Budget Resolutions
Debate between Stella Creasy and John Redwood
John Redwood
That might be worth looking at. We need to consider why the forecasts went so comprehensively wrong on this occasion. We also need to probe further why they went so wrong in 2007-08, when they disrupted the world economy in the west. They disrupted the Labour Government very dramatically, because there was absolutely no foresight about the consequences of the actions they were taking over the banking system, first allowing it to expand too fast and then collapsing it far too quickly, with awful consequences, as we know. I am delighted that I can fully support the Government’s latest forecasts, because they are in line with where I have been throughout.
That brings me neatly to the monetary situation. The Government need to recognise that there is a new move afoot. We will probably see an interest rate rise in the United States of America next week, and we might see two or three rises of 25 basis points over the course of this year, because it recognises that its recovery is sufficiently advanced. There is quite a bit more inflation in the American system, and it needs to start to normalise interest rates a little more. We might even hear from the European Central Bank tomorrow that it is no longer thinking of cutting rates further; they are already negative. It might need to think in due course about tapering its rather generous quantitative easing programme.
We are moving into a world where interest rates tend to go upwards, rather than going downwards or staying stable. If we are too slow in responding to that mood, we will find undue pressure on the pound. I do not think that has anything to do with Brexit; I think it is to do with interest rate differentials. The pound started to fall away in the summer of 2015, and most of the devaluation we have seen to date actually took place by April last year, before the vote, but there has been more pressure in recent weeks. When people look at these interest rate differentials, they will say, “Why don’t I hold my money in dollars? Not only will I immediately get a pick-up in interest, but I think there will be further rate rises in America.” We need to factor that in. That is why I welcome the Government’s decision to increase public spending in certain areas. As a constituency MP, I want more money spent on social care. I represent a high-cost area of the country, where the shoe is pinching and there are more people needing that assistance. The Government were right to make a sensible contribution, and I look forward to seeing the details.
John Redwood
I am running out of time, so I cannot take any more interventions.
I welcome the decision to have more money for schools and the NHS, because there, too, my area has been poorly funded for many years. We are looking forward to getting a much better settlement for our schools under fairer funding, and I hope that there will be something for our schools as a result of the Chancellor’s sensible decision to make some increases. I think that colleagues will generally welcome the Government’s attention to schools, the NHS and social care funding. I hope that the rate relief fund will be generous, because I represent an area where there are likely to be substantial increases in the rates, but where businesses are not necessarily generating the extra turnover that makes it easy to pay those sharp increases. We particularly need to look after small and growing businesses. I hope that the fund will be well targeted and will deal with what will otherwise be a series of tough, hard cases.
I welcome the extra spending and relief on tax, because I am not as worried as some about the level of UK debt. We need to remember that the figures the Government are giving us are for the gross debt. They are saying that the debt, at 86% of GDP, is high and needs to be brought down, but of course quite a bit of that debt is owned by the Bank of England on our behalf, so we owe the money to ourselves. The adjusted figure is about 65%, which is a perfectly reasonable level, particularly at a time of very low interest rates. Whatever happens with advanced country monetary policies, we all think that interest rates will remain abnormally low for quite a long period of time—well below the averages we were used to before the banking crash.
This is not a bad time for the state to borrow, particularly if it is investing in projects that we need and that may have some return. We definitely need better transport and strengthened broadband, much of which can be done by private finance. We also need better flood control and, at the same time, more water reserves for the fast-growing areas of the country. We need a lot of extra housing, which brings with it the need for more provision of schools and hospitals.
If we are to carry on growing at something like the rate at which we have done in recent years, we have to accept that there is a backlog of infrastructure requirements—everything from roads to water supply, through to getting our broadband up to speed and sufficient in capacity. I want as much of that as possible to be financed in the private sector, and a lot can and will be, but the Government have an important role in all these areas. They have to offer licences and organise planning permissions. They may need to pump-prime. Parts of the networks may not be financially viable without Government money. That is certainly true of our road system, because we have a system that is free at the point of use, owned by the state in all its manifestations. As we need better roads, Her Majesty’s Government clearly need to invest a decent amount in roads.
I note that the Budget was mercifully short of measures on the tax side, although I am always in favour of measures that cut taxes, rather than increase them, and I would have welcomed rather more of those. The Chancellor understandably wishes to go to having one Budget a year, in the autumn. We look forward to a Budget that deals with taxation in the autumn. He has set out a number of ideas for consultation, or perhaps pre-announcements; I trust that there might be some modification to those by the time we get to the proper Budget in the autumn. I urge him to understand just how crucial flexibility is to our economy, and that flexibility comes from having so much, and a growing volume of, self-employment. We need to ensure that it is as easy as possible to get into self-employment, and that it is as worthwhile as possible when people are successful.
I always think it is a good idea to try to confine taxes, and certainly tax rises, to things that we do not approve of very much. We have quite a number of sin taxes, which are rather easier to sell to the public. We should not go out of our way to tax work, enterprise and success. I know we have to do some of that, because we need a lot of revenue for the range of public services we offer, but our taxes on those things are quite high enough. We might actually find that we raised more revenue from more work and more enterprise if the rates were lower, because there is definitely a beneficial effect if we can get our rates to a competitive level worldwide. We need to understand that other countries around the world are getting the idea of cutting tax rates. The new President of the United States of America is working with Republicans on the hill on a major set of tax proposals that could cut American corporate tax rates and income tax rates dramatically, which would give America an important competitive advantage and make it a much more attractive place for talent and inward investment. We need to bear that in mind as we go into our autumn Budget cycle here, because I want the UK to be the most competitive major economy in the world.
My last point, in response to the previous speaker from the Scottish National party, the hon. Member for Dundee East (Stewart Hosie), is that he should not start painting this picture of misery and collapse in three years’ time, given that there was no collapse immediately after the vote. Were we to end up on World Trade Organisation terms, we would collect £12 billion in tariff revenue, which we could give back to businesses and consumers here; other countries would collect only £5 billion in tariff revenue from our exports to them, so we would be better off financially in that transaction. We would also be better off because if countries placed large tariffs on food exports to us, which would be an extraordinary type of self-harm on their part, we would presumably substitute a lot of imported food from cheaper parts of the world.
Education and Social Mobility
Debate between Stella Creasy and John Redwood(8 years ago)
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John Redwood
The right hon. Gentleman simply does not understand. If a young person from a poor background becomes a top footballer, that is a transformational event in their life, and good luck to them. Why do the Opposition not understand that exactly the same arguments apply to art, ballet and music? We take the children who we think are going to be the most talented musicians, at quite a young age, and we give them elite special training so that they can play to the highest standards in the world.
Stella Creasy (Walthamstow) (Lab/Co-op)
I am glad that the right hon. Gentleman has mentioned football. The fact is that 13% of our national football team went to private schools, which is twice the national percentage of children who go to private schools. Does the right hon. Gentleman think that that might account for the performance of our national football team, and that we might be missing out on the talent that exists in the comprehensive sector? Does he not recognise that that is precisely the problem that we are discussing today? We are missing out on talent as a result of too narrow a focus.
John Redwood
I do not think that we will get a better team by training them less, and no longer giving them any kind of elite education. I think that Opposition Members are being very obtuse.
Let me try a different argument. The Opposition’s second argument against grammar schools is that in Buckinghamshire and Berkshire, where we have some good grammar schools, all the other schools must be suffering. Opposition Members write off and write down the many excellent comprehensive schools in areas that have access to grammar school places, in a quite unrealistic and unpleasant way.
I know my own area better than Buckinghamshire. We do not have any grammar schools in my constituency, but there are two excellent grammar schools just over the border in Reading, a girls’ school and a boys’ school, which take some of our brightest and academically most gifted pupils from the Wokingham area. Our comprehensive schools in Wokingham also contain great, academically gifted children. Those children, at the top of those schools, do not have to compete with the children at the grammar, and they go on to compete very successfully and get good places at elite universities. Opposition Members should not write off those schools, or pretend that they are some kind of failed secondary modern.
I am glad that my hon. Friend the Member for Bexhill and Battle (Huw Merriman) reminded us that there are some very good secondary modern schools whose pupils achieve great things. My hon. Friend himself achieved great things before coming to the House, and some will consider it a great achievement that he is in the House now. I think that that shows that no one should write off any whole category of school. As an Opposition Member pointed out in a more honest moment, what really matters in a school is the talent of the teaching force and the good will and working spirit of the pupils. The two play off each other. That can be found in a good comprehensive, and it can be found in a good grammar school.
The Opposition must understand that we are not trying to create a series of schools for failures. We want to have great schools for everyone. We believe that selecting some pupils on the basis of academic ability and giving them elite academic training can make sense for them, but it does not write off the other schools.