Section 5 of the European Communities (Amendment) Act 1993

Debate between Simon Hoare and Elizabeth Truss

Tuesday 26th March 2019 Commons Chamber

[Elizabeth Truss]

I was very glad to visit a successful business in the hon. Gentleman’s constituency. I know that he is very committed to the development of business in his area. It is important that money spent is raised locally as far as possible. As a Government, we have rebalanced from central Government giving money to local government to more of that money being kept locally, whether through business rates retention or council tax. That is an important principle. However, we did recognise in the Budget that local authorities were under pressure. That is why we put in an extra £650 million, which can particularly be spent on adult social care and children’s social care where there is pressure. Of course, we will look at that balance in the spending review.

At the moment, we have a complicated landscape in the support offered to business. When there is a complicated landscape, it can sometimes be the big businesses that know how to work the system that end up getting the money. We need to move to a system where we have lower taxes and it is clearer and simpler to see where the support is. Of course, we are also investing in the infrastructure that helps business to succeed, whether it is local roads, fibre or rail. Ahead of the spending review, I am making visits around the country to hear from people on the ground to understand what the public’s priorities for public spending are. It can sometimes be easy in Whitehall to listen to the big lobby groups— the big organisations that have an operation here in Westminster—but I want to hear what people in Coventry and other places around the country think about what their priorities are. I have done a few of these sessions so far, and the topics that come up tend to be education, local roads, the NHS—for which we have already put in additional money—and police. We need very much to keep in mind what the public want to see our money spent on rather than just listening to the big organisations.

[Simon Hoare (North Dorset) (Con)]

I am delighted to hear my right hon. Friend mention education. May I press her to consider the fact that in our rural areas the funding per pupil is still not as it should be by comparison with urban schools? We have a huge number of Victorian schools, such as that which I visited earlier in the week in Motcombe in my constituency, where the maintenance of the buildings costs far more. We are therefore looking, in the comprehensive spending review, for a long-term increase in new money to deliver the first-class education to grow the entrepreneurs who will return the investment that we put into their education while they were at school.

[Elizabeth Truss]

My hon. Friend makes a very good point about education funding and how important young people having a good education is to the future of the economy. In this year’s spending review, we are looking not just at how investment in physical infrastructure like bridges and roads improves our economy, but at human capital—where we need to put in extra money to make sure that children and young people leave school, university or an apprenticeship with the skills that will help them to get a good job and to live a successful and fruitful life. That is very important. In the past, Governments have been more interested in spending money on things that are sexy and new—the big new pieces of infrastructure—and maintenance has sometimes taken a back seat, but it is very important to make sure that all the existing assets we have, whether roads or schools, are fit for purpose. In the zero-based capital review, we are looking at the balance between maintenance and new infrastructure investment.

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[Simon Hoare (North Dorset) (Con)]

It is a pleasure to follow the Chief Secretary to the Treasury.

[Elizabeth Truss]

Shadow.

[Simon Hoare]

I mean the shadow Chief Secretary. [Laughter.] Of, course, it is a pleasure to follow the Chief Secretary to the Treasury. It is a greater pleasure to follow her shadow, the emphasis being on the word “shadow”—it is sort of me and my shadow. I call him a friend; I think we get on pretty well when we have a gossip in the Tea Room. He is known for his great sense of humour, and it was deployed beautifully in his speech, which started as a serious attempt and then descended into some sort of 1890s music hall act slightly on its way out—rather like the Labour party and its economic manifesto. I am sorry he did not talk about the need to ring-fence anything in the Budget for the re-education of Treasury officials, which the little red book and Chairman Mao will doubtless be planning the curriculum for even as I speak.

I rise to make a few points to the Treasury Bench. This is a key time in our national economic affairs. The challenge/opportunity of Brexit, including the need for a deal to ensure an orderly withdrawal from the EU, will provide a fundamental foundation for maintaining economic growth and jobs, as my right hon. Friend referenced. From those jobs, of course, come the taxes that pay for the nurses, the doctors, the teachers, the roads and any other project the Government wish to support. We are approaching, if we have not already arrived at, that opportunity which comes with having fiscal headroom and permits choices to be made.

In the last few years—let us be frank—it has been economic management by necessity. We have been trying to deal with the task that we were bequeathed, not by choice, but which the electorate trusted the Conservative party to resolve. Treasury Ministers past and present deserve the nation’s thanks for facing into those difficult decisions. It is all too often characterised, sometimes by the hon. Member for Bootle (Peter Dowd) and his colleagues, as an ideological pursuit by the Conservative party that in some way engenders jollity and laughter. I believe that all politicians enter public office and service to improve lives and the lot of our constituents. More and more of our constituents, as they get older, look to public services, and it should always be a matter of pride for a Conservative Government with a sound record of economic stewardship to deliver quality public services as efficiently as possible.

The end of the legacy of the crash and everything that flowed from it now provides that opportunity for choices. I would characterise those choices as needing the striking of a balance that is both sensitive and sophisticated. With my right hon. Friend the Chief Secretary and my right hon. Friend the Chancellor at the helm of the Treasury, I think we have both those characteristics, although I will not say which of them is sensitive and which is sophisticated—probably they will meld into the two. That is important, though, because we now have an opportunity to choose.

My right hon. Friend the Chief Secretary and I are very much children of the 1980s—our views and thoughts were shaped by the economic miracle that Mrs Thatcher and Geoffrey Howe worked—but we must appreciate that times have moved on. I am very struck by the fact that people in an earning bracket such that 25 or 30 years ago they would have looked to private health provision and education now look to and use state provision. I applaud that. I used the NHS. I had an operation at Dorchester last week, and I use my local education service—we have three girls in our local primary school. It is important to bear that in mind.

My right hon. Friend is right to point to the need for competitive taxation, whereby we can take people out of tax such that they have more money to spend, and it is absolutely right that our policies focus on those on the lowest incomes, but it is also right, in a fair and equitable society, that those who can should shoulder the burden, in a competitive way, to make sure we can deliver those services that people are looking for. I think it is too easy a prescription merely to say that we must pursue an agenda of tax cuts, as if British society had not evolved since 1985, 1986 or 1987. That is where the balance needs to be struck. It may be the balance between a liberal Tory and a more Thatcherite Tory—I do not know—but it needs to be struck.

As other Members have pointed out, as a result of a period of austerity we are now in a period in which the fiscal headroom allows for additional investment. The spring statement was helpful, and what my right hon. Friend the Chief Secretary has said about an average increase of 1.2% in departmental expenditure was also welcome. However, we would be foolish to ignore the fact that we are now having to claw our way back from a period in which spending has been—albeit quite justifiably —capped.

Any Member whose constituency contains a prison will notice that the fabric of the prison estate has deteriorated. Some people might say that that is a good thing because we are talking about prisoners, but I am inclined to think that if we are serious about bringing people back into society—the redemption strategy—we need to provide a satisfactory prison environment.

In an intervention on my right hon. Friend the Chief Secretary, I mentioned schools and the need for the long-term provision of new money in the comprehensive spending review. It is great that we are offering the widest and deepest range of free-at-the-point-of-use educational opportunities in our country, and when T-levels come on stream, it will become even wider and even deeper, but it is folly to suggest that we can continue to provide that, and can make the necessary investment to deliver a happy, educated, productive next generation, with the fiscal envelope currently enjoyed by the Department for Education.

Economic and Fiscal Outlook

Debate between Simon Hoare and Elizabeth Truss

Monday 30th April 2018 Commons Chamber

[The Chief Secretary to the Treasury (Elizabeth Truss)]

I beg to move,

That this House approves, for the purposes of Section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment of the medium term economic and fiscal position as set out in the latest Budget document and the Office for Budget Responsibility’s most recent Economic and Fiscal Outlook and Fiscal Sustainability Report, which forms the basis of the United Kingdom’s Convergence Programme.

Of course, we all look forward to the day when we have left the European Union and we no longer have to file this report. But while we are in the European Union, it is a legal requirement, as part of the stability and growth pact, to present our economic and budgetary plan. Owing, to the opt-out that we negotiated in the 1990s, there are no sanctions or actions should items of the plan not be met. In fact, the only stated requirement is to endeavour to avoid excess deficit. Now, that is something of which I approve anyway and with which we are happy to comply.

I am proud to talk about the record of this Government over the last eight years. We have reduced the deficit by three quarters and have now reached the turning point of debt falling as a share of the economy, which will happen in this financial year. As the Chancellor said in the spring statement, we are now in a much healthier position, but it is very important that we do not abandon this fiscal discipline.

In 2010, the economy was on its knees. We had the highest level of deficit since the second world war, youth unemployment was rising and 1.4 million people were left on the scrap heap. Since then we have turned things around, by reforming the economy and with our fiscal plans. There is a record number of new companies; real wages are increasing; we have record levels of employment; and there are positive signs right across the country. These strong economic fundamentals are down to the decisions of this Government.

We have reformed our welfare system to ensure that it always pays to go to work. We have reformed our education system to make sure that our children and young people have the skills that they need for the modern economy. We have made it easier for companies to take on staff. We have reduced corporation tax. Recently we have seen the two strongest quarters of productivity growth since before the financial crisis. Inflation is set to fall this year and we have seen an easing of pressure on living standards. But despite all this progress, every one of these measures has been opposed by the Labour party.

The shadow Chancellor has said that he sees business as the enemy. Labour Members have opposed our efforts to make Britain open for business and want to go back to the days of punishing taxes and red tape. They have also opposed our welfare and education reforms. [Interruption.] I hear mutterings from the Opposition Front Bench.

These reforms have been accompanied by fiscal discipline. Our fiscal strategy has been vital in boosting confidence in the UK economy and enabling growth in the private sector. We have brought down the deficit by three quarters, and at the same time we have maintained high-quality public services. We spend more per student on education than Japan or Germany, and we have seen our results in reading improve against our international peers. Our health spending is higher than the EU average, and we now have record cancer survival rates. Through our fiscal prudence—that phrase used to be popular on the Labour Benches—we have been able to spend targeted amounts of money to boost our productivity. Infrastructure spending will be at a 40-year high as a proportion of GDP by the end of this period. We are tripling the number of computer science teachers and encouraging more students to take maths at a higher level.

We are now at a turning point. After the highest debt that we have seen in Britain’s peacetime history, we will see debt as a proportion of GDP falling. To people who say that now is the time to turn on the spending taps, I say that would be premature. It is very important that we bring down debt as a proportion of GDP. We know that economies with high levels of debt see a drag on their growth rates and are less resilient to external shocks. We also know that we are spending a huge amount on debt interest. With the debt interest we spend—£50 billion a year—we could completely abolish council tax, business rates or fuel duty.

[Simon Hoare (North Dorset) (Con)]

Does my right hon. Friend agree that one of the most tempting phrases that we often hear from the Opposition Benches, but the one to be resisted most strongly, is “Borrow to invest”? Irrespective of what one does with the money, one is still borrowing it and it still has to be paid back.

[Elizabeth Truss]

My hon. Friend is right. We are switching spending from current spending to investment, and that is why we have a 40-year high in our infrastructure investment. He is absolutely right that any spending increases the national debt. Because of the actions of the previous Labour Government, who spent 45% of GDP in the public sector and built up a huge debt, it is our responsibility to bring the debt down and make sure that the country gets back in balance.