Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Peter Dowd

Tuesday 18th April 2017 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

An important driver of economic growth, both inside and outside London and the south-east, is productivity. Notwithstanding the rosy picture painted by the Chancellor, the Financial Times’s chief economist says that our productivity performance is “calamitous” and that the disparity in performance has widened regionally. Who do we believe, a respected economist or a backtracking Chancellor?

[Mr Hammond]

I do not recognise the picture that the hon. Gentleman paints of my position. I have stood at this Dispatch Box on countless occasions and lamented the fact that Britain has a poor productivity record—worse than Germany’s, and worse than those of the United States, France and Italy—but simply lamenting that fact is not enough. What we must do is put together a plan for tackling it, and it will be a long—

--- Later in debate ---

[John McDonnell]

Seven years.

[Peter Dowd]

Yes, seven years.

Although the £6 billion investment for a new two-mile lower Thames crossing is welcome, how does such imbalanced infrastructure spending help to close the economic gap of regions outside London and the south-east? Does not that simply reaffirm the Government’s pathological incapacity to see much beyond the M25? I will be happy to buy the Chancellor a satnav if he wants to take the opportunity to use it.

[Mr Hammond]

I am not going to take any lectures from the hon. Gentleman on regional awareness, but perhaps he should speak to the Mayor of London, who has a view on infrastructure investment and what should drive it. The Government are clear that we need to spread infrastructure investment around the country in a way that will tackle the productivity challenge. One of the ways we will tackle it is by harvesting the benefits of our city regions in the west midlands, in the northern powerhouse and elsewhere, which evidence across the developed world has shown can be major drivers of productivity improvement. That is what we have to focus on.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Peter Dowd

Tuesday 29th November 2016 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

The south-west’s productivity has drifted down since 2010 and, according to the House of Commons Library, the UK overall has seen the widest productivity gap with the G7 since 1991, when the data series began. What plans, if any, does the Chancellor have to pursue his predecessor’s so-called “Fixing the foundations” productivity plan? Or is that another failed policy that this Chancellor is trying quietly to jettison?

[Mr Hammond]

No, and if the hon. Gentleman looks at the document we published last Wednesday, he will see that it contained a specific reference to “Fixing the foundations”, which is the base document setting out the Government’s agenda for addressing productivity issues. Of course, the key announcement in last week’s autumn statement was an additional £23 billion of borrowing specifically targeted at the highest-return investment projects; this is designed to raise Britain’s productivity by raising the productivity performance of our regional cities, in particular, and our regions more generally, to that of London and the south-west.

[Peter Dowd]

It is six years late. The productivity gap has widened for both the south-west and the country, and so has the gap in earnings and wages. According to the Institute for Fiscal Studies, the outlook for wages is “dreadful”, with workers likely to earn less in real terms in 2021 than they did in 2008, and with the biggest losers being lower-income families, with the poorest third likely to see incomes drop. So in tandem with action on the productivity crisis, what are the Chancellor’s plans for action on the wages crisis?

[Mr Hammond]

First, if the hon. Gentleman that if he looks at real household disposable incomes, he will see that the picture is rather brighter, and they present a much more real picture of what people in the economy are experiencing. He is right to say that real wages are a reflection of productivity performance, and the only way sustainably to raise real wages is to raise the productivity performance of this economy. So rather than whinging about whether something was done this year, last year or six years ago, and perhaps with a careful eye on the performance of the previous Labour Government in this area, he might care to welcome the announcement made last week as an appropriate initiative to try to raise the UK’s productivity performance, and raise real wages and living standards over the long term.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Peter Dowd

Tuesday 25th October 2016 Commons Chamber

[Mr Hammond]

I am not aware of the project to which the hon. Gentleman refers. As far as I am aware, the Northern Ireland Executive has not been in touch with the Treasury about it. We have, in fact, made two announcements. I announced that all projects signed in the normal course of business before the autumn statement would be guaranteed, irrespective of whether they continued to be funded by the EU after our exit. I subsequently made a further statement saying that after the autumn statement any new EU-funded projects would, provided they passed a UK value-for-money and strategic priorities test, get the same guarantee: however long they last, they will be funded by the UK Treasury once EU funding stops.

[Peter Dowd (Bootle) (Lab)]

This Government continue to be in chaos over their flagship so-called northern powerhouse. I live there, and I see it every day: they have no long-term industrial strategy. Meanwhile, notwithstanding what the Chancellor said earlier, regional economies are suffering from a lack of sustained investment in their infrastructure, and particularly transport infrastructure, by comparison with our major European partners—a problem now compounded by Brexit. What plans does the Chancellor have to end this uncertainty and finally bring about a rebalancing or an enhancement of regional transport infrastructure expenditure?

[Mr Hammond]

I urge the hon. Gentleman not to talk down the north and the significance of the northern powerhouse. The northern powerhouse is an important part of the Government’s strategy, and the new Prime Minister has made clear her commitment to it. The hon. Gentleman is, however, right to draw attention to the shortfall of infrastructure investment in the United Kingdom overall, by comparison with our principal competitors. That is an issue that we must address at national level. We must look for the best value for money—the projects that will make the greatest contribution to closing the productivity gap across the UK—and that is what we will do.