Budget Resolutions - Amendment of the Law

Part of the debate – in the House of Commons at 4:34 pm on 14th March 2017.

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Photo of Shabana Mahmood Shabana Mahmood Labour, Birmingham, Ladywood 4:34 pm, 14th March 2017

I congratulate my hon. Friend Gareth Snell on his excellent maiden speech, which I enjoyed very much. It moved many of us to laughter and tears. I gently correct him on one point: Stoke is not the centre of the known universe. That would be another place in the west midlands called Birmingham, but I will let him off on this occasion because that was a first-rate start to his parliamentary career and I wish him all the very best.

I want to focus my remarks on the Government’s record and their failure on their own terms. I note with interest that the Government Benches are all but empty. That may be because Government Back Benchers are not exactly lining up to defend the increase in national insurance, given the row that has erupted between No. 10 and No. 11 Downing Street, but the reason may go back further than that. Long before the Government’s broken manifesto commitment on national insurance, the Government failed the test they set for themselves: their central mission when they came into government in 2010, and the one promise they made to this country, was that they would eliminate the deficit in five years and that the age of austerity was the only way to achieve it.

The Budget documents are clear. In 2016-17—I am glad more Government Members are coming into the Chamber, so they can hear about their Government’s failure on the deficit in person—the deficit will be £51.7 billion. In 2017-18, it will be £58.3 billion. Even in 2021-22, it will still be £16.8 billion. On this trajectory, the deficit will not be eliminated until 2025-26: a full 15 years after their famous promise, made in 2010, to eliminate the deficit in five years.

That is the true shameful record of this Government, but it sits alongside a much starker and more catastrophic reality on living standards for ordinary working people. [Interruption.] Government Members should stop chuntering and listen to what they have done to ordinary working people. On current forecasts, average earnings will be no higher in 2022 than they were in 2007. That amounts to 15 years without a pay rise for ordinary working people. According to the Resolution Foundation, by 2020 families will have missed out on pay growth of £12,000: the worst decade in 210 years. That is what the Government have delivered for ordinary working people country. They used to taunt us on the Labour Benches with a slogan about us not fixing the roof while the sun was shining. For people going 15 years without a pay rise, it is as if the sun never shone at all.

On pay, wages, jobs and growth, I was particularly disappointed that the Government failed to take action to offset the planned cuts to universal credit later in this Parliament. I say to Conservative Members, who rightly kicked up such a fuss on the changes to tax credits planned by the former Chancellor of the Exchequer, that the U-turn was not truly a U-turn. The cuts are still coming down the tracks. Many of the same people will be affected when those currently on tax credits are moved on to universal credit towards the end of this Parliament. At the moment, only 170,000 or so people are in receipt of universal credit. By the end of this Parliament, millions of families will be on universal credit.

The Secretary of State’s warm words on opportunity mean nothing given what the Government are doing to the working poor. The cuts to work allowances will total £6.4 billion by the end of this Parliament. Only a tiny concession was given at the autumn statement by the Chancellor when he reduced the taper rate from 65% to 63%. It remains the case that lone parents on the national living wage with one child in 2021 earning £16,000 will lose £2,800. The measures in the autumn statement will give them back only £200 of that money, so they will be £2,600 a year worse off. Those are not small sums. They are the difference between keeping a roof over your head and being homeless. They are the difference between putting food on the table or watching the children go hungry. That record of delivery that the Government are putting on the people of our country in the 21st century is unacceptable.

In the end, politics is always about choices and priorities. This Government have made the choice to cut corporation taxes, totalling £11.2 billion by 2021-22. They could have made a different choice. They could have chosen to spend that money elsewhere, perhaps on universal credit or social care or to alleviate the crisis in the national health service. This is a choice that they are making. It is not the case that cuts to corporation tax are necessary to ensure that we have job growth in our country. We have seen what has happened to wages, and we know that business investment is nowhere near where it should be. The cuts to corporation tax are therefore being pocketed as profit more than they are delivering for the rest of the economy. They should be reconsidered. The Government’s choices thus far have made ordinary people pay the price, which is unacceptable.