The Economy

Michael Fallon Excerpts

Thursday 24th October 2019 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

I remind the House of the interests recorded in my entry in the Register of Members’ Financial Interests.

In supporting the excellent Queen’s Speech, I wish to touch briefly on just three areas: expenditure, the new borrowing framework, and what more we can do to make our capitalism inclusive.

On expenditure, the new money for the NHS and for schools is extremely welcome. With regard to the NHS, I hope it will help to relieve the pressure on our general practitioners, to get more resources into mental health and to start to fill the gap between health and social care. I hope it can do all that without involving us in yet another bureaucratic reorganisation, at any level.

The extra money for schools is particularly welcome in Kent. At long last, it addresses the inequality of funding between some of our shires and the metropolitan areas. It will mean more for primary schools in my constituency, which have been historically underfunded. As that money comes through, I hope the Secretary of State for Education will also look into how we can better protect the main schools block, which authorities such as Kent are currently having to raid to cope with the increasing demands for special needs provision.

Having welcomed the extra expenditure, given that the previous fiscal framework is clearly under some stress, I also welcome the Chancellor’s ambition to set out in his Budget a new fiscal framework for the future. I hope the framework will be clear and credible for the markets, and I also hope he will avoid some of the fudgeable targets and fuzzy definitions and classifications that we saw in the later years of Gordon Brown’s chancellorship.

I hope that, as Conservatives, we will continue to look at how we defend and refresh our capitalism and make it more inclusive for all our country. Back in the 1980s, we developed popular capitalism: 11 million people in this country held shares and had a stake in the privatised industries. Thirty years on, too many of those private industries are too poorly regulated, and we have seen share ownership in decline. Let me give an example of two of those industries.

The first industry is rail. Last year, we Members of Parliament—my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) was with me—had to intervene in the timetable chaos and persuade one rail operator that shared a line with another to pick up passengers who had been stranded by that other operator. Both rail operators were subsidiaries of the same group, so why did Members of Parliament have to intervene? Where was the rail regulator to sort it out? I welcome the proposals in the Queen’s Speech to look again at the structure of the industry and ensure that it is more accountable and better regulated.

The second industry is water. Thames Water has been privatised for 30 years. It pays hundreds of millions over to its shareholders and to its parent company, yet it is behind on its leakage targets and behind other water companies on the installation of smarter meters. Because it is behind, it is bleeding the chalk streams around London, including the River Darent, with the extraction of water that it needs to top up its supplies in the centre of London.

[Tom Tugendhat]

My right hon. Friend has been an example in helping to bring together the various companies to realise their duties. Does he agree that there are also good examples? Greggs has done an enormous amount by pushing share ownership to employees and has massively improved the equity stake that individuals have in the product of their own labour.

[Sir Michael Fallon]

I certainly understand that, and my hon. Friend takes me to the point with which I wish to conclude, which is what more we can do to encourage share ownership. Some of the employee share schemes we have—I have written to the Chancellor on this—are still very complicated. The qualifying periods are still very long and do not reflect the mobility of the modern workforce. I am afraid some of the lower-paid staff simply cannot afford to participate in them. I hope that when it comes to his Budget, the Chancellor will keep looking at how we can do more to promote employee share ownership in particular, by reducing the qualifying periods and giving people a real incentive to save.

[Craig Mackinlay (South Thanet) (Con)]

Will my right hon. Friend give way?

[Sir Michael Fallon]

I am sorry but I will not; I am just finishing.

One of my heroes of the year—there may be many other candidates—is an entrepreneur called Julian Richer, who is now coming up to retirement and is handing over 40% of his company, Richer Sounds, to the employees, ensuring that they have a stake in the future. We need more incentives like that to promote loyalty and give people a real stake in their future. I thoroughly support the Queen’s Speech.

Spending Round 2019

Michael Fallon Excerpts

Wednesday 4th September 2019 Commons Chamber

[Sajid Javid]

The hon. Lady will know that this spending round covers day-to-day departmental spending and that the vast majority of DWP spending is not covered by day-to-day spending. So, when we get to a Budget, we can say much more about DWP spending. She will also recognise that this spending round will help more vulnerable people by protecting our economy and making sure it continues to grow and to generate jobs, which is the best way out of poverty.

[Sir Michael Fallon (Sevenoaks) (Con)]

I welcome the increase in defence spending, which is well justified by the increase in the threats that the country faces. However, can my right hon. Friend reassure the House that any revision of the fiscal rules will never make the Government vulnerable to the charges of fudged targets, reference periods and spending classifications that characterised the last Labour Government?

[Sajid Javid]

I thank my right hon. Friend for his support for the increase in defence spending and I can give him that assurance. When the fiscal rules are looked at in time for the next Budget, that will be done openly, transparently and clearly, which is exactly what is needed to maintain market confidence.

Loan Charge

Michael Fallon Excerpts

Thursday 11th April 2019 Commons Chamber

[Stephen Metcalfe]

My right hon. and learned Friend makes some good points, and I am aware that the Government have set out some of the mitigating measures they want to put in place. I am sure we all welcome those measures, but there is a need for both a pause and a full and proper review of what is being proposed to see whether we are acting in a way that would be considered to be natural justice.

[Sir Michael Fallon (Sevenoaks) (Con)]

rose—

[Stephen Metcalfe]

I want to continue. In failing to act back in 2012, when it had the opportunity—and surely the duty—to do so, HMRC denied my constituent the opportunity to depart the arrangements and seek an alternative solution for his payroll needs.

[Sir Michael Fallon]

My hon. Friend has been so generous in giving way that I hesitate to intervene once again. When he says that something feels wrong, he is on to something, because what feels wrong to some of us is that the equivalent effort does not seem to be put into pursuing the promoters of the schemes, or indeed the employers, and that the entire weight of recovering the so-called tax gap is falling only on the employees. That does not feel right.

[Stephen Metcalfe]

rose—

Spring Statement

Michael Fallon Excerpts

Wednesday 13th March 2019 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

Can the Chancellor reassure me that the very welcome consultation on future infrastructure financing will not become any reason to delay a start on some of the essential major projects such as the lower Thames crossing, which will not only relieve pressure on the Dartford crossing but will be a fundamental link between two great wealth-creating regions of our country?

[Mr Hammond]

I can give my right hon. Friend that assurance. I am acutely conscious of the fact that we are committed to building a tunnel under the Thames but we have not yet committed to the link roads that will link that tunnel to the rest of the road network, and of course we absolutely will do so. This is a broader-based review to look at how we replace PFI and EIB funding over the medium term.

Leaving the EU: Economic Impact of Proposed Deal

Michael Fallon Excerpts

Wednesday 20th February 2019 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

Will the Financial Secretary undertake to publish to the House, in good time for the meaningful vote, the decisions that he and his colleagues are currently taking on the tariffs that would apply in the event of no deal, including which industries would be protected, at what rate, and what the impact would be on prices?

[Mel Stride]

Tariff policy in the event of no deal is clearly something that we are heavily engaged with. My right hon. Friend rightly identifies the aspects or elements of tariffs that relate to protecting domestic producers, and that of course will be a very important part of the considerations that we are undertaking at the moment. We will come to the House in due course with the details of those tariffs.

Budget Resolutions

Michael Fallon Excerpts

Thursday 23rd November 2017 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

I hope to find an early opportunity to speak out on what is the right level of defence spending to meet the threats that our country faces, and to do so more freely than the constraints of government allowed, but today I want to focus on the Budget before us. It is the first Budget of this Brexit Parliament, and I warmly welcome it.

It is extraordinary that we still have no answers from Labour Front Benchers on the amount of additional borrowing they would undergo, or indeed, 24 hours later, on the amount of additional interest that they are prepared to rack up. Those are legitimate questions. This is not trite journalism. A shadow Chancellor should be able to tell the House exactly how much more he would be spending and borrowing.

I particularly welcome the additional money for the national health service and the measures for long-term investment in our infrastructure, but that long-term investment will need to be accompanied by other and deeper structural reforms. How can we be encouraged to save again rather than to spend on credit? How can we reverse some of the more pernicious side-effects of quantitative easing, which seem to benefit those who already hold significant assets?

The fall in unemployment has probably been the greatest single achievement since 2010. Unemployment has fallen not because of one single policy, but because of the cumulative reductions in taxation and regulation that have taken place over the last seven years, almost every one of which was opposed by Labour Members. The 5 million small businesses and nearly 5 million self-employed people are the real wealth creators. They are the people who work every hour that God sends, and who invest—and risk—their own money to create, in turn, the tax revenue that funds our public services. I hope that, over the current Parliament, we will continue to cut the form-filling and let them keep more of what they earn.

There are four areas in which I hope we can make even more progress. The first is low-paid work. No Government have done more for the low-paid than this Government, who have introduced the national living wage and taken so many more people out of tax altogether, but we need to keep going. Is it logical to go on raising the personal allowance but not the national insurance threshold? A full-time worker on the national living wage pays almost as much in national insurance as in income tax. Those who are working part-time—for example, 25 hours a week—and earning between £8,000 and £11,000 a year miss out as we raise the thresholds. I hope that Ministers will look at that again.

Secondly, I particularly welcome the steps to tax the global digital companies more effectively.

[Sir Desmond Swayne (New Forest West) (Con)]

Will my right hon. Friend acknowledge the leadership of the Government of which he was a part in driving that particular agenda internationally?

[Sir Michael Fallon]

I certainly recognise that, and it is important for these matters to be approached internationally.

Our constituents do, of course, benefit from the greater convenience and efficiency that digital retailers provide, but it cannot be right for our high streets, small shops and local businesses to bear all the pain of local rates while giants such as Amazon pay rates on a handful of warehouses. Their staff, too—Amazon staff, Google staff and Facebook staff—need well-funded schools, good local services and a proper NHS. It is right that they should pay their proper share of local and national taxes, and I applaud the steps that the Chancellor is taking down that path. One nation should mean one economy, for large and small businesses alike.

Thirdly, if we want to be one economy, more of our people should have a stake in it. In the year when Margaret Thatcher left office, 11 million adults in our country held shares. Today, although the population is significantly larger, only 8 million do so: a quarter fewer. When I privatised Royal Mail, I offered free shares to each of its 150,000 employees. Despite union advice—or possibly because of union advice—99% of the employees took up the offer. We deliberately skewed it towards small investors, and, as a result, 20% of Royal Mail is now owned by its staff and by small investors.

That is what we should be doing with all our remaining shareholdings, including the banks and the new social enterprises, and we should go further. Employee-owned companies are more productive and more profitable. Is not higher productivity the golden fleece for which Ministers keep searching? We need not just one John Lewis Partnership, but 1,000 John Lewis Partnerships across our economy. Existing schemes such as Sharesave and share incentive plans are not increasing the number of share ownership companies.

[Scott Mann (North Cornwall) (Con)]

I speak with a bit of personal experience, having been a Royal Mail employee and having benefited down the line. My right hon. Friend is absolutely right: apart from the trade unionists who drive the Royal Mail train, a huge number of workers have benefited greatly from having that share option. I pay tribute to those workers, who are doing a good job and who will be delivering our post during the Christmas period.

[Hon. Members]

Hear, hear.

[Sir Michael Fallon]

I echo that tribute. I should like that example of share options to be followed much more widely. Let us incentivise our companies, with a lower tax rate, to offer free shares to all their employees.

Finally, let me say something about exports. Our constituents benefit, of course, from cheap imported goods, but we are now importing far more than we export. We have run deficits of more than £30 billion in goods and services in each of the past five years, and a deficit of more than £43 billion in the last year alone—and this on an island of entrepreneurs, of engineering excellence, of innovation and of ingenuity. It is good that, according to the CBI, a quarter of manufacturers now expect an increasing order book, but the cheaper pound should not obscure the reality that outside the single market we will live or die by what we can sell to the world in goods and services.

It is not just down to this Government. There were serious deficits in the Labour years as well. Too many medium-sized companies do not bother to export at all, but, post-Brexit, we must clearly put exports at the front and centre of our economic policies. Campaigns such as GREAT and Global Britain are important, but they are just campaigns. We now need to hard-wire exporting into every British business: exporting should be a condition of all our major Government support schemes, our grants and our loans. In return, the Chancellor is beefing up our export finance, making it easier for first-time exporters to take the plunge, and I fully support that.

A fairer economy, much wider employee share ownership, putting exporting at the heart of every Government industrial programme: those are some of the necessary steps towards our new economic future. Let us agree across the House, Brexiteers and Europhiles alike, that muddling along—mere managerialism—is not going to be enough. Brexit Britain demands a bigger vision: more confident, outward-looking, self-rewarding. Let us build on this successful, sensible Budget to enable Britain to be bolder still.