Budget Resolutions

Stephen Kinnock Excerpts

Thursday 7th March 2024 Commons Chamber

[Mel Stride]

I thought I had already covered this point, but the reality is that the tax burden has had to go up to pay for all the support we provided around covid, and because of the inflationary pressures created by a war on European soil. The hon. Lady cannot get away from the fact that through this fiscal event, and the previous one, 27 million hard-working people, employed in businesses up and down the country, will be better off to the extent of £900 per year. Some 2 million self-employed people will be £650 per year better off. She talks about those earning less than £19,000, but those many millions of people who earn above £19,000 will have a lower tax burden than before, when we take into account the interplay of the freezing of thresholds and the cuts in national insurance.

[Stephen Kinnock (Aberavon) (Lab)]

It has been widely reported that the taxpayer is having to pick up the tab for £15,000 of legal costs and damages incurred because of the actions of the Secretary of State for Science, Innovation and Technology, the right hon. Member for Chippenham (Michelle Donelan), who is rapidly becoming known as the hon. Member for “chipping in”. Will the Minister confirm that the figure of £15,000 is correct? Will he say whether he thinks it is morally right that the taxpayer should be picking up the bill for the outrageous lack of judgment and behaviour of one of his colleagues?

[Mel Stride]

What I think will be absolutely outrageous is the taxpayer having to pick up the bill for a future Labour Government. I have just explained the record of the hon. Gentleman’s party in government.

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[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am delighted to have caught your eye in this important Budget debate, Madam Deputy Speaker. I am also pleased to follow the hon. Member for Warwick and Leamington (Matt Western), although I disagree with almost every word he said. That is the nature of this place —we are entitled to debate these matters.

I have listened to the speeches from Opposition Members today. Both they and most of the financial commentators who have criticised the Budget—I totally agree with my hon. Friend the Member for Folkestone and Hythe (Damian Collins) on this—have failed to mention that we have been through two catastrophic world shocks: namely, the pandemic and the unexpected war in Europe, in Ukraine. They have had catastrophic effects on our economy. I ask all the Opposition Members who have criticised the Budget this: would they not have spent the money on the furlough scheme or the business loan scheme? Would they not have helped people out with energy loans? Of course they would have, so they would be in exactly the same place as we are, grappling with today’s economic problems.

A number of measures in the Budget are to be warmly welcomed, and I will come to one or two of them. I am particularly pleased that inflation has come down from a high of 11.4% to 4% today, and it is forecast to be below the Bank of England’s target of 2% by the end of this year. That is the most important thing we can do for the cost of living of all our constituents, above all tax reductions or anything else. I warmly welcome that. I will turn to some of the individual measures in the Budget, before moving to public sector productivity measures. After that, as my hon. Friends on the Front Bench will not be surprised to learn, I will mention the tourist tax.

My constituents will welcome a number of measures set out in the Budget, particularly the cut in employee national insurance contributions. Taken with those of the autumn statement, they amount to £900 for the average working person in this country earning £35,000. I suggest to everybody across the House that that is a significant increase in the take-home money that our constituents will see in their pockets today. That, combined with the number of our constituents who are self-employed—a particularly important and growing sector—means £650 for someone earning £28,000, which is also warmly welcome. That will encourage our hard-working constituents to work longer hours and become more productive.

As my right hon. Friend the Chancellor said yesterday, national insurance is a double tax on working people. National insurance combined with income tax is an unfair tax arrangement for working people. If we are to start making tax cuts, which I hope we will, it must be right to try to drop one or other of them, and that is why I warmly welcome the cut in national insurance.

[Stephen Kinnock]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

Let me make one important point, which I hope the hon. Gentleman will consider when he intervenes. Yesterday the Chancellor said that, through our tax cuts and by raising the personal allowance, the tax on ordinary working people today is at its lowest level since 1975, and possibly since the war, although we do not have records to prove that. It is lower than in America, France, Germany or any G7 country. The ordinary working person’s tax burden through national insurance and income tax is extremely low at the present time.

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[Stephen Kinnock]

It is clear that the tax burden is actually the highest it has been in 70 years. The hon. Gentleman raised a point about national insurance contributions. I assume that he has seen the email that the Chancellor of the Exchequer sent to all Conservative party members, making it clear that the plan is to scrap NICs in the next Parliament. Does he accept that that is the Government’s plan, because it is in that email in black and white? Does he also accept that that would leave a £46 billion black hole in the public finances?

[Sir Geoffrey Clifton-Brown]

I think the hon. Gentleman is misrepresenting what my right hon. Friend the Chancellor said yesterday. I have Hansard here. I cannot look through it quickly enough to give the exact wording the Chancellor used, but he basically said that when the economy is in a fit state to so do, and when economic conditions allow, such a move is an ambition—that is not a promise or a commitment to anything at all; it is just, as my right hon. Friend said, a commitment to travel.

[Stephen Kinnock]

rose—

[Sir Geoffrey Clifton-Brown]

I will give way to the hon. Gentleman, but I hope he is not going to misrepresent what the Chancellor said. I will have to get it in Hansard, but I will give him one more chance.

[Stephen Kinnock]

As the hon. Gentleman will be aware, I am an avid reader of the Chancellor’s emails to Conservative party members. He states:

“We want a simpler, fairer tax system where you only pay tax once. If we stick with our plan that’s working, we’ll be able to make progress towards that goal in the next Parliament.”

If that is not a commitment to scrapping NICs in the next Parliament, leaving a £46 billion black hole—why do they not just own up to it, and then explain how they are going to fill that black hole?

[Sir Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for intervening a second time, because I now have the exact words from Hansard. The Chancellor said:

“When it is responsible, when it can be achieved without increasing borrowing, and when it can be delivered without compromising high-quality public services, we will continue to cut national insurance as we have done today, so that we truly make work pay.”—[Official Report, 6 March 2024; Vol. 746, c. 852.]

I do not think it is as the hon. Gentleman is saying. I think he is misrepresenting the words of my right hon. Friend the Chancellor, and I hope he will not persist with that line of questioning.

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[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Listening to parts of this debate, I wonder what universe some Conservative Members have been occupying for the last four years. In fact, I wonder whether someone has been slipping soma, or something, into their tea. The House will recall that soma is the magic potion that is fed to the characters in the Aldous Huxley novel “Brave New World” to quell their unhappiness and blind them to the realities of life around them. That is how it feels listening to parts of this debate.

Try as they might, this Government cannot escape responsibility for the state of our economy, the cost of living crisis and the damage they have done to family budgets and to the people they have plunged into debt. In my pre-Budget survey, Selly Oak constituents were clear: 93.3% wanted the Chancellor to prioritise the cost of living crisis—he has not; 70.7% wanted him to concentrate on growing the economy—he has not; and 67.7% were against apparent giveaways followed by public service cuts—that is exactly what he has done.

This is not a tax-cutting Budget because, as we have heard, tax is still going up. The Chancellor is presiding over the highest level of tax for 70 years, and he has the effrontery to prance around pretending to be a tax cutter. He is a bit like a Prime Minister who professes a love for equality while boasting of transferring funds from poor areas to rich areas.

People are not stupid. They know that the continuing freeze on allowances means that they are paying more. People like teachers and nurses are now paying higher rate tax and, since the Tories came to power, the average income tax paid by pensioners has risen, with 1 million more sucked into the tax system in the last year.

And, of course, there are the hidden costs. A prudent Chancellor would have put something aside for the contaminated blood scandal, the victims of the Post Office Horizon nightmare, the WASPI—Women Against State Pension Inequality Campaign—women debacle and the LGBT ex-service personnel. Those are all things that he should have sorted by now but has ignored, probably deliberately. Perhaps he is planning to leave those issues for someone else.

If the Chancellor wanted to grow the economy, he would have done more to help small business. For example, Attic Brew in my constituency is a popular little business that, having weathered covid, has created about 40 full-time and part-time jobs, but it struggles with high energy bills and taxes, which hit sales of locally produced beer. I acknowledge the alcohol duty freeze, but he did nothing about energy bills or reducing duty on draught beer and cider, which would have done far more to help small independent producers. That is how to reward work and enterprise.

Growing our economy is the only way to get enough money to pay for good public services. Where in the Budget was the support for skills investment, which is essential if we are to grow and provide jobs for the future? I heard Conservative Members laugh yesterday at the idea of GB Energy, just as they used to laugh at a non-dom tax. GB Energy will allow us to take control of our energy sector and protect us from hostile powers, and will help to wean us off fossil fuel. Labour knows the value of that, because we have done it before. When we created the British National Oil Corporation, we created a structure that could have rivalled the Norwegians for providing dividends and a sovereign wealth fund for our people, had not the Tories squandered the proceeds of North sea oil receipts. They understand the needs of oil giants, but they show little understanding of, or care for, the needs of ordinary people and small business.

Finally, we have seen the classic Tory deception. The Chancellor ended his Budget speech by planting a story about something that he will probably not do. He wants us to talk about the total abolition of national insurance, an unfunded proposal worth more than the tax bonanza from the right hon. Member for South West Norfolk (Elizabeth Truss), which almost wrecked our pension funds. Of course, that assumes that he is promising to scrap only employee NI. If he were also considering employer contributions, we would be talking about a black hole of not £46 billion, but £178 billion. We can see why we need clarity from these people about what they are actually promising.

[Stephen Kinnock]

My hon. Friend is making an excellent speech. Does he think that it is extraordinary, given what happened after the so-called mini-Budget, that the Conservative party seems to have learned nothing and is still making all sorts of unfunded commitments, which could wreak havoc on our economy, just as happened last time around?

[Steve McCabe]

This is extremely serious, and I am not surprised that the Conservatives are trying desperately to get away from it, because we can all see the risks that are posed.

This is a Budget based on the kind of fantasy reality that could well have come from an Aldous Huxley novel. We have a Chancellor with nowhere to go, representing a Government no one believes. It is time to let the people decide.

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[Stephen Kinnock (Aberavon) (Lab)]

It is a real pleasure to follow my hon. Friend the Member for Easington (Grahame Morris).

We on the Labour Benches talk a lot, and rightly so, about the Conservatives crashing our economy and sending mortgages up by almost £3,000, rent up by 10%, and food prices up by 25%. We talk a lot about the fact that the Prime Minister is utterly blinkered about the truth that he has gone from being a low-growth Chancellor to a no-growth Prime Minister, with the introduction of Rishi’s recession, and that working people are paying the price in this cost of living crisis. We talk a lot about Tory waste: the fact that the Prime Minister has blown £7 billion on covid loan fraud, and £500 million on a Rwanda plan that has flown three Home Secretaries to Kigali, but not a single asylum seeker. We know that the tax burden is at its highest level for 70 years, while debt has rocketed and is still going up.

However, we should probably talk more about the underpinning mismanagement of our economy and the broken economic model that has seen Tories under-investing, turning our country into a stagnation nation. We have a record high NHS waiting list of more than 7 million people; schools that are literally crumbling because the Prime Minister cut the school building budget when he was Chancellor; 90% of crimes going unsolved, with rape victims waiting three years for their day in court; and three times as many children living in poverty today as did six years ago. The reality is that the past 14 years have been an omnishambles. As a result, nothing in this country seems to work any more, yet the British people are being forced to pay more and more for less and less.

What ideas have the Conservatives put forward to fix this mess? None whatsoever. Instead, they resort to pilfering Labour’s policies like some sort of embarrassingly bad tribute act. When the cost of living crisis hit, we knew we needed to support households through it, so we proposed a windfall tax on the excess profits of oil and gas companies. The Conservative party eventually caved in and delivered that policy, but poorly and riddled with loopholes.

This week, the Government have made a feeble attempt to mimic our policy of ending the non-dom tax loophole. Just think: if they had acted when Labour first suggested ending this loophole two years ago, they would have generated £6 billion for the policy areas we suggested. They could have delivered 3.8 million extra operations, 1.3 million emergency dental appointments and free breakfast clubs for nearly 4.5 million children. The Conservatives are followers, not leaders. They are slogan-mongers, not servants of the people. They believe in government by gimmick rather than the hard graft of governing in the national interest.

Labour, meanwhile, is taking a long-term responsible approach to get our economy back on its feet and growing again, which is why we have our five core missions. We will get businesses growing and put demand back into the economy, starting with our new house building programme for 1.5 million homes over five years, creating new jobs and getting young people and families the housing they need. We will deliver clean energy by 2030 and switch on Great British Energy. Our transition to a modern economy will deliver half a million good jobs, lower household bills and make our energy supply secure from Putin. We will get the NHS back on its feet and fit for the future, and bring down waiting times with the biggest ever workforce expansion, including 17,000 more doctors and nurses and 2 million more available appointments. We will put 13,000 police back on the streets, and halve the number of incidents of violence against women and girls. We will spread opportunity for young people everywhere by shattering the class ceiling through better early years provision and improving technical education.

Instead of the Government’s hands-off, “Not my problem, guv,” approach to the economy, we can deliver an active industrial strategy, backing our businesses to make, buy and sell more in Britain. This includes Labour’s £3 billion steel renewal fund. With that, I am urging Tata Steel to step back from the cliff edge, which would cost 2,800 people their jobs in Aberavon and Wales, and not do anything that cannot be undone before the next general election. What a disgrace it is that the Conservative Government have given £500 million to Tata to make 2,800 people redundant. We will work with industry to secure a bridge to the new economy, so that steel companies can seize the opportunities of the future and Britain can maintain its sovereign capability to make its own steel from scratch. This is a vital security issue in the dangerous and turbulent world in which we live. If we want to get Putin’s boot off our throats, we have to sustain our vital steel industry.

We on these Benches are also committed to supporting small businesses. We will legislate to tackle late payments, unlocking £20 billion in unpaid invoices. We will scrap business rates, and replace them with a system that is fairer for bricks and mortar businesses. These are the kind of growth measures we need to get Aberavon, Wales and Britain firing on all cylinders.

Last year, the Prime Minister said, “We’ve turned the corner,” and promptly plunged Britain into a recession, with an economy smaller now than when he entered Downing Street, mortgages through the roof, house building fallen off a cliff, worklessness rising, homelessness never higher, crimes going unsolved and rape victims waiting years for their day in court. We have rivers full of sewage, which is the perfect metaphor for the stench of decay that is emanating from this clapped-out Government.

Households are £870 worse off on average under Sunak’s —the Prime Minister’s—tax plan. With just 5p given back for every 10p taken from our constituents, he is giving with one hand and taking twice as much away with the other. That is not a plan; that is a scam. It is a con from this Government, who have run out of ideas, run out of energy and run out of road. We need an election this spring, and we need a Labour Government who will rebuild our public services, re-energise our economy and get our country back on track.

[Several hon. Members rose—]

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[Nigel Huddleston]

The hon. Gentleman is making an important point. I said earlier that, unfortunately, we have had taxes at a higher level than we want, but now we are in a position to reduce them. Reducing them and focusing on NICs is impactful for 29 million workers—anybody earning above £12,500. People now need to earn more than £1,000 a month before they pay any tax whatsoever.

As I said, when we came into power unemployment was near 8%, but it is now about 4%. We should not take full employment, or near full employment, for granted. We all know that every Labour Government have increased unemployment—that is not an impressive record but it is a consistent one.

I particularly want to reflect today on how our plan rewards hard-working families. The Government believe that people’s careers should support rather than undermine another important role: parenthood. That is why at last year’s Budget the Chancellor announced the biggest ever expansion of childcare from September 2025, extending the 30-hour free childcare offer to all children of working parents from nine months old. That will result in an extra 60,000 parents entering the workforce in the next four years. But to deliver on that we need to support the private sector to play its part too, so yesterday we confirmed that the Government are guaranteeing the hourly rate paid to childcare providers to deliver the free hours offer.

[Stephen Kinnock]

The Minister has not yet mentioned the Government’s damascene conversion on scrapping the loophole for non-doms, but there is a point here about what they could have generated. If they had listened to Labour and done that two years ago, it would have generated an extra £6 billion of revenue, which could have paid for free breakfast clubs for nearly 4.5 million children. So on the point of childcare, does he think that is relevant?

[Nigel Huddleston]

The hon. Gentleman gave quite a wish list earlier, which, by my calculations, could come out as being quite expensive. I do not know whether he has had conversations with the hon. Member for Leicester West, who is on his Front Bench.

On the hon. Gentleman’s point about non-doms, we will be scrapping the non-dom status, but we will be replacing the system with one that is residency based, including measures that will encourage and incentivise further investment into the UK, because we will be implementing transition measures. I did not hear the Opposition talk about them. Those transition measures are likely to encourage £15 billion of additional investment into the UK. Non-doms at the moment pay about £8.5 billion in taxes. We want to welcome people, but we recognise that those with the broadest shoulders must carry the greatest burden. None the less, we want to be internationally competitive, and the new system that we have proposed will be.

Returning to the childcare measures that I outlined earlier, this commitment would mean over £500 million of additional investment in childcare over the next two years. This will give childcare providers the confidence to invest in expanding at a crucial time, to deliver the free childcare expansion and help bridge the gap between parents’ career demands and their childcare needs.

This approach complements further changes that we are making to the tax system to incentivise parents to increase the hours they work. Yesterday, the Chancellor announced that from 6 April the high-income child benefit charge threshold will be raised to £60,000. In addition, the level at which child benefit is withdrawn completely will increase to £80,000. That was very much welcomed by many Members on the Conservative Benches, including my hon. Friends the Members for Devizes, for The Cotswolds and others. As a result, no one earning under £60,000 will now pay the charge. This will put pounds in parents’ pockets, saving nearly half a million families with children an average of £1,300 a year. According to the OBR, this change will also result in an increase in hours for those already working, which is equivalent to around 10,000 more people entering the workforce full time.