Baroness Morgan of Cotes
Main Page: Baroness Morgan of Cotes (Non-affiliated - Life peer)
Nicky Morgan (Loughborough) (Con)
Everybody is leaving the Chamber—it must be something I said, or perhaps something the right hon. Member for Islington North (Jeremy Corbyn) did not say. The Chancellor had a difficult job, with a conflicting economic outlook as he prepared today’s Budget, but he has offered solutions and a vision for the future, unlike the Leader of the Opposition, from whom we heard no vision, no solution and no idea what needs to be done to support growth in this country.
On the one hand, borrowing is down to its lowest levels since the beginning of the century, and although plenty of economic challenges remain—not least the need to boost growth—there are encouraging signs that pay and productivity are picking up at last, while unemployment rates remain at historic lows. As my right hon. Friend said, the OBR forecasts sustained real wage growth, and it is extremely good news—albeit undersung—that this country is no longer borrowing to fund current spending. That is the result of an enormous amount of hard work by the British people and by Ministers, including the previous Chancellor.
On the other hand, the job of bringing back down the national debt—a lasting legacy of the financial crisis—is only just beginning, and the OBR’s long-run projections make it clear that demographic pressures on the public finances will only build further from here. My right hon. Friend rightly referred to the 2019 spending review, which will be a critical moment for the future of public spending in this country.
Caroline Lucas (Brighton, Pavilion) (Green)
Barely two weeks ago, the world’s scientists issued their most stark warning yet that we have just 12 years in which to tackle climate change and avoid climate catastrophe, yet there was not a single word from the Chancellor about climate change, nothing about clean energy, nothing about green energy. Does the right hon. Lady agree—[Interruption.]
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. Interventions are meant to be short. I think the hon. Lady has got her message across.
Nicky Morgan
Thank you, Mr Deputy Speaker. I heard the Chancellor mention climate change. The hon. Lady will have her own opportunity to speak later on in this debate.
It is time to look at the next iteration of the Government’s plan to ensure that public services have the funding they need while keeping borrowing and debt under control. The Chancellor made a welcome start on that plan today by setting out how the boost to NHS spending will be funded and indicating the overall envelope for the forthcoming spending review. The Treasury Committee will of course take a close look at the detail of the plan. I particularly welcome the NHS spending on mental health. I declare an interest as a trustee of a small mental health charity in my constituency. The fact is that it is this Government who have made a clear commitment to parity of esteem for mental and physical health.
With sustainable public finances comes the resilience to deal with the challenges and risks that may lie ahead. Brexit is of course the greatest and most imminent source of uncertainty looming over the Budget. It is just stating the obvious to say that the nature of the United Kingdom’s withdrawal from the EU could up-end the economic forecast on which the Budget is based. The Office for Budget Responsibility is still playing its cards close to its chest. It is still forecasting a relatively benign Brexit with a smooth transition that has no implications for productivity. I am sure that is what we all hope for. However, its forecast of continued reductions in public borrowing depend on those benign assumptions becoming a reality. None the less, the OBR has begun to make some of its thinking about Brexit clearer. Its view of the implications of a no-deal Brexit has become very clear indeed. The nearest precedent the OBR could think of was the three-day week, which it says knocked 3% off our economy that quarter. But even assuming a smooth transition, the OBR also says that increased trade barriers with the EU, not just tariffs, will likely leave our economy smaller and reduce long-run productivity growth.
Mary Creagh (Wakefield) (Lab)
Does the right hon. Lady not find it slightly disingenuous of the Chancellor to talk about a deal dividend from Brexit, when every single Treasury forecast for any Brexit deal shows that our economy will be worse off?
Nicky Morgan
It is undoubtedly the case that our economy will be worse off because of Brexit. We could have the best possible deal, but no deal secured will be as good as the deal we have at the moment. As a strong and ardent remain campaigner, I have to accept how 17.4 million in this country voted. The hon. Lady, and I am sure others in this House, will be very aware of my particular position, which is that if we are going to go down this route, there is a deal that can be done that mitigates the worst of the damage. That deal is the Norway option, which I hope my Government will seriously, seriously consider. I also gently say to the hon. Lady that had the Opposition Front Bench, particularly the Leader, played its part fully in the referendum campaign, we might well not be in this position now.
It has been said repeatedly that the divorce bill and the UK’s contributions to the EU budget will be dwarfed by how the future UK-EU relationship impacts on trade, migration and productivity. Amid this uncertainty, the Treasury Committee will support Parliament in scrutinising the economic implications of the UK’s withdrawal agreement. My right hon. Friend the Chancellor will know that we have requested detailed assessments of the withdrawal agreement and the future framework, once negotiated, from the Treasury, the Bank of England and the Financial Conduct Authority. We need those assessments in good time before Parliament comes to vote. The Committee has appointed a specialist adviser, Professor Sir Stephen Nickell, a former member of the OBR budget responsibility committee, who will subject the Treasury’s analysis to independent assurance. The Committee will also take evidence from the Chancellor. I know he is looking forward to that session.
As far as the Budget is concerned, the forecast on which it is based can only be considered preliminary until the OBR gets an opportunity to review the Brexit deal. The OBR’s next forecast, the spring statement, will therefore assume a greater importance than usual. The Committee will expect the OBR to receive the analysis and information it needs from Government Departments and agencies in good time to incorporate the agreement fully into its forecasts. I note that the OBR has made it clear in some documents today that it was pushed for time in the analysis that it did before the Budget. We all understand why the Budget is early, but we want to make sure that the OBR has sufficient time in future.
In that context, I remind the House of my comments at last year’s Budget debate concerning the role of the Treasury Committee in upholding the independence of the OBR as well as subjecting it to scrutiny and challenge. The OBR is a vital tool in helping this Parliament to hold the Government to account, and the Committee will continue to seek assurances that the OBR has done its work free of political interference and will defend its reputation for independent judgment, if need be. That is all the more vital given the extraordinary situation that UK politics finds itself in at the moment. I am sure the whole House would agree that when Jon Thompson, the chief executive of Her Majesty’s Revenue and Customs, receives death threats for the evidence that he gives to my Committee, that is abhorrent and has no place in our democracy.
I have said before that the Government should not wait for Brexit before moving forward on their domestic policy agenda. In an uncertain economic climate, households are also under financial pressure, with the saving ratio at record lows and negative in cash terms. Earlier this year, the Committee’s household finances inquiry called for the Chancellor to report on the state of household finances and savings at the Budget and set out his strategy for improving their resilience. I do not think that has happened today, but I hope that it happens in future fiscal statements. I note, however, the Chancellor’s announcement of such things as income tax cuts, which very much help with the cost of living, and savings to beer duty—although I did notice the calls from my hon. Friends on the Bench behind me regarding wine duty, which I am sure he will have heeded. I also note that the Chancellor has announced a package of support for affordable credit and credit unions, including announcements on the “breathing space” changes, which will be very welcome.
Following last year’s Budget, the Committee also called for the Treasury to publish robust equalities impact assessments in future that include gender breakdowns of Budget measures. I gently remind the Leader of the Opposition that it is the Conservative party in government that has introduced the gender pay gap regulations and is on its second female leader, while the Opposition still need to have their first. The Committee will be taking evidence from the Women’s Budget Group and others later this week, and I welcome the evidence that they will give us.
The Committee has also just published its report on SME finances, making a number of recommendations that, if implemented, will allow small businesses to make an even greater contribution to our economic performance. The Chancellor has announced measures today, including in relation to the annual investment allowance, that will support small and medium-sized enterprises.
I note that the Chancellor said he would encourage the expansion of the Financial Ombudsman Service to deal with problems that small and medium-sized businesses have with their banks. Neither I nor the Committee think that that goes far enough. A tribunal is needed to allow those for whom going to court is simply not an option to have their access to justice when their relationship with their bank—a critical relationship—goes so badly wrong.
Kevin Hollinrake (Thirsk and Malton) (Con)
I am very appreciative of the Chancellor’s recognition of the work in this area by the all-party group on fair business banking and finance, but 90% of the cases that we deal with are claims well in excess of the £350,000 threshold, or even the £600,000 threshold, as recommended by Simon Walker. We need to fill that big gap in justice before we can finally put these issues behind us. Does my right hon. Friend the Member for Loughborough (Nicky Morgan) agree with that position?
Nicky Morgan
I thank my hon. Friend very much. He has done a huge amount of work in this space through his all-party group, and he has spoken eloquently in debates on this subject. Just as we welcome wage increases, which we have not seen over the last 10 years—I would argue that that is much of the reason why UK politics is in the state it is in at the moment—he is right to say that putting these issues to bed, including the relationship breakdowns between the banks and smaller businesses, is vital to allowing that important relationship to move on. That is why I think that both he and I would agree that a tribunal is the right way forward.
The Chancellor talked about productivity, which is clearly going to be part of the debate. He also talked about the need to review business rates; he is absolutely right and the help that has been given today is very important. However, the Committee will look further at business rates because, although today’s announcement is obviously welcome—I speak as somebody whose constituency office pays business rates—there has to be a more fundamental look at this issue going forward, if we want to support our retailers and small and medium-sized businesses.
The Chancellor also announced changes on digital tax, which is another issue of fairness. We welcome that announcement and await the details, and we look forward to questioning him on these issues at future scrutiny sessions. The Committee is rising to the challenge of an early autumn Budget with an accelerated schedule for our own scrutiny and analysis. As I say, we will be taking evidence from the OBR and others this week, and we look forward to hearing further from the Chancellor in a week’s time on the measures he has announced and on the economic and fiscal outlook.
As a constituency MP, I would like to thank the Chancellor for the £70 million for the Defence and National Rehabilitation Centre just outside my constituency. I would have liked him to say more, however, about the national retraining scheme announced in last year’s Budget. Investing in things is important to the industrial strategy, but so is investing in people and skills.
Finally, the Chancellor said right at the start that this was a Budget for the strivers, the grafters and the carers. I fully endorse his desire to build an economy that works for everyone, and we look forward to asking him further questions in the scrutiny sessions ahead.
Several hon. Members rose—