Budget Resolutions

Debate between Angus Brendan MacNeil and Andrew Jones

Tuesday 12th March 2024 Commons Chamber

[Andrew Jones (Harrogate and Knaresborough) (Con)]

As this is day four of our Budget debate, much has already been said, so I will restrict my remarks to a few general comments before addressing some specific areas.

This has been a much more wide-ranging Budget than most commentators have noted, but the most positive thing that jumped out at me from all the data is the upgrading of growth forecasts. I completely recognise that economic forecasting has not been easy with all the uncertainty from the pandemic and the war in Ukraine, but I think our economy is stronger than most forecasters estimate and is regularly underestimated.

The upward revisions to the OBR forecast are large, too, with growth up by 0.5 percentage points in the months since the autumn statement. The recently published business surveys are also heading in the right direction, all indicating increasing confidence. Indeed, the main message I receive from businesses in Harrogate and Knaresborough is how hard it is to fill vacancies. The local unemployment rate, announced today, is 1.9%, which is a remarkably low figure, but it is matched in other parts of our country.

The growth in employment is a key reason our economy has been resilient. There are over 4 million more people on payrolls than there were in 2010, which is a significant achievement. Unemployment has been halved, and there are 1 million more businesses in the UK than in 2010.

As my right hon. Friend the Chief Secretary to the Treasury said in her opening remarks, the UK’s growth has outperformed that of the other major European economies—Germany, France and Italy—and is set to do so for the next five years, but our productivity has lagged badly. Indeed, the “Economic Indicators” report published by the House of Commons Library last month shows that UK productivity lags German productivity by 16%, which is a very significant gap, yet we are still outgrowing Germany. That raises the question of what the impact would be on growth if we kept what is driving our economy while addressing the productivity gap.

I am, therefore, pleased to see the Budget’s focus on productivity in both the private and public sectors, which I pursued as a Minister, particularly in the Treasury—once a Treasury Minister always a Treasury Minister—but we should define what it is. Productivity is not about working harder; it is about working smarter so that there is more output from each hour worked, not more hours worked.

The best way to drive productivity is with investment. Another encouraging stat in the Budget is that business investment has risen to 10.6% of GDP and is continuing to grow, which is very positive. It is how our future wealth will be created, and it is also a 14% increase compared with the level of investment under Labour. With GDP growth creating a bigger economy and investment taking a bigger slice, the budget involved is measured in the tens of billions. The permanent expensing announced in the autumn statement is a huge factor, and I strongly welcome the commitment to extending it to leasing. This is all about making the UK more competitive and an even better place to invest and grow a business.

One area that has not received the attention it deserves over a number of years is public sector productivity The delivery of good public services requires several components. One of them is budget, as the total amount spent matters, but it is not just the total amount spent. It is also about how well the money is spent.

There have been huge increases in public spending, so we need to ensure transparency and accountability. We also need to ensure that funds are directed to where there is the greatest return and the greatest need, and that taxpayers achieve value for their money. There is plenty to be done on that, particularly on infrastructure, where the Government are investing so heavily—that is a different speech, but I refer the House to the excellent work of the all-party parliamentary group on infrastructure, which I coincidentally chair.

It also requires the Government to make the right policy choices. For example, there is a less than 2% difference in per pupil funding between England and Wales, but English schools are rising up the international league tables for maths and science, and we are the best in the west for reading. Wales is sadly going down the league tables, and it is now ranked in the mid-30s. The financial difference is a world away from the ranking difference, and it comes down to policy choices.

[Angus Brendan MacNeil]

The hon. Gentleman is talking about education outcomes. I do not know whether he saw “Newsnight” last night, but a teacher in the city of Paisley in Scotland linked bad behaviour in the classroom to hunger. The teacher also spoke about the difficulty of getting good educational outcomes amid poverty. Is it not a fact that Department for Work and Pensions policies that keep families in poverty, including the two-child cap, add considerably to the problems in Wales? It is a matter of poverty, not education.

[Andrew Jones]

I did not see “Newsnight” last night, as I was here until very late. I was working away, as ever. Our benefits system has not held back the educational progress being made in England so, without having seen the programme, I suspect that other factors are involved.

The productivity of our public services remains below pre-pandemic levels, which suggests that the full value of budget increases is not being realised. It was, therefore, good to hear the announcement of a public sector productivity plan in the Budget. This important initiative has the potential to be a game changer. The National Audit Office suggests that a 5% increase in productivity is equivalent to a £20 billion budget increase.

The Budget detailed investment to upgrade IT in both the justice system and the NHS. The Chancellor revealed that 13 million hours are lost by doctors and nurses to outdated IT. The sheer scale of that is phenomenal, but not in a good way.

Governments of all colours have struggled with NHS IT for years, but the world is digitising. AI will change things even further and faster, and it is right to embrace these changes and secure the benefits they will bring. It is not just about the systems but about the processes used, and there is an attitudinal element as well. We have to think about how output will be achieved. In the world of government in the UK we tend to measure, then trumpet, inputs rather than outputs. That does not happen in the private sector. Moving that thinking into the policy and delivery teams so that they think more about outputs is critical in the longer term.

The most encouraging parts of the Budget tackle investment and productivity. Progress on those will create more wealth and better health for our future, which is why I will be supporting this Budget.