Finance Act 2001
Posted: Tue Jan 19, 2021 1:49 pm
The Chancellor presents the government’s 2001 budget – titled “Budget 2001: Prudent finances, responsible investment.” His drink of choice is water.
Mr. Deputy Speaker,
Before I lay out the proposals I am setting before the House, let me take us back to the country we were in 1997, when Labour had first taken government: we were still attempting to come back from another recession overseen by the Conservative government, unemployment was at an unacceptable 7% and volatile and crushing interest rates. And we should also remember what we saw in our public services after decades of neglect and mismanagement – record numbers of patients waiting more than six months for crucial operations. Children attending schools with overcrowded classrooms, outdoor toilets and outdated facilities. Crime soaring out of control.
The electorate trusted Labour when we knew they were tired of the status quo and when we offered something new. It has already been established planning an economy from the centre and rigid statism had failed. But we learned the hard way that the same Conservative free market dogma had been failing us too. And that was a sad truth the country could unite behind: in the previous decades, successive governments had failed public services. They’d failed businesses. They’d failed homeowners. They’d failed families.
Labour offered a simple solution: if we invested in people prudently and if we worked with businesses and public services, we could see our country succeed and prosper.
It had not always been easy. The state the country had been left in demanded difficult choices – sacrifices, often. There is still much work to be done. But this government has delivered real results, and we see that in the economic figures. Thanks to prudent economic management, Britain has avoided the global recession and growth has continued at a strong 2.5%. Inflation has remained stable at 2%. Interest rates have remained stable at 6%. We’re seeing more investment, more productivity and wages have been boosted by 4%.
These aren’t just statistics on a spreadsheet, as easy as it may be for many in his House to view them as such. Those statistics mean more prosperity for businesses, more certainty for homeowners and more wealth for our crucial public services. They also mean we have the flexibility to start investing not just in those in Britain who need help the least, who have already experienced prosperity, but providing crucial ladders to prosperity for the working people of Britain so we can all play our part in creating wealth and prosperity.
And we have been able to do this in a fiscally sustainable manner, Mr. Deputy Speaker. After the investments and tax cuts we have made in this budget we still see a surplus of £14.65 billion. If you exclude current spending, we have increased the surplus by £2 billion to £26 billion. The result of this is debt falling by 2.6%, from 31.8% to 29.2%.
This doesn’t just mean a stronger economy, Mr. Deputy Speaker. It means we have fiscal flexibility to continue investing next year just as we have this year. It means a 3.2% cut in how much public money is continuing to service interest, with £200 million more this year going into our public services. That, Mr. Deputy Speaker, is what this government means when it says prudence with a purpose.
But what have we done with the investments we have made while managing to keep our fiscal situation in strong shape? The answer, Mr. Deputy Speaker, is plenty.
We have lifted the starting rate of income tax to £5000 – lifting thousands of the poorest out of income tax altogether and saving millions across the country £60 this year. We have lifted thresholds with inflation and there have been no raises to the level of income tax or national insurance.
We have also abolished the starting rate of corporation tax, relieving the tax burden of businesses and start-ups by up to £660 million, allowing crucial start-ups and the innovators and entrepreneurs that power them to prosper and join the 100,000 businesses that have been created since Labour have come to power.
Mr Deputy Speaker, I understand there will be many across the opposition benches who will appreciate the tax cuts announced by Labour today, but who will want us to go further. But it’s crucial to remember that fiscal responsibility does not just extend to spending. Just as we must spend sensibly, we must cut taxes sensibly too. To do otherwise would compromise the strong fiscal position Britain has found itself in and to tilt us back towards boom and bust economics which only promise more tax rises in the future.
It is this government’s intention to abolish the starting rate of income tax, and to cut the basic rate to 20%. It is also this government’s intention to see corporation tax, particularly the small companies rate, lowered. But I’ll remind both this House and the public that in a race, the tortoise always beats the hare.
In that vein, this year we have seen no raises in either capital gains or inheritance tax. But where the government has focused its more reforming efforts is on stamp duty.
Mr. Deputy Speaker, for too long we have focused our energy discussing the fair taxation of income in this country, and not the fair taxation of wealth – which we often ignore despite it being a more crucial indicator of life chances than income and despite it having less productive value than income, and despite millions who accumulate their incomes in wealth paying nothing while working and middle-income Britons work hard to have one fifth to nearly half of their incomes taxed.
The government’s changes today are an attempt to begin to reflect this and to build on more long-term work that needs to be done to ensure we have a fairer taxation system that makes work pay. That is why we have created more tiered, progressive approach to stamp duty.
The government’s changes will see the majority of working and middle class better off. We have lifted stamp duty so that nobody who buys the average house will pay a penny in stamp duty, and we’ve cut the stamp duty to 1% for anyone buying property worth less than £280,000. This constitutes stamp duty relief for the vast majority of working to middle class buyers, with taxes increased on a progressive scale between 3-5% for those buying properties over £250,000 – three times the average house price.
These changes favour a shift in wealth to working and middle class individuals, only levying between 3-5% stamp duty increase on the wealthiest and raising up to £4 billion for our public services whilst keeping our fiscal position strong.
Mr. Deputy Speaker, with indirect taxes there have been no increases and all duties have been frozen either in real or nominal terms. VAT remains the same, with exemptions added for museums and art galleries so that they can be free of charge to the general public: making art and education accessible for all and encouraging visitors to attend great British institutions like the VA who had seen a dramatic collapse in their attendees since charges were introduced by the last Conservative government. This move also perfectly complements the 2% real terms rise in Britain’s arts budget.
Alcohol duties have been frozen – a real terms cut – to help out our pubs, breweries and distilleries.
Tobacco duty has been increased in line with inflation, and will continue to be monitored. The government has been encouraged by the drop in tobacco consumption but is prepared to take swift action to protect our National Health Service from any further burden if necessary.
And this government has taken action to protect motorists, cutting fuel duty in real terms by a penny and freezing vehicle excise duty. Mr Deputy Speaker, when the last Conservative government introduced the fuel duty escalator which they now protest there was a real incentive to do so: petrol prices were low, and pollution had become a huge concern in many communities.
As those prices have increased, motorists have found themselves increasingly burdened by the Conservatives’ fuel duty escalator with little assistance. While this government condemned the destructive and illegal protests last year, we have heard the concerns of motorists who have felt left behind and made their voice heard in a legal and just way. That is why I am also announcing the removal of the fuel duty escalator, Mr. Deputy Speaker, and will make it clear the government will freeze fuel duty in nominal terms next year and at least by real terms the year afterwards. Future policy will then be reviewed, with levels of pollution and the price of fuel taken into consideration.
It can often be hard to strike an appropriate balance, Mr. Deputy Speaker, but that is what this government seeks to do.
With the sustainable tax reforms we’ve made, we have also ensured there is apt fiscal room to invest in public services and in families. For pensions alone we have invested in those who have worked hard their whole lives and ensured they are rewarded – with our rise of £3.25 meaning we are on track to hit our target of the basic state pension hitting £77 by 2003, all pensioner benefits retained, and a 5% increase added to the state second pension so we can put resources towards tackling the immense pension poverty we had seen built by the previous government. Now that this government has put us in a strong fiscal position, we can guarantee to the pensioners of this country that we will ensure pensions always increase by earnings and that this government has your back.
Disability and sickness benefits have been increased in line with inflation, with the exception of a Disability Tax Credit we have introduced to replace Disability Living Allowance – ensuring that those who are disabled, whether they work or not, are granted £2100 a year returned to them. The government has also invested significantly in Carer’s Allowance, ensuring it increases with earnings so we can thank those who sacrifice countless hours to care for those that need it the most, relieving that burden from our social care system and NHS in the process.
Family benefits have also been increased in line with inflation, with the government acting in a way that benefits families of all shapes and sizes. While this government respects the institution of marriage, we respect that couples will make the best choices for themselves and their families. That is why instead of a single £1000 tax break to the married, and instead of this government deciding to take a route that would penalise widows and domestic violence victims, this government will be here to support the children of Britain and the hard workers of Britain instead. Instead of a single £1000 tax break, the government’s policy will see up to £1200 extra put into the pockets of working families this year alone, whether they are married or not. And, Mr. Deputy Speaker, our policy will not be so cruelly designed as to financially penalise individuals who are widowed or who wish to leave abusive partners as the Marriage Tax Allowance’ proposals would.
We will be putting an extra pound on the child benefit, an extra £10 a week into the Working Tax Credit and we have established a children’s tax credit worth up to £500 a year for families. We have also put an above wages level of investment into Income Support to assist the most vulnerable, and increased maternity pay by almost a third, meaning we will support working women who choose to have children and provide them with almost £2000 extra a year.
In establishing these tax credits and tools that support families and tackle poverty and want, we’ve established that we would make work pay. Because there is no greater weapon against poverty than employment, Mr. Deputy Speaker – and we will continue to support Britons in employment and Britons into employment. That starts with the establishment of a £1 million to ensure skills tests are given to the social security claimants, with the appropriate training offered to those who need it.
But there is no point encouraging individuals to work if the government is not encouraging job creation, Mr Deputy Speaker. Whether it’s relieving businesses of their tax burden or investing in our economy, Mr. Deputy Speaker, that is Labour’s mission.
And thanks to our prudent spending, this government is now investing more into our economy – into the economic affairs budget – than we are on interest repayments. This has allowed us to give 5% increases to Regional Development Agencies, the small business service, innovation grants to business and export credit guarantees, helping power up every region across the country and establishing innovation and creation across the United Kingdom.
It means not just a 10% boost in the research budget, but a rise of investment research across departments. Nuclear energy research almost doubled, a 10% boost in medical research, a 10% boost in University research funding, a 10% boost in defence research and a 40% increase in the Environmental Affairs research budget – these all represent the government laying down the foundations for an R&D revolution, where Britain can lead the world in innovation and development.
This government will use that power to tackle the rising concerns around pollution, environmental degradation and global warming. In one budget, we have increased the spending on renewable energy to £500 million. I’ll be clear to the House this is only a start, but it is a crucial start. In tackling these environmental ills, we can’t just protect our economy from long term threats – but we can create jobs, promote British energy independence and create the green and pleasant land that was so articulated in the Jerusalem the first majority Labour government wished to create.
We will also be doing this by promoting a £600 spending package into transport, assisting motorists with £50m permanently put into highways investment, trebling rail investment, investing £250 million into local transport grants and £25 million into London transport grants and ensuring that every part of the country can benefit from transport investment.
We will also be going further than any government has in generations to boost the employment prospects of young people across Britain, and in diversifying the economy to benefit those across the country. The New Deal introduced by this government was a remarkable success in tackling the short term problem of youth unemployment inherited by this government, and key programmes within it have been kept and even expanded – with £25 million put forward to establish a New Deal for rural communities, £25 million set aside for a New Deal for coastal communities and £50 million put forward to establish a New Deal for deprived communities.
But, to promote economic efficiency we have scaled the New Deal for 18-25 year olds to £100 million, and invested the remaining funding – £1.2 billion to the New Deal Apprenticeship programme, an unprecedented and historical investment into apprenticeships in Britain that will tackle the issue of youth unemployment not just in the short term, but in the long term too. Apprenticeships are a powerful economic tool, Mr. Deputy Speaker: they provide opportunity to those who need it most, diversify our economy and equip young people with specialised and practical skills that are too often missing within our workforce. But successive governments have understated, if not ignored, their power. This government will not, which is why we will make the creation of a mass apprenticeship scheme the most vital plank of our innovation revolution.
And while infrastructure, innovation and business make the beating heart of the British economy, we know what the soul of Britain itself is: none other than our National Health Service. Mr. Deputy Speaker, all of us know someone who works for the NHS, or who owes their life to our health service. It has woven itself into our communities and into the story of our lives and our nation, never failing to be there for us when we need it – even in the face of immense pressure and at times underfunding.
But if neglected, even the strongest fabric can tear. This government will never forget the debt all of us owe to the NHS and will be more than willing to pay it back. That is why we will be giving the NHS the biggest cash boost since its creation – with £4.6 billion invested into the Health Service we owe so much to. As I outlined to the House weeks ago, we need a long term funding settlement for the NHS, but this government will not sit around and wait. We will take action now.
With those funds, we have in this year alone exceeded our staffing targets as set out in the manifesto with 5,000 nurses and 2,500 doctors hired, but we’ve shown our immense gratitude with a 5% pay raise – representing a £1000 boost to the wages of NHS nurses. We’ve extended NHS bedding capacity by 2,000, build 40 new clinics, put £75 million into dentistry and nearly £100 million social care, cut the burden of prescription charges on the working and middle class sick and seen £750 million put into clinical commissioning to tackle excessive waiting times and significant investment in training and public health.
But there is no investment as crucial as the investment in education, Mr. Deputy Speaker. I made that abundantly clear when I announced the New Deal Apprenticeship Scheme, and we must build that across every layer of education. That is why in real terms, our biggest budgetary increase has been in education.
And our approach with investment has been to tackle education from cradle to grave and ensure it is there to nurture a variety of talents, not to see education as merely academic schooling at to leave it there. We know early interventions are the most effective, which is why we have guaranteed free nursery hours for all parents who have a child aged zero to five and invested more than £30 million into Sure Start – but we have a moral responsibility to step in and lift up those who have been failed in the past. That is why we have put £186 into the adult skills budget to eradicate illiteracy.
But we have still taken action to clamp revitalise our schools. Alongside the £1.5 billion Future Classrooms programme, we have put £1 billion extra in current spending for both primary and secondary schools, hired 4,000 teaching assistants and over 4,000 teachers – exceeding our manifesto target, and giving them our teachers a well-deserved £1000 pay rise in the process.
And instead of relying on cheap stunts to gain votes in our University sector, we’ve protected funding and taken the evidence-based approach to lifting up disadvantaged children: expanding the Widening Participation budget by 10% and giving a 7% boost to student grants.
Together, this marks the radical action a government that pledged to put education first takes – and we will continue to make education an absolute priority.
On the global stage, we will continue to invest in strengthening Britain’s power and influence, which is why we have invested in Britain’s soft power, contributing to the UN population fund and nudging our international development spending closer to that crucial 0.7% target to help the global poor and establish Britain’s place on the world stage as an aid superpower. But it is also why we have invested in our hard power too – putting forward the necessary £455 million investments in vessels and contributing £230 million in defence research, allowing Britain to not just defend herself if necessary, but to defend our allies, interests and values too. And we will thank our troops for the sacrifices they make, giving them a £1000 pay rise this year.
And while working to keep Britain safe from outside threats, we have invested to keep Britain’s streets safe too. We have taken an approach that is both tough on crime and tough on its causes – hiring 1,600 new policemen, giving them a significant pay rise, putting £50 million into our immigration services to keep our borders secure and expanding prison capacity by 3,000 places, whilst ensuring we invest to compensate and protect victims with our £40 million victims’ compensation fund.
Mr. Deputy Speaker, it is not enough to run a prison on the cheap and believe that delivers the most efficient service. Safety cannot be delivered on the cheap or flogged off to the highest bidder. Overcrowded prisons could lead to riots that could risk the safety of Britain’s streets, and releasing prisoners without ensuring the cycle of crime is broken risks creating more victims and perpetuating a vicious cycle which compromises safety or lives. While this government does not inherently oppose the role private providers can play in delivering public services, the evidence has made it clear private run prisons are not effective, which is why we will be bringing prisons in house. Alongside this, we’ll be investing £150 million in rehabilitation, ensuring that those who pay their debts to society and are prepared to work hard to reintegrate into it can do so, and preventing the brutal perpetuation of crime in the future.
As aforementioned, we have taken a bold approach to ensuring we have a greener, more sustainable future with cleaner energy, investing £13 million into countryside and rural regeneration, putting nearly £70 million into energy efficiency and protecting our communities from the effects of environmental degradation by putting over £40 million into the environment agency, with the lion’s share of that funding being invested in flood prevention.
In housing, we’ve put over £400 million to encourage local councils to get building and into social housing, particularly in the communities that need it the most. And we have taken bold action against rough sleeping – investing nearly £100 million this year alone. Labour came into office with a bold pledge: to cut rough sleeping by two thirds in the short term and to eliminate rough sleeping in the long term. We’ve successfully done the former, Mr. Deputy Speaker, and we will give the rough sleeping unit the resources to tackle the remaining, more complex cases.
In local government we’ve taken a more balanced approach, exceeding the £400 million investment in councils to protect local services, whilst also ensuring waste is not encouraged and keeping council tax as low as possible. This year, council tax will be raised at one of its lowest rates since its establishment, and the rise in council tax will not exceed the rise in wages whilst we also protect services. And we will ensure we share prosperity across the UK, putting nearly £500 million extra into Scotland, nearly £250 million extra into Wales and nearly £200 million extra into Northern Ireland.
I made clear that investments come with a cost, Mr. Deputy Speaker, which is why I am clear that stamp duty for the most expensive homes in the United Kingdom had to be raised. I am honest to the British people where we need to make sacrifices to safeguard their future. On spending outside the departments I’ve mentioned, we have exercised necessary funding restraint which means there will be a small real terms cut which can be delivered without compromising services by taking efficiency measures.
Mr. Deputy Speaker, I crafted this budget with an overarching mission: to maintain prudent finances, to invest in our public services and to ensure we have a fairer taxation system. On that, this government has succeeded. This budget guarantees we maintain a strong fiscal position going forwards so that we can continue investing in our public services without excessive or unfair taxation being necessary. It guarantees success not just in the short term, but resilience in the long term.
With pride, I commend this budget to the House.
Budget: https://docs.google.com/spreadsheets/d/ ... =604492038
Mr. Deputy Speaker,
Before I lay out the proposals I am setting before the House, let me take us back to the country we were in 1997, when Labour had first taken government: we were still attempting to come back from another recession overseen by the Conservative government, unemployment was at an unacceptable 7% and volatile and crushing interest rates. And we should also remember what we saw in our public services after decades of neglect and mismanagement – record numbers of patients waiting more than six months for crucial operations. Children attending schools with overcrowded classrooms, outdoor toilets and outdated facilities. Crime soaring out of control.
The electorate trusted Labour when we knew they were tired of the status quo and when we offered something new. It has already been established planning an economy from the centre and rigid statism had failed. But we learned the hard way that the same Conservative free market dogma had been failing us too. And that was a sad truth the country could unite behind: in the previous decades, successive governments had failed public services. They’d failed businesses. They’d failed homeowners. They’d failed families.
Labour offered a simple solution: if we invested in people prudently and if we worked with businesses and public services, we could see our country succeed and prosper.
It had not always been easy. The state the country had been left in demanded difficult choices – sacrifices, often. There is still much work to be done. But this government has delivered real results, and we see that in the economic figures. Thanks to prudent economic management, Britain has avoided the global recession and growth has continued at a strong 2.5%. Inflation has remained stable at 2%. Interest rates have remained stable at 6%. We’re seeing more investment, more productivity and wages have been boosted by 4%.
These aren’t just statistics on a spreadsheet, as easy as it may be for many in his House to view them as such. Those statistics mean more prosperity for businesses, more certainty for homeowners and more wealth for our crucial public services. They also mean we have the flexibility to start investing not just in those in Britain who need help the least, who have already experienced prosperity, but providing crucial ladders to prosperity for the working people of Britain so we can all play our part in creating wealth and prosperity.
And we have been able to do this in a fiscally sustainable manner, Mr. Deputy Speaker. After the investments and tax cuts we have made in this budget we still see a surplus of £14.65 billion. If you exclude current spending, we have increased the surplus by £2 billion to £26 billion. The result of this is debt falling by 2.6%, from 31.8% to 29.2%.
This doesn’t just mean a stronger economy, Mr. Deputy Speaker. It means we have fiscal flexibility to continue investing next year just as we have this year. It means a 3.2% cut in how much public money is continuing to service interest, with £200 million more this year going into our public services. That, Mr. Deputy Speaker, is what this government means when it says prudence with a purpose.
But what have we done with the investments we have made while managing to keep our fiscal situation in strong shape? The answer, Mr. Deputy Speaker, is plenty.
We have lifted the starting rate of income tax to £5000 – lifting thousands of the poorest out of income tax altogether and saving millions across the country £60 this year. We have lifted thresholds with inflation and there have been no raises to the level of income tax or national insurance.
We have also abolished the starting rate of corporation tax, relieving the tax burden of businesses and start-ups by up to £660 million, allowing crucial start-ups and the innovators and entrepreneurs that power them to prosper and join the 100,000 businesses that have been created since Labour have come to power.
Mr Deputy Speaker, I understand there will be many across the opposition benches who will appreciate the tax cuts announced by Labour today, but who will want us to go further. But it’s crucial to remember that fiscal responsibility does not just extend to spending. Just as we must spend sensibly, we must cut taxes sensibly too. To do otherwise would compromise the strong fiscal position Britain has found itself in and to tilt us back towards boom and bust economics which only promise more tax rises in the future.
It is this government’s intention to abolish the starting rate of income tax, and to cut the basic rate to 20%. It is also this government’s intention to see corporation tax, particularly the small companies rate, lowered. But I’ll remind both this House and the public that in a race, the tortoise always beats the hare.
In that vein, this year we have seen no raises in either capital gains or inheritance tax. But where the government has focused its more reforming efforts is on stamp duty.
Mr. Deputy Speaker, for too long we have focused our energy discussing the fair taxation of income in this country, and not the fair taxation of wealth – which we often ignore despite it being a more crucial indicator of life chances than income and despite it having less productive value than income, and despite millions who accumulate their incomes in wealth paying nothing while working and middle-income Britons work hard to have one fifth to nearly half of their incomes taxed.
The government’s changes today are an attempt to begin to reflect this and to build on more long-term work that needs to be done to ensure we have a fairer taxation system that makes work pay. That is why we have created more tiered, progressive approach to stamp duty.
The government’s changes will see the majority of working and middle class better off. We have lifted stamp duty so that nobody who buys the average house will pay a penny in stamp duty, and we’ve cut the stamp duty to 1% for anyone buying property worth less than £280,000. This constitutes stamp duty relief for the vast majority of working to middle class buyers, with taxes increased on a progressive scale between 3-5% for those buying properties over £250,000 – three times the average house price.
These changes favour a shift in wealth to working and middle class individuals, only levying between 3-5% stamp duty increase on the wealthiest and raising up to £4 billion for our public services whilst keeping our fiscal position strong.
Mr. Deputy Speaker, with indirect taxes there have been no increases and all duties have been frozen either in real or nominal terms. VAT remains the same, with exemptions added for museums and art galleries so that they can be free of charge to the general public: making art and education accessible for all and encouraging visitors to attend great British institutions like the VA who had seen a dramatic collapse in their attendees since charges were introduced by the last Conservative government. This move also perfectly complements the 2% real terms rise in Britain’s arts budget.
Alcohol duties have been frozen – a real terms cut – to help out our pubs, breweries and distilleries.
Tobacco duty has been increased in line with inflation, and will continue to be monitored. The government has been encouraged by the drop in tobacco consumption but is prepared to take swift action to protect our National Health Service from any further burden if necessary.
And this government has taken action to protect motorists, cutting fuel duty in real terms by a penny and freezing vehicle excise duty. Mr Deputy Speaker, when the last Conservative government introduced the fuel duty escalator which they now protest there was a real incentive to do so: petrol prices were low, and pollution had become a huge concern in many communities.
As those prices have increased, motorists have found themselves increasingly burdened by the Conservatives’ fuel duty escalator with little assistance. While this government condemned the destructive and illegal protests last year, we have heard the concerns of motorists who have felt left behind and made their voice heard in a legal and just way. That is why I am also announcing the removal of the fuel duty escalator, Mr. Deputy Speaker, and will make it clear the government will freeze fuel duty in nominal terms next year and at least by real terms the year afterwards. Future policy will then be reviewed, with levels of pollution and the price of fuel taken into consideration.
It can often be hard to strike an appropriate balance, Mr. Deputy Speaker, but that is what this government seeks to do.
With the sustainable tax reforms we’ve made, we have also ensured there is apt fiscal room to invest in public services and in families. For pensions alone we have invested in those who have worked hard their whole lives and ensured they are rewarded – with our rise of £3.25 meaning we are on track to hit our target of the basic state pension hitting £77 by 2003, all pensioner benefits retained, and a 5% increase added to the state second pension so we can put resources towards tackling the immense pension poverty we had seen built by the previous government. Now that this government has put us in a strong fiscal position, we can guarantee to the pensioners of this country that we will ensure pensions always increase by earnings and that this government has your back.
Disability and sickness benefits have been increased in line with inflation, with the exception of a Disability Tax Credit we have introduced to replace Disability Living Allowance – ensuring that those who are disabled, whether they work or not, are granted £2100 a year returned to them. The government has also invested significantly in Carer’s Allowance, ensuring it increases with earnings so we can thank those who sacrifice countless hours to care for those that need it the most, relieving that burden from our social care system and NHS in the process.
Family benefits have also been increased in line with inflation, with the government acting in a way that benefits families of all shapes and sizes. While this government respects the institution of marriage, we respect that couples will make the best choices for themselves and their families. That is why instead of a single £1000 tax break to the married, and instead of this government deciding to take a route that would penalise widows and domestic violence victims, this government will be here to support the children of Britain and the hard workers of Britain instead. Instead of a single £1000 tax break, the government’s policy will see up to £1200 extra put into the pockets of working families this year alone, whether they are married or not. And, Mr. Deputy Speaker, our policy will not be so cruelly designed as to financially penalise individuals who are widowed or who wish to leave abusive partners as the Marriage Tax Allowance’ proposals would.
We will be putting an extra pound on the child benefit, an extra £10 a week into the Working Tax Credit and we have established a children’s tax credit worth up to £500 a year for families. We have also put an above wages level of investment into Income Support to assist the most vulnerable, and increased maternity pay by almost a third, meaning we will support working women who choose to have children and provide them with almost £2000 extra a year.
In establishing these tax credits and tools that support families and tackle poverty and want, we’ve established that we would make work pay. Because there is no greater weapon against poverty than employment, Mr. Deputy Speaker – and we will continue to support Britons in employment and Britons into employment. That starts with the establishment of a £1 million to ensure skills tests are given to the social security claimants, with the appropriate training offered to those who need it.
But there is no point encouraging individuals to work if the government is not encouraging job creation, Mr Deputy Speaker. Whether it’s relieving businesses of their tax burden or investing in our economy, Mr. Deputy Speaker, that is Labour’s mission.
And thanks to our prudent spending, this government is now investing more into our economy – into the economic affairs budget – than we are on interest repayments. This has allowed us to give 5% increases to Regional Development Agencies, the small business service, innovation grants to business and export credit guarantees, helping power up every region across the country and establishing innovation and creation across the United Kingdom.
It means not just a 10% boost in the research budget, but a rise of investment research across departments. Nuclear energy research almost doubled, a 10% boost in medical research, a 10% boost in University research funding, a 10% boost in defence research and a 40% increase in the Environmental Affairs research budget – these all represent the government laying down the foundations for an R&D revolution, where Britain can lead the world in innovation and development.
This government will use that power to tackle the rising concerns around pollution, environmental degradation and global warming. In one budget, we have increased the spending on renewable energy to £500 million. I’ll be clear to the House this is only a start, but it is a crucial start. In tackling these environmental ills, we can’t just protect our economy from long term threats – but we can create jobs, promote British energy independence and create the green and pleasant land that was so articulated in the Jerusalem the first majority Labour government wished to create.
We will also be doing this by promoting a £600 spending package into transport, assisting motorists with £50m permanently put into highways investment, trebling rail investment, investing £250 million into local transport grants and £25 million into London transport grants and ensuring that every part of the country can benefit from transport investment.
We will also be going further than any government has in generations to boost the employment prospects of young people across Britain, and in diversifying the economy to benefit those across the country. The New Deal introduced by this government was a remarkable success in tackling the short term problem of youth unemployment inherited by this government, and key programmes within it have been kept and even expanded – with £25 million put forward to establish a New Deal for rural communities, £25 million set aside for a New Deal for coastal communities and £50 million put forward to establish a New Deal for deprived communities.
But, to promote economic efficiency we have scaled the New Deal for 18-25 year olds to £100 million, and invested the remaining funding – £1.2 billion to the New Deal Apprenticeship programme, an unprecedented and historical investment into apprenticeships in Britain that will tackle the issue of youth unemployment not just in the short term, but in the long term too. Apprenticeships are a powerful economic tool, Mr. Deputy Speaker: they provide opportunity to those who need it most, diversify our economy and equip young people with specialised and practical skills that are too often missing within our workforce. But successive governments have understated, if not ignored, their power. This government will not, which is why we will make the creation of a mass apprenticeship scheme the most vital plank of our innovation revolution.
And while infrastructure, innovation and business make the beating heart of the British economy, we know what the soul of Britain itself is: none other than our National Health Service. Mr. Deputy Speaker, all of us know someone who works for the NHS, or who owes their life to our health service. It has woven itself into our communities and into the story of our lives and our nation, never failing to be there for us when we need it – even in the face of immense pressure and at times underfunding.
But if neglected, even the strongest fabric can tear. This government will never forget the debt all of us owe to the NHS and will be more than willing to pay it back. That is why we will be giving the NHS the biggest cash boost since its creation – with £4.6 billion invested into the Health Service we owe so much to. As I outlined to the House weeks ago, we need a long term funding settlement for the NHS, but this government will not sit around and wait. We will take action now.
With those funds, we have in this year alone exceeded our staffing targets as set out in the manifesto with 5,000 nurses and 2,500 doctors hired, but we’ve shown our immense gratitude with a 5% pay raise – representing a £1000 boost to the wages of NHS nurses. We’ve extended NHS bedding capacity by 2,000, build 40 new clinics, put £75 million into dentistry and nearly £100 million social care, cut the burden of prescription charges on the working and middle class sick and seen £750 million put into clinical commissioning to tackle excessive waiting times and significant investment in training and public health.
But there is no investment as crucial as the investment in education, Mr. Deputy Speaker. I made that abundantly clear when I announced the New Deal Apprenticeship Scheme, and we must build that across every layer of education. That is why in real terms, our biggest budgetary increase has been in education.
And our approach with investment has been to tackle education from cradle to grave and ensure it is there to nurture a variety of talents, not to see education as merely academic schooling at to leave it there. We know early interventions are the most effective, which is why we have guaranteed free nursery hours for all parents who have a child aged zero to five and invested more than £30 million into Sure Start – but we have a moral responsibility to step in and lift up those who have been failed in the past. That is why we have put £186 into the adult skills budget to eradicate illiteracy.
But we have still taken action to clamp revitalise our schools. Alongside the £1.5 billion Future Classrooms programme, we have put £1 billion extra in current spending for both primary and secondary schools, hired 4,000 teaching assistants and over 4,000 teachers – exceeding our manifesto target, and giving them our teachers a well-deserved £1000 pay rise in the process.
And instead of relying on cheap stunts to gain votes in our University sector, we’ve protected funding and taken the evidence-based approach to lifting up disadvantaged children: expanding the Widening Participation budget by 10% and giving a 7% boost to student grants.
Together, this marks the radical action a government that pledged to put education first takes – and we will continue to make education an absolute priority.
On the global stage, we will continue to invest in strengthening Britain’s power and influence, which is why we have invested in Britain’s soft power, contributing to the UN population fund and nudging our international development spending closer to that crucial 0.7% target to help the global poor and establish Britain’s place on the world stage as an aid superpower. But it is also why we have invested in our hard power too – putting forward the necessary £455 million investments in vessels and contributing £230 million in defence research, allowing Britain to not just defend herself if necessary, but to defend our allies, interests and values too. And we will thank our troops for the sacrifices they make, giving them a £1000 pay rise this year.
And while working to keep Britain safe from outside threats, we have invested to keep Britain’s streets safe too. We have taken an approach that is both tough on crime and tough on its causes – hiring 1,600 new policemen, giving them a significant pay rise, putting £50 million into our immigration services to keep our borders secure and expanding prison capacity by 3,000 places, whilst ensuring we invest to compensate and protect victims with our £40 million victims’ compensation fund.
Mr. Deputy Speaker, it is not enough to run a prison on the cheap and believe that delivers the most efficient service. Safety cannot be delivered on the cheap or flogged off to the highest bidder. Overcrowded prisons could lead to riots that could risk the safety of Britain’s streets, and releasing prisoners without ensuring the cycle of crime is broken risks creating more victims and perpetuating a vicious cycle which compromises safety or lives. While this government does not inherently oppose the role private providers can play in delivering public services, the evidence has made it clear private run prisons are not effective, which is why we will be bringing prisons in house. Alongside this, we’ll be investing £150 million in rehabilitation, ensuring that those who pay their debts to society and are prepared to work hard to reintegrate into it can do so, and preventing the brutal perpetuation of crime in the future.
As aforementioned, we have taken a bold approach to ensuring we have a greener, more sustainable future with cleaner energy, investing £13 million into countryside and rural regeneration, putting nearly £70 million into energy efficiency and protecting our communities from the effects of environmental degradation by putting over £40 million into the environment agency, with the lion’s share of that funding being invested in flood prevention.
In housing, we’ve put over £400 million to encourage local councils to get building and into social housing, particularly in the communities that need it the most. And we have taken bold action against rough sleeping – investing nearly £100 million this year alone. Labour came into office with a bold pledge: to cut rough sleeping by two thirds in the short term and to eliminate rough sleeping in the long term. We’ve successfully done the former, Mr. Deputy Speaker, and we will give the rough sleeping unit the resources to tackle the remaining, more complex cases.
In local government we’ve taken a more balanced approach, exceeding the £400 million investment in councils to protect local services, whilst also ensuring waste is not encouraged and keeping council tax as low as possible. This year, council tax will be raised at one of its lowest rates since its establishment, and the rise in council tax will not exceed the rise in wages whilst we also protect services. And we will ensure we share prosperity across the UK, putting nearly £500 million extra into Scotland, nearly £250 million extra into Wales and nearly £200 million extra into Northern Ireland.
I made clear that investments come with a cost, Mr. Deputy Speaker, which is why I am clear that stamp duty for the most expensive homes in the United Kingdom had to be raised. I am honest to the British people where we need to make sacrifices to safeguard their future. On spending outside the departments I’ve mentioned, we have exercised necessary funding restraint which means there will be a small real terms cut which can be delivered without compromising services by taking efficiency measures.
Mr. Deputy Speaker, I crafted this budget with an overarching mission: to maintain prudent finances, to invest in our public services and to ensure we have a fairer taxation system. On that, this government has succeeded. This budget guarantees we maintain a strong fiscal position going forwards so that we can continue investing in our public services without excessive or unfair taxation being necessary. It guarantees success not just in the short term, but resilience in the long term.
With pride, I commend this budget to the House.
Budget: https://docs.google.com/spreadsheets/d/ ... =604492038