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Finance Act 2008


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Budget 2008: Stability, Prosperity, and Security for the Future

Mr Deputy Speaker,

I rise to deliver the first budget of this government in challenging economic times.

What started as tightened credit markets in the United States expanded to financial turbulence across the world. A global squeeze on credit has reduced global growth: in America, in Europe, in other major economies, in developing economies, and here in the United Kingdom.

As this squeeze came to our shores, we acted in the national interest. We took dramatic and necessary action when Northern Rock was threatened with collapse. We took action to stabilise the housing market and protect homeowners.

These actions reduced the impact felt by people across the country. However, I must warn that there is more turbulence to come.

Yet as I warn that, I must make clear: we are committed to doing what it takes to protect the British economy. We are committed to protecting the people of the United Kingdom.

Against that backdrop, I must announce that the United Kingdom is expected to experience negative growth in the coming fiscal year. Moreover, unemployment is slated to increase.

Mr Deputy Speaker, I make these announcements against the backdrop of a greater recessionary trend across the world. This is not unique to the United Kingdom.

The government is working with global partners to ensure that we can promote growth here at home and globally as soon as possible. We have agreed to launch a global effort to ensure rapid communications about threats to financial stability alongside the American, French, and German governments. We have agreed to coordinate global efforts to stimulate economies.

These are significant steps, Mr Deputy Speaker. And I must acknowledge my global colleagues who are committed to acting alongside me.

Yet as we prepare to act, we must recognise the reality of the situation here in the United Kingdom.

Over the past decade, the previous government based British economic growth off of financial services, government spending, and a housing boom financed by loose credit policies. The consequences of this are profound.

British households are amongst the most indebted in the world.

Government accounts are operating at a deficit.

The financial services that fueled growth under the previous government cannot be counted on to fuel growth today.

This is different from the rest of the world, Mr Deputy Speaker. Instead of running a current account surplus, the United Kingdom maintained current accounts on a knife edge. Other governments did not splurge during the boom years - they saved. As a result, they are in a more advantageous position than the United Kingdom when it comes to stimulus.

Other nations used their boom years to diversify their economies. In making the decision to accept the growth of the financial services industry as a primary means of economic growth, the United Kingdom did not. That threatens growth over the long term.

Correcting these flaws will require a long-term rebalancing of government spending and investment. But I must emphasize: that will be a long-term process.

Despite the financial state and economy that we were left with, it is my belief, Mr Deputy Speaker, that a contractionary fiscal policy would be wrong at this time. While we will consolidate the public finances so as to ensure efficiency, there will not be cuts to frontline services.

That is not to say spending will run away. The vast majority of departments will see their resource spending frozen in real terms. I can, however, confirm some exceptions to this. Health and education will see spending increase by 2% in real terms. The Home Office will see spending increase by 1% in real terms. And while resource spending is frozen in many departments, capital spending will be brought forward.

The need to control spending is a reality of our financial situation. In the current climate, the cost of government borrowing must be carefully balanced. Gilt rates slightly increased in the past year making the process of issuing new debt more costly for the Treasury.

That is not to say we are not prepared to act. We are. I am announcing a targeted series of measures today that will provide support to households, improve liquidity in the financial system, and encourage investment and hiring by businesses. Moreover, I am announcing investments that will stimulate the economy and provide both immediate and long-term growth for communities across the country.

As we overcome the impact of the current macroeconomic environment, we will act more aggressively to make efficiencies in government. We will transition from short term support to long-term investment. Investment in the critical sectors that we need to support: innovation, infrastructure, and skills.

Yet it must be our first priority to promote stability now, ensure prosperity for hard working people, and build the foundation of a secure economic future.

And it starts with financial stability.

Mr Deputy Speaker, I have the responsibility of being the Chancellor who addresses this House during a time of significant turbulence in financial markets. As I outlined in my recent speech at the World Economic Forum, the government has a plan to bring forward reforms to the financial regulatory system. As I made clear via my statement with the French and German finance ministers, we are taking our commitment to coordinated action seriously. However, intention for reform is not enough. Action is necessary.

With the support of the Governor of the Bank of England and the Chair of the Financial Services Authority, I am announcing a guarantee scheme for newly issued preference shares in British financial institutions. For securities held for at least three years, the government will guarantee up to fifty percent of the difference between the purchase price and the price for which they are sold. Guarantees issued under this scheme shall be limited to £20 billion in capital.

The nature of this program is such that the Exchequer will not face any liability until three years from now. Moreover the government’s guarantee on prices shall have an expiry date of three years from the date of issue.

Mr Deputy Speaker, this scheme will assist financial institutions in raising capital at a time when the financial sector is in need of equity. It will do so at limited risk to the government, given the timescales involved.

Hand in hand with our action to stabilise financial markets, we must be prepared to stabilise the housing market.

Earlier this year I announced my concern regarding the housing market in turbulent times. Though indicators appear to remain stable, I am prepared to announce further support today.

First, Mr Deputy Speaker, I am raising the nil rate bank of stamp duty to £175,000. Under this government, anyone purchasing a home at the average home price in the United Kingdom will pay no stamp duty. This will help countless home buyers, knocking another £500 off the taxes that they must pay in the first year of home ownership.

Moreover, I am announcing, as part of a broader stimulus package, an additional £750 million in spending on the construction of social and housing association homes. This adds to the £500 million previously announced for this purpose.

In addition to this £750 million for new construction in this sector, I am announcing £250 million, to be managed jointly by the Department of Communities and Local Government and the Department for Energy and Climate Change to finance the weatherisation and installation of energy saving appliances in social and housing association owned homes. Mr Deputy Speaker, this investment will not only be good for our environment, but, by cutting energy use, will ensure that families pay less for electricity and fuel.

Mr Deputy Speaker, I am further prepared to announce reforms to measures previously announced to support the housing market and promote financial stability.

First, for the self-employed who may use their home as their primary place of employment, I am announcing reforms to the Mortgage Support Loan Scheme. The loan repayment period for these individuals will be extended to ten years. I understand the difficulties in running a home and a business at the same time, from the same place. This will provide further relief in difficult times.

Second, I am announcing the expansion of the Relief to Rent Scheme. Under new regulations, local governments and housing associations will be able to enter into negotiations with financial institutions to purchase homes repossessed in the previous year and enter them into the social and housing association stock. £250 million from the carry-forward from last year’s reserve will be used to finance this expansion of Relief to Rent, of which £150 million may be used to purchase homes repossessed in the past year.

I thank the Rt Hon Member for Kingston and Surbiton for her discussion on the matter.

As we work to stabilise markets in the macroeconomy, we must look towards fiscal policy that aligns with our values.

Mr Deputy Speaker, as turbulence in financial markets facilitates headwinds in global growth, the United Kingdom is left in an unenviable position. Just a year ago, under the previous government, one of my predecessors stood at this box and announced the scrapping of the 10p rate of income tax.

Under that regime, every person in this country saw their taxes rise. However, the impact was most dramatically felt by those on lower incomes. That is unacceptable.

However, that ends today. Mr Deputy Speaker, I can announce that, in addition to uprating the personal allowance, I am restoring the 10p rate of income tax. This will return £240 to the average earner each year. It will return £240 to every person earning more than £7,300 per year - the vast majority of taxpayers.

The distributional effects of restoring the 10p rate, Mr Deputy Speaker, ensure that low earners get a significantly larger tax cut than alternatives would provide.

I must explain the economic context for this decision. When other governments around the world are cutting taxes or improving the earnings of low earners, Britain stood alone in increasing them. Mr Deputy Speaker, that could not be allowed. This decision has a significant impact on the Exchequer. But it is a reasonable one.

As we focus on cutting taxes for working Britons, we must consider other efforts to ensure support in challenging economic times. As such, I am uprating all working age, old age, and disability associated benefits in line with inflation.

Additionally, I have allocated additional resource funding to the Department for Work and Pensions to ensure that the department is prepared to provide support in the event of future disruptions in the labour force.

There is one area of our social safety net that requires specific mention: efforts to eliminate child poverty. Throughout the past decade, the government frequently missed targets on child poverty. In the last year of the previous government, child poverty levels increased. That is a moral failure - one that requires intervention. It is in that light, Mr Deputy Speaker, that I can announce the uprating of family benefits for the coming year.

Mr Deputy Speaker, Child Benefit will be increased from £15 to £16 per week. Child Tax Credit will be increased from £30 to £32 per week. The impact of this will be that millions of families will find themselves over £150 better off per year.

These reforms will lift nearly 300,000 children out of poverty.

Yet that is not all I am prepared to announce. As a mother, I understand that the earliest years of a child’s life are the most expensive. Nappies, formula: the costs add up. These costs are particularly acute for families on low incomes, who simply want the best for their children. And we know that access to quality nutrition and resources early in life has long term benefits for children.

It is on that note that I am implementing the Toddler Top-Up as a supplement to the Child Tax Credit. For the first three years of a child’s life, families receiving Child Tax Credit will receive an additional £5 per week. That is £250 per year.

For families receiving Child Tax Credit, when combined with the return of the 10p rate, the impact of these changes will be profound. A low-income family with a child will find themselves £400 better off. A family with a toddler will find themselves £650 better off. Those are real benefits for families: real benefits that will lift children across the country out of poverty.

Yet our support for working families does not end there. I am able to announce that families with three and four year olds with parents working full time will be eligible for an additional 7.5 hours per week of free child care, bringing the total to 20 hours per week.

And our support for children in low-income families will continue beyond that. Alongside my Rt Hon Friend the Education Secretary, I am announcing a pupil premium: a £500 payment for all students receiving free school meals or in care.

This pupil premium will be used to boost funding in the schools that these children attend: providing vital resources to provide enrichment activities, boost critical curriculum related spending, and ensure that communities with a greater than average number of students on free school meals get the resources required to provide better education. It will be used by schools to build partnerships with the third sector and integrate the community into education: building the big society that we need for children to succeed.

Yet it is not just individuals that make our economy work: it is business. And today, businesses need our support. That is why I am freezing business rates for the next year.

Yet rate relief alone, reducing the burden on business, is not sufficient, Mr Deputy Speaker. We must do more to encourage business investment in our economy. I am prepared to take such decisions.

I am introducing full capital expensing for plant and machinery over the next two years.

Mr Speaker, this has the potential to unlock nearly £15 billion for investment in our economy. £15 billion that can be redirected to growth. When combined with further efforts to stimulate growth in our economy, it has the potential to create feedback that will drive further investment.

And it does so at reasonable cost. Over the capital cycle, full capital expensing for plant and machinery will be deficit neutral, as it is offset by lower writing down allowances in later years. When combined with the growth effect of this measure, it will result in a net benefit for the public finances over the medium term.

To help companies unlock investment, the government will be providing £4 billion in loan guarantees for small- and medium-sized enterprises. These guarantees will guarantee 75% of losses on loans to SMEs made by British banks, up to 20% of the total guaranteed loan book issued by the bank.

At the cost of £800 million in risk to the Exchequer, this program stands to stimulate over £5 billion in lending to small businesses. As not all risks are being assumed by the government, banks are still duty bound to act responsibly. However, this effort will significantly derisk lending to the small businesses that are the cornerstone of our economy.

Additionally, to support the development of green industries in the country, the government is unlocking £500 million in financing for renewable energy and low-carbon manufacturing capacity.

This financing will be extended to offset up to 25% of the cost of capital investments and improvements made in renewable energy and low-carbon manufacturing capacity, leveraging £1.5 billion in private capital in doing so. It will be an investment in making the United Kingdom a hub for the green energy industry, spurring business growth across our country.

Mr Deputy Speaker, as we look towards providing broad stimulus, we must ensure the stability of local economies across the country.

The local pub is a cornerstone of community economies across the country. To make their lives a little easier, I am freezing the duty on beer this year, Mr Deputy Speaker. In uncertain times, nobody should have to pay more for a pint.

And our efforts to protect communities across the country includes rural economies, where driving is a part of life. This is not the time to increase the cost of fuel. For that reason, Mr Deputy Speaker, I am freezing fuel duty for this year.

I cannot ask my constituents in Cumbria to pay more for essential activities in a time of economic uncertainty. I cannot make that request for anyone living in a rural community.

As we move to keep the cost of getting around low, we must look to invest in how we get around the country. 

In building a growth-oriented society, we must realise that it is the connections within our communities and between our communities that matter. It is for this reason that I am bringing forward £1 billion in capital spending on critical transport projects. These projects will have the joint effect of stimulating the economy and building a stronger transport system between communities.

They start, Mr Deputy Speaker, with a programme of investments to boost connections within some of Britain’s major cities. These investments start with the most ambitious urban transit project in the modern era: Crossrail.

I am announcing full funding for the Crossrail programme, Mr Deputy Speaker. This will see £4.8 billion released by the Department for Transport over ten years to complete construction, beginning with £480 million in the coming year.

Crossrail will be transformative for our nation’s capital and is essential to relieving stress on the Tube.

Yet, as we transform London, we cannot forget about other cities. Leeds, Mr Deputy Speaker, is the only city of its size in Europe without functioning light rail or trams. It is time to change that. I am announcing full support, over five years, for the construction of a tram system in Leeds.

Yet society is built on more than trains and trams, Mr Deputy Speaker. Recently, London has piloted, with great success, the use of hybrid buses as part of its bus service. These new buses provide better services for those that use them and reduce emissions in our cities. As part of our stimulatory package, we will be providing £100 million for deployment of hybrid buses.

For our cities this will have a monumental impact. There will be nearly 350 new buses providing better services for passengers. They will be green buses, reducing the environmental impact of public transit. These are investments that will matter for our cities.

And on the topic of buses, Mr Deputy Speaker: as part of our agenda for localism and decentralisation, the government will legislate to give other metropolitan areas that choose to seek devolved powers London-style powers to franchise bus services.

Mr Deputy Speaker, the funding and ambitions of Network Rail were severely stunted over the past decade. After significant progress in the 1980s and early 1990s, efforts to electrify our railways came to a halt.

This has consequences. The institutional knowledge and talent that facilitated our last programme of railway electrification has largely moved elsewhere. This loss of human capital makes railway electrification, and infrastructure programmes generally, more difficult to initiate and sustain. That is unacceptable.

In cooperation with Network Rail, I am announcing the beginning of a thirty year, rolling programme of railway electrification. This programme is critical for boosting the capacity and sustainability of our railways. The early investment that I release today will be critical for Network Rail to boost its human capital base, expand planning, and commence early electrification work. This investment is essential. It cannot wait for Network Rail’s next Control Period.

As we announce early electrification work, we must consider the projects that will be prioritised. Early work will be focused on “no regret” schemes - those that absolutely must be brought forward. These schemes include connections like the TransPennine Express connecting Liverpool and Manchester to Leeds and beyond. The Great Western Railway that links London with the South West and South Wales. The Midlands Main Line.

Mr Deputy Speaker, this programme will be significant, but it is necessary. A critical benefit of this programme will, by 2040, be the removal of diesel fuel from our passenger rail system. This will have untold environmental benefits, in addition to the economic benefits: a reduction in climate emissions from the railway sector, less pollution from the use of diesel fuels. This is the action of a green government.

As I mentioned, Mr Deputy Speaker, one of our priorities is the electrification of the TransPennine Express. We are making a series of investments now to relieve stress on this essential rail line in preparation for electrification work.

First, I am able to announce a programme, over four years, to reopen the Skipton to Colne line. This will create an additional east-west route in the North of England, linking West Lancashire directly with Leeds. Additionally, routes linking Manchester with Leeds via this route will be available. This will relieve stress on the Huddersfield line of the TransPennine Express and provide an alternative route for freight shipping.

Second, I am able to announce work to be completed on the Hope Valley line, which will expand passenger service capacity and speed along that line. This will dramatically improve passenger service between Manchester and Sheffield, linking two great Northern cities.

Bringing forward these two projects in the current Control Period is essential to preparing the North of England for works that will be completed as part of our rolling electrification programme. We cannot wait. 

Further to electrifying our railways, we must consider the need for additional railways to improve national connectivity.

I am announcing to the House that, in addition to measures put forward today, there will be a review into national connectivity and, in particular, the construction of new rail lines, including high speed rail. This review will be led by the President of the Institute of Civil Engineers, Douglas Oakervee.

This review will look at key connectivity needs and make recommendations regarding a national rail construction programme. This review will provide critical guidance to the government as we seek to improve connectivity and promote growth: where lines are overburdened, where a strong business case can be made for high speed rail, where improved intercity connectivity will benefit economic growth. Further details will be provided by the Infrastructure Secretary. I look forward to reviewing its conclusions.

We acknowledge that, outside of national connectivity, communities often know what is best for them: particularly in building strong, prosperous local economies. However, allowing them to do so requires strong local government structures and a return to localism across the country.

That is something this government is committed to.

Mr Deputy Speaker, we are increasing financing available to local authorities. In return for this financing, we are freezing council tax rates for the coming year. The reality is that, just like the central government, local governments will have to make efficiencies. We will extend support in doing so.

We will provide incentives to local authorities that seek to reduce costs by transitioning to unitary status. Mr Deputy Speaker, the results of fifteen years of study are clear: unitary authorities cost less and provide better services for the communities that they serve. They remove coordination barriers and confusion for residents who don’t know which council to call when they have a problem.

Supporting single tier authorities will benefit every person in those communities.

Of course, we acknowledge that there are some areas that are best dealt with at a greater scale. Areas such as bus franchising and strategic planning or skills development. Mr Deputy Speaker, the government will bring forward legislation in the coming year to create a new tier of devolution: city regions and county regions.

These regions will be centered around economically sensible and defined geographies to promote scalable investment in communities. Examples of such regions might be Greater Manchester, Mr Deputy Speaker, or the heart of our South West in Devon, Somerset, and Dorset.

And as we create these devolved regions, we will abolish unelected, bureaucratic, and centralised Regional Development Agencies and transfer their funding to local structures. The cost savings from abolishing these agencies will be reinvested in communities. In the next year alone, this will see an additional £75 million in economic development funding transferred to our communities.

In regions, such as London, where a regional development agency covers an entire devolved area, we will give the Mayor and London Assembly the opportunity to take over the management of the agency and reform it as they see fit.

Money for communities, not bureaucracy. That is the Conservative way.

Of course, improving our infrastructure means that we must consider the broader issue of long-term financing of investment. To achieve this, I am announcing a Treasury-led review of Britain’s investment environment. Mr Deputy Speaker, no topic will be off limits in this review.

We will review reforming the capital gains tax to favour long-term investment.

We will review private vehicles for investment that can be supported in the long term, such as infrastructure ISAs, promoting institutional investment in infrastructure finance, and the like.

We will review models for supporting venture capital and private equity investment in innovative startups around the country.

And most importantly, Mr Deputy Speaker, we will review the case for a United Kingdom Infrastructure Bank.

Modeled off of the highly successful German KfW, it is our belief that an infrastructure bank can transform the United Kingdom’s investment environment. It is our belief that such a bank can dramatically increase our ability to leverage private capital to achieve public good. That is the foundation of the big society that we seek to build.

Rethinking how we finance long-term investment will allow us to continue to finance two additional projects over the long-term: the continued rollout of high-speed broadband and the deployment of a “smart grid” across the United Kingdom’s energy infrastructure.

Mr Deputy Speaker, these initiatives are both critical to promoting growth in our economy. The smart grid is essential to sustainability in the economy. And I am proud to launch new investments in them today. However, like the electrification of the railways, they require long-term financing: financing that we will bring forward.

And as we look at the KfW model, Mr Deputy Speaker, we must look at where else we can bring forward opportunities for investment.

KfW provides a model that would benefit business investment as well as infrastructure investment. In partnering with KfW, small and medium-sized German businesses are able to access low interest, long term financing for growth. These are resources that British businesses, by and large, currently lack. They are resources that we should create. And as this bank is brought forward, we will look to transition the Treasury’s loan guarantee book to this institution.

I look forward to presenting the results of this review and bringing forth the appropriate legislation in due course.

And let me be clear, this review is essential now, Mr Deputy Speaker. As the United Kingdom overcomes the economic headwinds facing us, we will transition to recovery. And as we do, we must do everything in our power to leverage private capital and finance to build a more resilient economy, a more entrepreneurial economy, a more cooperative economy.

While we must stimulate investment broadly, we must also recognise the benefit of certain forms of business. Particularly, we must look at models of business that promote inclusive ownership and governance as not only providing benefits for their workers, but also for their communities.

Mr Deputy Speaker, the government acknowledges the benefits of cooperatives, mutuals, and social enterprises in building the big society in the United Kingdom. It is for this reason that the government is committed to supporting them.

Today, I am implementing a cooperatives rate of corporation tax. Cooperative enterprises and mutuals, no matter their size, will be taxed at the small profits rate henceforth.

The Treasury, in coordination with the Department for Business, Enterprise, and Regulatory Reform, will conduct a further review of our laws surrounding cooperatives, mutuals, and social enterprises. In doing so, we are committing the government to bringing forward a Cooperatives and Social Enterprises Bill in the coming year.

I take the protection of our NHS seriously, Mr Deputy Speaker.

For the duration of this Parliament, I can announce protection of the NHS budget and guarantee real terms increases each year. I can announce that any efficiency savings found in the NHS budget will be reinvested in the NHS.

The result is clear: the NHS is in safe hands under this government.

And the proof is in the decisions we made today.

Last year, under the Labour government, there was no investment in new NHS facilities. Today, we are announcing the construction of six new hospitals and one hundred new clinics. That is progress, Mr Deputy Speaker.

We are hiring more doctors, more nurses, and more support staff that are essential to functioning of the NHS. And we are giving them the pay raise that they deserve.

However, we are slowing the rate of growth in managers. And we are limiting NHS managers to a pay raise equal to that of the private sector. Mr Deputy Speaker, this government has been adamant that we need more doctors and nurses on the frontlines and fewer managers. We are achieving that outcome.

Yet we are also working to improve efficiency in the NHS. That Health Secretary has been granted an NHS Innovation Fund, currently set at £25 million, to trial novel forms of health delivery that reduce costs but not quality. Such investigations could include telemedicine, more efficient use of physiotherapy, or deployment of cost-saving electronic health records.

The government will use this evidence base to make future decisions about the efficiency in the NHS. We will take what works and spread it across the NHS, freeing up resources for improvements in frontline care. Because that is what this government is about: getting you the health care that you need.

Moreover, I can announce our first tranche of efficiency savings within the NHS, Mr Deputy Speaker: cleaning up the epidemic of ghost patients registered to GPs offices. Our models suggest that the NHS pays well over £120 million in excess costs as a result of these ghost patients. And we pay this amount because, for every ghost patient registered to their practice, a GP gets a £100 bonus.

That is £120 million that could be going to frontline care. And we are taking steps to ensure it does. As a result of our ghost patient cleanup initiative, we anticipate freeing up over £80 million for investment in the NHS this year. £22 million of that funding will be diverted to Primary Care Trusts that act to remove ghost patients from the rolls. This funding will be used for capital expenses and equipment purchases: ensuring GPs have the tools that they need to treat their patients.

The remaining £60 million will be investing in commissioning within the NHS. This will ensure that commissioning grants rise above the rate of inflation. It will ensure that more operations can be performed. That better services can be provided.

I look forward to working with the Health Secretary to further strengthen our NHS over the coming years.

As I previously announced, Mr Deputy Speaker, we are protecting the budget of the Department for Education.

But it is not just being protected. We are investing.

We are expanding financing available to open more academies across the country. As my Rt Hon Friend the Education Secretary so eloquently told this House during the debate - or lack thereof - on the Schools Act, there is evidence that academies outperform traditional maintained schools. We will expand the academies programme to allow more students to take advantage of the opportunities that they provide.

As part of our effort to build a high wage economy for the future, I am announcing the release of funding to support our schools and universities in the provision of STEM education. £200 million will be made available to build and renovate STEM facilities at universities across the country. £300 million will be made available to build and renovate STEM facilities, including those associated with further education in STEM fields, at secondary schools and further education colleges across the country.

These investments are vital to ensuring that our children have access to the tools needed for a STEM education. Whether that is computer facilities or chemistry labs, exposure and access are critical to building the STEM workforce that we will need in the future. And, Mr Deputy Speaker, we will ensure that the funding is equitably distributed. It will not just be research universities in the golden triangle that benefit. It will not just be high performing schools that benefit.

My Rt Hon Friend the Home Secretary has detailed our investments in the police before this House, so I will not dawdle with the House’s time there, as I’ve spoken for quite some time.

However, I will take time to announce the investment in rehabilitation that we are making, particularly as it relates to knife crime. Mr Deputy Speaker, the Home Secretary has laid out how we will work to deter and combat knife crime. However, for those who are at low risk of reoffending, we are working to provide the rehabilitation facilities - whether mental health or third sector support - that are necessary for individuals to become productive members of society again.

Mr Deputy Speaker, in times of economic uncertainty, this government is committed to bringing forward the big society that we were elected to achieve. We are committed to bringing about an agenda that embraces capitalism for the common man.

As we look towards the future, we must ask ourselves: what is capitalism for the common man?

It is competitive and consumer-oriented capitalism.

It is cooperative and corporate responsibility capitalism.

It is creative and innovative capitalism.

It is community capitalism.

And that is what the agenda we have laid out today is designed to achieve.

But we will do more over the coming weeks, months, and years.

This government is committed to strengthening markets, financial and otherwise, to create an environment of true competition. This government is committed to dramatically improving consumer protection. This government is determined to promote cooperatives and social enterprises, to build responsible corporate governance structures. This government is determined to create an environment for investment in our brilliant start ups and world class infrastructure. This government is determined to create strengthened communities that are more responsive to the needs of the people whom they serve.

Our legislative agenda over the coming years will reflect this reality. It will build on the path that we have laid out today. It will build a growing economy, one that will emerge from the headwinds that we face today stronger, more resilient, and more prosperous.

Our fiscal policy sets the trend for this future. We are working to deliver stability today. Ensure prosperity tomorrow. And build a secure, long-term climate for investment in the United Kingdom.

I am not afraid to do what is necessary in light of the economic challenges we face.

I am ready to ensure the continued prosperity of British families.

I am determined to protect our future.

That is what this budget facilitates. We are acting to ensure financial stability. We are cutting taxes for every worker in this country. We are getting serious about child poverty. We are boosting investment across the country. We are choosing to build a green economy for our future. And we are protecting our public services.

We will continue to be serious about the challenges that we face.

Today, we are setting the right course to limit any economic downturn and pave the way for a robust recovery.

One that will be met by a stronger United Kingdom.

A United Kingdom that invests in innovation, infrastructure, and skills. A United Kingdom that is committed to building better markets. A United Kingdom that is committed to the well-being of its people.

There are no decisions that I take lightly today. But for that people of this country, my message is clear: this government will stand with you. This government will do what it takes.

We face a moment of great challenge.

We will meet that challenge.

This budget puts us on course to do so.

I commend it to the House.

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Mr Deputy Speaker,

The Government alleges that this budget offers ordinary people stability, prosperity, and security. In line with the carefully manicured, focus-grouped image this Tory Party has steeped itself in, the reality is far different than the framing. In this time of economic crisis and uncertainty, this budget takes from working people while placating their speculator and fat cat mates. 

The Tory spin machine decided this budget offers stability. The reality for working people is that it creates conditions of chaos and despair. Unemployment rates are skyrocketing. Wage growth is stagnant. Families are forced to make choices nobody should have to make about how to scrape by. People in working communities are afraid. In these conditions, only a Chancellor raised with a silver spoon would refer to a budget that analysis suggests will lead to tens of thousands of ordinary people getting the sack as one that offers stability. 

Tens of thousands of public sector employees, people whose hard work makes our communities run, are being senselessly given the sack. Somehow, the Government believes this is efficient and prudent governance in a crisis. And maybe the Chancellor and Prime Minister's elite Davos mates agree that this is a prudent step. Perhaps a rail worker like me just doesn't get it. Or perhaps the Government's callous dismissal when confirming the news of the sacking reveals a Government composed of people who've never experienced economic pain. A Government composed of people who had everything handed to them in life and can't comprehend the magnitude of stripping families of their livelihoods. 

This budget denies stability to ordinary people and the communities they live in. While the Government has offered meager support to businesses, they are leaving workers in the dust. Not only have they refused to provide real-terms pay increases to most public sector workers, they are condemning others to real-terms pay cuts, including those that ensure our NHS provides the quality care we all expect and deserve. Further, they have been happy to dole out tax freezes and cuts to their wealthy mates, including a massive subsidy to functionally bail out reckless, gambling bankers by guaranteeing minimal losses to share prices, but failed to offer direct injections of money into the pockets of ordinary people.

Higher wages and single-time cheques to ordinary people will put money into the hands of those who need it most. That money will be spent in local High Streets creating even more jobs in our communities. This would create a positive cycle of growth and support from the working and consumer up. That is true economic stability. That is Labour's plan.

Instead, when the Tories talk about stability, they talk about a "heads I win, tails you lose" situation with a massive risk-subsidy scheme for bankers. For the Tories, bankers can gamble away our economic health and be rewarded with a guaranteed recovery to their bottom line. However, according to this budget, public sector workers can get the sack, suffocating local communities and forcing local businesses to give their employees the sack due to decreased consumer demand. 

This budget means stability for hedge fund managers and retraction and despair for working communities. 

The Tory spin machine decided this budget offers prosperity. The reality is prosperity for gambling hedge fund managers and others in the financial sector who are encouraged to take risks without a bank levy and subsidies for losses. This Tory plan creates profound perverse incentives. But for many ordinary people, prosperity and care in retirement remains unobtainable. 

We need an infrastructure program that will create stable, long-term jobs while addressing a brewing crisis in Britain. With an aging population that will increasingly enter retirement and increasingly require care, and fundamentally inadequate care infrastructure, Labour believes it is shameful that this Government believes that those who have worked their entire lives should have their savings eaten away in an inadequately prepared care industry. 


Labour believes that a historic investment in the creation of a National Care Service - modeled on the great post-war Labour Government's bold vision in establishing our NHS will create long-term stability, prosperity, and dignity in retirement while creating permanent jobs doing necessary work in communities throughout Britain. 

The Tory spin machine decided this budget offers security. The reality is that the wealthy few receive security for reckless investments, the wealthy few get security from disproportionately high tax breaks, the wealthy few receive no accountability in creating this crisis while hundreds of thousands of workers are plunged into despair - ordinary people continue to face insecurity. This budget contains no comprehensive jobs program. It contains no program for wage growth. It contains no support for worker organizing to uplift the millions of underworked or underpaid throughout Britain. And while bankers sleep easy knowing their reckless investments have a Tory-backed insurance policy, those who protect our communities - the police - are receiving no real-terms pay increase. 

Economic despair leads to increases in crime. Study after study confirms it. Yet as Britain heads into crisis, this Government is treating millionaires and billionaires with more compassion than those who keep our communities safe.

The focus groups might say this budget has a nice tagline. But the reality is that beyond the usual flair and smugness, this budget offers callousness and cruelty to ordinary people while rewarding those whose recklessness and greed caused this crisis to begin with.

Jim Connelly

MP for Bradford South (1994-Present)

Leader of the Opposition, Labour Leader (2007-Present)

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Mr Speaker,

I would like to congratulate my Right Honourable Friend, the Chancellor, for delivering her first Budget. It wasn't the circumstances under which she would have preferred to deliver it, but despite the very challenging global circumstances she has charted a well-balanced course. The budget will support prosperity, grow the big society, and support the most vulnerable.

I would like to take the opportunity to highlight three things to this House.

First, the investment in all levels of education. 20 hours a week of free childcare for all 3 and 4 year olds with parents in full time work will save money for those who face the highest costs and allow more parents to work. Our pupil premium will invest £600 million to raise the educational attainment of our poorest pupils. And 20,000 youth apprenticeships will equip our young people with more skills as they look to enter the workplace.

Second, the investment in tackling crime. Most notably, I would like to highlight to the House the significant investment that we are making in rehabilitation, which comes with a £50 million commitment to make alcohol, drug, or mental health treatment available in a quarter of all community sentences - far more than now. That comes on top of investment in more officers, and in prison places to end Labour's overcrowding.

Finally, this Budget will put Britain back on track in its goal to cut child poverty. For the last two years for which figures are available, the last Labour Government left office with child poverty rising not falling. Child poverty rose by 200,000 in the last two years of Labour in Government. In this Budget we have invested in child tax credits and in child benefit to arrest that rise. The measures announced by the Chancellor will take around 300,000 children out of poverty. Against the backdrop of extreme uncertainty, that is something I hope the whole House can rally behind.

Katherine West

Conservative MP for Watford (2007 - )

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Well well well, Mr. Deputy Speaker, “community capitalism” - it is very promising to see that this Government is moving more and more to the left, embracing Blue Labour perhaps. Maybe this time next year they will drop the capitalism, and replace it with Socialism.
 
Mr. Deputy Speaker, before I go on to talk about the areas of the Budget surrounding my own portfolio, I would first like to start by echoing the words of my Right Honourable Friend, the Leader of the Opposition. He has hit the nail on the head with exactly what this Budget is, and detailed what it should have been. As I said before the Tory Government cannot be trusted with the public purse, like a reverse Robin Hood, they always snakely rob from the poor to give to the rich. The Chancellor says that the Government have “acted in the national interest”, and the Tory spin machine will say that this Budget will be all about helping those in need, low income families, and working class people - but in reality it will only serve to benefit their fat cat mates in the city. I am still at a loss of words from the Chancellor who said the Tory Government would “cut taxes for every working family”, and at the same time were laying off tens of thousands of workers. The Tory plan to help families in the face of a recession Mr. Deputy Speaker - send them to the dole queue. The Tories are cutting taxes for tens of thousands of families by laying them off so they don't have an income to tax. Families and communities will continue to struggle - they couldn’t even give workers fair, real terms pay increases - which by the way, they never even bothered to consult unions on pay requests. Meanwhile businesses and those better off reap the rewards of this Budget. All this in the face of economic turmoil in the country, and the world - Shame on this Government. Shame!
 
I welcome the Leader of the Oppositions’ announcement on the National Care Service, a policy that I have helped formulate and work on since my time as Shadow Health and Social Welfare Secretary. This is an example of how you support those in need. This is how you provide economic certainty for people in need of social care. And this will help strengthen our NHS and the service it provides - something the Tories have been trying to chip away at since the 1980s.
 
I have to say I am pleased to see that the Home Office Budget will aim to prevent crime and rehabilitate offenders, as well as a 1% increase in real terms to funding to tackle issues in our home affairs - however these plans do not go far enough, or fall incredibly short. 
 
Firstly, the extra £5million to the so-called “Breaking the Cycle” strategy on knife crime is something that can only be welcomed, as can hiring an extra 2,000 more police officers to help address this issue, and crime rates in general, as well as the extra 325 plain clothes detectives. I said during the debate on the Knife Crime Strategy Motion, and I would like to echo my comment that throwing money at a situation doesn’t make it go away. The Home Secretary promised there would be safeguards to ensure the money is spent efficiently, and not squandered, and I hope this is the case. We need this fund to not only support communities, but to ensure that the funding achieves its goal in stopping the knife crime crisis in the United Kingdom. We must ensure we do not see a generation of Jack the Rippers in our country.
 
Mr. Deputy Speaker it is no secret that I value rehabilitation over punishment. Punishment while necessary often leads to people falling into a system and continuously reoffending - this is something we must address. I am happy to see that the Government is following this line of thinking too. I commend their plans for more support for the health and wellbeing of offenders. Likewise for their “post-sentence employment service” plan to help reintegrate offenders into work, something that ex-prisoners can often find hard to do is gain employment, and I hope this will help address this. I do find it interesting however that the Government is placing its focus on rehabilitation, but has granted plans to build one thousand new prisons. Are they expecting crime rates to rise, and a need for more room for prisoners despite their rehabilitation over punishment plans?
 
The most serious issue here Mr. Deputy Speaker, is that while the Government clearly wants to increase its support in rehabilitating offenders, their money they have set aside in this Budget falls completely short of doing so. Recent estimates, determined by combining figures from the original Home Office Economic and Social Costs of Crime report, along with those in the 2002 Social Exclusion Unit, put the cost of re-offending by ex-prisoners to be in the region of £9.5billion to £13billion. This means the paltry £90million boost offered by the Government will be a drop in the ocean in terms of helping deal with rehabilitation. If this Government is serious about tackling reoffending and supporting rehabilitation, they need to get real and have their boosts in the billions, not the millions.
 
Mr. Deputy Speaker, following the events of the BNP rally last year, and the suicide bombing in Belfast, I welcome the idea of an “Extremism Unit”, however I do have some cause for concern with this new unit. The rights of civil liberties and rights are something that I will always fight to ensure they are not infringed upon Mr. Deputy Speaker. That is why in the Knife Crime Strategy debate, I asked whether the “hotspot” strategy would see an increase in police stop and search powers, that is why I asked whether these “hotspots” would just be an excuse to target areas that are poor, disadvantaged, or populated mainly by minorities. Whilst I believe in safety, we as a Parliament have a duty to protect the liberties of the citizens of this country too, and more often than not stop and search can infringe on these rights. Questions must be asked about this “Extremism Unit”. What will define far left and far right extremism? What exactly will the powers of this unit be? Will we see the return of the disgusting use of internment seen during the Troubles in Northern Ireland? This House needs to see legislation be laid out before it to define all of this, so these powers are not abused and not extreme in themselves.
 
Mr. Deputy Speaker, once again the Tories have come so close, but no cigar with this Budget. While it has its good points, it lacks a hell of a lot.

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Deputy Leader of the Labour Party

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Shadow Secretary of State for Health and Social Welfare (December 2007-January 2008)

 

 

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Shadow Secretary of State for Health and Social Welfare: Dianne Abbot MP

Shadow Secretary of State for Innovation, Infrastructure, and the Environment: Barry Gardiner MP

Minister for Northern Ireland: David Anderson MP
 

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Shadow Secretary for Infrastructure and the Environment: Barry Gardiner MP
 
A promising Budget for the Department of Infrastructure and the Environment, Mr. Deputy Speaker, but as my colleagues have said, it falls short of the mark on a good few occasions.
 
I’ll start with a compliment, Mr. Deputy Speaker, and say that I am happy to hear the Shadow Chancellor say she will support rural communities, especially in regards to fuel duty, which will allow farmers to continue their work without facing further financial impact. 
 
I completely welcome the plans for the Government to provide more housing, especially affordable housing. That £750million that will help construct social and housing association homes, as well as the Relief to Rent Scheme, will allow many more people to finally have their own home.
 
The announcement of £250million to finance the weatherization and energy saving appliances in social and housing association homes is also most welcomed. Futureproofing these homes and making them more energy efficient for the future is not only a good thing for tenants, but for the climate in the future. However Mr. Deputy Speaker, I do need clarification from the Government on how this money will actually be managed, the Chancellor mentioned it would be the Department of Communities and Local Government and Department for Energy and Climate Change, which as far as I am aware, neither of which exist. Could the Government clarify which ministries will actually manage this fund?
 
Support given to the self-employed who own their own homes, also has to be commended. It alleviates the pressures of running a business and paying a mortgage for those who do so.
 
Financing the green energy industry with £500million is also a massive step forward, Mr. Deputy Speaker. We have all seen this year that climate change is a real danger, and moving towards clean and renewable energy will only help combat that.
 
This Budget has set aside massive amounts of funding to build up infrastructure in the country, which is commendable, the infrastructure of a country is the lifeblood that keeps it running. I would like to raise however, although £100million has been set aside for hybrid buses, the Government must ensure to futureproof the country from and to tackle climate change we must ensure all further improvements to public transport should be solely based on green vehicles. Things such as electric or hybrid buses, trains, and even bike rental systems for cities to help cut the amount of traffic and thus car emissions.
 
Furthermore to that point, the Government must start making more commitments on climate changes. We need to work towards all cars and transport being run on clean fuel or energy ASAP, moving away from fossil fuels, petrol and diesel. I was disappointed on the Environmental side of this Budget, that the Government is not pushing to fight against climate change, with the Energy and Climate Change funding only rising by the rate of inflation. Not too long ago, this Government promised that they would “be a world leader in combating climate change”, and this Budget suggests that they are not as serious on this as they made out to be. 
 
Finally Mr. Deputy Speaker, while money has brilliant been set aside, Labour are still disheartened that the Government did not listen to us, and our plans from our Flood Strategy to introduce £1billion of investment in improving flood defences, and introducing a flood support fund for those without insurance who need help rebuilding their lives and communities. After a year of the worst flooding we have seen since records began, this Government must put the investment in to protect against future flooding and support those affected - and they simply aren’t doing enough.
 
While I fully support the Government’s plans to increase the amount of social and affordable housing, as well as investing in the green energy sector, I think it is clear from my points they could be doing far more to combat climate change, and their investments reflect. The lack of support for preventing flooding and helping victims, after the year we have had is just shameful. For a Government who wants to be a leader in combat climate change, it would be good to see them finally act like one.

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Deputy Leader of the Labour Party

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Shadow Secretary of State for Health and Social Welfare (December 2007-January 2008)

 

 

NPCs:

Shadow Secretary of State for Health and Social Welfare: Dianne Abbot MP

Shadow Secretary of State for Innovation, Infrastructure, and the Environment: Barry Gardiner MP

Minister for Northern Ireland: David Anderson MP
 

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Shadow Secretary of State for Health and Social Welfare: Dianne Abbott MP
 
More of the same from this Government, Mr. Deputy Speaker, talking out of both sides of the mouth as usual. The Chancellor says that she takes protecting the NHS seriously, which I am happy to hear as her party has wanted to get shot of it for decades now. But at least we have her word in Parliament that the NHS budget will be protected and a guarantee of real terms increases each year. That promise will not be forgotten, and I would the Government, failure to do so would be an offence in misleading this House.
 
Yes, Mr. Deputy Speaker, the Government has promised new hospitals and clinics, and more staff - but this is all the usual stock lines given by a party who has no idea how to run a health care service. The talk of big investment plans, and real terms increases each year, but when you read most of the health section of the budget, funding only rises by the rate of inflation. The only reason health saw a 0.5% real terms increase in funding was because of the building of new facilities, everything was frozen.
 
The fact Mr. Deputy Speaker, that she has said she is giving healthcare workers a “pay raise that they deserve”, when they are taking a pay freeze, and managers and admin staff taking a 1% pay cut, is a total insult to the hard work, compassion, and dedication healthcare workers up and down this country put into their work. 
 
Don’t get me wrong Mr. Deputy Speaker, I will never not be happy to see a better resourced and better staffed NHS, but this Government is twisting the truth in how it is really investing into the health service but I can tell them now, the wool will not be pulled over the Opposition or the public’s eyes.
 
I will however welcome the announcement of £25million into trials for novel forms of health delivery, that could potentially be more cost efficient than current practice. I must ask, does the Government believe this investment is enough, and will they review these trials after a year to ensure they are working and value for money?
 
I respect that the Government will be chasing up so-called “Ghost Patients”, Mr. Deputy Speaker, especially with the money it could potentially save. Can the Government guarantee today that money saved from “Ghost Patients” will be kept within the NHS for investment purposes?
 
I am glad to hear today that additional resources have been allocated to the Department for Work and Pensions to ensure proper support is provided to the labour force. I imagine this is the extra real term increase of about £200million. The Government must ensure workers and the unemployed are always supported in their lives. Likewise Mr. Deputy Speaker, I can only be supportive of their plans to address child poverty, heling families financially and with more childcare hours.
 
Mr. Deputy Speaker, I have to say I am very disappointed with the Government’s outlook with the NHS, they seem to have no plan to improve things, they have lied about pay rises for healthcare workers, and so far their promise of real terms increases are just freezes padded out by building facilities. We need more for our health care service Mr. Deputy Speaker. We need plans like the National Care Service, such as my Right Honourable Friend, the Leader of the Opposition, has proposed that would see people all over the country benefit from free social care. Where are the Government’s plans and investment for that sort of thing? I can tell you know Mr. Deputy Speaker - they don’t have any.

 

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Deputy Leader of the Labour Party

Shadow Home Secretary

 

Former Roles:

Shadow Secretary of State for Health and Social Welfare (December 2007-January 2008)

 

 

NPCs:

Shadow Secretary of State for Health and Social Welfare: Dianne Abbot MP

Shadow Secretary of State for Innovation, Infrastructure, and the Environment: Barry Gardiner MP

Minister for Northern Ireland: David Anderson MP
 

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Mr Speaker,

I shall take this time to respond to the technical questions put forward by the Members for Sedgefield, Hackney North and Stoke Newington, and Brent North.

Mr Speaker, the first technical question raised by the Member for Sedgefield relates to the increase in prison capacity. Mr Speaker, the previous government left our prisons horrifically overcrowded. Even with efforts to promote rehabilitation and community-oriented justice, they remain overcrowded. For that reason we are investing in additional prison places.

Regarding the functioning of the extremism unit, I would refer the Member to the statement issued by the former Home Secretary on the matter.

Mr Speaker, in regards to the Member for Brent North, I wish to assure him that both the Department for Energy and Climate Change and the Department of Communities and Local Government still exist. The minister responsible for them is my Rt Hon Friend the Secretary of State for Infrastructure and Environment.

Finally, regarding the technical questions put forward by the Member for Hackney North and Stoke Newington. First, Mr Speaker, I must admit that I am confused by her maths. The Department for Health has received a real terms funding increase of 2% over last year. Much of this is associated with the additional provision of medical care, including increases in commissioning and increases in the budget for prescription medications. Of course, even if one does exclude spending on buildings and procurement, spending on medical care and staff increased by 1.8% in real terms. Statistics are terribly inconvenient things, Mr Speaker. But I an assure the member opposite that she is incorrect.

Mr Speaker, in terms of the Health Innovation Fund, I must stress that this is a first time investment. If the fund proves successful, funding will be increased. If the fund is not successful, funding will be withdrawn and redistributed across the health system. If changes in practices are determined to have value for money, then they will be rolled out across the National Health Service. That is, after all, the point of the fund.

Moreover, Mr Speaker, had the Member for Hackney North and Stoke Newington paid attention to my statement, she would know that all net efficiency savings within the NHS, including the identification of ghost patients, are to be reinvested in the NHS. If the member would refer to the written copy of the budget statement, I can assure her that it says, and I quote, "I can announce that any efficiency savings found in the NHS budget will be reinvested in the NHS."

Mr Speaker, might I note that, in the future, it would be beneficial for the members opposite to pay attention during statements made to the House. They might find that many of their questions have been answered.

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Mr. Speaker -

Lakshmi Mittal.

Roman Abromovich.

Hans Rausning.

John Friedrickson.

Philip Green.

David and Simon Reuben.

Richard Branson. 

Bernie Ecclestone.

I mention these names for a reason. The aforementioned list of men and their families rank amongst Britain's most wealthy families. I do not begrudge them their success. After all, I believe in capitalism is the best way to generate wealth. 

I just believe that capitalism must be done better.

It must be done not with billionaires in mind. It must be done with people in mind. 

Teachers. Nurses. Shop clerks. Police officers. Dog walkers. Maintenance workers.

We must focus on the 22-year-old from a struggling Northern town on the water who has big dreams but no idea how to turn his entrepreneurial instincts into creating a product or service that makes our lives better. 

We must focus on an elderly pensioner, whose husband passed away, who finds it increasingly difficult to live a quality-of-life she worked so hard to obtain. 

But instead, this government chose to help billionaires. 

They've done this, notoriously, through this awful plan to guarantee the aforementioned billionaires and the investor class access to bank stocks they they will insure against losses. 

Would any individual in their right mind want to chip in and help pay for the insurance Roman Abromovich's 19th yacht? For the homeowner's insurance for Bernie Ecclestone's Italian villa that he visits, at best, twice a year?

That is who this government is providing insurance for.  If those men and their family's purchase a new share from a bank, their losses will be protected. That is bailing out billionaires before they even need to be bailed out.

Mind you - when it comes for ways to make flood insurance affordable for regular people - this government has no idea on how to make that happen.

Further, the government has not yet provided any comment about whether members of this government will take part in this deal of a lifetime.

This guaranteed share price plan is not just a bad idea. It is a thoroughly insane idea. 

This is a government that will provide insurance for the billionaires of the world. 

This is not a government that cares about the actual citizens of Great Britain.

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Mr Speaker,

I'm glad to hear that someone on the Labour benches is supportive of capitalism. Perhaps the Member for the City of Durham should discuss that with the Leader of the Opposition, who famously wants more nationalisation: of the banks, of the trains, of the utilities, of the insurance industry, and I'm sure many more sectors.

I agree with the member opposite that capitalism must be done better. That is why this government has laid out an agenda for doing so. We have pledged to bring forward legislation to strengthen competition law, ensuring reversing concerning trends in market concentration that we have witnessed over the past decade in the financial services sector and beyond. We have pledged to bring forward legislation reforming the financial regulatory system, preventing the actions that have brought us to this place. We have pledged to reform the governance of cooperatives and mutuals, making these institutions a core part of our recovery. We have committed to building an innovative Britain, investing in our universities and taking the steps necessary to increase support for start-ups.

I look forward to the support of the member for the City of Durham as we bring forward these proposals.

Although I don't count on it. When the government announced plans to rebuild Northern Rock as a building society, she called it a "power grab" - I guess that takes supporting mutuals off the table. When we announced plans to reforming banking regulation, she couldn't even be bothered - I guess that takes support for a better regulatory system off the table. So I won't hold out too much hope. I'd hate to be disappointed by the Labour Party once again.

And today she comes before the House, seemingly to critique the government, but actually only offering her shoddy populism. I cannot say I'm surprised. Her party has not taken the turbulence in the financial sector seriously from the start. They tried to start a run on the banks. They tried to undermine confidence in the system. They haven’t offered a single, novel thought. In sort, Mr Speaker, they haven’t a clue.

Mr Speaker, the member for the City of Durham talks about "helping billionaires" as if they're the only people with a stake in financial institutions. Mr Speaker, let me advise the member who else is invested in financial institutions: pension plans, insurers, charities, university endowments, mutuals, commercial banks.

These are not the province of billionaires, Mr Speaker. Pension plans are vital for our pensioners. Insurers protect families from loss. Charities invest their funds and use the return for societal good. Universities use their endowments to provide bursaries, to improve education. Mutual funds provide vital financial services and investment capability to their members. In fact, Mr Speaker, these institutional investors provide a great deal of the capital invested in shares. These investors are the ones who will benefit from our recapitalisation plan.

These are not billionaires, Mr Speaker. These are vital institutions. They provide critical services for our pensioners, for our communities, for our homeowners, for our students, for the less well off. They have a stake in the well-being of British banks, Mr Speaker.

The member talks of the "investor class", as if she wishes to deny that the economy is built on investment and credit. Investment and credit finances the shops that make our High Street vibrant. Investment and credit make is possible for families to buy homes. Investment and credit ensures that pensions get paid out. These are fundamental realities.

I should note the irony, Mr Speaker. The Labour benches are filled with members who loved the "investor class" when times were good and their taxes were paying for Labour's spending binge. Now that times are bad, Labour can't run away fast enough. And we are left to fix Labour's mess.

Of course, in her statement, the member has yet to actually critique the plan being put forward. I should not be surprised. Her critique of the government's action on Northern Rock was so wild-eyed that her new boss, the Leader of the Opposition, was forced to disavow it. And the reason for that is clear: she can't argue against the economics of the proposal. She knows that the private sector taking on some risk is better than the government shouldering all of the risk. She knows, as a good capitalist does, that government over investment crowds out the value of private investment. She knows that bank recapitalisation is a fundamentally good thing.

And that is why the member is not critiquing the plan. She knows that the end result is a positive one. She knows that reinforcing capital in the financial system is right. So instead, in a shallow, callous attempt for electoral support, she's playing the populist. Once again, I shouldn't be surprised - this is coming from the same party that had the Shadow Home Secretary call for unions to violate the law.

The reality, Mr Speaker, is that when banks raise capital, their shares are diluted. If the government injects capital, institutional investors - granny's pension fund - lose out, their investment diminishes; as a result, granny loses out as well. But with private sector capital, there are choices. So for the pension fund that pays granny's pension, they have a choice. Let their shares be diluted and watch their £100 million investment become a £75 million investment? Or choose to invest and maintain a portion of their stake. This is a critical decision, not just for the pension fund, but for granny. If her pension fund does poorly, granny's pension payment get smaller.

If they trust in the bank, they would invest. However, in the current economic climate, they might be a little jittery. With this plan, the government is protecting a portion of their investment. The government is saying that we have confidence in the underlying stability of the British financial system. The government is reducing, but not eliminating, the risk of the investment. Now, if the result is good and the bank prospers, everything is fine - times are good. But if times are theoretically bad and the bank loses 50% of its share price, there are diverging realities. In the first, the bank did not take up the share offer: their investment is now £37.5 million - granny's pension suffers a great deal. Alternatively, if the bank took up the share offer, their investment is worth £50 million and, because of the government's guarantee, its value goes up to over £56 million - granny's pension is doing better.

This is the protection being offered by the government, Mr Speaker. Perhaps some wealthy people will benefit. But the majority of the benefit will go to the institutional investors who are critical to financing these institutions. Institutional investors who play a positive role in society. Institutional investors who are vital to the functioning of our economy.

And the end result of recapitalisation, Mr Speaker, will be a more stable financial system. That is the goal of this government: stability. A stable financial system will see lending restored. A stable financial system will facilitate long term growth. A stable financial system will benefit communities, families, and businesses across the country. That is what this plan is designed to help facilitate.

Of course, Mr Speaker, it wouldn't be a performance by the member for the City of Durham without some tugs at the heartstrings. But what I can tell the member is that the government does care about these people. The government is actively working to improve their lives.

For the pensioner who's husband passed away, the government is working to ensure that the pension fund that pays part of her pension pot does not face extreme losses. The government is ensuring that her State Pension keeps pace with the cost of living. The government is ensuring that she doesn't face a Council Tax hike on her home. The government is helping to weatherise and better insulate her home to keep her fuel costs down.

For the 22 year old who doesn't know how to start a company and wants to create a product, the government is expanding apprenticeships, so that he can train and get the skills and mentoring that he needs. The government is extending loan guarantees to provide financing for start ups and small business, so that he can get the access to capital to be an entrepreneur if he so chooses. The government is providing financing to Northern communities to create economic development areas via our Regional Growth Fund. The government is investing in transport in the North so that, one day, when he has his company and needs to get his goods to the market, he can. The government is investing in high-speed broadband deployment so that he has access to high-speed Internet.

I could go on, Mr Speaker. I could talk about how this government is providing a pupil premium to help those in disadvantaged areas get a better eduction and improve their chances at life. I could talk about how this government is cutting taxes for low earners. I could talk about how this government is working to lift 300,000 children out of poverty. But then I had hoped to make my intervention short.

So I will close by expressing my disappointment with the member opposite and with the Opposition as a whole. When challenged to critique the government, they simply failed to. They embraced the language of faux populism. They sought to use a billionaire straw man argument to block the recapitalisation of the banks. They call our plans a disaster, as if they were not the party that sought to cause a panic in our banks. As if they were not the party calling for illegal strikes. As if they are not the party that spent more time trying to tear the British economy down than build it back up. They haven't a shred of economic credibility left.

Fortunately, on this side of the House, we still do. Fortunately, on this side of the House, we are working hard to stabilise the financial system. We are working hard to ensure British families can prosper. We are working hard to build a secure economic foundation for the years ahead. That is reality that the member opposite can't even begin to touch.

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Shadow Secretary of State for Health and Social Welfare: Dianne Abbott MP

Mr. Deputy Speaker,

I thank the Chancellor for her response, fiery as always. I welcome that the efforts to save money around the NHS, well be kept within the NHS.

I will concede I misread the Budget on the real terms on spending in health, but I will not concede that most of this is padded with building new facilities - that while I commend such a move - it will be years before the NHS feels the impact of this investment. This Government must ensure immediate investment, which I will say I am glad to see this Government is keen to do. Our NHS is one of the greatest British institutions, and I am glad both side of the House agree in protecting it at all costs.  

I will say I find it very convenient in her beratement of my speech, she left out any comment on the pay freeze for health staff, and pay cut for managers and admin.

 

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Deputy Leader of the Labour Party

Shadow Home Secretary

 

Former Roles:

Shadow Secretary of State for Health and Social Welfare (December 2007-January 2008)

 

 

NPCs:

Shadow Secretary of State for Health and Social Welfare: Dianne Abbot MP

Shadow Secretary of State for Innovation, Infrastructure, and the Environment: Barry Gardiner MP

Minister for Northern Ireland: David Anderson MP
 

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Mr Deputy Speaker,

Despite the misplaced criticisms of the opposition, I cannot help but commend the reality of this budget: it is the budget that Britain needs for challenging times.

We are taking action - decisive action - to ensure the stability of the British economy. We are priming the economy for prosperity. We are putting in place a plan for long term investment and economic security.

That is reality.

Workers in this country will see a £250 tax cut - putting money back in their pockets in challenging times.

Working families with children will see a minimum uplift of family benefits by £150 this year. For families with toddlers, that number rises to £400.

Businesses in this country will have the opportunity to unlock over £7 billion in capital investment, turbocharging our economic recovery.

Cooperatives - enterprises that invest in their workers and grant them an ownership share - will see their taxes cut under our brand new cooperative rate of tax.

The members opposite talk about how this is a budget for billionaires. Mr Speaker: nothing could be further from the truth.

This is a budget for pensioners, who will see their pension pots protected.

This is a budget for working families, who will see their taxes cut after Labour hiked them.

This is a budget for children, 300,000 of whom will be lifted out of poverty.

This is a budget for our National Health Service, which is seeing capital spending restored after Labour axed it.

This is a budget for small business, who will see rates frozen and new financing available during this credit crunch.

Even the Leader of the Opposition, Mr Deputy Speaker, has no real criticisms of this budget. At least no criticisms that are grounded in reality.

He claims that there are massive tax cuts for billionaires. That is simply not the case. We’ve slashed taxes on the low earners, Mr Speaker. The greatest beneficiary of this government’s tax cut will be minimum wage earners, who will see their take home pay increase dramatically.

He claims that this budget is a handout for hedge funds. Mr Deputy Speaker, as I have already explained to the member for the City of Durham, this budget provides protection for pension funds, for savers, and for ordinary people who invest their money in mutual funds.

Even his Deputy Leader, who most recently called for illegal strikes, seems to not be familiar with the contents of this budget.

She claims that this government is taking from the poor to give to the rich. Mr Speaker, why then are those on lower incomes getting their most significant tax cut in years? Why are we ensuring that every working person is £250 better off?

If we are taking from the poor to give to the rich, why are working families set to get a significant boost in family benefits? I’ve said it once, I’ll say it again: low earners with children are set to be an additional £150 better off. Why are we instituting the toddler top up - which will give low income families even more support during the expensive early years of life?

If we are taking from the poor to give to the rich, why are we instituting a pupil premium that will see more money invested in disadvantaged schools and improving educational opportunities for children from lower income homes?

It seems that the Opposition’s only strategy is to trot out the old talking points and hope for the best. Mr Deputy Speaker, I understand that the Leader of the Opposition entered this House in 1983. While he might still be fighting the battles of a quarter century, the rest of us have moved on.

And I can understand why they would trot out the old talking points.

They can’t face the reality that this is a budget that stands up for working families - putting more money in their pocketbooks and lifting 300,000 children out of poverty.

They can’t face the reality that this budget invests in our public services - strengthening our schools and our NHS, while finding efficiencies that ensure more money is spent on front line services.

They can’t face the reality that this budget delivers the greatest single downpayment in Britain’s green future - investing in environmentally friendly forms of transit, strengthening our electricity grid, and kickstarting green manufacturing across the country.

Their greatest talking point is that public sector workers are only getting a pay raise three times greater than private sector workers across the country. Mr Deputy Speaker, I respect our public sector workers - that is why their pay is protected. I respect our public sector workers - which is why each and every one of them will be better off as a result of Labour’s working family tax being scrapped.

That is the reality of the policies put forward by this government.

The only other refrain from the Opposition benches is to spend more.

Mr Deputy Speaker, it’s easy to cry “spend more” when you’re not in government. But as Chancellor, it is my job to protect the public finances. That means I cannot just look at this year. I have to think of next year. I have to think of the next five years. I have to think of the next ten, twenty years.

We are stimulating the economy responsibly, with targeted measures, to achieve the maximum of benefit. And we are doing so to protect the public finances for the next year. We are working to ensure Britain’s debt remains sustainable. Because spending more and more means that borrowing becomes more expensive. And if borrowing becomes more expensive, it becomes harder to fund the public services next year. And the year after that. And so on and so forth.

Not that I would expect the Opposition to recognise that. it is their fiscal policies that left us in this situation. Labour's spending splurge during the boom years left us in a state where the public finances must be managed extremely carefully during leaner times. While other governments built buffers during the boom, Labour spent any buffer we might have accumulated away. Yet you won't hear the Opposition talk about that.

Of course, protecting the public finances is not just a matter of spending. It is a matter of better enforcing our tax laws. That is why I boosted funding for HMRC, so that we will be able to better enforce our tax laws and devise new schemes to crack down on tax evasion. Hardly the action of a government protecting billionaires. In fact, the member for the City of Durham listed a series of billionaires. I doubt those same billionaires will be particularly fond of me when HMRC is intervening to make sure they’re paying their taxes in full.

And that, Mr Deputy Speaker, is why this budget is good for Britain.

This budget is protecting working people.

This budget is stabilising our financial system.

This budget is lifting hundreds of thousands of children out of poverty.

This budget is supporting homeowners in challenging times.

This budget is helping businesses invest in Britain.

This budget is investing in the communities that were left behind.

This budget is turbocharging our efforts to fight climate change.

This budget is protecting the public finances.

It is not a budget of populist talking points. It is not a budget of class warfare rhetoric - the only type the Opposition seems to be able to engage in.

It is a budget for working people. A budget for financial stability. A budget for economic recovery.

This is the budget of a government that is committed to changing Britain for the better. This is the budget of a government that is committed to building a big society - one that brings people together to confront the challenges of our times.

I have said that there are challenges ahead of us. But I have no doubt that we are on the right path to overcoming them. And we are determined to overcome them.

Mr Deputy Speaker, this government is committed to financial stability. It is committed to prosperity. And it is committed to long-term security for the British economy.

That is what we are bringing about.

I commend this budget, once again, to the House.

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From a sedentary position, rolling her eyes.

Spin spin spin.

 

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Deputy Leader of the Labour Party

Shadow Home Secretary

 

Former Roles:

Shadow Secretary of State for Health and Social Welfare (December 2007-January 2008)

 

 

NPCs:

Shadow Secretary of State for Health and Social Welfare: Dianne Abbot MP

Shadow Secretary of State for Innovation, Infrastructure, and the Environment: Barry Gardiner MP

Minister for Northern Ireland: David Anderson MP
 

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Mr. Deputy Speaker, 

I thank the Chancellor for her comprehensive statement today. 

With the turbulence of financial markets dragging the economy into recession Mr. Deputy Speaker it’s clear that we have hit a crucial point. A point none of us hoped would come after being sold the myth that boom and bust had come to an end – now we’ve met with bust after a boom period. 

But that statement isn’t just a slogan and the numbers of unemployed we see on the budget aren’t just statistics. Behind that is the terrifying reality for millions across the country. Just one person becoming unemployed is devastating. Just one family home being lost is unbearable. In this House, we have to process the reality this is happening to tens of thousands up and down the country. 

I am scared, Mr. Deputy Speaker. Not scared for myself – in Westminster we’re comfortable and secure. Too comfortable, some might say. But I’m scared for my constituents. I’m scared for my neighbours. Scared for my friends. 

Imagine the terror others in the country must have, Mr. Speaker. Imagine the single mother wondering if she can keep her job. Imagine the new family who wonders if they can keep the home they worked hard to buy. Imagine the fear that hits all too many in the country when they hear the knock on the door, wondering if it’s the bailiff. 

For those people the government had a responsibility to act today. And it is for those people we on the opposition benches need to show serious scrutiny. 

Those people, scared to pay their bills, would not be reassured if they were watching this debate today Mr. Deputy Speaker. A serious and grave situation has quickly become a testing ground to play out weak populist slogans, personal attacks and not so clever gotchas. The British people surely deserve better. They deserve an honest appraisal of this budget, of measures worthy of support and critiques and questions. 

That is the approach I hope to take today. 

Mr. Speaker, I’ll be frank that I would be misleading the House if I told them with a straight face there were no redeeming features in this budget. I acknowledge that for many there’ll be vital lifelines within this budget, and I’m thankful for that Mr. Deputy Speaker. 

I want to extend thanks to the Chancellor for the cooperation she showed. In particular, the Liberal Democrats are proud with the role we played for many across the country, providing a voice for many who may not have felt considered in the initial wave of support offered by the Chancellor. In particular, I am pleased that after we had discussed those whose homes had been repossessed before the Chancellor took action and self employed people who primarily work from home have been considered in this budget. Putting repossessed homes into the social housing stock and the extension of the Mortgage Support Loan Scheme for the self employed are moves we commend wholeheartedly. 

From the anti-extremism unit, to expanded childcare, to the cooperative rate of corporation tax there are a plethora of policies that the Liberal Democrats wholeheartedly support. 

Unfortunately, a budget has to be more than a plethora of policies. It is a wider approach and strategy. And I do not have full confidence that the Government have taken the compassionate, encompassing approach and reforming strategy necessary during this crucial time. 

Further, while I acknowledge the Chancellor’s skills as a manager, the situation before us makes one thing clear: at this present moment we need more than management. To manage a broken system well does not change the fact it is broken. 

It is clear we need that change, Mr. Deputy Speaker. 

That is why the budget cannot receive our support at this time. 

On tax, while I appreciate the government bringing back the 10% tax rate as an alternative to Labour’s unfair tax hike on working people, we need to be frank about what that tax rate is: it’s a poverty tax rate. The government’s strategy must be centred on lifting the poorest tax altogether. I am sad to that end that National Insurance has not been considered. The government’s tax strategy should be focused entirely on lifting the poorest out of tax altogether, not small ameliorations.

Further, while I agree with the government’s decision to freeze fuel duty and beer duty, I question their decision to freeze beer duty but to not do the same to wine and spirit duties. To do so would not only further offer assistance to the pub and hospitality industries, but would support the whisky industry in Scotland – a significant and strategic industry in Scotland and the United Kingdom that will need support through this critical time. But it is clear when we look at allocated public monies Scotland, Wales nor Northern Ireland have played significantly on the government’s minds. 

But this was a huge missed opportunity for the government to critically think about how we tax, particularly how we tax land and property. A measly £50 cut from frozen council tax is better than the constant stealth rises we’ve seen under Labour. But it does not disguise the fact that council tax, and business rates which have not been mentioned to the Chancellor at all despite the immense impact they have on so many SMEs, are a fundamentally broken, regressive and unfair system. 

We currently tax households, not owners, regressively based on the value of their property in 1991 – 1991, Mr. Speaker, when the new generation of homeowners were children. 

With business rates we tax business rates and investment explicitly over landowners, and disincentives development. Manufacturing and high street businesses in disadvantaged areas are particularly hard hit. 

And with stamp duty we disincentivise mutually beneficial transactions and reduces the incentive for people to move home, blighting social mobility in the process. 

Our tax system is built on unfairness, discouraging investment and perverse incentives Mr. Deputy Speaker. Today the Chancellor had the opportunity to change that in light of the immense economic difficulty that will be faced by households and businesses. She had the opportunity to create a tax system that encourages investment and was more fair. 

That opportunity, sadly, was not taken. 

In that meantime, I cannot help but feel appropriate action has been given to safeguard our public services Mr. Speaker. 

On Home Affairs, while I commend the considerable investments the government made on knife crime, on extremism and rehabilitation there is a fundamental truth the government have not acknowledged: that our prison system is broken. 

It’s made unsustainable by the government’s continued insistence that we criminalise more and more things, create tougher and tougher sentences for said things and call it a day. It has done nothing to decrease crime but everything to create a prison system that is as morally unsustainable as it is financially unsustainable. We have the largest prison population in Western Europe Mr. Deputy Speaker, and I know we do not have the largest criminal one. I believe in a better Britain than that. 

The Liberal Democrats beyond budgetary measures would ensure we reform the criminal justice system so it can focus on violent offenders instead of creating new things to criminalise, freeing up more money for rehabilitation, police and prisons in the process. 

Mr. Deputy Speaker, the government’s health proposals can look good on the surface. But in terms of a real term rise the offer is paltry when compared not only to previous Labour governments but previous Conservative governments. This would be all well and fine if rectified by reforms that can make money spent within the NHS more efficient, but we have seen nothing from the government for our health service since they came to power. Not a Ministerial statement. Not a bill. Nothing. The former Health Secretary spoke publicly about the Foreign Secretary’s career and Iran more than he did the Health Service, and we are seeing the consequences of that in this budget. 

Further, Mr. Deputy Speaker, the singling out of administrative staff for a pay cut is wrong. I get it appeases the tabloid press to be seen to have a dig at managers, of which I note nothing has been done to actually reign in on the perceived excess of NHS managers, but when one single group of public sector workers is targeted for a pay cut – and because of that reception workers, IT workers and others are shortchanged of almost £400. That isn’t just unacceptable, but it is immoral. 

I also find the government’s refusal to engage with social care bewildering Mr. Deputy Speaker. I understand it is not high on the political agenda. But as we face an ageing population and long term viability of the social care sector, it is something the government has failed to address in its budget. There has been no offer for those who rely on social care and the more than half a million who work in care and the more than one million people who take on unpaid care work. The government could have learned from other devolved administrations and removed the financial burden of care and need for millions of families to sell their home to pay for care by introducing free personal care, Mr. Deputy Speaker. Further, there could have been action taken today to integrate health and social care – the most effective way we can introduce efficiency in our NHS. I am disappointed we have not seen that today. 

Mr. Deputy Speaker, education is an utmost priority for the Liberal Democrats as the great equaliser and the strongest economic and moral good the government can deliver. So on a practical level I am once again made to question the government’s academies programme. Despite much talk about it and despite the Education Secretary making academies the pillar of her reforms we’ve only seen a mere £13 million invested in the academies programme. This is despite the expansion of the academies programme as legislated by the Education Secretary being almost unlimited in its scope and with us in the knowledge academies are a larger burden to the taxpayer when compared with state maintained schools. 

It begs the question Mr. Deputy Speaker – how is this sustainable? 

While childcare has gotten some mention and attention from the government, I want to be clear if we want to drive up educational attainment and child development in this country in the long term we would do well to spend even a fraction of the time the government have spent obsessing over structures to instead invest in early years. Sure Start needs to be reformed and invested in so it can reach its full potential as a pillar for investing in early childhood development and the government should have used efficiency savings in childcare to build the foundation for universal childcare provision. 

Mr. Deputy Speaker, after much talk from this government I’m disappointed we have not seen any further efforts to withdraw from Iraq. We can see the budgetary consequences of this, and it’s unnecessary billions spent on supporting a war we now know to be immoral instead of supporting the British people. 

And on that subject while I’m heartened to see there has been serious attempts to tackle child poverty in this budget — action the government wholeheartedly supports – we find it is action on welfare where the government is most sorely lacking. 

Pensioners who have paid into the pot their whole lives deserve better than a pay freeze during a recession. But that is all the government has offered. Further, pension credit has been frozen. It is wrong the government has provided billions in funding to businesses of their choice, but has not spared money for the grandmother who has to pick between heating or eating.

And when the Chancellor confirmed to me in person that there were concerns around renters, Mr. Deputy Speaker, and confirmed that the DWP would be there to support those requiring housing benefit I find it unconscionable that housing benefit has not been further increased. The Chancellor could have chosen to invest in housing benefit and chosen to create a stronger barrier between renters and homelessness. I think it is a shame that this path has not been taken forwards. 

Of course, the gravest threat to humanity at present time is climate change. While I appreciate the work the Chancellor has taken in supporting a greener private sector, we cannot just incentivise businesses and call it a day. While I am thankful for some of the Chancellor’s public transport initiatives, it is clear that we needed the government to show it was prepared to take its own initiative and invest in renewable energy and insulation to create jobs, promote clean energy and take the fight against climate change head on. 

So while I appreciate the Chancellor’s work in this budget to manage the economy and respond to recession, I think of those who can’t appreciate the budget in front of us today. 

The pensioner in Rhyll. 

The struggling high street shop in Rochdale. 

The renter in Romford.

The carer in Reading. 

Because we need to be honest that when the financial sector was ‘stable’, Mr. Speaker, our economy still worked for too few. We taxed unfairly, spent unfairly and did that all on a fiscal model that was, as we can now see, unsustainable. 

That needs to change. But the Chancellor did not offer that change today. And the situation is so dire I can only support real change for those who need it most.

Thank you.

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