Budget Resolutions

Iain Wright Excerpts

1st reading: House of Commons
Tuesday 14th March 2017 Commons Chamber

[Justine Greening]

The investment that we have brought forward in the Budget will enable us to go further and faster on that backlog, but as I said earlier, it is also important that we plan ahead. We need to make sure that the demographic bulge of people who have been in our primary schools and are moving through to our secondary schools have school places and classrooms to go to when they need them. That is why balanced investment was announced in the Budget, not just in refurbishing existing schools and school places, with a particular focus on those that need it the most, but in ensuring that we have the extra good school places that our country will need in the future.

I touched briefly on why lifelong learning and the investment in it in the Budget are so important. Lifelong learning needs to become the norm in our country, and I want to ensure that people have the tools to do it. The reality is that many of us will never study again after leaving school, yet we know that in the economy of the future, readapting to new skills and continuing to learn will be vital. That is why we are making available up to £40 million over the next two years to fund lifetime learning trials. That will help us to ensure that we know what works, where it is needed and how we can change our country so that we have a culture in which more adults seize opportunities to upskill and take control of their lives.

As I said earlier, we have the highest level of female employment on record, which is a fantastic achievement, and the gender pay gap is at a record low of 18.1%, but there is still a gap. The Government are implacable in our commitment to close that gap to zero within a generation, and we know that some women find it hard to return to work after taking time out to care for young children. Many feel that they come back to work at a lower level or have to expect less progression in their work and pay. That is not good enough, and our economy cannot afford to miss out on that talent. Some employers are already running schemes to help women return to work, and we want to learn from those businesses and work with them to support more women to be able to do so. We also want to apply the same lessons in the public sector, together with improving people’s ability to take up lifelong learning.

I want to see people coming back to work better skilled than when they left to take a career break, rather than somehow having to struggle to get their career back on track. That is why I have announced that my Department will work with business groups.

[Mr Iain Wright (Hartlepool) (Lab)]

On labour market participation, the Red Book shows that funding for returnships will be £5 million, as opposed to £655 million for extending the free schools programme. Does the Secretary of State think that is an appropriate balance?

[Justine Greening]

Returnships are not widely used at the moment—in fact, they are used by just a few companies—but we know that where they have been invested in, they have made a real difference. We are at the beginning of bringing forward some pilots so that we can better understand what works and get a clearer sense of the broader strategy that we should have for the long term. That comes alongside the investment in lifelong learning, which ties into that work. Critically, we will consider how we can ensure that, as we develop those policies and ideas, they are informed by evidence. That was the reason for the investment that we announced in the Budget.

--- Later in debate ---

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to follow the hon. Member for Gainsborough (Sir Edward Leigh); he made a thoughtful and forward-looking speech, although I have to say that I could not disagree with him more on the matters of insurance-based payments to fund our NHS and selective education; those are the wrong approaches for this country to take.

I want to mention three key points. The first is the position of the national debt. This year’s “Economic and fiscal outlook” document from the Office for Budget Responsibility states that

“the fiscal mandate has targeted different measures of the deficit at different horizons”,

which is a beautifully diplomatic way of saying that the Government keep moving the goalposts and still fail to score the goal. The OBR goes on to state that

“the Government does not appear to be on track to meet its stated fiscal objective to ‘return the public finances to balance at the earliest possible date in the next Parliament’.”

So the Government have failed on the deficit, but they are failing catastrophically on the debt.

In 2010, the Government expected public sector net debt to be falling as a share of GDP; it was forecast to reach a high of 70.3% in 2013-14, falling to 67.4% by 2015-16. However, in every single year that the Tories have been in No. 11 net debt has risen in actual and relative terms, reaching 83.7% of GDP last year, and it is going to rise through this Parliament, with the Red Book forecasting that it will reach 88.9% this year.

When the coalition took office, public sector net debt was £771 billion. This year it reached £1.6 trillion, and the Red Book forecasts it is to rise again throughout this Parliament to £1.9 trillion. This is my first key point: in little over a decade, the Tories will have increased public sector debt by 146%, with it rising by over £1 trillion.

In his statement, the Chancellor said that they

“will not saddle our children with ever-increasing debts.”—[Official Report, 8 March 2017; Vol. 622, c. 811.]

However, when Tory Chancellors have increased the public debt by almost 150% in a decade, saddling our children with ever-increasing debts seems to be precisely what this Government are doing.

[Chris Philp]

Will the hon. Gentleman join me in welcoming the fact that the deficit has gone down from 11% of GDP when Labour left office to 3% of GDP today?

[Mr Wright]

But the public sector debt is almost touching £2 trillion. The hon. Gentleman cannot be satisfied with that situation when the whole nature of Tory Governments since 2010 has been not only to reduce the deficit, but also to get the debt down to manageable proportions.

On that point, having debt on a low and falling proportion of GDP provides some scope to absorb the impact of any future economic shock. That was the case with the Labour Government in the run-up to 2008, and in many respects it was the case with the Thatcher Government in 1988, ’89 and ’90, to hit the recession of the early 1990s. But this Government are failing to do the same thing: we will hit any economic turbulence or downturn with public sector debt being about 80% to 85% of GDP. That does not give us the flexibility to be able to respond and help firms and families in a robust and strong way.

The second point I want to make is about the nature of the economic recovery. Seven years ago a Tory Chancellor’s first Budget for 13 years stated that the British economy had become unbalanced, too reliant on growth and, as the 2010 Red Book said,

“driven by the accumulation of unsustainable levels of private sector debt and rising public sector debt.”

Growth was confined to a limited number of sectors and regions. I have mentioned public sector debt, and it is true to say that the British economy has performed well; the UK was the fastest-growing G7 economy last year. However, if we scratch beneath the surface, it is questionable precisely who is benefiting from that growth and what sort of growth we are having. Of course, growth is growth, and it has to be welcomed, but the British economy seems to be reverting to type, which could leave us vulnerable to long-term challenges and mean that we fail to take advantage of great opportunities.

Who is benefiting from the growth? The UK has been the only big advanced economy in which wages have contracted while the economy has expanded. Households are facing a period of 15 years in which average real wage growth simply does not happen. Average earnings in real terms are expected to be the same in 2022 as they were in 2007. Such a long period of wage stagnation is unprecedented since before the industrial revolution. Yet despite the lack of wage growth, household consumption is powering the economy, as the hon. Member for East Lothian (George Kerevan) mentioned in his powerful contribution. This has led to an expansion in the dominant services sector, but if consumption growth is running faster than wage growth, it must mean that people are either reducing their savings or increasing their borrowing.

The Governor of the Bank of England said in a speech in January that

“the UK expansion is increasingly consumption-led. Evidence from the past quarter century across a range of countries suggests episodes of consumption-led growth tends to be both slower and less durable.”

The household debt-to-income ratio has increased from 140.8% to 143.9% this year alone. These are worrying trends, and we are not seeing an increase in investment or an export-led recovery. Business investment has constantly undershot expectations, and there was a year-on-year fall in business investment of 1.5% last year. Despite the drop in sterling’s value against the dollar by about a fifth since 23 June, we have not seen the boom in exports that we might have expected. In fact, the trade deficit widened to £13.6 billion in the third quarter of 2016. That was due predominantly to a trade in goods deficit getting larger by £8.5 billion.

My third point is that we need a new model for the economy. To be fair to the Prime Minister, she said when she first came into No. 10 that she wanted to see an economy that worked for everyone, and that she wanted to see private sector reform to ensure that growth was rebalanced and reached all parts of the UK. However, that is not what we saw in last week’s Budget. The Government have referred to an industrial strategy as the path by which such growth could be achieved, yet the Chancellor failed to mention the term “industrial strategy” once in his financial statement, which demonstrates the buy-in from the Treasury to the concept. We talk about rebalancing across the regions, but as a north-eastern MP, I could find no reference whatever to the north in the Budget statement, let alone an assurance that we could have an economy that worked for everyone.

In our recent Select Committee report following our inquiry into the industrial strategy, we noted that the Government tend to operate in silos, and this Budget sadly reveals business as usual and more of the same. The Government intervene in the economy every single day, through taxes and regulations, as the Red Book shows. They can do that in an ad hoc, piecemeal way, or they can do it as part of a co-ordinated, strategic purpose. Sadly, the Budget seems to stress the former. It is true that the industrial strategy talks about skills as being essential, and the Chancellor’s announcement on technical education is welcome, but we will not see the fruits of those proposals until 2020-21. The industrial strategy also talks about ensuring that we are one of the most competitive places in the world to start and grow a business, yet the national insurance contributions debacle will result in a tax on enterprise, on ambition and on personal risk-taking by entrepreneurs.

The Committee would have liked to see a more ambitious, mission-based approach in which the Government, working with business, set a long-term direction for the economy in the pursuit of tackling global and national challenges. Where in the Budget was the vision on decarbonisation? Where in the Budget was the ambition to be the leading economy to exploit the fourth industrial revolution? Sadly, we got the same short-term tinkering, which will not address issues such as low productivity, skills deficiencies and massive regional imbalances. If the Prime Minister is serious about an economy that works for everyone, we need to see a step change in the way the economy works. An industrial strategy could be the means by which we achieve that but, sadly, in this Budget we saw business as usual.

[Lucy Allan (Telford) (Con)]

Thank you for calling me to speak in this important debate, Madam Deputy Speaker. It is a pleasure to follow the considered speech of the hon. Member for Hartlepool (Mr Wright). I congratulate the Secretary of State for Education on her passion and commitment to social mobility. We saw that today and we see similar themes in the Budget. I am so pleased that she is doing everything possible to ensure that my constituents have the opportunity to realise their potential. I particularly welcome the Government’s commitment to technical education, the introduction of the T-levels and the fundamental reform of education for 16 to 19-year-olds. It is truly a Budget for skills. I care so much about that because it represents an important investment in the future of my constituency. Telford has a proud industrial past as the birthplace of the industrial revolution.

[Mr Iain Wright]

That’s just wrong.

[Lucy Allan]

I know that the hon. Gentleman disagrees with me, but I will continue to say that Telford is indeed the birthplace of the industrial revolution. We have our foundries, ironmasters such as Abraham Darby, the invention of the inclined plane, the Ironbridge—I could go on, but we are here to talk about skills. Over the years, through innovation and the indomitable Telford spirit, we have been able to overcome obstacles and find solutions to many problems. As a result of that innovation and spirit, Telford has become a dynamic, vibrant centre of the modern industrial revolution. From polymers and plastics to the high-tech automotive supply chain and advanced manufacturing, high-skilled, high-paid jobs are on offer to Telford’s young people.

Some years ago, I addressed sixth-form students at Abraham Darby Academy, which is in Madeley in my constituency, and said that university is not for everyone, that many graduates feel ill-equipped for the world of work on graduation and that some find themselves highly in debt in low-paid jobs. There was a bit of shuffling and an awkward silence and the teachers looked at each other and at the floor, and it became clear that almost all the students were being actively encouraged to go to university, which is what they planned to do. At that stage, however, they did not have the choice that is now being offered to students. We now have a clear-cut quality alternative for students who want to spend their post-16 years preparing for the world of work, which has to be a good thing. We have to ensure that the young people of Telford have the right skills and the work-readiness abilities to take full advantage of the opportunities presented by the high-skilled, high-tech jobs that are now coming to Telford.

Employers in Telford frequently talk to me about the skills gap being a major challenge, and the Budget’s measures on technical training will address that. Telford already has some fantastic organisations that are working hard to upskill our young people. Juniper Training and the Telford College of Arts and Technology do fantastic things on work readiness and skilling young people up with technical skills. Equally important, however, is the skills training offered by primary schools in Telford. We may be doing something unique, so I want to tell the House about it because it is a model that other primary schools should look to follow.

At Dawley C of E Primary Academy, which I visited recently, every single child uses technology in the classroom in amazingly innovative and advanced ways. Children are acquiring skills that will equip them for the jobs of the future. I got to see 7-year-olds using 3D printing and computer-aided design to make flowerpots and benches for an outdoor area as if it were second nature. The school is giving children the skills to thrive in the Britain of tomorrow—skills for success in a modern economy. Pupils from Newdale Primary and Nursery School visited me in Parliament today, and one young boy told me all about how they are learning to code. Many schools do that, but we need to build on the technical skills that children learn at a young age. It is fantastic that we can build on that with a complete overhaul of 16-to-19 provision to create a workforce of tomorrow for jobs that have not even been created yet, which is vital for a vibrant economy and for our global competitiveness.

I say “Well done” to Dawley C of E Primary Academy and to Richard Smith from Amazing ICT, who goes around all the primary schools in Telford helping pupils to discover technology at the youngest possible age. They are giving students the skills they need to thrive in the modern economy and equipping them for the jobs of tomorrow. A particular “well done” goes to the Secretary of State for Education for introducing that transformative approach to skills. As with the new T-levels and the technical education routes, we are helping children to do what they wish to do, and we are boosting UK productivity and UK competitiveness in a post-Brexit world.

I welcome many of the Budget’s other measures, too. I particularly want to mention the measures for women, including the £5 million for the centenary of votes for women in 1918, as it is important that we mark that incredible milestone. I welcome the £5 million for returners and the £20 million for the victims of domestic violence, and I am glad to see those important measures.