Autumn Statement Resolutions

Carol Monaghan Excerpts

Monday 21st November 2022 Commons Chamber

[John Glen]

I am, as ever, grateful to my right hon. Friend, and he made the same point when I was previously at the Dispatch Box. As he knows, the Bank of England is independent. He asks about quantitative tightening, and I am sure such matters will feature in conversations between the Chancellor and the Governor.

The new taxes will help to pay for the £55 billion of help for households and businesses with their energy bills, in one of the largest support plans in Europe. From April, we will continue the energy price guarantee for a further 12 months at a higher level of £3,000 a year for the average household.

Our support for public services means that, despite needing to find £55 billion in savings and tax rises, we are protecting the amount going into public services in real terms over the five-year period. Overall departmental spending will grow at an average of 3.7% a year over the 2021 spending review period. Departments will be required to find efficiency savings to manage pressures from inflation. After the spending review period, day-to-day spending will continue to grow in real terms, but slower than previously planned at 1% a year in real terms until 2027-28. We are launching an efficiency and savings review, which will include reprioritising lower-value and low-priority programme spending and reviewing the effectiveness of public bodies.

I now turn to our most vital public service, the NHS. The nation stood outside their homes and clapped for NHS workers every Thursday during the pandemic, and we did so because of their sacrifice during the historic pandemic. It is now incumbent on us to help address the issues they face, the workforce shortages and the pressures on the social care sector.

To recruit and retain our dedicated NHS workforce, the Department of Health and Social Care and the NHS will publish an independently verified plan for the number of doctors, nurses and other professionals we will need in five, 10 and 15 years’ time.

[Carol Monaghan (Glasgow North West) (SNP)]

Will the Minister confirm that the reason why we have such terrible bed-blocking and such terrible staff shortages in care homes and social care is because we cannot recruit from across Europe in the way we did before Brexit?

[John Glen]

I cannot account for what is happening in Scotland, but there are £1.5 billion of Barnett consequentials from the autumn statement. I have been clear with the House that the workforce plan is designed to set out transparently where the gaps are, and obviously it will be for various Government Departments to respond to that.

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[Anthony Browne (South Cambridgeshire) (Con)]

I very much welcome this carefully crafted and carefully balanced autumn statement. I welcome the fact that, at its heart, its No. 1 priority is balancing the books. The reason that is so important is shown by chart 19 of the OBR report, if people read it, which shows that debt interest payments as a proportion of Government revenue are at record high levels. As the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin), pointed out, our interest payments are heading for being almost as much as is spent on the NHS.

We have to fill that fiscal black hole, and the Chancellor has managed to do it in a way that the Office for Budget Responsibility has said will lead to lower inflation than would otherwise be the case, a shorter, shallower recession than would otherwise be the case and lower unemployment than would otherwise be the case. Those from the Office for Budget Responsibility are coming before us on the Treasury Committee tomorrow, and I look forward to grilling them then.

The Chancellor has also done this in a way that is fair. I notice that the right hon. Member for Newcastle upon Tyne East (Mr Brown) welcomed many of the measures. In fact, it is noticeable that virtually none of the Opposition Members has attacked any of the substantial measures in the autumn statement: the pensioner triple lock being continued, we welcome it, they welcome it; benefits being uprated with inflation, we welcome it, they welcome it; and the energy price guarantee, we welcome it, they welcome it. The windfall tax has been a bit controversial at some points, but there we are, and it is there. I do not know how they are planning to vote tomorrow—I do not know if they have said which way they are going to vote—but I would be very surprised if they vote against all these measures that they clearly welcome.

The Opposition have called for more money on the NHS, without explaining how they are going to pay for it—whether they are going to cut spending elsewhere, raise taxes in other places, or borrow more—but I do say this. As I pointed out in one of my interventions, despite the Labour party repeatedly accusing the Conservatives of starving the NHS of money, spending on the NHS is at record high levels not just in cash terms or in real terms adjusted for inflation, but as a percentage of GDP. Never has more of the UK economy been spent on health than now—it is now 10% of GDP. The latest international figures that I have seen—they are from 2019 —show that the UK Government were spending more of their money on health and the NHS than the European average. The Guardian—hardly a Conservative-supporting newspaper, and a doughty defender of the NHS—recently published analysis showing that, as a result of the autumn statement, spending on the NHS between 2010 and 2024 will have increased by 35% in real terms after inflation. That is from The Guardian, and that is to be welcomed.

I will make some substantive points, but I have one more observation about the Labour party. The shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), talked in his opening comments about the economic crisis made in Downing Street—a theme of many Opposition interventions—and the Conservatives’ terrible economic track record since coming to power in 2010. He mentioned the mini-Budget and blamed that for the economic crisis. I agree that we have an economic crisis—inflation is at its highest level for 40 years and disposable incomes are falling rapidly—but that is nothing to do with the mini-Budget.

Let me share a little secret with the House: almost nothing in the mini-Budget was actually implemented. Almost all of it has been ditched. It is absolutely true that it did cause turmoil in the bond markets for a few weeks and it pushed up mortgage rates. For those who renewed a fixed-rate mortgage in that period, yes, it would have pushed up the cost. However, just last week, Andrew Bailey, the Governor of the Bank of England, went before the Treasury Committee and both the Chair and I grilled him on whether the mini-Budget had pushed interest rates up higher than they would otherwise be and whether there were any long-term consequences for the economy. He said, “Absolutely not.” He was explicit.

[Carol Monaghan]

rose—

[Anthony Browne]

I will give way to the hon. Member. I do not expect her to agree with me.

[Carol Monaghan]

I thank the hon. Gentleman for giving way, but of course there were long-term consequences. I have been contacted by a number of people who have lost out on mortgage deals, and some of them were first-time buyers who lost out on properties because of the chaos created.

[Anthony Browne]

I agree with the point made. As I said, there was a temporary period of a few weeks when there was a rise in interest rates. Some people renewed mortgages in that time and some people lost mortgages. That is terrible for those people, but there are no ongoing, long-term consequences because virtually none of the mini-Budget was implemented.

Many Opposition Members have referred to the Tories’ economic record since 2010. The fact is, we have had a series of extraordinary economic hurricanes. In 2010, we inherited an economy in recession—by Labour’s own admission, we had run out of money—and the 2008 economic crisis was so profound and deep that it led to the longest, deepest recession since the second world war. It took about a decade for the structural changes to the economy to play through, and gradually we returned to growth. Since then, as many have mentioned, we have had the once-in-100-years pandemic followed back to back by the once-in-50-years energy price shock.

During the pandemic, we spent £400 billion supporting households and businesses. I do not think Labour has complained about that too much, but that has led to higher national debt. The pandemic also led to problems with global supply chains that hit countries across the world. On the energy price shock, we are an energy importer, so inevitably we are poorer as a country and inflation has shot up. The question is this: if you are in a plane in a hurricane, or repeated hurricanes, and the plane gets struck by lightning and the engine catches fire and explodes, do you attack the pilot and ditch them because they happened to be in the pilot’s seat when all that happened or do you judge them on their performance and how they managed to get through those crises?

There are two things. First, this is not a UK crisis at the moment. Inflation has shot up around the world and is at roughly the same level in America and Germany as it is here. The IMF has said that one third of the global economy is going into recession this year. The downturn in Germany is faster than it is here. In America, they are putting up taxes by $800 billion to pay for it all. This is a worldwide phenomenon.

Secondly, as many Opposition Members keep going back to 2010, I have been checking my data—I like data. Between 2010 and 2019—the latest international figures I could find while sitting in the Chamber—the UK’s GDP growth per capita was lower than that of the US and Germany, but higher than that of every other G7 country. It was higher than that of Japan, Canada, France, Italy, and every other major European economy, including Spain. Our economic track record between 2010 and 2019 was better than all those countries, so the Conservative Government have a lot of which to be proud.

I want to make a couple—I see you waving your hand at me, Madam Deputy Speaker—of substantive points. The autumn statement does increase taxes; no Conservative Government like increasing taxes, but it is far better to iron out tax distortions before, or indeed while, raising them. The capital gains tax system, for example, has many distortions and is not indexed with inflation, which it should be. It works in a very perverse way. Inheritance tax, which has effectively been increased because the threshold has been frozen, is riddled with issues. There is a potentially exempt transfer scheme where many people do not pay any inheritance tax at all. We need to get rid of all these exemptions, smooth things out and fix inheritance tax before raising it. I also urge the Government to look at marginal rates of taxation that are more than 50%. Increasing numbers of people are falling into that bracket because of the freezing of the thresholds.

Finally—thank you for your patience, Madam Deputy Speaker—I welcome the protection of capital budgets. In particular, I urge the Government to protect the funding for Cambridge Children’s Hospital.

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[Carol Monaghan (Glasgow North West) (SNP)]

We have heard several times today from Conservative Members that the economic climate we are in is a result of covid and the war in Ukraine. Of course, they fail to mention the monumental act of self-harm that is Brexit.

Brexit Britain’s outlook is bleak. Inflation is running riot and wages are stagnating. Martin Lewis, the money saving expert, has said that there will be an “energy bills catastrophe” this winter. The IFS has said that despite the support for energy bills, median households will face a £900 increase in their bills compared with this time last year. People are worried. They are not putting on their heating. I have been contacted by an 82-year-old constituent. He lives on his own, and he is now going to bed early wearing additional layers of clothes, instead of turning on the heating, but that has additional impacts.

I have noticed a worrying trend in the past couple of weeks that I have never seen in my seven and a half years as an MP. People are getting in touch because of mould in their houses. That mould is not because the houses are damp and have various problems. It is because people are not putting on the heat or opening the windows to ventilate their homes. We are reminded, of course, of little Awaab Ishak who died due to prolonged exposure to mould. Unfortunately, I do not think he will be the last. That has an impact on the NHS and costs society more. People need to be able to put their heating on, to dry out their houses and to ventilate them.

For my constituents who are worried about energy bills, it is particularly difficult for them when they look out of their windows and see the turbines generating the energy that Scotland uses, but Scotland’s renewables suppliers have been hammered by the grid connection charges. Norway can pay £1.36 per megawatt-hour to feed into our grid and France just 17p, while Germany, Luxembourg and the Netherlands pay nothing. However, Scotland’s renewables sector is punished with grid connection charges of £7.36 per megawatt-hour, despite those turbines being right next to the people having to pay these extreme bills.

As well as energy costs, food costs are of course rising—at the fastest rate for 45 years—with the costs of basics such as milk, cheese and eggs surging. It is reckoned that food inflation is now at 16.2%. The Trussell Trust has experienced its busiest ever April-to-September period with a 34% increase, and 40,000 food parcels for children.

We have heard a number of Conservative Members talk about the strivers and the grafters. Are the strivers and the grafters the 2,900 members of the armed forces who are having to claim universal credit? Are the strivers and the grafters our veterans? There are 56,000 veterans—those are figures we have, but it is reckoned there are far more, because the information is not captured—who are collecting universal credit. Are we going to label them as layabouts? That is problematic.

Benefits are not rising at the same rate as inflation. The Chancellor’s commitment to uprate benefits by 10.1% next year is a step in the right direction, but what are people doing this winter? How are they heating their homes, and how are they feeding themselves? They need the money now. I have also heard comments such as, “People need to get better at managing their budgets.” Let us be clear: when someone is on a very tight budget and knows where every penny is coming from and where every penny is going, they are extremely good at managing their budget. If Members want to see how to manage a budget, they should speak to the most disadvantaged in their communities, because they know how it is done.

There are things this Government should be looking at. They should be looking at the Scottish Government’s Scottish child payment of £25 a week for every eligible child up to the age of 16. They should decouple gas and electricity supplies so that the prices are reduced, especially for those who can see the energy being generated. We need to tax these energy companies’ profits properly. It is not right that they are generating huge profits off the back of the most vulnerable in our communities. The Government also need to look at freezing rents for those in the private sector, as has been done in Scotland.

More and more people in Scotland are looking at the differences between these two nations; increasingly they are saying that there is only one future for them, and it is not in this Union.