Budget Resolutions

Seema Malhotra Excerpts

Wednesday 11th March 2020 Commons Chamber

[Sir Peter Bottomley (Worthing West) (Con)]

I think the most challenging speech after the Chancellor’s was the one by the Leader of the Opposition, and he discharged it well. The most challenging to listen to was the one by the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), the leader of the SNP, who seemed to put each page of his notes to the back of the pack and go through them twice. We were told not to interrupt him, but he interrupted himself about six times, so perhaps we could have a go instead next time. I think he was really saying that he welcomed the freeze on duty on whisky and the promotion of Scottish products overseas, and he will probably welcome the Barnett increase in spending available to the Scottish Government. Having said that, I would like to turn to the UK side of the Budget.

The Government will have to recognise that our pattern and levels of taxation will change dramatically over the next 10, 20 or 30 years, with climate change and adaptation to it. If we think of the amount of money that has come from the duties on tobacco, fuel and the like, that is all going to change. We have to be prepared for a proper debate on what we are going to tax, when we are going to tax people and what we are going to spend the money on. I prefer a life cycle approach; I prefer giving people generous help when they are dependent, encouraging independence and making sure that, when people come to later stages of life, they can get proper, full help without having to ask for it.

One initiative from the Chancellor that I particularly welcome is the extra £1 billion to help people affected by dangerous cladding on buildings. That is in addition to the £600 million announced by a previous Communities Secretary. I pay tribute to the all-party parliamentary group on leasehold and commonhold reform, which I help to lead, and which has managed to give a voice to the voiceless. I deeply regret that the Government’s advisory service, LEASE, did not immediately tell the Government that private leaseholders in big blocks were completely exposed as the only tenants who were expected to pay for the waking watch and for the remediation of dangerous cladding.

I pay tribute to former and present Ministers for getting a grip of this issue, and I hope they will find a way of getting together with the campaigning charity, the Leasehold Knowledge Partnership, and with the National Leasehold Campaign. I also invite the major media to appoint housing editors and housing correspondents who can follow the details of these debates, so that they do not turn up just occasionally on Victoria Derbyshire’s programme—I pay great tribute to her and her producers, and I also pay tribute to some of the money programmes. We need to have housing experts in the media who can help to get these stories into the public domain so that the Government respond faster and more fruitfully more often.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I pay tribute to the Father of the House for his work. I want to raise a point that came through this week from a constituent who has been affected by the leasehold issues that the APPG has raised. In instances such as hers—she is in shared ownership—cladding is becoming an issue for those who wish to sell their homes. We need clarity about exactly who will be eligible, and any provisions need to be flexible enough to cater for all those who are affected.

[Sir Peter Bottomley]

I agree. I also think it would be a good idea in the medium term if the Government and the investment sector found ways of taking freeholds and landlordism away from some of the big, bad owners and giving them to a group of infrastructure holders who would actually treat leaseholders and shared ownership people fairly and properly.

I want to move on to a number of other issues, because of the time limits we are left with. In 2002, the Government gave up the Crown preference whereby a failing business had to find how to allocate the money that could be gathered in, especially where attempts were being made to reconstruct the business to keep it going. The Government gave up their priority, but they are now bringing it back. I hope they will meet UK Finance and recovery experts to go through the issues that were debated in the Committee on the Enterprise Bill—now the Enterprise Act 2002—on 9 May 2002. I hope they will ask whether it is necessary for them to try to take a small fiscal gain for themselves at the risk of a 10 times greater impact on our economy. We know that businesses fail, and it is important that they do, but it is also important that they can be brought back to function in our economy. I hope the Government will review the question of whether Crown preference should be brought back in the way it is being.

The Government have rightly paid attention to the pub sector, and I welcome the reliefs announced in the Budget today by the Chancellor. I would refer him to the worries of some family businesses in the brewery sector—I do not want to name any in particular. When a business has been in the same family for 200 years or more, and when the family invest five times their dividends in modernisation and pay a third of their revenue to the Government in taxation, the question of whether business relief on inheritance tax should be under threat is important. That is a separate point from the entrepreneurs’ relief the Chancellor spoke about, which could be a subject of debate now and in the future.

Business relief for inherited family businesses is important if we want to have middle-sized companies that invest for the future year after year, and if we want to have a way for them to pass down their assets to future generations. That does matter in this country. The gap has been identified almost since the Macmillan gap 50 years ago—when I was studying economics rather badly—and it needs attention now.

While I am talking about the pub sector, I should mention that there are many vacancies, especially in the south. The limit on people coming into this country with the £12.63 an hour rate of pay will leave a number of vacancies. I therefore hope the Government will talk to the family brewers, in particular, and work in detail through whether there can be transitional relief or arrangements that will allow our hospitality sector, employing two thirds of its people from this country, but requiring a fair number of cooks and others from overseas, to continue safely and securely.

I talked about the life cycle approach to things. I happen to believe that the change introduced by a previous Conservative or coalition Government to make child benefit ineffective for people on £60,000 a year or more was wrong. I believe that support for children should come automatically. In a couple in which both people may be earning £60,000 a year, the taxation they pay on their £120,000 combined earnings will easily outweigh the child benefit they receive. We do not need to have people declaring or opting out of child benefit, or discovering that some change in their pay during the year has put them in a tax trap. I would restore child benefit for all children and expect that the cost of that would come out in the wash for those who are very well off.

The leader of the SNP talked about the 1950s women and the WASPI campaign. Anyone who thinks we can rectify the whole issue of state retirement pension for women at 60 is wrong. That approach was put forward at the last election, and it was rejected. However, there should be some give. That might involve an actuarial calculation, which is something my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) and I put to a previous Secretary of State for Work and Pensions, although he would not let his officials do the calculations. Equally, we could have at least some give, and give the Freedom Pass to these women so that they get some recognition of the fact that they have been double-hit by the changes. That would be a welcome initiative, and one that I would put forward to the Government.

While I am talking about pensioners, the biggest stain on this Parliament is that overseas pensioners in dominion countries and some others do not get the increases in the state pension. The law, as judged by case judges, is that while what the Government are doing may be legal, it is quite clearly wrong. The fact that we had pension agreements with Canada, South Africa, Australia, New Zealand and some of the Caribbean countries from the 1950s, when inflation was not an issue, should not leave us going on defending the indefensible. Why do half of our overseas pensioners get the increase and the other half do not? The Government really must build in getting rid of that anomaly by the end of this Parliament. It is unfair and unjustified, and it should not continue.

If we take a long view of taxation, we can afford to pay for essential public services and the cost of borrowing for investment. I do not believe our taxation system should be unchanged forever. We may find that people are willing to pay more at certain stages of life or in certain circumstances, and less at other times.

It is crucial that we recognise the value of health and education, and the Government have been doing that. The campaign to get fairer funding for schools has been successful, and those who tried to make school funding party political have failed, and they will fail if they try again. Let us unite on fairer funding for schools, as we have on leasehold issues, and on getting our health services to adjust the best way they can.

As an overall judgment, no one can tell what effect this coronavirus will have on the economy as a whole, except that the economy will be challenged in some ways that can be foreseen and in some ways that cannot. I hope the Chancellor will take the opportunity in the coming nine months to keep the balance between opportunity and fairness, with consultation on major changes before they are suddenly thrown on to an unsuspecting public.

The Government should never fear to talk about their options in the open, as they do between Government Departments. I wish the Chancellor well, I hope the Government succeed in our adjustment to being outside the European Union, and I hope our partnerships within this country, across Europe and across the world will bring the kind of prosperity that makes a difference to us.

I have been around long enough to know that, between 1979 and 1985, Britain went from being the sick man of Europe to being one of the most prosperous and most go-ahead nations. Some of those changes were planned and some were forced on us, but the key point is that we took advantage of the opportunities, and that is what we need to do again now.

--- Later in debate ---

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I should declare an interest in the Budget as a leaseholder in a block that needs cladding removing, although, happily, in my case, the developer is footing the total cost. Would that all were so responsible!

The Budget is optimistic—that is the polite way of describing it. It is a mix of old announcements repackaged and a very long wish list, and of course the devil will be in the detail of the delivery, which I and the Public Accounts Committee will be examining. It is a privilege to chair the Committee, although it also ruins me in terms of making cheap political promises, and it means I can spot a cheap political promise a mile off. There are missed opportunities in the Budget, on housing, education and social care, and it comes against the backdrop of a looming spending review—supposedly in July, though we understand that coronavirus could delay things—in preparation for which Departments are already facing 5% cuts on normal business.

Let’s not pretend, then, that a wave of a magic wand today and a flurry of promises means that what is being promised will be delivered. There are particular issues that may be quite problematic, which I will pick up on later, but I want to talk first about the proposals on statutory sick pay for coronavirus. I welcome the intent, of course, but so many people are on zero-hours contracts that this serious issue of coronavirus is underlining a systemic problem in our society. We have a two or even three-tier employment system, with too many people not even able to get statutory sick pay. In my constituency, we also have many self-employed people—a rising area of work—and the idea that a claim for benefits will be quick and easy is not realistic. I had the privilege of visiting my local jobcentre and meeting the fantastic team. They are working hard on a personal level to deliver for the people of Hackney on benefits. I did not get the chance to ask them about the Budget, but I think it will be quite hard to set up a scheme in which a load of checks would have to be waived, in which everything would have to be done over the phone, and in which a lot of the normal processes would have to be suspended. That will lead, I fear, to fraud, and particularly to the scourge of overpayment, because it will be difficult to do the necessary checks to make sure that people are getting what they should.

Zero-hours contracts are a growing issue. The Office for National Statistics labour force survey tells us that from October to December 2019, there were 974,000 workers on zero-hour contracts, which is 3% of the workforce. That is a record in both percentage and absolute terms. If we look at younger people, 9.1% of people aged 16 to 24 who are in employment—nearly one in 10—are on a zero-hours contract. The Government trumpet the new jobs that are being created, but we need to be mindful that many of them are part time, low paid and very insecure. It is not surprising that over a quarter of people on zero-hours contracts want an additional job, or a replacement job with additional hours. That is a big concern, particularly in the social care sector, where about a quarter of the workforce are recorded as being employed on zero-hours contracts.

We heard nothing, except in the Chancellor’s peroration, about social care—no solution for that sector. People in the national health service know that without investment in social care, any money thrown at the health service will have limited effect. Given the current situation with coronavirus, it is particularly vital that we protect social care.

[Seema Malhotra]

Will my hon. Friend give way?

[Meg Hillier]

I will not, I am afraid, because of the time.

Another issue that I am very concerned about is housing. Money for housing may be a start, but it depends exactly where it is going. According to the Red Book, the money is for an affordable housing fund, but my definition, and my constituents’ definition, of affordable housing is very different from the Prime Minister’s when he was Mayor of London. In high-cost areas such as Hackney, it is vital that housing be properly affordable. I have so many constituents living in really difficult circumstances. As of August last year, there were over 13,000 households on the housing register in Hackney. That is a 33% increase over the past five years, and responsibility for that lies firmly, squarely at the Government’s door. The wait for new housing is life-changing. The wait for a two-bedroom property for someone in the “urgent” band is seven years. For those in the “priority” band, it is three years, and it is six years for those in the “general” band. Madam Deputy Speaker, can you imagine waiting six or seven years to get your child and your family into stable accommodation? I have rafts of examples of people in temporary accommodation who are living in one room in a hostel with their children.

I absolutely welcome the money that the Chancellor has committed to removal of dangerous cladding. So many of my constituents are mortgage prisoners who face bankruptcy, and whose life is on hold, so that money is a welcome step, but—there is a “but”—it is probably not as much money as is needed. It may well be that £1 billion is a drop in the ocean of what is required, and the money is only for properties over 18 metres high, yet the latest Government guidance note includes buildings over 11 metres. The Chancellor spoke quite loosely about removing all dangerous cladding; that is a very wide promise, and in the Red Book, all I see is that detail will be laid out in the spending review that is expected in July, so there is a delay in getting more details, and a further delay before the promise is implemented. If the spending review is delayed because of coronavirus, or for any other reason, people in my constituency and across the country will remain in limbo, waiting to find out what will happen.

I was glad that the Chancellor, in an almost throwaway line, pledged that the Government would pursue building owners and developers to ensure that they paid their share. That is absolutely right. Some of the estimates are high because everything to do with fire safety that has gone wrong in a building is being added to the bill. Frankly, if a developer did not put a fire door in properly, it should not be down to the taxpayer or homeowner to backfill for that; that should be down to the people who made the mistake. The track record shows that for any Government, getting money back from the private sector once there has been a taxpayer-funded giveaway is challenging. I will look closely at the detail to make sure that those who were irresponsible do not get away with it.

An area that is missing from the Budget is Brexit preparations. We are due to leave the European Union on 31 December, yet there was nothing in the Budget about how we will pay for that. On two occasions in the past year, money has been spent like water to prepare for no deal. The Public Accounts Committee has been looking at that. It is very expensive to prepare when we do not yet know what is happening. Businesses up and down the country, among others, are living in uncertain times and will need information, so there will at the very least be an information campaign. Of course, a lot of other Government work is being done to prepare, but there is nothing in the Budget for that on top of what is in existing budgets.

The Chancellor talked about capital investment in further education; I only ask how much will be used to pay off the existing loans that the Government have had to bung to FE colleges because they are so cash-strapped that they were unable to pay back the grants they were given so those grants were turned into loans. That could absorb quite a chunk of money, so I wonder how much is actually for new capital investment that will be invested in vital technical and other education to make sure that we have a workforce fit for the future.

The Public Accounts Committee has looked into carbon capture and storage. There have been two attempts to deliver it and a third competition that delivered nothing. Millions of pounds have been wasted. An £800 million bung to a sector that has not managed it so far, when there is no capacity out there to deliver it, seems to me to be good money after bad. It is a great idea—I would love to see carbon capture and storage work to make sure that our energy-intensive industries can continue—but there is a long way between promising £800 million and getting it delivered. I really do hope that the Department for Business, Energy and Industrial Strategy is looking at the issue closely and actually has a plan behind the money. The worst thing is just to throw money at something for a cheap headline and not have a plan for delivery.

The health surcharge has a big impact. I have a constituency that is the world in one constituency—the world in one borough—and am proud of that. The many fees that are landing on migrants are having a huge impact on their ability to get on with their lives and become fully contributory members of our society. At £624 per annum—more than double the current rate—the health surcharge is going to mean a huge cost of more than £2,000 for a typical family. If a person applies for discretionary leave to remain, they now have to apply three times before they have the option of applying for citizenship. The fees rack up, at £800 a time for DLR and more than £1,000 for citizenship. It is no wonder that young people and older people are being deported from this country because the law currently says that if they do not have citizenship and commit a crime, they will be deported—many people would be citizens, if only they could afford the cost.

The issue with NHS pensions, which was first identified by the Public Accounts Committee in 2012, is now finally being tackled, eight years later, but at the huge cost of the loss of the experience of doctors that we now need in the NHS to deal with the coronavirus.

There are many promises, but little detail. I assure the Chancellor and the Treasury that there will be plenty of scrutiny from the Public Accounts Committee.

--- Later in debate ---

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Mid Norfolk (George Freeman) and to have spoken at one of his big tent events.

The Chancellor claimed in the Budget to have stuck to his fiscal rules. I look forward to seeing how long his rules last. Labour had two fiscal rules in 12 years; the Tories have had 16 in 10 years, and I am sure there are more to come. Politics aside, however, I want to recognise at the start that the Budget would have been difficult for any Chancellor and to congratulate him on delivering it today, given the speculation three weeks ago that it might be delayed. He was right to do so.

The Chancellor delivers his Budget to a nation deep in anxiety about our resilience and ability to cope with the challenges ahead. Internationally, we see a backdrop of stagnating growth and failing globalisation, which requires us as a nation to work with other nations more closely, not to retreat. Domestically, the coronavirus and the potential cliff edge of Brexit are serious challenges, but so, too, are our public services. Commentators note that the NHS has 43,000 fewer nurses than it needs, that over 15,000 beds have been lost since 2010 and that the UK now has second lowest number of beds per capita in the G7. His announcement of funding for 50,000 nurses will not deliver trained and experienced nurses overnight and is the starkest of admissions that the Tories cuts have gone way too far.

The Chancellor delivers his Budget to a nation that has watched, in every corner of our Union, its great public institutions weaken, its jobs become less secure, and its communities become less safe. Only last month, the Marmot review found that life expectancy among the poorest 10% of women in England had fallen over the previous 10 years for the first time in more than 100 years and linked austerity to this outcome.

The coronavirus measures announced today are essential and must be kept under review, but as well as the changes to universal credit the Chancellor announced, in practical terms the Government must go further to streamline applications for those in need and to reduce the time it will take to process them, to prevent a backlog and build-up of cases that will only cause further strain for families.

The OECD’s latest forecast projects that economic growth in the UK will slow from 1.4% in 2019 to 0.8% this year, even if the coronavirus is relatively contained. While the Government are supported across the House on their steps today, they must also invest quickly in the systems they need so that businesses, local authorities and public services in our communities can quickly access the support the Chancellor is making available and not be made to wait.

The Chancellor mentioned the welcome interest rate cut, but he must make sure that the rate cuts announced by the Bank of England are fairly passed on. Today, Rachel Neale, on behalf of mortgage prisoners, is writing to all active and inactive lenders and unregulated debt collectors to ascertain whether this base rate cut will be passed on to the tens of thousands of families trapped on high standard variable rates. She has spoken this morning to Heliodor and Landmark. Heliodor has, it seems, stated that it will only review rates on a quarterly basis, while Landmark has no intention of cutting the rate at present. This simply is not good enough. I would be grateful if the Treasury could act today and make its expectations on this matter heard.

On research and development, we have fallen woefully behind other developed nations. The support for electric vehicles, innovation and invention is right, if overdue, but missing today was any commitment to social care, which we know is at crisis point. It is also not clear what the compensating measures to local government will be with the cuts to business rates. Local authorities that have lost 60% of their income over the last 10 years, such as Hounslow Council, cannot afford to lose any more, because they, too, have a place in the prosperity and wellbeing of our local communities, and it is vital that they be supported.

The Leader of the Opposition was right to give the backdrop of where we are now after a decade of decline. In almost every year since 2010, the economy has grown by less than 2%, and the rate of growth has slowed since 2015. Productivity growth in the UK has flatlined. The Chancellor says that the Budget will result in a long-term productivity increase of 2.5%, but it is far from clear how. The Office for Budget Responsibility is lowering long-term, steady-rate productivity growth from 2% to 1.5%, and inequalities between regions of the United Kingdom have grown. Between 2010 and 2018, GDP per capita increased by a mere 2.4% in the north-east, but by 16.6% in London.

The Government have today brought forward welcome plans for infrastructure spending, but their record is poor. Cuts have been deep, and overspending and delays in delivery are far too common. In the 10 years to 2018, Britain’s bus network shrank by a shocking 8%; that is 134 million fewer miles travelled. The World Economic Forum ranks the UK 11th of 141 countries for the overall quality of its infrastructure, behind France, which is seventh, Germany and the Netherlands. World Bank data ranks the UK 27th of 28 EU countries for investment.

I hope that as part of the important plans for rail and road, southern rail access to Heathrow gets the support it needs. That will give workers and passengers the opportunity to get to Heathrow from Waterloo, Surrey and the south, and will transform the prospects of three of the most deprived wards in my constituency.

The Government must also have an eye to the gender impact of their Budget. I hope there will be a serious equality impact assessment from the Government, because decisions affect men and women differently. The Women and Equalities Committee has described previous impact assessments as insubstantial and lacking in detail. As the Women’s Budget Group says, for women especially, levelling up means investment in people, not just road and rail. However, the Budget needs to do more than simply make funds available; it needs wraparound on how communities and local places will be engaged for the long term, and how decisions will be made.

The last Labour Government had at their core a commitment to ensuring that economic prosperity was spread. Nine regional development agencies were tasked through statute with driving economic development across the regions in a coherent and strategic way. There were also the Government offices for the regions, which had representatives from all the key Departments of Whitehall, because both economic and social wellbeing are needed for prosperity, and to generate the human flourishing that we need to see.

The regional development agencies, abolished by the coalition Government in 2012, took a wide-ranging and flexible approach to boosting economic growth across the country, and to the public and private sectors working together to invest in skills, infrastructure and regeneration. Between 2002 and 2007, they delivered over 500,000 jobs, created 56,000 new businesses and leveraged £5.7 billion in private sector funding. Indeed, independent PwC analysis of the impact of the RDAs found that for every £1 spent, 4.5% was added to regional gross value added. I say that because lessons can be learned from what happened with the RDAs to ensure that what the Government choose to invest in now and in the future is protected, and to ensure that money is spent in the best possible way.

The decade of decline has also brought growing inequality; children especially are being hit hard. In Feltham and Heston, on average a third of children are growing up in poverty after housing costs. Poverty has consequences: child obesity is high and on the rise in the wards with the greatest deprivation, and only 77% of our children achieve the required reading standard at key stage 2. We know how important early years education is to children’s life chances. The Budget was very light on detail on early years, but I welcome the cut in VAT on digital books. The Government should go further, however, and make much more assistive technology available in our schools. They should see the reading and writing skills of our children as a national mission for our prosperity, not just for today but for tomorrow.

On health and capital spending, as well as for hospitals, capital spending must be made available for the renewal of dilapidated primary care facilities—such as the Heston health centre—which are the frontline of public health demand and should be equipped to do much more in our communities to tackle heart disease, diabetes and childhood obesity.

The real test of this Budget will be measured against how it genuinely drives growth, shares prosperity and tackles growing inequality, all with the backdrop of the need to protect the economy from the current coronavirus shock and the challenges that Brexit will present—on the last, the Government and the Budget have been explicitly silent. No longer should we see the rich leaving behind the poor; young people struggling to break into the housing market; regions in desperate need of investment; and income and living standards too much based on where someone is and who they are, not on their talents.