Budget Resolutions Debate
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Torsten Bell
Main Page: Torsten Bell (Labour - Swansea West)Department Debates - View all Torsten Bell's debates with the Department for Work and Pensions
(1 day, 4 hours ago)
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Sir Mel Stride
That is absolutely true.
Let us look at how we ended up at this sorry pass. In opposition, Labour assured the British electorate that they would not be putting up taxes left, right and centre, and when they got into power, what did they do within a few short months? They slapped taxes—£40 billion-worth—on the British people, £25 billion of that by way of national insurance increases on business alone. It is no surprise that that destroyed employment and growth.
They talked down the economy. They came up with this confected £22 billion black hole. What an irony it was—[Interruption.] There may be chuntering from those on the Front Bench, but what an irony it was that it was at the behest of the Government themselves that the Office for Budget Responsibility was invited to look into this claim and said that it would not legitimise that figure. The damage was done. The animal spirits in the economy were extinguished.
Of course, they did something else that socialists down the ages always do: they borrowed and borrowed and borrowed and spent and spent and spent until they ran out of other people’s money—
Sir Mel Stride
The Minister is having trouble containing himself, such is the punishment that he is receiving at the moment. They borrowed all this money, and what did that do? It stoked inflation, and with inflation higher, interest rates have been higher for longer.
Sir Mel Stride
The Minister says from a sedentary position that inflation is coming down. The International Monetary Fund says that inflation will be the highest in the G7 this year and next year.
We know that with high inflation, interest rates are higher for longer. That means businesses’ borrowing costs are higher. It means that consumer sentiment is dampened. It means that the servicing cost alone on the burgeoning debt that this Government are constantly adding to is currently £100 billion a year—twice what we spend on defence. In fact, if debt servicing were a Government Department, it would be the third largest in Whitehall—not spending money on better public services, as we are often told by the Labour party, but simply paying for the profligacy of the Labour party when it comes to borrowing.
The run-up to this Budget was a farce. We have seen weeks and weeks of uncertainty generated by the Treasury, which has leaked every possible combination of tax increases and then U-turned on some of them. It has flown so many kites that it has blotted out the sun, and a huge shadow has been cast across businesses, which have pressed pause on investment and hiring. The Parliamentary Secretary to the Treasury should speak to Andy Haldane, who concludes that what I am saying is absolutely right. It has also weighed down on consumer sentiment. All this hokey-cokey around what is in the Budget has done real damage to our economy on this Government’s watch.
Sir Mel Stride
My right hon. and gallant Friend is entirely right, as usual, and something else has also been going on. I have written to the OBR to ask Richard Hughes exactly what happened with the information that the Treasury appears to have leaked out about the forecasts during the run-up to the Budget. I say that in the knowledge that the OBR’s own guidance says that information exchanged with the Treasury during the build-up to a Budget is provided to Ministers in confidence. Why is it then that the Chancellor herself was on the airwaves before the Budget, opining on the apparent coming downgrade to productivity? I have written to the OBR to ask whether it feels that that was appropriate.
I have also written to the permanent secretary to the Treasury to ask if he is implementing an investigation into the leaks coming from the Treasury. Interestingly, he has written back to me simply to say that in the event that there are suspected leaks, of course there is an investigation. He has not quite answered my question as to whether there is an investigation being undertaken at the moment, but I will be following up with him on that matter.
What has happened in this Budget? The OBR forecasts tell a sorry story: unemployment is higher in every single year of the forecast than it was forecast to be back in the spring. Inflation is up—we have seen the latest figures from the Office for National Statistics. Labour is the party that talks about resolving poverty; it is a disgrace that food inflation in the last set of figures went up way above the headline rate, from 4.5% to 4.9%. That rise is being borne by some of the most vulnerable and some of the poorest in our society.
On growth, of course the Chancellor tells a good story. She says that the growth forecast is up compared with spring this year, but, as the Parliamentary Secretary to the Treasury will know, it is down compared with the autumn of last year, when the OBR said that growth would be 2% in this year; it is now forecast to be 1.5%. In in every subsequent year, growth is forecast to be lower than was forecast back at the time of the spring statement. That is the simple fact.
Sir Mel Stride
We will come on to why that is the case momentarily.
What has happened to borrowing? One might have thought that the Government would have learned the lesson that ever-increasing borrowing always leads to disaster, but no: there is £11 billion of additional borrowing on average in every year of the forecast. What has that done to living standards? Real household disposable income—the economists’ measure of economic wellbeing —is down in every year of the forecast compared to the forecast in the spring.
The OBR says—the Parliamentary Secretary to the Treasury will like this one—that real income growth across this forecast will be well below the average of the last decade. So this Government should not point a finger at the last one when it comes to living standards.
Dame Harriett Baldwin
I am talking about yesterday’s Budget. The Chancellor herself announced that she was freezing the thresholds for a further three years, and I dare say that the hon. Gentleman will be asked to vote for that in the Aye Lobby next week. I disagree with him, because the Chancellor has just announced that the thresholds will be frozen for an additional three years.
Another person who will pay more tax as a result of the Chancellor’s decisions is a single young person on minimum wage. I do not know whether hon. Members have seen the emigration statistics that were published today, which show that hundreds of thousands of our young people are fleeing this country. That is something that we should all be very concerned about.
A single mother who has just received a lump sum in a divorce settlement will pay more tax as a result of yesterday’s Budget. A sole trader or entrepreneur who runs a business and perhaps pays themselves in dividends will pay more tax as a result of yesterday’s Budget. A driver in my rural constituency who needs to drive to go to work will pay more tax because of yesterday’s Budget. We can see that the choices made by the Chancellor punish the employers, the farmers, the family businesses, the workers, the savers, the pensioners and the drivers—everyone who tries to do the right thing and tries not to be a burden on the state.
I will leave the House with one final point.
Dame Harriett Baldwin
I am looking forward to the Minister’s winding-up speech at the end of the debate, and I will not give way at the moment.
Given the skulduggery that the Treasury seems to have engaged in during the run-up to this Budget, the lingering impression will be that the spectre of further tax hikes looms. The floating of the income tax idea and all the other tax ideas, and all the taxes, will come back like a ghoul in Budgets to come.
The Parliamentary Secretary to the Treasury (Torsten Bell)
It is a pleasure to close today’s debate, and I thank all Members for their contributions, including my hon. Friends the Members for North Warwickshire and Bedworth (Rachel Taylor), for Exeter (Steve Race), for South East Cornwall (Anna Gelderd), for Gower (Tonia Antoniazzi), for Norwich North (Alice Macdonald), for Newcastle upon Tyne East and Wallsend (Mary Glindon), for Newcastle-under-Lyme (Adam Jogee), for Newcastle upon Tyne Central and West (Dame Chi Onwurah), for Dunfermline and Dollar (Graeme Downie), for North Northumberland (David Smith), for Glasgow North (Martin Rhodes), for Mid Cheshire (Andrew Cooper), for Glenrothes and Mid Fife (Richard Baker), for Earley and Woodley (Yuan Yang), for Congleton (Sarah Russell) and for Calder Valley (Josh Fenton-Glynn), who all made strong cases for this Budget.
I listened carefully as Opposition MP after Opposition MP talked down the British economy, as the hon. Member for Huntingdon (Ben Obese-Jecty) did, talking down British workers and talking down British entrepreneurs. I have been trying to remember what it reminded me of. I was racking my brains, but then it came to me: they are just reading out exactly the same script that they had at exactly this time last year. The shadow Business Secretary, the hon. Member for Arundel and South Downs (Andrew Griffith), frothing with his usual excitement, claimed that Britain would spend 2025 in recession. He said:
“‘Could we be in recession?’ Yes we could.”
That was his forecast.
The actual figures are in, and the truth is that Britain in 2025 did not just avoid recession, but beat the forecast. The OBR has revised up growth this year from 1% to 1.5%. Let us look at wages. As my hon. Friend the Member for Erewash (Adam Thompson) said, wages are up in the forecast and, far more importantly, in people’s pay packets. Wages have gone up more in the first year of this Government than in the entire first decade of the last Conservative Government, and there is much more to do.
Changing Britain was always going to be hard, and we now know that the damage from the last decade of austerity and Brexit was worse than previously thought. That lies behind the productivity downgrade that the hon. Member for West Worcestershire (Dame Harriett Baldwin) rightly raised, but the question is how we respond to that news.
Sir John Hayes
I notice that the Minister is wearing a William Morris—or William Morris-esque—tie, and what Morris understood was the importance of craft and skills. The Government addressed apprenticeships in the Budget in a minor way, but does the Minister know that simultaneously the skills White Paper envisages downgrading apprenticeships by diluting the competencies they confer, thereby undermining their reputation with learners and employers?
Torsten Bell
What I know is that youth apprenticeships fell by 40% under the Conservative party. That is what failure looks like. I am coming on to some of those matters.
We do not want to grow this economy by simply borrowing more, as my hon. Friend the Member for Bolton West (Phil Brickell) rightly pointed out before he turned, at some length, to snails. There is nothing progressive about arguing that we should spend more than £1 in every £10 of taxpayers’ money on debt interest —money that would be better spent on schools and hospitals—so Liz Truss and the leader of the Greens should stay exactly where they belong and where they both started out: in the youth wing of the Liberal Democrats, far away from Government.
We in the Labour party will cut borrowing in every single year—more than in any other G7 country—and more than double the headroom against our fiscal rules. We are cutting borrowing and giving businesses the confidence to invest, and cutting inflation too. We are taking £150 off energy bills, freezing rail fares for the first time in 30 years—as my hon. Friend the Member for Burnley (Oliver Ryan) set out—and extending the fuel duty freeze. All this knocks 0.4% off inflation next year, helping interest rates—which have already been cut five times since the election—to keep on falling, helping businesses to expand and getting mortgages down.
What will not be coming down is public investment, which the OBR says boosts our economy. The pro-growth choice is not to return to the austerity of the past, as my hon. Friend the Member for Cannock Chase (Josh Newbury) set out. Austerity saw Tory Chancellors slash public investment, and repeatedly scrap and delay projects—the worst kind of short-term political fixes, with the worst kind of long-term economic consequences. This Budget presses ahead with an extra £120 billion of capital investment.
It is exactly because this Government are confident about Britain’s future that we are going to invest in it. Sizewell C is going ahead, and we are building the UK’s first small modular reactor at Wylfa—the biggest industrial investment in north Wales for a generation. We are also building the lower Thames crossing. Infrastructure is being built in every corner of Britain. The blockers and the pessimists, and the gloomsters and the doomsters, are being taken on, confronted and defeated. The Opposition parties have never seen a housing development or energy project that they did not want to block, but those days are done. Britain is getting back in the building business.
The Budget also contains necessary and fair choices on tax, which hon. Members have raised repeatedly. We have not hidden from that fact, nor am I hiding from the fact that we are asking everybody to contribute by further freezing tax thresholds towards the end of this Parliament. I hear the chuntering and the howls from the Conservatives, but where did this year’s frozen thresholds come from? Them. Who put in place next year’s freeze? Them. They announced threshold freezes, they defended threshold freezes, they voted for threshold freezes, and they cannot howl with outrage about them now. In case all of that is not clear enough to them, let me spell it out: of the revenue raised from frozen thresholds, over three quarters comes from the choices made on their watch. The difference between us and them is that we are not ducking the long-needed reforms that our tax system needs—reforms that mean we can keep the contribution from workers as low as possible.
We have already abolished non-dom status, raised capital gains tax and ended tax breaks for private schools. The Budget brings an end to the disgrace of someone in a terraced house in Blackpool paying more in council tax than someone in a £10 million mansion in Westminster—or what the shadow Chancellor called an ordinary family home. If he had had more time, I am sure he would have gone on to worry about people with an ordinary family deer park, duck pond and stables.
Torsten Bell
I will come to the hon. Lady in a second, because she and the hon. Member for St Albans (Daisy Cooper) told us that the Liberal Democrats wanted wealth taxes, while continuing their record run of opposing every single wealth tax put in front of them, and conveniently forgetting that the Liberal Democrats tried and failed to introduce just such a wealth tax in government —a level of convenient amnesia matched only by the hon. Member for Clacton (Nigel Farage) when reminiscing about his school days.
Sarah Olney
Because the Minister was maintaining his own running commentary throughout my speech, he probably missed me making the point that, although he keeps saying that this is equalising council tax between poorer areas and richer areas, he must admit that it in fact does nothing of the sort. When people owning £2 million houses in Putney pay their £2,500 levy on top of their council tax, they will still only be paying the same amount of council tax as people living in the lowest band of properties in my constituency. There are arguments to be had about the mansion tax, but can he stop saying that it equalises council tax rates in different parts of the country, because it does nothing of the sort?
Torsten Bell
I did not say anything of the sort. I said that we are not going to have a £10 million mansion in Westminster paying less tax than a terraced house in Blackpool, and that has been brought to an end by this Budget.
I have heard the worries of some Opposition Members about the surcharge, and I want to assure the House that less than 1% of properties will be affected, and even for the £10 million mansion I have mentioned, it will not exceed £7,500 a year. To put that in perspective, it is not even enough to bribe a Russian-sympathising, Putin-praising Reform politician—or a traitor, as we should always call them.
Other reforms in the Budget will ensure that everyone who drives on our roads helps to maintain them. It will address the fact that tenants pay higher taxes than their landlords and tackle some of the tax breaks that have exploded in recent years, disproportionately benefiting the wealthy. That is the fair thing to do, and it is the responsible thing to do.
I know that others want to take a different approach, and I heard representations from some to raise income tax. Who was particularly keen? The shadow Chancellor. He told eager listeners—[Interruption.] I think he should listen. He told eager listeners at the Conservative party conference that he would “go for income tax”. In fact, he was more enthusiastic than that, going on to label it the best “thing to do”. We have not taken his advice, and are instead delivering major reforms—reforms ducked by Tory Chancellor after Tory Chancellor.
We have heard a lot about welfare today, and I recognise why. It is because our welfare system is failing, and we are changing it. We are undoing the huge incentive to be labelled too sick to work that the Conservative party built into universal credit, and the OBR has confirmed that this will move tens of thousands more people into work. The shadow Chancellor claimed he had a plan to reform welfare, but he did not mention that it was quashed by the courts. What he actually did as Secretary of State for Work and Pensions was to oversee the subsidised leasing of luxury cars, with the ordinary taxpayer bearing the cost of tax breaks for Mercedes and BMWs on the Motability scheme. Well, those days are done. The scheme has itself removed luxury cars, and it has committed to half of its cars being built in Britain. We are reforming its tax breaks to save over £1 billion in the coming year.
Torsten Bell
I am afraid that I do not have time to give way.
The last Government cancelled face-to-face assessments for health benefits; this Government are bringing them back. The last Government also oversaw a scandal that has received far too little attention. They allowed people who came to Britain for just a few years—people who left, and never had any intention of returning—not only to buy a state pension, but to buy it on the cheap. The Conservative Government did not just waste money here at home; they wasted it across Canada, Australia and New Zealand, and we are bringing this overseas pension scandal to a close.
What this Government will never do is pretend that the Tory policy of making children poor does anything other than cost us all in the long run. Child poverty costs this country £40 billion a year. A child growing up in poverty is less likely to be in work as an adult, and they earn 25% less at age 30. We tackle child poverty not only because it is a moral imperative, as was laid out by my hon. Friends the Members for Rochdale (Paul Waugh) and for Camborne and Redruth (Perran Moon), but because it is an economic one. This Government will scrap the two-child limit, we will lift over half a million children out of poverty and we will deliver the biggest fall in child poverty of any Parliament on record.
Everyone can see what the Conservatives are trying to do. They cannot defend their record, and we all know why. They have nothing to say about Britain’s future, as the Leader of the Opposition made patently clear yesterday, and now they are salivating at the prospect of trying to hide their total lack of policy behind the cheap, divisive, lazy politics of talking about “Benefits Street”. Well, bring it on, because this Budget is for every street, with potholes being filled, neighbourhood police back on the streets and an NHS that is actually there when we need it. It is a Budget for every street in cutting borrowing because that helps not just mortgage payers, but employers; it is a Budget for every street in cutting energy bills because the cost of living crisis has seeped into everyone’s homes—rich and poor, north and south; and it is a Budget for every street because child poverty exists in every part of Britain, limiting life chances, wasting talents and undermining not just some childhoods, but all of them. With borrowing down, energy bills cut and public services rebuilt, this is a Budget for every street in Britain.
Ordered, That the debate be now adjourned.—(Gregor Poynton.)
Debate to be resumed on Monday 1 December.