Budget Resolutions

Laura Trott Excerpts

Tuesday 12th March 2024 Commons Chamber

[The Chief Secretary to the Treasury (Laura Trott)]

It is a privilege to open the final day of debate on the Budget—a Budget with a plan to grow the economy, a plan for better public services and a plan to make work pay. Today’s debate is focused on a theme close to my heart: improving productivity. As some Members know, back in 2010, before I became a Member of Parliament, I worked for my noble Friend Lord Maude on an efficiency and reform agenda that saved the Government £14 billion a year by 2014. It captured everything from buying printer paper collectively to managing Government projects better and digitising services. That agenda not only cut costs but improved productivity.

Ahead of the pandemic, and under this Government, productivity in the private sector increased by an average of 0.7% a year between 2010 and 2019. [Interruption.] As I am sure Opposition Members will be interested to know, that contrasts starkly with the decline in public sector productivity by an average of 0.2% per annum between 1997 and 2009. Our success was entirely due to hard work behind the scenes and a relentless focus on output.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Rather than cherry-picking statistics, will the Minister tell us what she thinks about the fact—confirmed by the House of Commons Library—that the UK has the lowest investment in the G7 and is the second worst performer in the G7, post-pandemic, in terms of economic growth?

[Laura Trott]

I will say to the hon. Gentleman that since 2010 we have grown faster than France, Germany and Italy, and we are predicted to do the same in the next five years.

It is no coincidence that between 2010 and 2019 the number of violent crimes and burglaries halved. Our reading standards in schools, which were previously behind those of France, Germany and Sweden, raced ahead. The latest technologies, such as the NHS app and virtual wards, are now used by patients across the country.

However, this is not a “once and done” situation. The effect of the pandemic on productivity was significant. Moreover, as Lord Maude has put it, the focus on productivity must

“never end. This will always be a work in progress. There never can be a steady state… The public, for whom public services exist, deserve nothing less.”

That is why this Conservative Chancellor is willing to invest once again to drive change.

The head of the National Audit Office has said that if we can improve public sector productivity, the size of the prize is tens of billions of pounds, and the Office for Budget Responsibility estimates that raising public sector productivity by 5% would be the equivalent of about £20 billion extra in funding.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

While the Chief Secretary is on the subject of the OBR, may I ask her whether the OBR is correct in saying that the target public sector debt measure is forecast to increase, or whether her own personal calculations continue to suggest that debt will fall?

[Laura Trott]

I am sure that the hon. Gentleman will see in the OBR figures that public sector net debt overall is expected to fall, and public sector net debt excluding the Bank of England is due to fall in the fourth and fifth year of the forecast. [Interruption.] No, that is just the overall public sector net debt figure.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

May I pursue the Minister’s response to my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty)? Why have the Government chosen a debt measure that excludes the Bank of England?

[Laura Trott]

To put it simply, it is because we are more in control of that figure. The overall figure is falling, but public sector net debt excludes the impact of the Bank of England on the figures.

The rise in public sector productivity will help us to manage the size of the state in the long term, while also maintaining public service quality and delivering savings for taxpayers. That is why, 14 years on, in my role as Chief Secretary to the Treasury, I am delighted to be leading our public sector productivity programme.

[Mr Clive Betts (Sheffield South East) (Lab)]

I am pleased that the Minister is in charge of that programme. Perhaps she can explain a little more about it. Local government currently has a deficit of about £4 billion. In the productivity plan for local government, the Government highlighted the need to reduce waste on equality, diversity and inclusion. I have found no Government figure showing how much that will save, but the TaxPayers’ Alliance says that it will save £50 million over three years, towards the £4 billion deficit. Has the Minister a figure that suggests that the saving in that part of the productivity plan will be greater?

[Laura Trott]

Yes, the savings in the productivity plan will amount to billions of pounds.

Let me say a little about the economic context. The last few years have not been easy. The pandemic, Putin’s illegal occupation of Ukraine, energy price rises, and now conflict in the middle east have taken their toll on the economy, on businesses and on families. However, because of the difficult decisions that the Government have taken, the economy is turning a corner. Inflation has more than halved, from 11% to 4%; real wages have risen for seven months in a row; and unemployment is down, from a high of 8% in 2010 to 3.9% at the end of last year. Because we have stuck to our plan, we have been able to cut the double tax on work, putting £900 back into working people’s pockets. On Sunday, the independent Institute for Fiscal Studies gave its verdict on our tax cuts for workers:

“genuinely putting a lot more money into the pockets of people”.

[Christine Jardine (Edinburgh West) (LD)]

The right hon. Lady is referring to the 2p cut in national insurance. That cut has been wiped out by the freeze in income tax thresholds, and the average worker on £35,000 a year will still be nearly £400 a year worse off this year than last year. How do these figures match up?

[Laura Trott]

I am sure the hon. Lady will be pleased to know that the average earner will be subject to the lowest effective tax rate since 1975.

[Clive Efford (Eltham) (Lab)]

Will the Minister give way?

[Laura Trott]

I am going to make a bit of progress.

Sadly, the Labour party is putting this in jeopardy. Labour Members have no plan to cut taxes, and cannot name a single one that they would cut. Instead, they are trying to pull the wool over the public’s eyes by pretending that they have refinanced their £28 billion a year plan to decarbonise. They themselves have said that their pledge costs £28 billion a year, and they are apparently not scaling their promises down. We all know what that means: more taxes for hard-working families. What the public and the House need to know is this: which tax will they raise to pay for the plan, and, if they are in government after the general election, will they stick to our spending plans as set out in the Budget? The British public deserve to know.

During this Parliament, total departmental spending has increased by 3.2% a year in real terms, and day-to-day departmental spending will grow at an average of 1% a year in real terms beyond the current spending review period. The Government are protecting the record increase in capital spending over this Parliament, which will deliver about £600 billion of public sector investment over the next five years. As announced in the Budget, we are also committing an additional £2.5 billion for the NHS in England in 2024-25, protecting day-to-day funding levels in real terms.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Is the Minister aware that thousands of people in this country would love to work and be productive, but cannot because they are living with cancer? Cancer is not only a threat to people’s life, but it also limits their ability to earn a living. I am sure that she is aware that a third of people diagnosed with cancer wait two months for their first intervention that will help to cure them. Is there any room in the capital spending that she set out for large-scale investment in radiotherapy, as suggested by the all-party parliamentary group for radiotherapy? That would help to cure people more quickly and in a more targeted way, so that there is no collateral damage, and people can go back to work much sooner.

[Laura Trott]

I praise the hon. Gentleman for the work that he has done on this very important issue, and I know that the capital we are providing will help with issues such as the one he has highlighted.

We cannot just put more money into public services and hope for the best. I was delighted to read that the hon. Member for Bristol North West (Darren Jones) said recently that he was in favour of reforming public services, not splurging on them. Well, here’s hoping that the Labour party breaks the habit of a lifetime. I genuinely hope that he will agree with some of the measures on productivity that we have set out today, because outcomes are determined by how things are done. By focusing on outcomes, not funding, we can deliver real value for the taxpayer. It is a trap to think that simply spending more buys us better public services. Simply spending more is also not sustainable.

[Keir Mather (Selby and Ainsty) (Lab)]

On the subject of unfunded spending commitments, we on the Treasury Committee learned from the Office for Budget Responsibility this morning that the Government have not told it about the £46 billion ambition to scrap national insurance contributions altogether, and because the OBR has not been told, it cannot forecast the economic impact that that may have. How does that bake in long-term economic stability for the United Kingdom?

[Laura Trott]

Unlike the Labour party’s massive £28 billion unfunded tax commitment until 2030, our long-term ambition to cut national insurance and erase the double tax on work does not have a date on it. We have shown that, through careful stewardship of the economy over time, we can reduce people’s taxes without cutting spending.

Simply spending more is not sustainable. If no action is taken, public spending is forecast to grow faster than GDP from 2030; that accounts for pressures that we cannot avoid, such as demographic changes. That must be managed, using all the tools at our disposal—and not by borrowing more, or increasing taxes on the British public. Instead, we have to assess how we deliver public services, and improve them to make the UK more productive and ensure the long-term sustainability of public finances. Yes, this is about money, but it is also about delivering the best services for the public, because productivity is not a theoretical concept; it affects us all, in each area of our everyday lives.

I want better outcomes for children, and teachers being able to spend more time with pupils, rather than filling out paperwork. I want the police to spend more time on the beat, not on forms. As a Member of Parliament representing constituents in Sevenoaks and Swanley, I want nurses and doctors spending time with patients, not having to look at computer screens. Better public productivity means better value for money, better support for frontline workers to do their jobs effectively, and better results.

In last week’s Budget, the Chancellor announced that we are allocating £4.2 billion to investment in productivity. The package is broad and comprehensive, and includes £3.4 billion for the NHS—double its current budget for tech and digital transformation. The NHS says that that will unlock over £35 billion in the coming years—10 times the amount we will put in. At the next spending review, that will be the model for all our public services. The package also includes £105 million for 15 new special free schools across England, which I know will be welcomed across the House. That will create over 2,000 high-quality places for children with special educational needs and disabilities, and prevent local authorities’ use of costly independent provision.

The Budget provides £165 million to tackle the shortage of children’s home placements and to rebuild the children’s home estate. That will reduce the need for expensive and unsuitable emergency provision that does not produce the right outcomes for the children who need our help the most. There is £334 million to cut crime by improving policing technology, and £17 million for modernisation of Department for Work and Pensions services, and replacing the paper-based system for benefits. As a former Pensions Minister, I know the impact that such modernisation has had on the state pension. However, this is just the start. I am also committed to driving forward work to embed productivity at every level across the whole public sector.

[Fleur Anderson (Putney) (Lab)]

Will the Minister give way?

[Laura Trott]

No, I will not. I have been very generous with my time.

When I began thinking about this agenda in 2009, no one could have foreseen the technological changes of the last decade. Those changes are revolutionising the private sector, and we must embrace them in the public sector, too.

Our job is not yet done on the economy, but we are making progress with our plan to reward work and create growth—a plan that would be put in jeopardy under the Labour party. This Budget does what it says on the tin: it sticks to the plan—a plan that Britain needs, a plan that is putting money back in the pockets of British people, and a plan that is working. I commend this Budget to the House.

[Several hon. Members rose—]