International Aid: Treasury Update

John Redwood Excerpts

Programme motion
Tuesday 13th July 2021 Commons Chamber

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

I draw the House’s attention to my interests, as set out in the Register of Members’ Financial Interests.

The Government have done the right thing today in ensuring that this House has a vote on this matter, and thank you, Mr Speaker, for standing up for Parliament in that respect. There is a straight choice here, as was outlined by the Leader of the House yesterday in his statement. It is between rejecting this motion, in which case the Government will restore the 0.7% from next year—that was the olive branch that my right hon. and hon. Friends and I suggested—and accepting this so-called “Treasury compromise”. I tell the House that it is no compromise at all; it is a fiscal trap for the unwary.

First, it is quite possible that these conditions will never be met. We do not need to look in the crystal ball—we can read the book. It is indisputably the case that there has been only one occasion in the past two decades—in 2001—when these conditions would have been met. If we look at what the OBR has said, we see that it is incredibly clear that the debt to GDP measure will not fall until 2024-25 and day-to-day debt will not fall until 2025-26. Given that the 0.7% goes up and down with our economic performance, a very important point is that the 0.7% policy protects us in that respect.

[John Redwood (Wokingham) (Con)]

Does my right hon. Friend not accept that the OBR has exaggerated the gloom on the debt and deficit, particularly in the last two years? It exaggerated it by £50 billion for last year between November and March, so why on earth does he believe the OBR’s gloomy figures now? I am sure we are going to get the deficit down.

--- Later in debate ---

[Rishi Sunak]

If my numbers are right, as a percentage of GDP we were for the last few years spending double what Labour ever spent when it was in office, and my right hon. Friend is right about what we will be doing even at this reduced level.

Today’s approach is a pragmatic approach to meeting our commitments to the world’s poorest today and to have the secure fiscal foundations we need to meet those commitments for decades to come. We should be proud of what UK overseas aid means to millions of the world’s poorest people. It means tens of millions of girls around the world getting a better education. It means food parcels stamped with a Union Jack arriving in famine stricken countries such as Syria and Somalia. It means wind turbines, solar panels and hydroelectric dams generating clean energy in developing countries. I am proud, as I know the whole House will be proud, of the extraordinary good this country is doing around the world.

[John Redwood]

I am looking forward to this answer. Will the Chancellor remind the House, given that we are rightly keen to save as many lives as possible, that this country has given a great gift to the world with many free vaccines and pioneered the cheapest and one of the best vaccines to save lives all around the world?

[Rishi Sunak]

I completely agree with my right hon. Friend, and I will come on to that in a minute.

I am proud, too, of our response to last year’s economic crisis—the deepest recession this country has ever seen. In total, we have provided hundreds of billions of pounds to protect jobs, keep businesses afloat and help families to get by. That was the right approach, but we should be clear-eyed: covid has severely damaged our public finances. We have the highest level of borrowing since world war two, national debt of £2 trillion and rising, and debt expected to peak at 100% of GDP. If we want to continue to meet our commitments in the future, both at home and overseas, we must act now to rebuild our fiscal resilience.