International Trade and Geopolitics

John McDonnell Excerpts

Thursday 20th April 2023 Commons Chamber

[Richard Fuller]

The hon. Gentleman tempts me, but let me answer his question in this way. The 2017 Labour party manifesto was not a hugely sensible document, but a second document was put together by the then shadow Chancellor, the right hon. Member for Hayes and Harlington (John McDonnell), in which he enumerated all the tax breaks that were given to different sectors of the economy, which amounted to an enormous sum. As one who can, I think, claim to be a low-tax Conservative, I suggest that those running a more efficient economy would get rid of almost all of them. They would say to those in, for instance, the carbon fuels sector, “You are on your own now. If you do not have enough money, go to the market and raise the money you need from your own shareholders or from other investors to grow your business.” We have had conversations about the level of debt—the right hon. Member for Hayes and Harlington is now present, so he can correct me if I am wrong. I read his document in 2017, and I thought it was an excellent analysis. One point that the Labour party made at the time of that election, about the need to look at tax breaks for large corporations and sections of the economy as a method of public spending, was spot on. We are not vigilant enough in that regard. My own free-market view is that the fairer the market, the lower the subsidy.

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise, Madam Deputy Speaker. I was not going to engage in the debate, but I was passing and heard a reference to me—

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. I would normally chastise the right hon. Gentleman for attempting to speak in a debate when he has not been present, but I happened to notice that he was in the Chamber although not in his normal place. Given that we are not under enormous time constraints this afternoon, I will be much more lax than I normally am.

[John McDonnell]

As generous and wise as ever, Madam Deputy Speaker.

To reinforce what the hon. Member for North East Bedfordshire (Richard Fuller) said, we did that piece of work because we wanted to review every tax relief. In opposition, that is impossible to do, but we would have done it in government. The reason was that we were discovering tax reliefs that had been introduced decades earlier that the Treasury had never reviewed to see whether the original purpose had been achieved or whether they should be amended. Example after example was found, and it was clear that the tax relief system was not working effectively or as it was originally planned.

[Richard Fuller]

I am grateful to the right hon. Gentleman for taking part in the debate. I do not think I agreed with anything else in the Labour party’s 2017 manifesto, but the point that he has just made is a point for the ages for whoever is in the Treasury.

In addition to my concern about taxpayers’ money, behind the big funding race between the EU and the US to put amounts of money at risk in a casino of green discovery is an open question about the trajectory of unit costs for the materials that will be required by those sectors that will assist us to achieve net zero. When others are rushing to do something, it is a natural human urge to rush to do it too. We can all remember the shortages of toilet paper at the start of covid, which was a shortage for no apparent reason. Because everyone else was buying loo paper, we all thought we should buy it. As we know, that created a surge in unit cost, which abated and—although I have not checked recently—the cost is now back down to a normal market price. As goes toilet paper—perhaps I should not use that phrase—so goes the unit cost for other items. A significant cost will be experienced by early adopters. My question is whether we would be better off participating in that surge in unit costs in an era of technological discovery, or keeping our money in our pocket until the unit costs come down once the successful discoveries have been made.

We should remember that there will always be opportunities for economic gain and financial success, even if the initial discoveries and the bulk of investment are elsewhere. There will always be international flows of trade. For example, in the 1940s and 1950s, most of the motor industry was in the United States, but in the 1970s the UK benefited because it needed to reshore to the UK. That will be the same in other sectors. Look at value-added: iPhones are made in developing countries, historically mostly in China, but most of the value added is in Apple’s design, and the UK has advantages in that area. We can be thoughtful about such areas, but I wanted to put on the record some questions for the Chair of the Select Committee who introduced this welcome debate.

I know that I have tested everyone’s patience with my opening remarks, so I will address another couple of points before allowing time for others. This issue tilts to the Indo-Pacific region, both through the trade arrangements and the infrastructure. The global review that the Government have done is welcome. Much like the hon. Member for Liverpool, Walton, who talked about the issues in Latin America, before getting involved in politics I spent a lot of time in the Philippines, Korea and Australia. It was clear that in those areas of the world, there is not only great opportunity for the United Kingdom, but a great recognition of the talents that we have and a great need for the various skills that we can provide in economics, defence and other areas.

When I hear politicians pooh-pooh the impact of CPTPP as a small percentage of GDP, I worry that they are missing the deeper point that it is a bigger connection. It is part of a globalisation of what the United Kingdom does. It is a recognition not that the UK is a big global superpower, but that it is seen by people around the world as having its place and having things to offer. We should look at this trade agreement as just the start of us pushing further into that part of the world in all the ways that we can.

I yearn for the day when we can do a similar deal across Africa. Trading with countries in Africa and opening up our markets to goods and services from Nigeria, Ghana, South Africa, Kenya and other growing economies is surely not only in our economic interests but in the interests of humanity. The greatest benefit to humanity in economic terms over my lifetime was made by Nixon’s visit to China and its redirection from Russia towards the west, and the consequent movement of hundreds of millions of people in China and surrounding areas into the global trading system. It has been a great sadness to me that the countries in the continent of Africa have not been part of that. For this generation of politicians over the next 10 or 20 years, I hope that we can look to play our small part in achieving that.