Budget Resolutions and Economic Situation

Mark Hoban Excerpts

Wednesday 18th March 2015 Commons Chamber

[Mr Mark Hoban (Fareham) (Con)]

May I first refer Members to my declaration in the Register of Members’ Financial Interests?

I commend the Chancellor for his Budget, which continues the themes of economic reform and fiscal consolidation that we have seen in each of the Budgets and autumn statements in this Parliament. It is that twin-track approach that has led to a fall in the deficit, putting the nation on a path towards a surplus in 2019-20, with one of the strongest growing economies among our competitors, falling inflation and a job-rich recovery confirmed by today’s unemployment figures.

It is absolutely vital that we continue the programme of deficit reduction. The previous Government spent beyond the nation’s means, increasing the deficit even when the economy was growing. In his speech, my right hon. Friend the Chancellor mentioned the fact that debt as a proportion of GDP increased in each year of the previous Labour Government. Even in the good times, Labour continued to spend more than the country could afford. The problem we inherited was not that the UK was under-taxed, but simply that the Government were spending too much. It has therefore been right that the bulk of deficit reduction has been borne by spending cuts.

I am pleased the Chancellor has reconfirmed our commitment to tackling the deficit after the next general election. It is wrong of both the Labour party and the Liberal Democrats to seek to slow the pace of deficit reduction. The longer the deficit takes to tackle, the more debt we will incur. Labour has failed to mention—I notice the Leader of the Opposition failed to mention it in his speech today—the £30 billion of cuts it has already signed up to. It is also pledging to spend £50 billion more than we are, which would require increased borrowing or increased taxes. The people of this country cannot afford borrowing on that scale, and to continue would be inequitable. There are three reasons why I think it is wrong.

[Mr Redwood]

I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.

[Mr Hoban]

That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Mr Hoban]

Let the hon. Gentleman answer this question: is it really fair for our children and grandchildren to pay the cost of debts we have built up? Let him answer that question.

[Geraint Davies]

Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?

--- Later in debate ---

[Mr Hoban]

That is a remarkable argument. Is the hon. Gentleman saying that we should have cut further and faster? That is not the prescription of the shadow Chancellor or the Leader of the Opposition. They always said we were cutting too far, too fast. They cannot have it both ways. That is the problem and that is why the Labour party has no economic credibility: it has no coherent argument on the economy or on the deficit.

While interest rates are at historically low levels we can afford to service those debts, but when interest rates return to more normal levels, money that could be better spent on schools or hospitals will have to diverted to meet higher interest payments. The Chancellor today talked about the £35 billion we have saved as a consequence of lower interest rates. If we return to the economic chaos of the previous Government, will interest rates remain low? Will we not see an increase in the cost of interest payments cutting the amount of money that can be spent on health and social care?

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

I was struck by the hon. Gentleman’s comments about economic credibility. What credibility do the current Government have, given that they insisted they would eliminate the deficit in this Parliament but have achieved only half that?

[Mr Hoban]

I am surprised by what the hon. Gentleman says, because he is a member of the Treasury Committee and has looked at these things very carefully. He will have seen what happened in the eurozone in the first half of this Parliament. The headwinds from the eurozone—the OBR confirmed this—had a negative impact on the UK economy. We cannot ignore the impact of turmoil abroad on the strength of the UK economy. It is surprising that a respected Member fails to recognise the lessons of what has happened over the course of this Parliament.

[David Rutley]

I congratulate my hon. Friend on the powerful speech he is making. Does he also recall that the OBR spelled out very clearly, a year or so after 2010, that it had underestimated the real impact of Labour’s recession?

[Mr Hoban]

My hon. Friend is absolutely right. The problem for Labour Members is that when they are confronted with the facts, they hide. That is the problem they will all face in the course of the next 50 days. They have clearly not developed economic credibility, because their plans and message are confused. They have no idea how they would deal with the economy. All we know about Labour is that it will spend more and borrow more and tax more, the way all Labour Governments have behaved in office.

The final reason we should be moving towards a surplus and reducing the national debt is that if we continue to lock in debt at high rates, we are reducing the capacity of future Governments to withstand future economic shocks. One of the challenges we faced in this Parliament was that the high levels of debt racked up by the previous Government made it increasingly hard to put in place the measures to turn the economy around.

We cannot simply pretend to ignore, or rack up, unfunded spending cuts. We need to work hard to tackle the deficit to ensure debt falls as a proportion of national income, as it will at the end of this Parliament, to get the right messages across. Let us be responsible about how much we spend. Let us be responsible on taxation and spending. Running a surplus in the good times will help the economy when difficult times lie ahead.

[Mr MacNeil]

Does the hon. Gentleman not accept that this has been the slowest recovery from any recession just about ever? Research from the National Institute of Economic and Social Research shows that, had it not been for the austerity cult and the Government choosing austerity, GDP would be 5% higher and extra tax revenue would be about £32 billion—about a third of the current deficit. Cuts and austerity have cost not just the economy but people’s opportunities.

[Mr Hoban]

I am really not going to be lectured by a Member from the Scottish National party about economic realities. We heard in the Budget today that because the United Kingdom is together, we are able to support the North sea oil sector in a way it could not have been supported if the SNP had achieved independence, so I am not going to take any lessons on economic credibility from the SNP.

In preparing for this speech, the last I will make in this House, I looked back to my maiden speech. Unsurprisingly, it touched on the local economy. I highlighted the strength of the business community in Fareham and its low unemployment rate. I also talked about the pressures on public services and infrastructure from house building. Perhaps it is with this frame of reference that I should talk about the economic reforms the Government have introduced in the past five years.

Fareham’s economy is still strong. In 2010, unemployment was 2.2%; today it is 1%. Strong businesses have helped to contribute to that and they have benefited from the Government’s reforms. Lower employment and corporate taxes have helped businesses to recruit locally. The apprenticeship reforms introduced in the past five years have meant that Fareham businesses have taken 740 apprentices in the past year, compared with just under 600 in 2010-11. The reforms have led to a renaissance at Fareham college where, thanks in part to taxpayers’ money, it has opened a specialist advanced manufacturing centre to meet the growing needs of local business, as well as refurbishing its campus in Fareham.

In my maiden speech, I criticised the top-down housing quotas that characterised the old-fashioned approach to planning. They had failed Fareham. The Government’s planning reforms, focusing on securing consent through a bottom-up approach, have secured widespread consent for 6,500 homes to be built in the new community of Welborne. This new settlement has benefited from the local growth deal funding infrastructure improvements, such as the new all-ways junction at junction 10 of the M27. Whereas in the past infrastructure never quite met local needs, I am more confident now than ever before that new development in Welborne will not harm the quality of life of local residents.

One of the challenges we face in Fareham is getting young people on the housing ladder. The Help to Buy ISA announced today by the Chancellor in the Budget will help to make it easier for many young people in my constituency to get a home of their own.

The economy of south-east Hampshire is dependent on good infrastructure, which is why I am pleased that the M27 is scheduled to be upgraded to a smart motorway in the next Parliament. I encourage my hon. Friends on the Treasury Bench to ensure that that is delivered in the first half of the next Parliament, not in the second half. Poor road and rail infrastructure makes it harder for those out of work in the older urban areas of south-east Hampshire to access employment opportunities in Fareham.

In taking forward the economy in south-east Hampshire, we have benefited from the abolition of regional development agencies and the introduction of local enterprise partnerships. I always felt that the South East England Development Agency neglected south-east Hampshire and focused its money and efforts elsewhere. The Solent LEP has had a relentless focus on economic growth in our community, playing an outstanding role in delivering all aspects of economic infrastructure in our community. I believe that our economic reforms and long-term economic plan have benefited Fareham and its residents and provided a route for further prosperity and security for local families. It has been an honour to serve those families over the last 14 years as their Member of Parliament, and I am grateful to them for the trust they have shown in me.

Through you, Madam Deputy Speaker, I would like to thank the staff of this House for the support they provide to Members of Parliament. Their work over the past 14 years has been invaluable and has supported me in becoming a more effective Member. It is ironic that I am making my last speech in front of you, Madam Deputy Speaker, as we sparred many times on Finance Bills under the last Government. One of the most important roles of any Government is economic stewardship. We need to provide jobs and growth for families and economic stability, which is vital to people’s confidence and well-being. I leave Parliament at the next election knowing that the economic future of my constituency is much more secure than it was five years ago. We should not squander those hard-won gains by losing the next general election.