Budget Resolutions
Debate between Jacob Rees-Mogg and Geraint Davies
Mr Jacob Rees-Mogg (North East Somerset) (Con)
The hon. Member for Hackney South and Shoreditch (Meg Hillier) lays down the challenge that not enough was said on Brexit, so let me try to put that right; it is a challenge I am happy to rise to. If one thinks back to just a few months ago, we were expecting this to be the “punishment Budget,” and that my right hon. Friend the Member for Tatton (Mr Osborne) was going to be telling us that it was all doom and gloom. I have looked up a quotation from one Mr Angel Gurría, the secretary-general of the OECD, which yesterday gave us a little good news. He said there would be a Brexit tax of £2,200 per person and went on to tell us:
“The costs are piling up, and we are still two months away from the referendum.”
He said it was getting worse and worse.
I rather feel as the diners must have felt at Belshazzar’s feast, when the words appeared written on the wall, “Mene, Mene, Tekel, Upharsin,” and Daniel came and translated them and said, “You have been weighed in the balances and found wanting.” After the feast they all went to bed and woke up the next morning, and instead of Darius the Mede having taken over, Belshazzar carried on as normal. It was business as normal, and that is what is so impressive about this Budget.
We are, indeed, in a period of transition with Brexit; we are heading out of the door, I am glad to say, in spite of their lordships’ obstructionism, but we are doing so from a position of extraordinary strength and remarkable stability. And that stability is deliberate and is part of Government policy.
It is worth looking at page 57 of the Red Book, because we see there the percentage of GDP that is anticipated to come in as public sector receipts. It will be consistently between 36% and 37.5% over the period we are looking at. If we look back over a much longer time period, all the way to Harold Wilson’s prime ministership, we see that public sector receipts remain in the region of 34.5% to 38.5%.
However detailed, pernickety and fiddly the changes in taxation, it is remarkably difficult to raise that taxation much above current levels, and therefore what we are talking about in this Budget is more a question of how the cloth is cut than whether there should be more taxation or not. Expenditure must then fit in with that, and to ensure that expenditure remains under control remains the business of government, whether they are this Conservative Government, they were the last coalition Government, or, heaven forfend, they are a socialist Government, should Labour ever manage to return from its current sorry state.
Geraint Davies
Does the hon. Gentleman not agree that the Brexit vote reduced the size of the cloth at a stroke? It shrank by 15% through devaluation—of the value of our economy, our wages, our savings and our assets. Moreover, after the short-term window of export growth because of that devaluation, we are going to face tariffs that clobber us again.
Mr Rees-Mogg
That really depends on how we measure our cloth. I am in favour of measuring my cloth in imperial measures—that is to say, pounds and ounces, inches and feet and so on, and therefore of using sterling as my base for measuring things. If we do that, our international assets have gone up enormously, because any dollar assets we hold are worth 15% more in pounds. That is more income coming in, and that helps reduce the current account deficit; it is good news for the British economy. Our exporters are 15% more competitive. That deals with any tariffs that may be imposed—if any are imposed. What is more, we are at the front of the queue for a trade deal with the strongest and biggest economy in the world, so, actually, post-Brexit we are fighting fit. The Chancellor of the Exchequer said that he would ensure that we were fighting fit, and we are. We are open for business with the world. With the continuing cuts in corporation tax, we are showing that we are absolutely willing to compete with anybody in attracting capital investment and that we are ready to do business in a way that investors will like.