The Economy

Kelvin Hopkins Excerpts

Thursday 22nd March 2018 Commons Chamber

[David Linden]

At least the Scottish Government produced a White Paper, which was a heck of a lot more than the UK Government provided in the run-up to the Brexit referendum. Perhaps the fact that there was not enough information was the reason why a number of people in the UK felt they could not make up their mind on the referendum.

The right hon. Member for Wokingham spent a lot of time talking about fishing. One of his great heroines is Margaret Thatcher, but it was of course Margaret Thatcher who said that the Scottish fishing industry was “expendable”, so I will take no lessons from him on fishing.

I am very grateful for the opportunity to contribute to this debate on the economy. My Chief Whip, my hon. Friend the Member for Glasgow North (Patrick Grady), who has just come into the Chamber, tells me that the debate can last until 5 pm. I will not speak for the next two hours and 45 minutes, because some members of the Press Gallery would not be happy, but this is a good opportunity for us to focus on the record of a UK Government who are very much asleep at the wheel.

[Kelvin Hopkins (Luton North) (Ind)]

I am sorry that I was not in the Chamber earlier, but I was watching the debate, and I listened very carefully to what the right hon. Member for Wokingham (John Redwood) said. As a socialist of the left, I clearly have some differences with him, but he focused on one thing with which I agree—the balance of trade and our enormous net financial contribution to the rest of the EU. That contribution amounts to about £100 billion this year: we are paying 5% net of our total GDP into the EU. Does the hon. Gentleman not agree that that is a very valid point?

[David Linden]

I am grateful to the hon. Gentleman for that point, and I am about to come on to Brexit. We know that Brexit is casting a very large shadow over the UK economy, and precious Government spending—up to £3 billion—is being set aside to counter the self-inflicted harm of a hard Brexit. After the Prime Minister took office, she said that she would deliver a red, white and blue Brexit, but I certainly did not expect such a Brexit to mean that passports would be made in France. But by all means—there you go.

One announcement that I do welcome is the Government’s decision on NHS staff pay. I welcomed it for the SNP from the Front Bench during yesterday’s urgent question. I commend the Government for taking action finally to give England’s hard-working NHS staff a pay rise, and I very much hope that the Welsh Labour Government will follow and do likewise.

Of course, in Scotland, the SNP Scottish Government was the first devolved Government in the UK to commit to lifting the public sector pay cap. We have already delivered on our promise on public sector pay, setting a 3% pay increase for those earning up to £36,500, which has the potential to benefit three quarters of Scotland’s public sector workforce. It is only fair that I declare an interest at this juncture in that my wife is a primary school teacher employed by Glasgow City Council and will receive that pay rise. Those earning over that threshold of £36,500 but less than £80,000 will receive a pay rise of up to 2%, and those earning over £80,000 will receive a £1,600 uplift. The 3% increase potentially covers 82% of NHS staff in Scotland for the next financial year, 2018-19. The Chancellor’s announcement will of course result in Barnett consequentials being allocated to the Scottish Government, and Ministers in Scotland have indicated that they will use this money to support “Agenda for Change” staff in Scotland.

Today’s general debate on the economy allows us the opportunity to take stock of the current economic climate, which does not make pleasant reading for Treasury Ministers. The independent Office for Budget Responsibility forecasts economic growth to be lower in each of the next five years than annual growth was in 2017, when it was 1.7%. Indeed, the Institute for Fiscal Studies notes that this puts the UK’s growth prospects

“among the worst in the G20.”

The right hon. Member for Wokingham—I am afraid that he is not in the Chamber—felt that my hon. Friend the Member for Glasgow Central (Alison Thewliss) painted a somewhat doom-laden picture, but that is just the reality. We can argue about politics, but we cannot argue about the facts. The IFS goes on to warn:

“Dismal productivity growth, dismal earnings growth and dismal economic growth are not just part of the history of the last decade, they appear to be the new normal.”

Britain now has the worst wage growth in 210 years, with a hard Brexit threatening to provide further shocks to an already fragile economy.

Treasury Ministers know that Brexit will be an economic disaster, and that is why the Government are setting aside £3 billion in 2018-19 and 2019-20 for expenditure on Brexit preparations. The Scottish Government will receive only 2.5% or £37 million of the funding allocated for 2018-19. I would be keen for the Exchequer Secretary, when he sums up, to explain how that figure was actually arrived at, because I certainly cannot work it out. It is deeply frustrating that the money we are receiving falls significantly short of the full Barnett share of the funding allocated at UK level.

I would be doing a huge disservice to Scotland if I did not take this opportunity to call once again, as many SNP colleagues have done, on Treasury Ministers to return the £175 million in past VAT payments to Scotland in respect of Police Scotland and the Scottish Fire and Rescue Service. I know that my own area commander would be more than happy to see some of that money coming back, and he could invest it.

[Kelvin Hopkins]

Does the hon. Gentleman not agree that the great advantage of being a United Kingdom is that we can redistribute from the wealthiest areas to those in greater need? Sometimes, through the Barnett formula and regional spending, money can be redistributed from places such as the south-east, which is very wealthy, to places that are less wealthy, such as Scotland.

[David Linden]

Yes, and one of those less wealthy places is my constituency of Glasgow East, but people there do not regularly come to me and say how wonderful the United Kingdom is because it has these lovely nuclear weapons that can defend the foodbank in Parkhead. I welcome the decision to include the police and fire and rescue services in the exemption from UK VAT, but it is only fair that the £175 million is returned to Scotland, so that we can invest.

--- Later in debate ---

[Kirstene Hair]

I strongly believe that we should allow working people to keep more money in their pockets. The Conservative party has always been the party of low tax, and the contributions from Conservative Members today have shown how that is in the best interests of growing our economy.

The Scottish Government have made an immense mess of business rates, with Scottish businesses having to pay £14 million more in tax than they would if they were based in England. Small wonder that Scotland now has the lowest rate of business growth in the United Kingdom. Of course, it is again the nationalists who are holding Scotland back with their constant threats of putting us through a second independence referendum, which the people of Scotland do not want.

The SNP’s goal of independence inside the EU single market would destroy the internal market of the UK, which accounts for 61% of Scotland’s exports, yet the SNP turns a blind eye to that. Is it any surprise that businesses and investors are deterred by the SNP holding the threat of a second independence referendum over their heads? The Scottish Government want to sacrifice the UK internal market on the altar of the EU single market, which is almost four times less important to Scotland’s economy. They want to take Scotland back into the EU and—inevitably—subject Scottish fishing communities to the unjust common fisheries policy in perpetuity. For coastal communities in Angus and across Scotland, getting out of the CFP is the first, necessary step towards reviving our fisheries and wider coastal economy. Fishing already contributes greatly to the Scottish economy, and once out of the CFP, it will have even more to offer. I have said openly that this week’s transition deal was disappointing, and the UK Government will have to be extremely vigilant to ensure that the interests of our fishing industry are defended until the end of 2020.

[Kelvin Hopkins]

I apologise for intruding on private Scottish grief. Does the hon. Lady not accept that the real reason we have sluggish growth in the United Kingdom as a whole is because of Tory austerity, cuts in public spending and low wage growth?

[Kirstene Hair]

The contributions from my hon. Friends, which I do not need to reiterate, showed the very positive steps the United Kingdom as a whole has taken. Scotland, however, has done less than half of that, which is why it is incredibly important to highlight.

Moreover, the UK Government must deliver full control of our waters, with no compromise on any final Brexit deal that sells out our fishermen in exchange for something else. But the facts remain the same: the Conservative UK Government want us out of the EU and out of the CFP so that our fishing industry can flourish again. The SNP Scottish Government want to fail coastal Scotland again by taking us back into the EU and back into the CFP.

The truth is clear. While the rest of the United Kingdom shares the fruits of successful Conservative policies, Scotland stagnates under the SNP. If anyone wants to know about the SNP’s attitude to economic growth, know simply that in 18 months it still has not spent a penny of its own £500 million growth scheme. I very much welcome the UK Government’s investment in the Tay cities deal. This will be a welcome boost to my local economy in Angus and I am working incredibly hard to ensure that rural areas receive their fair share.

I am counting down the days, as are many others, until 6 May 2021, when Scottish voters will give their verdict on the SNP’s era of stagnation and bring it to a close. In the meantime, we can only point out what must be done if Scotland is to return to prosperity: an end to the menacing speculation about indyref 2; a clear commitment to preserving the UK internal market through Brexit and beyond; the abolition of the “Nat tax” to ensure that Scotland is no longer the most taxed part of the Union, either for individuals or businesses; and the cutting out of waste and diverting that money to promote growth and make our public services functional again. I hope that, at some point in the next three years, the Scottish Government will see the light and allow Scotland to fully benefit from the strong UK economy that the Conservatives have built, but it is looking increasingly likely that that task will fall to our next First Minister, Ruth Davidson.

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to speak in a debate, even if, as often happens, it is at the tail-end. I thank all right hon. and hon. Members for their contributions so far and for their specific interests in the economy. I would like to bring a Northern Ireland perspective to the debate.

The economy is an issue that affects every village, town and city in the United Kingdom of Great Britain and Northern Ireland. We all read the grim, doomsday predictions about Brexit, yet we are still here and we are still standing. We will still be here and we will still be standing after 31 March 2019. I am a proud Brexiteer. Indeed, I think the Democratic Unionist party invented the word, because we were Brexiteers before the word was ever mentioned. We have always had concerns about Europe. It is good that we will now leave, and the sooner the better.

Like all Members, I am always interested to receive the constituency-tailored claimant counts, which indicate how the labour market is performing in our areas. I thank the economics, policy and statistics section of the Library for its sterling work, which it provides to us on request and as a matter of rote. Northern Ireland unemployment is down by 3,400 and now stands at 29,000. There has been a very focused economic strategy for Northern Ireland, which has worked out extremely well. We stand at 3.4% across the whole of Northern Ireland. Some constituencies are below that figure and some may be above it.

The total number of jobseeker’s allowance claimants in my constituency in February 2018 was 1,370, or 3.2% of the economically active population aged 16 to 64—the 207th highest of the 650 UK constituencies—but that is down from 5% when I first came into the House in 2010. The equivalent UK claimant rate was 2.7%. The UK unemployment rate, which includes people not claiming benefits and is estimated from survey data, was 4.3% between November 2017 and January 2018. The number of claimants in Strangford constituency is 115 lower than in February 2017, which perhaps indicates that we are moving in the right direction. There were 290 claimants aged 18 to 24 in February 2018, which is 75 lower than February 2017. That, to me, is an indicator that we are progressing. Indeed, as a party colleague highlighted, the latest labour market statistics show Northern Ireland moving in the right economic direction.

It is important to say that we have not had a working, functioning Northern Ireland Assembly for 14 months. In that time, we have experienced some of the greatest growth in Northern Ireland for employment, job opportunities and the economy as a whole. Those are good things, even though we have not had a Northern Ireland Assembly to drive it. Significant employment opportunities have taken place because of the good work of, and the foundations laid down by, the Northern Ireland Assembly, when it was working, and the Department for Enterprise, Trade and Industry. One of my DUP colleagues, in the Belfast Telegraph, said:

“Boosting the economy through private sector growth has been a key DUP priority over the last decade. It is very welcome that private sector jobs are now at their highest level since records began in 1974. We want to see that grow further and significant funding secured through the Confidence and Supply agreement to deliver on key infrastructure projects such as the York Street interchange and the superfast broadband are the foundation of future growth.”

Some Members have referred to the £1.4 billion that the DUP secured with the Conservatives as part of the confidence and supply agreement. We would be happy to assist those who are interested in how to negotiate a good deal.

[Kelvin Hopkins]

I am pleased that Northern Ireland is doing relatively well, in spite of difficulties. Does the hon. Gentleman not accept that a factor in manufacturing doing relatively well in Northern Ireland, and in the rest of the United Kingdom, is the depreciation of the pound following the referendum, and that keeping the pound at a sensible level would be better for Northern Ireland’s future and for the United Kingdom’s future?

[Jim Shannon]

It would be remiss of me to say other than that the value of the pound has enabled our exports to grow and our manufacturing base to maintain its position. The hon. Gentleman is absolutely right.

The DUP’s confidence and supply agreement with the Conservative party has brought in money for everyone in Northern Ireland, regardless of whether they are Unionist, nationalist or anything else. Everybody gains from that agreement.

The House has seen progress on business rates and the small business rates relief scheme. I am very pleased that the Government have continued to ensure that that happens, because it will definitely bring benefit to all the high streets across the United Kingdom. Rates relief has brought opportunities and retained employment in shops in places in my constituency such as Newtownards, Comber and Ballynahinch. Rates relief ensures that we do not have empty shops. Those involved in the retail business say that we have some of the best shopping opportunities in the whole of Northern Ireland.

We have pursued the issues of air passenger duty and tourism VAT, negotiating and consulting with the Conservatives on how the confidence and supply agreement can benefit us, as well as the whole of the United Kingdom. There are advantages for others across the United Kingdom in a reduction to air passenger duty and tourism VAT. We need to be on equal terms with the Republic of Ireland to be able to grow our tourism sector. The DUP is continuing to work on issues that affect the local economy in Northern Ireland, as well as the whole of the UK economy. We are pleased to be part of the economic success story we have in the whole of the United Kingdom of Great Britain and Northern Ireland.

As the briefing paper succinctly put it, in terms we can understand, in 2016-17 the Government borrowed £46 billion to make up the difference between their spending and the income raised from taxes and other sources. Since 2009-10, the UK’s borrowing—often referred to as the deficit—has fallen by 70%, which again is good news. Borrowing is now at a similar level to that before the 2007-08 financial crisis, and the OBR forecasts that it will fall each year to just over £1 billion in 2022-23, which is equivalent to around 1% of GDP. If anyone thinks that this is not good news, they need to take another look at what it is saying. In laymen’s terms, we still have a massive debt—there is no doubt about that—but, in fairness to the Conservative party, it is trying hard to reduce the deficit, and if we continue along the lines we are on, it will be to the benefit of everyone in the Chamber and every one of our constituents.