Autumn Statement Resolutions

Tobias Ellwood Excerpts

Monday 27th November 2023 Commons Chamber

[Mr Tobias Ellwood (Bournemouth East) (Con)]

Let me welcome you back from your important visit, Mr Speaker, and begin by welcoming the maiden speech from the hon. Member for Tamworth (Sarah Edwards). She will find this to be quite a robust, feisty place, where perhaps courtesy is not what it should be, but we should commend an exemplary maiden speech and wish her all the best in her parliamentary career.

I am grateful to catch your eye, Mr Speaker, for this important opportunity to comment on the Chancellor’s autumn statement, the Government’s update on the health of the nation’s finances. Members in all parts of the House have recognised that the backdrop to any discussion about our economy would not be complete without recognising the unprecedented, seismic events that have impacted the nation’s finances over the past few years: covid and the Ukraine conflict. Those once-in-a-generation events would have tested any Government, whoever was in power, as indeed they have tested Governments across Europe and beyond. Looking at how we compare with other nations puts the challenges we have experienced in perspective. In 2022, all but one of the G7 nations experienced higher debt-to-GDP ratios than the UK, so we have stabilised the nation’s finances.

It is time to move forward and grow our economy. It is time to take advantage of the welcome fiscal headroom to increase UK productivity; to continue to tackle the cost of living crisis by helping more people back into work; and to map out a clear economic vision for the future. I am sure that reducing national insurance, increasing benefit payments, along with the national minimum wage, and advancing the state pension are changes that will be welcomed, not just by the public but by Labour.

I say to the Minister that I was hoping for more support for the tourism and hospitality industry. The value of tourism to Britain is too often overlooked. It is worth £140 billion to our economy, it accounts for 6% of our GDP and 11% of our workforce are employed in this important sector. I welcome the continued extension of the 75% rate relief for hospitality, but I would like us to go further, with a permanent reduction in VAT for tourism. We saw that briefly during the covid crisis. I know that the discussion is taking place and perhaps—please—we will see that measure come out of the hat in next year’s spring statement. Tourism is vital to our economy and to Bournemouth, so reducing VAT in the tourism and hospitality sector is something I hope Ministers will consider.

[John Redwood]

Does my right hon. Friend agree that the problem is that the OBR’s forecasting never gives any credit for cutting a tax rate in order to get more revenue? This could be a good example of where that would work.

[Mr Ellwood]

My right hon. Friend is absolutely right. The Centre for Economics and Business Research suggests that there is £10 billion to be made in lost GDP at the moment, as we are not attracting overseas visitors because our taxes are higher than those of our continental counterparts.

Looking at the bigger picture, finances certainly remain tight. The national debt, although falling as a percentage of GDP, as I said, remains too high. Our growth, although larger than Germany’s, is not where it should be. Given that we are the sixth largest economy in the world, we need to look at improving productivity, which remains sluggish, as it has been since 2008. A lot of these economic debates focus, understandably, on the micro level—the line-by-line budget allocations to Whitehall Departments, and the changes to general taxation, benefits and pensions—but how all those fiscal jigsaw pieces fit together is often overlooked. Our world is changing fast. Not only is it becoming more internationally competitive, but there is a question mark as to what our role actually is. I am reminded of what John Foster Dulles, the former US Secretary of State, said:

“Britain has lost an empire and not yet found a role.”

What we saw in the autumn statement was interesting indeed. The world is going digital, as IT changes every aspect of our lives: how we communicate, travel, do business and even strengthen our own security. That is all good news for the UK, as we have the third largest tech sector in the world, after the US and China. We are world leaders in pharmaceuticals, life sciences, creative industries, aerospace, fintech and artificial intelligence. With some of the best universities in the world, along with our globally recognised finance sector, we are well placed to become a high-tech superpower—another silicon valley. That is also good news for Bournemouth, because that is exactly where our area focuses; we are focused not just on tourism and financial services, but on the creative industries.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman for what he says about the pharmaceutical and engineering sectors, as we have businesses in those areas in my constituency that can do well. One thing that is needed to improve it is reviewing and increasing the child benefit thresholds—perhaps the Government should consider that. It would enable families that work hard to get more benefit, which they cannot do at this moment in time.

--- Later in debate ---

[Mr Ellwood]

In the spirit of brevity, let me just say that I 100% agree with the hon. Gentleman on that.

I began by mentioning the global shocks of covid and Ukraine, and placing them in context. There is clearly a direct correlation between our economy and our security. About half of our GDP is affected by international headwinds. For those of us who follow international events, it is clear that there will be more covids and more Ukraine-sized conflicts. Our world is becoming more dangerous, not less. These threats are growing and becoming more complex and dynamic. There is an increasing blurring, with the scale of direct military threats being matched by those in the economy and, specifically, in the digital space. With authoritarianism on the rise, we have entered an ever-uncertain era of insecurity, akin to the 1930s, with rising populism, new and dangerous alliances forming, increased threats to our international rules-based order and our international institutions unable to hold errant nations to account. This is all causing a number of alarm bells to ring on the global order dashboard. Arguably, the situation is even more grave than the one in the 1930s, because we also face climate change, cyber threats and the pervasive role of the non-state actor in that equation.

So I end by simply calling for greater investment, including in security and defence. Such calls may fall on deaf ears, because of all the domestic challenges we face, but I simply say: look at how our fragile stability is fragmenting; we must be better prepared for the global shocks that our economy will face in the longer term. We are rekindling our statecraft skills, but please may we see an increase in defence spending in the spring Budget?

[Several hon. Members rose—]