Economic and Fiscal Outlook

Debate between Jacob Rees-Mogg and Elizabeth Truss

Monday 30th April 2018 Commons Chamber

[Elizabeth Truss]

I find it absolutely astonishing that the hon. Lady would say that, given that her party is planning to spend half a trillion pounds, increasing our debt. She has obviously not read the speeches of the shadow Chancellor and the shadow Chief Secretary. The 20% increase in debt that Labour is proposing would make us much more vulnerable to external shocks. The fact is that we have spent the past eight years repairing the damage done to the economy by profligate spending by Labour Members who did not fix the roof while the sun was shining.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Does my right hon. Friend recall that the previous Labour shadow Chancellor accused the Government of going too far, too fast? He thought that throughout the period of austerity we should have been spending more, leaving us with even further debt. The Government are to be commended for their robust approach.

[Elizabeth Truss]

I thank my hon. Friend for making that point. Labour Members seem to believe that by spending more money and borrowing more, we can reduce debt. That simply does not add up. Under Labour’s plans, we would be vulnerable to an external crisis, as we were when it was last in office in 2009. The Labour party seems to welcome that prospect. The shadow Chancellor said that the 2008 economic crash was a “capitalist crisis” for which he had been waiting for a generation. We have a Labour party that is actively planning a run on the banks if it gets into office.

Exiting the EU: Costs

Debate between Jacob Rees-Mogg and Elizabeth Truss

Wednesday 29th November 2017 Commons Chamber

[Elizabeth Truss]

It is absolutely right that the UK honours its commitments in the spirit of our future partnership, but as I have said before, nothing is agreed until everything is agreed. We will expect to make progress and secure that long-term economic partnership, which will be to the benefit of UK citizens.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Will my right hon. Friend note the growing concern at the fact that Her Majesty’s Government seem in these negotiations to be dancing to the tune of the European Commission? Further to the question from my right hon. Friend the Member for North Shropshire (Mr Paterson), may I also ask whether she can be certain that, after 29 March 2019, we will make no payments to the European Union whatever in the absence of a full agreement covering trade?

[Elizabeth Truss]

I can assure my hon. Friend that we are not dancing to anyone’s tune. What we care about is the future of Britain’s economy, protecting the British taxpayer from excess payments and making sure we secure a good deal, which is why it is so important that we do not discuss these numbers while we are in the middle of a very important negotiation.

Budget Resolutions

Debate between Jacob Rees-Mogg and Elizabeth Truss

Wednesday 22nd November 2017 Commons Chamber

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

I am sorry that I have not been in the Chamber for the whole debate, Mr Speaker. I have been at a meeting of the Exiting the European Union Committee debating one of our reports. We have been firmly excising split infinitives, and making sure that apostrophes appear in the right place and that Humble Addresses are preceded by the correct indefinite article. All those important matters took me away from the Chamber.

It is a pleasure to follow the hon. Member for Nottingham East (Mr Leslie), who is always so interesting on such matters, although we disagree very firmly about them. I thought it might be worth looking at how much better the figures are than they were expected to be. In the context of Brexit, we are always told that the end of the world is nigh, the writing is on the wall and all will be terrible, and yet when we look at the Red Book, the figures that we have had so far are better—in spite of the Treasury and others saying that it will all be a disaster. Paragraph 1.36 of the Red Book states:

“Borrowing in 2017-18 is £49.9 billion, £8.4 billion lower than forecast at Spring Budget 2017.”

Why? Because receipts are higher and more money is coming in, which is indicative of the economy’s strengthening. The following page indicates that that is down to spending decisions and tax decisions that have been taken in the Budget.

I have one specific question for Ministers on the Treasury Bench about the Red Book. This may have been raised by my hon. Friend the Member for Dover (Charlie Elphicke), but it is of considerable importance. Page 82, which I think is copied from page 114 of the OBR’s “Economic and fiscal outlook”, states that in 2022-23 there will be a £3.5 billion “own resources” contribution to the European Union. Now, I cannot believe that the wise figures in the OBR or in Her Majesty’s Treasury could have made the schoolboy error of just assuming that money paid out in one year would continue indefinitely, but it misses the point that we will have left the European Union by 2022-23, that the implementation period will have ended, and that the whole concept of “own resources” will have ceased to exist. It is rather like spotting an error in “Wisden Cricketers’ Almanack”, which is very rare, and indicates a failing that I hope will be put right. I hope that we will discover that it was unintended, because if it is intended, that means that we will not in fact be stopping our contributions to the European Union, which would be very strange. To have this described as “own resources” is even more peculiar, because that assumes that we are still members of the EU. I think there is an error there.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

To respond to my hon. Friend’s point about the forecasts, they are made by the OBR. The OBR was provided with the Prime Minister’s Florence speech—the basis on which we are negotiating with the EU—and it is up to the OBR to make its own independent forecasts. My hon. Friend will have to speak directly to the OBR about that, but my understanding is that it has used an average of other independent forecasts.

[Mr Rees-Mogg]

I am grateful to my right hon. Friend, but I do not think that that quite works for the “own resources” figure, because the OBR has made assumptions relating to our net contribution to the European Union and has assumed that those moneys will be spent domestically in the United Kingdom, and that therefore there is no fiscal advantage. However, there is still a £3.5 billion negative income from “own resources”. It is hard to think that the OBR would have taken that from other forecasters, because that is a matter on which the Treasury can give an authoritative view, and it would be odd if the Treasury had not explained that “own resources” will end at the point at which we leave the European Union. They have to, because only member states of the European Union can make “own resources” contributions, for obvious reasons, although I have always disliked the term “own resources”, and I have always been with Margaret Thatcher in that it is our money and we would quite like to keep it, thank you very much.

All that ties in with a point made eloquently by the hon. Member for Islwyn (Chris Evans): the key to this Budget has to be Brexit. What we are doing currently is in the context of leaving the European Union, and this Budget is inevitably encompassed by Brexit and by productivity. That is where the challenge lies. The OBR’s gloomy productivity forecasts suggest a reduction in potential output in 2021-22 of 3%. The challenge for the architects of our economic future is how to make Brexit work to ensure that we get a productivity boost.

That is where I was so encouraged by what the Chancellor had to say about this Government being a free trade Government, and that the real opportunity that comes from Brexit is freely opening up our markets to the rest of the world. We must remember that the customs union, in which the hon. Member for Nottingham East is so keen to stay, is actually a protectionist union that stops people in the United Kingdom from buying the cheapest available goods and that, by and large, it protects industries that the UK does not have. The overwhelming majority of the protections under the customs union are for things such as German coffee processors or Spanish orange growers—the types of things that we are not doing. Our industries receive marginal protection from the customs union, but at a very high cost to British consumers—it is thought that the cost for food is 20%, and that the next highest level of tariffs is on clothing and footwear.

The opportunity for the poorest in our society to see their standard of living and real wages rise is quite fundamental. Their weekly, monthly and annual expenditure will be reduced and their real incomes will rise, making funds available for other expenditure, or indeed for saving and reinvesting in British industry. Equally, the loss of cosy protectionism means that we will cease to subsidise inefficient continental businesses. It will also ensure that we concentrate on what we are best at. That ought to lead, of itself, to a boost in productivity. Indeed, that is the lesson of history when we move to free trade and remove not only formal tariffs, but non-tariff barriers.

That, if the correct policies are adopted, is how the £350 million a week can ultimately be provided for the national health service. Figures produced by Professor Patrick Minford and his distinguished team at Cardiff University indicate that there will be a boon of £135 billion between 2020 and 2025, and £40 billion a year after that, which will make it possible to have tax cuts and to fund the health service. It is encouraging that the Chancellor has already started that process and is making more money available for the health service now, because it is important that politicians deliver on the spirit of their promises, as well as on the detailed, pettifogging, nitpicking, small-print elements. It is right that that should be made possible, and having a free trade development of economic policy will be crucial to that, so it was welcome that the Chancellor included it in his Budget statement.

The other issue of greatest importance to voters is that of housing, and here I would encourage the Chancellor to go further. The Government are absolutely right to be supporting more house building, but the key will be reform of the planning system. The thing that makes housing in this country so expensive is the fact that supply is controlled. As the Chancellor rightly said in his Budget statement, actions to help demand are merely likely to push prices up. What we need is to see prices coming down, at least in relation to incomes, and that means not only increasing supply, but increasing the supply of housing that people want to live in.

The one question that I will therefore raise on the Budget is this. The Chancellor said that he would look to ensure that the housing was primarily in an urban setting, but when we ask people what housing they want to live in, 80% say that they want to live in houses with gardens, and that means we will have to build on green fields. It would be wise to review the green belt, because some parts of it are not actually essential to life and the pursuit of happiness. What we really want is a succession of Poundburys across the country, because that is the type of housing that people want to live in, and I think that the Conservative party should be on the side of not only the Prince of Wales, but the people.