Achieving Economic Growth

Chris Grayling Excerpts

Wednesday 18th May 2022 Commons Chamber

[Rachel Reeves]

I thank the hon. Member for speaking so powerfully about his constituents. After years of work and contribution to this country, a pensioner is sleeping in a sleeping bag to keep warm.

The Government got rid of the triple lock, and now they are refusing to implement a windfall tax. Every day, the case for Labour’s windfall tax gets stronger, while the Tory defence for refusing to act gets weaker and weaker, yet last night every single Conservative MP voted against a windfall tax for the third time. People can no longer afford to pay for the Government’s mistakes. The Government should put the national interest first and follow Labour’s advice. It is time to do the right thing; it is time to put the needs of people first; it is time to introduce a windfall tax to get bills down.

[Chris Grayling (Epsom and Ewell) (Con)]

Will the hon. Lady clarify one thing? There is a bit of dispute about how much a windfall tax would raise per household. There are about 25 million households in the UK. Will the hon. Lady confirm how much money per household a windfall tax would actually raise?

[Rachel Reeves]

A windfall tax would raise about £3 billion. That, combined with the extra VAT that the Government are receiving because prices have gone up so much, could go directly towards taking money off people’s bills. It would make a real impact now. Every single day, the energy companies are making £32 million in unexpected profits. This Government increase taxes on working people; a Labour Government would increase taxes on the big oil and gas companies.

The cost of living crisis is being made worse by a wage crisis, as years of Conservative Governments have failed to stand up for working people. At the Conservative party conference last year, the Prime Minister bragged of plans for a high-wage economy. How is that going? Let me update the House. In the six months since then, average real-terms pay has not risen, but fallen. Behind the headline figures, data released yesterday by the Institute for Fiscal Studies shows not only that workers are experiencing a fall in their real pay, but that the gap between those earning most and those earning least is widening. For the hospital porters, the supermarket assistants, the delivery drivers—the very people who worked tirelessly through the pandemic to keep this country going—wages are in no way keeping up with the rising cost of living.

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[Alison Thewliss (Glasgow Central) (SNP)]

Today is National Numeracy Day and there will be a lot of figures flying about this afternoon. It often makes me think that it would be helpful in this place if we were allowed to do as they do in the US Senate and have great big charts we can point at to make these debates easier for people to follow. But the Bank of England’s predictions on GDP growth, thankfully for the Government, are quite easy to illustrate—they are pretty much a flat line. The cost of living crisis and Brexit continue to hold back growth, and opportunities for more sustainable, inclusive growth, conscious of our climate obligations presented at the COP26 summit in my constituency last year, are being squandered. It is not so much a Union dividend as a stagnant economy. It does not have to be this way.

We need to recognise that the endless pursuit of GDP growth at any cost destroys communities and the planet. Growth should be inclusive and should prioritise policies that tackle inequalities, contribute to net zero and provide high-quality jobs. Investing in green technologies, in insulating and retrofitting homes, and in improving public transport would all be a good start, but no Bills in the Queen’s Speech get close to that ambition. In Scotland, the SNP has put wellbeing at the heart of our economic strategy. It is through wellbeing and fair work that we can deliver higher rates of employment and wage growth, reduce poverty, and improve outcomes for disadvantaged families and communities.

I was proud to serve on the Scottish Government’s Social Justice and Fairness Commission, which, prior to the pandemic, set out some of the direction of travel. Last week, the Scottish Government announced the establishment of a new centre of expertise in equality and human rights, which will see the Scottish Government working with leading experts to address economic inequality, building on the principle that a fairer economy is a stronger economy.

Post pandemic, we are presented with a clear choice over whether to lead or to lag behind other successful and more equal economies while we recover from covid, deliver net zero, tackle structural inequalities and grow the economy. The UK Tory Government have chosen to ignore the problems and to lag. The UK economy is now forecast to be the worst-performing G7 economy next year. This week, we had more of the Chancellor’s sleight of hand on Twitter, in using a scale on a graph that makes less than 1% in GDP growth look good. It is not that good, so the Government should stop pretending that it is, and it is in no small part a consequence of their policy choices.

There has been no clear economic strategy from the UK Tory Government, yet the policy choice that looms over all things, from the Northern Ireland protocol disputes to manufacturing and labour supply, is Brexit. There is no doubt that global forces are posing huge challenges now, but these have been compounded by Brexit, the daftest of all economic policies. By December 2021, leaving the single market and customs union had reduced UK goods trade by 14.9%. Analysis by the Centre for European Reform shows that UK exports have taken a larger hit than imports. Pushing through that Brexit cliff edge in the middle of a pandemic, and masking the economic damage regardless of the economic cost, is an act of great economic self-sabotage. GDP growth in the UK is only about half the EU average since the Brexit referendum.

[Chris Grayling]

rose—

[Alison Thewliss]

I will certainly give way to the right hon. Gentleman if he can explain why there is a benefit of Brexit when we see only economic harm.

[Chris Grayling]

I ask the hon. Lady to correct the record. If she looks at the website of the Office for National Statistics, she will see that the opposite of what she is saying is the case. In fact, UK imports from the European Union have fallen, whereas UK exports to the EU have recovered. It is not clear why that is, but that is what the ONS says and I hope she will go away, read that website and correct the record.

[Alison Thewliss]

That goes to my point that we can make all kinds of statistics show all kinds of things. But what we hear from food producers in Scotland is that it is very difficult for them to get their high-quality exports to the European markets, and that is a direct choice with Brexit. We have also seen it become easier for EU goods to get into the country and more difficult for UK goods to get out—these mad policies have caused all kinds of difficulties.

We face weak growth in 2023 in comparison with not just the G7, but most of the world, as well as higher inflation by far than anywhere in the eurozone. Figures today that put inflation at 9% are shocking, and it is only May. Some of that inflation rate has come about via the Government’s choice—and it was a choice—to increase VAT back to 20%. Given the rampant energy costs, it is certain that more price rises are yet to come.

Last week, Adam Posen, the president of the Peterson Institute for International Economics, told the Treasury Committee that in his view, a

“substantial majority of the inflation differential for the UK over the euro area is due to Brexit”.

That is a choice by this Government that is making things harder for people in these islands. It is an act of self-harm supported not only by the Tory idealogues, of course, but now by the Labour Front-Bench team, who apparently want to make Brexit work, against all good reason and good evidence, and against the 62% of people in Scotland who voted to remain in the EU. Earlier in the week, when I asked Ministers about the benefits of Brexit, they pointed out freeports in Teesside, which will not have huge benefits for my constituents, that is for certain.

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[Chris Grayling (Epsom and Ewell) (Con)]

Thank you very much, Madam Deputy Speaker; I will endeavour to fulfil that.

The right hon. Member for Leeds Central (Hilary Benn) is right about conciliation, but it is noticeable that the European Union is preventing the United Kingdom from participating in Horizon Europe, while allowing the Israelis to do so. That does not feel to me like an awful lot of good will from their side, and that is to be regretted.

I rise to support the Queen’s Speech. As we focus on economic growth, these are extraordinary and difficult times for our economy. We have had in this country to deal with an unprecedented series of problems, and so have our Ministers—something the Opposition often forget as they throw brickbats at them.

We now know from the World Health Organisation that the Government and the country handled the tragic circumstances of the pandemic pretty well. Many countries suffered and so did we, but we were far from being the bad performer that has been suggested. We also forget the continued impact of the pandemic in China, where there are severe lockdowns still. That is causing an economic ripple effect that contributes to the inflation problems we face. The sad reality is that when oil prices, food prices and the cost of household energy soar, those things are outside the control of any individual Government and there are few Governments that can wave a wand and solve them.

I am pretty supportive of much of what this Government have done and how they have gone about dealing with the range of issues that have arisen, but I make one simple point to the Minister and his colleagues: we cannot achieve growth by over-taxing our economy. The decisions that have been taken on tax have been taken, but the direction of travel needs to change, and soon.

We also need to step up our incentivisation of investment. If we are to deal with the huge energy challenges this country faces, we must do more. That means continuing our dramatic progress on wind and solar power; it means, I suspect, looking again at tidal energy and it means developing hydrogen. It must be said that we would be in a much more difficult position if this Government and the coalition Government before them had not placed such emphasis on renewables. That was clearly the right thing to do. However, we also need more domestic production of gas. There are those who say we should stop all fossil fuel projects now. I take completely the opposite view.

As the world rightly moves away from coal, something needs to take its place. Countries that have been dependent on coal are not suddenly going to make a complete switch to renewables or zero-emission nuclear power stations overnight, so gas, which is the cleanest of the fossil fuels, must be a short-term priority for us. Indeed, it is the move away from coal in parts of Asia that started the gas price surge in the first place. It is pretty clear that the world does not at the moment have enough gas for the transition to net zero, particularly as we deal with the consequences of the war in Ukraine, so we will see prices continue to remain high unless we deal with supply issues.

That is why it makes absolute sense—the Government are right to be supporting this—to have additional extraction of gas from the North sea. Frankly, we would be in dereliction of our duty if we did not look again at the potential to use shale gas to help us through. To those who say, “No more UK production”, I just say this: the emissions from a tanker of gas from Qatar are roughly twice those of a similar consignment from the North sea. I want to cut emissions. I also believe that we need a steady transition to net zero by 2050—but it is a transition. Burning fuel that generates twice the emissions makes no sense. Gas is a key part of our transition to net zero, and the more it can be produced in the UK, the lower our emissions will be. We also need to move rapidly on nuclear, and I welcome the Government’s commitment to that as well. We cannot achieve net zero without it.

Let me turn to the environment and conservation. If I have a disappointment in this Queen’s Speech, it is that the legislation on conservation I was hoping for has slipped beyond this Session. I hope that my right hon. Friend the Minister for Brexit Opportunities and Government Efficiency, who is in his place will make sure that it comes back in the next Session. We urgently need to take forward the progress we have made but also to put in place a modernised framework for wildlife protection in this country. For example, it makes no sense to have expansive protections in place for newts, which are numerous here, but not for creatures such as the hedgehog that have declined so much. I have pushed for the hedgehog to have greater legal protection and I look forward to this happening in the next Session, at least. But there are steps that can be taken now. When the levelling-up Bill comes before the House, I will table an amendment, if the Government have not already acted, to require a full wildlife survey of every development site, and if vulnerable species are found, there should be a legal duty to relocate them to an appropriate habitat elsewhere. No more should we tolerate developers cutting down all the trees on the site and clearing all the foliage, turning it into a wasteland, before they have even applied for, let alone secured, planning consent. We need growth, and we need more houses, but a cavalier approach to local wildlife cannot be the consequence.

In this Session I will continue to push Ministers to go further and faster on bottom trawling in marine protected areas. We have made a start in the first few areas, but there is much further to go. This is a really important of protecting our ecology. Having stronger environmental protections in our seas is one of the benefits that is deliverable now that we have left the European Union. It would not have been possible while we were still EU members.

Turning to broader issues on conservation, I applaud Ministers for the work they are doing internationally, and particularly what Lord Goldsmith is doing to support the Congo Basin. The leadership of my right hon. Friend the Member for Reading West (Alok Sharma) on COP26 and its aftermath has been exemplary. One of the key moments of the coming Session will be the negotiations at the Convention on Biological Diversity summit this year. I want the UK to play a key role in delivering what is needed—a renewed international drive on species protection and habitat restoration. WWF estimates that the amount of degraded land internationally where deforestation followed by over-farming has taken place is the size of South America. If we are going to tackle climate change, protect endangered species and deal with a global food shortage, we need to start recovering this land, restoring it for wildlife in some areas or properly managed agriculture in others, with a particular focus on creating sustainable livelihoods for the people in those areas. Our Ministers need to make sure that we set a path towards those goals as we finish our year of COP presidency and take part in the CBD discussions.

There is a lot to do in terms of a growing economy, the move towards net zero, and doing our bit internationally to secure a proper future for all our environments. I am glad to support a Government who, in my view, have made a good start, but there is still a lot to do.