Parliament

Budget Resolutions

Published date : 12 March, 2024
I can say without fear of contradiction that the UK faces three big challenges economically and socially: we have an energy security crisis, we have a climate crisis and we still have a cost of living crisis that needs to be tackled. This Budget barely changed course on any of those three measures.

Since 2010, the Conservative party has adopted 11 different economic strategies and had seven Business Secretaries, seven Chancellors of the Exchequer and five Prime Ministers, sometimes within weeks of each other. After 14 years of Conservative government, it is laughable that the present incumbents would present this as a Budget that will encourage investment and create long-term growth.

The fact is that the UK has long had a productivity problem. Figures show that the UK’s productivity is around 20% lower than that of France or Germany. UK workers work some of the longest hours in Europe, and return some of the lowest levels of productivity. A number of very lazy assumptions are made, often on the centre right of politics, around what contributes to productivity or the lack of it. Who could forget the wisdom of the right hon. Members for Spelthorne (Kwasi Kwarteng) and for South West Norfolk (Elizabeth Truss) in the book “Britannia Unchained”? They said that

“the British are among the worst idlers in the world. We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.”

Those lazy prejudices, with the idea that everybody should work harder and enjoy fewer protections in the workplace, seem to underpin a worldview about how we get to productivity. However, the simple truth is that the only way to make a genuine improvement in productivity is to improve the quality of physical and human capital by investing in people. The Government have a massive, pivotal role to play in that. It is not good enough for the Government just to say that they want to tackle productivity issues; they have to put in place the long-term policies to do so. Despite it being nearly an article of faith in some sections of the House that cutting tax is the way to get there, if that comes at the expense of public investment and investment in social services, we will not achieve productivity.

The Chancellor has opted to use £20 billion of potential headroom by cutting national insurance by 4p in the last few months. Yet the Institute for Fiscal Studies has said that the Chancellor’s Budget will leave public services facing savage cuts equivalent to £20 billion a year by 2028. As the ISF director, Paul Johnson, has warned, there is almost “a conspiracy of silence” around the billions of pounds in tax cuts that the UK Government have prioritised and the consequences of them.

We know from the shadow Chancellor, who is no longer in her place, that if Labour is to alter course on that, either taxes or borrowing will have to go up, or spending will have to be cut in different places. I take issue with the Labour Front-Bench spokesperson on that subject. I am proud that the party of which I am a member is in government in Scotland. It has ensured that taxes are lower for over half the people in Scotland than they would be if they lived anywhere else in the UK, putting money back into the pockets of hard-working people who need it most. I am proud of that. If that is where the Labour party wishes to draw the battle lines for the election, bring it on. I am very happy with the choices we are making.

If those tax cuts are to be reversed—the hon. Member for Bristol North West (Darren Jones) was nodding away gleefully, implying that they were—then the question must go back to his colleagues in the Scottish Parliament, or perhaps he can help us out—[Interruption.] He is nodding again, which is good. I look forward to some answers, and I will happily take an intervention. What parts of the enhanced social settlement in Scotland would the Labour party seek to take away? Is it people’s bus passes? Michael Marra MSP threatened to introduce tuition fees again. Would Labour reverse the Scottish child payment that is taking over 100,000 Scottish children out poverty? [Interruption.] I, too, was looking for an intervention, but I am clearly not getting one. The hon. Member for Bristol North West is chuntering, but would he like to intervene?

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That was absolutely ridiculous—a complete waste of time. The reason I brought it up was that the hon. Gentleman brought it up; clearly his memory is very short.

Scotland needed much more money for investment in infrastructure, the public sector and public services, but the UK Government have let us down again in this Budget. Any attempt at boosting productivity—that is the subject of this debate, although I did not hear a great deal of mention of productivity from either Front Bencher—will run headlong into the effects of the austerity that has been prevalent since the financial crisis of 2008.

We know from first hand the impact that austerity has had on public services across the UK. As a result of those spending choices, investment levels in the UK remain the lowest of any country in the G7. Research by the UK in a Changing Europe group has found that investment is 10% lower than it would have been if we had remained in the EU. and that our GDP is already 5% lower. If the Government want to increase productivity and drive investment, it is clear that they to do more to recognise the vital role they have to play through their capital expenditure.

Capital expenditure is what maintains our infrastructure. It is what builds houses, replaces hospitals and schools, maintains roads and, crucially, drives and encourages private investment. It is utterly bizarre that as a consequence of their spending decisions here, the UK Government will be cutting the Scottish Government’s capital budget in real terms by 10% over the next five years.

Another key area where the Budget does nothing to shift the dial is research and development, as I have said before. The UK lags behind our European competitors when it comes to overall levels of investment in research and development, but London and the south-east are taking the lion’s share of even that reduced amount. Wales and the north of England lag behind. Scotland holds its own, but if the Government genuinely want to level up—not words we hear paired with each other terribly often these days—they need to shift the dial and start to address inequalities inherent in the way the Government carry out business as usual.

Let me turn to energy. The decision to continue the energy profits levy can only be described as a slap in the face for all the bold and brave Scottish Conservative politicians who were boasting about how they were going to personally oppose it and get rid of it. However, the Labour proposals to increase its level further risks killing the goose that laid the golden egg. I am a big fan of the way the Norwegians have run their oil and gas sector. Scotland and the UK would be in a much better place if we had done the same, but the UK basin is closer to the end of its life than much of the Norwegian basin. Simply saying everything will be alright on the night if we tax at the same level as Norway puts investment decisions on a precipice. I caution the Labour party to think about that carefully if or when it forms the next Government. Increasing taxes beyond their current level in that industry risks putting tens of thousands of jobs on the line.

Finally, we are all quite bored with weak leadership, but does leadership get any weaker than a party taking its one and only identifiable policy—investing £28 billion in renewable energy—and throwing it on the fire because its leader is absolutely terrified of losing political ground to the weakest and worst Conservative Government any of us have the misfortune to remember in our lifetime?

It is absolutely vital not just for the country, but particularly for the north-east of Scotland, to get the energy transition right. Labour is absolutely correct to say that it will have a pretty dismal economic inheritance from the current UK Government, but, my goodness, what a dismal legacy Labour will leave for the Government who eventually replace it if it continues on the current path. That is why Scotland needs to be away from both the Labour and Conservative Front-Bench teams and making decisions for ourselves as a fully sovereign independent country.

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