The Budget Debate

Discussion of the Budget in Parliament

The main issue arising from the budget is the one outlined in the editorial: the anti-working class new fiscal rules that limit public spending and favour the private sector.  Only one MP refers to this (see below) and he’s not Labour.  The other worrying factor is Hunt’s professed admiration for Nigel Lawson and his Big Bang, and Hunt’s decision to imitate Lawson’s deregulation of the banking sector.  Wasn’t deregulation the origin of the 2008 Global Financial Crisis and subsequent loss of income and decline in public services for the majority?

The Shadow Chancellor Rachel Reeves is not worried by the fiscal rules or the intended copying of Nigel Lawson.  At least she didn’t refer to them in her reply or indeed anything in the speech in particular.  She made a demented sounding general attack against the Tories, with no analysis of the actual budget.    Labour MP subsequent interventions went no further than propose one particular extra tax to fund one particular benefit, nothing was said about funding increased economic activity.  

Serious points were made about social care, and generally the funding of local authorities, which worries both Labour and Conservatives.  

At the end, Jeremy Hunt makes a surprising admission.

Editor’s titles are in square brackets.

[Jeremy Hunt on Nigel Lawson’s Big Bang]:

We learned from the success of Nigel Lawson’s big bang in 1986 that smart regulatory reform can spur investment from all over the world, so today, using our Brexit freedoms, I confirm the next steps in our supply-side transformation. By the end of next year, we will decide on and announce changes to EU regulations in our five growth industries: digital, life sciences, green industries, financial services and advanced manufacturing.


Nigel Lawson’s big bang inspires us today, but nearly 40 years on we must stay true to its mission to make the UK the world’s most innovative and competitive global financial centre, so to further support investment across our economy, I also announce that we are publishing our decision on Solvency II, which will unlock tens of billions of pounds of investment for our growth-enhancing industries.

[On the issue that Social Care will be funded by increases in Council tax]

Clive Betts (Sheffield South East, Lab):

To come back to social care, in the Chancellor’s previous role as Chair of the Health and Social Care Committee, he will remember arguing for a £7-billion increase in social care funding. Will he confirm that today’s package is nothing like that? Will he further confirm that much of it is coming from council tax increases, which give most to the richest councils and take proportionately most from the poorest households? Finally, will not the rest of local government face real-terms cuts to essential services? This is austerity mark 2, with the prospect of financial collapse for many councils up and down the country.

Jeremy Hunt’s answer 

I have to say that I think local councils are welcoming today’s announcement because the biggest item of expenditure that worries them the most is their social care budgets, and this is the biggest-ever increase in the social care budget. I am pleased that the hon. Gentleman has read the report into social care that the Health and Social Care Committee produced when I was the Chair—I sometimes worry whether people actually read the reports—and he is right to point to that £7-billion figure. That was made up of about £5 billion in core funding and £2 billion for the Dilnot reforms. Today, we are delivering nearly that £5 billion of funding and the Dilnot reforms will happen at a later stage, so it is not everything at once, but it is broadly consistent with what I recommended.

[Rebecca Long-Bailey raises the question of local councils with a high number of tax-payers getting relief from council tax]:

The statement proposes council tax increases to top up social care funding, but the Chancellor must be aware that in Salford, the 18th most deprived local authority, with a current list of 27,000 people accessing council tax reduction support, any increases would raise only nominal funds, and the pain would be felt by residents on a huge scale. How will Salford pay for its social care, and what support will the Chancellor provide to mitigate the impact on those who cannot afford council tax increases?

[Ian Mearns (Gateshead, Lab) on local authority funding after the 2010 Tory decision to withdraw revenue support grant from councils.]

In his statement, the Chancellor said that because of difficult decisions in 2010, the Government could then go on to do several things. However, places like Gateshead are still living with the drastically detrimental consequences of those 2010 decisions. The decision to incrementally withdraw revenue support grant from councils means that my own local authority is £179 million per year worse off now than it was in 2010. Many local authorities with a low council tax base are in exactly the same boat. We are worried about austerity 2.0, but we are also very, very worried about the continuing consequences of austerity 2010. So, after 12 years, when will the Government do something about local government finance to prove to people in Gateshead that the words “levelling up” are not just empty rhetoric?

[Mick Whitley (Birkenhead, Lab ) on council funding]

Local authorities all over the country are at breaking point, with Conservative- run Kent and Hampshire County Councils warning this week that they face the very real prospect of bankruptcy. The challenge is especially acute at Wirral Council, which is grappling with a shortfall of nearly £50 million next year, driven in no small part by a drastic cut in central Government grant funding since 2010. Does the Chancellor accept that his proposals to allow local authorities to hike council tax risks forcing people in the most deprived communities, such as Birkenhead, to pay even more in return for ever-diminishing services? Will he commit to providing more direct financial assistance to local authorities so that they can continue to provide those services, which will be so essential in helping local towns such as Birkenhead?

[Rachel Hopkins (Luton South, Lab) on same]

Today, in response to the Chancellor’s statement, the Conservative chair of the Local Government Association said:

“We have been clear that council tax has never been the solution to meeting the long-term pressures facing services—particularly high-demand services like adult social care, child protection and homelessness prevention. It also raises different amounts of money in different parts of the country unrelated to need and adds to the financial burden facing households.”

Does the Chancellor agree with that, and will he commit himself to working on a fair funding formula for local authorities, including police and fire services, which we have heard little about today?

Munira Wilson (Twickenham, LD) on free school meals

The Chancellor rightly claimed that education is not just an economic mission but a moral mission, so can he explain to the House why he is still able to find £6.5 billion in tax cuts for the biggest banks over the next five years, but no money to expand free school meal provision, when 800,000 children living in poverty are not even entitled to a hot meal at school? Hungry children cannot learn. So much for his moral mission.

[The SNP calls for more immigration]:

Alison Thewliss (Glasgow Central, SNP)

The Chancellor should also grow the tax base by increasing immigration and improving the lot of those who have already done us the significant honour of coming to live, work and study in our communities. We should thank them, not tell them they are not welcome. It is beyond time that the UK had a sensible, grown-up conversation about immigration. We on the SNP Benches are clear that immigration is an economic good. The OBR forecasts that higher net migration reduces pressures on Government debt over time. The Chancellor should consider that.

[One Conservative on fiscal responsibility not being ‘riskfree’]:

David Davis (Haltemprice and Howden, Con)

This is one of the most difficult circumstances in memory in which an autumn statement has been delivered, so I congratulate the Chancellor on a remarkably skilful statement. Of course, fiscal responsibility is incredibly important, but one of the risks that goes with it is that of worsening a recession, so it is particularly important that on small businesses, investment and innovation, he came up with a radical new agenda for growth. When he delivers his Budget in the spring—after, I hope, gas prices and financial markets have stabilised—will he reinforce that agenda for growth?

[In response to a question about HS2 Jeremy Hunt, surprisingly, admits the UK is not very good at infrastructure projects]

My hon. Friend is right that the increases in the budget for HS2 are disappointing, but a strong economy needs to have consistency of purpose, and that means saying we will make sure that we are a better connected country. The lack of those connections is one of the fundamental reasons for the differences in wealth between north and south, which we are so committed to addressing. There is a bigger issue about the way that we do infrastructure projects: it takes too long, and the budgets therefore get out of control. We are just not very good at it, and we have to sort it out.

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