Budget Resolutions

Richard Drax Excerpts

Tuesday 12th March 2024 Commons Chamber

[Richard Drax (South Dorset) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests.

It is a pleasure to contribute to the Budget debate. Before I talk about a few specific issues, I promised a constituent—a victim of the infected blood scandal—that I would raise the question of compensation if it was not mentioned in the Budget speech. As far as I am aware, it was not, so I ask the Minister to let my constituent know in the wind-ups when compensation will be paid. I understand that the recommendations for that to happen were made 10 months ago, so my constituent and I—and, I am sure, many others—will be grateful for an answer.

I regretfully say that it comes to a pretty pass when a Conservative Government have to plunder the Opposition’s policies in a Budget. I am talking about scrapping the non-dom tax status and extending the windfall tax on oil and gas companies. The latter is especially nonsensical for a number of reasons, not least because we want to reduce our reliance on foreign imports. If I am correct, the tax amounts to about 70%. Which company is going to bid for a licence when it is simply punished for providing the country’s energy? All this when only today the Government announced that they are to build new gas power stations in order to keep the lights on. Net zero is an admirable aim, but it risks impoverishing the country; we need a pragmatic approach to the change.

While I am talking about the country’s essential requirements, let me say that there was also no more money in the Budget for our stretched and depleted armed forces. There was a whisper that defence spending might rise to 2.5% of GDP if and when that was possible, but that is simply not good enough when we live in such dangerous times. I wish we would stop plucking spending targets out of thin air. As I have said before, we should let our three services work out what we need to support and, if necessary, fight alongside NATO; cost it; and then decide what we can afford.

The Chancellor’s key rabbit was a further reduction in national insurance, which has not endeared the Budget to pensioners, who do not pay the tax—although, as my hon. Friend the Member for North West Norfolk (James Wild) said, they do still have the triple lock, which is generous. Instead, pensioners risk paying more tax on income as the threshold at which the higher rate of tax is paid is frozen; freezing thresholds is, in effect, a stealth tax. According to the OBR, which the Government refer to on many occasions, that would see millions of new taxpayers as their income rises above £12,570 a year, nearly 3 million workers being dragged into the higher rate of 40%, and 600,000 taxpayers paying the additional rate of 45% as their income passes £125,140 a year. This is hardly Conservative doctrine.

When I heard the Chancellor speak of the importance of lower taxes and allowing people to keep more of their hard-earned money, I was expecting a bombshell of an announcement during his speech—for example abolishing inheritance tax; lowering income tax, which I would have personally chosen, not national insurance; lowering corporation tax to encourage growth; simplifying the tax system; less state and less regulation; reforming business rates; and curbing many of these bloated quangos, if not scrapping them all together, and returning control to elected Ministers.

With our party staring down the barrel of a gun, it was time to be bold and courageous. I totally accept that the Chancellor is dealing with unprecedented times. No doubt disease, wars, a vast debt and an increasingly unstable word all played a part in his cautious approach, but where have we made the savings? Why do we think—like the Opposition—that the state has all the answers? The key to a successful economy and growth is a thriving private sector, whose taxes pay for the public sector. The more bloated the latter, the more punitive the Government have to be on the wealth creators, the risk takers, the innovators and our very future.

The Budget has its good points, but they are tinkering at the edges. Even the small reduction in property capital gains tax and the tiny rise in the VAT registration threshold will neither ignite the property market nor boost small and medium-sized businesses. After 14 years in this place, I find it remarkable that Labour is quiet on its spending priorities. I ask why, and I fear it is because if Labour wins the election, it will simply endorse ours.

What we needed was crystal-clear blue water from the Budget. Instead, we are pursuing the socialist way and punishing those who earn more by working hard for their families, all to pay for a bigger state that is both unaffordable and runs contrary to every single Conservative value.

Draft Postal Packets (Miscellaneous Amendments) Regulations 2023

Richard Drax Excerpts

Monday 17th July 2023 General Committees

[The Chair]

Let me finish answering this point of order first, please. Let me be absolutely clear: when the Division was called, I set out that it would be 15 minutes for the first vote and 10 minutes thereafter. I said that if the Minister and the shadow Minister were back, proceedings would continue. I was the first person back from the vote. If I can get to the front of the queue at my age, other people who are younger than me can get to the front of the queue.

It is not for the Chair to determine who gets back to the Committee Room first in order that they can carry on their previous point of order or make new points of order. I made it absolutely clear that the first vote, as set out procedurally, is always 15 minutes, followed by 10 minutes thereafter. However, on the last vote, if the Minister or the shadow Minister is in attendance, proceedings can continue. It is not for me to encourage Members to run or sidestep people in the Lobby to be here before the Minister and the shadow Minister or, indeed, the Chair.

[Richard Drax (South Dorset) (Con)]

On a point of order, Mr Pritchard. I was here earlier and, if I may correct you, you did say that this session would start at the end of the Divisions. We can check in Hansard, but I am pretty certain that that is what you said. If that is true, this session has started prematurely.

[The Chair]

I am grateful for that point of order, but I do not believe that that is the case. It would have been “or when the Minister and shadow Minister are in attendance”. I have been on the Panel of Chairs for only 10 years, so perhaps the hon. Gentleman is right, but I am pretty sure, having called many Divisions in many situations over those years, that I know we can proceed when the Minister and shadow Minister are in attendance.

Finance (No. 2) Bill

Richard Drax Excerpts

Report stage
Tuesday 20th June 2023 Commons Chamber

[James Murray]

I will leave matters for the Welsh Government to the Welsh Government to set out their position. We are trying to challenge the position of the UK Government on air passenger duty.

Whatever the UK Government say, the reasoning behind air passenger duty changes have been hard to come by. In Committee, we wanted to understand why the cost of domestic flights is so high up the agenda of this Government under this Prime Minister. I asked the Minister whether, if someone were to travel by helicopter around the UK, for instance from London and Southampton, that would be subject to air passenger duty. I could equally have asked if that would be the case if someone were to get a helicopter ride from London to Dover. At the time, the Minister clarified that there is no air passenger duty other than on fixed-wing aircraft, so that anyone wanting to make short hops in a helicopter can rest assured that this tax would not apply.

I also asked the Minister whether, if someone travelled on a private jet around the UK from, say, London to Blackpool, what rate of air passenger duty would apply in that case. The Minister confirmed that private jets will not benefit from the domestic air passenger duty cut—something the Chancellor may want to let his neighbour on Downing Street know. Finally, I asked the Minister what rate of air passenger duty would apply if someone lived in the UK but was travelling to another home of theirs, let us say in Santa Monica, California. The Minister did not say at the time whether such a flight would attract the ultra long-haul rate, but my understanding is that it would not, so anyone on the Government Benches who needs to fly to their Los Angeles home will not be hit.

It is clear from the Tories’ approach that they have no idea how to spend public money wisely, and that their judgment over what to prioritise is at odds with the British people. Under the Conservatives in this Parliament alone, people across Britain have faced 25 tax rises and 12 interest rate rises. Yet the Tories think the priorities for taxpayers’ money in the middle of a cost of living crisis should be tax cuts for frequent flyers and for those with the very largest pension pots. The truth is that under the Conservatives, working people always end up paying the bill.

[Richard Drax (South Dorset) (Con)]

On the Government Benches, we get tired of hearing from the Opposition Benches about taking taxpayers’ money. This is money the poor taxpayer is having to pay in the first place and should not be taxed on. So far as pensions are concerned, surely the aim for all of us is to have, if we can afford to, sufficient money to live free of the state and off the state at the end of our years, thereby allowing taxpayers’ money to be effectively used for those who really do need it.

[James Murray]

I thank the hon. Gentleman for his intervention. At one point I thought he was touching on a point that we might agree on, which is that spending public money is about priorities. It is about making choices on how to spend public money wisely. That is important at any stage for any Government, but in the middle of a cost of living crisis, when household budgets are being stretched and people are facing mortgage payments going up relentlessly, it is more important than ever that we prioritise the spending of public money and spend taxpayers’ money wisely. That is really at the heart of the argument I am making. We need a fairer tax system in this country, but time and again the Conservative Government have ignored chances that were in front of them to do something about it. Our new clause 9 relates to the Government’s approach to non-dom tax status—the £3.2 billion a year loophole that the Prime Minister called “that non-dom thing”.

--- Later in debate ---

[Priti Patel (Witham) (Con)]

I am grateful for the opportunity to speak to amendment 20, tabled in my name, which has the support of more than 25 right hon. and hon. Members.

It is not breaking news that I remain concerned about the introduction of a global minimum corporation tax. We have debated the issue in the House, in Committee— Ministers, the Chancellor and colleagues, including the hon. Member for Ealing North (James Murray), the Opposition spokesperson, are aware of my views—but I think it is right that we have the right level of scrutiny of the policy because I have concerns about the implementation, which I have raised consistently.

Before I come to the range of concerns about the policy, I will touch on the remarks made by the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin). She spoke about the need for business certainty, which is crucial, as did the hon. Member for Ealing North. I believe that the implementation of this tax policy creates challenges for businesses and for business certainty. As she highlighted, it also exacerbates the complexities that businesses face when it comes to administering these policies. There are also implications for capital allowances.

[Richard Drax]

I congratulate my right hon. Friend on amendment 20. The only certainty that the Opposition can offer to businesses is that taxes will be so high that businesses will fail—that is about the only thing the Opposition can do. So far as this measure is concerned, can she tell the House what the Americans think of the idea? Where are they in their thinking?

[Priti Patel]

I thank my hon. Friend for his support for the amendment and for his comments. As we have discussed previously—I was going to touch on this—the United States is not in a position to introduce the policy. It is a fact—politics in the US is like politics here or anywhere in the world—that the Republican party has made it abundantly clear that it will not allow this policy to go through. It wants to go further and to bring in legislation that will put retaliatory measures in place against countries that impose the new tax and burdens on US businesses and multinationals.

Returning to the amendment, I will come on to some specifics with regard to the dialogue I have been having with the Minister and the Chancellor on this subject. It is right that we scrutinise the policy, which the amendment seeks to do. It is right for the Government to pursue international agreement to address the complex tax arrangements, which hon. Members have referred to, that exist with multinational corporations and businesses operating in multiple jurisdictions. That is vital and makes sense.

Finance (No. 2) Bill

Richard Drax Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[Victoria Atkins]

As the right hon. Gentleman knows, I am bound by collective responsibility, so I can neither confirm nor deny what the Secretary of State for Scotland may or may not have said. I do not know, but I certainly intend to continue to support the Scotch whisky industry. [Interruption.] My hon. Friend the Exchequer Secretary to the Treasury reminds me that the changes will be coming in in August. We want to work constructively with industry on this.

Another opportunity is in delivering a better connected country. As announced in the autumn Budget 2021, the Bill delivers a package of air passenger duty reforms that will bolster air connectivity across the UK through a 50% cut in domestic air passenger duty. Set at £6.50, the new domestic band will benefit more than 10 million passengers from April. The reforms will also align with UK environmental objectives by adding a new ultra-long-haul band, ensuring that those who fly furthest and have the greatest impact on emissions incur the greatest duty.

The Bill will also take forward measures to support sustainable public finances, helping to provide the stability and confidence that underpin the economy and supporting businesses and households across the country. Despite energy prices having come down since they reached historic heights after the invasion of Ukraine, we know that many families and businesses still feel the strain. The only sustainable solution to the link between the cost of gas and the price paid by customers for all electricity is to reform the energy market and reduce the reliance on gas generation, so as we announced at the autumn statement, the Government are now legislating for a tax on the extraordinary returns of electricity generators resulting from the spike in gas prices driven by Russia’s illegal war in Ukraine. It is forecast to raise approximately £14 billion over the next five years, to help to fund public services and interventions to support households and businesses with increased energy bills.

To further ensure that businesses pay their fair share of tax, the Government will also legislate to protect the UK tax base against aggressive tax planning by large multinational businesses, and to reinforce the competitiveness of the UK; I know that this is a matter of interest to several right hon. and hon. Friends. The Bill will implement OECD pillar two in the UK, which builds on the historic agreement of over 135 countries to a two-pillar solution to the tax challenges of a globalised and digital economy. The global minimum tax—pillar two, as it is called by those who speak accountancy language—will ensure that multinational enterprises pay a minimum 15% rate of tax in each jurisdiction in which they operate, meaning that those companies operating in the UK contribute their fair share to sustainable public finances.

[Richard Drax (South Dorset) (Con)]

Can the Minister tell the House how many countries have signed up to this mad, mad move?

[Victoria Atkins]

I am sensing from my hon. Friend that perhaps I have to convince him. I can tell him that 135 countries have signed the agreement.

My hon. Friend’s question may well extend to implementation; I know from listening to colleagues that there are concerns about that. We are acting in unison with other countries. EU member states are legally obliged by a directive to implement the measure by 31 December this year. Things are moving very fast. Germany published its draft legislation last week, showing its full intent to implement the directive; it joins Sweden and the Netherlands in doing so. Other countries implementing to the same timescale include Japan, Korea and Canada. In its Budget yesterday, Canada made the point that

“the multilateral framework for the global minimum tax regime is now being put in place.”

I understand the concerns that colleagues have raised about implementation and the timing thereof, but we are very much working in unison with other countries. Importantly, because of the position that we are taking, we can help to shape the rules.

--- Later in debate ---

[Craig Mackinlay]

My hon. Friend speaks a truism that should not need to be spoken from the Conservative Benches, as it should be patently clear.

A sole trader who is running a good little business and doing quite well might be knocking on the door of £100,000 in profits—I would have thought that is not an unusual amount for some in the south-east of England, even in the building trades. Too many of them will say, “I’m not going to pay 60%, plus 2% national insurance. I will work four days a week and spend the fifth day on the golf course.” We are losing out through the 60% rate.

Ministers will not be surprised by my objection to corporation tax being increased from 19% to 25%.

[Richard Drax]

Raising corporation tax from 19% to 25% is a 31% increase. That figure is not often used.

[Craig Mackinlay]

My hon. Friend makes a very good point. This 6 percentage point increase is actually very big in percentage terms.

The corporation tax increase is in clauses 5 and 6, and corporation tax has a story in this country. I went back to April 1973, a mere 50 years ago, and it was at 42% in those days. Corporation tax has generally fallen over time, both in the Conservative years and under the Labour Administration between 1997 and 2010. Peculiarly, the Labour Administration even introduced a 0% rate on small profits up to £10,000 between 2000 and 2006. I was more vigorously in practice at the time, and the 0% rate was a bizarre move that caused a rash of incorporations, which people did not need the wisdom of Solomon to foresee. The rate was deemed to be malused, shall we say, so things changed again.

Under us, since 2010, the maximum rate of corporation tax has reduced from 28% to 19%, and what have we seen? We used to have discussions about Laffer-curve economics, to which I am an adherent. There is a sweet spot at which reducing the rate raises more tax. That was behind the thinking of George Osborne, a previous Chancellor. I would not say that I agree with everything he did—I think he meddled rather too much with the tax system; hence, we now have a tax code that runs to about 23,000 pages—but he believed that reducing corporation tax would increase returns, which is exactly what happened. The money we are looking to raise to pay for the NHS, and to do all the good things that public services provide for us, was being delivered through a lower corporation tax rate. Is it any surprise that Ireland decided to put this on steroids by taking corporation tax down to 12.5%? The rate per head of receipt in corporation tax is four times the rate in the UK. Ireland’s corporation tax returns are way in excess of what is raised from one of our primary taxes, VAT.

We lived through the 19% rate era, however, which was very welcome. It attracted international business and, on the other side of this, made domestic businesses think that the risk reward was better and they therefore took their business forward. We had a lot of complications in the old days, when we had marginal rates and businesses had to go from the lower small company rate to the bigger company mainline rate. It was a complicated calculation, and my hon. Friend the Financial Secretary referred to that. It was not only that that was complicated; those with a number of associated companies had to divide the limits, and it was a dreadfully complex calculation. She said clearly that the lower rate of 19% will remain for companies on up to £50,000 of profits, which is welcome and will catch a lot of the numbers as a percentage of the entirety registered at Companies House, so many companies will not be affected.

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

Every time my late father—bless him—heard me speak, all he said was, “Too long, Richard,” so on that basis I shall be brief. It is a pleasure to follow the right hon. Member for East Ham (Sir Stephen Timms). I refer to my entry in the Register of Members’ Financial Interests. I will speak, probably for no more than five minutes, about the corporation tax rise and the international minimum level of 15%.

I turn first to the corporation tax rise. I have huge respect for the Chancellor, as I do for the Ministers on the Front Bench, so I do not want this point to be taken incorrectly, but during his 2019 leadership campaign, he proposed reducing corporation tax to 12.5%—the rate that, I believe, the Republic of Ireland has now. Corporation tax in the UK will now rise from 19% to 25%, which may look like a 6% rise, but is actually a 31% rise. I totally accept that smaller companies will not be affected, and I accept that there are various capital allowances that larger companies can go for, but as many colleagues have said, why complicate an already complicated tax system? Why not just keep it simple? As a former soldier, I remember the acronym KISS: keep it simple, stupid. I wish sometimes that politicians would do that.

I am very surprised that the international agreement on the minimum level of tax—the OECD scheme—is being pushed through in the Bill. I find that quite extraordinary, because the two do not sit comfortably together. Many Conservative Members and some Opposition Members fought very hard to get control of our country back by leaving the EU, so that we could have our own laws, our own taxes, our own money and so on. I am therefore completely bamboozled by this, and have yet to hear a very good reason why we are signing up to the very thing we were trying to escape: something that enables an unelected multinational organisation to affect how we set our own taxes. As my hon. Friend the Member for Amber Valley (Nigel Mills) said so well, why can we not set and control our taxes? Surely we could have dealt with this on our own.

I find this move, which will subject us to a tax rate set outside our country, to be really extraordinary, and I will have great difficulty in supporting the measure on Third Reading. The Government have said that the effectiveness of the policy

“depends on a high degree of consistency in the implementation in different jurisdictions”.

The Financial Secretary listed a whole mass of countries in answer to a question I asked earlier, but as I understand it, countries including Singapore, Hong Kong and Thailand have announced that they will be delaying implementation until 2025. I also understand—I hope I am correct—that the EU has broken a commitment that was agreed internationally by giving smaller member states a six-year delay before they, too, will have to implement the measure. That will disadvantage the competitiveness of UK-based multinationals against their EU rivals.

I remember campaigning for Brexit: it was a great thing. We were going to become an offshore, Singapore, low-tax, let’s go, gung-ho place, and create business, create jobs and create wealth. That is what the Conservative policy is, so what on earth are we doing? We are signing ourselves up to a package that could once again see British courts overruled by foreign ones. The industry—I have read much about it in the press—has also called for the policy to be delayed, because UK growth will be stunted by unnecessarily burdensome administrative costs for business.

All this is being put forward in a rush. There was no mention of these plans either in the Chancellor’s Budget statement, unless I missed something, or in the accompanying Red Book and costings document. HM Treasury documents confirm that the Government still intend to implement pillar two this year. Why are we having such minimal scrutiny of something with so huge a potential effect on the ability to attract business to this country? I thought that that was exactly what we wanted to do.

The role of a Government, particularly a Conservative one, is to create an infrastructure in which business can thrive. One of the key levers for that is low taxes—the lower, the better. On the whole, as the Exchequer Secretary well knows, the lower the taxes, the more money comes rolling into the Treasury.

The size of all this has already been mentioned. I have in front of me two massive documents. Pillar two takes up 169 pages of the Bill, across 156 clauses and five schedules. The Finance Act 2022 ran to only 222 pages, including schedules, and had 104 sections in total.

I really do ask the Government to rethink. I know that Opposition Members have already commented with glee that people like me are leaping up to oppose this measure. Yes, of course we are, because we are Conservatives. I have been here for 13 years; on three or four occasions during that time the whole House has agreed to a proposal, and every single time it has been wrong, so for me that is the clearest guide that something has gone seriously wrong here.

Let me say to the Ministers on the Front Bench that it is in the best interests of the United Kingdom to delay implementation of pillar two until 2025, or, even better, to bin it altogether.

Charter for Budget Responsibility

Richard Drax Excerpts

Monday 6th February 2023 Commons Chamber

[Richard Drax (South Dorset) (Con)]

If I might paraphrase, Treasury officials have Ministers by the short and curlies, which is perhaps not the best position for them to be in.

[Kit Malthouse]

My hon. Friend puts it in a pithy way, as he often does. It is not so much that there is some kind of trap or problem here; it is that a situation has evolved—probably more by accident than by design—whereby the OBR has been drawn into the machinery of the Treasury and therefore acquired an authority and an effective veto, in a way that is perhaps not helpful.

The reason that is a problem is that economics is an inexact science—if we put three economists in a room, we will have five opinions. Economics is not delineated in the way chemistry is; it is as much an art as it is a science, and much of it is actually psychology. So if the OBR is to be so involved in policy making, it is important that we understand the economic basis of its assessments. For example, do the people who produce these now Treasury —but actually OBR—forecasts appreciate, understand and believe in the Laffer curve? Do they think that if we reduce taxation, income will rise? That sits at the heart of the argument the Conservative party has had over the last few months about corporation tax. If we cut it, will we collect more money? Seemingly, the forecasts say not. Those are the kinds of judgment that anybody forming economic and fiscal policy must make.

There are also more fundamental issues—about, say, the operation of capital. If the head of the OBR is going to be so involved in policy formation—if there is to be a negotiation between the Chancellor and the OBR on an iterative basis—will that person be operating on the same ideological basis in terms of capital versus labour? Are they a Keynesian? Are they a monetarist? What is the impact of those kinds of belief system? Drawing the OBR into the Treasury machine therefore creates some difficulty for an organisation that, as I know the Minister will agree, has value because of its independence and its alternative view of what the Treasury is trying to do.

The second issue I want to raise is about the mandate. The previous charter contained a point about balancing the budget within three years; that is omitted from this charter. As the Minister said, things have changed, so that has been dropped. When we are effectively chasing a ratio as measured against GDP, we are chasing a moving number, which may make our lives more difficult. For example, if we are chasing a debt-to-GDP ratio, and our GDP is falling, we have to work ever harder to hit our target. The things we have to do to hit that target may also, paradoxically, reduce GDP even further, so we end up chasing ourselves down a spiral against a moving target. That is why, in last year’s charter, which has changed, the idea of balancing the budget within three years, and ensuring that our expenditure did not exceed our income, was quite helpful; it meant that there were two absolute numbers over which we had some control.

Fortunately, in its February forecast, the Bank of England says that if there is a recession, it will be shallower than we thought, which is good. That is not least because last year’s Budget represented a mild fiscal loosening in its initial stages, although not so much later on, with the energy price cap and all the rest of it. That may have helped with aggregate demand, making the recession less severe. However, if GDP does fall, the ratio that the Treasury is chasing will worsen, unless there are significant spending cuts or yet more tax rises, both of which may exacerbate the fall in GDP. That is why I am nervous about the mandate. The objective of reducing debt against GDP is absolutely right, but I ask the Minister to guard against the issue that I have raised.

Finally, I want to say something about the longer term. As politicians, we often focus naturally on a three to five-year horizon. We do that because, guess what, there are elections in a three to five-year horizon, and it is a horizon that is understandable and controllable. However, as the Minister will know, there are significant long-term issues for this country, which are driven by demographics and the nature of our economy. He will know that there are alarming reports that look way into the future, and if he has looked at the significant work done by my hon. Friend the Member for Wycombe (Mr Baker) before he was a Minister, he will know what I am talking about.

To take an example, the Government Actuary’s quinquennial review of the national insurance fund basically says that it will run out of money in about 20 years’ time. Indeed, the rise in the pension age that we have just put through may mean that that period will be shorter, unless there is significant Government intervention in the form of more money going into the fund, which will basically mean tax rises. In addition, the OBR’s financial stability report from last year—it now does a long-term financial stability report—forecasts that, on the current trajectory, although our debts will start to fall in the short term, by the time we get to the middle of the century, they will be well above 200% of GDP and heading towards 270%, and we will be running at a deficit of 10% of GDP.

These long-term trends are driven fundamentally by demographic issues. As a country, we are growing older. We have fewer workers per pensioner, and we are not replacing ourselves from a birth rate point of view, and that will cause an enormous problem. Other countries are in a worse situation. In Japan, on current rates, the population will have halved by the end of this century, which will be economically catastrophic for the country. Unless we start chasing our tail—raising taxes to pay more in welfare and Government spending—we will be in big trouble, which may exacerbate our GDP issues. When we put together the whole cocktail of forecasts—short, medium and long term—they scream out at us to think about the model we are operating.

The wealth of this country was built on three great leaps forward in growth. We had the industrial revolution. That was followed at the end of the 19th century and the start of the 20th century by mass industrialisation, and since the ’70s we have had the IT revolution. In some of those periods, particularly the last, growth was quite turbulent, but throughout them, there was a very high average level of growth; 3%, 4%, 5% or 6% a year was not uncommon. We stand on the verge of another technological revolution—a great leap forward with automation, artificial intelligence, the way we do things and the green economy. We are on an ellipse of scientific discovery. Life sciences are a particular passion of mine, because there are a number of companies on the verge of curing cancer.

If we are to capture this upswing in human ingenuity, we have to think about the model of our economy and the operation of capital within it, and whether we have the right fiscal measures to encourage the kind of buccaneering capitalism that took advantage of those three previous upswings. We did less of that in the third period, the IT revolution. We went through a period of what I suppose we could call centre left or socialist Governments, and it was not de rigueur until the ’80s to be an entrepreneur. We sat on the operation of capital and, as a result, we missed the swing. That is why we do not have an Apple, a Microsoft, a Facebook or a Google. We have some companies coming, and we had some nascent companies. Some Members will be old enough to remember Acorn. For a while it was going to be a great world-beating company, but it fell by the wayside.

The Minister thinks about these issues carefully, and is conscious of the need to energise capital in a way that will build the businesses, products and jobs of the future. I urge those on the Treasury Front Bench to reflect on the longer-term issues that I have raised, and to recognise the kind of straitjacket that we are putting ourselves in. That, and the debts we incurred during covid, may well mean that we miss the next upswing in the world economy, unless we are willing to take risks with the mandate. There has been much debate in this House, and certainly in the media, about going for growth, but if we miss this upswing in growth, we really will miss a huge opportunity for the next generation of our fellow countrymen.

Autumn Statement Resolutions

Richard Drax Excerpts

Monday 21st November 2022 Commons Chamber

[John Glen]

I very much recognise that this country faces very difficult headwinds, as I said in the opening of my speech. Obviously the extensive support package that we have put out there for consumers and businesses will offer some relief from some of those pressures, but the major challenge we face as a country and an economy is a level of inflation that we have not seen for 41 years. The measures in this statement are designed to tackle that and, as the OBR recognises, make this recession shorter and shallower than it might otherwise have been.

I will now turn to the armed forces and security. We already know that Putin’s aggression has piled pain on citizens across the free world, as well as brave protesters in Russia. As President Ronald Reagan once said:

“Optimism comes less easily today, not because democracy is less vigorous, but because democracy’s enemies have refined their instruments of repression.”

Today there is still nothing certain about democracy’s victory, but if one thing does give me optimism, it is the courage of our armed forces, so we will continue to maintain the defence budget at at least 2% of GDP, to be consistent with the enduring NATO commitment. Of course, we also stand up for what we believe in through overseas aid. The OBR’s forecast shows a significant shock to the public finances, as I have set out, so it will not be possible to return to the 0.7% target until the fiscal situation allows, but I want to reassure the House that we remain fully committed to the target, and the plans that I have set out today assume that official development assistance spending will remain at around 0.5% for the forecast period.

[Richard Drax (South Dorset) (Con)]

Two per cent. for defence is simply not enough; 3% is far nearer the target. It was 5% in my day, and all the kit is much more expensive, so 3% is the minimum that we need to spend. Will my right hon. Friend tell the House when we will look at this again? I believe there will be another review of the review. When will that take place, and when will we have the Government’s final decision on what they are going to spend on our armed forces?

[John Glen]

I am grateful to my hon. Friend. The integrated review is under review at this time. That needs to be done urgently—I think in the next three or four months—to enable us to come to an assessment of what that means for our defence spending. But I will say that, as I know he will know, we did front-load a significant increase in the defence budget, of £24 billion, over this spending period. I would work on the basis that, while this must be our top priority, it must be based on an updated assessment of the need, in which there have been a lot of changes in recent times.

I am conscious of time. Opposition Members have said in recent days that we needed a statement that provided fairer choices for working people and a proper plan for growth. I maintain that this is what the autumn statement delivers: not a return to austerity, but a fair way to shelter from the economic storm and encourage its passing as soon as possible. As we weather it, we will do so with resilience and compassion, we will give a safety net to our most vulnerable, we will invest for future generations, and we will grow the economy and improve the lives of people across the United Kingdom.

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

It is a pleasure to speak in this debate, Madam Deputy Speaker. I refer the House to my entry in the Register of Members’ Financial Interests.

During equally challenging times in the late ’70s, our party’s logo was a torch. The image then was clear: it was to bring light where there was darkness, hope where there was despair, and aspiration where there was desperation. My goodness, do we need a bit of that now. Our Conservative philosophy is one of low tax and less state, and of giving the individual the freedom to lead their own life—it is probably the simplest philosophy of all the political parties—so although I have great sympathy for the Chancellor, pushing taxes to the highest level since world war two in the face of a recession is a move that I question.

Last Thursday, I reminded Members on both sides of the House, who are pledging to spend billions and billions and billions more pounds, of where that money comes from. As we have heard in many speeches today, it comes from the taxes of the private sector and hard-working people, many of whom, as has been said by Members on both sides of the House, are already struggling to make ends meet. And while their disposable income has dropped, pensioners and those on benefits have been protected. Of course, we must take account of both groups, but all this has to be paid for, and the Government do not generate the money to pay for it. As I have said, the hard-working people out there, doing their best to look after their families and their companies, are the ones who generate all that money.

The rush to balance the books has, regrettably, seen the Treasury go after those who have dared to invest some of their hard-earned income, the proceeds of which are given the deceptive term “unearned income”. The implication is all too clear: raiding that pot is perfectly acceptable—but it is not. Tell that to those who have saved all their life for their retirement, to enjoy their grandchildren and, crucially, to remain independent from the state.

We are facing these financial challenges not least because of an unprecedented pandemic and now a war in Europe, both of which have thrown all economies, not just ours, out of kilter. However, our overreaction to the first damaged not only our economy but, it seems, our nation’s very psyche. Spending more than £400 billion to lock the nation down was always going to have consequences, and a few in this place warned of such. Now, the war in Europe has exacerbated the problem, with rising inflation and interest rates causing alarm and despondency to many of our citizens—again, as we have heard from across the House.

The years of quantitative easing have come to an end, and that chicken really has come home to roost. Now, in recession, surely it is time to be radical. My right hon. Friends the Members for South West Norfolk (Elizabeth Truss) and for Spelthorne (Kwasi Kwarteng) had the right idea, but poor timing and presentation saw it flounder. At least they attempted to break with the current orthodoxy, which sees the Government hobbled by organisations such as the Office for Budget Responsibility, whose predictions are often wrong, and the Bank of England. Interest rates could and should have risen far sooner.

To date, and in this debate, I have heard consistent calls for money but little debate on what we can save. Saving is hard for an already bloated state to do, but save it must. It stretches credulity that we are pouring billions more into—and we all know it—a failing NHS. Although doctors and nurses are doing their best, a complete overhaul is desperately needed if we are to avoid throwing good money after bad. Worryingly, for defence, where money is needed as a war rages in Europe, there is to be yet another review, leaving the budget at an inexcusable 2% of GDP. Growth is what we need, and I fear that raising taxes will stifle productivity, disincentivise wealth creators, discourage investment from abroad and, as we have heard again from Members on both sides of the House, increase unemployment.

Finally, we left the EU to, among other reasons, give ourselves the flexibility to run our own economy, but 4,000 EU laws are still in statute, and the issues relating to the Northern Ireland protocol are unresolved. To truly flex our economic muscle and allow the innovators and wealth creators to do their job, those two glaring hangovers from leaving the EU must be dealt with. These are challenging times, as we have all heard, but if we are to succeed and see our country through this recession, we need to relight that torch, and fast.

Autumn Statement

Richard Drax Excerpts

Thursday 17th November 2022 Commons Chamber

[Jeremy Hunt]

I am very aware of the pressures and issues of childcare. The £4.7 billion increase in the social care budget will make a difference to people with caring responsibilities, with potentially another 200,000 packages, but I want to return to this issue and I take what the hon. Lady says very seriously.

[Richard Drax (South Dorset) (Con)]

I have huge sympathy for my right hon. Friend. We are facing severe financial challenges for the reasons he explained so well, but Members on both sides of the House are promising to spend billions and billions more pounds. I remind the House that it is the private sector, and hardworking people through their taxes, who pay for Government expenditure. Does my right hon. Friend agree that raising taxes on both risks stifling the growth and productivity that he and I both want, and that would counter the recession we are now in?

[Jeremy Hunt]

My hon. Friend is right to make the case for a lightly taxed dynamic economy, and I would like to bring taxes down from their current level. We are faced with the necessity of doing something fast to restore sound money and bring inflation down from 11%, which is why we have made difficult decisions today. But yes, my hon. Friend is absolutely right: there is no future for this country unless we get back on the path to being a lower taxed economy.

Economic Update

Richard Drax Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

With the greatest respect to the hon. Lady, I did not pledge a new wave of austerity. If she does not like austerity, she should look at the generosity of the furlough scheme and what we are doing on the cost of living crisis. This has all been done because of difficult decisions she opposed every time.

[Richard Drax (South Dorset) (Con)]

I welcome my right hon. Friend to his place. He talks about growing the economy and a strong economy, and I agree with that. May I remind the House, particularly those on the Opposition Benches, that it is, in the main, the private sector that raises the money that pays the tax for the public sector? We cannot go on hammering the private sector if we want to see the growth we want. As he takes his place, will he bear that in mind and reduce taxation as soon as he is able?

The Growth Plan

Richard Drax Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

I reject that. The hon. Gentleman will know that, when I was Secretary of State for Business, Energy and Industrial Strategy, I was very focused on bringing the renewables pot to remote island wind. We achieved great things by working together, and I hope we can continue that dialogue in my new office.

[Richard Drax (South Dorset) (Con)]

I welcome my right hon. Friend to his place. How refreshing it is to hear some Conservative policies at last. Weymouth is talking to officials about the idea of an investment zone—we are entirely supportive and very much hope to get it. If we do get it, Weymouth is asking for the infrastructure funding to go with it. Without that, we will not attract the private investment we need to create prosperity and jobs.

[Kwasi Kwarteng]

My hon. Friend is absolutely right. We will link the investment zones to infrastructure projects, because one without the other does not make sense. I would be very interested to talk to him about Weymouth and the opportunities for investment zones in that area.

Economy Update

Richard Drax Excerpts

Thursday 26th May 2022 Commons Chamber

[Rishi Sunak]

No, we are not giving consideration to that. As I said, we are giving consideration to excess energy profits being made in other parts of the sector, on the generation side. As I said, we will examine the scale of that challenge and the right steps to address it.

[Richard Drax (South Dorset) (Con)]

I warn my right hon. Friend that throwing red meat to socialists by raising taxes on businesses and telling them where to invest their money is not the Conservative way of encouraging those who create our prosperity and jobs to do just that. Does he agree that by setting this bar we are in danger, were we ever to lose power, of allowing the socialists to raise it, which they would do with relish again, again, and again?

[Rishi Sunak]

I thank my hon. Friend. What I would say to him is that I believe that a pragmatic and compassionate Conservative Government would act to provide support to the most vulnerable at a time of great need and that a fiscally responsible Conservative Government would look to try to fund as much of that as possible in as fair a way as possible.