Budget Resolutions — House of Commons, 2021-10-27
Topic: Macroeconomics
Rachel Jane Reeves (Labour, Centre-left): So as well as having the highest death toll in Europe, Britain has suffered the worst economic hit of any major economy. The Chancellor now boasts that we are growing faster than others, but that is because we fell the furthest. While the US and others have already seen their economy bounce back to levels seen before the pandemic, the UK has not. Our economy is set to be permanently weaker On top of all that, the Government are now lurching from crisis to crisis: people avoiding journeys because they cannot fill up their petrol tank is not good for the economy; people spending less because the cost of the weekly shop has exploded is not good for the economy; and British exporters facing more barriers than their European competitors because of the deal the Government did is not good for our economy. If this were a plan, it would be economic sabotage. When the Prime Minister is not blagging that this chaos is part of his cunning plan, he is saying he is not worried about inflation. Well, tell that to families struggling with rising gas and electricity bills, rising petrol prices at the pump and rising food prices. He is out of touch, he is out of ideas and he has left working people out of pocket Conservative mismanagement has made the fiscal situation tight. When times are tight, it is even more important to ensure that taxes are fair and that taxpayers get value for money. The Government fail on both fronts. We have a grossly unfair tax system, with the burden being heaped on working people. Successive Budgets have raised council tax and income tax. Now they have raised national insurance, too. But taxes on those with the broadest shoulders, those who earn their income from stocks and shares and dividends and property portfolios, have been left nearly untouched. Businesses based on the high street are the lifeblood of our communities and are often the first venture for entrepreneurs, but despite what the Chancellor said today, businesses will still be held back by punitive and unfair business rates. The Government have failed to tax the online giants and watered down global efforts to create a level playing field Just when we needed every penny of public money to make a difference, we have a Government who are a byword for waste, cronyism and vanity projects. We have had £37 billion for a test and trace system that the spending watchdog says treats taxpayers like an ATM cash machine, a yacht for Ministers, a fancy paint job for the Prime Minister’s plane, a TV studio for Conservative party broadcasts that seems to have morphed into the world’s most expensive home cinema, £3.5 billion of Government contracts awarded to friends and donors of the Conservative party, a £190 million loan to a company employing the Prime Minister’s former chief of staff, and £30 million to the former Health Secretary’s pub landlord—and every single one of those cheques signed by the Chancellor. Now the Chancellor comes to ordinary working people and asks them to pay more than they have ever been asked to pay before, and, at the same time, to put up with worse public services, all because of his economic mismanagement, his unfair tax system and his wasteful spending. Of course, there are some welcome measures in the Budget today, as there are in any Budget. Labour welcomes the increase in the national minimum wage, but the Government need to go further and faster. If they had backed Labour’s position of an immediate rise to at least £10 an hour, a full-time worker on the national minimum wage would be in line for an extra £1,000 a year. Ending the punitive public sector pay freeze is welcome, but we know how much this Chancellor likes his smoke and mirrors, so we will be checking the books to make sure that the money is there for a real-terms pay rise. Labour also welcomes the Government’s decision to reduce the universal credit taper rate, as we have consistently called for, but the system has got so out of whack that even after that reduction working people on universal credit still face a higher marginal tax rate than the Prime Minister. Those unable to work through no fault of their own still face losing more than £1,000 a year. For families who go out to work every day but do not get Government benefits, who are on an average wage, who have to fill up their car with petrol to get to work, who do that weekly shop, and who see their gas and electricity prices go up, the Budget today does absolutely nothing We have a cost-of-living crisis. The Government have no coherent plan to help families cope with rising energy prices. Although we welcome the action taken today on universal credit, millions will still struggle to pay the bills this winter. The Government have done nothing to help people with their gas and electricity bills through the cut in VAT receipts that Labour has called for—a cut that is possible because we are outside the European Union and could be funded by the extra VAT receipts of the last few months. Working people are left out in the cold while the Government hammer them with tax rises. National insurance is a regressive tax on working people: a tax on jobs. Under the Chancellor’s plans, a landlord renting out dozens of properties will not pay a penny more in tax, but their tenants, in work, will face tax rises of hundreds of pounds a year The Chancellor is failing to tackle another huge issue of the day: adapting to climate change. Adapting to climate change presents opportunities—more jobs, lower bills and cleaner air—but only if we act now and at scale. According to the Office for Budget Responsibility, failure to act will mean public sector debt explodes later to nearly 300% of GDP. The only way to be a prudent and responsible Chancellor is to be a green Chancellor: to invest in the transition to a zero-carbon economy and give British businesses a head start in the industries of the future. But with no mention of climate in his conference speech and the most passing of references today, we are burdened with a Chancellor unwilling to meet the scale of the challenges we face. Homeowners are left to face the costs of insulation on their own. Industries like steel and hydrogen are in a global race, but without the support they need. In the week before COP26, the Chancellor has promoted domestic flights over high-speed rail. It is because of this Chancellor that in the week when we are trying to persuade other countries to reduce their emissions, the Government cannot even confirm that they will meet their 2035 climate reduction target Everywhere working people look at the moment, they see prices going up and they see shortages on the shelves, but this Budget did nothing to address their fears. Household budgets are being stretched thinner than ever, but the Budget did nothing to deal with the spiralling cost of living. It is a shocking missed opportunity by a Government who are completely out of touch There is an alternative. Rather than just tweak the system, Labour would scrap business rates and replace them with something much better by ensuring online giants pay their fair share. That is what being pro-business looks like. We would not put up national insurance for working people. We would ensure that those with the broadest shoulders pay their fair share. That is what being on the side of working people looks like. We would end the £1.7 billion subsidy that the Government give to private schools and put it straight into our local state schools. That is what being on the side of working families looks like. We would deliver a climate investment pledge of £28 billion every year for the rest of this decade: gigafactories to build batteries for electric vehicles; a thriving hydrogen industry creating jobs in all parts of our country; and retrofitting so that we keep homes warm and get our energy bills down. That is what real action on climate change looks like This country deserves better, but it will never get it under this Chancellor, who gives with one hand but takes so much more with the other. What you get with these two is a classic con game, like one of those pickpocketing operations you see in crowded places: the Prime Minister is the front man distracting people with his wild promises, and all the while his Chancellor is dipping his hand in their pockets. It all seems like fun and games until you walk away and find that your purse has been lifted But people are getting wise to them. Every month, they feel the pinch. They are tired of the smoke and mirrors. They are tired of the bluster, of the false dawns and of the promises of jam tomorrow. Labour would put working people first, and would use the power of government and the skill of business to ensure that the next generation of quality jobs are created right here in Britain. We would tax fairly, spend wisely and, after a decade of faltering growth, get Britain’s economy firing on all cylinders. That is what a Labour Budget would have done today.