Achieving Economic Growth

Martin Docherty-Hughes Excerpts

Wednesday 18th May 2022 Commons Chamber

[Rachel Reeves]

It is great to see Conservative Members taking so much interest in this. It suggests to me that a policy from them on the windfall tax is coming soon, and it will be welcome.

We have said that the £600 would go to a third of households. We would increase the warm home discount from £140 to £400, and that would go to a third of households. The hon. Member is, like me, an MP in Yorkshire. Across Yorkshire, every day, an extra £4.5 million is spent on energy costs as a result of the Conservative party’s failure. A total of £220 million has been spent in the seven weeks since the energy price cap went up. Constituents in Thirsk and Malton, like my constituents in Leeds West, are looking for answers, and an expansion of the warm home discount, paid for by a windfall tax, would make a massive difference throughout our region in Yorkshire.

We need an ambitious plan for the future. That is why Labour will scrap business rates, and the system that replaces them will incentivise investment, promote entrepreneurship and bring life back to our high streets. The race is on for the next generation of jobs, and Labour will make the investment we need with a growth plan to bring opportunities to the whole country, working in partnership with great British industries to get us to net zero and revitalise coastal communities and former industrialised towns. We do not want to be importing all the technologies and products we need; if we can make it here in Britain, we should do so. That is why a Labour Government will buy, make and sell more here at home.

We will make Brexit work, with a bespoke EU-UK veterinary agreement to cut red tape for the food and agriculture industries and mutual recognition of professional qualifications to help our fantastic business services industries and to make it easier for our creative industries to tour and perform. Unlike the Conservatives, Labour will ensure that our economy grows and prosperity is shared.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

On the matter of making Brexit work, there is a concern that the United Kingdom now mirrors the United States with its labour shortages, rather than mirroring the right to work across the European Union. This is having a drastic effect on the whole of the United Kingdom of Great Britain and Northern Ireland. Can the hon. Member say a wee bit more about how they want to emulate Europe’s labour market situation rather than that of the United States with its labour shortages?

--- Later in debate ---

[Mr Clarke]

My hon. Friend is exactly right. He is always a fantastic advocate for the car industry in his part of the midlands. We need to make sure that the engine of growth is able to fire, and our plan for growth, published last year, sets out how we will increase investment in the three pillars of growth: infrastructure, skills and innovation.

[Martin Docherty-Hughes]

On business opportunities, specifically for small and medium-sized business, the National Institute of Economic and Social Research basically is pouring cold water on the Government’s bunkum on the benefits of Brexit for the economy, so I wonder whether the Chief Secretary to the Treasury agrees or disagrees, when it comes to small and medium-sized businesses that need people in the country now, not trained 10 years down the line, that links with the EU through trade and potential labour market mobility have benefited Northern Ireland. Does he agree or disagree?

[Mr Clarke]

I am clear that we were right to implement the majority decision of the people of this country to leave the European Union. The Procurement Bill is designed precisely to make sure that small and medium-sized businesses can access the benefits of public procurement in a way that works to their considerable benefit.

We have made excellent progress against our plan for growth: a landmark capital uplift in the spending review I chaired last autumn; the creation of the UK Infrastructure Bank led by my hon. Friend the Economic Secretary; more funding for apprenticeships and skills training; a big injection of public investment in R&D; and the launch of the UK-wide Help to Grow scheme.

I want to see us go further by looking at innovative supply-side solutions to problems, particularly in delivering the homes people need, in ensuring people have access to the services they need and in carefully managing the risk of inflationary spirals. As my hon. Friend the Member for Rugby (Mark Pawsey) alluded to, this is all about creating the conditions for private sector growth. In his Mais lecture earlier this year, the Chancellor set out his plans to create the conditions for that growth by supporting a culture of enterprise through a focus on capital, people and ideas, and the Government have already taken steps to encourage business investment, including through the super-deduction.

On expenditure incurred between 1 April 2021 and the end of March 2023, companies have the right to claim 130% capital allowances on qualifying plant and machinery investments, allowing them to cut their tax bill by up to 25p in every £1 they invest, making our capital allowances regime one of the most competitive anywhere in the world.

The power of our private sector is also seen in our tech industry, in which there was more than £27 billion of investment in 2021. The UK sits alongside the United States and China as one of only three countries in the world to have produced more than 100 tech unicorns. The UK boasts a thriving start-up scene, with a new tech business launching every half an hour throughout 2020.

--- Later in debate ---

[Alison Thewliss]

That goes to my point that we can make all kinds of statistics show all kinds of things. But what we hear from food producers in Scotland is that it is very difficult for them to get their high-quality exports to the European markets, and that is a direct choice with Brexit. We have also seen it become easier for EU goods to get into the country and more difficult for UK goods to get out—these mad policies have caused all kinds of difficulties.

We face weak growth in 2023 in comparison with not just the G7, but most of the world, as well as higher inflation by far than anywhere in the eurozone. Figures today that put inflation at 9% are shocking, and it is only May. Some of that inflation rate has come about via the Government’s choice—and it was a choice—to increase VAT back to 20%. Given the rampant energy costs, it is certain that more price rises are yet to come.

Last week, Adam Posen, the president of the Peterson Institute for International Economics, told the Treasury Committee that in his view, a

“substantial majority of the inflation differential for the UK over the euro area is due to Brexit”.

That is a choice by this Government that is making things harder for people in these islands. It is an act of self-harm supported not only by the Tory idealogues, of course, but now by the Labour Front-Bench team, who apparently want to make Brexit work, against all good reason and good evidence, and against the 62% of people in Scotland who voted to remain in the EU. Earlier in the week, when I asked Ministers about the benefits of Brexit, they pointed out freeports in Teesside, which will not have huge benefits for my constituents, that is for certain.

[Martin Docherty-Hughes]

I do not want to labour the point, but when it comes to freedom of movement, if people want to make Brexit work, perhaps the easiest way is to make the Northern Ireland protocol cover the whole of the United Kingdom of Great Britain and Northern Ireland.

[Alison Thewliss]

My hon. Friend makes an interesting suggestion because, of course, Northern Ireland has benefited from that.

Investment in our communities has taken a direct hit from the loss of European structural funds. The UK Government’s shared prosperity fund will see Scotland allocated £32 million in 2022, £55 million in 2023 and £125 million in 2024—but even that third year of funding will deliver less than Scotland received before Brexit.

--- Later in debate ---

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

There is something liberating about coming in at nearly the end of the debate, Mr Deputy Speaker. Knowing that you do not have much time to get your points across, you tend to get right to it, so I will.

I want to talk about not only economic growth, which we all understand the importance of, but the sustainability of that growth and the type of economy that it seeks to create, which is similar to what the hon. Member for Norwich South (Clive Lewis) was talking about earlier in the debate.

The cost of living is the order of the day, as it should be, but for all the talk of economic shocks and external factors that we cannot avoid, many of the largest price rises have come in areas where the Government on these islands have decided they no longer have a role to play, abdicating their national responsibility. I think in particular of energy storage and transportation—I say that as my attention has been to the news that Russia has decided to stop energy exports to Finland the day after it announced its intention to join NATO. That decision was met with a shrug by the Finns, who had been planning for such an eventuality and have avoided the Russian energy trap that so many other European states have sleepwalked into. Resilience is built into Finnish society, and its economy plays as much of a role in the defence of the homeland as its military. That is key to avoiding the temptation to fall back on the easy gains of what some call balance-sheet capitalism.

If the House will indulge me, I will quote a paragraph from the introduction to Brett Christophers’ excellent overview of the modern UK economy, “Rentier Capitalism”, which nicely encapsulates the quandary that this place will find itself in when trying to legislate for inclusive and sustained growth:

“A form of capitalism geared principally to doing pays heed to the balance sheet only to the extent that assets facilitate and liabilities mitigate profitable making or providing, or whatever else a business does. For a form of capitalism structured by contrast around ‘having’—rentier capitalism, in other words: a mode of economic organisation in which success is based principally on what you control, not what you do—the balance sheet is the be-all and end-all.”

In this political state, as successive Governments—blue and red—have sought to keep the City of London onside, unthinking deregulation has been the order of the day, and a rentier capitalist system has been created. That may have kept stakeholders happy, but as we stare down the barrel of massive utility price rises, I am not sure that our constituents, including mine in West Dunbartonshire, always have been. A Government who own and maintain the fundamental pieces of infrastructure that allow entrepreneurs to proliferate and thrive is one who can keep an eye on the horizon and ensure that our fundamental national interests are upheld, and the temptation to put shareholder interests ahead of citizen interests is avoided.

My contribution to this area is a paper published with Stuart Evers by the Progressive Policy Research Group last year regarding the ownership and regulation of telecoms infrastructure. As we get our head around the challenges that have been mentioned and the opportunities presented to us by the new digital economy, it is imperative that the keystone industries of the economy are kept principally in public hands, not only because extracting private rents from them is unfair but because that allows us to get back to focusing on an economy that actually does things. It will surprise no one in the House if I say that I cannot see a way in which this political state can extract itself from under the dead hand of the UK’s rentier economy, so I draw the conclusion that so many of my fellow Scots increasingly do: it is only through independence that Scotland can create an economy that is fairer for all of us, in which growth is sustainable and whose foundations are resilient enough to face the economic headwinds we are heading into. I only hope that the Government will allow us to make that decision for ourselves.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Tahir Ali will be the last Back Bencher to speak before the wind-ups, so any Member who has participated in the debate should make their way back to the Chamber for the wind-ups.

--- Later in debate ---

[Mr Rees-Mogg]

My hon. Friend is wise, and this is part of the reason why Poundbury has been a success, because it provides basic services, including a primary school. That is part of the planning requirement, so I agree with him very much.

I was delighted by the contribution of the right hon. Member for Leeds Central (Hilary Benn), which are not words I thought I would use nor words he probably thought I would utter. I always thought he was the high priest of remain, yet I could have delivered most of his speech on the intransigence and stick-in-the-mud-iness of the European Union.

I am glad to say that, in the UK, we are being much more flexible. We are recognising that the EU has not suddenly become dangerous. We may not like the EU, we may not think it is the best construct and we may not want to belong to it, but we do not think it has suddenly become rabid. That is why I was delighted to announce in April that the remaining import controls on EU goods will no longer be introduced. This is not a delay but a change in policy, because we recognise that goods produced in other parts of the world—not just the EU—can be produced safely, and it therefore makes sense to have unilateral recognition if others will not give us mutual recognition. Between now and the end of 2023, we will look to see how far we can extend that with other friendly nations that have high standards, as it cuts costs for consumers.

The right hon. Gentleman probably has better relations with highfalutin EU figures than I do, and he may be better placed than I am to persuade them that reciprocation would be more in their interest than ours.

[Martin Docherty-Hughes]

On open trade, will the Minister give us some clarification on “friendly nations”? Does that include India shipping cheap Indian whisky to the UK?

[Mr Rees-Mogg]

This will have to be a risk-based assessment. If the hon. Gentleman can say that this whisky is dangerous or poisonous, or it is breaking a trademark—

[Martin Docherty-Hughes]

Cheap.

[Mr Rees-Mogg]

Do we really have a Scotsman in the House who does not like his whisky to be cheap? Does he want to pay higher prices for whisky? Is he calling for this for the good people of Scotland? This is news. This is a newsflash, and I hope the PA is reporting it carefully, along with Hansard: the SNP wants higher prices for whisky. It wants higher prices for an evening tipple. I look forward to that being a good and successful slogan at the next general election: “Vote SNP for higher whisky prices”.