Balancing the Public Finances

Andrew Selous Excerpts

Tuesday 11th July 2017 Westminster Hall

[Andrew Selous (South West Bedfordshire) (Con)]

Economies that lose control of their finances lose control of their destiny and that is why it is absolutely right to focus on living within our means. Conservative Members believe that the best way to do that is to power up an enterprise economy. We all hate austerity; we believe in prosperity. We believe in creating businesses and helping them to grow and expand to create the wealth to fund public services so that we can see them grow and develop.

We must be conscious that as a country we need not only to live within our means but to help our lower paid workers to have the means to live. I am proud of what the Government have done with the national living wage because we want well-paid jobs and decent public services. Productivity is the absolute key to higher wages, often for lower paid workers—a good movement, “Be the Business”, has been launched by Charlie Mayfield today. Technical education is at the heart of that, so the Government are putting it to the front. Dealing with extortionate housing costs in London and the wider south-east is also key to the productivity issue, because high housing costs are a drag on the economy. Our national productivity infrastructure fund, focusing on transport, digital, research, investment and housing, is absolutely the right way forward. We should have common purpose across the House; we must all focus on driving up the country’s productivity.

I am proud that, as a result of the hard things that the Government have had to do, the richest 1% are paying more in tax than happened under Labour and that income inequality is at its lowest since 1986—according to the Office for National Statistics, not the Conservative research department. Finally, the Government have taken 75 measures to raise an extra £140 billion in tax.

[Joan Ryan (in the Chair)]

I will now call the Front-Bench spokesmen. If they take eight or nine minutes each, Mr Harper will have one minute at the end.

--- Later in debate ---

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship today, Ms Ryan. I welcome the Financial Secretary to the Treasury to his position. I have no doubt we will have many of these debates in future. I thank the right hon. Member for Forest of Dean (Mr Harper) for tabling this debate on this important issue and on the need for Governments to balance the books. I also thank hon. Members for inviting me to the 1922 Committee. It is a pleasure. That was a joke—give it a bit of thought and try to keep up.

It is worth looking at the Conservative Government, in which the right hon. Member for Forest of Dean was a Minister for six years when all those decisions were made. Since coming to office, the Conservative Government have consistently failed to balance the books and to abolish the deficit, despite continually pledging to do so.

[Andrew Selous]

Will the hon. Gentleman give way?

[Peter Dowd]

May I get further into my speech? I will then be happy to give way.

First, it was promised that the deficit would be abolished by 2015. Then it was pushed back to 2020. We have now been told by the Chancellor that it is likely that it will not be abolished until 2025. The phrase used in the Conservative manifesto—hon. Members will appreciate that I read it avidly—was

“by the middle of the next decade”.

A full 10 years after the former Chancellor originally pledged to do it, and a full 15 years since the Conservatives started making the promise, the books still will not be balanced.

[Andrew Selous]

Does the hon. Gentleman think that our task of reducing the deficit would have been easier or more difficult if we had acceded to the Labour party’s continual requests for more spending and its opposition to every single reduction in spending that we put through?

Economy and Jobs

Andrew Selous Excerpts

Thursday 29th June 2017 Commons Chamber

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

It is an honour to follow such a brilliant maiden speech. The hon. Member for Chichester (Gillian Keegan) represents one of the most beautiful constituencies in the country and was a great credit to it this afternoon. She betrayed her grasp that all politics is local; she quite clearly has her eyes set on making a significant contribution to the national debate, with all the benefit of her life experience.

I want to speak in support of the amendment tabled by Opposition Front Benchers, but given that we all find ourselves in a new hung Parliament, I first want to set out four or five areas in which it should be possible for us to work across the House on some shared challenges in the years ahead. I want to pick up where my right hon. Friend the Member for Doncaster North (Edward Miliband) left off by discussing the surging levels of inequality and injustice in this country, which are contributing to such instability in politics not only in our country, but across the western world.

The Opposition have talked for some time about the challenges faced by what we used to call the squeezed middle, and the Prime Minister has talked about the challenges confronted by just managing families. It pleases no one in this House that working families are about £1,400 a year worse off than they were before the crisis. The Chancellor and the shadow Chancellor were absolutely right when they pointed their fingers at the core of the problem: the challenge of productivity bedevilling our economy. The fact that the rest of the G7 can finish making on a Thursday night what it takes us until the end of Friday to get done will hold us back from having rising living standards, unless we get things sorted. The level of productivity growth in our economy is worse than it was in the late 1970s, when we used to call the problem the “British disease”.

While there are four or five areas in which we can make significant progress, there was very little reference to them in the Queen’s Speech. If we are to become a richer country, we patently need to become a smarter country. Unless we spend more on science and on research and development, it will be impossible for our economy to become more productive. We spend just 1.3% of GDP on research and development, which is well behind the 2.3% spent across the rest of the OECD and the 3% spent by economies such as Germany, South Korea and Israel, which all have significant manufacturing sectors that are bigger than ours. The Government set out a long-term target for 2.3%, but they should be more ambitious and we should be debating now how we lever in more private sector investment through good public sector investment, safe in the knowledge that public investment crowds in private investment.

[Andrew Selous (South West Bedfordshire) (Con)]

I just want to let the right hon. Gentleman know that our manifesto commits to raising research investment to 3%, which I am sure he would welcome.

[Liam Byrne]

But without a timeframe, unfortunately. The manifesto sets a timeframe for achieving 2.3%, but not that longer-term ambition.

Secondly, moving from the supply side to the demand side, we need a faster rate of growth. The previous Chancellor, George Osborne, sought to try to close the deficit, but with 90% of that achieved through spending cuts, our economy was put in a place where wage growth began to slow. If we want fiscal policy to do more and if we are now going to celebrate across the House austerity being over, we will need a grown-up debate about tax. I think we have overdone things on corporation tax, and for this simple reason: the investment that has gone into our economy since the crash has been dwarfed fivefold by the amount that companies have put in the bank to sit there and do nothing. As the shadow Chancellor said, companies are now sitting on nearly £600 billion in cash. As we cut taxes and hand money back to big multinationals, they are putting much more of it in the bank, where it is doing nothing, than they are spending on creating new jobs. That is why we must have a much more grown-up debate about who needs tax incentives and who does not.

Thirdly, we have to look at not just public investment but private sector investment. Our capital markets are not patient enough and do not invest in long-term growth, but sadly the debate about patient capital stalled at about the time the right hon. Member for Twickenham (Sir Vince Cable) left office. We need a new debate about how we encourage more long-termism in the City and elsewhere, including in our banking sector, because at the moment we do not have it. Back in the 1950s, shareholders held on to their shares for an average of six years, whereas now the figure is six months. We need to encourage longer-term horizons in the boardroom.

Fourthly—there was something in the Queen’s Speech about this—labour markets have to become more skilled. There is good ambition for T-levels and I welcome the apprenticeship levy, but the truth is that in Birmingham, one of our great cities, there are still only 120 young people on apprenticeship paths that take them up to a degree level of skill. That is inadequate, and it holds back places such as my city. We should be devolving the apprenticeship levy as far as is possible. Crucially, we should also be reversing the swingeing cuts we have seen over the past few years to our further education sector, because our colleges are the bridge between lower and higher-level skills, and they need more support.

Fifthly, we need a new debate about enterprise in this House. I heard the speech made by the hon. Member for Milton Keynes South (Iain Stewart), but the reality is that, according to the House of Commons Library, all the tax cuts over the past few years have not stopped 1 million people leaving entrepreneurial activity. Why are we not expanding the start-up loan scheme? Why are we not making sure that every person who leaves school knows how to start a business? Such practical things could make a difference.

The final area in which we need change is about not just corporate governance rules, but the powers that we give to local authorities. I do not criticise the deal that the DUP struck. All I would note is that we are talking about an average of £244 per person in Northern Ireland, which is 15 times more than under the devolution deals that have been granted to other local authorities. If we in the west midlands had a Northern Ireland-sized deal, we would have £657 million coming into our area each and every year. I therefore urge the Secretary of State to be an awful lot more ambitious.

The great George Orwell once wrote:

“The world is a raft sailing through space with, potentially, plenty of provisions for everybody”.

Some people have done well since 2010—the stock market is up 40% and the property market is up 25%—so let us use this new wealth to make sure that there is wealth for all in the years ahead.