Budget Resolutions

Lord Swire Excerpts

Monday 27th November 2017 Commons Chamber

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I am delighted to join the Foreign Secretary in congratulating Prince Henry of Wales and Meghan Markle on their forthcoming marriage. However, I was disappointed that the Foreign Secretary did not feel it appropriate to acknowledge a recent sad event. I want to ensure that all of us in the House join in sending our thoughts to the families of all of the hundreds killed, including 27 children, and injured in Friday’s horrific terrorist attack on al-Rawda mosque in north Sinai. It is a brutal reminder that by far the biggest targets and the highest number of victims of jihadi terrorists are people of the Muslim faith, and that the inhuman evil that is Daesh, which worships no gods but death and publicity, must be wiped from the face of the earth.

For reasons lost in the past, Budget debates have often been the occasion for some degree of light-hearted exchange over the years. However, not least in the light of the events in Egypt and the serious situation in which we currently find ourselves as a country economically, diplomatically and militarily, I do not believe that levity is in order today. Especially when it comes to the Foreign Secretary, all the jokes have worn just a bit thin of late.

I am nevertheless glad that the Foreign Secretary is leading today’s debate. Back in March he acknowledged how rare that was, because never under David Cameron’s Government did a Foreign Secretary lead a Budget debate. In the first two Budgets under the new Prime Minister and Chancellor, however, the Foreign Secretary has been given that honour. Perhaps this is their way of dipping his hands in the blood, as the economic impact of his Brexit plan becomes ever clearer, or perhaps, to be slightly less Shakespearian, it is their way of rubbing the nose of a wild, carefree puppy in the mess he has made.

[Sir Hugo Swire (East Devon) (Con)]

Will the right hon. Lady join me and the rest of the House in welcoming the announcement of two major pharmaceutical investments in the UK?

[Emily Thornberry]

Of course I welcome that, but I am concerned that we still have no answer from the Government on what will happen to the European body that currently regulates pharmaceutical trade across Europe. With no answer on that, it is difficult to be able to look at a long-term plan in that regard.

I was talking about the mess. We saw that mess last week in the Office for Budget Responsibility’s latest projections. Growth in the UK, which was already projected to be the lowest of all major economies, has now been cut again, in one of the biggest downgrades in our economic history. The truth is that it could be much worse. Let us face the reality. The OBR’s forecasts last week were still based on an optimistic assumption of Brexit.

The OBR said:

“Given the legal requirement for the OBR to produce its forecasts on the basis of current Government policy, we once again asked the Government to provide us with any detail on post-EU exit UK policies in relation to trade, migration and EU finances.”

Let us note two points about the OBR’s language, because Robert Chote is not one to use his words loosely. He said that he had “once again” asked the Treasury for its Brexit plan—presumably, he has been making that request for many months now. What he asked for was very simple but very shocking: he asked the Treasury for “any detail” about its plan. What did the Treasury do in response? According to the OBR, the Treasury sent it a copy of the Prime Minister’s Florence speech. How utterly pathetic. That was followed up with a bunch of documents full of aspirations and pipe dreams, with no detail and of no practical worth.

The OBR was left to conclude:

“We were not provided with any information that is not in the public domain.”

In other words, the organisation whose legal responsibility it is to forecast the future state of the British economy asked the Government what their plan was for Brexit and was treated just as dismissively as every Member of this House has been treated for the past 17 months. As a result, the OBR concluded:

“Given the uncertainty regarding how the Government will respond to the choices and trade-offs it faces during the negotiations, we still have no meaningful basis on which to form a judgment as to the final outcome and upon which we can then condition our forecast”.

Seventeen months on from the referendum, the OBR still has “no meaningful basis” on which to make a forecast about what Brexit will mean, either because the Government refuse to tell them, or because the Government cannot decide what kind of Brexit they want.

However, let us be absolutely clear about one thing: as dreadful as the OBR’s forecast for growth and the public finances is, it still assumes that there will be a deal on future trading arrangements between Britain and the EU. It has not even attempted to look at the consequences of a no-deal outcome on trade, employment and growth. Therefore, when the Economic Secretary to the Treasury responds at the end of the debate, will he address one specific question? The Government have said that they will conduct precautionary preparations for the prospect of a no-deal, cliff-edge Brexit. Can he please reassure the House that, as part of those preparations, the OBR will be asked to assess the likely economic and fiscal impact and to publish that paper as soon as possible, so that Parliament and the British public can fully understand the costs of that scenario?

--- Later in debate ---

[Emily Thornberry]

I am grateful to the right hon. Gentleman for that question and I will come on to answer it if he will give me a moment.

Beside the specific proposals, there is a wider point of principle on defence spending, which takes us back to the question of falling growth. We on the Labour Benches have long argued that the way the Government meet the target to spend 2% of GDP on defence is wholly inadequate. Defence spending should mean spending on defence, not on Ministry of Defence pensions, as the right hon. Gentleman and the Select Committee have pointed out, or on any other items that the Government simply lump in to meet the target. We need to ensure, at a time when growth is being downgraded—we are dangerously close to a period of falling GDP—that the Government do not use that as an excuse to cut the armed forces budget, in effect treating the 2% figure not as a target but as a cap. If anyone thinks that is a fictional risk, let us take a look at the budget for international development.

I am told this is different but I believe it is not. The Budget speech in March this year was one of the first I can recall since coming to this House, under Chancellors from different parties, that made no mention of international development and our obligations to the poorest in the world. I believed at the time that it was a temporary aberration, but sadly it happened again last week. This time, the omission was far more serious. Say what you like about George Osborne—and I am sure the Foreign Secretary frequently does—at least when he used to cut the international development budget and keep it capped at 0.7% of GDP, he would stand in front of this House and announce that decision publicly. It is a disgrace, by contrast, that the Chancellor last week chose to cut £900 million from the overseas aid budget over the next two years but did not think it worth mentioning in his speech, let alone detailing exactly which projects and programmes will be cut in the world’s poorest countries as a result of the Government’s failure on growth.

[Sir Hugo Swire]

Will the right hon. Lady give way?

[Emily Thornberry]

I gave way to the right hon. Gentleman once before. I am sure he will be able to cover any points he wants to make in his speech.

Across the world, this is a precarious time for investment in international development. The US Congress is battling to limit Donald Trump’s proposed cuts to foreign aid and the global fight against malaria, but still the only question is the size of the eventual cuts, not whether they will go ahead. Closer to home, the EU’s proposed 2018 budget includes a 6% cut in development spending, a cut that dwarfs any proposed increase in spending on humanitarian aid.

--- Later in debate ---

[Sir Hugo Swire (East Devon) (Con)]

Coming at a time when we are exiting the EU, this is a prudent Budget. Obviously, we would have liked to see more of our own special things in it, but that is the nature of a Budget. The problem for the Opposition is that, despite stresses in some areas, the British economy is performing pretty well on the whole, which is why the polls show that, even at this stage, the Conservative party is either level-pegging or ahead of the Opposition, which is a real problem for them.

Leaving the EU presents the United Kingdom with an opportunity to think about itself, to redefine itself and to decide where it wishes to go. It was US Secretary of State Dean Acheson who, in the aftermath of the second world war, famously said:

“Great Britain has lost an empire and not yet found a role.”

That was true. When we think about our withdrawal east of Suez and about throwing our lot in with the EU, an individual British role was in a sense submerged by those events, but it is now incumbent on us to talk Britain up and our constituents want us to do that. It may be a difficult challenge for some and, judging by some of the contributions from the Opposition tonight, that is not their inclination, but people want us to talk Britain up and to think about how we can reinvigorate our advantages. With one of the best militaries in the world, we have hard power. We are committed to NATO, and we encourage others to spend the amount of money that we are spending. We are a permanent member of the UN Security Council. Those things give us real global influence, and we should be proud of them and guard them jealously.

Increasingly, our soft power cannot be divorced from hard power; we need to use them both at the same time. We have our values, our parliamentary system, the work of institutions such as the British Council, our culture and our royal family. I say that at a time when the world is yet again focused on us due to the engagement of Prince Harry and Meghan Markle.

[Ms Ghani]

My right hon. Friend mentioned the British Council, which recently noted that one in seven world leaders studied at a British university. That presents a great opportunity for us not only to promote our universities, but to export our values overseas.

[Sir Hugo Swire]

My hon. Friend is absolutely right, and I will come to that in a minute. When I used to travel around the world on behalf of the Foreign Office, it was fantastic to have the GREAT Britain campaign branding everything that the UK was doing.

On the subject of the Foreign Office, I note that the budget will be £2 billion in 2017-18 and then £1.2 billion in the subsequent two years. I have some nervousness here. I understand the arguments about official development assistance, but let us compare that with the Department for International Development’s budget in those years: it goes from £7.6 billion to £8.2 billion—I cannot quite understand how the right hon. Member for Islington South and Finsbury (Emily Thornberry), who speaks for the Opposition, managed to regard that as a cut. I believe that the Foreign Office should own what the UK does abroad. There are too many departments in capitals around the world that do not dovetail with what the FCO is doing. I will leave it until another time to make the point again that the more closely integrated DFID is with the FCO, so much the better.

The Foreign Office needs to expand. We are obviously withdrawing from the European External Action Service—the Federico Mogherini-led overseas diplomatic corps of Europe—so we need to think about where we are going to re-resource our posts around the world. I believe in an international, rules-based system, and I believe in Britain’s role in it. I would also like the UK Government to lead on a new financial architecture. The Bretton Woods system is outdated and fails to recognise the emergence of countries such as China.

I want a properly resourced military that retains our amphibious capabilities and our peacekeeping role. I want the UK to engage better with the Commonwealth, and what better opportunity is there to restate our commitment to it than the Commonwealth Heads of Government meeting in London next April? I want the UK to recognise and recommit to our responsibilities to our overseas territories. I ask the Foreign Secretary whether we can press the OECD harder to look at the redefinition of aid and to consider why we cannot provide more aid to the overseas territories. Some of the calculations on middle-income countries are fallacious. Financial services are counted in those calculations, but the money does not go to individuals in those countries—the money often flows in and out. We should be able to fund our overseas territories properly.

I would like us to engage with the neglected markets of Latin America. I would like British companies to take advantage of China’s one belt system. My hon. Friend the Member for Wealden (Ms Ghani) referred to scholarships, and we should boost the Chevening, Marshall and Commonwealth scholarship programmes, possibly bringing them together as one scholarship programme. We can continue to lead on climate change and on protecting vulnerable states—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I call Alex Cunningham.