Economy and Jobs

Lord Mann Excerpts

Thursday 29th June 2017 Commons Chamber

[Mr Hammond]

I have not got to it yet, but the hon. Gentleman will hear an elaboration of our record since 2010 in just a moment.

I was talking about the 1970s, a decade when the lights literally went out, when inflation was in double digits, the country was crippled by strikes and bully-boy union power, and the Labour Government were forced to go cap-in-hand to the IMF for a bailout. The pretence of fiscal credibility is gone from Labour’s offer. The new pretence is that the cost of its spending spree would fall on someone else—the rich, corporates and foreign investors—but it would not. The cost would fall, as it always does when Labour gets its hands on the British economy, on ordinary people trying to get on with their lives.

If the Shadow Chancellor would put down “Das Kapital” for a few minutes and read an elementary economics textbook, he would understand why. Take Labour’s proposed corporation tax hike. The IFS analysis is pretty straightforward. The right hon. Gentleman quoted the IFS, but it said that

“much of the cost is likely to be passed to workers through lower wages or consumers through higher prices”.

The IFS is not alone. The shadow Chancellor’s predecessor, Mr Ed Balls, agrees. He says:

“The argument from this Labour manifesto that only the rich will pay, I don’t think it stacks up. From opposition, you can say, ‘Don’t worry, someone else will pay’–but you can’t do that in government.”

He might have added, “not if you seriously aspire to be in government”.

[John Mann (Bassetlaw) (Lab)]

Will the Chancellor give way?

[Mr Hammond]

I will in just a moment.

Here is the inconvenient truth for the Labour party about corporation tax. We cut corporation tax to the lowest rate of any large developed economy and two things happened. The private sector created 3.4 million new jobs—something, by the way, that the Labour party used to care about in the old days—and in the process we raised an additional £18 billion in corporation tax to fund our vital public services. That did not happen by magic. Lower corporate taxes attract more investment, more investment creates more jobs and more profits, and more profits deliver higher taxes. It is not very complicated.

--- Later in debate ---

[John Mann]

As the Office for Budget Responsibility confirmed to the Treasury Committee following the Chancellor’s recent Budget, all his tax projections are predicated on an extra 1 million new immigrants entering the country and working over the next five years. Can he confirm that that is still his plan?

[Mr Hammond]

It is the OBR that makes the projections and it has been quite transparent about what its assumptions are about both trade and immigration.