Finance Bill
Debate between Sammy Wilson and Mark Harper(7 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sammy Wilson
Does the right hon. Gentleman accept that that has been shown to be true not only in the case of corporation tax but, in the Irish Republic, in the case of VAT? When VAT was reduced on aspects of the hospitality industry, tax revenues actually went up because that reduction generated more business. Indeed, there may be lessons to learn on VAT rates for the hospitality industry in the United Kingdom.
Mr Harper
I am always grateful to have excellent suggestions from colleagues in Northern Ireland. It is worth remembering that they bring a particular perspective to Brexit, given that they have a land border with the Irish Republic. We need to be very conscious of tax effects across the border as we leave the European Union.
I set out in my Westminster Hall debate, which I will not reprise now, our good record on economic growth since 2010, our reduction of the deficit and the significant number of jobs that businesses in the United Kingdom have generated. That is all very positive. But I am perfectly happy, as are the Government, to accept that there is one area in which the country’s economic record since 2007-08—under both the Conservative party and the Labour party, when it was in government—has been less impressive, and that is productivity. Since the economic crash, productivity growth has stagnated, and the level of productivity is significantly below that of the G7.
As I have said, it is essential to raise productivity if we are going to increase pay in both the public and private sectors. I want—I think all Conservative Members want—to give public sector workers a pay rise, just as much as Opposition Members do. But we understand that that has to be paid for. There is also an element of fairness. Private sector wages fell, in cash terms, after the crash, but that did not happen in the public sector. The work done by the Institute for Fiscal Studies shows that after a number of years of pay restraint, pay in the public and private sectors is now roughly in balance. It is, perhaps, a little ahead in the public sector if we take account of the more generous pension schemes. I want workers in both the private sector and the public sector to be properly rewarded; I do not want to favour workers in one sector at the expense of those in the other. That idea is missing in the comments we have heard today from the trade unions about public sector workers. We have to have a balanced settlement for workers across the economy, not just those in one area of it.
It is not clear what has caused the lack of growth in productivity. It will probably not surprise anyone in the House to learn that according to economists—I apologise if there are any economists in the Chamber; I stopped my economic training when I left university—a number of things seem to be at the root of this, one of which is that there could well be a lack of wage growth, which means that companies are not investing in capital equipment to make work more effective. As a former Minister for Immigration, I think that having unlimited unskilled migration—it is definitely at the lower end of the labour market, keeping wage growth low—has certainly not encouraged companies to invest in machinery and equipment to drive up productivity. Leaving the European Union gives us the opportunity to reduce importing unskilled workers from the current level. That does not mean reducing it to zero, but reducing it a little will help to improve such an incentive.
Mr Harper
My right hon. Friend is absolutely right. Half of young people in Greece are unemployed, and that is after a significant number of other young people have come to countries such as the United Kingdom and Germany to work. I must say that that is not a sustainable economic model. I suspect there is going to have to be a shake-up in the eurozone at some point—more fiscal transfers, or looking at the currency—because it is not sustainable for half of a country’s young people to remain unemployed for a considerable period.
Thankfully, we have not had to confront such a problem in our country—we have a different set of challenges—but my right hon. Friend is right about productivity. Let us look at the Bank of England analysis. He has already referred to falling productivity in the oil and gas sector and the financial sector. As I have said, there has been the impact of the financial crisis on allocating capital. I think there is now enough capital in the economy, but the issue is about getting it to the right businesses. There has also been a slowing rate of growth in innovation and discovery, as well as some inaccuracies in the data.
There is no single thing that we can do, which is why I am very pleased that the Government have set out a range of options in the productivity plan published by the previous Chancellor, George Osborne, in his Budget immediately after the general election in 2015, and in the measures set out by my right hon. Friend the present Chancellor, who was in the Chamber earlier. In relation to the national productivity investment fund, the Chancellor has set out some very important areas of spending, which I will briefly mention.
The first area is accelerating the housing supply, which is absolutely critical. I share the concerns expressed by Opposition Members. It is absolutely critical that we look at growing the housing supply urgently so that younger people, and not only younger people, can find affordable houses for them either to rent or to aspire to buy. A very significant sum in the national productivity investment fund will go towards that incredibly important area. The second area is investment in transport. I welcome today’s announcement about the very significant investment in the A303 and the significant amount of money to ensure that we properly protect the ancient monument of Stonehenge. That is very important for me and colleagues from south-west England. We are also seeing improvements to rail, and to the missing link on the A417—the bit of the road that is not dualled—in which the Government are committed to investing. Therefore, there is investment in some important areas of transport.
I also welcome the conversations that my right hon. Friend the Secretary of State for Transport is having with colleagues in the north of England about significant investment that we could make on top of HS2 to connect cities in the north properly. My understanding is that if we see an agreed plan from Transport for the North, the Government will be very keen to fund that to drive productivity growth in the north of England, in the same way that significant investments in road infrastructure have driven productivity growth in London and the south of England.
It is important that we invest in other transport infra- structure such as airport connectivity. Particularly in the light of our leaving the European Union, Britain needs to be able to join up with global markets all around the world. I am particularly keen, as a south-west MP, for the Government to move forward on the Heathrow option and install that extra capacity so that businesses in my constituency, the south-west of England and elsewhere can be joined up properly with the rest of the world.
Sammy Wilson
Does the right hon. Gentleman accept that an important issue in respect of connectivity and airports is the detrimental impact that high levels of air passenger duty have on the opening of new routes and on encouraging people to use existing routes from the United Kingdom to other parts of the world? The Government need to look at that seriously. What should we do about air passenger duty, and how can we stop it being detrimental to the kind of connectivity he is talking about?
Mr Harper
The hon. Gentleman makes a very good point. It would be helpful if we reduced the level of air passenger duty, but the Government have to be mindful, since I have heard lots of bids in the debate for money to be spent, that we also have to raise it. If we want to reduce air passenger duty and we think that that will reduce the amount of revenue we collect, we will have to look at areas where we can reduce spending, at other taxes or at growth in productivity in the public sector, as my right hon. Friend the Member for Wokingham said, in order to do that. It is not a simple question. The Chancellor will no doubt look at it in the round as he makes his Budget judgments later this year.
Mr Harper
Let me make a little more progress, then of course I will give way.
I would like to make two more points before I finish, Madam Deputy Speaker. The other area I wanted to mention in relation to the national productivity investment fund, which is incredibly important for my constituency, is the acceleration of the roll-out of broadband, in particular the full fibre roll-out. We have made considerable progress in rolling out broadband. By the end of this year, I think 80% of my constituents will have superfast broadband. In Gloucestershire we have a plan, with a new supplier, to roll out to the remaining households to meet the Government’s commitments under the universal service obligation. That is welcome. The more we can do to extend that across the country to increase those speeds with full fibre to the home and to business will be very welcome.
Finally, given the competition we face in the world, and the challenges, rightly raised, of ensuring that, as we leave the European Union, we have a global outlook and we remain competitive, it is very important for Ministers to have a sense of urgency in driving forward developments in housing, productivity and investment in road infrastructure. As a constituency MP, I know that the length of time it takes to build new houses and roads and to roll out broadband is very frustrating. I am sure that frustration is shared by Members across the House. One thing Treasury Ministers could do, when thinking about the settlements they make with Departments, is to reward those that accelerate progress. Perhaps Departments that deliver against the Government’s objectives more quickly could be rewarded with more money to go ever faster, and Departments that are a little slower at delivery perhaps might have some of their funding removed and moved to higher-rewarding parts of government where things are delivered more quickly. That might boost public sector productivity, as my right hon. Friend the Member for Wokingham mentioned.
The Finance Bill is a good start. It raises some much needed revenue to help to continue balancing the books. I, for one, will have no trouble supporting it in the Division Lobby today.