Economic Growth

Stephen Hammond Excerpts

Tuesday 14th November 2023 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

I warmly welcome my hon. Friend the Chief Secretary to her new position. Last week we were all allowed to see the historic spectacle of the King giving his first speech to this House. There are many historic spectacles associated with the speech, and today, entertainingly, the shadow Chancellor played her role, which is to claim that nothing has ever gone right with the Government and that there is nothing in the King’s Speech at all.

Of course, on bald numbers the shadow Chancellor is wrong, because it is clear that since 2010 the UK has had the third-highest growth in the G7 and 3.9 million more people are employed. However, that does not mean that growth should not be a priority, especially given the long-term supply002Dside shocks this economy has had from covid and the current crisis in Ukraine—although that seems to be forgotten at the moment—causing other energy shocks. It is therefore encouraging that the preoccupation of the King’s Speech and of this Government is to promote economic growth.

It is right to start by talking about supporting the Bank of England in taking measures that will reduce inflation. Inflation is economically corrosive, and it is the job of Governments to be financially responsible. When inflation is stable at lower levels, we see the encouragement of personal savings, which is a benefit, we see less pressure for people from what is described as the cost of living, and we see businesses investing. It reduces some of the inefficiencies that economists talk about and rigidity in the economy. It is key that we take measures and encourage the Bank of England to bring down inflation in order to have higher growth.

One such measure is to ensure that, for the next part of the 21st century, we look at the industries that both the Government and the private sector can foster so that we see sustained economic growth. The United Kingdom has the chance to be the world leader in many high-tech industries. The shadow Chancellor was right to welcome what the Government did in the spring statement with 100% expensing; it is the right thing to do, because it encourages businesses to invest. However, we can make it permanent only if we do away with some of the grants and take other actions to make it fiscally neutral, and it is of more benefit if it does not go only into plant and machinery. I urge the Government to look at a system that allows research-intensive industries to put research and development costs into full expensing as well.

The industries of the future were mentioned in the King’s Speech. I welcome the measures that we will see and discuss in the Digital Markets, Competition and Consumers Bill and the Data Protection and Digital Information Bill. Another industry of the future in which we must ensure that we remain a world leader, having been a world leader in it for the last 40 years, is the car industry. We must do more to encourage the electric vehicle industry. There are some simple measures that the Government could enact to encourage more people to take up electric vehicles. The first is the stabilisation and equalisation of VAT, so that people charging their vehicles in a public or a private place pay the same rate. The second is to put a presumption on local authorities to have byelaws permitting safety gullies, to allow charging by those who do not have access to their own off-street parking. Those are simple things that the Government will do to encourage growth.

The Government rightly recognise the importance of the quality of infrastructure and getting more people to invest in it. One thing that was not in the King’s Speech but is being circulated is the new rail reform Bill. I welcome some of the measures in that Bill, but we will need to look again at it because there is far too much emphasis on what the public sector does, and not enough on what the private sector could do—it could do more.

I welcome, and hope to see more use of, initiatives such as the Mansion House compact. I encourage the Government to think about how first-time buyers could use their pension funds to fund deposits, using something similar to what we have with self-invested personal pensions, which allow people to take out 25% tax free.

Economic growth for everybody across the world is difficult to achieve at the moment, but there are measures in the King’s Speech—as, I have no doubt, there will be in next week’s autumn statement—that will allow that growth to prosper. I welcome the King’s Speech.