Spending Review and Autumn Statement

Lord Higgins Excerpts

Wednesday 25th November 2015 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, as I think was touched on in part of the question asked by the noble Baroness, Lady Kramer, the cuts are in the Department for Transport’s operational budget. There is a significant increase in capital spending. With respect to a number of our investment challenges, I would also highlight that some of the additional £12 billion capital investment is specifically for transport. Tangential to that, I also highlight the more specific commitment to HS2, as well as—very importantly for the northern powerhouse project—a significant allocation of money for the rollout of Transport for the North, particularly the state-of-the-art ticketing proposals that we hope will come to the fore.

[Lord Higgins (Con)]

My Lords, the Chancellor is determined to eliminate the deficit, but the results so far show very clearly that this is entirely consistent with having a rate of economic growth that compares very favourably with those of other countries around the world. To add one particular point, the Chancellor was clearly frustrated at being unable to zero-rate VAT on certain items because of the European regulations. When negotiating with the European Community, would it not be a good idea to include negotiations on this particular point, which inhibits us from taking the tax decisions that we wish to take?

[Lord O'Neill of Gatley]

My Lords, on the second question, which I assume specifically refers to the so-called tampon tax, the Chancellor took great delight in announcing to the other place that a number of women’s charities would be direct beneficiaries of the money we accrued from the imposed tax from the EU. In the mean time, the Government will continue to debate the merits of that tax with the EU.

On the first question, as I touched on, the basis for the OBR’s improved forecast is of course the circular connection between the improvement in the economy—which I repeat that the OBR has become slightly more optimistic about—and the improved nominal GDP outlook for the rest of this Parliament, as well as tax revenues. That has given the flexibility for the Chancellor to commit—or recommit—to the mandate that the Government successfully achieved from the electorate to reduce the level of debt and to move towards a fiscal surplus, while choosing various priorities in domestic spending. Indeed, it is that economic success that has been so helpful in giving the flexibility highlighted in today’s policies.