Budget Resolutions

Jeremy Quin Excerpts

Monday 13th March 2017 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to speak in this Budget debate. I had the same pleasure last year, and I appreciate the opportunity. I want to talk about quite a few things. The Foreign Secretary talked about global Britain, but we are in fact looking at a broken Brexit Britain. We are looking at a package of unfairness not only in the Budget, but in the austerity that the Government have followed for years. Ordinary working people have not been supported by this Government or the previous Government.

The UK Government have their head in the sand, and they have it there for two good reasons. First, they do not have the faintest idea of what Brexit will actually mean. What they do know about the outcome of Brexit is that it will be bad, so they do not want to tell us what they know. Secondly, the Government talk all the time about how things will affect the ordinary working person, but most Conservative Members—or at least too many of them—do not actually have a clue about what it is like to be an ordinary working person. They do not have a clue what it is like to push a trolley around the supermarket and feel inflation going up, as it has done over the past three months. Inflation has gone up to its highest level in ages during the past three months. People are seeing a 15% increase in the price of butter and a 6% increase in the price of tea. Those things have a real impact on families’ budgets, because they are everyday essentials which people regularly buy, so when they go up in price people are disproportionately affected. In Scotland, 48.4% of adults have less than £100 in savings. Across the UK families owe, on average, £2,770—that is the debt that families have. This is a really tight situation for people. People are struggling; they are not able to save and they have levels of debt.

People who have had a mortgage in the past eight years have never seen interest rates above 0.5%. Therefore, if the Bank of England decides to raise interest rates because of the weakness of the pound, which is not inconceivable, these people will be hit by increased mortgage costs that they did not expect, because they had never seen such increases before and so have not planned for them. This Government are doing nothing to help the budgets of these people. I spoke to some of my friends about how they feel the economy hits them. Too many of them told me, “I lie awake at night worrying because I have no savings. What if my partner gets laid off? We have no money. We have no slack in our budgets.” With rising inflation, because of Brexit, and the fact that the UK Government are not willing to take action now to combat it, people’s budgets are going to be squeezed even more tightly.

We have also seen wage stagnation as part of this package of unfairness. In 2022, average earnings will be no higher than they were in 2007. The UK Government need to take action—they need to be spending—to counter that and to make sure that people’s everyday budgets and everyday family incomes balance.

[Jeremy Quin (Horsham) (Con)]

Just to put this into perspective, the Office for Budget Responsibility’s forecasts are for inflation to be 2.6%, then 2.4% and then coming down to 2%. Although that is higher than we would like—it is above the target—it is not the kind of inflation we have seen in the past under other Governments. The hon. Lady is talking about a fiscal reflation—throwing more money into the economy—but that would increase inflation.

[Kirsty Blackman]

I am talking about putting more money into infrastructure, things that actually create jobs, and research and development. What we have seen in the UK is pitiful productivity. In Scotland, we are beginning to counter that, as our productivity has grown much faster than the level in the rest of the UK. That is partly because of the fiscal stimulus given by the infrastructure packages we have put in place, which has allowed us to make a difference to productivity. If the UK Government intend to take us out of the single market and to make it more difficult for us to have trading relationships and to export, they will need to make sure that they are increasing productivity to counter that, otherwise we will face a real issue on the lack of wage growth.

The Chancellor stood up and said, “It is fabulous what we are doing for the oil and gas industry. We are going to make it easier for oil and gas companies to transfer late-life assets.” This is really important, because the oil and gas industry will continue to take oil out of the ground for a very long time to come. Some fields are nearing maturity and may be operated by one of the big operators, and we need to make it easier for those assets to be transferred to some of the newer, smaller operators so that they can “sweat” them: get the maximum economic recovery out of those assets. My problem with what the UK Government announced is that they announced it last year and did not do it; they announced this exact thing on late-life assets last year and it has not been done, so I hope they will forgive me for not dancing around in excitement at the fact that there is now going to be a panel of experts to look at this thing that the Government announced last year—it would have been nice if they had actually done it back then.

I want to mention the £350 million of extra money that is going to Scotland. It was kind of the Chancellor to stand up and say, “We are giving £350 million of extra money to Scotland,” but this is rubbish—it is not what is happening at all. Because of how the Barnett formula works, if the Government spend more money in England and Wales, it just so happens that Scotland gets an extra slice as a result. The Chancellor cannot pretend that he is giving lots of money to Scotland while asking Departments to make 6% cuts and in the face of continuing austerity. He cannot stand up and say that the Government are giving Scotland all this money, given that we have had a £2.9 billion real-terms cut over the decade from 2010. It is ridiculous that we are in this situation.

I wish to touch on a couple of things that the Foreign Secretary said. In response to an intervention, he talked about falling back on WTO rules and how it would be “perfectly okay”. I am interested to see the analysis that he has done on that, because I do not think it would be perfectly okay. I think he is guessing, imagining, inventing—[Interruption.] He is hoping with his fingers crossed, as my hon. Friend the Member for Argyll and Bute (Brendan O'Hara) says. I say that because falling back on WTO rules and most favoured nation status is a harsh reality for our exporters, particularly for our small and medium-sized enterprises.

On SMEs, the Foreign Secretary said that people on my side of the House were mocking entrepreneurial spirit. He is from the party that has made changes to the national insurance contributions of the self-employed and he is accusing us of mocking entrepreneurial spirit! We are supporting entrepreneurs. We are supporting those people in small businesses, particularly the incredible numbers of women and people on lower incomes who have started businesses and taken on the mantle of self-employment. This is really important. These people have decided to become self-employed and now this Government are taxing that aspiration.

This Budget has dodged far too many of the important issues. It has not spoken about the real fallout from Brexit. The Government are unwilling to give the OBR any real information, and the improper forecasts that they have therefore been provided with have allowed them to dodge those issues. Despite all the comments in the run-up to it, this Budget has been shambolic. It has dodged the issues, taxed aspiration and done absolutely nothing for the oil and gas industry beyond what was promised last year. This is not a Budget that is promising for Scotland. It has increased the package of unfairness and consigned ordinary working people to a long-term lack of prosperity.

--- Later in debate ---

[Jeremy Quin (Horsham) (Con)]

It is a great pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman), although I did not agree with a great deal of what she said. None the less, Scots have played such a valuable role in shaping the foreign affairs of the United Kingdom over such a long, protracted period, and, through that, those of the fifth largest economy of the world and, through that, the affairs of the world. I trust and hope they will continue to do so for many, many years to come.

It will not come as a great surprise to you, Mr Deputy Speaker, to learn that I am not much of a mountaineer, but I have been told by those who are that the most dangerous point in climbing any mountain is after one has made the stupendous effort and reached the summit, and one then begins the so-called “easy descent”. In fiscal terms, after nine long and difficult years, the House finds itself nearing the summit. The struggle to rein in public debt is an immense and ongoing undertaking, but, according to the OBR, public sector net debt as a percentage of GDP peaks in 2017-18—this coming year—and in every successive year thereafter it falls. Whatever the very real temptations, encouraged by some one-off factors this year, to slow further the pace of deficit reduction, we owe it to future generations to finish what we have begun.

We are now in our eighth year without a recession. Unlike others, Conservatives do not pretend that we can abolish the business cycle. It is critical to our domestic economy and to our standing in the world that we rebuild our financial firepower so that we can tackle anything that comes our way. The 2% of GDP on defence and 0.7% on overseas aid, to which my right hon. Friend the Foreign Secretary referred, give us great hard and, indeed, soft power, but our allies need to know that our commitments are real and sustainable.

It was frustrating to hear the passionate words of the right hon. Member for Islington South and Finsbury (Emily Thornberry). She bemoans efficiencies being made in the public sector, without recognising, in this Budget debate, how critical it is that we bring down the deficit and show our ability to act credibly abroad and to achieve long-term sustainable finances.

With our national debt topping out at some £1.8 trillion, our annual interest payments also represent the entire combined annual spend on defence and policing, as the Chancellor pointed out. That is why the proper, sensible husbandry of our resources is critical. Despite the huge increase in the national debt, we are currently spending the same on interest as we were 15 years ago. With the base rate bound to rise—something on which I agree with the hon. Member for Aberdeen North—that is not sustainable in the long term. The risk is compounded by demographic shifts, notably the retirement of the baby-boomer generation. Demographic changes are projected to increase the cost of the state pension by 40% and to drive up health and social care spending.

I recognise the efforts being made to enhance our productivity with T-levels; the half billion of extra spending on technical education for 16 to 19-year-olds; and the £300 million commitment to support the brightest research talent, including 1,000 new PhD places in science, technology, engineering and maths. Combined with transport spending, that will help to narrow our relative productivity gap.

Education is the key. I have literally studied line by line the financial projections of some of the schools in my Horsham constituency, so I can assure the Chancellor that, after years of being relatively underfunded, they run an extremely efficient and tight ship, with staffing costs often accounting for 85% of total spend. Schools in historically well-funded areas have much to learn from schools such as those in West Sussex and could potentially do more than is currently being asked of them. I am grateful for the Secretary of State for Education’s commitment to look carefully, as part of the fair funding consultation, at the minimum funding required by schools to deliver the standards and curriculum that students, and we, have every right to expect.

National insurance contributions have been much discussed in the media. I welcome the Taylor review, and feel sure that later this year his report will outline many ways in which the Government can support the genuinely self-employed and clarify the position of the virtually employed. The self-employed population is higher than ever before and steadily growing. It is a simple matter of maths that such growth undermines the tax base on which future generations will rely.

The Government are introducing a package of measures: the changes to class 2 and class 4 NICs and the enhancement to pension provision for the self-employed are coming in over the next two years and cannot be viewed in isolation. Some 60% of those affected by the changes to NICs will gain. For those at the higher end of the earnings bracket, the impact is capped at around £600 a year, and the average annual additional contribution is £240 a year. Meanwhile, self-employed pension benefits will be enhanced by £1,800 a year—a benefit which, if purchased in the open market, would cost some £50,000.

Those measures will help to support the self-employed in retirement. They are progressive, while still ensuring that being self-employed has tax advantages. Of course we will support the entrepreneurs who will help to drive our country forward in the new post-Brexit environment, but by helping them to meet the costs of retirement while also narrowing the potential reduction in our tax base, these are proportionate, long-term steps in a Budget focused on the long-term financial health of the country, which I commend.