Economy and Jobs

Helen Whately Excerpts

Thursday 29th June 2017 Commons Chamber

[John McDonnell]

I would check the hon. Gentleman’s facts, but let me say—[Interruption.] I suggest he goes back to other Labour Governments who increased employment in this country as a result of direct state investment: the Attlee Government in particular, and the Wilson Government.

The issue for many of us is the quality of those jobs. The fact is that we now have people in employment who literally cannot fend off poverty. Two thirds of our children who are living in poverty are in families where people are in work. That is the quality of some of the jobs brought about by this Government.

The Queen’s Speech promises

“to invest in the National Health Service, schools, and other public services”,

but that could not be further from the truth. The reality is that spending per pupil remains set to fall, the jobs of police officers, firefighters, border guards will be cut, and the NHS is “already at breaking point” and has been promised no new money. Those are not our words, but those of the British Medical Association.

In various interviews over the past fortnight, the Chancellor has bemoaned the fact that he was hidden away during the election campaign and that his record on the economy was not the central plank of the Conservative campaign. I agree with him. I wish he had been more to the fore in the campaign, with his record more widely exposed, because if that had been the case, Labour would be in government now.

I do not believe that the right hon. Gentleman has been afforded his proper place in history. For those hon. Members who were not in this place 10 years ago, let me explain that prior to 2010 the Chancellor was the shadow Chief Secretary to the Treasury. In that role, as an ardent neoliberal, he was the architect of austerity. It was he who designed the detailed economic programme rolled out by his mentor, George Osborne, after 2010, and he has been at the heart of every austerity Cabinet throughout this period.

In the Chancellor’s recent Mansion House speech, he referred to his Government’s austerity record as one

“of which we are proud.”

The foundation of the Chancellor’s record is its adherence to neoliberalism and trickle-down economics—a theory that argues that if we cut the taxes for the rich and the corporations, and if we turn a blind eye to tax avoidance and tax evasion, somehow the wealth will trickle down to the rest of society. This Chancellor has certainly cut taxes for the rich and the corporations. Corporation tax, capital gains tax, inheritance tax and the bank levy have all been slashed by this Chancellor. Independent analysis of Office for Budget Responsibility costings demonstrates that the tax cuts introduced by the Conservatives on those four measures alone since 2010 will have cost taxpayers more than £70 billion between last year and the end of this Parliament.

[Helen Whately (Faversham and Mid Kent) (Con)]

As the right hon. Gentleman well knows, history tells us that increasing corporation tax actually leads to reduced tax revenues. Were he in government, his plans would mean that corporation tax revenue would fall. If he were in a position to do so, how would he make up that shortfall in Government revenue?

[John McDonnell]

The argument we heard was that corporation tax cuts would lead to a large-scale increase in business investment in our economy, but business investment fell last year for the first time since 2009. It remains lower than that in the rest of the G7 countries, with the exception of Italy. Corporations are now sitting on more than £580 billion of earned income that they are not investing. Some have been exposed as using that earned income in share buy-outs to boost performance statistics and therefore boost bonuses. That is the product of the corporation tax cuts.

--- Later in debate ---

[Mr Hammond]

I will in just a moment.

Here is the inconvenient truth for the Labour party about corporation tax. We cut corporation tax to the lowest rate of any large developed economy and two things happened. The private sector created 3.4 million new jobs—something, by the way, that the Labour party used to care about in the old days—and in the process we raised an additional £18 billion in corporation tax to fund our vital public services. That did not happen by magic. Lower corporate taxes attract more investment, more investment creates more jobs and more profits, and more profits deliver higher taxes. It is not very complicated.

[Helen Whately]

Is it not the case that if we are to have the public services that we want for our constituents, we have to have a strong and growing economy? It is very simple.

[Mr Hammond]

My hon. Friend is exactly right. There is no short cut and there is no free lunch. There is only the hard grind of improving the productivity and growth potential of our economy to build the sustainable public services that we want for the future.