Charter for Budget Responsibility

Debate between John McDonnell and David Rutley

Wednesday 20th July 2016 Commons Chamber

[John McDonnell]

The problem with the hon. Gentleman’s contention is that we were told the way to control welfare spending was to introduce a welfare cap, and this was part of the charter. The Government have now breached that charter consistently and are forecast to breach it in every year throughout their Administration. The point I am making is that the fiscal charter is almost redundant now, because it is so ineffective. Housing benefit did rocket, but the way to control welfare is by building council homes again, so we are not pouring money into the pockets of private rented landlords.

[David Rutley (Macclesfield) (Con)]

rose—

[John McDonnell]

Let me just press on; I commit to coming back to the hon. Gentleman. Madam Deputy Speaker might get a bit hot if I continue to take too many interventions.

Households and businesses up and down the country need clarity and guidance, and it would be irresponsible to leave them without guidance as to the Government’s actions until the autumn. Waiting until October is a luxury this economy cannot afford, and Britain is on hold until the Chancellor makes his plans clear. Unfortunately, this is only the latest consequence of a shocking lack of planning by the Government for the eventuality of a leave vote. The then Chancellor said back in March that a credible blueprint was completely missing from the leave campaign, but a blueprint of any kind seemed to be missing from the entirety of the Government. The Chancellor must now take the necessary steps to give himself the freedom to invest in the economy, without being bound by a surplus rule he has conceded is likely to be ditched in the autumn in any case.

[David Rutley]

I very much hope that Madam Deputy Speaker is not too hot at this point in time. The hon. Gentleman is trying his best to put forward his arguments, but his approach completely lacks credibility—he has not even brought any Labour Members in to support him today. Is the truth not that even two Eds were better than none?

[John McDonnell]

I will have to watch my language, Madam Deputy Speaker. Let me say to the hon. Gentleman that when someone is going to crack a joke in this place—I know this because I have failed so often—it is best that they get the script right. As for Labour Members, the message has come across in every debate we have had, consistently since September, including today, that this is about the difference between having a fiscal charter that allows us to invest and one that does not. It is as simple as that. I respect his views and I have listened to his contributions in the past, but on this issue I believe that even those on his own side are beginning to move.

Britain is on hold until the Chancellor makes his plans, because, unfortunately, as I said, this is not the only consequence of the lack of planning. I say to Conservative Members that it is important now that we recognise the decisions that have to be made as soon as possible, particularly on the surplus rule. We already know about the black hole in March’s Budget brought about by the Government’s U-turn on personal independence payments, but following the leave vote, the former Chancellor also announced plans to reduce corporation tax to below 15%. That is a significant fiscal announcement. According to the ready reckoner of Her Majesty’s Revenue and Customs, by the time it takes full effect it could mean an enormous additional £4 billion giveaway by the Treasury. This is money that could otherwise be spent on public services. It would be useful to know today whether the successor Chancellor is planning to be similarly generous to large corporations and whether the reduction to 15% is still part of the Government’s plans.

UK Economy

Debate between John McDonnell and David Rutley

Wednesday 29th June 2016 Commons Chamber

[John McDonnell]

It must be recognised that the trading relationship with India, although growing, is still relatively small. I welcome the negotiations that are taking place, but we know from our experience of the timescale in which trade agreements have been secured over much of the past decade that the process is lengthy, and that when individual states negotiate on their own, they do not necessarily achieve the benefits that they would have secured within a trading bloc.

The simplest explanation for these decisive economic weaknesses is the poor state of investment in the UK. Admittedly, business investment was already in decline before the referendum, but it is undoubtedly falling still further, and, as the press has reported, the ongoing uncertainty alone is enough to deter investment. That fall in business investment is being worsened by the Government’s plans to cut their own investment which, according to current projections, is set to fall by the end of the decade. Without sustained investment—private and Government investment—we shall not be able to address the economic decline that has blighted too much of our country.

[David Rutley (Macclesfield) (Con)]

The hon. Gentleman talks about the need for an industrial strategy. The Government have set out important strategies for key industries such as life sciences, and, of course, for a northern powerhouse to help to rebalance the economy. Given the challenges that we face and the continuing need to rebalance the economy, will the Opposition now get behind the Government’s plans and, in particular, support the northern powerhouse, about which they have been equivocal?

[John McDonnell]

We have welcomed initiatives to try to rebalance the economy; the problem has been the success rate. The investment pipeline that the Chancellor announced several years ago has been less than 20% successful. Five years on, we have seen only £1 billion of the £20 billion that was meant to come from pension funds. The Government announce well, but they do not implement very well. There is too much government by press release rather than by implementation.