Sammy Wilson
Main Page: Sammy Wilson (Democratic Unionist Party - East Antrim)
Chris Leslie
Why did the Chancellor not mention it in his speech? It is true, as somebody said recently, that this is a “mono-purpose” Government, and that everything has been blown out of the water because of Brexit. Why be so coy about it? They are pretending that it is not an issue, saying, “It’s fine. We’ll cope. Don’t worry, there’s nothing to see here.” But Brexit will be at the front and centre of our considerations.
Let us look at what has happened since sterling has been devalued so significantly. Consumer spending, which has propped up our economy so much in recent months, has started to feel the squeeze. Retail sales are already starting to head down. If we do not have consumers with such spending power—if living standards are squeezed, and wages do not keep pace with that—we should not be surprised if our economy starts to shudder. The OBR says on page 6 of its report that we will see a squeeze on GDP growth in the year ahead.
We know that we have a productivity problem, and at least the Chancellor acknowledged that, but unless we can find some way to catch up with the Germans and the French and to narrow the productivity gap—they produce in four days what our employees in this country take five days to produce—we will not generate the wages we need to ensure that there is growth and prosperity.
The uncertainty hanging over businesses that export and depend on trade for their income is immense. That is not just about market access, because services account for 80% of our economy, and whatever free trade agreements Ministers manage to get—they had jolly well better get a free trade agreement—such agreements tend not to deal with service sector trading issues. The National Institute of Economic and Social Research predicts that there may be a 61% fall in our trade in services, even with a free trade agreement. Ministers have got their work cut out, and I think it is astonishing that the Chancellor did not mention Brexit. That is the big issue in the Budget.
Sammy Wilson (East Antrim) (DUP)
I hate to deflate the hon. Gentleman’s main argument, but the Chancellor did actually mention Brexit. In fact, in the second sentence of his Budget speech, he said: “As we start our negotiations to exit the European Union, this Budget takes forward our plan…for a brighter future.”
Chris Leslie
The Brexit analysis that should be in the Budget should take into account the drivers that produce economic growth. Brexit will affect consumers, as we know—the Chancellor did not touch on those issues. It will affect business investment—he did not touch on some of those issues. Trade will obviously be affected and, of course, public sector investment and public service expenditure will be radically affected by it. The reason I keep banging on about the impact on the financial services sector is that it generates £67 billion of revenue for our Exchequer. I need that in my constituency of Nottingham East to pay for the schools, hospitals and vital public services, and the Economic Secretary knows that. Brexit therefore has to be at the centre of our analysis and our policy expectations, and I am astonished that the Government are trying to skirt around it. They do not want to talk about it; they are hoping that it will just disappear.
Labour Members have to acknowledge that there is no magic money tree to deal with all the issues that lie ahead. We know that debt is very high and that borrowing is high. In fact, the Chancellor did not talk about the fact that he is projecting borrowing actually to rise—to go up—in the next financial year from £51 billion to £58 billion. We have to be very prudent and careful with taxpayers’ money. That is absolutely the case, and the OBR predicts real problems over the next 20, 30 or 40 years, because of the ageing population and health expenditure questions.
Just as there is no magic money tree, however, there is also no such thing as the “Have your cake and eat it” world outside the single market. I have to say to those on the fringes of politics and the hard Brexiteers who think they can continue our economic relationship with the 27 other European Union countries with no economic effect whatsoever that they are living in cloud cuckoo land. We should be doing all we can to salvage our relationship with the single market and to preserve the frictionless tariff-free trade that very much serves as the cornerstone of many of our industries, particularly manufacturing ones such as the car industry.
The other big issue I want to talk about is self-employment. There are 5 million self-employed people in this country, and I have 5,100 self-employed people in Nottingham East. They will have seen the Chancellor’s decision to break the solemn manifesto promise made at the last general election, when the Conservatives promised that there would be no increase in national insurance contributions. They have ripped up that promise. I feel that people will see the increase in national insurance contributions for the self-employed—it is not a 1% increase; it is going up to 11%—as a betrayal of the offer or promise that was made by the Conservatives at the last general election.
Those 5 million self-employed people have a number of disadvantages, relative to those with stable salaried employment contracts, that make their lives more precarious. These are the entrepreneurs who generate much of the wealth and prosperity that this country needs. As my hon. Friend the Member for Leeds West said, they do not necessarily have the opportunities of holiday pay and sick pay that exist in full-time salaried employment. They are less likely to be able to save for the long term and often do not have the company pensions and so forth that exist in other forms of employment. They face enormous risks if they fall ill, given the poor insurance coverage for loss of earnings. The self-employed also find it much harder to get a mortgage because their income is far less predictable than is the case for those on stable salaried contracts.
Sammy Wilson (East Antrim) (DUP)
The Chancellor started his Budget speech in an appropriate way by making a confession. He said that the commentators, including himself, his predecessor and many others in this House, had got it wrong when it came to the growth of the UK economy. In fact, he started by saying that the economy had “continued to confound the commentators with robust growth” since the historic vote to leave the European Union and that that growth was predicted to continue over the next number of years.
Several Members have already said that the Chancellor made no mention of Brexit, but many Members still feel that Brexit has been properly mentioned only if it is referred to in negative terms. They do not want to hear the good news that Brexit and the decision to leave the EU has not and will not destroy our economy. The Chancellor pointed out at the start of his statement that the Budget was designed to prepare the United Kingdom for a brighter future and to provide a stable platform for the negotiations. While I do not agree with everything in the Budget, we must accept that the spending on infrastructure development, innovation, research and development, and education, including the changes to technical education, is designed to make our economy more competitive and to enable us to take the opportunities that will be presented when we are free of the EU and therefore able to make trade deals with countries across the world. It is wrong to say that the Budget did not mention, does not cater for, or does not acknowledge the challenges that we will face when we leave the EU.
There are several things in the Budget that I particularly welcome. I will not go into all of them in detail in the short time available to me, but we have raised “Making tax digital” with the Treasury on a number of occasions, and the line in Westminster Hall debates has been much harder than what was announced today. I am glad that the Chancellor accepts that the strategy was going to create huge problems for many small businesses. I trust that the arguments for extending and delaying its introduction for one year will apply in future years because, as has been pointed out, many businesses do not have the necessary facilities or even access to the internet. They rely on accountants and would have found it either impossible or costly to meet the requirement.
I welcome the extra £200 million for innovative broadband initiatives. In rural areas such as my constituency, despite BT’s monopoly and the money that it has received, we still do not have proper broadband coverage. Indeed, innovation is sometimes stifled by BT’s monopoly and its control of the network. I hope that we will see innovation there.
I also welcome the £120 million that will be available to the Northern Ireland Executive. However, the attitude that Sinn Féin has adopted over the past couple of days means that anybody—including the Secretary of State for Northern Ireland—who does not accede to what they want is accused of waffle; their members then walk out. If we do not get the Assembly up and running, will the money be held? I fear that it may be some time before the Executive are in a position to spend that money, so will interest be added to it?
The forecast for growth still heavily depends on consumer spending, which depends on consumer borrowing. By 2021, consumer borrowing will reach 153% of household income, and I have a problem with the Government here. I understand that they have to control public spending and borrowing, but why is it okay for growth to be fuelled by high levels of consumer debt? In fact, consumer debt is twice the level of Government debt as a percentage of GDP. Why is it okay for consumers to continue borrowing to fuel growth, but not for the Government to accept that there may be arguments, in a low-interest-rate regime, for marginal increases in spending on the plenty of good infrastructure projects that could provide a good return for the economy through increased productivity?
Rob Marris
As the hon. Gentleman may be aware, according to the Library briefing paper, an OECD working paper in 2012 found that
“when household debt levels rise above trend the likelihood of a recession increases.”
The International Monetary Fund found that recessions preceded by large increases in household debt were “more severe and protracted.” There are real dangers here.
Sammy Wilson
There are real dangers. Consumer spending is a huge component of GDP, and of course we need buoyant consumer spending, which is one reason why the constant talking down of the economy is not good for future economic growth. At the same time, we have to recognise that focused public investment in the economy is, first, affordable and, secondly, desirable, yet the Chancellor seems to be resistant to undertaking such investment.
George Kerevan
On that point, does the hon. Gentleman agree that, rather than the Chancellor keeping his investment war chest for another two years, it would be better to spend the money now on infrastructure and offset anything that might come in future?
Sammy Wilson
There is a strong case for saying that, especially given the way in which Government fixed capital spending is due to fall over the next year. Of course, as interest rates are low and are predicted to go up, now is the time to borrow and spend.
My second issue has been raised by a number of Members, but it needs to be restated, because it is so important to constituencies like mine, that there will be an increase in tax, through national insurance contributions, for the self-employed. I serve a constituency that is about half rural. Many of my constituents depend on self-employment for work. We have lost a number of jobs through big manufacturing closures over the past couple of years, and many of the people who lost their job have moved into self-employment. Local enterprise agencies in my constituency, according to figures they recently gave me, have encouraged some 1,400 people into self-employment through training. Many of those people start by taking a risk with their redundancy money. They work long hours for not a great deal of money, and they do not have the benefits and security that people in full-time employment have.
The Government say, “The system has been abused, so we have to level up the tax paid.” We do not do that in other areas of taxation. The BBC, for example, gets its top presenters to go into self-employment to avoid taxation. If that is an abuse, stop it, but do not impose additional costs on people who help to bring up the United Kingdom’s employment figures and bring down the unemployment figures by taking risks and going into self-employment. The Chancellor tried to downplay the amount of money involved, but many self-employed people are struggling at the margins because they are trying to get businesses up and running. The difference in taxation will be significant for them. The Government have got that one wrong. Hopefully, the issue will not come back to bite them; it has not been very well explained.
The last issue I shall raise is housing. One way to increase employment and, of course, productivity in the economy is by having a good housing stock that enables people to move around easily. However, if we look at the figures, we find that housing investment is due to fall by 50% this year and stay at a low level. The statistics attached to the Budget indicate that house prices will go up by more than twice the rate of inflation as a result. That will make the average house price around nine times the average salary, which will mean that many young people will never have the chance to own their own house. At the same time, the restrictions on buy to let mean there will be increased costs for the rental market. It is disappointing that the Chancellor did not make any proposals on how he will deal with the housing issue, because it is as much part of making the economy fit for the future as it is part of giving people the opportunity to have a decent home.
Several hon. Members rose—