Spending Review and Autumn Statement — House of Commons, 2015-11-25
Topic: Macroeconomics
George Gideon Oliver Osborne (Conservative, Centre-right): This spending review delivers on the commitment we made to the British people that we would put security first—to protect our economic security by taking the difficult decisions to live within our means and bring down our debt, and to protect our national security by defending our country’s interests abroad and keeping our citizens safe at home. Economic and national security provide the foundations for everything we want to support: opportunity for all, the aspirations of families and the strong country we want to build Five years ago, when I presented our first spending review, our economy was in crisis and, as the letter said, there was no money left. We were borrowing one pound in every four we spent, and our job then was to rescue Britain. Today, as we present this spending review, our job is to rebuild Britain—build our finances, build our defences, build our society—so that Britain becomes the most prosperous and secure of all the major nations of the world, and so that we leave to the next generation a stronger country than the one we inherited. That is what this Government were elected to do, and today we set out the plan to deliver on that commitment We have committed to running a surplus. Today, I can confirm that the four-year public spending plans that I set out are forecast to deliver that surplus so that we do not borrow forever and are ready for whatever storms lie ahead. We promised to bring our debts down. Today, the forecast I present shows that, after the longest period of rising debt in our modern history, this year our debt will fall and keep falling in every year that follows We promised to move Britain from being a high-welfare, low-wage economy to a lower-welfare, higher-wage economy. Today, I can tell the House that the £12 billion of welfare savings we committed to at the election will be delivered in full, and delivered in a way that helps families as we make the transition to our national living wage We promised that we would strengthen our national defences, take the fight to our nation’s enemies and project our country’s influence abroad. Today, this spending review delivers the resources to ensure that Britain, unique in the world, will meet its twin obligations to spend 0.7% of its income on development and 2% on the defence of the realm But this spending review not only ensures the economic and national security of our country, it builds on it. It sets out far-reaching changes to what the state does and how it does it. It reforms our public services so that we truly extend opportunity to all, whether it is in the way we educate our children, train our workforce, rehabilitate our prisoners, provide homes for our families, deliver care for our elderly and sick, or hand back power to local communities. This is a big spending review by a Government that do big things. It is a long-term economic plan for our country’s future Nothing is possible without the foundations of a strong economy, so let me turn to the new forecasts provided by the independent Office for Budget Responsibility, and let me thank Robert Chote and his team for their work. Since the summer Budget, new economic data have been published which confirm this: since 2010, no economy in the G7 has grown faster than Britain. We have grown almost three times faster than Japan, twice as fast as France, faster than Germany and at the same rate as the United States. That growth has not been fuelled by an irresponsible banking boom, like in the last decade. Business investment has grown more than twice as fast as consumption, exports have grown faster than imports, and the north has grown faster than the south. For we are determined that this will be an economic recovery for all, felt in all parts of our nation, and that is already happening In which areas of the country are we seeing the strongest jobs growth? Not just in our capital city—the midlands is creating jobs three times faster than London and the south-east. In the past year, we have seen more people in work in the northern powerhouse than ever before. Where do we have the highest employment rate of any part of our country? In the south-west of England. Our long-term economic plan is working But the OBR reminds us today of the huge challenges we still face at home and abroad. Our debts are too high; and our deficit remains. Productivity is growing, but we still lag behind most of our competitors. I can tell the House that, in today’s forecast, the expectations for world growth and world trade have been revised down again. The weakness of the eurozone remains a persistent problem, and there are rising concerns about debt in emerging economies. These are yet more reasons why we are determined to take the necessary steps to protect our economic security That brings me to the forecasts for our own GDP. Even with the weaker global picture, our economy this year is predicted to grow by 2.4%. Growth is then revised up from the Budget forecast in the next two years to 2.4% in 2016 and 2.5% in 2017. It then starts to return to its long-term trend, with growth of 2.4% in 2018 and 2.3% in 2019 and 2020. That growth is more balanced than in the past. Whole economy investment is set to grow faster in Britain than in any other major advanced economy in the world this year, next year, and the year after that When I presented my first spending review in 2010 and set this country on the path of living within its means, our opponents claimed that growth would be choked off, a million jobs would be lost and inequality would rise. Every single one of those predictions has proved to be completely wrong. So, too, did the claim that Britain had to choose between sound public finances and great public services. It is a false choice; if we are bold with our reforms we can have both. That is why, while we have been reducing Government spending, crime has fallen, a million more children are being educated in good and outstanding schools, and public satisfaction with our local government services has risen. That is the exact opposite of what our critics predicted. Yet now, the same people are making similar claims about this spending review, as we seek to move Britain out of deficit and into surplus, and they are completely wrong again The OBR has seen our public expenditure plans and analysed their effect on our economy. Its forecast today is that the economy will grow robustly every year, living standards will rise every year, and more than a million extra jobs will be created over the next five years. That is because sound public finances are not the enemy of sustained growth; they are its precondition. Our economic plan puts the security of working people first, so that we are prepared for the inevitable storms that lie ahead. That is why our charter for budget responsibility commits us to reducing the debt to GDP ratio in each and every year of this Parliament, reaching a surplus in the year 2019-20 and keeping that surplus in normal times. I can confirm that the OBR has today certified that the economic plan we present delivers on our commitment That brings me to the forecasts for debt and deficit. As usual, the OBR has had access to both published and unpublished data, and has made its own assessment of our public finances. Since the summer Budget, housing associations in England have been reclassified by our independent Office for National Statistics and their borrowing and debts been brought on to the public balance sheet, and that change will be backdated to 2008. This is a statistical change and therefore the OBR has re-calculated its previous Budget forecast to include housing associations, so that we can compare like with like. On that new measure, debt was forecast in July to be 83.6% of national income this year. Now, today, in this autumn statement, the OBR forecasts debt this year to be lower at 82.5%. It then falls every year, down to 81.7%—