Contribution
Let me respond to the hon. Member for Dartford (Jim Dickson) in one respect. Harwich and North Essex is a very rural constituency, and any restraints applied to gas or electricity have limited effect, because a lot of my constituents in rural areas are on kerosene and heating oil—I confess that I am on heating oil. The Government have not even removed VAT on domestic heating oil. Why are the Government doing this pre-election council band A to D manoeuvre, which will benefit mostly their voters, but completely ignoring the interests of rural voters?
Forgive me if I detain the House a little on defence. We are in exactly the same position that we were in when the previous Defence Secretary resigned under Keir Starmer. In fact, the Chancellor said that he set a target date of 2030 for 3%. That is the same target as when the then Prime Minister appeared before the Liaison Committee. The Chancellor said that
“I am getting work under way to get there in a fiscally sustainable way.”
That was the reason the now Chancellor resigned from the Government, so what was that all about? It was obviously not about defence, because nobody can make any plans until the Treasury has signed off figures for increased defence spending, and it has not done so. It is still not going to sign them off until the public spending review, which may be after the next general election.
I am sure that Labour Members know that the next general election is going to be pretty tough for them. Their very large majority was a bit of an electoral accident, so many of them will lose their seats, but they can trust the Prime Minister, because he said on 25 September, “Don’t worry, the election will be in 2029”—just as he said, “We’re not going to reopen all the arguments about rejoining the EU” and, “We’re not going to reopen the argument about free movement.” Hon. Ladies and Gentlemen in difficult seats facing a difficult election next spring can absolutely trust the Prime Minister; he is not going to do that to them. Trust is rather important in a political party. I hope it is not getting too bad within Labour.
Let me say what I really think about this Budget. It is a non-Budget, exactly as my right hon. Friend the Leader of the Opposition and others have said. It is a breathing space. Another £2.2 billion of new taxes on business is by far its biggest effect, and the impact of the two previous, absolutely catastrophic Budgets remains embedded in Government policy. They hammered sectors such as hospitality, and businesses that used to enjoy employing a lot of young people can no longer afford to do so. Take Rix, a farm business in my constituency that is the leading supplier of potatoes and onions to Tesco. It employs mostly low-paid workers—a lot of young people—and its costs have rocketed as a result of the change to national insurance contributions.
Take the Cricketers in Eight Ash Green, a pub that has been virtually driven out of business by the increase in national insurance costs and business rates. By the way, there has been no cut in business rates—this Government put them up. I am very pleased that they have responded to the Conservative campaign to increase the exemption, but as we have just heard from my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), it is a very slight change. As has also been pointed out, all of these 59 micro-measures are minute. What the OBR actually says about national insurance contributions is that
“Sharper falls in employment among lower-paid sectors are consistent with our judgement that these firms would be most affected by the”
increase in national insurance contributions. That is the truth, and the Government have not faced up to it.
On the question of the real public expenditure outlook, let us look at the section in the OBR’s outlook that deals with welfare spending—the Chancellor is announcing £100 million here, £200 million here or £10 million here, but this is the real problem. Paragraph 5.21 says:
“Welfare spending is forecast to rise…by £19 billion (5.7 per cent) to £353 billion or 11.1 per cent of GDP… It is then forecast to rise in nominal terms by an average of £16 billion (4.4 per cent) a year over the rest of the forecast period”.
That utterly dwarfs any other figures that the Government have been talking about.
“This would be 1.3 per cent of GDP higher than its pre-pandemic level of 10.1 per cent of GDP in 2019-20, with 0.5 per cent of GDP of this increase occurring between 2025-26 and 2031-32.”
The Government are still spending on welfare, and they are not committing to spend on defence. That is the reality of this Budget.