The Chief Secretary to the Treasury (Laura Trott)
I beg to move, 1 Cigarettes An amount equal to the higher of— 16.5% of the retail price plus £316.70 per thousand cigarettes, or £422.80 per thousand cigarettes. 2 Cigars £395.03 per kilogram 3 Hand-rolling tobacco £412.32 per kilogram 4 Other smoking tobacco and chewing tobacco £173.68 per kilogram 5 Tobacco for heating £325.53 per kilogram”.
That—
(1) In Schedule 1 to the Tobacco Products Duty Act 1979 (table of rates of tobacco products duty), for the Table substitute—
“TABLE
(2) In consequence of the provision made by paragraph (1), in Schedule 2 to the Travellers’ Allowances Order 1994 (which provides in certain circumstances for a simplified calculation of excise duty on goods brought into Great Britain)—
(a) in the entry relating to cigarettes, for “£393.45” substitute “£422.80”,
(b) in the entry relating to hand rolling tobacco, for “£351.03” substitute “£412.32”,
(c) in the entry relating to other smoking tobacco and chewing tobacco, for “£161.62” substitute “£173.68”,
(d) in the entry relating to cigars, for “£367.61” substitute “£395.03”,
(e) in the entry relating to cigarillos, for “£367.61” substitute “£395.03”, and
(f) in the entry relating to tobacco for heating, for “£90.88” substitute “£97.66”.
(3) The amendments made by this Resolution come into force at 6pm on 22 November 2023.
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.
As a country, we are in a very different position from the one we were in a year ago. Back then, the Office for Budget Responsibility and the Bank of England were predicting a recession, but we have had growth. Debt was predicted to rise almost 100% of GDP by the end of the forecast, but headline debt is now predicted to be more than 5% lower. Rather than falling, average real incomes have risen.
None of that happened by accident. It happened because of the difficult decisions we have made, which have turned the economy around. We have learned the lessons of what happened a year ago, but the Opposition have not. Today, we set out a plan for the economy that will grow our potential, reduce debt and reduce taxes, yet all Labour wants to do is reverse this progress by borrowing £28 billion. It is the same old Labour party.
Let me begin with what we have achieved.
Dame Angela Eagle (Wallasey) (Lab)
On that point, will the hon. Lady give way?
Laura Trott
Let me make some progress. It has been a difficult few years for all families, up and down this country. We have had to tackle a once in a lifetime global pandemic and another period of global turmoil, caused by Putin’s invasion of Ukraine and the pressure that put on energy prices, driving inflation around the world.
When the Prime Minister took office, inflation was at 11.1%, but because of the difficult decisions taken by the Prime Minister, the Chancellor and the Bank of England, inflation is now down to 4.6%—a promise delivered. The OBR says that headline inflation will fall to 2.8% by the end of 2024 and we will therefore reach our 2% target by the middle of 2025, something I am sure that the hon. Member for Wallasey (Dame Angela Eagle) is about to welcome.
Dame Angela Eagle
I welcome the hon. Lady to her new post. I hope she has an enjoyable time at the Treasury, as I did when I was there. Will she confirm that figures show that this Parliament is the highest tax-raising Parliament since records began, in all our history, even after today’s statement?
Laura Trott
I am sure the hon. Lady will be interested to know that taxes for the average worker have gone down by £1,000. However, those on higher incomes have had to pay more, which I am sure she will agree is the right approach in a difficult period.
On growth, in 2010 we were facing the worst recession since the second world war, but this Conservative Government have turned things around. Since 2010, we have grown our economy faster than many in the G7, including France, Germany, Italy, Spain and Japan. Following the pandemic and the energy crisis, which were predicted to take us into recession, the economy has recovered more quickly than previously thought and is now 1.8% larger than its pre-pandemic size, growing faster than Germany. Looking ahead, the economy will continue to grow, boosted by 0.5% through the measures taken in the autumn statement and spring Budget.
Perhaps most critically of all, debt is down. I know the Members on the Opposition Front Bench are concerned about that, but reducing debt and borrowing is essential to controlling inflation, keeping mortgage rates down and taxes low. Let me be clear: Labour’s plans would send us all the way back to square one. Labour’s inflationary £28 billion borrowing commitment will drive up inflation, cause interest rates to spiral and hammer families up and down the country. That is a fundamental difference between this Government and the Opposition.
By contrast, look at what my right hon. Friend the Chancellor has achieved. Before he took the difficult decisions in last year’s autumn statement, headline debt was predicted to rise to 99.6% of GDP by the end of the forecast. Labour’s approach would see that number rising but, in contrast, our approach has seen debt predicted to be 5.5 percentage points lower as a proportion of GDP by the end of the forecast.
We will therefore meet our fiscal rule to have underlying debt falling as a percentage of GDP in the final year of the forecast, with double the headroom compared to the OBR’s March forecast. That headroom allows us to take the actions we are proposing in the autumn statement, because the job is not yet done. Debt and inflation are heading the right way, but we must keep pushing.
While growth is better than it could be, it is not as high as it should be. Our solution is not simply to borrow more, as the Labour party would, but to back British business and invest in areas that will create growth, driven by our values: living within our means, protecting the poorest and rewarding work. We are attracting an extra £20 billion a year from business investment, reducing taxes on working people and increasing the national living wage to give workers £1,800 year on average, and we are freezing alcohol duties until August next year.
Our announcement to make full expensing permanent means that we now have not just the lowest headline corporation tax rate in the G7, but the most generous capital allowances, too. For every £1 million that a company invests, it will get £250,000 off its tax bill at the end of the year. This will make a huge difference to investment, as more than 200 business leaders and industry bodies across the country have pointed out. We can do this only because—in case anybody is in any doubt—this Conservative Government have more than halved inflation, have met our borrowing rules three years early and are seeing our debt lower every single year.
Meanwhile, our small and medium-sized businesses, which account for more than 99% of private business in the country, remain the backbone of the economy. Our business rates support saves the average independent shop more than £20,000. We continue to back those businesses by extending the 75% business rates discount for retail, hospitality and leisure businesses for another year, and by tackling late payments.
We are reforming our welfare system, so that it supports those who cannot work and helps those who can find work. The list does not end there. With this hard-earned fiscal headroom now secured, we have a final measure: to implement a tax cut for 27 million employed people, worth an average of £450 per year; and to simplify and cut taxes for nearly 2 million self-employed people, while protecting the interests of those on the lowest pay by saving self-employed people an average of £350 a year from April.
We have always said that, when it is responsible to do so, we will cut taxes, and, because we keep our word, we are cutting the main rate of employee national insurance from 12% to 10%. That makes somebody on the average salary of £35,000 more than £450 better off, which is something that hon. Members will welcome. As we want people to see that benefit on their payslip soon, we will immediately introduce legislation to bring in this new rate from 6 January. This is the biggest cut to employee and self-employed tax ever, and the biggest tax cut implemented since 1988. These measures, however, are not by chance. This is what happens when we take tough decisions early, when we take responsibility for those decisions and when we deliver on them in good time and on budget, as the Prime Minister said we would.
Things have been really tough, but the economy is on the right track and the future is growing brighter. We have made: tax cuts for big businesses to drive investment; tax cuts for smaller businesses to drive growth; tax cuts for self-employed people to reward hard work; and tax cuts for 27 million working people who make our country what it is.
As we debate these measures in the next few days, I leave Members with a few reflections. We have halved inflation and we have avoided recession, but growth is not achieved by burning our businesses or our people, as the Labour party would have us believe. Instead, in this autumn statement we have—and let me repeat this—delivered the biggest ever cut to employee and self-employed tax; the biggest tax cut since 1988.
Laura Trott
I will say it lots of times, believe me.
This Conservative Government are the party of business. This Conservative Government are the party of workers. This Conservative Government are the party of working people. The Government have a plan to keep delivering, and it is presented to this country and to this House in today’s autumn statement. It is a plan that permanently increases the size of the economy, that backs Britain and Britain’s businesses, that rewards work and improves pay and that will deliver growth in every part of this United Kingdom.
The Economic Secretary to the Treasury (Bim Afolami)
I am delighted to bring today’s debate on the measures in the autumn statement to a close, and also to pay tribute to my shadow, my good friend the hon. Member for Hampstead and Kilburn (Tulip Siddiq). I am very glad to follow in the footsteps of Members as eminent and as good at this job as my right hon. Friend the Member for Salisbury (John Glen). He was excellent in his job, and I am happy to follow his example.
Bim Afolami
Don’t miss him; he’s still here.
Make no mistake, Madam Deputy Speaker: this is an autumn statement for growth—one that supports entrepreneurs, cuts business tax, rewards work and brings prosperity to every corner of our wonderful country, and one that the OBR says will permanently increase the size of our economy. [Interruption.] That is what the OBR says. As my right hon. Friend the Chancellor said this afternoon, the Government understand that a successful economy depends less on the decisions and diktats of Ministers than on the “energy and enterprise” of its people, and that is the thrust of this autumn statement. It is about a Government taking action that reduces the burdens on businesses, while also empowering people and getting Great Britain growing and moving again.
But the context really matters. We are only able to pursue these policies now because of what the Government, under our Prime Minister, have achieved up to this point. We have brought inflation down from 11.1% to 4.6%, meeting the Prime Minister’s pledge, and we are on track to meet the 2% target by the middle of 2025. The OBR has confirmed that the measures announced today will make inflation next year lower than it would otherwise have been. We have achieved this while growing our economy, which is already bigger than it was pre-pandemic, contrary to what was often said on the Opposition Benches in debates in recent weeks and months. Our economy has grown faster than many of our competitors since 2010, which is when this Government first came into office.
Ian Blackford
I welcome the Minister to his position. Will he not acknowledge that, under the current plans, it will take until 2028 for wages to get back to their 1998 levels in real terms—a 20-year absence? That is the reality.
Bim Afolami
The measures here are designed to grow the economy, to make us more prosperous, to make businesses invest more and to cut taxes for working people, so I am confident that that prediction will not be borne out in the way that the right hon. Gentleman suggests. This autumn statement provides the foundation for the next decade of growth—not just for next year or the year after that. Next year, just as a start, the economy will be 2% higher—that is worth around £40 billion—than was forecast only in March this year. That is a result of the actions we have taken today.
I have been hearing about what the shadow Chancellor said to the parliamentary Labour party earlier this week. I am told that this is what she said, but I am happy to be intervened on if it is incorrect. She said that the next election would be a fight on the economy, a fight on fiscal responsibility, a fight on making working people better off and a fight on who would be the party to show that it backed British business. This autumn statement firmly shows that this Government and this party are the only choice for the British people and the British economy on these measures—[Interruption.] I see chuntering among Opposition Front Benchers. If they and the shadow Chancellor wish to fight an election on those matters, I say bring it on.
Let us talk about fiscal responsibility—[Interruption.] The Opposition do not want to hear about that. This Government have brought inflation down by half. Debt is falling by the end of this forecast period. We have the second lowest debt in the G7. We are only able to have this sort of growth Budget because of the prudence and careful measures that we have so far undertaken. Indeed, if I may use language that the Opposition might understand, this is prudence with a purpose. Let us contrast that with the record of the Labour party and Opposition Members. They are still saying that, on top of everything we have heard today, they are going to borrow an extra £28 billion. That will lead to higher debt, because they are borrowing, and higher inflation, which will lead to high interest rates for longer.
Dame Angela Eagle
I also welcome the Minister to his position. Does he not distinguish between borrowing for capital investment and borrowing for current expenditure? If he does not, he has a very peculiar view of the national accounts.
Bim Afolami
Of course I understand that distinction, but that does not take away from the fact that if we are borrowing, it has to be paid for. Unless the Labour party can show how it is going to raise that money—[Interruption.] Look, the non-dom tax has been used about 15 times to pay for 15 different things; that is not going to cut it. Unless the Labour party can say how it is going to pay for that extra £28 billion, it is not fiscally responsible. So on that measure, I say bring it on.
Let us look at whether working people will be better off as a result of this autumn statement. My right hon. Friend the Member for North Somerset (Dr Fox) talked about the need to responsibly bring down taxes for working people, and that is what we have done. The cut in the national insurance rate, worth £450 to the average worker, will benefit 29 million people. That matters to my constituents and to all the constituents we represent in this House. That is what this autumn statement delivers. The national living wage is up 30% in real terms—30% after inflation—in this Parliament. Again, that is what this autumn statement delivers. As a result of the measures on the local housing allowance, 1.6 million of the most vulnerable households in this country are all going to get an extra £800.
Contrast that with the record of the Labour party. Do not let them fool you, Madam Deputy Speaker; Labour Members do not believe in tax cuts. They do not believe in low tax. They are trying to pretend that they do, but we all know that they do not. They believe—and it is a reasonable, principled position—in ever greater, ever expanding Government control, debt and tax. That is their position.
Those of us on this side of the House and this Government have a different philosophy and a different policy. We believe in backing British business. We believe in backing the British people. We believe in cutting taxes for working people. We faced a once-in-a-lifetime pandemic earlier in the Parliament, and we spent over £450 billion supporting the lives, jobs and health of our constituents. That has led to an increase in our tax burden. But that is why this autumn statement is so important—because we are turning the corner.
Bim Afolami
I will not.
Members may wonder how we are able to cut taxes and bring our debt down at the same time in a fiscally responsible way. We are able to do it because we back British business. There are over 100 growth measures in this autumn statement. The policy of full expensing means that for every pound that our businesses are able to invest, they will get 25p off their tax bill. There are measures to protect small businesses on business rates; on R&D tax credits, we are reducing the rate at which the credit is taxed from 25% to 19%; and we have introduced investment zones across huge swathes of our country. A few years ago, I co-authored with the Chief Secretary to the Treasury a policy on accelerator zones. These have been ideas on this side of the House for a long time, and this autumn statement puts them into practice. My good friend and constituency neighbour, my hon. Friend the Member for North East Bedfordshire (Richard Fuller), knows that I share his view that we need to make sure that regulators adhere to the need to focus on growth and competitiveness.
It would be remiss of me not to address some of the comments made during the debate. The Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), addressed many points. I listened carefully to her concerns about the welfare measures, which were shared by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms). I say gently to them both that what we are trying to do with the back to work plan and reform of the work capability assessment is to support the most vulnerable while making sure that taxpayers’ money is used sensibly and that only those who need it are given that support.
My right hon. Friend the Member for Witham (Priti Patel), who is a good friend, focused in her excellent speech on the need for a low-tax economy. She said that she would like to see some more “cheeky measures”—her words, not mine—to get personal tax down. I assure her that I will constantly listen to her and take her advice. Given her great experience, I am sure others on the Treasury Bench will do so too.
This country is full of potential, with the most innovative industries in Europe and the best minds in the world. With this autumn statement, this Government are backing this country. Labour do not have a plan. They do not understand the economy. They want to borrow £28 billion extra, yet they want to take everything in the autumn statement. How are they going to pay for it? We have a plan; they do not. I commend the autumn statement to the House.
Ordered, That the debate be now adjourned.—(Mark Fletcher.)
Debate to be resumed tomorrow.