Budget Resolutions and Economic Situation

Theresa May Excerpts

Tuesday 9th March 2021 Commons Chamber

[The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)]

It is a real pleasure for me to open today’s debate on the Budget that my right hon. Friend the Chancellor the Exchequer brought before the House last week. It is a Budget that meets the needs of the moment. It delivers support to all corners of our United Kingdom. It shores up our defences against the ravaging impact of the pandemic while laying a clear path for our journey out of the crisis and into a brighter future. As the Chancellor himself acknowledged last week, it is a path that we are only able to take because of the incredible efforts of our frontline health workers who have vaccinated more than 20 million people across the United Kingdom, and the researchers and manufacturers who have managed to produce effective vaccines in such a short space of time. I am sure I speak on behalf of the entire House when I express the deepest gratitude to everyone involved in this heroic national effort.

[Mrs Theresa May (Maidenhead) (Con)]

My right hon. Friend makes some very important points about our health staff and the vaccination programme, which has been absolutely superb in this country. Does he recognise that the creation of a new vaccine centre and medicines manufacturing centre were part of the life sciences deals that were enabled by the modern industrial strategy? Will he welcome the modern industrial strategy?

[Kwasi Kwarteng]

I have not come here to defend or rebut any of the wonderful measures that we took under my right hon. Friend’s leadership. I am very conscious of the fact that many people want to take part in this debate, and I am afraid that I have to press on.

The researchers and manufacturers have done an extremely good job, as my right hon. Friend says, in shoring up our response to the crisis. The Budget provides an additional £65 billion of measures in response to covid, designed to support the economy this year. It covers an extension of the furlough scheme, which has already supported 1.3 million employers and more than 11 million jobs, providing vital funds to households and communities throughout our country. It has added to the near £20 billion of support that the Treasury has paid out to support 2.7 million self-employed people.

The Budget presents a dynamic and generous plan to help businesses to get up to speed. We are providing restart grants of up to £18,000 to more than 680,000 business premises. We are also providing further support for hospitality and retail businesses who may be more affected by restrictions when they reopen. While our plan for jobs has been given a £126 million boost supporting 40,000 more traineeships and doubling the cash incentive for firms taking on new apprentices, the Budget ensures that more people are able to access secure, skilled work.

Of course, there can be no denial that the jobs market has changed profoundly over the past year.

--- Later in debate ---

[Mrs Theresa May (Maidenhead) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests.

In unprecedented times, I commend my right hon. Friend the Chancellor for recognising the need to combine continued support for people in jobs, even as we see the light at the end of the tunnel of this pandemic, with the need to restore our public finances and to set us on the path of growth for recovery in the future. I will not dwell on the first of those, but I welcome specifically the funding for tackling domestic abuse, focused as it will be on the perpetrator programmes often overlooked in the past. However, I continue to fail to understand why the Treasury, and, I fear, the Department for Business, Energy and Industrial Strategy, seem institutionally incapable of understanding the significance of the aviation sector for jobs and for our economy.

On other specific issues, I wish to refer to one group who are badly affected by the impact of dealing with the pandemic: women. There is evidence to show that lockdown measures have been particularly difficult for women, and that there are women who have abandoned their careers because they have found it impossible to juggle the requirements of lockdown, with home schooling and so forth, with their careers. We need those women in the workplace. We need those female entrepreneurs for our future. I urge the Government to look actively at what they can do to deal with that issue and to encourage women entrepreneurs.

Another group badly affected by the pandemic is young people, with the hospitality sector being a case in point. The intergenerational divide between young and old has been exacerbated by the measures taken to deal with the pandemic, so it is absolutely right that we take measures to restore our public finances and do not simply land the bill on young people and future generations. I know there are those, including some of my colleagues, who will say, “You don’t need to do anything to taxes. You just need to have growth”, but one worry from this Budget must be the OBR forecast for growth. It is forecast in the medium term not to return to the pre-financial crisis level of an average annual rate of 2.5%, but to be around the pre-covid rate of 1.5%. There is no doubt that the pandemic has had an impact, but pre-covid the uncertainty around Brexit was also having an impact on our economy. Of course there is every prospect that Brexit will have a continued impact in reducing the size of our economy into the future. So we need to focus on growth, and I will say a little more specifically about that in a moment.

I am concerned that the Government have simply adopted the Treasury orthodoxy that if we wish to encourage investment by business, all we do are capital allowances. I can tell my right hon. Friend the Business Secretary that year after year that is the answer the Treasury comes up with. If we want an innovation economy, we need to invest and support investment in areas that encourage growth and innovation, and that means research and development. We are to see another consultation on R&D tax credits—I believe it is the third in three years. I have to say to him: stop consulting, just get on and do something. We could extend the definition of R&D expenditure or increase the rate, but we must act. We need investment in innovation, not in chief executives’ Jacuzzis.

Another area I want to emphasise for my right hon. Friend is that there is a lot of talk from Government—we all do it and we have done it in the past—about capital spending, and infrastructure is always what we reach for. We must never forget, however, that human capital is increasingly what we must be investing in. We should be ensuring that there is effort and funding available for the skills White Paper and for the response to the Augar review. What we need to build back better is a plan that transforms the economy: ideas and an innovation economy; people investing in skills; upgrading infrastructure; and making this the best place to grow and start a business. That was the modern industrial strategy.

The Government say they need a new framework. My right hon. Friend has said that that framework builds on the industrial strategy, but it does not. There are two reasons this is the wrong approach. First, we need a long-term strategy. We cannot just magic a plan out of thin air and expect it to work in a year or so—we need something that will work longer term. We should make changes where necessary, not just for the sake of making a change.

Secondly, a huge amount of effort went in, with Government working with the private sector, to develop that modern industrial strategy. The private sector welcomed it, because it was not about picking winners. This is where I depart from the former Leader of the Opposition, the right hon. Member for Doncaster North (Edward Miliband), because Labour’s answer was always to pick winners; we agreed with business the sectors that needed to be strengthened and in which we were strong, and let the market decide the companies that were going to be the winners. We need to continue with that effort. The industrial strategy was welcomed by the private sector and it was recognised internationally. Do not abandon it. Build on it, for the sake of all our futures.

[Mr Deputy Speaker (Mr Nigel Evans)]

It was like a blast from the past there, momentarily.