The Economy

Peter Dowd Excerpts

Thursday 22nd March 2018 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

I do not know how the Chief Secretary managed to keep a straight face throughout that speech, and I am confused, too: listening to her, I thought I was in some sort of utopian democracy, but I am afraid it is completely not like that. It is a little over a week since the Chancellor stood up in the Chamber and delivered the first spring statement, proclaiming that there was light at the end of the tunnel, yet at the same time the Government have presided over the slowest recovery since the 1920s. The Chief Secretary did not mention that, so it is no surprise that for many people across this country her words rang hollow and untrue. The Tigger-like demeanour of the Chancellor and the back-slapping and self-congratulatory tone of his Cabinet colleagues, rather than reassuring an increasingly fearful public, reek of a complacency that betrays the poor state of the public finances and the challenges our economy faces.

The Chief Secretary referred to facts so let us have a few, because the facts do speak for themselves. Last year growth in the UK economy was the lowest in the G7 and the slowest since 2012. Inflation is the highest in the G7. Despite the marginal upward revisions last week, the Office for Budget Responsibility has revised forecast growth down in both 2021 and 2022, and growth is lower in every year of the forecast compared with March 2017. Those are a few facts I thought I would chuck in.

Meanwhile the economy, according to the Institute for Fiscal Studies, will now be 3% smaller in 2020-21 than was forecast just two years ago. Another fact: real wages have fallen every month in the last year and are lower today than they were in 2010. The OBR has said that it expects wages to remain subdued—an understatement if ever there was one—over the next five years, and the Resolution Foundation has gone further, arguing that the last decade has been the weakest for average earnings in two centuries after adjusting for inflation. So that is a strong economy, is it? It does not look very strong from where I and millions of other people sit.

Meanwhile, personal debt, which has risen to worryingly high levels, and stronger world growth are helping to keep the show on the road, masking just how useless the Government’s economic policy is. The reality is that the Government’s bluster and bravado are fooling no one, particularly at a time when their failed economic policies continue to harm the UK economy and not just the most vulnerable in society, but millions of people who are in work.

Whatever positive spin the Chancellor and the Chief Secretary want to put on it, this Conservative Government have missed every deficit target they have ever set. [Interruption.] It would be a lot better than under this Government; they have not really invested, and the investments they have made are pretty poor. Public sector borrowing is still higher than forecast a year ago, and public sector debt is over £700 billion higher than when the Conservatives came to power. This is hardly a record of economic competence, but is instead reflective of just how out of touch Ministers are. And may I remind the Chief Secretary that they supported all Labour’s financial spending plans in 2007-08?

[Luke Graham (Ochil and South Perthshire) (Con)]

Does the hon. Gentleman not find it a little ironic that he is criticising my colleagues on this side of the House when his own party’s plans would plunge our country into even more debt, which we would be paying off for another two generations?

[Peter Dowd]

The hon. Gentleman is living on the same fantasy island as the Chief Secretary to the Treasury.

Outside the corridors of Whitehall and the Conservative cocktail parties, the reward for such a consistent record of failure in any job would be the boot. Instead, this divided and increasingly paralysed Government linger on, propped up by the Democratic Unionist party, with not much of a legislative agenda to speak of. It is almost like being on a zero-hours contract, which I know the Chief Secretary to the Treasury loves, while still being paid. It is clear that the Government are running scared. It is been seven weeks since the Public Bill Committee stage of the Taxation (Cross-border Trade) Bill, yet there is still no sign of Ministers putting it before the House for its Report stage. They are frightened to death to come to the House on that matter. Instead, we have been subjected to the reckless and misinformed musings of the Transport Secretary, who has speculated that customs checks will simply not be enforced at the port of Dover. Similarly, Ministers have refused to bring back the Trade Bill, at a time when President Trump is on the verge of starting a trade war.

[Bim Afolami]

I want to take the hon. Gentleman up on his point about personal debt levels. Does he agree that it is because this Government’s fiscal management has been so sensible—and recognised as such by the international markets—that interest rates have been kept low? This means that personal debt repayments are now lower on average than they were when the Labour party left office.

[Peter Dowd]

We lost our triple A rating under the hon. Gentleman’s Government, so I do not think he has any room to point the finger at anyone.

While stressed-out doctors and teachers go to work every day, the Government duck responsibility and parliamentary scrutiny at every opportunity. The Chief Secretary to the Treasury might call these hard-working people “blobs”, but every day they run our health service and educate our children. Rather than spending her time attacking workers and the professional classes, the blob snob Chief Secretary should instead focus her attention on lifting the public sector pay right across the board and stepping up and taking action on our schools.

[Elizabeth Truss]

The point I was making was that, rather than supporting the vested interests, as the Opposition want to do, we want to get rid of state aid roles supporting the big companies and those who want to stop new people entering professions. I am on the side of people who have not got on the housing ladder or who have not entered a profession but who want to set up a new business. We want to deal with the vested interests that prevent that from happening.

[Peter Dowd]

I will tell the right hon. Lady what those professionals have: they have a vested interest in the health of our people, and in the health and education of our children. They have a vested interest in those people, unlike those on her side of the House.

[Thelma Walker]

Does my hon. Friend think that a massive increase in the use of food banks, homelessness and child poverty—and women’s life expectancy going down for the first time since 1920—suggests that we have a healthy economy and a compassionate Government? I do not think so.

[Peter Dowd]

My hon. Friend is absolutely right. Those are yet more facts that the Government will not listen to.

The Chancellor has chosen to play things down, and he has desperately attempted to diminish the importance of his spring statement. He might have ditched the Red Box, but he has not ditched the plethora of problems facing this country. From social care to children’s services, our public services are stretched to breaking point, and it is the most vulnerable people in our society, and working people, who are paying the price.

[John Redwood]

I note that only two Labour Back Benchers think that this is an important issue. Does the hon. Gentleman agree that it is an awful lot better to be living in the United Kingdom’s economy today than it was in the last Labour year, when we had a banking crash and a great recession?

[Peter Dowd]

I remind the right hon. Gentleman of the document that he oversaw, “Freeing Britain to Compete”. In it, he proposed even more deregulation. He said at the time that if Labour regulated the banks even more, they would be stealing all our money. Well, in effect, they did, because they had to have a £1.5 trillion bail-out, yet he wanted more deregulation. We are not going to sit here and listen to all this fantasy from the Government.

[John Redwood]

If the hon. Gentleman had read the whole report, he would have seen the clear warning that the banks did not have enough cash and capital. We said that they should have more.

[Peter Dowd]

I actually did read those turgid 300 pages. It was my penance to have to read that document. I will most probably get time off purgatory for that.

On the subject of children’s services, the decision on free school meals is unforgivable. It was made by the Chancellor and his colleagues in the full knowledge that it would have a detrimental impact on people up and down this country who rely on those kinds of services. In relation to social care, no amount of kicking things into the long grass will make up for the inaction and indifference that the Chancellor has displayed.

[Bambos Charalambous]

Does my hon. Friend agree that, with one Tory council having gone bust and others forcing unprecedented cuts on local services, the Government are failing local government? Does he agree that the Chancellor has not funded local government finance properly, leading to suffering among the most vulnerable people?

[Peter Dowd]

Yes, and quite frankly, what the Government tend to do in these situations is stick their fingers in their ears. They do not want to hear these facts.

I know that the Chief Secretary to the Treasury has been much more active, particularly on our trade deficit in regard to dairy products and the interests of cheesemakers. This has led her to extol the virtues of “unfeta-ed” markets on so many occasions that I have begun to feel that I “camembert” it any more. It has become increasingly clear that the Government’s economic policy has more holes in it than a Swiss cheese. But there is a serious point here. During her seemingly endless public interventions, the Chief Secretary to the Treasury can only focus on a single theme. She has brought it back to us today, and I thank her for that. It is her belief that the state should continue to recede under permanent austerity. Schools, hospitals, social care, childcare, road maintenance, pollution standards and local government services more generally are all under the cosh, while her beloved market forces create new vape shops on every corner, and more misery.

[Bim Afolami]

To be more accurate, was not the Chief Secretary to the Treasury actually talking about a percentage of the total GDP of the state, and not the quantum amount? The heart of her argument was that if we continue to grow the economy as we are doing, we will have much more money for our public services. That was the real core of the point she was making.

[Peter Dowd]

Look, the reality is that the economy is not growing to the level it should be, because this Government are not investing in it. Actually, something like 50% of the growth in the economy is going to the most well-off 10%, and that is not reasonable. It is not fair. I ask the hon. Gentleman to bear those figures in mind. It is not simply a question of the growth in the economy; it is a question of where that growth goes and whether it is being shared out reasonably.

[Luke Graham]

Given that we are talking about growth figures, will the hon. Gentleman welcome the export boom in the north-west that has seen exports increase in the billions for Cumbria and Liverpool?

[Peter Dowd]

Of course, and I am glad that the Chief Secretary mentioned the port of Liverpool, which is actually in my constituency. She should have popped in for a cup of tea.

[Elizabeth Truss]

The hon. Gentleman was not there.

[Peter Dowd]

I know; I was busy here. The hon. Member for Ochil and South Perthshire (Luke Graham) makes a point about exports, but we have seen the biggest devaluation in the pound for as long as anyone can remember, and I suspect that that has had something to do with it. It is hardly down to the policies of the Government; it is an unexpected consequence.

Let us move on to something released today. Her Majesty’s Inspectorate of Constabulary and Fire and Rescue Services yet again reports huge pressures on police forces, with emergency services responding not in seconds, minutes or even hours, but days. The “golden hour” is being stretched to up to a week—there is an achievement by this Government from a strong economy! It comes in the wake of the UK Statistics Authority having to correct the Prime Minister’s imaginative—not a word that we often use in association with the Prime Minister—use of police funding figures. I cannot see much cause to celebrate the current state of the economy after eight years of Tory austerity.

Britain continues to have astonishingly low levels of productivity compared with other G7 countries, which is a direct result of this Government’s failure to invest productively and proactively in the economy. Bizarrely, however, the Chief Secretary wants to celebrate—she did it again today—the poorly paid, precarious labour market that has fostered unproductive business models, which rely on exploitation instead of innovation and investment. For example, much of her Policy Exchange speech was spent singing the praises of Uber, as she did again today, but Uber’s labour practices and poor track record on safety have made it the subject of an investigation by Transport for London. She sits in awe of some large corporations that use every opportunity to dodge their taxes. Yesterday, we heard about Facebook misusing people’s personal data for profit. Is that the sort of country we want to live in? Of course it is not. Is that the sort of company that the Chief Secretary thinks is marvellous, wonderful and a model?

The Labour party embraces the opportunities of a fourth industrial revolution that empowers working people to take control of their own lives, yet the Conservative party wants to return to the practices of the first industrial revolution, when the world was dominated by the interests of the few. It is strange that the Chief Secretary talks about freedoms while advocating a society in which the broad mass of citizens are denied basic rights. For example, how has the slashing of public services, while tax breaks are being handed to big corporations, made us freer? It has only trapped people in poverty and poor health.

[Bim Afolami]

The hon. Gentleman’s speech illustrates the big dividing line between the two sides of the House. The Chief Secretary is concerned with people and consumers having access to high-quality, well-paying jobs and high-quality public services; the Opposition and the hon. Gentleman are obsessed with vested interests and the producers, many of which are not providing a good service to the British people.

[Peter Dowd]

Things are not going very well on that basis, but the bottom line is that that is the Tories’ one-dimensional approach to things. Producers and consumers often interact. The person who works in the factory is a consumer and a producer. This goes to the heart of why the Tories just do not get it. They are the one-dimensional party.

The Government’s entire economic strategy has been the transfer of private losses on to the public sector through austerity, using the state to pay for the losses built up by their donors. In other words, the Chief Secretary’s free, lightly regulated markets have ended up costing us all a good deal, and she now wants to expand that even further at greater expense to us all. Her Government’s economic strategy has left us buckling under huge national debt, with public services in crisis. It has left us with NHS trusts ending this financial year with a £1 billion deficit, and we have seen capital transfer to revenue for about the past four years, which is hardly the sign of a strong economy.

[Giles Watling (Clacton) (Con)]

I hate to go back to A. A. Milne, but I am hearing Eeyore all over the place. In the past half an hour, I have received news that Dura Composites in Clacton-on-Sea is going to start exporting to India. There is great news everywhere if we just look for it, but if the hon. Gentleman keeps talking things down, that will not do the country any good at all.

[Peter Dowd]

Well, I have been hearing a lot of “Pooh” today, quite frankly. I remind the House that, yes, Tigger was the one who bounced all over the place, but he also created inventions that always went wrong. That is what is going to happen here, so I ask Members to go and read about that.

The reality is that the economic strategy has left us with a Government who are trying to deprive 1 million children of a decent school dinner in the name of tough choices. In local government, it has left us with Conservative councils going bust, a 40% cut in early intervention to support families, the highest number of children taken into care since the 1980s, and 400 women seeking refuge being turned away because there were no places available for them last year. That is the reality of the Chief Secretary’s vision of what she referred to as the Government’s “success”.

[Vicky Ford (Chelmsford) (Con)]

May I call on the hon. Gentleman, who is meant to be good at maths, to withdraw his statement about school dinners? Instead, will he confirm that following the debate and vote that we held last week, we will give school dinners to 60,000 more children, including young Josh whom I met in my constituency last week?

[Peter Dowd]

The hon. Lady is quite simply wrong—it is as simple as that. That debate went on for a considerable period of time and the hon. Lady is wrong. Try telling that to the 4,000 affected families in my constituency! I will hear none of it.

Will the Chief Secretary to the Treasury tell me exactly how having fewer refuge places makes a woman trapped in domestic violence freer? How much freer are the unprecedented numbers of children being taken into care as a result of cuts to early intervention? Finally, how are children who are unable to concentrate at school, because they have not had a decent meal, more free to pursue their life chances? This tired nonsense, full of old chestnuts, continues to be peddled by this Government as a cover to disguise an economic strategy in tatters—[Interruption.] The right hon. Lady talks about rhetoric, but there is nothing rhetorical about cuts to the NHS, education services or universal credit. There are cuts right across the system. There is nothing rhetorical when somebody has to sleep on the streets. There is nothing rhetorical about having the largest number of rough sleepers.

The Conservative Government cannot face up to the fact that we are living in a country that is denuding its citizens of the services to which they are entitled. That is happening due to not our ideological views, but the Government’s. Their lofty talk of abstract freedoms is an attempt to steer the conversation away from hard facts about who has paid the price of their failure: the poorly paid, precarious workers stuck in in-work poverty in one of the companies that the right hon. Lady hails in her speeches. Sixty per cent. of people in poverty now live in a working household. Does that indicate that the country has a strong economy? Millions are struggling to find a decent roof over their heads because of this Government’s refusal to invest in the houses we need. They are the mañana Government. They will do it tomorrow or next week or the week after. It is a little bit like the police turning up next week or the week after when they were supposed to be here today. They will eventually get there—it is just like this Government’s attitude to public services.

Disabled people have borne the brunt of austerity cuts by a Government who do not believe them when they say that they want to work but need more support. So have the 4 million people waiting on the NHS treatment list at the end of June. So have the thousands of our fellow citizens sleeping rough on Britain’s streets—twice the number in 2010—in possibly the coldest weather we have experienced for a decade. To talk about abstract freedoms when the basic needs of citizens are not being met is at best folly and at worst an insult.

Thankfully, there is only so long that the Government can try to hide their failing economic policies behind abstractions before the citizens of this country elect a Government who stand for the rights to freedom and justice of the many, not just the privileged few. I note that the Minister talked about nationalisation. The Conservative party believes in public ownership, as long as that means other countries owning our public services.

--- Later in debate ---

[John Redwood]

I am an optimist. We will have a perfectly good economic relationship even if we do not get a comprehensive formal deal of the kind that I know those on the Front Bench would really like to secure. The hon. Gentleman shakes his head. Well, let me give him the evidence. When I studied this subject before the referendum—I always like to ensure that I give good advice, so I try to find out what I am talking about and have some facts—I looked at the economic performance of the United Kingdom during the early 1970s, when we first entered the European Economic Community, and took great interest in the economic growth rate around 1992 when the single market was completed, which people say is so crucial to our growth rate. From that, I can assure the hon. Gentleman that we cannot see any positive kick up in the graph of UK growth either when we first joined the EEC or when the single market was completed in the early 1990s. Indeed, the growth rate fell off on both occasions. I do not blame the EU for all of that, but it shows that there was no great benefit.

If there was no benefit going into the thing, why should there be something negative when we come out? It is not asymmetric. There will not be a hit. I promise him that when we look back on it all in five years’ time, he will not be able to see that—certainly on world growth graphs and, I suspect, on UK economic graphs—when we left the EU. It will not be a big economic event. It is a massively important political event, but it will not be a significant economic event, because joining it was not. Indeed, even worse, in the immediate aftermath of both joining the EEC and of completing the single market, there were very big recessions where our growth rate took a very big hit. I do not blame the EEC for the first one—that was more to do with international banking and the oil crisis—but I entirely blame the EU for the second one, because it was the European exchange rate mechanism that ripped the heart out of our companies and our economy and led to a boom and bust that was almost as big as Labour’s at the end of the last decade. That was why we did so badly.

Let me now go into a little more detail on some of the crucial sectors that have been badly damaged by our membership of the EEC, and then the EU and single market. We can do rather better in those areas once we are out of the legal entanglements.

Let us start with the most obvious and topical one this week—the fishing industry. When we first went into the EEC, we had a flourishing fishing industry, with a large number of trawlers and successful fishing ports in Scotland, England and Wales, and a net surplus of fish. We were an exporter of fish because we had access to one of the richest fishing grounds in the world in our own territorial waters and beyond. The common fisheries policy destroyed much of that. Many of our boats were lost, and much of our fishing capacity was lost. We are now a heavy net importer of fish, as a result of being part of the common fisheries policy. Our fishing grounds have been greatly damaged, because too many industrial trawlers have been allowed in from outside to do damage to the seabed and to the shoals of fish that we once had. The quota system has not really worked because of the discard policy.

It would be easy to design a UK fishing policy through which we would have both more fish to eat and we would take fewer fish out of the sea. We would do that by not having the discards. It would also be easy to design a policy in which the fish was landed in the UK, so that there would be more economic benefit for us in processing and selling it on, and in which we would have much more capacity in the English and the Scottish fleets so that we could capture more of the added value. I look forward to the Secretary of State publishing a detailed strategy and offering us draft legislation, and I look forward to the Scottish National party supporting that legislation, because it must know how important the recovery of our fishing industry is.

[Peter Dowd]

I know that Mrs Thatcher was a great heroine of the right hon. Gentleman. She said:

“Just think for a moment what a prospect that is. A single market without barriers—visible or invisible—giving you direct and unhindered access to the purchasing power of over 300 million of the world’s wealthiest and most prosperous people.”

It is now 500 million. Was she wrong at the time?

[John Redwood]

Mrs Thatcher was not always right. As her chief policy adviser, I gave her extremely good advice on the single market, which she did not actually accept. She took most of my advice on a lot of things, but I told her not to give the veto away—it was not worth it, because we needed to keep control of our own law making. However, the Foreign Office was more persuasive than I was, and that was where things started to go wrong. We were tricked into accepting what she hoped—and what a lot of British people thought—was just going to be a free market where there were fewer barriers for trade.

What actually happened was that we were entrapped in a massive legislative programme, which meant that more and more controls—often of an anti-business nature —were imposed, even when the UK did not want them and even when we had voted against them, when we were in the minority. That is why many British people fell out of love with the Common Market that they thought they had voted for in the early 1970s; they thought that it would just be about more jobs and more trade, but discovered that it was about the EU taking control. I am afraid that, on that occasion, Margaret Thatcher was less than perfect. She did not choose the right advice to follow. If she had vetoed the loss of the veto, the hon. Gentleman might have had his way and we would still be in the European Union with a rather different relationship from the one that we were forced into taking.

I turn now to the energy industry. Under European rules we were trapped in a common European energy policy, which meant that we went from being entirely self-sufficient in energy to being quite heavy importers. There is a wish to make us more and more dependent on imported electricity and gas through interconnectors with the continent, meaning that we have less security of supply and are more dependent on the good will of many people on the continent—ultimately, on Russian good will, because of the importance of Russian gas to the energy supply on the continent. Fortunately, the situation has not gone damagingly too far, and we can rescue it when we come out of the European Union. Our gas supplies can be much more dependent on Norway and Qatar, which are not members of the European Union. That is a useful precaution because we can trust those suppliers and the supply will not be subject to the same common problem that might arise in the European system.

We need to be careful about the framework of regulation. I am all in favour of cleaner air and looking after the environment, but the rapid and premature closure of coal power stations before we have good, reliable alternatives puts us in a bit more jeopardy. We have already experienced cold days, when there is big industrial demand but very little wind; it is extremely difficult to balance the system and keep up the full amount of power that people want. We may have to go on to industrial rationing in some cases. If we follow European policy and shut all the coal stations without having proper, reliable alternatives in place, running a good industrial strategy will be that much more difficult.

What would I put at the top of my list for a good industrial strategy? My No. 1 need would be a plentiful and cheap supply of energy. Having had jobs that involved running factories and dealing with transformation materials that have a high energy content, I know the importance of reliability and relatively low price for running certain kinds of process industry. The United States are now reindustrialising because they will have access to a lot more cheap feedstock and fuel as a result of their drive to have much more domestic energy, at a time when we have been going in the other direction by becoming more reliant on other systems that are not reliable and on imports. We are now finding that we are becoming short, and our power—certainly at peak demand—can be extremely expensive unless people have a long-term contract that properly protects them.

I urge Ministers to use the opportunity to rethink our energy strategy, and to put it at the top of the list for the industrial strategy they tell us they want, because it is the No. 1 requirement for a strong industry across the piece. The other day I was talking to my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton), who reminded me just how important cheap and readily available gas is to the Potteries. We want those industries to grow and flourish—I used to be involved in them a bit—and there is huge scope for that, but it will require a sensible, UK-based energy policy.

I turn next to the vehicle industry, which I think will be just fine. It has been built, with a lot of foreign investment and local talent, into a very fine industry. But we need to remember its exact shape. The UK has the capacity to make about 1.7 million cars per annum, but it has the capacity to build 2.7 million engines. Last year 1 million of those engines were diesel. Successive Governments have done a good job of persuading large motor and engine manufacturers to come to or expand in the UK. We now have a centre of excellence in diesel engine technology, and engine production generally, for passenger cars and light vans. We should be rightly proud of that, but it is important that the Government understand this achievement and do not do things that inadvertently damage it.



Car sales continued to rise very nicely after the Brexit vote. We experienced a very strong market and there was a good trend of car sales in the UK for the first nine months after the Brexit vote, as was happening before. But in spring last year there was a sharp reduction, which has continued. Why has this happened? Well, it is nothing to do with Brexit. It is to do with policy decisions taken in the United Kingdom. Three things happened at the same time.

First, it was decided that too many car loans were being advanced, so there was a restriction on car loan credit. I think we worry too much about that. There is security: people who get car loans usually have reasonable jobs and incomes. I am pleased to say that we are not looking at a set of job losses any time soon, so I cannot really see the big problem. Secondly, there was the imposition of much higher vehicle excise duty, particularly on higher-value cars, which are particularly profitable and successful to make.

Thirdly, of course, there were the general arguments that diesel is no longer acceptable. Diesel technology in this country, and through European regulation, has reached much higher standards of cleanliness and control of exhaust. As far as we know, all these engines are more than meeting the legal requirements, because we all want cleaner air. But if the idea gets abroad that all these standards are actually going to be tightened very quickly, or that it is going to become unacceptable to run a diesel engine, it puts people off buying. There has therefore been a big collapse in support for diesel engines and cars, which explains the pattern in that market. I hope that the Government will look at a sensible compromise. Yes, we want clean air, but we also need to say and do supportive things for what is now a very important industry in our country.

There is huge scope for farming. The Secretary of State has made a start with his White Paper, but it still of a fairly high level of generality. I look forward to more detail soon. The motif of the policy must be that we can and should grow more for ourselves. In the early days after we joined the European Community, we were about 95% self-sufficient in temperate food, which is the kind of food that we can produce; we are now under 70% self-sufficient. We import a lot of food from the Netherlands and Denmark—countries with similar climates to our own—and quite a lot from Spain, which produces some things that we cannot grow for ourselves, although we could buy cheaper alternatives from South Africa or Israel if we were allowed to do so. We need to look at all that and do a better deal for the lower-income countries that can sell us food that we cannot grow for ourselves without the same kind of tariff barriers. We also need to do a lot more work on how we can grow more of our own food.

[John Redwood]

There is still quite a large number of net inward migrants to this country. I look forward to higher wages and more automation. All these problems are perfectly soluble. There are now some good automatic systems for picking produce, if people do not want to do those jobs. I hope that there will be more productive ways of employing people so that they can be paid more—for instance, if they work smarter and have more technology to support them. That would be good for the employee and for the farming business. Some of this is about scale and some is about investment.

I hope that we develop a farming policy that still provides public money to support farms sensibly, but that will be more geared to the production and successful sale of food, particularly domestically. We want fewer food miles on the clock and rather more local produce. I hope that the policy will allow and encourage more agricultural businesses in the United Kingdom to add value to the product coming from the field, shed or farm, because that is an important part of developing a prosperous and more successful economy.

The UK has enormous scope in sectors such as the media because we have the huge advantage of the English language. We largely share that advantage with the United States of America, which is also very good at media and internet-related businesses. I look forward to the tech revolution being an important part of our better-paid jobs and in the increase in jobs in the future. Once we are out of the EU, we will also be able to choose our own tax and regulatory regimes. I trust that we will choose a best-in-class, world-leading regime for both tax and regulation. Although I understand some of the irritations that the EU and others have with existing large technology companies, it is important that we also understand how phenomenally popular their services are, how hugely important they are as wealth generators, the choice they offer customers and the new jobs that they will create. We therefore need a tax and regulatory regime that is fair and is not part of a trade war between the EU and the United States of America, which seems to be developing at the moment in an unfortunate way.

Infrastructure is very important. One thing that perhaps unites the House is that we would all like more investment in infrastructure, although we then have disagreements about pace, style, and ways of financing it. There is huge scope for more infrastructure in this country. If we wish to take advantage of our greater freedoms and the kinds of business developments I have been sketching in different sectors, we will certainly need a lot more capacity in road and rail. Rail capacity can be increased more cheaply and more rapidly if we go over to digital controls. One of the features of our railway system is that we run very few trains an hour on any given piece of track. With better controls, we could increase the number of trains we ran on existing track—a quicker and cheaper solution than having to build lots of new tracks.

We are going to need improved road transport. Internet styles of purchasing require road capacity for all the van deliveries that will be made when people have bought on the web. Road capacity is also needed for those who still like going to a traditional shop and expect to find somewhere to park when they do so. Only the shopping centres that have really good access and really good parking are likely to flourish in today’s world, because people naturally want convenience. I trust that the Government will find sufficient public capital support for these necessary programmes, but will also be imaginative in finding new ways of harnessing private finance where that is appropriate, as it clearly is in areas like energy and communications where there are defined revenue flows that should be financeable through the private sector.

The aim of Brexit is to cheer the country up, to get wages up, and to get jobs up. So far it is all going reasonably well. There are more jobs after the Brexit vote, despite the false forecasts. Pay is going up a bit. We would like more improvement in real pay, and it is good to see some moves being made in the public sector. The big Brexit bonuses we want comprise spending our own money and knowing when, how much, and what we are going to get for it; having a fishing policy that makes sense both for British fishermen and for British fish; having a better agricultural policy that means we can grow more of our own food; and having an energy and industrial policy that supports more investment and more growth.

[Peter Dowd]

The right hon. Gentleman is an advocate of a united kingdom, especially as we are coming out of Europe, but there is the vexed question of Northern Ireland. How does he see that fitting in with his vision for the future? It is very important for Northern Ireland, as part of our UK economy, to understand where he is coming from on this matter.

[John Redwood]

I trust that Northern Ireland, as part of the United Kingdom, will benefit from the economic policies I have been describing. It is the settled wish of a majority in Northern Ireland that they stay part of the United Kingdom, and they are very welcome. If the hon. Gentleman is referring to the alleged difficulties regarding the border, I simply do not think that that is a serious, real problem. It is obviously a political problem because the EU wishes to make it so, but the EU needs to understand that this border is already a complex one. When goods are being moved either way between the Republic of Ireland and Northern Ireland, there is a currency change to be effected, and there are different incidences in excise rates, VAT, income tax and corporation tax levels on each side of the border. Yet we do not have a man or a woman at the border stopping every truck and working out the sums on what has to be done on the excise tax or the currency, because that would be ridiculous. If we end up with World Trade Organisation-based trading so that there do have to be tariffs at the border, it is no more difficult to calculate the tariff electronically and charge it away from the border than it is to charge the excise and the VAT at the moment. We know how to do it; it is not that complicated: we live in the electronic age. I can see that Labour Members want to live in the pre-computer world and do not think that we can send data electronically, but I assure them that it is a magical development.

[John Redwood]

The hon. Gentleman has been here long enough to know that all parties have always agreed that we keep the common travel area with the Republic of Ireland. That has always been a given. It was not dependent on the EU in the first place, and everybody wants to keep it.

Let us deal with the question of our UK external border, wherever it may be, and the issue of migration. Yes, the British people voted to have more controls over the number of people who come to work and settle here. The Prime Minister has promised on several occasions that she will get the net migration total down to tens of thousands from the quarter of a million-plus we have been experiencing each year, and I wish her every success with that. We do not need new hard border checks because, as I understand the way that thinking is going in the Government—the way I encourage it to go—we just want to control two things. We want to control the right to work through a work permit system and we wish to control the entitlement to benefit by making sure that people are properly qualified for it. That does not require big controls at the border. Anybody is welcome to come as a tourist, to come and spend their own money, and to come and invest. That is not what we are trying to stop. We can control the things we wish to control through a work permit system and through a benefit system.

[Peter Dowd]

I am listening carefully to the right hon. Gentleman, if only out of a sense of morbid curiosity, with regard to how he is going to explain practically the situation in Northern Ireland. We have heard a lot of abstract ideas; we need practical solutions. It is incumbent on him to give us a serious, practical way forward in relation to that problem, which is very serious, notwithstanding what he says.

[John Redwood]

I do not agree. It is already a complex border. There are already anti-smuggling arrangements. There are already methods that satisfy those on both sides of the border as regards the possible passage of criminals and so forth. All those things will stay in place. They are not made that much more complicated by our leaving the EU. The Republic of Ireland is not part of Schengen; it does not have those special arrangements that the rest of the EU has, so this is making a mountain out of a molehill. Indeed, I do not think it is even a molehill. I just do not understand why serious people can think that it is a serious issue. I understand why political people want it to be an issue—because they want to extract a price from the United Kingdom, as if we had not already offered enough in the interests of friendly relations, in due course, with the European Union. I assure Labour Front Benchers, who are meant to be pro-Brexit and have a lot of pro-Brexit voters, that I cannot see any extra complication that cannot be solved by a bit of electronics and the development of what we already have, because it is already quite a complex border.

There are huge opportunities. If we take advantage of these freedoms, we can boost our growth rate. I have shown how we can do that in a few individual sectors. I have shown overall how we will do it by spending our own money, and explained how we have a huge opportunity to rein in some of the excessive imports we are taking in at the moment by replacing them with home production. We can do many good trade deals around the world to extend and improve our trade with the rest of the world, which is already good, growing and flourishing despite tariffs and WTO terms: we know how they work and they work just fine. I just say this to the Government: let us get on with it; let us not make any more concessions; and let us make sure that if we do end up with a deal, it is a deal worth having.

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[Giles Watling (Clacton) (Con)]

It is an honour to follow the hon. Member for Peterborough (Fiona Onasanya), and I do so with good heart, because although Tendring District Council has experienced year-on-year revenue support grant reductions, we are flourishing and have not cut one frontline service. That can be done; we are a lean, mean administration machine.

Unlike the hon. Member for Bootle (Peter Dowd), I recognise that it is springtime and our economy has gone beyond green shoots. The financial sap is positively rising: unemployment is at a near record low; the deficit is down; and there is more investment in our vital public services, including £4.2 billion for our NHS. That means that the “Agenda for Change” staff in England are to receive a pay rise of at least 6.5% over the next three years. As the Secretary of State for Health tweeted yesterday:

“Rarely has a pay rise been more deserved.”

I thoroughly agree.

I was delighted to hear in the spring statement that there may be capacity for further increases in public spending and investment in the years ahead. Of course, that would be done while continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted. It is therefore good news that the most recent forecasts of the Office for Budget Responsibility suggest that economic improvements will be maintained. It is also clear to me that the economy is already beating the forecasts and correcting the naysayers, and I have no doubt that it will continue to grow, create jobs and beat those expectations after we leave the European Union. This is a time to celebrate those improvements, not talk them down, which can only do damage to our prospects.

I was also pleased to hear the OBR’s projections that following Brexit our payments to the EU will be £4.9 billion lower in 2025 than they are today. Consequently, I maintain that there will be opportunities to spend in both the short and the medium term, which brings me neatly on to the question of where that money should be spent.

I believe that some of the money should certainly be spent on business and infrastructure. In a previous life, when I was Tendring’s cabinet member for regeneration and inward investment, I saw at first hand how support for businesses and infrastructure can pay tremendous dividends for economic growth. At the core of all that is the need not just to make cash available, but to make sure that it is spent in a timely and appropriate manner, and used to build infrastructure for future growth. It is a question of i before e—infrastructure before expansion.

In my previous role, I made grants of up to £150,000 available to businesses in Tendring so that they could grow, flourish and create new jobs in manufacturing, engineering, energy, low-carbon, maritime, and research and development activities. That cash came from the Tendring District Council small and medium-sized enterprise growth fund, which I introduced. We could move quickly and effectively, and therefore grow a great reputation as a business-friendly council. Moreover, being a district that very much marketed itself as open for business meant that we turned heads towards our glorious sunshine coast.

For example, with £16,000 from our growth fund, we managed to attract the Lampshade Company, a bespoke shade manufacturer, to our patch. We also got Ball Launcher with a £70,000 grant. It makes a football launching device to train players—very topical. When it came, it brought jobs with it, and that happened because Tendring was a council that was out there touting for business. Those are examples of committing cash for infrastructure. Business gets excited and then wants to work with us and to invest—it is a win-win situation.

That is why, like my right hon. Friend the Member for Witham (Priti Patel), I regularly use my position in this House—I am sure that many hon. Members have noticed this—to call on Ministers to spend more on roads and rail for Clacton and the east coast to address the fact that it takes far too long to commute from Clacton to the capital. The distance is only 70 miles, but the journey takes nearly one hour and 40 minutes by train. If we cut that journey time to closer to an hour, we would regenerate the east of Essex at a stroke.

It will come as no surprise to hon. Members that I ask the Chancellor to consider diverting some of the Brexit dividend to Clacton’s much overlooked infrastructure. Investment should be delivered locally, to unlock the economic potential of communities such as Clacton; regionally, to improve connectivity between our economic hubs, including through the improvements to the A120 that we have long called for; and nationally, to rebalance our economy. Crucially, that investment will not only attract business, but upgrade the UK’s infrastructure and underpin the Government’s modern industrial strategy, which is good for our economy and our country.

It would be remiss of me if I did not ask, during this period of strong economic development, that the Chancellor listens to the representations of my right hon. Friend the Defence Secretary and ensures that our military gets the £2 billion a year it needs to deal with constant and growing threats, and rising equipment costs. I am a member of the armed forces parliamentary scheme, and I have worked closely with our military personnel, who do an exceptional job in difficult circumstances. As a result, it has become clear to me that while our forces are, on the whole, superbly equipped, they need serious support to enhance their capability. It is imperative that those hard-working, brave men and women feel valued and supported.

Following our success in removing the cap on the police precept, I have no doubt that the Government fully support our hard-working local police forces, for which I am incredibly grateful. I would, however, now ask that the Government use some of the Brexit dividend to do the same for our valiant and professional armed forces.

[Peter Dowd]

If I visited Clacton and then decided to go across the water to the continent, would the hon. Gentleman think that my new blue passport should be made in Britain or in France? Will he give me a bit of advice on that?

[Giles Watling]

I can give the hon. Gentleman some great advice, and one of the first pieces of advice would be that he comes to Clacton. It is one of the most beautiful places in the country. We have 36 miles of unspoilt coastline, some of the greatest beaches and great backwaters. I am very proud of my passport—I have it with me now—and if it is blue, let us make sure that we get the best value for money in the printing of the things.

[Peter Dowd]

I am absolutely delighted by the hon. Gentleman’s invitation to Clacton—I am more than happy for us to compare our diaries—but he really should answer my question: does he think that my new blue British passport should be made in this country or by the French?

[Giles Watling]

I draw the hon. Gentleman’s attention to the fact that I did answer his question—I said that we have to get the best deal possible. We are still a member of the EU, with its rules and regulations in place, and we have to look for the best possible deal. I would prefer that we made everything in Britain, but we cannot go down that road.

I am certain that the hon. Gentleman will remember that not that long ago—in 2010—the drawer had no money left in it. Well, we are filling it up again, and we must never again leave it in the hands of those who might want to empty it and impoverish our nation, damage our economy and hurt those least able to help themselves. This period of economic growth presents us with funding opportunities, and I hope that the Chancellor will make the best use of those opportunities by investing in our infrastructure, which will attract new business to participate in the Great British economy.

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[Kirstene Hair (Angus) (Con)]

It is now nearly eight years since Labour left this country in the grips of an economic crisis, and it is undeniable that we have come a long way since then. Unemployment is now at lows last seen in the mid-1970s, and not even in the years before the last recession were so few people out of work. Indeed, we used to debate whether such low unemployment rates were even possible in a modern economy and whether “full employment” these days means simply a higher level than it used to be.

Under this Conservative Government, we have proved the doubters wrong. Our economic policies, such as cutting corporation tax from 28% to 19%, have spurred job creation, and our welfare policies—in particular universal credit—have stopped the scandal of people being punished by the benefits system for entering work or increasing their hours.

Employment is not the only area of success. The UK’s economic growth continues to outperform expectations, and the £154 billion a year deficit that Labour left us with has now been cut to just £45 billion. Conservative policies have cleared up the mess left behind by Labour and brought prosperity back to Britain. That makes me all the more angry and disappointed that, thanks to SNP misrule, Scotland is not fully sharing in that prosperity. The story of Scotland under the SNP is an outrage in itself, but it is also a cautionary tale about what the SNP would do to Scotland if it achieved its dream of independence and about what a hard-left Labour Government, propped up by Scottish Labour and the SNP, would do to Britain.

Scotland’s economic growth has been well below 1% for two years in a row, while the rest of the United Kingdom races ahead. Once population growth is accounted for, Scotland is hardly growing at all. Even more shocking is the fact that the Scottish Fiscal Commission expects that stagnation to continue, until growth finally limps above 1% in 2022. That would mean six consecutive years on the brink of recession—a malaise the likes of which we have not seen in 60 years.

[Peter Dowd]

We heard the right hon. Member for Wokingham (John Redwood)—

[David Linden]

Where is he?

[Peter Dowd]

Where is he indeed? We heard the right hon. Gentleman completely distance himself from Mrs Thatcher, which is an achievement in itself. I now give the hon. Member for Angus (Kirstene Hair) the opportunity to distance herself from Mrs Thatcher’s policies, which saw mines and shipyards closed down and industry completely decimated in Scotland. Will she apologise for that?

[Kirstene Hair]

I thank the hon. Gentleman for his intervention, but I am most concerned about the Labour leader, the right hon. Member for Islington North (Jeremy Corbyn), leading Britain.

The Salmond-Sturgeon era is turning into a dark period in Scotland’s history. Let there be no doubt that the blame for Scotland’s stagnant economy lies squarely with the SNP, which has made Scotland the most taxed part of the United Kingdom.

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[Vicky Ford]

Is it now the largest ever? I thank my hon. Friend.

Those are phenomenal targets, ambitions and spending, but they are coupled with specific, targeted actions to unlock some of the most innovative sectors. It has been great to be in the House when we have been discussing how to unlock investment in the next generation’s batteries so that we can get the automated vehicles sector up and running and leading the world. My constituency is the home of radio. The first ever radar messages were sent out to the world from Chelmsford. The Space Industry Bill will mean that this country can not only make satellites and be part of their manufacture, but actually launch them.

I also spoke about productivity in my maiden speech, because it is key to our success. I said then that the people of Chelmsford spent too much time sitting in traffic jams and waiting for delayed trains, that it was a waste of their personal time, and that it hit the nation’s productivity. I was so pleased yesterday when the Government identified 44 parts of the country that would receive a further £4.4 billion of investment in our roads, railways and infrastructure. My part of Essex is a key element of that. The infrastructure in which the Government are investing will help not just to deliver new housing for the future, but to unlock our productivity and enable people to get on with their lives.

I want to say something about taxation, because it is part of the big picture of how we get the economy working. Under the last Labour Government, I was working as a volunteer chairing the local free school. I recall one of my best members of staff coming to me and saying that she had to hand in her notice because she simply could not afford to work any more: she would be better off claiming benefits. Ensuring that the tax system works for those who are on the lowest incomes, and ensuring that work pays, has been key to the Government’s success. That is why I am so proud that 4 million people have been taken out of tax altogether, and 24 million, I believe—the figure may have increased—have benefited from tax cuts. The tax gap has in fact narrowed, and those on the lowest incomes are now paying the lowest tax, with those on the highest paying more.

[Peter Dowd]

Does the hon. Lady agree with the leader of Chelmsford council, Councillor Roy Whitehead, who said that the Government cuts to education were short-sighted?

[Vicky Ford]

I agree with my council leader in so many ways, but the leader of Chelmsford City Council is not responsible for the education budget; that is covered within the Essex County Council area, where more frontline delivery of children’s services is happening every year.

On the issue of tax, it is vital to remember that it is this Government who have made sure that the wealthier pay the largest share of tax, and the top 1% of earners are paying more tax than ever before.

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[Robert Jenrick]

Our priority is to ensure that younger people in the workplace gain the skills that they need in good and secure employment and then, in time, they will benefit from the living wage, which did not exist before this Government created it. We have increased the personal allowance; we have taken 4 million British people out of tax altogether; and we have reduced the tax of 31 million of our fellow citizens.

On the subject of fair taxation, which was raised, the top 1% are paying 27% of the income tax in this country. On the subject of enforcing tax and reducing avoidance and evasion, the tax gap in this country is at its smallest ever level. It is one of the smallest of any developed country in the world and it is certainly smaller than the previous Labour Government left it. The bottom 20% of earners—this is an important statistic—have seen real wages increase by 7% since 2015. We have high levels of employment and we are working hard to support the lowest paid in society.

Thirdly, we have addressed productivity by investing in skills to ensure that our workers and fellow citizens have the skills that they need for the jobs of the future. We have seen that in many of the measures that we have discussed today: in increasing vocational and technical education; in our apprenticeships; in the advent of T-levels, one of the greatest innovations in our secondary education system since the creation of the A-level; in increasing numeracy and digital skills in schools with maths teachers, with IT teachers and with coding at primary level; and in the creation of the national retraining partnership—a partnership between the Government, the private sector, the CBI and the TUC, which was launched last month by the Chancellor—to ensure that workers have the skills that they require as the world of work changes in the years to come.

For small businesses and family businesses, we have increased management training and skills training, so that the greatest innovation in our economy is diffused throughout the regions and to the smallest businesses, we are backing people such as Sir Charlie Mayfield with his Be the Business movement, and we are undertaking a review of the long tail of British businesses, which was announced by the Chancellor in the spring statement. All of that will help to ensure that productivity increases in all parts of the United Kingdom and in all parts of the economy. What are the early results of those efforts? We have 2 million more children in good or outstanding schools than in 2010.

Fourthly, addressing productivity also requires us to invest in our infrastructure. The level of infrastructure investment—both public and private—by the end of this Parliament will be greater than at any time since the 1970s.

[Peter Dowd]

I thank the hon. Gentleman for mentioning my constituency earlier. I would like to mention his if he does not mind. Roger Blaney, the leader of Newark and Sherwood District Council, was speaking in response to a report that ranked the district near the foot of the social mobility league table. He put Newark and Sherwood

“323rd out of 324 local authority areas based on factors such as education outcomes, employability and housing prospects.”

Does the Minister still think that he is doing a good job for his own area?

[Robert Jenrick]

I most certainly do. That report revealed decades of underinvestment and neglect by Labour councils in Nottinghamshire, which let down their old former coalfield communities—the communities that they have taken for granted for too long. We are changing that, and the policies of this Government have seen, in my constituency, 40% more young people in good or outstanding schools, and a new free school in Newark, which I have created and of which I am proud to be a governor. Those are the practical changes that will transform the lives of local people. In the midlands and the north, we do not take them for granted; we get things done for them.

We are making long-term investments in infrastructure —road, rail, broadband and mobile—in all parts of the United Kingdom. The Infrastructure and Projects Authority, which measures our spending in those areas, said that there will be more central Government investment in the north of England over the course of this Parliament than in London or the south-east. We have created a pipeline of £600 billion of investment in construction and other infrastructure. The challenge now is less about money and more about ensuring that we have the construction workers and skills that we need to deliver on those projects. We are backing the midlands engine, the northern powerhouse and the Oxford-Milton Keynes-Cambridge opportunity. We are creating new deals in Sheffield, hopefully in the borderlands between England and Scotland, in north Wales and in other parts of the United Kingdom, where we believe in allowing local people to have greater say over their own lives. The Mayors whose positions we created—including Andy Street and, in the Tees Valley, Ben Houchen—are already making a huge impact and putting their own areas on the map.

Fifthly, we are embracing new technology, not turning away from it. We want to ensure that the United Kingdom leads the world in the technological revolution, but we also want to ensure that that works for everyone as the world of work changes profoundly. The pace of change has never been faster, but it will never be so slow again. The tech entrepreneurs and investors I meet are not preoccupied by Brexit. Their eyes are fixed on the horizon and so are ours. This is true of companies in FinTech, life sciences, artificial intelligence, autonomous vehicles and electric cars, and green growth, all of which we are taking seriously in our industrial strategy and in other policies. At least 15 UK tech companies could float today for in excess of $1 billion—companies that did not exist five or 10 years ago, including Citymapper, Deliveroo and Farfetch. This country is on the cusp of something great and we do not want the Labour party to lose that.

[Peter Dowd]

Does the Minister agree with Councillor Blaney that his constituency is the “Cinderella of regional funding”? What is he doing about that?

[Robert Jenrick]

Well, we have been investing in all parts of the United Kingdom, including the east midlands. We created the midlands engine, which I just mentioned and which is designed to unleash the economic potential of the midlands. In the west midlands, we have seen the huge potential that Andy Street has now given to a city that has been run by the Labour party for too long.

What are we doing to invest in new technology? As my hon. Friend the Member for Chelmsford (Vicky Ford) described, we are investing more in research and development than has been invested since the 1970s, when the statistics were first recorded, so we are probably investing more than has ever been invested in modern times. We have made the R&D tax credits more generous. We are investing in the enterprise investment scheme and the entrepreneurs’ relief that are so important to crowd in investment to the United Kingdom from all over the world. The Chancellor is today at the FinTech summit that the Treasury is hosting, with 600 investors from all over the world coming to the United Kingdom to see some of our most exciting business that are creating 60,000 new jobs in the FinTech sector alone.

What have we done to create a business environment? We have lowered capital gains tax and corporation tax, and committed to lowering it still further. Labour would reverse those changes. Our reductions in corporation tax have actually resulted in more tax revenue for the Treasury and more money for public services. That is prosperity over ideology.