Budget Resolutions

Stephen Crabb Excerpts

Wednesday 11th March 2020 Commons Chamber

[John Redwood]

My right hon. Friend and I think that, but more importantly, that is what the Scottish people voted for just a few years ago, when we very wisely and democratically said, “Yes, let the Scottish people decide.” They did decide and I wish their elected representatives here would understand the result of the referendum and remember that their colleagues told us at the time, when asking for it, that it would be a once-in-a-generation matter. While I am a democrat who thinks that these things occasionally need exploring, we cannot explore them every five years. These are fundamental things that are very disruptive if we keep going into them. I had to wait many years to get an EU referendum—rather longer than I wanted—but I do not think we should have one every five years. That would be quite inappropriate.

To go back to the Budget judgment, I was interested to see that quite substantial increases in spending, which we need in health, education and police, for example, have been relatively easily accommodated. It is good to see already in the first-year figures—for 2020-21— £4.6 billion of Brexit savings coming through. It is very good to see that there will be another £10 billion on top of that by the end of the forecast period, so the Brexit bonus is available and is beginning to come into these figures.

It was also good to see the £6.6 billion of interest cost reduction, thanks to the quite substantial falls in interest rates that had occurred before this month. The point that I was making to my right hon. Friend the Member for Bromsgrove (Sajid Javid) is that those savings would be considerably bigger if we forecast them at today’s interest rates, because interest rates for Government borrowing have fallen even further. He countered and said, “Yes, but you still have to be very careful because you can’t necessarily assume that that will go on into the future.” The bad news is that interest rates are going to stay low for a bit, but the good news is that the Government can borrow for 30 years for practically nothing, so now is surely a very good time to lock those interest rates in so that the future interest rate programme is very cheap, as well as the present one. It is something the Government need to think about. I know they have issues about how long they fund, but this is surely a time to move in the direction of longer funding so that we lock the very low rates in.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

On the very low costs of borrowing, does my right hon. Friend recognise that there is enormous demand in the City of London for long-dated assets? There is a lot of money looking for long-term investments that will provide secure returns, which is ideal for long-term infrastructure spending.

[John Redwood]

Let us hope that that is right, yes. We hope that the City gets better at managing the gap between those who say they have all this long-term money and the projects that are available. We seem to need a bit more work on that. I am very keen that more of it is privately rather than publicly financed, so that we can get more investment for less strain on the public finances.

The Government, looking at their forward budgets, have rightly said that they wish to increase public sector infrastructure investment. In principle, I agree, but I urge one thing on the Government—I wish that they would look at a large number of smaller, quicker schemes, because what we need to deal with transport problems, in particular, is quicker-acting, smaller schemes that we can get up and running and that will have some tangible results. On the railways, we could have short sections of bypass track on existing main lines to get express trains past stopping trains when the timetable falls over, and digital signalling on a very widespread basis, which could give us something like a 25% capacity increase much more quickly and cheaply than some of the rather big schemes that we have been looking at in this place recently, but I will not be dragged down that particular avenue today.

On roads, the immediate priority is the digitalisation and rephasing of the many traffic signals in this country, because they are not optimised, meaning that junctions restrict traffic much more than they need to. Roundabout substitution, right filters with right lanes and junction remodelling are also possible. We need to get people on the move, and junctions are often a cause of tension and delay. Junctions would also be safer if we optimised them and had less frustration and conflict between vehicles at those junctions. I hope the Government will look at that. We also need lots of bypasses and other local roads to relieve the main motorway system, which is a fixed entity; nobody is suggesting building a new motorway any more, so we need to relieve the pressure on the motorway network with more local road projects. I want to see those projects going in and some concentration on that in the investments we will see in that programme.

I hope that we will look at water management on both sides: we probably need to store more water for water use—there is plenty of it around at the moment, and it will be galling if we have a long hot summer and then discover we are short of water, given what we have just been through—but we also need that accelerated development of drainage projects and probably more pumps, more dredging and more routes to take water safely away from areas of habitation. It is not good in a first-world country to see the kind of scenes we have seen this winter, with this prolonged period of excess rainfall.

The Budget is going in the right direction. The Bank of England has joined in and is doing the things it ought to be doing—we hope we will not need all that credit, but it is important that those facilities are available against a possible worsening of the virus situation—and I am glad we are making down payments on what we need to do on health and education spending. I have said how I would like the infrastructure money to be accelerated and developed into smaller projects that will really work. We also need more tax reform. My one worry about the Budget is that it does not cut taxes enough; I would like to see more tax cuts. We only have five years to show how fast this economy can grow before the electorate will judge us, and the more the Government cut taxes, the more the economy will grow, and the more we trust people with their own money, the better they will spend it and the better the economy will do. I say to the Government: trust the people and cut taxes more, and then it would be an even better Budget.

--- Later in debate ---

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

It is a privilege to conclude the first day of the debate on the Budget, and it is a pleasure to follow the hon. Member for Hornsey and Wood Green (Catherine West), who always makes thoughtful speeches.

I would like to start by putting on record my congratulations to my right hon. Friend the Chancellor, who presented a strong, future-facing Budget. Before I say more about that, I would like to put on record a tribute to my very good and right hon. Friend the Member for Bromsgrove (Sajid Javid), who was his predecessor. His tenure as Chancellor of the Exchequer might not have been long, but I believe he was part of the change of mindset at the Treasury that the Chancellor spoke about today. He said he recognised much of what was in the Chancellor’s Budget statement, and well he might, because he contributed to some of the new thinking. Indeed, back in the summer of 2016, he and I presented a plan for a growing Britain fund—a £100 billion fund to invest in long-term productive infrastructure, taking advantage of record low borrowing rates at the time. It is encouraging to see some of those ideas come to fruition in the Budget statement we heard earlier this afternoon.

If the Budget was about looking to the future, it was also about facing up to the very real challenges of the present. It was a Budget delivered in the shadow of the growing coronavirus crisis. All Governments around the world are trying to wrestle with this problem. All Governments are trying to work out the science and what the correct balance and trade-offs are between measures and tactics to contain and delay the virus and not imposing excessive economic cost on their citizens. Every Government is working out these decisions for themselves, but the challenge is considerable.

We should all be encouraged by what we saw today in response to the growing crisis. We saw the United Kingdom able to take a strong set of measures and communicate them to international and domestic markets through a strong set of co-ordinated messages from different branches of government, starting with the Bank of England this morning and followed up by the Chancellor of the Exchequer in his Budget this afternoon.

The platform for that strong, co-ordinated response to the coronavirus has come from two things: a broadly sound set of public finances after 10 years of responsible decision making by successive Conservative Administrations; and a banking system that is far safer than it was in the previous crisis of 2008. Together, this action has created a strong framework for protecting our economy, our businesses and our citizens from whatever the coronavirus may throw at us.

Like many hon. Members who have spoken this afternoon, I, too, strongly welcome the balanced, sophisticated package of measures to support business at this time of crisis. My constituency, as you know well, Mr Deputy Speaker, is a coastal, beautiful and peripheral constituency with a great many businesses in tourism, hospitality and leisure that are looking forward to the start of the new season in just three weeks’ time.

Like many hon. Members, I have spoken to a lot of businesses in recent days that have expressed a growing sense of concern and fear about their business prospects this year. Many of them lose money during the winter months and earn their money during the strong summer season, and they are already reporting to me that bookings are down. Where bookings have been made, they are secured only by 30% deposits. The fear is that this will prove to be a very challenging few months.

An idea put to me by one business is that the Government should delay implementing the increase in the national minimum wage. My view, which I communicated strongly to the business, is that that would be the wrong thing to do. We are proud of our track record of increasing the national minimum wage, putting more money back into the pockets of those on the lowest incomes, but it is a measure, a sign and a signal of just how fearful many small businesses are about their cash-flow prospects in the weeks and months ahead. The measures set out by the Bank of England and the Chancellor today provide a measure of resilience for many of our small businesses.

[Several hon. Members rose—]

[Stephen Crabb]

I will not give way.

I also strongly welcome the measures on statutory sick pay to protect family incomes. If I had a couple of concerns to put on record, one would be that we are placing an awful lot of faith in the banks to do a lot of the heavy lifting in providing support to small and medium-sized businesses. Most of us who have been in this place for the past 10 years will have seen constituency cases of small businesses not being treated well by the banks, being treated unfairly and, at times, being thrown under a bus. We are looking to the banking sector, especially in light of the measures taken by the Bank of England this morning to help the sector’s balance sheets, to make good on delivering support to small businesses at this time.

My second area of concern would be about the self-employed weathering the storm that coronavirus potentially places on them. As a number of hon. Members have already said, this crisis will highlight the vulnerability and fragility of some workers in our economy. We are proud of our labour market record, and the United Kingdom’s record of creating and sustaining jobs over the past 10 years is nothing short of remarkable. One of the keys to that has been flexibility, but we should not make a god of flexibility. One area we will need to look at in the weeks ahead is how we ensure that the self-employed, freelancers and people working in the gig economy can get better social protection at a moment of crisis.

I will wrap up there, other than simply to say that my right hon. Friend the Chancellor did a superb job of delivering a very good, strong first Budget.