Oliver Dowden: It is a pleasure to follow the eloquent remarks of Hilary Benn. I am conscious that we are on a tight time limit, so I shall confine my remarks to the question of productivity and its implications for public spending. By the OBR’s own recognition, many of the numbers that it has produced are speculative, but it is clear that we have a long-term productivity challenge, as the Chancellor has rightly recognised in his Budget. This challenge has been disguised in recent years by our membership of the European Union, in that we have had large-scale migration of highly skilled migrants from eastern Europe, and we have principally had to compete only with European markets. Both of those factors are rightly going to change as a result of the vote, and we consequently need to raise our sights and think about the public spending choices made by this country relative to those of other countries such as South Korea which are likely to be our competitors in the years to come. When we look at that, we see that we have some difficult questions to answer.
The amount that this country spends on welfare includes almost £100 billion on in-work welfare and more than £100 billion on retirement welfare. In comparison, South Korea spends but 2% of its national income on welfare, so we have some choices to make, and we must be clear about those choices. Every £1 that we choose to spend on welfare is £1 that we cannot spend on our education system, on our research and development or on our infrastructure. All that money could be used to increase the long-term productive capacity of our economy, and a failure to spend in those areas reduces that capacity and reduces our potential output. We therefore have to look at each of those areas and ask what more we can do.
Bim Afolami: I commend my hon. Friend on his speech. In relation to the more productive ways in which he thinks Government funds could be spent, will he elucidate further on what aspects of the Budget he feels could be upgraded or extended?
Oliver Dowden: We should consider whether we are able to release further resources for infrastructure spending. For example, the materials used for digging Crossrail 1 could be released straight into Crossrail 2, and we could look at HS2 and see whether we can release resources into HS3. It is those sort of long-term decisions that countries such as South Korea, China and India are making and that we are constrained from making due to excessive spending on current priorities.
I therefore urge the Government to continue with their agenda for in-work benefits, whereby we are increasing the personal allowance so that people on the lowest incomes pay less tax and increasing their income through the national living wage so that they are less reliant on the state. We are also reforming welfare through universal credit to ensure that people keep more of what they earn and that they are constantly incentivised to move further away from reliance upon the state and towards self-reliance, and the case for doing so is both economic and moral. I urge the Government to ignore the Opposition Members who constantly harp on about universal credit. If they actually go to their local jobcentre, as I had the privilege of doing just last week, they will hear countless stories of how universal credit actually incentivises people to take on more hours of work and creates a smooth path out of welfare and into work.
My right hon. and learned Friend Mr Clarke eloquently made the case for looking at retirement benefits. It cannot be right that people who are perfectly capable of looking after themselves have access to universal benefits that they simply do not need. Equally, we need to look at the balance between the younger generation and the older generation. The previous Government rightly committed to a deal whereby we increased retirement benefits so that people had dignity and security in retirement, but we need to consider the rate of increase and ask ourselves whether it is fair that the older generation’s benefits are increasing at a faster rate than those of people who are in work. Surely equality demands that such benefits should be increased only with increases in working-age benefits. If we do not embrace and make such choices, we will surely have them forced upon us as we fall poorer and experience lower living standards than those of our competitor nations.
Bim Afolami: I have been listening to the debate for some time, and it is worth reminding the House of the Treasury document published as a result of a report done by a senior civil servant, Sir Michael Barber, on the public value framework. It indicated that the way in which we get value in our public services is not simply the input of money, but what is delivered. As we talk about all these millions and billions of pounds that we will spend on this, that and the other, I urge the House to consider that output and delivery are more important that what we put in.
Owing to time constraints, I will not say all the wonderful things that I could say about the Budget. Preet Kaur Gill talked about certain areas of the public sector, and Conservative Members always need to remember the public sector as well as the private sector. In particular, however, I want to talk about my constituents in Hitchin and Harpenden, who are very dear to me. In their professional lives, they are overwhelmingly focused on financial services and small businesses, and there was one particular measure in the Budget that will really help them: the expansion of the enterprise investment scheme. I have done my homework on this, so I know that the EIS is critical and that the Government have doubled the annual allowance for investment in early-stage businesses and innovative growth capital.
Kemi Badenoch: I wanted to mention the enterprise investment scheme earlier, but I did not have time. Saffron Walden is right next to the Oxford-Cambridge corridor and houses many knowledge-intensive industries. Does my hon. Friend agree that increasing the allowance for the EIS will provide a boost to the small and medium-sized companies that are the backbone of this country—
Lindsay Hoyle: Order. The hon. Lady had a good go when she spoke earlier, and a lot of Members have been waiting a long time to speak. Interventions must be very short. I also ask Members to be restrained in giving way; otherwise, it is not fair to all those who are waiting.
Bim Afolami: Thank you, Mr Deputy Speaker. I thank my hon. Friend Mrs Badenoch for her intervention. I would add to her point by saying that the EIS funnels private capital that might otherwise be sitting in housing assets or on a bank balance sheet into our most early-stage, innovative and risky creative businesses. That is the magic of the EIS. Such tax reliefs and allowances are beneficial to the country because they effectively mitigate the risk for private investors in risky, early-stage businesses. We need to recognise that fact and welcome the doubling of this investment allowance, alongside the addition of a new test to ensure that the money is going not into lazy, low-risk ventures, but into high-risk, creative businesses.
A point I often make about tax schemes such as the EIS and entrepreneurs relief, which this Government introduced to ensure that we remain one of the best places in the world to develop early-stage businesses, is that they ensure that we do not have to ask our banks to make risky investments. One of the reasons why we found ourselves in the financial crisis was that the banks were making very risky investments, as we discovered from their balance sheets. The EIS allows private capital to be used in productive ways. Many of my hon. Friends have already described the Budget as balanced and reasonable, and I hope that it is also the beginning of a long-term process of a radical entrepreneurial vision for the British economy.