Economy and Jobs

Stephen Hammond Excerpts

Thursday 29th June 2017 Commons Chamber

[Mr Hammond]

I will make a little progress and then I will give way to some more colleagues on both sides of the House.

On this side of the House at least, we continue to believe that the most effective way to protect and support ordinary families is to ensure that they have jobs, and that is what we have done, in spades. The flaw in Labour’s tax plan is not just that it will hit those whom Labour claims to support; it is that it will not raise anything like the revenue that it is claiming. Labour says it will raise taxes by £48.6 billion without anyone earning under £80,000 paying a penny more. The Institute for Fiscal Studies—which the right hon. Member for Hayes and Harlington quoted rather selectively—has examined the credibility of that plan. It found that Labour

“certainly shouldn’t plan on their stated tax increases raising more than £40 billion in the short run, and more likely than not they would raise less than that. They would certainly raise considerably less in the longer term.”

So before we even turn to Labour’s spending plans, there is already a black hole of £8.6 billion a year and rising on the taxation side alone.

[Stephen Hammond (Wimbledon) (Con)]

Is it not even worse than that, in that the IFS said that there were £58 billion of uncosted promises in Labour’s supposedly costed manifesto?

[Mr Hammond]

My hon. Friend is exactly right, and if he bears with me, I shall continue.

That black hole of £8.6 billion a year and rising in taxation will have to be filled by raising tax on ordinary people, and that was just the manifesto. Since the Leader of the Opposition got his new suit, he has been out and about, flinging spending commitments with gusto at anyone he comes into contact with—another £9.5 billion of unfunded commitments for each year of this Parliament. Added to the hole in Labour’s tax plans, that is an additional £90 billion over the course of the Parliament that has to be raised in taxation on ordinary working families.

Let me say that again for the right hon. Member for Hayes and Harlington: £8.6 billion a year of under-recovered tax, according to the IFS, and another £9 billion-plus a year that his right hon. Friend the Leader of the Opposition added in additional unfunded commitments after the manifesto was published. In short, that is the Opposition’s approach to the type of tough decisions that have to be made every day in government about prioritising limited resources—“Should we do x or should we do y?” His answer is just yes: more everything for everyone, and all of it for free—a catastrophic recipe for economic and fiscal disaster.

--- Later in debate ---

[Stephen Hammond (Wimbledon) (Con)]

I congratulate the hon. Member for Warrington South (Faisal Rashid) on his maiden speech and his gracious tribute to his predecessor.

When I read the Queen’s Speech, I see the essence of the Government’s economic policy—to continue to improve the public finances. Government is about taking the right and the hard decisions for this country. Improving the public finances, often disingenuously called “austerity”, is not a political decision, but the key to prosperity. There is nothing intrinsically economically sound about a nation with a budget deficit of 11% spending £1 of every £4 it borrows on interest payments—money that should be spent on investing in public services and the future of this country. I therefore support the continuation of the commitment to apprenticeships and T-levels.

As we have seen the deficit fall over the past seven years, we have been able to use the money to make sure that we take the lowest paid out of tax and to create the national living wage and an environment in which 2.9 million more jobs have been created. Investment and extra taxation are coming in and being reinvested in the public sector.

The opportunity to govern is nothing unless it is used as an instrument for good. In closing the deficit—and not only through the measures in the Queen’s Speech—the Government will have the opportunity to do good. We have all stood on the doorsteps in the past few weeks during the general election, which exposed intergenerational tendencies that we have not seen in decades. The normal pact that a new generation will be wealthier than the one preceding it has broken down.

Given the Government’s sound economic policy, we now have chances to create Conservative solutions to some of the problems. We do not need to follow the snake-oil politics of the right hon. Member for Islington North (Jeremy Corbyn), but we do need to consider why it is acceptable for interest payments on student loans to be 6.1% when the market rate is something less than 1%. A Conservative solution is to say, “That’s a market distortion—let’s attack it.” Let us do that in several ways. One way is surely to allow new entrants into the student loan market, to ensure that the level of loan payment is brought down.

It is the instinct of everybody in the country to own a home or rent one in the area they choose. In the 1950s, Supermac built homes for all; in 2020, the challenge for the Prime Minister is to become “Supermay”, to ensure that this Government build a million homes in the next five years. We can do that with Conservative policies. I see the Secretary of State for Business, Energy and Industrial Strategy on the Front Bench; I hope he will continue to espouse changes to planning laws, to free things up. I hope that the public sector and private sector become involved. Let us have tenure-free building from housing associations and let them free up some of the rent provision so that they can build more.

Anyone who has read anything about the first industrial revolution will understand that it was local capital that built homes, that built industries. Let us use local institutions, the local enterprise partnerships, to fund infrastructure bonds and project bonds to build those houses and build the infrastructure this country needs so that at the next general election, as my right hon. Friend the Member for Loughborough (Nicky Morgan) said, it will be the Conservative party that offers that vision of hope and aspiration and that yet again offers the ladder of opportunity for all.