Autumn Budget speech: Chancellor burying his head in the sand

Catherine spoke yesterday in Parliament in the debate which followed the Chancellor’s Autumn Budget – you can read a full copy of her speech below:

Catherine McKinnell: Like any hon. Member ahead of a major Government event, I have been inundated with correspondence from people about what they did or did not want to see in the Budget — from concerns about beer duty, business rates, fuel duty, Green Belt protection and Equitable Life to proposals to make the private rented sector more secure and affordable. Ahead of the Budget I diligently raised every issue I have been contacted about; the Chancellor and his team may have been concerned at having gained a new pen pal in the process.

I think that most people would confess that they did not have high hopes for this Budget, and the Chancellor has not fallen short in that regard. This is a Budget with its head is buried in the sand when it comes to the enormity of the challenges facing our economy. The downgrading of our growth, productivity and investment projections has implications for ordinary households up and down the country as they continue to face the misery of this cost of living squeeze — not to mention Brexit uncertainty and its looming implications.

I want to focus on a number of issues of particular interest to the North East. In the Budget today, we finally received confirmation that the Government are minded to devolve funding and power to the North of Tyne area, ending months of uncertainty. I look forward to seeing the details in the days and weeks ahead.

I also welcome the long awaited announcement of the funding to replace the Tyne and Wear Metro rolling stock, more than a year after the Government received a full business case from the region for that investment. About 40 million passengers use the Metro every year, but the poor reliability of the system has been causing constituents problems on a daily basis. We must have the investment in the new trains by 2021 if the Metro is not to grind to a halt. I would be grateful if the Minister confirmed that Nexus will be able to go to market this year to meet the timescale necessary, given that, according to the Red Book, the first tranche of funding will not be made available until 2019/20.

To continue my transport-related theme, despite clear commitments from the former Prime Minister and former Chancellor that further devolution to Scotland would not be allowed to disadvantage parts of the UK economically, we are still to receive from the current Chancellor a commitment on how he intends to mitigate the impact on English regional airports of devolving air passenger duty to the Scottish Government. Newcastle International Airport is in my constituency and supports 19,000 jobs across the North East. According to the Government’s own assessment, it will be the airport most affected by the Scottish Government’s plans to cut Air Passenger Duty.

I first raised the issue in Parliament back in February 2016, and I have still not had an answer. “Wait and see” is not good enough on this key, vital infrastructure issue. We know that the Government are struggling to make a decision on anything at the moment, trapped as they are in this post-election Brexit quagmire of their own making.

Jamie Stone (LD, Caithness, Sutherland and Easter Ross):Does the hon. Lady agree that the ideal solution for this cross-border tension—I speak as an MP who represents a Scottish constituency—is to get rid of Air Passenger Duty altogether across the UK?

Catherine McKinnell: Obviously, it is incumbent on the Government to come up with a solution, but I am sure they will take on board the hon. Gentleman’s suggestion.

Combined with the continued uncertainty about the Prime Minister’s ability to deliver a deal that will not have a devastating impact on the UK’s economy, on investment and on our jobs, I fear that this zombie Government threaten to set our economy back decades if they do not rapidly get a grip, particularly for exporting regions such as the North East. How can we possibly compete for business on a post-Brexit global stage if we struggle to make infrastructure decisions that have been dragging on for years, as on Heathrow and the Tyne and Wear Metro?

How can the Government be serious about rebalancing the economy and creating a Northern Powerhouse, when countless businesses are still none the wiser as to what that actually means? Indeed, just last week, the North East chair of the Federation of Small Businesses said:

“Three years on from the first mention of the Northern Powerhouse… it’s still hard to find concrete manifestations of it. With a week to go until the Budget, we’d like to see the Chancellor take some meaningful steps towards getting the show on the road.”

He also said:

“We need cast iron guarantees about EU funding post-Brexit. Firms across the North East are benefitting from EU support to the tune of millions every year. One thing’s for sure, we won’t have a Northern Powerhouse unless that money’s replaced.”

Yet again, though, the Budget does not give the answers businesses need.

The North East has so much to contribute to UK plc — indeed, it already does contribute — but if we are to achieve our full potential, we need a Chancellor who is on our side, who is prepared to rebalance investment genuinely to support sustainable economic growth and who is able to give businesses the confidence to invest. In highlighting its pre-Budget demands, the North East England Chamber of Commerce said:

“If the Government is serious about securing the much-heralded prize of closing the gap between London and other regions, there is major work needed to change the distribution of public and private investment, and economic activity in the UK. This is a trend that has built up over several decades. Listening to the calls of businesses in our region is essential to achieve this.”

However, it has become increasingly clear that, in meeting the challenge of reducing unemployment in regions such as the North East, we must also solve the productivity crisis and tackle the epidemic of low-paid, insecure and low-skilled work that is afflicting our communities. Research published just this year by the TUC highlighted the fact that the North East has become the UK capital of insecure work: the equivalent of two thirds of the new jobs created in our region in the past five years are without guaranteed pay or normal employment rights.

People’s wages are now lower in real terms than they were in 2010. It is little wonder, therefore, that we are seeing household debt rising and more and more children living in poverty.

There is a whole raft of issues I could have covered today, many of which I have raised countless times before and to which we have still not seen any meaningful solution in the Budget this afternoon. There are the hundreds of families across Newcastle who have suffered absolute misery after the Universal Credit roll-out — I know that we have seen some announcements, but they do not go far enough. There are the thousands of women in the Women Against State Pension Inequality Campaign (WASPI) who are now in real financial difficulty as a result of the discrimination against them, and there are the local schools that are still struggling to balance their books because of the Government’s real-terms budget cuts.

We also have an NHS and social care system on its knees, with mental health services continuing to deteriorate because their funding is not ring-fenced. Public sector workers are all overstretched and undervalued, and they have seen a significant fall in their living standards as a result of the long-standing 1% pay cap. They need to know that any pay rises will be fully funded.

The issues I could have covered also include constituents who are now feeling the brunt of the £221 million of cuts that Newcastle City Council has had to make since 2010 and the £124 million of cuts imposed on Northumbria Police over the same period.

All of that could have been addressed by the Chancellor today if the Government were serious about tackling tax avoidance and dealing with the cost of living crisis. All of that is falling further down the Government’s agenda as the Chancellor sets aside £3 billion to cover the anticipated costs of the Prime Minister’s potential failure to secure a Brexit deal. And all of that is further away from being addressed than ever before, with growth, business investment and productivity forecasts all dramatically downgraded.

Once again, constituents in Newcastle and the wider North East have been failed by the Budget. The only thing it has succeeded in is living up to the expectation that it would simply not be up to the job.