Budget Resolutions and Economic Situation
Debate between Graham Stuart and Peter Kyle(1 day, 12 hours ago)
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Peter Kyle
I will make some progress, because lots of Members want to speak, and I have not even got on to the main argument that I want to make.
There are real benefits from this Budget. In my constituency, the council tax rebate will impact positively on 42,000 homes. The same will be true in the constituency of the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale) and in others around the country.
The Chancellor also mentioned directly the defence dual use investment for companies doing dual-use innovations. When he was Defence Secretary and I was Secretary of State at the Department for Science, Innovation and Technology, we worked together, and it was the first time that the Secretaries of State of those two Departments came together to work on the strategic challenges and opportunities faced in the defence industry. I am really pleased that we now have a Chancellor investing in dual use. It will be based on the conversations and workstreams that we set up when we were those two Secretaries of State. Those two roles should work together going forward.
When Labour came to office in 2024, we inherited a growth emergency. Now we have taken solid steps forward, but we must still have the mindset that we are facing a growth emergency. It is my belief that we are on a motorway heading in the right direction but even now are only travelling at 30 mph.
I believe that the challenge we face is a complacency that was set down in previous times, when we took growth for granted. From the 1997 Government onwards, for a decade before the financial crash, I think it is fair to say that we felt that growth was dependable—that there was a sense of inevitability about growth. We could focus on all the social issues we wanted to tackle based on the proceeds of that growth, but we did not pay enough attention to underpinning growth and making sure that it was sustainable into the very long term.
Graham Stuart
I agree with every word that the right hon. Gentleman just said about the need to focus on growth. The question is: how do we get it? It seems that too many on the Labour Benches believe that it is by Government intervention rather than reducing the taxes that create disincentives for business. Is he as alarmed as I am at the more than £2.2 billion increase in taxes on business today—from writing down allowances to company distributions and business asset disposal relief, as well as the probable more than £6 billion reduction in lending that will result from the £1.5 billion bank tax?
Peter Kyle
The right hon. Gentleman’s intervention was longer than my speech has been so far. When I find that I agree with every word that somebody is saying, I usually sit down and listen to a bit more of it rather than trying to challenge it. Perhaps the rest of my speech will answer the questions that he raises.
In that decade, because of the predictability and certainty of growth, I think that growth policy was seen like any other policy. In other words, if there was a shelf with all the different policies of Government on it, growth would be one set of policies on that shelf. I know that there are a lot of analogies going around these days, and Liz Truss has blown a hole in analogy use as well as in our economy, but it is my belief that we now need to have the mindset that growth is the shelf itself. We cannot have successful social policies delivered in the way that all of us in this Chamber would like unless we have a solid, predictably-growing economy into the long term that provides security and prosperity and from which we can share investment fairly around the country.
We must on both sides of the House be as animated about economic growth as we are about creating prosperity, spending it and challenging the social ills in our society. We must care as much about economic growth as we do about rough sleeping, social care and international development—I say that as someone who spent my early life in international development. Tackling those issues depends on economic growth itself.
Public services are incredibly important. They are enablers of growth. We cannot have growth if people are arriving late to work, are too sick to work or are stuck on a Tory waiting list for treatment. We need to have the right skills in the right places. All of those things are absolutely essential, but we should not kid ourselves that such growth is not built on by private enterprise.
Thanks to the Prime Minister deciding that I could have some time over the summer, I was able to write an essay—now that Tony Blair has brought them back into fashion. I know that many Members will have already read it, making some of my words today obsolete, but let me refresh their minds about what I focused on. I confined the essay to my experience in Government and how we can configure Government more assiduously and dependably to unlock the economic growth that our country needs so much—focusing on what Government themselves can deliver. That experience comes from leading two Departments as Secretary of State. I saw in both those Departments that civil servants can deliver boldly when they have the authority to and when incentives align.
I will use one example—the automotive sector—to illustrate to Members the challenges that the Government face to unlock growth. Delivering support for the automotive sector means aligning energy, trade, regulation and all these different areas of policy. All are held by more than one Government Department, and each of those Departments has its own priorities. As Secretary of State in the Department for Business and Trade, at times I was prioritising the automotive sector and recognising how important it can be for growth. Let us bear in mind, when Jaguar Land Rover suffered its cyber-attack, 0.2% was taken off our GDP. When it was up and running six weeks later, 0.2% was returned to our GDP. The importance of industry is still fundamental. When the Prime Minister and the Chancellor talk about reindustrialisation, hon. Members should not underestimate its ability to deliver growth for our overall economy.
We have another asset when it comes to the automotive sector in our country. When we talk about frontier technology—I am looking for the Minister for Artificial Intelligence, who was in his place a moment ago—we think about the AI labs, most of which are in California, with some in China, but we have a frontier industry here in the UK in the automotive sector, and it is Formula 1, because 11 of the 12 teams do all their research and development and all the deployment of their vehicles right here in the UK. No other country in the world has that asset, and that filters skills through our automotive sector. The ability to grow that sector is huge, but that needs Government to work in an aligned way.
I discovered how different Departments with different priorities have oversight over things like automotive, and how sometimes they can slow down those priority areas. We need the structures and incentives in Government to be much better aligned, because we cannot have all these important sectors depending on Ministers’ ability to WhatsApp each other to sort out problems. We should have a system of Government that is already on the side of making pro-growth choices.
I want to say a few brief words about defence, which has already been raised in the debate. I am grateful to the Chancellor for the statements he has made on this. We focus on the percentage of GDP allocated to defence, but the debate cannot just be about how big a share of our economy we spend on defence; it must also be about how big an economy we have. If we were to achieve five years of 3% annual growth, 3% of our national income on defence would deliver almost the same amount of money as moving to 3.5% in an economy of today’s size.
Oral Answers to Questions
Debate between Graham Stuart and Peter Kyle(11 months, 4 weeks ago)
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Peter Kyle
I am grateful for my hon. Friend’s passionate question. As he will know, we have struck a trade deal with the EU and reset the relationship with it. We will continue to build on that to deliver for all parts of our economy.
Graham Stuart (Beverley and Holderness) (Con)