Oral Answers to Questions
Debate between Elizabeth Truss and Bim Afolami(5 years, 2 months ago)
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Bim Afolami (Hitchin and Harpenden) (Con)
What is the Treasury’s view of the idea of opportunity zones to help to revitalise some of the more disadvantaged parts of our country, particularly in that they differ from enterprise zones because they involve a capital gains cut rather than other types of tax relief?
Elizabeth Truss
I congratulate my hon. Friend on his article proposing new ideas. He raises one example of some of the exciting prospects for the post-Brexit economy that will help to revive some of the industrial areas throughout Britain.
The Economy
Debate between Elizabeth Truss and Bim Afolami(6 years, 1 month ago)
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Elizabeth Truss
The figure that the hon. Lady has given is not correct. During the current spending review period, we are spending more per head on infrastructure in the north of England than in the south. In the longer term, there will be decisions to be made about which projects we fund in the north, but we are absolutely committed to ensuring that the north has its fair share of transport and infrastructure funding.
Since rail privatisation, the number of complaints has fallen by 75%, satisfaction has risen from 76% to 81%, and the days of waiting hours for a train and a stale sandwich from British Rail are long over.
Royal Mail was loss-making when it was in public ownership, sucking up resources that could have been spent on services such as the NHS. By contrast, it has been financially healthy in every year since privatisation. If Labour Members think that they could do a better job of running those services, they need to demonstrate how. On current form, I believe that their proposals would mean chaos and confusion, and if we include the £350 billion for the strategic investment board, they would also mean the addition of an eye-watering half a trillion pounds of debt to the UK balance sheet.
Bim Afolami (Hitchin and Harpenden) (Con)
My right hon. Friend is making a very powerful speech. Does she agree that the Government’s approach is about practically achieving the best outcomes for people, whereas Labour’s approach is ideologically driven and will lead the country into more debt and more borrowing?
Elizabeth Truss
My hon. Friend is absolutely right. Rather than giving people and businesses the ability to shape their own futures, Labour Members want to put power in the hands of vested interests such as the unions and big companies. They say that they want to get rid of the state aid rules. That would prevent competition from taking place properly, and the end result would be taxpayers, including small businesses and families, picking up the tab through higher taxes. Labour’s plan would mean less money for schools and hospitals, and more money diverted to loss-making businesses.
The reality is that Labour still has not learnt the lessons of its failings in 2010. It has not learnt that a Government with no control over public finances will damage the economy and damage public services. When Labour left office, we were devoting 45% of our national income to public spending, and we have seen the longest increase in debt since the Napoleonic wars. Labour just does not understand that allowing the state to get too big cuts out individual enterprise. It cuts out people’s incentive to take on risk, try new things and do new things. State-owned companies compete for space and resources with private companies, starving them of oxygen. What is worse is that what Labour is planning would have to be funded through higher taxes.
Under the last Labour Government, we saw public services that did not improve in terms of the outcomes for patients or students, but we also saw huge amounts of money squandered. The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) is laughing. Is he laughing at the fact that in the international education league tables, the UK ended up 26th in mathematics? We saw no improvement, although vast amounts of money were squandered.
Through the fiscal discipline of the last eight years, we have reduced the deficit by three quarters to 2.3%, and we have reached the turning point of debt falling as a share of the economy in the coming financial years. Our efforts, needless to say, have been opposed at every turn by the Labour party, but they have restored confidence in our economy. They have boosted investment, and they have led to more jobs and growth. The Government’s concrete plan to get debt down has given us a competitive advantage. If businesses know that we can keep our house in order, they will base themselves here in the UK, creating highly skilled and well-paid jobs.
At the same time, we have ensured that our public services are improving through public sector reforms such as the introduction of academies and free schools, and programmes that have put more people into work. We are seeing record cancer survival rates, better school results and record employment levels, because we have made the decision to reform the way in which our public services work. Because of our stewardship of the economy, we are now able to target Government spending where it is needed and where we recognise that there are issues.
Alongside our national retraining programme, we are tripling the number of fully qualified computer science teachers, so that our young people are able to succeed in the modern economy. We are increasing infrastructure spending on things like transport, which the hon. Member for Colne Valley (Thelma Walker) mentioned, to a 40-year high, even though we are having to make difficult decisions elsewhere. Yesterday we struck a deal to give nurses and other NHS staff a 6.5% pay rise over three years in exchange for reform that will improve patient outcomes, to make sure we can continue to recruit high-quality people in the NHS. We can do that only because we have got control of the public finances and we have fixed the economy, measures that Labour opposed at every turn.
So let me be clear: if we had listened to Labour and let the public finances spin out of control, there would be no money to invest in public services, and there would be no money now for that NHS deal, so nurses would not get their well-deserved pay rise. It is Labour that put public services at risk by losing control of spending and crashing the economy. Conservatives are delivering a stronger economy, stronger public services and a pay rise for hard-working NHS staff.
We are not out of the woods yet, however. Debt and borrowing are still too high. Debt is forecast to peak at 85.6% of GDP in 2017-18, the highest it has been for 50 years. That leaves us vulnerable to economic shocks in the future that are by their nature hard to predict, but—worst of all—it places a burden on the next generation, because we are still spending £50 billion a year on interest payments, more than the combined amount we spend on the police and armed forces. So in order to ensure the UK’s economic resilience, improve sustainability and reduce the burden on future generations, we need to get our debt falling. However, even despite all these obvious facts that are all there in black and white, the Opposition continue to call for big spending announcements.
Bim Afolami
On debt interest repayments, will my right hon. Friend explain further how even a relatively modest rise in interest rates would make what is currently £50 billion of interest repayment completely unmanageable if Labour got in and we had a run on the pound?
Elizabeth Truss
My hon. Friend makes a good point, and the reality is that the Opposition are planning for a run on the pound; they have actually released documentation that suggests that this is a real risk should they get into power. I find that incredibly worrying.
As I mentioned, the Opposition have called for big spending announcements. That is fiscal fantasy land, and there are only two ways it could be achieved. First, we could borrow more and plunge ourselves further into debt, making us less resilient to any potential shocks that might happen to the economy. Secondly, we could increase taxes, which would be bad news for families, bad news for businesses and bad news for the economy.
The Opposition claim that they could just increase taxes on the highest earners. That is simply not true. The levels of taxation they are talking about for their plans for a state on steroids would lead to the highest taxes we have seen in peacetime history, and the people who would really suffer are ordinary working people struggling to get by, and struggling to get on the housing ladder. Those are the people who would be hammered by Labour’s tax increases.
Alongside our fiscal policy, we have a clear independent monetary policy and a macro prudential framework that has helped to bring inflation under control and promoted financial stability. We must remember what happens when the Government do not get this right: the banks had to be bailed out under the failure of Labour’s tripartite regimes. Our reforms, which included establishing the Financial Policy Committee in the Bank of England, have made sure we have the sound financial institutions that people can rely on. In 2017 the Bank of England tested the financial system against a scenario that was more severe than the global financial crisis, and our system had the capital to cope. Our independent monetary policy regime has also kept control of inflation, which is set to fall this year, easing pressure on living standards.
Ten years ago we were on the brink: we were teetering on the edge of a very serious crash, and public spending was out of control. Over the past eight years, and as a result of the policy decisions we have taken, we have seen a huge growth in the number of new businesses opening in this country; we have got more people, particularly the young, into employment; and we have put our public services on a sustainable footing.
We are getting our public finances back to black. This week’s economic news has been positive, but we are not complacent. We recognise that there is more work to do and we will continue to work hard to make sure our economy continues to grow, because as Britain prepares to leave the EU it is more important than ever that we unleash businesses and the people of Britain to fulfil their true potential.
Oral Answers to Questions
Debate between Elizabeth Truss and Bim Afolami(6 years, 1 month ago)
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Elizabeth Truss
We have given the NHS a sustainable settlement. It received an additional £6.3 billion, but it is also important that we reform our healthcare services, that we put in place sustainable transformation plans, and that we are investing in capital and new technology and making sure that we use our fantastic frontline workers—nurses and doctors—in the best way possible.
Bim Afolami (Hitchin and Harpenden) (Con)
As the Chancellor knows, investment in infrastructure is key to ensuring that we can build the thousands of homes that this country needs. Will the Chancellor agree to meet me, other Hertfordshire MPs and the leader of Hertfordshire County Council to discuss how we might be able to do that in Hertfordshire, where we need to deliver about 100,000 new homes?