Budget Resolutions and Economic Situation

Sam Tarry Excerpts

Tuesday 21st March 2023 Commons Chamber

[Sam Tarry (Ilford South) (Lab)]

This Budget follows successive Conservative and coalition Governments that have overseen the worst growth in GDP per head since records began, a sustained decline in living standards, and a disintegration of our vital public services. Worse still, a recent forecast by the IMF has said that we are going to be languishing behind even the Russian economy in terms of economic growth. That is the result of 13 years of stagnant wages and rapid inflation—what the TUC has called the worst pay crisis “since Napoleonic times”. Real income is still below the levels of 2010, the last time that we had a Labour Government. The recent collapses of Silicon Valley Bank and Credit Suisse have shown how fragile global financial regulatory frameworks are. SVB took unnecessary risks and triggered a run on its assets, while Credit Suisse accrued fine after fine, as well as the involvement of Greensill, a former Prime Minister’s employer, in damaging its capital.

Yet every time, it is my constituents in Ilford who have borne the brunt of this economic chaos. My inbox is full of desperate cries for help from people being forced into debt and even further below the poverty line. This Budget, unfortunately, was a Budget for the select few, totally divorced from the reality that so many constituents face every day. Rather than supporting ordinary people struggling to make ends meet, the Chancellor is handing billions to the wealthiest 1% through tax cuts for corporations and abolishing the lifetime pensions allowance at huge taxpayer cost. What is most bizarre is that, on the day that the Budget statement took place, 400,000 teachers, doctors, rail workers and civil servants took industrial action for better pay and conditions, yet the Budget made just one cursory reference to wages.

In the past year, public sector pay has fallen by £185 a month, with real pay being lower now than in 2008 and not expected to go back above 2008 levels until 2027. It is no wonder that, in almost every sector of the economy, workers are taking industrial action. The New Economics Foundation has warned that we are now on the precipice of the

“greatest living standards crisis on…record.”

Colleagues will undoubtedly have seen the OBR forecast that predicts a staggering 5.7% fall in real income per capita over the next two years, after what has already been a decade of decline. What that means for the lived experiences of families, especially those already on a low income, is utterly grim. By December 2024, based on estimates from the Joseph Rowntree Foundation, 43% of households will be unable to afford a decent standard of living. On average, those falling below the threshold for a decent standard of living will be short by £10,000 a year—10 grand, Mr Deputy Speaker.

Let us be clear: low pay is the cause of thousands of unfilled vacancies in key professions such as nursing and teaching. Until wages grow in real terms, there will be no long-term solution to the recruitment and retention crisis. James Meadway and Costas Lapavitsas have just launched a new book on the cost of living crisis. The language of pay restraint urged by some Government Members is out of kilter with the economic reality for so many, because there is no wage-price spiral. It is nonsense—it is economically illiterate and untrue—to say that putting people’s wages up is going to lead to inflation rises. If the Government are serious about tackling this crisis, they must provide public sector workers with the inflationary pay rise that they sorely deserve. The Government were perfectly capable of spending billions in taxpayer money to protect private enterprises during the pandemic and to bail out banks. This needs to be extended to ordinary working people.