John McDonnell MP,
Labour’s Shadow Chancellor, delivering a speech today in central
London on Labour’s pre-Budget demands on the Government, said:
***CHECK AGAINST
DELIVERY***
Good morning.
Thank you for coming here
today.
Next week’s Budget has
been widely trailed as one of the most significant in recent times.
The Prime Minister and the
Chancellor don’t agree on much but they do on that.
They both seem to be
viewing next week’s Budget as an emergency Budget to save their jobs.
We do need an emergency
Budget.
But we need an emergency
Budget not to save them but to save our public services.
After seven years of
austerity under the Tories people are asking what was it all for?
They were told austerity
was the solution to the economic crisis.
So it’s understandable
that after seven years of the austerity solution, they are angry when they
queue for hours at A&E, see their school laying off teaching assistants,
their Surestart centre closing and the local neighbourhood police withdrawn
from their streets.
Especially, while at the
same time, they learn about the Paradise Papers and the tax avoidance of the
super-rich.
A week on, outrageously
neither the Chancellor nor the Prime Minister has managed even a comment.
Its understandable people
should raise questions.
In his first year as
Chancellor, Philip Hammond has shown that he appears to have no idea what is
happening in the real world and how people are feeling.
Before next week we are
all hoping he wakes up and appreciates what life is now like for our people.
In particular the state of
our public services after seven years of the Conservatives’ austerity policies
and the struggle many have to go through to make ends meet.
In recent weeks we have
been sent stark messages from the front line of our public services.
The Chief Executive of the
NHS has warned that five million people will be left on waiting lists if
additional funding is not found in this Budget.
A quarter of our nurses
are forced to take a second job just to be able to make ends meet yet this
Governments plans will mean per head NHS spending is due to fall next year.
In the sixth’s richest
country on earth we are faced with the damning spectacle of our underpaid
nurses being asked to stay behind after 12-hour shifts to give patients extra
care just to keep the system from imploding.
For many who have
dedicated their lives to public service and our NHS, the strain is becoming too
much to bare. They feel they have no alternative but to leave the profession
and the NHS now faces the worst recruitment crisis in its history
The heads of our schools
are also warning the Prime Minister they have been reduced to “desperate
requests to parents for voluntary donations”, while schools are facing their
first funding cut per pupil in real terms since the 1990s.
One of the heads of our
counter terrorism unit has warned that the cuts to local policing are a direct
threat to national security and specifically to the fight to keep our streets
safe from terrorism.
Locally, councils are
being starved of the funds they need to protect our most vulnerable children.
Charities on the frontline
have been explicit about the impact of these cuts.
Local authorities have
confirmed their services are at “breaking point”.
The cuts to parenting
classes, children’s centres, substance misuse prevention, teenage pregnancy
support and short breaks for disabled children risk turning the current crisis
into a catastrophe for the next generation of children and families.
The percentage of children
living in relative poverty is the highest since records began in 1961.
In the last year alone,
almost half a million of our children were provided with a three day emergency
food supply from a foodbank.
The lesson is clear.
We can’t go on like this.
Austerity doesn’t just
have to end.
We have to start seriously
investing in our public services and in our economy.
It’s hard not to survey
the last seven years without feeling rising anger.
Just look back at the
record.
I remember Philip
Hammond’s predecessor, George Osborne, newly arrived in Number 11 pushing his
own “Emergency Budget” that launched the biggest programme of public spending
cuts this country has seen for generations.
We were told, seemingly in
all seriousness it was because “the cupboard was bare”.
That austerity programme
was based on what we can now say quite plainly was at best a myth, at worst an
outright lie.
Government debt exploded
in 2008 because our bloated financial system imploded.
Yet as the cuts ground on,
it was nurses and teachers, and people right across our society – except at the
very top – who have paid the price of austerity.
Philip Hammond has been
there every step of the way.
As Shadow Chief Secretary
to the Treasury, he prepared the grounds for the Government’s programme in
office.
As a senior member of
Conservative-led governments, not once did he break – as some of his own
Conservative colleagues did and have done – with the cuts programme.
And now, as Chancellor, he
tells us that a programme of austerity he supported, and that was supposed to
be over by 2015, will now stretch into the next decade.
The ideology behind this
is that the public sector is like a hideous weed that needs to be cut back to
prevent it strangling free enterprise.
As if those who work in
the private sector don’t send their children to publicly-funded schools, or
drive on publicly-funded roads, or rely on the publicly-funded NHS when they
are sick.
To coin a phrase, we
really are all in this together. Cuts to public spending damage the whole of
our society.
When a government – as the
Tories did– cut research funding by £1bn, it has real economic consequences.
When governments – as the
Tories did – cut investment spending by nearly £20bn, it has an impact on
business.
Investment in the United
Kingdom is the third lowest of any major developed economy, ahead of only
Portugal and Greece.
Public spending on
transport is the very lowest out of those 35 major developed economies.
Without investment, we
don’t get the new equipment and technologies that can sustain growth.
It means skilled people
and those with talent and ideas across the whole country are not realising
their potential, and businesses cannot grow as they wish.
The result is that our
whole economy is becoming, relative to other, similar economies, worse and
worse at turning ideas, labour and machinery into economic growth.
This is the “productivity
crisis” that even this Chancellor has been forced to acknowledge.
In his first Autumn
Statement he loudly bemoaned the “shocking” productivity gap between ourselves
and comparable countries.
In his first Budget,
earlier this year, he complained about “stubbornly low” productivity.
He lectured the Party
faithful on the point at Conservative conference in October.
I welcome the Chancellor’s
recognition of this, perhaps most serious, economic challenge.
But perhaps it would help
if he also recognised that he is not some concerned bystander.
He has been a senior
member of every government since 2010.
And now, as Chancellor, he
is directly responsible for economic policy.
It is his fault and that
of his colleagues.
Their fault, and theirs
alone that they have not merely failed to address the long-term problems of our
economy – they have added to them.
The Office for Budget
Responsibility is widely expected to highlight just how bad the situation has
become under the Tories in its report next week.
But official statistics
already paint a grim picture.
Under his and his
predecessor’s watch, the gap between what Britain produces in an hour, and what
the rest of the G7 produce in an hour, has widened to its largest for more than
a generation.
Because productivity here
is so poor, we have to work longer hours to compensate.
The average employee in
Britain works over 300 hours more a year than the average employee in Germany.
That’s equivalent to
nearly 40 full working days a year.
And we don’t just work
longer hours.
Most of us now work in
worse conditions, with worse pay.
Real pay is lower than it
was in 2010, and is still falling.
Insecure work is up
one-third since 2010.
There are now three
million jobs in the UK where there is no guarantee of hours or employment
rights.
The scale of this
government’s failure needs to be placed in its context.
No generation in living
memory has experienced such a decline in its living standards.
And the younger you are,
the worse that decline becomes.
Those in their twenties
have seen their pay fall by almost 10 per cent since 2010.
To compensate for this,
more and more are forced to borrow more and more on unsecured loans, like
credit cards and payday lending, which has grown nearly 20 per cent in the last
five years.
Borrowing has helped fuel
a return to weak economic growth.
But even as the economy
has grown, most people are getting poorer.
If most people are not
benefitting from growth, the benefits of growth must be going to someone else.
It is easy to see where. A
few at the top have done extremely well.
The top ten percent now
own half the nation’s wealth.
There are more
billionaires living in London than ever before.
But even as property
speculation has boomed, investment in manufacturing is down by more than £2bn
since the crash.
So instead of investments
in productive enterprises, new ideas and new technology, under the Tories our
economy has swung ever more into hoarding unproductive wealth.
The great lie behind
austerity was that we had no choice – that cuts were essential because there
was no money.
This is a wealthy country,
one of the richest in the world.
But that wealth is held in
too few hands, and spent for too little purpose.
Even as they have been
cutting public services to the bone, they have been offering huge giveaways to
the mega-rich and giant corporations.
Tax cuts introduced for
both since 2010, including Corporation Tax and Capital Gains Tax, will cost us
over £70bn over the next five years.
Every single penny lost in
these tax cuts means less money for our public services.
And the Paradise Papers
showed, once again, how the super-rich and giant corporations simply refuse to
play by the same rules as the rest of us.
The UK is losing at least
£16bn a year to tax havens.
Every penny lost means
less funding for our public services.
Labour’s Tax Transparency
and Enforcement Programme is the comprehensive means to close the loopholes and
end tax evasion.
The Government could learn
from it, instead of throwing about dodgy statistics.
Or introducing loopholes,
like the “controlled foreign company” rule changes, which open the door to tax
avoidance that it is now under investigation by the European Commission.
Next week’s Budget cannot
be a continuation of the failure for the many that we have witnessed since
2010.
There has to be a genuine
and decisive change of course.
This Government may be
weak, but Britain doesn’t need to be.
It needs strong, effective
action to properly deal with the challenges we face as a nation.
Next week the country
needs an ‘emergency Budget’ to alleviate the emergency taking place right now
in our public services, and the millions of working households in our country
struggling to get by.
Not a Budget desperately
designed to save the jobs of a weak Prime Minister and her embattled
Chancellor.
Philip Hammond wants you
to believe there is nothing that can be done to end these scandals. That the
millions more children who will grow up in poverty under this Government due to
their changes cannot be prevented.
He wants you to believe
that the housing crisis in our country cannot be fixed the way Labour has
consistently called for, and even colleagues in his own Cabinet have argued
for, by increasing investment to build more housing.
He wants to pretend he
cannot invest on the scale needed, yet he has already borrowed more in his
first year as Chancellor than any of his predecessors in their first year at
the Treasury.
There is a better way than
this. But it needs a complete break with past failures.
The Chancellor has the
opportunity next week to address the worst consequences of his austerity
programme.
Let’s look at some of the
key priorities to be addressed.
Since the last Autumn
Statement, the Government has accelerated the roll out of Universal Credit
despite evidence it is causing poverty, debt and evictions.
The six week delay in
payments has taken some families into outright destitution.
The Trussell Trust has
found a 30 per cent increase in foodbank usage in areas where Universal Credit
has been rolled out.
And under the guise of
reforming the system, the Government have pushed through swingeing cuts now
amounting to £3bn a year.
Those cuts will now mean a
million more children living in poverty.
By 2021-22, the Institute
of Fiscal Studies estimate that more than one in three of our children will be
living in poverty as a result of benefit cuts.
In the sixth richest
economy on the planet, this is a national disgrace.
It should shame us all.
But in particular it should shame this Government.
As the Women’s Budget
Group’s research today confirms, these cuts will mean 5.9 million women living
in households eligible for universal credit will lose almost four and half
thousand pounds a year by April 2021 as a result of the combined impact of tax
and benefit changes introduced since this Government came to office.
The Chancellor has the
opportunity to ease the worst burden.
Last month, the House of
Commons voted unanimously to pause and fix Universal Credit.
The Children’s
Commissioner for England is the most recent voice calling for a pause of the
bungled Universal Credit rollout.
The Chancellor himself has
admitted that there is a “challenge around the waiting times.“
He needs to act now to
stop thousands of families being pushed into absolute poverty and despair.
The public sector pay cap
has seen the pay of our public sector works hammered for year after year since
it was introduced in 2010.
The TUC estimates that
nurses, firefighters and border guards face losing thousands of pounds in real
terms by 2020 if the Government sticks to its plans.
Midwives, teachers and
social workers will see their pay in real terms drop by more than £3,000.
Our public services cannot
function without staff, and they cannot function well unless those staff are
properly rewarded.
But it’s not just
frontline staff. It’s those in the back offices who keep our hospitals running,
or make sure our taxes are collected fairly who also deserve a pay rise after
year upon year of pay cuts.
The Government must end
the public sector pay cap, and do so right the way across the public the
sector.
Schools face the first
funding cuts per pupil in real-terms since the 1990s.
Headteachers have marched
on Downing Street. 5,000 have signed a petition calling for more funding for
their schools.
As local authorities have
been pushed further and further into desperate measures by cuts, they are
beginning to pull back on the essentials.
The Chancellor must
immediately bring forward the funding needed to halt the most serious crises in
our public services – for the NHS, our schools, and local authority children’s
services.
The housing crisis is
inescapable. Every day brings fresh stories of the misery this has caused.
Homelessness is up 50 per
cent since 2010. Homeownership has collapsed to its lowest level in decades.
Private tenants in England spend nearly half their pay on rent.
Yet the starker the crisis
becomes, the more visible the despair, the more feeble this Government’s
response has become.
The housing crisis won’t
be solved by cutting stamp duty on a few housing sales.
Today, the Government is
trying to pull the wool over our eyes by trumpeting an accounting change which
happened last month.
It won’t be solved by
accountancy tricks, shuffling Housing Association debt on or off the Government
balance sheet.
It will be solved with
bricks and mortar.
That means the Chancellor
must bring forward genuine new funding to deal with this in next week’s Budget.
But since 2010 with
Conservative Ministers we’ve built fewer homes than at any time since the
1920s.
The scale of the crisis
demands action on an equal scale. We need at least 100,000 new social homes
a-year funded and built by this Government, to even begin to address the
problem.
If the Chancellor won’t
listen to Labour, or the housing experts, or the tens of thousands suffering
with sky-high rents in substandard accommodation, perhaps he can listen to his
own Communities Minister, and bring forward the funding a major housebuilding
programme needs.
And, after the tragedy of
Grenfell Tower, the Government must immediately deliver the money required to install
sprinklers in every council or housing association block that needs them.
Because the fundamental
issue here is that it is investment that will secure the high-paid, high-skill
economy of the future.
Investment in our housing.
In our transport system. In communications. In scientific research.
The Chancellor claims to
understand this. He has spoken repeatedly of the need for investment to drive
up productivity and so secure wages.
Yet he seems to be
incapable of recognising the scale of the problem.
Our infrastructure creaks
and slowly crumbles. Every business group from the CBI to the Institute of
Directors, quite rightly, complains about delays and cancellations.
The Government’s record on
this is abysmal.
Electrification of the
Great Western Railway – delayed, and partially cancelled.
Electrification of
Transpennine services – delayed and then cancelled.
The Swansea Tidal Lagoon –
dithering, delay, and still no firm answer on whether it will be built at all.
Broadband speeds far below
the European average.
The most expensive
railways.
The most expensive
electricity.
And what little
infrastructure spending takes place is overwhelmingly concentrated in just a
few spots that are already ahead of the rest.
We want the Chancellor to
bring forward the funding needed to make sure that every part of our country
benefits.
The infrastructure
investment needs to address and close the regional funding gap, and to begin to
realise the potential that is out there.
Re-announcements of old
schemes, a fixation on rewarding only one part of the country, and the feeble
amounts the Chancellor has previously offered will not be enough.
He needs now to show some
evidence he has grasped the enormity of the harm this Government has caused to
this country.
We face, all of us, as a
country, immense challenges over the next few years.
On every single one of
them, this Government looks not just ill-prepared but incapable.
On Brexit, the Tories are
more concerned with their own petty, factional manoeuvres than anything resembling
the national interest.
And this Chancellor, in
the words of the Prime Minister’s own former advisor this week– is incapable of
delivering a vision for the country.
As is usual, he and his
colleagues have trailed great expectations for this Budget.
It has been claimed it
will be “revolutionary”.
But as Budget day itself
approaches it becomes clearer and clearer that we have a Chancellor unable to
make the decisive break with the failed past that is needed.
A Chancellor completely
cut off from the world most of us live in.
Great trumpets in the
weekend papers become feeble squeaks at the despatch box.
Every grand claim rings
false, and every promise turns hollow.
Should he fail once more
next week, this is how it will end for him: not with a bang, but with a
whimper.
Ends