Budget Responsibility Bill

Mark Francois Excerpts

2nd reading
Tuesday 30th July 2024 Commons Chamber

[Ms Stella Creasy (Walthamstow) (Lab/Co-op)]

I feel as though I am almost in Alice in Wonderland world when I listen to the Opposition response to this legislation. I certainly feel concerned that they, with the Cheshire Cat and possibly following the Queen of Hearts, might have been trying to pretend that their previous Conservative Prime Minister did not exist, or indeed that the former Member for Spelthorne was never ever the Chancellor. Those of us paying for a mortgage—and I declare a direct interest—know all too well that they were in charge and about the damage that they did with their disastrous mini-Budget, which is why this legislation is so important.

I would wager that that what their constituents would tell them if they suggested that the economic harm the previous Government did to this country, for which we will all be paying for generations to come, was solely to do with Ukraine or the pandemic. That mini-Budget was a political choice, but worse than that, it was a politically uninformed choice. The Government at the time consciously and purposefully made the decision on ideological grounds to press ahead with a Budget that cost 1% of our GDP, and to hell with the consequences, as we have all seen. That is why this legislation is so important.

I will always welcome a sinner who repenteth, so I am pleased that the shadow Minister recognises the value of independent scrutiny and, indeed, urges us all to go further. We will always welcome such an approach, because it is right and because our constituents deserve better, because we can see how bad things are and how broken this country is. What this Bill has at its heart are the funds to repair the damage done by the previous Administration. That is why the Chief Secretary to the Treasury is here today with this Bill to be clear with us about why it matters, why we put things on the books and why sound money is at the heart of it.

The markets did not react by accident and put up all our mortgages; they saw with terror the damage that bad leadership in the Treasury can do and have accordingly asked us to meet that challenge. Frankly, there is nothing progressive about crashing the economy, and that is exactly what the previous Government did. By putting on the record the need to report independently on fiscally significant measures, we are starting with a clean sheet and saying that we will not take such a reckless approach with other people’s money. At the end of the day, that is what this is: the tax revenues that are generated are the moneys of our constituents, and it is therefore right that we are careful about how we administer them.

However, I recognise that there are challenges in this legislation. I am speaking today because I hope to hear from the Ministers on the Front Bench further clarity about the concept of “fiscally significant”. As somebody who has always liked to be hawkish about public money, I think it is important that we are clear where we are investing, and I very much urge the Treasury to think about investing to save. I see in our broken society the damage that is done by poverty, poor public services and the higher costs that come with that, so I want us to be clear about the funding we have, where it is coming from and why every penny matters.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

As the hon. Lady knows, the new Government have intimated that they may decide to mirror much new EU legislation, which could well have budgetary consequences. She and I have not quite always seen eye to eye on Europe, but does she agree, in that context, that it is actually a bad mistake to do what the Government want to do tonight and abolish the European Scrutiny Committee?

[Ms Creasy]

The right hon. Member pre-empts many of my concerns. There is a very strong story to tell about good fiscal discipline, but it is not possible to do that independently in a modern, global economy, so the scrutiny that we can provide in this place of a whole range of regulations does matter. Those include financial regulations—I think particularly about the City and issues around a financial transaction tax, for example. I have not yet convinced him of the merits of working more closely with Europe, but I am confident that one day we can do so. I agree with him, however, that this House should be fully part of that, just as I believe in the principles behind the Bill—that disinfectant comes from transparency and our ability to see what is going on. That is why the Government are so right to bring this legislation forward.

Let me move on to some areas where it is right to ask what we mean by fiscally significant. The right hon. Member and I might disagree about the deal we do in resetting our relationship with Europe, but there can be no doubt that that will have a clear economic impact on this country. I think of the hauliers who are considering whether they will give up bringing goods to the UK because of the Brexit border tax. The previous Government admitted that that measure was inflationary and could have a significant impact not just on our food security, but on our economy, pushing up the cost of living. Many of our constituents know that there is still too much month at the end of their money, and we should challenge any measure that makes that harder. That will also inflect our tax take.

The point I am getting to is that if we are talking about measures that are so fiscally significant that they count for 1% of GDP, a trade deal would easily meet that criterion. We need to be clear in the Bill what we ask of the Office for Budget Responsibility—which, after all, has provided evidence on the impact, for example, of leaving the European Union—and whether we consider its role in such matters. If we are going to put everything on the books, let us make sure that the public understand fully the decisions that we make and where the information comes from.

Another area in which we as a House need to act is our outgoings, especially when we are being asked to make very difficult choices about some of the most vulnerable in our communities, such as people who rely on welfare, or pensioners who rely on the winter fuel payment. We have to be honest: this country is pretty much bankrupt as a result of the previous Administration. If somebody in that dire financial position came into one of our surgeries, we would sit with them and talk about a debt relief order. We would look at their costs and particularly at consolidating the debts that they may have.

Many colleagues here will know that for many years I have been concerned about legal loan sharking. That is not just in people’s private lives, but in the public sector, and I consider the private finance initiative to be the legal loan sharking of the public sector. If we are talking about fiscally significant measures—measures that meet the test of £28 billion—we should consider that we have £151 billion of outgoings committed to private finance companies in this country, against £57 billion-worth of assets. Most people can see that those figures do not add up.

Local authorities spend around £18 billion every two to five years on PFI repayments, of which about £4 billion is interest costs. That would suggest an average interest rate of around 35%. If somebody came into a surgery with a loan at a 35% interest rate, we would encourage them to go to a debt relief order. Our country is no different, and this matters because, individually, local authorities might not meet that fiscally significant threshold, but collectively, they will for us. We are not going to let hospitals and schools go bust and go out of business. Parklands high school in Liverpool was built under PFI. It was closed because there was not a demand for the places, but Liverpool city council is still playing £12,000 a day for that closed school. It has repayments of £42 million left and the company that owns it is making a profit of around £340,000 a year from the scheme.

Private finance companies are on our books, and they should be on our books nationally. They should be considered fiscally significant. We can do things to consolidate those loans and to reduce the outgoings that will come. My contribution to the Bill and the amendments that I might table, depending on what Ministers say, will relate to the fact that I think we need to be clear that everything that is fiscally significant—decisions that we might not proceed with and ones that we do—should be subject to that level of scrutiny.

The National Audit Office has given us plenty of information about the poor value for money of private finance initiatives. Many Members who have these schools and hospitals in their constituencies will have seen this at first hand. There is evidence from the Department of Health and Social Care about what could be done to consolidate loans that probably would generate savings that would be fiscally significant, when we talk about the sums involved. It would be fantastic to see the Office for Budget Responsibility pick this matter up as part of our knowing how much we have to pay out as a country; how much of a contribution we need to make. This money is going to private companies that, on the whole, are not paying tax in this country, so it is not generating revenue that can go back into paying for the repairs that need to come.

The previous Government started to look at these issues and then walked away. I know that this Government, with their commitment to fiscal discipline and fiscal transparency, will want to be open about the benefits, costs and fiscal significance both of the trade deals that we might make and of private finance initiatives. I look forward to hearing from Ministers about that. This is a very different world—[Interruption.] The shadow Minister is smiling. I am sure that he misses his colleague from Spelthorne, but I know he will not miss the opportunity to say sorry to all our constituents for the mess we have been left in and the reason why we need this legislation on the discipline of the OBR, and for the failure to tackle the long-term problems that have left legal loan sharks and poor trading opportunities for our constituents, because they are going to pick up the pieces for generations to come.

Public Spending: Inheritance

Mark Francois Excerpts

Monday 29th July 2024 Commons Chamber

[Rachel Reeves]

This country is owed a £22 billion apology by the Conservative party, and my hon. Friend is right to highlight the overspends, including on the hospitals programme; there is a £4 billion gap between what was announced and what is needed for those hospitals. There is also a £6.4 billion overspend on the asylum system. That was all unfunded and undisclosed until I disclosed it today.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

I welcome the affirmation of the funding for Ukraine, which I presume was already fully allocated from the Treasury reserve, in the usual way.

On the mainstream defence budget, the Chancellor has announced that all departmental spending will now be reviewed every two years. Given the speed at which Whitehall works, this means that the minute one review is finished, work will start on the next. All public spending, particularly capital spending, will effectively be under permanent review. This will not work. How can we commit to 10-year defence programmes, such as the vital new Tempest fighter, if all departmental budgets are up in the air every two years?

[Rachel Reeves]

First, there is a £9 billion reserve for departmental expenditure, and it was spent three times over before I arrived in the Treasury. That is why we face these problems today.

Secondly, yes, we fully intend to set longer-term budgets for capital expenditure, but we will have three-year spending reviews every two years for day-to-day departmental expenditure, which is really important for giving certainty, so that Government Departments can plan for the future. Today, no Department or local authority knows its budget beyond next March. That is no position to put Departments in, including the Ministry of Defence.

Economy, Welfare and Public Services

Mark Francois Excerpts

Monday 22nd July 2024 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend for that question. He speaks powerfully, and I pay tribute to his work in the last Parliament, particularly around education and skills. This is a really important point. For me, the most important pages of the manifesto that we stood on were the three grey pages at the back of it, which set out all our spending commitments and how they would be paid for. That was important, because to earn the trust of the electorate parties must be really clear about where the money will come from and what they will use it for. That is what we did in our manifesto, and it is what we will do in Government.

The shadow Chancellor made some points about GDP, comparing ours with that of other countries, but since 2010 UK GDP per capita—that is the most important measure, because it reflects how people feel and the money that they have—has grown slower than the G7 average, slower than the EU average, and slower than the OECD average. Treasury analysis that I requested when I became Chancellor shows that, had the UK economy grown at the average OECD rate these last 14 years, our economy would be over £140 billion bigger today. That could have brought in an additional £58 billion of tax revenues in the last year alone—money that could have been used for our schools, hospitals and other vital public services. Growth is about more than just lines on a chart; it is about the money in people’s pockets, and Treasury analysis shows that achieving the rate of growth of similar economies would have been worth more than £5,000 for every household in Britain.

The shadow Chancellor stood up and once again claimed that he bequeathed a great legacy. Seriously? The last Parliament was the first on record where living standards were lower at the end than at the start. The highest level of debt since the 1960s, the highest tax burden in 70 years, mortgages through the roof, the economy only just recovering after last year’s recession, economic inactivity numbers last week showing a further rise, and borrowing numbers last week showing over £3 billion more borrowing than the OBR expected—that is the Conservatives’ legacy. If that is a good inheritance, I would hate to see what a bad one looks like. I think deep down the shadow Chancellor knows that. In fact, he does know it.

Yesterday, the shadow Chancellor admitted what we all know: that the manifesto that he campaigned on was undeliverable, and the money for the tax cuts that he promised simply was not there. If he wanted to show the country that his party has listened, and learned from its mistakes, he would have used his speech this afternoon to apologise, but he did not, and that tells us everything that we need to know about this Conservative party: party first, country second; political self-interest ahead of the national interest; irresponsibility before the public good. Let me say this to the Conservative party, “We will not stop holding you responsible for the damage that you have done to our economy and to our country.” Never again will we allow the Conservatives to crash our economy. They failed this country. They shied away from tough choices, and we will not repeat their mistakes. It falls on us, this new Labour Government, to fix the foundations so that we can rebuild Britain and make every part of our country better off. We will govern through actions, not words, and we have already begun to do just that, because there is no time to waste.

Less than 72 hours after I was appointed as Chancellor, I put growth at the very heart of our work. Working alongside my right hon. Friend the Deputy Prime Minister, I set out reforms to our planning system—reforms that the Conservative party did not deliver in 14 years. Our reforms restore mandatory targets to build the homes that we desperately need, end the absurd ban on onshore wind to deliver home-grown cheap energy and recover planning appeals for projects that sat on the desks of Ministers in the last Parliament for far too long. Those are tough decisions that the Conservative party already opposes.

Why was that my first act as Chancellor? Because getting our economy growing is urgent, and this King’s Speech shows that we are getting to work.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

On the matter of mandatory housing targets, having been a constituency MP for 23 years and seen them tried in a number of different ways, may I humbly offer the Chancellor this, with all sincerity? There is such a thing as good development, but it only works if it is something that we do with people and not to people. This Stalinist approach will not work.

[Rachel Reeves]

I have been compared to a lot of things, Madam Deputy Speaker, but I have never been compared to Joseph Stalin.

Our approach is a brownfield-first approach. We will reintroduce those mandatory targets; of course it is up to local authorities and local communities to decide where the housing should be built, but the answer cannot always be no. If the answer is always no, we will continue as we are, with home ownership declining and mortgages and rents going through the roof. On the Government side of the House, we are not willing to tolerate that.

This King’s Speech shows that we are getting to work. As my right hon. Friend the Prime Minister set out, our programme for government is founded on principles of security, fairness and opportunity. Our No. 1 mission is to secure sustained economic growth in our great country through a new partnership between Government, business and working people that prioritises wealth creation for all of our communities.

We will fix the foundations of our economy so we can rebuild Britain and make every part of our country better off. There are a number of important pieces of legislation in the King’s Speech that will help us to grow the economy. In this speech, I will focus on three in particular: the Budget Responsibility Bill to restore economic stability, the national wealth fund Bill to drive investments and the pension schemes Bill to reform our economy. Those Bills speak not just to our programme for government, but also to trust in politics. They show that we will govern as we campaigned and that we will meet our promises to the British people.

In the election campaign, I said the first step we would take would be to restore economic stability, because stability is the precondition to a healthy, growing economy. It is how we keep taxes, inflation and mortgages as low as possible. After years of irresponsibility, we are putting our economy on firm ground once again. We introduced the new Budget Responsibility Bill on Thursday to deliver on our manifesto commitment to introduce a fiscal lock so that I can keep an iron grip on our country’s finances.

--- Later in debate ---

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

Thank you, Mr Deputy Speaker, for kindly calling me to contribute to this important debate on the King's Speech, after 11 very good maiden speeches and 11 very promising—even fabulous—starts to parliamentary careers. Those who have been in this House a little longer will know that our great friend the late Sir David Amess, whose plaque now rightfully hangs on the wall, had a great talent for managing to combine a very large number of topics into one speech. I lack Sir David’s skill, so I will seek to confine my remarks this evening to three topics, all development related.

The first topic relates to an expansion in medical capacity for the NHS, and specifically to proposals to expand the Jones family practice in Hockley. I declare an interest: my wife Olivia has worked in the NHS for nearly 20 years. In essence, the plan is to expand the practice, with a first-floor extension to create eight new GP consulting rooms and additional training facilities. Rochford district council recently approved planning permission for the extension, and the senior partner, Professor Dr Mahmud, and his active practice management team are now seeking approval from local NHS bosses to support the scheme.

It is my intention as the recently re-elected local MP—for which I am very grateful to my constituents—to lend weight to these positive proposals. They are designed not just to expand capacity, but hopefully to provide training places for graduates from the new medical school at Anglia Ruskin University in Chelmsford. For the record, I have also been working for some time to try to expand Riverside medical centre in Hullbridge, and I will be pursuing that with the NHS as well.

Secondly, the town of Wickford has suffered a dearth of supermarket capacity in recent years. My constituents endured something of a perfect storm last year when the Aldi supermarket was closed, while at the same time the old Co-op nearby has effectively stood semi-derelict for three years. During that supermarket vacuum, my constituents were forced to fall back on the small Iceland in the high street and Wickford market.

I was very pleased to reopen the enlarged Aldi last autumn, and it is now doing a brisk trade. However, the Co-op still remains undeveloped and, while boarded up, is occupying valuable spaces in the town’s principal car park. It is a long and complicated saga. Suffice it to say that the site was bought several years ago by a development company named Heriot, which originally came up with a plan in conjunction with the supermarket chain Morrisons to redevelop the store, with an underground car park and some flats above. I always had doubts about the commercial viability of those proposals, especially the underground car park, and the scheme collapsed some months ago.

Nevertheless, Heriot is working on what might be called a plan B, and for some months has been in what it describes as “advanced talks” with another major supermarket chain. For commercial reasons Heriot asked me not to name the supermarket in this speech, something I have agreed to respect—although I have to say that the name of the company in question is now effectively an open secret, and was even being reported back to me on doorsteps by my Wickford constituents during the general election.

I spoke to the directors of Heriot in advance of this debate, who assure me they are seeking to bring their commercial negotiations to a conclusion as soon as possible. They are well aware of my frustration at these three years of delay, which I conveyed to them again this morning, and they have asked me to relate that they realise that my Wickford constituents have already waited a long while for a new supermarket. That is an issue I campaigned on heavily at the general election, so I hope Heriot will be able to announce something definitive this summer. My message to Heriot is simple: “You have had more than enough time—get on with it.”

Finally, over two decades I have seen examples of both good and bad development in my constituency. Young people cannot live at home with their parents into their 50s and 60s, so it must be possible to build some houses in a sustainable manner to meet the housing need. Crucially, however, the infrastructure required to accompany them has to be built first. To put it another way, from long experience, if development is to be successful—and it can be—as I said earlier, it has to be done with people, rather than to people. The proposals at a place called Dollymans Farm in my constituency, which I was re-elected with a mandate to oppose, are precisely the opposite of that. We all want to find somewhere suitable and appropriate for people to live, but we have to do that in the right way.