Budget Resolutions

Seema Malhotra Excerpts

Wednesday 27th October 2021 Commons Chamber

[Robert Jenrick]

I agree entirely with my hon. Friend. At the end of the day, the way we boost productivity is by backing the private sector in the economy. The way we grow the economy is to make the UK a more competitive place to do business. That will mean ensuring that we attract investment from overseas. It will also mean correcting the poor levels of trade that we have seen in recent years, as has been mentioned. That needs to change. It also means ensuring that we as a Government bring forward some of the supply-side reforms that we will have to implement if we are going to make ourselves more innovative and competitive.

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

The right hon. Gentleman has had a position at a senior level of Government overseeing local government, and I wonder whether he would like to modify his comments slightly. Of course I understand that the private sector is vital for our growth and productivity, but strong public services and strong local government are also critical for helping to enable a strong local economy. Does he not feel that it is important to build that into the Government’s thinking?

[Robert Jenrick]

Absolutely; I do not demur from that, but we have to find the right balance in our country between public expenditure and ensuring that the private sector can flourish. I worry that we have now reached the moment at which there is not much more that we can spend.

We have to ensure that we grow our way out of this challenge. That was illustrated in some of the Chancellor’s announcements today, including those on research and development relief, the continuation of the investment allowance, the support for skills and also the maths support, about which I would be interested to hear more detail. This is also about ensuring that we have sensible tax arrangements in this country that can incentivise investment and ensure that businesses can prosper. The overall tax burden is at its highest sustained level in peacetime, and I worry that we will not be able to go much further than that.

I want to make one last point briefly before closing, because I appreciate that—

--- Later in debate ---

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

It is a pleasure to speak in the debate and follow many important contributions from Members across the House. It is disappointing that we heard very little that was new, or that was not pre-announced. It is frustrating that Parliament seems to be a sideshow when it comes to the Government making important decisions.

Moving on to the content of the Budget, a test for the Budget is whether it makes life easier or harder for businesses and families across the UK, and whether it takes the steps necessary to tackle the increase in the cost of living which we all know families in our constituencies face. The Chancellor’s choices today will shape how well children can learn; who goes to bed hungry; and how our businesses, which have been on the frontline, can not just survive but can be equipped and prepared for the future.

It is a shame that the Chancellor seems to have chosen a tax cut for bankers that is bigger than the extra funding that he is providing for children to catch up. Even that as a total is a third of what was recommended by the Government tsar. That was not a random figure of £15 billion picked out from a hat; it was based on research and evidence, and on understanding what children across the country needed to get through and catch up because of what they faced and how they were held back during the pandemic. They must continue to be at the front of our minds in this House.

This winter, the country faces a cost of living crisis of historic proportions. Fuel shortages, rising energy prices, the Government’s supply chain crisis and price inflation have hit families across the UK. A recent survey by 38 Degrees in Feltham and Heston found that 90% of respondents were concerned about their current supply of critical food and goods. Sixty-four per cent. of respondents had observed insufficient stock in their supermarket. The price of fruit and vegetables is up, and half of respondents had seen a rise in their energy bills. In the past few weeks, the Office for National Statistics has reported that 8 million Britons have been unable to buy essential food items, while grocery prices are reported to be 1.7% higher than last year.

These changes cannot be denied, and they have been compounded by the Government’s cruel decision—and it was cruel—to cut universal credit for six million families this winter, taking £20 a week from the pockets of families at time when prices are rising. In Feltham and Heston, 18,000 households are worse off as a result of the cut. £18 million has been cut from our local economy. Where was the £20 for universal credit going? It was not going into offshore tax havens; it was being spent by families, on families, in our businesses, in our communities and on our high streets. Returning what appears to be £2 billion through changes to the tapering of universal credit is welcome, and is an important step, but it does not go far enough. It will support some people, but not all, and there will still be millions of families who, just by trying to get through, will end up going into debt, with all the consequent problems that that brings. The Chancellor knows that, food banks know it, and the citizens advice bureau knows it. Everyone who looks at families’ income and the impact of the universal credit cut knows it.

I am glad that the Government have at least taken the advice of the Low Pay Commission to increase the minimum wage. I welcome this, but it needs to go further, and to a minimum of £10; good employers such as Morrisons have already increased wages to a minimum of £10 for all their employees. Many families are still going to struggle, however, even before taking into account the likely rise in gas and electricity prices next year, but there are no measures today to assist householders with rising domestic gas and electricity bills.

Meanwhile, many businesses are approaching what should be their most profitable period of the year yet are in great danger of insolvency, faced with huge debts from the pandemic, soaring energy bills, rising prices, empty shelves and growing shortages. Analysis based on the Office for National Statistics business survey suggests that over 300,000 new businesses, employing some 800,000 people, are at risk of closure in the next few months, yet the Government’s response has been to hit businesses with a new jobs tax as well as weakening their industrial strategy, and to take little more than piecemeal steps to resolve a supply chain crisis made worse by inaction and the lack of forward planning.

This crisis has hit British businesses and families harder than those in other countries. Almost 50 high street shops per day closed in the first six months of this year. Without further targeted action the face of our high streets and communities will be changed beyond recognition. Although today’s changes to business rates are welcome and a step in the right direction, as the Chancellor knows these reforms are in part a response to the stand Labour has taken.

The current business rate system in England is not fit for purpose. It punishes investment and entrepreneurship and hits the high street. Some of the incremental changes announced today, adopting calls for change from the British Retail Consortium, the CBI and others, are the steps that we need to incentivise rather than disincentivise investment, but there is no proper plan for sustained reform and rebuilding our high streets and economy. UK Hospitality has previously said that the biggest cost danger in sight for the sector was the reintroduction of business rates from 2022.

Today’s moves are welcome but also highlight why Labour called on the Government to freeze the business rates multiplier and extend the threshold for small business rates relief. This can be paid for by increasing the sales tax, levelling the playing field between online and bricks and mortar businesses, but this is an area where the Government have inexplicably been dragging their feet. Why, on page 144 of the Red Book, do they say they will

“continue to explore the arguments for and against a UK-wide OST”

and “publish a consultation shortly”? This has been going on for a long time; this is not a new issue. The inequity between online and bricks and mortar businesses is impacting on the prosperity of those on the frontline in our communities, who have served our communities and who have served our country through the pandemic. They are being penalised for being in our communities rather than moving their services online. Reducing the cost burdens so many of our businesses face is essential if they are to survive and grow that necessary employment for the future.

If this Government were genuinely supporting entrepreneurship, I would have liked to see more about that in the Budget, and it would be helpful for the Government to be clear about whether they are still targeting the new enterprise allowance for cuts. Latest statistics show that since its launch in 2011, 268,000 start-ups have been initiated by 249,000 individuals. Those businesses reportedly range from plastering, gardening and removal services to website design, film making and architecture enterprises; they are businesses that are at the heart of our communities and that go on to employ others. This scheme has been supported by the Prince’s Trust and others that do amazing and important work in supporting enterprise and entrepreneurial skills for young people. This is the kind of culture and opportunity we should be looking to enhance; it should be integral, not an add-on. In the work we have been doing in Hounslow, I have consistently been surprised—positively and pleasantly surprised—by how many young people want the skills and opportunities to start their own businesses, and how many people who may lose their jobs want support to do something different and to achieve a dream or grow a passion. Yet we seem to make it harder, not easier.

I grew up in a small business in our community in Hounslow. I have been self-employed. I have an MBA. I have worked in the private sector and the public sector. I know what innovation and entrepreneurship is. I know what it takes; I know the sacrifices that those who are self-employed—those who start up and bear the risk —make. I know what they do.

In the last year, I have co-chaired the development of the west London innovation district, looking to use innovation and create opportunities for research and investment to enable our local aviation hub to become a worldwide Silicon Valley for aviation, working with all parts of our national and international aviation supply chains to take advantage of opportunities in technology and to drive jet zero outcomes. We are working with West London Business and our research institutions— Brunel University, Imperial College and others—because we recognise that a place-based response to innovation is what drives sustainable growth. Part of that is bringing entrepreneurship and entrepreneurs into the overall growth programme and having an integrated strategy that helps to deliver that.

I want the UK to be the best place to start and grow a business. We should be improving and upgrading measures such as the new enterprise allowance, as opposed to pulling the rug out from under the feet of new community-based entrepreneurs—not just those in the City but those in the heart of our communities, who deserve opportunities at grassroots level.

With a week to go until COP26, the Government have also failed to match their climate change rhetoric with action, as shown by the Climate Change Committee predictions that the Government are on course to miss future carbon budgets. A recent British Chambers of Commerce survey found that just 11% of small and medium-sized enterprises are aware of how to measure their carbon footprint.

How much of the increased R&D investment, which is so critical to supporting innovative businesses at the cutting edge of the new economy, is going to support small businesses on their transition to net zero, and how is that going to be enabled? How are these announcements going to be delivered and translated to outcomes on the ground that make a difference in the recovery of local communities such as Hounslow—being an aviation community, we were hit very hard by the covid slowdown—with tremendous green growth ambitions?

I cannot see in this Budget the step change in vocational and technical skills that we need, or the less bureaucratic apprenticeship system. I am sure that hon. Members across the House will have seen this in their constituencies, but in north-west London, for example, millions in apprenticeship levy money has gone unspent. It is a scandal that that has been carrying on for years. The Government have been told about it, but we need structural reform to the apprenticeship levy to make it easier to create opportunities for skills to be grown for the future. We need businesses to be able to find the skilled workers that they need, and we need our local communities to have access to those opportunities so that they are equipped for the jobs of the future.

I, too, want an optimistic Budget—we all want an optimistic view for our country—but why did today’s Budget not make a clear, unequivocal commitment, with clear messages about our direction, such as Labour’s call to invest £28 billion every year until 2030 to tackle the climate crisis so that we can protect the planet and secure jobs in the UK? Businesses want to be certain about our vision and direction. They want a clear view of where they should invest. They want to know that if they make an investment today, they will get a return on it in five years’ time, and that there will not be another sudden change of strategy. The Chancellor has been talking to businesses; he will have heard the same message that I have.

Let me mention a few other areas of concern before I close. As co-chair of the all-party parliamentary group on mortgage prisoners, I find it disappointing that there is nothing in the Budget to help the 250,000 mortgage prisoners trapped paying high interest rates. The Government sold many of them off to mortgage loan sharks, which are charging them hundreds of thousands of pounds extra a year. That is more than seven months after the Chancellor promised Martin Lewis that the Government were looking for workable solutions. Markets are now expecting rises in interest rates, which will have a devastating impact on the finances of mortgage prisoners. The Government need to make sure that all mortgage prisoners can access reasonable fixed rates, so they get a fair deal and are protected against interest rates rises.

On building safety and cladding, I want to make just a brief mention of the challenges leaseholders are facing in blocks below 18 metres. I am not the only MP who is hearing about this from their constituents and the anxiety it is causing families week after week, day after day, with the uncertainty of how the safety measures and remediations will be funded. There needed to be more on that in the Budget and the Government need to tackle the issue urgently.

On children and youth facilities, I must say that I take issue with the portrait of Sure Start centres painted by right hon. Member for South Northamptonshire (Dame Andrea Leadsom). Her experience was not the same as mine. Our Sure Start centres did exactly what she described: they were family hubs, they gave advice and they supported early education. They supported language and literacy for those who were one or two years old. They supported new parents and they brought families together. I pay tribute to Noveen Phillips and others who ran the Bedfont Sure Start centre, which was forced to close as funding ran out. Those cuts affected over 500 Sure Start centres across the country, with children paying the price. On youth services—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We were suggesting eight minutes; the hon. Lady has now taken 16 minutes.

[Seema Malhotra]

On youth services, No Shame in Running, Project TurnOver and other Hounslow youth services have seen cuts. They are doing an excellent job of trying to support young people.

In conclusion, the Budget should have had a longer-term and better plan for the short-term cost pressures facing businesses and families. We need a more resilient economy and public services. I will be honest: I expected more today. We needed more today. I hope that, in the interests of our country, the Chancellor will take heed of the comments from Members across the House this week.