Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 17th April 2018 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

15. What plans he has to increase productivity.

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

Productivity, as I have already said, is at the very forefront of the Government’s agenda. That is why we established the national productivity investment fund, a £31 billion package of investment in infrastructure and research and development, and committed to introducing a national retraining scheme, which we are developing in partnership with the CBI and the TUC to ensure that British workers have the skills they need to benefit from technology change. The focus now has to be on moving forward with firm-level initiatives, such as Be the Business led by Charlie Mayfield and Made Smarter led by Juergen Maier, that start to look at the challenges we face at the level of the firm in this country to make sure that we are doing what we need to do not only in infrastructure and skills but in investment in management at the level of the firm.

[Mr Hammond]

My right hon. Friend is right that there is some evidence of a measurement challenge around the productivity figures. My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) asked a few moments ago about the relationship between rising wage costs and continued economic and employment growth. The question is why the tightening labour market is not driving a higher productivity performance and whether an element of that is in fact a management challenge. A great deal of time and energy is being spent on this issue. Indeed, the figures on productivity for the last two quarters do, on the face of it, show some improvement. Now, one swallow does not make a spring and we should be very cautious about interpreting—even a summer, Mr Speaker. I am even less ambitious! We should be very cautious about interpreting those figures, but, as we see record high levels of employment in the economy, we should expect them to help to drive the UK economy’s productivity performance.

[Stephen Hammond]

I listened to my right hon. Friend set out the Government’s plans for investment in transport and infrastructure a few moments ago. What direct impact on productivity does he expect those investments to have in the regions where they occur?

[Mr Hammond]

We are undertaking the largest rail investment programme since Victorian times and the largest road investment programme since the 1970s. Overall, the Government are now investing public capital at the highest rate for 40 years. This is one of the components that drives productivity in one of the areas where we have a long-standing gap with our principal competitors: too little public infrastructure. We are closing that gap and that will have a positive impact on productivity growth, but we still have to tackle skills, capability at the level of the firm, and access to capital. It is an important strand, but it is only one strand of the productivity conundrum.

Spring Statement

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 13th March 2018 Commons Chamber

[Mr Hammond]

I will perhaps remind the hon. Lady that the OBR’s autumn report in November was only four months ago and that in the normal course of events one would not expect, in the absence of some shock to the economy, economic forecasts to change very significantly. The front-end forecast has changed, because the outturn for 2017-18 has changed. The OBR forecast growth 0.2% lower than it turned out to be in 2017-18 and that has a knock-through effect, which has increased its growth projection for this year.

[Stephen Hammond (Wimbledon) (Con)]

Investing in our economy creates jobs and growth, and successful businesses drive that. Will my right hon. Friend tell the House how much the corporate tax take has gone up since the cut in corporation tax? Will he confirm that he will do nothing to hinder our internationally competitive corporate tax rates?

[Mr Hammond]

Yes, I can. I am happy to tell my hon. Friend that since we reduced the rate of corporate tax to 19%, the yield—the amount of tax we raise for our public services, our hospitals and schools—has gone up 54%. It is clear that being one of the most competitive tax jurisdictions in the G20 is one of the determining factors in many investment decisions coming to the UK, creating the jobs and prosperity we need for the future.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 27th February 2018 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

Will my right hon. Friend tell the House what assessment the Treasury has made either separately or jointly with the Department for Transport of how external initiatives on competitiveness and investment might help the rail sector and Network Rail in particular?

[Mr Philip Hammond]

Strictly, this is an issue for my right hon. Friend the Transport Secretary, and he is looking at how to improve productivity in the railway and how to ensure that every pound we invest in the railway delivers the maximum possible benefit to railway users. He will make further announcements in due course.

Economy and Jobs

Debate between Lord Hammond of Runnymede and Stephen Hammond

Thursday 29th June 2017 Commons Chamber

[Mr Hammond]

I will make a little progress and then I will give way to some more colleagues on both sides of the House.

On this side of the House at least, we continue to believe that the most effective way to protect and support ordinary families is to ensure that they have jobs, and that is what we have done, in spades. The flaw in Labour’s tax plan is not just that it will hit those whom Labour claims to support; it is that it will not raise anything like the revenue that it is claiming. Labour says it will raise taxes by £48.6 billion without anyone earning under £80,000 paying a penny more. The Institute for Fiscal Studies—which the right hon. Member for Hayes and Harlington quoted rather selectively—has examined the credibility of that plan. It found that Labour

“certainly shouldn’t plan on their stated tax increases raising more than £40 billion in the short run, and more likely than not they would raise less than that. They would certainly raise considerably less in the longer term.”

So before we even turn to Labour’s spending plans, there is already a black hole of £8.6 billion a year and rising on the taxation side alone.

[Stephen Hammond (Wimbledon) (Con)]

Is it not even worse than that, in that the IFS said that there were £58 billion of uncosted promises in Labour’s supposedly costed manifesto?

[Mr Hammond]

My hon. Friend is exactly right, and if he bears with me, I shall continue.

That black hole of £8.6 billion a year and rising in taxation will have to be filled by raising tax on ordinary people, and that was just the manifesto. Since the Leader of the Opposition got his new suit, he has been out and about, flinging spending commitments with gusto at anyone he comes into contact with—another £9.5 billion of unfunded commitments for each year of this Parliament. Added to the hole in Labour’s tax plans, that is an additional £90 billion over the course of the Parliament that has to be raised in taxation on ordinary working families.

Let me say that again for the right hon. Member for Hayes and Harlington: £8.6 billion a year of under-recovered tax, according to the IFS, and another £9 billion-plus a year that his right hon. Friend the Leader of the Opposition added in additional unfunded commitments after the manifesto was published. In short, that is the Opposition’s approach to the type of tough decisions that have to be made every day in government about prioritising limited resources—“Should we do x or should we do y?” His answer is just yes: more everything for everyone, and all of it for free—a catastrophic recipe for economic and fiscal disaster.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 28th February 2017 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

13. What fiscal steps he is taking to support the development of long-term infrastructure.

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

We recognise that the need to increase public spending on infrastructure is at the heart of our productivity agenda. That is why, at autumn statement 2016, we committed £23 billion of additional capital to fund new productivity-enhancing economic infrastructure through the national productivity investment fund. Coupled with the commitments made at spending review 2015, that means that between 2016-17 and 2020-21 central Government investment in economic infrastructure will rise by almost 60%, from £14 billion to £22 billion.

[Mr Hammond]

I think the Stubbington bypass was well worth waiting for. It will indeed support growth and development by improving access to both the M27 and the A27, allowing much needed business investment, creating new jobs, but also enabling the development of 900 new homes. Where we can get transport infrastructure investment to perform its transport function but also to help to open up land for development for new homes, that is a double hit.

[Stephen Hammond]

My right hon. Friend will be aware of the appetite for non-Government sources to provide funding for UK infrastructure. Can he confirm whether the Government are considering regional, national or project-based infrastructure bonds? Will he agree to meet me and a group of funders to discuss the attractions of such bonds?

[Mr Philip Hammond]

The most economical way for the Government to fund infrastructure investment is through conventional gilts—that is the lowest cost to the public purse. However, the Treasury backs infrastructure bonds and loans issued by the private sector through the UK guarantees scheme. At autumn statement, I announced that that scheme would be extended until at least 2026. It has played a vital role not just in underwriting and guaranteeing finance for projects, but in allowing a large number of projects to go ahead without the Government guarantee, simply by having underwritten the financing during the programme phase.

Charter for Budget Responsibility

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 24th January 2017 Commons Chamber

[Mr Hammond]

My right hon. Friend, who represents one of the most productive sub-regions in the entire European Union, is of course right. There is a perfectly respectable economic argument that, as participation in the labour force increases, bringing more marginally productive workers into the labour force, that may have a depressing effect on labour productivity overall. However, the employment participation rates in Germany and in the UK are not all that different. I do not think we can explain a 30% productivity performance gap by differences in levels of participation in the economy. Indeed, there is much debate among economists about the cause of this productivity gap, and the cause of the generally poor productivity performance of developed economies over the past few years.

We chose at autumn statement 2016 to invest an additional £23 billion through a national productivity investment fund, which aims to raise productivity, support job creation, and boost real wages and living standards. Every penny we spend from this fund will be used to boost economic infrastructure, research and development, and housing. It will bring total investment in these areas to £170 billion over the next five years. It means that gross public investment will be at least 4% of GDP for the rest of this Parliament—that is higher than in any period between 1993 and the great crash.

[Stephen Hammond (Wimbledon) (Con)]

The Chancellor is right to place productivity at the centre of the economic problem, and the productivity fund will undoubtedly be helpful in infrastructure. Another challenge is to get the corporate sector back into investing. The factory of which my hon. Friend the Member for Lichfield (Michael Fabricant) spoke is a new one with new technology. Surely, one of the lessons that we can learn from his experience is that getting corporates to invest will boost productivity, and I wonder what measures the Chancellor is hoping to bring forward in that area.

[Mr Hammond]

My hon. Friend is absolutely right. Public investment in infrastructure is part of the story, as is public and private investment in skills. Increasing the stock of capital available for each worker to use is also part of improving labour productivity.

We know that business hates uncertainty, and the uncertainty that has been created by the Brexit vote has undoubtedly slowed down business investment decisions. However, the problem of productivity that we are looking at is not a short-term problem in response to the Brexit vote; it is a much longer-term challenge in the UK economy. Large companies in the UK are well capitalised, and their levels of capitalisation are similar to those of comparable businesses elsewhere. I suggest that there is a challenge over the capitalisation of smaller businesses in the UK, and that access to long-term capital in the UK is one of the challenges that we need to address. The Government undertook at autumn statement to conduct a review of the availability of patient, long-term capital for smaller businesses in the UK.

The money that I have just spoken about for public investment through the national productivity investment fund will provide the financial foundations for our industrial strategy, which was launched yesterday and builds on Britain’s strengths. Let me be clear that this charter is not consistent with Labour’s proposal to borrow at all times for anything that it terms “investment”. If any of my hon. Friends are thinking that that sounds horribly familiar, that is probably because it is essentially Gordon Brown’s old golden rule, which is the very antithesis of budget responsibility. We all know where that got us: an unsustainable boom in Government spending that took us into the great recession with the largest structural deficit in the G7. Labour’s big idea is to repeat the same mistake all over again. That is yet another demonstration that the Opposition are not willing to learn from the past and have no ideas for the future.

What I propose is different. The national productivity investment fund will be targeted at economic infrastructure projects, housing and research and development that will boost national productivity. The National Infrastructure Commission will ensure that our future infrastructure decisions are based on independent, robust analysis. We choose to invest in productivity not just because doing so can transform the growth potential of our economy, but because it contributes to addressing the social challenges that we face. Sustainable living standards, for all parts of our country and all sectors of our population, depend on our improving our productivity through better skills, opportunities to retrain, better infrastructure and better private investment. That investment is possible only because we are prepared to take tough decisions to maintain control of current spending.

As the OBR made clear last week in its fiscal sustainability report, the end of the Parliament is not the end of the challenge. That report contains some tough messages and some important early warnings. The OBR sets out clearly the significant challenges we will face as our population continues to age over the next half century. Driven by increasing life expectancy, low fertility rates and the retirement of the baby boomer bulge, our dependency ratio will go from 3.5 people of working age supporting each retiree to just 2.2 in 2066. The OBR projects that those demographic trends will lead to increased spending in age-related areas such as health, long-term care and the state pension, but that the same demographic and economic trends mean that revenues will remain broadly stable.

The OBR notes that we are not the only country facing those challenges. It also notes that the long-term figures are highly uncertain and should be seen as illustrative projections rather than precise forecasts. None the less, the potential impact on the public finances is significant.

On the assumption of no policy response—in other words, that the Government do nothing, which I promise hon. Members will not be the case—debt could rise to 234% of GDP by the end of the 50-year projection period, with two thirds of the increase since the 2015 report attributable to healthcare spending. In the rather nearer term, the report also shows that without further policy action we will not hit a surplus in the next Parliament.

That is why at autumn statement 2016 I reiterated that the tax and spending commitments for this Parliament set out in the 2015 spending review will be delivered, and we will meet our manifesto commitments to protect the budgets of priority public services. I also confirmed that the Government will review public spending priorities and other commitments for the next Parliament in the light of the evolving fiscal position at the next spending review. There will be more difficult choices to make before we have completed the job of restoring the public finances to health.

Controlling our welfare bill is a vital element of getting back to balance. At £220 billion, welfare represents a quarter of all Government spending. In the absence of an effective framework, spending on working-age benefits tripled in real terms between 1980 and 2014. By 2014, each person in work in this country was contributing, on average, £3,000 per year to the cost of working-age benefits. Action taken since 2010, including the welfare cap in the previous charter, has stabilised welfare spending, and we will maintain that stability.

The charter before the House introduces a new medium-term welfare cap, which is set to reflect the current forecast of eligible welfare spend, taking into account the policy changes made since the last Budget. The cap will apply to welfare spending in 2021-22, and performance against this cap will be formally assessed by the OBR once—in the year before that, 2020-21. In the interim, progress towards the cap will be monitored by the Government, based on the OBR’s forecasts of welfare spending. Shifting from an annual to a medium-term cap will avoid the Government having to make short-term responses to changes in the welfare forecast, while ensuring that welfare spending remains sustainable over the medium term.

Let me reiterate to the House what I have said previously: the Government will deliver the overall total of welfare savings already identified, but we have no plans to introduce further welfare savings in this Parliament beyond those already announced.

Autumn Statement

Debate between Lord Hammond of Runnymede and Stephen Hammond

Wednesday 23rd November 2016 Commons Chamber

[Mr Hammond]

First, I urge the right hon. Gentleman to look at the figures in a little more detail. The £122 billion that he quotes runs over a fifth year. It includes the £23 billion of discretionary additional commitments that I have made today, as well as more than £20 billion of baseline adjustments due to previous policy changes around welfare benefits and classification changes made by the ONS. He therefore really needs to look at the figures.

On the NHS, as I have said already, there are trust deficits building up across the country. At the moment, they are manageable within the context of the NHS’s own internal cash management system, but we will of course keep a close eye on them. We take the view that the NHS has asked for financing of a specific and defined plan. We have provided that financing. We now need to challenge NHS managers who have asked for that money to deliver the outcomes that they promised. We will watch very closely and stick close by as they do.

[Stephen Hammond (Wimbledon) (Con)]

I congratulate my right hon. Friend on his first and last autumn statement. In particular, I warmly welcome the support for infrastructure. With regard to the investment for 140,000 new houses, may I ask him to consider the suggestion from the National Housing Federation that those affordable houses are built tenure-free so that they might be delivered more quickly?

[Mr Philip Hammond]

I did say in the statement—my hon. Friend might have missed it—that we will relax the restrictions on tenure that are normally attached to affordable housing grant funding so that affordable housing providers can build with the mix of tenures that is right for the particular market in which they are operating. That will allow housing to be built more quickly, and housing need to be met more quickly.

Daesh: Syria/Iraq

Debate between Lord Hammond of Runnymede and Stephen Hammond

Wednesday 16th December 2015 Commons Chamber

[Mr Hammond]

Whatever the hon. Gentleman’s issues, after the 11-and-a-half-hour Syria debate, it is not a problem that any of us think you share, Mr Speaker.

I am grateful to the hon. Gentleman for his question. There is evidence of Daesh penetration in many countries, including Afghanistan. What we have to do in Afghanistan is to continue to support the Government, as we and the international coalition have done, to fund the Afghan national police and the Afghan national army to resist the attempt to create a new caliphate, and we will find that happening elsewhere. We need to be clear about this; it will pop up in other countries as well, and we need to be ready to respond to it, wherever it arises.

[Stephen Hammond (Wimbledon) (Con)]

I welcome my right hon. Friend’s statement, particularly the remarks about humanitarian support and his answer on humanitarian corridors. Can he tell the House any more about the ongoing discussions on securing access across Syria for humanitarian support and whether there has been any progress in meeting the resolution?

[Mr Hammond]

That will be one of the issues on the table on Friday. I mentioned earlier an end to the indiscriminate use of weapons in civilian areas and to the bombing of medical facilities and humanitarian access to besieged areas—the three early confidence-building measures that the UK in particular is promoting and will be promoting at the conference on Friday.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 3rd March 2015 Commons Chamber

[Mr Philip Hammond]

That is exactly what we are doing. The hon. Gentleman seems to subscribe to the view of the world in which Britain sits isolated on the edge. We are a major player in Europe. We have the second largest economy in Europe. We are leading the way in so many areas within the European Union. We have to seize this opportunity to shape the European Union in a way that works for Britain. It went off the rails somewhere over the past 20 years, and we must take this opportunity of reform and renegotiation to get it back on the rails. Crucially, we must then let the British people have the final say on whether the package we have negotiated is good enough or not.

[Stephen Hammond (Wimbledon) (Con)]

16. Like you, Mr Speaker, I have complete confidence in the Foreign Secretary. I am sure he has sensed not only that there is increased public demand for renegotiation, but that there is absolutely no movement in public demand for that referendum. Is that his assessment, and will he commit to a referendum prior to the end of 2017?

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 28th October 2014 Commons Chamber

[Mr Hammond]

There are still outstanding disputes between Irbil and Baghdad, but, if I may say so having been there two and a half weeks ago myself, the mood music between Irbil and Baghdad is much better now than it has been for months, probably years. Kurdish Ministers are now in Baghdad. There is a serious discussion going on about the division of oil revenues, which is one of the crucial outstanding issues. I told the House a week or so ago, and I repeat again today, that I am optimistic about relationships between Irbil and Baghdad at least in the medium term.

[Stephen Hammond]

Important though air strikes are, of course alone they are not going to defeat ISIL. In his answer to the Member for Ayr, Carrick and Cumnock (Sandra Osborne) my right hon. Friend explained the political progress being made in Iraq. Will he update the House on how he sees the importance of political progress in Syria in also defeating ISIL?

[Mr Hammond]

My hon. Friend is absolutely right. In the fullness of time, pushing ISIL back in Iraq, which is our first priority, will not be sufficient to defeat that organisation; there will have to be political progress in Syria as well. At the moment we are focused on ensuring the consolidation of the Syrian moderate opposition and the organisation of the additional training and equipping that the US Congress has now agreed to finance for Syrian moderate opposition fighters.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Monday 20th February 2012 Commons Chamber

[The Secretary of State for Defence (Mr Philip Hammond)]

In support of the police and other civil and Olympic authorities, the armed forces will provide up to 13,500 regular and reserve personnel to ensure the Olympic and Paralympic games are safe and secure. Up to 7,500 will support the smooth running of Olympic sites, while the remainder will use their specialist capabilities and equipment to contribute to the delivery of Olympic security.

I announced to the House earlier today by written statement that an order has been made under section 56(1A) of the Reserve Forces Act 1996 to enable up to 2,000 reservists to be called out to support Olympic security.

The Army will apply its policy of intelligent selection for the Olympics. Only those reservists who volunteer and who have the support of their employers will be called out in connection with the Olympic games.

[Stephen Hammond]

I thank my right hon. Friend for the scale of support that he has announced. I recently visited the regional fire control centre that is opening in my constituency, which will provide emergency fire control at the Olympics. Will my right hon. Friend offer some insight to the House about who might be in overall command of an emergency or of security, and what procedures he is putting in place to ensure that both the civil and military authorities concerned with the Olympics security will work together?

[Mr Speaker]

I thank the Secretary of State, who had intended to group Question 5 with Question 11. He did not, so I do so on his behalf. I know he will be grateful.

Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Stephen Hammond

Monday 14th November 2011 Commons Chamber

[The Secretary of State for Defence (Mr Philip Hammond)]

It is the policy of this Government that NATO remain the cornerstone of UK defence. We see no justification whatsoever for a permanent EU military operational headquarters, and we will continue to oppose it. We have been clear that the establishment of a permanent operational headquarters would be a duplication of existing capability provided by NATO, would permanently dissociate the EU from NATO, and would be an unnecessary and unjustified use of resources.

[Stephen Hammond]

The lesson from recent military operations is that our operations with joint and existing allies have enabled military objectives to be achieved. The Secretary of State is clearly right that the proposal to create an EU headquarters would be a duplication, but would it not also curtail the involvement of some of our existing allies in military objectives that we may wish to undertake?

[Mr Hammond]

My hon. Friend is exactly right. It would duplicate and undermine arrangements we have in place that have been demonstrated to be perfectly adequate.

--- Later in debate ---

[Mr Hammond]

As the right hon. Gentleman knows, the appointment of Ministers is a matter for the Prime Minister. But I cannot help noticing that the Leader of the Opposition does not appear to have taken note of the right hon. Gentleman’s self-denying recommendations.

[Stephen Hammond (Wimbledon) (Con)]

T3. I welcome my right hon. Friend’s comments about the need for sustainability. Will he therefore confirm to the House that he will continue the good work of his predecessor in implementing the whole of the Levene recommendations?

[Mr Hammond]

I am happy to give my hon. Friend that assurance. I have been through the body of recommendations that Lord Levene made and that were endorsed by my predecessor. I am happy with them as a whole and I will pursue their implementation.

Intercity Express and Rail Electrification

Debate between Lord Hammond of Runnymede and Stephen Hammond

Tuesday 1st March 2011 Commons Chamber

[Mr Hammond]

The hon. Lady is absolutely right that when we get such an opportunity to reinforce our skills base and move up the value-adding curve with our work force, we have to seize it. There is already a project in Nottingham that I am hoping to visit very shortly that involves rail engineering apprenticeships, and there is another project in Crewe that I have been invited to go and see. We need to generate more of these projects in response to the investment opportunities arising. I agree completely with the sentiment that she expresses.

[Stephen Hammond (Wimbledon) (Con)]

I welcome unequivocally my right hon. Friend’s statement and its excellent news for rail infrastructure. He will be aware that ongoing designs for existing platforms are usually more cost-effective than new designs. Will he confirm to the House, therefore, that the revised Agility proposal represents better value for the British taxpayer both in what it represents and in cost terms?

[Mr Hammond]

The value-for-money appraisal certainly shows that the revised Agility proposal represents the highest value for money of the proposals that we have considered for the replacement of the inter-city diesel express trains. It represents a strong value-for-money case and is affordable. Hitachi has responded in an exemplary way to the Government’s commitment to high-speed rail—that changes the dynamics—and to the UK’s fiscal situation in order to ensure that we can go ahead with the programme.

High Speed Rail

Debate between Lord Hammond of Runnymede and Stephen Hammond

Monday 20th December 2010 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

I commend my right hon. Friend on his statement and the speed with which he has brought forward these proposals. He is particularly right to reject some of the criticisms of the Opposition, because I recall that their conversion came only with Lord Adonis and that proposals for anything beyond Birmingham were tacked on only in March this year. What discussions has my right hon. Friend had with Transport for London? Beyond Old Oak Common, what dispersal measures will be needed in London?

[Mr Philip Hammond]

By the time the HS2 railway is built, the improvements and upgrades to the Northern line—for which we confirmed our investment funding in the recent spending review statement—will be completed. Dispersal will take place, it is estimated, with about one third at Old Oak Common, with passengers dispersing principally on to Crossrail, and about two thirds at Euston, with the upgraded Northern line. I have also asked HS2 to consider remodelling the station at Euston, so that Euston Square station can be incorporated into the main Euston station, giving access to additional underground lines.