Balls’ response to the Autumn Statement 2014 – full text

The House has not yet seen the detailed documents from the Treasury and the Office for Budget Responsibility tables. I am sure they will arrive shortly.

But I have listened carefully to the Chancellor’s statement.

And in order to establish the facts, I want to start by asking the Chancellor questions on issues that are vital for our country’s future, on living standards and wages, tax receipts and borrowing, growth and immigration, and taxation and the health service.

Living Standards

First, on living standards.

Wages have not kept pace with prices for 52 of the last 53 months.

Today’s forecasts from the OBR confirm that wage growth is once again weaker than expected.

Working people are now £1600 a year worse off than they were in 2010.

Someone in full-time work is now £2000 a year worse off.

Mr Speaker, for working people there is a cost-of-living crisis.

And that squeeze on living standards is not only hitting family budgets.

It has also led to a shortfall in tax revenues.

The OBR confirms that stagnant wages and low-paid employment have hit revenues.

This is what the OBR says:

“weaker-than-expected wage growth so far in 2014-15.. [is].. depressing PAYE and NICs receipts.”

So let me ask the Chancellor first of all: does he agree with the OBR’s analysis?

Can he tell us – this year how much tax revenue has been lost because of stagnating wages and forced part-time employment?

Borrowing
Mr Speaker, the result of this shortfall in tax revenues is that – once again – I believe the Chancellor has had to revise up his forecasts for Government borrowing.

The Chancellor has today told the House that the deficit for this fiscal year is now expected to be £91.3 billion.

But he did not set out in detail much worse things are since the Budget.

So in his answer can he tell the House, how much has borrowing this year been revised up compared to his Budget target?

Back in 2010, the Chancellor and the Prime Minister pledged to balance the budget by the end of this Parliament and see the national debt falling this year.

The Prime Minister said in 2010, and I quote:

“In five years’ time, we will have balanced the books.”

Today the Chancellor has, I believe, announced the deficit next year is forecast to be £75.9 billion. Can the Chancellor confirm that number?

And the fact that the national debt next year is forecast not to fall but to rise?

And can I ask the Chancellor – because while he has clearly missed his targets, he did not give us the scale to which he has missed them: how much more will he have borrowed in this Parliament than he planned in 2010?

Growth and Productivity

Mr Speaker, the reason why wages, incomes and borrowing have been hit so hard is because productivity growth has been so weak.

But today the Chancellor has announced he is forecasting growth not to accelerate but to slow down next year.

I know the Chancellor wants to blame the poor growth performance and poor productivity growth on the Eurozone.

I share his ‎concerns about the Eurozone – we do need a plan for stronger growth in Germany and across the Continent.

But the weakness of the Eurozone cannot explain why, despite the notable successes of a number of our companies, our export performance has been so poor – and so much worse than other Eurozone countries.

Since 2010, our export performance has not only been 16th in the G20 but in the EU it’s actually been 22 out of 28 countries. Three quarters of EU countries have done better than us.

Business investment, which has also lagged behind our competitors, actually fell in the last quarter.

Bank lending to small businesses is falling.

The number of apprenticeships for young people is actually falling this year.

House-building under this government is at its lowest level since the 1920s.

And on infrastructure, for all the Chancellor’s reheated re-announcements, barely a fifth of projects are ‘in construction’ and since 2010 infrastructure output is actually down over 11 per cent.

Mr Speaker, on business rates, on the R&D tax credit, on APD we welcome the action the Chancellor has taken. We will support what the Chancellor has proposed on Air Passenger Duty.

I would like to ask the Chancellor about the Air Passenger Duty proposal. We will support what he has proposed but following the Smith Commission proposal to devolve Air Passenger Duty to Scotland, will the Chancellor urgently lead work across government, working with the Scottish Government on a mechanism to ensure that English airports, particularly in the north of England are not disadvantaged by that devolution.

Let me also say on business rates, while the review is welcome, it won’t report until I believe until 2016. Why can’t the Chancellor take immediate action and adopt our plan to cut business rates for small companies?

But why won’t he increase the bank levy and adopt our plan to extend free childcare for working parents from 15 to 25 hours per week? Why won’t he properly capitalise the Business Investment Bank?

Why won’t he raise as a proportion of earnings the national minimum wage faster than earnings?

And why won’t he repeat the bank bonus tax to guarantee a compulsory job for all young people?

On regional devolution why won’t he devolve full growth in business rates to give city and county regions real control?

We need a plan for more good jobs and more balanced growth.

And on the subject of growth the figures the Chancellor announced actually reveal growth has been revised down. In 2016 from 2.6% to 2.2%; down in 2017 from 2.6% to 2.4% and in 2018 from 2.7% to 2.3%. Why is growth being revised down year after year after year?

The OBR figures show, this is an interesting fact from the OBR – if our economy grew by just half a per cent faster than forecast, government borrowing would come in over £32bn lower in the next Parliament.

Doesn’t the Chancellor see those downgrades to growth are bad news. Without decisive action to sustain growth and get living standards rising – a recovery for the many, not just a few – he is going to carry on missing his own deficit targets year after year after year?

Immigration

And let me ask the Chancellor about another missed target.

Over the past twelve months, net migration to the United Kingdom has been 260,000 more people.

Can the Chancellor tell the House, what is the OBR estimate for net migration over the next twelve months that underpins the growth and public finance forecasts?

It seems highly unlikely that it’s going to be anywhere near the Prime Minister’s forecasts of the tens of thousands.

Is it going to be over 100,000 next year? Over 150,000? Over 200,000?

And, this time, did the Chancellor remember to tell the Prime Minister what the facts were?

Spending and Taxation

Turning to spending and taxation, the Prime Minister claimed in the Times newspaper a month ago that 80 per cent of the planned spending cuts had been made.

The Institute for Fiscal Studies says it is less than 50 per cent.

Can the Chancellor clarify who’s right and who’s wrong?

He claims he can cut welfare spending by £12bn in the next parliament.

But in this Parliament spending on social security is now over £20bn higher than he planned in 2010, because of what’s happened to housing benefit in particular.

He is now planning a £3billion real terms cut in tax credits that will hit 3 million working people on middle and low incomes and once again he is hitting women harder than men.

I’ve got to say the Prime Minister rather let the cat out of the bag earlier when he referred to maso-sadism, as I understand it, maso-sadism is someone who enjoys having pain inflicted upon them and enjoys inflicting pain on other people. We know the Chancellor’s views on the first Mr Speaker, it rather seems from the way he smiled when he announced the tax credit cuts he is rather enjoying the second as well.

How can it be fair to hit working people with a £3 billion cut to their tax credits when he’s spent £3 billion giving a tax cut to people earning over 150k? How can that be fair?

And when families are paying £450 more a year in higher VAT, does he really think people will fall for the Prime Minister’s latest promise – of a £7 billion unfunded tax cut in the next Parliament, which even the Business Secretary has called a fantasy?

Two months on, the Chancellor gave us no details at all of where he is going to get the money from. Not a single penny.

Is he planning to pay for it with a further rise in VAT?

He said at the weekend he’s got ‘no plans’ to raise VAT. That is what he said before the last election – and then he raised it after the General Election.

He should stand up at this Despatch Box today and promise that he will not raise VAT again on families and pensioners.

NHS
And on the NHS, we welcome his belated recognition that there is a funding crisis.

Everyone knows, other than the Prime Minister it seems, our health service is going backwards – A&E waiting times are going up, GP waiting times are going up. Thanks to their £3 billion reckless reorganisation.

The Chancellor announced £2 billion pounds every year, which he said was into the future, paid it seems by an underspend, every year into the future. I’ve never heard of a prospective forecast of an underspend done in quite that way.

Can he confirm that his £2 billion a year is over a flat, real base line for the NHS? We need to know the answer to that one Mr Speaker.

He’s also confirmed that the £700 million of crisis-cash is actually a renouncement of a reallocation from within the existing Department of Health budget.

What we have seen today from the Chancellor, with his Stamp Duty reforms, he has now accepted, welcomingly, that high value properties are under-taxed in our country.

But rather than taxing them only on sale, why doesn’t he have the courage of his convictions?

The average person pays 390 times more in annual council tax, as a percentage of their property, than the billionaire buyer of a £140million penthouse in Hyde Park.

Why won’t the Chancellor have an annual charge on the highest value properties and use that for an extra £2.5bn a year in the NHS so we can have an extra 20,000 nurses and 8,000 GPs?

Why won’t he match that commitment?

Our National Health Service deserves a fully-funded long-term plan – not just more short-term sticking plasters.

Fiscal Vote

And then we heard the Chancellor’s diversionary stunt.

He has today had to admit he has failed to balance the books in this parliament.

He’s now trying to divert attention with a vote on balancing the books in the next parliament.

At the time of the Budget though, he talked up a vote on the overall budget surplus.

But I understand from reports in the Financial Times that he’s done a U-turn and retreated to a vote on a current budget surplus in the next parliament.

Can he explain what’s going on? What’s the nature of the problem he is dealing with?

We want to get the current budget back into surplus as soon as possible in the next parliament, and get the national debt falling.

But the lesson of this Autumn Statement is that a plan to balance the books will only work if it puts good jobs, rising living standards and stronger growth at its heart.

But I’ve got to say Mr Speaker, the Chancellor’s diversionary tactics won’t work.

Because since he has sat down I’ve now received the Office for Budget Responsibility’s Economic and Fiscal Forecast.

And in table 1.2 on page 15 they actually set out in detail how the latest fiscal forecast compares to the forecast at the time of the Budget.

And it gives us the numbers which the Chancellor failed to tell us in his Autumn Statement. So Mr Speaker, I will give the country and the House the numbers which the Chancellor failed to give us.

Compared to his Budget target, it’s here on page 15, table 1.2, borrowing this year has not gone down it’s has been revised up by £4.9bn. Revised up by £4.9 billion this year.

Next year, it’s revised up by £7.6 billion. Over two years he’s revised up borrowing by £12.5 billion.

And the answer to my other question- this means that the Chancellor will have borrowed in this Parliament £219 billion more than he planned in 2010. £219 billion.

It’s all here in black and white – hard evidence from the OBR that the Chancellor’s borrowing targets are all in tatters.

We can all know that the he’s changed the way he styles his hair.

But he can’t brush away the facts.

People are worse off. And that’s why he’s failed to balance the books.

Conclusion

I’ve got to say for all his strutting, all his preening and all his claims to have fixed the economy.

He promised to make people better off – and working people are worse off.

He promised we were all in this together – and then cut taxes for millionaires.

He promised to balance the books in this Pparliament – and today that pledge lies in tatters.

Every target missed.

Every test failed.

Every promise broken.

We need a recovery for the many, not just a few.

We need to balance the books in a fair way.

And a long-term plan to save our NHS.

That is the Autumn Statement we needed.

And it will take a Labour government to deliver it.