Budget Resolutions — House of Commons, 2017-11-22
Topic: Macroeconomics
Joanne Kate Swinson (Liberal Democrats, Centre to centre-left): The British economy today faces three key challenges. First, we have low productivity, with the associated wage stagnation that comes with it, and of course the reduced tax receipts. Secondly, we have high public sector debt. We must recognise the constraints that that places on what is possible economically, and be honest about some of the hard choices that need to be made. Thirdly, there is Brexit, which has already been described as the elephant in the room. We see the uncertainty it is creating for businesses and investment in the country, its impact on our economy, and the opportunity cost of all the energy and money being spent on preparing for it that could otherwise be directed elsewhere The Chancellor is a serious man. We had significant differences in coalition but in recent months he has appeared to be one of the few voices of reason in the Cabinet on Brexit. He had an unenviable task coming to the House today, given the picture of higher inflation, lower growth, lower productivity and high levels of debt. It really is bleak. The economy will be £45 billion smaller in 2021 than had been projected just in March this year, so his attempts to paint a cheerful vision of the future were rather less successful than his jokes. The truth is, as the Chancellor knows, that this Budget, the next one, the Budget after that and all future Budgets are made all the more difficult because of Brexit and the extreme approach to it that this Government are pursuing. Making it clear that an exit from the single market and the customs union is a red line for the Government—this is aided and abetted by the Labour Front-Bench team—imperils the future of the UK economy, and the Chancellor knows it The right hon. Member for Loughborough (Nicky Morgan) rightly said that there is no pot of gold at the end of the Brexit rainbow, although the more appropriate metaphor is that of a thunderstorm. We learned today that the cost of Brexit preparations is not just the £700 million already allocated but a further £3 billion, which is more than the extra money that could be found for the NHS, and that tells its own story. We need to add to that the exit bill, and who knows what that will be—£20 billion, £30 billion, £40 billion? In addition, there is the overall hit to the economy, which the OECD has suggested could be £40 billion. It is no surprise that these figures were not stuck on the side of a bus in the referendum campaign To promote the health of our economy we have long needed to use the advantage of low borrowing rates to increase investment in the economy, so I welcome some of the measures set out today to unlock new house building. However, they are not ambitious enough. As ever in Budgets, the devil is in the detail. The headline figure touted was £44 billion, but only £15 billion of that was new and just £6 billion of it was extra for increasing the housing supply. As my hon. Friend the Member for Bath (Wera Hobhouse) said, there was next to no help for extra social housing, which of course is badly needed as part of the mix On the NHS, Simon Stevens had asked for £4 billion next year, but the Chancellor’s response does not come close. The new revenue peaks at £1.9 billion next year and then drops to £1.1 billion. As I say, Liberal Democrat Members appreciate that hard choices need to be made, and if we want to resource our NHS and social care properly we need to look at how to find the funds. That is why we have proposed an increase in income tax of one penny in the pound specifically for the NHS and social care. It is worth noting that social care was something the Chancellor did not even think worth mentioning in his remarks.