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Public Finances

Volume 648: debated on Tuesday 6 November 2018

The 9.9% of GDP post-war record deficit that we inherited in 2010 is forecast by the Office for Budget Responsibility to fall to 1.2% this year and to 0.8% of GDP in 2023-24, the lowest level since the start of the century. The OBR’s Budget forecast shows that borrowing will be lower in every year than was the case at the spring statement, and that we are now meeting our two fiscal rules three years early. We continue to be committed to our balanced approach—getting debt down, keeping taxes low, investing in Britain’s future and funding our public services, with the spending review to take place next year.

The nature of the economic cycle means that, inevitably, over the next few years there will be a global economic downturn. Can the Chancellor reassure the House that he will always retain sufficient headroom and resilience in the public finances to enable us to respond strongly to such a shock?

Yes, and I remind my right hon. Friend that the fiscal targets are set in cyclically adjusted terms, so that in the event of an economic downturn, fiscal space is automatically created. In addition, I have kept a buffer, over and above any cyclical dividend, of £15.4 billion in 2020-21 to allow us firepower should any unexpected events cause headwinds for the economy.

After the Budget, then, more than 3 million families will still be losing an average of £2,100 a year by transferring to universal credit. With 40% of claimants in debt and 38% in rent arrears, are not the Government simply transferring the nation’s debt into the pockets of the poorest families, and what assessment has the Chancellor made of their ability to move into work?

The hon. Lady should not have spoiled it. She was doing very well before she added a further bit that was not required.

The hon. Lady will have heard the Chief Secretary remind the House earlier that the Resolution Foundation has now identified that, with the additional money we have put into universal credit, the system is now more generous than the legacy system that it replaces. It has a clear incentivisation to work, and those of us on the Government Benches believe that the best way we can support and help and families is to help them into work. That is the sustainable route out of poverty.

Parliament passed legislation in 2016 to save hundreds of millions of pounds each year by limiting public sector exit payments to £95,000. As my right hon. Friend is so keen to improve public finances, why has he not yet implemented that legislation, which would have outlawed the obscene £474,000 exit payment recently announced for the chief executive of Dorset County Council, with many similar payouts to follow?

My hon. Friend raises a perfectly legitimate question. This is a complicated area. We are making progress on it and we hope and expect to be able to make an announcement shortly.

Just as the Chancellor’s claims to end austerity already lie in tatters, so do his claims of fiscal prudence, given the Institute for Fiscal Studies’ assessment that the Chancellor took a bit of a gamble with this Budget. Does he agree with the Father of the House that the Budget was based on an

“unexpected surprise”,

and that,

“news about…tax revenues recently may not last”—[Official Report, 1 November 2018; Vol. 648, c. 1099.]?

If so, how worried is he about Standard & Poor’s warnings about the potential for recession if we leave the EU without a deal?

The Opposition try to have it all ways. Look, the truth is that our remarkable record in creating jobs—3.3 million new jobs in this country since 2010—forecast by the OBR to continue over the next four years, has led to a boom in fiscal revenues, which we have been able to deploy. The Budget that I delivered to the House last Monday shows debt falling in every year, the deficit falling in every year, and both of those metrics lower today than they were forecast to be at the spring. [Interruption.] The hon. Member for Norwich South (Clive Lewis) says, “Inequality up,” but unfortunately for him, he is wrong. Inequality in this country is lower now than it was under the last Labour Government.