Budget Resolutions

Torsten Bell Excerpts

Wednesday 30th October 2024 Commons Chamber

[Dame Harriett Baldwin]

Unforced. During the election campaign, the Chancellor told the British public that taxes were too high. She said that she wanted to bring taxes down. She has roundly broken that promise today, because the Budget increases tax for every household in this country, possibly by up to £10,000 over this Parliament. That is way beyond the £2,000 figure that we warned about during the election campaign—a warning that the Prime Minister said on national television was a lie.

The Chancellor campaigned on a general election strategy that I believe was deliberately designed to mislead the electorate. Her plans, and those of the Deputy Prime Minister, end up giving us German taxes with French labour laws—a recipe for higher unemployment if ever I have seen one. The scale of the tax changes announced today for small businesses that employ more than four people is astonishing. Labour Members should let that sink in.

[Torsten Bell (Swansea West) (Lab)]

Will the hon. Lady give way?

[Dame Harriett Baldwin]

I will not give way to the hon. Gentleman, who so often gave evidence to the Treasury Committee. I recall that I had to press him on the fact that NHS productivity has not yet returned to its pre-pandemic level. He told us on the record that if it did, that would be worth £20 billion in additional NHS output.

The Chancellor promised that she wanted to focus on growth. That is her mission, but I believe that more taxes, more public spending and more borrowing do not lead to growth; if they did, Venezuela would be one of the most prosperous countries on earth. What the Chancellor was planning all along, together with her Cabinet colleagues —who have no experience of working in the wealth-creating, job-creating, tax-paying private sector—is a Budget of the public sector, by the public sector, for the public sector. She cannot blame us, because in her first 25 days as Chancellor she announced £25 billion of additional new spending, whether that was for Great British Energy, a national wealth fund, or inflation-busting backdated union pay rises with no productivity requirements.

I also want to speak up for my farmers in West Worcestershire.

--- Later in debate ---

[Torsten Bell (Swansea West) (Lab)]

I praise my hon. Friend the Member for East Renfrewshire (Blair McDougall) for his speech and for his reference to Alistair Darling, who would indeed think that not being serious was the worst thing that could possibly happen. But he also would have had his definition of seriousness, which would be saying that on a day when we have a huge Budget like this and people will be spending their time going through all the weeds—I promise you, Madam Deputy Speaker, it is sorely tempting —we should focus on the big picture choices that have been made, because those are the choices that will define not just this Budget, but this Parliament and this Government.

I will touch on two of those choices today: first, the choice that the state of the public finances and public services cannot continue as it is today; and, secondly, the choice that we cannot continue to be a country living off our past rather than investing in our future. Those are the choices of this Budget, and the fact that Opposition Members are not in their place shows that they do not know what their choices are and they do not have answers to those questions.

Let me turn first to the public finances and public services. We all live in parts of the country where people are not getting the operations they need, where crimes are not being investigated, and where prisons are overflowing and do not have the places we need them to. In order to turn that situation around, tax rises are inevitable, and we will start to do that through the tough but fair choices set out by the Chancellor today.

Several Opposition Members have suggested that our position on the public finances is a looser perspective, but the truth is that the fiscal rules we have set on current spending today relate to a target that was not met once —not in one single year—under the previous Conservative Government. I think most Opposition Members know that public services are not sustainable and that they left the public finances in bad shape. The peak of austerity was back in 2018, and they knew then that it could not be sustained politically or indeed socially, because they promised to bring austerity to an end.

But it has not felt like austerity has been brought to an end. Yes, that is partly due to difficult circumstances, from covid to the cost surges on energy, but it is also because the previous Government were distracted, promising tax cuts while delivering tax rises. I invite all hon. Members to turn to chart 4.5 in the OBR document to recognise that the tax rises put in place by the previous Government were much larger than the tax rises that have had to be announced, regrettably, by the Chancellor today. If tax rises are the death of growth, the tax rises that the country is living with are Tory tax rises.

This is not just about tax; the previous Government were also promising public service improvements without allocating the public spending to make them a reality, as the OBR has laid out clear and bare today. We all know the result. Public services are worse today than they were in 2018, and the spending plans we inherited would have made them worse still, with £1 in every £10 cut from day-to-day public service spending. None of us thinks that is possible, so we have made a different choice. We have chosen to take tough but fair choices on tax and to put in the spending that is needed, including £1.7 billion for Wales.

Let me turn to the second choice that I outlined at the start of my speech: the choice to invest. We cannot carry on living off our past rather than investing in our future, and even if that were ever an option, it is not today, after we have done so for three long decades. The previous Government were planning a cut of a third in net investment—over £20 billion a year. Why? Yes, because politics of all stripes has short-termist incentives, but also because for too long our macroeconomic framework has had a heavy bias against investment spending built in.

Fiscal rules have driven cuts whenever bad news has arrived, which drives problems in the volume of investment—the average OECD country has invested 50% more than us this century—and in the volatility of investment. That was what the previous Government were planning, and that weak investment undermines growth. It has been said a lot today that business will not like every measure in the Budget, and it may not, but we need to be clear that business investment in Britain has been lower than in every other G7 economy in previous years. Why? Because of a lack of stability, from Liz Truss to Boris Johnson; because things cannot be built; because we cannot get the workers; because we have run down the NHS and people are too sick to work.

It is true that this is a big Budget and there are big choices that we have to recognise. How do we deliver stable public finances? How do we deliver functioning public services? How do we deliver an investment programme that underpins growth, rather than undermining it? We should all agree that those are the questions facing the country, and the Tories lost the election because they did not even try to answer them. On the basis of today, they are still not trying. The Chancellor has answered all three, with tough but fair choices—not easy answers, but a new direction for Britain.