Economic and Fiscal Outlook — House of Commons, 2018-04-30
Topic: Macroeconomics
Elizabeth Mary Truss (Conservative, Centre-right): I beg to move, That this House approves, for the purposes of Section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment of the medium term economic and fiscal position as set out in the latest Budget document and the Office for Budget Responsibility’s most recent Economic and Fiscal Outlook and Fiscal Sustainability Report, which forms the basis of the United Kingdom’s Convergence Programme Of course, we all look forward to the day when we have left the European Union and we no longer have to file this report. But while we are in the European Union, it is a legal requirement, as part of the stability and growth pact, to present our economic and budgetary plan. Owing, to the opt-out that we negotiated in the 1990s, there are no sanctions or actions should items of the plan not be met. In fact, the only stated requirement is to endeavour to avoid excess deficit. Now, that is something of which I approve anyway and with which we are happy to comply I am proud to talk about the record of this Government over the last eight years. We have reduced the deficit by three quarters and have now reached the turning point of debt falling as a share of the economy, which will happen in this financial year. As the Chancellor said in the spring statement, we are now in a much healthier position, but it is very important that we do not abandon this fiscal discipline In 2010, the economy was on its knees. We had the highest level of deficit since the second world war, youth unemployment was rising and 1.4 million people were left on the scrap heap. Since then we have turned things around, by reforming the economy and with our fiscal plans. There is a record number of new companies; real wages are increasing; we have record levels of employment; and there are positive signs right across the country. These strong economic fundamentals are down to the decisions of this Government We have reformed our welfare system to ensure that it always pays to go to work. We have reformed our education system to make sure that our children and young people have the skills that they need for the modern economy. We have made it easier for companies to take on staff. We have reduced corporation tax. Recently we have seen the two strongest quarters of productivity growth since before the financial crisis. Inflation is set to fall this year and we have seen an easing of pressure on living standards. But despite all this progress, every one of these measures has been opposed by the Labour party The shadow Chancellor has said that he sees business as the enemy. Labour Members have opposed our efforts to make Britain open for business and want to go back to the days of punishing taxes and red tape. They have also opposed our welfare and education reforms. [Interruption.] I hear mutterings from the Opposition Front Bench These reforms have been accompanied by fiscal discipline. Our fiscal strategy has been vital in boosting confidence in the UK economy and enabling growth in the private sector. We have brought down the deficit by three quarters, and at the same time we have maintained high-quality public services. We spend more per student on education than Japan or Germany, and we have seen our results in reading improve against our international peers. Our health spending is higher than the EU average, and we now have record cancer survival rates. Through our fiscal prudence—that phrase used to be popular on the Labour Benches—we have been able to spend targeted amounts of money to boost our productivity. Infrastructure spending will be at a 40-year high as a proportion of GDP by the end of this period. We are tripling the number of computer science teachers and encouraging more students to take maths at a higher level We are now at a turning point. After the highest debt that we have seen in Britain’s peacetime history, we will see debt as a proportion of GDP falling. To people who say that now is the time to turn on the spending taps, I say that would be premature. It is very important that we bring down debt as a proportion of GDP. We know that economies with high levels of debt see a drag on their growth rates and are less resilient to external shocks. We also know that we are spending a huge amount on debt interest. With the debt interest we spend—£50 billion a year—we could completely abolish council tax, business rates or fuel duty.