Long-term Economic Plan

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 21st July 2015.

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Photo of Simon Burns Simon Burns Conservative, Chelmsford 11:30 am, 21st July 2015

What progress he has made on his long-term economic plan.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

The long-term economic plan is working, but when it comes to building a Britain that lives within its means, we now need to finish the job. Today I am launching the spending review, which will support our priorities such as the national health service and national security. Savings will have to be made in other areas, but we have shown that, with careful management of public money, we can get more for less, and give working people real control over the decisions that affect them and their communities. The spending review will deliver better government and economic security, and the results will be announced to the House on 25 November.

Photo of Simon Burns Simon Burns Conservative, Chelmsford

The summer Budget took clear steps towards the delivery of a higher-wage, lower-tax, lower-benefits society, with the new national living wage as the centrepiece. Does that not clearly demonstrate that the Conservatives are the natural party for hard-working people and their families?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My right hon. right Friend is absolutely right. We are building the higher-wage, lower-tax, lower-welfare economy that our country needs if it is to compete in the future and give real opportunities to working people. The new contract that we offer is this: businesses will pay higher wages and pay lower taxes and people will receive bigger pay cheques, but there will be lower welfare. That, I think, is a contract that the British people support.

Photo of Barry Sheerman Barry Sheerman Labour/Co-operative, Huddersfield

The Chancellor’s plan will not look very well planned or very long if it does not include some reference to productivity, higher-quality management, and, indeed, manufacturing. What is he going to do about those key issues?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

We entirely acknowledge that we need to improve the productivity of the British economy. That is why, after the Budget, we published the productivity plan, which will introduce, for example, an apprenticeship levy to ensure that young people are given the skills and training that they need, and roads funds that will help to ensure that we have the right infrastructure for our country’s future.

As the hon. Gentleman acknowledged this morning in an interesting tweet, I think it was, the Labour party is going back to the 1980s. Those were his words. Unfortunately, the sensible voices of the old intake—

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

—are being drowned by those of the new intake.

Photo of Andrew Tyrie Andrew Tyrie Chair, Treasury Committee, Chair, Treasury Committee, Chair, Parliamentary Commission on Banking Standards (Joint Committee)

I am sorry about that, Mr Speaker. I thought that the Chancellor was just getting into gear.

Growth will, of course, depend partly on what the Bank of England does. Over the past five years, the Chancellor and Parliament have granted the Bank huge new powers over not only monetary but, in particular, financial policy, which directly affect millions of people. Does that not make the reforms of the way in which the Bank runs itself that the Chancellor will propose, along with greater accountability for its new board—for which the Treasury Committee, among others, has been pressing for a long time—all the more essential?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I pay tribute to the work that was done during the last Parliament by the Treasury Committee, some of whose members are still in their posts, and I again congratulate my right hon. Friend on remaining Chair of that Committee. Today we are publishing the consultation document on the new Bank of England Bill, which will come before Parliament in due course. The Bill follows the reforms announced by the Governor of the Bank, which built on the work done by the Treasury Committee and others. It will ensure that a modern Bank of England is able to exercise the leadership that is required for the delivery of economic and financial stability. Moreover, for the first time—this is crucial, and I think that Parliament will appreciate it—the Bank will be open to the advice of the National Audit Office, and the value for money that that can deliver.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

The success of the economic plan, long-term or otherwise, and the potential to improve productivity must be driven in part by sustained infrastructure capital investment, so can the Chancellor confirm that, instead of doing that, the plans he laid out in the summer Budget show total capital expenditure down every single year between 2015 and 2019-20 compared with the March Budget?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

We made some in-year savings in this financial year in capital budgets that were not going to be well spent. We want to deliver value for money for Scottish taxpayers, as well as for taxpayers across the United Kingdom, but we will be spending more as a percentage of national income on capital investment in this decade than occurred under the last Labour Government.

Photo of Stewart Hosie Stewart Hosie SNP Deputy Leader, Shadow SNP Westminster Group Leader (Economy), Deputy Leader, Scottish National Party

That is a fascinating answer, because of course the real answer is that in cash terms the spending is down—from 2015-16 onwards down £1.2 billion, £0.8 billion, £0.9 billion, £0.7 billion, and £1.3 billion by the time we get to 2019-20. So we know the forecasts are reduced, we know the Chancellor is cutting more than he needs in order to run a balanced budget, and we know he is undermining the potential for long-term growth, so why did he ignore all the advice, particularly from the OECD who told him two days before the Budget that “gross investment is low” and

“Transport infrastructure investment is poor?

Does he really expect us to believe every—

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

We are investing a record amount in our transport system, and the new roads fund will help with transport investment in England, but there will be consequentials and money for Scotland as well. I make this general observation to the hon. Gentleman: if the Scottish Government think we are not spending enough in Scotland, they can raise taxes on the Scottish people and spend all the money in Scotland. They should have the courage to make that argument to the Scottish people.

Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon

My constituents would like to commend the Chancellor on the long-term economic plan, which is seeing great success in Wimbledon. Does he agree that the Budget measures, such as the apprenticeship levy and the drop in corporation tax, provide an incentive for employers to take on more apprentices and to reduce the productivity gap in the economy, and see further success in the long-term economic plan?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I thank my hon. Friend for the support he has given and welcome the fact that the people of Wimbledon understand that economic security is the bedrock on which we can support the aspirations of working people. The apprenticeship levy addresses the key problem of the lack of skills in the British economy that has bedevilled us for decades. We are now going to introduce a system whereby companies that train their workforces get rewarded, and companies that do not have to make a contribution to the training that they free-ride off.

Photo of Chris Leslie Chris Leslie Shadow Chancellor of the Exchequer

Was it always part of the Chancellor’s long-term plan to scrap the maintenance grants for students from lower-income backgrounds? The Institute for Fiscal Studies said this morning that this change

“will raise debt for the poorest students, but do little to improve Government finances in the long run.”

Can the Chancellor tell us why this was not in his manifesto?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

We put building a first-class university system right at the heart of our manifesto, and I think the person who made the best observation about this is the person the hon. Gentleman is backing for the leadership of the Labour party: Yvette Cooper. This is what she said in the House of Commons in 1998 when the last—[Hon. Members: “1988?”] There was a Labour Government then, who abolished grants and introduced loans, and this is what she said:

“I ask the House, having listened to the debate this evening, not to vote for” maintenance grants which have

“not helped my constituents, but to take the radical approach, to go for the new, fair student loan system”.—[Hansard, 8 June 1998; Vol. 313, c. 831.]

There we have it: support from the right hon. Lady. The hon. Gentleman is old Labour.

Photo of Chris Leslie Chris Leslie Shadow Chancellor of the Exchequer

Well, that fell a bit flat. I was asking about the Chancellor’s manifesto and what he promised. Taking away maintenance grants was always part of his plan wasn’t it, but he did not have the guts to tell students and their families before an election? However much he spins it, he is hitting students with more fees, more repayments and more debt—much more debt. Will he confirm that the poorest students will graduate not with the current £40,000 of debt, but now with an average of £53,000 of debt?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

We are increasing the maintenance support that students have. We heard all that in the previous Parliament, when the Opposition said our reforms would put off people from low-income backgrounds going to university. In fact a record number of students from low-income backgrounds are now going to university. The Labour party that he is a member of once supported getting rid of grants and introducing loans, but this shows the distance it has come—that it now opposes this measure to support our university system. It has a new intake of old Labour MPs dragging them back to the 1980s, and we know the direction they are heading in: left, left, left—away from the centre ground of British politics and away from support for working people.