Budget Resolutions

Theresa May Excerpts

Wednesday 27th October 2021 Commons Chamber

[Mrs Theresa May (Maidenhead) (Con)]

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

First, I commend my right hon. Friend the Chancellor for the good news in the Budget. It is indeed good news that the economy is growing faster than was predicted and it is good news that we are bouncing back from the pandemic not just faster than predicted but faster than other countries in the G7, with the OBR confirming the 6.5% growth that the International Monetary Fund and OECD predicted. It is good news that unemployment is lower than the very dire predictions that we heard at the beginning of the pandemic, largely owing to the action that the Government have taken. It is good news that, as my right hon. Friend announced, the national living wage has increased to £9.50, thereby putting, as he said, just over £1,000 into the pockets of some of the lowest paid. It is also good news for public sector workers that the pay freeze is going to be lifted.

It is good news that the Chancellor has felt able to announce, albeit over a number of days publicly rather than to the House today, increased spending on issues such as infrastructure, the NHS and science. I agree with my right hon. Friend that we must today start to build the new economy post covid and that we are on the verge of what could be an economy fit for the new age of optimism. Like my right hon. Friend, I have always been optimistic about what can be achieved by the talents, hard work and initiative of the British people and what they can do to build a brighter future for themselves, their families and the country. But the brighter future will not be built simply by telling people that it will be there: a new economy needs sure foundations and optimism needs to be backed by practical delivery.

As we know, there are headwinds that mean that however optimistic people are for the future, many are finding it difficult to manage today. As the Chairman of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride) said, there is a debate to be had about what is going to happen to inflation and whether higher inflation is here to stay or just temporary. Of course, that will have an impact on interest rates.

Increased taxes will have both direct and indirect impacts on individuals, as will increased costs in other areas. We must never forget, as the Labour party so often does, that people are hit by increased taxes on business, because those increased costs often cannot be absorbed and are passed through to consumers—to members of the public.

I welcome the significant cut in the universal credit taper rate announced by my right hon. Friend the Chancellor. It is true to say that it is something that Conservative Governments have been working for, but previous cuts have been rather less dramatic than the one he announced today. What he has done is extremely good news.

Let me focus briefly on three particular issues in the Budget and spending review, the first of which is the forecast for the future growth of the economy. As I said, yes, we are bouncing back well, but our economy will be smaller for a number of reasons, some of which are specific to the UK, and the predicted rate of growth is below that which would normally be seen as an acceptable growth trend rate.

I am interested by the fact that the Government appear to think that they can sustain a situation wherein public spending increases by, as I think my right hon. Friend the Chancellor said, 3.8% a year, but the economy grows at less than half that rate. I welcome the fact that my right hon. Friend has introduced new fiscal rules, but I may have misheard or misunderstood: I think he said that the new fiscal rules will be met in the third year of every forecast period, but the forecast period rolls forward every year, which suggests to me that we will never reach the fiscal rules and they will just be rolled forward every year. As the Chairman of the Treasury Committee said, it is not the case that previous Governments have not been guilty of changing the date at which the fiscal rules were going to be met, but it seems to me that, unless I have misunderstood, it is baked in that they never necessarily need to be met.

The answer to the issue of the balance of increased public spending versus growth is, of course, to increase the growth rate of the economy. I support the desire for a green industrial revolution, but that brings me to my second point: the green industrial revolution is about not just providing support to businesses, to different sectors and to initiatives such as hydrogen. Those moves are important, though, and I welcome the fact that the Minister of State, Department for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) has introduced the Nuclear Energy (Financing) Bill and is finding a way to ensure that the RAB—regulated asset base—financing model will work for new nuclear in future.

To deliver the green economy of the future, we will have to ensure that we have the green skills of the future, which means that the issue involves not just the Treasury and the Department for Business, Energy and Industrial Strategy but the Department for Education. It is about ensuring that at every stage in our education system we prepare people for the jobs of the future and ensure that they have green skills. There were a lot of references to skills in the financial statement, but I did not hear any specific reference to green skills, which are very important. Young people are hugely enthusiastic about saving the planet, as I know from when I raised the seventh green flag for St Mary’s Catholic Primary School in Maidenhead recently. We need to ensure that young people’s education provides them with what they need to be able to take up the green jobs of the future.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I am grateful to the right hon. Lady for giving way and even more grateful that she is mentioning the whole issue of the climate emergency and green skills. It felt like the Chancellor was skating over that vital issue—I do not think he got the memo on the climate emergency. Does she agree that if we had much greater investment in the net zero review, we would be able to scale up the jobs at the level she is describing? At the moment, we have a pitiful amount going into that net zero review. We have a Budget that is making more car driving more likely. It is making that cheaper. It is making short-haul aviation less cheap. So it is sending out the wrong messages at the wrong time. We need a test that would make sure that every single spending decision is measured against its climate impact.

[Mrs May]

The hon. Lady has always spoken passionately on these issues in this House, but I think she has overlooked the fact that the Chancellor announced a significant number of green jobs—several hundred thousand of them—for the future. Investment is going in from the Government, but the point I am making is that it is not just about the investment that the Government are putting directly into these areas; it is also about ensuring that our whole Government, on a cross-Government basis, understand the importance of this issue. That includes education. I had a positive meeting with the Secretary of State for Education earlier this week on that and other issues. So it is a cross-Government exercise and it needs to be understood as such.

My third and final point is on a different issue, which is about the NHS and social care spending. I recognise the increased money going to local authorities, but there are local authorities that feel they will be hit with significant costs with the new social care provisions. This is about not just the costs over the next couple of years before the levy money comes into social care, but those authorities that are in areas where the provision of care is more costly than in other parts of the country and where they have a very high proportion of self-funders. That includes both Wokingham Borough Council and the Royal Borough of Windsor and Maidenhead.

My main and final point is that in the necessary bid to deal with the backlog in the NHS—obviously more funding has been announced in relation to that—we do not lose sight of the long-term plan. Crucially, the long-term plan had commitments on areas such as mental health, prevention and workforce planning. Those commitments need to be met if we are to put the NHS on a sustainable footing for the future. For example, the young person whose mental health needs are identified and provided for at an early stage is the person who will not then turn up at A&E in a crisis situation, costing the NHS more.

Another important aspect in the long-term plan is that it was matched with measures and metrics that the Treasury was going to be able to use to ensure that money was spent effectively and wisely. As we know, the NHS does not always spend the money as well and as effectively as it could. People want to see more going into the NHS, but they want it to be spent properly with value for money, so it is important that the Government do not lose sight of that.

As a Conservative, I believe in low taxes, fiscal prudence, and sound management of the economy. I look forward to our being able to be in a position to deliver that at the same time as we are delivering that green economy for the future and that optimistic future that the Chancellor referred to in his speech.