Budget Resolutions

Debate between Caroline Dinenage and Meg Hillier

Wednesday 30th October 2024 Commons Chamber

[Dame Meg Hillier]

The hon. Lady is a former Chair of the Treasury Committee and I welcome her being a member of it, as she will add great value. As she knows, we will have the opportunity to raise questions with the Chancellor at next week’s hearing. She has now been forewarned that the hon. Lady may ask about this issue. It is important that we recognise good people who provide support in the public sector by watching our public finances, and I always take people on good faith unless I have a reason not to do so. We have an opportunity to explore this issue elsewhere.

As a share of GDP, taxes are higher than at any time since world war two. Before the election, my right hon. Friend the Chancellor was tough on spending commitments, and sometimes there was a bit of moaning in the Tea Room. I do not want to tell tales out of school, but shadow Ministers were dismayed because they could not spend everything that they wanted to spend. As Chair of the Public Accounts Committee at the time, however, I knew what she was talking about and that what was coming was not going to be pretty, so I welcome some of the steps that she has announced today. I have not had a chance to look in the Red Book or at the detail, but the multi-year funding settlements that she has put in place are a great opportunity to give certainty to business and investors in our country. Hopefully, we will finally nail the issue of HS2, which has cost the taxpayer a fortune. We need to get on with that in order to make sure that we are delivering investment for our country.

I look forward to seeing the detail on cladding, but it is a big issue in my constituency, where many people’s lives are on hold as a result. The money for affordable homes is incredibly vital for those living in difficult situations, and the Chancellor is absolutely right to have finally funded the compensation schemes for infected-blood victims and for postmasters and postmistresses. When the state makes an error, the state needs to correct it. It should never be a party political football.

The Chancellor has had to make tough choices, and she has set out her fiscal rules to provide clarity to the markets and a long-term trajectory for investment and growth. We on the Treasury Committee will watch net financial debt closely to see how the benefit is measured, and it is important for taxpayers and the market that we do so. She will be more aware than anyone about the impact on the market if she does not manage debt very carefully. International investors may use the existing debt model, so when she comes in front of the Treasury Committee, I would be interested in talking to her about how she sees this playing out in the international arena.

[Dame Caroline Dinenage (Gosport) (Con)]

I have enormous respect for the hon. Lady, given her previous role and her important new role as Chair of the Treasury Committee. As the Chancellor will be coming to see the Committee shortly, could the hon. Lady put a question to her on my behalf. We all know that we can learn lessons from previous Budgets about the law of unintended consequences. The thing that most concerns me in this Budget is the combination of raising employers’ national insurance contributions, cutting the threshold at which they start paying NI, and raising the minimum wage. Could the hon. Lady ask the Chancellor whether there will be special support for businesses that employ a lot of people on low wages, such as care homes and childcare settings, which will be most impacted by the measures? Otherwise, the costs will be passed on.

[Dame Meg Hillier]

The hon. Lady is a very experienced Member of this House, and she has made her point. She will no doubt have the opportunity to speak in this Budget debate, and there will be plenty of opportunities across the Committee corridor. I welcome her as a fellow Chair. Committee Chairs are already planning how we will work together to ensure that we hold the Government to account, whichever party we represent.

The fiscal rules are designed to provide fiscal certainty and predictability, to bring a sense of discipline to the public finances, and to reassure the markets, as I have mentioned. I welcome that stability, as will the markets, as the FTSE increase suggests. Given the headroom that the Chancellor has secured under the new rule, the Treasury Committee will be watching how much she invests, because we need to see the growth that she has set out as her goal. That must be sustainable, so it needs to be productivity growth. There is no single solution, but analysis by the Resolution Foundation found that a 1% increase in capital stock increases productivity by 0.4%. We will look closely at this, and at the spending review in 2025.

On tax, the increase in employers’ national insurance to 15% is an understandable measure. It is always challenging to find money in these difficult fiscal circumstances, but the increase brings money into the Exchequer at a faster pace than some of the other measures that were mentioned in the media. I have a wide approach to reading about things. If we read The Daily Telegraph, we will think the world is going to hell in a handcart, but if we read more measured commentary, we will find that the Chancellor is judged well on what she has achieved today.

As the hon. Member for Gosport (Dame Caroline Dinenage) said, there are concerns about how the measures in the Budget interact. Alongside sister Committees, we on the Treasury Committee will examine those.