Budget Responsibility and National Audit (Fiscal Mandate) Bill [HL] — House of Lords, 2016-09-09
Topic: Macroeconomics
George Young (Conservative, Centre-right): My Lords, we are all grateful to the noble Baroness, Lady Kramer, for introducing and speaking to her Bill and for giving us an opportunity to discuss how best we can secure the strength and stability of our economy. In this debate, we have heard a lot of helpful suggestions and ideas, which I know the Chancellor will want to take on board as he thinks about his Autumn Statement. I will try to deal with many of the points raised, but if I do not I will of course write. I am grateful to the noble Lord who has just spoken for his welcome. He may recall that we were once on the same side. In 1974, we were both in the parliamentary football team. I remember that I was, uncharacteristically, playing on the left wing but he was by far the most professional player on the team. I hope I enjoy encountering him 40 years later in a somewhat different capacity I turn to the three principles the noble Baroness has set out in her Bill and, on a consensual note, assure her that these are right at the heart of our economic policy. First, we share her enthusiasm for investment in the infrastructure we all rely on in our daily lives. We share her commitment to providing support and opportunities to young and old alike and we share her determination to ensure that our economy remains competitive in an increasingly competitive world economy. At the end of Clause 1—which the noble Baroness did not touch on—we also agree that it is sensible to consult independent experts as we develop our policies. On those broad objectives, there is not a cigarette paper between us Picking up on some of the points she made in her speech, the noble Baroness did less than justice to the progress that the Government have made and are continuing to make on the three topics of her Bill. On infrastructure, there are challenges ahead but we have made good progress since 2010 with more than a quarter of a trillion pounds invested in the past six years and 3,000 projects completed across the country, including dozens of major road and local transport schemes. The noble Baroness should be congratulated on her role in contributing to this when she was Minister for Transport. We have seen 3.5 million premises get access to superfast broadband for the first time ever; 175,000 homes better protected from floods; and, crucially, 700,000 new homes built since 2010, with housing completions at an eight-year high. So we have made progress to date, but we have a long way to go. Some £100 billion is committed to infrastructure over the course of this Parliament, including the biggest investment in transport in generations. HS2, a project the noble Baroness strongly supports, is part of that. Then there is £8 billion over the next five years to build an extra 400,000 affordable homes Intergenerational fairness is already in the charter: it is one of the first objectives in Chapter 3.1, so to some extent that particular amendment is redundant. The crucial way we help the younger generation is to pay down the national debt, not allow it to pile up and just pass it on to the next generation to deal with. That is why we have worked so hard to cut the deficit from its highest in our peacetime history by almost two-thirds On the younger generation, challenges lie ahead, too. However, we have raised the school-leaving age to 18 and have seen record university application rates from young people, including those from disadvantaged backgrounds. We are committed to delivering 3 million apprenticeship starts by 2020 and we are helping more young people to save for their futures through the lifetime ISA The third element of the noble Baroness’s Bill is economic competitiveness, where progress has been and is being made. We have cut corporation tax to 20% and will take it further, to 17%, while at the same time cutting business rates and employer national insurance contributions. As I said, we are in agreement. The noble Baroness put a slightly different complexion from mine on what we have done to date, and I hope mine has put it in a better perspective. She started her speech by pointing out the change in objective in fiscal policy in that capital spending is now included in the target. This was also mentioned by the noble Lord, Lord Bilimoria. That was a manifesto commitment by my party. We said that we, "will ensure that in normal economic times, when the economy is growing, the government will always run a surplus in order to reduce our national debt and keep our economy secure" That was incorporated in the draft charter and then the 2015 charter, and endorsed by the House of Commons on 14 October. However, as the noble Baroness will know, it is qualified by the significant negative-shock provision, whereby, if real GDP growth of less than 1% on a rolling four-quarter basis happens, that discharges the immediate obligation. If one looks at the August inflation report of the Bank of England, forecasting growth of 0.8% next year, it looks as if the negative-shock provision will be activated. The Chancellor has made it clear that he is no longer pursuing the objective of headline surplus by the end of this Parliament, consistent with the provisions that I have just read out, and he will plan to set out future plans in the Autumn Statement The noble Lord, Lord Bilimoria, spoke about the independence of the OBR. The Budget Responsibility Committee of the OBR makes all its judgments in its forecasts independently and confirms this at the publication of every forecast. The OBR’s independent forecasts for the UK economy and public finances allow the Government to fit fiscal policy to a central forecast rather than changing the forecast to suit fiscal plans, which is what used to happen I turn to the principal area of disagreement I have with the noble Baroness, which is whether we need primary legislation to achieve her objectives. It so happens that yesterday I replied to my first debate in the House of Lords in the Moses Room. The QSD in the name of my noble friend Lord Framlingham concerned the need to stem the flood of legislation. During that debate, representatives of all three parties united to beg for restraint in introducing legislation. I can do no better than quote from the noble Baroness’s noble friend Lord Beith, who spoke in that debate. He said: "As a Liberal Democrat, I believe that some degree of restraint is needed when you decide to bring in new laws … You should not bring in laws because you have to be seen to do something" He went on: "Before we start, we should ask: is there anything this Bill can do that cannot be done at least as well under existing law? That is the primary question we should always ask".—[Official Report, 8/9/16; cols. GC 209-10.] Of course, we can do all the things the noble Baroness wants under the existing law. I could not have put the case against proceeding with primary legislation better myself. Therefore, it is the Government’s position that while we back the spirit of the Bill, we do not see the need to legislate for what we are already committed to doing, and what, indeed, any subsequent Government should also do for the greater good of the country Having said that, it would be churlish to sit down before congratulating the noble Baroness and all those who have taken part in this debate on their very helpful contributions on a vital subject.