John Redwood
(Wokingham) (Con): It was a pleasure to see our new Speaker in the Chair at
the start of the debate, and I would like to send my congratulations to him
through you, Mr Deputy Speaker. I was delighted at his election, and I am quite
sure that he will be a fair and experienced judge of our affairs and will look
after our House very well.
The recent election and the conversations that I was able
to conduct even more intensively than usual with the electors of Wokingham told
me that they do want some changes. I made promises to them that I would come
here again as an advocate for more money for our local schools, which have been
short-changed in recent years, so it is a pleasure to see in the Gracious
Speech the down payments promised for next year, and I look forward to those
continuing in the years that follow.
My electors and I agreed that we need more money for our
local surgeries, more nurses and doctors to be recruited and better support for
our local district general hospital in Reading. Again, I see that answer
already in the Gracious Speech, with a promise of substantial new
resources—financial and personnel—for the national health service, which will
be laid out in legislation for a five-year period. I welcome that. It is a
pleasure to say to my electors that two parts of the job seem to be well on the
way to being done, but having a little experience of government, I know that
there will remain, day by day and month by month, issues to sort out, to ensure
that my constituency gets its fair share of the money.
Liz Saville
Roberts (Dwyfor Meirionnydd) (Plaid Cymru): In his capacity as a former
Secretary of State for Wales, does the right hon. Gentleman share my concern
and disappointment that there was no mention of Wales whatsoever in the Queen’s
Speech, as well as my concern about how the money being promised to England
will find its way to Wales, through the Barnett formula or wherever? Finally,
will he perhaps ask the same question as me: how much longer do we need the
Wales Office for? Looking at the behaviour of this place, there will be people
outside saying, “Surely Wales could do a bit better than this.”
John Redwood: The
right hon. Lady knows full well that there is a formula and consequentials from
the English settlement. I am quite sure that my right hon. Friends in the
Government will look after Wales, and it is her job to test them out in the
appropriate debates. This speech is not the appropriate moment, because I am
not here to speak for Wales; I am here to speak for Wokingham and West
Berkshire, and I am here to speak for the wider nation, as we all do.
I am also looking forward to the promises on
infrastructure. The Government have rightly said that we have a big job of work
to do to improve our railways and roads, to make sure that people can get to
work and get their children to school, that we can bust the congestion and that
people have easier journeys. That, too, will reduce pollution and increase
safety.
Wokingham is a very fast-growing area, because we are
doing more than our fair share for the national housing achievement. We
particularly need support on putting in additional transport links, with
digital signals on the railways so that we can have more capacity and more
trains, and an improved road network. It was a pleasure to work with the
previous Secretary of State for Transport in the last Parliament on the idea of
strategic local highway networks. We needed more money and support for those
important roads, which are under the control of councils. They do not qualify
for trunk status but can often relieve trunk roads and provide an important
means for my constituents and others to get to work or get their children to
school. The previous Government answered that, but it falls to the new Government,
with the more generous financial settlement that I look forward to, to ensure
that we can work together, so that I can get some of those road schemes and rail
improvements for the Wokingham area, which will be much needed.
The big thing, which represents a seismic shift in
Government policy and which I welcome, is the introduction of optimism and
enthusiasm—the belief that this country can achieve great things, that we do
not have to constantly cut under the Maastricht criteria and that we should no
longer make state debt the main objective of economic policy. I have been
working away for some time to get that change of policy, but Philip Hammond was
not sympathetic to my views in all sorts of ways. I am delighted that the new
Prime Minister and the new Chancellor are enthusiastic about the idea that the
aim of economic policy for this Parliament must be prosperity— prosperity for
the many, and tax cuts for everyone.
Tax cuts are a very important part of creating greater
prosperity. People work hard, and they want to keep more of their own money.
They are often better judges of how to spend their money than councils and
Governments. It falls to a renewed Conservative party to take that message to
every part of the country, implement that message in the forthcoming Budget and
show that not only will we find more money for schools, hospitals and roads,
which is needed, but we will also have some money for tax cuts.
Some tax cuts do pay for themselves because our rates are
too high, and if we cut them to an affordable rate, people work harder, stay
here, contribute more and are more enterprising, and we get more money in.
Other tax cuts will reduce the revenue, so we need to grow the economy, and
over the years it works because growth generates more jobs and higher incomes,
and in comes more money.
To fulfil this new objective, the Government have rightly
changed the basis on which the economy is going to be governed. We have gone
away from state debt as a percentage of GDP, the iron rule that dominated the
last dreadful years of the Labour Government—a period of collapse, when state
debt got out of control—dominated the coalition period of recovery and
dominated the Philip Hammond Conservative Government period, when he seemed to
like that particular proposition. Now we have a much more sensible idea, which
is that we should of course be prudent—there is no magic money tree, and we
cannot spend safely on the scale Labour recommended to the country—so what we
are suggesting now as the golden rule is that any current expenditure must be
covered out of taxation, but we can borrow up to 3% of GDP to put in those big
new investments and the myriad smaller investments in broadband, rail, road,
water and the other things where public money is needed as an adjunct to the
substantial private investment that will in many places be going into those
important developments.
This will make a lot of difference, because this
Parliament needs to understand that there has been a very nasty world manufacturing
recession over the last six months or so and there has been a worrying slowdown
in the world economy over the last year. It began, as these things always do,
with the central banks that get it wrong. It began with the tightening of the
central bank in America, the Federal Reserve Board, in the third and fourth
quarters of 2018. We could feel the shake on the world economy, and we
saw what was happening to world markets. It spread to the eurozone, which
stopped all its quantitative easing, although its economy was still very weak
and could not really take that particular shock, and it came to the United
Kingdom, where we had a very severe policy being pursued by the Bank of
England. Very predictably—I remember warning about it some time ago—these changes
in central bank policy did indeed slow the world economy.
Now things have changed, but they have not changed yet in
the United Kingdom, so I urge the Prime Minister and the Chancellor to get the
UK authorities into line with the analysis and the prescription of the world
central banks outside the United Kingdom. What we have seen in the last six
months is a very big move to cut interest rates worldwide by most of the major
central banks not only in the advanced world, but even more dramatically in
quite a number of the emerging market countries from Turkey to India and
Brazil. We have seen cuts in the United States of America, and we have seen the
reintroduction of quantitative easing—bond buying, created money—in the
eurozone, because the eurozone economy has shuddered to a halt in some places.
We have seen further developments in Japan, which carried on with quantitative
easing and zero or negative interest rates throughout the difficult period, but
it too needs to boost things rather more.
However, there has been no response in the United
Kingdom. Indeed, only in the last few days the Bank of England has gone the
other way. It has done a series of stress tests on the major banks, and I am
delighted to say that our major banks passed with flying colours. The worst
case in the stress test was very severe, but there were no problems for the
banks, as the Bank of England reported. However, the Bank of England then said
that the clearing banks had to double the counter-cyclical buffer of capital
they keep. That is technical language. What does it mean? It means there is
about £20 billion less available for mortgages, car loans, business expansion
and new investment. That is what it means—a very fundamental monetary
tightening. It happened at the same time that sterling went up about
10%—another very strong monetary tightening.
Money growth is eye-wateringly low in the United Kingdom,
unlike in the eurozone, and it is well below that in the United States of
America. At exactly the point when we were doing this, the Federal Reserve
Board, with 2%-plus growth in America, which we would love to have on this side
of the Atlantic, was injecting billions—I think about $150 billion was injected
in a single month—into the money markets to keep things liquid so that the American
consumer, car buyer, mortgage demander and small businesses would have access
to the money they needed to continue the very successful American growth
strategy. Let us ensure a growth strategy in which monetary policy does not
stand too much on the brake.
There is also the issue of how the Treasury has been
recalculating our obligations at official level. Around October, when it
probably thought that we might be leaving the European Union—there was a chance
of that at the time—it decided that the student loan system was costing us £12
billion a year more, although that system had not been accounted for in such a
way up to that point. There were no changes to the student loan system, or to
the experiences of those who could not repay their loans, yet the figures
that we presented deteriorated sharply as a result of that decision. I do not
think we should allow that to deviate from what I hope will be a positive
Budget—probably at the end of next month, given the rumours I see in the press.
We need the Budget to provide that boost to growth. I
think it is eminently affordable to have the increases that we promised and
talked about in the general election regarding schools, hospitals and
infrastructure, and also eminently affordable to have those promised tax cuts
to business rates and national insurance. We would not need to offset that with
other tax increases, because this economy desperately needs a boost.
In a world where some other Governments are boosting on
the fiscal side, and practically every other country is boosting on the
monetary side, in order to see off the threat of the world slowdown turning
into something worse, it is important that the United Kingdom authorities do
the same thing. I have every confidence in my right hon. Friend the Prime
Minister, who I think is single-handedly turning around the mood with his
message of confidence and enthusiasm for how we can do better. That will take
some cash, however, and now is the time to spend a bit of that.
This country and its economy can achieve a lot more, so
let us ensure that the new message of prosperity for the many and tax cuts for
everyone is seen through. That is the way to bring most people in this country
together, and honour the promises that many of us made in the general election.
That will show that the country has made wise decisions up to this point, and
that Brexit will not be damaging to our economy, but can be part of a positive
move towards faster growth, better jobs, and more paid jobs, just as we have
experienced in recent years and months.
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