Budget Resolutions — House of Commons, 2021-10-27
Topic: Macroeconomics
Theresa Mary May (Conservative, Centre-right): I refer the House to my entry in the Register of Members’ Financial Interests First, I commend my right hon. Friend the Chancellor for the good news in the Budget. It is indeed good news that the economy is growing faster than was predicted and it is good news that we are bouncing back from the pandemic not just faster than predicted but faster than other countries in the G7, with the OBR confirming the 6.5% growth that the International Monetary Fund and OECD predicted. It is good news that unemployment is lower than the very dire predictions that we heard at the beginning of the pandemic, largely owing to the action that the Government have taken. It is good news that, as my right hon. Friend announced, the national living wage has increased to £9.50, thereby putting, as he said, just over £1,000 into the pockets of some of the lowest paid. It is also good news for public sector workers that the pay freeze is going to be lifted It is good news that the Chancellor has felt able to announce, albeit over a number of days publicly rather than to the House today, increased spending on issues such as infrastructure, the NHS and science. I agree with my right hon. Friend that we must today start to build the new economy post covid and that we are on the verge of what could be an economy fit for the new age of optimism. Like my right hon. Friend, I have always been optimistic about what can be achieved by the talents, hard work and initiative of the British people and what they can do to build a brighter future for themselves, their families and the country. But the brighter future will not be built simply by telling people that it will be there: a new economy needs sure foundations and optimism needs to be backed by practical delivery As we know, there are headwinds that mean that however optimistic people are for the future, many are finding it difficult to manage today. As the Chairman of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride) said, there is a debate to be had about what is going to happen to inflation and whether higher inflation is here to stay or just temporary. Of course, that will have an impact on interest rates Increased taxes will have both direct and indirect impacts on individuals, as will increased costs in other areas. We must never forget, as the Labour party so often does, that people are hit by increased taxes on business, because those increased costs often cannot be absorbed and are passed through to consumers—to members of the public I welcome the significant cut in the universal credit taper rate announced by my right hon. Friend the Chancellor. It is true to say that it is something that Conservative Governments have been working for, but previous cuts have been rather less dramatic than the one he announced today. What he has done is extremely good news Let me focus briefly on three particular issues in the Budget and spending review, the first of which is the forecast for the future growth of the economy. As I said, yes, we are bouncing back well, but our economy will be smaller for a number of reasons, some of which are specific to the UK, and the predicted rate of growth is below that which would normally be seen as an acceptable growth trend rate I am interested by the fact that the Government appear to think that they can sustain a situation wherein public spending increases by, as I think my right hon. Friend the Chancellor said, 3.8% a year, but the economy grows at less than half that rate. I welcome the fact that my right hon. Friend has introduced new fiscal rules, but I may have misheard or misunderstood: I think he said that the new fiscal rules will be met in the third year of every forecast period, but the forecast period rolls forward every year, which suggests to me that we will never reach the fiscal rules and they will just be rolled forward every year. As the Chairman of the Treasury Committee said, it is not the case that previous Governments have not been guilty of changing the date at which the fiscal rules were going to be met, but it seems to me that, unless I have misunderstood, it is baked in that they never necessarily need to be met The answer to the issue of the balance of increased public spending versus growth is, of course, to increase the growth rate of the economy. I support the desire for a green industrial revolution, but that brings me to my second point: the green industrial revolution is about not just providing support to businesses, to different sectors and to initiatives such as hydrogen. Those moves are important, though, and I welcome the fact that the Minister of State, Department for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) has introduced the Nuclear Energy (Financing) Bill and is finding a way to ensure that the RAB—regulated asset base—financing model will work for new nuclear in future To deliver the green economy of the future, we will have to ensure that we have the green skills of the future, which means that the issue involves not just the Treasury and the Department for Business, Energy and Industrial Strategy but the Department for Education. It is about ensuring that at every stage in our education system we prepare people for the jobs of the future and ensure that they have green skills. There were a lot of references to skills in the financial statement, but I did not hear any specific reference to green skills, which are very important. Young people are hugely enthusiastic about saving the planet, as I know from when I raised the seventh green flag for St Mary’s Catholic Primary School in Maidenhead recently. We need to ensure that young people’s education provides them with what they need to be able to take up the green jobs of the future.