Exiting the EU: Costs

Desmond Swayne Excerpts

Wednesday 29th November 2017 Commons Chamber

[Elizabeth Truss]

The hon. Gentleman will be aware that considerable work is taking place across Government, but it would be wrong to cut across our negotiators in the deal they are seeking to strike. It is in our country’s interests to reach the point where we are talking about our long-term economic relationship with the European Union.

[Sir Desmond Swayne (New Forest West) (Con)]

My right hon. Friend should not pay more than we owe, but she should be confident that, whatever that is, it is a bargain against the cost of staying in.

[Elizabeth Truss]

My right hon. Friend makes a good point. Were we to stay in, the costs would be considerably higher than any amount we are talking about as part of our negotiations.

Budget Resolutions

Desmond Swayne Excerpts

Thursday 23rd November 2017 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

I hope to find an early opportunity to speak out on what is the right level of defence spending to meet the threats that our country faces, and to do so more freely than the constraints of government allowed, but today I want to focus on the Budget before us. It is the first Budget of this Brexit Parliament, and I warmly welcome it.

It is extraordinary that we still have no answers from Labour Front Benchers on the amount of additional borrowing they would undergo, or indeed, 24 hours later, on the amount of additional interest that they are prepared to rack up. Those are legitimate questions. This is not trite journalism. A shadow Chancellor should be able to tell the House exactly how much more he would be spending and borrowing.

I particularly welcome the additional money for the national health service and the measures for long-term investment in our infrastructure, but that long-term investment will need to be accompanied by other and deeper structural reforms. How can we be encouraged to save again rather than to spend on credit? How can we reverse some of the more pernicious side-effects of quantitative easing, which seem to benefit those who already hold significant assets?

The fall in unemployment has probably been the greatest single achievement since 2010. Unemployment has fallen not because of one single policy, but because of the cumulative reductions in taxation and regulation that have taken place over the last seven years, almost every one of which was opposed by Labour Members. The 5 million small businesses and nearly 5 million self-employed people are the real wealth creators. They are the people who work every hour that God sends, and who invest—and risk—their own money to create, in turn, the tax revenue that funds our public services. I hope that, over the current Parliament, we will continue to cut the form-filling and let them keep more of what they earn.

There are four areas in which I hope we can make even more progress. The first is low-paid work. No Government have done more for the low-paid than this Government, who have introduced the national living wage and taken so many more people out of tax altogether, but we need to keep going. Is it logical to go on raising the personal allowance but not the national insurance threshold? A full-time worker on the national living wage pays almost as much in national insurance as in income tax. Those who are working part-time—for example, 25 hours a week—and earning between £8,000 and £11,000 a year miss out as we raise the thresholds. I hope that Ministers will look at that again.

Secondly, I particularly welcome the steps to tax the global digital companies more effectively.

[Sir Desmond Swayne (New Forest West) (Con)]

Will my right hon. Friend acknowledge the leadership of the Government of which he was a part in driving that particular agenda internationally?

[Sir Michael Fallon]

I certainly recognise that, and it is important for these matters to be approached internationally.

Our constituents do, of course, benefit from the greater convenience and efficiency that digital retailers provide, but it cannot be right for our high streets, small shops and local businesses to bear all the pain of local rates while giants such as Amazon pay rates on a handful of warehouses. Their staff, too—Amazon staff, Google staff and Facebook staff—need well-funded schools, good local services and a proper NHS. It is right that they should pay their proper share of local and national taxes, and I applaud the steps that the Chancellor is taking down that path. One nation should mean one economy, for large and small businesses alike.

Thirdly, if we want to be one economy, more of our people should have a stake in it. In the year when Margaret Thatcher left office, 11 million adults in our country held shares. Today, although the population is significantly larger, only 8 million do so: a quarter fewer. When I privatised Royal Mail, I offered free shares to each of its 150,000 employees. Despite union advice—or possibly because of union advice—99% of the employees took up the offer. We deliberately skewed it towards small investors, and, as a result, 20% of Royal Mail is now owned by its staff and by small investors.

That is what we should be doing with all our remaining shareholdings, including the banks and the new social enterprises, and we should go further. Employee-owned companies are more productive and more profitable. Is not higher productivity the golden fleece for which Ministers keep searching? We need not just one John Lewis Partnership, but 1,000 John Lewis Partnerships across our economy. Existing schemes such as Sharesave and share incentive plans are not increasing the number of share ownership companies.

Budget Resolutions

Desmond Swayne Excerpts

Wednesday 22nd November 2017 Commons Chamber

[Ms Eagle]

That is absolutely right. Merseyside police will have suffered cuts of £183 million by 2021 and is 1,000 officers and 700 support staff down. It is little wonder that crime levels are now the highest in a decade. Madam Deputy Speaker, I could go on, but I think you get the point. Austerity has exacted a brutal cost from the most vulnerable.

This Budget takes place against a backdrop of unparalleled uncertainty and danger for our country because this Government are paralysed by their own disagreements over Brexit. They are unable to resolve their own internal contradictions around the Cabinet table, let alone chart the path to a successful conclusion of the article 50 negotiations in Brussels. We have a Prime Minister who puts the interests of her party above those of her country, and half of the Tory party would rather that we crashed out of the EU without any deal than stay in a moment longer.

[Sir Desmond Swayne (New Forest West) (Con)]

Does the hon. Lady not acknowledge that preparing for no deal is an essential ingredient of securing a good deal? Has she ever bought a second-hand car? Did she go in and tell the salesman that she had to leave with a car and yet expect a discount?

[Ms Eagle]

I would certainly buy a second-hand car from the right hon. Gentleman.

The Chancellor, who is regarded with the utmost suspicion by the Brextremists on his own side, was warned at the weekend that he had to produce a game-changer of a Budget or his career would be over. They want rid of him because they do not think he is Eurosceptic enough. The Prime Minister has already shown her faith in him by making him disappear for the entire recent general election campaign. After his outing on the Sunday politics shows at the weekend, when he claimed that no one in Britain was unemployed, we can see what they are worried about. It is no wonder that he declined to get in the driverless car that they were going to put him in for a pre-Budget high-tech photo-op.

The Conservative party is responsible for the slowest recovery from recession since the Napoleonic wars and the largest squeeze on living standards since Victorian times, and it is presiding over record levels of wealth inequality. That is not a record to be proud of. The Budget has done nothing to address those abject and fundamental failures. Since the crash, GDP per head has increased by just 2.4%. During the 1990s recession, the comparable figure was 21%. Meanwhile, driven by the significant decline in the value of the pound after the referendum vote, UK inflation rose to 3% in September, which is double the rate in the eurozone. Growth in the UK is anaemic by historical trends and is on a downwards path, as shown by the OBR today.

In real terms, wages are lower now than they were in 2010, and the living standards squeeze has returned as prices are outstripping wage increases once more. The public sector has seen a decade of falling wages, which is causing real hardship. The TUC has calculated that, as a result of the public sector pay freeze, paramedics and NHS dieticians are £3,800 a year worse off since 2010, firefighters are £2,900 a year worse off, and Crown prosecutors in our courts are £4,400 a year worse off. The TUC’s polling shows that 15% of staff in our public services have skipped meals in order to make ends meet.

Meanwhile, in Tory Britain, workers are not only struggling with stagnant or falling pay levels; they are also experiencing a huge increase in job insecurity. One in 10 of the workforce—3.2 million people—now face insecurity at work, including: 800,000 on zero-hours contracts; 760,000 on non-standard forms of temporary working, including agency and casual work; and 1.7 million in low-paid self-employment, earning below the Government’s modest so-called living wage.

It is little wonder, then, that tax receipts are falling as employers take advantage of tax structures that incentivise less secure forms of employment. It is little wonder that Bank of England figures show that household levels of unsecured consumer debt are rising at their fastest rate since the global financial crash—up by over 10% last year and now higher than they were in 2008. The Budget contained nothing to address any of those important concerns.

However, there are a few people who are doing really well out of the current system. Pay ratios between FTSE 100 CEOs and the rest continue to widen. They are now paid a staggering 160 times more than the average worker. That means they made more money by the first Wednesday of 2017 than the average worker could earn all year. Some 5% of households now own 40% of all the wealth in Britain. Is that really the kind of society we wish to create?

Boosting productivity is the key to economic growth and pay increases, yet over the past decade the UK’s productivity performance has been the worst of all G7 countries. Since 2010 the Government’s failure to invest in infrastructure and in skills has seen our productivity flatlining so that we are now 15% lower than the G7 average. So bad has been this Government’s record on productivity that the OBR has revised down its assumptions about future growth from productivity gains. The UK has the lowest level of investment in the G7. Driven by the Government’s failure to invest, business investment has grown slowly over the past 10 years—by only 5%. That is nowhere near enough to retool our economy and make it fit for the future. Addressing that problem must be at the heart of any Government’s industrial strategy.

This Budget might have been the time when the Chancellor decided to tackle the regional disparity in economic performance, when he took the opportunity to invest in our infrastructure and skills base, and when he finally gave Britain the pay rise it so badly needs. But he did not. This is a Budget of missed opportunities. Once more there is nothing on social care. It is a bits and pieces Budget that fails to rise to the huge challenges that this country faces.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am pleased to follow the hon. Member for Wallasey (Ms Eagle), but her speech shows that the Labour party has learnt nothing about how to run a successful modern economy. The Chancellor referred in his speech to the Labour party increasing our national debt by £500 billion. The easiest thing in the world is to spend more and borrow more, which is precisely the situation the Labour party left us in back in 2010, which is why we have had to have austerity Budgets over the past few years.

Indeed, I recently went to a lunch and met a director of one of our major banks—[Interruption.] Opposition Members ought to listen to this. He said, “Our focus of attention has changed from Brexit. We will cope with whatever politicians throw at us with Brexit, but our focus of attention has changed to political risk: the risk of a Labour Government ruining the economy.”

In contrast, what we saw today was a prudent Budget from my right hon. Friend the Chancellor. As my right hon. Friend the Member for Wokingham (John Redwood) has said, it was a fiscal loosening Budget, but at the same time we have been able to stabilise our national debt and put more money into our public services, particularly the NHS and education, and into infrastructure, and we have been able to deal with some of the tax evasion. I serve on the Public Accounts Committee, so I was particularly pleased to see that its recommendations on VAT fraud have been taken up. I pay tribute to my hon. Friends the Members for Dover (Charlie Elphicke) and for Daventry (Chris Heaton-Harris) for their hard work on that.

The recent Government White Paper on housing said that the UK needs to build 250,000 new houses a year. It certainly does, because if one asks the teachers or nurses in the Cotswolds where they live, nine times out of 10 they will say that they do not live in the Cotswolds, and that also applies in other areas of high house prices. Anything that can be done to stabilise the housing market and produce more housing for lower-paid people must be a good thing.

[Sir Desmond Swayne]

In my parliamentary division, the difficulty is that private builders will not address that proportion of the market where the need is greatest: the bottom and the mid-market. Equally, such is the increase in supply that is required to drive down the price, it is questionable as to whether it would be in the interests of independent builders to secure such a reduction in price. The greatest increase in the market was achieved through public sector building; does my hon. Friend see that as a possibility?

[Geoffrey Clifton-Brown]

The need to build more houses is about providing houses for those who cannot afford to buy and get on the housing ladder. There are lots of ways to do that in the affordable housing sector, such as affordable rent-to-buy, staircasing and many other methods. That is what we need to pay attention to. I shall say something about the planning system in a moment.

The structure of house ownership has changed in the past 10 years, in which the number of under-45s who own their own homes has dropped by a million. That is something we need to address, so I find it extraordinary that Labour Members should be carping about the welcome announcement by my right hon. Friend the Chancellor of the stamp duty exemption for first-time buyers for homes under £300,000, with a £500,000 limit in London. They carp about it as if it is somehow going to increase the market for first-time buyers, but the cut in stamp duty is likely to way exceed any consequential increase in house prices, so we should welcome it.

We should also welcome the measures the Government are introducing to build more houses, particularly the use of new town development corporations, which were used successfully by the Conservative Government in the 1980s to create whole new towns such as Milton Keynes. The legislation is still on the statute book. The corporations are partnerships formed among the Government, local authorities, the private sector and the social housing sector to build more houses. They worked in the 1980s and we should use them again, and we should make sure that new town development corporations are able to access more land.

I have two suggestions as to how we should alter the planning system. First, we need to alter the material-start system so that when builders get planning permission it is in all cases for only three years. Secondly, they should always have to build out a site in its entirety for services. That would stop house builders from sitting on land—land banking—for an unacceptable period and put an end to the practice of house builders using a vacant site as a bargaining tool to gain planning permission on other sites. Those would be important improvements.

The hon. Member for Wallasey touched on the Brexit divorce bill—the biggest liability this country faces for the next few years. It has been rumoured that we are going to pay £38 billion, which of course includes our obligations for things such as outstanding budget contributions, financial programmes, agriculture, overseas aid, pensions liabilities and decommissioning liabilities. Nevertheless, as my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) so rightly said, in a negotiation for a second-hand car, one does not go in and pay an excessive price; the clever negotiator pays the right price—the minimum price that they can get away with. That is what we ought to do with the EU. To put it into perspective, is not just about that £38 billion; it is about our promise of two years of payments after we leave, which is an additional £8 billion a year or £16 billion in total. That takes us up to some £54 billion, which is more than our entire transport budget and almost as much as our entire defence budget. That is what we have to think about with regard to those very large figures.

In 1945 the USA loaned us £2.2 billion—£87 billion in today’s money—as war reparations, and it took us more than 50 years to pay it off. I hope at the very least that we will do two things with this payment, if we actually agree it with the EU. First, it should be paid over a significant number of years. Secondly, it should be linked to our ability to earn money from it—that is, through a trade deal and other deals, which will help us earn and pay it off.

Technology is really important if this country is to remain competitive with our foreign competitors and our productivity is to increase. Thankfully, this country has experienced huge growth in digital innovation. However, we have a shortfall of about 40,000 people with the necessary skills in science, technology, engineering and maths to meet the demands of our economy. My hon. Friend the Minister for Universities, Science, Research and Innovation is present. I am delighted to learn that maths is now the most popular subject in our schools, and I am delighted with the extra money to encourage even more children to take maths at A-level. I am glad that the Chancellor announced that our national infrastructure fund will rise from £23 billion to £33 billion, and I am delighted that the main R and D tax credit to enable our firms to invest in even more infrastructure will be maintained. The Chancellor said that a new high-tech company emerges every hour, which is an amazing figure, and that he wants to cut it to every half an hour.

On education, I was pleased to learn earlier this year, having led a long campaign, that primary and secondary school funding will be maintained so that every child in this country gets a budget that increases in real terms every year, and that the secondary school budget would move up to £4,800 per pupil by 2020, which will begin to eliminate the gap between the lowest funded authorities, such as mine in the f40, and the highest funded authorities such as those in the middle of London. Our commitment to spending the extra £1.3 billion that we announced in our election manifesto has given the Cotswold School £450,000 more than it would have got under the old proposals. That is a welcome boost.

The Chancellor had a very welcome announcement for small businesses. There are 5.5 million small businesses in this country and, as he made clear, they are the engine of jobs and growth, so we need to make sure that they prosper. I welcome the fact that, contrary to the leaks about the Budget—thank goodness that leaks are often wrong—we are not going to reduce the VAT threshold, because that would not only introduce more bureaucracy for small businesses, but bring them within the making business digital threshold, which would, at a stroke, introduce even more bureaucracy for them.

--- Later in debate ---

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

It is a pleasure to follow the hon. Member for Islwyn (Chris Evans), although I fear that my speech will take a slightly different view. I draw the House’s attention to my interests in the register.

The Chancellor faced a pretty difficult task today—he was said to be between a rock and a hard place—but this is a sensible and pragmatic Budget. I think he will be well content with that analysis.

I want to start with the midlands, because I represent part of that area. We are very pleased that we now have the second devolution deal. The support for the automobile industry—for driverless and electric cars—is enormously important. You will understand, Madam Deputy Speaker, how much that matters in the west midlands. The midlands is at the centre of this industry. We are leaders in technology, design and production internationally. We very much welcome that support, more of which I think is to be announced later this week.

The £200 million that we receive for cleaning up brownfield land is now being spent, thanks to the vigour and effort of Andy Street, our Mayor. He is doing a very good job. I hope the Treasury will consider providing more funding when that £200 million has been used. The importance of spending money on cleaning up brownfield land is immense, because it means that we do not have to build on the green belt. We should only ever do that as a last resort. We in the west midlands are delighted that we are to be part of a national pilot of Housing First, which is a particular priority of our Mayor, Andy Street. The pilot will allow us decisively to address rough sleeping across the west midlands, and we are determined to do so.

I express my gratitude to the Government for the announcement that resources will be made available for the children’s emergency medicine and paediatric care centre at Birmingham Children’s Hospital. Many of us have campaigned for that, and the news is excellent.

[Sir Desmond Swayne]

If I may, I will take my right hon. Friend back to housing for a moment. Does he agree that the Budget needs to be seen in the round with other Government announcements, particularly the opportunities in the White Paper for local authorities to build once again?

[Mr Mitchell]

My right hon. Friend makes his point exceedingly eloquently.

I want to underline to the House the fact that free enterprise and open markets have been, and continue to be, the greatest engines of social and economic advancement known to man. We need to stand up for those things more than we have done recently, against the opposing views espoused by the shadow Chancellor and, indeed, by large numbers of young people who were not around to learn some of the pretty basic economic truths that many of us learned in the 1970s and ’80s.

Having said that, capitalism has always required Governments and regulators to set boundaries to human activity and, inevitably, human greed, and that point chimes in very well with the activist views that our Prime Minister has expressed since she took up the job. I want to point briefly to three areas in which I think such regulation of capitalism is of the greatest importance. The first, which we have debated in the House, concerns open ownership registers, particularly for the British overseas territories. That was an initiative of the Cameron Government. We in Britain have imposed such transparency on ourselves, and we need to do so for the overseas territories. Many in this House care deeply about the matter, including my hon. Friends the Members for Stafford (Jeremy Lefroy) and for Amber Valley (Nigel Mills), and the right hon. Members for Barking (Dame Margaret Hodge) and for Don Valley (Caroline Flint). It is important that the Treasury recognises that point in the Finance Bill, and I very much hope that it will do so.

Energy prices are the second area in which regulation is important. The Government are absolutely right to pursue that, because the current monopolistic situation works against the interests of consumers. The right way to deal with it is by regulation rather than by nationalisation, which is entirely unnecessary because of the regulatory regime.

Other Members have mentioned the third area in which regulation is required, but I will make the point again. A recent study of the annual reports of FTSE 100 companies shows that average pay for chief executives rose from £5 million a head in 2014 to £5.5 million in 2015. I find it offensive and totally unjustifiable that that is 140 times the average salary of their employees. It is noteworthy that only a quarter of FTSE 100 companies pay the voluntary living wage to their employees. The scale of that inequality, which is vastly greater than it was, gives capitalism a bad name. At a time when inequality more generally has fallen, with income inequality at its lowest rate for 30 years, this is something that the Government need to address through regulation.

Oral Answers to Questions

Desmond Swayne Excerpts

Tuesday 24th October 2017 Commons Chamber

[Mr Hammond]

I am always very open to receiving from colleagues around the House ideas for specifically targeted taxes. If my hon. Friend has such an idea I would be very pleased to receive it.

[Sir Desmond Swayne (New Forest West) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

As we look ahead to the GDP figures out tomorrow and to the Budget in a month’s time, my focus is on the three key challenges we need to meet as we seek to build an economy that works for everyone: first, protecting the economy by managing short-term uncertainty; secondly, achieving a good Brexit outcome; and, thirdly, addressing the longer term productivity challenge to ensure that real wages, and thus living standards, can continue to rise. Everything my Department does will be focused towards those three objectives.

[Sir Desmond Swayne]

What revenue has the privatisation programme raised and what would be the cost of nationalising the utilities?

[Mr Hammond]

I refer my right hon. Friend to the analysis of the Opposition party’s proposals, if we can call them that, done by the Conservative party at the time of the general election. The Government’s policy is to sell assets when there is no longer a policy reason to retain them and to reinvest the proceeds of such sales in policy priorities. Nationalising assets would increase public sector net debt, which would increase our debt interest bill and divert public spending away from more valuable areas. It would also mean that the future investment needs of any nationalised industries would have to compete for capital with our public services.