Wednesday 23 March 2022 / 2:17 PM Economy / Rachel Reeves

Shadow Chancellor Rachel Reeves responds to the Spring Financial Statement


Today was the day the Chancellor could have put a windfall tax on oil and gas producers to provide real help to families. But he didn’t.

Today was the day for the Chancellor to set out a plan to support businesses and create good jobs. But he didn’t.

Today was the day he could have properly scrapped his national insurance hike. But he didn’t.

We said it was the wrong tax. Wrong time. Wrong choice.

Today the Chancellor all but admitted he got that one wrong.

Inflation at its highest level for 30 years – and rising. Energy prices at record highs. People are worried sick.

For all his words, it is clear the Chancellor doesn’t get the scale of the challenge.

He talks about providing security for working families. But his choices are making the cost of living crisis worse – not better.

Mr Speaker, the situation following Putin’s criminal assault on Ukraine remains gravely serious.

Just one month after the invasion, so much has changed – with repercussions for years to come.

But the Chancellor has failed today to explain why he chose to sign off on a reduction in our country’s armed forces last October.

Will the Chancellor confirm if the Government’s target army size is still being reduced by 10,000 troops?

Let me say this to the Chancellor: Labour will support whatever is needed on defence and security to keep our country safe.

Mr Speaker, the tremors following Putin’s aggression will impact on Britain – including economically.

But the cost of living crisis pre-dates Putin’s attack on Ukraine.

In October, inflation was already forecast to be double the Bank of England’s target and yet the Prime Minister said that fears of inflation were ‘unfounded’.

Today we learned that inflation has reached 6.2% – and is expected to go higher in the coming months.

People are rightly looking to their government to help them weather this storm.

Labour will support sensible measures to ease the pressure.

But what the Chancellor has outlined today says everything we need to know about his priorities.

The cost of living crisis is hitting people particularly hard becomes incomes have been squeezed during the last 12 years of Conservative governments.

Ordinary families, disabled people and pensioners are facing really difficult choices.

Mums skipping meals so that their children don’t.

Families struggling to buy new school shoes and uniforms for their children.

Older people hesitating about putting on the heating because they’re worried about the cost.

At the weekend the Chancellor was asked about fuel poverty and he didn’t know the numbers.

It is shameful that he doesn’t.

Because when Martin Lewis predicts that 10 million people could be pushed into fuel poverty, the Chancellor should sit up and listen.

And we know that pensions and social security are not going to keep up with inflation.

Pensioners, and those on social security, will be getting a real terms cut in their incomes.

So, what analysis has the Chancellor done on the impact of benefits being uprated by less than inflation?

How many more children and pensioners will drift into poverty because of the choices of this Government?

Who does the Chancellor’s prioritise?

He continues to defend the record profits of the oil and gas producers who themselves admit that they now have “more money than they know what to do with.”

BP describes this crisis as a ‘cash machine’ for them, but it is British people who are paying out.

And it is deeply regrettable that the SNP have joined the Tories in wanting to shield oil and gas producers from Labour’s progressive measures.

When I set out Labour’s plans for a windfall tax in January, we estimated that it would have raised £1.2 billion.

Now, because of the continued rise in global oil and gas prices, it would today raise over £3 billion.

That’s money that could be used to help families, pensioners and businesses.

With a cut to VAT – a real Brexit dividend that would help working families and pensioners across our country.

And a targeted Warm Homes Discount that would see families and pensioners on the lowest and modest incomes being supported by £600.

Today the Chancellor comes along after 12 years of failure on energy efficiency and announces a VAT cut on building materials.

This is wholly inadequate.

A proper energy efficiency scheme like the one we have set out could cut bills by £400 to people from next year.

And the silence from the Chancellor on our energy intensive manufacturing industries is appalling.

At this time of national crisis, people and businesses need a government that is on their side.

Now the Chancellor spoke of difficult choices. And I agree – there are always choices to be made.

Like who to tax and who to shield.

Despite the Chancellor’s reluctant measures, the facts are that he is taking money out of people’s purses and wallets with an increase in national insurance contributions.

The changes he is making today, begs the question why did he embark on these changes in the first place?

Despite the warnings from the Labour Party and many, many others.

Now it’s one thing for the Prime Minister and Chancellor to disagree with each other, but the centre piece of the statement that the Chancellor has delivered today is based on a disagreement with himself.

And for all his tax rising on the millions in the middle, where is the increased tax contribution from the very wealthiest in society?

A landlord with a large number of properties won’t be paying a penny more in taxes.

But their tenants will.

Someone with significant income from buying and selling stocks and shares won’t be paying any more in tax.

But those people powering our economy will.

The Chancellor has made the wrong choices.

Now, the Chancellor says he can’t help everyone. And that’s absolutely true.

But who has the Chancellor been helping out?

Those who have been swindling the taxpayer.

The Chancellor left open the vaults for widespread waste, crony contracts and a frenzy of fraud.

It was, as his former Tory Treasury minister put it: “happy days if you are a crook”.

7 billion items of PPE not usable and now being burnt. Taxpayers’ money literally going up in smoke.

£3.5 billion worth of contracts awarded to friends, donors and pub landlords.

It gets worse.

The Chancellor has been signing cheques to fraudsters – including organised criminals and drug dealers.

Let’s put the Chancellor’s fraud failure in context.

He has lost a staggering £11.8 billion of public money to fraud.

This is twice the amount a previous Conservative government lost on Black Wednesday.

As a result of – let’s face it – this jaw-dropping incompetence, the Conservatives have been funding crime instead of fighting it.

And now the Chancellor has the audacity to come to British taxpayers asking them to pay more to fill his black hole.

But there can be no cover-up to hide political embarrassment.

Let’s call in the National Crime Agency to investigate.

We need answers.

People held to account.

Because let’s be clear: taxpayers want their money back.

The truth is Mr Speaker, people can no longer afford the Conservatives.

Working families can’t. Pensioners can’t. Businesses can’t.

The weak growth forecasts we’ve seen today should be flashing red on the Chancellor’s desk.

And the Chancellor, says that ‘the work starts today’.

Is he serious?

The Conservatives have been in government now for 12 years, not 12 hours.

What’s taken them so long?

Because since his party entered government, the UK has experienced the biggest downgrade in growth of any major economy.

With the last Labour government economic growth was 2.1% a year.

12 years of the Conservatives and growth has averaged 1.5%.

And now we know that growth has been downgraded this year too.

Growth is essential for funding our public services, keeping taxes under control, and keeping a handle on public finances too.

That’s why Labour have announced a tough set of fiscal rules to get our debt and deficit down.

But the truth is that because of this government’s failure to get the economy growing, it’s this Chancellor that has put up taxes on families and businesses a staggering 15 times.

This Chancellor has raised taxes more in the last two years than any Chancellor in the last 50.

He says it’s all down to the pandemic.

But the truth is the Conservatives have become the party of high taxation because they are the party of low growth.

Now, I understand the Chancellor has a portrait of Nigel Lawson above his desk.

Well, today we’ve got an energy price crisis.

Record prices at the pumps.

Inflation is back.

And the truth is, he’s not Nigel Lawson, Mr Speaker.

He’s Ted Heath with an Instagram account.

Labour would be getting the economy firing on all cylinders. Ensuring we buy, make and sell more in Britain.

Scrapping business rates and replacing them with a fairer system fit for the 21st Century.

Something that small businesses and high street businesses are crying out for, and the Chancellor mentioned it not at all in his statement today.

A Climate Investment Pledge to decarbonise the economy, create good jobs in every part of Britain, and strengthen our energy security too.

Businesses are seeing unprecedented increases in their costs right now, but all we hear from this Chancellor today is a promise of jam tomorrow rather than the support that is needed now.

And today’s statement lacks a long term plan for productivity, skills and growth. Where is it Chancellor?

Mr Speaker I can’t help but feel that in both the Chancellor’s recent Mais Lecture and in his statement today, we are presented with increasingly incredible claims.

Perhaps the Chancellor has been taking inspiration from the characters in Alice in Wonderland. Or should I say – ‘Alice in Sunakland’.

Because nothing here is quite as it seems either.

It’s the sort of place where a Chancellor celebrates giving people £200 to help with spiralling energy bills,

before explaining that he needs it all back.

In Sunakland, the Chancellor proclaims “I believe in lower taxes.” While at the same time hiking Alice’s National Insurance contributions.

Alice asks the Chancellor: when did ‘lower’ taxes mean ‘higher’ taxes? Has ‘down’ really become the new ‘up’?

The Chancellor follows Humpty Dumpty’s advice and says “when I use a word, it means just what I choose it to mean — neither more nor less.”

Alice knows that under the Conservatives, taxes are at their highest level in decades – as a result of the policies of this very same Chancellor!

In fact this Chancellor was the only G7 Finance Minister to raise taxes on working people during this crucial year of recovery.

Curiouser and curiouser.

As Alice climbs out of the rabbit hole to leave Sunakland, she recalls the words of the White Rabbit, and concludes that perhaps the Chancellor’s “reality is just different from yours.”

The actual reality, Mr Speaker, is that this Chancellor’s failure to back a windfall tax and his stubborn desire to pursue a National Insurance tax rise are the wrong choices.

In eight days’ time, people’s energy bills will be rising by 54%.

Two weeks today the Chancellor’s latest tax hike will start hitting working people and their employers.

His National Insurance tax rise was a bad idea last September, and he’s admitted it’s an even worse one today.

The Chancellor is making an historic mistake.

Today was the day to scrap the tax rise on jobs.

Today was the day to bring forward a windfall tax.

Today was the day for the Chancellor to set out a plan to support British businesses.

But on the basis of the statement today – and the misguided choices of this Chancellor – families and businesses will from now on endure significant hardship as a result.

The Chancellor has failed to appreciate the scale of the challenge that we face.

And he is yet again making the wrong choices for our country.