Surplus Target and Corporation Tax

Debate between Rachel Reeves and George Osborne

Monday 4th July 2016 Commons Chamber

[Mr Osborne]

We have to be realistic about the economic shock that the referendum result has created, which is acknowledged not just by the Bank Governor but by many independent forecasters—it is reflected in the financial markets. It will have an impact on the public finances, which will partly be cyclical, but also partly structural. In the end, a structural deficit—my hon. Friend, who is a good fiscal conservative, will know this—needs to be addressed through either reduced spending or higher taxes over time. Obviously, as a Conservative, I tend to look at the spending solution rather than the tax one, but that is what happens when there is a structural deficit, as we know to our cost in this country. Let us wait for the OBR to make its assessment in the autumn, then we can collectively decide how to proceed.

[Rachel Reeves (Leeds West) (Lab)]

The OBR says that cuts in corporation tax have so far had no discernible impact on either business investment or growth. Indeed, in the latest forecast, despite cuts to corporation tax, business investment was revised down. I urge the Chancellor to look instead at helping small businesses or investing in infrastructure rather than going ahead with further cuts in corporation tax, which so far seem to have made no difference.

[Mr Osborne]

I am all for supporting small businesses, which is why we have a package of rates relief in the Budget. I am all for making the big transport investments, which this country has, frankly, not done for a generation. That is why I support High Speed 2 and indeed High Speed 3, as well as a new runway in the south-east of England.

The OBR has revised up its economic forecast for business investment when we have introduced corporation tax cuts, so it draws a link between the two. A study on the long-term impact of our corporation tax cuts so far suggests that they have seen an increase in our long-run GDP of 1.3%, which is the equivalent of £24 billion in today’s prices.

Oral Answers to Questions

Debate between Rachel Reeves and George Osborne

Tuesday 7th June 2016 Commons Chamber

[Mr Osborne]

My hon. Friend raises an important issue. In recent years there has been a focus on economic development in the big cities of the north, but we now want to support the counties and county towns of the north of England. In the area that she represents so well we have the new growth deal for the Preston, South Ribble and Lancashire city deal area. We are looking to devolve more economic powers to counties so that they too can see the benefits of securing economic growth. My door is always open to good, sensible proposals for investment in the counties of the north of England.

[Rachel Reeves (Leeds West) (Lab)]

The Chancellor speaks about investment in transport and in flood defences, both of which are crucial in my city of Leeds. Yet last month the Government cancelled the Leeds trolleybus scheme, and in 2011 flood defences were cancelled in Leeds, which contributed to the flooding we saw in December. Earlier this year the Government announced some money for flood defences, but it was just a fraction of what was cancelled five years ago, so I am surprised by the complacency of the hon. Member for Pudsey (Stuart Andrew), and ask the Government to invest properly in flood defences in our city.

[Mr Osborne]

The hon. Lady is being a little churlish. We committed £6 billion to investment in transport in Humberside and Yorkshire, the area that her constituency is in. Specifically on flood defences, she raised on the Floor of the House very specific schemes that she wanted me to fund. I funded those in the Budget. As she well knows, the future phases do not yet have plans or a price tag, but I have said that in principle we are committed to those as well. If she works with us we will deliver those schemes, which of course were never delivered under a Labour Government.

Budget Resolutions and Economic Situation

Debate between Rachel Reeves and George Osborne

Tuesday 22nd March 2016 Commons Chamber

[Mr Osborne]

I will tell you what is unfair: to saddle the next generation with debts you have no way of paying off. That is what the right hon. Lady did. [Interruption.] That is what she did. I will come on specifically to disability benefits, but let me tell her about fairness and what we have done over the last six years. We have taken action that means 500,000 fewer children are growing up in workless households than when she was at the Treasury, 1 million fewer people are on out-of-work benefits and over 2 million more people are in work than when we came to office. That is the social justice record we on this side of the House are proud of.

I am also proud that the work continues, and in this Budget we are taking further steps to build a stronger society. There is money and reform to improve our nation’s schools. There is action to reduce sugar intake and give our children better healthcare. There is support for the savings of low-income families. There is more help and housing for homeless people. There are personal allowance increases that will lift another 1 million of the low-paid out of income tax altogether, and there is an increased minimum wage ahead of the introduction of the first ever national living wage in just two weeks’ time. Those are all in the Budget we will debate today—all the actions of a compassionate, one nation Conservative Government determined to deliver both social justice and economic security.

[Rachel Reeves (Leeds West) (Lab)]

The new Secretary of State for Work and Pensions said yesterday, in his first statement, that the Government would not be making any further cuts to welfare during this Parliament, but later on he said that there were “no plans” to make further cuts to welfare during this Parliament. Will the Chancellor now confirm, for the sake of disabled people and others, that there will be no further cuts to the welfare budget in this Parliament?

[Mr Osborne]

Yesterday, my right hon. Friend the Secretary of State gave exactly the Government’s position, which is that,

“we have no further plans to make welfare savings beyond the very substantial savings legislated for by Parliament two weeks ago, which we will…now focus on implementing.”—[Official Report, 21 March 2016; Vol. 607, c. 1268.]

I will now address the specific issue of welfare savings and disability, but I should have thought that the hon. Lady, when she got to her feet, might have thanked the Government for delivering the flood defence schemes that she asked for for her city, and which were in the Budget statement a week ago.

Let me turn to the disability benefits. We are proud that this Government are providing more support to the most disabled people. It was very clear that while the reforms proposed to personal independence payments two weeks ago drew on the work of an independent review, they did not command support. We have listened, and they will not go ahead. Even if they had, this Government are spending more on disabled people than the previous Labour Government ever did.

People have asked what this means for future support for disabled people, for our welfare cap and for the numbers in the Budget. Let me directly address all three points.

Oral Answers to Questions

Debate between Rachel Reeves and George Osborne

Tuesday 19th January 2016 Commons Chamber

[Mr Osborne]

I think that it will help to promote home ownership, because it will mean that there is a more level playing field between an owner-occupier who wants to buy a house, a first-time buying family and a buy-to-let landlord. There is nothing wrong with people investing in property, but there should be a level playing field so that we reverse the decline in home ownership in our country.

[Rachel Reeves (Leeds West) (Lab)]

A long-term economic plan means supporting small businesses across the country. On 26 December, 250 businesses in my constituency that employ 2,500 people were inundated by floodwater. Will the Chancellor take this opportunity to commit to a full flood defence scheme in Leeds so that this sort of disaster cannot happen to businesses in my constituency again?

[Mr Osborne]

I certainly commit to looking personally at what can be done to improve flood defences in Leeds. The Environment Agency and the Government are conducting a review after what was the highest level of rainfall in Yorkshire in modern history. Of course, having committed the additional £2 billion to flood investments, we are able to afford these things. We would not be able to afford any of this sort of thing if we had wrecked the economy like the last Government did.