Spring Budget 2024: Welsh Economy — [Peter Dowd in the Chair]

Part of the debate – in Westminster Hall at 2:30 pm on 17 April 2024.

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Photo of Ruth Jones Ruth Jones Shadow Minister (Environment, Food and Rural Affairs) 2:30, 17 April 2024

I beg to move,

That this House
has considered the impact of the Spring Budget 2024 on the Welsh economy.

It is a pleasure to serve under your chairmanship, I think for the first time, Mr Dowd. I am delighted to be able to bring this debate before the House today, but I want to start by acknowledging the seriousness of the situation in the middle east. My hopes and those of my constituents are for a more peaceful world and a meaningful de-escalation.

As we consider the impact of the spring Budget 2024 on Wales and the Welsh economy, I want to acknowledge the voices, views and concerns of the people of Newport West. My constituents have shared their worries and concerns with me in recent weeks since the Chancellor delivered his Budget. Of course, I am also thinking about people right across Wales who are dealing with the consequences of a Conservative Government that are out of touch and out of time.

The recent Budget could and should have been a unique opportunity to unlock Wales’s promise and all the potential we see in and around our communities, but instead it was more decline and decay. It is clear to everyone in the Chamber, and I suspect to the Minister too, that this Government have decided to continue papering over the cracks of almost 14 years of Conservative economic failure, rather than giving us the change we need.

As we consider the impact of Budget 2024, we need to think about where we are thanks to this Government. Every colleague in this Chamber will know that, after 14 years of Conservative Government, people in Newport West, Monmouth, Clwyd East and Bridgend, and indeed right across Wales, as well as in the rest of the United Kingdom, are worse off. Families continue to struggle with the cost of living crisis, higher taxes and eye-watering energy bills.

The list is depressing and long: debt and interest rates are much higher; Britain’s standing in the world is diminished; economic growth is stagnant; our much-needed and valued but seriously underfunded public services are on their knees; and taxes are higher than at any time since the second world war—indeed, never have a British Government asked their people in Wales and across the UK to pay so much for so little.

Let us take a moment to talk about the Tories’ unfunded plans to abolish national insurance contributions, and the Chancellor’s promise of £46 billion of unfunded tax cuts, which would leave a gaping black hole in the public finances. That reckless approach exposes the clear risk of five more years of the Conservatives. They will gamble with the public finances, and working people will be forced to pay the price yet again.

This Tory Government clearly have not learned anything since the former Prime Minister, Elizabeth Truss, crashed the economy and sent people’s mortgages spiralling, as we heard this morning during Prime Minister’s questions. I welcome the approach of the Leader of the Opposition and the shadow Chancellor, Rachel Reeves, who have been very clear that Labour will never play fast and loose with the nation’s finances.

On average, households in Wales will be £700 worse off under the Tory tax plan, which gives 5p for every 10p taken from people across the country. The Budget confirms that the UK has the highest tax burden in 70 years, rising every year of the forecast period. The Office for Budget Responsibility figures speak for themselves: for every 10p extra working people pay in tax under the Tories plan, they will get only 5p back as a result of the combined national insurance contribution cuts. That includes the OBR’s revised estimate for the impact of tax threshold freezes, which raise £41.1 billion over the forecast period and will create 3.7 million new taxpayers by 2028-29.

As we go back to the people in this general election year, we will be closing the door on the worst Parliament on record for living standards—the only Parliament on record where living standards have fallen. I welcome the Minister to her place, but it is important to remind her that real pay has gone up by just £17 a week over 13 years of Conservative Government; under the last Labour Government, wages rose by £183 a week over 13 years. The spring Budget reveals that growth in GDP per capita is negative this year, and has been downgraded in the four years of the forecast period.

The OBR confirmed what may be called “Rishi’s recession”, with GDP per capita smaller than when our unelected Prime Minister moved into No. 10, taking over from the former Prime Minister, who was beaten by a lettuce. The Conservatives have wrecked the public finances, debt has almost tripled under them, from £1 trillion to just under £2.6 trillion, and borrowing has been revised up for the next five years of the forecast period. That is the legacy handed down to the people of Wales after 13 years of Conservative Government.

Mr Dowd, you will not be surprised to hear me note that this is not just about the impact on Wales, as part of the United Kingdom; the Government have presided over the biggest drop in living standards in Wales since records began, but the same is true for England, Scotland and Northern Ireland too. That will obviously have a huge impact not only on the economy in our part of the United Kingdom, but right across the country.

In recent months, more than 7,000 homeowners across Wales have faced a Tory mortgage bombshell as their fixed-term mortgage rates have come to an end. The average estimated hike is approximately £240 per month; that is the real cost of the Conservative party. Under this Prime Minister, the Conservatives do not have a plan for our future. They crashed the economy and now they expect working people to pay the price.

Our country needs change, and that is why I am proud that the defining purpose of the next Labour Government, if we are fortunate enough to win the trust and support of people across Wales and our United Kingdom, will be to grow Britain’s economy so that we can invest in our future. Labour’s plan for growth is about making working people better off, boosting the Welsh economy and moving our country forward. We will put economic stability first by introducing a new fiscal lock to bring economic security back to family finances. We will back British business. Importantly for me, as a former president of the Wales TUC, Labour will make work pay.

The impact of Budget 2024 on the Welsh economy also shows how important it is that colleagues of mine standing for Labour across Wales are elected to this place. Many are strong Welsh women, such as Becky Gittins in Clwyd East, my neighbour Catherine Fookes in Monmouthshire—a constituency I know very well indeed—and Jackie Jones over in west Wales. They stand alongside colleagues such as the shadow Secretary of State, my hon. Friend Jo Stevens, and my hon. Friends the Members for Newport East (Jessica Morden), for Gower (Tonia Antoniazzi), for Pontypridd (Alex Davies-Jones), for Swansea East (Carolyn Harris) and for Llanelli (Dame Nia Griffith). Their re-election to this place will help ensure that better days lie ahead, and that any future Budgets under a Labour Government will have a significantly better impact on Wales and our economy than Budget 2024.

I have several questions for the Minister. Figures from Citizens Advice Cymru show that the number of people in Wales unable to top up their prepayment meters has increased by 36 times since the last general election. Will the Minister tell us how many households in Wales still have prepayment meters, and whether any have been forcibly installed since the ban in February 2023? I appreciate that she may not have the figures to hand, so perhaps she will write to me about that.

A recent Which? survey found that one in five working-age parents in Wales are skipping meals due to high food prices. Has the Minister had any recent conversations with supermarkets in Wales about keeping the cost of food down?

This year, 62,000 homeowners in Wales will face a Tory mortgage bombshell as their fixed-term rates expire. A Labour Government would require banks to protect homeowners, so what is the Minister doing to help owners with the bills caused by her party’s disastrous economic mismanagement?

The Conservatives have crippled working people with the highest tax burden since the second world war. The Prime Minister’s latest gimmick means that if a British person pays £10 in tax, they will get just £5 back. Does the Minister agree with Iceland boss Richard Walker that Labour is now the right choice for his customers?

You will be pleased to hear that I am drawing my remarks to a close, Mr Dowd. It will come as no surprise that, in my view, the best thing to do is to change course, deliver for our people and move forward with a Labour Government—and the sooner, the better.