First, I thank so many of my right hon. and hon. Friends for making important contributions to the debate, highlighting constituency concerns, offering a critique of the Chancellor’s strategy and questioning the wisdom of his short-sighted short-termism. To name only a few, that includes my hon. Friends the Members for South Shields (Mrs Lewell-Buck), for Wigan (Lisa Nandy), for Coventry South (Mr Cunningham), for Livingston (Graeme Morrice), for Darlington (Jenny Chapman), for Stalybridge and Hyde (Jonathan Reynolds), for North Tyneside (Mrs Glindon), my right hon. Friend Mr Darling, and my hon. Friends the Members for Inverclyde (Mr McKenzie) and for Liverpool, West Derby (Stephen Twigg). They all made the case very strongly.
The country needed a Budget to deliver a recovery built to last and a recovery that is felt by all. We needed a Budget to ensure that growth is sustained; to support a balanced approach across industrial sectors; to spur on business investment and productivity; to drive exports; and to lift growth in all the regions and nations. We needed a Budget to make sure that a recovery is shared by the whole country, not just the wealthy already at the top.
Yet what we had last Wednesday was a Budget more notable for the reforms it did not contain. There was nothing to tackle long-term youth unemployment, which has doubled since the Government came to power. There was nothing to reform the big six gas and electricity companies, who are hitting families and pensioners with ever-higher energy bills. There was nothing to bring forward real help now with child care costs that are spiralling upwards year after year. There was nothing to drive forward the infrastructure investment that we so urgently need and nothing to address the wages crisis leaving the typical working person £1,600 worse off than they were in 2010. There was not even a mention by the Chancellor of the cost of living crisis, or even a passing reference to it in the 120 pages of the Budget Red Book. Instead, it fell to the Office for Budget Responsibility to spell out the realities to the British people: you will be worse off at the coming election than you were back in 2010—and that is official.
What sort of Budget was it? It was a Budget attempting to get the Government from here to election day, rather than to entrench, extend and enhance a recovery for all.
That is why we had a few small give-aways and that patronising little pat on the head for hard-working people to do more of the things they enjoy—and was it not interesting to see the Chancellor looking so authentic playing bingo earlier today? What a great offer from the Chancellor: buy 300 pints of beer and get one free. They give a little with one hand, but take away so much more with the other.
Amazingly, the Chancellor did not mention VAT at 20%, the granny tax, the cuts to child benefit and to tax credits, or the 2 million working people who have been drawn into the 40p tax band since the Government came to office. He also did not mention the very generous tax cut for millionaires, or the deal he struck with the big banks to water down the bank levy even further—a secret tax cut for the banks that we will be voting against tonight.
There is a crisis out there in the country. The Prime Minister once said:
“Helping with the cost of living. That is what matters most of all.”
Whatever happened to that promise? Britain needed a Budget for big changes, but the Chancellor was busy dealing with the small change, the new £1 coin modelled on the threepenny bit. Of course, as the right hon. Gentleman is the heir to the Osborne baronetcy, perhaps it is no surprise that he has such an emotional attachment to old money.
Back in the real world, changing GDP statistics are not yet felt by those on lower or middle incomes, who do not share the Chancellor’s rosy view. They are concerned about job insecurity, zero-hours contracts, escalating rents and bills and frozen incomes, while food banks are increasingly the last resort for those with nowhere left to turn. That is the real Britain that his short-termism is creating.
As my hon. Friend Susan Elan Jones said, young people who want to get ahead are sensing that the odds are stacked against them. They belong to “Generation rent”, ripped off by letting agencies, with the housing market out of reach because Help to Buy has not been matched with the help to build that we need. But because the Chancellor is so focused on showing off his new £1 coin, so focused on his short-term ambitions—[Interruption.] It does not matter if he changes its shape; its value is still shrinking day by day under him. He is failing to take the long-term steps we need to improve this country.
The flexibilities on annuities are welcome in principle, and we look forward to scrutinising the detail in due course. Annuities have failed too many pensioners. We also hope, however, that the Chancellor will address the need for comprehensive advice for those nearing retirement and for reform to go further by capping pension fund charges to stop rip-off fees and improve consumer trust.
Did the Chancellor make that change on annuities for a long-term reason or a short-term one? Is it pure coincidence that the reform will grab hundreds of millions in tax from pensioners years earlier than it would otherwise have come into the Exchequer? Did he really have the long term in mind, or was it a “manoeuvre”, as the IFS calls his tricks, from a Chancellor who will borrow £190 billion more than he said he would?
Although the annuity changes are welcome, it is difficult to escape the feeling that they are being used to distract from the inadequacy of the rest of the Budget. They provide a veneer of long-term reform to an otherwise short-term Budget. The Chancellor dangles the annuities issue as a device to divert attention from his inaction on the cost of living and the reforms we need to build a lasting recovery that is felt by all.
The Chancellor is absolutely desperate for people not to notice the broken promise to balance the books by next year. It turns out that the past three years of economic stagnation will leave the next Government inheriting a budget deficit of £75 billion. It is staggering that the Chancellor had the nerve to claim in his Budget statement that
“as a nation we are getting on top of our debts”.—[Hansard, 19 March 2014; Vol. 577, c. 781.]
The Chancellor’s neglect of economic growth has added a third to the national debt, which is now over £1.2 trillion. He promised to stop adding to the debt, but he has borrowed more in four years than the previous Government did in 13 years.
That is why my right hon. Friend the Leader of the Opposition called for a cap on structural welfare reform in June last year. Yes, we need to be tough on welfare inflation, but we also have to be tough on the causes of welfare inflation, tackling low wages and rising rents and helping to get the long-term unemployed off benefits and back into work. That is the way to ensure that we get the current budget back into surplus as soon as possible.
The Chancellor should be confronting the causes of falling revenues and rising costs for taxpayers, but he has form when it comes to bending the rules to make it appear that progress is being made. In this Budget, again, there are some extremely dodgy accounting tricks used by this master of prestidigitation: treating a forecast of worsening public sector pension costs as an opportunity to spend more money; banking future tax revenues on the basis of what the OBR called “particularly uncertain” behavioural assumptions; committing to spending billions extra on the basis of cuts to services while refusing to say where the axe will fall; and inventing revenues from tackling avoidance even though the Swiss tax deal has delivered only a quarter of what he originally promised. The IFS calls these the Chancellor’s “manoeuvres” which he will keep on repeating—a few give-aways inadequately funded by unspecified funding cuts.
We are beginning to hear that the Chancellor and his outriders are on manoeuvres in other ways too. He and the Chief Secretary to the Treasury have an eye on their personal advance to the top of their parties—believe it or not. In fact, the Chief Secretary is on odds of 14:1 to take over the Liberal Democrats after the next general election. There they sit, right there: one a zealous champion of right-wing Conservatism and the other the Chancellor of the Exchequer. No wonder the public are not getting a look-in. We needed a Budget to lock in the recovery, but all we got was a Budget designed to lock out the Chancellor’s rivals for the leadership of the Conservative party.
The Government are not ensuring that we have a sustainable recovery. The reason the Chancellor is being forced to address a growing savings crisis is that, as the
OBR says, growth might slow down again when consumer savings run dry—and it predicts that savings will be depleted even more quickly after the Budget measures are factored in. Exports will not contribute a thing to growth for the next five years, according to the OBR. A Conservative Government will certainly not invest in a pro-growth approach; they do not even acknowledge that productivity is a problem that has been emerging in recent years. Why are they not helping small and medium-sized businesses with a cut in business rates rather than making yet another cut in corporation tax that benefits only 2% of British businesses? Their short-term chopping and changing on renewables, on investment allowances and on the carbon price floor are all symptoms of a fickle and inconsistent Treasury governed by political impulse. We finally have some growth not because of this Chancellor, but despite this Chancellor.
Britain needed a Budget for the long term—long-term recovery, long-term stability, and long-term growth—but Britain got a Budget for the short term from a part-time Chancellor more preoccupied with his party’s recovery than with building Britain’s recovery. Britain deserves better.