing rising prices and flatlining wages, it shows the Tories’ true colours that they are prioritising a tax cut for bankers. To rub salt in the wound, as the IFS has pointed out, the cut in air passenger duty will flow through the UK emissions trading scheme and push up electricity prices at home. It was shocking to hear the Chancellor announce a cut in air passenger duty just days before COP26, and it is shocking that his tax cut for banks will cost the public finances £1 billion a year by the end of this Parliament.

That cut will see the corporation tax surcharge for banking companies slashed from 8% to 3%, with the allowance for the charge raised from £25 million to £100 million. It is worth reminding ourselves why that sector-specific tax was first introduced. As the policy paper published alongside the Budget—I am sure the Minister has read it—sets out clearly, the charge has been levied on banks to reflect

“the risks that they pose to the UK financial system and wider economy”

and to recognise

“the costs arising from the financial crisis.”

When the surcharge was introduced 10 years ago, in the wake of the financial crisis, the Government at the time seemed to recognise that banks had an implicit state guarantee due to their central position in the UK economy, and that that guarantee should be underpinned by greater tax contributions. Yet, as Tax Justice has pointed out, the Office for Budget Responsibility found in 2019 that £27 billion of Government expenditure on bailing out the banks was still outstanding. It seems that the Government are determined to push ahead with a cut to the surcharge, despite the fact that it will not even have fully repaid the public money spent on banks during the financial crisis, let alone provided any insurance against a future crash. We will question Ministers on that further in Committee.

We will also use that chance to press Ministers on other parts of the Bill, including those that introduce the residential property developer tax and measures relating to money laundering and tax avoidance. We support the principle behind the residential property developer tax, which will be levied on the largest developers in the residential property sector. It is right that those responsible for putting dangerous materials on buildings should pay towards the very significant costs of removing unsafe cladding, but it would be a mistake to assume that levying that tax alone will mean that the cladding scandal will in any way come to an end.

The tax is expected to raise £2 billion over 10 years, yet the Housing, Communities and Local Government Committee has estimated that addressing all fire safety defects in every high-rise or high-risk residential building could cost up to £15 billion. What is more, extreme pressures on labour and materials mean that the cost of fire safety works could rise significantly, all but wiping out the money raised from the new tax proposed in the Bill.

The bottom line is that leaseholders living in buildings with potential fire risks and facing huge remediation costs need to know how those costs will be met in full and that the necessary work will be done without delay. There are plenty of people involved in this scandal who should be paying to fix it, but leaseholders are absolutely not among them.

We also support the principle behind the economic crime levy to raise money from the anti-money laundering regulated sector to pay for measures in the economic crime plan to help tackle money laundering. As the director of the Centre for Financial Crime and Security Studies has said, a

“key challenge for the UK Government’s response to financial crime is a lack of investment in capabilities to respond to its policy ambition.”

We hope that the funding from the levy will go some way towards increasing the capacity in government to tackle economic crime, although we will press Ministers on whether it is enough.

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[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Bill and the Budget that it follows do little to respond to the scale of the challenges facing our country, many of which have been brought into sharp focus by how the coronavirus pandemic has hit our society, not to mention the long-term hit on our gross domestic product because of Brexit—a 4% hit to the economy, on top of a 2% hit from the pandemic, as forecast by the Government’s own Office for Budget Responsibility.

Nor does the Bill respond to the climate emergency, as hon. Members have pointed out. Despite the fact that the UK has just hosted the COP26 summit in Glasgow, the Government have no plan for growth. Growth would put more money in people’s pockets and increase tax revenues, but what we are seeing is a low-growth, high-taxes approach, meaning a greater burden on working people because of the Budget.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend makes an important point. Does she agree that the lack of stimulus from the Government contrasts with what is happening in the US? The Government seem to be making the same mistakes as after the financial crash in 2008-09.

[Rushanara Ali]

My hon. Friend is absolutely right. The US has already returned to pre-pandemic levels of growth, as have a number of European countries, whereas the UK is still playing catch-up. We need to learn lessons from what happened after the global financial crisis so that we can get growth back up to the level that we need.

The UK faces the additional challenge of making up for the long-term hit on our economy as a result of the trade that we are losing because of our exit from the European Union. Given that we have exited the European Union, we need to know how the Government will make up for the 4% hit on our GDP in the long term, alongside the 2% hit that I mentioned.

Under this Government, taxes will reach their highest level since the Clement Attlee Government in the post-war era. Clement Attlee had a lot to show for the increase: the national health service, our education system and the welfare state, much of which we have benefited from for generations and continue to benefit from. This Government have poor living standards, a poor economic outlook and weak economic growth to show for their tax rises. While the pockets of working people are being hit, this Bill, shockingly, allows a tax cut for banks. It cuts the surcharge on their profits from 2023, which, as I mentioned earlier, will cost taxpayers £1 billion a year. Nowhere is it clearer where this Government’s priorities lie, and where they think the tax burden should lie: the Bill gives a tax rise to workers and tax cuts to the banks.

The Government have wasted billions of pounds of taxpayers’ money by brazenly giving out PPE contracts to a number of people who are linked to the Conservative party. As the National Audit Office has pointed out, a significant amount of money has been wasted and a “high-priority” channel was provided for Government contracts linked to people in Government and they were 10 times more likely to be successful. Some estimates suggest that nearly £2 billion of contracts went to people with links to the Conservative party.

According to the Public Accounts Committee, the test and trace scheme, which cost billions of pounds, has not shown a benefit commensurate with the amount of money spent. If the Government had spent that money wisely, many billions would not have been wasted on crony contracts, and some of the money could have been spent on dealing with the loss of income that many have experienced and the poverty and inequality that people are facing in our country.

This Bill does nothing to improve our country’s bleak economic outlook. As the Office for Budget Responsibility has confirmed, the UK is suffering the slowest recovery in any major advanced economy. GDP in the UK at the end of this year is further below the 2019 level than it is in any other G7 country, and any future economic growth in the medium term is likely to be anaemic: the OBR forecasts an average growth rate of just 1.5% a year between 2024 and 2026. Meanwhile, our long-term growth rate fares little better. Brexit is forecast to reduce the UK’s GDP by a staggering 4%, and the OBR has drawn attention to a 2% hit as a result of the pandemic. If the Conservative Government had grown our economy at the same rate as other countries with advanced economies since 2010, the economy would have been £100 billion larger by 2019, leaving over £30 billion more to spend on public services without the need to raise taxes.

Given poor growth and high taxes, it is no wonder that the outlook for living standards is so dire. The director of the Institute for Fiscal Studies has described the outlook for living standards as “actually awful”, with the country facing

“five more years of stagnant living standards at best”—

and that is in the context of a decade of stagnant wages. How are people meant to cope with all that has happened over the last decade as well as the impact of the pandemic and the increase in fuel prices and the cost of food caused by disruptions in supply chains?

In-work poverty has reached record levels under the Conservative Government. There are now 2 million more people from working households living in poverty than there were in 2010. Of the 6 million families who were hit by the £20-a-week cut in universal credit, fewer than a third will benefit from the changes in the universal credit taper rate. While those changes are welcome, 4 million other people will not be given the help that they need. As the Minister herself admitted, many of those people have caring responsibilities or serious disabilities, and are not in a position to return to work. Their incomes will fall dramatically: they will lose £1,000 a year, and that will force more of them into severe poverty.

In my constituency the child poverty rate has increased over the years, and now stands at 60%. Nearly 20,000 households, which include 11,000 children, have been hit further by the universal credit cut. According to the Independent Food Aid Network, there has already been a 66% increase in demand at food banks across the country since the cut, after only a few weeks. As we approach Christmas, the food bank queues are growing longer and longer in constituencies such as mine, and food banks are struggling desperately to cope with the spike in demand. That is only set to become worse. It seems that the Government have learnt nothing from the lessons taught by campaigners such as Marcus Rashford; in fact, they have made matters worse for people who desperately need support.

The Government have also failed to deliver on their net zero promises. There has been plenty of rhetoric and little substance, and, indeed, a cut in domestic air passenger duty was announced in the run-up to COP26. We have a Government who are treating the climate emergency as an afterthought rather than something that is central to what we do in the future. We need a green jobs and a green investment revolution, and, as has already been said, we need a focus on a just transition. The Government do not seem to have the commitment or the ambition to deal with a climate emergency.

The Bill lands tax rises on working people while giving tax cuts to banks, and this feels like groundhog day because a decade ago, when the Government first came to power, their instincts were very similar. There were tax breaks for bankers and austerity for the rest of the country, and that has continued: the Government have reverted to their worst instincts. There is evidently no plan for economic growth, and we are facing a terrible future with low growth and high taxes. What we need is a Government who will stimulate growth, invest in improving people’s living standards, and ensure that there is more fairness in the distribution of income and opportunity across our country.

If the Government were serious about growth and improving our productivity, which has been poor for a very long time on their watch, they would invest significant sums in school catch-up, so that our economy can benefit from the investment in skills in creating an economic future that addresses the challenges we face now. We have a long way to go to catch up with other countries because of the twin hit on our economy from the pandemic and the long-term impact of leaving the EU. That is why we needed this Government to be creative and innovative in their policy announcements, and bold in terms of investment in our businesses, small, medium and large. They need to do that on a greater scale than we have seen if we are to recover from what has happened in recent years in our country.

Oral Answers to Questions

Rushanara Ali Excerpts

Tuesday 22nd June 2021 Commons Chamber

[Steve Barclay]

I understand my hon. Friend’s frustration. He will know from the announcement at the Budget that the prospectus set out the process, the types of projects, and indeed how bids will be assessed. To reassure him, there will be further opportunities for local authorities to submit bids to the fund. One of the things that we are encouraging those local authorities to do is to work with elected Members of Parliament in the shaping of those bids, and I hope that they will now take the opportunity to do so.

[Rushanara Ali (Bethnal Green and Bow) (Lab) [V]]

More than half a million young people are out of work and thousands are on furlough. The delay in easing restrictions without associated support for businesses is set to further increase unemployment by 300,000. In the event of a third wave that triggers further restrictions, will Ministers commit to extending the coronavirus job retention scheme and other support that has been vital for our constituents and businesses in our constituencies?

[Rishi Sunak]

The hon. Lady talked about outcomes in the labour market. She will know that we have now had six consecutive months of more people in work, which is something to be celebrated. Vacancies are now running higher than they were at the start of the pandemic, which is a fantastic sign of things to come. The unemployment rate, as I highlighted earlier, is now half what was forecast: 2 million fewer people are forecast to lose their jobs, which is lower than most of our major competitor countries. She is right to highlight, as we have discussed previously, the plight of young people. Our interventions, such as the kickstart scheme and the apprenticeship incentive, will continue to provide opportunity for them up and down the country.

Finance (No. 2) Bill

Rushanara Ali Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Rushanara Ali (Bethnal Green and Bow) (Lab) [V]]

This Finance Bill fails to meet the scale of the economic challenges and it fails to provide the growth that is needed to recover from the pandemic, not to mention the impact of Brexit. Unemployment is already at 5% and is set to rise to 6.5%. Some groups have been hit particularly hard, especially the young—youth unemployment is at 14.3%—and those from minority backgrounds face much higher levels of unemployment.

Business investment has been in decline for many years and the pandemic has not, of course, made matters any better. We have heard a great deal about the productivity rate being incredibly slow, which it has been for the past decade. Instead of focusing on the big challenges facing the country, such as tackling the jobs crisis and youth unemployment, and promoting growth, what we see is the Government reverting to their comfort zone with an irresponsible council tax hike that will create even greater pressures for families who have faced the most unprecedented of challenges over the last year, and huge adversity—ordinary families in constituencies such as mine, where the level of child poverty is among the highest in the country.

By freezing the threshold for the personal income tax allowance, the Bill introduces a stealth tax on households. Meanwhile, the so-called super deduction gives tax cuts to some of the biggest businesses in the country, including those who have done particularly well during the pandemic, when the support should be targeted to companies that need much greater help and where there is greater need for support.

It is as if the Government have learned nothing from this crisis, as they take funding away from families who desperately need help. That brings me to the issue of universal credit, which will return to its original level later in the year. Millions of families will suffer when that happens. That is why I believe that this Finance Bill does not support families. The stealth tax that has been introduced will hurt ordinary families, including our NHS heroes and other key workers who have sustained us through the pandemic.

The Bill does not go far enough to support the 700,000 young people who face unemployment. Only one in 49 are eligible for support through the kickstart scheme. The Government have not taken the opportunity in the Bill to provide additional support to get those young people back to work.

Despite the fact that local councils such as mine have had to spend a great deal more because of the pandemic, there is nothing in the Bill to support them. There is very little to support our public services when they are facing an unprecedented crisis. The Bill lacks the ambition that is desperately needed after the biggest economic hit for generations. It lacks the ambition to get the unemployed back to work, and bold action to increase investment, productivity, and innovation, create the green industrial revolution, and power our economic growth in the face of the double hit of the pandemic and the 4% long-term hit to GDP as a result of Brexit. It hits families hard when they need to be supported, and it lacks the ambition to match the scale of the economic, social and healthcare challenges exposed by the pandemic. I will therefore not vote for the Bill.

Spending Review 2020 and OBR Forecast

Rushanara Ali Excerpts

Wednesday 25th November 2020 Commons Chamber

[Rishi Sunak]

My hon. Friend is absolutely right: not only are we maintaining our commitment to the NHS’s five-year long-term settlement, but we are providing additional funds, with £3 billion for covid recovery this year, and also providing fully the extra funding required to deliver on the commitments to 50,000 more nurses, 50 million more GP appointments and, indeed, 40 new hospitals.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The British people have faced an incredibly difficult year, with covid and the resulting economic crisis. We then have the looming prospect of either a no-deal Brexit or a minimalist one that will be very disruptive for businesses. The OBR has forecast a 5.2% loss of potential GDP over the next 15 years, while the Governor of the Bank of England has said that with a no-deal Brexit we could see a situation that is two to three times as bad. How much more economic carnage and unemployment should the British people expect, with these two scenarios on top of coronavirus and its impacts?

[Rishi Sunak]

All I would say is that our teams are hard at work, and I am very hopeful that we can reach a constructive agreement with our European friends and partners. Our wishes in this negotiation have always been consistent and transparent and are based entirely on the precedent of what other countries have achieved with the EU, so I am very much hopeful that, with good work and a constructive attitude, we can get there.

Economic Outlook and Furlough Scheme Changes

Rushanara Ali Excerpts

Tuesday 16th June 2020 Commons Chamber

[Jesse Norman]

As my hon. Friend will be aware, we have always taken Moray very seriously. We have made a significant investment in the oil and gas sector, from which it is a massive beneficiary, and have supported the city of Aberdeen. We have been very engaged indeed and will continue to look at the sectoral and geographical impacts of the pandemic, but I am grateful to him for highlighting the enormous impact in his constituency of our work so far.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

We remember our dear friend Jo Cox today and deeply miss her voice in this House. She was a powerful voice for those who desperately need our support.

Can the Minister commit urgently to support the 1 million people who have fallen through the gaps in provision? The provision that the Government have made is welcome, but we need a focus and a commitment to support the new starters, self-employed and freelancers, as identified by the Treasury Committee, and we need that commitment today. With the spectre of 9 million people facing unemployment, including 1 million young people, what assessment has the Minister made of the number of additional jobs that are likely to be lost with employers being required to pay 20% of employees’ wages?

[Jesse Norman]

In response to the latter point, we think that a graduated return to employers paying for their own staff and being subject to the usual economic laws of supply and demand is an essential precondition for a proper economic recovery and, therefore, for the sustainability of not just jobs but the economy as a whole. In regard to the wider issues, it would be absurd for me to offer any response from the Dispatch Box to the Treasury Committee report that was filed yesterday, but as I have said to the Chair, we will look very carefully at it and the issues that it raises.

Future Relationship with the EU

Rushanara Ali Excerpts

Tuesday 9th June 2020 Commons Chamber

[Penny Mordaunt]

My hon. Friend makes a very good point. It is not just that we have been in this partnership with the EU but the fact that its arrangements with other nations set the parameters for many of the things that we are discussing. This is perfectly doable. It is just a matter of good will and focus, but there is good will, and there is increasing focus.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Time is running out, and there is a real risk of a cliff-edge Brexit, which would come in the context of a health pandemic and the associated economic crisis, with rising unemployment towards the end of the year. Have the Government initiated any planning for the event of a deal not being reached?

[Penny Mordaunt]

It would be prudent and wise for us to prepare for every scenario, just as we have always done. We did so last year and then did not need to implement those preparations. I am confident that we can not only come to an agreement but do so in a timeframe that gives people the time that they need to prepare and to understand. We are very aware of the other things that are going on in the world that form the backdrop to that. Our approach is going to be achingly pragmatic.