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Economic Stability

Volume 722: debated on Tuesday 15 November 2022

Inflation is the enemy of stability and this Government have acted decisively to bear down on it, including through the energy price guarantee, which will take up to 5% off the headline rate.

I was very grateful for the Chancellor’s time last week when he listened to feedback from businesses in Milton Keynes about the economic situation and the situation they are in. As well as support for households, businesses, schools and councils, the main thing that came through all the things I managed to feed back to him last week was the need for certainty so that businesses can invest, forecast and plan. Will the package that he announces on Thursday contain a long enough period so that businesses can put that planning and investment into our economy, and we can grow our way to prosperity?

My hon. Friend is absolutely right; having run a business myself, I know that that certainty and stability is what gives the confidence to invest. I want to reassure him that what I talk about on Thursday will include our plan for growth over the next five years as well as our plan for stability. Both matter, but in the end, as Conservative Members know, wealth is not created by Governments—it is created by businesses.

I know that my right hon. Friend is working intensively to ensure that the United Kingdom can meet its current spending obligations, but can he confirm that the same prudence extends to our national debt? Throughout the summer, my right hon. Friend the Prime Minister said repeatedly that we cannot allow debt to spiral and we cannot burden future generations with further debt. Does my right hon. Friend share the Prime Minister’s commitment and will he use his statement on Thursday to set out a pathway to debt reduction?

My hon. Friend will know that Margaret Thatcher said that there is nothing moral about spending money you do not have, precisely because of what my hon. Friend says: it passes the burden on to future generations to pay it back. Currently, our debt to GDP ratio is about 98% and we are spending debt interest of £22 billion more in the year to date than at the same time last year—that is more than the entire budget of the Home Office. So I absolutely agree with her.

Our growth rate in the 12 years since 2010 has been just 1.4%, which is lower than the OECD average, and behind that of the USA, Canada and Germany. The public should have an answer to this: why does the Chancellor think that is?

What the public know is that unemployment is the lowest for nearly half a century under a Conservative Government.

Energy inflation and food inflation are already making the finances of schools and local authorities almost unsustainable, with many in real fear of going bust in the next few months. May I urge the Chancellor, as he is thinking about Thursday, not to push this all down on to council tax, because many of the poorest areas of the country have the highest level of need and the fewest people who can afford to make additional contributions? So it would be entirely counterproductive to do that, and the ratchet effect could make local authorities even more unsustainable.

I hear what the hon. Gentleman says. It is going to be a very difficult announcement on Thursday, because we are going to be asking everyone to contribute more. But we will be asking people who have more to contribute even more, and that will be reflected in our decisions on council tax and every other tax as well.

I was encouraged by the Economic Secretary’s answer to the question from my right hon. Friend the Member for Ludlow (Philip Dunne) about mortgages. I know that the Chancellor believes that the restoration of economic stability is essential for mortgages to come under control in the future, but will he confirm that he will bring in imaginative plans to protect people who took out mortgages in good faith and now find them unaffordable?

I can absolutely give my right hon. Friend that confirmation. Indeed, I intend to meet a group of lenders later this month to discuss that very issue.

I think people understand the difficult choices that they and their Chancellor face come Thursday, but will the Chancellor ensure that the small and medium-sized enterprises across the United Kingdom that provide the backbone of our economy and employment opportunities are not forgotten?

I can absolutely give the hon. Gentleman that undertaking. We must remember that, for those businesses, very often the most insidious taxes are those that they have to pay before making any kind of profit, because those are the taxes that can make them go under. As the Conservative party—the party of small business—we will think very hard about their needs.

Governments do not create wealth, says the Chancellor. Well, this Government certainly do not, nor did any of their predecessors.

Can the Chancellor tell us at what point in his predecessor’s so-called plan for growth did he realise that it was a recipe for economic disaster? If, like everyone on the Opposition Benches, he realised that before his predecessor had sat down, why did it take him so long to speak up about it?

I did actually reverse most of those measures within three days of becoming Chancellor, so, among my many failings, the one thing I cannot be accused of doing is being slow to change things.

As I understand it, the Chancellor is basing his fiscal strategy on Office for Budget Responsibility forecasts, but does he agree that the only thing we know for certain about those forecasts is that they are wrong?

We know that all economic forecasts are inaccurate, but that does not mean that it is better not to have a forecast than to have one. In defence of the OBR, I would say that its forecasts are more accurate than the Government forecast that we used to use before it.