Budget Resolutions and Economic Situation

Albert Owen Excerpts

Thursday 17th March 2016 Commons Chamber

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the hon. Member for South West Wiltshire (Dr Murrison). I have great respect for him and his views on health and I would never call him a health fascist. He is measured in the way that he presents health issues, particularly in relation to public health.

I will repeat some of what was said from the Front Bench by my hon. Friend the Member for Hayes and Harlington (John McDonnell). This is the eighth Budget of this Chancellor in six years—eight Budgets of big promises to eliminate the deficit by 2015. He has broken his own budgetary rules on debt and on welfare, and he is heading towards breaking his rules again on the budget surplus in this Parliament. Why? Because of the actions of this Chancellor. Yes, there are global issues that will impact on any country’s economy. That was the case when the Labour party was in government, it was the case when the previous Conservative Government were in office, and now this Chancellor is admitting that they will impact on his plans.

Early Budgets choked off growth. The initial emergency Budget in 2010 contained cuts and an increase in value added tax.

[Mr Kevan Jones]

Does my hon. Friend agree that it is remarkable that the Chancellor now refers to global headwinds that may knock him off course, but in 2010 when he choked off demand—and we have heard it again today—he claimed that the recession in 2008 was nothing to do with the global situation, but was all down to a Labour Government? Is it not ironic that he chooses to use the global situation as an excuse for what he blamed the Labour Government for in 2010?

[Albert Owen]

My hon. Friend is right. He and I and the Chancellor came into Parliament together and we know he has form on these issues, which have been laid bare in this Budget.

The early Budgets choked off growth. I mentioned value added tax because it is forgotten that initially this Government raised value added tax by 2·5p in the pound. That took money out of the economy at a time when there should have been a fiscal stimulus, as there was in many other countries, to ensure that we got out of the recession and out of austerity as quickly as possible. So it is the Chancellor, in his eighth Budget over six years, who is responsible for not being able to balance the books, which he promised he would do.

The poorest, the vulnerable are paying the price of extended austerity, and less so those on higher incomes, who have seen their income tax cut. Now we hear in this Budget that capital gains tax will be cut at a time when the personal independence payment is being taken away from some disabled people. That is the priority of this Chancellor, and that is why we are in the present situation.

I talk about value added tax being raised because the Chancellor is always talking about how thresholds are going up and how that is helping. However, that is eliminated by the additional value added tax that people have to pay on goods. The big announcement yesterday about a freeze in petrol duty and a freeze on beer duty is wiped out when people have to pay 2·5p on each pound when they buy petrol, drink beer or go out for a meal. This Chancellor is putting taxes up, not down, and families are suffering across the country. Ordinary people are paying the price.

I refer to the insurance premium tax. Yes, we all want to see investment in our flood defences, but again, it is ordinary families who will pay for that through a stealth tax. Rather than being the work of a tax-cutting Chancellor, the Osborne taxes are hurting ordinary families in this country.

The biggest losers are women and the disabled. The Chancellor really missed an opportunity to use the Budget to help the many women born in the 1950s through transitional pensions. He missed the opportunity to use some imagination to come up with a formula to try to smooth out the issue of those whose pension age is going up but who were not given sufficient warning to plan for that.

The Chancellor talked about an ISA for young people under 40. He needs to get out and about. I have two daughters under 40, and they are burdened with student debts—they are struggling to pay the bills. People like them do not have £4,000 in their back pockets to invest for the future. They need help and support—not to be told that they can get an extra £1 for every £4 they save. The Chancellor is out of touch.

I do agree with the sugar tax, but it is not a silver bullet. To deal with child obesity, there needs to be long-term, careful planning, and there needs to be a change in lifestyles as well. I welcome the proposals on sports provision in English schools—I do not think it has been cut in Welsh schools—but it was the Chancellor who cut the funding for it, which he is now reintroducing.

When the Chancellor talked about infrastructure for the future and the next generation, there was one area he missed out: digital infrastructure. The Prime Minister has promised universal superfast broadband coverage across the United Kingdom. Again, the Chancellor had an opportunity to stand up and say how we will fund that in a way that will allow us to compete with the South Koreas of the world and to have modern infrastructure.

Mobile coverage is poor across most of the United Kingdom. There is a small plan in the Budget for 5G in 2017. Many areas that I represent in north-west Wales do not even have 3G, and they certainly do not have the luxury of 4G. Poor broadband, alongside poor mobile coverage, makes businesses in that area difficult to operate. We talk about education, but what about those who are not in conventional education but doing Open University courses? They cannot complete their studies, because they do not have the basic infrastructure in the 21st century.

The Budget is therefore a missed opportunity, although I welcome many of the things the Chancellor talked about. He mentioned north Wales, which I was very pleased about, because I have been lobbying the Conservative Government to link north Wales into the so-called northern powerhouse. I will work with the Welsh Government, the UK Government and local authorities to get a good deal for growth in north Wales, but we need to see the detail. What we heard were big plans for the long-term future that we have heard before. What we wanted were radical, bold initiatives to invest in this country, invest in people now, invest in those who are losing out on pensions and invest for those in the next generation, helping them today—not giving them false promises for tomorrow.

--- Later in debate ---

[Diana Johnson (Kingston upon Hull North) (Lab)]

In following the hon. Member for Faversham and Mid Kent (Helen Whately), it is worth setting the record straight: it was a worldwide banking crisis that caused the recession, not Labour investing in teachers, nurses, doctors and shiny new buildings, as she called them. I think what she meant to say was hospitals and schools. In fact, in 2010, the economy was growing when Labour left Government.

It has been 24 hours since the Chancellor’s Budget statement, and I think it will be remembered not as a Budget for the next generation, but as a Budget of unfairness. That is most starkly emphasised by the £4.2 billion-worth of support taken from disabled people, many of whom cannot work, to give £2.7 billion-worth of support in capital gains tax cuts to wealthier people, many of whom do not need to work.

It is certainly not a Robin Hood Budget, because he was good at hitting his targets. I also note that the Chancellor pledges to fix 214,000 potholes in the next year, but I think that filling the huge one in his deficit plans will take much longer.

The bulk of what I want to say is about the effect of this Budget on my constituents in a city in the north that is apparently a key player in the northern powerhouse, although the Government seem to forget that Hull is part of the northern powerhouse, because they focus mostly on the Manchester area. As someone who has been a Hull MP for 11 years, I know that we have to fight every inch of the way for a fair deal and we often have to make our own luck. After getting only £1 million in the autumn statement, I was pleased that the Budget made available to Hull a more fitting £13 million for its year as city of culture in 2017. That happened only after the issue was raised on numerous occasions in the House and with Ministers, but I am pleased that the lobbying by the three Hull MPs has paid off. Granting the £5 million to renovate Hull’s new theatre will leave a legacy after 2017, which is one of the main city of culture objectives. I also welcome the £1.2 million for the British mercantile marine memorial collection in Hull.

Elsewhere, however, the news is more mixed for people in Hull. Although Labour in particular has championed changes to business rates for small businesses and letting local areas keep business rate revenue, the Government’s approach ends any recognition of the needs of poorer areas—the cause that George Lansbury went to prison for so many years ago. This Government constantly favour wealthy areas that have a stronger local tax base and that have experienced less deep cuts than more deprived areas such as Hull.

Hull, like many other northern cities, is left facing a social care crisis, even with the social care levy that the Government have announced. It worries me greatly that local social care providers and other small businesses in the area are not getting enough help to ensure that the living wage meets its objectives and does not mean job losses in the months ahead.

There is little hope in the Budget for Hull’s policing or NHS services. Today, the Secretary of State for Health is in Hull demanding that the people who work in the NHS in Hull perform better, but taking no responsibility for the disastrous Lansley reforms introduced in the last Parliament. Neither is the Secretary of State taking any responsibility for his mishandling of the junior doctors’ contracts, which is affecting morale and recruitment in an area where it is very difficult to recruit doctors in the first place.

I want to move on to infrastructure investment, which is a vital part of rebalancing the economy, increasing productivity and raising overall UK growth. There is good news, I note, for those in Hertfordshire who want to travel to Surbiton via Chelsea, with the £27 billion for Crossrail 2. Although High Speed 3 between Leeds and Manchester was announced again, our privately financed initiative for rail electrification between Selby and Hull, to get average speeds above 42 mph, has been stuck in the sidings in the Department for Transport’s decision-making process for the last two years. The Department has been studying the business case since September, but time is running out on the proposal if we are to get it by 2021.

Clearly, Hull is not given the same priority as building a £500 million Crossrail station at Canary Wharf or plans for a £175 million Thames garden bridge. With no A63 road upgrade, and even a delay in building the bridge over the A63, Hull faces running city of culture 2017 with not one of the transport improvements that would have assisted in its success. It beggars belief that we cannot even get a bridge built over a road, but we can put a man on the moon. Similarly, I am concerned about the increase in flood insurance premiums. Hull flooded terribly in 2007, and I want to make sure that some of that investment comes to our city.

I want to close by talking about devolution. We heard about the greater Lincolnshire model for devolution yesterday, but we heard nothing about Yorkshire. That is a real pity, because it will divert attention away from the Humber estuary.

[Albert Owen]

On the issue of devolution, only a few months ago the Chancellor said that he would devolve business rates to local authorities. Does my hon. Friend feel that local authorities will lose out as a consequence of the threshold changes?

[Diana Johnson]

The poorer areas of the country are going to lose out. The way in which the Government have handled devolution is really sad. They have rushed it through and imposed arbitrary timescales for putting deals forward. The public have not been properly engaged. I have talked to people in Hull who say that they have not been asked for their opinion about what they would like. They also object to the fact that the Government want to impose this one-size-fits all model of an elected Mayor. That may not be suitable for whole swathes of the country, but it is the only option available.

There is a real problem, particularly in my area, with the idea of the greater Lincolnshire model. There is nothing for Yorkshire at the moment, and I think that there will be real problems for Hull. All in all, if we are serious about getting devolution right, we need to go back to the drawing board and think carefully about what suits the needs of different parts of the country, rather than rushing ahead. My constituents will find the Budget wanting, and they will think that it does not really meet the needs of a city such as Hull.