Budget Resolutions
Debate between Jim McMahon and Damian Collins(8 months, 2 weeks ago)
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Damian Collins
My hon. Friend is quite right: if anything, Labour wanted the lockdown to carry on longer, meaning that the debts would have been even higher. Had the Conservative party not put the public finances back in order, we would have started that pandemic with much higher levels of debt than we did. The necessary decisions were made to put the economy right.
The borrowing has gone on because of the need to pay for covid. It has been complicated by a war in Ukraine —again, I have not heard any Labour Members say that we should not have supported the Ukrainian people.
Jim McMahon
The hon. Gentleman’s speech is giving the impression—I understand why—that the world was rosy up until covid came and that the problems followed afterwards, but before covid, there were 2 million more people on the NHS waiting list than under the previous Labour Government. The NHS was in a fragile state, as was the national debt, which was over £1.5 trillion before covid hit. The hon. Gentleman cannot say that that is strong foundations.
Damian Collins
No, I did not say that at all. What I said was that we picked up the pieces of an international banking crisis, with no plan from the previous Government for how that would be paid for. It was entirely down to the Conservative party to find that money. The criticism was that the previous Labour Government were increasing borrowing before the banking crisis hit. They were already borrowing for political reasons—to sustain spending they could not afford—and then had to bail out the banks on top of that. If Members are going to criticise the past 14 years of Government, let us start where the problem started, which was before we came into power. We were required to pick up the pieces of the mess we inherited.
There are big things that happen, which require responsible Governments to take big, responsible decisions. That sometimes means that they have to put up taxes in order to pay for borrowing to get through a crisis. Let us not pretend that that is not the case, but the question is whether Governments have a serious, credible plan and whether they are prepared to be honest with the British people about what that plan entails. On the back of the pandemic, we have had to put up taxes and borrowing to pay for that. We have done that, and we are now at a decision point. As the economy recovers and the OBR projects that debt will fall, what can we do? What path should we go down? As the Chancellor has set out, the priority of this Government is to recognise that because taxes had to go up to pay for the pandemic, we want to reduce taxes when we can. We want to lift that burden from the British people and start to reduce taxes.
If any hon. Members want to come in at this point, I am happy to give way.
Damian Collins
I do not agree with that. Just looking at my own constituency, we have had two brand new secondary schools built, a big new special needs school, and primary schools as well. There has been investment in most school buildings, and we have seen a huge amount of investment in the infrastructure of this country. References have been made to the decision not to complete the northern leg of high speed 2. Of course, that money is not being taken out of infrastructure spending—it is just being spent on different things. That is a point that has not been made.
As the economy recovers and debt is predicted by the OBR to fall, we have a decision to make. The priority of the Government is to reduce taxes, and they have done so through the national insurance cuts made in the autumn statement and again in the Budget: a 4% cut in national insurance, and yes, a longer-term ambition that that tax may go altogether. That is not an unfunded commitment; it is saying, “That is the priority. That is the decision we would take—the direction we would go in.”
Damian Collins
In one moment. What we have heard in today’s debate—particularly from the shadow Chancellor, the right hon. Member for Leeds West (Rachel Reeves)—is that Labour would go down a different path. Labour would spend more; they call it investment, but basically, Labour would spend more. Labour’s priority is not to cut taxes. It is begrudgingly going along with the tax cuts we have announced because it does not want to oppose them, but there was certainly no statement made today that suggested Labour would seek to cut taxes.
Labour would seek to spend more, so that is the choice for the British people at the next election and moving forward: as the nation recovers from the shocks it has been through, and as the Chancellor has got the discretionary money to spend, do we give that money back to the British people? Do we let them keep more of what they have earned, or do we just spend it on their behalf? That is the classic separation between our parties, which has existed for generations. The belief to which the Labour party is still wedded is that growth is created—something that we both want to see—by the Government spending more. What has been demonstrated over the decades is that by backing the British people, and their ingenuity and hard work, we generate the growth we need. That is the separation that we see now.
The shadow Chancellor said at the beginning of her speech that she would not make unfunded commitments on spending or taxes, but she has done so today, because now that the money from the non-doms is no longer available to fund the things that Labour wanted to spend it on, there is no plan in place. On the radio this morning, she said that she would find the money; today at the Dispatch Box, she said that there would be a detailed piece of work to seek it out, but we still do not know what the plan is. The only thing the Labour party could point to today that would increase revenue is taxes on private schools, which will not pay for much at all, so we have an unfunded commitment to spend more—we do not know how; I imagine that it will be borrowing more, but it could be taxes going up—and some specific unfunded commitments. The Labour party will not say where the money will come from, but what it has said today, loud and clear, is that cutting taxes is not its priority. There has been no ambition today to say that we should cut taxes at all.
Jim McMahon
I thank the hon. Gentleman for giving way twice. He has mentioned a number of times the need to repay any debt and borrowing. He will know that part of the borrowing for HS2 was going to be serviced through the revenue from HS2 ticket sales, and through moving more freight off-road and on to rail, to be carried by the track that was freed up. Is he absolutely confident that the new transport projects, including on potholes, that will be funded by the spare capital that has been freed up will be serviced through revenue, or will that be a funding gap in the future?
Damian Collins
I am confident that the robust plan that the Government set out for spending that money on other transport projects will deliver.
What I would say about High Speed 2 in the north—based on my own constituency experience in Kent, where we have High Speed 1—is that Folkestone in my constituency has benefited enormously from high-speed rail. I believe that these big infrastructure projects deliver benefits in time that are sometimes intangible and difficult to predict at the beginning. However, for HS1, the train only goes at high speed on the high-speed line as far as Ashford. The same rolling stock then runs on the traditional railway to Folkestone, Dover, Canterbury, Ramsgate, and other places on the Kent coast. A high-speed rail service that runs at high speed on the high-speed line from Birmingham to London, but with those trains starting elsewhere in the north of England, will still deliver huge benefits in reduced journey times and attracting other investment. That has certainly been our experience in Kent, and that is why I have always supported high-speed rail for the north: I think it can deliver the same thing. I still think it will deliver big benefits for the north-west, even though the trains will only go on the high-speed line from Birmingham down into London.
In addition to the points I have made about the very clear difference between the two parties with regards to taxing and spending—whether we want to cut taxes, or put spending up—I will focus on one or two specific things. The Chancellor noted in his speech that Britain has become a global centre for television and film making. Sometimes, that is said as if it is a happy accident; that, despite the fact that people could have invested anywhere in the world, they decided through serendipity to invest in the UK. The reason that the UK now has this leadership position, which is not one that we had in 2010, is that we have invested in making it happen. We have recognised that in a highly global market, production tax credits mean that people will bring production investment to the UK, rather than taking it elsewhere in the world. That generates revenue for the Treasury—my hon. Friend the Member for Christchurch (Sir Christopher Chope) is not in his place, but that is another great example of Mr Laffer’s curve at work. When we reduce the tax burden, the investment goes up, and the revenue goes up with it.
That has had huge benefits for this country: the investment in our creative industries, the jobs that people have in studios and film production—jobs that simply did not exist before—and the fact that we remain a massive global centre for investment. We have introduced tax credits for high-end television production, animation, video games, orchestras and touring exhibitions. I was very pleased to see in the Budget yesterday that those tax credits will be extended to smaller-budget independent productions, which will massively open up opportunities for smaller film companies to attract investment.
However, the big thing we have seen is the investment in studio space. Britain rivals any place in the world for studio size, which makes it, after California, the global home of film and television. One of the barriers to further investment in studios—I am thinking of a very exciting and ambitious studio project just outside my constituency in Ashford, an investment that will benefit the whole of east Kent—is that if someone builds a film studio on derelict land, which studios are often on, the business rates cost would go up massively. Is that fair, given that the uplift was generated by massive external investment? If the Chancellor recognises that, and gives new studios a 40% reduction in business rate uplift for 10 years, it will unlock a further pipeline for investment, allow us to consolidate our global leadership, and be a huge boost for the creative sector in this country.
I want to mention nuclear technology and small modular reactors. I have a constituency interest in this: Dungeness nuclear power station is in my constituency, and it would be an ideal site for small modular reactors. The Government have launched a competition to design them, and the Chancellor is encouraging people get their tenders in. I hope that we will consider that the benefit is not just us producing the clean energy that we need for the future, but us backing British industry. A British-designed and built SMR manufacturing process in this country will meet our needs, but this could also be a fantastic export industry for Britain.
I urge the Government and the Chancellor to carry on backing this new nuclear technology, to support the design competition, and to back one of the bidders. Ideally, a British company such as Rolls-Royce would be great, but there are other excellent bidders. The Government should also support the roll-out of this technology. Through their civil nuclear road map, they have established how they intend to do that, and they acknowledge that they need more nuclear sites. As a result of the road map and the consultation on it, I hope that other sites, such as Dungeness in my constituency, will be identified where this technology can be deployed.
Huge investment in green energy and new nuclear has been delivered under this Government. In 2010, when we came into government, we still had not completed the national policy framework on nuclear energy, and there had not yet been any decision about where nuclear would go. The new fleet of power stations, and the investment —and there is a lot—has entirely taken place under this Government, which is something I whole- heartedly support.
In closing, a number of hon. Members have talked about housing, and a lot of important points were made about levelling up in the Budget, and in the statements released by Ministers alongside it. New house building is incredibly important for delivering economic growth, and growth of our communities. I was very pleased that Folkestone town centre was a beneficiary last year of a significant levelling-up investment. I encourage the Department for Levelling Up, Housing and Communities and Homes England to continue their discussions with Folkestone and Hythe District Council about backing the new garden town proposal in Otterpool Park in my constituency, which will not only deliver homes that people need, but create a great many new jobs in east Kent for the coming decades.