Budget Resolutions and Economic Situation
(Limited Text - Ministerial Extracts only)
Read Full debate19:01 - The House divided: - Ayes: 360 / Noes: 274 - Question accordingly agreed to.
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
It is a real pleasure for me to open today’s debate on the Budget that my right hon. Friend the Chancellor the Exchequer brought before the House last week. It is a Budget that meets the needs of the moment. It delivers support to all corners of our United Kingdom. It shores up our defences against the ravaging impact of the pandemic while laying a clear path for our journey out of the crisis and into a brighter future. As the Chancellor himself acknowledged last week, it is a path that we are only able to take because of the incredible efforts of our frontline health workers who have vaccinated more than 20 million people across the United Kingdom, and the researchers and manufacturers who have managed to produce effective vaccines in such a short space of time. I am sure I speak on behalf of the entire House when I express the deepest gratitude to everyone involved in this heroic national effort.
Mrs Theresa May (Maidenhead) (Con)
My right hon. Friend makes some very important points about our health staff and the vaccination programme, which has been absolutely superb in this country. Does he recognise that the creation of a new vaccine centre and medicines manufacturing centre were part of the life sciences deals that were enabled by the modern industrial strategy? Will he welcome the modern industrial strategy?
Kwasi Kwarteng
I have not come here to defend or rebut any of the wonderful measures that we took under my right hon. Friend’s leadership. I am very conscious of the fact that many people want to take part in this debate, and I am afraid that I have to press on.
The researchers and manufacturers have done an extremely good job, as my right hon. Friend says, in shoring up our response to the crisis. The Budget provides an additional £65 billion of measures in response to covid, designed to support the economy this year. It covers an extension of the furlough scheme, which has already supported 1.3 million employers and more than 11 million jobs, providing vital funds to households and communities throughout our country. It has added to the near £20 billion of support that the Treasury has paid out to support 2.7 million self-employed people.
The Budget presents a dynamic and generous plan to help businesses to get up to speed. We are providing restart grants of up to £18,000 to more than 680,000 business premises. We are also providing further support for hospitality and retail businesses who may be more affected by restrictions when they reopen. While our plan for jobs has been given a £126 million boost supporting 40,000 more traineeships and doubling the cash incentive for firms taking on new apprentices, the Budget ensures that more people are able to access secure, skilled work.
Of course, there can be no denial that the jobs market has changed profoundly over the past year.
Kwasi Kwarteng
I am very conscious, as I am sure my right hon. Friend I, that many, many Back Benchers want to take part in the debate. I understand that he is on the call list, so I am afraid I am going to have to make more progress.
It is no secret that over the years, and even in years of strong growth, prosperity has not been spread fairly between the regions and nations that make up our United Kingdom. That is an imbalance that this Budget seeks to correct, with the Department for Business, Energy and Industrial Strategy leading the charge. Where regions have been left behind by the decline of old industries, we will create new industries and support sectors as they transition to a low-carbon, sustainable and competitive future.
Kwasi Kwarteng
I must press on. Lots of Back Benchers want to speak. However eminent and distinguished my right hon. Friend is, there are lots of other people who want to speak.
We are backing the development of hydrogen hubs in the Tees Valley and Holyhead, to breathe new life into coastal and post-industrial communities while we drive a new clean energy transition. We are establishing four carbon capture and storage clusters across the next two decades, and we hope that they will play their part in decarbonising our industrial processes. We are investing tens of millions of pounds in the Aberdeen energy transition zone and the global underwater hub.
We are providing a support package of more than £2 billion to Britain’s incredible auto industry, with £500 million going towards the growth of our electric vehicle supply chain. That package will help to support and safeguard nearly 170,000 jobs in the UK auto sector, including in the north of England, the west midlands and Wales. We intend fully to deliver a boost to the ambition to build at least one UK gigafactory before the end of this Parliament, and we hope to secure investment for others in the longer term.
Greg Clark
I am grateful to my right hon. Friend and successor for giving way. Will he acknowledge that the battery manufacturing innovation centre and the Faraday challenge, which galvanised the move to providing batteries for electric vehicles, were part of the industrial strategy, as was vaccine manufacturing? Can he explain why it is thought appropriate to abolish that strategy? Is it not better to have a plan, rather than no plan?
Kwasi Kwarteng
I hear my right hon. Friend’s passionate defence of his own work, and I commend a lot of his work. I have read the industrial strategy comprehensively, and it was a pudding without a theme, in my view. I feel very strongly that the conditions of 2017 do not apply to 2021, and I am very pleased to announce to the House that we are morphing and changing the industrial strategy into the plan for growth. I am happy to take further interventions on that, should they arise.
What we have announced in these packages is levelling up in action. There will be new investment in new industries, creating new jobs and driving real change in communities across the UK. With these examples, we are talking about a vision for the future of the kind of country we want to be: a country that hosts good-quality, high-skilled, long-term jobs in every community and that takes its commitment to net zero extremely seriously. I would like to commend the work of my right hon. Friends the Members for Maidenhead (Mrs May) and for Tunbridge Wells (Greg Clark) in passing the net zero legislation in 2019. That was a signal piece of legislation for which I commend them heartily. As Secretary of State for Business, Energy and Industrial Strategy—which is still the name of the Department—I am very pleased that we are committed to net zero in the way that we are.
Because of all the profound changes that we have seen over the last three or four years, as well as our departure from the EU, our legislation to end our contribution to climate change by 2050 and the unprecedented impact of the coronavirus, I believe that we must take a fresh look at our plans for industrial policy and long-term economic growth. As a consequence of all this, alongside the Budget, we have published “Build Back Better: our plan for growth”. Our cross-government plan for growth signals a departure from the industrial strategy brand and details a renewed focus on infrastructure, skills and innovation. It reflects new opportunities available to us following our exit from the European Union, which was successfully achieved as a consequence of the deal that we struck at the end of last year. This opens up new ways to drive growth, build on our competitive advantage and support a vision for a truly global Britain. We will draw on the valuable lessons we have learnt from the 2017 industrial strategy as we transition to this new, more focused and more ambitious plan for growth.
I want to reassure the House that the energy of my Department is entirely focused on building back better after the coronavirus pandemic. It is leading the Government’s work on supporting British industry and priority sectors, and I am happy to acknowledge that we are building on the incredibly dynamic and good work that was pursued by my right hon. Friend the Member for Tunbridge Wells. We will publish our innovation strategy in the summer. We will set out details of our approach to supporting sectors, places and technologies in the innovation strategy. Those will give a clear indication and sense of purpose as we seek to shape the UK’s future. My Department is already leading on strategies with respect to net zero, hydrogen and, of course, innovation itself, as well as the space strategy. We are engaging on a comprehensive programme of work to protect and create jobs as we transition to net zero.
The principle underlying all this effort is, of course, the green recovery. We fully intend to end, and we will end, our contribution to climate change by 2050, and we will do so through investments and innovations such as the ones I have just mentioned. Last week’s Budget builds on the framework set out by the Prime Minister’s 10-point plan, as well as on the support announced at the spending review and in the national infrastructure strategy.
I am delighted that my right hon. Friend the Chancellor spoke fulsomely about the UK infrastructure bank. The bank will target investment in green projects, which will help us meet our net zero targets in the public and private sectors throughout the country. It will provide a global centre of excellence and advisory support for net zero projects across the country.
We have committed an initial £12 billion of capital and £10 billion of guarantees. By crowding in— attracting—private investment, we fully expect the bank to support at least £40 billion of investment in our precious infrastructure. This investment will help us to amplify success in decreasing emissions, which we have already reduced by 44% against 1990 levels. That is by far the best performance in the G7.
With our strengths in many sectors, from offshore wind to hydrogen, carbon capture technologies and zero-emission vehicles, we are well placed to seize the opportunity of the green transition and lead a global green industrial revolution. The 10-point plan, which the Budget expands on, puts us in a very good position to achieve that goal.
Backed by £12 billion of public investment, the 10-point plan will reinvigorate our industrial heartlands in the north-east, the north-west, Yorkshire, the Humber, the midlands, Scotland, Wales and elsewhere. It will support the creation of hundreds of thousands of green jobs across the UK by 2030. It represents a really exciting and dynamic vision for the development of economic opportunity throughout this country.
This is a Budget that is timely in its interventions, entirely realistic in its ambitions and, above all, remorselessly and unapologetically optimistic about the future of the United Kingdom. It outlines an investment-led recovery, with a targeted, laser-like approach to levelling up every nation and region.
Thanks to the actions of the Government, we will emerge from this virus sooner and stronger than many would have anticipated. Thanks to the Budget, we have the means and the tools necessary to continue our trajectory towards recovery in the next year. We will be embracing innovation, we will be creating green jobs and we will be rejuvenating our industrial heartlands and spreading opportunities. We look forward to building back better throughout the entirety of the United Kingdom.
Edward Miliband (Doncaster North) (Lab)
I want to start by quoting a speech given in this Chamber 77 years ago, in June 1944, by Ernest Bevin, who was then the Minister of Labour. He said:
“With my right hon. Friend the Prime Minister, I had an opportunity of visiting one of our ports and seeing the men, of the 50th Division among others, going aboard ship…The one question they put to me when I went through their ranks was, ‘Ernie, when we have done this job for you, are we going back to the dole?’…Both the Prime Minister and I answered, ‘No, you are not.’”—[Official Report, 21 June 1944; Vol. 401, c. 212-13.]
The circumstances of this Budget are, of course, very different, but the sentiment is just as relevant. As we come through a very different national crisis, how do we in our generation do right by the British people? Some 120,000 people have died from covid. Our way of life has been dramatically restricted. Our key workers have stepped up and put themselves in harm’s way for all of us. Businesses have shuttered to protect our health and have faced incredible strain. The British people have been nothing short of heroic.
While the crisis has revealed the best of our country, it has also laid bare the deep flaws in the way our institutions and economy are run. In the words of the OBR,
“the UK has experienced higher rates of infection, hospitalisations, and deaths from the virus than other countries.”
We know that is partly because of higher deprivation, inequality and poverty. We know we are deeply unequal, both within and between our regions. Even before this crisis, 2 million of our fellow citizens faced destitution. That means they lacked at least two of the following basic essentials: shelter, food, heating, lighting, clothing or basic toiletries. That should shame us all in one of the richest countries in the world. We know our public services are deeply underfunded, from health to social care. We know, too, that the world of work is characterised by deep divisions of power, which meant some workers were safe and some were not.
This chasm between the spirit of the British people and the reality of how our country works demands from us that we face the Bevin question once again, of how we transform our country not just on jobs, but on public services and on inequality, too. This challenges us all, whatever party, to think bigger and more boldly. Of course that is hard, in the dire circumstances we face coming out of this pandemic—the public finances are under strain and the economy will take time to recover—but they are far less dire than those Bevin and his colleagues faced after 1945, and they thought big about the kind of country we could be. They raised their sights in the face of adversity.
While I would praise some of the measures taken by the Chancellor, I do not believe that a fair-minded observer would say that the Budget passes the Bevin test. On jobs, according to the OBR, even by 2025 unemployment never even gets back to pre-crisis levels. On welfare, the Budget tells people on universal credit that they need to go back to living on £74 a week from September, just as unemployment starts to peak. On the next crisis—the climate emergency—the Budget rejects a green stimulus and cuts green spending, as I will explain.
On public services—I do not think the Business Secretary talked about public services—the Budget appears to draw the extraordinary lesson from the crisis that public services need less resources, not more. In total, £17 billion has been taken out of departmental spending since Budget 2020, which was before the crisis, despite the greater needs and despite all that has been revealed in the pandemic.
What does building back better mean when unemployment is higher as far as the eye can see, the welfare state goes back to the way it was, the green revolution is ducked and public service spending is cut? This Budget fails the Bevin test and the build back better test. Why? I think it is because the Government have not truly learned the lessons of the past decade.
To be fair, the Government have been remarkably open about the failure of the last decade. The Business Secretary referred to the “Build Back Better” document that they published. It is a very interesting document, perhaps not for the reasons intended. There is a striking chart that shows the long-standing productivity gap between ourselves and our competitors, but it shows something else. In the past decade, we have not addressed our long-standing weaknesses, but fallen further behind. The productivity gap has doubled with Germany and is up by three quarters with France and one quarter with the US. Government getting out of the way did not work. Markets left to their own devices did not work and austerity did not work, so the question for the Government is: what are they going to do differently in the coming years from the last 10?
We needed first of all—the right hon. Members for Maidenhead (Mrs May) and for Tunbridge Wells (Greg Clark) have made reference to it—an industrial policy that intervenes at scale to help growth sectors and industries to succeed. There is one pre-eminent test on that, which is the green stimulus. To give some context, President Biden has pledged a $1.7 trillion green plan over 10 years. Germany has committed €40 billion over two years and France €30 billion over two years. Even what the Business Secretary claims—I will come to that shortly—is a fraction of that amount over the decade.
Let us take the infrastructure bank, as the Secretary of State talked about that. The OBR is highly revealing on the infrastructure bank: the annual spending of the bank is going to be just a third of the amount of its predecessor, the European Investment Bank—£1.5 billion a year versus £5 billion a year. So, not more investment, but less. What is the OBR’s verdict on the infrastructure bank? It says that
“given the scale of its operations (at around 0.1 per cent of GDP a year) and the fact that it replaces only some European Investment Bank activity, we have not adjusted our economy forecast.”
In other words, the bank has absolutely zero effect on growth, from all of those green measures that the Business Secretary talked about.
One of the most interesting things about the Budget—but which has perhaps been less remarked on—is that the growth returns to trend is up just an anaemic 1.7%. That is incredibly low by historical standards. This is low growth and low ambition.
A green stimulus could have helped our crucial manufacturing sectors, but instead they were left out in the cold. On steel, where is the £250 million clean steel fund, which was promised two years ago? There is no mention of steel in this 110-page document. On offshore wind, we are way off the Government’s target of 60% domestic content, and the negligible resources in the Budget simply do not measure up. On the automotive sector, I want to say something positive: it is good that the Government have brought forward the date of the petrol and diesel phase-out to 2030, which is what we called for. But I say to the Business Secretary that the rhetoric of ambition is not matched by financial support for this crucial sector. The Society of Motor Manufacturers and Traders said in reaction to the Budget:
“This is an opportunity lost”.
Germany is investing a total of €7 billion for transformation; we are way off that. The Government seem almost allergic to support for these sectors.
Let us take another area that everybody agreed could create hundreds of thousands of jobs, and I do not think the Business Secretary mentioned this either. It could help people in every community in our country: home insulation and retrofitting. We need a transformation of our housing stock. People may forget that the flagship policy of the Prime Minister’s 10-point plan was the green homes grant. The Business Secretary was given personal responsibility, as the Minister of State, for the green homes grant. He told us the Government would learn the lessons of the green deal, which had been a complete disaster:
“We’re completely focused on trying to make this a much better roll-out, and we’ve learned our lessons…We need to make sure that the right projects are identified, and that we can get the money out”.
It would “pave the way”, he said,
“for the UK’s green homes revolution.”
What has happened? The project has been a complete fiasco on his watch: contractors not paid; installers forced to make lay-offs; homeowners unable to get the grants—not a long-term comprehensive plan, but a piecemeal, privatised approach characterised by shambolic delivery on his watch, and he said not a word about it. He would be welcome to come in and say something about it now; he obviously does not want to. And no wonder: now the Government are cutting more than £1 billion from the green homes grant scheme as it has been such a disaster.
Is this just an accident? No, it is not. The failure on the green homes grant and on green manufacturing is all part of the same problem. The Government are good at talking about a green revolution; they will the ends, but not the means—a proper, thought-through industrial strategy. Indeed, tragically, we now have a Secretary of State for Business, Energy and Industrial Strategy who does not believe in industrial strategy. If I can put it this way, he is half the Secretary of State he once was. Any self-respecting organisation would have asked him in the interview when he was applying for the post of Secretary of State for Business, Energy and Industrial Strategy—although Secretaries of State do not exactly apply, they are offered the job—“Do you believe in industrial strategy?”
We got suspicious when in one of his first acts he tore up plans for the industrial strategy White Paper, and we thought, “How curious.” Then on Thursday we found out he had abolished the Industrial Strategy Council set up by the right hon. Member for Maidenhead. I hope the right hon. Lady will not take it amiss if I say that I admired some of her work, and this is one of the things I admired. I pay tribute to her and the right hon. Member for Tunbridge Wells; they learned the lessons of our history and said, “We need Government, business and unions working together on this joint enterprise, coming together to address the challenges our country faces.” And, goodness me, do we need this now as we seek to recover from coronavirus.
I have to say to the Business Secretary, who is new to his job, that this decision has caused consternation—I do not think that is too strong a word for it—in businesses up and down the country. Make UK said that it causes
“significant concern and frustration within manufacturers of all sizes across the UK.”
The director general of the British Chambers of Commerce said that the strategy’s demise was a
“short-sighted step that ministers will come to regret”.
All around the country, thanks to the work that was done, local chambers of commerce and local enterprise partnerships have spent years working on local industrial strategies. Now they are wondering what they are supposed to do with them, because the strategy seems to have fallen out of favour.
People might think that is just an accident. It is not an accident. I know that the Business Secretary dismisses his past pamphlets as the work of a maverick Back Bencher, but it is not a coincidence, because this—it is very interesting—is what he wrote:
“The draining of effort from our psyche has been replaced by a sense of entitlement.”
I do not know quite what that means. He continued:
“It has also led to a false belief in the value of industrial policy.”
I thought he had put all that behind him, but clearly not. He is so ideological—so dogmatic—about the free market that he had to get rid of the industrial strategy, and therefore he cannot deliver the partnership between Government and business that the country needs.
Let us turn more generally to business support. Businesses have made huge sacrifices in this crisis, as I said, and they face huge challenges in recovering from the pandemic, added to which are the billions of pounds of red tape as a result of the implementation of the Brexit deal. Even when the health crisis is over, businesses will take a long time to recover. We welcome some of the measures talked about by the Business Secretary, but there are still important groups that I believe are left out: two thirds of the excluded self-employed are not helped by this Budget, including limited companies, many freelancers and others; supply chain businesses are still left out; and whole sectors, such as the wedding industry, are ignored. Their plight will hold back the recovery.
We know that business debt is one of the biggest threats not just to individual businesses but to the recovery as a whole. Some £70 billion of business debt has built up during the crisis. In December, the Federation of Small Businesses reported that the proportion of those businesses describing their debt as “unmanageable” was 40%. The OBR says that, on current plans, the Chancellor will have to write off £27 billion of those loans.
In these circumstances, a sensible Chancellor would have been creative, yet he still refuses to budge. We have a scheme from the Chancellor with no links to profits, no ability to restructure and no ability for management or workers to develop creative solutions. He is just leaving it to the banks. Well, even the banks are telling him that that is very risky. If we face a wave of insolvencies, it will be at the Chancellor’s door. The danger is that this holds back the recovery, and it certainly fails the Bevin test.
Many of the businesses facing those debts are on our high streets, in retail. What is the single biggest long-term change that those businesses require? It is to address the deep unfairness that high street shops face against online retailers. I am sure that the Business Secretary is familiar with that problem. The Government launched a review of business rates not in the last Budget, not in the Budget before, not in the one before that, but six years ago. In fact, they launched the review so long ago that I was Leader of the Opposition when they did so—it is that long ago! A long-term Budget would have finally taken action in this area, but instead we got more delay.
I turn to the measures that were taken. On the so-called super deduction, we will welcome any measure to help business, but I point out, as we think about our capital stock and investment, that the OBR says that that measure
“does not affect the long-run level of the…capital stock”.
In other words, it will make a difference to the timing of business investment, but in fact, according to the OBR, business investment is expected to fall significantly in 2023 and 2024, and there are real questions about why this measure is targeted just at plant and machinery, which is only one fifth of business investment. Then we have freeports, which have been tried for 30 years. I am afraid that all the evidence is that, at best, they may displace economic activity from one area left out of prosperity to another a few miles away.
The problem is that the Government simply do not get that we cannot build private sector success on the back of public sector austerity. The cuts of the last decade have made local services worse, squeezed demand and undermined the crucial infrastructure of business success. People might wonder, “Well maybe they’ve learned their lesson.” I fear they have not. Again, this was not very clear from the Budget on the day, six days ago, but in a year’s time, for many of our public services, it will be austerity all over again. Next year, for current services in transport, housing and local government, and other so-called unprotected areas, public spending will be cut in real terms by £2.6 billion. Let us be clear: growth is anaemic, because their measures are so weak, so they turn to a strategy they tried from 2010 of cutting current spending and raising taxes on ordinary families. I fear they have not learned the lessons. They cannot grow the economy if they are giving tax cuts with one hand, but cutting the services that communities and businesses rely on with the other.
The issue is not just about resources, but about who spends them and where they are spent. We are the most regionally unequal country of any major developed economy and the most centralised. The levelling-up fund is a centralised pot of money to be determined by Ministers, and we are starting to discover where the money is actually going.
Salford is the 18th most deprived area in the country, but it is placed not in the category of most need—category 1 —but in category 2. Barnsley is the 38th most deprived area and is also in category 2. Richmond is 256th out of 317 for deprivation, but it happens to cover the Chancellor’s constituency, so it has found its way into category 1. The Government have said this is based on objective criteria, so what are they? Again, I am very happy to give way to the Business Secretary if he wants to explain what these objective criteria are. If it is all above board, why have they not published the criteria? Of course, they have form on this—the towns fund, the crony outsourcing of contracts to donors. The British people have a right to expect that the money meant for the most deprived areas is spent in the most deprived areas.
Ministers do not get the role for Government, they leave it to the market; they cannot tackle the inequalities we face; and, far from leaving austerity behind, for many it will look like austerity, feel like austerity and it will be austerity.
Of course, we have the most egregious example of all in the decision to cut the pay of nurses and NHS staff. They more than anyone have been the heroes of this crisis: they have put themselves in harm’s way for all of us. The Government promised a pay rise in the NHS plan. They did not just promise it; they legislated for it and they walked through the Lobby a year ago to vote for it. The Business Secretary was put up on “Question Time” on Thursday, as this decision was breaking, to try to justify this broken promise, and this is what he said:
“When I look at people in the hospitality sector, in aviation, in retail, many of them are very…worried they won’t…be in a job in two or three months.”
Edward Miliband
He nods. As if that is somehow a justification for cutting the pay of nurses. What is the world in which their plight justifies cutting the pay of our nurses? I have never heard anyone, in a year of discussions, in any of those sectors say to me, “I’m finding it hard, so Government should cut nurses’ pay.” People would only say that if they believe in a race to the bottom or they believe in levelling down.
Before the Minister says everybody needs to tighten their belts, he should be careful, because it turns out there is plenty of cash to spend millions on a Downing Street makeover for a media briefing room that has not been used; to spend hundreds of thousands of pounds to pay off the man the Home Secretary was accused of bullying; and to give Dominic Cummings a 40% pay rise. The truth is it is one rule for them and another rule for everyone else. Let them not ever try again to tell people in this country that we are in this together.
Beneath the rhetoric, the Government cannot be the answer to the problems of the country. They may have produced a document charting 10 years of failure on productivity, but they have not changed their view. The answer to 10 years of failure cannot be more of the same. This should have been a Budget with a plan to respond to the climate emergency by creating the jobs of the future; and a Budget with a plan to help business through the crisis and beyond with debt restructuring, providing a decent pay rise for our key workers and dignity in the social security system, rather than plunging the most vulnerable into deeper poverty. This is a Budget of low ambition for Britain. The post-war generation would never have accepted such a meagre vision as that presented by the Chancellor and the Government. They never would have, and neither should we, and that is why we will vote against the Budget tonight.
The Chief Secretary to the Treasury (Steve Barclay)
It is a privilege to close this debate on behalf of the Government. In recent days, the House has debated the Budget through the lens of the Government’s response to the pandemic, including the comprehensive efforts we have made to protect jobs and businesses. Today, the focus of the debate has been on looking forward and discussing the ways in which last week’s Budget prepares the country for an investment-led recovery. I thank right hon. and hon. Members from across the House for the very constructive contributions that we have had throughout the debate.
This is a Budget in three parts: first, it protects jobs and livelihoods and provides additional support to get the British people and businesses through the crisis; secondly, it is clear and honest about the need to fix the public finances once we are on the way to recovery; and thirdly, it begins the essential work of building our future economy, including by providing the opportunity to level up across the country.
The Budget announced an additional £65 billion of measures over this year and next to support the economy in response to coronavirus. Taking into account the support in last November’s spending review, that figure for this year and next is £352 billion. Add in measures from the spring Budget last year and the figure rises to £407 billion. In other words, a comprehensive and sustained economic shock has been met with a comprehensive and sustained response.
In fact, thanks to the actions of my right hon. Friend the Chancellor, the Office for Budget Responsibility now expects the UK economy to recover to its pre-crisis level six months earlier than originally expected. That means the second rather than the fourth quarter of 2022. Unemployment, meanwhile, is expected to peak at around 6.5% instead of the nearly 12% that was feared last summer. As the Resolution Foundation has observed, this would be by far the lowest unemployment peak in any recent recession, despite this being the deepest downturn for 300 years.
The Budget maintains a number of essential further support measures, including the furlough scheme, which has been extended until the end of September, and support for the self-employed, which will also continue until September. Indeed, anyone who had filled in a tax return before last Wednesday will now be able to claim the fourth and fifth grants that have been made available for the self-employed, supporting more than 600,000 people on top of those already helped.
The Budget also maintains the universal credit uplift of £20 a week for a further six months, provides working tax credit claimants with equivalent support over the same timeframe and reaffirms our commitment to increase the national living wage to £8.91 from April. We announced a restart grant from April to help businesses to reopen and get going again and a new recovery loan scheme to replace our earlier bounce back loans and coronavirus interruption loans. We will continue to deliver a package that is unprecedented in its scope and scale and which reflects the wider strategy for cautiously reopening the economy, as set out in the Government’s road map. Above all, the distribution analysis shows that this is a package of measures that has supported those on the lowest incomes the most.
Over the course of the debate today, we have heard powerful contributions from a wide range of Members, and I want to draw attention to a number in particular. My right hon. Friend the Member for Maidenhead (Mrs May) spoke of the importance of skills, innovation and investing in human capital, which a number of Budget measures set out. My hon. Friend the Member for Fylde (Mark Menzies) recognised the importance of additional economic support, particularly in the hospitality, leisure and tourism industry.
My hon. Friend the Member for Stroud (Siobhan Baillie) reinforced the Government’s commitment to a green recovery and reskilling to take advantage of the investment set out in the Prime Minister’s 10-point plan. My right hon. Friend the Member for Ashford (Damian Green) also highlighted the importance of green innovation, which is reflected in the commitment to double the spending on energy innovation, with a new £1 billion net zero innovation portfolio.
My right hon. Friend the Member for South Northamptonshire (Andrea Leadsom) highlighted the key opportunity provided by our leadership of COP26. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) highlighted the value of the super deduction policy. In answer to his question on fishing, I can confirm that fishing boats are within scope either for the super deduction or the related 50% first-year allowance.
My hon. Friend the Member for Southport (Damien Moore) praised my right hon. Friend the Chancellor for the vital support that businesses in his constituency, particularly in the hospitality sector, have received throughout the pandemic. My hon. Friend the Member for Milton Keynes North (Ben Everitt) praised the Budget as one that looks after jobs and looks after the future, including the new tech campus that will help the next generation in his area.
My hon. Friend the Member for Clwyd South (Simon Baynes) praised the additional funding for the Welsh Government and the investment through the accelerated city deals. My hon. Friend the Member for Waveney (Peter Aldous) praised the successful freeport bid for Felixstowe and the value of the towns fund, which will make such a difference to the regeneration of his local community.
My hon. Friend the Member for Guildford (Angela Richardson) praised the expansion of the self-employment income support scheme, which will support a further 600,000 people. My hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) and many other Members praised the super deduction and the great benefits it will have for investment, as UK business leads that investment in our recovery.
My hon. Friend the Member for Crewe and Nantwich (Dr Mullan) welcomed the skills package, which will help to support our economic recovery from the pandemic. My hon. Friend the Member for Cities of London and Westminster (Nickie Aiken) welcomed the 5% VAT cut extension and rightly drew the House’s attention to the importance of Lord Hill’s listing review and the wider opportunities of the FinTech industry.
My hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) praised the Budget’s focus on levelling up and the towns agenda, and we make no apology for the frequency with which we will talk about our commitment to levelling up. My hon. Friend the Member for Bury South (Christian Wakeford) recognised the package of business support and the stimulus for jobs in his constituency that is offered by the super deduction.
Given the time, I will not run through the wide range of measures that my right hon. Friend the Chancellor set out or how, in addressing some of the issues raised by those on the Opposition Front Bench, he will boost productivity through schemes such as Help to Grow and Help to Grow: Digital, the plans to ensure that the UK is a scientific superpower, the £400 million annual uplift in science spending, the “future fund: breakthrough” scheme, the lifetime skills guarantee, the kickstart scheme, the restart scheme, the £3,000 for apprenticeships, the tripling of traineeships and the Government’s commitment to skills and investment.
Over the last year, this country has experienced a 10% fall in GDP—the largest fall in 300 years. In response, the Chancellor has presented a plan that will continue to protect jobs and livelihoods, that supports the British people and businesses through this moment of crisis, and that begins to fix the public finances and build our future economy. This is a Budget that, as the Chancellor rightly said, “meets the moment”; I commend it to the House.
Question put and agreed to.
Resolved,
That income tax is charged for the tax year 2021-22.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).
Madam Deputy Speaker (Dame Rosie Winterton)
I am now required under Standing Order No. 51(3) to put successively, without further debate, the Question on each of the Ways and Means motions numbered 2 to 80, on which the Bill is to be brought in. These motions are set out in a separate paper distributed with today’s Order Paper.
2. Income tax (main rates)
Resolved,
That for the tax year 2021-22 the main rates of income tax are as follows—
(a) the basic rate is 20%,
(b) the higher rate is 40%, and
(c) the additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
3. Income tax (default and savings rates)
Resolved,
That—
(1) For the tax year 2021-22 the default rates of income tax are as follows—
(a) the default basic rate is 20%,
(b) the default higher rate is 40%, and
(c) the default additional rate is 45%.
(2) For the tax year 2021-22 the savings rates of income tax are as follows—
(a) the savings basic rate is 20%,
(b) the savings higher rate is 40%, and
(c) the savings additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
4. Income tax (starting rate limit for savings)
Resolved,
That—
(1) For the tax year 2021-22, the amount specified in section 12(3) of the Income Tax Act 2007 (the starting rate limit for savings) is “£5,000”.
(2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for that tax year.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
5. Basic rate limit and personal allowance (future years)
Question put,
That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made taking effect in a future year for each of the following amounts to remain at the amount specified for the tax year 2021-22—
(a) the amount specified in section 10(5) of the Income Tax Act 2007 (basic rate limit), and
(b) the amount specified in section 35(1) of that Act (personal allowance).