Budget Resolutions

Stephen Timms Excerpts

Tuesday 12th March 2024 Commons Chamber

[Darren Jones]

My hon. Friend is right. Ministers should answer this question and I am repeatedly giving them the opportunity to do so. What is the answer to the question? How will the Conservatives fund their £46 billion unfunded tax cut commitment? We can only assume, given that taxes are the highest they have been for 70 years and borrowing is the highest it has been for many decades, that further cuts must be coming from the Conservatives to our national health service and our state pension. The fact of the matter is that the Conservatives’ plan to abolish national insurance is not just fiscally irresponsible but morally abhorrent. In contrast, the Labour party will never promise to do anything it cannot pay for—[Interruption.] I seem to have woken them up on the Government Benches. I encourage them to continue to try to answer the questions we put to them.

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

My hon. Friend is making a powerful case on national insurance. Does he agree that the plan to abolish national insurance raises fundamental questions about the future of the state pension? Even if income tax were increased by 8p in the pound to pay for it, the question of eligibility for the state pension and other contributory benefits would be very difficult to address.

[Darren Jones]

I thank my right hon. Friend, the Chairman of the Work and Pensions Committee, for raising that important and, I might say, obvious question. The public will want to know the answer. Why are Conservative Ministers not telling the Office for Budget Responsibility how they plan to pay for this £46 billion unfunded tax cut? When do they plan to do so? Why can they not tell the House today how they will pay for this £46 billion unfunded tax cut? The public will have to look at what the Conservatives are offering, and at their record in office over these past 14 years, and make a judgment call.

I started my speech by highlighting my concern for Conservative Ministers, given their obvious state of confusion, delusion and denial, but my real concern is elsewhere. My concern is for working people who are paying more in tax than ever before; for pensioners who are dragged into paying tax out of their fixed income for the first time; for families who are struggling with the cost of living crisis and seeing the economy going in the wrong direction; for our national health service that is now presumably at threat from the £46 billion unfunded promise to abolish national insurance contributions with no plan for how to pay for it; and for our country which, after 14 years of Conservative failure, is exhausted, on its knees and staring into the abyss.

We are all fed up with the weak leadership that the latest Conservative Prime Minister is offering our country. We are bored to the back teeth with the Conservative party’s chaos and infighting taking priority over the country. We want to get our economy back on track and our public services back on their feet, to close the book on 14 years of Conservative failure and to get Britain its future back. I have only one ask of the Conservative party today: to set the date for the general election.

--- Later in debate ---

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

Let me associate myself with what my hon. Friends the Members for Lewisham East (Janet Daby) and for West Ham (Ms Brown) said about the scale of the hardships being faced by so many residents of the London boroughs that all three of us represent.

In his Budget speech, the Chancellor said that the Government would

“continue to explore how savers could be allowed to take their pension pots with them when they change job.”—[Official Report, 6 March 2024; Vol. 746, c. 843.]

I am pleased that the Economic Secretary is present, because I was relieved that the Chancellor did not commit himself to pursuing that particular course at this stage. The proposal is driven by the laudable aim of consolidating pension schemes to gather resources to invest in the economy, which is an important part of tackling the productivity challenge of which we have spoken today. However, many of the responses to the Government’s consultation on it opposed the particular model on which the Chancellor had consulted—the “lifetime pension pot” model—because it would substantially increase costs and complexity for employers, whose support in pension provision has been important to the progress that has been made. At the very least, adopting this model would have the damaging effect of ending the cross-party consensus on pensions policy that has been so important to the progress of auto-enrolment over the last 20 years.

A major trade body, the Pensions and Lifetime Savings Association, said that there was “no evidence” that the lifetime provider model would help savers, but that it had

“the potential to significantly undermine the successes of AE”.

It warned of a

“sharp increase in marketing and product costs which will ultimately be borne by savers.”

It also suggested alternative ways in which to tackle lost and small pots, and to deliver the consolidation that is, undoubtedly, very important. The Association of British Insurers said that the model would “re-engineer auto-enrolment ”, and warned that

“We must not lose sight of the great success of automatic enrolment, while acknowledging that there are key reforms already underway…that need to be completed.”

The TUC described the proposal as a “gimmick” and a “dangerous distraction ”, likely to

“lead to higher charges and lower retirement incomes for most workers, with the lowest paid the greatest at risk of getting ripped off.”

Lane Clark & Peacock, where the former Pensions Minister Steve Webb now works, said that the model was “fundamentally flawed”. I was therefore relieved that the Chancellor was not rushing ahead with the proposal.

I wish we had seen more progress elsewhere. The Work and Pensions Committee has reported a widespread consensus in favour of the 2017 auto-enrolment review recommendations. The legislation received Royal Assent last September, but we now need a consultation on how it will be implemented and when. If the Minister is able to tell us when that is likely to happen, it would be of great interest. We also highlighted the

“consensus that many people need to increase their pension contributions if they are to have an adequate income in retirement.”

We said:

“The middle of a cost of living crisis is not the time to ask people to pay more into their pension. However, if they are to do so in the future”—

as they need to—

“work to prepare the ground needs to start now to build consensus”

on the need for the change that must come. It would be good to hear from the Government about when they will get on and move auto-enrolment to the next stage.

I, like other Members who have spoken in the debate, welcome the Chancellor’s extension to the household support fund. It has been crucial in supporting families through the cost of living crisis and in enabling local councils to reach those who most need help, but as we heard from the hon. Member for Motherwell and Wishaw (Marion Fellows), there is a strong case not just for extending the fund for six months but making it permanent.

Local welfare assistance replaced the old social fund in 2014. Money was transferred to local authority budgets, but it has increasingly been squeezed out in subsequent cuts. If the household support fund does end in September, a significant number of councils will end local welfare assistance altogether in their areas. The Government support local provision, but they need to fund it as well, and one important advantage of the household support fund is that a large number of councils have been able to support families with no recourse to public funds when other help is not available to them at all. I very much hope that the campaign to make the household support fund permanent will be accepted by the Government.