The Economy
Liam Fox Excerpts(6 months ago)
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Bim Afolami
My response to the hon. Gentleman, whom I respect deeply, is twofold. First, we are at an inflection point and the job is not complete. We know that many millions of people are suffering, which is why we are continuing to improve their incomes through cutting their taxes. It is why we are continuing to make sure that small businesses around this country can thrive, and why we are continuing to put more money into our public services and, indeed, to reduce inflation. We know that the job is not done.
Secondly, many people have had to suffer as a result of the difficult decisions that had to be taken over recent years because of the generationally unique shocks that we saw. It has been up to this Government to guide and help the country through that, which is what we will continue to do in the weeks and months ahead.
Sir Liam Fox (North Somerset) (Con)
Inflation is now lower than in France, Germany or the eurozone, growth has been upgraded by the IMF, and Britain has become the world’s fourth biggest exporter, overtaking the Netherlands, France and Germany. Employment is at a historically high level, and the UK is the third biggest destination for inward investment globally. On financial services investment, we are top, attracting 108 projects last year, compared with France’s 39 and Germany’s 38. I wonder whether my hon. Friend can correct me—or did I miss the post-Brexit apocalypse that many, including the Treasury, predicted?
Bim Afolami
My right hon. Friend has put that incredibly well. Very good things have happened to our economy over recent months, particularly in my own area of financial services. I would add that many Members, on both sides of the House, were concerned about the impact of Brexit on the British economy. As he suggested, our record shows that this Government have been able to guide the country through the post-Brexit period and towards better times than ever.
Autumn Statement Resolutions
Liam Fox Excerpts(1 year ago)
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James Murray
As always, my right hon. Friend makes an important point. The Government are trying to have it both ways. When inflation goes up, it is someone else’s fault. When it comes down, they claim the credit. I think that we can trust the British people to see through whatever way they try to distort the truth.
James Murray
No, I will make some progress.
The truth is that the Conservatives’ fingerprints are all over the cost of living crisis, and it would be ludicrous for anyone to expect the prime suspect to be asked to solve the crime. It is clear that we cannot trust the Government with the cost of living crisis. It is also clear that we cannot trust them with our money. No wonder they want to run from their record in office when they have wasted taxpayers’ money so badly. The levels of fraud and waste on their watch make the 25 tax rises over this Parliament all the more galling, and even harder for hard-pressed families to stomach. From the £7.2 billion of public money that was lost on fraud during the pandemic to the £50 million spent on a new helicopter for the Prime Minister to make the short trips that he is so fond of, it is clear that the Conservatives are incapable of spending public money wisely.
Labour will set up an office of value for money as part of our pledge to put fiscal and economic responsibility at the heart of our approach if we win the next election. On that foundation, we will get the economy growing after 13 years of stagnation, as we know that economic growth is the key to making people across Britain better off. Had the UK economy grown since 2010 at the same rate that it did under Labour in the years before, it would be £150 billion bigger today—£5,000 more for every household, every year. That is why Labour’s plan to provide the stability, certainty and critical infrastructure improvements that businesses value so greatly is so important.
Our new fiscal lock, which the Conservatives voted against last week, will strengthen the Office for Budget Responsibility, helping to ensure that the disastrous mini-Budget of this time last year could never happen again. Our new road map for business taxation will give businesses from the UK and around the world the certainty and predictability that they need to invest in Britain. That need for certainty has been behind our calls to make full expensing permanent, which the Government have finally announced—though with this Government, businesses may well be left wondering how long their latest position will last. While small businesses and the retail, hospitality and leisure industries will no doubt welcome any further help with business rates, again the Government have failed to provide the fundamental reform promised at the general election.
Where the Conservatives have failed, Labour will deliver. Our proposals to overhaul the planning system will fast-track the decisions that we need to deliver clean energy, critical infrastructure, and the factories and workplaces of the future. Our national wealth fund will provide catalytic public investment to leverage three times as much private sector investment into jobs and industries across our country. Our approach will be one of a pro-business, pro-worker Government, ready to grow Britain’s economy and make working people better off. Governments in other countries around the world know that businesses want their support in growing new industries and making the transition to a low-carbon economy. As the chief executive of the UK Sustainable Investment and Finance Association said just yesterday, the Chancellor needs to
“urgently set out the UK’s overdue response to the”
US approach
“and similar measures in other jurisdictions, such as the EU, Canada and Japan”.
The truth is that through their lack of ideas, lack of ambition, and lack of the industrial strategy that we need, the Government are holding British businesses back. Ministers are making Britain the outlier, while the Governments of similar nations around the world are supporting their national industries to attract jobs and investment. The Conservatives cannot deliver what our economy needs, and people and businesses across Britain know that it is time for a change. Even the Prime Minister has conceded that our country needs change. Maybe that is why he still has misplaced confidence in the Conservatives: he thinks that because they have changed their Cabinet so much and so often, they must be on to a good thing. It is true that their record on changing who is sat around the Cabinet table is remarkable. To have had five Prime Ministers, seven Chancellors, and an astonishing 16 Housing Ministers is noteworthy—but not, of course, for the right reasons.
The problem for the Conservatives is that whatever they try to do now, they know, and the British people know, that they cannot be the change that we need. Nothing can compensate for the damage that they have already done. What on earth will they put on their election leaflets, I wonder? Will they say, “We may have increased taxes 25 times, but things will be different now—honest!” or will they say, “Don’t worry—0% growth is actually better than what it could have been.”? Maybe they will play it straight with something like: “We may have failed for 13 years, but we’d like another chance.”
We all know that that simply will not wash. The Conservatives are out of touch and, increasingly, out of time. After 13 years, working people have had enough of paying higher taxes, enough of seeing their wages stagnate, enough of their public services falling apart, and enough of Britain’s economy falling behind. The change that our country needs can only come from our changed Labour party—one that is ready to serve, ready to get the economy growing, and ready to make people across Britain better off. The truth is that people in our country should be given the chance to get Britain its future back. That is why a general election cannot come soon enough.
Dr Liam Fox (North Somerset) (Con)
I warmly welcome the Chancellor’s statement as a move back towards some sound Conservative principles that have been somewhat lacking in recent years. I would have liked his language to have been even more explicit, because the No. 1 principle that underpinned what the Chancellor was saying—if not expressed so explicitly—was that there is no such thing as public money, or Government money: there is only taxpayers’ money, whether they are personal taxpayers or business taxpayers. We are beginning to get away from the sterile tax and spend debate that has bedevilled our country and, I would argue, our party for too long, and to get back to the territory of how to create wealth.
It was right of the Chancellor to remind us of Nigel Lawson’s maxim that borrowing is just the deferred taxation of the next generation. No one would think it was reasonable behaviour to max out their credit card and then give the bills to their offspring, but that is exactly what overspending and over-borrowing leads to, and it is exactly the same recipe that the Labour party is putting to the British public all over again. Like the shadow Minister, the hon. Member for Ealing North (James Murray), I very much look forward to a general election: we will be able to expose the fact that the Labour party cannot even tell us as a matter of fact—as a matter of its credibility—what proportion of current inflation it thinks is due to, for example, the commodity price shock that resulted from the invasion of Ukraine. Labour Members absolutely refuse to accept that anything is responsible for inflation other than UK domestic pressures and domestic policy. If they believe that that gives their party credibility in the markets, they have got another think coming. We will want to make sure that the electorate understand that analysis very well.
Catherine West (Hornsey and Wood Green) (Lab)
Will the right hon. Gentleman give way?
Catherine West
The right hon. Gentleman talks about which questions will be asked during a general election campaign. Since last year, my constituent has had to move with her husband and children back into her parents’ home: she cannot afford a mortgage, because when she went to renew hers, the right hon. Member for South West Norfolk (Elizabeth Truss) had crashed the economy. My constituent and a lot of other people who live in Crouch End and Muswell Hill cannot afford their mortgages because this Government crashed the economy. Can the right hon. Gentleman tell the House what the Government will say to my constituents at a general election?
Dr Fox
Unsurprisingly, the hon. Lady was both incapable of answering the question and unable to do so. The question was, “What was the cause of inflation?” It was inflation that drove up interest rates. I reiterate the point that my hon. Friend the Member for Torbay (Kevin Foster) made: the Fed rate is 5.5%, while the Bank of England rate is 5.25%. I presume the hon. Lady thinks that—in her words—my right hon. Friend the Member for South West Norfolk (Elizabeth Truss) crashed the American economy too. It is complete nonsense; it is a bogus economic analysis.
We all know the impact that inflation has. We know that it hits the poorest people in our society hardest, which is why the Government, along with the Bank of England, were willing to see the pain of higher interest rates applied. Inflation does not help anyone. What I wanted to know, which I did not get from the hon. Lady or from her Front Benchers—surprise, surprise—was what they thought was the external responsibility for that inflation. We do not have an answer from Labour, and therefore we have an Opposition who have no credibility on one of the most basic questions: what causes inflation? If they do not know the answer, they cannot possibly be trusted to be in charge of this country’s finances.
One of the other things that I welcomed today is that we are moving slowly—still a little too slowly, I would argue—towards a lower-tax economy. The Chancellor set out the reasons why a lower-tax economy is a good thing. It is not just an abstract economic argument; it fits with Conservative ideas of individual responsibility, reducing the size of government, giving individuals greater choice, and providing incentives for those who will generate the wealth on which our future public services will depend. By emphasising the importance of creating prosperity, rather than the sterile debate about whether we should spend less or tax more, we are getting back into the right territory for a Conservative Government.
I was especially pleased to hear the measures for small businesses. My hon. Friend the Member for Sevenoaks (Laura Trott) recently had to endure my previous speech on this subject recently, in which I pointed out that, unlike what you would believe if you listened to the Labour party, public sector and private sector jobs in our economy are not in balance. The public sector produces only about 17% of the jobs in our economy; it is the small businesses and the private sector that produce the jobs and prosperity on which our country depends. We have had too high a tax burden on small businesses as they have come out of the pandemic, so I welcome the measures today.
I still have trouble with this term “growth” that goes around. I do not believe that growth as measured by the standard definitions is appropriate for a UK economy so highly geared towards services compared with goods. I know that it is the accepted norm, but I think we need to find better ways of describing it.
I welcome some of the moves towards improving capital availability, because if our businesses face one real problem, it is the lack of capital available for growth in our economy compared, for example, with the United States. That is because our economy is still too heavily geared towards the banks, and not enough towards private equity. We need to look at the breadth and depth of the private equity or venture capital industry in the United States and find out how we can replicate that in the United Kingdom if we are to give even more help to our small businesses.
I very much welcome the incentives to work that the Chancellor announced. Again, getting people back into work is not just an economic exercise; it is what I would regard as a moral imperative. If the only value people know they have is what the state gives them to do nothing, how can they possibly know what value they could be to themselves, their families and their communities if they were allowed to realise their full potential? Getting 200,000 more people back into work is a socially progressive thing to do, and if we are able to get more disabled people back into the workplace, so much the better for them, not just for the economy. I welcome what the Government have announced, because the best way to tackle poverty is to get people into work, and it is not just financial poverty but poverty of aspiration and poverty of hope that we are addressing by making this important social change.
There were one or two other elements on which I would have liked to have had some more detail from the Chancellor. I hope my hon. Friend the Minister might be able to provide that in responding to the debate. One of the problems right across the economy, particularly for small businesses, as the Chancellor stated, is late payment. However, one of the most important culprits in late payment is local government. Local authorities are spending the taxes that we in this House have to raise, in addition to the taxes they raise themselves, and surely it is not acceptable to us that the taxes we raise are spent in a way that actually adds an extra burden to small businesses. It should be a requirement on local authorities that they pay all their bills to small businesses on time. I hope the Government will look at that, because I believe there would be widespread support across this House for measures that compelled local government to do so.
I very much welcome the additional £20 billion investment over the next decade. That will help to address the one problem that has bedevilled our economy more, I think, than any other factor: productivity falling behind that of our competitors. Improving the horizon for freeports by up to 10 years will give additional stability, and again I hope we can look at how we can have a deregulatory exercise in those areas. That could test exactly how much we would get were we to expand the concept of freeports. I hope we can look more at the experience of countries such as the United States, where freeports have greater freedoms than they have in the United Kingdom. The Government are moving in exactly the right direction, but let us move further and faster on that.
The Chancellor talked about other supply-side reforms to the economy, one of them being the speeding up of improvements to the grid so that we can take advantage of the investments that have been made, for example, in renewables. I do not expect a response to that in the wind-up today, but I introduced a private Member’s Bill exactly to ensure that individuals impacted by the speeding up of improvements to the grid would have access to an independent arbitration programme, and not have National Grid deciding whether they should get compensation and how much they should get. That was an unacceptable position. We have not yet seen the regulations that will produce that independent arbitration, and we need to see them quickly. If we are to see the roll-out of an improved grid, it will impact more people, and we have to see a fair, equitable and affordable system where individuals can seek redress if they feel they have been dealt with unfairly.
I will briefly mention the continuing whinging victimhood of the nationalists. When they were talking about the ridiculous position that they are put in by being part of the Union, they just forgot to mention—I am sure it was an omission—that the block grant has now risen to the highest level since devolution began, at £41 billion this year. For every £100 that the UK Government spend in England, the Scottish Government receive £126 per person in Scotland.
Dr Fox
The hon. Member gave his side of the case. I am just pointing to the fact that individuals in Scotland do extremely well out of their membership of the Union. If SNP Members want to see a crash, they know exactly which way to go about it, although I fear that the electors of Scotland at the general election will ensure that they do not get the opportunity to test their mad theories to destruction.
I was glad that we had a Conservative financial statement today that sets course for the spring Budget and the chance to set out genuine differences of ideology when we get to a general election. We believe that we should have a smaller state; we believe in lower taxes, public sector reform, and getting better value for money for the taxpayer. The Labour party will want to increase spending, increase borrowing and pass it on to the next generation. As with all things, the primal difference between socialists and Conservatives is that we believe in equality of opportunity; they believe in equality of outcome and equal mediocrity for all. What we want to see is the betterment of the United Kingdom for the sake of all its people.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
Listening to the Chancellor today, one would believe that the economy has turned a corner and the cost of living crisis is over. The truth is that after 13 years of economic failure, millions of people are struggling to make ends meet. Some of the comments we have heard from the Government Benches show just how completely divorced the Government are from the reality of working people’s lives.
We hear heartbreaking stories every single day from our constituents about how they skip meals to pay higher bills, with the price of food up 30% in the past two years, electricity up 40% and gas prices up 60%. We hear how they are struggling with the highest tax burden this country has seen in 70 years. The freezing of current thresholds has confirmed an additional 4 million of the poorest in society will now pay income tax by 2029. We hear from constituents worrying about where to find the money to pay their mortgage, to avoid having to sell their family home due to the reckless actions of this Government. Millions continue to pay the price of the Tory mortgage penalty. Working families will see an average increase of £220 a month in mortgage costs because of Tory economic failure and 1.5 million households are also set to suffer as they re-mortgage their deals next year.
Tulip Siddiq
I think the right hon. Gentleman is trying to absolve himself of the fact that it was his former Prime Minister and Chancellor who crashed the economy of this country. He just needs to go to his constituents and, I tell you what, they will provide him with the answer at the next election.
The OBR revealed today that household incomes will still be 3.5% lower next year in real terms than before the pandemic hit. To put that in context, it is the biggest hit to living standards since records began, as my hon. Friend the Member for Hemsworth (Jon Trickett) neatly summarised in his speech. My hon. Friend the Member for Wallasey (Dame Angela Eagle) brilliantly articulated, as she always does, the biggest insult to working people, which is that in return for their hard-earned contribution, their reward is crumbling public services. The Conservatives’ mismanagement of the economy has left our public services on their knees, with people unable to get hospital appointments and waiting lists 7.8 million people long.
According to the latest IMF forecast, if people have not seen it, the UK will have the slowest growth in the G7 next year. Today, we learnt that growth in the economy has been downgraded not only for next year, but for two years after that. As British people already know, the promises made today cannot compensate for the damage that has already been done. The measures announced today are equivalent to handing back £1 for every £8 of the Conservatives’ tax increases in 2019 alone. The freeze in the personal allowance threshold means that a couple on an average wage will still be £350 worse off per year, even after all of today’s announcements. After 13 years of economic failure, the Chancellor is asking people to be grateful and telling them that their lives will suddenly improve, despite the Government’s continuing to make them worse off. So the question is this: do people feel better off today than they did 13 years ago? I think our constituents know the answer.
Before I sum up the powerful contributions to the debate that we have heard from the Labour Benches, it would be remiss of me not to welcome the hon. Member for—[Interruption]—the hon. Member for Hitchin and Harpenden (Bim Afolami). Excuse me for forgetting, but he is the fourth Economic Secretary I have shadowed in two years. I know he is an ambitious young man, but he will have a very hard job trying to get the title of the most charismatic Economic Secretary I have shadowed so far. The right hon. Member for Salisbury (John Glen) has earned that. I shall watch the new Economic Secretary to see how he performs in his job. If there are any words of wisdom he wants from me, he is welcome to contact me. I hope he lasts longer than his predecessors.
I am grateful to my Labour colleagues for their important contributions. My hon. Friends the Members for York Central (Rachael Maskell) and for Hackney South and Shoreditch (Dame Meg Hillier) rightly talked about the huge demand for social housing. Private renters are paying the price of Tory failure, along with mortgage holders. My right hon. Friend the Member for East Ham (Sir Stephen Timms) rightly argued that we need to go further on the consolidation of defined contribution pension funds and questioned whether the Government are rushing their reform of work capability assessments. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) gave an important speech on the complete failure of the Government to strengthen adult social care. My hon. Friend the Member for Stockton North (Alex Cunningham) powerfully raised the plight of rising child poverty and once again raised the need for a hospital in his local area.
A Labour Government will always prioritise supporting working people. We will deliver an ambitious plan for growth that meets the scale of the challenge that we face—to turn around the UK economy. Labour will get Britain building again. We will deliver a robust industrial strategy on a statutory footing that will in turn deliver high-skilled, high-paying jobs across the country. We will close unfair tax loopholes to ensure that we can support our schools and hospitals with the investment that our people are crying out for. We will scrap the non-dom tax status loophole, which costs the Exchequer £3 billion in revenue. That money will help us to reduce the NHS waiting list and provide free breakfast clubs for all children of primary school age.
Labour is leading the charge on unlocking investment in high-growth firms. Through our national wealth fund, a Labour Government will work in partnership with industry to deliver the investment that our businesses need to scale up and deliver growth across the economy. We will empower industry to invest, alongside our Labour Government, in the industries that are crucial to Britain’s success, such as hydrogen, electric battery factories, wind and nuclear, and we will do so in a way that meets our fiscal rules. We will set the fund a target to ensure that for every pound that Labour puts in, we leverage three times as much in private investment. That is because we believe in growing the economy. We want to raise living standards, and we will fund our public services better.
The Tories have claimed that they have a plan for growth, but forecasts are down. They claim to be reducing debt, but it remains at record levels. Despite their claim to be reducing taxes, the tax burden will be the highest since the war. After 13 years of failure, this Government cannot deliver a serious plan to address the fundamental challenges faced by our constituents and the country. All they can do now is take their record to the voters, and call a general election.
Economic Growth
Liam Fox Excerpts(1 year ago)
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Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Thank you, Mr Deputy Speaker. I did not hold out much hope of enlightenment from this debate, and it is fair to say that I am underwhelmed. This is a truly zombie Government, so bereft of ideas and talent that they have scoured the sheds of Chipping Norton to find a former Prime Minister who, along with his Liberal Democrat coalition partners, set most of the economic woes on their way for Scotland and the other nations of the UK, and resurrected him into their Cabinet. What a signal; what a shambles.
It is to the shame of Westminster that the Government spend so much time reliving past failures, continuing to do the same thing over and over—culture war rhetoric, punishing the vulnerable, and ignoring the suffering of the most vulnerable and the poorest. One of the many former Prime Ministers of this failing Government—although, to be fair, an elected one—used to talk about those people “just about managing”. I have news for her and for this place: they ain’t just about managing any more. They are struggling. Many more each day are failing to get by. Food bills, energy bills, mortgages and rents are crushing them.
Given the misery that the Government have wrought through austerity, the infamous mini-Budget and everything else, they should have put the cost of living at the forefront of the King’s Speech. They should have listened to those struggling to pay their electricity bills, put food on the table and keep a roof over their heads. Instead of talking about tents, they should have been talking about rents. While they pound the slogans of division by saying “stop the boats”, I trust the public will ensure that all they do for this terrible Government is stop the votes. Of course, being accountable and elected is not an issue for this place. The Tories and Labour will always simply create another Lord to do their bidding if they need to do so.
In a time so obviously marked by escalating living costs, the No. 1 concern on the doorsteps of Scotland—and, I contest, the other nations of the UK—is the cost of living. The King’s Speech glaringly overlooked the need for policies to assist households grappling with food and energy costs, mortgages and rents. While the Scottish Government have made a concerted and targeted effort to shield Scots from the brunt of Westminster policies, the omnipresent shadow of these often cruel Westminster directives remains inescapable.
The King’s Speech starkly underscored the unreliability of Westminster Governments in serving Scotland’s interests, with both the Tories and Labour wedded to a low-growth, Brexit-anchored economy. Independence and a return to the European Union, where all partners are treated as equals, is the only viable path for the prosperity of Scotland. The Scottish Government, within their limited capacity, strive to cushion Scots from Westminster’s harshest policies, yet Scotland’s full potential remains constantly stifled under the UK’s policy regime—a theme I will return to shortly.
Dr Liam Fox (North Somerset) (Con)
On the hon. Gentleman’s logic, if Brexit is the impediment to growth, why is it that since pre-pandemic times Britain has grown faster than either France or Germany?
Drew Hendry
Tory Members keep peddling this line, but what they know, and what everybody else knows, is that they started from a lower base because they tanked the economy in the first place. They have to live up to that responsibility. They claim higher growth from a lower point of entry. [Interruption.] They can try to shout me down, but I will make progress.
The King’s Speech, which was alarmingly brief on tackling the cost of living crisis, was a missed opportunity to offer concrete measures for relief. It paid lip service to reducing inflation and easing living costs, but lacked substantive policy proposals. Labour, too, is offering little on the cost of living crisis. Where are the measures that could be taken now to help people in their homes? Completely absent. Of course, that is just part of Labour’s “don’t scare the Tory voters” approach to securing office. The UK’s economic stagnation, which is evidenced by recent data, underscores a systemic failure to foster growth, post financial crisis. There is nothing in the King’s Speech to help support people, our food and drink industry, or our tourism and hospitality sector. That is something the Chancellor will need to correct before next week.
In a UK battling—unlike what the Government claim—rampant destitution, the failure of the King’s Speech to prioritise poverty reduction is indefensible, with millions, including a shocking number of children, unable to meet their basic needs. The situation in the UK is dire. Scotland’s lower destitution rate is a testament to SNP policies such as the Scottish child payment, but there is no attempt to replicate that anywhere in this House or to suggest that we do so. The eradication of poverty remains a more distant prospect under the current Westminster regime. Labour’s stance, echoing Tory rhetoric and policies, leaves independence as Scotland’s only hope for a fair and dynamic economy.
Dr Liam Fox (North Somerset) (Con)
I also welcome my hon. Friend the Member for Sevenoaks (Laura Trott) to her new post. Her promotion is richly deserved.
One thing on which I am sure we can all agree in this House is the need to create non-inflationary growth in this country. The question is how we go about it and, to some extent, how we define it. I say to my hon. Friend that gross domestic product, as a measure of growth, is becoming an increasingly less relevant index in our economy because, although economic growth has been low across the western economies, balance sheets and net worth have tripled; there is a dislocation there.
GDP needs to take domestic unpaid labour, such as child or elderly care, into account. It excludes a huge proportion of what happens online, as well as intangibles such as intellectual property, and is much less suited to a service economy than to a manufacturing economy. It also has the perverse incentive of making us want to encourage immigration, rather than discourage it. When we have the wrong analysis, we are likely to have the wrong targets and, ultimately, the wrong policy. That needs to change. We need to concentrate on wealth creation, which happens when we take unique IP from any of us and turn it into a good or service that does not currently exist, or into a better good or service than exists today.
We have a problem that, in a capitalist economy, we cannot get that sort of wealth creation if there is not sufficient access to capital. One problem in the UK is that 85% of company scale-ups here are done with bank lending and 15% are done with private equity, whereas it is 80:20 in the other direction in the United States. We need to have deeper and wider access to private equity and venture capital in this country if we are to maximise the benefits of our hugely creative and innovative population, and if we are to stop the IP leakage, especially to the United States.
We also need to create more wealth by improving our share of global trade, by which I mean the share of global markets that are expanding fastest, and not our obsession with the European Union. The latest Institute of Economic Affairs report shows that trade continued to grow between 2016 and the conclusion of the Brexit transition in 2020, indicating that Brexit had no main effect on trade. UK goods exports rose by 13.5% to EU countries and by 14.3% to non-EU countries between 2019 and 2022, so we need to put that issue behind us and instead focus on the world’s growing markets. The Office for Budget Responsibility forecast said that Brexit barriers would result in a 15% drop in trade volumes, contributing to a 4% lower GDP in the long run, and that is already clearly wrong. I ask those on the Government Front Bench to request from the OBR a much more updated and realistic assessment of where our trade sits at the present time.
Contrary to what many people will perceive, and certainly to what the Labour party will tend to suggest, 82.5% of all the jobs in this country are in the private sector and only 17.5% are in the public sector. From listening to our media and politicians, we would often think this was 50:50. Some 61% of those private sector jobs are in small and medium-sized enterprises. I know that if we are able to cut taxes, many of my colleagues will want to see personal taxes cut, but our priority should be to cut taxes for small businesses, because they are the ones that create prosperity and employment. They are the mainstay of our economy. In particular, I would like to see more Government action on late payment, particularly by local authorities; this is taxpayers’ money that should be getting through to SMEs on time, and the fact that it is not is a scandal. I would also like to see the retail, hospitality and leisure business rates discount extended to give many of the companies struggling in that sector the help they require.
We also need to look at other elements, including the broadband infrastructure in our country. Constituencies like mine still contain places with no broadband. It is ridiculous that we are putting public money into the programme and yet leaving parts of our economy without any of the advantages they require to participate fully in our economy. We were told that we would get that broadband at the end of 2022 and then we were told it would be in spring 2023. It was then to be October 2023, and now we have no idea when we will get it. I say to the Minister that the Treasury needs to give a kick up the proverbial to other Departments to make sure they are carrying out the promises that the Government made at the last election to stop some of the limitations in the rural economy and to get that infrastructure in place.
Finally, I want to say a quick word about the Bank of England. It has operational independence, but where is the accountability? We were told that inflation would be transitory and that there were external influences involved. I looked at the letters between the Governor of the Bank of England and the Chancellor, and not once did they mention monetary stability or the fact that we had had an expansion of our money supply for far too long, at far too great a level. These are not rounding errors. If we get extra inflation created by monetary expansion that is too fast, it will affect the poorest in our society and the balance of our public finances, and it will cost taxpayers money. I have no problem with the Bank of England having operational independence, but what I want to know is: when it gets it wrong, who is it accountable to? Ultimately, it is the taxpayers and the people of this country who pay the bill, not those who are well paid in the Bank of England.
Energy (oil and gas) profits levy
Liam Fox Excerpts(2 years ago)
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Tulip Siddiq
I will make a bit more progress, but I will come to the Members in a minute. I am happy to take interventions.
We of course welcome that, after months of kicking and screaming, the Government have decided to adopt Labour’s policy of strengthening the windfall tax on energy giants, but they are still leaving billions of pounds on the table by giving a tax break to companies drilling for new polluting fossil fuels. Labour would have raised over £10 billion more—£10 billion, at the time of a cost of living crisis, is an enormous amount—over the next three years than the Government’s proposal by closing that unfair loophole, taxing oil and gas at the same level as other countries such as Norway and backdating the tax to January of this year.
Dr Liam Fox (North Somerset) (Con)
It has been clear from this debate and the previous debate that the backdrop to our economic discussion is one of continuing post-pandemic global economic disruption and the rise of global inflation, caused not least by Putin’s invasion of Ukraine. If anyone still believes that we do not live in an interconnected and interdependent world, they are simply not looking at the evidence around us.
Part of the difficulty in assessing the data is the opacity of some of the figures on post-pandemic global trading and investment, but some patterns are now clearly beginning to emerge. According to the Office for Budget Responsibility, in the fourth quarter of 2021, UK imports from the European Union dropped by 18%, but global imports from the rest of the world were up by more than 10% and UK exports to the European Union in July this year reached an all-time high of £17.4 billion. In other words, despite the fact that there are greater barriers to trade on the European Union side than on the UK side, British exports to Europe are actually managing to be more robust than European exports to the United Kingdom. So let us be clear: we do not need a new relationship with the European Union, Swiss or otherwise. We do not require freedom of movement, integration into the European single market or integration of EU law into the UK.
Kit Malthouse
My right hon. Friend has outlined some impressive figures. Does he recall that one of the themes of the Brexit debate was that our trading patterns should change? We said that there was a big wide world out there to which we had to look, from a trade point of view, that we had become over-reliant on the EU and that there were more exciting markets elsewhere that were growing much more strongly and that we could participate in.
Dr Fox
I entirely agree. The concept of the bloc in trade terms is very second half of the 20th century. We need to look at the growing markets that give greater opportunities for the United Kingdom in goods and services. The fact that they are not immediately geographically adjacent to us should not be our primary concern. We need to move with the trends in the global economy, not focus on what is a largely ossified view of the world based on the post-second world war consensus.
When we look at the origins of the inflation that we are facing in the United Kingdom, we see that there are several of them. They have been referenced a lot during this debate. The post-pandemic supply issues are still ricocheting around the global economy and particularly harming developing countries at the present time. Also, the central banks—not just the Bank of England but the Federal Reserve in the United States and the European Central Bank—got into a group-think on what they laughingly call the modern monetarists, which means that they are not monetarists at all. They believed that they had found some sort of monetary alchemy through which they could continue to print money faster than the economies were growing without creating inflation. I believe that is why there is higher inflation in the United States, the United Kingdom and Europe than in other countries—notably Switzerland, which sits in the middle of the eurozone but did not follow the same expansionist monetary policies.
By far the greatest boost to inflation has come from Putin’s invasion of Ukraine, however. That has come about in a number of ways, which I will come to in just a moment, but we must remind ourselves that inflation is not just an economic evil; it is a moral and social evil as well. The poorest people in our society are hit the hardest by inflation because they spend more of their income on non-discretionary items. It also transfers money from the savers to the borrowers in society, which is not something that a Conservative Government should want to see. The Government have done much in this statement to protect those on low and fixed incomes, including an extra £26 billion in cost of living support, particularly on fuel, on top of what we have spent already, and an extra £11 billion on uprating benefits. The Government introduced those two items to protect those on low and fixed incomes and, taken together, they are the size of the United Kingdom’s defence budget. These are not small sums. Our increased spending on education and health is hugely welcome, especially as we catch up on the post-pandemic disruption, but to be frank, even the generous sums put forward by the Government will largely be eaten up by inflation until we get it under control.
And that is before we come to the most frightening item of all, the fact that this year we will be spending £120 billion on debt interest payments. For reference, we spend only £134 billion on NHS England each year, so we are spending almost the NHS budget on debt interest payments. We need to recognise that we cannot increase our debt further. As my right hon. Friend the Member for North West Hampshire (Kit Malthouse) said, around 20% of our debt is now index-linked and is therefore very vulnerable to rises in the retail price index. Duncan Simpson, the chief executive of the TaxPayers Alliance, said:
“The spiralling cost of servicing the national debt is deeply concerning. Taxpayers’ money that should be spent on frontline services or keeping rates down is instead going towards interest payments that outsize the costs of government departments.”
If we cannot raise debt any further, either we have to see spending come down or taxes go up, or we have to increase Britain’s wealth from the rest of the global economy. The latter is difficult in current global conditions and the Government have correctly, but rather disappointingly, from a political perspective, had to see taxes rise. That sets a clear way in which to see our future priorities. The first thing is to bear down on inflation. At the same time, we have to get control of the public finances and then we have to get our taxes back down.
I hope the Opposition will reflect on this point today. We have heard from the Opposition Front Bench on both days of this debate that we are facing a recession made in Downing Street. Currently, the greatest source of global inflation is Putin’s invasion of Ukraine and rising global commodity prices, particularly food and fuel, which is causing potential starvation in vulnerable states, with widespread social dislocation and increased international migration.
Dr Fox
I will not give way.
Those who talk about a recession made in Downing Street might want to ask themselves how much they are absolving Vladimir Putin of the global inflation we see today and whether, in fact, they are neglecting their duty to be patriotic at this time.
Conservatives do not want to see taxes rise. If we have to see temporary rises in taxation, the necessary corollary is that, as soon as inflation starts to be controlled, we will see those taxes coming down again. I would go further than my right hon. Friend the Member for North West Hampshire in one respect: this is not just a debate about growth, because any dummy can borrow tomorrow’s money to spend today and call the increased activity “growth,” which has been central to every Labour Government since the second world war.
The Government need to focus on wealth creation, in which we turn our unique intellectual property into goods and services that do not exist today, or into better goods and services than exist today. That means dealing with the supply-side constraints on the economy, making more private capital available to scale up companies, getting more international investment in the United Kingdom and making us more competitive globally. No one in the world owes us a living, and no Government can guarantee increasing living standards to the next generation. Only a successful free-market country in a free-market world can achieve that, and the sooner we get there, the better.
Sarah Olney (Richmond Park) (LD)
This is a cost of chaos Budget. Everyone is now paying the price for Conservative incompetence. This Conservative Government crashed our economy with their reckless, unfunded tax cuts. They have presided over years of low growth, low investment and declining productivity, and now they are eroding our public services and hiking taxes on ordinary people, all while slashing taxes on the big banks and refusing to close the windfall tax loophole that has allowed Shell to avoid paying a single penny.
The British people need a Government with a plan for a fairer economy that can secure future prosperity.
Sarah Olney
I will not give way, as the right hon. Gentleman has just spoken.
The British people need a Government who truly value public services, and who focus on removing barriers to economic growth by tackling workforce issues and rebuilding trade, yet all we have instead is Conservative chaos and incompetence. Thanks to the Conservatives’ economic mismanagement, Britain is getting poorer; we are all getting poorer.
Families across the UK are set for the largest fall in living standards since records began. The coming months will see family budgets put under extreme pressure. Mortgage payments are set to explode, doubling to their highest level on record next year. Energy bills will be almost £2,000 a year higher than they were in 2021, and the weekly shop is becoming more and more expensive. This is simply unmanageable with the tax rises announced by the Chancellor.
The Conservatives’ disastrous mini-Budget cost the public finances £30 billion, and now the Government have hiked taxes by £24 billion, forcing the public to clean up their mess. Everyone will be hit by unfair stealth tax rises, and more than 5 million people will be dragged into a higher band as a result, yet they will not see any benefit from the higher taxes they pay.
The Conservative Government are trying to pin the blame for all our economic woes on global factors, but the fact is these global challenges are hitting the UK harder than other major economies. We are set for the worst GDP decline in Europe next year, we are the only G7 country to have a smaller economy than before the pandemic and we have the third lowest growth forecast in the OECD.
Businesses are also really struggling right now. Conservative chaos and incompetence are forcing small businesses to suffer under crippling uncertainty, and many have already closed their doors. Last week, I spoke to a group of independent publicans in my constituency, and every single one had grave concerns about the future viability of their business. One publican told me that their current situation is 10 times worse than during the pandemic, because this time round they have no support from the Government. The business rates relief announced in the autumn statement is cold comfort to a sector that was promised a fundamental review of the unfair rates system. The previous reduction of VAT to 5% gave hospitality a lifeline during the pandemic, and the publicans I speak to say that a return to this rate would provide much-needed relief in the new year as the cost of living really starts to bite.
Publicans also need urgent clarity on energy bill support after April, as they will not be able to survive without continued assistance. I urge the Government to listen to the concerns of the hospitality sector, which is so integral to business, British industry and local communities. I would welcome a statement from the Minister for Enterprise, Markets and Small Business, the hon. Member for Thirsk and Malton (Kevin Hollinrake), on the steps the Government will take to support hospitality in the months ahead.
I was pleased to hear the Chancellor finally acknowledge workforce constraints in his speech last Thursday. Economic inactivity is a huge barrier to growth, and I welcome the review of the issues holding back workforce participation. In his review, I urge the Secretary of State for Work and Pensions to consider the impact of our inadequate childcare system on women’s participation in the labour market.
The Conservatives must also accept that their failure to deliver effective public services has led to a dramatic increase in the number of people who are long-term sick. The OBR forecasts that an additional 1.1 million people will need health and disability benefits in four years’ time, taking the number registered as unable to work to a record high of 3.5 million.
The UK’s labour shortages cannot be filled by a review of workforce participation alone. We must also look at our broken visa and immigration system, and acknowledge the impact that Brexit has had on our labour market. Brexit has also been disastrous for UK trade. Rather than opening up opportunities for global trade, businesses have been inundated with red tape. The OBR forecasts that the UK’s trade intensity will be 15% lower in the long term than if we had remained in the EU. Trade is vital for economic growth. It is way beyond time that the Government finally got a grip and started rebuilding our trading relationships.
The Liberal Democrats are the only party with a comprehensive plan to rebuild trust and co-operation with Europe, to rebuild ties with our largest trading partner and to grow our economy. The Conservatives have no plan for future prosperity. We need a plan for an innovation-led economy aligned to net zero; one that sustains economic growth and fuels a fairer society with high-quality public services. Instead, the Conservatives have inflicted higher taxes and weaker public services on everyone, all without a proper mandate and all to pay for the damage that they caused in the first place.
Autumn Statement
Liam Fox Excerpts(2 years ago)
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Jeremy Hunt
Because of the way the Barnett consequentials work, this is a cash amount that the Welsh Government will receive, but if they do what the English Government are doing with schools and hospitals —[Interruption.] If they do what the United Kingdom Government are doing in England with schools and hospitals, there will be a real-terms increase in Welsh schools and hospitals.
Dr Liam Fox (North Somerset) (Con)
I congratulate my right hon. Friend on a balanced and skilful statement prioritising fiscal stability. He will be aware that some of us believe that the Bank of England maintained monetary conditions that were too loose for too long, but that it would also be a mistake to maintain monetary conditions that are too tight for too long. Can he therefore confirm that the anti-inflationary measures that he has taken today will mean that the pressure to raise interest rates will be minimised, and that there is a much greater chance that they will fall earlier than would otherwise have been the case?
Jeremy Hunt
My right hon. Friend is absolutely right to focus on this issue, because every 1% increase in interest rates is about £850 more on the average mortgage, so it is hugely important to families up and down the country. The OBR has said that the measures that we have taken today will mean that inflation is lower than it would otherwise have been. That means that the Bank of England is under less pressure to increase interest rates, which for reasons that he knows are such a worry for so many families.
Economic Update
Liam Fox Excerpts(3 years, 10 months ago)
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Dr Liam Fox (North Somerset) (Con)
Given the state of public finances, and as we look to the post-covid recovery, will my right hon. Friend resist any calls, in his forthcoming Budget, for increases in public expenditure? This needs to be a private-sector-driven recovery, most importantly by small businesses who will provide the employment and prosperity that we will need going forward if we are to fund our public services in future.
Rishi Sunak
My right hon. Friend is absolutely right and has spoken passionately about this throughout his entire career. I firmly agree with him: this must be a private-sector-led recovery. Government cannot and should not do everything. We can support free enterprise by investing in skills, innovation and infrastructure, but ultimately it will be those small and medium-sized businesses that create the jobs that we desperately want to see.
UK-EU Future Relationship Negotiations and Transition Period
Liam Fox Excerpts(3 years, 11 months ago)
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Penny Mordaunt
The right hon. Gentleman will hear no argument from me to say that no deal is going to be better than getting a deal, but everyone is working to get a deal; that is our objective. That is why Lord Frost, as I speak, is there with his team trying to secure that. I would say to the right hon. Gentleman that delaying a decision and extending the negotiations—[Interruption.] Well, I think that is what he is driving at, but the facts are not going to change. We have all the information and the positions are as they are. It is only by continuing those negotiations, and by us continuing to put the pressure on for those negotiations to be concluded, that we will, I hope, arrive at a deal.
Dr Liam Fox (North Somerset) (Con)
We all want to see a deal, but the difficulties are not really about trade. Uniquely, we began these negotiations with an entire identity of regulations, of tariffs and of trade law, which is unprecedented in the history of trade negotiations and should have made this more straightforward. Does my right hon. Friend agree that this is not really about trade difficulties, but about EU politics? It is about ensuring that no country follows the United Kingdom in exercising their legal powers to leave the European Union, and about the desire of some in the EU to limit the competitive potential of post-Brexit Britain.
Penny Mordaunt
I agree with my right hon. Friend. It is not just the issues that I have set out in the UK’s position that should be focusing the minds of the EU’s negotiating team and the Commission; it is also what is in the interests of their member states. Britain’s position—the United Kingdom’s position—is that we want this outcome not just for our own benefit, but for the benefit of all member states, and the businesses and citizens within them.
Economy Update
Liam Fox Excerpts(4 years ago)
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Rishi Sunak
I am glad the hon. Lady welcomed the extension of job support through to next year. With regards to Scotland, it is clear, as even the First Minister has conceded, that the generous support currently available in Scotland is only possible and affordable because we have a Treasury that represents the whole of the United Kingdom. I can, of course, confirm that the coronavirus job retention scheme is a UK-wide scheme. We will continue to apply the furlough to each part of the UK equally, treating every citizen, no matter which region of the nation they live in, the same.
The hon. Lady also asked some specific questions and I am happy to provide her with the answers. Scotland will receive an upfront guarantee today worth £8 billion. That is an increase of £1 billion on the previously agreed upfront guarantee. That funding is for the Scottish Government to use as they see fit. The hon. Lady asked many questions about supporting businesses and people. It is, of course, up to the Scottish Government to make those choices on what to do with their extra £1 billion. We look forward to hearing what they plan to do with that additional funding. It is also worth bearing in mind, as we hear from the hon. Lady about the future Scottish Budget, that the Scottish Government have the ability to raise taxes. The Scottish Government have the ability to raise the funds they need to fund the various projects they would like to fund. If those things are important, then of course the Scottish Government will be able to make those decisions on behalf of their people and be held accountable for them.
Dr Liam Fox (North Somerset) (Con)
I thank my right hon. Friend for demonstrating the strength of the Union and showing that, with the best will in the world, the Scottish Government would not have the ability to have the resources to protect Scottish jobs in this way. Is it not now more important than ever that, across the whole of the United Kingdom, we stimulate wealth creation, creating new goods and services using the natural creativity and innovation of all the people of the United Kingdom? Can we look forward to my right hon. Friend using his considerable energy to bring forward proposals in this area based on sound, financially prudent Conservative principles?
Rishi Sunak
I thank my right hon. Friend for his comments and I absolutely agree. He knows better than most the power of the Union and has seen it demonstrated countless times over the years of his service. He is also right about the power of free enterprise to drive our recovery. I can give him every reassurance that those sound free enterprise principles will be at the heart of everything we do, and ensure that we have a swift and generous recovery that will benefit citizens wherever they live.
Future Relationship with the EU
Liam Fox Excerpts(4 years, 5 months ago)
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Penny Mordaunt
I am very disappointed to hear that from the hon. Gentleman. On the withdrawal agreement Joint Committee, I am Barnier’s oppo, and I thought I was charming.
Dr Liam Fox (North Somerset) (Con)
No one would disagree with that sentiment. Post-covid, it will be essential to get the global trading system moving, and nothing could give greater confidence in that system than seeing a UK-EU trade agreement in place. To enable that to happen, the EU could give Britain a Canada-style agreement. Does my right hon Friend agree that the UK has a right to expect from the EU no less than what the UK itself agreed, as part of the EU, with Canada?
Penny Mordaunt
My right hon. Friend makes a very good point, which I agree with wholeheartedly. He is also right to put the focus on rest-of-world trade. Clearly, many decisions that will be taken in the negotiations and the workstreams going into implementing the withdrawal agreement are linked to our ambitions with rest-of-world trade. We must always remember that while the EU side of things is clearly a priority for many in this House, we ought also to be talking about the opportunities that exist with other nations around the world.
Public Health England Review: Covid-19 Disparities
Liam Fox Excerpts(4 years, 5 months ago)
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Kemi Badenoch
Again—I will repeat this point—it is important that we understand the key drivers of the disparities. What we commissioned was a quantitative review. We want to be evidence-led. Stakeholder engagement is important, but we do not want to conflate the two things, and that is something that we will be taking forward in the future.
Dr Liam Fox (North Somerset) (Con)
One of the biggest disparities in deaths from covid is the gender difference. The standardised mortality rate among men is 781 per 100,000; among women, it is 439 per 100,000. Across all communities, we are talking about fathers, brothers, sons, husbands, partners and friends. This affects the whole country. Will my hon. Friend ensure that resources are given to understanding why this gender difference is there and how we can tackle it in the future? I am sure that one thing the whole House can agree on is that all lives matter and they all matter equally.
Kemi Badenoch
That is absolutely correct; I agree with my right hon. Friend. At the risk of sounding clichéd, this is a Government that we want to work for everyone, but it is not yet fully clear what drives the differences in outcomes between males and females. Some could be driven by risks of acquiring infection due to behavioural and occupational factors—again, that is something that the PHE review was not able to look at—or by differences in how women and men develop symptoms and biological and immune differences. However, my right hon. Friend is absolutely right; this is something that does need to be looked into further, and we are actively working on that.