The Economy

Michael Fallon Excerpts

Thursday 24th October 2019 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

I remind the House of the interests recorded in my entry in the Register of Members’ Financial Interests.

In supporting the excellent Queen’s Speech, I wish to touch briefly on just three areas: expenditure, the new borrowing framework, and what more we can do to make our capitalism inclusive.

On expenditure, the new money for the NHS and for schools is extremely welcome. With regard to the NHS, I hope it will help to relieve the pressure on our general practitioners, to get more resources into mental health and to start to fill the gap between health and social care. I hope it can do all that without involving us in yet another bureaucratic reorganisation, at any level.

The extra money for schools is particularly welcome in Kent. At long last, it addresses the inequality of funding between some of our shires and the metropolitan areas. It will mean more for primary schools in my constituency, which have been historically underfunded. As that money comes through, I hope the Secretary of State for Education will also look into how we can better protect the main schools block, which authorities such as Kent are currently having to raid to cope with the increasing demands for special needs provision.

Having welcomed the extra expenditure, given that the previous fiscal framework is clearly under some stress, I also welcome the Chancellor’s ambition to set out in his Budget a new fiscal framework for the future. I hope the framework will be clear and credible for the markets, and I also hope he will avoid some of the fudgeable targets and fuzzy definitions and classifications that we saw in the later years of Gordon Brown’s chancellorship.

I hope that, as Conservatives, we will continue to look at how we defend and refresh our capitalism and make it more inclusive for all our country. Back in the 1980s, we developed popular capitalism: 11 million people in this country held shares and had a stake in the privatised industries. Thirty years on, too many of those private industries are too poorly regulated, and we have seen share ownership in decline. Let me give an example of two of those industries.

The first industry is rail. Last year, we Members of Parliament—my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) was with me—had to intervene in the timetable chaos and persuade one rail operator that shared a line with another to pick up passengers who had been stranded by that other operator. Both rail operators were subsidiaries of the same group, so why did Members of Parliament have to intervene? Where was the rail regulator to sort it out? I welcome the proposals in the Queen’s Speech to look again at the structure of the industry and ensure that it is more accountable and better regulated.

The second industry is water. Thames Water has been privatised for 30 years. It pays hundreds of millions over to its shareholders and to its parent company, yet it is behind on its leakage targets and behind other water companies on the installation of smarter meters. Because it is behind, it is bleeding the chalk streams around London, including the River Darent, with the extraction of water that it needs to top up its supplies in the centre of London.

[Tom Tugendhat]

My right hon. Friend has been an example in helping to bring together the various companies to realise their duties. Does he agree that there are also good examples? Greggs has done an enormous amount by pushing share ownership to employees and has massively improved the equity stake that individuals have in the product of their own labour.

[Sir Michael Fallon]

I certainly understand that, and my hon. Friend takes me to the point with which I wish to conclude, which is what more we can do to encourage share ownership. Some of the employee share schemes we have—I have written to the Chancellor on this—are still very complicated. The qualifying periods are still very long and do not reflect the mobility of the modern workforce. I am afraid some of the lower-paid staff simply cannot afford to participate in them. I hope that when it comes to his Budget, the Chancellor will keep looking at how we can do more to promote employee share ownership in particular, by reducing the qualifying periods and giving people a real incentive to save.

[Craig Mackinlay (South Thanet) (Con)]

Will my right hon. Friend give way?

[Sir Michael Fallon]

I am sorry but I will not; I am just finishing.

One of my heroes of the year—there may be many other candidates—is an entrepreneur called Julian Richer, who is now coming up to retirement and is handing over 40% of his company, Richer Sounds, to the employees, ensuring that they have a stake in the future. We need more incentives like that to promote loyalty and give people a real stake in their future. I thoroughly support the Queen’s Speech.