Charter for Budget Responsibility — House of Commons, 2017-01-24
Topic: Macroeconomics
Rebecca Long-Bailey (Labour, Centre-left): The credibility of the Government’s fiscal plan as outlined in the charter for Budget responsibility has been called into question time and again. Labour opposed the Government’s amended charter in 2015 as it epitomised the Government’s austerity agenda and refusal to intervene and invest in our nation’s future. Today, this Chancellor is seeking Parliament’s approval to break with his predecessor’s fiscal targets and amend the charter Is that good news? Has the Chancellor accepted the policy advice of the IMF, the OECD, the CBI and the TUC that austerity is not a credible economic model and that the Government’s role is to support investment? Well, no, sadly, he has not. The amendments to the rules that we are considering today still commit to the Government’s austerity agenda, which has forced misery on the most vulnerable people in Britain. It also fails to allow the investment necessary for future growth and prosperity As my right hon. Friend the shadow Chancellor outlined earlier, it is encouraging that the previous surplus target for 2020 has been ditched—the Government now seek to balance the books at some point in the next Parliament—but, crucially, capital and current spending are still lumped together and subject to the framework, so the Government’s ability to make large-scale investments is significantly constrained. That is quite the opposite of Labour’s fiscal position, which has been outlined today: £250 billion of direct Government investment, with a further £250 billion mobilised, with private sector support, through a national investment bank and a network of regional development banks. The Government’s own infrastructure pipeline lists £500 billion-worth of projects—that is the scale of investment deemed necessary by organisations such as the CBI simply to put us on a level footing with other industrial countries around the world We know that the rules in the charter simply do not work effectively, and so do the Government, but, rather than put in place a new fiscal rule that would provide the structure needed to rebuild and transform our economy as we prepare for Brexit, the Chancellor has chosen to cut off the oxygen needed to create a fertile environment for business. It is time he realised that we must forge a new economic destiny that ensures that Britain has a prestigious place at the world’s table, rather than simply threatening to turn us into a tax haven We need to rebuild those communities that have been left behind for far too long. If anything should have woken the Government up, Brexit should. It was those communities up and down Britain that had been starved of investment for decades that were angry, and they were right to be angry. They had endured nearly seven wasted years in which investment had been allocated on almost a lottery basis; an economy in which the Government promised £5,000 of investment per head in London but just £413 per head in the north-east; an economy in which local authorities had lost £18 billion of Government funding in real terms between 2010 and 2015, with the poorest bearing the brunt; an economy in which the Government slashed the budgets of vital services such as social care and then asked local areas to find the money themselves through council tax increases But, we are told, it is all part of a bigger plan, so let us assess whether the strategy has actually worked. We were told that, if we pulled together and dealt with the sting of austerity for a while, things would improve. So, is the deficit at zero? Have we slashed the national debt? Well, no. As we have heard today, the Government have, to date, added more than £700 billion to the national debt. We have an economy driven by consumer spending, not trade and exports. Even the Bank of England has voiced concerns about the sustainability of the model going forward, because much of that spending is fuelled by extremely worrying levels of household debt—debt that is incurred by people who simply cannot make ends meet We have what the Bank calls a "lost decade" of earnings, with wages having stagnated to the extent that most non-retired families have less money now than they did before the financial crash, according to the Office for National Statistics. We have heard that productivity growth has stagnated. German workers produce the same in four days as UK workers produce in five—I am pleased that the Chancellor brought that up in his contribution. They had a Government who invested in industry; sadly, we do not All that is not the soundtrack of a Government who are jostling to make us one of the world’s leading economies post-Brexit. They have carved us out a future based on low investment, low productivity, low wages and skeleton public services. I am a northern MP, as Members can tell by my accent, and I can recall the Conservative Government of the 1980s stripping away industry from northern towns and cities. Our communities suffered immeasurable damage. The Government back then simply allowed our northern towns and cities to enter into a state of managed decline. What we see today in the amended charter is no better than that managed decline, which is why we will not be approving it today.