Budget Responsibility Bill

Sarah Olney Excerpts

2nd reading
Tuesday 30th July 2024 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to see you in the Chair, Madam Deputy Speaker; congratulations on your election.

The Liberal Democrats understand the importance of a stable economy to the wellbeing of our nation, and we will support the Bill as it makes its way through Parliament. We have seen the effects of the chaos and uncertainty wrought by the previous Conservative Government in their horrendous mismanagement of the economy, and we know that future prosperity can be built only on a firm foundation.

The former Member for South West Norfolk may have intervened to prevent officials from using the phrase “disastrous” mini-Budget in the King’s Speech document, but this was a disaster for which many millions across the country continue to pay the price. Liberal Democrat MPs have been returned to this House in greater numbers than ever before, because we understand how much our constituents have suffered from the increase in mortgage payments, higher fuel bills and escalating food prices that resulted from the disastrous mini-Budget. We will do all we can to tackle the cost of living crisis being felt by so many, and we welcome the new Government’s commitment to building a strong platform for economic growth. We welcome the Bill as a symbol of strengthened fiscal responsibility and transparency, which we hope will prevent a repeat of the Conservatives’ disastrous mini-Budget under Liz Truss from ever happening again. After the turmoil of the outgoing Conservative Government, we welcome the seriousness of intent from this Government as they rebuild trust with the financial markets and the business and financial sector as a whole.

The financial irresponsibility and unfunded tax cuts in the mini-Budget sent mortgage rates soaring and continued a pattern of low growth, falling living standards and business uncertainty under the Conservatives. Millions of people across the country continue to see the devastating impact of their disastrous governance in their food and energy bills and to feel its heavy burden in their personal finances.

A recent report from the Institute for Fiscal Studies shows that 320,000 people have been pushed into poverty because of mortgage interest rate rises caused by the incompetence of the previous Conservative Government. It has been devastating to hear the stories of so many households dragged into poverty, and to know that so many families are struggling under the worst cost of living crisis in a generation. It is painful to reflect on the thousands of people who were hoping to make progress in their life and improve the circumstances of their family, but find themselves pulled backwards by the weight of the costs now piled upon them. The IFS report tells us that the number of adults unable to keep their home warm enough increased from 1.8 million in 2020 to 4.6 million in 2023. The IFS attributes that increase to the rise in mortgage interest rates during that period. The statistic lays bare in shaming detail the enormous and ongoing impact that the Conservatives’ disastrous mini-Budget had on all our lives.

The positive responses that this Bill has evoked from the broader business and finance sector are indicative of the desire for industry stability. We welcome the engagement from economists and industry experts, who advise of the Bill’s beneficial impact on confidence in public finances. Even the former Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), has acknowledged that he is minded to support the Bill. We will carefully scrutinise its details to ensure that it will achieve its intended aims. In particular, we will look closely at the threshold for fiscally significant measures, set out in the legislation as measures worth at least 1% of GDP or approximately £30 billion, and will consider whether that provision could be circumvented by Government announcing major changes just below that threshold.

The proposed terms set a substantial threshold that would have to be reached before the OBR could insist on intervening. That raises questions about how easy it would be for a Government to skirt the rules and avoid scrutiny from the watchdog. We understand that the bar has been set relatively high to prevent a large-scale irresponsible fiscal event, such as the disastrous mini-Budget, but we are aware of the limitations that places on the Bill. In particular, an announcement could have a largely indirect fiscal effect—it could have an impact on the economy, but come at a small up-front cost to the Government—and therefore not trigger the fiscal lock. We therefore ask the Chancellor: can a GDP measure alone adequately capture the impact of a spending or taxation measure on the economy? Should the Government examine the possibility of using additional criteria in establishing the threshold?

We must consider the wider context in which the Conservatives’ damaging mini-Budget came about to determine whether the measure that we are debating would be sufficient to prevent such a disaster ever happening again. The Conservatives’ period in government, and the last two Parliaments in particular, were characterised by a distaste for the institutions that provide checks and balances on power, and efforts to actively undermine them. Throughout the past few years, we have seen attacks on the judiciary, the civil service, the BBC, the Bank of England, the EU and any British citizen who dared express the view that the Government’s botched Brexit deal was doing enormous damage to our economy. We have seen the provisions of international treaties airily discarded. Conservative Ministers even illegally prorogued Parliament. Even now, in the Conservative party leadership contest, it seems that the one thing all candidates agree on is a promise that the UK will leave the European Court of Human Rights.

The disastrous mini-Budget emerged from the philosophy that the power of central Government, exercised by successive Conservative Prime Ministers, can trump that of other vital independent institutions, and it is precisely that philosophy that we must never again see from Government. The ongoing failure of the former Member of Parliament for South West Norfolk to apologise for the disastrous mini-Budget underlines the fact that she thinks she was both entitled and correct to unleash it on an unsuspecting country that voted for neither it nor her.

Truly addressing the causes of the systemic failure that led to the disastrous mini-Budget will take a great deal more than this Bill. It requires the Government to work alongside institutions that exist to support and challenge their decision making. It requires the Government to submit their proposed measures to parliamentary scrutiny. The Liberal Democrats think that reforms devolving power to local bodies to decentralise decision making would also strengthen our ability to take long-term decisions in the national interest. This Bill and other measures are encouraging signs of this new Government’s intention to ensure that those in power act with more integrity and transparency, but ultimately, unless all Governments are committed to upholding the principles of fiscal responsibility, transparency and sound governance, the risk of future disasters such as the mini-Budget will remain.

In our general election manifesto, we set out the need for every fiscal event to be accompanied by an independent forecast from the OBR. More broadly, we wish to see the Government foster stability, certainty and confidence by managing the public finances responsibly, getting national debt falling as a share of the economy and ensuring that day-to-day spending does not exceed the amount raised in taxes. We must make the tax system fairer by asking some of the wealthiest companies in the world to pay their fair share—the big banks, the oil and gas producers and the tech giants—instead of adding even more to the burden on hard-working families. To improve stability and growth, we need to fix our broken trading relationship with Europe and set up an industrial strategy, helping to make Britain one of the most attractive places in the world for businesses to invest. We must work in partnership with responsible, sustainable businesses to tackle the climate emergency, and spur the growth that is needed for investment in health, social care, education and other essential public services.

Responsibly managed public finances are essential if we are to have the stability, certainty and confidence that drive economic growth, and they are vital in getting mortgage rates under control, too. Under the outgoing Conservative Government, we found out just how much pain and damage can come from fiscal irresponsibility. The Liberal Democrats want a thriving British economy that provides jobs and opportunities and is attractive to businesses and investors. We welcome this Bill as a useful step in that direction that will help to improve long-term stability and responsible economic management.

[Richard Tice (Boston and Skegness) (Reform)]

On a point of order, Madam Deputy Speaker.

Public Spending: Inheritance

Sarah Olney Excerpts

Monday 29th July 2024 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

I thank the Chancellor for advance sight of her statement. Let me associate myself with the expressions of gratitude to our emergency services; the thoughts of all Liberal Democrats are with those affected by the incident in Southport.

Years of Conservative chaos and mismanagement have left our economy on life support and in desperate need of emergency care. Things cannot go on like this any longer. We must now revive growth by getting people off NHS waiting lists and back into work, so we urge the Government to invest wisely in GPs, dentists and hospitals, not only to support patients but to improve efficiency in the NHS and deliver the growth that is so desperately needed after years of Conservative failure.

The outgoing Conservative Government will go down in the history books as one of the most damaging Administrations that our country has seen, and today’s statement has thrown that picture into even starker relief. It was not just their catastrophic mini-Budget; we saw a vicious cycle of stagnation and recession, driven by years of chaos and uncertainty. For the first time, living standards declined over the course of a Parliament as people experienced the harshest cost of living crisis in generations. Our public services were abandoned: waiting lists soared, schools crumbled, and our social care was in crisis. The dire state in which the Conservatives left our public finances is indicative of their irresponsibility.

People are painfully aware that Conservative chaos has real-life consequences. Interest rates were sent soaring, and millions of people saw their mortgage payments increase by hundreds of pounds a month. That is why, more than ever, we need to foster economic stability to draw a line under the uncertainty of the last few years. An important step in rebuilding confidence in our economy is the setting up of a long-term industrial strategy. That will help to unlock vital investment, create good jobs, and help us to tackle the climate emergency. Will the Chancellor reassure the House that the Government will start work on such a strategy as soon as practically possible?

We cannot talk about rebuilding our economy without talking about the crisis in health and social care. Millions have long-term health conditions that make them too ill to work, and millions more are stuck on NHS waiting lists. Many others cannot leave hospital because there is no care provision. The Liberal Democrats have always understood that we cannot have a thriving economy and strong public finances until we fix the crisis in health and social care, which is why we put forward detailed proposals to deliver more GPs, invest in dental services, and cut ambulance waiting times. Equally, we must give people the good-quality care that they deserve, so we urge the Government to work across party lines to implement a system of free personal care and give our unpaid carers the proper support that they need. The last Conservative Administration left people with crippling care costs. That is why it is urgent for us to have cross-party talks on social care, and I urge the Government to begin those as soon as they possibly can.

Investing in health and care is not just about giving people the fair deal that they deserve; it is also about sound management of our public finances. Will the Chancellor guarantee that the NHS and social care will be at the heart of her plans to address the Conservative party’s legacy of mismanagement? Part of that legacy is the previous Government’s promise to deliver 40 new hospitals, which was postponed, redefined and never properly funded. It turned out to be yet another empty Conservative promise, but having listened to many colleagues on these Benches over the last few years, some hospitals are clearly in dire need of investment, with crumbling roofs and buckets to catch the leaks. Will the Chancellor meet Members whose constituents will be affected by today’s announcement, to hear directly about the situation in their hospitals?

Lastly, let me turn to the other side of the equation: securing the funding that our public services so desperately need. Over the last Parliament, we saw the Conservative party raise taxes on hard-working households again and again, just to pay for its own mistakes. Does the Chancellor agree that it would be unfair to ask working people to pick up the tab a second time, after they have already suffered through years of painful tax rises? My party has set out detailed proposals to raise funding for our public services in a fair way—for example, by reversing the Conservatives’ tax cuts for big banks, putting in place a proper windfall tax on oil and gas producers, and raising the digital services tax on social media giants. I urge the Chancellor to draw from these ideas, which could raise billions of pounds by asking some of the largest companies in the world to pay their fair share.

There is no doubt that our economy, our public services and our public finances have been left in a precarious position. Now the hard work must be done to repair the damage and return stability, growth and prosperity to our country. That is what the Liberal Democrats will always champion, and we sincerely hope that the Government will look closely at our proposals to end the crisis in health and social care, grow our economy and give people a fair deal.

[Rachel Reeves]

I thank the hon. Lady for her contribution, particularly the theme about helping people into work and fixing our national health service. I totally agree with her about the immense damage that the Tory mini-Budget did, particularly in pushing up mortgage costs for so many of our constituents.

The hon. Lady asks about industrial strategy. My right hon. Friend the Business and Trade Secretary will be setting out more details of the modern industrial strategy, which will enable us to work in partnership with business to exploit the big opportunities that the country and the economy have for growth and prosperity in all parts of the UK.

The hon. Lady asks about health and social care. She is absolutely right to highlight the huge challenge of the waiting list—it was at 7.6 million when the Conservatives left office. I welcome the deal to get junior doctors back to work, and I am sure the whole country will, because it will mean that people can get operations and treatment when they need. After last year’s industrial action cost our economy £1.7 billion and caused 1.4 million appointments to be missed, the deal will be welcomed by people on NHS waiting lists. Of course, this Government have made a commitment to provide 40,000 additional appointments every single week. That is why we will crack down on tax avoidance and ensure that, finally, non-doms who make their home in Britain pay their fair share of tax here.

My right hon. Friend the Health Secretary will meet constituents who are affected by the previous Government’s betrayal on building 40 new hospitals, because we recognise, as the hon. Lady says, the importance of ensuring that all our constituents have the health services they deserve. I could not agree more with her that it should not be working people who pick up the tab for the Conservative party’s failure. That is why I have restated our commitment not to increase taxes on working people—there will be no increases in income tax, national insurance or VAT. That is the commitment on which we campaigned in this election, and I stand by that commitment.

Economy, Welfare and Public Services

Sarah Olney Excerpts

Monday 22nd July 2024 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

Thank you, Madam Deputy Speaker. It is a pleasure to see you in the Chair.

It is a real pleasure to contribute to the debate on behalf of the Liberal Democrats, not just because I am speaking on behalf of so many more of them than I used to, but because it gives me an opportunity to welcome the Chancellor of the Exchequer to her place and express my personal congratulations on becoming the first woman in the UK’s history to hold the position. I am personally delighted. I spent many years working in banking and finance, and I know how male-dominated those industries still are. I wish her well in her new role and look forward to working with her over the coming Parliament. The Liberal Democrats will be vigorous in scrutinising her plans, but we will always work in the national interest, and I can assure her of the support of the Liberal Democrats on all those matters on which we can agree.

I am sure that one of the things on which we can certainly agree is that the right hon. Lady and her colleagues have received a dismal inheritance from the departing Conservative Administration. The numbers reveal a dispiriting picture of low growth, high interest rates and a record fall in living standards delivered by an out-of-touch and incompetent Conservative party that took people for granted for years. Our constituents see this situation reflected in the increases in their mortgage payments, the hike in their energy bills and the prices they pay at the tills for their weekly shop. They see it in public services that are in a state of crisis and an NHS that is failing to deliver the care they need. The Liberal Democrats welcome the seriousness with which this King’s Speech focuses on stability, reinvesting in our crippled public services and growing the economy.

We welcome measures such as the introduction of an industrial strategy council to co-ordinate policy on economic growth, but the immediate and pressing problems that our constituents are facing in their everyday lives cannot just be addressed by centralised, top-down institutions run from Whitehall. Our economy needs to grow from the bottom up, bringing prosperity to every community, taking away the barriers to entry for small businesses and enabling individuals across the country to make the most of their skills and talents. The Liberal Democrats want urgent measures introduced to give immediate support to families and small businesses.

While out on the doorsteps during the general election campaign, I and my 71 colleagues heard a clear message from our constituents that their biggest priority was fixing the NHS. We are here because we promised to fight hard for a better NHS for our constituents and for communities across the country. That is why we are calling for the Chancellor to immediately draw up a Budget for health and social care. We cannot deliver economic growth without fixing the crisis in our NHS and in social care. NHS waiting lists are at an all-time high; it can take weeks to see a GP and it is now almost impossible to see an NHS dentist. Everyone deserves access to the care they need when they need it and where they need it. A successful health and social care system is fundamental to a fair society and our country’s prosperity.

The failures of the Conservative Administration led to a dramatic increase in the number of people experiencing long-term sickness conditions and the Liberal Democrats will continue to push for public service investment to help reduce NHS waiting lists to get people back to work.

[Ben Maguire (North Cornwall) (LD)]

Does my hon. Friend agree that reforming social care should be one of the most urgent priorities of this Government? The Royal Cornwall hospitals NHS trust recently announced that £26 million a year is spent on patients who are medically well but unable to be discharged due to a lack of social care packages.

[Sarah Olney]

My hon. Friend is right, and it is wonderful to see him in his place; the people of North Cornwall will be well served by his championing of social care, which was front and centre of the Liberal Democrats manifesto in the general election.

The most direct way to alleviate poverty is to increase the money paid to the poorest households. We know that our fellow citizens who are living in the severest poverty are likely to be families with small children. Growing up in poverty affects children’s educational chances and is likely to impact their physical and mental health, holding them back from achieving their true potential. Taking immediate steps to tackle child poverty should therefore be a priority. We believe that removing the two-child cap is the most cost-effective way of immediately lifting 500,000 children out of poverty, while helping to make costs more manageable for parents. That would have a direct benefit to families struggling with the cost of living crisis. Not only do we have a moral obligation to change this unnecessary policy but it is the most cost-effective way of alleviating poverty with a broad range of economic advantages, including supporting more parents back into the workforce. So I urge the Chancellor of the Exchequer to remove the two-child limit on social security payments in her Budget to ensure that all families who need it receive immediate reassurance and support.

But families of all sizes are suffering under the cost of living crisis and desperately need help. Our schools are increasingly having to battle the effects of poverty to ensure children are able to attend school and have the best chance of reaching their potential, and too many children are distracted from their lessons because they have not had enough to eat. The Liberal Democrats set out plans in our manifesto for free school meals for all children living in poverty, with an ambition to extend them to all children once public finances allow. The Liberal Democrats are calling on the Government to consider funding free school meals as a priority to alleviate the pressure on the finances of the families who are struggling the most. This will also contribute to positive educational outcomes that will benefit us all in the future.

The Liberal Democrats welcome many of the measures in the King’s Speech that aim to boost economic growth, and we support the Government’s objective to make that a priority. We welcome moves to boost stability and provide strategic leadership via an industrial strategy council and to increase investment through pension reform. However, our small businesses and local high streets need immediate support, and the Government need to do more to ensure economic growth can reach every part of the United Kingdom and that small businesses and entrepreneurs can quickly rediscover the confidence that they need to invest after years of Conservative chaos and mismanagement. Liberal Democrats want to see more direct support which will impact local community businesses. We believe we need swift action specifically to tackle high energy costs and we continue to call for business rate reform.

A new Parliament presents a real opportunity to begin to properly rebuild our trading relationships with Europe. From speaking with many small business owners I understand the pressures and limitations that current trade deals with Europe pose to businesses. We must tackle the arduous legislation around importing and exporting goods, which significantly limits the opportunities for small businesses to grow. The Liberal Democrats have a comprehensive plan to rebuild trust and co-operation with Europe, and we understand that to be a crucial aspect of the support that businesses urgently need. We welcome the Government’s acknowledgment of the need to reform the apprenticeship levy. However, we would like to see them go further and replace the current scheme with a broader and more flexible skills and training levy. We hope that the Government will join us in encouraging the take-up of apprenticeships, particularly for young people, and support our calls to guarantee that they are paid at least the national minimum wage by scrapping the lower apprentice rate. We understand the broad economic benefits of supporting the development of skilled workers and are optimistic about the advantages that can bring to business.

The recent years of chaos and irresponsible Conservative administration have left a substantial challenge for the new Government to tackle. We do not underestimate the work lying ahead to get the economy back up and running, to nurture an environment that will allow businesses to thrive and to restore the public services that provide care for people when they need it. My Liberal Democrat colleagues and I will hold the new Government to account to ensure that they deliver on the promises outlined by His Majesty on Wednesday as we work to rectify the damage done by the Conservatives: rebuilding our economy, supporting individual communities and small businesses, and urgently investing in health and social care.

[Several hon. Members rose—]