Energy (oil and gas) profits levy
Debate between David Linden and Liam Fox(1 year, 9 months ago)
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Dr Fox
I entirely agree. The concept of the bloc in trade terms is very second half of the 20th century. We need to look at the growing markets that give greater opportunities for the United Kingdom in goods and services. The fact that they are not immediately geographically adjacent to us should not be our primary concern. We need to move with the trends in the global economy, not focus on what is a largely ossified view of the world based on the post-second world war consensus.
When we look at the origins of the inflation that we are facing in the United Kingdom, we see that there are several of them. They have been referenced a lot during this debate. The post-pandemic supply issues are still ricocheting around the global economy and particularly harming developing countries at the present time. Also, the central banks—not just the Bank of England but the Federal Reserve in the United States and the European Central Bank—got into a group-think on what they laughingly call the modern monetarists, which means that they are not monetarists at all. They believed that they had found some sort of monetary alchemy through which they could continue to print money faster than the economies were growing without creating inflation. I believe that is why there is higher inflation in the United States, the United Kingdom and Europe than in other countries—notably Switzerland, which sits in the middle of the eurozone but did not follow the same expansionist monetary policies.
By far the greatest boost to inflation has come from Putin’s invasion of Ukraine, however. That has come about in a number of ways, which I will come to in just a moment, but we must remind ourselves that inflation is not just an economic evil; it is a moral and social evil as well. The poorest people in our society are hit the hardest by inflation because they spend more of their income on non-discretionary items. It also transfers money from the savers to the borrowers in society, which is not something that a Conservative Government should want to see. The Government have done much in this statement to protect those on low and fixed incomes, including an extra £26 billion in cost of living support, particularly on fuel, on top of what we have spent already, and an extra £11 billion on uprating benefits. The Government introduced those two items to protect those on low and fixed incomes and, taken together, they are the size of the United Kingdom’s defence budget. These are not small sums. Our increased spending on education and health is hugely welcome, especially as we catch up on the post-pandemic disruption, but to be frank, even the generous sums put forward by the Government will largely be eaten up by inflation until we get it under control.
And that is before we come to the most frightening item of all, the fact that this year we will be spending £120 billion on debt interest payments. For reference, we spend only £134 billion on NHS England each year, so we are spending almost the NHS budget on debt interest payments. We need to recognise that we cannot increase our debt further. As my right hon. Friend the Member for North West Hampshire (Kit Malthouse) said, around 20% of our debt is now index-linked and is therefore very vulnerable to rises in the retail price index. Duncan Simpson, the chief executive of the TaxPayers Alliance, said:
“The spiralling cost of servicing the national debt is deeply concerning. Taxpayers’ money that should be spent on frontline services or keeping rates down is instead going towards interest payments that outsize the costs of government departments.”
If we cannot raise debt any further, either we have to see spending come down or taxes go up, or we have to increase Britain’s wealth from the rest of the global economy. The latter is difficult in current global conditions and the Government have correctly, but rather disappointingly, from a political perspective, had to see taxes rise. That sets a clear way in which to see our future priorities. The first thing is to bear down on inflation. At the same time, we have to get control of the public finances and then we have to get our taxes back down.
I hope the Opposition will reflect on this point today. We have heard from the Opposition Front Bench on both days of this debate that we are facing a recession made in Downing Street. Currently, the greatest source of global inflation is Putin’s invasion of Ukraine and rising global commodity prices, particularly food and fuel, which is causing potential starvation in vulnerable states, with widespread social dislocation and increased international migration.
Dr Fox
I will not give way.
Those who talk about a recession made in Downing Street might want to ask themselves how much they are absolving Vladimir Putin of the global inflation we see today and whether, in fact, they are neglecting their duty to be patriotic at this time.
Conservatives do not want to see taxes rise. If we have to see temporary rises in taxation, the necessary corollary is that, as soon as inflation starts to be controlled, we will see those taxes coming down again. I would go further than my right hon. Friend the Member for North West Hampshire in one respect: this is not just a debate about growth, because any dummy can borrow tomorrow’s money to spend today and call the increased activity “growth,” which has been central to every Labour Government since the second world war.
The Government need to focus on wealth creation, in which we turn our unique intellectual property into goods and services that do not exist today, or into better goods and services than exist today. That means dealing with the supply-side constraints on the economy, making more private capital available to scale up companies, getting more international investment in the United Kingdom and making us more competitive globally. No one in the world owes us a living, and no Government can guarantee increasing living standards to the next generation. Only a successful free-market country in a free-market world can achieve that, and the sooner we get there, the better.
Oral Answers to Questions
Debate between David Linden and Liam Fox(5 years, 1 month ago)
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David Linden (Glasgow East) (SNP)
Dr Fox
I had a number of discussions in the United States about that issue this week, as the hon. Gentleman may have guessed. It is likely that tariffs will be applied following the WTO determination of the level of tariffs that the US is allowed by law to set following the judgment on Airbus. Of course, the judgment on Boeing, to which he alluded, is also coming. At some point, we must ensure that both European countries and the United States are able to give appropriate support to their aircraft industries, because the alternative will be market access for China, which will be in the interests of neither.
Future Free Trade Agreements
Debate between David Linden and Liam Fox(5 years, 6 months ago)
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Dr Fox
I will make some progress. I will give way again shortly.
New opportunities are clearly available to the United Kingdom, and seeking them will demand some of the agility that is required to respond to the potentially seismic shifts that are taking place in the world economy. The United Kingdom will have to be ready to compete for emerging sources of growth. While our established partners—such as the European Union—will continue to be vital, the locus of economic power is none the less shifting rapidly. It is estimated that 90% of global economic growth in the next five years will occur outside the EU. A centre of gravity that rested in North America in 1990 will have shifted to China and the far east by 2050, and we are already seeing the effects of some of that in the global economy. Those changes in economic development, global trade patterns and population growth in emerging and developing economies will fundamentally alter the opportunities that developed economies will have in the years to come.
Overall, the global population is projected to rise from 7 billion in 2010 to 9.8 billion by 2050, with the increase stemming mainly from Asia and Africa. The world is becoming increasingly well educated, wealthier and more urbanised. It is expected that by 2030, 60% of the world’s population—5 billion people—will be middle-class. In 2009, the figure was only 1.8 billion. In the intervening time, middle-class spending will more than double to $6.38 trillion. The rise of the middle class in Asia means that there is an enormous potential demand for the high-quality products and services in which the UK specialises. By 2030, China alone will have 220 cities with a population of more than 1 million, while the whole of Europe will have only 35.
David Linden (Glasgow East) (SNP)
The Secretary of State is right to refer to the emerging middle class in growing economies—India is one example—but can he give me a cast-iron guarantee that when he is negotiating these trade agreements, human rights and issues such as freedom of religion and belief will be at the forefront of his mind? I am concerned about the possibility that, as we go around negotiating these wonderful free trade agreements, we will start to ignore human rights, particularly in the case of India.
Dr Fox
The importance that the UK ascribes to human rights is extremely well documented in the range of Departments that are involved. The Government do not intend to seek any watering down of concepts of human rights, although it is very reasonable for us to have different provisions in countries such as Canada and the United States, whose legal remedies and legal systems are similar to ours, from those that we would have in some other countries. We will want to be flexible on that, and it is one of the issues that I want to see built into real-time parliamentary scrutiny of our trade agreements so that the House can determine whether the values represented by the United Kingdom are reflected in those agreements.
Trade Policy
Debate between David Linden and Liam Fox(6 years, 1 month ago)
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Dr Fox
I am not sure that that question was entirely within the scope of the statement, Madam Deputy Speaker. Even if we are looking purely at goods issues, I think that the ability of the United Kingdom to abolish or reduce to zero tariffs with the United States on cars, for example, would have been something that President Trump would have welcomed last week.
David Linden (Glasgow East) (SNP)
If Scotland is an equal part of the United Kingdom, why can it not have a seat at the table when we are negotiating the free trade agreements?
Dr Fox
Back when we signed the memorandum of understanding, we made it clear that if there are areas where any of the devolved Administrations might have specific interests, that may allow us to have a seat at an international negotiation. Of course, that would involve having to further the Government’s position because, remembering that trade is still a reserved matter, we could not go into negotiations with someone sitting on the British side of the table who took a different view from the Government’s broader objective for the whole United Kingdom.
Oral Answers to Questions
Debate between David Linden and Liam Fox(6 years, 4 months ago)
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David Linden (Glasgow East) (SNP)
The liquid gold that is Scotch whisky is a major export good for our economy, but so far in the EU negotiations we are still not getting clarity on geographical indications, which many other drinks benefit from as well. When will we get clarity on GI for Scotch whisky and other drinks that we enjoy?
Dr Fox
It always comes round to whisky at some point in these discussions on a Thursday morning. As the hon. Gentleman will know, the Government accepted that we would roll over the EU treaties that exist at the present time, including those on GIs. It is a pity that he voted against that in the House of Commons.