Afternoon summary
- John McDonnell, the shadow chancellor, has called for the government to spend around £12bn more on health and social care. In a pre-budget speech this morning he said:
Based on estimates by the Chartered Institute of Public Finance and Accountancy, the NHS and social care face a funding gap of between £8.5 and £15bn by 2020.
Published figures indicate that tax receipts are currently higher than anticipated.
Given that we’re facing an immediate crisis in the NHS and social care, I’m calling on the chancellor to use that money to address this NHS and social care emergency.
Any measure less than this is likely to be inadequate.
In his speech McDonnell did not directly put a figure on how much extra money should go to the NHS. But later, when asked what McDonnell meant by tax receipts being higher than expected, an aide cited a statement on the public sector finances published by the Office for Budget Responsibility last month (pdf) saying borrowing was £12bn below the November forecast. The OBR said:
Ten months into the year, PSNB is already £13.6 billion lower than last year. As well as downward revisions to earlier months of 2016-17, this reflects stronger receipts growth in recent months than our full-year forecast of 4.3 per cent. Simply extrapolating this percentage change over the final two months of the year would imply full-year PSNB of £56.2 billion, a £12.0 billion bigger fall than required to meet our November forecast, with £1.6 billion of that reflecting the CT classification change.
- McDonnell proposed using 10-year budgets, hypothecation and a new “health OBR” to establish a better and more sustainable way of funding the NHS. (See 1.26pm.) The Conservatives said that Labour policy was a “shambles” because only a few weeks ago Jeremy Corbyn indicated that he was opposed to using hypothecation for the NHS. (See 3.14pm.)
- McDonnell said the Corbyn team were now willing to take advice from people like Lord Mandelson and Progress for the sake of Labour unity. (See 12.23pm.)
- Figures from the Electoral Commission have revealed that the Lib Dems received more than Labour in donations in the last three months of 2016. According to the Lib Dems, this is the first time they have ever outperformed Labour in fundraising over a quarter. (See 10.15am.)
- Paul Drechsler, the CBI president, has warned that leaving the EU without a trade deal would be “irresponsible”. He will give a speech on this tonight, but in extracts released in advance he says:
Wherever I go across Europe, I hear concerns about the UK leaving without a deal and falling into World Trade Organisation rules.
We should be under no illusions about what this would really mean. A ‘no deal’ scenario would open a Pandora’s Box of economic consequences.
The UK would face tariffs on 90% of its EU exports by value and a raft of new regulatory hurdles. Let’s remember these barriers would hurt firms on both sides of the Channel.
Here in the UK and across the continent firms are worried about this ‘worst-case scenario’. Some are getting ready for it to reduce economic damage. Some won’t prepare because they’re hoping for a deal. But in reality many firms can’t prepare because the cost of change is simply too high to even consider it.
The prime minister is confident that a deal can be achieved - and we agree.
But to those whose first and only choice is for Britain to walk away without a deal, I say you’re not only wrong but irresponsible.
- Peers have been sent legal advice saying Brexit will need a further act of parliament. It has been sent to them by Open Britain, a group campaigning for a “soft” Brexit, ahead of a vote next week on an amendment to the article 50 bill saying parliament should get a vote on the final Brexit deal. The advice (pdf), drafted by three QCs, Sir David Edward, Sir Francis Jacobs and Sir Jeremy Lever, says “actual withdrawal from the EU will need to be authorised by parliament in a future Act, once the outcome of the negotiations, and the impact on individual and business rights, is known.” Open Britain says it shows that, if the government does not accept the amendment, it could face another legal challenge over Brexit.
- A new two-shot Taser has been authorised for use by police forces in England and Wales. As the Press Association reports, the Taser X2 is said to be more accurate and features a second cartridge for back-up if the first shot fails.
That’s all from me for today.
Thanks for the comments.
Updated
Tories accuse Labour of being split over hypothecation for NHS
In his speech this morning John McDonnell, the shadow chancellor, proposed a move towards funding the NHS through hypothecation (taxes raised for specific spending purposes). See 1.26pm for the details.
But the Conservatives are pointing out that Jeremy Corbyn indicated only a few weeks ago that he was not in favour. In an interview with Andrew Marr (pdf), Corbyn said he was prepared to consider the case for hypothecation for the NHS. But he also said:
I am not one that’s generally in favour of hypothecated taxation ... If you go down the road of hypothecated taxation then you’re going to do hypothecated taxation for every other service. That’s an issue.
A Conservative party spokesman said:
Labour have today shown what a shambles they are – with the shadow chancellor suggesting a way of funding the NHS the Labour leader says won’t work.
Here are some election day photographs from Northern Ireland.
City minister Simon Kirby has been stripped of responsibilities for overseeing Brexit’s impact on financial services, just months after being handed the portfolio, the Press Association report. Instead, those duties have been transferred to former Tesco executive Lady Lucy Neville-Rolfe, who was appointed commercial secretary to the Treasury in December.
Here is the Guardian’s Brexit Means ... podcast, with Jon Henley, Jane Golding and Jennifer Rankin discussing the issue of what happens to Britons living in other EU countries after Britain leaves the EU.
In an interview with the Times (paywall) published today, Ruth Davidson, the Scottish Conservative leader, refused to commit herself to saying Scotland should get responsibility for agriculture when powers are repatriated from Brussels. She suggested that Westminster could take responsibility instead.
Here’s the key extract from her interview with Kenny Farquharson.
Subsidies for Scottish farmers is shaping up to be a touchstone issue in these negotiations. At the moment responsibility for agriculture is wholly devolved to Holyrood ministers, but with Brussels exercising control of generous subsidies. After Brexit, who will exercise this power? Who will determine just how generous these subsidies should be? Who will decide who gets what? And, crucially, who will benefit from any savings made?
Ms Davidson seems reluctant to give an assurance that the answer to each of these questions will be “Holyrood”. I ask her how it could be possible that Treasury power over Scottish agriculture subsidies would not be a contravention of the devolved settlement. As skilled politicians tend to do, she answers a different question altogether.
“If Nicola Sturgeon wants to be in charge of raising the taxation to pay for farmers then that’s great — she needs to have that conversation,” says Ms Davidson. “I’m not sure the farmers are exactly excited about that at the moment.”
She accepts, however, that the issue is a contentious one ...
How you raise the cash for farmers is as big an issue as who gets to decide how it is distributed, she says. “For example, [on] help for farmers, is there a suggestion it’s going to be funded on a regional basis? So does it come out of the Scottish parliament’s budget and they have to levy additional taxation for that?
“Or are we assuming that’s coming from the Treasury? If it does come from the Treasury are we talking about where it’s administrated?”
During first minister’s questions in the Scottish parliament Nicola Sturgeon, Scotland’s first minister, said Davidson’s comments contained “two important revelations”. She told MSPs
[Davidson] seems to suggest that in areas where Westminster currently has no power over Scotland at all, for example agriculture, they intend to use Brexit to seize such power - clear undermining of the devolution settlement if ever there was such a thing.
On money, instead of Scotland getting its fair share of any savings that Westminster makes by no longer having to pay EU contributions, Ruth Davidson’s suggestion seems to be that the Treasury should keep all of that money and the Scottish government should be left to raise taxes in order to fund farm payments.
That is absolutely outrageous and completely unacceptable.
I hope that before the day is out the Tories will have clarified this and make sure that a) there will be no power grab and b) there will be no cash grab on the Scottish government by the Westminster government.
David Davis, the Brexit secretary, is in Denmark and has been speaking to journalists. According to the BBC’s Norman Smith, Davis said that getting a reciprocal deal on the rights of EU nationals in Britain and Britons in other EU countries would be the “first thing” on the government’s agenda when the Brexit talks started. But he stressed that this was not simple.
David Davis says Govt tried to strike deal on EU nationals in December at EU council.
— norman smith (@BBCNormanS) March 2, 2017
EU nationals will be "the first thing on our agenda" in Brexit negotiations says David Davis
— norman smith (@BBCNormanS) March 2, 2017
Deal on EU nationals complex. "It’s not just aboutright to remain, it’s also about pensions, social support and health care" - David Davis
— norman smith (@BBCNormanS) March 2, 2017
McDonnell proposes 10-year budgets, hypothecation and 'health OBR' to rescue NHS funding
Here is the full text of John McDonnell’s pre-budget speech.
We previewed the shadow chancellor’s plan to make people publish their tax returns if they earn more than £1m a year here. And I set out what McDonnell said about Labour’s three priorities for the budget here.
But the speech also contained some interesting proposals relating to NHS funding. Here are the key points.
- McDonnell said that an independent body should be given the job of deciding how much funding the NHS needs. He said the Office for Budget Responsibility could do this job if the law was changed, but he suggested that a new body should be set up to do this job.
The financing of the NHS has become excessively politicised to the point where even supposedly official figures are subject to dispute.
There needs to be an independent adjudication of both needs, and actual provision, to restore public trust and confidence.
The Office for Budget Responsibility has already taken steps to assess the levels of funding needed for the NHS in the longer term.
I have written to Robert Chote to ask about the ability of the OBR to continue to provide these assessments, as part of its overall brief to monitor the government’s fiscal position.
To change the OBR’s responsibilities and bring in permanent oversight on healthcare funding would require primary legislation from government.
Fair and objective assessments of long-term need are required, along with close monitoring of actual spend being made.
That’s a bigger task than ministers can provide.
We need a political neutral body, modelled on the Office for Budget Responsibility, that can remove the question of long-term funding from the political squabbling.
Only in this way can public confidence in the figures be restored – and essential spending correctly made.
- He said the government should move towards giving the NHS a 10-year funding settlement.
As Lord Macpherson [the former Treasury permanent secretary] and others have suggested, placing the NHS on a stable five-year financing basis means that certainty of funding can be assured.
But we need to do more than tie funding down for the length of a parliament and look to ten-year budgets.
- He said he supported more hypothecation for health spending. (Hypothecation involves allocating tax revenue for a specific purpose.) McDonnell said:
People need to know that the contribution they make will be spent properly.
Hypothecation, allocating taxes raised to specific purposes, can make absolutely clear where tax money is being spent.
It can help restore the trust and confidence in taxation and government spending that has otherwise started to break down.
But hypothecation for the NHS has to be more than a commitment from a politician or a political party to spend a given amount, however firm that promise.
It needs a clear commitment, over the long term, that specific taxes will be used for specific purposes, and that this spending will be properly monitored.
This is also a plan that has been provisionally backed by Lord Macpherson, despite the Treasury’s traditional objection to hypothecation. In a submission to a Lords select committee inquiry into NHS funding published in November last year Macpherson said:
I see considerable benefits in a fixed five year budget for health spending: indeed, it is arguable that that is the status quo, subject to the Government reintroducing “end year flexibility”.
In my view, hypothecation merits further examination.
Moving to “full hypothecation” of NICs to health spending would be challenging. But it is the only form of hypothecation which would give taxpayers complete assurance about where the national insurance they paid was going. It is the option most likely to legitimise a tax funded increase in health spending.
You can read Macpherson’s written evidence to the committee in full here.
Number 10 has reiterated this morning that the government has no intention of budging on the issue of EU citizens’ future status, despite its defeat in the House of Lords over the issue last night.
At the morning lobby briefing, the prime minister’s spokesman said:
I think it’s clear that we’re disappointed that the Lords have chosen to amend a bill that passed through the Commons without amendment; it’s a bill with a very simple purpose that’s just to enact the referendum result and allow the government to get on with the negotiations.
He underlined the fact that Theresa May does not expect to have to make concessions to get the bill through, saying: “The prime minister has made clear her intention that the bill should be passed unamended.”
Conservative rebels are unlikely to back the EU nationals amendment when the legislation passes back to the House of Commons later this month, and the bill will then pass back to the Lords, in a process known as “ping pong”.
Asked about how the government would handle that eventuality, the spokesman said: “We’ll deal with next week as and when we’re confronted with the situation.” He added:
The Lords has its own role to carry out, and it’s important that it carries that out. It’s right that they scrutinise legislation that’s passed up to them; I think we’ve seen a very healthy and vigorous debate in the Lords; but we’re very clear on our ambition that this bill be passed unamended.
Corbyn team now willing to take advice from Mandelson and Progress for sake of Labour unity, says McDonnell
Here are the main points from John McDonnell’s Q&A.
- McDonnell said that the Corbyn leadership would be willing to take advice from people like Lord Mandelson and Progress because it was important for Labour to unite. He said that he accepted that he was known for his “pugnacious approach”, but he said now it was important for Labour to unite, and for different groups to listen to each other.
And, yes, that is holding out hands from my wing of the party, from Momentum we established, to those people in Progress. And, yes, Peter Mandelson. And having a constructive relationship for the future.
He was particularly positive about Mandelson. He said he had recently listened to Mandelson’s speech in the article 50 debate in the House of Lords. (He did not say if it was Mandelson’s speech in the second reading debate, or his speech in the committee stage debate on Monday.) McDonnell said:
It was an incredibly interesting speech. And after that I took the view that I would meet him and talk it through, because we need everyone’s advice on how we go forward, particularly on the Brexit negotiations.
What he said was exactly the same as us; we need access to that single market. If we lose access to that single market, we’re already seeing that the threat of not getting access to that single market is influencing investment decisions ...
So, yes I will be inviting him to come and have a cup of tea, and discuss issues around common concern etc.
- McDonnell claimed the Tories would split over Brexit. He said this offered an opportunity to Labour because it was united.
I think what you will find is a united Labour party on a common agenda trying to get the best deal for Brexit for the country overall [and] the Tories ripping themselves apart. I cannot see Theresa May delivering some form of a deal that will satisfy Bill Cash, George Osborne and Anna Soubry.
- McDonnell rejected the suggestion from the Guardian columnist that Corbyn should now stand aside for an alternative leftwing leader. Jones set out his proposal in this column. McDonnell rejected the idea, although he said Labour was following Jones’ advice on the need to develop radical policies and sell them to voters. McDonnell said:
So, thank you Owen for your advice, we are following part of it.
McDonnell also said Jones had rejected an invitation to offer advice to the party on a more formal basis.
I’ve invited Owen in on a regular basis to come along and advise us but obviously he wants to maintain his independence as a journalist and I respect that.
Updated
Q: What are your policies on banks? And what will you do to encourage small businesses?
McDonnell says Labour wants to use the national investment bank to help small businesses.
On banks, the party has a review going on looking at governance in the public sector. Those discussions are continuing.
There is a report coming on the national investment bank, and then later another on corporate governance.
And that’s it. The Q&A is over.
I’ll post a summary soon.
Q: You once wrote an article about iPad socialism. You have never said anything more about it. Can you do so.
McDonnell says he gave a speech about investment in new technology because the government cut £1bn from science investment. He says this investment is vital if we are to create skilled jobs.
He says new technology should be used to improve public services. But that needs investment. Managers want to do this, but do not get the investment they need.
He says he called it “socialism with an iPad”. He wishes he had not, now, because it sounded a bit glib. But new technology is where we need to go.
He says the Labour party is interested in platform co-ops. It is trying to introduce more digital democracy. The party will try to use this to enable members to contribute to policy. That is really exciting. If Labour is a social movement, it needs to use new tools, he says.
Q: What will you do about low pay?
McDonnell says he would like to restore sectoral pay bargaining.
But we need a real living wage. He says George Osborne’s “national living wage” is no such thing.
When you meet people, you discover how low wages are. Last year food banks gave out food 1m times. That is scandalous, he says.
Parents are choosing who eats in a family. That is unacceptable.
Q: Are you in the market for hypothecating business tax to encourage hauliers to switch from diesel vehicles?
McDonnell says he will not make policy on the hoof, but that he is interested in any proposals on this.
He says one of the best things Mandelson did as business secretary was the car scrappage scheme.
Q: Why don’t you invite Lord Mandelson to come in and advise you? If he did, he would say this is unrealistic. He would say tax and spend policies always go wrong for Labour?
McDonnell says he is not talking about higher taxes.
Q: Apart from the rich?
McDonnell says he is talking about tackling tax avoidance.
He says he would like to create a situation where people are proud to pay their tax.
He says he did work with Mandelson for the TUC when they were young. Perhaps they learnt different lessons, he says.
He says he went to listen to Mandelson’s speech in the Lords recently. He agreed with much of what Mandelson said about Brexit. He says he would like to take advice from him. He will invite him in for a cup of tea.
Updated
Q: How would you fund extra money for the NHS? And are you backing hypothecation?
McDonnell says he is saying the government must address the emergency in health and social care.
He says he recently did a film on this in his constituency.
The impact of these cuts is falling mainly on women.
We need an emergency injection of cash, he says.
He says Labour will come forward with its own proposals in a matter of weeks.
Then it will appeal to the government for a bi-partisan approach.
He says there will have to be hypothecated funding for health.
He says the Office for Budget Responsibility should have a role overseeing health spending.
And, on tax evasion and tax avoidance, he says the government fails to collect tax. And when it does collect tax, it gives it to the rich. Some £70bn is going to the rich and to corporations.
The argument was that the corporations would invest. But figures suggest they are not investing the money they have.
Q: Owen Jones suggests that Corbyn should step aside for a younger leftwinger. Do you agree?
McDonnell says he gave Jones his first job after university. Jones wants the party to develop radical policies. He is doing that, he says. So he is following Jones’ advice in part.
He says he invited Jones to come in and give him regular advice. But Jones prefers to keep his independence as a journalist.
McDonnell's Q&A
John McDonnell is now taking questions.
Q: [From Ben Glaze from the Daily Mirror] Last week you said there was a soft coup under way against Jeremy Corbyn. Why did you change your mind?
McDonnell says he was annoyed by the contribution from Tony Blair. Then Lord Mandelson said he was trying to undermine Corbyn every day. But by Sunday, when he went on the Pienaar programme, he decided he did not want to “go there”. The priority for the party is to unite.
He says the party is united on most things. When Owen Smith stood against Corbyn, his most common comment was that he agreed with Corbyn.
He says before the leadership challenge Labour was just behind the Conservatives, or even ahead in the poll.
He says Corbyn took a brave decision to impose a three-line whip backing article 50. But if Labour had not backed that, it would have been damaged in the country.
He says Labour was united on all the amendments.
And now the Tories are divided. The most significant speech came from George Osborne, who said he was up for a fight on Brexit issues. He says Michael Heseltine and John Major feel the same way.
He says Theresa May will find it impossible to find a Brexit deal that satisfies Bill Cash and George Osborne and Anna Soubry.
He says he wants a constructive relationship with others in Labour, even with Lord Mandelson, he suggests.
John McDonnell, the shadow chancellor, is delivering his speech now.
John McDonnell sets out his pre budget demands -says cuts of £4.5n have brought social care to the brink of collapse pic.twitter.com/IOQv3j6FZA
— iain watson (@iainjwatson) March 2, 2017
I’ll post a summary once I’ve got the full text.
The department for communities has published its English housing survey for 2015 to 2016 and it shows that the proportion of people owning a home has fallen from 67.4% percent in 2009/10 to 62.9% percent in 2015/16. Labour says this is the lowest figure since 1985.
John Healey, the shadow housing minister, said:
These new government figures show yet another fall in the home-ownership rate in England to the lowest rate in more than 30 years. There are now almost 200,000 fewer home-owning households than in 2010 when Conservative ministers first took charge.
Meanwhile, the number of people stuck in an insecure and increasingly expensive private rented sector has grown dramatically over the last seven years. Since 2010, the number of households renting privately as ballooned by over a million.
After seven years of failure on housing, not only has home-ownership fallen, but affordable housebuilding has hit a 24 year low and rough sleeping has more than doubled. The truth is Conservative ministers are out of ideas and have no long-term plan to fix the cost of housing crisis.
The Financial Times has got more about Greg Nasmyth, the donor who has given the Lib Dems £1m. (See 10.15am.) It is the biggest donation the party has had for several years. Here’s an extract from the FT’s story (subscription).
The donation from Greg Nasmyth, whose family made its fortune from Argus Media, the energy information business, will be reported on Thursday when Electoral Commission figures are published.
It comes as the Lib Dems gain momentum as an anti-Brexit party, committed to advocating a referendum on the terms of Britain’s departure from the EU. Mr Nasmyth is understood to have been motivated by the party’s position on the EU and also on green issues.
He agreed the donation in July, soon after the Brexit vote. It was finally made in October in the run-up to the December by-election in Richmond Park, where the Lib Dem candidate ousted the Brexit-backing millionaire Zac Goldsmith ...
Mr Nasmyth is an environmentalist and former journalist who has supported Greenpeace, Friends of the Earth, Shelter, Save the Children and other charities.
Argus Media, his father’s business, was sold last year to General Atlantic, a private equity firm, in a deal valuing the company’s equity at about £950m. Nine members of the family had owned a 52 per cent stake in the company.
The Electoral Commission has published its latest figures for donations to political parties, covering the final quarter of 2016.
Unusually, they show the Lib Dems receiving more than Labour (which is explained by an individual donor giving the Lib Dems £1m.)
The figures also show the Greens getting more than Ukip.
Here are the figures showing the totals received by the main parties.
Conservatives - £3,610,983
Lib Dems - £1,972,904
Labour - £1,970,055
Greens - £46,228
Co-operative Party – £39,750
Ukip - £33,228
Women’s Equality party - £30,000
Here is a chart with more detailed figures.
And here is a chart showing the top donors.
Updated
On the Today programme this morning the crossbench peer Lady Meacher claimed that 30 Conservative MPs could defy the whip and vote in favour of giving a guarantee now that EU nationals living in the UK will be able to stay after Brexit. The Lords voted for this last night, and the government intends to reverse this when the bill returns to the Commons. But a rebellion by 30 Tories would lead to the government losing.
Meacher told the programme:
We understand there are 30 Tories who are saying they will vote to support this amendment. Obviously the Tory whips in the Commons are going to work extremely hard with all sorts of bribes to get these people to vote with the government.
I believe it can be won in the Commons on the basis of morality and principle and Tories are principled people in general.
However, Meacher’s claim seems unlikely. The Commons has already voted on this issue and the government won that vote by a majority of 42. One that occasion only three Conservatives (Kenneth Clarke, Tania Mathias and Andrew Tyrie) rebelled.
It is also worth pointing out that last night only seven Conservative peers defied the whip and voted with the opposition on this issue.
Updated
McDonnell sets out Labour's three priorities for the budget
Next week Philip Hammond will deliver his first proper budget. He has done an autumn statement, which has become a budget in all but name, but the statement next Wednesday will be the real thing. And today, in a pre-emptive strike, John McDonnell, the shadow chancellor, will give a speech setting out Labour’s three budget priorities.
In an interview with the Guardian McDonnell has made the case for more tax transparency, and proposed forcing all taxpayers who earn at least £1m a year to make their tax records public.
In the speech he will say Labour’s three priorities are (in Labour’s words):
Proper funding for the NHS and social care – it must be funded properly to ensure it ends the ‘state of emergency’ in our health service, and crisis in our social care system.
Secure living standards – protect working families from the rising cost of living and stagnant wages.
Protected public services and gender equality – ensure our public services are properly funded, and end the gender inequality in which 86% of all cuts have fallen on women.
Sarah Champion, the shadow secretary of state for women and equalities, gave more details about the third proposal in an interesting speech yesterday.
On health and social care, McDonnell will say:
The experience on the ground of patients, doctors, and nurses is of a treasured institution already drifting into the greatest crisis in its history.
Current plans from the government do not come anywhere close to addressing the scale of the crisis, even in an optimistic scenario.
It is essential that they now bring forward plans to close the funding gap if we do not want to lose our NHS.
Labour will never break from the fundamental principle that our National Health Service should be free at the point of use.
When my colleagues Heather Stewart and Anushka Asthana asked McDonnell in their interview how much extra funding the NHS and social care systems should be given, he replied: “What they need; what they need.”
I will be covering the speech in detail.
Here is the agenda for the day.
10.30am: The Commons home affairs committee takes evidence on immigration in Glasgow from witnesses including Alasdair Allan, the Scottish government minister for international development and Europe, and Ruth Steele, head of migration strategy at the Scottish government.
11am: John McDonnell gives his budget speech.
And in Northern Ireland people are voting in the assembly elections.
As usual, I will also be covering breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web. I plan to post a summary at lunchtime and another in the afternoon.
You can read all today’s Guardian politics stories here.
If you want to follow me or contact me on Twitter, I’m on @AndrewSparrow.
I try to monitor the comments BTL but normally I find it impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer direct questions, although sometimes I miss them or don’t have time. Alternatively you could post a question to me on Twitter.
Updated
