Finance (No. 2) Bill

Alex Chalk Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Mel Stride]

My hon. Friend is entirely right. The additional tax raised from the banks amounts to £9 billion between 2010 and the present time, and a further £25 billion is projected over the current forecast period. Far from taxing the banks less over time—as, no doubt, the Opposition will shortly have us believe we have done—we are securing more tax revenues than we did in the past.

[Alex Chalk (Cheltenham) (Con)]

As circumstances change, it is right for us to move from a bank levy to taxing bank profits. I am sure that, in due course, we shall hear a great hue and cry about how appalling it is to lose the bank levy. Is that not a little perplexing, given that Labour voted against its imposition in 2011?

[Mel Stride]

That is a valid point. I am waiting with some interest to hear what Opposition Front Benchers have to say about that point in particular. Even my shadow, the hon. Member for Bootle (Peter Dowd), is waiting expectantly to hear what he himself has to say, which is intriguing.

--- Later in debate ---

[Peter Dowd]

I will come to that in due course as well, if I may. I am beginning to think that my staff have been leaking my notes. I shall have to have words with them.

Last week, in true one nation mode, the right hon. and learned Member for Beaconsfield (Mr Grieve), among others, gave the Brexit Front Benchers every opportunity to acquiesce to his reasonable requests. In effect, he tried to give them a “get out of jail” card, but they could not take yes for an answer, and the remnants of the Government’s credibility went down the pan. There is a civil war going on within the Government, and this goes to the heart of the matter. The Government are throwing everything into the mix to try to distract us from the civil war that is going on in the Tory party.

[Alex Chalk]

I am grateful to the hon. Gentleman for talking about civil war. By contrast, in the interest of showing the solidarity among Labour Members, does he agree with the shadow Chancellor’s listing of his hobby in “Who’s Who?” as

“generally fermenting the overthrow of capitalism”?

[Peter Dowd]

I know that the hon. Gentleman was disappointed when he was unable to ask that question last week because the Whips wound up his ability to do so. The reality is that that is of absolutely no relevance to the matter in hand. It does not matter; it is a complete irrelevance. We are in danger of getting swamped by red herrings.

Finance (No. 2) Bill

Alex Chalk Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Helen Whately]

I appreciate the hon. Lady’s point, but I still think that she very much spoke about spending and not about the content of this Finance Bill.

Our job in this House is to make difficult decisions not just on what we spend money on but on how we raise that money—who we tax and what we tax, when we are reluctant to tax people and would much rather they had the money in their pockets to spend themselves. Our aim is to make things better for our constituents, young or old and those in between. It is not our job to make promises that cannot be kept, to write cheques that we cannot cash, and just to say things that sound nice, like massive amounts of spending, but might turn out to have nasty consequences like high unemployment. Labour Members may tell us differently, but spending that we cannot afford is not the moral high ground—it is the moral low ground.

This Finance Bill builds on the tough decisions of the Governments led by Conservative Prime Ministers over the past seven years who have reduced the deficit by 75%, while as of next year debt will fall as a share of GDP. Let us not throw that all away, as Labour Members would, with uncosted proposals and unquantified borrowing. As we heard earlier, they could not answer our questions on how much their borrowing would cost.

[Alex Chalk (Cheltenham) (Con)]

Twenty-three times.

[Helen Whately]

I think it was at least 25 times that Labour Members were asked, and still no answer other than “See if you can look it up for yourself.” Why it could not be said at the Dispatch Box, I do not know, but I fear that they are inevitably planning to pile up debt for future generations.

I welcome three things in particular. First, there is the Government’s commitment to help people on low wages. The continued increase in the personal allowance is taking people out of tax and enabling them to keep more of what they earn to spend as they need to. Alongside that, the minimum wage is rising, but at a rate that is manageable for businesses so that they do not have to lay people off in order to pay it. Policies in the Budget to increase the supply of houses should bring down rents, which, we acknowledge, have been going up far too fast. In this Bill, there is a stamp duty cut for first-time buyers to bring buying a home within reach of more families—a particular challenge for my constituency in the south-east. As Shepherd Neame brewery is the largest employer in my constituency, I should mention the very welcome freeze on beer duty, which will be good for it and good for beer drinkers across the country.

Secondly, I welcome the actions on tax avoidance and evasion to make sure that we collect more, if not all, of the tax owed. That builds on the Government’s track record in this area, as the Financial Secretary to the Treasury pointed out. Particularly in the context of my constituency, I welcome plans to cut down on online VAT evasion, with the advantages that gives to online businesses in paying VAT, because I want us to achieve a more level playing field between online businesses and those with premises such as our high street shops. Regarding the policy on landfill tax, in my area we have an ongoing problem with rogue land fillers who start off in line with the law and seem to end up not in line with it.

Thirdly, I welcome the incredibly important commitment to addressing our productivity challenge. This has been acknowledged by this Government many times—it is not suddenly news. In fact, the measures in the Budget and the Finance Bill are the product of a huge amount of work looking at how we can improve productivity—a long-running problem in this country. It is vital that we raise productivity because that means that people get more money for every hour that they work. That is the key to improving living standards and funding the public services that we want, particularly with NHS costs going up as people need and want more care. There are many factors underlying our productivity challenge. Skills are a challenge for us. There is an issue with companies investing in workers, and workers investing in themselves. It is, to some extent, a cultural challenge. One venture capital investor told me that the key difference that he notices between British and American start-ups is that it is common to see in the business plan of American start-ups investment in training for themselves as the founders of the business. He rarely sees that in British start-up companies. That is, to some extent, a cultural challenge; we do not see investing in ourselves and our skills as part of life.

We know that we lag behind other countries in the use of technology and investment in automation. One specific example is our robot density. In Japan, there are 305 robots per 10,000 employees. In Germany the figure is 301 and in the Netherlands it is 120, but in the UK it is just 71. That is just one example of where we lag behind in investment in technology and automation. We have to drive up investment in those areas, as the Finance Bill does. Such investment cannot just come from Government spending more; we have to stimulate private investment in those areas, as my hon. Friend the Member for North West Hampshire (Kit Malthouse) said eloquently. We have to mobilise private capital through incentives such as the EIS, which really works. I welcome the increases in that area, which will help to ensure that more businesses start and grow in this country, to provide the jobs and the higher wages that our constituents want.

There are no easy answers; what matters is getting the right answers. We need to help people on the lowest wages to keep more of what they earn, get a fair contribution from high earners and global businesses, build a more productive economy and invest in skills and technology. We want people to have higher wages in the jobs of the future so that they can live as they aspire to.

--- Later in debate ---

[Robert Courts (Witney) (Con)]

It is an honour to follow my hon. Friend the Member for Redditch (Rachel Maclean), whose impassioned speech took in so many detailed points with respect to the Opposition Front-Bench team. It was a forensic dissection of their economic policy from which they will struggle to recover for months and years.

This is a Budget and Finance Bill that the people of Witney and West Oxfordshire will warmly welcome. It is strategic and finely focused on the challenges that the country faces. Moreover, it operates within a constrained and careful financial climate. The Government understand the requirement for sensible fiscal policy. They understand that it is not possible simply to promise endless spending without any idea of how it will be paid for. They do not think it is simply a matter of appealing to certain groups by promising them whatever it is suggested might be wished for at the time. The Government take a sensible, practical attitude—one of financial probity and, one might even say, prudence, a concept that was once respected and beloved by the Labour party. For all those reasons, I welcome the Bill, which forensically and strategically identifies the challenges the country faces and puts in place methods and means by which to combat them.

I start my brief remarks by looking at the positives achieved by the Government and their predecessors since 2010. It is worth repeating this because it is an extraordinary record, and I hope very much that the Minister will repeat some of it, if he thinks these achievements are worthy of repeating. We have an extraordinary financial and economic record. The Government have achieved an economy that has grown by 15.8% since 2010. The deficit has been cut by two thirds and debt is scheduled to start to fall next year.

[Alex Chalk]

Does my hon. Friend, like me, welcome the fact that at the same time as the economy has been growing the tax system has been made more progressive so that the top 1% now pay 27% of the entire tax revenue—

[Stephen Kerr]

Twenty-eight per cent.

[Alex Chalk]

I am corrected: they pay 28%, which is a higher proportion than ever before.

[Robert Courts]

My hon. Friend makes an extremely good point that we have not heard often enough. We should absolutely keep making the point that although we hear talk of a progressive tax system from the Opposition, we see action from the Government. The 1% of highest earners now pay 28% of tax. That proportion is higher than it ever was under Labour. That is a record to be proud of. It is real progressive, practical politics from the Conservative Government.

Public Sector Pay

Alex Chalk Excerpts

Monday 4th December 2017 Westminster Hall

[Chris Stephens]

If the hon. Gentleman does not believe that the public sector pay cap was ideological, I really do fear for him and for his political analysis. Of course it was designed to be ideological. It was part of the cuts programme in the Budget. They kept boasting about the number—

[Alex Chalk (Cheltenham) (Con)]

Will the hon. Gentleman give way?

[Chris Stephens]

In a second; I will just finish answering that point before we have a jack-in-the-box routine. It is good we have finally woken Conservative Members up.

Of course it was ideological—the Government kept talking about the savings it would bring to the Exchequer by imposing a public sector pay cap. I will talk about the effects on the devolved Administrations later on, but it might be very well for Conservative Members to read the petition itself. It says that the UK Government should be providing additional funding to fund the ending of the public sector pay cap and not allow local authorities and devolved Administrations to have to pick up the tab.

[Alex Chalk]

It is well known that Scotland now has tax-raising powers. If the Scottish Government want to pay their public sector workers more, why do they not just go on and do it?

[Chris Stephens]

Well, I would have thought a Conservative would know that the Scottish Budget follows the UK Budget. On 14 December, the Scottish Government—[Interruption.] The hon. Member for Cheltenham (Alex Chalk) can shout people down and follow the lead of the Scottish Conservatives that we have seen in the last six months, but he obviously has not read the petition. We are debating a petition that says additional funding should be made available by the UK Government for this. As I said, a local authority, a health board or a devolved Administration should not be clearing up the mess of this Government, who continue to impose poor wages on public sector workers.

--- Later in debate ---

[Peter Dowd]

My hon. Friend is spot on. Yesterday I was at Tesco in Litherland collecting for food banks. I would like to thank every single one of those people—we have all been there—who gave a tin of soup, a tin of beans, some fruit, some cornflakes, washing liquid, all sorts of things for those people. Thanks to those people for the 1.1 million food parcels going through.

[Alex Chalk]

My constituents at GCHQ believe in their national security mission and are immensely dedicated and skilful public servants, but those skills are much sought after in the private sector too. As the Government move away from the 1% national pay cap, does the hon. Gentleman agree that the need to address pressures on recruitment and retention in this vital national security sector should be borne in mind when future improved pay rates are set?

[Peter Dowd]

Any public sector worker, whether somebody in the military, a nurse, a refuse worker, a teacher or social worker, the five-odd million of them all deserve the pay rise. If the hon. Member’s constituents in GCHQ need a pay rise, I will support them—will he? I am not sure he will.

Meanwhile, nurses, firefighters and border guards will face losing more than £2,500. The cap is not working. There is a situation where households will have one partner working in the public sector and somebody else in the private sector. It is typical: divide the public sector from the private sector. Homes do not work like that. As I said, if one person is working in the public and another in the private sector, should one subsidise the other? Should the wife subsidise the husband? Should the brother subsidise the sister? No. It is absolutely iniquitous and it should stop now. The Government’s continued support of the cap is economically nonsensical. The party of economic confidence, of business—the nonsensical party as far as I am concerned.

Budget Resolutions

Alex Chalk Excerpts

Wednesday 22nd November 2017 Commons Chamber

[Alex Chalk (Cheltenham) (Con)]

I have just looked at table 1.2 on page 17 of the Red Book, to which the hon. Gentleman referred. It shows the deficit going down from £58.3 billion to £16.8 billion, but the figures he referred to—£8.4 billion going up to £20.6 billion—relate to the receipts forecast. They do not indicate a reduction in receipts as a result of Brexit.

[Mr Leslie]

I am afraid they do show a reduction in receipts. The hon. Gentleman will see in the end column that the budget deficit for 2021 was forecast in the spring to be £16 billion, but today’s Budget now predicts that it will be £30 billion. The level of borrowing is predicted to go up significantly, largely driven by the £20 billion fall in receipts. The figures are quite clear.

The Government could choose not to take resources out of public services now. They could add to the borrowing, but that would have an impact due to extra debt interest. My suspicion, certainly with this Government, is that there will be more fiscal tightening and more austerity in the tail end of the years ahead. When we add up the money being wasted on Brexit preparations and the divorce bill, and take into account the fall in receipts because of low productivity and lower growth forecasts, which in turn are being driven by the dark cloud of Brexit, we realise that this is the real story behind the Budget. However, this need not be the fate of this country if we take certain decisions. I say to hon. Members on both sides of the House: let us not be responsible for this level of austerity in the future. We can choose a different fate, and we need to ensure that we intervene and retain our membership of the single market and customs union.

Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 24th October 2017 Commons Chamber

[Stephen Barclay]

The investment going to the west midlands as part of the midlands engine and through the devolution deal is part of wider investment—the £23 billion of investment that has been announced through the national productivity investment fund. The hon. Gentleman will be aware of the Secretary of State for Transport’s announcement on rail spending between 2019 and 2024, which includes the £24 billion announced just last week.

[Alex Chalk (Cheltenham) (Con)]

12. What recent progress he has made on reducing the level of corporate tax evasion.

[The Financial Secretary to the Treasury (Mel Stride)]

Since 2010, HMRC has secured more than £53 billion from big businesses alone in additional tax revenue from tackling tax evasion, avoidance and non-compliance, and we have made it an offence for a corporate to fail to prevent the facilitation of tax evasion by its employees. Corporation tax revenues were £55.3 billion in 2016-17, their highest level on record.

[Alex Chalk]

Keeping up the pressure on multinationals to pay their fair share of tax is vital. Will my right hon. Friend join me in welcoming the additional £160 billion in tax revenue collected by HMRC since 2010 as a result of tackling avoidance and evasion, thus making the UK’s tax gap one of the lowest in the world?

[Mel Stride]

My hon. Friend is absolutely right—we have collected £160 billion since 2010, far more than was raised during the 13 years under the Labour party. The latest figures show that our tax gap overall is now at 6.5%, better than any year under Labour, where in 2005-06, for example, it was as high as 8.3%.

Summer Adjournment

Alex Chalk Excerpts

Thursday 20th July 2017 Commons Chamber

[Alex Chalk (Cheltenham) (Con)]

May I, on behalf of all the House, start by warmly congratulating my hon. Friend the Member for Torbay (Kevin Foster) on his wedding and wish him a very happy honeymoon, whenever that takes place?

I thank you, Mr Deputy Speaker, for this opportunity to raise a few issues that can be crowded out in the ordinary course of busy parliamentary business. In doing so, I will unapologetically focus on Cheltenham, because one thing I have learned over the last two years is that, for all the cynicism about our democratic process, Parliament does, indeed, remain the forum in which we can seek effective redress for our constituents and speak truth to power. We saw that in action with the Government’s welcome decision last week to allocate more frontline funding for our secondary schools, and my hon. Friend the Member for Gloucester (Richard Graham) and I saw it in the last Parliament, with the passage of legislation to extend the maximum sentence for stalking, following the terrible ordeal of a Cheltenham GP.

I would like to take the opportunity at the outset to congratulate all the students who are receiving awards at the National Star College leavers award ceremony in Gloucestershire. The National Star College, for those who do not know it, is an independent specialist further education college for people with physical disabilities, acquired brain injuries and associated learning difficulties. It is an extraordinary place; no one who visits it can fail to be moved by what is being achieved by staff and students alike.

What I want to talk about specifically today is Cheltenham General Hospital. We in Cheltenham value our hospital greatly. Members might think that that is a truism, but it is particularly the case in a town of 115,000 people. Only this morning, I received a message from a constituent, who referred to Cheltenham General, stating:

“My wife has been admitted there four times in the past two years—three times for surgery—and on each occasion—from the first visit of the paramedics to the A&E staff and on the various wards she has received the most wonderful attention—professional, kind, caring and patient.”

What a wonderful tribute, and it is not unusual. It is echoed by the findings of the recent Care Quality Commission report. Inspectors describe staff as “committed, caring and compassionate”. They also observed “exceptional teamwork”, particularly when a department was under pressure.

However, there is an issue about our night-time A&E. In 2013, Cheltenham General’s A&E service was downgraded. Blue light services were diverted to Gloucestershire Royal Hospital. Although night-time A&E notionally remained, and indeed remains, open for GP referrals and walk-ins, the reality is that a major service change took place. The emergency nurse practitioners, who do a magnificent job of holding the fort, do not have doctor support to assist them. That is important, because in the CQC report I referred to a few moments ago, medical and nursing staff raised concerns with inspectors about medical cover at night. To their great credit, consultants regularly work longer hours to support their junior colleagues. The CQC was not convinced that that was sustainable, and nor am I. That is notwithstanding the fact that the care that has been delivered is co-ordinated and multi-discipline.

What needs to be done? There is a clear problem with the recruitment of middle-grade doctors in A&E not just in Cheltenham but across the piece—the trust has made that clear, and the evidence bears it out. That is why I have called for a debate on the issue in this place, and I take the opportunity to raise it now.

Improving incentives for middle-grade A&E doctors is a crucial part of the long-term solution. In the short term, I welcome the fact that the trust is looking closely at providing an urgent care centre at Cheltenham General Hospital—something that was reported in the local paper, the Gloucestershire Echo, in March this year. Only today, we heard my hon. Friend the Member for Corby (Tom Pursglove) extol the virtues of urgent care centres, because they provide urgent care, as the name might suggest, and, crucially, divert patients from accident and emergency—something we all have an interest in. An urgent care centre would see emergency nurse practitioners supported by GPs, which I welcome. However, that will take place only if we as a country increase the pipeline of GPs in our surgeries, and that means addressing the issue of rising GP indemnity—or insurance—premiums, which I have referred to previously.

The key point is that the people of Cheltenham want Cheltenham’s A&E to be preserved and enhanced. I have made that point in the past and I will continue to make it. Some have raised with me a concern about whether the downgrading of night-time A&E was simply the thin end of the wedge that would presage the end of A&E in Cheltenham. After my election in 2015, I met representatives of the trust to make precisely that point and to raise precisely that concern. I was given a clear assurance regarding A&E’s future; there was no suggestion of its demise. That was also the case in the following year, 2016, when I met the then chief executive, who described rumours of A&E closing as “blatant scaremongering” and confirmed:

“What we said to you on 5 June 2015 still stands and the board has not changed its position on A&E at Cheltenham General.”

I welcome that robust commitment to A&E. It must remain in place. Crucially, it must remain in place notwithstanding the recent finding of financial mismanagement at the trust—which, I should stress, predates the appointment of the current chief executive and chairman, who are doing an excellent job in uncovering these problems.

Retaining and enhancing A&E at Cheltenham General must remain a service priority. I say that because the idea that a resident in Battledown, Oakley, Charlton Kings or Charlton Park to the east of Cheltenham can readily get to A&E at Gloucestershire Royal hospital, having to travel all the way down the Golden Valley bypass and the A40 in a big traffic jam, is for the birds. Those of us who live there know that that is not a realistic or optimal solution.

Finally, I want to pay tribute to two constituents of mine, Lynda and Philip Hodder. Mr and Mrs Hodder are the parents-in-law of a young Australian woman who, in June of this year, was, very sadly, killed in Borough Market in the terrorist atrocities. The young woman who was killed was referred to by some as “the angel of London Bridge” because of the way that she sought to aid others who were coming under attack. The dignity, fortitude and courage shown by my constituents has been enormously humbling. It is what has fortified me in making the representations that I have made about how we go about addressing the issue of those who are suspected and even convicted of terrorist offences in this country.

The point that my constituents have made to me, with a power that only people in that position can, is that while of course in a free society we rightly take account of the human rights of all people who come into contact with our criminal justice system—and yes, that must mean people who come into contact with it for terrorism offences—let us never forget that the most fundamental human right of all is the right to life of people who are innocent, decent, hard-working, law-abiding members of our community doing nothing more than going about their business, whether at Borough Market or anywhere else. Their rights must always be put first.

It is a huge privilege to be able to raise the concerns of my constituents in this great place, and to seek redress on their behalf. Thank you, Mr Deputy Speaker, for giving me the opportunity to do so. I wish you and all Members of this House a very happy and restful recess.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I call Nigel Evans.

Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 18th July 2017 Commons Chamber

[Stephen Barclay]

We can see the effects, were we to follow the hon. Lady’s policy, by looking at youth unemployment rates elsewhere in Europe. In Greece it is 45.9%, and even in France it is 22%. The best way of addressing poverty is by keeping young people in work.

[Alex Chalk (Cheltenham) (Con)]

18. Government investment in Cheltenham’s cyber-accelerator since 2015 is now yielding results, with numerous cyber start-ups benefiting from local mentoring from experts at GCHQ. Does my hon. Friend agree that mobilising the UK’s sovereign expertise in areas such as cyber boosts jobs for young people and opportunity in places such as Cheltenham?

[The Exchequer Secretary to the Treasury (Andrew Jones)]

The GCHQ cyber-accelerator in Cheltenham is part of the Government’s £1.9 billion cyber-security strategy. It allows business start-ups to gain access to GCHQ’s world-class personnel and expertise, and the accelerator helps these businesses to expand, contributing to jobs and opportunities, including in Cheltenham, and it makes the UK a safer place online. I know that my hon. Friend has worked very hard on this for a considerable period of time. He makes an important point as he speaks up for his constituency, and how it is leading in the UK and across the world.

Balancing the Public Finances

Alex Chalk Excerpts

Tuesday 11th July 2017 Westminster Hall

[Chris Evans (Islwyn) (Lab/Co-op)]

I pay tribute to the right hon. Member for Forest of Dean (Mr Harper), who made an interesting and succinct speech, as he always does. He has come to be known in this place as a deep thinker about all matters economic, and I hope that one day he will return to the Front Bench, from which he is sorely missed.

I feel somewhat like Custer at the battle of the Little Bighorn, as the Comanches come running towards me. I apologise to those Tories present, because I will pour cold water on some of the more political points raised by the right hon. Member for Forest of Dean. Over the past seven years the Government have been good at one thing—patting themselves on the back and congratulating themselves on what a great job they are doing with the economy. Even though so many families are more pessimistic than ever about the future, the Government still trade on the myth that they are overseeing a strong and robust economy. When they were elected in 2010, they were given a mandate alongside the Liberal Democrats to bring about change. They allowed people—intentionally, I believe—to believe that the deficit and the national debt were one and the same thing, and told the British people in 2010 that they would pay off the debt and bring the budget into surplus by 2015. It is now 2017, and they have failed.

Despite its being enshrined in legislation in October 2015, the Government have now abandoned their plan to achieve a budget surplus by 2019-20. The Chancellor of the Exchequer has said that the previous commitment will be replaced by a vague pledge to deliver a budget surplus as early as possible in the next Parliament. Since we have had a general election since that statement was made in November 2016, I imagine that that could happen in the next five years. According to the Institute for Fiscal Studies, even reaching that is likely to be difficult. The deficit this year is forecast by the Office for Budget Responsibility to be £68.2 billion, or 3.5% of national income. That is high by historical standards. Over 60 years, from 1948 until the eve of the financial crash and associated recession, average UK Government borrowing was 1.9% of national income.

[Alex Chalk (Cheltenham) (Con)]

If the hon. Gentleman is so concerned about closing the deficit, why has the Labour party, at every opportunity, thwarted every attempt to keep it under control?

[Chris Evans]

I admire the hon. Gentleman, as he knows; I know his constituency well. I believe that we said there was a rush to pay off the deficit; the former Prime Minister and the previous Chancellor started an unnecessary rush to pay off the debt. We said it needed to be slower. We were concerned about high unemployment and a double-dip recession. But for monetary policy, that might have happened.

After six years of austerity, the deficit this year will be higher than it was for 80% of the time in the 60 years before the financial crash, while debt is now at its highest level as a proportion of national income since 1965-66. Is it any wonder that when the Tories tell the electorate “Trust us to pay off the deficit”, voters respond by taking their majority away? The Conservative party just do not get it. The electorate told them time and again that they wanted change, but they were given business as usual. Nearly 10 years after the financial crash of 2008, its legacy still weighs heavy on confidence and growth. By its very nature, it rocked financial institutions in this country. Suddenly, phrases such as “safe as houses” or “money in the bank” became laughable clichés. As the Labour Government rushed to bail out the banks and bring about a stimulus that was one of the largest in peace time, the Tories nodded their approval. It was not until much later that, for political purposes, they brought words such as “deficit denial” or “the age of austerity” into the political lexicon.

Sustained austerity has in the main been bad for the British economy. As the deficit fell from 10% to 3.5%, around a percentage point has been reduced from demand each year. The labour market has been unable to return productivity growth to anything resembling pre-crash levels. In June, the British Chambers of Commerce released its second quarterly economic forecast for this year, and the predictions do not make good reading. It forecast that, for the next few years, economic growth would underperform its historical average, falling to 1.3% next year and rising to only 1.5% in 2019. It also predicted that inflation would rise to a five-year high of 3.4% towards the end of the year. Interest rates are also expected to rise by 0.5% in the first quartile of 2018—much earlier than initially predicted. At the same time, there is a tax gap of £36 billion between expected and actual receipts in 2016. We can talk about tinkering with tax levels, but it means very little if we do not collect taxes effectively in the first place.

The Government have still not given any clarity on their plans for the post-Brexit world. The Government’s main tool to address inherent weakness in our economy has been monetary policy. Constraints on how low interest rates could go meant that the Bank of England had to buy gilts—so-called quantitative easing. That move, together with the cut in interest rates to their lowest possible level, has probably kept the lid on high unemployment, but it is only papering over the cracks. Listening to some of the speeches about how sunny the economic outlook is over the years during my time in the House, it has to be asked why people are not cracking open the champagne and singing, “Happy days are here again”? The reason is simple; people feel more anxious than ever, they view innovative technology with suspicion and they fear that jobs will be automated or lost. GDP can be a measure of the health of the Government’s spending, but it can never be a measure of people’s happiness, concerns, or worries.

Productivity has not recovered, and as a consequence, real wages are below what they were a decade ago—something no one alive has ever experienced before. The facts are stark. There is a 16% shortfall in the UK’s productive capacity. Monetary policy can only stabilise demand around the economy’s potential, it cannot increase it. Boosting long-term prosperity is firmly the job of the Government’s structural or supply-side policies—something that has been sorely lacking from the Tories over the past seven years.

Government policies influence investment in education and skills, capacity for research and development, the regulatory environment in which business operates, the flexibility of the labour market and—above all, in the light of Brexit—its openness to trade and investment. In the Queen’s Speech, the Prime Minister said that her Government would work to attract investment in infrastructure, so as to support economic growth. She also spoke of plans to spread prosperity and opportunity across the country.

--- Later in debate ---

[Peter Dowd]

The reality is that that pay cap has now been institutionalised. It has been there for virtually a decade and it will continue. The Government have also chosen to underfund the NHS and cut £4.6 billion from social care, and they now threaten huge cuts for schools. However, despite those huge and deeply unfair budget cuts to public services, the Government have been able to find £70 billion of tax cuts for those who need them least of all.

Throughout the election campaign, which I might add is a happy memory, we were told that there was no magic money tree that could be used to solve the nation’s financial problems. If anything was magic about it, it was that it turned into a cherry tree, and the Prime Minister proceeded to pick the cherries and hand at least £1 billion-worth to the Democratic Unionist party to keep her in No. 10.

[Alex Chalk]

Under the previous Labour Government, low-paid workers were required to pay tax on earnings above about £6,500. The position now is that they do not pay it on earnings up to about £11,500. Is it not a positive thing to take low-paid people out of tax? Does the hon. Gentleman not welcome that?

[Peter Dowd]

Yes, I welcome anything that helps the low-paid, but that is not the only element in someone’s life chances or in people’s prosperity. The reality is that there was a mendacity in the deal with the DUP that will take a long time to be wiped clean.

Similarly, the Chancellor, in the spring Budget, was able to find a temporary £2 billion to backfill the cuts to social care and then further money to do a U-turn on raising national insurance contributions for the self-employed. There was a bit of cherry-picking there as well. It is clear that the Tories can find money when it is needed to oil the palms of certain people in order to assist the Prime Minister in retaining the tenancy of No. 10, and it is all dressed up as being in the national interest. That is not real and it is not acceptable.

When it comes to the long-term health of our economy and a wage rise for dedicated nurses and teachers, there is no money. They will have to continue with the pay they have, year in, year out. The truth is that austerity is not a necessity, but has been used by the Government to fulfil the ideological aim of shrinking the state beyond comprehension and privatising public services. That is a choice that the Government made. They should simply acknowledge that.

There are countless examples of countries taking a different approach. One hon. Member referred to Greece, and another referred to Portugal. The Government of Portugal, our oldest ally, have reduced the country’s deficit faster than us, but simultaneously they have restored state pensions, wages and working hours to pre-bail-out levels, and they managed that without crippling austerity. When we use examples, let us have a spread of international examples.

The well-off have done much better in austerity Britain. Meanwhile, those in the public sector have not seen their wages increase. The richest 100 families in the UK have seen their wealth increase by £55.5 billion. The Public Accounts Committee has reported that, while income tax for all taxpayers has risen by 9% under this Government, income tax receipts from high-net-worth individuals have fallen by 20% since 2009-10. That is typical of this Government’s approach: those who had nothing to do with the global financial crisis—the bulk of low and middle-income households—are made to pay the price of austerity through slashed services, increased taxes and falling wages, while the richest in society and big corporations get greater tax benefits. The old chestnut that we are all in this together is still trotted out.

--- Later in debate ---

[The Financial Secretary to the Treasury (Mel Stride)]

It is a pleasure to speak under your chairmanship, Ms Ryan. I thank my right hon. Friend the Member for Forest of Dean (Mr Harper) for securing this extremely important debate and for the impassioned and meticulous way—we have grown used to that in his case—in which he dealt with some of the most important issues that our nation faces.

Many hon. Members have this morning gone back to 2010, as is right and proper, and set the debate in that context. Let us remind ourselves that in 2010 the deficit was 9.9% of GDP. To put that in context, the last time the Labour party put us into very deep and troublesome economic waters was in 1976, when the figure was somewhat lower but still led to the then Chancellor, Denis Healey, having to go cap in hand to the International Monetary Fund because this country was bust. That is the perilous background.

Over the past seven years we have made extremely good progress. We have reduced the deficit by three quarters and, according to OBR forecasts, are probably about two years ahead in terms of the interim targets that we have set and that have been discussed in this debate. One of the most spiriting aspects of the debate on the Government side of the Chamber has been the focus that was rightly placed on our huge economic achievements. Let us not forget that employment is at a record high, there are more women in employment now than at any other time in our history, unemployment is at its lowest level since the mid-1970s and, as many Members have rightly pointed out, we have sustained levels of economic growth that other members of the G7 would be proud of and wish to achieve.

However, as many Members have said, we cannot duck the fact that our level of indebtedness, which will peak at the end of this financial year at 89% of GDP, is too high. It is unsustainable. It is not just a burden on future generations, as has been pointed out, but means that we are vulnerable to external economic shocks. We need to get that level down.

[Alex Chalk]

Does my right hon. Friend agree that it is a sobering fact that in 2007 Greece had a debt to GDP ratio of 100%? The fact that ours is close to 90% means that we have to take this matter very seriously for our national security and that of future generations.

[Mel Stride]

My hon. Friend is absolutely right. If we do not start to see the figure coming down, it can only bode ill for the future. That is why we are so determined to get it down.

Turning to the contributions that have been made, my right hon. Friend the Member for Forest of Dean made important points about our record on growth and jobs, about the threat of interest rate hikes if we fail to get on top of our debt and about keeping taxes low, particularly for our businesses. Many Members have made the point that as we have reduced corporation taxes the actual tax yield has increased, which rather suggests that the Opposition’s policy of raising them would be counterproductive in every sense. He made very important points about public sector pay. Let us not forget that this is not just about controlling public sector pay and spending, but about preserving jobs. The OBR reckons that by sticking to our plans we are protecting about 200,000 jobs in the public sector. When we talk about the 10,000-plus more nurses and 10,000-plus more doctors in the NHS, one of the reasons we have them is that we have given ourselves the room to afford them.

If I may, I will turn now to the hon. Member for Islwyn (Chris Evans), who made an impassioned attempt to take on the powerful arguments from the Government side. He is somewhat outnumbered. He suggested that he was like Lieutenant Custer. Of course, at Custer’s last stand, which was in 1876 at the battle of the Little Bighorn, unfortunately Custer was annihilated: he lost five companies, two of his brothers, a nephew and a brother-in-law to boot. It is remarkable that the hon. Gentleman is still standing after the onslaught from the hordes on our side of the Chamber today.

The hon. Gentleman made one point about the tax gap. He bemoaned the fact that, at £36 billion, it is higher than we would like it to be. That is absolutely true, but what he did not mention is that it represents 6.5% of the tax that we raise and is at the lowest level for very many years. As another hon. Member pointed out, since 2010 we have had about 55 new tax avoidance measures that in total have raised no less than £140 billion, which is three times the size of the deficit we face.

My hon. Friend the Member for Witney (Robert Courts) delivered the essential truth that borrowing must be repaid and the intergenerational unfairness of failing to do so. He made important points about the cost of servicing our debt and that if we lose the confidence of financial markets, those costs will rocket, to our detriment. The hon. Member for Glasgow East (David Linden) referred to Brexit as an ideological obsession, but I say no, actually: it is respecting the democratic will of the people. Although I, probably like him, was on the other side of that argument.

My hon. Friend the Member for Redditch (Rachel Maclean) made some very important points. The Opposition always say that we are looking after the wealthiest in society, but the truth is a long way from that. Some 27% of tax is paid by the wealthiest 1% in this country. A statistic that could also have been used is that the wealthiest 3,000 people in our country pay as much tax as the poorest 9 million. We are doing a huge amount on the issue of income equality.

My hon. Friend the Member for Horsham (Jeremy Quin) made an impassioned speech in which he referred to the importance of keeping interest rates low by keeping on top of the debt. My hon. Friend the Member for South Suffolk (James Cartlidge) finished his contribution on the Queen’s Speech debate today, and I am glad that he did because he made some important points, particularly on productivity, and quite rightly referred to our £23 billion productivity investment fund.

My hon. Friend the Member for Chichester (Gillian Keegan) gave a powerful speech and referred, I think, to the shadow Secretary of State for Education’s performance on “The Andrew Marr Show” on Sunday, when the hon. Member for Ashton-under-Lyne (Angela Rayner) referred to Labour having a large abacus. I have to say that my jaw hit the Stride sofa when I heard her say that it would cost about £100 billion to wipe out student debt and that this was something they were looking at.