Budget Resolutions

Stephen Timms Excerpts

Thursday 7th March 2024 Commons Chamber

[Mel Stride]

There is no immediate Government approach to merging income tax and national insurance, and I rather put that in the category of those comments about the apparent commitment of £46 billion, although I think the hon. Member for Bethnal Green and Bow nudged it up in a typical Labour way to £48 billion a moment ago.

Let me turn to the remarks that the right hon. Member for Leeds West made about growth. As she knows, we have had a technical recession of two quarters of negative growth—one of which was the princely amount of 0.1%—and most of the purchasing managers index data makes it clear that the economy is on a very different path. Indeed, to return to the comments of the hon. Member for Bethnal Green and Bow, the OBR makes it clear that over the period of the forecast, there will be reasonable and decent growth—greater than that of France, Italy and Germany. That is on the back of exactly the kind of growth record that this Government have had since 2010.

[Sir Stephen Timms (East Ham) (Lab)]

On growth, it was the former Prime Minister, when seeking election as leader of her party, who characterised the growth record since 2010 as lamentable. She was surely absolutely right about that particular point.

[Mel Stride]

My point is that the externalities that I referred to, such as covid and the war between Ukraine and Russia, have impacted economies around the world. Relative to other economies, and looking at the OBR’s forecast over the next five years, we will have a growth record that is up there and better than many of our major competitors, including countries such as Germany.

--- Later in debate ---

[Mel Stride]

I will not get into the weeds of the issue that the hon. Gentleman is attempting to draw me into, other than to say that he made at least one comment that I agree with: I am indeed a decent man. I thank him very much for that.

Inflation is falling faster than expected. People’s wages are rising in real terms, and have done for the last seven months. Under this Government, our labour market has been strong and resilient, delivering opportunities despite the headwinds. We have put incentives at the heart of our welfare. We have grown faster than Germany, France or Italy. According to the OBR, we will continue to do so over the next five years. We are attracting the business investment that is key to growth, delivering high- quality jobs across the country—from Nissan to Google to AstraZeneca, which announced £650 million of investment only yesterday.

No matter how much the Labour party seeks to talk down Britain, the investment flowing into our economy is a huge vote of confidence in our country. It shows that our plan is working. By contrast, as has been laid all too bare this afternoon, the Labour party has no plan or credible record. I have already gone through the tale of woe about the level of unemployment that Labour has left us in the past. Those poor young people had a 45% increase in youth employment on the watch of the shadow Chancellor’s party, and over 1 million people were left on out-of-work benefits for almost a decade.

On the Government Benches, we believe that work, not welfare is key to improving living standards. That is why we are incentivising and rewarding work in this Budget. Making work pay and ensuring families are better off means tackling the global inflation that I have referred to, on which we are making significant progress. As inflation decreases, we recognise that there are still some people who need extra help. I was pleased to see the extension of the household support fund for a further six months from April, which was also pushed for by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms).

[Sir Stephen Timms]

The Minister is right that I warmly welcome that extension. Is there not a strong case for making the household support fund permanent, not just extending it for another six months?

[Mel Stride]

Six months is a meaningful period of time. Inflation is coming down. As the OBR says in its report, inflation is expected to hit target within the next few months, which will make a huge difference. It highlights some uncertainties around that, but £500 million of investment over six months, including Barnett consequentials, is a major move forward to support the most vulnerable.

The sustainable way to change lives is through work, and the evidence could not be clearer. It is good for the economy, communities and the individuals concerned. I want everyone who can work to have the opportunity to do so. One of the great labour market challenges is economic inactivity, and I want to put that into context. In the UK, inactivity has come down since its pandemic peak and remains lower than the average across the G7, the OECD and the European Union. Our progress has seen a significant fall in the number of people who are inactive because of caring responsibilities. We have the second lowest youth inactivity rate in the G7, and thousands of over-50s are returning to work.

However, the rise in the number of people out of work due to ill health and disability is stifling potential—potential that I am determined to realise. That is why, as we cut taxes for working people, our multibillion-pound back to work plan is providing substantial support to help the long-term sick return to work and keep people in the workforce. That includes doubling the number of placements on universal support, expanding access to mental health support, delivering Work Well, giving people earlier and better access to integrated work and health support, reforming fit notes and working with employers to improve occupational health. Through our next generation of welfare reforms, we are breaking down the barriers to work. Our chance to work guarantee will enable people on incapacity benefits to try work without fear of losing their benefits if a job does not work out. As the OBR has confirmed, our reforms to the work capability assessment will reduce the number of people on those benefits by 371,000. That is 371,000 more people getting the support they need to enter employment.

As part of our back to work plan, we are also tackling long-term unemployment, because the longer people stay in unemployment, the less likely they are to rejoin the workforce. That is why we are phasing in more rigorous requirements for fit and able jobseekers, with more time with work coaches, more intensive support and mandatory work placements. Ultimately, if a claimant does not engage with the support they are being offered, they will lose their benefits, underscoring our belief that we should always be there for those who need our support, but we must equally be fair to taxpayers.

By contrast, for all the protestations from the Opposition that they have changed, they are not fooling anybody. They are squeamish on conditionality, weak on sanctions and completely out of touch with the British public, who rightly expect a welfare system in which everyone meets their obligations.