The speech made by Shabana Mahmood, the Labour MP for Birmingham Ladywood, in the House of Commons on 20 March 2023.
It is a pleasure to speak in the debate today, but, while I do not wish to be unkind, it was a little less of a pleasure to listen to the Secretary of State open the debate. I notice that she is leaving the Chamber. Listening to her assertions about economic growth and the record of this Government, I had to wonder what planet she was on.
The reality is that, despite the assertions made from the Dispatch Box by the Secretary of State today and the Chancellor last week, the OBR has downgraded the UK’s long-term growth forecasts, with downgrades in all of the last three years of the forecast period. The OECD has confirmed that we will be the weakest economy in the G7 this year, no other G20 economy other than Russia is forecast to shrink this year, and our economy is still smaller than it was prior to the pandemic.
All that has a huge impact on the finances of families in Birmingham, Ladywood and all over the country. The hit to living standards over the past two years is the largest since comparable records began. Wages are lower in real terms than 13 years ago and real weekly wages are expected to remain below their 2008 levels until at least 2026. I believe that a little more humility was needed at the Dispatch Box today, because the measures taken by this Government over the past 13 years—in particular since the so-called kamikaze Budget last November—have car-crashed the finances of families and households all over our country, with no end in sight.
Given how deeply the cost of living crisis is hitting families all over our country and given the headline rates of economic growth, it is shocking that the only permanent tax cut the Government announced was the £1 billion tax cut for the richest 1% of earners. The pension changes announced by the Chancellor last week mean that for higher earners with a pension pot of £2 million, that tax cut is worth almost £250,000.
That measure is supposed to be about getting people back to work—older doctors in particular. Labour agrees that targeted measures are needed to deal with the NHS crisis and to make sure that doctors are not leaving the profession in the numbers they currently are, but the way the Government have gone about making these changes will cost them £70,000 for every single person returning to the labour market—and that is if the Government even manage to hit the number of people they say will return to the labour market as a result. There have been warnings, including from a former Pensions Minister in the coalition Government, that some people will retire early as a result of those measures, so in fact some people will now leave the labour market who were not originally planning on it.
Labour’s priority would have been to take targeted measures to help doctors, given the acute crisis in the NHS labour market, not the golden
“sledgehammer to crack a very small nut”,
as the IFS calls it, announced by this Government. It is the wrong priority at the wrong time.
The burden of tax must be shared fairly; making a permanent tax change that benefits the 1% with the biggest pension pots is unfair and wrong and, in government, we will reverse it. I also wonder why the Government are still leaving more than £10 billion on the table with the windfall tax. If they closed down the holes and had a proper windfall tax, we could bring in billions of pounds more, which could help ordinary families if that money was put towards easing the pressure of the cost of living crisis.
We heard a lot about the people’s priorities from the Dispatch Box today. The people’s priorities are easing the cost of living crisis and measures that pay for that easing by asking those with the broadest shoulders to pay more and those profiting from the war in Ukraine to give that money back to the taxpayer so that we can help families in our countries. That is what was needed and that is what the Government have singularly failed to deliver.
If I may say something about the west midlands, I noted with interest the trailblazer devolution deals announced for both the Greater Manchester area and the West Midlands Combined Authority. That particular deal is welcome, although I worry about the very asymmetric way the Government have approached devolution in our country. We need a nationwide approach to an economic devolution settlement that has some coherence to it, not a “Hunger Games”-style system where areas fight it out over relatively small pots of money, while other areas that are already a little further ahead get more powers and more money. While the deal is welcome to west midlands MPs such as myself, I do not think it is an approach that helps people all over our country.
While I very much hope that both that deal and the levelling-up zone in the East Birmingham-North Solihull corridor are a success, they must ultimately be judged by whether they turn around the deep-scarring problem of high unemployment in Birmingham, which in the last decade or so has shown no signs of coming down. My constituency has the highest rate of unemployment in the country; Birmingham, Perry Barr is second, Birmingham, Hodge Hill is third, Birmingham, Erdington is fourth, Birmingham, Hall Green is sixth, Birmingham, Yardley is ninth and Birmingham, Northfield is 13th. The trailblazer deal, with all the powers within it and the greater financial devolution it entails, has to result in a step change. It must be a game changer on unemployment rates across Birmingham and the wider west midlands area if it is to be judged a success.
