Budget Resolutions and Economic Situation

Angus Brendan MacNeil Excerpts

Wednesday 16th March 2016 Commons Chamber

[Tom Elliott (Fermanagh and South Tyrone) (UUP)]

It is interesting to witness the Budget unfolding in the Chamber today, because, in years past, I have watched the Chancellor deliver his speech from the comfort of my own home, or read about it in the papers the next morning. There is almost a sense of anti-climax this afternoon. I remember huge controversies around the Budget, particularly some years ago when there were huge increases in income tax, but I do not see that so much now, as we seem to have a slightly more settled economy. We have seen much less controversy in the Budget not just for this year, but for the last number of years, and if we look at some of the empty Benches in the Chamber, we can see that perhaps there is something in that. Like all financial statements, there are some good parts and some bad parts, and that has been recognised even on the Opposition Benches.

First, let me highlight some of the significant investments that are going into the English regions. I guess that much of that will not be a huge benefit to Northern Ireland, or indeed to Scotland or Wales. Of course, those regions are getting some of their own financial benefits as well.

One aspect that I have been looking at is the £700 million that has gone into flood defences in England. I just wonder whether there will be Barnett consequentials around that for Northern Ireland, or indeed for Scotland or Wales, as those regions have suffered significantly from flooding as well. In my constituency of Fermanagh and South Tyrone, one person sadly lost their life in the flooding this winter. Many people in my constituency were severely affected by the flooding, and I am sure that it was equally as bad in other areas. I am keen to know whether there will be Barnett consequentials around that £700 million that will come to the Northern Ireland Executive.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Gentleman raises a good point. The Barnett consequentials are a consequence of a need in England. If there is a need in Northern Ireland, Wales or Scotland, the Treasury does not react to that need. We have to wait until there is a need somewhere else before we get the money. It is our taxes as well. When we have a need, we should get the money. If there is a need in Northern Ireland, the consequentials should follow to the other nations, but that never happens. It is always about need in England, and the rest will take what comes of that.

[Tom Elliott]

I appreciate the hon. Gentleman’s intervention. Perhaps he is explaining some of the Treasury’s rationale on this. I do not know whether there has been any co-operation on this, but he does seem to be offering some kind of explanation.

The devolution of corporation tax to Northern Ireland has been a live issue for at least eight years, perhaps even longer. I assume that the proposal for a reduction in corporation tax to 17% in the UK, will mean that, with our 12.5% rate in Northern Ireland, we will have a lower overall reduction in our block grant. Some argue that if the UK decides to leave the European Union in the forthcoming referendum there may not be any reduction at all in the Northern Ireland block grant to reflect the fact that our corporation tax is devolved, simply because the Azores ruling does not come into effect. I am interested to hear the debate about that, because it is an issue that we have already raised with the Prime Minister.

One measure that I really welcome for Northern Ireland is the £4 million investment in an air ambulance. I have personally lobbied for that for quite a long time. Northern Ireland is the one region in the United Kingdom that does not have an air ambulance and that support mechanism. I thank the Treasury for that. It will be a great memorial for the family of the late Dr John Hinds who lost his life campaigning for an air ambulance. He was a great motorcycle enthusiast, and his campaign will hopefully now come to fruition. It is also good news for those currently involved in the air ambulance campaign, including my constituent, Mr Rodney Connor, who has been a great campaigner in that respect.

--- Later in debate ---

[Wes Streeting (Ilford North) (Lab)]

It is a privilege to speak on the first day of the Budget debate. This has been a fascinating journey, following the Chancellor as he has brought us to this point. Following the Chancellor on the economy has been a bit like following a drunk driver on the road, swerving all over the place as his description of the state of our economy has moved from the sunny uplands that lie ahead to the stormy weather of the global economy. Instead of focusing on the long road ahead to our national recovery, he seems to be more interested in the short walk next door to No. 10. So keen is he to avoid any focus on his record as Chancellor for the past six years that we have been reduced this afternoon to talking about fizzy drinks. Like the very worst fizzy drinks, this is full of fizz and leaves us with a bad aftertaste.

Let us start with the Chancellor’s own performance. Who would have thought that six years into his term as Chancellor, growth would be being revised down, national debt would be continuing to rise and he would have failed to meet his targets for deficit reductions once again?

[Mr MacNeil]

The hon. Gentleman talks about growth, and it is interesting that the Chancellor has talked about major advanced economies as though that was a very narrow club. Our neighbours in Ireland have growth treble that of the UK and those in Iceland have double that growth, so the Chancellor is not performing well at all, even by his own measurements.

[Wes Streeting]

I certainly agree with that assessment. This year, growth has been revised down from 2.4% to 2%. It will be down next year, the year after that, the year after that and the year after that. We were promised that he would eliminate the deficit during the course of a single Parliament, but he is doing nothing of the sort. In fact, it is very hard to imagine how we will eliminate the deficit by the end of this Parliament. A close look at the figures produced by the Chancellor in his Red Book shows that in order to achieve his forecast surplus in 2019-20, he would rely on moving from a £21.4 billion deficit in one year to a £10.4 billion surplus the next. These are fantasy figures, which possibly explains why he has failed to meet them every other year—debt revised up every year during the course of this Parliament; £40 billion more borrowing over the course of this Parliament.

On productivity, once again the outlook has been revised down, and productivity is still below pre-crisis levels. The Chancellor has been in office for six years—what on earth has he been doing? Maybe we should start looking at his productivity to explain why the productivity of the economy is still so weak.

I welcome the investment in Crossrail 2, but net public investment will fall during the course of this Parliament to £32 billion by the end of the decade, when we would be investing if this were genuinely a long-term economic plan. Exports are falling and nowhere near hitting the Chancellor’s £1 trillion target. Although he prides himself on being the low-tax Chancellor, the tax burden, at 36.3% of GDP, is higher than at any point during the last Labour Government. So it seems we cannot even rely on the Tories to cut tax any more.

I very much welcome what the Chancellor said about Britain’s membership of the European Union and all the benefits it brings, but the Chancellor has a problem because, right as he is on that issue, he cannot carry his party with him. In fact, even as the Governor of the Bank of England has remarked that leaving the European Union is Britain’s single biggest domestic risk, of the Tories that have bothered to turn up this afternoon—they have run out of speakers to talk up the Chancellor’s Budget—many have turned up to trash the Chancellor on Europe. [Hon. Members: “Where are they?”] Indeed, where are the Conservatives flocking to defend the Chancellor’s position on Europe? In fact, to borrow a phrase, the fact that the majority of the Conservative party would take us out of the European Union makes them a threat to our economic security, our national security and “your family’s security”.

Let us look at the impact on households. Almost half of the gains from income tax cuts in this Budget will go to the richest fifth of households. The amount that the Chancellor is cutting in capital gains tax would offset the cuts that he is imposing on disabled people in this very Budget.

The Chancellor claims to be helping the next generation. This is a Chancellor who trebled university tuition fees, abolished the education maintenance allowance, cut student grants, imposed tuition fees for student nurses and midwives, and proposes to scrap the NHS bursary, and look at the state of careers education in our schools. Even with the measures in this Budget to encourage saving and home ownership, we should listen to Brian Berry, the chief executive of the Federation of Master Builders, who says:

“We are nearly 12 months into the current Parliament and the Government is already falling well behind on its targets”

to build new homes. He also says that,

“these announcements are limited in scope and won’t signal the…change…we need to see.”

In fact, the Office for Budget Responsibility has revised its forecasts to show an increase in house prices as a result of the introduction of the new lifetime ISA, which will fuel demand, but it has lowered its estimate lower projected investment in new builds because of the impact of Budget measures on housing associations. I think it is cruel to encourage people to want to own their own homes but not provide the investment, the support and the economic plan to ensure that those homes are in plentiful supply, and that people from ordinary backgrounds can get on the housing ladder, rather than Conservative MPs who are using the Help to Buy ISA not only to buy their first home but also, it seems, to buy extra homes for members of the family as well.

Finally, I want to talk about the Budget’s impact on local government. For the past six years, local government has been absolutely clobbered. These are not just any services; they are front-line services. The majority of my council’s public funding from central Government has been lost. When the Conservatives talk about a tax on sugar to encourage fitness, they should explain why they have cut public health funding in-year and time and again. If they want a healthier nation, they must invest in tomorrow today.

We should look at the other services that are being cut and the tax rises that are being imposed by the Chancellor, such as the new social care precept. As my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) pointed out, even an increase in social care funding through the precept will barely cover the cost of introducing the national living wage and certainly will not meet the social care crisis. That is why so many councils are struggling and so many councillors have to vote to put up council tax. Even in Labour-run Redbridge, the Conservative Redbridge opposition voted in favour of a 2% increase in council tax through the social care precept, and also for an increase of just under 2% in council tax, because they understand the pressure that this Government are piling on to local authorities. The Government went even further today by cutting business rates, knowing full well that that will not be the Chancellor’s headache—it will be the job once more of local councillors to balance the books because we are paying the price of his failure.

So I am not impressed by today’s Budget. It is nothing like a long-term economic plan. It is long-term fantasy figures from what will prove to be a short-term Chancellor, and I certainly will not be supporting it.