It is a pleasure to follow the hon. Member for North East Bedfordshire (Richard Fuller). I understand the points he made about taxation. There have to be limits on how we tax people, families, businesses and so on, but the position we are in today underscores the need to deliver sustainable economic growth, because that will deliver the tax receipts that allow us to invest in our public services.
The autumn statement is clearly framed with the next UK election in mind. While some of the measures are welcome—I particularly welcome the announcement of the reallocation of the Inverness and Highland city region deal, allowing £20 million in funding for the Corran ferry in my constituency, which will be well received by the community in the Ardnamurchan peninsula and others—overall the autumn statement is a missed opportunity to deal with the structural weaknesses in the UK economy, while recognising the pressures felt from the cost of living crisis.
Let us reflect on the headroom referred to by the hon. Member for North East Bedfordshire. In large measure, that has been caused by the inflationary aspects on taxation receipts. Much of the gloss of the headline tax cuts will wash away when people realise the harsh reality: inflation will erode the fantasy that the Chancellor is making folk better off, and, as have heard, fiscal drag is real issue. While much of the focus is on the short term, where is the vision to sustainably grow the economy for the long term? Interestingly, when we look at the OBR book, we find that business investment is forecast to fall from 10.9% of GDP this year to 9.7% by 2029. The illusion that we will see an explosion of investment growth is not borne out by the analysis of the Office for Budget Responsibility.
We can debate the source of the pressure on public finances, but absence of growth fundamentally caps the growth in tax receipts that would allow us to invest in infrastructure and our public services, and ultimately pay down our accumulated debt through the delivery of growth. The harsh reality is that the United Kingdom is
falling down the league tables for investment and growth, which affects all of us here and is all too apparent to all our constituents and communities.
Let us look at the OBR forecasts: GDP growth of 0.6% for this year, 0.7% for next year and 1.4% for the year after. That is an average of 1.4% over the six-year period forecast. I do not know how the Chancellor classifies a high-growth economy—but, my goodness, this is not it. It is a fantasy if those on the Tory Benches believe that this autumn statement delivers high and sustainable growth; quite simply, it does not.
By comparison, let us look at the International Monetary Fund forecast for the US: growth of 1.6% this year, 1.1% next year and 1.8% the year after, and an economy that has outpaced the UK on average by 1% a year over the last decade. That is the reality of how the UK has fallen behind over the period of Tory Governments since 2010. The UK has failed on growth since the financial crisis and, on today’s forecasts, the UK will continue to fail on growth. To quote the phrase to the Chancellor: “It’s the economy, stupid”.
Let us look at the reality of policy failure in broken Britain. The Resolution Foundation suggests that the current parliamentary term is on track to be the worst for living standards since at least the 1950s. The OBR suggests that real wages will only get back to the 1998 level in 2028: two decades of no growth in real wages—yet you wouldn’t believe any of that when you hear the bùrach coming from the Tory Benches. Why do they not just admit that over the course of their Administration—and thank goodness it is coming to an end—people have got poorer?
We can talk about the tax burden and we can talk about the investments they have trumpeted, but the harsh reality is that what we have seen is a massive, massive mismanagement of the economy. I ask colleagues across the House to dwell on that, and the Chancellor and his Treasury team to accept the failure of financial management that has resulted in such poor outcomes. My goodness, what a disgrace. With our debt and taxation burdens, people have got poorer. Those on the Government Benches should look at themselves in the mirror and at what they have presided over.
It is not just a failure of leadership and management in this parliamentary term; the problems run much deeper. In particular, we have been stuck with a low-growth economy since the financial crisis of 2008. Low growth, low investment and low productivity growth led to that lost decade and that squeeze on living standards.
When we think back to the period post the financial crisis, the only game in town was quantitative easing; much of it was required, but there were two failures. The complete misalignment between monetary and fiscal policy for much of the period meant that the circumstances to create sustainable economic growth could not be delivered. The failure of that lies at the door of this Tory Government. Then the continued printing of money through the QE scheme was one, but not the only, cause of the increase in inflation that we have seen. The Government say that they are not responsible for the increase in inflation to 11.1%—of course recognising the independence of the Bank of England, but let us not kid ourselves about the alignment that takes place—but much of that increase in inflation was a failure of
policy, in particular a failure of policy at the time of covid. Let us accept some responsibility where it is necessary to do so.
The Government had some cheek congratulating themselves on the decline in inflation when the increase in the first place was driven by policy failure. Although the growth in inflation is falling, let us please not forget that it is hurting ordinary folk. We know about the continued increase in food prices, the cost of energy, and the painful choices that people are having to make. The lack of direct support to counteract all that is hitting home for millions of folk who are struggling to make ends meet.
Tomorrow the energy cap will be announced, and it is expected to increase from £1,800 to £1,900. That is the reality of what is happening to people—that increase in cost and the impact on consumers. Of course, there is also the fact that the Bank of England is warning that interest rates will remain high, and millions will face the impact of rising mortgage costs yet to come. And let us remember that the international markets attach a risk premium to the UK; our interest rates will remain higher for longer than our international counterparts, and that has been the case for a while now.
What we see with the tax cuts that are being trumpeted today is that our UK economy is very much based on a trade and current account deficit. What happens in the end is that the currency takes the hit and investors say they want a premium to hold UK assets. Again, that is the failure of long-term planning for the UK economy—not just the disastrous Budget last year, but the penalty of being in the UK, and for us in Scotland of being in broken Britain.
Let me return to the future and to the questions about vision and the sort of economy that the UK is. Fundamentally, the UK is a trading economy, not a manufacturing economy. When we are discussing this autumn statement and the prospects for growth, we cannot ignore the self-harm of Brexit or the lost growth opportunity that impacts the UK to the tune of 4% of our GDP—when we are struggling for growth, we actually inflict that self-harm on ourselves. Just look at the OBR forecast for growth. Where is the plan to change this? Where is the green industrial strategy?
I am delighted that the Scottish Government have been presented with an industrial strategy—it is sitting with the Government now—because we recognise the enormous opportunity that there is to increase our green energy output fivefold and to create, between now and 2050, 325,000 jobs. What a contrast it is to have a Government who will make sure that we have that just transition, who will prioritise investment in net zero, and who will make sure that we tackle fuel insecurity. The Scottish Government estimate that there are 830,000 fuel-poor households in Scotland—a third of all our households. It is a scandal that energy-rich Scotland is paying the price for the failure of UK energy policy. It clearly demonstrates that, while we have the power in Scotland, Westminster has control—and in Scotland, we pay the price.
Let me wrap up. The UK Government should have reinstated the £400 energy bill support scheme. Protecting people from the cost of living crisis should have been a priority in the autumn statement. My colleagues in the Scottish Government, through initiatives such as the Scottish
child payment, are helping to drive young people and families out of poverty. We understand the importance of using our capital funding to strengthen the conditions for economic growth, but we are having to do that while our capital budget is being constrained and cut by the UK. That is the real-terms cost to Scotland of being held back by broken Britain—