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Category: Economy

  • John Eatwell – 2021 Speech on the Budget Statement

    John Eatwell – 2021 Speech on the Budget Statement

    The speech made by John Eatwell, Baron Eatwell, in the House of Lords on 12 March 2021.

    My Lords, in these very uncertain times, it is inevitable that some of the Budget measures will prove an unexpected success and some an unexpected failure. So, instead of dealing with detail, I will focus on the inspiration and what the Budget tells us about the Chancellor’s thinking—his economic philosophy, if you like.

    Fortunately, that philosophy is summed up in the Budget speech:

    “The only reason we have been able to respond as boldly as we have to covid is because 10 years of Conservative Governments painstakingly rebuilt our fiscal resilience.”—[Official Report, Commons, 3/3/21; col. 255.]

    Note that he said: “The only reason”. For the Chancellor, the prime objective of government policy must be fiscal resilience—the heartbeat of austerity. There was no mention of the impact of those 10 years on public services desperately understaffed as the pandemic hit, no mention of the lack of 35,000 nurses in the NHS—indeed, no mention of the NHS at all—and no mention of the fact that we entered the pandemic with a little over six intensive care unit beds per 100,000 population, compared with double that number in France and Italy and five times that number in Germany.

    For the Chancellor, fiscal resilience is paramount and the unique determinant of economic success. Hence the grandstanding on future tax rises in the Budget. For the future is to be dominated not solely by higher taxation but by cuts in government spending on top of the cuts already announced in the autumn. These are deemed necessary to pay off the debt. Overall, it is deflation in excess of £30 billion a year—year after year. How well founded is the Chancellor’s assertion that austerity is

    “The only reason we have been able to respond”?

    As is evident from the OBR report, the increase in government spending to counter the pandemic was funded almost entirely by the Bank of England. Does anyone really believe that the Bank would have refused to fund the increase?

    Is the Chancellor right to suggest that fiscal resilience should be his principal objective, or is his obsession distorting the Government’s entire approach to economic policy? Let us be clear: the prime objective of government economic policy should be the management of demand for the nation’s real resources, labour and productive capacity. The Government should set fiscal policy to ensure the very best use of resources today and development of resources for the future. If this involves more debt, then that is the best economic decision; if it involves more taxation, then that is the best decision. The role of taxation is not to pay off the debt but to be part of a balanced programme of fiscal and monetary policy to stimulate the real output needed for the achievement of the Government’s goals: health, education, defence of the realm, decent living standards, tackling climate change and so on.

    Of course, the mixture of taxation, spending and debt decrease or increase may have other consequences that must be taken into account. For example, the OBR demonstrates that quantitative easing has lowered the maturity of UK debt, making it more interest rate-sensitive. That is serious. There may be other effects in the money markets. For example, holders of government bonds may come to believe that current policy will increase inflation. It does not matter whether the belief is true or false; if the result is that they sell off bonds, interest rates will tend to rise. Given his important responsibility of managing expectations, there is market danger in the Chancellor’s suggestion that fiscal resilience should be the paramount goal.

    If, instead, we view the Budget through the lens of a programme of monetary and fiscal policy that secures the highest real output, some key consequences emerge. In a speech last week, the Governor of the Bank of England defined the ideal post-pandemic economic policy: the cost of the Covid shock

    “has to be managed, and it will be easier to do that with a higher trend rate of growth, boosted by stronger investment.”

    Have the Government provided a plan for stronger investment? The approach in the Budget is best characterised as, “There’s a problem, so throw money at it and hope it works. There’s a lack of investment, so throw money at super deduction for two years.” The result is spelled out by the OBR: long-term investment will not be increased, just shifted around. There will be a two-year boost to take advantage of the subsidy, then a decline. For companies to invest, they do not need super deductions; they need the prospect of growing demand for their products. What does this Budget offer them? Miserable rates of demand growth: 1.5% in 2023, 1.6% in 2024 and 1.7% in 2025—no long-term strategy for investment.

    Similarly, there is a housing crisis. Let us throw money at it in the form of stamp duty holidays and a mortgage guarantee. The result? Sharply rising house prices and a few more houses. Has the Chancellor not noticed that house prices have risen by 8.5% in the midst of the worst recession of modern times? There is no long-term strategy for housing.

    So, where is the plan for investment? Well, there is what I can only describe as a PR brochure, Build Back Better: Our Plan for Growth, published by the Treasury. It is full of wonderful, glossy photographs and a lucky dip of proposals on infrastructure, skills, innovation and the environment, but the photos fail to disguise the fact that there is no unifying framework, a complete absence of any plan for implementation or monitoring, no institutional oversight and no evidence of consultation —nothing to encourage the commitment of private investment, and no strategic thinking for an investment decade. How could there be when fiscal resilience and spending cuts have to come first?

    The pandemic has imposed a massive cost on the British economy, the real cost of lost output, lost jobs, furloughed idleness and collapsed businesses, the highest death rate in the G7 and the biggest fall in production. But there is an economic opportunity. New thinking can define a break from the policies of the past 10 miserable years. Just as, after the war, Britain built a better society, we can build a new economy and a new society now, but only if monetary and fiscal policy are the servants of a building programme; not if, as for the Chancellor, the real economy is to be squeezed in the service of outdated fiscal orthodoxy.

  • Theodore Agnew – 2021 Statement on the Budget

    Theodore Agnew – 2021 Statement on the Budget

    The statement made by Theodore Agnew, Baron Agnew of Oulton, in the House of Lords on 12 March 2021.

    My Lords, the Budget that the Chancellor set out last week has three key elements. First, it protects jobs and livelihoods and provides additional support to get the British people and businesses through the pandemic. Secondly, it is clear and honest about the need to fix the public finances. Thirdly, it starts the work of building our future economy, including by providing opportunities to level up across the country.

    The Budget announced additional measures worth £65 billion to support the economy through the pandemic this year and next. Added to last November’s spending review, the number is £352 billion and, taking into account measures from the spring Budget last year, the figure rises to £407 billion. The OBR now expects the UK economy to recover to its pre-crisis level six months earlier than originally expected—in the second rather than the fourth quarter of 2022.

    Importantly, the Budget extends the furlough scheme until the end of September. Support for the self-employed will also continue until September, with an additional 600,000 people now potentially eligible to claim. The universal credit uplift of £20 a week will be maintained for a further six months and working tax credit claimants will receive equivalent support over the same timeframe.

    Among other things, the Budget also reaffirmed the Government’s commitment to increase the national living wage to £8.91 an hour from April. It also announced a new restart grant in April to help businesses to reopen and get going again, as well as a new recovery loan scheme to replace our earlier bounce-back loans and coronavirus business interruption loans.

    The Chancellor was also open about the longer-term fiscal challenge that we now face. The Budget does not raise the rates of income tax, national insurance or VAT. Instead, it maintains personal tax thresholds on income tax, inheritance tax, the pensions lifetime allowance and the annual exempt amount in capital gains tax, with higher earners affected the most. It also announced an increase in corporation tax to 25% from 2023. Importantly, 25% is still the lowest corporation tax rate in the G7 and companies that make less than £50,000 profit annually will only be subject to a 19% tax rate. Given that the Government are providing businesses with over £100 billion of support to get through the current crisis, it is only right to ask them to contribute to our recovery.

    The third component of the Budget is a series of initiatives and measures to support the investment-led recovery that the country needs. A new super deduction will, in some cases, allow companies to reduce their taxable profits by 130% of the cost of the investment that they make in plants and machinery, which is equivalent to a 25p tax cut for every pound that they invest. Worth £25 billion over the two years that it is in place, the super deduction represents the biggest business tax cut in modern British history.

    The Budget also announced, among other things, the creation of the first ever UK infrastructure bank, headquartered in Leeds. Two new schemes—Help to Grow and Help to Grow: Digital—will help tens of thousands of small and medium-sized businesses to get world-class management training and help them to develop their digital skills. We are helping to ensure that we have access to the talent that we need through the reforms that we are making to our visa system.

    Achieving an investment-led recovery means allowing investment to flow more freely, which is why we want to give the pensions industry more flexibility to unlock billions of pounds from pension funds into innovative new ventures. Alongside these measures, our commitment to levelling up across the United Kingdom is reflected in the £4.8 billion levelling-up fund; accelerated city and growth deals in places such as Ayrshire, Falkirk, north Wales and Swansea Bay; more than a £1 billion for 45 new towns deals; and a £150 million fund to help communities across the United Kingdom take ownership of pubs, theatres, shops or local sports clubs at risk of loss. This complements the inward investment that will be attracted through the announcement of eight new freeports in eight English regions.

    The country has experienced the worst fall in GDP in three centuries—not the 1976 sterling crisis, not the Second World War, not the First World War, not the Napoleonic War; this has been harder financially than all those. In response, the Chancellor has presented a plan that will continue to protect jobs and livelihoods and to support British people and businesses through this moment of crisis. It will begin to fix the public finances and will start the work of building our future economy through investment-led recovery.

  • Anneliese Dodds – 2021 Comments on January ONS Figures

    Anneliese Dodds – 2021 Comments on January ONS Figures

    The comments made by Anneliese Dodds, the Shadow Chancellor of the Exchequer, on 12 March 2021.

    Today’s figures confirm that under the Conservatives we’ve had the worst economic crisis of any major economy.

    Rather than securing the recovery, Rishi Sunak’s budget last week risked weakening it through a combination of pay cuts and tax rises, and a looming cut to social security just as unemployment is set to spike.

    The Chancellor’s mask has slipped. He’s making irresponsible choices now and has no long-term plan for the future. The people of Britain deserve better.

  • Anneliese Dodds – 2021 Comments on £95 Billion of Tax Cuts

    Anneliese Dodds – 2021 Comments on £95 Billion of Tax Cuts

    The comments made by Anneliese Dodds, the Shadow Chancellor of the Exchequer, on 9 March 2021.

    Labour has argued for over a decade that cuts to corporation tax don’t boost investment or raise extra revenue – they just cost the Treasury billions that could have been put to better use.

    We welcome the Chancellor’s conversion to our point of view, but we can never get back the £95 billion lost to the Treasury over the last few years from this economically illiterate tax cut.

    That money could have been used to strengthen our economy going into this crisis. Instead the Conservatives slashed salaries for key workers, ran down our schools and hospitals, and cut 21,000 police officers from our streets.

    Never again should any Conservative government be allowed to use such a discredited economic argument to weaken the foundations of our country.

  • Douglas Ross – 2021 Speech on the Budget

    Douglas Ross – 2021 Speech on the Budget

    The speech made by Douglas Ross, the Conservative MP for Moray, in the House of Commons on 3 March 2021.

    I want to welcome the Budget on behalf of my constituents in Moray and of people across Scotland. There is a lot of good news in what the Chancellor had to say today. First, however, I want to pick up on a few remarks in the speech made by the leader of the Scottish National party, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford). He accused members of this Government of not understanding what it was like to be poor. That is quite an incredible statement from someone who earned his fortune as an investment banker in the City of London before he rediscovered himself as a humble crofter.

    The right hon. Gentleman went on to say that this Budget lacked ambition, but I thought there was ambition weaved throughout the Chancellor’s statement. It has ambition for individuals, families and businesses in the weeks and months ahead, and ambition for our country in the years ahead. If the leader of the SNP at Westminster wanted to see a statement that lacked ambition, he should have looked at Nicola Sturgeon’s statement last week on her partial route map out of lockdown restrictions for Scotland. That was a document and a statement that lacked ambition, hope and clarity and one that we are seeing unravel at the moment as people in Scotland expect more from their Government.

    The final point I want to focus on from the right hon. Gentleman’s speech is his comment about how in Scotland there has been an extension to the freeze on business rates for a further year. That is true, but that further freeze, for another 12 months, was made possible and accepted by the SNP Finance Minister only because of an additional £1.1 billion of support from the UK Government to the Scottish Government. Kate Forbes stood up in Holyrood and said that she was able to do this only because of additional support coming from the UK Government to Holyrood, to the Scottish Government, so that is why we have the extension for a full year of business rates in Scotland.

    The right hon. Gentleman mentioned that newspapers were also covered. Of course, the SNP had to be forced to include newspapers in the business rates relief. A vote by the Scottish Conservatives in Holyrood, which the SNP was against to begin with, forced a U-turn. I will leave it to others to speculate why the SNP at this time would not want to support the newspaper industry in Scotland.

    Throughout the last year, in dealing with this pandemic, the UK Government have delivered unprecedented support for Scottish families and businesses: the furlough scheme and the self-employed income support, protecting 930,000 Scottish jobs; loans to over 90,000 Scottish businesses and an extension of the reduced rate of VAT for hospitality, leisure and tourism; the £20 a week uplift for universal credit to help those in our society who need it most, which is something I have been calling for since October last year; and £9.7 billion of additional funding for Scottish public services. With this Budget, the Chancellor is continuing those vital lifelines, extending furlough and the self-employed income support until September.

    Just as this pandemic has gone on longer than any of us could have imagined back in March last year, so, too, has the broad support delivered by the UK Treasury to the people of Scotland. Yet this is not just a Budget to help the Scottish economy to survive the pandemic. It is also a Budget for our recovery, with investments to support the economy in the north-east in its transition towards green energy, an acceleration of the transformative funding for Scottish growth deals to bolster the local economies in Ayrshire, Argyll and Bute, and Falkirk, and a freeze on the fuel duty to back Scottish drivers, which is crucial to our remote and rural areas. Just look at how that contrasts with the SNP Scottish Government lobbying for an increase in fuel duty. It has gone widely unreported that the SNP is calling for an increase. When we look at the options for fuel duty, how will that go down with voters in rural Scotland in a few weeks’ time? And, of course, as the MP for Moray, representing more Scotch whisky distilleries than any other MP in this place, I warmly welcome the freeze on spirits duty. That is hugely important to the distilleries in my constituency and alcohol producers more widely in Scotland and across the UK.

    The Budget shows that the UK Government have a plan to rebuild Scotland’s economy after the immediate health crisis is over, to create jobs and opportunity in every part of our country as we pull together to deliver our recovery. The Chancellor said that the majority of these measures apply across the United Kingdom. We have a further £1.2 billion of spending going to the Scottish Government. We need to see the Scottish Government ensuring that that gets to the services and businesses that need it most. On the stamp duty freeze, we now see that holiday continuing in England until September, but in Scotland it has now ended. We need to see action on that in Scotland as well.

    Yet SNP Members cannot welcome this plan—they could not support the Budget because they would rather focus on another divisive independence referendum than our recovery from coronavirus. They say that they want to bring this referendum forward at the earliest opportunity, just when people are renewing their ties with friends and families and businesses are beginning to reopen. Their plan would damage not only our Scottish recovery, but that of the whole of the United Kingdom. That is the last thing we need right now. What families and businesses across Scotland want to hear from the Scottish Government is a full route map for ending restrictions, not a route map for separation. As I said earlier, they are looking for certainty and for hope. This Budget has delivered that by extending the vital lifelines that Scottish families and businesses are relying on. It is now time for the Scottish Government to do the same.

    The Chancellor has set out an ambitious programme that will not only secure the survival of many jobs and businesses in Scotland, but provide the basis for our economic recovery in the future. There was just one point that I agreed with the leader of the SNP on. He said that Scotland has a choice of two futures—we do. In the coming Scottish Parliament election, voters will decide whether they want the focus of all the politicians and all the parties within the Scottish Parliament to be on another independence referendum or on rebuilding Scotland from coronavirus. Let us not choose more damaging division. Let us instead rebuild Scotland and the whole of the UK together. Today’s Budget will help us do that.

  • David Davis – 2021 Speech on the Budget

    David Davis – 2021 Speech on the Budget

    The speech made by David Davis, the Conservative MP for Haltemprice and Howden, in the House of Commons on 3 March 2021.

    May I start by associating myself with the comments of the Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), on ExcludedUK and helping them, and on the leaseholder issue, which also requires help? I also associate myself with those on both sides of the House who have called for the uplift in universal credit to be rendered permanent, which I think in due course will prove sensible.

    When I applied to speak in this debate a few days ago, given the headlines in the press I thought that I might be challenging head-on the Chancellor’s strategy, in view of my concern that sudden tax increases would crush any recovery. It is therefore a pleasure today to find that that is not the case, and that I can be much more supportive of my right hon. Friend.

    Obviously covid-19 has led to incredibly difficult economic circumstances. The country has suffered the worst peacetime economic shock ever. Indeed, we have the worst outcome in the G7, and the deficit is the worst since 1944—a date that I will come back to—which, in and of itself, is extraordinary. The Chancellor faces quite remarkable economic problems that are worse than any Chancellor has faced in peacetime history, and he has handled it with remarkable sensitivity in the way he has put his policies together. I have a question about one or two, but broadly speaking, he has met this economic challenge of enormous magnitude with great skill.

    What do these numbers mean? These billions and trillions that are casually thrown about by supposedly expert commentators are incredibly difficult for ordinary people to understand. In my view, they are best understood when looked at in terms of the impact by household or by wage earner, because that gives a better idea of what they mean. For example, the latest deficit figures published before today were £394 billion a year. That is £14,000 per household—that is the size of the black hole we have to fill. Just looking at the size of the number tells us that no tax policy can solve it. The idea of imposing £14,000 per household of taxes is nonsense; it would be designed to destroy any economic recovery. Only a recovery policy designed to restore the tax base and remove the need for subsidies will close that gap, and I am pleased to see that the Chancellor has essentially adopted that strategy.

    The most recent estimate of the debt is well over £2 trillion and may be £3 trillion. Some £2 trillion or thereabouts amounts to £77,000 per household. I remember only a few days ago a BBC commentator talking about paying off the overdraft. I do not have an overdraft of £77,000. This is a big mortgage that is not paid off in one year. To pay off such a debt rapidly would be crippling. Again, the size says it all. It has to be paid off in the very long term—as the Chancellor said, over decades.

    Since this is the worst debt and deficit combination since 1944, we should treat it in the same way as they did then: with a 50-year time horizon on the loan—a war loan, if you like. Both the world war one and world war two debts were paid off this century, within the last 20 years, so that gives us an indication of what needs to be done. I have heard a number of people say, “The interest rates might go up.” To a large extent, two things are happening here. Every single country in the world has this issue, and therefore every single Government in the world has an incentive to hold interest rates down, and they now have the mechanisms to do it—they have done it time and again with quantitative easing, even before today.

    To close that £14,000 per household deficit, we need to increase growth, increase employment and increase wages. All those things will increase the tax base. The Chancellor said—and I am glad to hear him say it—that his first priority is employment. That is the centre of those aims, and that is exactly right. That requires higher domestic investment to achieve it. It requires higher foreign inward investment to achieve it. It requires higher new company formation and higher research and development, and it will, in turn, generate higher aggregate demand. Tax increases help none of those things.

    The issue of tax increases is not a Tory ideological issue; it is about what delivers the recovery. Income tax increases, whether direct or stealthy, reduce aggregate demand; they reduce the amount of money people can spend. Corporation tax increases suppress investment. Capital gains tax increases deter both domestic investment and foreign investment. The one thing I am worried about in this Budget is the proposal to go to 25% corporation tax in a couple of years. That will have precisely the deterrent effect I worry about with respect to inward investment. I am looking at my Northern Irish friend the right hon. Member for East Antrim (Sammy Wilson), who is nodding at me, because of course in the Province that is absolutely a central issue for us all. We have to worry about tax increases from that point of view.

    I was very pleased to hear the Chancellor’s emphasis on what he called the science superpower strategy, and, as he said, it is not hubristic; we are the country with the highest number of Nobel prizes per capita in the world and should be able to marshal something out of that. We have already had an announcement on setting up our equivalent of the Defense Advanced Research Projects Agency—the Advanced Research and Invention Agency; we have new strategies and new funding for science, and new tech visas. All those things will help as all—the whole kingdom—in improving our growth rate.

    What is a growth strategy worth? It is very difficult sometimes, particularly dealing with the Treasury, which is very difficult about dynamic taxation and indeed does not seem to understand it, despite the fact that the British Treasury under Nigel Lawson created the best dynamic tax demonstrator in history.

  • Christine Jardine – 2021 Speech on the Budget

    Christine Jardine – 2021 Speech on the Budget

    The speech made by Christine Jardine, the Liberal Democrat MP for Edinburgh West, in the House of Commons on 3 March 2021.

    It is an honour to follow the hon. Member for South Ribble (Katherine Fletcher). I think we all appreciate that the Chancellor’s statement today comes at a time when the covid-19 virus has had far-reaching and, in some cases, life-changing and even life-ending consequences for far too many of our constituents. People have seen the well-planned, well-financed future they had built for their families swept away by the virus. Businesses are now on the brink because they followed responsibly the rules laid down by the Government. While there are some steps in the Budget that I am sure will be welcomed, it does not go far enough for the many who have suffered the most, such as those on lower incomes, for whom the freeze on the tax threshold will mean a real- terms loss in their income.

    Today, a million small businesses and small-business owners who have been fighting desperately to stay afloat and protect jobs and livelihoods were looking to the Chancellor to extend a lifeline—something to get them through the next few months and out on the other side of this pandemic. While there will be changes to corporation tax in two years’ time, that is two years’ time. What about tomorrow, next week and next month? I am sorry, but what we have heard today falls far short of what those small businesses needed. We need to get shops, tradesmen, hairdressers and florists, who are the backbone of our economy and the heart of our communities, through the next few months and they needed changes now. They have lost income and revenue to pay the rent costs, which are building up, and they are accruing debt.

    Five billion pounds for small businesses is not enough. What the Chancellor has announced does not even touch the sides of the problem. What we need, and what Liberal Democrats have been calling for, is a £50 billion recovery fund to help small businesses meet their costs and replace their lost revenue until they are able to trade properly again, until the economy is open—£25 billion over three months, totalling £50 billion. We have seen in Germany that it can succeed.

    We have also called on the Chancellor to implement a zero business rates policy for all small businesses in 2021-22. While maintaining the VAT cut for hospitality is essential, we would have liked to see that stay in place until the end of the financial year, not just until September, and not just for hospitality but for all businesses. VAT deferral would allow them to free up capital to invest in their business.

    The extensions to furlough, to self-employment support and to the universal credit uplift all needed to go much further. Furlough should be extended for as long as we need it, and all the self-employed and excluded should be brought into it. Too many people who have been left out will remain so after this Budget. There are 3 million people who have had no financial support at all in this crisis, and only 600,000 of them, according to the Chancellor’s own figures, will be helped. The gaps in support all-party parliamentary group gave the Chancellor a plan that would have helped those left out. Why did he not take it?

    As for the universal credit uplift, even with it, the UK still has one of the least generous social welfare systems in the OECD, and one that we all know is seriously flawed. The uplift is due to end when unemployment could rise again, as the furlough scheme, which has kept it down, comes to an end. Therefore, when will the Government listen to the voices across the country, and from all political parties, that are calling for pilots and trial schemes of a universal basic income, which would have meant that nobody fell through the cracks during this crisis?

    Now we all look to September and wait for the Chancellor’s next batch of patches. I am left today with far too few answers and too many questions. Why is our economic performance so much worse than those of other countries? Why is support for small businesses and the self-employed so little, especially for those so hard hit by Brexit? There is no long-term reform of business rates. Why is there nothing on social care and carers? Why so unambitious on our future green industries? There are no tax incentives for transitioning away from a carbon economy, and there is nothing to replace the green homes grant. But there is a tax hike on the lowest paid, by freezing the threshold next year. Simply mitigating the problems caused by covid will not repair the economy or provide the investment for the growth that we need for recovery.

    Small businesses, families and self-employed people up and down this country were watching today, hoping for something to repay their commitment and their sacrifice in fighting this pandemic—a fair response from the Government, not self-congratulations on having done so well. The Chancellor, at the beginning of his statement, promised us a Budget to meet the moment. I am afraid that I do not think he has fulfilled that pledge.

  • Katherine Fletcher – 2021 Speech on the Budget

    Katherine Fletcher – 2021 Speech on the Budget

    The speech made by Katherine Fletcher, the Conservative MP for South Ribble, in the House of Commons on 3 March 2021.

    Last year, I asked the Prime Minister, on behalf of the good people of South Ribble, to throw the kitchen sink at supporting the British people through this awful pandemic. Today, this Conservative Chancellor has continued to do just that: kitchen sinks are being thrown. The scale of the financial support that we are offering is massive. We are extending our spending to help people and businesses right through to September and beyond, which is much further than many expected. We are helping businesses to survive with furlough and VAT cuts and supporting them to get back on their feet with restart grants. Costing £407 billion, it is a lot of money to help this country in its time of need.

    It was the Conservatives who spoke a decade ago of getting the nation’s finances sorted. We were fixing the roof while the sun was shining. Well, this once-in-a-century global pandemic is the weather equivalent of it raining stair-rods. Cats and dogs have fallen from loaded dark grey clouds on the British people during this pandemic. Businesses have been forced to close, or to work in different ways, to save our lives. Our existential British right to talk a load of nonsense down the pub on a Friday night with friends and strangers has been curtailed, not to mention what has happened to the brilliant people who run these businesses. This Chancellor and Government know what they are doing. We get that we could not have a situation where people lost their jobs or their hard work for businesses just because some bat in China got a nasty cough a couple of years ago. That is not their fault, and this Government have done eye- wateringly massive things quickly to protect people, their families and their work from the consequences of bats and biology.

    It is also honest to say that this help has cost us a fortune. This Conservative Government have been fair in protecting people when the awful things happened, but the sums of money required are—wow—massive. It is our money. When I say that it is costing us a fortune, I do mean “us”. It is not Government money or some nebulous concept; it is our money raised by our taxes on our hard work and our business innovation. At some point, we will have to pay this massive support back— not all in one go and not at any price. I commend the Chancellor’s honesty today in setting out two broad themes on how to keep us on an even keel with our money and the nation’s finances.

    As individuals, we will have to push back some potential gains to future years, such as freezing salaries, paying a bit more tax, and asking the bigger businesses to contribute a bit more without making us as a country too different from our international peers in the G7. As the Government, we will have to continue to be careful about how we spend our money, but when we do spend money, we should spend it to invest. This statement shows that we will focus on areas that will help us grow our businesses and our communities. We are putting in place the foundations for a future economy to boing back, never mind bounce.

    Today’s announcements of investments, super deductions and capital investment plans will boost business investment by enormous sums with world-leading measures. This Government are supporting people to invest to grow their business, creating good jobs across the country. Measures today such as the UK infrastructure bank in Leeds—it is the wrong side of the Pennines, but still amazing—and the levelling up fund will make the UK and Lancashire the best place in the world for innovative businesses to set up and grow. Freeports will help us get our goods to the world, and Help to Grow is brilliant. It will give everyone access to new skills and technologies and boost their businesses, no matter how small they are. I would have run with open arms to these measures when I was running my business.

    On a personal note, the people of Leyland want me to thank the Chancellor hugely for the announcement today of the £25 million investment in our town. For too long, Leyland has not seen its fair share of investment. Recently, local businesses, local officials, elected people like me and experts from the Government have been working really hard together in the town board to put a bid together to transform our town centre. I am so chuffed it was successful. Thank you. We cannot wait to get spades in the ground and get started.

    It is also important to note that I have the honour in today’s debate of following the right hon. Member for Islington North (Jeremy Corbyn), if only to point out where his crazy spending plans would have put us in the middle of this crisis—in short, a mess. The plans, which the Opposition Front Benchers supported in their manifesto, would have dug a black hole bigger than this pandemic has done in our nation’s finances, which the pandemic would have then deepened. The Labour party is just not being honest or straight with the public when it suggests we can just borrow our way out of this. When Labour Members are a bit vague about what they would actually do to fix this problem, that is because they are not being honest about the consequences of having too much debt for the safety and security of our country.

    Not committing to anything and being a bit vague is fine as a political strategy, but it is not the way to do the right thing by the great British people. This Chancellor and this Government are doing the right thing to support us—responsible, grown-up, practical and fair. They are being honest about what we have been facing and are still to face. They are looking to the future and investing for growth in Leyland’s town centre, in Lancashire’s businesses and across the nation. It is what we need to build back better, and I support this Budget wholeheartedly today.

  • Jeremy Corbyn – 2021 Speech on the Budget

    Jeremy Corbyn – 2021 Speech on the Budget

    The speech made by Jeremy Corbyn, the Independent MP for Islington North, in the House of Commons on 3 March 2021.

    I am delighted to be able to speak in this Budget debate, but sadly this Budget does not reflect the reality of people’s lives. Just this morning I have come from a local food bank where people were queuing up to try to get enough food to get by. They are people who thought they would always be okay and have enough money to live on, but they do not and they therefore rely on food banks. To the tens of thousands of people who have volunteered in mutual aid groups all over the country, I think we should say a huge thank you. They have contributed, in a way that the Government have not, to the lives of so many people who would be in such great difficulty if those food banks were not there.

    The Chancellor talks about extending the furlough scheme and protecting people on those wages. I point out to him that the scheme includes no floor and that 80% of minimum wage is a lot less than the money people need to live on. It was my right hon. Friend the Member for Hayes and Harlington (John McDonnell) who proposed a year ago that we should have a furlough scheme. He sent substantial papers to the Treasury in order to bring that about. Sadly, I do not believe that the Chancellor read all of them.

    The scheme proposed by my right hon. Friend would have guaranteed everybody’s income and jobs, it would have had a floor, and it would have gone on to protect people’s conditions and wages, as well as those of people in all aspects of self-employment, including in the artistic sector. There are many people in work at the moment who are being threatened with fire and rehire, and there are companies trying to dismiss the whole workforce and rehire them on lower wages and with worse working conditions. British Gas and British Airways tried it on, and so many other companies are trying to do the same thing. Where is the protection for people’s living standards and jobs in this Budget? Sadly, it is desperately missing.

    On public sector pay, many are going to be hit by the pay freeze and by a stealth income tax rise through the freezing of the tax allowance. I remind the Chancellor that a previous Government—a Labour Government in the 1970s—came a cropper on that one when the Rooker-Wise amendment was passed to prevent the Chancellor from the freezing the tax-free allowance.

    Millions of public sector workers have contributed so much to dealing with the covid pandemic. Those working in our national health service, our care services and our local government have made super-human efforts to try to help people get through a desperate time, helping people through the mental health crisis and so much else. Their reward is going to be frozen pay and, for those working in local government, a continued underfunding of local government services.

    For pretty well everyone across the country, there will be a 5% rise in council tax, as local councils desperately try to balance the books and deal with the increased demands on their services because of the covid pandemic. I hope that the Chancellor will recognise that we need a proper funding formula for local services across the country, and not just claps for the NHS, the care service and delivery workers, but actual pay increases to recognise the massive contribution that they are making to our society.

    The Budget said a great deal about corporation tax and other business taxes, but it did not say very much about tax evasion or tax avoidance. From the Government’s statements, they propose to raise around £2.2 billion between now and 2025—in the next four years—from tax avoidance and tax evasion, yet the real figure is that something over £30 billion a year is lost to our public services through tax avoidance and tax evasion. If the Government were serious, they would have included measures in the Budget to deal with tax avoidance and tax evasion.

    I hope, by contrast, that the Government will recognise that not increasing statutory sick pay while at the same time doing nothing about tax evasion and tax avoidance says it all about Tory priorities. Statutory sick pay is £95 per week. The Secretary of State for Health and Social Care himself said he could not live on that; I do not think that any Member would want to try to live on that, so why are we expecting anybody else in our society to do so? It has to be increased, and we need a guarantee of at least the £20 rise in universal credit, which at the moment is still a temporary measure.

    The Chancellor had obviously read quite a lot of the proposals made by my right hon. Friend the Member for Hayes and Harlington before the last election, in which he pointed out that he wanted to move jobs to the north and ensure that the increase in public spending that we were proposing would help people across the north. The Chancellor made a big deal of about 750 jobs going to Darlington. Sadly, all that is cancelled out by the huge number of job losses in transport authorities across the north of England, particularly in Greater Manchester and Merseyside City Region. That is because the Government have not provided them with the funding package to support transport systems that they have in London and other places. This degree of unfairness between the north and the south will continue, and the degree of unfairness between the richest and poorest in our society will increase under this Budget.

    Towards the end of his speech, the Chancellor managed to provide a great deal of greenwash for his proposals. Of course, we all support a green industrial revolution. It was central to Labour’s manifesto at the last election, but where is the commitment to net zero emissions by 2030? Where is the commitment on protection of biodiversity to protect us all for the future? This Budget is such a lost opportunity. At the end of it, our society will be more divided than it is at the present time, there will be greater stress and uncertainty in so many people’s lives because of this Budget. We can, should and must do much better than this.

  • Sajid Javid – 2021 Speech on the Budget

    Sajid Javid – 2021 Speech on the Budget

    The speech made by Sajid Javid, the Conservative MP for Bromsgrove, in the House of Commons on 3 March 2021.

    Over the course of the past year in countries not too dissimilar to our own, people have been asked to choose between protecting their livelihoods and protecting their lives. That has not been the case in our country, and for that we have my right hon. Friend the Chancellor to thank. He said, right at the very start of this pandemic, that he would do whatever it takes to protect jobs, to protect businesses and to protect public health, and he has delivered on every count, and this nation has rightly given him its gratitude.

    Despite his success, the Chancellor will be in no mood for a victory lap. Comprehensive support, as he has said today, has come at unprecedented pressure on our public finances. To date, as we have heard, the Government have already spent more than £300 billion, every penny of that borrowed. While low interest rates have certainly helped, we cannot expect such a benign lending environment to last forever. With national debt already close to national output, as we have heard, just a 1% rise in gilts would mean an additional yearly cost in debt servicing of £25 billion by 2024. That is more than half of the annual defence budget. Indeed, we are already seeing rising pressure, especially because of rising global inflation expectations, so we cannot allow the inflation tiger to prowl unchecked.

    The faster our economy can bounce back, the easier it will be to manage our debt in the future. Thankfully, I believe that our prospects for a sharp, strong recovery look very promising. Thanks to the Government support, the vast majority of businesses are ready for the shutters of the economy to be lifted. The Bank of England has shored up confidence with monetary easing. Households are sitting on some £100 billion of excess savings and, unlike in wartime recessions, there has been no physical destruction of capital. Above all, the Government are delivering on their vaccination programme—a programme that is the envy of Europe and that will lead this continent out of the lockdown. For these reasons, I am very optimistic about the recovery, and I think it will happen rapidly.

    Andrew Griffith (Arundel and South Downs) (Con)

    My right hon. Friend was of course part of the legacy that has put us in a strong position to make the support packages of my right hon. Friend the Chancellor. Does he agree with me that small businesses are the absolute lifeblood of our recovery, and that my right hon. Friend the Chancellor has brought forward, in the Help to Grow package today, two really insightful schemes that will support the nation’s smallest businesses?

    Sajid Javid

    I thank my hon. Friend for his comments, and I very much agree with that. I think there are actually more than two schemes, if we are honest. There are a number of schemes that will help businesses, not least the speed and the scale of the recovery that I have talked of. I especially welcome those measures, but also the super deduction and the support through grants for businesses.

    In the medium term, we will put our country back on to a firmer financial footing by tackling some of the systemic issues that were around long before this pandemic hit, such as low productivity and regional inequality. That is why I also welcome the Chancellor’s emphasis on infrastructure investment. Not only will this provide an immediate increase in economic activity, but it will drive long-term productivity improvements and will make sure that growth is even better distributed across the entire United Kingdom.

    However, I would urge the Chancellor not to take his eye off delivery. Successive Governments have had a poor history of delivering infrastructure projects on time and on budget. I therefore hope my right hon. Friend will consider complementing his very welcome changes to the Green Book and the new national infrastructure investment bank with a comprehensive cross-government delivery strategy.

    While grants and support schemes have been consumed by our generation, they will be paid for by the next. That is why the Chancellor was absolutely right to level with the British people and to set out so candidly the pressure on the nation’s finances. While slamming the brakes on spending now would be self-defeating, the Government should be drawing up medium to long-term plans to manage debt. That is why I welcome many of the initiatives the Chancellor set out today, including his commitment to try to avoid borrowing for day-to-day spending. That commitment starts with new fiscal rules. The Chancellor should ensure that those rules are in place by year end, ideally alongside the next Budget and the comprehensive spending review. Having run four spending Departments and the Treasury, I am left in no doubt that a fiscal anchor is essential to control spending and to control debt.

    Lastly, in the long term, putting the country back on a firm financial footing means that we need to build resilience against future disasters, as the Chancellor recognised in his Budget speech. Of course, not every disaster is a black swan and it would be foolish to prepare for crises we cannot foresee while we ignore those that we can. In terms of their potential impact on the future economy, few crises are more existential than climate change and declining biodiversity. That is why, as Chancellor, I set Professor Dasgupta very ambitious terms for his independent review on the economics of biodiversity. It makes clear that biodiversity is declining faster than at any other time in human history. If we continue to undermine the resilience of the natural world, we will introduce new sources of serious financial uncertainty, not least the increased spread of infectious diseases. While of course it will take time for the Treasury to digest Professor Dasgupta’s review, the Treasury should make a start on one of his most central recommendations: the need to recognise the value of the natural world in our national accounts. I urge the Chancellor to formally ask the UK Statistics Authority to review how that might be done. The Office for National Statistics is one of the most widely respected economic institutions in the world. If it can lead by example, it can make such a difference in trying to persuade other countries and financial institutions to do the same. We can lead on this, not least because of our chairmanship of the G7 and the COP26 conference this year.

    This has been a long hard winter and we have all been hibernating for many months, but, as case rates fall and the vaccination programme continues at pace, the frost has begun to thaw and we are beginning to see the first signs of spring. The Government have been given a precious opportunity not just to resurrect our economy but to reinvigorate our entire country. I am in no doubt that the Chancellor will rise to the occasion with the energy that this moment requires and the sense of purpose that history demands. I am pleased to say that his Budget is the first step to doing just that.