Below is the text of the speech made by Angela Eagle, the Labour MP for Wallasey, in the House of Commons on 11 March 2020.
It is a pleasure to follow the Father of the House. I agree with his view that we are on the cusp of a very major change in the tax base, and it is important that we debate what the nature of that change should be.
We are living in very uncertain times. We are on our third Conservative Prime Minister in four years, and this Budget was presented by the fourth Conservative Chancellor in as many years—a Chancellor who has been in place for barely a month and who had to agree to play second fiddle to Dominic Cummings as the price of his sudden elevation.
No Budget was delivered last year, and the Office for Budget Responsibility last published an official forecast nearly a year ago. To make up for that, we are now told to expect that 2020 will be a year of two Budgets and a spending review, so what the Chancellor announced today may be only the first in a trilogy of fiscal events this year.
This Government of Brexit obsessives have deliberately chosen to inflict a high level of uncertainty and disruption on our future trade arrangements. There is still the prospect of an effective no-deal cliff edge at the end of 2020 should the talks with the EU go badly. The Bank of England’s own assessment points to an 8.25% hit to GDP by 2024 in the event of a sudden, unmanaged WTO outcome to the talks, yet the Chancellor barely, if at all, mentioned Brexit in his hour-long speech.
If that were not enough, the country is now facing an immediate and massive threat caused by the rapid advance of coronavirus across the globe. In his evidence to the Treasury Committee last week, the outgoing Governor of the Bank of England said that coronavirus is likely to have a large but temporary effect on the global economy. Today, announcing an emergency interest rate cut of half a percentage point and an offer to banks of four years of cheap funding to ensure they continue to lend, the Bank of England noted a “marked deterioration” in the outcome of already weak economic growth in the coming months. With the persistence of historically low interest rates since 2008, the efficacy of monetary policy is now questionable. That makes the Chancellor’s fiscal adjustment and supply-side response in today’s Budget crucial in mitigating the coronavirus crisis.
Clearly, fiscal policy needed to be looser, temporarily at least, to protect otherwise viable businesses from being destroyed by the short-term abnormal supply and demand shock, so I welcome the Chancellor’s fiscal stimulus package, which he costs at £30 billion. We all hope he has done enough, and we all trust that he will return with more if the situation demands.
I echo the hon. Lady’s comments. The announcements on support for small businesses are welcome, but I have been contacted by many small businesses in my constituency that are worried about extra charges due to the new Financial Conduct Authority regime for overdrafts. The Treasury needs to look at this before the regime comes into force in May.
I certainly hope the banks will recognise the Government’s generosity to them on lending and buffers and will pass that on to the hon. Gentleman’s constituents, as well as mine.
Climate change and the commitment to reach net zero carbon by 2050 also pose a major challenge, and the effect of being unprepared has been tragically evident in the flooding experienced this winter. This Budget offered an opportunity to address the need to introduce transformative policies to get us on the path to net zero before it is too late, but I do not see an awful lot of detail. I welcome the increase in expenditure on flood defences, which would have been even better had it not been preceded by major cuts in expenditure on flood defences. I look forward to the Treasury’s net zero review, which needs to outline the path forward to net zero, but I am puzzled about agriculture being excluded from the announcement on red diesel. Agriculture is the major sector that uses red diesel, so that needs more detailed scrutiny.
The UK economy remains weak in the face of these formidable challenges. The Office for National Statistics has just revealed that the UK economy did not grow at all in the last quarter of 2019, and annual growth of 1.4% last year is one of the weakest on record. The OBR’s forecast for this year was put together before the larger effects of coronavirus were taken into account. Its forecast for expenditure, excluding those effects, is an anaemic 1.1%.
The OECD recently said it expects coronavirus to cut global growth in half. If that is true, it puts us down to about 0.6% for the year, which is one of the worst performances we could expect to see. Monday showed that, even now, the markets are pricing in a recession, so there are vulnerabilities in growth.
There are also vulnerabilities in the UK labour market, in which 3.7 million people are in insecure jobs and have not seen real wages rise in 12 years. Inequality is rising, and one in five workers are earning less than the real living wage. Child poverty is soaring and is set to reach 5 million by 2024 due to the ongoing cuts to benefits and family support, of which there was no mention whatsoever in the entirety of the Chancellor’s speech.
Nearly 1 million workers are on zero-hours contracts, and 2 million are not earning enough to qualify for statutory sick pay. Those in the gig economy and the self-employed are similarly vulnerable to a loss of income so, as far as they go, I welcome the Chancellor’s announcements on statutory sick pay and support for those who self-isolate, but I am extremely sceptical about his announcement that those who work on zero-hours contracts will apparently be expected to apply for employment and support allowance in order to be compensated for doing the right thing. That is likely to be highly inadequate, and we need to return to that issue. I suspect the answer will be statutory sick pay for all from day one.
The lack of rights at work is a barrier in the fight against coronavirus, and it prevents a desperately needed transformation in productivity and investment in skills. The fight against in-work poverty barely features in this Government’s thinking. Recent analysis by the Resolution Foundation has shown that the poorest fifth of the population have experienced a 7% fall in their disposable household income in the past two years, as a direct result of choices this Government have made, which were not reversed by the Chancellor. A decade of swingeing cuts has decimated public services. Public sector workers have had to do more with less, and be rewarded by suffering a real-terms fall in pay and conditions. The NHS has 17,000 fewer beds. There are 43,000 nursing vacancies and 10,000 doctor vacancies in the NHS that we are expecting to deal with the coronavirus crisis. There is a £6.3 billion shortfall in the resources needed for social care. We can welcome the first new investment in a decade, but we have to be clear that it barely begins to restore what has been taken away.
We also have to remember that infrastructure spending, although welcome, does not deal with the current expenditure squeeze, which is ongoing. My local authority, Wirral Council, has £635 less per household to spend than it did in 2010. Merseyside police has seen £136 million of cuts since 2010, so the £28 million extra pledged in the spending review is welcome, but £5 million of it has to come from council tax increases and it will not restore what has been lost. We see the same in area after area: the Government trying to take credit, as though they were a new Government entirely, and distancing themselves from the Governments of the right hon. Member for Maidenhead (Mrs May) and her predecessor, who did all this cutting in the first place.
They say that imitation is the sincerest form of flattery. Today’s overspun announcements of a £600 billion investment programme are welcomed in the self-same Tory tabloids that denounced Labour’s manifesto plans to invest £500 billion as “ruinous Marxist nonsense.” Apparently, £100 billion extra is acceptable if it is the Tories doing it. Let’s face it: we have heard it all before. Let us wait to see what they deliver before we pat them on the back. We must never forget that the Government would not have to allocate £2.5 billion to fix 50 million potholes had they not neglected our roads system with their ruinous austerity policies in the first place.
The Conservative manifesto promised no increases to income tax, which was not mentioned today, national insurance or VAT, and the Chancellor’s fiscal rules, which he is apparently reviewing, give him only minimum headroom for any non-investment spending. His choice, therefore, is to find tax increases elsewhere or increase borrowing, which proves that the extreme cuts that have been inflicted on our society were not necessary in the first place and that the misery they have unleashed has been needlessly cruel. Starting to put right some of the damage they have done is welcome, but we will not forget the suffering and hardship they have caused, especially to the poorest in society. We will not forget the soaring levels of child poverty the Government have chosen to inflict, and the waste of potential and life opportunities that this indifference implies. We will not forget the attacks on the most vulnerable and the Government’s neglect of social care. We will continue to hold them to account for it at this and future Budgets.