Economy and Jobs

Debate between John McDonnell and Helen Whately

Thursday 29th June 2017 Commons Chamber

[John McDonnell]

I would check the hon. Gentleman’s facts, but let me say—[Interruption.] I suggest he goes back to other Labour Governments who increased employment in this country as a result of direct state investment: the Attlee Government in particular, and the Wilson Government.

The issue for many of us is the quality of those jobs. The fact is that we now have people in employment who literally cannot fend off poverty. Two thirds of our children who are living in poverty are in families where people are in work. That is the quality of some of the jobs brought about by this Government.

The Queen’s Speech promises

“to invest in the National Health Service, schools, and other public services”,

but that could not be further from the truth. The reality is that spending per pupil remains set to fall, the jobs of police officers, firefighters, border guards will be cut, and the NHS is “already at breaking point” and has been promised no new money. Those are not our words, but those of the British Medical Association.

In various interviews over the past fortnight, the Chancellor has bemoaned the fact that he was hidden away during the election campaign and that his record on the economy was not the central plank of the Conservative campaign. I agree with him. I wish he had been more to the fore in the campaign, with his record more widely exposed, because if that had been the case, Labour would be in government now.

I do not believe that the right hon. Gentleman has been afforded his proper place in history. For those hon. Members who were not in this place 10 years ago, let me explain that prior to 2010 the Chancellor was the shadow Chief Secretary to the Treasury. In that role, as an ardent neoliberal, he was the architect of austerity. It was he who designed the detailed economic programme rolled out by his mentor, George Osborne, after 2010, and he has been at the heart of every austerity Cabinet throughout this period.

In the Chancellor’s recent Mansion House speech, he referred to his Government’s austerity record as one

“of which we are proud.”

The foundation of the Chancellor’s record is its adherence to neoliberalism and trickle-down economics—a theory that argues that if we cut the taxes for the rich and the corporations, and if we turn a blind eye to tax avoidance and tax evasion, somehow the wealth will trickle down to the rest of society. This Chancellor has certainly cut taxes for the rich and the corporations. Corporation tax, capital gains tax, inheritance tax and the bank levy have all been slashed by this Chancellor. Independent analysis of Office for Budget Responsibility costings demonstrates that the tax cuts introduced by the Conservatives on those four measures alone since 2010 will have cost taxpayers more than £70 billion between last year and the end of this Parliament.

[Helen Whately (Faversham and Mid Kent) (Con)]

As the right hon. Gentleman well knows, history tells us that increasing corporation tax actually leads to reduced tax revenues. Were he in government, his plans would mean that corporation tax revenue would fall. If he were in a position to do so, how would he make up that shortfall in Government revenue?

[John McDonnell]

The argument we heard was that corporation tax cuts would lead to a large-scale increase in business investment in our economy, but business investment fell last year for the first time since 2009. It remains lower than that in the rest of the G7 countries, with the exception of Italy. Corporations are now sitting on more than £580 billion of earned income that they are not investing. Some have been exposed as using that earned income in share buy-outs to boost performance statistics and therefore boost bonuses. That is the product of the corporation tax cuts.

Budget Resolutions and Economic Situation

Debate between John McDonnell and Helen Whately

Thursday 17th March 2016 Commons Chamber

[John McDonnell]

Unlike the current Chancellor, we will not set ourselves targets that can never be realised, and we will create an economy based on consultation with the wealth creators themselves—the businesses, the entrepreneurs and the workers. In that way, we will have a credible fiscal responsibility rule.

Yesterday, the OBR revised down its forecast for growth for this year, and for every year in this Parliament—in some cases by significant margins. That is reflected in lower forecasts for earnings growth. The Resolution Foundation says that typical wages will not recover to their pre-crash levels before the end of this decade. It is not just forecasts for economic growth and wages that are down. Those are driven by productivity, which has also been revised down for every year of this Parliament. Any productivity improvements last year have disappeared. As the OBR said, it was, “Another false dawn”. Perhaps that is not surprising. After all, productivity is linked to business investment, which should be driving the recovery, but which plunged sharply last quarter.

[Helen Whately (Faversham and Mid Kent) (Con)]

I have noticed that the hon. Gentleman does not like answering the question on how much he would be willing to borrow were he Chancellor. Is there any limit to the amount that he would be willing to borrow and to the debt that he would be willing to pass on to future generations?