Spending Round 2019 — House of Lords, 2019-09-25
Topic: Macroeconomics
Bryan Davies (Labour, Centre-left): My Lords, I too welcome the noble Lord, Lord Duncan, to his role. I warn him, however, that I have been at the Dispatch Box for the Opposition for almost a decade, and I think I have faced 10 Finance Ministers. Longevity is not easy; if he wants to make a mark in the field he has to get cracking fairly quickly. This is not the most auspicious of starts for him. How on earth did the Prime Minister persuade the Chancellor that his first major speech to Parliament should be to introduce this spending round? It is not, of course, a review: reviews were introduced to identify spending patterns and resource allocations over several years. They might be annual, but they built up a pattern. This one is defined as a one-off. It is certainly a spending round. Of course it is a one-off, because it has a pretty limited objective, which is to give some substance to the Government’s economic position in the early forthcoming election that we all anticipate This spending round meant that no serious political analyst, nor Member of either House of Parliament, saw this as anything more than a rush job—a mere substitute for a Budget. As the noble Lord, Lord Young, pointed out, with a budget the OBR produces some independent advice and analysis of its role. With this spending round, there was nothing from the Government except a series of throwaway lines on what they thought would be attractive to the electorate in terms of expenditure It is a pity, therefore, that we have devalued the concept of economic strategy. The country is in a difficult enough position on politics at present; we have all endured the crisis days of the last week. But for the economy to be treated with throwaway lines is a most unfortunate development. For a great deal of this debate, serious Members of this House sought to give some substance to this flimsy document, as my noble friend Lord Liddle called it, to try to translate it into something of substance. I give full credit to the noble Lord, Lord Fox, who also identified just how inadequate this spending round would prove to be and the difficulties of thinking about anything else, except in short-term electoral terms There is no attempt at long-term analysis. That is why all the complaints about fundamental issues that have obtained over the last decade are so much wasted air against a background where this document has no ambition with regard to laying future foundations, but is really looking at the way in which it can bring to an end, it hopes, the concept of austerity and go on a spending spree. It is obvious that the problem of austerity is a good deal more rooted than is suggested by those—the Chancellor, in particular—who felt they could get away with a speech of this kind in a document of this type. So many of the issues are so deep-rooted, and people have suffered for such a considerable period in the age of austerity, that there is no way that even the most resourceful Government could turn things round in the space of a year or so, which is what this spending round attempts to suggest. It requires a firm commitment to very significant economic plans, which, as the Labour Party, we intend to put before the electorate when that election occurs The problem has been identified again in this debate. Every spending commitment that has been portrayed in this document as a real advance has in fact fewer resources committed to it than is suggested. NHS spending, for instance, boasted by the Chancellor to rise by £1.8 billion, soon proved to contain £1 billion that was not new money at all. The Institute for Fiscal Studies said that to give a real increase to the health service, £3.8 billion was needed. That superficial approach to the problem of the health service runs through the whole of the document. In education, school heads and staff soon saw that there would be little new money except that for meeting rising costs that are unavoidable—the rising costs associated with employee pensions and the number of school pupils who have to be taught in our schools. Therefore, there is no real growth in school expenditure in this spending round There is some advance and I give credit to the Government for it, as did the noble Lord, Lord Young, and the right reverend Prelate the Bishop of Durham. Other aspects of education need real attention. There is no doubt that the Government have long battled to increase productivity, but they have lost that battle year after year for almost a decade. Serious attention needs to be paid to vocational education. Yet we have had a slashing onslaught on further education colleges. They are due to receive £400 million extra in the coming year. That is obviously welcome and shows that the Government have learned some lessons of their own, but it is against a backdrop of £3.3 billion of cuts over the last decade in this crucial education sector, which sets out to improve skills in industry and business and would give some hope to reducing the regional disparities that we all recognise represent a real problem for Britain Other areas of expenditure produce the same problem. It is claimed that 20,000 new policemen are to be afforded on the streets. But no allowance was made for the fact that out of that 20,000, 7,000 will be nowhere near the streets. They will be in the National Crime Agency and other national agencies; they will not be bobbies on the beat, which is what the concept of 20,000 new policeman sought to convey In this ineffectual document one of the outstanding omissions—the noble Lord, Lord Greaves, probably knows about it in relation to his local community—relates to the terrible local authority funding gap. We cannot pretend to reduce gross inequalities in our society if in fact we precipitate despair, and not only among Labour or Liberal local authorities—the first outrage was expressed by Northamptonshire County Council, which is a Conservative authority. This year alone, the social care spending gap is destined to be £2.6 million. How can we say that the resources are there to meet real needs Some 10,000 new prison places have been promised, but after all, these were promised two years before in the election manifesto of 2017, so this is merely a rehashing of a previous activity by the Government, which has not been realised to the extent they were suggesting. There is no suggestion about how any of this will be paid for Noble Lords on my side of the House, in particular, were keen to emphasise the fact that this country has an acute problem of poverty—it has an increasing problem of child poverty—and yet Conservative Chancellors have been concerned, as the noble Lord, Lord Livermore, pointed out, to reduce the tax on higher-income taxpayers three times more than taxpayers on the basic rate. There are an awful lot of people in work on the very low rates in this gig economy in which the question of taxation plays a relatively minor part—they do not earn enough to actually qualify for it. The right reverend Prelate the Bishop of Durham emphasised this point in a strong moral plea for some degree of fairness for those who are in poverty. In one of the world’s richest economies, the dependence of so many of its citizens on food banks, as well as sleeping rough and having continual problems with the operation of universal credit is something which the Government ought to be thoroughly ashamed of There have been not inconsiderable economic resources devoted in these last few years to a no deal Brexit, as the Government wrestle with the consequence of the strategy they have been pursuing, which is clearly fraught and has divided the nation in a very dramatic and sad way. We all know that we have a society which requires some very constructive and important solutions to its needs. It is necessary that we have budgetary approaches which, in fact, tackle those needs. This spending round is not one of those documents.