John Bercow
Main Page: John Bercow (Speaker - Buckingham)Department Debates - View all John Bercow's debates with the HM Treasury
(7 years, 5 months ago)
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Mr Hammond
Yes—it says here because I wrote it here.
My ambition is for the UK to be a world leader in 5G. That means a full-fibre network; a step change in speed, security and reliability. So we will invest over £1 billion in our digital infrastructure to catalyse private investment in fibre networks and to support 5G trials. From April, we will introduce 100% business rates relief for a five-year period on new fibre infrastructure, supporting further roll-out of fibre to homes and businesses.
We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment, but we must sustain this effort over the long term if we are to make a lasting difference to the UK’s productivity performance, so today I have written to the National Infrastructure Commission to ask it to make its recommendations on the future infrastructure needs of the country, using the assumption that the Government will invest between 1% and 1.2% of GDP every year from 2020 in economic infrastructure covered by the commission. To put that in context, we will spend around 0.8% of GDP on the same definition this year.
I am also backing the commission’s interim recommendations on the Oxford-Cambridge growth corridor, published last week, with £110 million of funding for east-west rail and a commitment to deliver the new Oxford-Cambridge expressway. That project can be more than just a transport link. It can become a transformational tech corridor, drawing on the world-class research strengths of our two best-known universities. I welcome the commission’s continuing work on delivery model options. We will carefully consider its final recommendations in due course.
The major increase in infrastructure spending I have announced today will represent a significant increase in funding through the Barnett formula, of more than £250 million to the Northern Ireland Executive, £400 million to the Welsh Government and £800 million to the Scottish Government.
Public investment is only part of the picture, however. About half of our economic infrastructure is financed by the private sector, and we will continue to support that investment through the UK guarantee scheme, which I am today extending until at least 2026. The new capital investment I have announced will provide the financial backbone for the Government’s industrial strategy that the Prime Minister spoke about on Monday, a firm foundation upon which my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy will work with industry to build our ambition of an economy that works for all.
I can announce four further measures to back business. I am doubling the UK export finance capacity to make it easier for British businesses to export. I am funding Charlie Mayfield’s business-led initiative to boost management skills across British businesses. I am taking a first step to tackle the long-standing problem of our fastest growing start-up tech firms being snapped up by bigger companies, rather than growing to scale, by injecting an additional £400 million into venture capital funds through the British Business Bank, unlocking £1 billion of new finance for growing firms. I am also launching today a Treasury-led review of the barriers to accessing patient capital in the UK, so that we can take further action to address them.
This Government recognise that, for too long, economic growth in our country has been too concentrated in London and the south-east. That is not just a social problem but an economic problem. London is one of the highest-productivity cities in the world and we should celebrate that fact. But no other major developed economy has such a gap between the productivity of its capital city and its second and third cities, so we must drive up the performance of our regional cities. Today we publish our strategy for addressing productivity barriers in the northern powerhouse, and give the go ahead to a programme of major roads schemes in the north. Our midlands engine strategy will follow shortly, but I am today providing funding so that the evaluation study for the midlands rail hub can go ahead.
In addition, we are investing in local infrastructure in every region of England. I can announce the allocation of £1.8 billion from the local growth fund to the English regions: £556 million to local enterprise partnerships in the north of England, £542 million to the midlands and east of England, and £683 million to LEPs in the south-west, south-east and London. We will announce the detailed breakdown of allocations to individual LEPs shortly.
Devolution remains at the heart of this Government’s approach to supporting local growth, and we recommit today to our city deals with Swansea, Edinburgh, north Wales and Tay cities. I can also announce today we are beginning negotiations on a city deal for Stirling so that every single city in Scotland will be on course to have a city deal. To support new mayoral combined authorities in England, I can announce that we will grant them new borrowing powers to reflect their new responsibilities.
While we continue discussions with London and the west midlands on possible devolution of further powers I can announce today that London will receive £3.15 billion as its share of national affordable housing funding, to deliver a commitment of more than 90,000 affordable homes. I can also announce that we are devolving to London the adult education budget, and giving London greater control over the delivery of employment support services for the hardest to help.
I have deliberately avoided making this statement into a long list of individual projects being supported, but I am going to make one exception. I will act today, with just seven days to spare, to save one of the UK’s most important historic houses, Wentworth Woodhouse near Rotherham. It is said to be the inspiration for Pemberley in Jane Austen’s “Pride and Prejudice”. But in 1946, in an extraordinary act of cultural vandalism, the then Labour Government authorised extensive opencast coal mining virtually up to the front door of this precious property. Perhaps that is Labour’s idea of a northern powerhouse. Wentworth Woodhouse is now—[Interruption.]
Mr Hammond
Wentworth Woodhouse is now at critical risk of being lost to future generations. A local effort has been hugely successful in securing millions in funding from various foundations and charities, subject to the balance required being found by 30 November. We will today provide a £7.6 million grant towards urgent repairs to safeguard this key piece of northern heritage—all but destroyed by a Labour Government, and saved by a Conservative one.
I can also confirm distribution of a further £102 million of LIBOR bank fines to armed forces and emergency services charities, including, my hon. Friends will be pleased to hear, £20 million to support the Defence and National Rehabilitation Centre at Stanford Hall in Nottinghamshire, as well as £3 million from the tampon tax fund for Comic Relief to distribute to a range of women’s charities.
We choose to invest in our economic infrastructure because it can transform the growth potential of our economy, as well as improving the quality of people’s lives. That investment is possible only because the Government are prepared to take the tough decisions—every one of them opposed by the Labour party—to maintain control of current spending. When we took office in 2010, public spending was 45% of GDP; this year, it is set to be 40%. During those six years, we have seen crime fall by more than a quarter, the highest proportion ever of good or outstanding schools, the number of doctors in our NHS increasing by 10,000, pensioner poverty at its lowest level ever, the lowest ever number of children being raised in workless households and the highest ever number of young people going on to study full time at university.
We have demonstrated beyond doubt that controlling public spending is compatible with world-class public services and social improvement. But, as the OBR’s debt projections demonstrate, we have more work to do to eliminate the deficit. Departmental spending plans set out in the spending review last autumn will therefore remain in place, and departmental expenditure in 2021-22 will grow in line with inflation. The £3.5 billion of savings to be delivered through the efficiency review, announced at the Budget and led by my right hon. Friend the Chief Secretary to the Treasury, must be delivered in full. I have, however, exceptionally agreed to provide additional funding to the Ministry of Justice to tackle urgent prison safety issues by increasing the number of prison officers by 2,500.
Having run two large spending Departments in previous roles, I came to this job with some very clear views about the relationship between the Treasury and spending Departments. I want Departments to be incentivised to drive efficiencies, and I want the Treasury to be an enabler for good, effective spending across government. To kick-start this new approach, I will allow up to £1 billion of the savings found by the efficiency review to be reinvested in 2019-20 in priority areas and I have budgeted today accordingly.
We manage public spending so that we can invest in the public’s priorities. The Government have underlined those priorities with a series of commitments and protections for the duration of this Parliament. I can confirm today that, despite the fiscal pressures, we will meet our commitments to protect the budgets of key public services and defence; keep our promise to the world’s poorest through our overseas aid budget; and meet our pledge to our country’s pensioners through the triple lock. But as we look ahead to the next Parliament, we will need to ensure that we tackle the challenges of rising longevity and fiscal sustainability, so the Government will review public spending priorities and other commitments for the next Parliament in the light of the evolving fiscal position at the next spending review.
I now turn to taxation. Since 2010, the Government have put a business-led recovery at the heart of our plan. We have cut corporation tax from 28% to 20%, sending the message that Britain is open for business. The additional investment in productivity and infrastructure that I have announced today underscores that message, and the raft of investments in the UK announced since the referendum—by SoftBank, Glaxo, Nissan, Google and Apple among others—confirms it. My priority as Chancellor is to ensure that Britain remains the No. 1 destination for business, creating the investment, the jobs and the prosperity to protect our long-term future. I know how much business values certainty and stability, so I confirm today that we will stick to the business tax road map we set out in March. Corporation tax will fall to 17%, by far the lowest overall rate of corporate tax in the G20. We will deliver the commitments we have made to the oil and gas sector. The carbon price support will continue to be capped out to 2020, and we will implement the business rates reduction package worth £6.7 billion. I can also confirm today that, having consulted further, my right hon. Friend the Communities Secretary will lower the transitional relief cap from 45% next year to 43%, and from 50% to 32% the year after. That’s complicated, but it’s good news—just in case anybody wasn’t sure, Mr Speaker. I will also increase the rural rate relief to 100%, giving small businesses in rural areas a tax break worth up to £2,900 a year.
In return for these highly competitive tax rates, the tax base must be sustainable. From April 2017, we will align the employee and employer national insurance thresholds at £157 a week. There will be no cost to employees, and the maximum cost to business will be an annual £7.18 per employee. Insurance premium tax in this country is lower than in many other European countries, and half the rate of VAT. In order to raise revenue, which is required to fund the spending commitments I am making today, it will rise from 10% currently, to 12% from next June. At the same time, I can confirm the Government’s commitment to legislate next year to end the compensation culture surrounding whiplash claims, a major area of insurance fraud. That will save drivers an average of £40 on their annual premiums.
Technological progress is changing the way people live and work, and the tax system needs to keep pace. For example, the OBR has today highlighted the growing cost to the Exchequer of incorporation. So the Government will consider how we can ensure that the taxation of different ways of working is fair between different individuals doing essentially the same work, and sustains the tax base as the economy undergoes rapid change. We will consult in due course on any proposed changes. In the meantime, the Government will take action now to reduce the difference between the treatment of cash earnings and benefits. The majority of employees pay tax on a cash salary, but some are able to sacrifice salary by agreement with their employer and pay much lower tax on benefits in kind. That is unfair, so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else. Following consultation with stakeholders, ultra-low emission cars, pension savings, childcare and the cycle-to-work scheme will be excluded from this change, and certain long-term arrangements will be protected until April 2021. For pensions that have been drawn down, I will also reduce to £4,000 the money purchase annual allowance, to prevent inappropriate double tax relief being gained.
This Government have done more than any other to tackle tax evasion, avoidance and aggressive tax planning. The UK tax gap, it may surprise some Opposition Members to hear, is now one of the lowest in the world. But we must constantly be alert to new threats to our tax base and be willing to move swiftly to counter them. At the Budget, we committed to removing the tax benefits of disguised earnings for employees, and I am now going to do the same for the self-employed and employers, raising a further £630 million over the forecast period. We will shut down inappropriate use of the VAT flat rate scheme that was put in place to help small businesses. We will abolish the tax advantages linked to employee shareholder status, in response to growing evidence that it is primarily being used for tax-planning purposes by high-earning individuals. We will introduce a new penalty for those who enable the use of a tax avoidance scheme that HMRC later challenges and defeats. These measures, and others set out in the autumn statement document, raise about £2 billion over the forecast period.
There is understandable public concern that the pitch is tilted in favour of large multinational groups, which are able to use cross-border structures to manage their tax liabilities. Following detailed consultation, I can confirm that we will implement our new restriction on tax relief for corporate interest expenses and reform the way relief is provided for historic losses. These measures, scored at Budget 2016, will help to ensure that large businesses will always pay tax in years where they make substantial profits. They will also mean that businesses cannot avoid tax by borrowing excessively in the UK to fund their overseas activities. They take effect in April, and will raise over £5 billion from the largest businesses in the UK.
I said that the tax system must be fair, and that means rewarding those who work hard by helping them to keep more of what they earn. There is one tax reform the Government have pursued since 2010 that has done more than any other to improve the lot of working people: raising the tax-free personal allowance. When we entered Government in 2010, it was £6,475. After six years, it is now £11,000, and will rise to £11,500 in April. As a result, we have more than halved the tax bill of someone with a salary of £15,000 to just £800. That is a massive boost to the incomes of low and middle earners. Since 2010, we have cut income tax for 28 million people and taken 4 million people out of income tax altogether. I can confirm today that, despite the challenging fiscal forecasts, we will deliver on our commitment to raise the allowance to £12,500, and the higher rate threshold to £50,000, by the end of this Parliament. Once that £12,500 has been reached, the personal allowance will rise automatically during the 2020s in line with inflation, rather than the national minimum wage, as currently planned. It will be for the Chancellor to decide from year to year whether more is affordable.
As well as taking millions of ordinary people out of tax, we are the Government who introduced the national living wage and gave a pay rise to over 1 million workers. [Interruption.] Labour Members don’t like it—a Tory Government gave a pay rise to over 1 million of the lowest-paid workers. We are the Government who introduced 15 hours a week of free childcare for all three and four-year-olds, and we will double that for working families from September. We are the Government whose education reforms have raised standards and expanded opportunity, with 1.4 million more children now in “good” or “outstanding” schools, while the new capital funding I have provided today for grammar schools will help to continue that trend. We are the Government who pledged to invest in our NHS, and we are delivering on that promise by backing the NHS’s “Five Year Forward View” plan for the future with £10 billion of additional funding by the end of 2020-21. But we recognise that more needs to be done to help families make ends meet and to ensure that every household has opportunities to prosper. So today I can announce that the national living wage will increase from £7.20 to £7.50 next April. That is a pay rise worth over £500 a year to a full-time worker.
Creating jobs, lowering taxes and raising wages address directly the concerns of ordinary families, and the revenue-raising measures that I have announced today enable me to go further to help families on low wages. Universal credit is an important reform to our benefits system and is designed to make sure that work always pays. We want to reinforce that position. I have considered very carefully the arguments made by my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and others, and weighed them carefully against the fiscal constraints, and I have concluded that from April we can reduce the universal credit taper rate from 65% to 63%. This is effectively a targeted tax cut that will be worth £700 million a year by 2021-22 for those in work on low incomes. It will increase the incentive to work and encourage progression in work, and it will help 3 million households across our country.
We believe that a market economy is the best way of delivering sustained prosperity for the British people. We will always support a market-led approach, but we will not be afraid to intervene where there is evidence of market failure. We will look carefully over the coming months at the functioning of key markets, including the retail energy market, to make sure they are functioning fairly for all consumers. In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, despite attempts to regulate them, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees. So I can announce today that we will ban fees to tenants as soon as possible. We will also consult on how best to ban pension cold calling and a wider range of pension scams.
We can also help today those who rely on the income from modest savings to get by. Low interest rates have helped our economy to recover, but they have significantly reduced the interest people can earn on their cash savings, so we will launch a new, market-leading savings bond through NS&I. The detail will be announced at the Budget, but we expect our new investment bond will have an interest rate of around 2.2% gross and a term of three years. Savers will be able to deposit up to £3,000, and we expect around 2 million people to benefit.
The announcements I have made today lower taxes on working people, boost wages, back savers and bear down on bills. In early 2017, we will begin the roll-out of tax-free childcare across Britain, providing a saving of up to £2,000 per child. Once it is rolled out, we pledge to keep it under review to ensure that it is indeed delivering the support that working families need.
There is one further area of household expenditure where the Government can help. The oil price has risen by over 60% since January, and sterling has declined by 15% against the dollar. That means, of course, significant pressure on prices at the pump here in Britain, so today we stand on the side of millions of hard-working people in our country by cancelling the fuel duty rise for the seventh successive year. In total, this saves the average car driver £130 a year and the average van driver £350 a year. This is a tax cut worth £850 million next year and means that the current fuel duty freeze is the longest for 40 years.
I have one further announcement to make. This is my first autumn statement as Chancellor. After careful consideration and detailed discussion with the Prime Minister, I have decided that it will also be my last. I am abolishing the autumn statement. [Hon. Members: “Hear, hear.”] No other major economy makes hundreds of tax changes twice a year, and neither should we, so the spring Budget in a few months will be the final spring Budget. Starting in autumn 2017, Britain will have an autumn Budget announcing tax changes well in advance of the start of the tax year. From 2018, there will be a spring statement responding to the forecast—[Laughter.]
Mr Speaker
Order. The House is in a great state of emotion. Some people are very easily humoured. I am glad they are so humoured, but we must hear the Chancellor.
Mr Hammond
Perhaps they should have read their briefing, Mr Speaker, because they might then have remembered that Parliament has mandated the OBR to produce a report to Parliament twice a year and has mandated the Government to reply. From 2018, therefore, there will be a spring statement responding to the forecast from the OBR but no major fiscal event. If unexpected changes in the economy require it, I will of course reserve the right to announce actions at the spring statement, but I will not make significant changes twice a year just for the sake of it. This change will allow for greater parliamentary scrutiny of Budget measures ahead of their implementation. It is a long-overdue reform to our tax policy-making process and brings the UK into line with best practice recommended by the IMF, the Institute for Fiscal Studies, the Institute for Government and many others.
The OBR report today confirms the underlying strength and resilience of the British economy. This autumn statement responds to the challenge of building on that strength, while also heeding the warnings in the OBR’s figures, as we begin writing this new chapter in our country’s history. It re-states our commitment to living within our means and sets out our choice to invest in our future. It sends a clear message to the world that Britain is open for business and it provides help to those who need it now. We have made our choices and set our course. We are a great nation, bold in our vision, confident in our strengths and determined in our ambition to build a country that works for everyone. I commend this statement to the House.
John McDonnell (Hayes and Harlington) (Lab)
This morning, we heard the verdict from the trial, following the tragic murder of Jo Cox. That murder robbed this House of a fierce advocate for social justice and a passionate campaigner. Her killing was an attack on democracy itself. Our thoughts are with her family.
Today’s statement places on record the abject failure of the last six wasted years, and offers no hope for the future. The figures speak for themselves. Growth is down; wage growth, down; business investment, down. [Hon. Members: “Sit down.”] The Government’s own deficit targets are failed; the debt target, failed; the welfare cap, failed.
Mr Speaker
Order. Let me say now that if Members from either side want to shout out, they should not bother to stand, because they will not be called. I say that to Members on both sides—stop it. It is juvenile, low grade and hugely deprecated by the public, whose support we should be seeking and whom we should try to impress, not to repel.
John McDonnell
Thank you, Mr Speaker.
We have heard today that there will be more taxes, more debt and more borrowing. The verdict could not be clearer. The so-called long-term economic plan has failed. As the Treasury’s own leaked paper reveals, the Government knew it had failed before the referendum result was announced. We now face Brexit—the greatest economic challenge of a generation—unprepared and ill equipped. The new Chancellor acknowledged the failure of the economic strategy in October when he promised a reset of economic policy.
Today, we expected a change of direction after those six wasted years. Instead, we have seen further cuts to earnings for those in work through cuts to universal credit, and a living wage increase that is lower than expected under the previous Chancellor. This is a new Conservative leadership with no answers to the challenges facing our country following Brexit, and no vision to secure our future prosperity.
Labour respects the decision of the British people to leave the European Union, but the chaotic Tory handling of Brexit threatens the future prosperity of this country. The Chancellor must now do the right thing for British workers and businesses. He must insist on full, tariff-free access to the single market. He and the Treasury know that that is what will get the best deal for jobs and prosperity here. It may not be in the Chancellor’s nature, but in the national interest I urge him to stand up to the Prime Minister and the extreme Brexit fanatics in her Cabinet. If he stands up for British businesses and jobs by fighting for single market access, he will have our full support.
After six wasted years, wages are still lower than they were in 2008. Self-employed people are, on average, paid less than they were a generation ago. Six million people are earning less than the living wage. Too many people are having to worry about buying school uniforms, affording a family holiday or even just paying the rent or mortgage.
We have had a month of briefing from the Conservative party on those people who are called “just about managing”—the JAMs. To the Conservative party, these people are just an electoral demographic. To us, they are our friends, our neighbours and the people we represent. Let me tell the House why those people are just managing. It is the result of Tories imposing austerity on an economy that could not bear the strain. We have seen productivity stagnate, but there is nothing in the autumn statement on the scale needed to overturn those six wasted years.
If the Chancellor really wants to make a fairer tax system as well, he can start by bringing back the 50p tax rate for the richest in our country. We have heard familiar hollow rhetoric from the Tories on tax avoidance, when they have cut the resources of Her Majesty’s Revenue and Customs—the very people who collect these taxes. The resources available to HMRC today are 40% less than they were in 2000.
The Chancellor has frozen in-work benefits at a time when food prices are rising and we do not expect wages to keep up. We need an economy that is fundamentally more prosperous and where prosperity is, yes, shared by all. The increases in the national living wage announced today are lower than expected and leave the poorest-paid workers still earning less than they need to live on. So I ask the Chancellor to adopt a real living wage level, as Labour has pledged, and abandon his predecessor’s empty rhetoric.
Regrettably, the Chancellor is still going ahead with some of the cuts to universal credit. Thanks to pressure—I pay tribute to Members of all parties who have campaigned on this issue—he is offering to soften the blow. We do not want the blow softened; we want it lifted altogether. Today’s changes will leave a single parent on average at least £2,300 worse off. These are the very people who are working hard to deliver for their families, and the Government are betraying them.
People with disabilities, who have been put through the ordeal of the discredited work capability assessment and are trying to get themselves ready to return to work—they are “just about managing”—still remain in the Chancellor’s firing line. He is cutting £30 a week from the support that these disabled people receive. In our society, that is scandalous.
Those who are “just about managing” also rely on our public services. They send their children to local schools; they depend on their local hospital; they rely on local council services to clean their streets, tend to their parks and playgrounds and open their libraries. The reality, however, after six wasted years is that our public services are just not managing. Today, the childcare that parents rely on remains underfunded, as the Public Accounts Committee has reported—and it will remain underfunded, even after today’s announcements.
I want to pay tribute to my hon. Friends the Members for Swansea East (Carolyn Harris) and for Erith and Thamesmead (Teresa Pearce) for the important work they did in bringing the issue of child burial fees to public attention. I ask the Government to do the right thing on child burial fees and reconsider making funding available for families in these desperate circumstances.
Councillors from all political parties are reporting that they are at a tipping point in the provision of social care. The previous Chancellor cut nearly £5 billion from social care, meaning that over 1 million people who need care are not getting it. They are not even “just about managing”, and they got little help today. We call for additional support for social care, because the funding being provided today is only a stop-gap measure. Our social care system will not be secure without long-term funding. Tonight, many elderly people will remain trapped in their homes, isolated and lonely, lacking the care they need because of continuing cuts to social care—and social care cannot be cut without also hitting the NHS.
The supposed £10 billion funding allocated to the NHS is a restatement of an earlier commitment, but the Health Committee described this £10 billion claim as “misleading and incorrect”. The real amount is less than half that claimed. As a result, we now have 3.9 million people on NHS waiting lists—more than ever—and many of those 3.9 million people are waiting in pain, and they got no relief today. Across the country, hospitals face losing their A&E units, their maternity units and their specialist units. This Tory Government are failing patients, as well as failing the dedicated NHS staff who serve us so well. This is the first time that healthcare spending per head has declined since the NHS was created, and I fear there will be a crisis in funding and care over this Christmas. The NHS cares for us, and we should care for the NHS.
Members of this Government have also overseen the biggest real-terms cuts in education for four decades. One pound in every seven has been cut from further education college budgets, and Conservative policy has saddled a generation of students with a lifetime of debt. How can a Government seriously talk about supporting a 21st-century economy when they are planning to pour tens of millions into the failed 20th-century policy of grammar schools, segregating our children at an early age?
As for housing, the Chancellor announced today that he was scrapping “pay to stay” proposals and letting agents’ fees—a U-turn that is a victory for Labour’s campaigns against both the “tenant tax” and letting fees. The Chancellor has spoken before about the dream of home ownership for the young. Nothing that he has announced today is of the scale that is needed to suggest that that will remain anything other than a dream. The hard facts are these. The Government of which the Chancellor was a member built fewer homes than had been built at any point since the 1920s, and there are now a third of a million fewer home owners under the age of 35. Today the Chancellor could have delivered the scale of investment that is required to build the homes that we need and to create a new generation of home ownership. He significantly failed to do so.
Thanks to campaigning by my right hon. Friend the Member for Wentworth and Dearne (John Healey), the Wentworth Woodhouse building will be saved. I am grateful for that. The accusation was that a Labour Government had sited an opencast mine near the building and threatened it. That, I believe, was in 1947. I only wish that some of the policies pursued by Tory Governments since the 1950s could be reversed so easily.
The Government’s biggest investment failure is this: the Chancellor has failed to address properly the Government’s most consistent shortcoming. His predecessor cut public investment to the lowest that it had been since the 1990s. Instead of delivering the ambitious investment that our economy needs throughout the country, the Chancellor has failed to recognise the scale of the challenge. He also risks repeating the mistakes from last year, with the national flood resilience plan failing to provide the protection that our communities need.
Just one in five of the projects in the investment pipeline is under construction, and shovel-ready projects worth £82 billion are still being delayed. The infrastructure gap between London and the rest of the country remains unbridged. London was scheduled to receive 12 times as much public investment per head as the north-east of England. The announcement of a £1.1 billion investment in transport is a reannouncement. The Oxford-Cambridge rail link is significantly delayed against Network Rail’s original planned completion date of March 2019. There are no new ideas here, just a promise to deliver what the Government have previously failed to deliver. This is press-release policy-making, not provision. All that we need now is the return of the high-vis jacket.
The “fourth industrial revolution” will not be delivered on delays, old news and reannouncements. The Government have, at last, realised their mistake, and now talk about an industrial strategy—words that Ministers refused even to refer to in the past—but it is not enough to change a few ministerial titles. The Government and the Chancellor need to deliver. We have yet to see the proposed Green Paper on industrial strategy that was promised over the summer.
The same Government who now talk up high-tech investment oversaw a real-terms cut of £1 billion in science funding during the last Parliament. The OECD recommends that developed countries should be spending 3% of GDP on science. On the basis of what we have heard today, the new spending will lift our expenditure from 1.7% of GDP to a mere 1.8%.
It is the same familiar story for business. The Chancellor is continuing the race to the bottom on corporation tax, and, while continuing the cuts in public services, he is cutting taxes for big business. We know that it is not headline tax rates that encourage long-term investment by businesses. Business investment has been revised down every year under this Government. What encourages businesses to invest is the knowledge that they have access to skilled workers, world-class infrastructure and major markets.
Today’s grim economic forecasts reveal the challenge that lies ahead. The Chancellor admitted over the summer that it was time for a change of course. He has now had to abandon the Government’s fiscal charter, with its failed hard surplus target. Labour warned that a hard surplus target lacked the flexibility to adapt to economic circumstances and the capacity to allow investment. The Chancellor’s U-turn today demonstrates just how right we have been over the past year.
Only weeks ago, the Prime Minister offered the hope of change and the Chancellor offered to “reset” economic policy. Today, we have seen the very people whom the Prime Minister promised to champion betrayed. The Chancellor has failed to break with the economic strategy of austerity. The country remains unprepared and ill-equipped to meet the challenges of Brexit and secure Britain’s future as a world-leading economy. I fear that, after all the sacrifices that people have made over the last six years, today’s statement has laid the foundations for more wasted years. Only a Labour Government will deliver on the ambition and vision to rebuild and transform our economy so that no one and no community is left behind.
Mr Speaker
That was a splendidly pithy answer, but questions are becoming rather long. There are still nearly 50 Members seeking to contribute, and I am keen to accommodate them, but I can do so only if people can—to put it bluntly—abandon the preamble and get on with the pithy, preferably single-sentence, inquiry. I am sure that we can led in this by Caroline Lucas.
Caroline Lucas (Brighton, Pavilion) (Green)
Thank you, Mr Speaker.
Disappointingly, this Chancellor has joined his predecessor in failing to mention the words “climate change” even just once anywhere in the statement. That is in the year that is set to be the hottest on record, when parts of the country are under floodwater. Can he justify continued handouts to the oil and gas sector when there is no assurance of support for clean energy post-2020, no reversal of the critical solar tax hike, and nothing on keeping homes warm this winter?
Mr Hammond
If the hon. Lady looks carefully at the statement, she will see that I did announce significant additional funding to pursue ultra-low emission vehicles. That is an area in which the UK is already a technology leader. I have also announced today that, from next April, there will be 100% first-year allowances on all electric charging infrastructure. We know that the biggest deterrent to moving to electric vehicles is the fear of being unable to charge them. Getting a widespread charging network rolled out will allow us to meet our ambition to electrify the fleet.
Several hon. Members rose—
Mr Speaker
I must advise the House that I have noticed a growing split within the Chamber between the glowerers and the smilers—Members deploying different techniques in a bid to be called. Some have very beatific smiles and others—
Several hon. Members rose—
Mr Speaker
From the abundance of smiling Scottish nationalist countenances, I choose Mr George Kerevan.
George Kerevan (East Lothian) (SNP)
I congratulate the Chancellor on abolishing the autumn statement and the spring Budget, and introducing a spring statement and an autumn Budget. I trust that that is not his definition of productivity. The OBR central forecast suggests that after 2019 there will be a precipitate fall in the contribution by business investment to GDP growth. In addition, there will be a negative contribution from trade. Does that not suggest that when Britain leaves the single market—if we are taken out of the single market—the only thing between a recession and growth will be public expenditure and an overheated housing market?