Budget Resolutions and Economic Situation

Debate between Tommy Sheppard and David Morris

Wednesday 16th March 2016 Commons Chamber

[Tommy Sheppard (Edinburgh East) (SNP)]

I would like to start on a positive note by welcoming the Chancellor’s statement on the sugar tax. He may well want to consider whether he needs to wait a full two years to bring it in, but none the less it is a welcome start, and I commend him for it.

I am afraid that is where my generosity towards the Chancellor, his Treasury team and this Budget must end, because I see the rest of it in exceptionally negative terms. This is a Chancellor, after all, who is making a career out of failure. He has failed every one of the macroeconomic targets that he has set for himself. If we were to score him on a report card, we would have no option but to give him an F-minus. I think that when he began to prepare this Budget he was looking at failing in his final objective, which was to create a budget surplus by 2019. I would like to pause to ask what that is actually about, because a surplus in Government finances is quite a strange thing. It means that the Government are spending less on this country’s public services than they is taking in taxes from the people who depend on them. That is a strange thing to aim for.

I wonder why the Chancellor is so concerned to have a £10 billion nest egg in 2019-20. It would not have anything to do, would it, with the proximity of the 2020 general election and a Chancellor who is determined to see a longer career for himself in this House, perhaps in a different position? In fact, I wonder whether the Chancellor has less of a long-term economic plan for the country and more of a long-term political plan for himself. In order to get the £10 billion surplus, he has decided that he has to have another range of cuts, with £3.5 billion being taken out of non-protected Departments. I dread to think what that will mean when we work through the detail.

We have to ask ourselves: is there no alternative to this austerity being piled on top of austerity? There is an alternative. We said during discussions on last year’s Budget—and we will say it again this year—that rather than cut back on public spending, a prudent Government should have a slow, sustained increase over the lifetime of this Parliament in order to use the public sector as an engine for economic growth to raise revenues, eradicate the deficit and drill down on the debt. That is received economic wisdom in most of the world, including most of our competitor countries, most of the members of the European Union and the United States of America. It is only the City of London and the United Kingdom Treasury that are blinkered to that very obvious approach.

This is also a Budget for inequality. If we look at the middle income range, we will see that someone who earns £35,000 will benefit by about £180 a year from the increase in the threshold for the basic rate of income tax. However, someone who earns £45,000 will benefit by £580 a year—more than three times as much. In what parallel universe could that approach be described as removing inequality in our country?

And that is only if people are lucky enough to be earning enough wages to be taxed in the first place. Even with the Chancellor’s pretendy national minimum wage, if someone is earning £7.20 an hour over 30 hours a week, they will not meet that basic income tax threshold. This Budget does nothing for the millions of people who are in that position. It does nothing for the people who are on fixed or low incomes, or for those who, because of their situation, have to rely on state benefits.

Is not the cruellest thing of all that, while tax breaks will be given to people who can afford to pay their taxes, there will be miserly and parsimonious cuts to the benefits of the most vulnerable in our community? The Department for Work and Pensions is preparing for a £1.2 billion cut in the personal independence payment programme. That will involve assessing 640,000 claimants, 200,000 of whom will be removed from the benefit altogether, while the rest will have their benefits reduced from £85 to £55 a week. What a miserly, mean-spirited, mean-minded approach to providing a welfare system.

The Chancellor has made much of this being a Budget for business. Before I came to this House, I started and ran a successful small business. I welcomed the day that it did well enough to pay corporation tax, because it took a few years to get there. The Chancellor talks about this being a nation of shopkeepers, but there are plenty of shopkeepers in my constituency who are less worried about the rate of corporation tax than they are about whether enough people are coming through the shop door with enough money to buy their products and to keep them and their employees afloat. Rather than tinkering, it would be better to consider a programme for economic growth and regeneration.

Let us not kid ourselves that it is small businesses that will benefit from the one-size-fits-all business tax approach. A business that makes a £20,000 profit pays the same rate of tax as a business that makes a £20 million profit. That means that most of the £15 billion that is being given back in the business tax cuts is being given back to large multinational corporations that are the friends of the Conservative party and of the Chancellor.

[David Morris (Morecambe and Lunesdale) (Con)]

Will the hon. Gentleman give way?

[Tommy Sheppard]

I will not give way, because I have a minute left and others want to come in. I say to the small businesspeople of this country: “Be very wary about what is being done in your name. This is not the way to make your business successful; it is a tiny little bribe.”

I am out of time, but I want to finish on the Chancellor’s suggestion that this is a Budget for the next generation. God help us if he really believes that. The next generation have just had the remaining grants for education removed from them. They are faced with living with their parents well into their 30s and 40s because their housing options have gone, and they are now being told that they may have to work until they are 80 years old. I do not think that those people will thank the Chancellor for this Budget. They will expect the Government to do an awful lot more to provide them with the future that they require.