Yuan Yang

I rise to welcome the Budget, because despite the difficult economic times we are in, the Chancellor has made decisions that are strong, sound and fair. It is a strong budget that more than doubles the fiscal headroom to £22 billion. It is a sound budget that improves the economic efficiency of some of our taxes and maintains our capital investment in the country’s future. It is a fair budget that lowers the cost of living, saving us money on rail fares and energy bills, and raising half a million children out of poverty. First, on the headroom, this Chancellor has the strength to do what previous Chancellors have shied away from doing. Headroom is important to buffer us from the volatility in the global economy. It buffers us against shocks that we cannot predict. I am glad to see that the Chancellor has also followed the International Monetary Fund’s recommendations to assess the fiscal rules annually, which will improve the predictability of policymaking. Yesterday during the Budget debate, the former Chancellor, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), accepted my intervention. I asked why he had left us with the lowest headroom in the history of the OBR. He said that he did not raise more headroom because he would have had to cut spending or raise taxes, and he was not prepared to do those things. I therefore take it with a pinch of salt when the shadow Chancellor says in this debate that suddenly they have dreamt up plans in the past 12 months in opposition, when they did not have such plans in 14 years of governing. The response of the right hon. Member for Godalming and Ash was that he was not prepared to do the things that were necessary. That is like someone saying to their flatmate that they did not do the washing up because they would have had to tidy up and get their hands wet, and they were not prepared to do those things. He took the weak option. He shied away from making important economic decisions—he left us with his dirty plates—and is now lecturing us about making difficult choices. I am glad of the right hon. Gentleman’s honesty, and his acceptance of my intervention, because it shows us a deeper truth: the previous Tory Government could not cut further, because they had already cut everything they could, and then some, leaving us with courts backlogged for years, prisons overflowing and child poverty at its highest this century. Secondly, this is an economically sound Budget. Different forms of income should not be taxed differently. This is not just about fairness; it is about economic incentives. Landlords should not pay lower effective rates of tax than their tenants, and those who can afford an accountant should not be able to benefit from structuring their income as dividends, thereby paying a lower rate of tax. I welcome the raising of rates on property savings and dividends to make them closer to the rates paid on earned income, reducing the bad incentives to restructure income for tax avoidance. The tax system is not just about raising funds for public services; it is about shaping the economy and building in the right incentives to encourage productive behaviour. I am glad that the Chancellor will reform the system of enterprise investment and venture capital trust schemes and review the tax system’s impact on entrepreneurs. I meet many of them in my constituency in Reading, which is a brilliant place for companies on all scales, from university spin-outs to world-leading giants. We have a particular concentration in life sciences, pharmaceuticals and IT services—services the OBR might be able to benefit from. Whether I am visiting Oxford Quantum Circuits in Thames Valley science park or a blockbuster film set at Shinfield Studios, I see my constituents building the British industries of the future, and when I visit schools, I encourage the schoolchildren to dream big and to take their share of that future. But what of those children? The previous Conservative Government put 700,000 more children into poverty. Almost one in three children are growing up in relative poverty. That is the highest this figure has been this century. In Earley and Woodley, which is easily in the richest fifth of all constituencies in the UK, I get letters from parents who cannot feed their children during the half-term holidays. Because of the Chancellor’s Budget, 1,750 children in my constituency will be lifted out of poverty. The hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown) said that it was possible to find “cases” of people falling into poverty. I would urge him to look at the figures. Poverty can befall anyone. According to “Understanding Society”, the largest longitudinal household panel study we have, the poverty entry rate—those who start off above relative poverty one year and find themselves impoverished the next—is around 8%, which means that one in 12 of our constituents could, in any given year, find themselves suddenly in dire straits. That could be because of divorce, bereavement, illness, bad health or bad luck, and that is what the social security system is for. Some 70% of children growing up in poverty are in working families. There is something wrong with an economy that produces these outcomes. That is why it is important that this Government are raising the minimum wage and giving workers more power to negotiate their terms in the workplace. At the same time as fixing the foundations, we have to put out the fire on the roof, because poverty is an urgent challenge; if we do not address it now, it threatens to burn the house down. We speak a lot about the post-pandemic cohort of young people who are not in employment, education or training, but why are there so many? This is the austerity generation. New evidence published yesterday by the Work and Pensions Committee shows that individuals exposed to multiple instances of childhood adversity, such as poverty and poor parental health, were five times more likely to be NEET. An estimated 53% of NEET cases today are attributable to persistent poverty and family adversity. Our children are the future of our economy; we have to invest in them and in our future. That is why I am proud to support a sound, strong and fair Budget.