Spending Review and Autumn Statement

Stewart Hosie Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

My right hon. Friend is absolutely right. As an economy, we have been growing faster than most of the advanced economies of the world. In that situation, not getting the deficit and the debt falling is really signalling to the world that we are never, ever going to try to bring public finances under control. As it is, we have debt falling in every year of this forecast, and it is lower than the forecast in the Budget. The deficit is also falling and overall borrowing is lower in this forecast than in the one I produced in the summer Budget. We take these steps to pay down our debts. Our national debt, at 80% of national income, is uncomfortably high. It does not necessarily, therefore, give us all the flexibility we would want if we were to be hit by some kind of external shock and is all the more reason for us to use the better times to pay down the debt.

[Stewart Hosie (Dundee East) (SNP)]

I was intrigued by Tory Back Benchers cheering the humiliating U-turn on tax credits. It seems barely three or four weeks ago that they were cheering on, and voting for, the implementation of the tax credit policy. But times move on and things change.

The genesis of today’s statement was the decision announced last year when the Chancellor stated that he wanted to reduce public spending to barely 35% of GDP by the end of this Parliament. That was adjusted up to just over 36% in the summer Budget, but the direction of travel—the shrinking of services provided by the state—was very clear. It was set in stone with the fiscal charter earlier this year, with the intention to run a current account surplus of £40 billion a year by 2019-20. Those numbers have changed slightly today. The Chancellor wants not only to shrink the size of the state to 36.5% of GDP but to run a current account surplus of £42 billion. Can we just be clear? The UK has not routinely seen spending at 36% or 37% of GDP since the 1930s and 1940s. The Chancellor’s ideology has not changed. In essence, he still intends to cut £40 billion a year more than he needs to, to run a current account budget in balance by the end of this Parliament.

Notwithstanding the humiliating U-turn on tax credits, the Government added £37 billion of cuts in tax rises in the summer Budget to the £121 billion of fiscal or discretionary consolidation in the previous Parliament. Announced in the Blue Book today is £18 billion of cuts and the Chancellor was very clear that the £12 billion of welfare cuts remain on the table. Even after today, the public are facing a decade of austerity. These decisions are political choices. The Government ignore the fiscally responsible alternative course of action, which, with a very modest increase in public expenditure, would ensure that no one is left behind.

The Government are not for working people. Nothing they say can camouflage the failure of the past five years, and the Chancellor’s statement merely confirms that they are making the same mistakes all over again. We saw the impact on GDP growth of rising inequality in the 20 years to 2010. The continuation of the austerity agenda represents a wilful disregard for and failure to learn the lessons of the recent past.

The Chancellor may not care about inequality, and the 1 million people receiving food parcels compared with barely 25,000 five or six years ago, but the Government should care about its impact on economic growth. Let me ask the Chancellor some specific questions. We have been concerned for some time about the failure to increase productivity. The Chancellor knows that the UK sits in the third quartile of advanced economies. How does a 17% cut to the Department for Business, Innovation and Skills help to support firms seeking to increase productivity?

We have been concerned about the negative impact of balance of trade, a situation that got worse between the spring and summer Budget forecasts. The impact for every year published today is still negative. How does the absence of a plan to encourage exports and a further cut to the UK Trade & Investment budget help to reverse the dire balance of trade position? We share the Chancellor’s concern to protect growth and tax yield, and to close the tax gap, but how does the closure of 137 HMRC offices possibly do anything other than weaken the ability of the Revenue to collect the tax that is due?

The Chancellor said that the UK would take the fight to its enemies, but he omitted to mention action in Syria. Should the Government get the vote they want in the next few weeks, will he tell us how much he plans to set aside for the reconstruction and stabilisation of Syria after any military intervention is over? We remain as concerned as he does about the failure to invest in capital, which is absolutely imperative to boost economic growth. We welcome the increase in capital spend announced today. I just say to him, however, that cuts last winter, increases in the spring, cuts in the summer and increases in the autumn represent a shambles of a way to plan long-term capital investment.

In Scotland, we saw cuts to revenue and capital over the previous Parliament. We have had confirmation today of further real-terms cuts to Scottish revenue funding over the spending review period. Instead of the Bullingdon sneering about oil, which the Chancellor did earlier, he would have been better recognising that the Scottish economy is now 2.5% larger than it was pre-crisis and productivity is 4% higher than in 2007. It is contributing to the UK recovery. Instead of hobbling and undermining the Scottish Government, he might consider it to be worthy of support.

The Government received barely a third of the vote of those who voted and the Conservative party achieved its worst result in Scotland since 1865. Let us be clear. I do not expect the Chancellor to change his mind, but the public in Scotland and in the UK did not vote for a decade of austerity.

[Mr Osborne]

This spending review delivers economic and national security for the people of Scotland. It funds a £1.9 billion increase to their capital budget and the block grant goes up by £1 billion. There is a 14% capital boost from the United Kingdom Government. Instead of complaining, the hon. Gentleman might, on behalf of the Scottish Government, have welcomed that and set out any plans he might have for how to spend it. I suspect we will hear a lot from the Scottish nationalists in this Parliament about process, constitutional issues and all that, but they will not tell us what they are actually going to do to improve the lives of people in Scotland. He talks about productivity. If we look at the Scottish Government’s record, we see that they have cut 140,000 further education college places in Scotland. They have used the money they have taken from the university sector for free prescriptions for millionaires, as if that is a good use of Scottish taxpayers’ money. Health spending in Scotland is rising more slowly than it is in England, where the Conservative Government are in charge of the English national health service.

In the spending review, there is extra capital for Scotland so it can invest in its long-term future. There is a huge commitment to the defence estate in Scotland, with new planes based at RAF Lossiemouth and a massive investment in shipbuilding on the Clyde for many years to come. By the way, I know that the SNP is keen to court the unions in Scotland. The GMB said that the news about the frigates

“should be welcomed and not used for political mischief”.

That is another sensible thing the GMB has said. And there is the huge investment at the base at Faslane, where 8,000 people work. The Scottish National party pretends it would get rid of the nuclear deterrent and somehow give all those 8,000 people jobs in our defence establishment—the SNP is not being straight with the people who work on the Clyde or in Scotland’s defence industries.

We are also working on implementing the Glasgow city deal, and on a city deal for Inverness and for Aberdeen, and we are ready to sit down with John Swinney to negotiate a fiscal framework. We have now the Scotland Bill, which Lord Smith says “delivers the legislation required” to deliver the agreement. For months, SNP Members have been telling us that we were not doing what the Smith commission said, but now Lord Smith says that we are. To make these powers work, we need agreement on a fiscal framework. Let us sit down—we can sit down tomorrow, next week or whenever—to agree a fair fiscal funding framework.

The truth is that SNP Members complain about decisions on public expenditure, but if Scotland had voted to be independent, its public finances would be in complete tatters. The OBR forecast today is that oil revenues are down 94% in the North sea because of the fall in the world oil price. That is a £20 billion hole in the financial programme that the SNP Government tried to foist on the people of Scotland. The whole thing can be summed up by the words of Mr Alex Bell, who was the former First Minister’s head of policy. He said this week:

“The SNP’s model of independence is broken beyond repair…the campaign towards the 2014 vote, and the economic information since, has kicked the old model to death. The idea that you could have a Scotland with high public spending, low taxes, a stable economy and reasonable government debt was wishful a year ago—now it is deluded.”

That is the SNP verdict on the SNP plans.