Debate resumed (Order,
Question again proposed,
(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
Order. Before the right hon. Gentleman develops his speech, may I gently say to those Members who—unaccountably—are leaving the Chamber before the oratorical fireworks the Foreign Secretary will volunteer that it would be greatly appreciated if they could do so quickly and quietly, so that we can proceed with the debate and the right hon. Gentleman can enjoy the certainly quiet and even possibly—if he is lucky—respectful audience that he seeks.
As I was saying before your kind advice to Members, Mr Speaker, it is right that at this pivotal and exciting moment in our international economic relations, not just with the EU but of course with the 93% of the world that does not live in the EU—shortly to be 94%—that I should be the first Foreign Secretary in more than 10 years to open a Budget debate. I do so with pride, because this is a Budget that will sustain the momentum of what is already one of the fastest growing economies in the west, with unemployment at its lowest for 11 years, the stock market 1,000 points higher than it was on
I want to make a tiny bit of progress. I will give way many times, but let me get to the end of my second sentence—more people in work than ever before. This is a Budget that continues and enables the biggest programme of infrastructure investment this country has seen since Victorian times. It offers our young people the funding and technical qualifications to enable them to realise their full potential. As Britain prepares for re-entry, as I call it, into the global economy and for forging new relationships and partnerships around the world, the Budget—
As the right hon. Gentleman well knows, we manage to run a world-class network—the most developed diplomatic network in the world—on approximately two thirds of the budget that the French spend, and we will continue to exercise the greatest prudence in managing our budget. I am fortified in that by the support that I have from the current Chancellor of the Exchequer, who was, of course, my predecessor in office. It is thanks to the Chancellor’s wisdom in his Budget that young Britons will be able to compete with confidence.
This is a Budget for global Britain. It is this Government’s argument not only that Britain is more outward facing by history and by instinct than any comparable economy, but that its global character is profoundly in the interests of the British people. A truly global Britain is a prosperous Britain, and it is Britain’s engagement with the world that means this country plays an extraordinary and indispensable role in the security, stability and prosperity of the world.
Specifically on the issue of global Britain and our new trading relationship, does my right hon. Friend acknowledge that one of the ultimate ways in which we could project the soft power and prestige of Britain around the globe and promote trade is to recommission a new royal yacht for Her Majesty the Queen as a floating trade mission to be used by industry around the globe in the interest of our nation?
May I say how much I admire my hon. Friend for the indefatigable campaign he is running to create such a vessel? It is my view that it would indeed add greatly to the soft power of this country, which is already very considerable, if we were to have such a vessel, always provided—I know that this is part of his prospectus—that the new Britannia should not be a call on the taxpayer. If it can be done privately, I am sure it will attract overwhelming support.
Order. Why are people making such a noise when the Foreign Secretary is saying things that might be important? [Interruption.] Order. I would like to hear the Foreign Secretary.
I am grateful, Madam Deputy Speaker.
The new royal yacht is one of a number of measures that I am sure this Government will be able to consider. In the meantime, we have before us a Budget that is helping to create the conditions in which this economy can continue to flourish.
The first of these conditions—
If Labour Members will allow me, I shall say a couple more sentences.
The first of the conditions that are essential for the prosperity of global Britain is security. Unlike the Labour party, whose idea of a nuclear deterrent is to send our submarines to sea without a nuclear missile aboard so that the whole nation is literally firing blanks, this Government see the vital importance of maintaining our defences. This Budget therefore provides once again for the United Kingdom to set an example to our European partners by spending 2% of our GDP on our armed forces, thereby giving vital credibility to NATO, which of course serves as the guarantor of the security of all our major trading partners on either side of the Atlantic.
I repeat what I said at the weekend; and I am delighted that the hon. Gentleman was paying attention. I do not believe, by the way, that it will come to that, because we will have no difficulty over the next couple of years in doing a deal that is very much in the interests of both sides. I shall come on to that later.
To get back to the defence of the planet, let me remind Members that we are not only committed not only to transatlantic defences we will also spend £3 billion east of Suez in the Gulf region over the next 10 years. In fact we are reopening and restoring our role east of Suez, arguably for the first time since 1967. We are reopening a naval base in Bahrain, which makes perfect economic sense as well. If Labour Members cared about these things, they would understand that there is an absolute connection between our security and our economic prosperity, because the region of the Gulf—the Opposition probably do not know this—is our largest and fastest-growing export market apart from the EU and the US.
It does not end there either, because we are also committed to the security of the wider world, including Asia. Last year, as the House will know, the Royal Air Force sent Typhoon fighters to Japan, South Korea and Malaysia, proving that Britain remains one of the handful of countries able to deploy air power 7,000 miles from its shores. Soon the Royal Navy will have two giant aircraft carriers, each of them longer than the Palace of Westminster—the biggest warships this country has ever possessed, HMS Queen Elizabeth and HMS Prince of Wales.
Much as I am enjoying the Foreign Secretary’s travelogue, could we get back to the business in hand, which is the Budget? Will he confirm that the Office for Budget Responsibility has said that we are going to see less trade and less economic activity as a result of Brexit, and that we are going to borrow an extra £100 billion as a direct consequence of Brexit?
With great respect, I think we have heard enough of that sort of stuff over the last year or so. It has proved convincingly to be wrong. As I said, the stock market is 1,000 points up. As for the deficit, which the hon. Gentleman mentions, we are bringing it down to below 3% for the first time since 2007—thanks to the prudent management of this country’s finances, and thanks to the Conservative-led Administration who had to take over the catastrophic mess that needed to be cleared up after his party was in office.
I am grateful. May I say how much I support the Government’s commitment to the 2% minimum on defence spending? However, does my right hon. Friend agree that we are going to need every penny of it, given in particular that the Chinese—my right hon. Friend mentioned east of Suez—are seeking to colonise militarily a number of uninhabited atolls in the South China sea, which is destabilising the region? Given that we are signatories to the five power defence arrangements, does he agree that we need to take action on that, and therefore increase the defence budget and not keep it steady where it is?
I am delighted that my hon. Friend makes that point. He reminds me that it was the leader of the Labour party, the current Leader of the Opposition, who said that he did not think this country needed a defence policy at all. I think he said that we do not even need an Army, let alone any spending on the security and stability of the South China seas. I remind my hon. Friend that 25% of the world’s trade goes through the straits of Malacca, so it is more vital than ever that we have a truly global commitment.
I will give way in due course, but I wish to make this point, because I have been asked to return to the Budget. I do so with absolute pleasure, because it is thanks to the careful stewardship of this country’s finances that we are able to deploy not only hard power on the scale that I have mentioned—we are the second biggest military contributor to NATO—but soft power on a scale unmatched by any of our European partners. The BBC, our universities and the British Council, an absolute gem of this country and its culture—an unsung gem, I might add—give the United Kingdom a cultural penumbra across the world that is of massive economic value.
The Foreign Secretary has mentioned the British Council. As he knows, the British Council will no longer receive any funds from the British Government. At the same time, there are continuing pressures on our diplomatic missions around the world as a result of the budget crisis with which the Foreign and Commonwealth Office has had to deal. Can the Foreign Secretary tell us how many additional diplomats will be appointed to increase the FCO’s budget so that it is able to deal with the consequences of Brexit, which is what the Foreign Affairs Committee called for in a recent report?
I have to say that I am deeply disappointed that I finally gave way to the hon. Gentleman, because he has shown the most staggering ignorance of the British Council, of Foreign Office spending and of the success of our diplomatic network. However, I will give him the answer to his question. In response to the challenge and the opportunities that we have, we are increasing our representation: just in our European posts, 50 more diplomats and 25 new trade experts have been recruited. We are expanding a fantastic network, and that is on top of the enormous soft and hard power that we have. As I am sure the House will know, the United Kingdom is the third biggest contributor to development finance in the world, after the United States and the European Union. That is an extraordinary record, of which I think every Member in the House—certainly every member of this Conservative Government —should be proud.
I am terribly sorry; I missed the second half of that question. However, if the assertion was that British diplomacy is in any way falling short, let me say this. I believe that in the last few months we have seen an understanding of what the country wants, and a growing warmth towards our objectives, because they are, after all, shared with our European friends and partners.
As I have said, one of the things that are most admired by our colleagues around the table, not just in Brussels but in the United Nations, the G7 and the G20—all the bodies whose meetings I attend—is the fact that, as they realise, our Government have an extraordinary record of giving development aid. As we sit here now, the Department of my right hon. Friend the Secretary of State for International Development is helping the Pakistani Government to put 6 million girls through school in the Punjab alone. I think everyone appreciates that that is the best way of promoting economic growth, curbing infant mortality and reducing the pressures of a growing population.
We do not spend our aid budget—0.7% of gross national income—just because that is the right thing to do, although surely it is morally the right thing to do. I am not embarrassed to say that it is also the best way of promoting the development of the economies concerned, and thereby spurring the growth of our export markets. In that sense, a global Britain—[Interruption.] I did not think Labour Members would like that, because they are not interested in any policy that is so obviously of economic benefit to the country, but that is one of the reasons we are doing this. I speak as a defender of, and a believer in, globalisation, because millions of British people in our country—tens of millions, indeed—depend for their jobs and their livelihoods on the benign force of global free trade, which in turn requires safe and open shipping lanes, clear rules and effective institutions. None of that can be taken for granted.
In the context of global free trade and, in particular, the judgment of the international financial markets, does the Foreign Secretary not accept that since
One would have thought that they would learn. One would have thought that the merchants of this kind of thing would have understood that there is no point in continually standing up and running our country down when, in fact, we are back up at number five. We have seen record investment in the United Kingdom, and we continue to see that the fundamentals of the British economy are strong and getting stronger.
I will in 10 seconds.
One of the reasons for that is the active role that we play in protecting and insisting on the rules-based international order. And with that, I give way to my hon. Friend.
My right hon. Friend talks of the importance of the development budget and what it brings to the United Kingdom. Will he at least accept that there is an issue over how that money is invested in, for instance, the British Council, and, indeed, cross-invested in elements of his budget? Will he accept that that policy can only be applied to the developing world, that it is rather more important for him to have the tools to present global Britain across the whole world, and that the policy should not be constrained by the source of the expenditure?
My hon. Friend speaks with great wisdom and authority. I know that the Foreign Affairs Committee, which he chairs, has made some useful recommendations on how we can maximise our overseas spending, and co-ordinate it so that it helps to deliver not only our security but our economic objectives. I totally accept that point.
In the pursuit of the system that we want to see, our diplomats and intelligence officers and our serving men and women, backed up by the Department for International Development, are striving every day to preserve the essentials of the rule-based order, thereby helping to protect jobs and the safety of our constituents here in the United Kingdom.
Let me just conclude my thought about trade. Back in 1990, about 37% of our fellow human beings world wide lived in absolute poverty. Today, that figure has fallen to less than 10%, which is all the more remarkable when we consider that the world population has risen by 1.8 billion in the interim. That dramatic fall in poverty, unparalleled in history, coincided with the biggest expansion of free trade and open markets that the world has ever seen. Conservative Members believe in that policy implicitly.
I think that Mr Howarth will agree with me when I say that the rules-based international order which we uphold in global Britain is an overwhelming benefit for the world as a whole.
Of course I agree with the Foreign Secretary. It is just a pity that on some occasions he does not seem to project that view when he travels abroad—but that is another problem.
A moment ago, when my hon. Friend Mike Gapes asked him some questions, the Foreign Secretary dismissed them as ignorant. When the Chair of the Foreign Affairs Committee, Crispin Blunt, asked him exactly the same questions, he agreed with his hon. Friend. He cannot be right in both cases.
With great trepidation, I must correct the right hon. Gentleman. We travelled abroad together and both spoke the same sort of language at the time. Alas, Mike Gapes revealed the profoundest misunderstanding—let me put it no higher than that—of the exact state of the British Council’s finances. That was regrettable and worth correcting.
Thanks to my right hon. Friend the Chancellor, we are able to continue to support an active global Britain through the Budget, but there is of course much more to be done. Once we leave the EU, the Government will—we will all—regain a power that this country has not been able to deploy for 44 years, and that is the ability to conclude free trade agreements. The first and most important of those deals will be with our friends and partners in the EU. As the Prime Minister has repeatedly said, we are leaving the EU but we are not leaving Europe. To those who seriously doubt that we can pull it off in the next two years, let me remind them of the most essential point—that deal is profoundly in the interests of our friends and partners on the other side of the channel, who have a massive net balance of trade with us. They are optimistic. They are determined. I sometimes wish that we could have a little more of the same spirit from the Labour party.
Perhaps the hon. Gentleman will now say that he is abandoning his gloomadon-popping and that he is going to come up with something supportive of the British negotiating position.
I am going to seek to support the Foreign Secretary’s getting back to the question of the Budget. He talks about trade being increased in future—as a result of Brexit, I presume. Does he therefore disagree with the view of the independent, Tory-created Office for Budget Responsibility that trade will be reduced as a result of our leaving the EU?
I must respectfully say to the hon. Gentleman that, again, he is being too pessimistic. If we look at the UK’s trade with the rest of the EU over the past 20 years, regrettably we see that it has been declining as a proportion of our exports. I would like to see it increasing again—why not?—but I would also like to see my right hon. Friend the Secretary of State for International Trade, who I am delighted to see sitting next to me, doing those free trade deals around the world. As the House will know, there is massive excitement and enthusiasm among our global partners to do just that. There is literally a queue of countries that want to do significant and substantial free trade deals.
Does the Foreign Secretary agree with the Select Committee on Foreign Affairs, which just yesterday said:
“The possibility of ‘no deal’ is real enough to” justify planning for it and that not to plan would be a mistake and constitute a serious “dereliction of duty” by the present Administration. That is your Foreign Affairs Select Committee.
Madam Deputy Speaker, thank you. If I may, I will remind the hon. Lady of my optimism. I urge Labour Members to contain their pessimism. They asked me to name the countries that wish to do free trade deals. There are dozens. They have heard what the United States of America wants to do and that will be hugely in the interests of every part of this country. Right hon. and hon. Members may not know this, but at the moment the United States still has an embargo not only on British beef but on Scottish haggis. I do not know whether members of the Scottish parties agree with that, but there is no way of liberating the haggis to travel across the Atlantic again unless we do a free trade deal with the United States.
I appreciate the Foreign Secretary’s concern for Scotland’s exports. Does he still believe that a pound spent in Croydon is of far more value to the country than a pound spent in Strathclyde?
What I certainly believe is that a free trade deal with the United States and free trade deals for this country would be of profound benefit to the whole of the United Kingdom.
Since the hon. Gentleman has interrupted me, let me remind him that today is Commonwealth day, which provides an opportunity for us all to celebrate that remarkable institution which embraces one third of humanity and now includes some of the fastest-growing economies in the world—a free association of 52 countries, spread across every continent and dedicated to advancing the values that we share. I am proud to say that Britain will host the Commonwealth Heads of Government summit next year. Although we may not be able to sign free trade deals with our Commonwealth friends now, we can see them in outline and taking shape. Let me say this to our friends from the Scottish nationalist party, who seem so determined to wrench themselves out of the UK, even though they had a decisive referendum on the matter, as Members will recall, only a couple of years ago: never mind haggis; Scotch whisky exports to the Indian whisky market, a potentially huge market—the Indian thirst for whisky is colossal—account for only 4% of Indian whisky consumption. That is because at the moment, without a free trade deal, the Indian Government impose a 150% tariff on Scotch whisky.
Imagine a free trade deal that lifted the exports of Scotch to India by only a few per cent.—to, say, 6% or 10%. Dare to dream that Scotch whisky, which everyone in the House would concede is the original and authentic whisky, were slaking just 15% of that gigantic Indian thirst for whisky. We would be talking about an increase in profits for the Scotch whisky industry, for this country and, above all, for Scotland every year running into hundreds of millions of pounds. That means jobs, growth and investment for Scotland. It means the prosperity that comes with having a truly global outlook, which unfortunately Members on the Opposition Benches signally seem to lack.
Let me make some progress.
In that global marketplace, this Budget will allow young Britons to compete with the best by investing in the talents and skills of the rising generation—more than a hundred new free schools provided for; a thousand more PhD places specifically for science, technology, engineering and mathematics; and another £270 million for biotech, robotics and electric vehicles. There will be another £16 million for 5G mobile technology. That is building on and fostering a global reputation for innovation. Last year, we were ranked the third most innovative country in the world. We were one place above America, 7 places ahead of Germany, 15 higher than France, and fully 21 places above China. That is the measure of the extraordinary intellectual fecundity of this country.
Cambridge University alone has produced more Nobel laureates than every university in Russia and China added together and multiplied by two. When those breakthroughs take place, when that spark of innovation takes place, we foster it, we encourage it and we give business every possible incentive to turn those brilliant ideas into world-beating products.
From next month, my right hon. Friend the Chancellor will cut corporation tax to 19%, and it will be 17% by 2020—the lowest of any G20 economy. And it is by creating the right business environment—by investing in infrastructure, skills, housing and technology—that we are not only building a platform for sustainable growth but creating a launch pad for the most extraordinary exports. As I never tire of telling my friends, we export tea to China and cake—chocolate cake—to France; we export bicycles, I am proud to say, made in London to Holland; we export TV aerials to South Korea, and boomerangs to Australia, I believe; I think we have at least once in the past exported sand to Saudi Arabia; and Nigel Farage to America, I am delighted to say.
On Friday—[Interruption.] Opposition Members mock, and they may mock the entrepreneurial spirit and the exporting drive and originality of this country—[Interruption.]—but let me tell them that on Friday—
I will conclude with these thoughts.
Last Friday, I was in my constituency of Uxbridge and South Ruislip, and I am proud to say that I visited a business on a backstreet in Uxbridge that has more or less cornered the market in manufacturing the fancy display cabinets used to sell delicacies such as Toblerone in every airport in Saudi Arabia, and it is expanding. Thanks to the ingenuity and enterprise of that business, if we go to a Saudi Arabian airport and buy a Toblerone, we will buy it over a counter made in Uxbridge.
Given the ingenuity that this nation is showing, I believe—
I will not give way.
I believe that we have every reason to be confident in what we can achieve together, as one United Kingdom. This is a nation that in the last 300 years has become prosperous and successful precisely because it adopted a uniquely global outlook—active, engaged, and trading with every corner of the planet—not just for the benefit of the people of this country, but, I dare to say it, for the benefit of the entire world. This is once again the course on which we are now embarked, and this Budget will help us to fulfil our potential as a truly global Britain.
Let me start by saying that, like many other Members, it was my privilege this afternoon to attend the service of celebration for the Commonwealth at Westminster Abbey, in the presence of Her Majesty the Queen. In the context of tonight’s debate, it was a reminder of the powerful and historical ties that Britain enjoys all over the world; we are a country that will always face outwards and never turn in on ourselves, and, like the Secretary of State, I hope that at next year’s service we will have another member of the Commonwealth present, as a democratic Gambia completes the process of re-admission.
I thank the Secretary of State for opening this evening’s debate on the Budget and Britain’s place in the world. It is an issue of vital importance, and yet one that, it is fair to say, has not been centre stage in the five days of the debate on the Budget. If someone had told us last summer that going into article 50 week the Prime Minister and the Chancellor would be at each other’s throats, at war through the media, and engaged in a desperate blame game, while the Secretary of State for Foreign and Commonwealth Affairs would be sent into the television studios to act for the Government as the voice of calm and unity, no one would have believed them. However, if this is indeed to be his new role—if he is going to be the new Willie Whitelaw figure, or, dare I say it, the new John Prescott—I congratulate him and wish him the very best of luck in the future.
Of course, there will be some unkind souls who look at the row between No. 10 and No. 11 and think it is exactly what the Secretary of State needed this weekend. In their cynical minds, had it not been for that row, much more attention would have focused on Sunday’s real heavyweight contest, the one the public really wanted to see explode, the one between the two Tory blond heavyweights: Hezza versus Bozza; Tarzan versus the Zip-Glider; the Dog-Killer versus the Dave-Slayer. We were denied a true fight, but we were left with these immortal words from Lord Heseltine:
“When I listen to Boris…he has turned the art of political communication into a science” of using
“waffle charm, delay, anything to stop actually answering questions.”
In the rest of my speech, I intend to ask some very straightforward questions on the Budget and Britain’s place in the world, and I hope that the Secretary of State will be able to answer them without waffle or delay, and with no more charm than he feels is absolutely necessary.
It is striking that we are here to debate a Budget that has almost nothing to say about Britain’s place in the world, and with even less to offer for it. I am sure that we could all have predicted some of the rhetoric that we have heard from the right hon. Gentleman tonight about re-entry into world markets, a truly global Britain and an active global Britain. I predict that we will hear more about “brand Britannia” and terms such as “dynamic”, “agile”, “cutting edge”, “global powers”, “global reach” and “global influence”, and about the yacht and exporting boomerangs and so forth—but the question is this: what is the strategy for achieving all that ambition, and how does the Budget provide the resources to back it up? So far, we have seen no evidence of either.
It is not enough simply to want a relationship with Europe that has all of the benefits and none of the costs and to be a leading global power at the same time, or to say, like Tinkerbell, that all we have to do to make it happen is believe that it is possible. Indeed, the right hon. Gentleman almost seems to be implying that if we do not believe, or if we ask awkward questions, somehow these things will not happen, and that fairies will start falling from the skies.
It has been said in this debate—and no doubt it will be said again—that the Government are meeting their commitments to spend both 2% of GDP on defence and 0.7% on development, but while these seem like clear commitments, when we scratch the surface there are many unanswered questions, about how funding is split between the Foreign and Commonwealth Office, the Ministry of Defence and the Department for International Development, and about how, where, why and on what this money is actually spent.
It seems likely that a large part of the Foreign Office budget over the next few years will come from funding streams that are nominally shared across Departments, most of them with blandly unobjectionable names such as the Conflict, Stability and Security Fund and the Prosperity Fund. The idea of shared funding is perfectly valid in principle, but we need to know how these funds will be used by the Foreign Office. How much will be classed as “aid” spending, and how much as “defence”, and, for that matter, how much will be classed as both? We need to know why there is so little transparency on this issue, and what kind of oversight there is to make sure that these funds are used responsibly. One might, if one was of a suspicious frame of mind, even conclude that the Government are being wilfully opaque in this matter, but I am sure that the Secretary of State will bristle at the very suggestion, and will want to do all he can to dispel such a thought from the debate.
Of course, the reliance of the Foreign Office—perhaps the over-reliance—on funding from outside its budget settlement is really just symptomatic of a much larger and much more damaging trend under this Government. Unlike defence or overseas aid, our diplomatic service lacks the financial security of a politically or legally binding spending target, and I am sorry to say that it shows. Of the three Departments that share most of the responsibility for “Britain’s place in the world”—the Foreign Office, the Ministry of Defence and the Department for International Development—the FCO’s budget accounts for just 3% of the combined total, despite the fact that it is every bit as essential as the other two.
I am sure the right hon. Gentleman saw the Financial Times on Friday, which highlighted the real change in Departments’ resource budgets between 2016-17 and 2019-20. It is no surprise—there was a great deal of fuss about this—that there has been a cut of 37.2% to Department for Communities and Local Government budgets, but which Department has the largest cut of all? It is the Foreign and Commonwealth Office, which has a minus 38.1% change to its budget. The Under-Secretary of State for Foreign and Commonwealth Affairs, Mr Ellwood may shake his head, and if I am wrong, he should please tell me. I would be interested to see him go into battle with the Financial Times on this matter.
The Department’s budget is already very small, and it comes as no surprise that these cuts have had serious consequences for our standing in the world and for our global reach and influence. To start with, there has been a loss of expertise. We have seen the Government repeatedly being caught by surprise on events of great global significance such as the Arab spring, the crisis in Ukraine and the attempted coup in Turkey. There has been a hollowing out of expertise in these critical areas, not to mention a loss of skilled linguists. If the Secretary of State can tell us what progress has been made on recovering Russian and Arabic language capabilities, for example, I should be very grateful.
My hon. Friend is making a powerful case about the hollowing out of the FCO’s budget. On the question of linguists, has she seen the report on Russia from the Foreign Affairs Committee that we published last week? It describes the lack of expertise in the FCO for looking at Russia. Does she agree with me and the Committee that the FCO needs more resources if we are to confront and understand the problems being caused by Russia’s behaviour towards its neighbours?
It is because I have read that report that I mention Russian language capabilities. In my view, the reports produced by the Foreign Affairs Committee are thoughtful and informative, and I recommend them to the Secretary of State. The Committee has raised a number of flags that need to be carefully considered, because changes are happening to our precious Foreign Office and we are losing capabilities that it will be very difficult to redevelop.
Order. Hon. Members must not object when a Member is polite to someone on the other side of the House. That is being honourable.
That is a rare phenomenon in respect of the hon. Lady, sometimes, Madam Deputy Speaker. On a serious point, is it not only fair to record that those of us who occasionally travelled to central and south America witnessed a shrinking of our footprint and our soft power as the previous Labour Government closed many of the embassies there? We also downgraded the Chevening scholarships. This is something that we now need to review urgently as we go forward post-Brexit.
I am surprised to find myself agreeing with the hon. Gentleman to the extent that I do. It is important that we should stop and have a review. We need to look carefully at the 38% cuts that are being implemented by his Government at this crucial time for Britain. That is the point that I am making in this Budget debate. I believe that these issues need to be seriously addressed, and questions and answers about haggis are not sufficient when it comes to dealing with cuts of 38% to the Foreign and Commonwealth Office.
It is not just language skills that have suffered. Let us consider BBC Monitoring, a vital service that monitors and translates foreign news reports and serves as an indispensable source of intelligence for Government Departments, including the Foreign Office. By transferring the responsibility for its funding from the taxpayer to the BBC itself, the Government have left BBC Monitoring open to cuts, and last year saw the announcement of 96 job losses and the closure of 20% of its posts overseas. Is that responsible behaviour, at a time like this? Cuts such as those will continue to have effects as incalculable as they are far-reaching.
It turns out that what a Government choose to fund, or not to fund, can tell us a great deal more than just the short-term spending priorities of the Government as a whole. For the Foreign Office, those decisions can identify the most basic principles underlying the Government’s foreign policy approach. For perhaps the best example of that, we need look no further than the downgrading of human rights as a priority for the Department. They are now considered far less important than the so-called prosperity agenda— [Interruption.] I hear people saying that that is entirely untrue. Let me pray in aid the permanent secretary to the Foreign and Commonwealth Office, who has said precisely that. That decision has been confirmed as a more or less direct consequence of the cuts imposed by the Government.
“no downgrading of human rights” under his Government. He argued that it was neither in our interests nor in our nature to have what he called a
“foreign policy without a conscience”.
I could not agree more, and he must surely be sharing our disappointment to see a Tory Foreign Secretary and a Tory Prime Minister practically tripping over each other to cosy up to the likes of Donald Trump. We used to think that there were some world leaders who would always unite the opinion of this House, and that Members on both sides would always have the courage to speak out against those who did not share our values. These days, the Government’s values are obscure, to put it politely, beyond being in favour of trade, so the question is not just one of how much the Government are prepared to spend on the world-class diplomatic service that they want, important though that is; it is also a question of what they are prepared to do with the resources that they have.
The hon. Lady is making her points from the Opposition Front Bench, but does she not agree that the Government have made important strides on freedom of religion or belief? They held a conference a few months ago to help to promote those issues, not just in the Commonwealth but globally. As a member of the all-party parliamentary group on international freedom of religion or belief, I really appreciate that sort of action. It is very important, and it should not be downgraded by such talk from the Opposition Benches.
That is to be acknowledged, but we must also look at what is happening within the various missions and at the posts that are being stripped out. Those whose job it was to make contact with human rights activists and with civil society within those countries—[Interruption.] If the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Bournemouth East, wishes to intervene on me, I will have no problem with that. However, if he is not going to intervene, could he just be quiet and let me finish my speech? I would appreciate that.
I want to talk about what our foreign policy is, in essence. Ministers are fond of speaking of the opportunities that leaving the EU could provide. On foreign policy, a fundamental rethink of the Government’s approach could be one of those opportunities, but in fact it is more than that: doing so is an absolute imperative. As the Government start to think—however belatedly—about the kind of relationship they might want with Europe, they should also consider what kind of relationship they want us to have with the rest of the world. In doing so, we need more than just warm words from the Government—we need a plan. Our Foreign Office has been at its very best when it has been allowed in its foreign policy to give proper weight to British values as well as to British interests. I hope that the Secretary of State will look to that legacy and embrace and build on it, rather than undermining it any further. In the more immediate term, we need the Government to start thinking sensibly about Europe as a matter of urgency. We know little more about Ministers’ intentions than that they are prepared to break the British economic model if they feel that that is needed if we do not get a deal.
I heard the Secretary of State say at the weekend that we would be “perfectly okay” if we left the EU without a deal. So why is the Chancellor of the Exchequer briefing that he is going to hoard £60 billion because of Brexit? Perhaps it is to fund the extra £350 million a week that the Secretary of State promised for the national health service. If so, I hope that the Secretary of State has asked the Chancellor about it, because £60 billion would provide three years, three months and one week’s-worth of extra money for the NHS. At the moment, he seems to be doing no more than crossing his fingers and hoping for the best. This is a serious situation. We need clear thinking about our future in Europe and in the wider world, and simply talking about Toblerone display cabinets in Saudi Arabia is not sufficient. We need clear thinking and a clear plan, and we need them without any further delay.
Order. It will be obvious to colleagues that a great many people want to speak and, although we have plenty of time, I am going to set a time limit immediately for Back-Bench speakers. Otherwise, the people who speak at the beginning will take three times as long as the people who speak at the end, which is what happened last week. So we will start with a time limit of eight minutes.
I totally agree with the Foreign Secretary that today—at this moment—we are presented with a massive opportunity to create a new form of global Britain. I particularly agree with his points about Britain’s soft power. Just to clarify the point about the British Council, the figures actually show that there will be a 43% rise in FCO funding by 2020, reflecting the seriousness with which we take the opportunities for Britain’s soft power.
The opportunities for global Britain are of particular importance to my constituents and to people in the Black country part of the west midlands. The announcement of the midlands engine strategy in the Budget is a significant moment for the people of the Black country. The Budget sets aside £55 million of new investment for the area, building on the significant investment made in the previous Parliament when, through the city deals, £1 million was invested in an advanced science, technology and engineering centre at Halesowen College. Significant progress has already been made in investment in the Black country, and the area is one of the UK’s fastest growing sub-regions, with more jobs and better skills, but we need to do more.
As we build the global Britain that the Foreign Secretary talked about, areas such as the Black country face five key challenges. The first is skills. Even though the number of young people not in education or training in the Black country is below the national average—we have made significant progress—skills gaps still exist in the area that I represent. I welcome the £7 million of new capital investment for further education that was announced in the Budget as part of the midlands engine strategy, but more is needed for investment in technical skills and to tackle historical levels of educational underperformance in the Black country and the wider west midlands. Skills gaps hold the Black country back as we seek to develop this global Britain.
The second challenge is transport and infrastructure, where historical under-investment is also holding the west midlands back. I welcome the announcement of £25 million to tackle congestion as part of the midlands engine, and we need a longer-term focus on the potential benefits of HS2, the development of Birmingham airport, and our rail and road network across the Black country and the west midlands.
The third big challenge addressed in the Budget, and one that we need to consider in the long term, is innovation rates. The Black country is becoming a world leader in, for example, the automotive, aerospace and advanced manufacturing sectors, with products such as Bugatti brakes and even the chairs used on “Match of the Day” being produced in the area, which is developing a worldwide reputation for design and product manufacturing.
The fourth challenge, which is a cumulative impact of the others, is relatively low productivity. It is a puzzle that we are yet to solve, and we need to tackle it by approaching it from all angles: improving skills, improving education at primary and secondary levels, and investing in transport infrastructure and the wider social realm.
The fifth challenge for the Black country is exporting, inward investment, and the potential opportunities of Brexit. With a 49% increase in exports since 2010, the west midlands’ export performance has been excellent in recent times and better than many other UK regions. We must be positive about the future and position the west midlands front and centre in our global trade plans to take advantage of the opportunities presented by Brexit. That is why I welcome, as part of the midlands engine strategy, the move towards the creation of a midlands trade and investment programme to develop markets to which the west midlands does not currently export. It has a good record in China and the United States, but we have the opportunity to open up and exploit new markets in many other countries.
Does my hon. Friend agree that foreign language skills are one of the most important things that we lack? That is intimately associated with our relatively poor export performance in the past, and we need better learning and teaching of foreign languages in order to penetrate those new markets.
My hon. Friend is absolutely right. Foreign languages are one key component, but the challenge in areas such as the Black country is to raise education performance levels more broadly. Standards need improving at primary and secondary levels, and we need to focus on technical education. The west midlands must face outwards and take advantage of the global opportunities that are currently presented.
Critically, the Black country and the west midlands are too often talked about as though they are a relic of Britain’s industrial past, but that is wrong. The Black country is increasingly in the vanguard of our industrial future. It is a leading player in high-tech manufacturing and has an increasingly competitive, productive economy. We do not need to focus on managing decline. The Black country is not some kind of industrial museum to look back on with fondness as part of Britain’s industrial greatness. The area is becoming a world leader in critical parts of our economic future.
As we take a forward view of global Britain, it is important not to focus just on London and the south-east; part of our long-term strategy should be the rebalancing of the economy. It is taking a long time, but we have made a lot of progress towards achieving that rebalancing. We must redouble that effort, invest in the appropriate skills and in the future of the businesses in the west midlands, and take away the barriers to growth, which include our transport infrastructure. It is simply too hard to get around the Black country and the wider west midlands, and the evidence is that transport bottlenecks make it increasingly difficult for the west midlands to realise its economic potential and achieve productive growth. As I said, we are not managing decline or nostalgically looking back to a mythical golden age; we seek to embrace the future of the Black country and of our young people in a global Britain.
It is a pleasure to speak in this Budget debate. I had the same pleasure last year, and I appreciate the opportunity. I want to talk about quite a few things. The Foreign Secretary talked about global Britain, but we are in fact looking at a broken Brexit Britain. We are looking at a package of unfairness not only in the Budget, but in the austerity that the Government have followed for years. Ordinary working people have not been supported by this Government or the previous Government.
The UK Government have their head in the sand, and they have it there for two good reasons. First, they do not have the faintest idea of what Brexit will actually mean. What they do know about the outcome of Brexit is that it will be bad, so they do not want to tell us what they know. Secondly, the Government talk all the time about ordinary working people and how things will impact on the ordinary working person, but most Conservative Members—or at least too many of them—do not actually have a clue about what it is like to be an ordinary working person. They do not have a clue what it is like to push a trolley around the supermarket and feel inflation going up, as it has done over the past three months. Inflation has gone up to its highest level in ages during the past three months. People are seeing a 15% increase in the price of butter and a 6% increase in the price of tea. Those things have a real impact on families’ budgets, because they are everyday essentials which people regularly buy, so when they go up in price people are disproportionately affected. In Scotland, 48.4% of adults have less than £100 in savings. Across the UK families owe, on average, £2,770—that is the debt that families have. This is a really tight situation for people. People are struggling; they are not able to save and they have levels of debt.
People who have had a mortgage in the past eight years have never seen interest rates above 0.5%. Therefore, if the Bank of England decides to raise interest rates because of the weakness of the pound, which is not inconceivable, these people will be hit by increased mortgage costs that they did not expect, because they had never seen such increases before and so have not planned for them. This Government are doing nothing to help the budgets of these people. I spoke to some of my friends about how they feel the economy hits them. Too many of them told me, “I lie awake at night worrying because I have no savings. What if my partner gets laid off? We have no money. We have no slack in our budgets.” With rising inflation, because of Brexit, and the fact that the UK Government are not willing to take action now to combat it, people’s budgets are going to be squeezed even more tightly.
We have also seen wage stagnation as part of this package of unfairness. In 2022, average earnings will be no higher than they were in 2007. The UK Government need to take action—they need to be spending—to counter that and to make sure that people’s everyday budgets and everyday family incomes balance.
Just to put this into perspective, the Office for Budget Responsibility’s forecasts are for inflation to be 2.6%, then 2.4% and then coming down to 2%. Although that is higher than we would like—it is above the target—it is not the kind of inflation we have seen in the past under other Governments. The hon. Lady is talking about a fiscal reflation—throwing more money into the economy—but that would increase inflation.
I am talking about putting more money into infrastructure, things that actually create jobs, and research and development. What we have seen in the UK is pitiful productivity. In Scotland, we are beginning to counter that, as our productivity has grown much faster than the level in the rest of the UK. That is partly because of the fiscal stimulus given by the infrastructure packages we have put in place, which has allowed us to make a difference to productivity. If the UK Government intend to take us out of the single market and to make it more difficult for us to have trading relationships and to export, they will need to make sure that they are increasing productivity to counter that, otherwise we will face a real issue on the lack of wage growth.
The Chancellor stood up and said, “It is fabulous what we are doing for the oil and gas industry. We are going to make it easier for oil and gas companies to transfer late-life assets.” This is really important, because the oil and gas industry will continue to take oil out of the ground for a very long time to come. Some fields are nearing maturity and may be operated by one of the big operators, and we need to make it easier for those assets to be transferred to some of the newer, smaller operators so that they can “sweat” them: get the maximum economic recovery out of those assets. My problem with what the UK Government announced is that they announced it last year and did not do it; they announced this exact thing on late-life assets last year and it has not been done, so I hope they will forgive me for not dancing around in excitement at the fact that there is now going to be a panel of experts to look at this thing that the Government announced last year—it would have been nice if they had actually done it back then.
I want to mention the £350 million of extra money that is going to Scotland. It was kind of the Chancellor to stand up and say, “We are giving £350 million of extra money to Scotland”, but this is rubbish—it is not what is happening at all. Because of how the Barnett formula works, they are spending more money in England and Wales, and it just so happens that Scotland gets an extra slice as a result. The Chancellor cannot pretend that he is giving lots of money to Scotland while asking Departments to make 6% cuts and in the face of continuing austerity. He cannot stand up and say that the Government are giving Scotland all this money, given that we have had a £2.9 billion real-terms cut over the decade from 2010. It is ridiculous that we are in this situation.
I wish to touch on a couple of things that the Foreign Secretary said. In response to an intervention, he talked about falling back on the WTO rules and how it would be “perfectly okay”. I am interested to see the analysis that he has done on that, because I do not think it would be perfectly okay. I think he is guessing, imagining, inventing—[Interruption.] He is hoping with his fingers crossed, as my hon. Friend Brendan O'Hara says. I say that because falling back on WTO rules and most favoured nation status is a harsh reality for our exporters, particularly for our small and medium-sized enterprises.
On SMEs, the Foreign Secretary said that people on my side of the House were mocking entrepreneurial spirit. He is from the party that has made changes to the national insurance contributions of the self-employed and he is accusing us of mocking entrepreneurial spirit! We are supporting entrepreneurs. We are supporting those people in small businesses, particularly the incredible numbers of women and people on lower incomes who have started businesses and taken on the mantle of self-employment. This is really important. These people have decided to become self-employed and now this Government are taxing that aspiration.
This Budget has dodged far too many of the important issues. It has not spoken about the real fallout from Brexit. The Government are unwilling to give the OBR any real information, and the improper forecasts that they have therefore been provided with have allowed them to dodge those issues. Despite all the comments in the run-up to it, this Budget has been shambolic. It has dodged the issues, taxed aspiration and done absolutely nothing for the oil and gas industry beyond what was promised last year. This is not a Budget that is promising for Scotland. It has increased the package of unfairness and consigned ordinary working people to a long-term lack of prosperity.
May I just say that we will introduce a six-minute limit, so if Members could stay tight to that, we will be able to get everybody in?
It is a great pleasure to follow Kirsty Blackman, although I did not agree with a great deal of what she said. None the less, Scots have played such a valuable role in shaping the foreign affairs of the United Kingdom over such a long, protracted period, and, through that, those of the fifth largest economy of the world and, through that, the affairs of the world. I trust and hope they will continue to do so for many, many years to come.
It will not come as a great surprise to you, Mr Deputy Speaker to learn that I am not much of a mountaineer, but I have been told by those who are that the most dangerous point in climbing any mountain is after one has made the stupendous effort and reached the summit, and one then begins the so-called “easy descent”. In fiscal terms, after nine long and difficult years, the House finds itself nearing the summit. The struggle to rein in public debt is an immense and ongoing undertaking, but, according to the OBR, public sector net debt as a percentage of GDP peaks in 2017-18—this coming year—and in every successive year thereafter it falls. Whatever the very real temptations, encouraged by some one-off factors this year, to slow further the pace on deficit reduction, we owe it to future generations to finish what we have begun.
We are now in our eighth year without a recession. Unlike others, Conservatives do not pretend that we can abolish the business cycle. It is critical to our domestic economy and to our standing in the world that we rebuild our financial firepower so that we can tackle anything that comes our way. The 2% of GDP on defence and 0.7% on overseas aid, to which my right hon. Friend the Foreign Secretary referred, give us great hard and, indeed, soft power, but our allies need to know that our commitments are real and sustainable.
It was frustrating to hear the passionate words of Emily Thornberry. She bemoans efficiencies being made in the public sector, without recognising, in this Budget debate, how critical it is that we bring down the deficit and show our ability to act credibly abroad and to achieve long-term sustainable finances.
With our national debt topping out at some £1.8 trillion, our annual interest payments also represent the entire combined annual spend on defence and policing, as the Chancellor pointed out. That is why the proper, sensible husbanding of our resources is critical. Despite the huge increase in the national debt, we are currently spending the same on interest as we were 15 years ago. With the base rate bound to rise—something on which I agree with the hon. Member for Aberdeen North—that is not sustainable in the long term. The risk is compounded by demographic shifts, notably the retirement of the baby-boomer generation. Demographic changes are projected to increase the cost of the state pension by 40% and to drive up health and social care spending.
I recognise the efforts being made to enhance our productivity with T-levels; the half billion of extra spending on technical education for 16 to 19-year-olds; and the £300 million commitment to support the brightest research talent, including 1,000 new PhD places in science, technology, engineering and maths. Combined with transport spending, that will help to narrow our relative productivity gap.
Education is the key. I have literally studied line by line the financial projections of some of the schools in my Horsham constituency, so I can assure the Chancellor that, after years of being relatively underfunded, they run an extremely efficient and tight ship, with staffing costs often accounting for 85% of total spend. Schools in historically well-funded areas have much to learn from schools such as those in West Sussex and could potentially do more than is currently being asked of them. I am grateful for the Secretary of State for Education’s commitment to look carefully, as part of the fair funding consultation, at the minimum funding required by schools to deliver the standards and curriculum that students, and we, have every right to expect.
National insurance contributions have been much discussed in the media. I welcome the Taylor review, and feel sure that later this year his report will outline many ways in which the Government can support the genuinely self-employed and clarify the position of the virtually employed. The self-employed population is higher than ever before and steadily growing. It is a simple matter of maths that such growth undermines the tax base on which future generations will rely.
The Government are introducing a package of measures: the changes to class 2 and class 4 NICs and the enhancement to pension provision for the self-employed are coming in over the next two years and cannot be viewed in isolation. Some 60% of those affected by the changes to NICs will gain. For those at the higher end of the earnings bracket, the impact is capped at around £600 a year, and the average annual additional contribution is £240 a year. Meanwhile, self-employed pension benefits will be enhanced by £1,800 a year—a benefit which, if purchased in the open market, would cost some £50,000.
Those measures will help to support the self-employed in retirement. They are progressive, while still ensuring that being self-employed has tax advantages. Of course we will support the entrepreneurs who will help to drive our country forward in the new post-BREXIT environment, but by helping them to meet the costs of retirement while also narrowing the potential reduction in our tax base, these are proportionate, long-term steps in a Budget focused on the long-term financial health of the country, which I commend.
The test of the Budget should be whether it tackles the big challenges facing our country now and in future. I shall focus on three of those challenges: the need for support for business to alleviate the inevitable uncertainty that will prevail throughout the Brexit negotiations; the need to tackle the inequality that is dividing our society more each and every day; and the need to provide sustainable funding to build a new integrated NHS and care system that can cope with ever-increasing demand. On all those counts, the Budget is a missed opportunity.
The increases to business rates and national insurance contributions for the self-employed have raised questions about the Government’s competence, integrity and business credentials. Even David Cameron has expressed concern that a clear Tory manifesto commitment has been broken. At a time when Brexit is causing so much uncertainty for business, it is unforgivable that the Government should make the situation worse, not better. Alongside that, the Budget failed to identify any measures to begin the process of mitigating the impact of the UK no longer being a member of the single market. As that is the Government’s stated objective, they have a duty to take it fully into account from now on when they introduce measures that will affect business.
Inequality is fuelled by many factors, but wage stagnation is one of the worst. The Government should commit to phasing in a proper living wage over this Parliament, not the bogus living wage they are currently implementing. I propose a register whereby every three years companies would be required to publish their profits and the pay increases they have awarded their staff, from the boardroom to the shop floor. If companies are struggling, or if they are start-ups, it is totally right that job protection, not wage rises, should be a priority. However, if significant profits are being made, it is immoral that workers are not seeing an increase in their pay.
Perhaps the most grotesque symbol of inequality in today’s society is the epidemic of rough sleeping we are seeing in many of our towns and cities. I welcome the Homelessness Reduction Bill and the work of Bob Blackman that made it possible, but it will not solve the problem alone. The Government should have used the Budget to make specific resources available to ensure that local authorities and third-sector organisations can come together to offer people who are sleeping on the streets emergency accommodation and a package of support to enable them to reintegrate into the community. In the longer term, the Chancellor must consider new ways to enable councils and housing associations to access finance so that they can build a mix of social and affordable housing.
On the NHS and social care, I welcome the extra money for social care in the Budget, but the gerrymandering of public money to favour political friends brings the Government into disrepute. The extra money will not change the fact that in the vast majority of local authorities, the eligibility criteria that determine access to publically funded social care mean that people have to deteriorate to a very poor state before they receive any help whatsoever. People whose financial means make them ineligible for funding are all too often not even offered advice and support to choose the right care and support for themselves and their families.
As a former social care Minister, I can testify that successive Governments have been reluctant to tackle the social care funding issue because there is no credible solution that will not require the public to pay more. Unlike the NHS, social care has always been means tested. Higher taxes and/or national insurance, greater individual and family contributions, payments out of inherited estates, and an insurance-based system for social care are all difficult options. Any solution, therefore, must not be a political football, and any work must be done on an all-party basis.
I am sorry to say that the Budget commitment to yet another Green Paper on social care funding matches neither the scale nor the urgency of the challenge. I reject the view of those on the right who argue that the NHS as a system free at the point of use, funded by general taxation, cannot be sustained. It must be sustained as a non-negotiable and enduring statement of unique British values.
The Government rightly talk about the importance of shifting the focus of public services to prevention and early intervention, yet their slash-and-burn approach to council funding is having the opposite effect. My local authority, Bury, will be required to make cuts of approximately £30 million between 2017 and 2020, and the situation is made worse by an unfair local government funding formula. If Bury were funded at the English average, it would equate to an additional £9 million per year. The reality is that Bury and local authorities are having to shut preventive and early intervention services rather than invest in them.
The Budget exposes, once again, the illusion that the Government have been economically competent or successful. Not only have they failed using their own measures of success—deficit reduction and borrowing—but they have failed to address low pay and the rising cost of living for too many of our fellow citizens. They have also failed to address the growing under-employment of young people, the impact of benefit sanctions, child poverty and cuts to grassroots and frontline public services, all of which are creating a deeply divided society—a division that both contributed to and was reflected in the Brexit vote.
The incompetence of this Budget has brought the Prime Minister’s honeymoon period to an end. She can talk as much as she likes about standing up for working people and those struggling to get on, but unless her Government change course, that will not happen, and furthermore, her legacy will be a deeply divided country, and a party once again viewed by many as the nasty party. That would be both an irony and a tragedy for the first Tory politician with the courage to face up to the reality of her party’s reputation.
It is an honour to follow Mr Lewis, though, in contrast to him, I believe that there is much to praise in this year’s Budget. I was particularly pleased to see the focus on investing in technical skills, school buildings, broadband infrastructure, transport and road infrastructure, and of course the increased funding for social care.
The Chancellor absolutely struck the right tone in outlining the overall state of the British economy. He highlighted the record employment numbers, increasing GDP and wages, and lower debt, while underlining that Government debt remains stubbornly high, at an astonishing £62,000 per household. That is one of the figures that really stood out for me in the Budget speech. Of course, another term for that level of debt is deferred taxation; it has to be paid off at some point, and we need to take responsibility for doing that, rather than leaving it to future generations.
While we are paying off the debt, the reality is that despite all the comments about cuts and all the rhetoric about austerity, Government spending overall is increasing by significant amounts; it was £754 billion last year, versus £716 billion five years ago. In the last five years alone, spending has increased by more than £11 billion on the NHS, £2 billion on overseas aid, £7 billion on transport, £4 billion on education, and £13 billion on welfare and pensions. We may well, and do, disagree on how Government money has been spent, and whether the spending is enough—certain areas have been cut—but the fact cannot be avoided: Government spending has increased by about 9% since the last Labour Government, and it is expected to reach £800 billion by 2018.
The theme of this debate is Britain’s place in the world. It is worth remembering that we are world leaders in many aspects of our economy, including in the pharma industry and precision engineering. We have some of the best universities in the world, and we are one of the world leaders, if not the world leader, in the digital space. At 12.4% of GDP, our digital economy is the largest in the G20—something that we should be immensely proud of and should shout from the rooftops. As the Budget indicated, investing further in digital skills, technology and broadband will enable us to keep that leadership position.
On the subject of changes in the landscape, it is heartening to hear some indication and recognition that perhaps taxes like business rates have had their day—ones based on bricks and mortar, as opposed to clicks and order. We need to change the dynamics of the economy, reflect the fact that the economy has changed, and tax appropriately. I am looking forward to the debate that I am sure that we will have in the House looking at ways of raising business rates that are fairer to companies, including small businesses, that have a presence on the high street, as opposed to the likes of Amazon. I also ask the Chancellor and the Treasury team to look again—I am sure that they will—at cases such as individual cinemas, which seem to have been unfairly hit by the changes in business rates.
Finally on Britain’s place in the world, there was perhaps one missed opportunity in the Budget, which I am sure will be taken in the November Budget: air passenger duty. Perhaps as early as April next year, the Scottish Government are likely to reduce air passenger duty by 50%. That would immediately put English airports at an unfair disadvantage. Many of us have been discussing with the Treasury whether, or how, we should respond on air passenger duty. It is absolutely vital that we support our aviation industry; it is the third largest aviation industry in the world, and at this time of Brexit, there is great uncertainty about the future of the aviation industry; after all, there are no non-WTO alternatives, should we not reach a deal. The share price of easyJet has fallen by a third, and £2 billion has been wiped off its value since Brexit. I look forward to playing my part in further discussions about APD and how we can support the aviation industry, and I look forward to further statements on the subject in the November Budget.
The former Chancellor, Mr Osborne, did not have many great reforming achievements, but let me praise one: the emergence of the Office for Budget Responsibility, which is essentially the benchmarking organisation that lets the Government know what fiscal room they have to work in, and lets us all know where the bodies are. The OBR made a series of assumptions in its central forecast for the Budget. The first was that the UK would leave the EU in April 2019. The second was that the money that we spend on the EU would come back and be spent broadly on the same things as before. The third was that we would need to make no exit payment, and the fourth was that no changes to taxes levied and payments made through the EU would be made over the period that the OBR looked at. It said:
“While the Government has now set out some of its objectives more formally, there is understandably little detail about how it intends to achieve them.”
Each of those assumptions is questionable at best; that is the fault not of the OBR, but of the Government. Each assumption will have a huge impact on the public finances. This was a Budget with a black hole at its very heart. Brexit is mentioned just once in the Red Book, yet we are entering the chilling reality of a hard Tory Brexit at a time when they have presided over seven years of economic failure and missed deficit reduction targets year after year. Short-term fixes have meant that the past decade’s most intractable economic problems have not been dealt with. Let us examine those assumptions.
The first assumption was that we would leave the EU in April 2019. I have no reason to question that after the Bill on article 50 passed through the Commons today, but we know that there could be a hard landing on to WTO terms, or a transitional deal. We could be doing this against the backdrop of one of our nation states leaving the other three.
The second assumption was that after Brexit, our money would return from the EU. The sum of £350 million a week was spoken about quite a lot during the referendum campaign. Where did that come from? It was an inflated figure; the actual cost to us is about £8 billion a year. Provided that we are able to do everything as efficiently as we do now—now, we pool the resources of 28 member states, but we will shift from sharing costs to them being borne by one state—and provided that we choose not to contribute any additional sums to our farmers, regional development, or university research, we will get back that £8 billion a year, but if the economy was just 1% bigger, borrowing could be some £14 billion lower each year. The Institute for Fiscal Studies says that if leaving the EU were to reduce national income by just 0.6%, that would be enough to outweigh the positive effects on the national finances. Bear in mind that the effect is cumulative; 0.6% lower in one year means that the economy is 0.6% smaller in every year going forward. That is because of lower tax receipts, higher debt, a larger deficit, and less to spend on public services such as our schools or the NHS.
The third assumption was that no exit payment would be made. The figure being talked about in Brussels is in the range of £50 billion or €60 billion. We have built up liabilities, commitments, and pension funds, and without settling those, we will not get the kind of deal that we want with the rest of the European Union. We have bailed out the banks, but actually we have had significant amounts of that money back. This will be a one-off payment that we will need to make, and it was not reflected in the Budget that we discussed this week.
The fourth assumption, which is no changes to taxes levied through the EU, rather begs the question: why are we doing this in the first place when we know that we are going to diverge over this period? What did we learn? We learned that economic growth is down, not up, from Brexit; that we will have lower tax revenues; that lower immigration will hurt us, not help us; and that a weaker pound will drive inflation, storing up the inflationary effects into 2017, 2018 and 2019. On trade and exports, UK trade will fall, slowing the pace of export growth for 10 years; business investment will be lower and will drop; and EU students and exports will drop off as well, taking money out of the real economy.
Last week, we learned that the Vauxhall van plant in Luton, where my dad and his dad before him worked, will be sold to a European firm. Despite the fact that that organisation is one of the most efficient and profitable parts of the business, the long-term future of that plant will be down to the kind of deal that we get on Brexit. Frankly, with an eight-year lead time on the van that we build there, I am perfectly content that the workers will see that through, and I thank PSA for its assurances. The reality is that when we look at Ellesmere Port, where a decision has to be made on a new vehicle coming in at the back end of 2018, it becomes abundantly clear why those of us on Labour’s Benches and some on the Government Benches say pushing for the hardest possible Brexit available is a bad choice; it comes at exactly the wrong moment for the kind of investment that we want. A hard Brexit is not some big bang, but the slow deflation of a balloon as the air comes out.
In conclusion, this Tory Budget amounts a massive hit to the public finances—around £100 billion. Targets have been abandoned, and there are no rules of the road. There is a lack of acceptance that the effects of this Budget will last for a long period of time. If we are going into a storm, the ship in in a poor state and the captain is driving us harder and harder into those choppy seas.
It is a pleasure to follow Mr Shuker. I have to say that although we do not always agree, he has put forward some good points.
It is well recognised that Britain is a world leader in science and technological research. As we saw earlier at a STEM event in Portcullis House, many advances, which begin as just glimmers of ideas, are developed by our amazing entrepreneurs and commercialised. Such entrepreneurs are vital in helping Britain succeed in a global economy. However, that is not a reason to shy away from bringing parity into the tax system, between the employed and the self-employed. Before being elected to this place, I was self-employed for 19 years. When I first ventured down that path, I did not think, “I must become self-employed to pay less national insurance.” I went self-employed because I had a business idea and relished the challenge of making a success of it, and I wanted the freedom of being my own boss.
After my first year of trading, I was quite surprised to see just how little national insurance I was paying. Although I recognised that there were many benefits that I would not be able to access as a result of being self-employed, I felt that the advantages outweighed those disadvantages. I welcome the news that Matthew Taylor is looking at the differing employment practices that we now find across the industry. I also welcome the review, because this is the time not to tinker around the edges, but to make lasting reforms to the tax system that are fit for the changes that we are seeing in today’s employment environment in the gig economy and also to keep us at the forefront of the global market.
I also want to spend a little time in welcoming the additional funding for social care. As the Chancellor quite rightly said in his Budget statement, the social care system is under a great deal of pressure, which in turn puts pressure on our national health service. As someone who has family experience of great working practices, I can say that this is about not only money, but how we implement processes and spend the money.
I am a member of the Health Committee, which has taken evidence from people about great working practices. Although I welcome news of the extra £2 billion over the next three years, with £1 billion for the next financial year, we must ensure that that money comes with reform. What is wrong is when stakeholders, clinical commissioning groups, local authorities, health trusts, primary care trusts and third sector providers are not willing to come together to make the changes that are so necessary.
Sustainability and transformation plans are necessary. We cannot continue to do what we have always done and then expect to get different results. The future of the NHS and social care has got to be two-way: reform must come alongside additional funding. That is why I welcome the Chancellor’s announcement of a Green Paper on the future financing of social care later this year. As with the reforms to the tax system, these reforms cannot tinker at the edges and think that the job is done.
As a midlands MP, it would be remiss of me not to mention the midlands engine. As an east midlands MP, it would also be remiss of me not to remind people that the midlands engine covers both the west midlands and the east midlands. Sometimes that gets glossed over. I welcome the focus on skills and training, and the investment in transport infrastructure at pinch points. However, more needs to be done. I have called for an additional motorway junction between junctions 25 and 26 on the M1, which would really help to alleviate some of the congestion throughout my constituency. Alleviating congestion helps productivity.
It is important to remember that investment in skills, training and infrastructure across the whole of the midlands, as part of the midlands engine for growth, will really benefit small towns and large cities. My message to the Chancellor is that we need to continue that investment to ensure that we hold our place in the global economy and at a local level.
I listened carefully to the contribution from Maggie Throup, who brought her personal perspective and that of her constituency to the debate. But it is more than clear that the Chancellor will have to rethink his plans for national insurance contributions for the self-employed not only because he is widely seen as having broken a manifesto commitment, but also because his scheme has been devised in such a cack-handed way that it looks as though those with the lowest earnings will be the hardest hit.
My hon. Friend Owen Smith estimates that a large number of low-income families whose main earner is self-employed will see their income fall by a sixth. I welcome the fact that the Chancellor’s plans are going to be re-examined and I support the call for an impact assessment of the changes, but I very much hope that the Chancellor will re-examine his plans in the context of the much wider problems of insecurity at work. I hope the Chancellor will put his review alongside the work being carried out by Matthew Taylor, which was referred to previously in the debate and in the Brexit White Paper. It is a clear example of where economic policy should be aligned with policies and negotiations on leaving the European Union, even though the Chancellor failed to mention Brexit in his speech. There has been a huge growth of insecure work in recent years, whether that is in low-paid self-employment, insecure temporary work through agencies, casual or seasonal work, or the explosion in the number of workers on zero-hours contracts.
Staff at the Department for Work and Pensions office in Doncaster tell me that whereas one or two companies would have been using zero-hours contracts 20 years ago, it is now almost the norm for many of them. The number of self-employed nationally has risen by about 1 million, and the number of workers on zero-hours contracts has risen by about 700,000. Insecure work is bad for workers, families and our communities. And, as the Chancellor must recognise, it is bad for the Treasury too, as it is punching a massive hole in the public finances. Zero-hours contracts cost the Treasury billions because they lead to a lower tax take and higher spending on in-work benefits. Zero-hours workers pay significantly less in income tax and national insurance contributions than people in more secure employment. A recent study by Landman Economics shows that this has created a £1.9 billion hole in the public finances. It says that the true costs are higher still, as those on zero-hours contracts are more likely to need to rely on in-work benefits such as tax credits and housing benefit.
Overall, the TUC has estimated that over the past decade there has been a net loss to the Treasury of £5.3 billion due to insecure working—equivalent to just over a third of the social care budget for England, as set out by my hon. Friend. People in insecure work tend to be paid lower wages. Some employers use zero-hours contracts or bogus self-employment to manage their financial risk and leave the public finances to pick up the bill. Inevitably, employers who prefer to keep employees on insecure contracts are the least likely to invest in proper skills and training, which is again bad for our overall economy and has a huge impact on productivity.
As well as the increased use of agency staff by employers, there has been a growth in employers encouraging workers to set up as a limited company. This bogus self-employment has a knock-on effect on other parts of the economy. Last week, one of my constituents told me of the experience of her and her partner when trying to get a mortgage. She said:
“My partner went from working as an agency worker to being a limited company: however he remained working for the same company on the same if not higher wage. This meant getting a mortgage was particularly difficult as we were unable to use his wage as income as he didn’t have enough years limited company accounts, despite the fact he remained at the same company for 2 and a half years and it was just the way his wages were paid which had changed. Neither of us had any other outstanding credit and we had saved 25 per cent of the house price.”
Her father acted as guarantor, and that was the only way she could get a mortgage. Insecurity at work affects the whole of our economy, and the Government should tackle its root causes. They should strengthen legal protections for workers on zero hours and clamp down on bogus self-employment and agency employment.
This is not only a UK issue; it is affecting other EU countries, as well as EU migrants in this country, who are often kept in insecure, undercutting work. That is why having a proper review of this area, and linking it to how migration between the UK and the remaining EU countries post-Brexit will operate, is something the Government should get on with as a matter of urgency.
It is a real honour to follow Dame Rosie Winterton, who made some extremely important points, particularly about those who are self-employed.
I believe the Budget was extremely balanced and very sensible, not trying to do too much, but trying to do the right things and, by and large, succeeding. The concentration on technical skills—the T-levels—on infrastructure and on living within our means was welcome. We saw money put into the right places, including business rate relief, addressing a problem for a number of companies in my constituency and, no doubt, in the constituencies of all right hon. and hon. Members.
There was also a substantial increase in the investment in social care. I believe this is just the start; we need to see a radical revamp of the financing of health and social care. In announcing a Green Paper on social care, the Chancellor took a first and firm step in that direction, and it needs to be followed by others, but I very much welcome the increased investment in social care.
Of course, there has been some discussion about the ways in which the additional revenue was found, but let us not forget that this was a balanced Budget: the Chancellor did not seek to increase borrowing—absolutely rightly—and nor did he seek to cut spending any further than was already planned in some Departments. He sought to raise the revenue to pay for the additional investment in social care. That is absolutely the right way to go about it, and I commend him and his team for that.
Raising the revenue through national insurance contributions was absolutely understandable given the constraints, but I welcome the fact that there will be a closer look at this whole area. As the right hon. Lady said, self-employment will be with us increasingly in the coming years, and more and more people are becoming self-employed. That is something to be welcomed, and I have been self-employed in the past. As my hon. Friend Maggie Throup said, it is something we should encourage, but, at the same time, we have to recognise the risks involved.
In future, as we look to raise additional revenue, we ought to look at some of the reliefs available to the higher paid, whether that is reliefs on national insurance and pensions, or reliefs available through schemes that have perhaps outlived their usefulness and that relate only to people at the higher end of the income scale.
That brings me to an important point. As a Parliament and a nation, we have to decide what level of income—what percentage of our GDP—we will raise in taxation and what percentage we will spend. We tend to raise approximately 37% of GDP in taxation, and that will continue through to 2020-21. We spent 40% in 2015-16, and that will go down to about 37% at the end of this Parliament. If we are to maintain the kind of commitments in all areas that we, and the Government, wish to, whether on defence, international development, looking after the elderly through social care, increasing investment in health or increased pension costs, we will find it very difficult to stick to a level of 37% of GDP in terms of both income and expenditure—it will be nearer 40%. That is still well below almost all our fellow European countries, certainly France and Germany. However, we have to take this seriously. It is not legitimate for us to stand here and advocate the kind of investment that, rightly, we want to see, while retaining our footprint as global Britain, and not be prepared to pay for it.
I serve on the International Development Committee, and a couple of weeks ago was privileged to see the work that DFID-supported organisations do in Tanzania with some of the poorest people on this planet in supporting them in their education. We have seen many other such schemes around the world. In Congo last year, we saw DFID working in a place where pretty much nobody else was working—apart from the Congolese people and Government themselves—to bring water schemes to people for the first time.
I was there with Mr Sharma. I think he will remember that visit, where we washed our hands together having drawn water from a pump that had just been put into a village—the first water that those people had not drawn directly from the river. This work supported by DFID is absolutely priceless. As the Foreign Secretary said, it gives Britain a global presence. However, the point made by another speaker about funding for the Foreign and Commonwealth Office is also valid. We have to remember that as we withdraw from the EU there are many Foreign Office missions around the world where we do not have a DFID presence and yet a lot of British development is going on through the European Union. That will now have to be picked up by the Foreign Office. We need to look very carefully at the funding for that.
I would like to say many other things, but time is limited. I make just one plea. The British Council does fine work, as we saw in Tanzania. It wants to teach people English and there is huge demand for that, so we need to give it the necessary resources.
It is a pleasure to follow Jeremy Lefroy.
We have heard many Members speak of the positives and negatives of our imminent departure from the European Union. I voted both in my constituency and in this place to remain. However, I wish to draw our attention to matters a little further afield—first, to the USA. It does our place in the world no good to be seen as too keen an ally of the American President. As America loses influence, we will be dragged down, tarred by his racist policies. When the Prime Minister visited Washington, we saw that she and this Government do not intend to question his policies or to counsel a different course. His racist policies have already led to a climate of fear in which two Indian men were shot in Kansas, and one killed. It is being investigated as a hate crime. We must not allow the same climate of distrust and malice to grow in this country.
With that sober warning behind me, I wish to turn to more positive matters. I look to India, once the jewel in the crown, offering succour today in a way it once did to our predecessors sitting here. I hope I can offer a different perspective from that of some other Members in this Chamber. I am a British Member of Parliament of Indian origin born in India. India must be not only our key strategic partner but our friend and ally at the crossroads of Asia. We have much to gain from each other, not just financially but culturally. There are deep-rooted bonds. Indians and the British understand each other. The Indian diaspora in the UK acts as a bridge between the UK and India. The Indian legal system is modelled on our own, and English is a shared language for almost everyone.
Those relationships, however, cannot be nurtured by business as usual. During the February recess, I led a cross-party delegation to India and we met many businesses. They want to work with Britain, increase trade and create jobs and opportunities, but many are frustrated by the punitive visa policies in place. When we met the Indian Prime Minister, he was keen to stress how much he valued a strong relationship with the United Kingdom. However, good will on the Indian side is not enough; it must be met with actions from us—actions that show that we, too, value the strong relationship. Platitudes alone are not enough.
Wages are still 10% lower than they were before the financial crisis. There are financial black holes in social care, education and the NHS. Some 4 million children are living in poverty. Britain is a wealthy nation, but how can we proud of that? The Budget does not offer anything to address the real issues facing Britain. We need support for real trade policies that do not hurt smaller and poorer nations and that show real respect to long-term allies and partners, and a foreign policy that leads the world by acting responsibly towards children from Syria. If we are to maintain our place in the world, we should offer proper leadership. The Budget fails to show any, but perhaps our foreign policy can do so.
The Budget’s measures include those that will be welcomed by constituents of mine who are concerned about business rates. Equally, the investment in social care will be of great relief to people who are worried about that. Likewise, schools have received welcome funding.
In the brief time available, I want to concentrate on skills. As we discuss Britain’s place in the world and forge a new identity for ourselves as a global Britain outside the European Union, it is right that this Budget puts in place the financial and fiscal measures that will enable us to make a success of Brexit. I believe that the Budget does that, and I want to focus on the skills associated with it.
There are strong underlying factors in the economy. We are an outward-facing, open and globally trading nation. Our economy grew by 1.8% in 2016, second only to Germany of the advanced nations. The growth forecast for 2017 has increased from 1.4% to 2%, and the deficit has been reduced by two thirds since 2010. That is all a testament to the underlying strength of our economy.
My constituency has a number of high-level technical businesses that are very skilled and, in many ways, world beaters. These companies include Polar Tech and Siemens in Eynsham, STL Communications in Witney, and home-grown businesses such as Darke and Taylor in Hanborough. There are also businesses that have not been grown in West Oxfordshire but that have come to make their home and invest in my area, including Airbus, Boeing and Thales in Carterton.
For many years, however, we have not been training the young people that those companies need, so home-grown workers do not have the skills required to work in my area. The CBI estimates that 75% of companies will need higher-skilled workers and that 40% will require intermediate-skilled workers. We are 16th in the OECD rankings, so I welcome the measures in the Budget that promote training people to make a success of our economy, both locally in West Oxfordshire and as we look to become a global nation.
Measures being brought in by the Budget include T-levels, with a fund of £300 million in this Parliament. This is the greatest reform of 16-plus education since the introduction of A-levels. It has long been time this that country had parity between academic education and technical education. That has never been more true than in my constituency, where we have so many excellent, world-beating companies that need highly skilled technical workers. These people, who make things and have ideas, drive our country and its economy forward. I wish to support them, and I am glad that the Budget does so as well.
I therefore applaud measures introduced in the Budget, such as the 15 specific routes to employment, the high-quality work placements and the maintenance loans for higher education students, meaning that such forms of education are seen in the same way as the academic sector. There is a £90 million fund to provide 1,000 PhD places beneath the underlying umbrella of the industrial strategy, of which 85% are in STEM disciplines and 40% are collaborations between business and academies, again under industrial partnerships. That is critical for companies like Abbott Diabetes Care in my constituency which need such a system of STEM education so that their workers have the level of education they require.
Lastly, I will touch very briefly on research and development, about which I am equally pleased. I welcome the £23 billion national productivity investment fund. It will focus on an area of enormous significance to my constituency, and it will improve the productivity of the country and its economy as a whole. I will quickly mention full-fibre broadband, which is of massive importance. My constituency is full of innovative, intelligent, creative and thoughtful people, but they need high-speed broadband to ensure that their businesses can operate and export to the world. It is very much the same with transport networks: the A40 has long been a source of contention for such people, and it is a real brake on the ability of my constituency to achieve the full potential of its economy that is just within its reach. Technology is important, as is housing that people can afford to live in, so that they can come to work in and remain working in the areas that they have grown up in and that are near all the wonderful companies I have mentioned. I welcome the measures on research and development and skills that the Budget will bring in. It is a Budget that underlines and supports the skills our economy needs, and I commend all these measures to the House.
It is a great pleasure to follow Robert Courts. I warmly endorse much of what he said about investment in technical skills and in our industries.
Today, we are debating the elements of the Budget that relate to Britain’s place in the world. I want to start by saying that I found it absolutely extraordinary that, apart from a passing preliminary reference, the Chancellor had absolutely nothing to say in his Budget speech about the most significant event affecting our position in the world, which is of course Brexit. We know that Brexit is bound to bring economic shocks and economic instability and that it will create economic uncertainty, including in relation to the divorce settlement itself. The European Parliament has been very clear that that settlement has to include our meeting our financial obligations, whatever the Foreign Secretary and the Government may believe.
In my constituency, people are already feeling the effect of rising prices as a result of the devalued pound. More importantly for a manufacturing and exporting constituency such as mine, local businesses have highlighted to me the impact on them of the rising cost of imports. In that context, it is deeply worrying that the Government seem so determined to pull us out of the single market at all costs, while leaving their intentions about our engagement in a customs union quite murky. Failing to protect our maximum access to the single market will be deeply damaging for the many businesses in my constituency that have a long and deep trading relationship with the European Union.
I of course support measures to tackle exploitation in the labour market, which can be exacerbated by the free movement of workers, but as my right hon. Friend Dame Rosie Winterton said, the insecure position of those in low-paid, unstable unemployment is not addressed at all in this Budget. As many hon. Members have said, for the self-employed, the position is particularly troubling. I agree that there should be consistency in treatment both of contributions and benefits between the self-employed and those in employment, and that we should crack down on the bogus self-employment that is really employment in disguise, but it is not right for the Government to put the cart before the horse in a way that will be unfair to many self-employed people by increasing their contributions without fully aligning their benefits with those in paid work.
I am particularly troubled by those self-employed people in low-paid self-employment, the group the OBR identifies as rising fastest. Some of those will be the newly self-employed, who in practice are in low-paid self-employment because they cannot find the permanent employment that many would prefer. I hope that in developing this measure—and I understand that the Government will now take a little time to think more carefully about it—Ministers will publish a detailed impact assessment of who will be affected, in which industrial sectors and how the effect will vary across regions, age groups, and how long people have spent in self-employment.
In the context of this debate’s theme of Britain in the world, I also express my concern at the Budget’s failure to address our environmental obligations. Last week, the Chancellor missed the opportunity to announce measures that would have reduced the number of diesel vehicles on our roads, but it has been estimated that nearly 40,000 early deaths a year can be linked to air pollution in the UK, and the cost to the Treasury is more than £27 billion. It is therefore disappointing that the Chancellor did not announce an increase in vehicle excise duty for new diesel vehicles, or have anything to say about a scrappage scheme.
On our ability to compete in the world, I want to say something about the education and skills announcements in the Budget. I agree with the Chancellor about their importance to improving our productivity, but the proposed back to work support of £5 million is frankly derisory. I am dismayed by the announcements on schools—£320 million on new free and selective schools, increasing to £655 million in 2021-22, but only £216 million for all other schools combined. That funding is only for the next three years with no additional funding in the long term. Trafford schools already face losing £443 per pupil according to teaching and support unions, but the Government are to pour more money into new free schools that will educate only a minority of our children, with no evidence that they will raise standards or the attainment of our most disadvantaged kids.
To add insult to injury, there will be money for children on free school meals to travel to selective schools—that amounts to fewer than 3% of children. In Trafford, parents of children with special educational needs have to pay for home to school transport. Last week, a primary school serving a disadvantaged intake in my constituency was unable to take up the offer of a free health and wellbeing session at Lancashire cricket club because it could not afford the bus fare to get there. It is iniquitous that transport to school should be prioritised only for those going to selective schools.
I do not see this Budget as one that works for everyone. It is a Budget that will leave us poorer, more isolated, and more divided, especially for those of my constituents in low-paid work, who are just about managing, if they are lucky, but more likely struggling to get by. In betraying the next generation, it will do nothing to enhance Britain’s status in the world.
It is a great pleasure to speak in this debate. It is interesting that the Opposition keep telling us that we must spend more, when of course we inherited a deficit of £150 from them, so every year we are borrowing £150 billion more than we are earning. Now we are finally getting that down to £50 billion, but we still have a £50 billion deficit. It is right that the Chancellor takes strong action to get down our deficit. Until we remove our deficit, we will not get debt down—debt will rise. The Opposition will then start saying, “Debt’s going up.” Of course it is—because we inherited such as basket case of an economy from them.
I very much welcome taking many of the lower paid out of tax altogether, and I welcome the fact that work actually pays. I have some concern, however, when we look at the self-employed. This Government have rightly reduced corporation tax so that large businesses can come to this country and existing businesses can do well from lower corporation tax. Many small businesses and companies in my constituency and across the country are not, however, incorporated, so trying to tax the self-employed more is not the right way forward.
I look forward to the Taylor report. There may be some abuses where people set up bogus businesses and act as self-employed, but the genuinely self-employed who have set up their businesses and struggled to start them without earning much money do not get all the benefits of the employed, so they need to be helped through that situation.
As we move into Brexit and away from the European Union—whether or not we are in the single market—the one thing this country will need is a lot of good businesses, and we have got them. We have seen a reduction in the value of the pound. We might not necessarily have engineered that as a Government, but after the Brexit vote the pound dropped by about 18%, which has created a huge stimulus to the economy. We must make sure that we benefit from it by allowing these businesses to develop. As these self-employed businesses develop, they will create employment, which is what we need. It is another great success of this Government. Millions of jobs, we were told, were going to be lost when the coalition Government came into power in 2010. Instead of that, we have created millions of jobs—something that seems to be lost in the forecast of Opposition Members.
Let me deal in my remaining three minutes with the situation in my constituency. It is great to see that, on the basis of previous Budgets and this one, we are still very much looking at infrastructure. What has happened on the A303 and the A30 is a great innovation, but we must make sure that we do not stop at Ilminster, but get through to Honiton, because there is a bit of a gap at the moment. I have been talking about this matter for some time.
When it comes to social care and our hospitals, I very much welcome the little bit of extra money in the Budget, but many Members always have little local difficulties, which is the case for me, too. At the moment, we have hospital beds both in Honiton and in Seaton, but there is a proposal to remove those hospital beds from both of those places. That will create an area of approximately 100 square miles without any hospital beds. The administrations of the health service need to realise the size of Devon and the distance people have to travel in order to get to hospital, including those who want to visit their loved ones. The cottage hospitals have a great advantage in reducing some of the pressures on the acute hospitals, so we need to ensure that we find some funding for them. We need to care for people more in their homes, but we also need to care for people in hospital.
There was a little mention of more funding for schools and education. Devon has been able to educate its children across the county with a very low budget. Over the years, we have had a poor share of the overall budget. Now we have seen an increase in that share, which is welcome, but as always we need some more cash. Although this is not down to the Chancellor, we also need a little more flexibility when it comes to how Devon spends its cash. If we had that flexibility, we could make the money go further.
Great education for our children is what we will need when we move into this brave new world. I voted to remain, but I am now very much committed to the fact that our economy is strong and that this country will be great—in or out of the European Union, and in or out of the single market. We must make sure that we get our trade deals, look after our farmers and have great food, as we do these Brexit deals. The one thing we must do is always talk up this country—never down.
It is a pleasure to follow Neil Parish, He described the health and social care crisis in his constituency as “a little local difficulty”. It is a funny that “a little local difficulty” seems to affect every constituency in the country.
I want to deal with three Budget issues as they affect my constituency. The first is school funding. Teachers’ unions contacted me recently to express—rightly—concerns about funding cuts. Over the next few years, such cuts will have a considerable impact on schools in Knowsley, and the council predicts, as a result, a significant rise in the number of schools that will go into deficit or, in some cases, be forced either to merge or to close.
The Government’s decision to cut school funding while preparing to spend money on creating additional places in grammar schools and offering schools incentives to become academies is counterproductive, certainly in Knowsley. The Government’s policy will do nothing to deal with deprivation in Knowsley, or with the challenges posed by its above-average number of pupils on free school meals and high levels of absenteeism: that simply is not going to happen. The Department for Education has confirmed that there will be no inflationary increase in Knowsley’s dedicated schools grant for 2017-18. This will be the seventh consecutive year with no inflationary increase. If the grant had been increased by the average rate of inflation over that period, it would have grown by about 20%, so there has been a significant real-terms cut in school funding.
Training is one of the key drivers for long-term increased economic growth. It is also critical to ensuring that young entrants to the labour market are properly prepared for the opportunities for skilled people that a modern economy can offer. In some cases, however, skill training alone is not an option. Employers whom I speak to in Knowsley often cite another problem: young people who are ill prepared for any form of employment. The reasons for that vary from case to case. In some cases it results from challenging family circumstances, in others from poor attendance, or non-attendance, at school. There are projects—such as Knowsley Skills Academy, a charity that I chair—which can help by providing a structured framework that helps to address those problems, but it is increasingly difficult to fund such approaches, although they are overwhelmingly successful in putting young people back on track.
Having been an engineering apprentice originally, and having taught in further education, I know that skill training should be straightforward. Under successive Governments, however, we have succeeded in over-complicating the process, at best focusing on the names of technical qualifications, and at worst passing off tick-box training as a substitute for the classroom and the workplace. Calling something an apprenticeship is entirely different from actually providing apprenticeship training worthy of the name. The key, which will benefit our economy, is providing skills that are transferable, and not just relevant to a single workplace. That can be achieved only by day release to colleges that can provide transferable skills that are both valued and recognised. If the Government are serious about meeting the economic challenges of the future through training programmes, they need to engage in a radical rethink about skill training.
The second issue is health and social care. Chronic underfunding and increased cuts in local government budgets have created a health and social care crisis. The supplementary funding through the improved better care fund—in Knowsley’s case, it amounts to just under £9 million over three years—is completely inadequate to cover the needs of local residents appropriately. A large proportion of that extra money will be taken up solely by the cost of implementing the national living wage. Lack of resources threatens the financial stability of care homes at a time when they are badly needed.
Finally, Government cuts in local government grant funding have meant that Knowsley has had to save £86 million since 2010, with another £14 million needed over the next three years. Knowsley will have reduced its spending on key local services by £100 million between 2010 and 2020. The funding provided by central Government will have been cut by 50% by 2020. In Knowsley, it is simply not possible to generate enough funds to cover that, so this is a Budget that is unfair to schools, those who need social care, local authorities and those who depend on their services.
In his contribution, the Foreign Secretary undertook a global perambulation, bumbling for Britain. May I bring the debate back to Birmingham, a city of 1.5 million people—I am proud to represent Erdington—the city of Chamberlain, and an ambitious, growing, young city that is determined to build on its strengths?
There are some welcome steps in the Budget. We have worked cross-party to secure the midlands engine initiative and local growth deals, but those steps are modest in the extreme. There is £392 million for the entirety of the west and east midlands, and £54 million for job creation in Birmingham and Solihull. That pales into insignificance given the £700 million of cuts already made to Birmingham City Council and the fact that London, in the autumn statement, got nearly 10 times more than the entirety of the west and east midlands, and that was for housing alone. Once again, Birmingham loses out to London.
Time and again, there is a grotesque contrast between how Birmingham is treated and how the leafy Tory shires are treated. The Surrey sweetheart deal on social care is now legendary. On other fronts, the Government talk about social mobility, yet for our nursery schools in Birmingham, which are absolutely vital to giving kids the best possible start in life, final baseline funding is set to drop by 5%, the maximum allowable and the biggest in the country. However, in the Prime Minister’s constituency, in Windsor and Maidenhead, funding per hour goes up. Every school in Erdington bar one is losing out on the funding formula.
On safety and security in the west midlands, crime is rising—little wonder; there has been a cut of 2,000 police officers. Crime is rising by 9%. Violent crime is up by 20%. Yet the west midlands has been hit five times harder than Surrey in terms of police funding since 2010. It goes on.
Time and again, what we hear from the Government is talk of all this being about fair funding. Fair funding? It is shameful doublespeak because it pays no regard to need. One in three children in Birmingham are in poverty. Infant mortality rates in Birmingham are twice the national average. Birmingham is ranked first for the total number of fuel poor households. There is the extraordinary statistic that, if a man gets on the train at New Street and gets off at Erdington or Gravelly Hill, he is likely to live seven years less than if he continues on that train to Four Oaks in leafy Sutton Coldfield.
It is true that Birmingham is a great city, but it is a city of high need. I always say about my constituency of Erdington that it is rich in talent but it is one of the poorest in Britain. It has the seventh highest level of unemployment. Despite all that, the city and my constituency have been failed by a Government, and a Tory leadership in Birmingham and the west midlands, who have lamentably let Birmingham down. To add insult to injury, they then blame the city for the problems created by the combination of the mess inherited by a Labour council from a previous Tory administration on the one hand and what the Government have done to the city of Birmingham on the other. It is little wonder that in Birmingham people are not impressed by the Budget.
On other fronts, the Government failed to listen to appeals for justice, but nevertheless imposed additional burdens on working people in Birmingham. They failed to listen to the appeal for justice. There were 100 WASPI—Women Against State Pension Inequality—women down last week, who were utterly dismayed that there was not one penny in the Budget to put right that terrible wrong. For example, there is a woman in my constituency who is 62 and cannot now retire until she is 66. Her husband died two years ago, and her father died a week later. She has never done a cleaning job in her life—not that there is anything wrong with cleaning jobs—but is now having to do three part-time cleaning jobs to make ends meet. She had hoped that her appeal for justice would be listened to by the Government, but there was not one penny in the Budget for her.
There are also the additional burdens imposed on working people. If there are 37,000 WASPI women who feel let down, there are over 60,000 of the self-employed who feel that they have been hit hard by a Government who are oblivious to the consequences of their actions. Little wonder that a Kingstanding white van man on Saturday told me how bitter he was that he is being treated in the way that he is, with no additional rights but having to pay more national insurance. What he said is true of so many in the city who feel let down by this Government: “I’ll never believe any promise from the Conservative party again.” He will not be alone.
I welcome this debate. One thing that the Budget shows is that we cannot have properly funded schools and hospitals with a Tory hard Brexit. My schools confirmed that in a meeting I held with the Minister for School Standards and representatives from both a selective and a comprehensive school, both of whom felt that they were going to be under very severe financial pressure as a result of Government funding for schools. Also, on what the Government have offered in terms of health and social care, while the £2 billion over three years is welcome, it clearly will not suffice. As a number of Members have said during the course of various debates, I am sure that in just a year’s time we will have to return to that.
The Budget would have been an opportunity for the Government to roll back their proposed changes to personal independence payments. They claim the withdrawal of mobility funding from people with mental health problems was what was intended in 2012. I urge Ministers to go back and look at the Government response to the consultation in 2012, because that clearly indicated that they did not intend to withdraw those benefits from people with mental health problems.
However, I want to focus most of what I say today on the Foreign and Commonwealth Office, as it was the Foreign Secretary who opened the debate. Perhaps I have misunderstood the departmental resource budgets, but they seem to show very clearly that the FCO is going to suffer very severe budget cuts, going from £2 billion to £1.2 billion in 2017-18; to £1.2 billion in 2018-19; and to £1.3 billion—going up slightly—in 2019-20. If I have misunderstood those figures, I hope someone will explain them to me, but the Foreign Secretary seems not to be aware of what is happening to the funding for his Department. Perhaps he is thinking that if we add up the budgets of the other Departments that have been created—those for Exiting the European Union and for International Trade—we miraculously we get to roughly the same figure. Well, we do not; we get to less than the £2 billion allocated to the FCO for this year. I hope we will get some clarity on that when the Minister responds, because it is difficult to see how the Foreign Secretary’s claim that this will be a Budget for a global, outward-looking nation will be achieved at a time when the FCO’s budget is plunging.
Other Members have referred to the issue of staff with language skills. We know from a freedom of information request that in June last year fewer than 500 staff in the FCO spoke Russian, Mandarin or Arabic. I wonder what progress has been made on that, given the necessity to strengthen staff numbers in all those areas. The Foreign Secretary was rather dismissive of the concerns being expressed about human rights issues, but I say to him and to the Economic Secretary to the Treasury, who will respond to the debate, that the Government’s position on Bahrain, Burma, Turkey, Saudi Arabia and Yemen makes it clear that human rights are not a priority for them, although trade and arms sales are. This is something that the Government need to take seriously.
There is an area of funding on which I can support the Government, and it relates to the Department for International Development. However, I am worried that the Government are losing their focus on eradicating poverty. There has already been a controversy over the envelope for the CDC. I think it was the spokesperson for the official Opposition who raised the issue of the prosperity fund and the conflict, stability and security fund. Organisations might be doing valuable work, but it is not entirely clear what they are doing or where their funding is coming from. I am waiting for a response to a parliamentary question asking when these funds and activities are going to start appearing on the development tracker, so that we can see what is being spent and, I hope, confirm that it is being spent sensibly on DFID’s priority of eradicating poverty, rather than on slightly less deserving priorities. I hope that the Government will mount a vocal defence of the work that DFID does. I am pleased that the Foreign Secretary did so earlier, because it is clear that the Department and its budget are under a huge amount of scrutiny, if not assault, from certain parts of the press who would be quite happy to see its budget slashed. That is something that the Government must defend.
I should like to finish on a specific issue. I rarely praise the Foreign Secretary, partly because I hold him personally responsible for the decision on Brexit, which I believe is going to do permanent damage to the UK’s economy and to our global influence. He has been outspoken on the issue of Israel and Palestine, however, and I hope that in this anniversary year of the Balfour declaration, he will ensure that the Government recognise Palestine. That would be something of which he could be proud. It would leave a legacy that would be widely recognised internationally, and it would benefit the Palestinians and, in the long term, the Israelis.
In the Foreign Secretary’s introduction to the debate today, we heard his typical bluster, lack of detail and “winging it” approach, which augurs very well for his forthcoming visit to Russia. His speech gave a complete fantasy view of what is likely to happen to our international trade. We were told that we were going to get a trade deal with the United States, yet the Trump Administration have already torn up the Trans-Pacific Partnership. In any trade negotiations with the UK—with our 65 million population, compared with the EU’s 550 million—the US Administration’s desire to put America first and make America great again will mean that they insist on getting more than they give. Are this Government prepared to accept food from the United States that is pumped full of steroids? Are they prepared to lower our health and safety standards? That is what will happen if we no longer have EU regulations and we accept the American model of trade.
Fortunately, we have the possibility of an agreement with Canada based on the EU-Canada agreement that was negotiated over seven years. Similarly, the EU-South Korea agreement could provide a model for something that would be beneficial to us. However, as my hon. Friend Mr Sharma pointed out, as for the idea that we can just export thousands of crates of whisky to India, as implied by the Foreign Secretary, in some kind of great trade agreement, India generally does not want to consume vast amounts of whisky—certainly not Prime Minister Modi, who I understand is a teetotaller. The reality is that India will desire access for its young people to study in this country and a loosening of the visa regime. So much for this Government’s 100,000 yearly immigration target. The forecasts on which the OBR’s economic growth assessments are based assume 185,000 people coming to this country. How can that be reconciled? This is a Government of smoke and mirrors, and the Foreign Secretary’s pathetic performance today is a great example of that.
Similarly, the Budget states that the Government are going to put £325 million over three years into financially challenged sustainability and transformation plans in the NHS. The STP in my area of north-east London has a predicted deficit of £575 million, which must be eliminated within three years. That is just one STP. The Government say that they are providing £100 million for capital spend on new A&E departments. If the plan to close the A&E at King George hospital in my constituency goes ahead, they will need almost that amount just to replace the beds and wards on the site of the Queen’s hospital in Romford, which is part of the STP. This is Mickey Mouse economics, and it does not make sense.
I do not have time to comment on the underfunding of our schools, the wasting of money on free schools, or the damaging consequences for local government of the continuing cuts. There is a sticking-plaster solution to assist for two years with the social care crisis, but there is no long-term plan. We need a more serious Government that considers such issues.
Then, of course, there is the NICs crisis. As The Daily Telegraph headline said, the Tories are no longer the low-tax party. That is the perception of millions of people in this country. If we had a credible Opposition, we would be able to challenge on that issue effectively and avoid diversions into other matters. Twenty years ago, Labour was 20 points ahead in the opinion polls and on course for a landslide victory, and I say to all Labour supporters, “Things can only get better.”
I do not want to accuse the Chancellor of any dodgy activity, but I would love to know where he has hidden his stash—his cash stash to help us make our way in the world as we ride out the storm of a low pound, rising prices, and uncertainty as we leave the EU. Everywhere we look, we see our companies working harder than ever to sustain their business and to persuade their often overseas-based bosses to invest in the UK rather than somewhere else. I am particularly worried about the future potential of our energy-intensive industries, such as steel, chemicals, and ceramics. Nothing that I have seen from the Chancellor does anything for any of them.
The North East England chamber of commerce was disappointed last week and said:
“What we needed to hear were optimistic and supportive policies which would help existing and potential exporters access new markets.”
It said that small and medium-sized businesses will be particularly affected by the fluctuation of the pound and will be hit the hardest by increased import costs.
The Chancellor also announced £90 million of roads cash for “the north”, but what did the area covered by the new Tees valley mayor get? It looks like it will be a set of traffic lights and some minor improvements to a junction on the A19—this is worth less than a million pounds. That is not a serious commitment to infrastructure in the north-east of England. What a great day it would be if we could just have 1% of all the money invested in London and the south-east, and HS2.
Other areas in which we could establish a place in the world and lead are in carbon capture and storage, and the decommissioning of North sea oil and gas infrastructure. The Chancellor did refer to a discussion document about maximising the extraction of oil and gas from wells that are nearly depleted. That is welcome, but he missed a trick by not extending that to plans to create thousands of jobs in areas such as Teesside from the decommissioning of oil and gas rigs. The Government have invested money in Decom North Sea, but no work and no jobs appear to have followed other than in the organisation itself. Teesside is ideally placed for this, with the right riverside facilities, furnaces to receive the metal and many people who are qualified for the jobs that would result from this decommissioning.
I am sure Ministers will be aware of the Teesside Collective, a cluster of leading industries with a shared vision to establish Teesside as the go-to location for future clean industrial development by creating the UK’s first carbon capture and storage-equipped industrial zone. Labour’s mayoral candidate for the Tees valley, Sue Jeffrey, joined me in a direct plea to the Minister to back the Teesside Collective, and although we received kind, warm words, they were simply that: just kind, warm words. I think we can expect a strategy some day from the Government, but I just wonder when that will be and whether it will be backed by funding in the autumn Budget.
Seven years ago, the Tory-Lib Dem coalition axed the new hospital in my area, and the North Tees and Hartlepool Hospitals NHS Foundation Trust has been forced to make do in an area where health inequalities are a major issue. Don’t get me wrong, the trust does a good job but in very difficult circumstances. The capital spending cuts across the Parliament and the £5 billion shortfall in NHS maintenance means there is no hope of our Teesside people being provided with the same facilities enjoyed elsewhere. Our people need to be healthy if we are to make our way confidently in the world, and that includes being mentally healthy. But we know people are not getting the support they need, and I illustrated that when I raised a constituent’s case at Prime Minister’s questions. The Prime Minister said she would “take up” the case, but she passed the buck to the Health Secretary and I am still waiting for a reply.
The Chancellor did mention social care, and I remember the Tory cheers when he announced £2 billion extra—and then the rather pale faces opposite when they realised they had been had and it was not per year, but spread over several years. They have also been had on the whopping great tax increases on self-employed people, 2,600 of whom live in my constituency. I wonder how many more will put up with this manifesto betrayal. Another tax is to be increased, with probate fees set to rise from a flat rate charge of as little as £155 to a minimum of £300 and as much as £20,000—that is a nice little earner from the Tories’ very own and very real death tax.
There was some good news with the announcement of £500 million for further education, but we should not forget that it replaces less than a third of the money taken away since 2010. The scheme to merge colleges across the country is in tatters and, after a year of talks, in the Tees area the proposals are falling apart and one of the colleges in Redcar is going bust. Now that mergers are collapsing, not just in the north-east, but across the country, what will happen to that cash? Will it be invested in our young people or will it just be swallowed up by the Treasury?
Finally, the Chancellor gave us half a smile when he talked about wage growth, but he chose to ignore the public sector workers who have actually faced a real-terms loss of about 10% in wages since 2010. I am talking about the nurses and doctors that look after us when we get ill, the care assistants who look after the elderly and vulnerable day in and day out, and the teachers who are educating the minds of the future. Clearly this Government have no plans at all to help those who put everything into public service in this country, while their wealthy friends face more tax breaks.
If Britain is to maintain its place in the world, rather than end up as some kind of low-wage, backwater economy, we need to invest in our people, our industries and our public services, and keep our people happy and healthy.
Order. I am sorry, colleagues, but at least 15 hon. Members are seeking to contribute, and if I am to accommodate each, I am afraid that a limit of four minutes on Back-Bench speeches is now required. I am sorry, but it means that people get in, rather than not, as was commonly the case in the past.
It is strange to be debating Britain’s place in the world in the context of a Budget statement that refused to address the single issue that will completely dominate our place in the world for an entire generation: Brexit—a word the Chancellor managed to avoid using even once in his speech. His announcement that he will spend £500 million of new money on technology such as artificial intelligence sounds wonderful, but when we look at what is happening in the real economy, we see that our high-tech businesses are actively considering whether they can afford to remain in the UK at all if we leave the single market.
Only last week, the UKIE—the Association for United Kingdom Interactive Entertainment—which represents the UK’s dramatically successful gaming industry and has several members in my constituency, Norwich South, reported that 40% of its members are considering relocating all or part of their businesses abroad because of Brexit. Of course, the same figure, or higher, will be found in many other parts of the UK economy. The Chancellor knows that, and that it was always likely to be the case, which is why he—along with the Prime Minister, of course—opposed Brexit in the referendum.
Has the Chancellor, then, made any allowance in his forecasts for future losses in tax revenue yielded by the taxes of EU citizens working in the UK, who may be given no choice but to leave rather than be forced through the humiliation of expulsion? Some 7% of the UK workforce are EU citizens, and the Office for National Statistics estimates that they have been the net contributors of more than £20 billion in the past decade. Why did he make no mention of the tens of billions of pounds the UK will be asked to pay in exit-related costs? The OBR is clear that he has made no contingency for this huge cost, which may be more than £50 billion—why?
As time passes it becomes clearer that the Government have been hijacked by a small gang of ideological fanatics who want the hardest of hard Brexits, and against whom the Prime Minister and her Chancellor appear powerless. This hard Tory Brexit rests on nothing more than wishful thinking—on the fantasy that the UK will be able simply to stroll up to negotiating tables around the world and come away with deals that favour us and our industries, as if the likes of China, India and a Trump-led USA are unaware of how isolated and desperate our position will be.
Last June, the British people did not vote to apparently reclaim their sovereignty, laws and rights from Brussels only to see the Government auction them off to the highest bidder, behind closed doors. We are talking about our NHS, our Climate Change Act, and our employee rights. Nor did the British people vote to divide the Union, yet the Government’s hard Brexit is the key reason Nicola Sturgeon has given for requesting a second referendum. The First Minister wants the people of Scotland to have a choice, just as the Government now have a choice: do they want hard Brexit or do they want to retain the Union?
We must be on our guard. We stand to lose much more than the economy and the Union if we continue down this path. The world that the Donald Trumps, Geert Wilders and Marine Le Pens want to build is a genuinely dangerous one. It is a world of protectionism, bragging nationalism and domestic politics dominated by the empty, angry rhetoric of scapegoating. As any student of 20th-century history will tell us, these are ominous tidings indeed. The world around us is rapidly changing, and not always for the better. Out there, there is a sense that things are out of control. The term “going to hell in a handcart” is one we hear frequently. In this climate of uncertainty and instability—
That excellent speech by my hon. Friend Clive Lewis was certainly much more entertaining than the after-Budget speech we heard from the blond Bullingdon bombshell, who told of his experience selling Toblerone, whisky and boomerangs, after an apprenticeship in selling pork pies to the British public over Brexit. Hon. Members will remember that he promised us £350 million a week for the NHS, though it has not materialised in the Chancellor’s Budget—or, should I say, fudge-it?
I have spoken to the CBI, particularly in Wales, and it is worried about what is happening to cars—and not just Vauxhall, and Ford in Bridgend; there are other problems: Nissan wants under-the-table deals, and we have seen Rolls-Royce devalued by €4 billion, thanks to the revaluation of the pound. Our second biggest export is chemicals; we are told that 20% of chemical manufacturers are relocating to Ireland, or at least thinking of doing so.
We are told that if we lose trade with the EU, we can go to the emerging markets. Of course, those markets want to trade market access for migration and visas, in the same way that there is a trade-off with the EU between migration and intervention, so there is no obvious net benefit. Donald Trump said on his inauguration that countries are ravaging his economy, taking his jobs, selling his products, and stealing his companies, and he will not have a deal that does not give a net benefit to the United States, so things are not looking too good there.
As for Swansea West, which I represent, there was no news about the Swansea bay lagoon. There was no money for the city deal. There was no bringing forward of rail electrification; it is going to Cardiff in 2018, but it will not arrive in Swansea until 2024. Overall, in Wales, 70% of exports go to the EU, compared to 43% from the UK, so people are naturally concerned. We are told that the economy has grown by 2%, but that has been fuelled by consumer borrowing, which is unsustainable. We know that inflation will grow, which will further undermine people’s wages. Debt has risen from 45% of GDP under Labour to 90% under the Tories. What a failure! If we look at the Red Book, productivity has been flatlining since 2010.
John Maynard Keynes famously said:
“When the facts change, I change my mind. What do you do, sir?”
The vote for Brexit was predicated on more money, market access and less migration. All that is cast into question. We in this place, regardless of the votes earlier today, will have to look again at the situation that arises, and my prediction is that the British public will rise up against market failure, economic failure by the Government, and their decisions.
As my hon. Friend Kirsty Blackman said so eloquently, there is so much wrong with the Budget that it is difficult to know where to start. In the little time available to me, I would like to look at the Chancellor’s decision to reinstate the alcohol duty escalator and raise duty by 4%. I should declare an interest as the chair of the all-party parliamentary group on Scotch whisky.
“a truly great Scottish and British industry”, only for her Chancellor to undermine that same industry with a huge tax-grab just five days later. The Chancellor’s decision to raise duty is a major blow to an industry on which so many in my Argyll and Bute constituency depend. He has undone, in one fell swoop, all the good done in the last couple of years, in which the previous Chancellor, Mr Osborne, cancelled the duty escalator, cutting duty by 2% in 2015, and freezing it the following year. When he cut duty by 2%, it was estimated in the Treasury’s own Red Book that it would create a revenue shortfall of £185 million. However, the reality was very different, because that 2% cut in 2015 actually increased the tax take to the Treasury by more than £100 million, with a further 4.2% rise in revenue from spirit duty in 2016. In cutting duty, the Chancellor sent out a message to potential investors that confidence in the industry was high.
The initial duty freeze followed by the cut gave confidence to investors who, for the first time in decades, believed that the Government no longer saw the whisky industry as a cash cow. Their investment saw more than a dozen new distilleries opening in the past two years, with no fewer than 40 in various stages of planning, hoping to come on stream over the next two decades. It allowed existing production sites to grow and it helped distilleries to expand the very lucrative tourist/visitor side of their business. I fear that the signals sent out by this excise duty increase threaten to stall that investment and damage industry confidence.
In this Budget, 36p was put on a bottle of Scotch whisky, which means that the excise duty paid on 70 cl bottle of scotch is a whopping £8.05, taking the total tax take on a bottle to £10.20. That means that the tax on an average priced bottle of Scotch whisky now sits at an eye-watering 79%. A total of £4 in every £5 spent domestically on Scotch whisky now goes directly to the coffers of the Treasury in either duty or VAT. Sadly, this tax hike is little more than a cash grab by the Chancellor because, as I have said, it goes against the evidence of the past couple of years when duty was cut and then frozen. I fear that the days of the Chancellor using Scotch whisky as a cash cow have returned with a vengeance.
On Wednesday, I listened to the Chancellor’s statement and waited for the elephants in the room to be addressed: Brexit, the housing crisis, and infrastructure in the west of England—but I waited in vain. This Budget could have set out a great future for our country, but it did not. Businesses of all sizes in Bristol have told me that, to continue to secure jobs and growth for the region, they need the benefits that we currently get from full membership of the single European market. From the aerospace industry to the financial services sector to traders on the Gloucester Road, Bristol businesses say to me that they face huge uncertainties as our future relationship with the EU is negotiated, and yet the Chancellor said virtually nothing about Brexit in the Budget.
On housing, Bristol’s fantastic Labour mayor, Marvin Rees, and his team are working hard to tackle our city’s homelessness crisis and to get more homes built. Bristol West is in the midst of a housing crisis, which particularly affects young people, with soaring house prices and rents, and yet the Chancellor said nothing about housing.
In her speech last week, my hon. Friend Kerry McCarthy described how this Budget fell short on infrastructure in the west country. Bristolians have put up with the inconvenience and cost of railway electrification work, followed by its postponement. We have had all the bother with none of the benefits. Time and again, I have impressed on the Government that we need action, not least to eliminate the dangerous air pollution in our city, and yet the Chancellor said nothing about infrastructure in the west. However, what the Chancellor did say gave me cause for concern, particularly the proposed rise in national insurance contributions for the self-employed. The Office for National Statistics estimates that there are 12,800 self-employed people in my constituency, which is well above the national and regional averages. That includes freelancers in the technology and creative sectors, taxi drivers and car mechanics, decorators and plumbers, hairdressers and musicians. All earn, on average, 40% less than employees, but now face having to pay more in taxes in an already uncertain economy.
My hon. Friend Karin Smyth said last week that this Budget shows just how much Bristol was better off under a Labour Government than under these Tories. Then we had new schools and hospitals, Sure Start children’s centres, the education maintenance allowance and tax credits and so much more that has now gone. Under coalition and Tory Governments, we have had cuts to school budgets. Real-terms funding per pupil is set to fall and there will be a total budget cut of £3 billion by 2020—the worst funding cut since the 1970s. There are mounting pressures on the NHS, cuts to local government causing real suffering in social care, and further problems in hospitals when people cannot be discharged. This Chancellor dealt with none of those problems. There was also no mention of mental health issues, which particularly affect young people in my constituency.
I am disappointed. This could have been Budget to prepare our country for the journey ahead, to reassure the people, universities, mayor and businesses of Bristol, and to put Britain’s families, schools and hospitals on a firm financial footing. It could have put minds at rest, and helped us to look outwards to fulfil our potential in the global economy. It could have been a Budget that invested properly in mental health, physical health and social care, that tackled the housing crisis, and that showed we value older people, who have a great deal to offer and deserve to feel secure, and children and young people, who need a decent education.
The Foreign Secretary says that we are not being patriotic, and thinks that we can just snap our fingers and summon up trade deals, but this Budget is not patriotic. Instead, it threatens jobs, growth and the vibrancy of Bristol West. It is a Budget built on oversights and blind spots, which revised down Government estimates for growth and earnings for the next five years. It is a Budget that fails to face up to the issues threatening our nation. That is not patriotic; that is letting down the country.
This is my first Budget in the House. I sat here last week with real hope and anticipation, only to be let down, but as I come from the NHS, I am used to being let down by this Conservative Government.
Last Wednesday—International Women’s Day—was the perfect opportunity for the Government to take concerted action to ensure progress towards true equality for women, but they did not deliver. They simply provided cash handouts to keep women quiet. Yes, I welcome the three measures for women announced in the Budget, but £30 million spending in a Budget of more than £800 billion is simply a distraction from the fact that this Budget does very little for women. It does nothing to enhance their lives or living conditions. If anything, it entrenches them further. Why were women only considered in three measures? Why not throughout the entire Budget?
There is an old quote:
“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.”
In the choices we make, we demonstrate what we care about, what we value and what is important to us. It is clear that this Government do not care about or value women, nor deem women them important in our society. Throughout this Budget on International Women’s Day, the Chancellor proved himself to have little to no understanding of the struggles facing women today. The Chancellor has proved himself to be so far removed from women who are just about managing, women who are doing all they can to put food on the table, and women who simply wish to contribute to the economy. The Government had the opportunity to take the burden off of women’s shoulders, but they did not. The Chancellor refused to ensure that women would receive the same pay as their male counterparts when returning to work after a career break.
I visited Burntwood School in Tooting last week, where more than 200 sixth-form students told me that they were concerned about gender inequality. I apologise to those students and all students in Tooting for this Government’s inaction on ensuring that women are seen and treated as equals. I apologise that this Budget not only lets women down, but ensures that it will take until well after the retirement age of those sixth-formers for the gender pay gap to close.
A Budget is not just numbers. It affects real people, real lives and real families. However, that seems to be something that the Chancellor so easily forgets. Food bank usage is soaring. I see families week in, week out in my constituency surgeries who simply cannot cope, who get halfway through the month and are unsure how they are going to provide food for their children. We on the Opposition Benches, have a responsibility to protect this country’s citizens. Forcing women to prove that their third, fourth or fifth child is a product of rape in order to be eligible for further child tax credit and universal credit is simply moving the burden of spending away from one area on to another. The Treasury has chosen to make a series of tax cuts that will actually cost £41 billion a year by 2020—more than the £37 billion saved from social security cuts.
Fundamentally, on a day to celebrate women—all they do and the potential they have—the Chancellor chose to segregate them further in society, and to silence them with cash handouts that will not even touch the sides of improving their day-to-day lives. If it is true that how someone spends their money shows us what they care about, we can only conclude that this Government do not care about true equality for women. This Conservative Government love to focus on having two female Prime Ministers, but it is a Labour Government who will congratulate themselves on how they treat 32.5 million women in the UK. Whatever headlines the Government try to spin, whatever jokes the Chancellor has tried to make and whatever cash handouts they provide—
Thank you, Mr Speaker, for calling me this evening. As has already been—
The debate stood adjourned (
Motion made, and Question put forthwith (
Question agreed to.
Main Question again proposed.
As has been spelled out by my hon. Friend Geraint Davies, the economy has shrunk by 15% since June, and that cannot be ignored. Labour Members did not talk about economic cliff edges, but we did talk about the impact that leaving the European Union would have, and that has, of course, escalated, with the Prime Minister’s call to leave the single market and the customs union now weighing heavily on our economy. The pound fell to £1.14 against the euro and £1.22 against the dollar this weekend, and it is down 12% against the euro and 20% against the dollar since June, showing just how fragile our economy is—it is not an economy in recovery. And before someone pipes up about how well FTSE 100 companies are faring, I would remind them that that is due to the strength of the trade in dollars, not sterling.
All of that means that our nation is poorer, so the lack of attention in the Budget to building economic resilience was really quite astounding. I believe everyone voted last June with a legitimate aim: to see a better country. They put their trust in this sovereign Parliament to deliver that, but they are being badly let down. Half the country voted to achieve that aim by staying in the EU, and half voted to achieve it by leaving the EU, but no one talked about leaving the single market or the customs union. Of course, that is now impacting, with the increase in food and fuel prices really hitting the people in our constituencies on the front line—the consumers—who can least afford it. No one voted to become poorer, but people will have £21 less a week to spend as a result of the Government’s economic failing, with wages dropping below the level before 2007 and the economic crash.
Businesses in my constituency are also seriously challenged, even with the tweaking of our business rates, because the extortionate, over-inflated rents they pay on their properties are pushing up business rates. The sticking plasters do not go far enough to address these issues.
This is not a story of economic recovery. As we look at the £1.5 trillion of personal debt burdening people across our country, and at the national debt of £1.7 trillion, we no longer hear those calls from the Government Benches about confidence in the long-term economic plan, because we have long-term economic incompetence, and the eerie silence is echoing not just in this Chamber but throughout our land.
My concern is this: the Prime Minister has made her decision—hers alone—about what future we will have. We will be pulling out of the single market and the customs union—a hard Brexit, not a people’s Brexit—and that is destabilising our economy further. When we reach the end of this period of negotiation, and we judge the Prime Minister against her Lancaster House objectives, I think we all know what the truth will be: she will have failed.
What did not come forward in the Budget? There was nothing on how the Government are going to mitigate economic risks such as the loss of jobs, businesses going overseas, the fall in the pound and the shrinking of our public services. When will the Government seriously say, “Stop. We have had enough. We need to put people’s interests and the economy at the forefront of these negotiations”? We need to shift the negotiation priorities to stabilise the market, recognise the benefit of the single market—I will be the first to say it should be reformed—and make sure we are part of the customs union.
Economic competence is about showing that risk can be mitigated and managed—something the Chancellor failed to do last week. Before triggering article 50, I trust that the Government, perhaps even in their response today, will set out how they will respond to that risk.
It has not taken long for the gloss to come off this Budget. We have learned just how clueless those in charge really are. The reckless national insurance blunder told us what we need to know about the Chancellor; they saw him coming as he fell for a classic Treasury bottom-drawer policy. In the old days, it could take at least until the weekend for a Budget to unravel, but this Chancellor seems to have set a new record by producing one that disintegrated before the day was out.
What is worrying about this dreadful performance is that it is beginning to look like a pattern. As each day passes, we learn that this Government make it up as they go along, with Ministers woefully unprepared and in some cases just not up to it. We have had the City Minister relieved of key duties and an Education Secretary who hides from the press, goes around closing schools and pretending that huge cuts in funding are fair, and thinks she can sell grammar schools by promising an easier 11-plus. The health service is on its knees, so the Secretary of State for Communities and Local Government is planning to take an extra £4.3 million in business rates from Queen Elizabeth hospital in Birmingham, and has not even had the time to discuss the implications with Health Ministers. One measure they should have announced is that they are going to treat NHS hospitals like their private counterparts and exempt them from business rates. At the head of this shambles, we have a Prime Minister without a mandate who thinks that as long as she repeats it often enough, people will believe her: no sweetheart deals, the Home Office getting more efficient, Brexit means Brexit. The more she repeats it, the more we see right through her. Even the Chancellor’s allies are describing her key aides as economically illiterate.
I acknowledge that the performance on the Labour Benches is not always good enough, and that may be partly responsible for the extraordinary complacency we are now witnessing from Conservative Members, but that is no reason for them to think that they can get away with providing the British people with second-rate government. It is quite incredible that in this non-event Budget the Chancellor had nothing to say about preparations for Brexit, especially as we learn that the Government are seriously contemplating crashing out of the EU without a satisfactory deal. That is not respecting the will of the British people—it is abusing the referendum result to embark on a reckless course that threatens people’s jobs and businesses large and small, and guarantees the most enormous hike in food prices.
When will this nonsense stop? When we will stop having to listen to the Foreign Secretary? I never thought I would be grateful to Michael Gove for anything, but I am beginning to think he did us all one enormous favour. They cannot agree on anything. The Foreign Secretary thinks it will all be all right on the night, the International Trade Secretary warns that leaving without a deal will be a problem, and the Secretary of State for Exiting the EU says he is thinking about a back-up plan. It is like a live performance by the Three Stooges. Just how much longer are these people going to try pull the wool over our eyes?
This Budget could have been the opportunity to clarify some of the confusion over Government policy. They could have tried to sort out the mess on the apprenticeship levy before it is too late. They could have done something about energy prices, and the fiasco that if someone puts in a smart meter and then changes supplier, it has to be turned off. If they persist with this, that is £11 billion of Government money down the drain. There are plenty of things that they could have done in this Budget, but of course what is wrong with this Budget is that this Government do not know where they are from one day to the next.
It is astounding that as we face a harsh cliff-edge Brexit there was practically no mention of the economic impact of Brexit in the Budget. However, I will focus on the challenges facing higher education, which have not been addressed.
The UK currently has a world-leading research base with academics from across the globe. Many of these researchers are EU nationals. In order to protect the quality of this sector, the Prime Minister should be rolling out the red carpet for these staff, begging them to remain here, but instead the Government have only offered vague and confusing messages to EU citizens without providing any guarantees as to their right to stay. This has left many of our EU national friends and colleagues, world leaders in their fields, looking elsewhere for positions. This impacts significantly on the economy. International students, both EU and non-EU, are worth over £25 billion to the UK economy and provide a significant boost to regional jobs and businesses. Research conducted for Universities UK on the economic impact of those students shows that in 2014-15, spending by international students supported more than 200,000 jobs in university towns and cities, with the transport and retail sectors benefiting greatly from their spending.
The UK is currently the second most popular destination for overseas students, after the US. In 2014, the 400,000-plus international students in the UK made up 19% of all students registered at UK universities. They come here not because they like the weather, but because of the quality of courses on offer and the research being conducted. Without international research expertise, we will struggle to attract those students and we will feel the economic pinch.
The picture in Scotland, of course, is similar to that in the UK as a whole. Scotland’s higher education institutions benefit greatly from EU funding programmes, but how much longer that continues is currently in the hands of the UK Government, and that is a huge worry. Through Horizon 2020, Scottish higher education has secured more than €217 million. That funding is vital for attracting skills and talents and for keeping our research institutions at the top of international league tables. Without that funding stream and the associated collaborations, our institutions may struggle to remain internationally competitive. As well as losing international students, we could fall behind other economies in terms of productivity and innovation.
The Chancellor has not made clear how the UK Government are going to match that threatened funding. To not do so would just prolong the uncertainty, which is already causing much anxiety in the sector. Securing our future in Horizon 2020 and its successor programme should be a priority.
I am really positive about the £300 million being offered in England to support 1,000 new PhD places and fellowships in STEM subjects, but I do wonder where the supervisors and lecturers will come from. Will EU nationals be welcome to apply for those posts? Will they be welcome to stay?
There is £320 million of funding for 110 new free schools and grammars, but we know that the single most important resource in ensuring excellence in education is the teacher. We have already seen an erosion in the terms and conditions of teachers in England under this Tory Government. Can the Tories now guarantee that nationally agreed pay scales and conditions such as maternity and sick pay will be guaranteed? At least Scotland now has the possibility of a new and brighter future.
This year’s Budget coincided with International Women’s Day, whose theme was “Women in the Changing World of Work: Planet 50-50 by 2030”. It is nearly 100 years since women were first granted the right to vote in the UK, but there is still much to do to achieve gender equality, both here and around the world.
The last Labour Government achieved so much for women. We introduced the minimum wage, created tax credits, increased maternity and paternity leave and pay, introduced pension credits, expanded childcare, and introduced the Equality Act 2010. That all made a massive difference to women in this country.
Gender equality means delivering long-term, tangible change for women, including securing women’s economic freedom, providing secure work and promoting women’s access to innovative technologies. The Budget could have taken greater steps to achieve some of those aims. Instead, the Tory Government, in their seventh year, have failed to redress the disproportionate impacts experienced by women as a result of tax and benefit changes and public spending cuts since 2010. From tax credit cuts to the crisis in social care, it is women who have consistently been hit hardest by the Tories’ policies.
Yet again, this Government have made no assessment of how their policies impact on women in the UK. As of the 2017 spring Budget, £80 billion—more than three quarters of all savings—have come from women, with a disproportionate impact on women from black and minority ethnic backgrounds. Even the lauded £5 million for returning-to-work mums works out at a pretty useless £10 a mum. What exactly will that buy?
That is why I support the recent announcement by my hon. Friend Sarah Champion, the shadow Secretary of State for Women and Equalities, that she will seek to introduce an economic equality Bill, which will eliminate obstacles that prevent women from reaching their economic potential. Part of that will be the need to provide more secure work. The number of those working without guaranteed hours or baseline employment rights has shot up by more than 660,000 over the past five years. How is a working parent —a working mother—supposed to plan childcare when they do not know the hours they will be working? Never mind the fact that, under this Government, only a third of local authorities actually believe there will be enough childcare available in their area for eligible families.
The reality is that women still make up the majority of part-time, non-permanent full-time and zero-hours contracts. Of the 900,000 workers—nearly 1 million—on zero-hours contracts, 55% are women. That should come as no surprise because, in almost any labour market in the world, social care work is performed by an insecure and largely female workforce. In the UK care sector, companies delivering social care for cash-strapped councils are, in a bid to remain viable, offering more zero-hours contracts than ever, which means even less protection for these workers.
Equality must take more of a priority than this Government are currently affording it. One way to do that would be for the Government to provide a clear commitment to play a much more active role by promoting women’s access to innovative technologies to help them to be successful entrepreneurs and leaders in innovation; encouraging women to enter and thrive in the tech industry; creating the conditions necessary for change at all levels; and encouraging women to enter typically male-dominated sectors, such as the energy and renewables sector. That is happening in my constituency, where the likes of DONG Energy and E.ON are providing excellent apprenticeships for young women. The Government used to talk about that, but they have now gone suspiciously quiet.
We should do much more than the Government’s Innovate UK initiative, which is seeking to invest £200,000 to help more women to be successful entrepreneurs and leaders in innovation, as this one-off initiative essentially offers just 12 women a tailored package of support, of whom just four will actually receive a financial package worth up to £50,000. That is not a ringing endorsement of women by this Government.
This was supposed to be a new start with a new Chancellor, yet we have ended up with the same shambles and the same post-Budget fallouts.
Yet again, Scotland did not really feature in the Budget. It was mentioned twice: once in terms of increased productivity, and once with regard to Barnett consequentials. The way this Budget process works is that at no time do the UK Government ever ask the Scottish Government what they need. All that happens is that there are some panicked health and education allocations in the Budget, Scotland gets some Barnett spin-offs and we are meant to be eternally grateful. That is not mature Budget setting.
As my hon. Friend Brendan O’Hara said, the tax system is outdated, especially in the way it treats whisky. Why should whisky be taxed at 79%? Why do we not tax real luxury goods that only the wealthiest can afford and increase taxes that way? If the concern is about alcohol harm, why do the Government not look at minimum unit pricing, instead of crippling the Scottish whisky industry?
The Chancellor mentioned clamping down on tax avoidance, yet there are only two new additional income streams in the Budget. They are predicted to bring in only an extra £200 million over five years, which is a paltry amount compared with the Budget. Meanwhile, tax credit debt collection is predicted to bring in half a billion pounds in just over four years. We must ask ourselves whether the Government are clamping down on tax avoidance, or on hard-working families that have gone into tax credit debt due to failings in the tax credit system. It is another Concentrix waiting to happen.
The Chancellor told us he wants to leave some gas in the tank, yet he has left us all the tax giveaways: he has not revisited them or slowed down on them. We have £23.5 billion in giveaways with corporation tax, £2.8 billion with inheritance tax relief and £3.7 billion in lifetime ISA tax relief, which is £30 billion of tax giveaways in just a few lines. Yet the very same Chancellor sees fit to take £2 billion in national insurance contributions off the self-employed. The self-employed are struggling and do not get holidays, and many of them were forced to go self-employed because of Tory austerity measures in the first place. These people have been hailed as the new entrepreneurs who are going to take the country out of recession, yet they are getting hammered by national insurance contributions.
Meanwhile, for other hard-working people £1 billion is being recouped from salary sacrifice schemes, £1 billion from the realignment of primary and secondary national insurance contributions, £1.7 billion from changes to termination payments—more people are having to take voluntary redundancy than ever before—and £4 billion from insurance tax premiums. That is £10 billion from those who are just about managing, or are struggling to get by in work. Then there is the £6 billion to come from the two-child tax credit policy. Not mentioned in the Budget were the 2016 measures that have already kicked in—£30 billion from the benefits freeze and the welfare cap. We have already heard tonight about the WASPI women. There was nothing in the Budget for them, even though the SNP has a costed proposal for £8 billion, which is easily affordable compared with the tax giveaways. It is clear that the tax giveaways come on the backs of the most vulnerable in society.
On energy, there was nothing for the oil and gas industry; nothing on carbon capture and storage; nothing on renewables where investment will fall by 95% by 2020 and one in six jobs is at risk; nothing on decarbonisation and transport; nothing on Brexit; and nothing for farmers in Scotland. This is a poor Budget and it is only hidden by the Brexit shambles.
The Chancellor made several errors in his Budget. Somehow within hours he managed—in one of the thinnest Red Books for years and with a Budget of so little detail and so little action—practically to unite his Back Benchers, the Opposition and the press in calling for a U-turn on his central announcement on national insurance contributions.
I will be slightly kinder to the Chancellor than the former Prime Minister, because I know what he was trying to do. I can understand it: there is a worrying and growing trend of companies outsourcing their employees as self-employed contractors to save on employer NICs costs. Self-employment is a good choice for so many workers in the UK, but when workers do not have the choice and the employer drives the change, it tends not to be in the best interests of the workers. Raising employee NICs is not the way to solve the problem, and I suspect that the Chancellor may have to go back to one of his infamous spreadsheets soon.
The Chancellor’s biggest errors, for people up and down these isles, were errors of omission, and I plan to speak briefly about three of them—the employment and support allowance work-related activity group, WASPI and squeezed family budgets.
There was nothing from the Chancellor on ESA WRAG. In November I tabled a motion that was supported by Members from nine parties—that does not happen often—and it called on the UK Government at least to pause their cuts to ESA WRAG until the work and health Green Paper had been considered and implemented. People receive ESA WRAG because they have been assessed as unfit for work—they have long-term health conditions or disabilities that slow their path to employment. It has always been considered right that given their increased costs in finding work because of their disability or health problems, and the fact that they need support for longer than those on jobseeker’s allowance, they should receive a higher weekly payment. On
During the debate in November, Mr Burrowes garnered an important commitment from the Minister that financial mitigation and new regulations to help those falling in and out of work would both be in place before the cut came into force. We are less than three weeks from ESA WRAG being cut and we have heard nothing from the Government. The motion I tabled in November was deliberately consensual. It was a final appeal, a last pitch to the Government to act. Hon. Members on both sides of the House are now fast losing patience: time is running out and the Government need to act now.
The Budget included nothing on WASPI. On Budget day I joined a huge rally of women outside Parliament to call on the Chancellor to act on the injustice served to thousands of women born in the 1950s who have seen their state pension age increased at a faster rate than promised with little or no warning. Three of the 3,500 women affected in my constituency were there and it was a pleasure to speak to Ellen Connelly, Joan Cassels and Margaret Nisbet. It is not sustainable for the UK Government to keep trying to ignore those women—women who have suffered workplace injustice throughout their careers. The Government should do the right thing by those women and give them appropriate transitional relief.
All of the people affected by those errors of omission were victims of this Brexit Budget as the Chancellor set aside £26 billion as a down payment on exiting the EU. Ironically, however, there was barely a passing mention of the greatest economic, social and constitutional challenge to face this or any other Government for decades. Inflation is expected to rise, further squeezing households that are facing social security cuts and painfully slow wage growth. Cuts to support for sick and disabled people, cuts to women’s pensions, hundreds of thousands more in child poverty, slow wage growth and poor productivity—not so much spreadsheet Phil as the Dickensian Chancellor.
I am grateful for the opportunity to contribute to this debate on the Budget and Britain’s place in the world. I want to speak about the Budget proposals for education and the risks they present to our children who, in the context of Brexit and changes across the world, face an uncertain future. Our education system must be equipped and resourced to deliver the best possible education for all our children and young people to provide them with the skills, knowledge and confidence to navigate our uncertain world and to be truly global citizens of it.
I am fiercely proud of the schools in my constituency and everything they deliver for local children. The transformation of the quality of education in London was one of the proudest achievements of the last Labour Government. In my constituency alone, we saw four new secondary schools, and this record of delivery is continuing with a further new secondary school that opened last year as a result of a strong campaign by parents and local councillors. Every day, teachers in our local schools are delivering brilliant imaginative lessons, helping our children to be the best that they can be and achieving excellent results.
Yet the resources that the schools in Dulwich and West Norwood need to continue their excellent work are under threat. The Government have broken their manifesto commitment to protect per pupil funding for our schools. The NAO confirmed that the Department’s overall schools budget is protected in real terms, but does not provide for funding per pupil to increase in line with inflation. In addition, the Government have loaded further significant costs on to our schools that are not funded through national insurance contributions, the national minimum wage and the apprenticeships levy. Each of those costs are important in their own right, but it is entirely unfair of the Government to impose them without also funding them.
Schools in my constituency are already reducing staffing numbers to cope with these additional costs. On top of these burdens, the Government are proposing to cut the funding for London schools in order to deliver a fair funding formula for schools across the country. I support the objective of fair funding for our schools, but there is nothing fair about taking vital funds away from some schools. This will have a direct impact on the quality of education our schools are able to provide, and it will affect the competitiveness of the UK economy. The Budget does nothing to address this. Instead of committing to increasing the education budget by just 1% to ensure that all schools can access fair funding without any school losing out, it commits funding in order to open new grammar schools which, by any measure and definition, can deliver only for a small number of children.
As we contemplate the future of the United Kingdom outside the European Union in a rapidly changing global economy, it is not a time for nostalgia to be the defining force in education policy. It is a time to be learning from the success story of London schools—investing in our education system to ensure that it is fit for purpose to equip our children with the knowledge, skills and confidence to thrive in a challenging and uncertain world. The Foreign Secretary may trivialise the challenge of global trade with reference to boomerangs and Toblerone, but I am concerned that our schools can equip all our children with the values of tolerance, diversity and internationalism, and with the skills and qualifications to pursue careers in science and technology, culture and the arts, green industries, health and social care, construction and many other fields. By cutting the funding for our schools, this Government and this Budget are failing them.
Since the Budget statement last week, this Government have been heckled by headteachers, nobbled by national insurance and slated by the self-employed, as they blatantly break manifesto promises. The Chancellor appeared to have spent far too much time polishing up his stand-up routine and far too little on the finer details of what his party promised in their 2015 manifesto. The fact that the Prime Minister has now been forced to announce that the increase in national insurance contributions for the self-employed will be pushed back to the autumn shows a Government in disarray and does nothing to give security and certainty to working people. The Federation of Small Businesses is scathing about the national insurance rise, saying that it should be seen for what it is—a £1 billion tax hike on those who set themselves up in business.
The Chancellor claims that the economy grew more than expected last year, but this does not mean that everyone is better off. Indeed, the growth in the economy is on the back of a rise in employment coupled with a shift towards lower-paid jobs, with this growth largely driven by rises in self-employment and part-time jobs. In fact, while in most other countries, including France and Germany, both the economy and wages have grown, the United Kingdom is the only big, advanced economy in which wages contracted while the economy expanded. For the one in five public sector workers in the UK whose average pay is now more than £1,000 lower in real terms than it was in 2010, the Chancellor’s boast of growth in the economy is cold comfort for those who are not “just about managing”, but are really struggling to cope with a constant fall in living standards.
The Chancellor’s statement was remarkable more for what it did not say than for what it did. There was barely a mention of Brexit, there was nothing for WASPI women, and there was no mention at all of the previous Chancellor’s failure to deliver a promised surplus by 2020. Mr Osborne now seems to be devoting himself to creating his own personal surplus, having failed to deliver on his promises for the UK economy. He was a Chancellor who used to talk about strivers and shirkers; the current Chancellor is now attacking the self-employed strivers and shirking his own manifesto promises.
The £2 billion for social care is welcome, but that money is needed now to address the crisis in social care, rather than being spread over three years. Moreover, it is well short of the £4.6 billion shortfall in social care funding in the last Parliament.
As the Chancellor was at pains to point out, Budget day coincided with International Women’s Day. It is a sad fact that women are bearing the brunt of Tory austerity. Since 2010, 86% of the Tories’ net savings to the Treasury through tax and benefit measures will have come from women. Nothing in the Budget will reverse that trend, and, in yet another example of women being unfairly hit by this Government, the Chancellor has once again failed to address the hardship caused to millions of women by poorly handled changes in the state pension age.
As for our young people, the Chancellor claimed:
“We on this side of the House will not saddle our children with ever-increasing debts.”—[Official Report,
Vol. 622, c. 811.]
This from a party that trebled tuition fees, scrapped education maintenance allowance, abolished maintenance grants and NHS bursaries, and denies the so-called national living wage to those below the age of 25.
The Chancellor told a lot of jokes last week, but people in my constituency are not laughing. This is not a Budget for women, for the young or for business entrepreneurs, and it does not work for everyone.
The first thing that we should celebrate is the fact that the European Union (Notification of Withdrawal) Bill has come back from the other place, and this House is now, at long last, free to implement the Brexit will of the people. That is good news.
This is a difficult time of the year for those who have the dubious honour of lifting that red case. There are always groups who are happy to see a cut or happy not to see a cut in some sectors, depending on their opinion, but we all know that rises are inevitable when the aim is to cut one’s coat to suit one’s cloth.
I want to speak about the increase in national insurance on behalf of the 4.8 million self-employed workers in the European Union who will be affected by it. The rate of class 4 national insurance contributions is to rise by 1% to 10% in April next year, with a further rise planned for 2019. There have been some murmurs from the Government that the move may be reviewed. I know that some Conservative Back Benchers are not happy about it, and I hope that the Minister will tell us what the position is.
Given that small and medium-sized enterprises in Northern Ireland employ more people than large companies and the public sector combined, it is essential that we provide support rather than further burdening a group who pay more than their share in tax. I have, of course, heard the cries from Conservative Members that the increase is “only a few pounds a week”, but that refers to last year’s Budget. The fact is that the cumulative rise will put more pressure on those who work so hard as it is. I do not think it is right for the Government to cut the coat to suit the cloth at this stage. Again, I look forward to hearing the Minister’s response.
The Budget is a curate’s egg, containing some good things and some bad things. It is good news for the NHS that it will receive £425 million in Government investment over the next three years, and congratulations should be given where they are due. However, the British Medical Association has expressed concern, saying that
“the plans need at least £9.5 billion of total capital funding to be delivered successfully.”
Can the Minister confirm that there are indeed no plans to privatise further any aspect of the NHS?
I want to speak about health issues, too. The number of full-time GPs has fallen by nearly 100, while overall there has been no real increase in the number of GPs working in GP practices. I ask the Government and the Financial Secretary to the Treasury, who is looking responsive—as a former Health Minister, that is important —what steps are being taken to ensure that students are encouraged to take up the GP mantle. Some things could be done. I am aware of incentives last year that offered golden handshakes of up to £20,000 to become a GP in an understaffed area. Again, I am not saying that that will be the norm for the Government, but we need to address those issues in a positive way. Whatever way we recruit more GPs, I ask that consideration be given to that.
I conclude on one issue that really concerns me and many in this House. No specific funding has been allocated to children’s palliative care. Research by Together for Short Lives on equitable funding for children’s palliative care shows that voluntary sector children’s palliative care organisations receive just 22% of their funding from statutory sources, compared with 30% for adults. The Government have stated that commissioners and providers of services must prioritise children’s palliative care in their strategic planning. What steps are the Government taking to ensure that that happens? Will they provide further guidance to commissioners of children’s palliative care charities to address the inequity in financial support received by these organisations, which do tremendous work, deserve to be helped and provide lifeline care to children with life-limiting and life-threatening conditions, and their families?
As I said earlier, this is a curate’s egg of a Budget. There are good things and there are bad things in it. Among the things we need to address are the health issues. Among the good things is the extra money that has been set aside.
It has been a privilege to listen to the Budget debate today and to be able to respond on behalf of the Opposition. We have heard 32 Back-Bench speeches, two thirds of which have come from the Labour Benches, but in many ways it is understandable that so few Conservative Members wished to speak today. It was surely quite an achievement that the Chancellor managed to deliver a Budget that was so thin on announcements yet could generate so much criticism in response. In many ways, it was a Budget that pleased no one—apparently, not even the Prime Minister or, as we have learnt, the former Prime Minister.
For those of us hoping to see real help for public services, especially health and social care, there was only disappointment. For people who wanted to see how the Government would tackle the squeeze on living standards and persistent low pay, there was only consternation and outright anger at the national insurance rise. For anyone wondering what the path to prosperity will be for this country as we leave the European Union and seek a new place in the world, there were no answers at all. The Chancellor may be known as “Spreadsheet Phil”, but on this occasion he certainly did not Excel.
The Chancellor did, however, surprise us all by revealing that he likes to make a joke himself. I particularly liked his opening anecdote about Norman Lamont delivering his last spring Budget and being sacked as Chancellor just 10 weeks later. However, I imagine that that started to feel a bit less funny when the Chancellor saw his own headlines the next day.
Let me begin by considering the most controversial item, which has been mentioned by many hon. Members today: the significant hike to national insurance for the self-employed. On the Labour Benches, we simply do not accept the Conservatives’ belief that self-employed people now receive the same rights as employees. Self-employed people do not receive sick pay, maternity pay or paternity benefits. They are not eligible for industrial injuries disablement benefit and they cannot be auto-enrolled into a workplace pension scheme. The law may now give them similar access to state pension benefits, but receipt of that is decades away for most. Simply put, while they are in work, they are on their own. Most significantly, as one of my constituents said to me on Friday, if they lose their business, they are not even eligible for contributory jobseeker’s allowance. So to increase the tax burden on them, without a commensurate increase in benefits, is simply unfair and we will oppose the Government on it.
We recognise absolutely that there is a need to tackle bogus self-employment. I have constituents who are construction workers who have been forced to register as self-employed, who are paid the minimum wage and then receive the remainder of their salary as dividends. I believe that to be completely wrong. But it seems clear to me that an arrangement such as that is primarily designed to avoid liability for employers’ national insurance and for other benefits, and that is surely where the Government’s attention should be. To punish the self-employed, beginning with those earning above just £16,250 a year, while at the same time pressing ahead with very large reductions to corporation tax, to inheritance tax and to the bank levy, is a sign of a Government who simply have the wrong priorities—and to break a manifesto commitment to do that represents a profound lack of judgment.
Those misplaced priorities were also evident elsewhere. Social care in this country is in crisis—although, to be frank, the word “crisis” does not seem strong enough. As several Members have said today, that view is widely held on both sides of this Chamber. In the last Parliament, over £4.5 billion was taken out of adult social care alone. The King’s Fund and the Nuffield Trust say that the social care funding gap for just this coming financial year is £1.9 billion. We did get that from the Chancellor, but spread over three years with nothing additional scheduled after that. I say this to the Conservative MPs who make speeches about tough spending choices: yes, the decisions we make here in this place on a Budget are not easy, but they are not where the toughest decisions lie. The toughest decisions are actually taken by people on the frontline: by professionals struggling to reconcile their budgets with the real people and the real need they see in front of them.
This year, public spending on social care in real terms was less than it was 2009-10. As we have an ageing population, it is fairly clear that that is a not a sustainable position. Some 400,000 fewer adults are receiving publicly funded social care today than in 2010. Age UK says over 1 million older people have to get by without the support they need.
Of course, this is not just about older people: a third of social care spending goes on adults with learning difficulties—a situation that directly affects me and my family, so I declare an interest in that. These are all areas where we, as a society, should come together and ensure that we are willing to protect and take care of vulnerable people. There can be no area more in need of a long-term consensus than this one, so I reiterate again the offer from the Opposition to the Government: that we would join formal cross-party talks aimed at finding a sustainable and long-term solution, as many Members have asked for in this debate.
On the biggest issue of all—Brexit: what it will mean and how we will prepare for it—there was almost nothing. In fact we could be forgiven for thinking that the Chancellor does not think very much is going on right now, but we face some fundamental decisions, at a time when living standards for many people have taken a real hit, and they do not feel the economy works in a fair way for them.
This is the worst decade for pay in 70 years. Real pay rates are still lower today than before the financial crisis. We have 6 million people earning less than the living wage, and 4 million children living in poverty, two thirds of whom have a parent who is in work.
Against that backdrop, this Budget was simply inadequate. Where was the contrition that this has been the slowest recovery since the 1920s? Where was the recognition that we need to see a much greater and fairer distribution around the UK of investment in things like transport, so that we can ensure that each region fulfils its potential? Where was the plan to increase business investment? Fixed capital formation is lower today than it was in the 1970s.
There has been speculation that the Chancellor did so little because he wants to keep a Brexit “failure fund” as a war chest in case things go wrong, but surely it is his job to make those decisions now, to ensure that things do not actually go wrong to begin with. At a minimum, with changes to immigration rules almost certain, we might have thought that the Government would rethink cuts to school budgets and focus on the education of people here in the UK, but no such commitment was forthcoming.
On the issue of spending choices, I understand that when the Government are taking a hit for their poor decisions they always seek to deflect the attention back to the Opposition, but the accounting envelope for the decisions taken in this Budget is very clearly set out in the Government’s own documents. To take just one example, on page 30 of the Red Book it is clearly stated that the decision to further cut corporation tax will cost £2.2 billion in 2017, a further £2.2 billion in 2018, £3.1 billion in 2019, £4.9 billion in 2020, and £5.2 billion in 2021. Of course we want a globally competitive rate of corporation tax, but there is such a thing as a diminishing return. The average rate of corporation tax in the OECD is 25%, and a bargain basement level of corporation tax will do us no good if we do not have sufficient infrastructure across the country or we lack a workforce with the skills that businesses need, or if we have to fund that low level of corporation tax by hammering small businesses with unreasonable business rates or increase the tax burden on the self-employed.
To take another example, on the big cut to inheritance tax, phasing in the new couples’ allowance of £1 million in 2017 costs £265 million this year, £565 million next year, £610 million in 2019, £650 million in 2020, and £725 million in 2021. Incidentally, of the nearly 3,000 houses sold in my constituency last year, only six were sold for values above the current inheritance tax threshold of £650,000. I thank my hon. Friend Rachel Reeves for her research and campaigning on that issue. This is a Budget dictated not by poor financial constraints but by poor Conservative choices. It is defined by the unfairness of the choices it makes, by the hypocrisy of a broken manifesto commitment and by its total, abject failure to offer a coherent plan for the UK’s prosperity and for our future place in the world.
This debate has focused on our future. It has asked what kind of Britain we want to be as we write an important new chapter in our history. In opening the debate, my right hon. Friend the Foreign Secretary expressed, in his very clear style, the fact that Britain must now, as ever, continue to play an active, engaged and constructive role on the international stage. Many hon. Members have echoed that sentiment, and I thank the 32 right hon. and hon. Members who have spoken for their thoughtful and varied contributions this evening. In the short time available, I will do my best to address the points that they have raised.
Many hon. Members have focused on that most pressing of priorities: how we make Brexit—I will say the word—a success for the whole country. In summing up this debate, I want to look beyond that to how we want the rest of the world to view 21st-century Britain. For me, and I hope for Thangam Debbonaire, that means a prosperous country that is open for business and that is pioneering global developments in science and technology. So let me make a few remarks on that theme and respond to some of the points that we have heard today.
First, there is the need for a prosperous, stable and economically successful Britain. Once again, I remind those who do not acknowledge it of the absolute importance of Britain living within its means. Everyone should agree on that. For the sake of our long-term prosperity and for the good of our public services, we simply have to put our national finances on a stable and sustainable footing. So we are going to keep preparing Britain for whatever comes, getting the structural deficit below 2% of GDP and getting our debt falling during this Parliament.
We are also focusing on growing our economy. We want the world to see Britain as a country that is open for business, backing entrepreneurs, creating jobs and attracting foreign investment. That is the best way to raise living standards for people right across our society and up and down our country. That is why we have established a competitive tax environment. Corporation tax, which Jonathan Reynolds mentioned, will this year be the lowest in the G20 at 19%, falling even further to 17% in 2020. I should point out to him that when it was reduced from 28% to 20%, it resulted in a 28% increase in tax revenues and in more jobs. Also, there are an additional two thirds of a million new jobs in the forecast period, meaning more money, more businesses doing well and more people with a wage packet at the end of the week.
I will not give way.
Let me move beyond tax, because there are many other ways in which we are making Britain more productive and more attractive as a place to start or run a business. The big investment in skills—half a billion pounds a year—will benefit hundreds of thousands of our young people, giving them the best choice since A-levels were introduced 70 years ago and bringing forward the next generation of talent that businesses will rely on. The changes that we have made to invest in current and new schools and to make our technical education as good as our international competitors are important for everyone. Not only are they good for business, they will make a huge difference to the lives and careers of our young people. It is a good policy for everyone.
Something else that shows the world that Britain is open for business is the £23 billion investment package that we announced only weeks ago in the autumn statement: the national productivity investment fund. The Budget set out some of the important improvements that the fund will make, such as addressing pinch points on our national road network and investing in the digital infrastructure that modern businesses depend upon. There is much going on to establish Britain as a world-leading country for business.
The Government are ensuring that Britain plays its part at the forefront of tomorrow’s technology. More than half a billion pounds was allocated at Budget to help our innovators compete on the international stage, including support for trailblazing advances such as electric vehicles, robotics, and artificial intelligence. Investing in upholding the UK’s reputation as a world leader in R and D is not only a point of pride; it is a valuable boost to jobs and opportunities for British people.
I tell Emily Thornberry, my hon. Friend Jeremy Lefroy, and Tom Brake that we have protected the FCO’s budget in real terms to promote British interests around the world. I say to the right hon. Member for Carshalton and Wallington that both trade and human rights are clearly important.
My hon. Friend James Morris raised the important issue of the Black country, making good points about productivity, transport infrastructure, and skills. To the hon. Members for Aberdeen North (Kirsty Blackman) and for Airdrie and Shotts (Neil Gray), I say that living standards grew at their fastest rate in 14 years in 2015 to reach their highest ever level and are forecast to have gone even further in 2016. My hon. Friend Jeremy Quin made a skilful speech and commended the skills measures in the Budget—the biggest change in post-16 education in 70 years.
Mr Lewis asked about uncertainty, and I should make it clear that the Prime Minister’s first objective in the negotiations is to provide certainty and clarity. Mr Shuker asked about the type of Brexit, but the Prime Minister has been abundantly clear that we are aiming for a comprehensive deal based on the highest levels of goods and services. My hon. Friend Maggie Throup made an important point and is clearly a strong voice for her constituency and her region. Dame Rosie Winterton raised the important issue of protecting workers’ rights. We are, after all, the party of workers, and we will do all that we can in that area.
I tell the hon. Members for Ealing, Southall (Mr Sharma) and for Glasgow North West (Carol Monaghan) that the Government have been clear that the UK will remain open for business, outward facing, and global looking. The benefits of immigration will be retained, but immigration will not be uncontrolled. My hon. Friend Robert Courts applauded measures relating to skills and R and D, and I thank him for doing so. Kate Green asked about the Budget’s lack of environmental measures. We will consult on a national air quality plan in a matter of weeks. Along with Mr Howarth and Helen Hayes, the hon. Member for Stretford and Urmston also asked about school funding, and I remind them that the Government are giving more money to schools than ever before, reaching over £40 billion this year.
To my hon. Friend Neil Parish I say that the Government remain committed to devolving powers to support local areas to address their specific productivity barriers. To Mike Gapes I say that the Government remain committed to controlling migration and living within our means.
On business rates, I point out to Members that the £435 million package is in addition to the £3.6 million transitional relief scheme. The Government are also reducing business rates for all ratepayers over the next five years—this is costing almost £9 billion—and that includes taking 600,000 businesses out of paying business rates altogether.
National insurance contributions were mentioned by the hon. Members for Kilmarnock and Loudoun (Alan Brown) and for Birmingham, Erdington (Jack Dromey). The Prime Minister has made it very clear that the changes to national insurance will require legislation later this year, which will be brought forward after we publish a paper explaining the full effects of the changes, along with the changes to rights and protections for self-employed workers.
We have heard questions about regional infrastructure, and as far as the north is concerned we have put in place £90 million to tackle congestion. Clive Lewis asked me about businesses relocating, and I can assure him that we will be seeking a bold and ambitious free trade agreement. Geraint Davies said that the Budget is not doing enough for Wales, but I wish to point out that the Welsh Government’s resource budget will increase by almost £150 million through to 2020. Brendan O'Hara mentioned an increase in alcohol duties. We do recognise the importance of the Scottish whisky industry and I am pleased that those exports have increased.
Dr Allin-Khan asked us to show her the money, and I would say that £2.4 billion over the next three years for social care is quite a lot of money. She, along with Melanie Onn and Liz McInnes, also asked about supporting women, and I wish to point out that the gender pay gap is at a record low and there are more women in work than ever before. Rachael Maskell talked about the economy shrinking, but ours was the second fastest growing major advanced economy in 2016. I wish to point out that the NHS is free at the point of delivery and that is not going to change.
In closing, let me say that as the UK takes a new direction, we are paving the way for a Britain that is economically strong and stable; a Britain that is open for business; and a Britain at the forefront of technological progress. In short, this is a Britain that takes its place in the world as a prosperous, forward-leaning, outward-facing country. It is a truly global Britain and a country that works for everyone.
Ordered, That the debate be now adjourned.—(Mark Spencer.)
Debate to be resumed tomorrow.