Autumn Statement — House of Commons, 2016-11-23
Topic: Macroeconomics
Stewart Hosie (Scottish National Party, Centre-left): First, may I associate myself with the words of the shadow Chancellor and the Chancellor on the late Jo Cox? May I also thank the Chancellor for what he said about the Tay cities deal? I note that what he said was slightly different from the words in the Red Book, so we will take him at face value from the Dispatch Box. In his attempt to clamp down on evasion, it was disappointing that no reference was made to Scottish limited partnerships. One would have thought that there would be more, too, in terms of fairness overall, and a reference to the Women Against State Pension Inequality campaign and the unfairness for those women The Chancellor gave us plenty of information today, but with no more than a glib reference to being match fit at the beginning and a bit of deflection there was very little on the elephant in the room, which is Brexit. It is not as if the Treasury does not know what the consequences of it will be; its own assessment tells us that tax yields could be down by £66 billion a year after 15 years and GDP down perhaps by 9.5% —a figure confirmed by the London School of Economics—as a result of reduced trade lowering productivity. That amounts to some £6,500 per year per household. So where was the plan to ensure that there is no hard Brexit and to maintain access to the single market? Where was the plan to mitigate the losses in tax yield and GDP? Although the Chancellor said a considerable amount about capital investment and research and development—and I welcome some of it up to a point—where was the fully developed scheme actually to boost productivity We do not go into this next period from a position of strength. As the Chancellor knows, UK GDP is already nearly 20% lower than it would have been had we achieved even a 2% trend growth rate since 2008. Our argument is that the austerity of this Government and the previous Government sucked consumption out of the economy, weakening recovery. This Government are set to repeat the error. Growth barely reaches 2% for the forecast period, and although the Chancellor sensibly did not put a date on it, he is still targeting a surplus in the economy, perhaps again before recovery has been secured I am glad the Chancellor has changed the fiscal charter, because the previous permanent surplus rule, taking £10 billion a year more out than required to run a balanced economy and cutting £50 billion a year more than required to run a balanced current budget, left us with some terrible consequences. As discretionary consolidation, cuts and tax rises took place, the ratio of cuts to tax rises also increased, placing the burden of austerity and an arbitrary fiscal target on the back of the poor. That has made the poorest decile 5% worse off and the richest 10% almost entirely better off. The Government have clearly worked out something, and I welcome the move on the taper, but let us be clear: at 2p in the pound, on the minimum wage that is 14p an hour. It is not a king’s ransom and it will not cure poverty. The squeeze has not been lifted from the poor, and the screw of the welfare cap has not been turned off; this has simply made a brutal regime slightly less brutal I am glad that the Chancellor mentioned the actions of the Bank of England. Our party very much welcomes what the Governor has done. He has introduced an increase in quantitative easing and £60 billion of extra Government bond purchases, made £10 billion available for corporate bond purchases, set a 0.25% base rate and enabled additional term funding to encourage more and cheaper long-term lending from the banks. However, there has been a more or less complete absence of a fiscal policy stimulus to match the incredible monetary policy activism of the central bank The key part of today’s autumn statement—I am pleased to hear that this is the last one; it is my 25th Budget, autumn statement or pre-Budget statement—was the increase in total managed expenditure, but like, for like, it amounts to 1.5% of total managed expenditure over the forecast period from 2015-16 to 2020-21. It is to be welcomed, and it certainly represents a break from the recent past, but it can in no way be described as the sort of fiscal stimulus required to match the monetary policy discipline of the central bank The Chancellor talked about an increase in capital investment, which I very much welcome. He also talked about an increase in funding for research and development. However, given the fact that the description of research and development has changed in the Green Book, as has the description of the UK Trade & Investment funding—he said that there would be a doubling of some aspects of export support—it is hard to tell precisely what the impact of some of those measures will be. Will he tell us what the total increase in cash and percentage terms of this vital export support will be? Will he also tell us what the overall increase in research and development funding will be across the piece? How does he intend to deploy the £23 billion of what he described as capital investment?