Chief Secretary to the Treasury Greg Hands' speech at the London Chambers of Commerce and Industry Breakfast.
Good morning – it’s great to be with you today.
I’m Greg Hands; Chief Secretary to the Treasury.
A bit about me: I was born in the States – my first political memory being Richard Nixon’s election – but my family moved back to the UK when I was very young.
After studying history at university, I worked in financial services, in London and New York; was elected Member of Parliament in 2005; became a Whip after the 2010 election; and last year the Prime Minister asked me to become Chief Secretary to the Treasury.
One of the big aspects of being Chief Secretary is the job of portfolio manager.
The sums are quite something. 4 trillion pounds of assets and liabilities; over 700 billion pounds of expenditure a year.
Some people I speak to in the City get quite jealous of those numbers.
But the big difference, of course, is that making those numbers larger isn’t an indicator of success!
The Chief Secretary to the Treasury has to rein in public spending, and make sure that taxpayers’ money is spent wisely.
The caricature of the Treasury is as the department always saying “no, we can’t afford this”.
That’s not entirely unjustified: we were elected by British voters to eliminate the deficit, and made it clear that this would largely be through fiscal consolidation.
We set a very clear path at last year’s Autumn Statement and Spending Review; but navigating it over the coming years has its challenges.
It’s certainly a significant part of my job description to make sure we stick to that path, and that involves being tough; or, being an “economist” in the 19th century definition of the word – i.e. someone who believes in making economies in public spending wherever possible.
This is compounded by the economic landscape we’re currently experiencing.
The Chinese slowdown, the fall in oil prices, continued instability in the Middle East – all are economic risks to a greater or lesser extent.
And because we are an open, trading economy, and rightly so, all these threats will have some sort of impact on us.
The best way to insulate ourselves from these threats is to get our own house in order.
So what I have been saying to the civil servants looking after public spending is: “Now is not the time to take our foot off the pedal”.
Our long-term economic recovery depends on us continuing to seek ways to be more efficient, more effective, smarter in the way we use our resources – and that’s one of the things I’ll be concentrating on over the coming years.
But there is another part of the narrative. Spending cuts – though necessary – by themselves won’t deliver the economic results we need for long-term economic security.
It is equally important that we pull out the stops for enabling growth.
So the sorts of conversations taking place in the Treasury aren’t simply “take this off the shopping list”.
They will be along the lines of: “How can we do this in the most cost-effective way? Could we be more innovative about how we fund it, or design it? Is there a cheaper way of achieving the same outcome?”
Because we know that in order to achieve optimum economic growth, government investment is vitally important. The trick is to do it wisely.
That is why in a large number of areas, we have maintained, and even increased, spending.
Some of these areas are services which improve our quality of life; the NHS, our life chances; schools, our national security, or our commitment to help the world’s poorest people.
And some of those are areas which can be real drivers of economic growth in the future – science, research, broadband, housing, regional growth, and infrastructure, to name a few.
We know that it is businesses – such as the ones you represent – who generate growth in this country. And our programme of spending is directly calibrated to make it easier for you to do that – wherever you are in the UK.
Because although the Northern Powerhouse is a highly exciting programme for regional rebalancing through growth, the Chancellor is in the same place as I am: you don’t make the weak stronger by making the strong weaker.
This is the greatest city in the world, and we’ll keep it that way.
So what are our plans for helping London go from strength to strength? Four things:
Transport is one of the things my constituents are the most exercised about – rightly so. Inadequate transport is bad for productivity and bad for quality of life.
At the Spending Review last year, we committed to £11 billion support for London.
This funding will enable TfL to invest in the network in projects including Crossrail, due for completion in 2018; major underground upgrades, including new trains and increased capacity; 1,700 hybrid-electric buses this year; and new cycle superhighways to open by the end of this year.
Aside from this, we’ll see HS2 construction beginning next year, with the line from London to Birmingham to be completed in 2027, and extended to Leeds and Manchester by 2033.
As HS2 is built, places connected to it – for instance, Old Oak Common – will also receive funding for redevelopment.
And we’ve also pledged £55 million to extend the London Overground to Barking Riverside.
And of course, one of the most important investments we can make is in our people: making sure that we have world-class skills is at the heart of our long-term plan.
That’s why we have protected funding for the core adult skills participation budgets in cash terms, at £1.5 billion.
This will help around 1.7 million learners each year to develop the skills that employers need.
It is also why we are giving local areas more say in setting up skills systems that are responsive to local economic priorities.
We will vastly expand further education loans, to help those seeking to move their skills to a new level; and we will also consult on introducing maintenance loans for people who attend specialist, higher-level providers.
We’re funding 5 National Colleges and a new network of Institutes of Technology. Given London’s particular strengths in the digital sector, I’m delighted that the National College for Digital Skills – opening this September – will be based in Tottenham.
And there is our apprenticeship system – which is at the heart of our commitment to a world class skills system.
By 2020, spending will be double the level of spending in 2010-11 in cash terms.
We’re also putting control of funding in the hands of the employers through the apprenticeship levy, so that the system delivers the skills they want and need.
We’re committed to creating 3 million new apprenticeships by 2020, and I am delighted that employers across the capital are playing a key part in this, including in the design and development of new degree apprenticeships.
It is also vital that our world-class workforce has good places to live.
Being MP for an area where house prices set new records practically every month, I’m acutely aware of the pressures – particularly when it involves getting onto the property ladder.
Essentially, we need to build more.
Our manifesto committed to delivering 200,000 Starter Homes – homes for sale at a 20% discount, available to younger first time buyers, who plan to live in them.
In the Spending Review, we announced £2.3 billion to help deliver up to 60,000 of these.
We also committed to developing 135,000 Help to Buy: Shared Ownership homes in London, which will allow more people to buy a share in their home and buy more shares over time, as they can afford to.
The scheme will be open to all households earning less than £90,000 in London, and will relax and remove previous restrictions, such as local authorities’ rights to set additional eligibility criteria.
And our London Help to Buy scheme launched last month. The scheme will offer buyers with a 5% deposit on a loan of up to up to 40% of the value of a new build home, interest-free for 5 years.
Finally, we’re supporting specific developments. The Barking Riverside extension, which I mentioned, a few moments ago, will provide 10,000 new homes.
And the £97 million we’re providing to support redevelopment at Brent Cross will support 7,500 homes.
The fourth plank of our strategy for keeping London world-class is to help develop our financial services sector.
That means opening ourselves up to new and emerging markets – particularly in Asia and the Middle East, which still provide enviable levels of growth.
It means priding ourselves on exceptional standards of regulation, conduct – and therefore trust.
It means harnessing new technology, and fostering competition in the market.
And it means maintaining excellence, not merely in financial markets, but in all the range of associated professional services that come with the territory.
The hard work we’ve put in since 2010 has meant that London now enjoys the accolade of the world’s most dynamic financial centre, according to the Global Financial Centres Index.
Maintaining this competitiveness while keeping the highest standards of conduct is a major area of Treasury focus, and one on which my Ministerial colleague Harriett Baldwin is working tirelessly.
Underpinning all this activity is our core belief that the best way to ensure Britain’s continued prosperity is a thriving private sector, one that adds value and creates jobs and growth.
It’s fair to say that many of the old consensuses about the economy have disappeared.
Those of us who believe in things like the free market, and private-sector driven growth, and the benefits of wealth creation, need to continue making that case.
The very best thing we can do is to prove the naysayers wrong, through our actions as well as through our arguments.
Time and again throughout history, a dynamic, innovative private sector has proven the biggest spur to increasing our standard of living.
I look forward to working with you so that this continues over the coming years.