Finance Bill — House of Commons, 2020-04-27
Topic: Macroeconomics
Liam Fox (Conservative, Centre-right): It has often been said in this debate that this is the most difficult and unusual backdrop to a Finance Bill that any of us can remember, but at the time of the Budget, the global economy was already slowing. Growth in trade across the globe last year was downgraded from 2.8% to 1.8% to 1.2%, and actually came in at about 0.7%, and global trading growth went negative in the last quarter of 2019. That is unlikely to be reversed, because all of that was pre-covid. It was partly due to US-China trade tensions and partly due to greater protectionism since the global financial crisis, which saw an increase in the number of non-tariff barriers to trade operated by the G20 from 300 in 2010 to 1,200 by 2015. Dependence on global supply chains is not a bad thing, but one of the first lessons that we will have learned in this crisis is that over-dependence on just-in-time supply chains has tilted the pendulum too much towards efficiency rather than towards resilience. I predict that one of the changes that will come in the post-covid economic environment will be a move towards greater stockholding and warehousing I have never been a big believer in the big state. David Cameron once asked me what type of Conservative I thought I was, and I told him that I was an unreconstructed free-market Thatcherite, Unionist, Eurosceptic Atlanticist. I do not believe that we are seeing the re-emergence of the big state that many of my colleagues on the right of politics so fear and that those on the left would love to see, but what we are seeing from this Government is a sensible suspension of the norms so that we can go back to free-market economics. If we had not supported jobs and businesses, we would be seeing not the sort of evolution that we get in a free-market economy, but millions of jobs lost. We would have seen the well-being of families and communities destroyed, the loss of viable businesses, the loss of valuable jobs and a huge burden of the costs of unemployment falling on the taxpayers for absolutely no economic benefit I never imagined that I would be in the House of Commons calling for an increase in Government spending, even a temporary one, but as I used to tell my patients, there is no point in complaining about the air when there is nothing else to breathe. We are in a situation that demands unusual measures, but it is also fair for us to point out to taxpayers that the longer that we have to keep the economy in so-called sleep mode, the higher the cost will be for future taxpayers to bear over a longer period We need to see both domestic and global demand increasing, because there is a link between trade and prosperity and security. Oil demand is 30% below what it was at this time last year. That is great for the countries that import oil, but very bad for the economies of the producers. It is not in our interests globally to see destabilisation in states such as Saudi Arabia, which is what some of this lack of demand will ultimately lead to. We need to support demand, encourage confidence on which that demand rests and promote our own entrepreneurial creativity and talent. I echo the comments of my right hon. Friend the Member for Wokingham (John Redwood) that we need to do everything to promote recovery, which leads me to two brief practical points and one question for my right hon. Friend the Financial Secretary to the Treasury The first is a comment on bank lending. The problem is not that the money is not there and being underwritten by the Government; the problem is the lending criteria being operated by many of the banks, which applies more to some sectors than to others. In the tech sector, for example, the value lies in internet protocol and not in physical assets. That makes it very much more difficult for the sector to borrow against standard bank lending criteria. That needs to be looked at Secondly, I reiterate the points that have already made by some of my colleagues about IR35. Some of our most flexible and resilient workers in our economy are in that grouping, and what we must not do in trying to right a wrong is put them in a position where they are disadvantaged, without sick pay in line with other workers in the economy, for example This is a global pandemic that requires global co-operation. Are we, in the long term, to paralyse the global economy for the emergence of every new virus? Will we be governed in fact by the smallest pathogen on the planet, and if not, how will we develop the protocols that we will need to manage the situation? Globally, we need to find solutions. We will need them to be adhered to, to be transparent and to be verifiable. We cannot deal with these matters as single nation states. We have to find new ways to co-operate in an interdependent global economy. The risks will affect us all. Contagion in one bit of the global economy will affect us all whatever our political beliefs. That is one of the greatest tasks, and I urge my right hon. Friend to take a lead for Britain in that global debate.