Budget Resolutions
Some have dubbed this a “steady as she goes” Budget. That has been interpreted differently by those on different sides of the debate: some have taken it as praise while others have taken it as a criticism. You might be surprised to hear, Madam Deputy Speaker, that I fall on the side of that being a criticism. That is because I hold the really controversial view that avoiding market turmoil is a minimum requirement for a Budget; it is necessary but not sufficient, especially given the challenges we face in this country. I accept that we face constraints, given the war in Iran and everything that is doing to the country’s finances, inflation, energy prices and so on, but we have more challenges to face up to. This Government actually recognise those challenges. They have commissioned reports on welfare reform, but they have pushed it to the other side of the Budget. They have a Chancellor who recognises that we need a plan to spend 3% of GDP on defence, but those decisions, too, have been pushed further down the track. They understand that growth has been appalling in this country for a long time, yet they have not revealed what their plan for growth will be. These are all known issues that are unaddressed in this Budget, and I think that is a massive missed opportunity. That is not for want of measures in this Budget. There are a record-breaking 98 measures in the Budget, but they add up to the lowest total value we have seen for a very long time. Let us get into some of those. The Government have praised themselves for their £100 energy support package, and who can be churlish about £100 in times like these? But the truth is that the scheme is insufficient and poorly targeted. The tragedy is that we had an energy crisis in 2022, when we had to deliver huge sums of money, almost universally. Everybody said, “We cannot let this happen again; we must have a much more targeted scheme in future.” Four years on, what is the system we have? We are relying on the valuations of properties from 1991 to target our support. What a failure of Government. Moreover, hundreds of thousands of low-income households are now set to miss out on support, and those most in need of support will not get enough. Looking at all the “breathing space” measures combined, those in the very poorest deciles will get, on average, just £15 more than all the others. This Government could have done far more to deliver on breathing space. For instance, they could have looked to the Liberal Democrat proposal for an essential energy guarantee, which would be more targeted and would provide more support at the right income levels. This has been a real failure of Government. A second measure for which the Government have been praising themselves is the bank tax and the contributions that they have got that sector to make. We called for a bank tax and so we broadly welcome it, but why did they not go further? The banking industry expected this measure to be permanent and expected it to be set at 8%, and bank shares went up when we found out that that was not what the Government were going to do. In the Treasury Committee this morning, we heard from people in the banking sector, who said that they did not believe the tax would affect competitiveness and that they would be unlikely to pass on the costs to the consumer. Basically, the banks have been getting £1 billion a week this year because mortgage rates and interest rates are so high. They could have been squeezed some more, and this Government failed to do it. On living standards, this morning the Resolution Foundation described the situation as “catastrophic”. The 2010s was the worst decade on record, with 14% growth in real household disposable income. For the 2020s, the OBR’s growth forecast is 1.4%. This is a tragedy for every working family in Britain, and that is before we get on to the cost of doing business or the spending pressures that are pencilled in for down the track. Courtrooms, classrooms and councils are all set for real-terms cuts under this Government—it is all in black and white. That is their proposal to come. All of this can be solved in only one way: via growth. I said at the beginning of my speech that there is a lack of a growth plan, but there is one waiting on the table for the Government. We would like the Prime Minister to stop having an open, frank conversation with himself on Europe, and to actually start putting forward some concrete proposals such as rejoining the single market. That is the quickest single measure to boost growth in this country, and we should get on with it. This Budget has deferred decisions on welfare, defence, Europe, public services and growth. The Prime Minister came into office promising to end 40 years of neoliberalism, but it will surely make its 41st birthday. It has been a missed opportunity that the Government will come to regret. Budgets do not come around very often—just ask any of the six Chancellors in the last six years. Political capital is a depreciating asset—it is best to spend it early, and the Government have utterly failed to do so.