Economy and Jobs — House of Commons, 2017-06-29
Topic: Macroeconomics
Philip Hammond (Conservative, Centre-right): I want to make a little progress, but I will give way in a moment I have set out our record, but the British people did not get where they are today by admiring their achievements. We have work to do: we have to negotiate our future relationship with the EU; we have to enhance our global competitiveness through raising our productivity; we have to rise to the challenge of sustaining our public services in the face of demographic pressure; we have to address the needs of our population for affordable routes into home ownership; and we have to show the courage and vision to grasp the opportunities ahead. We will meet those challenges head on, as we have always done, with a plan that builds on the strengths of our economy, not one that denigrates them Let me say something about our public services and their funding. We all value our public services and the people who provide them to us. Health and social care, education, roads, local authority services, police, fire and rescue, defence and the many, many other services we enjoy all form part of the vital fabric of our society and contribute to the vibrancy of our communities. The challenge of funding those public services is accentuated by the changing age profile of the population, which necessitates a proper debate about how to make the funding of public services sustainable not just next year, but over the decades of demographic change to come. We have to be clear about the choices and what they mean because there are no free lunches or money trees in the real world, and all decisions have consequences There are three ways for the Government to increase spending on public services: higher taxes, higher borrowing or higher growth. Higher taxes have a cost in terms of business investment, economic growth and take-home pay. Conservatives are instinctively in favour of keeping taxes as low as possible so that business can continue to create high-quality jobs and hard-working people can keep more of the money that they earn. That is why we reject Labour’s manifesto plan, which would, according to the IFS, take taxation to its highest ever peacetime level. The right hon. Member for Hayes and Harlington is not listening, but—[Interruption.] Pay attention. If he wants to make the case for higher taxation to fund public services, will he at least make this a grown-up debate? Will he at least ask voters whether they want to pay higher taxes to fund public services, not whether they would like someone else to pay higher taxes? As Ed Balls reminds us, in the real world, it is ordinary people who pay. When we already have an eye-watering amount of debt, higher borrowing makes our economy vulnerable to future shocks. With £1.7 trillion of national debt outstanding and an annual interest bill of £50 billion, even at the current low rates, we should be reducing debt, not increasing it. However, borrowing means something else, too. It means that we are asking the next generations—our children and our grandchildren—to consume less in their lifetimes to pay for our consumption today. That is simply not fair; it is the opposite of sustainable.