Finance (No. 2) Bill

Stella Creasy Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

This week the shops have opened, many of us have finally had a haircut and some have even had their eyebrows done. Vaccines are being given out and unemployment has started to fall, which we all welcome. We know how hard this year has been for our constituents and the challenge of how to help weighs heavily on the minds of many across the House. Some would say that that challenge is just about the impact of the pandemic and that this week shows that it is slowly being addressed—that it has been a horrific year with the loss of loved ones, and the shutdown of businesses made necessary to prevent transmission, but we are making it through. And let’s be honest, some people have done well in the last year. We have seen them: the ones who have been able to spend time with their families and to work from home okay—wi-fi willing. They are the ones the Chancellor is counting on to spend their savings and make his sums work—the people to whom short-term measures to keep pumping up our housing market and spending on DIY will appeal.

Thanks to the Chancellor’s efforts and legislation such as this, everything is neatly in place for a classic short-lived consumer-led boom. Cheap borrowing costs and the stamp duty holiday mean that the residential property market is red hot. Indeed, last November, this country paid back more than it had borrowed on its credit cards for the first time since July 2013. But to say that we are heading out of the woods and just to keep going is to fail to recognise why we are so vulnerable in the first place, why the UK economy collapsed so badly over the last year and why our communities were so at risk of harm from the virus that our death rate has been so high—the underinvestment and austerity that mean that our productivity rate is so sluggish, our poverty rate is rising and our people are not waving but drowning in their debt. We do a disservice to our communities if we underplay these issues or the scale of the task ahead.

We need a Finance Bill made not for the here and now, but for the long term. We cannot go back to normal when normal means 23% of our population living in destitution; when millions of people are sitting on debts and rely on insecure work in industries that will never be the same when furlough ends; when our health inequalities have worsened so dramatically over the last year.

In addressing those underlying problems in our economy, I can welcome much in the Bill. I recognise that it is right to look at corporation tax, given that those with the broadest shoulders should help the most with repairing our fractured economy. We should be tackling the devastating impact on our environment of plastics; with some amendments, the proposals could drive not only a reduction in use, but new industries. We should be trying to tackle tax avoidance, although I always tell Treasury Ministers that it would be simpler to ask my right hon. Friend the Member for Barking (Dame Margaret Hodge) what they should do next.

The truth is that the Bill takes a nut to a sledgehammer. We would do better if we were to start again, rather than continue on with the fantasy that, with a few tweaks here and there, everything can go back to normal—whatever normal is. My worry is that relying on the fantasy the Bill creates will leave millions of families abandoned who may have weathered the shock of the pandemic, but were always going to be sunk by continued austerity. While millions have benefited from working from home and being able to save, millions more are struggling to make ends meet, having lost their job or seen their income fall.

The Institute for Fiscal Studies found that last year the richest fifth of households swelled their bank balances by over £400 a month, while the poorest were about £170 worse off each month. This is not people spending to entertain themselves during lockdown. Citizens Advice shows that roughly 6 million people have fallen behind on at least one household bill during the pandemic. Most people visiting the citizens advice bureau for debt advice are not coming to ask about credit card debts or rent-to-own purchases; instead, they are in debt to the public sector because of tax credit overpayments, benefits overpayments, council tax arrears or utility bill arrears. The Trussell Trust tells us that over half of food bank users struggle to afford food and clothes because they are repaying universal credit debts. Anyone who questions why that extra £20 matters should look at that information and realise that it needs to become permanent.

In total, £10.3 billion of debt and arrears attributable to covid have built up in the UK, most often by those who were already struggling before the pandemic—people such as renters, young people, single parents and low earners; people who, now that evictions have restarted, have few options when it comes to keeping a roof over their head; and many who were excluded from Government help altogether. I see nothing in the Bill to change those facts. Indeed, instead of helping, the Bill is walloping them with a tax rise. It squeezes family finances by freezing the personal allowance, after many families will have struggled to pay their increased council tax bills as well. The Chancellor might think he is being clever by using the least visible taxes to raise funds, but I tell him this: the public will notice. They notice when nurses get a pay cut, when VAT goes up and when they have even less money left at the end of the month with which to pay their bills. They notice just how segregated this country has become, with the haves and the have-nots not just in income terms, but in the divides between town and city, north and south, because of our failure to invest in the people of this country.

“Freeports!” the Government cry in answer. The Bill suggests that this will somehow generate jobs and growth in communities that were struggling long before anyone had heard of covid-19, but no one can explain why, if regulation is bad for business in the Thames Gateway, it is not bad for businesses in my community in Walthamstow. This is not the levelling-up agenda we need. It does not recognise that we stand alone among OECD economies in the extent to which our productivity problems are regional rather than sectoral, or that a super-deduction scheme will do little to invest in the children of Hartlepool, Harwich or Hendon.

We need not just to build back better, but to build back for all. Andy Haldane has highlighted that around 10 million people in this country are on insecure contracts. Our economy was so hard hit by covid because it was over-reliant on services, which made up as much as 80% of our GDP, whereas just 14% was based in construction and just 6% in manufacturing. The Bill shows that the Government still have not learned the lessons about how we are able as a nation to handle future shocks and diversify; to invest alongside business and academia in new technologies; to learn from the vaccine programme and encourage co-operation and innovation alongside the state and not in spite of it; or, in the run-up to COP26, to provide the incentives to renewable energy manufacturing and production that could futureproof our economy for decades to come.

This Government have no answer to our research and development sector, which is crying out for support while they use this Bill to give a tax break that will go to the biggest corporations and venture capitalists. Our charity sector is on its knees, but it gets nothing from this legislation. Charities cannot claim the super deduction tax for their IT equipment, whatever the hon. Member for Hitchin and Harpenden (Bim Afolami) might suggest.

Other nations are investing in their people and infrastructure, yet our Business Secretary has chosen this moment to abandon the industrial strategy enacted just four years ago and replace it with something that is neither industrious nor strategic. Combined with the approach in the Bill, that will simply confirm what a lot of companies and investors have already suspected for some time—that it is unwise to expect any UK Government to stick to a programme of supply-side reform for more than a couple of years. Frankly, the UK has generally got away with muddling through economic crises in the past, but the scale of the challenges that we approach makes that inadequate at this point in time. And we have not even today even really begun to understand how the B-word—Brexit—interacts with these longer-term challenges, hitting as it does our high-productivity export sectors while covid hurt our employment-rich domestic service sector. But truthfully, nothing in the Bill will help those at the mercy of either factor—unless they happen to have shares in Amazon or Google, or possibly the Chancellor’s private phone number.

Austerity has weakened the very foundations of our economy, but it is a political choice that the Chancellor is making in this legislation to use straw dust, not concrete, to try to repair them. Parliamentary time is valuable, and tax and spending is crucial to get right in such a context, so I propose to the House that we reject the Bill today and instead demand better for all our constituents.