Charter for Budget Responsibility and Welfare Cap — House of Commons, 2022-01-10
Topic: Macroeconomics
John Philip Glen (Conservative, Centre-right): I would like to start by agreeing with the remarks of the shadow Chief Secretary to the Treasury, the right hon. Member for Wolverhampton South East (Mr McFadden), concerning the great sadness at the passing of Jack Dromey at the weekend. I debated some legislation with him three years ago and he was a man of the greatest integrity. He was one of the best of us and he shall be missed across the House. My thoughts and prayers are with his family, especially the right hon. and learned Member for Camberwell and Peckham (Ms Harman), at this difficult time It is a privilege to close the debate on behalf of the Government and I thank Members, who have made informed contributions. In a few moments, I will turn to the substantive points that they have raised The pandemic has left us with levels of borrowing unparalleled in our peacetime history. Without considered action, something that was necessary in the short term could easily become unaffordable in the long term. The British people look to us now for a clear commitment that we will address that threat. As a Government, we will always be responsible with their money and, once the crisis has passed, deliver on our promise to strengthen the nation’s finances The charter represents a world-leading framework to guide us—a clear path back to fiscal sustainability—and it sets out a route to prosperity. On the one hand, we will get debt falling and rebuild our fiscal defences. On the other hand, we will support the economy to the best of our ability and invest in the future. To do otherwise would mean failing to fulfil our own potential and denying future generations the chance to fulfil theirs. Instead, we choose a plan that will enable us to rebuild the fiscal buffers, create the conditions for a strong economy and deliver on our historically significant investment plans. It also provides a sustainable welfare system while increasing the level of the cap, to reflect the impacts of the pandemic on our society, as the Chief Secretary to the Treasury set out in his opening remarks. In the plainest terms, to vote for the welfare cap motion is to vote simply to increase its level I want to turn now to some of the substantive points made in the debate. I do not recognise the characterisation by my right hon. Friend the Member for Wokingham (John Redwood) of this debate as a "Maastricht tribute debate", but I do recognise his enthusiasm for growth and his desire to target growth. That is obviously a critical element of the Government’s strategy. It is absolutely clear that we need to focus on greater productivity and it is important that, as set out in our plan for growth, with a focus on skills, infrastructure and innovation, we will deliver the key priorities of levelling up and net zero. I do not think that we disagree about the importance of economic growth and productivity, but because of the actions that we took to support our economy, we have been more successful than previously feared in preventing the long-term economic damage of covid. In its latest forecast, the OBR revised down its scarring assumption, from 3% to 2% The remarks of the hon. Member for Glasgow Central (Alison Thewliss) were echoed in part by the hon. Members for Glasgow East (David Linden) and for Cynon Valley (Beth Winter) and the right hon. Member for Hayes and Harlington (John McDonnell). I make it really clear to the House that the £10.5 billion increase to the cap provides the headroom above the forecast to allow for fluctuation in cap spending, and the cap only formally applies in 2024-25. The hon. Lady referred to rolling rules. Obviously, they can absorb some of the shocks and endurable challenges we face. I also draw her attention to the remarks of the Institute for Government: "The rationale for a rolling target is that it provides flexibility should the economic situation change." I turn now to the very thoughtful and characteristically well-informed speech by my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who set out the historic perspective but also recognised the changing macro-economic realities globally I thank hon. Members for their speeches. None of us in this House takes stewardship of the public finances lightly. It is important that we recognise that we take all steps that we can to ensure that this country is set on the right course. Therefore, I commend the motions to the House Question put.