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Speaker’s Statement
(1 day, 18 hours ago)
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Mr Speaker
I would like to remind hon. Members of the important courtesies relating to constituency business. You must make every effort to inform colleagues in advance whenever you intend to visit their constituency other than for purely private purposes. This applies equally to Front Benchers and to Back Benchers. Failure to do so is rightly regarded by colleagues as very discourteous.
Oral Answers to Questions
(1 day, 18 hours ago)
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James MacCleary (Lewes) (LD)
The Secretary of State for Education (Bridget Phillipson)
The early years are my No. 1 priority as Education Secretary. We will deliver a sea change in early years education to give parents better work choices and children better life chances. We will start by repurposing empty classrooms to create or expand school-based nurseries, making childcare more accessible and affordable for hard-pressed families. I encourage state-funded primary schools, working with their local authorities, to consider applying before the application window closes on 19 December.
James MacCleary
With Government data showing that 70,000 more early years places need to be created by next year, and with an overhaul of outdated business rates promised, will the Secretary of State commit to removing unfair business rates from nurseries and pre-schools, which will now be mostly delivering Government-funded childcare?
Bridget Phillipson
It is undoubtedly a challenge to deliver the roll-out, but we are determined to do it because it is so important for parents and for children’s life chances. We intend to reform the early years sector overall. We will be looking very closely at this into next year; I would welcome further input from the hon. Gentleman and his party on the way forward.
Several hon. Members rose—
Mr Speaker
I call Ashley Dalton. Oh, you are not standing. This is not directed at you personally, but when you stand I think you are going to ask a question, and then when you sit down I am left high and dry.
Kirith Entwistle (Bolton North East) (Lab)
As a mother in the north-west, I thank the Secretary of State and welcome the Government’s £1.8 billion commitment to expanding publicly funded childcare. As we transition towards more publicly funded childcare, can she share any plans for interim support to keep childcare affordable for working families relying on private providers?
Bridget Phillipson
My hon. Friend is right. As the roll-out continues, we will shortly reach a situation in which 80% of childcare is Government-backed. It is therefore right that in those circumstances we look closely at whether we are getting the best-quality provision for our children. As part of our early years strategy review, we will take account of all considerations. We are looking at a range of factors for the sector, including workforce recruitment, quality of provision and much more besides. I look forward to working with her on this.
Laura Trott (Sevenoaks) (Con)
Thank you, Mr Speaker. May I say how delighted I am to be in the role? We will be a constructive Opposition working in the best interests of young people. In that spirit, I ask the Secretary of State to confirm that the Government’s early years funding rates for all age groups will increase to reflect the changes in employer national insurance contributions. Will she give us a figure for how much that will cost the Department for Education?
Bridget Phillipson
I welcome the right hon. Lady to her place: it is the best job in opposition, just as mine is the best job in government. I am sure that whatever disagreements we might have in the weeks and months to come, we can all get behind the importance of education to our country.
We will set out more detail on funding rates in due course. What I would say to the right hon. Lady is that the Conservative party left behind commitments, but no plan to make them real. Instead, they left us a £22 billion hole in the public finances, and this Government have had to take some tough decisions to get our public finances back on a stable footing.
Munira Wilson (Twickenham) (LD)
Two thirds of early years places are delivered by private and voluntary providers. Further to the shadow Education Secretary’s question, what assessment has the Department for Education made of the impact of last week’s national insurance rise on those providers? How much more does the Department expect that parents will have to pay in nursery fees? How much additional cost will the Department have to bear to fund existing and planned so-called free hours for parents?
Bridget Phillipson
As was announced at the Budget, we expect to provide £8.1 billion for the early years entitlements in 2025-26, which is an increase of about 30% on the previous year. We will continue to deliver the roll-outs, because this Government have sought to protect education priorities in the Budget.
On the hon. Member’s precise question, we are looking in more detail at what the changes mean for providers in the early years sector, and we will have more to say shortly. Alongside the changes to the national insurance employer contribution rate, we are increasing the employment allowance to £10,500 and are expanding this to all eligible employers, so smaller providers may pay no national insurance at all in 2025-26.
Munira Wilson
Alongside formal childcare, many parents want to have the option of spending more time at home with their babies in those precious early months that are so crucial for a child’s development. Does the Secretary of State agree that at less than half the minimum wage, statutory maternity pay is far from “excessive”? What discussions has she had with ministerial colleagues about boosting support for those parents who want to spend more time at home, rather than being rushed back to work, in order to give families real choice in how they care for their children?
Bridget Phillipson
I agree that it is important we get the balance right. That is why the Deputy Prime Minister and the Secretary of State for Business and Trade are looking carefully, as part of our wider reforms to employment support and employment law, at what more we need to do around parental leave entitlements. I share the hon. Member’s concern about the comments we have heard from the now leader of the Conservative party, the right hon. Member for North West Essex (Mrs Badenoch), about maternity pay. I want to make sure that parents have choices about what works for them, what is best for them and what best supports their children’s development in those crucial early years.
Afzal Khan (Manchester Rusholme) (Lab)
The Parliamentary Under-Secretary of State for Education (Stephen Morgan)
What schools teach can play an important part, alongside wider activity, in the Government’s safer streets mission and tackling knife crime. Relationships, sex and health education includes content on situations that lead to young people carrying knives, including criminal exploitation, county lines operations and grooming relationships. We are reviewing the content to ensure that it remains relevant and protects children’s wellbeing.
Afzal Khan
Greater Manchester continues to experience some of the highest rates of knife violence in the country, with more than 10,000 recorded incidents since 2020. Organisations such as the Greater Manchester violence reduction unit have been doing excellent work in early prevention by engaging children and young people through community-led projects, including theatre productions. Given the importance of early community-based intervention, does the Minister agree that providing support for such initiatives is important in tackling knife violence?
Stephen Morgan
I thank my hon. Friend for raising such an important topic and highlighting the good work of the Greater Manchester violence reduction unit. As well as the work on the RSHE curriculum, the Government will create a new young futures programme, intervening early to stop young people being drawn into crime through preventive action and learning from best practice across the country. It is vital that we have a system that can identify and support those young people who need it most, be they victims or potential perpetrators.
Wera Hobhouse (Bath) (LD)
Preventive education is critical, and not just when it comes to knife crime. A recent report from the University of Bath highlighted that one in six vapes confiscated in school contains the synthetic drug Spice, a highly addictive drug that condemns young people—in particular, vulnerable young people—to a life of crime and addiction. Will the Secretary of State agree to a special educational programme to address the alarming issue of Spice-spiked vapes in schools?
Stephen Morgan
We want to make sure that every school and college across our country is a safe environment for children to learn. I am happy to meet the hon. Member to understand those issues in more detail.
Ian Lavery (Blyth and Ashington) (Lab)
The Secretary of State for Education (Bridget Phillipson)
School support staff are crucial to ensuring that we give children the best possible life chances. That is why we are reinstating the school support staff negotiating body, the new national voice for some of those who do the most important work in our schools. In 2010, the Tories scrapped the body. Within our first 100 days, Labour started the legislative process to bring it back. That is because we value the vital role that support staff play in our education system.
Ian Lavery
Low pay and limited career progression are driving many teaching support staff out of our classrooms. Three quarters of the profession are either considering leaving or are actively looking to leave, with one in five teaching assistant posts currently vacant. Will my right hon. Friend recommit to addressing this recruitment and retention crisis and ensure that these hugely valued employees receive the wages and terms and conditions that they have longed for, for so long?
Bridget Phillipson
My hon. Friend can be assured that the school support staff negotiating body will be tasked with establishing a national terms and conditions handbook, training, career progression routes and fair pay rates for support staff to make sure that we can recruit and retain the brilliant people, including teaching assistants and catering staff, who are essential to the functioning of our schools.
Caroline Voaden (South Devon) (LD)
Teaching assistants in my constituency are struggling to support a growing number of children who need extra help with speech and language skills. What is the Secretary of State doing to ensure that all school support staff have access to relevant training in speech and language development so that they can better support those children?
Bridget Phillipson
The hon. Lady is right to raise that. Our teaching assistants in particular have a crucial role to play in supporting children with special educational needs and disabilities. That is why we have committed additional funding this year so that we can roll out the Nuffield early language intervention to ensure that there is additional early speech and language support for children who are struggling. Our teaching assistants and others in support roles will be a crucial part of that, but I recognise that there is much more that we need to do after 14 years of Conservative failure.
Neil O'Brien (Harborough, Oadby and Wigston) (Con)
On pay, what is the cost to schools and colleges of the national insurance increase? How much will be provided to them in compensation? Will the Secretary of State confirm clearly that they will be fully compensated for the increased prices that suppliers and indirectly employed members of staff, such as caterers and IT and premises staff, will charge as a result? Will those indirect costs be covered—yes or no?
Bridget Phillipson
I welcome the hon. Gentleman to his place. Schools and colleges will be compensated at a national level. I would, however, point out to him that when I became Secretary of State in July, I was presented with the teachers’ pay review body award of 5.5% that the last Government received, put in a drawer and then ran away from and called an election. We have backed our teachers, who are crucial to the life chances of our children. That is why I was delighted that we were able to honour that award and recognise the vital contribution our teachers make. That is how we will recruit 6,500 new expert teachers. If the Opposition refuse to back our commitments on VAT, they should set out how many teachers they intend to cut.
Bill Esterson (Sefton Central) (Lab)
The Minister for School Standards (Catherine McKinnell)
Under the Conservatives, young people felt unprepared for their futures, and employers agreed. That is why this Labour Government have established an independent curriculum and assessment review chaired by Professor Becky Francis. The review aims to deliver a broad and rich curriculum that ensures that young people leave education ready for life and work, which includes embedding digital, oracy and life skills.
Bill Esterson
There is a shortage of technical skilled workers across our economy. It is a chronic problem, not least in sectors such as clean energy. For example, there are only 3,000 registered heat pump installers, but to deliver the last Government’s target of 600,000 installations a year we would need 27,000 of them. That is repeated across the economy. Does my hon. Friend agree that schools have a hugely important role in encouraging young people into technical roles? What are the Government doing to support young people into technical, skilled jobs?
Catherine McKinnell
I congratulate my hon. Friend on his work on the Energy Security and Net Zero Committee. He has a long-established record of championing this issue in the House, and I agree with him. That is why our curriculum review will include speaking to employers as part of the consultation about the essential knowledge and skills that will support and enable students to adapt and thrive in the world and workplace of the future, as well as ensuring that we have that specialist knowledge in schools to support young people to thrive.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
Everyone knows that a knowledge-rich curriculum is the reason why the English education system improved dramatically under the last Government. The embedding of academic rigour produced phenomenal results in PISA—the programme for international student assessment. With that in mind, will the Minister confirm that she has no intention of diluting the curriculum or any focus on academic rigour?
Catherine McKinnell
The hon. Gentleman ignores the many challenges that young people face in our school system. We have established the independent review, which will consider areas to focus on in the light of the evidence, responses to the call to evidence and widespread engagement with stakeholders, including employers. The review will seek to focus on the most significant issues in our curriculum and assessment, but will not destabilise the system. We are looking for evolution, not revolution, of our curriculum.
James Wild (North West Norfolk) (Con)
I think we will have to agree to disagree with the Minister about the record of the last Government on driving up apprenticeships, and in particular the work done by our colleague Robert Halfon. Looking ahead, by how much does the Minister expect the number of full apprenticeships to grow over the course of this Parliament? Will she publish the Department’s assessment of the move to the growth and skills levy and what that does to the number of people starting apprenticeships?
Catherine McKinnell
Our reformed growth and skills levy will deliver greater flexibility for learners and employers and will align with our industrial strategy, creating routes into good skilled jobs in growing industries, such as construction, digital and green skills. We want a shorter duration of foundation apprenticeships in those targeted sectors to help more people learn new high skills at work, fuelling innovation in businesses across the country, and to provide high-quality entry pathways for young people. We are in the process of designing the growth and skills levy, and we will set out more details in due course.
Patrick Hurley (Southport) (Lab)
The Parliamentary Under-Secretary of State for Education (Janet Daby)
Further education is vital in breaking down barriers to opportunity, driving growth and generating clean energy. The Budget allocated £300 million to support young people and improve skills development. In September, the Department launched a new phase of the “It all starts with skills” campaign to promote programmes such as apprenticeships and T-levels.
Patrick Hurley
After 14 years of Tory decline, there is much to do in this country to rebuild our crumbling infrastructure. A lot of people need jobs to help us achieve that. I am glad that the new Government are working to increase the number of students being trained in the industries of the future, but will the Minister tell us how she is working across Government to make sure that more young people can find those opportunities locally, rather than having to move away from their local communities?
Janet Daby
Central to our opportunity mission is that where someone is from should not determine where they end up in life. This Government are serious about supporting young people. We are working across Government to ensure that young people are supported in their communities through devolution, local growth plans, local skills improvement plans and the youth guarantee.
Tom Gordon (Harrogate and Knaresborough) (LD)
The largest provider of vocational education and training opportunities in my constituency is Harrogate college, which was previously promised more than £20 million in a combination of loans and grants under the FE capital transformation fund. I have written repeatedly to the Government to ask if they can secure an extension to that funding period because, due to a hold-up in the planning process, it will not be able to meet the deadlines. Will the Minister commit to guaranteeing the funding for Harrogate college for that rebuild?
Janet Daby
The hon. Member outlined many failings by the previous Government. I will ask my noble Friend the Minister for Skills to meet him.
Mike Martin (Tunbridge Wells) (LD)
Richard Foord (Honiton and Sidmouth) (LD)
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
Manuela Perteghella (Stratford-on-Avon) (LD)
The Minister for School Standards (Catherine McKinnell)
Every child deserves the opportunity to achieve and to thrive but, currently, far from every child has that chance. We have announced that high needs funding will increase by almost £1 billion in 2025-26 compared with 2024-25. We will work with the sector to strengthen accountability, improve inclusivity through Ofsted, support professionals to increase SEND expertise and encourage schools to set up resourced provision or special educational needs units in mainstream schools.
Mike Martin
My constituent Suzie waited for an education, health and care plan for her son Harrison for 42 weeks. By law, they have to be provided within 20 weeks, so Conservative-run Kent county council took more than twice the amount of time that it should have done. When it came, it was full of mistakes, and Harrison is now in the wrong school, his class size is too big and he does not have the specialist support he requires. Previously, Kent county council was put in special measures to sort out the problem with EHCP provision. Would the Secretary of State support KCC going back into special measures so that students like Harrison get the support that they deserve?
Catherine McKinnell
I am sorry to hear about the challenges faced by the hon. Gentleman’s constituent. Local authorities have been impacted by the increased demand for education, health and care plans and by workforce capacity issues, so more efficient and effective service delivery and communication with schools and families is central to turning that around. We will work as quickly as possible to ensure a more effective response and early identification for children, and I will take away the particular example he raises.
Richard Foord
Devon county council is spending £55 million on private provision for special educational needs and disabilities, without enough quality control by the county council. State schools in mid and east Devon want to be able to help provide more SEND specialists and teaching assistants, but EHCPs are prescribing one-to-one care with just £3,000, which is hardly enough for one-to-one provision. Will the Government consider setting up more SEND resource bases in Devon?
Catherine McKinnell
The hon. Gentleman raises an important point. It is vital for turning around the current situation faced by far too many parts of the country. There is not sufficient mainstream inclusion for children with special educational needs, there are not enough specialist units as part of mainstream school inclusion, and we do not have the specialist places needed, so I will, of course, take away the hon. Gentleman’s specific example.
Alison Griffiths
In West Sussex, EHCP requests are running at over 120 per month. Will the Secretary of State’s SEND reforms include measures that could make it harder to get an EHCP, potentially making it harder for children to qualify for special school places?
Catherine McKinnell
The hon. Lady raises an important point. I suspect it is on the back of 14 years of letting down children who need the education that is clearly wanting in so many parts of the country that explains the number of Members raising these issues today. She would do well to reflect on the record of the past 14 years. We are changing the situation as fast as we can, but it will take time.
Manuela Perteghella
The previous Conservative Government left SEND families in Stratford-on-Avon to fend for themselves. I want not just additional SEND places, but continued support for children already attending specialist provision. Further, we need proper investment in home-to-school transport. Children were left without transport at the beginning of the academic year, depriving them of access to their education. What are the Government doing to ensure not just that budgets reflect need, but that they do so to address the problem immediately?
Catherine McKinnell
I recognise the long list of challenges the hon. Lady sets out, which she knows her constituents are facing. Children with special educational needs and disabilities are being failed with poor outcomes, and parents are struggling to get their children the support they need and deserve. This Government’s ambition is for all children and young people with special educational needs or in alternative provision to get the right support to achieve and succeed in their education and as they move into adult life. We are moving as fast as we can. It is a key part of our opportunity mission and we will continue to do so.
Helen Hayes (Dulwich and West Norwood) (Lab)
The additional £1 billion in the Budget for SEND support is very welcome, but the Minister will know that local authorities remain anxious about the forthcoming end to the statutory override of dedicated schools grant deficits in March 2026. What discussions is the Minister having with the Treasury and the Ministry of Housing, Communities and Local Government on a plan to prevent the end of the statutory override from becoming a cliff-edge financial calamity for local authorities and children with SEND?
Catherine McKinnell
As my hon. Friend mentions, high-needs funding will increase by almost £1 billion in 2025-26, compared with 2024-25, bringing total high-needs funding to £11.9 billion. That funding will help local authorities and schools with the increasing cost of supporting children and young people with SEND. We will continue to support local authorities to meet those demands and reform our system, so we can create inclusive education for every child.
Rachael Maskell (York Central) (Lab/Co-op)
I want to raise the issue of governance. There are too many minds controlling the system, which ultimately stymies local authorities’ ability to reform services in order to embed a culture of nurturing and to ensure that the best interests of children are represented. While reviewing the SEND system, will the Minister take a look at governance, and ensure that is there is one controlling mind, and it is that of the local authority?
Catherine McKinnell
My hon. Friend will be aware of our plans to ensure that all schools co-operate, within their local facilities, with their local authorities when it comes to place-planning and admissions, to ensure that we have a school system that serves the whole community and to ensure that all children, whether or not they have special educational needs and disabilities, are properly served and given the opportunity to thrive within that system.
Ashley Dalton (West Lancashire) (Lab)
I apologise for my premature bobbing at the beginning of this questions session, Mr Speaker.
My constituent has been waiting for more than a year for Conservative-run Lancashire county council to issue her 15-year-old son’s EHCP. In that time he has attempted suicide and has stopped eating, and my constituent’s health is suffering as a result of the stress. How can the Minister reassure my constituent that the additional £1 billion for SEND provision will speed up the issuing of EHCPs so that students with special needs receive the support that they need?
Catherine McKinnell
I am sorry to hear about the experience of my hon. Friend’s constituent, and she was right to raise it today. We know that far too many families and children are waiting far too long to receive the support that they need, and we are determined to reform the system, because children’s needs should be recognised at the earliest possible stage. They should not be waiting for EHCPs in order to receive that support within our education system. That is the change that we want to see, but we recognise the demand on EHCPs and the process, and we recognise that we need to improve.
Mr James Frith (Bury North) (Lab)
The 2014 reforms put SEN rights at the heart of the special educational needs system, but the then Government did only half the job, failing to honour the resources that they had promised. EHCPs take too long to access, and children are often sent out of borough to receive specialist education, which is more expensive. How will the Government provide more SEN provision in our mainstream schools in towns such as mine?
Catherine McKinnell
My hon. Friend is right to raise the priority of ensuring that children with special educational needs and disabilities are accommodated in mainstream schools with their friends whenever possible. We are ensuring that training is available from the earliest possible stage so that those in the workforce can teach children with SEND, and that educational psychology services are there to help schools to make any changes that are necessary. We want to work in partnership with the sector to secure the best outcomes for every child.
Jen Craft (Thurrock) (Lab)
The Parliamentary Under-Secretary of State for Education (Stephen Morgan)
Ensuring that parents have access to affordable and high-quality childcare is a priority for this Government. We will focus on greater opportunities for every family to access early education, and on greater opportunities for children to thrive and develop. As an initial step, we have announced the bidding round for the first 300 school-based nurseries from next September.
Jen Craft
Many early years providers struggle to meet the needs of children with SEND. Lack of funds, lack of training and lack of specialist staff often mean that those that do provide a good or excellent service quickly become over-subscribed. What steps is the Department taking to reassure parents and carers of children with SEND that those children will have access to the childcare or early years provision in their areas that meets their needs?
Stephen Morgan
We are helping members of the workforce to develop the skills and confidence that will enable them to work effectively with children with SEND, and reviewing early years funding arrangements to ensure that they meet the needs of those children. I should be happy to meet my hon. Friend or visit her constituency to understand the issues that her local providers are facing.
Dr Luke Evans (Hinckley and Bosworth) (Con)
Martin Lewis has long campaigned for changes in childcare, in particular because the way in which it is set up can damage single parents. There is an obvious cliff edge. The last Government proposed a consultation on thresholds for households being taken as one, but this Government seem to have scrapped that in the Budget. Will Ministers be speaking to the Treasury to decide how they will overcome this cliff edge that affects so many single parents?
Stephen Morgan
I thank the hon. Member for his question. We have a child-centred Government, and early years is a priority for the Secretary of State. We will focus on reforming the childcare system to ensure that it is fit for purpose for the future and of high quality for all young people. We are taking the sector’s concerns seriously, and we want to ensure there is a sustainable system going forward.
Sarah Smith (Hyndburn) (Lab)
Laurence Turner (Birmingham Northfield) (Lab)
The Minister for School Standards (Catherine McKinnell)
Last month, the National Audit Office confirmed what many families already know: the SEND system that we inherited from the Conservatives is broken. Indeed, the number of hon. Members raising concerns on behalf of their constituents shows the scale of the challenge that we have inherited. We are working as quickly as we can to make the changes that families need. It is huge, complex reform, but we are determined to fix the system.
Sarah Smith
Far too many people in my constituency of Hyndburn find the current EHCP process to be adversarial and one that fails to assess their child’s needs adequately. As the Government work to reform the system, how can we be sure that the voices of parents and children will remain at the heart of any policy change?
Catherine McKinnell
I recognise what my hon. Friend is saying. We engage with children, young people, parents and carers in the development of policy, including through our participation contract. Next week I will meet our National Young People’s Group, which is a diverse group of young people from across England who have special educational needs and disabilities. They share their views and experiences with us, and I am looking forward to it.
Laurence Turner
At the recent SEND surgery that I organised with SEND Socials Birmingham, one message came through time and again: different public bodies are not working together as the Children and Families Act 2014 intended, and this is contributing to long delays and distress. Will the Minister agree to receive representations from young people and families in south Birmingham, so that their negative experiences can at least contribute to the important work of reforming the SEND system?
Catherine McKinnell
Absolutely. We are committed to working with families to deliver an improved SEND system that works for all. We ensure that families have access to free and impartial information, advice and support to enable them to participate as fully as possible in the decisions that affect them, but I would welcome suggestions from my hon. Friend and parents in south Birmingham on how to improve the system.
Richard Tice (Boston and Skegness) (Reform)
The Minister has just agreed that there is a crisis of capacity for SEND provision in the state sector, yet the Government’s deeply misguided VAT policy on school fees is exaggerating this crisis and the crisis of EHCP assessments. Surely the right thing to do is grant a VAT exemption on SEND children to ease the crisis.
Catherine McKinnell
We are committed to ensuring that pupils whose needs necessitate a place at private school are not impacted by this policy. Where a pupil’s place in private school is funded by a local authority in England, Scotland and Wales because the pupil’s needs cannot be met in the state sector, the local authority will be able to reclaim the VAT it is charged on fees.
Lewis Cocking (Broxbourne) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests. Hertfordshire currently receives the third lowest SEND funding in the country, but since 2015 the number of children in the county with educational, health and care plans has grown by a staggering 223%. Does the Minister agree that funding should reflect the current need?
Catherine McKinnell
High-needs funding will increase by almost £1 billion in 2025-26 compared with 2024-25, bringing the total high-needs funding to £11.9 billion. The funding will help local authorities and schools with the increasing costs of supporting children and young people with special educational needs. On the distribution of funding, the national funding formula will be announced later in November.
James Asser (West Ham and Beckton) (Lab)
The Parliamentary Under-Secretary of State for Education (Janet Daby)
This Government are about fixing the foundations. To help do this, we have launched an independent curriculum and assessment review, which aims to enable all young people to access rigorous and high-value qualifications and training. We will also introduce a youth guarantee, which will help 18 to 21-year-olds to access education, training and apprenticeship opportunities, and to receive employment support.
James Asser
The London Design and Engineering university technical college in my constituency caters for 14 to 19-year-olds and offers at secondary level the kind of training often only found at further education level. Does the Minister agree that we need to create more opportunities at secondary level for skills-based training to ensure that it is embedded and lasts, post 16, into the workplace and that it improves employability skills as well?
Janet Daby
I appreciate my hon. Friend’s thoughtful question. This Government absolutely value university technical colleges for helping young people to develop technical skills and, with employer support, to move into technical careers. The independent curriculum and assessment review aims to broaden the curriculum, ensuring that young people do not miss out on vocational subjects and that they leave education ready for employment.
Josh Babarinde (Eastbourne) (LD)
Eastbourne, as the sunniest town in the UK, is on a mission to be a solar energy superpower. At the heart of that is East Sussex college’s green training hub, which is supporting students, young and mature, to move into that sector. Will the Minister join me in celebrating the hub’s second birthday, and will she come down to Eastbourne to visit the hub and its principal, Rebecca Conroy, and to soak up some Eastbourne sun?
Janet Daby
The sun is obviously shining on Eastbourne, even though may not be shining everywhere else at the moment because of the weather. A visit to Eastbourne to celebrate the hub sounds delightful, but this falls to my noble Friend, Baroness Smith of Malvern, so I will pass on these comments to her.
Neil O’Brien (Harborough, Oadby and Wigston) (Con)
The sun always shines on Chorley, Mr Speaker. One thing that helps young people to gain skills is involvement in the cadets, but the Department recently confirmed a decision to cancel support payments to combined cadet forces in state schools. That payment was something that people involved in the cadets and teachers really valued. What assessment was made beforehand of the impact that this cut would have? Will the Secretary of State reconsider it?
Janet Daby
We respect all our young people who are in the cadets or any other armed forces areas. The hon. Gentleman raises this point, but after 14 years of the previous Government’s failure and the £22 billion black hole, there are difficult choices to be made. We are absolutely committed to children and young people and to doing the best we can do by them.
Bobby Dean (Carshalton and Wallington) (LD)
The Parliamentary Under-Secretary of State for Education (Janet Daby)
The Government are committed to breaking down barriers to opportunities for all young people, including young carers who provide a critical role in caring for their loved ones. We now collect specific absence data for young carers through the school census, and our statutory attendance guidance seeks to ensure that they receive holistic support to overcome barriers to attendance.
Bobby Dean
One thing that might be driving absences from schools for young carers is long-term mental health conditions. The Royal College of Paediatrics and Child Health says that as many as one in five young carers could be suffering from long-term mental health conditions. Can the Minister explain what measures the Department is taking to ensure that sufficient help is in place for people suffering from those conditions?
Janet Daby
We want to ensure that we support young carers in school, as well as other children who may be suffering from mental health conditions. This Government are entirely committed to supporting young people with mental health conditions, and we are making sure that there will be mental health support in every school up and down the country. For young carers who may be experiencing increasing mental health conditions, we are expanding the attendance mentoring programme to ensure that around an extra 10,800 young carers are supported, especially in the area of mental health.
Claire Hazelgrove (Filton and Bradley Stoke) (Lab)
Nick Timothy (West Suffolk) (Con)
The Secretary of State for Education (Bridget Phillipson)
Our independent curriculum and assessment review was launched in July. It will support our ambition for high and rising standards for all, and for a broader curriculum with an excellent foundation in the core subjects. The review has launched its call for evidence, and there is still time to participate. The review will publish its interim report in early 2025, with final recommendations in autumn 2025.
Claire Hazelgrove
Research from the University of Cambridge shows that financial habits are often set by the age of seven, yet financial education for young people is still a postcode lottery. It is not part of the primary curriculum, and many teachers at secondary level, where it is part of the curriculum, lack resources and confidence in teaching it. Can the Secretary of State confirm whether such foundational life skills, which all young people need in order to thrive, will be considered at all key stages in the curriculum and assessment review?
Bridget Phillipson
I am grateful to my hon. Friend for highlighting this important area, which has been raised by many Members in the past. I am sure the review will carefully consider what financial education young people need to meet that aim, and it will, of course, consider what support we need to provide to enable teachers to teach the reformed curriculum successfully.
Nick Timothy
I think parents will be quite alarmed by the answer given to my hon. Friend the Member for Central Suffolk and North Ipswich (Patrick Spencer), as it had very little focus on academic attainment. The Education Secretary appointed Becky Francis, who attacked the Blair Government for their obsession with academic achievement. The National Education Union denies that school accountability should be at the heart of our assessment system, which is wrong, so will the Secretary of State take this opportunity to rule out scrapping SATs in year 6?
Bridget Phillipson
I rather fear that the hon. Gentleman and his party have learned nothing from the massive defeat inflicted upon them by voters in July. I can assure this House that the review will be evidence-based and will not seek to fix things that are not broken. However, I remind the hon. Gentleman that his record is a SEND system in crisis, one in five children persistently absent from school—they cannot learn if they are not there—falling standards, a persistent disadvantage gap, and over half of disadvantaged pupils in state primary schools not leaving with the required standards in English and maths. He might be proud of that record, but I am not.
Edward Morello (West Dorset) (LD)
The Secretary of State for Education (Bridget Phillipson)
Last week’s Budget protects key education priorities, putting education back at the forefront of national life and breaking down barriers to opportunity for every child at every stage. The Department for Education’s settlement means that we can begin to deliver on this Government’s mission: rolling out funded childcare, rebuilding and maintaining our school and college estate, reforming the SEND system, investing in children’s social care, and ensuring that young people have the skills that they need to seize opportunity.
Additionally, the £2.3 billion increase in core schools funding, together with July’s fully funded 5.5% teacher pay award, further supports our commitment to recruit 6,500 new teachers. This Government will fix the foundations to deliver change, and there is no better place to start than education.
Edward Morello
West Dorset has seen a 134% increase in the number of children requiring SEN support in the last six years. As of the latest data, more than 275 children are waiting for education, care and health plan assessments, with the average waiting time well in excess of the 20-week statutory limit. Will the Minister outline what specific measures the Department is implementing to ensure that the much-needed £1 billion investment announced in the Budget is used to bring down waiting times for EHCPs in places such as West Dorset?
Bridget Phillipson
The hon. Gentleman is right to raise his concern, as so many have this afternoon, about the state of the system for supporting children with SEND. It is not working, and we know it needs reform, but committing an extra £1 billion into the system at this crucial time was an important first step. We face choices on how to take this system forward, and how to make it less adversarial and more focused on better life chances for our children. One of the first steps I took was to refocus the work of the Department for Education on children with SEND.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Bridget Phillipson
I am grateful to my hon. Friend for raising that important issue, about which there was a lack of thinking by the previous Government on how we do this properly and seriously. Challenges come with demographic change, but there are opportunities too. That is why we have announced more primary-based nurseries in empty classrooms, and we can think about doing more around additional support and provision for children with special educational needs and disabilities, in particular.
Laura Trott (Sevenoaks) (Con)
There has been a lot of discussion about our record in government. Under the Conservatives, England climbed international educational league tables, but what happened to Labour- run Wales? It fell. Under the Conservatives, youth unemployment went down and school standards improved —that is the record of the Conservative Government, which we are proud to defend. Does the Secretary of State agree that academisation was one of the driving forces behind that very good school improvement?
Bridget Phillipson
I am sorry to disappoint the right hon. Lady, but we will be talking about the Conservatives’ 14 years of failure for a very long time indeed.
Bridget Phillipson
Children across our country were failed by her party time and again, including the children with SEND we have heard about this afternoon—
Bridget Phillipson
We are focused on driving up standards for our children, the length and breadth of our country, by providing more teachers and improved school budgets, and by ensuring our children do not go to school in crumbling buildings, unlike the Conservative party, which made sure that our children went to school in buildings that were literally propped up.
Laura Trott
The problem that we have is that while we are learning the lessons of our defeat, the Government are failing to learn from our brilliant record on school standards. Results improved, more schools were “good” or “outstanding”, but now the party in government is trying to undermine one part of the basis for that success. Why is the Secretary of State scrapping the academy conversion support grant when it was such a push behind improving school standards?
Bridget Phillipson
The Conservative party has learned absolutely nothing and parents will not buy it. We were faced with some very tough choices because of the £22 billion hole in the public finances, as the right hon. Lady, the former Chief Secretary to the Treasury, knows all too well—[Interruption.] We are fixing the foundations and rebuilding our schools.
Mr Speaker
Order. Are we going to work together? It would be much easier for all of you, I can assure you.
Mr James Frith (Bury North) (Lab)
Mr Speaker
Order. These are topical questions. I have to get everybody in who has not got in before. You have got in once already, so don’t be greedy.
The Parliamentary Under-Secretary of State for Education (Stephen Morgan)
We are committed to improving school buildings, where we want our children to achieve and thrive, but that will not be a quick fix. Bury council has been awarded £1.8 million for the financial year to improve its school buildings, including The Derby high school. Last week, this Government increased next year’s capital allocation for England to £2.1 billion, some £300 million more than last year. I will, of course, be happy to meet with my hon. Friend—
Mr Speaker
Order. Obviously, set-up questions have very long answers. We should be able to have shorter questions and answers.
Calum Miller (Bicester and Woodstock) (LD)
Bridget Phillipson
We expect the additional funding to go directly to providing provision for children and young people. We will set out wider plans about the issues the hon. Gentleman raises in due course.
Damien Egan (Bristol North East) (Lab)
The Parliamentary Under-Secretary of State for Education (Janet Daby)
Foster carers provide some of the best care for children who are looked after. Some £4 million of new funding has been allocated for regional foster recruitment hubs, bringing the total amount of funding to £15 million. I am pleased to say that these hubs will generate hundreds of new foster placements.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
Stephen Morgan
I note the hon. Member’s point on that specific college. As he will know, the Chancellor committed £1.4 billion at the Budget to drive the delivery of the current school rebuilding programme for next year. Over the coming weeks and months, we will work with trusts and local authorities to identify which schools will be in scope.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Janet Daby
The Department considers level 2 English and maths to be essential, so students without those qualifications are required to continue studying to achieve them. The independent curriculum and assessment review is looking at support for students without level 2 in English and Maths at the age of 16, and further information will follow shortly.
James MacCleary (Lewes) (LD) [R]
Bridget Phillipson
Ensuring that there is the right level of provision for and identification of SEND in the early years is an essential part of our review of the early years system and of the reform that is required.
Oliver Ryan (Burnley) (Lab/Co-op)
Bridget Phillipson
It was a pleasure to visit my hon. Friend ahead of the election—and what a brilliant champion he is for Burnley and his constituents. I would be very happy to visit again. As part of setting out our commitment to further education, at the Budget we put in place an additional £300 million, alongside £300 million of capital funding for our colleges.
Tim Farron
The hon. Member for Strangford (Jim Shannon) and I are indeed never seen in the same place together. [Laughter.]
Stramongate nursery school in Kendal faces closure following an Ofsted inspection. If it had been a regular school, it would have had help to remain open under special measures, but as it is, the nursery has to close. Will the Secretary of State pay attention to this particular issue to ensure that the children and parents are protected, and that childcare can continue?
Bridget Phillipson
I will look carefully at the case and ensure that the hon. Gentleman has a meeting with the relevant Minister to discuss it further.
Chris Hinchliff (North East Hertfordshire) (Lab)
Stephen Morgan
I am very happy to meet my hon. Friend to discuss the matter.
Stuart Andrew (Daventry) (Con)
Thank you, Mr Speaker. It has been a while since I have spoken!
Those at Buckton Fields school in my constituency were delighted when they had a newly constructed building, but that delight was sadly short-lived, as there were defects. As a consequence, with interim arrangements, the school’s roll has gone up and down, and now it has a £45,000 shortfall in its budget. Will the Minister meet me and representatives from the school to discuss the issue?
The Minister for School Standards (Catherine McKinnell)
I welcome the right hon. Gentleman back to his place and would be more than happy to meet him to discuss the challenges in his constituency.
Jade Botterill (Ossett and Denby Dale) (Lab)
The UK’s social mobility commissioner has highlighted the “geography of disadvantage” being experienced by young people in northern post-industrial communities like those in Ossett and Denby Dale. Does the Secretary of State agree with the commissioner that decisive and bold Government action to improve educational attainment and opportunity is required for these children?
Bridget Phillipson
I do agree, and I am grateful to my hon. Friend for raising the point. I am leading the work across Government on breaking down the barriers to opportunity in order to break the unfair link between background and success. We know that tackling child poverty is a crucial part of that process, and it is essential that we get the recommendations of the child poverty taskforce to ensure that poverty does not hold back our children’s life chances.
Alicia Kearns (Rutland and Stamford) (Con)
Helen Blythe from Stamford has campaigned courageously for improvements to allergy safety since her son Benedict died following a severe allergic reaction at school in 2021. Will the Minister commit to meet me to discuss introducing a mandatory requirement for all schools to have a specific allergy and anaphylaxis plan, and for every school to have adrenaline auto-injectors?
Stephen Morgan
I met Helen Blythe last week, and I will happily meet the hon. Member to take forward her concerns.
Tom Rutland (East Worthing and Shoreham) (Lab)
I thank the Minister for working with Treasury colleagues to secure important additional funding to rebuild schools in last week’s Budget. Will he meet me to discuss the serious repair issues facing St Nicolas and St Mary primary school in my constituency, which are hampering children’s ability to thrive?
Stephen Morgan
We are proud of the investment that we are making in school buildings. I would be delighted not only to meet my hon. Friend but to visit his constituency.
Mr Richard Holden (Basildon and Billericay) (Con)
Will the Secretary of State acknowledge, as the right hon. Baroness Smith of Basildon has in the other place, that concerns around freedom of speech and academic freedom in our universities are not a botched culture war but a serious matter that needs to be addressed properly?
Bridget Phillipson
As I said to the right hon. Gentleman during the last Education questions, I believe in the vital importance of freedom of speech and freedom of expression within our university campuses. University is a place where young people should be exposed to views that they might find difficult or challenging; however, it is important that any legislation in this area is workable.
Chris Ward (Brighton Kemptown and Peacehaven) (Lab)
The current national guidelines on school transport mean that children who live less than 3 miles from school do not get any support in Government funding. In my constituency, that means that some of the most deprived kids either have to walk an hour and a half a day to and from school, or their already struggling families have to find the money for their transport. Will the Minister meet me to talk about this and see whether the 3-mile limit can be changed?
Catherine McKinnell
We are committed to removing barriers to opportunity for every child. No child should struggle to access education because of a lack of transport. We are keen to understand how well the transport system is working for children accessing schooling, and I will happily meet my hon. Friend to discuss it further.
Vikki Slade (Mid Dorset and North Poole) (LD)
The majority of teachers have had no more than half a day’s training on autism. If the Government are as committed as they say they are to ensuring that most children with special educational needs and disabilities receive a mainstream education, what will they do to ensure that teacher training meets children’s needs?
Bridget Phillipson
The hon. Lady is right to identify that this is an area where we must do more, and do it better. I hear, as she doubtless does, from teachers and support staff that they want additional training and support in this crucial area, and we will ensure that it is part of our SEND reform.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
We know that children with special educational needs and disabilities are more likely to live in poverty, so how will my right hon. Friend ensure that children with special and complex needs are incorporated into the child poverty strategy?
Bridget Phillipson
I am grateful to my hon. Friend for the work that she leads on behalf of this House on the Education Committee. Our child poverty taskforce is absolutely focused on this area. We will listen to and engage directly with families across the UK, including those who have children with SEND. As she identifies, child poverty blights the life chances of far too many, and that must change.
Alison Bennett (Mid Sussex) (LD)
Carers Trust estimates that two children in every classroom across the UK are young carers, yet 72% of schools say that they have no young carers on their roll. What steps is the Department taking to address that?
Janet Daby
We have recently required all schools to provide that data, so that we can find out where the young carers are and ensure that they gain the support that they need. Through the children’s framework, they can have an assessment alongside their parents. I am happy to speak further on this matter.
Warinder Juss (Wolverhampton West) (Lab)
I welcomed the Budget last week, in which the Chancellor confirmed the recruitment of 6,500 teachers. Will the Secretary of State please confirm how those extra teachers, including specialist teachers, will be recruited, and how issues such as workload, working conditions and support for the training and development of new and existing teachers and school support staff will be addressed?
Bridget Phillipson
We know that having a well-supported, highly qualified teacher at the front of the class makes the single biggest difference to children’s life chances, but it is also crucial that we tackle issues around workload and pay. That is why I was delighted that we were able to bring in a fully funded 5.5% pay award for our teachers, to recognise their brilliant hard work on behalf of our children, our families and our country.
Budget: Implications for Farming Communities
(1 day, 18 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mr Alistair Carmichael (Orkney and Shetland) (LD)
(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if he will make a statement on the implications of the Budget for farming communities.
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
I welcome the right hon. Gentleman to his place—he will make an excellent Chair of the Select Committee on Environment, Food and Rural Affairs—and thank him for the opportunity to talk about this important issue.
As the Minister for Food Security, I can assure the House that food security is national security. The Government’s commitment to supporting farmers and rural communities is unwavering. We have committed £5 billion in the agricultural budget over the next two years—the biggest ever budget for sustainable food production and nature recovery in our country’s history. We are also releasing £60 million to support farmers whose farms have been devastated by severe flooding, and investing £208 million to protect the nation from potential disease outbreaks that threaten our farming industry, food security and human health.
However, as we are all only too aware, the Conservatives left behind a £22 billion black hole in our nation’s finances—[Interruption.] Yes, you did. And this Government have had to take tough decisions on tax, welfare and spending to fix the foundations and deliver change, including a series of decisions on tax to protect the payslips of working people. That is possible only by making changes to other taxes, such as agricultural property relief, which was previously available to all agricultural property at a rate of 100%. Currently, small farms can find themselves facing the same levels of tax bills as much larger farms, despite having a much smaller asset. Twenty per cent of agricultural property relief is claimed by the top 2%; 40% is claimed by the top 7%. That is not fair, it is not sustainable, and sadly, it has been used in some cases by wealthy landowners to avoid inheritance tax. That is why the Government have announced plans to reform agricultural property relief.
The Secretary of State met National Farmers Union president Tom Bradshaw this morning. We absolutely understand—[Interruption.]
Mr Speaker
Order. Dr Mullan, I heard you before, and I am certainly not putting up with it this time. If you want to leave, do so now, because I want to be able to hear others. Do we understand each other?
Daniel Zeichner
The Secretary of State met Tom Bradshaw this morning. We completely understand farmers’ anxieties about the changes, but rural communities need a better NHS, affordable housing and public transport, and we can provide that if we make the system fairer. The reforms to agricultural property relief mean that farmers can access 100% relief for the first £1 million and 50% relief thereafter—an effective 20% tax rate. That means that an individual can pass up to £2 million, and a couple up to £3 million between them, to a direct descendant, inheritance tax-free. Currently, 73% of agricultural property relief claims—
Mr Speaker
Order. I do not know whether you are aware, Minister, but you only have three minutes. How long will you be now? Are you coming to the end at this minute?
Daniel Zeichner
Seventy-three per cent of agricultural property relief claims are for less than £1 million. The vast majority of farmers will not be affected. They will be able to pass the family farm down to their children just as previous generations have always done. It is a fair and balanced approach that protects family farms while also fixing the public services that those same families rely on. It is part of a Budget that will restore economic stability and begin a decade of national renewal.
Mr Speaker
I call the Chair of the Environment, Food and Rural Affairs Committee.
Mr Carmichael
I remind the House of my entry in the Register of Members’ Financial Interests.
Thank you, Mr Speaker, for allowing this urgent question. I also thank the Minister for his statement, but I fear that it illustrates rather well some of the lack of understanding that has brought us to this point. More than any other industry, farming relies on stability and long-term planning. That is why many people in the industry relied on undertakings given by the Secretary of State when in opposition that the Labour party in government would not change inheritance tax reliefs for farming.
Every farming business is capital-rich but revenue-poor. Those businesses also trade in a market that has been more heavily influenced by government intervention than any other. Agricultural property relief is not a loophole; it has been a deliberate policy of successive Governments for the past 40 years, designed to avoid the sale and break-up of family farms. Is that still a goal to which this Government adhere? As the NFU put it, the Government have seemingly failed to grasp
“that family farms are not just small farms, and that just because a farm is a valuable asset it doesn’t mean those who work it are wealthy.”
As the Minister will be aware, some of the figures he has just given the House have been vigorously challenged over the past few days, particularly the assertion that only one in four British farms will be affected. Will the Minister and his Treasury colleagues publish the data behind those figures? In particular, does the figure that 73% of farms will not be affected rely on the inclusion of very small holdings?
These changes will have a ripple effect across the whole rural community. Will the Government publish their impact assessment for other rural businesses? Can the Minister also explain why the Treasury has removed the ringfence around farm support to be spent in Scotland, Wales and Northern Ireland? That ringfence was introduced after the Bew review. If it needed a review to introduce it, how can it just be abolished now out of the blue?
The Prime Minister has said in the past, and the Minister has repeated today, that food security is national security. Can the Minister point to one measure in this Budget that makes achieving that aim easier, rather than harder?
Daniel Zeichner
I thank the right hon. Member for his questions, which are serious and important, as one would expect. Let me start by pointing out that until 1992, this relief did not exist. The system has existed before and people have operated differently, although I accept it has been different for the past 30 years.
Turning to the figures, I encourage people to reach for the detail—to look at the actual figures. The only thing we can go on is the claims, and the figures coming from the Treasury on claims for the last year available absolutely reflect that 73% figure. The right hon. Gentleman raises an important point about the ringfence; that point is under discussion, but I have made assurances that the devolved Administrations will be closely informed about, and involved in, what happens. These are important points, and they should be treated seriously.
Tonia Antoniazzi (Gower) (Lab)
I do not really care for the high-profile voices that we have got attacking a Labour Government, but I do care about the family farms in my constituency. I know that the Minister cares for those farms as well, as does the Prime Minister. I welcome the figures we have been given. However, those figures do need to be translated to our family farmers; they need to see what it is like on the ground. I would welcome a meeting with NFU Cymru and the Minister to discuss what things are going to look like for farmers, especially in Gower and the rest of Wales, where there is a completely different landscape.
Daniel Zeichner
I thank my hon. Friend for her contribution. Can I say how much I enjoyed visiting Wales, with the Welsh Minister, very early in my tenure? It was an important sign from this Government that we take farming seriously across the entire United Kingdom.
I share my hon. Friend’s very strong points about the importance of the family farm. What we are doing here is protecting the family farm. I have visited right around the country over the past five years, and on almost every visit, people have told me that they are concerned about people coming from outside—they often say “up London” or “down London”—with a lot of money and buying up local farmland over the heads of local people, not because they care about farming but to use that farmland for tax evasion purposes. This policy can be helpful to family farms and protect them against—[Interruption.] The hon. Gentleman on the Opposition Front Bench says from a sedentary position that it will not, but it is people from his area who have been telling me about these problems. They repeated them constantly when we were in opposition, and here are a Labour Government doing something about it.
Robbie Moore (Keighley and Ilkley) (Con)
Mr Speaker,
“losing a farm is not like losing any other business—it can’t come back.”
Those are not my words, but the words of our Prime Minister at the National Farmers Union conference just last year. Over the weekend, we have heard gut-wrenching stories from farmers up and down the nation who feel completely and utterly betrayed by the measures in this Budget. I ask the Minister: why does the Secretary of State continue to say that he is proud of his family farm tax? Does the Minister realise that the vast majority of farming families are not multimillionaires? Most are cash poor and many are struggling to break even. How does the Secretary of State expect farmers, in his words, to do—[Interruption.]
Mr Speaker
Order. Can I just say to the hon. Member for East Thanet (Ms Billington) that I do not need any chuntering? Do we understand?
Robbie Moore
How does the Secretary of State expect farmers to do more with less? Why is he happy to hand our next generation of farmers an impossible tax bill?
Next, the Government claim that small family farmers will be protected, yet the Country Land and Business Association and the NFU have today disputed the Government’s figures. Will the Minister commit to releasing a full assessment of his policy, including an impact on national food security?
While the changes to inheritance tax relief have been gaining the national headlines, there are many other negative impacts on farming businesses from the Budget. Increased national insurance contributions, coupled with a lower national threshold; an accelerated reduction in de-linked payment rates; higher taxes on double-cab pick-up vehicles; new taxes on fertilisers—I could go on, but this all begs the question: does the right hon. Member for Streatham and Croydon North (Steve Reed) actually know anything about farming at all? More importantly, after the Secretary of State looked British farmers in the eye and specifically promised them that there would be no changes to agricultural property relief, how on earth can farmers believe a single word that his Minister is about to say?
Daniel Zeichner
I am very grateful to the hon. Gentleman for promoting me to Secretary of State—I hope he has similar success in the coming hours.
The hon. Gentleman raises a whole series of questions. He asked again, as others have, about other elements in the Budget. The figures are absolutely there; they were published by the Treasury and are there for all to read. They are the facts on the estates that have made claims on agricultural property relief in the last year available. [Interruption.] They are there for everyone to see. It is not difficult, it is not complicated—they are there.
Something that perhaps has not been said, but which should be, is that there were many calls to reflect the changing way in which farming operates by including environmental land management schemes within the scope of agricultural property relief. I hear nothing from Opposition Front Benchers about that. Do they not understand the way in which British farming is changing?
Helena Dollimore (Hastings and Rye) (Lab/Co-op)
Many farmers in my constituency of Hastings and Rye are feeling the impact of 14 years of Conservative failure. In particular, they have faced many challenges with flooding. Can the Minister tell me what steps we have taken in the Budget to protect small family farms and how we will continue to support farmers facing flooding?
Daniel Zeichner
I am grateful to my hon. Friend because she makes some important points. Ahead of the Budget, there were lots of predictions about what would happen. Of course, what happened is that this Government have protected the farming budget—indeed, raised it—and we are absolutely committed to paying out to farmers the £60 million that they deserve for flooding. That is £60 million, of course, that was not really budgeted for by the Conservatives, as part of their £22 billion black hole. The difference between us and them is that we are taking a responsible approach, which means that farmers can look forward to a stable future, as opposed to the chaos of the last decade.
Tim Farron (Westmorland and Lonsdale) (LD)
Farmers across the United Kingdom are coping with the lingering legacy of betrayal—betrayal from the trade deals that happened under the last Government, which threw them under a bus; and betrayal from the transition from the old payment scheme to the new one, which saw many of them going bust or forced into making business decisions that they would never, ever have chosen. That legacy of betrayal is one that hangs heavy, and it is why farmers in my constituency and elsewhere feel so utterly disappointed by this Government’s Budget last week.
Let us look first at the agricultural property relief changes. There are 1,500 farms in Cumbria and 440 in my constituency affected by this. Has the Minister done an investigation into the number of farmers who are living on less than the minimum wage each year in terms of income, but who have a property that will be affected by these changes, particularly given the 41% decrease in farm incomes under the Conservative Government over the last five years? Will he also assess the impact on tenant farmers? Some 50% of my farmers are tenants and will be affected by the disruption that this change will create. Would it not be wise for him to implement the Rock review of tenant protections before introducing something like this? Will he also look again at the £2.4 billion budget and increase it by £1 billion, just as the Liberal Democrats suggest? If we do not feed ourselves, we are a failing country.
Daniel Zeichner
The hon. Gentleman is a well-informed, thoughtful person, and I listen closely to what he has to say on these issues, but I do wonder sometimes about the Liberal Democrats’ approach to economics, because that £1 billion would have to come from somewhere. I am afraid that the difference between Labour and the Opposition side of the House is that we are determined to get the public finances in order, because it is upon that basis that future prosperity in the farming sector will come.
In terms of farm incomes, the hon. Gentleman is absolutely right that many farms are very marginal. We know that, and it is complicated, but I would say to everyone in this House that the entire inheritance tax system is complicated; I must say I have read a lot over the weekend that was perhaps a little short on accuracy. He is also right about tenant farmers, and we are in close conversation with the Tenant Farmers Association about how the changes can perhaps be used to good effect, because another element which has not been raised so far, interestingly, by the Conservative party is the generational challenge we face in farming. I will not be telling farmers how to run their lives, but it is worth reflecting on the fact that sometimes it is difficult to make that transition and we need to get more younger people into farming.
Andrew Pakes (Peterborough) (Lab)
I put on record that I am an officer of the all-party parliamentary group on farming. I also put on record my thanks to farmers who, through a torrid decade, have produced food and sustenance for us in this country. We should all recognise that. Farmers will rightly be anxious after the experiences they have had in the past few years. Does my hon. Friend the Minister agree that that anxiety will only be heightened by the scaremongering from some Members of this House, and will he commit to working with hon. Members, the National Farmers Union and farmers to ensure that the positive elements around food security in this Budget are delivered in the years to come?
Daniel Zeichner
My hon. Friend and near neighbour is right to pay tribute to our food producers. One thing we know for sure is that we are going to need food into the future, and farmers are essential to the future of this nation and our economy. That is why we will treat them with the utmost respect and seriousness and have a serious debate about how we transform farming. Again, while this has not been picked up much in the debate so far, the effect of this Budget is to speed up still further that transition to an environmentally friendly, nature-friendly way of farming, alongside producing the food that our country needs. That is a really important transition—I pay tribute to the current Opposition, who started that process in government, but I have been unwavering in my support for it for a number of years and I am determined to see it through to a proper conclusion. My hon. Friend is also right that we will work with everyone involved to get good, sensible outcomes, because that is what this Government are about.
Dr Luke Evans (Hinckley and Bosworth) (Con)
The National Farmers Union tweeted:
“In 2023 Prime Minister Keir Starmer looked farmers in the eye and said he knew what losing a farm meant. Farmers believed him. After today’s budget they don’t believe him any more.”
What is the Prime Minister going to do practically to resolve that?
Daniel Zeichner
When we came to power a few months ago, the thing I was asked most strongly to do was to provide stability for the future. Through a series of interventions over the past few months, I have tried to indicate that that is exactly what we will do, whether through the environmental land management schemes or any other issues. The Government faced a huge challenge at this Budget—we all know that. Decisions had to be made. However, I am absolutely convinced that farmers and all those other people who live in rural areas want and need exactly the same decent health services, housing and transport as others do. They will be able to carry on farming, as they have done, but the difference is that that will be in a stable economic system, which means they will not suffer in the way they have over the last decade.
Jo White (Bassetlaw) (Lab)
Many farms in my constituency were under water for months after the floods last year. What is the Minister doing to support those farms as they recover from last year’s horrific storms?
Daniel Zeichner
Extreme weather events have clearly become a growing challenge for us all, which is part of the reason that we are so determined to make the transition to a more environmentally friendly form of farming. Last year, a scheme was in place to help farmers. The then Government increased it; as I say, I am not sure that they exactly identified where the money was coming from, but we have identified the money. We have honoured it and will be paying the £60 million out to farmers in the next couple of weeks.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
The Minister implied earlier that farmers in my constituency of Bridlington and The Wolds support this measure. I can categorically tell him that they do not; they are shattered by this announcement. The impact on my community will be devastating. I ask the Minister today to do the right thing and withdraw these plans.
Daniel Zeichner
I look forward to many more such exchanges over the Dispatch Box with the hon. Gentleman. What I said earlier was that on my many visits around the country, people consistently told me that they were concerned about how the system was being abused and how people were coming in and buying up land over their head. That is what I said, and that is what I stand by. As for these measures, I am afraid that this is a Budget that stands in its entirety—and the whole country needs stability, so it will stand.
Ms Julie Minns (Carlisle) (Lab)
A few months ago, I visited my constituents Andrew and Ada, who farm in a remote north-east corner of Cumbria. Sadly, after 14 years under Conservative Governments, they are largely getting by on Ada’s pension. Will the Minister set out what support will be available to farmers such as my constituents, following last week’s Budget?
Daniel Zeichner
My hon. Friend is absolutely right; many people in this country, and many farmers in particular, are struggling to get by. That is why it is very important that in this Budget we maintained the budget for the support schemes that people are getting used to; it is interesting to note that they are now being subscribed to in much higher numbers. That support will be available to help people to make the transition and to go on supplying food for this country, which is so important.
Sarah Dyke (Glastonbury and Somerton) (LD)
It has now been more than 10 years since devastating floods wrecked the Somerset levels and moors, causing untold damage. At the time, affected communities were told that money was no object when it came to protecting the area, but now, deep in the Budget document, there is a hint that the farming and flood defences budget might be cut. Can the Minister explain to my farmers in Glastonbury and Somerton, who are terrified of more flooding devastation this winter, how the Government aim to protect them?
Daniel Zeichner
I remember those awful times very well. “Money is no object” is not something that was said by my party, I can tell her; it was said by the now Opposition, and perhaps it was not exactly the right way to put it. Extreme weather events are a challenge for all of us across the country. My colleagues and I will work with everyone to find the best ways to resolve them, but let us not for one moment imagine that this is a simple issue to solve. The flooding challenges are very real and we are working on them. I look forward to further discussions with the hon. Lady.
Sam Carling (North West Cambridgeshire) (Lab)
The Minister knows lots of farmers in my constituency—he is a near neighbour of mine—and farmers are grateful for his engagement with them. He knows that farmers’ incomes fell year on year under the Conservative Government. Will he outline what measures there are in this Budget to support farmers in North West Cambridgeshire and help the industry to get back on track?
Daniel Zeichner
I thank my hon. Friend, who is another of my near neighbours. I did not use to have many near neighbours who were anywhere near as friendly as my new near neighbours, but Cambridgeshire has changed. Cambridgeshire has changed for a very clear reason: Cambridgeshire lost trust in the Conservative party. I am determined to build trust across the entire country by maintaining, over a prolonged period, the levels of support necessary to allow people to farm successfully. My answer to my hon. Friend is to look at the Budget, where we saw an increase in the farming budget. We will look to maintain proper support into the future because, exactly as has been said, these are long-term businesses and long-term interests. The reason that they are long-term is that we are all going to need to eat.
Kevin Hollinrake (Thirsk and Malton) (Con)
The Minister talks about the transition. I talked to my farmers in Bedale on Friday, and the only transition they can see is the transition from family farms to the state. Does he realise that the farming industry is one of the least profitable sectors in the country? The return on capital employed is 0.5%—that is the Government’s own figure—and that is around a 20th of the typical profit margin in the UK. Other than by some warped socialist ideology, how can he justify taking away 40 years of profits for the typical farmer?
Daniel Zeichner
The hon. Gentleman may wish to remember that the agricultural transition was embarked upon by the previous Government. It is a seven-year transition process, and we are just over halfway through. It is important that it is maintained in a stable and sensible way, and that is exactly what we are doing. My answer to his question is that the challenge put to me was to maintain stability and not to tear up those schemes—to maintain them and make them work—and that is exactly what we are doing.
Sam Rushworth (Bishop Auckland) (Lab)
I met farmers in my constituency in the days just ahead of the Budget. The biggest concern that they raised with me was not inheritance tax, but the transition from basic payments to ELM schemes. I welcome the fact that the Budget not only maintained the agriculture budget, but grew it, which the Conservatives said they would not do. There is a concern that under the previous Government, despite having the budget, the system was written in such a way that the smallest farms could not easily access that funding. That is the single biggest threat to agricultural businesses in my area. I rather think the Conservatives are raising a smokescreen. Will the Minister comment on what this Government will do to ensure that we can draw down that budget and ensure that local farms can take advantage?
Daniel Zeichner
It was striking that under the previous Government the agriculture budget was so substantially underspent. We are fixing that and making it possible for people to access those schemes in the way that my hon. Friend describes. It is interesting that the issue that came up most for him was basic payments. The issue that came up time after time on my visits was rural crime. That is the thing that has troubled so many people on farms and in the countryside. That is why it is so important that this Government are setting up a proper integrated rural crime strategy.
Simon Hoare (North Dorset) (Con)
The Minister is seeing silver linings in the clouds hanging over family farms and tenanted farms in North Dorset, but I must confess that I fail to see them. I will give ask the Minister a simple yes or no question: yes or no, will he come to North Dorset to meet farmers in my constituency and explain these wonderful silver linings that he can see in the clouds but none of us on the Opposition Benches can see?
Daniel Zeichner
I love visiting farms all over the country, and I am sure North Dorset will feature on my list at some point in the future.
On this whole question of optimism, pessimism and the stress and strain in the countryside, my hon. Friend the Member for Peterborough (Andrew Pakes) earlier warned about some of the things that are being said. I urge people to be temperate in their language on these issues, because people are stressed, anxious and worried. My task is to be calm, sensible and reassuring to them, and to remind them that the vast majority will be able to pass on their farms just as they have before. Just as pressing is to tackle those other real issues that they face. I do not underestimate the challenges that people face—of course it is difficult, and we know it is hard, but this Government will do everything we can to support people and to maintain their prosperity into the future.
Louise Jones (North East Derbyshire) (Lab)
Many of the farmers in my constituency have regularly raised concerns with me over protecting farms and our food system from animal diseases. Will the Minister please outline what steps he is taking to protect our food and farming systems?
Daniel Zeichner
I thank my hon. Friend for raising that important point, because among the many, many stressful things for farmers is not just the weather of the past few years, but the disease threats. Whether that threat is avian flu or bluetongue, we are committed to helping. As part of that, in the Budget we committed more than £200 million to start the process of upgrading the facilities at Weybridge, which is so very important for our future biosecurity. Biosecurity is so important. I was staggered that the previous Government did not take swifter action to protect our borders from African swine fever. We have toughened the rules on that.
Daniel Zeichner
I see the hon. Gentleman nodding. He is well versed in that; he knows.
Mr Speaker
Order. Can I just say that brevity will be helpful? I believe that everybody has a constituency interest, so I really want to get everyone in. If we can have shorter answers, that would be better. Also, if the Minister looked at me now and again, that would help me hear what is being said.
Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)
I declare my interests as a farmer.
A 75-year-old farmer emailed me last week and said
“we work long hours, usually alone.”
He said that agriculture
“has one of the highest suicide rates of any industry. There is a great deal of talk these days about mental health and the need to alleviate stress in the workplace, yet”
last week the Chancellor and the Secretary of State for agriculture
“destroyed everything I have ever worked for.”
How would the Minister answer that?
Daniel Zeichner
I would reassure that farmer. I am afraid that I do not think he is correct on that, and we are absolutely determined to ensure that he can hand on his farm, as others have done before, but let us ensure that he gets the proper advice.
Ashley Dalton (West Lancashire) (Lab)
I spent about 14 months in this place asking the former Government about water management, but I was always on a hiding to nothing. Does my hon. Friend recognise that the farmers in my constituency have a lot of expertise in water management and land management? Will he tell us how the Budget supports farmers to bring that expertise to the fore and work in partnership with us to manage that land and water?
Daniel Zeichner
I am grateful to my hon. Friend. The schemes we have in place will help us to work with farmers on those issues—alongside, of course, the payment of the £60 million that the previous Government promised.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
The Minister has asked Members to be temperate in their language, but there is deep anger in Scotland and in my constituency about these announcements, which the policy director for the NFU in Scotland has stated will be devastating for farmers and crofters. Will the Minister tell us how these announcements will increase food security and national security?
Daniel Zeichner
Once again, I would say that it is by having a stable, sensible approach to farming support in the coming years. Clearly in Scotland this area is devolved, and it is for the Scottish Government to determine how they operate, but we are setting the overall context, and in a stable economy in the future farmers will thrive.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I am proud to represent proud North Yorkshire farmers in my constituency. Will the Minister set out the steps he will be taking to ensure that small family farms will be protected by the Government? Additionally, will he endorse polyhalite, a fantastic crop nutrient fertiliser that is produced in only one place in the world: North Yorkshire?
Daniel Zeichner
I am grateful to my hon. Friend. I will always look with keen interest at anything that can help us to make progress. In terms of how we provide support and reassurance to those small farmers, that again is by making sure that we have a strong, stable economy.
Jerome Mayhew (Broadland and Fakenham) (Con)
I refer to my entry in the Register of Members’ Financial Interests. Is the Minister surprised by the reaction of the farming community?
Daniel Zeichner
I thank my fellow East Anglian MP for his contribution. Am I surprised? No, I am not entirely surprised, because people are very fed up and depressed, and they have been depressed for a long time. I understand why it is difficult, but my job is to reassure and talk calmly to people, and that is what I shall continue to do.
Mr Luke Charters (York Outer) (Lab)
I am proud to represent many wonderful farming communities. The young farmers I meet tell me that one of their biggest challenges is accessing rural mental health services. Does my hon. Friend welcome the record £22 billion extra going into the NHS, which will support access to rural mental health services?
Daniel Zeichner
My hon. Friend is absolutely right. The core message of the Budget is to get our finances stable and on track, which will allow us to invest in the public services that everyone needs, and particularly those in rural areas who are struggling with those issues.
Helen Morgan (North Shropshire) (LD)
One of many emails I have received in the past week is from a farmer who has an archetypal family farm of 330 acres of mixed dairy and arable that they are planning on passing on to their son, even though they are struggling to make ends meet. He is typical of farmers in my constituency, and he is very concerned. We have not seen any investment in public transport or any of the other sweeteners that the Minister mentioned earlier. Can he explain what investment will go into rural transport, and why he has set the threshold for APR so low?
Daniel Zeichner
I think the hon. Lady should wait a bit longer to see transport improvements—it has only been a week. The level has been set by the Treasury based on the figures that we have, to try to make sure it is fair. As I said, the vast majority will not pay anything. I hope she will find that reassuring.
Joe Morris (Hexham) (Lab)
For 14 years, farmers in my constituency were let down and betrayed by the Conservative Government on things like the Australia and New Zealand trade deal, and repeated broken promises that saw thousands of farm businesses across the country close. Does the Minister share my assessment that they were betrayed for those 14 years?
Daniel Zeichner
I do not think it is my assessment, but that of the voters, who made it very clear.
Lee Anderson (Ashfield) (Reform)
Sam Wilson is a farmer in Ashfield. He is not a rich man; in fact, he has not drawn a wage in the past four years. Will the Minister look me in the eyes and tell me how many farmers he has spoken to in the past few months who agree with this hare-brained scheme?
Daniel Zeichner
The last farmer I spoke to over the weekend congratulated me on what we were doing.
Dave Robertson (Lichfield) (Lab)
There appears to be a lot of discussion about agricultural property relief on inheritance tax today. Could the Minister confirm what percentage of the farms that claimed more than £1 million of agricultural property relief in the past two years actually received any agricultural income in the past five years?
Daniel Zeichner
I will have to go away and get the answer to that, and I will write to him.
Stuart Anderson (South Shropshire) (Con)
South Shropshire farmers were in touch with me over the weekend. They are up in arms about changes to APR that the Labour party told them would not happen. Will the Minister reverse this rural vandalism and back British farmers?
Daniel Zeichner
We will back British farmers, by making sure that they have a stable system in which they can flourish.
Bill Esterson (Sefton Central) (Lab)
It is extraordinary that a small number of wealthy landowners have been using agricultural property relief to avoid inheritance tax. What is more extraordinary is how the Conservatives have defended tax avoidance in the way that they have. Will my hon. Friend confirm to the farmers in my constituency and across the country that the Budget will benefit family farmers through investment in public services as well as through the agriculture proposals?
Daniel Zeichner
My hon. Friend makes a powerful point. Not only do those people seem to relish finding ways of creatively running their accounts, but some of them even take money to write columns about it.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I declare that my husband is in agriculture and farming, and therefore I have an indirect financial interest in the topic. This Government promised that they would not raise national insurance contributions, but they have. They promised that they would not reduce agricultural property relief, but they have. They have also added a fertiliser tax and a tax on pick-up trucks as a way of compounding the misery. Has the Minister done an impact assessment on food security and food prices following the Budget, and will he publish it?
Daniel Zeichner
The hon. Lady will know that many things impact food prices. I gently suggest to the Conservatives that they might want to look more closely at food price rises over the past few years before giving us any lectures on how to manage things. I am confident about this, because I have looked at the figures issued by the Treasury on the number of claims made in the past few years, and our figures stack up.
Claire Young (Thornbury and Yate) (LD)
I have previously raised in departmental questions that the farmers I speak to are reluctant to sign up for ELMS due to the complexity, and because they do not want to get locked into a deal when a better one might be around the corner. That may account for the £200 million underspend last year. In the Budget, the Government committed to maintaining the funding at the current level, including the underspend, but said that it would be reviewed in 2025-26 to ensure it is “affordable”. Does the Minister agree that that leaves farmers even more in the dark about their future, at a time when they are struggling to get by?
Daniel Zeichner
The hon. Lady raises an important point. I suspect that in the months ahead it will come out that, actually, over the last few months there has been a big uptick in the number of people making sustainable farming incentive claims. That says to me that we are now on track to make these systems work for people. I do not disagree with her that under the previous Government it was a very long painful process, but we are now making progress and we need to make it work.
Priti Patel (Witham) (Con)
Does the Minister recognise that the changes not only break the Government’s previous promises on APR to farmers, but that they will add significant burdens and costs to family farms and disincentivise food production?
Daniel Zeichner
I also wish my fellow East Anglian MP, the right hon. Lady, good luck in the coming hours. The reason we can look forward to a successful and stable future for farmers across the east of England and the rest of the country is that we have absolutely committed to stability. The reason things have had to be different is that we found—I found this in my Department, just as fellow Ministers found it in their Departments—that the situation was far worse than we had been led to believe. We had to tackle that problem.
Ann Davies (Caerfyrddin) (PC)
Diolch, Mr Llefarydd. As a tenant dairy farmer myself and chair of the Farmers’ Union of Wales Carmarthenshire, I perhaps understand this issue more than anybody else in the Chamber. The Government are trying to portray farming as an industry of super-wealthy landowners and that is simply not the case in Wales, let me tell them. Welsh upland farmers in mountainous and hilly areas have an average annual income of £18,600—yes, you heard correctly: £18,600. That is far below the national living wage for hours that are way beyond the average 40-hour week. What assessment has the Minister made of the impact of the changes to APR in Wales, where wages for farmers are so low?
Daniel Zeichner
The hon. Lady is absolutely right that farming is very tough right across the country and very difficult in Wales. It is a devolved issue, so I will not comment on specific schemes in Wales, but I point her back to the Treasury figures that show the number of people who made claims for APR. It is relatively few, and I would say it is probably relatively few in Wales.
John Glen (Salisbury) (Con)
I spent most of the past six years looking at Treasury figures and I have a great deal of sympathy for the hon. Gentleman. I fear he is a victim of a hit-and-run exercise by the Treasury on the Department for Environment, Food and Rural Affairs budget. He would do well to think about the lessons learned from the pasty tax, because if he is not careful this measure will be of a similar dimension for this Government.
Daniel Zeichner
I am very grateful for the right hon. Gentleman’s concern, but I have to say I do not agree with him.
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
Can the Minister confirm how many farms in Wales will be impacted by the changes to APR in the Budget?
Daniel Zeichner
I am grateful to the hon. Gentleman for his question. I do not think it is broken down by national area at the moment, but it is something we can go away and look at.
Kit Malthouse (North West Hampshire) (Con)
I draw the attention of the House to my entry in the Register of Members’ Financial Interests. Farmers and family businesses are deeply alarmed, because an important principle on which they have relied for decades has been breached. It is obvious from the Red Book that the Chancellor will have to raise tax again in the future. Is this the end, or can farmers and small businesses expect yet more demands on death?
Daniel Zeichner
The right hon. Gentleman says decades. I think it was in 1991 or 1992 when the current rules were introduced. I can absolutely assure him that we are now on track for a stable future. That will allow farmers in his constituency and across England to flourish.
Richard Foord (Honiton and Sidmouth) (LD)
Family farms are very often cash poor. Each time the average farm is passed from a parent to a child, the family may have to generate an extra half a million pounds. They may deal with that by trying to make each acre produce an additional £40 of profit. That could send into reverse the agricultural transition to a more nature-friendly farming approach, if they revert to more agrichemicals and intensive methods. As I asked the Minister in an Adjournment debate last week, what did he do ahead of the Budget to combat this appalling measure?
Daniel Zeichner
The hon. Member asks what we did. What we did was look at the farming budget and ensure that we protected it, to allow his constituents and constituents across the country to take part in the schemes that will support them in that important transition.
Sir Julian Lewis (New Forest East) (Con)
How does the Minister reconcile his sensible acceptance of the fact that food security is vital to national security with farmland being split up and sold off, probably for development, as a result of the Budget changes?
Daniel Zeichner
The right hon. Gentleman has raised an important point. We will be addressing it through the land use framework, which will be delivered in the next couple of months. Of course there are trade-offs. There are a range of pressures on our land, in respect of housing, food, energy and so many other things. We need to have a rational way of making those decisions, and that is exactly what we will introduce.
Richard Tice (Boston and Skegness) (Reform)
Are the Minister, the Secretary of State and the Chancellor aware that so serious are the consequences of this policy that the heads of farming families in their 80s and 90s are seriously considering committing suicide before it comes into place? [Hon. Members: “Shame!”] Shame on you! [Interruption.]
Daniel Zeichner
I find it hard to respond to a question like that. I spoke earlier about using language carefully, and I would just reiterate that point.
Sir Roger Gale (Herne Bay and Sandwich) (Con)
In the rural England that I am privileged to represent part of, they say that you should live as if you are going to die tomorrow and farm as if you are going to live forever. Do the Government not understand that if we inheritance-tax our farms out of existence, there will be no forever, and there will be no food from what was once the garden of England?
Daniel Zeichner
The right hon. Gentleman is very knowledgeable about these issues. I just gently ask him to look closely at the detail and the figures, which show that the numbers are low. I do not recognise his characterisation of the future.
Mike Wood (Kingswinford and South Staffordshire) (Con)
According to statistics published by DEFRA last Thursday, an average farm in England measures 88 hectares, which is roughly one hectare for every word that Labour had to say about farming in its last manifesto. What assessment has the Minister made of the typical value of a farm of that size—about 88 hectares?
Daniel Zeichner
I think the hon. Gentleman will know that the definition of a farm is actually rather complicated. That is what makes this quite a difficult debate, and I am not going to comment on individual farms, but the overall assessment—[Interruption.] Let me return to the point about the Treasury figures, which show that the number of claims likely to be affected by this change is relatively low.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Before the election, farmers in my constituency were very concerned about the environmental land management system, which had not worked for a long time but which they felt was just beginning to work. Will the Minister please reassure them that the Government will be proceeding with it?
Daniel Zeichner
I can absolutely give my hon. Friend that assurance. As I said earlier, throughout the last five years in opposition, I was a consistent supporter of the agricultural transition, and I am determined to ensure that it is successful.
Wendy Chamberlain (North East Fife) (LD)
I am conscious of the need to use temperate words, but one of my constituents said to me that the Government had left farmers the choice between selling now in a managed way and leaving their farms to their heirs, who would be at the mercy of HMRC and the banks. Either way, family farms would fall.
The Minister has talked extensively today about the challenges of wealthy individuals coming in to buy up farmland. Do the Government accept that this measure will potentially increase that problem, and, if it is a problem, what additional legislative steps will they take?
Daniel Zeichner
No, I do not. For the reasons that I outlined earlier, I think that it will act as a disincentive for people to do that.
Anna Dixon (Shipley) (Lab)
Farmers in my constituency have told me that they are struggling, owing to the abysmal implementation of a transition payment scheme by the last Government. There have been huge delays in receiving payments and they have been caught up in bureaucracy. Will the Minister reassure me, and those farmers in my constituency, that this Government are fixing those problems and speeding up payments to our farmers?
Damian Hinds (East Hampshire) (Con)
Ministers keep saying that we should not worry about APR because far more people think they will pay it than will actually be caught. Does he not recognise that that is part of the problem? People have to make business decisions now for an uncertain future, and this policy will have a depressive effect on the investment that we need in agriculture.
Daniel Zeichner
I do not agree. If the right hon. Member looks at a number of the more thoughtful commentators in the debate over the last few days, he will see that there are some very different views out there on the impact this policy will have.
Jacob Collier (Burton and Uttoxeter) (Lab)
I thank the Minister for his comments about rural crime, which is a real issue in my constituency of Burton and Uttoxeter. We have heard no apology from the Conservative party for cutting policing across our constituencies. Will the Minister say more about the steps that this Government will take to protect farmers from theft, antisocial behaviour and fly-tipping?
Daniel Zeichner
My hon. Friend is absolutely right. It seems that the Conservative party does not understand that if we raise taxes and invest in the future, we can do more to protect people who cannot protect themselves. It is vital that we tackle rural crime, which is a top issue that is raised with me consistently.
Alicia Kearns (Rutland and Stamford) (Con)
At the Rutland ploughing contest this weekend, it was clear that farmers feel devastated. They feel that the Government do not understand them, because farmers do not have liquid wealth; they rely on land as their asset to produce food. They turn a small profit but have a very constrained cash flow. Indeed, they have the lowest return on assets of any business sector—an average return of less than 1%.
“Losing a farm is not like losing any other business. It can’t come back.”
Those are the Prime Minister’s words. As the Minister’s constituency is a near neighbour of mine, will he come and repeat them to my farmers in Rutland and Stamford, and have that discussion with them?
Daniel Zeichner
I have been on an extended farm tour for the last five years, and I am sure it will continue.
Catherine Fookes (Monmouthshire) (Lab)
In my constituency of Monmouthshire, farmers are anxious and worried. Will my hon. Friend seek to reassure small family farmers by spelling out the figures? Last week, the Exchequer Secretary to the Treasury said:
“these exemptions mean that if someone has no other assets and is passing it on to a direct descendant, a farm or farming business worth up to £2 million can be passed on without paying any inheritance tax at all.”—[Official Report, 31 October 2024; Vol. 755, c. 1036.]
Daniel Zeichner
I am grateful to my hon. Friend. I am very reluctant to offer tax advice to anybody, but the advice I have been given is that the figure may even be more than that. I urge people to look closely at the detail, rather than jumping to the worst conclusion.
Martin Vickers (Brigg and Immingham) (Con)
Reference has been made to rural crime. May I suggest that a whole new definition of “rural crime” is the proposals contained in the Budget? The Labour party has yet again shown that it does not understand the rural community. If family farms close, there will be a knock-on effect for grain merchants, farm machinery dealers and so on. Can the Minister explain what assessment has been made of the impact on the total rural economy?
Daniel Zeichner
I agree with the hon. Gentleman that the rural economy is closely integrated and that one thing has an effect on another, but the thing that will be most beneficial for the rural economy is a strong economy, which we are building. We are putting the foundations in place.
Rachel Gilmour (Tiverton and Minehead) (LD)
I have 1,600 farmers in my constituency. Some 432 farms will be affected by this silly idea, not to mention the families, their employees and the shopkeepers who rely on our rural economy. This policy is insensible, irrational and plain wrong in its interpretation of real life in our rural communities. It will be like the highland clearances. Hundreds of years of tradition will be lost to the taxman. Before I ask the Minister to think again, I can say with absolute certainty that the policies of the Conservative and Labour parties have reaffirmed the fact that the Liberal Democrats are the only true champions of farmers and the countryside—
Mr Speaker
Order. Sit down, please. The question was long enough. We do not need to start playing politics around the Chamber.
Daniel Zeichner
I do not recognise those figures. When I look at the figures that the Treasury gave for the number of claims in the last year available, that is very close to the number in the hon. Lady’s own constituency, which seems unlikely to me.
Rupert Lowe (Great Yarmouth) (Reform)
First, I should declare an interest as an active farmer of 865 acres. Secondly, I represent a constituency with some of the most fertile farmland in the country, and since the Budget I have yet to come across anyone who thinks that this is anything other than a terrible decision. Speaking at the Country Land and Business Association conference before the election, the then shadow Secretary of State—now the Secretary of State—was asked whether Labour intended to change inheritance tax relief for farmland. The response was:
“We have no intention of changing APR”.
While I feel for the Minister in trying to defend the indefensible, would he like to take the opportunity today to apologise to the British farming community and, most importantly, commit to the reversal of this cruel assault on British family farms?
Daniel Zeichner
The hon. Gentleman well knows the financial state of the country that we inherited. Difficult decisions had to be made.
Harriet Cross (Gordon and Buchan) (Con)
The average farm in Aberdeenshire is 490 acres, and average values are about £5,000 an acre for bare land. Once the farmhouse, building machinery and livestock are added, that is suddenly well over the inheritance tax threshold and have a huge IHT bill of hundreds of thousands of pounds coming your way. DEFRA figures show that 19% of farms do not make a profit and 24% make less than £25,000, so does the Minister suggest that farmers sell the land they use to grow the food, sell the machinery they use to harvest the food or sell the buildings they use to store the food, in order to pay this bill?
Daniel Zeichner
The hon. Lady will know that farming policy is different in Scotland, but on the tax issues, which are UK-wide, that is absolutely right, but I would suggest that she gets her farmers to look in detail at these proposals, and what they will find is the vast majority—[Interruption.] When they look at them in detail, they will find that the vast majority will be absolutely fine.
Ben Obese-Jecty (Huntingdon) (Con)
As a fellow Cambridgeshire MP, and having already announced a forthcoming ban on neonicotinoids for our sugar beet farmers, what message will the Minister give to the Cambridgeshire farmers so gravely impacted by the Government’s family farms tax that will lead to farmland being sold, and potentially see more of our best and most versatile land being used for vast solar farms? How does the slashing of agricultural property relief help farmers in Cambridgeshire?
Daniel Zeichner
It is very good to see my near neighbour. What I will say to Cambridgeshire farmers is that the thing they need most of all is a stable economy, and they also need a sound environment in which they can farm. The measures that we are putting in place will ensure their prosperity for the future.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
Can the Minister reassure the House and the people of my constituency and our country, that the Budget will not add to the cost of producing food and will not result in consumers having to bear the brunt of rising prices, higher inflation and higher interest rates?
Daniel Zeichner
The hon. Gentleman makes an important point. The people of this country suffered gravely under the last Government, and we will do nothing to make their situation more difficult. In fact, this Budget protects the pay packets of the vast majority of the British people.
Greg Smith (Mid Buckinghamshire) (Con)
There are already very low margins on every farm, including those in Mid Buckinghamshire. Will the addition of between £50 and £75 a tonne on the price of fertiliser, through the Government’s proposed carbon tax, increase food prices? Who will shoulder that burden? Will it be the farmer, or will it be the consumer?
Daniel Zeichner
As the hon. Gentleman knows, a whole range of factors go into food prices. What is very good news is the establishment of GB Energy and a move to a much more affordable and reliable form of power for farmers as well as our consumers. We will all be better off.
Mr Joshua Reynolds (Maidenhead) (LD)
On Friday, I visited an agricultural college in my constituency, where I heard concerns about how the changes in this Budget will potentially strip an industry of young farmers. What discussions did the Minister have with farming stakeholders on changes to the agricultural property relief prior to the Budget?
Daniel Zeichner
The hon. Gentleman will know that tax discussions during the run-up to a Budget are a delicate issue. However, there was no shortage of discussion in newspaper columns across the country, so there has clearly been discussion. Younger people who want to go into farming face real obstacles, and this change could help.
Daniel Zeichner
The hon. Gentleman shakes his head but, if he talks to people who know about these issues, they agree with me.
James Wild (North West Norfolk) (Con)
Does the Minister accept that agricultural relief was introduced to protect family farms from being broken up, precisely to reflect their role as food producers and custodians of our countryside? Will he rethink this, do what Labour originally promised, and withdraw this proposal?
Daniel Zeichner
As a fellow East Anglian MP, the hon. Gentleman will know just how complicated farming is, how much it has changed over the last 30 years, and how much it is likely to change in the future. We have to ensure that farming is in the right place to benefit from the changes that we are seeing globally and nationally and, most importantly, that farming can operate in an environmentally and nature-sensitive way. Without that, we will all be in deep trouble.
Stuart Andrew (Daventry) (Con)
In the Minister’s opening answer, we sadly heard more Government slogans and soundbites than real understanding of the fear that Daventry farmers have been telling me about. I can assure him that they have been looking at the detail in great detail. One of them, whose father is sadly coming to the end of his life, is now actively looking to sell off land because they simply cannot make the farm work. That is the next generation gone. That is food that feeds NHS patients gone. Does the Minister not think it is time to reverse this policy?
Daniel Zeichner
I think it is time for people to take up the opportunities of the schemes that the previous Government introduced and that we are continuing, which allow them to farm in an environmentally and nature-friendly way. It will be good for the future and will produce food for this country. There is a very bright future for British farming.
Alison Bennett (Mid Sussex) (LD)
Given the varied estimates of how many farms will be impacted by these changes to agricultural property relief, will the Minister confirm how many farms he thinks will be impacted?
Daniel Zeichner
I refer the hon. Lady to my earlier answer. The figures are in the Treasury papers for all to see.
Matt Vickers (Stockton West) (Con)
Since Wednesday, I have been contacted by devastated farmers from across Stockton West. Their families have farmed for generations, and they know that, as a result of this Budget, they will be the last generation to do so. Has the Minister made any assessment of the impact this APR change—this family farm tax—will have on the viability of tenant farming?
Daniel Zeichner
Yes, we have, because we have looked at the figures. Again, I do not recognise the hon. Gentleman’s characterisation although, given some of the things that have been said over the last few days, I understand why people are alarmed.
Caroline Voaden (South Devon) (LD)
South Devon has some of the most expensive land in the country, which makes every farm, regardless of its size, worth a lot of money on paper. One farmer in my constituency said over the weekend:
“We may be land rich but we are cash poor and our children will more than likely have to sell the land and maybe buildings to cover the tax. Without the land, the farm is simply no longer a farm, taking valuable land out of food production.”
The Minister says he values food security, and agricultural property relief gave us that food security. He says—
Daniel Zeichner
I understand the point but, first, much of this can be avoided through proper planning. Secondly, Devon is one of the counties where we most often hear it said that people are coming in and buying up land for the wrong reasons.
John Cooper (Dumfries and Galloway) (Con)
Farmers in Dumfries and Galloway, who have been contacting me over the weekend, are not shroud-waving—let us be clear about that. Less clear are the figures. The NFU says that as many as 50% of farms that are producing food, meeting environmental targets and providing jobs in remote and rural areas could be at risk. Napoleon knew that an army marches on its stomach, and he also said that a good retreat is better than a bad stand. This Government are making a bad stand, and they have a chance to reverse this decision. Will they not do that?
Daniel Zeichner
“Could be at risk” has a very broad definition. The figures are absolutely clear, and I suggest that the hon. Gentleman looks at them.
Manuela Perteghella (Stratford-on-Avon) (LD)
Unlike in many countries that are dominated by vast corporate agribusinesses, the British rural landscape, including that of my Stratford-on-Avon constituency, is defined by small, family-run farms. They are our local food producers, and they are part of our communities. How do the Government plan to protect this heritage against the pressure to sell to multinational agribusinesses in the face of a significant inheritance tax burden?
Daniel Zeichner
We treasure our wide range of farms, which are very different in different parts of the country. The agricultural budget is at its highest level ever and it will provide support, particularly to small farms. The previous Government ended the five-hectare minimum level. I strongly support that and it will continue to be the case.
Nick Timothy (West Suffolk) (Con)
Farming families in West Suffolk feel deep anxiety, in common with those in other constituencies, as hon. Members from across the House have explained. When those families hear the Minister say that they do not understand the detail, or that they should listen to commentators who agree with the Minister but not them—commentators who probably have nothing to do with farming in the first place—they will be furious with him. Will the Minister apologise to those people? If it is not such a big deal, will he explain why more than 130,000 people have already signed the NFU petition telling him to change the policy?
Daniel Zeichner
At no point did I say that farming families did not understand the detail. What I asked was for Members on the Conservative Benches to look at the detail, because when they look at the detail, they will find the truth.
Calum Miller (Bicester and Woodstock) (LD)
Family farmers in my constituency of Bicester and Woodstock are left confused and angry by this betrayal by the Government over APR. They want to know whose daft idea it was. Will the Minister clarify whether the measure was proposed by DEFRA, as part of the stability for farms that he outlines, or did it come from the Treasury?
Daniel Zeichner
There is nothing daft about putting this country’s finances on a sound footing. I say to the hon. Gentleman’s constituents, if they want a decent health service, schools and transport, this Budget will deliver that.
Dr Kieran Mullan (Bexhill and Battle) (Con)
May I politely suggest to the Minister that the time for his weekend reading was before deciding the policy, not afterwards? Farmers in my constituency, including Jonathan Vine-Hall, tell me that the change to the relief will make it financially non-viable to pass on his very typical 450 acre farm. Does the Minister agree with me that the likely outcome of that will be that disinterested investors will buy the farm instead, which is exactly what he seeks to avoid?
Daniel Zeichner
The likely outcome will be that people will put arrangements in place to pass on their farms at the appropriate time, pulling more younger people into farming, which will be a good thing. My overall message to farmers across Britain is, “This Government are on your side. We will support you. Look at the agricultural budget and the money that has been paid out of the flood budget. We are with you. Don’t listen to these people.”
Point of Order
(1 day, 18 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate
Sir Roger Gale (Herne Bay and Sandwich) (Con)
On a point of order, Mr Speaker.
Mr Speaker
Points of order should come after statements, as you well know, Sir Roger, unless this is specifically about this point.
Mr Speaker
Well, in that case—I knew you knew better than me.
Sir Roger Gale
Were you given any indication as to why the Secretary of State was not here to answer the urgent question, Mr Speaker?
Mr Speaker
Absolutely not. I granted the urgent question because I know how important the issue is, including to my good farmers in Chorley.
Higher Education Reform
(1 day, 18 hours ago)
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Mr Speaker
Before I call the Secretary of State for Education to make a statement, I note that reports about the possible increase in higher education tuition fees started appearing in the media earlier this afternoon.
Mr Richard Holden (Basildon and Billericay) (Con)
What a surprise—very leaky.
Mr Speaker
Mr Holden, you don’t help yourself, do you?
The Secretary of State is here to make a statement, so hon. Members will have the opportunity to question her. If the premature media reporting is due to an unauthorised leak, that is a great discourtesy to this House. I hope the Secretary of State will be able to identify the guilty party, take appropriate actions and brief me accordingly. I hope the Secretary of State will announce a leak inquiry, we will get all the details of how this information could have got out and the House will be informed as that goes forward.
The Secretary of State for Education (Bridget Phillipson)
Mr Speaker, may I begin by expressing my deep regret that the content of the statement that I am about to make appeared in the media earlier this afternoon? It had always been my intention to come before this House to make the statement first, given its significance and importance. I appreciate that you, Members across the House, and our conventions, rightly demand and expect that. I hope that you can accept my deep frustration and regret at what has taken place. I will take whatever steps I can to keep you updated on the matter, because I do respect the conventions of and my responsibilities to this House.
Mr Speaker
Can we take it that there will be a full inquiry into how this has happened—that everybody will be brought in and questioned, and you will then update us on that full inquiry? That is what I really want.
Bridget Phillipson
I can give you that undertaking, Mr Speaker, and I will speak to officials about the matter, as you request.
The Secretary of State for Education (Bridget Phillipson)
With permission, I would like to make a statement about the future of our higher education sector and the changes that we will be making for students in the upcoming academic year, 2025-26.
Before I go further, I want to make clear the approach that this Labour Government take to our universities and, above all, to the students whose education is their central purpose, because the Conservative Government did not just talk down universities; they talked down the aspirations of working-class families across our country, and they dismissed the ambition of our young people and undermined their opportunities. This Government take a different approach. We are determined to break down the barriers to opportunity, and higher education is central to that mission.
Higher education is part of what makes our country great. It enriches our culture, powers our economy and sustains intellectual traditions stretching back centuries. It is a beacon of opportunity—to students not just from this country, but from across the world—and a sector of which everyone in this House ought to be proud. But when this Government took office in July, we found a university sector facing severe financial challenges. With tuition fees frozen for the last seven years, universities have suffered a significant real-terms decline in their income. We also found a regulator subject to political whim, unable to focus on the challenges our universities face. A succession of Conservative Ministers faced with tough decisions had, for year after year, ducked them time and again.
We inherited in our universities, as across so much of our public sector, the consequences of long years of shameful abdication of responsibility: long years in which I heard too often from students of the gap between the course they were promised and the experience they had, about the trouble they had making ends meet as they worked hard not merely at their studies but often at two or more jobs on top; long years in which I saw the amazing research our universities deliver but how infrequently those triumphs drove wider success; and long years in which I heard from international students, who make such an important contribution to our country, that the previous Government had made them feel neither valued nor welcomed. That is the mess that Opposition Members left behind, but where the Conservatives shirked the hard choices, this Government have not hesitated to grip the challenges we face and take the tough decisions to restore stability to higher education, to fix the foundations and to deliver change.
We have accepted in full the recommendations of the independent review of the Office for Students. We have also brought new leadership to the office and refocused its work to monitor universities’ finances and to hold leadership to account. I thank Sir David Behan for his work both leading the independent review and now as its interim chair. We have paused the commencement of the last Government’s freedom of speech legislation while we consider the impacts on universities, students and the regulator, because although universities must be home to robust discussion and rigorous challenge, regulation must also be workable.
I am here today to make two sets of announcements on higher education reform, addressing the challenges our students and universities face, and gripping these issues as a responsible Government. First, we will fix the foundations. We will secure the future of higher education so that students can benefit from a world-class education for generations to come. That is why I am announcing that, in line with the forecasts set out in the Budget last week, from April 2025 we will be increasing the maximum cap for tuition fees in line with inflation to £9,535—an increase of £285 per academic year.
I understand that some students may worry about the impact that the increase will have on their loan debt, so I want to reassure students already at university that when they start repaying their loan, they will not see higher monthly repayments as a result of these changes to fee and maintenance loans. That is because student loans are not like consumer loans; monthly repayments depend on earnings, not simply the amount borrowed or interest rates, and at the end of any loan term, any outstanding loan balance, including interest built up, will be written off.
Increasing the fee cap has not been an easy decision, but I want to be crystal clear that this will not cost graduates more each month as they start to repay their loans. Universities are responsible for managing their own finances and must act to remain sustainable, but Members across the House will agree that it is no use keeping tuition fees down for future students if the universities are not there for them to attend, nor if students cannot afford to support themselves while they study. I therefore confirm that we will boost support for students with living costs by increasing maximum maintenance loans in line with inflation, giving them an additional £414 a year in ’25-26. I also confirm that from the start of the ’25-26 academic year a lower fee limit of £5,760 will be introduced for foundation years in classroom-based subjects such as business, social science and humanities. The Government recognise the importance of foundation years for promoting access to higher education, but they can be delivered more efficiently in classroom-based subjects, at a lower cost to students.
The change that the Government are bringing about must go further, so my second set of announcements signals the start of deeper change for our students, our universities and our country. Today, I will set out the scale of our ambition to build a higher education system fit for the challenges not just of today but of tomorrow. In the months ahead, we will publish our proposals, because in universities, as across our public services, investment can come only with the promise of major reform. The contribution of higher education to our economy, our communities and our country must grow and strengthen. That begins with universities doing more to spread opportunity to disadvantaged students, in both expanding access and improving outcomes. Our most recent data shows why. The gap between disadvantaged students and their peers in progression to university by age 19 is the highest on record. I will not tolerate that shameful divide any longer. Universities can and must do more, and they must rise to the huge challenge of technological change, supporting adults with the flexibility that they need to retrain. That is why we confirmed in the Budget that we are pressing ahead with the lifelong learning entitlement.
While the UK is home to many world-class universities, it is time that all students in higher education in this country feel the benefit. It is time to raise the bar further on teaching standards, to improve our world-leading reputation and drive out poor practice, and it is time to ensure that all students get good value for money, which, if we are honest, has not always been the case in the past. Furthermore, universities must do more to raise their impact beyond their gates. They must do more to drive the growth that this country sorely needs by attracting talent from around the world, joining with Skills England, employers and partners in further education to deliver the skills that people and businesses need, and shaping world-class research to create good jobs across the country. Members across the House will know how important universities can be for the areas that surround them—not just local economies but local communities. I want universities to work harder to embed themselves in those local communities, as civic anchors—the beating heart of local life in our towns and cities—not ivory towers far from local concerns.
Lying beneath those challenges must be a further transformation: a renewed drive for efficiency. Students and taxpayers support the costs of our universities. They are right to expect that every penny is spent effectively. We will not accept wasteful spending. Universities must rise to the challenge, which means ensuring that the pay of their top teams is fair and justifiable. I am determined that our world-class higher education sector does not merely survive in the years ahead but thrives, supporting students in every corner of our country and at every stage of their lives. I am determined that our universities become all that I know they can be. The scale of our ambition demands a new approach, rooted in partnership, so I look forward to partnering with the sector, the Office for Students and UK Research and Innovation. I will work closely with Ministers across Government, in particular the Secretary of State for Science, Innovation and Technology, to deliver a reformed and strengthened higher education system for our country.
As today the Government look to the future, I am reminded that more than 60 years have passed since the Robbins report on higher education was presented to this House, with its famous principle
“that courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so.”
That principle drove the expansion of higher education over the decades that followed, under successive Governments of both parties. It is central to the thinking of this Government today. That is why responsible Governments must treat universities not as a political battleground but as a public good. It is why Government Members want to see the continued success of our young people, and it is why we are determined to ensure the sustainability and success of our higher education sector, not just in the years ahead but for decades to come. I commend this statement to the House.
Madam Deputy Speaker (Judith Cummins)
I call the shadow Secretary of State.
Laura Trott (Sevenoaks) (Con)
I thank the Secretary of State for advance sight of her statement.
The Budget last week declared war on business and private sector workers, and on farmers, as we have just heard. It seems that today the Secretary of State wants to add students to that list. Not content with pushing up the cost of living for everyone with an inflationary Budget, and pushing down wages with a national insurance increase, we are now in a situation whereby students will suffer from the first inflationary increase in a number of years, at a time when they can least afford it.
Yet again, there was no sign of that in the Labour manifesto. Indeed, in only 2020, the Prime Minister made scrapping university tuition fees a centrepiece of his leadership campaign—perhaps we should start putting sell-by dates on his statements. But it is not just the Prime Minister: in July this year, at the time of the King’s Speech, the Secretary of State said that she had “no plans” to increase tuition fees, and yesterday the Chancellor said that there was
“no need to increase taxes further.”
Yet what is happening today apart from a hike in the effective tax that graduates have to pay? Students have not had a chance to prepare for that rise. They will have fairly expected, based on all the statements that I have mentioned, that the last thing a Labour Government would do in office is put up tuition fees.
We have some of the best universities in the world here in the UK, but we need to do much more to reform the system and make it better and fairer for students and universities by ensuring that courses provide students with an economic return, helping universities to harness the growth potential of the innovations that they foster, and ensuring that students and lecturers are free to express and debate their views. We are willing to work with the Government on all those things. It is also right that we consider university funding, but pushing up costs for students at short notice in an unreformed system will lead to students up and down the country feeling betrayed.
How much of the increase will be absorbed by the national insurance increase for employees at universities? Does the Secretary of State intend to increase fees every year, or should students expect this to be the only increase? What is the impact of the change on public finances, and has the Office for Budget Responsibility been consulted? Why was the change not announced in the Budget? How much longer will it take the average borrower to repay their tuition fees as a result of the change? And why was Labour not up front about the measure in its manifesto?
In June 2023, the title of an article written by the now Secretary of State proclaimed:
“Graduates, you will pay less under a Labour government”.
Well, it turns out they will pay more—more broken promises.
Bridget Phillipson
Amid the faux outrage that we just heard from the shadow Education Secretary, I did not hear whether she will support the measure. She, like her party for many months during the election campaign, had nothing to say other than doing down the ambition and aspiration of young people and their families who want the opportunity to go on to university. The Conservatives went into the last election determined to ensure that fewer young people had the chance to go to university. That is shameful, and it is something that Labour will never back. Young people with talent and ambition, and their families, want a Government who recognise it.
It is little wonder that, at the ballot box on 4 July, the right hon. Lady’s party got a clear message. It is just a shame that in the time since, there has been no reflection on why that was. The Conservatives have learned nothing from their years of failure. They ducked the tough decisions for years. I make it absolutely clear to the House that I do not take any pleasure in this decision—it is not one that I want to take—but I am determined to secure the long-term financial sustainability of our world-leading universities. She is right to recognise their success. They are beacons around the world, and that necessitates tough decisions—decisions that she and her colleagues in the Treasury ducked year after year. They put a Conservative peer in to chair what should have been an independent regulator. They picked fights with the sector time and again, and over the course of 10 years, the Conservative party never had a serious plan to reform the higher education sector. I am determined to bring that reform, and in the months to come we will set out further plans to reform efficiency, access and participation for our young people.
To answer the precise questions that the right hon. Lady asked, as we lay legislation before the House, we will publish an impact assessment alongside it.
Madam Deputy Speaker (Judith Cummins)
I call the Chair of the Education Committee.
Helen Hayes (Dulwich and West Norwood) (Lab)
First, let me put it on the record that I am the parent of a young person in her first year at university.
The Secretary of State has set out very clearly the case for our universities and the justification for her announcement today. However, as young people who might be applying for university as the announcement is being made might see only the headlines, what steps is she taking to ensure that it is communicated effectively, so that it does not deter young people from low and middle-income backgrounds from applying to university in the first place?
Bridget Phillipson
I am grateful to my hon. Friend for her question, and I look forward to speaking with her and her newly constituted Select Committee about this issue and many others.
I recognise the importance of communicating the message that university should be for all young people who have demonstrated that they have the qualifications and talent required. This was not an easy decision, but as Secretary of State, I need to ensure that we secure the long-term financial sustainability of the sector. Alongside that, I am absolutely clear with the sector—with vice-chancellors and others—that it must do more to provide better support and to widen access and participation so that more young people, especially those from more disadvantaged backgrounds, have the opportunity to benefit from higher education.
Ian Sollom (St Neots and Mid Cambridgeshire) (LD)
I thank the Secretary of State for advance sight of her statement.
It is clear that the current university funding system is broken. Not only is it pushing many universities into a financial crisis, but the changes made by the previous Conservative Government have left us with a system that is deeply unfair in how it treats students. It simply cannot be right to raise fees without taking steps to substantially reform the system to make it fairer.
By abolishing maintenance grants for disadvantaged students in 2016, the Conservatives put up a barrier between disadvantaged students and higher education. The Liberal Democrats opposed that abolition at the time, and we have consistently campaigned to restore those grants ever since. The previous Government also cut the repayment threshold to £25,000, so today’s students have to repay hundreds of pounds more per year than older graduates on the same salary. Perhaps worst of all, they lengthened the repayment period from 30 years to 40 years for those starting courses from August 2023 onwards, so today’s students will still be paying back their loans in 2066.
Does the Secretary of State accept that the first priority must be to fully reform the system, fixing the damage that those changes made and creating a system that is fair for all students? That, rather than simply putting up fees without those much wider reforms, has to be the best way forward. The crisis in funding for universities must be addressed, but have the Government considered how to support universities without raising fees? Does the Secretary of State agree that an important first step would be to recognise the benefits of international students and give universities stability in that area of policy? Does she also agree that any reform must examine how universities currently spend their allocation of £10,000 per student per year, so that that money is spent as efficiently as possible?
Bridget Phillipson
I thank the hon. Gentleman for his questions. I gently observe that although it might have been slightly before his time in this House, his party has got a bit of form on this topic, but I will address his questions in the spirit in which he asked them. I appreciate the constructive approach that he has taken.
As part of the reform that we want to deliver for our young people and our sector, the hon. Gentleman’s questions about making sure that young people are supported to succeed are important ones. Since becoming Secretary of State, I have also been very clear that our international students play a crucial role, not just in our communities and our country but in the contribution they make to our local economies—I see that myself as a constituency MP. As we take forward our programme of reform, working with the sector and others, I will of course be happy to discuss that further with the hon. Gentleman.
Rachael Maskell (York Central) (Lab/Co-op)
The last Government nearly bankrupted a number of universities. Indeed, one of the two excellent universities in my constituency had to go through a significant redundancy programme to stay afloat. However, I recognise the challenges that students in my constituency are facing, not least because of the high cost of living. As part of my right hon. Friend’s reforms, will she also look at the cost of housing students, so that they can pay their way when they are studying?
Bridget Phillipson
My hon. Friend makes an important point, and we will absolutely take that into consideration. It is important that we look at student accommodation, which is a big challenge in many university towns, including in her constituency. I believe the sector should be doing more to address issues around student accommodation, working with local councils. We will be setting clear expectations of how that should work in future.
Sir Julian Lewis (New Forest East) (Con)
The Secretary of State mentioned having paused the Higher Education (Freedom of Speech) Act 2023. Does she accept that, given that the Act got Royal Assent in May 2023, it remains the law of the land until repealed by this Parliament? How long does she expect that pause to continue?
Bridget Phillipson
I am grateful to the right hon. Gentleman. He is correct in the question he asks; what I would say about the commencement of the provisions and the wider, long-term future of the Act is this. I believe it is important that our universities are places of robust challenge and disagreement, and that students should be exposed to a range of views, some of which they may not agree with. However, alongside that, it is important that regulation is workable. That is why we are taking our time to make sure that we get this right, listening to a range of voices across the sector who hold differing views. That work is under way. We will make sure that we act having listened to those views, and that will be at the heart of further steps we take in this area.
Darren Paffey (Southampton Itchen) (Lab)
I would not be standing here today were it not for the incredible opportunities of a university education. I was the first in my family to attend and I spent the next 20 years as a higher education lecturer, watching culture wars break out and the financial system become increasingly broken. Does the Secretary of State agree that we now have an opportunity to restore universities as machines of opportunity and economic growth?
Bridget Phillipson
I agree with my hon. Friend, who recognises, both in his professional life before coming to this House and as a constituency MP, the crucial role that our universities play in towns and cities, as well as by providing opportunities for lots of young people. Alongside that, one area where we need to make more progress—and in which I know that my hon. Friend has a real interest—is care-experienced young people and their opportunities at university. There is a lot more that the sector must do to support young people coming through the care system who want the chance to go on to university, to ensure that the additional barriers they face are overcome, and I would expect it to be doing more.
Christine Jardine (Edinburgh West) (LD)
Does the Secretary of State accept that it might have been better to hold a wider review of the whole system—it is broken; we know that—instead of jumping immediately to putting up tuition fees? She says that we all respect and want to protect our world-beating universities, but how does she square that with her Government removing the funding for the exascale computer at Edinburgh University, which would have maintained not only its position, but our whole university sector’s position?
Bridget Phillipson
What I am announcing today is very much in line with the approach that we took at this Budget—a one-year settlement that allows us to fix the foundations, given the need to bring financial sustainability to the sector, because we recognise the acute financial pressures that many universities are facing after years of falling income from fees. That was not an easy decision, but it cannot be the entirety of what we do. I am determined to reform the sector. I will happily work with the hon. Member’s party to look at ideas for how we do that, but she will know as well as I do that the record on progression to university for young people from more disadvantaged backgrounds in Scotland is not a strong one.
Matt Western (Warwick and Leamington) (Lab)
I commend my right hon. Friend for making such a bold and difficult decision here when so many of her predecessors shied away from it. Putting the sector on a sound financial footing is crucial, but I also welcome the move on maintenance support. Can she assure me that, when she talks about increasing efficiency in the sector, she is talking not about vice-chancellors balancing staff and workload, but about addressing the overspend in some capital projects that might be viewed as particularly wasteful, so that good money does not follow bad?
Bridget Phillipson
My hon. Friend has long championed our fantastic universities. He is right to draw attention to the need for further efficiencies, but he is also right to identify that efficiencies do not mean making staff do more with less, or indeed with fewer staff. They do mean reeling in needless or excessive spend and waste, and he is right to highlight that.
Mr Richard Holden (Basildon and Billericay) (Con)
Ten million pensioners, almost 30 million workers who the Institute for Fiscal Studies says will now see lower wages because of national insurance rises, tens of thousands of farmers, hundreds of thousands of small businesses seeing business rates rising, and today millions of students. Is there anyone that this Government told before the general election “Don’t worry!” who they have not since shafted?
Bridget Phillipson
I remain slightly bewildered by the right hon. Gentleman’s approach. He has clearly learned nothing from the election campaign we have just been through and clearly was not listening when he heard time and again about the £22 billion black hole his party left behind and the difficult decisions it ducked year after year. That is the Conservatives’ record, and he should reflect on it.
Adam Thompson (Erewash) (Lab)
Through a 10-year career in the higher education sector and now as chair of the all-party parliamentary university group, two things have become abundantly clear to me: first, the Conservative party left the sector in utterly dire straits when it left office, and secondly, today’s measures are absolutely necessary for our universities to avoid bankruptcy. What steps is the Secretary of State taking with universities, students and campus unions to develop a new financial model—one that delivers excellence and value for students, and stability and security for university staff and management?
Bridget Phillipson
My hon. Friend brings real expertise on these matters to the House. While the Government ensure that we play our part in securing financial sustainability, I have been clear with the sector that it too must do more. That involves playing an expanded role in driving economic growth, including in towns and cities across the country. The sector ought to be considering how it can do more, including working with further education providers to look at different ways of delivering provision, especially for adult learners, who often need a different approach in order to upskill, retrain and take on new opportunities. I have seen some great examples of that and some fantastic practice around the country, but there is more that the sector should be doing.
Richard Foord (Honiton and Sidmouth) (LD)
I welcome the Secretary of State’s announcement on increased maintenance loans and what that will do for equality of opportunity. I agree with her that the last Government did not properly value the contribution of international students. For more than 15 years, the much higher fees charged to international students have cross-subsidised British students, to say nothing of what international students do for British soft power. Will the Government remove international students from the net migration figures, so that that cross-subsidy can continue?
Bridget Phillipson
I agree with the hon. Gentleman on the important contribution that international students make to our country and the reach they give us around the world through soft power, influence and the business and trading links that they grow and develop, but I am afraid I cannot give him the answer he seeks on his wider question.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Keele University and the University of Staffordshire, two of the wonderful universities around my constituency, have been warning for a long time of the dire financial circumstances they face. We often forget that they are also major employers in my constituency, so I welcome the announcement of this financial support—if nothing else, to protect jobs in those institutions that currently face a desperate budget round. I share the Secretary of State’s ambition to widen participation; in my patch, Uni Connect’s Higher Horizons scheme is doing a lot of work to help disadvantaged students to access higher education. What is her Department doing to ensure that that funding is in place, so that more young people from places such as Stoke-on-Trent can have a higher education experience?
Bridget Phillipson
My hon. Friend is right to raise those issues and to highlight the important contribution that universities make to employment opportunities, and not just for academics and others engaged in research and teaching, but for a wide range of jobs right across the board. From security staff to hospitality staff and library staff, there are many jobs across higher education that play a crucial role. The Department is looking at how we can work with the sector to deliver an expansion in the civic role of our universities. It is important that they do more when it comes to economic growth, but also to widen participation, because it is shameful that too few young people from disadvantaged backgrounds have the opportunity to go to university.
Jeremy Corbyn (Islington North) (Ind)
I welcome the Secretary of State’s announcement that
“universities must be home to robust discussion and rigorous challenge”.
That is very welcome, but she must be aware that many students are put off going to university by the already very high fees. There were no proposals in her statement to reform university finance; there was only a proposal to charge students more. Will that not drive more people away from university education rather than to it? Universities should not be dependent just on student income to survive. Should we not be moving in the direction of lowering fees, or indeed removing them altogether, in order to make higher and further education genuinely open to all in our society?
Bridget Phillipson
I agree that there is more that universities can do to ensure that they have a wide source of income. That includes greater work around economic growth, around spin-offs and much more besides—I will be working with my right hon. Friend the Secretary of State for Science, Innovation and Technology on precisely those questions. The reality is that it is necessary to bring forward this increase next year to stabilise the sector. It is a difficult decision but a necessary one, because it is no good encouraging young people to go to university if their institutions continue to be in financial peril.
Bell Ribeiro-Addy (Clapham and Brixton Hill) (Lab)
I thank the Secretary of State for her statement. I fully understand that something needs to be done. Tuition fees were introduced just before I went to university. It never sat well with me that Members of this House went to university free of charge, or with a grant too, and then seemingly pulled the drawbridge up behind them. I am pleased that the Secretary of State mentioned disadvantaged students and her plans to conduct an equality impact assessment, but we know that university applications have been slowly declining. Has she any plans to review her actions if the equality impact assessment shows that there are issues for disadvantaged students?
Bridget Phillipson
We will be setting out further plans in the coming months around the wider reform that we intend to bring to the sector. I recognise my hon. Friend’s genuine concern about making sure that talented young people who want to expand their minds and benefit from university have the chance to do so. There is much more that the sector can and must do to improve outcomes for disadvantaged students, including around progression. Sadly, it is not just that fewer disadvantaged young people are thinking about university, but that the progression rates in terms of completion are just not good enough. More needs to happen on that front, too.
Ian Roome (North Devon) (LD)
Universities work in collaboration with FE sector institutions such as Petroc college in my constituency. Government funding for the FE sector has fallen significantly in real terms over the past decade, leading to falling teacher pay. What are the plans to fund the FE sector so that it can remain a viable and accessible option, particularly in rural areas such as mine, for people to access university courses?
Bridget Phillipson
The hon. Gentleman raises important points not just about the state of our further education sector, but about the important collaboration between further education and higher education providers, including in communities where travelling times might be longer, and about ensuring that access to education is available to a much wider range of people. I have seen some really great work going on across the country, but there is more that the Government can encourage higher institutions to do.
The Government inherited a real mess in further education, a sector that had been ignored for so many years. We are determined to put that right. That is why in this Budget we invested £300 million into further education, alongside a £300 million capital allocation, for the first time in a number of years: to ensure that we are investing in our further education colleges, which are crucial parts of our towns and cities.
Andrew Lewin (Welwyn Hatfield) (Lab)
We have thousands of international students at the University of Hertfordshire in Hatfield—they are most welcome and they make a great contribution. However, when the Conservative party was in power, the independent Office for Students concluded that the entire higher education model was reliant on international fee income. Does my right hon. Friend agree that that was a completely unsustainable model—another example of the Conservative party ignoring a problem and leaving it to us to rescue and reform our higher education sector?
Bridget Phillipson
International students play an important role in our communities and make an important contribution to our economy, but my hon. Friend is right to draw attention to the fact that there can sometimes be pressures. I know that can be especially acute where expansion happens and the right levels of accommodation do not follow. We will be setting clear expectations of the sector that it has to work with local councils to ensure the availability of high-quality accommodation. Alongside that, as a Government we are legislating to make sure there are higher standards in the private rented sector through the Renters (Reform) Bill, because too many students are expected to live in substandard private rented accommodation.
Vikki Slade (Mid Dorset and North Poole) (LD)
I put on record that I am the parent of three students—two undergrads and one postgrad—who are all paying their fees. Does the Secretary of State agree that courses offering just eight hours a week of contact time do not represent good value for money? Will she ensure that that element is fully evaluated in the reforms that are coming? Will she advise the sector that if students are getting only eight hours of contact time, which is effectively a part-time course, they do not need to charge the full fees?
Bridget Phillipson
We are working closely with the Office for Students on the areas that the hon. Lady identifies. She is right that we need to do more on quality, particularly teaching quality, and we will be discussing that further in the months to come. I would be more than happy to discuss that issue with her and her party.
Shaun Davies (Telford) (Lab)
Universities are critical for students, of course, but also for economic growth, town and city regeneration, and much more. Reform and accountability are also important. Will the Secretary of State outline in a bit more detail the accountability to which she will hold these university vice-chancellors on teaching contact time, helping vulnerable students and ensuring that universities play a huge part in the wider communities of the towns and cities in which they are anchor institutions?
Bridget Phillipson
One of the first actions I took as Secretary of State was to refocus the work of the Office for Students on precisely those areas that my hon. Friend identifies, because it is important that we ensure that the student experience at university is strong and that students have the opportunity to take part in a wider range of activities. I am also acutely aware of the financial pressures that many students are experiencing, and that is why we have taken the decision to increase maintenance loans at the rate of inflation. I have set out five priorities today for reform of the higher education sector. We will expect higher education providers to play a stronger role in expanding access and improving outcomes, especially for disadvantaged students. Such institutions should make a stronger contribution to their communities and to economic growth.
Mr Joshua Reynolds (Maidenhead) (LD)
It was not that many years ago that I was at university—[Laughter.] Who would have thought it? Just before the Secretary of State took to her feet, I checked my student loan balance, and it is just over £60,000. For many students at university, the elimination of maintenance grants was devastating, and the reintroduction of maintenance grants will mean that living costs are not barriers to university for those disadvantaged students. Will the Secretary of State confirm the reintroduction of maintenance grants, so that no young people are put off university for fear of the costs?
Bridget Phillipson
I can tell the hon. Gentleman that we will look at this issue as part of wider reform, but he will appreciate that after 14 years of Conservative failure when it comes to our universities, there are no easy options. This is a difficult decision and a difficult choice, but I can give him the assurance that I want to ensure that university remains an attractive option for all young people who want the chance to learn, to expand their minds and to take all the opportunities that come from a university education.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I welcome my right hon. Friend’s leadership not just on the funding, but on the reform that the sector needs. The previous Government’s approach to regulation put ideology over evidence, and one example of that is in the role of the designated quality body. It was there to check on quality and standards in higher education, but it had to give up that role because the regulatory climate that the previous Government brought in was non-compliant with international standards. Can the Secretary of State assure the House that the regulatory approach that she will take will be different from that of the previous Government and ensure that our higher education sector continues to be world-leading?
Bridget Phillipson
My hon. Friend brings real experience on these matters to the House. He will know it is important that the independent regulator retains the autonomy to act, but we will work with it closely on quality, student outcomes and much more besides. As he will know, under the last Conservative Government, that regulator was increasingly fixated on political matters and political whim, and did not have enough focus on teaching quality and students’ outcomes. Under its new interim chair, Sir David Behan, it has changed that approach and is focusing on ensuring not only that our universities are sustainable, but that they deliver better outcomes for students.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for her statement. With fees to increase, how can we expect students to stay and work within the United Kingdom when the fields are much greener on other shores and it is much cheaper to live there as well? May I make a plea about the retention of student and junior doctors? I have repeatedly asked for bursaries or forgiveness of debt against a job commitment of perhaps three or four years. Will she consider that? If enacted, that would mean more students and junior doctors staying, which has to be good.
Bridget Phillipson
I am grateful to the hon. Gentleman. For many young people, the chance to go to university is a long-term investment in their future prospects, which offers not just the chance to study and to learn, but the chance to take on a new career in the way he described, particularly in our health service. Of course, this matter overlaps with the Department of Health and Social Care, and he can be assured that we keep these matters under review.
Dr Scott Arthur (Edinburgh South West) (Lab)
I draw Members’ attention to my entry in the Register of Members’ Financial Interests. Any country that is serious about growing its economy should also be serious about supporting its university sector. In that context, I welcome the promise that a review will be published soon. I hope that it will take lessons from Scotland, where while undergraduate education is free, universities are grossly underfunded to deliver it. The announcement will only widen the gap between Scotland and England in that regard.
I also welcome the confirmation that we need our universities to be able to attract talent from around the world. Both the Higher Education Policy Institute and my union, the University and College Union, have said that the previous Government put blocks in place to that happening. Will the Secretary of State engage with the sector to ensure that we have the right environment to attract the best students and the best staff to UK universities and that the very best international graduates can work here at the point of graduation?
Bridget Phillipson
I am grateful to my hon. Friend, who raised a number of important points. In addition to those he made about the record in Scotland, he will know better than most of us the shameful record of the SNP Government when it comes to opportunities for university study for our more disadvantaged students. The share of first-time university entrants from Scotland’s most deprived areas fell for the second consecutive year. He will also know that the SNP Government in Scotland also cut mental health provision for Scottish students.
Anna Dixon (Shipley) (Lab)
I would like to put on the record that my husband works for a university. I welcome the announcement that the Government plan to reform and strengthen higher education. I went from a northern comprehensive school to university, and I agree it is vital that we expand access so that students from all backgrounds can go to university. I recently met the vice-chancellor of Bradford University, which has a high proportion of students drawn from the city, but many students fail to progress due to the lack of high-quality graduate jobs. I invite the Secretary of State to come to Bradford, perhaps meet other Bradford MPs and see the civic contribution that the university makes. Hopefully we will see more of that from other universities in the future.
Bridget Phillipson
I would be delighted to visit and meet my hon. Friend and other colleagues in neighbouring constituencies to discuss the approach that has been taken there. She made the wider point that our higher education sector is diverse and includes a range of providers who offer different kinds of opportunities, training and study for different sets of students. Of course, young people are often the focus of our attention in these discussions, but the chance to go to university later on in life is also crucial, with the opportunity to retrain, to upskill and to make a change of career. Many of our newer universities have driven so much of the excellent work that I have seen in expanding opportunities for adults to go back into education.
Peter Swallow (Bracknell) (Lab)
Before I was elected to this place I was a university lecturer and researcher. I worked hard to expand access to education for all. I agree with the Secretary of State that universities need to do more to ensure that, no matter people’s background, they have the opportunity to access a university education and the social mobility that comes with that. Does she agree that such opportunities are a fantastic route for social mobility, whether students choose to study a science degree, a social sciences degree, or one of the fantastic arts and humanities degrees?
Bridget Phillipson
I agree. My hon. Friend will recognise that over many years we heard the Conservatives doing down young people’s ambitions to go on and study. Like me, he will have heard dismissive talk, which I will not repeat, about types of degrees and the kind of study that our young people were engaged in. It is essential for a modern economy that people have the chance to study science and technology and much more aside, but also subjects like art and music, not just because they are good in and of themselves but because, increasingly, they are a key part of driving economic growth in our country.
Alice Macdonald (Norwich North) (Lab/Co-op)
The dire state of the finances of higher education institutions such as the University of East Anglia is likely to be improved by this announcement, but can the Secretary of State assure staff and students that mechanisms are in place to ensure that increased income from fees translates into fewer job losses and helps encourage more students from lower-income backgrounds into university?
Bridget Phillipson
That is my expectation. Excessive and wasteful spend in universities needs to be reined in. There must be a much greater push for efficiency. As a Government, we have made the difficult decision to increase fees to provide sustainability for the sector. Now, the sector must play its part.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
I have Falmouth University in my constituency, which is a world-leading arts university. Unlike the Conservatives, this Government have committed to restore the arts as a large part of the economy in this country. Could the Secretary of State confirm that arts degrees will be an important part of the economy in future, and will be supported by this Government?
Bridget Phillipson
Going to university is often a long-term investment in someone’s earning potential and career opportunities, but the chance to study is also good in and of itself. That means that we must value and respect a wide range of courses and opportunities, including subjects like music, art and much more besides, although many well-paid, great careers also result from studying such subjects.
Mr Mark Sewards (Leeds South West and Morley) (Lab)
When I was a student at Morley high school, the University of Leeds reached out to me and students like me to ensure that we considered a place at the institution, despite the fees at the time. Does the Secretary of State agree that, whatever the fees, it is crucial that these universities expand access to working-class students, to truly break down the barriers to opportunity?
Bridget Phillipson
I agree very strongly. It is crucial that our university sector does more to open up opportunities, including to working-class young people and those who do not have a family history of going to university. The experience that my hon. Friend described was very much my experience too—not just the encouragement that I received from my teachers but the opportunity to visit universities and see what was available. Although often there is individual good practice of the type he described, universities should do more, particularly within their regions, to collaborate to avoid duplication, ensure that they are serving their communities and draw on the wide range of talent available. They must make sure that university is an attractive option for young people who otherwise might not consider going to higher education.
Roadworks (Regulation)
(1 day, 18 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate
Mr Mark Francois (Rayleigh and Wickford) (Con)
I beg to move,
That leave be given to bring in a Bill to make provision about the regulation of roadworks; and for connected purposes.
I introduced a very similar ten-minute rule Bill in the previous parliamentary Session, which unfortunately ran out of time. However, under the heading of the “Can the Cones” campaign, I am now seeking to reintroduce similar legislation to help tackle the issue of overrunning roadworks head on.
One of the great frustrations of modern life is queuing for ages in a line of traffic, inching forwards to get through a set of contraflow traffic lights at the scene of some roadworks, only to then finally crawl past a large hole in the ground, heavily coned off, with absolutely no one working on the site. According to data highlighted by The Echo newspaper, recent freedom of information requests showed that during the 2021-22 financial year there were over 77,000 street and roadworks in my county of Essex, making it the most dug up county in Britain. But this is by no means an issue confined to Essex.
Last week, we had a debate in Westminster Hall on this same subject, ably secured by my hon. Friend the Member for Broxbourne (Lewis Cocking), who I am pleased to say is one of the sponsors of my Bill, which also has cross-party support. Last week’s debate was replied to by the Roads Minister, the Under-Secretary of State for Transport, the hon. Member for Nottingham South (Lilian Greenwood). I am pleased to note that she is in her place on the Front Bench listening today, as she promised she would be. I thank the Minister for her courtesy.
Roadworks can take place for a variety of reasons. Sometimes utility companies are carrying out repairs or maintenance, broadband providers laying new fibre, or property developers connecting new estates to the grid. In many cases, however, the common denominator is a lack of any palpable sense of urgency whatever to get the job done, regardless of the inconvenience caused to the travelling public. As a constituency MP, I have received a growing tide of complaints about the spiralling frequency of roadworks in recent years, with the gas utility company Cadent being by far the worst serial offender. Last year, in one of my villages, Hockley, a perfect storm of the above three things occurred and led to so many concurrent roadworks that the exasperated villagers, led by a very proactive local councillor, Adrian Eves, resorted to nicknaming their village “Blockley”.
Given all that, the Bill essentially has three key aims. First, it would give local highways authorities, such as Essex county council, much stronger powers to control the granting of permits to anyone who wanted to dig up the highway network. This is a critical weakness in the current arrangements. Currently, highways authorities can only really refuse to grant a permit on safety grounds. If those applying for one deem the work to be an emergency, the authority’s ability to refuse is weaker still. And I am sad to report that people sometimes attempt to game the system. The Bill would allow refusal on the grounds of causing unacceptable disruption and would materially strengthen the hand of councils to negotiate much tighter conditions, including stricter deadlines when granting permits, so that companies would hopefully be prevented from overrunning in the first place.
Secondly, the Bill would mandate highway authorities to take all practicable steps to deconflict roadworks in their areas to prevent multiple works in the same neighbourhood from leading to near gridlock, especially during peak periods. Under section 59 of the New Roads and Street Works Act 1991, local authorities are required to co-ordinate roadworks to minimise disruption to road users. It states that a street authority
“shall use their best endeavours to co-ordinate the execution of works of all kinds”.
Nevertheless, a few years ago we had near chaos in my home town of Rayleigh when several sets of roadworks on the main arteries in and out of the town were allowed to proceed at almost exactly the same time. When we subsequently looked into why, it turned out that the official at county hall who handed out the permits to developers did not communicate with the one who gave them to utility companies. In short, the left hand did not know what the right hand was doing, which led to utter confusion and some very frustrated constituents. The Bill seeks to rectify that, ensuring a far more joined-up approach, by imposing much stricter procedures on highways authorities that give out the permits. It also seeks to prevent the same stretch of road from being dug up multiple times, in short succession, by different companies.
Thirdly, the Bill would materially increase the fines for roadworks that do overrun. At present, under section 74 of the 1991 Act, local highways authorities have the power to fine utility companies for “unreasonably prolonged” occupation of the highway. The fines to be levied are set out in the snappily entitled Street Works (Charges for Unreasonably Prolonged Occupation of the Highway) (England) (Amendment) Regulations 2012, with which I am sure the whole House is familiar, and which provide for a maximum charge in respect of “traffic- sensitive” streets of £5,000 a day for the first three days of overrun and £10,000 a day thereafter.
However, for streets that fall outside that tightly defined category, the fines fall away dramatically. Crucially, they have not been updated or adjusted for inflation since 2012, and are hardly likely to be a deterrent to major utility companies or housing developers, some of whom just accept them—on the rare occasions on which they are actually levied—as a cost of doing business. The Bill would significantly increase the penalties for overrunning beyond the schedule agreed when the permit was first granted. Persistent offenders could be fined up to 10% of their annual corporate turnover, which should make even the most high-handed company sit up and listen.
Another related solution is “lane rental”—not to be confused with “road pricing”—whereby companies must pay per day to carry out roadworks. That gives them a clear financial incentive to be efficient, but at present it applies to only a very limited number of selected roads. May I suggest to the Minister that perhaps there is scope for this solution to be much more widely applied? I see that she is nodding.
As an experienced constituency MP, I know that it is a rare thing for a ten-minute rule Bill to make it on to the statute book. Nevertheless, I hope that the Government may yet be minded to grant it time to assist its passage. Failing that, I should be very grateful for a meeting with the Roads Minister so that we can seek at last to “Can the Cones”, either through legislation or, at the very least, by strengthening Government guidance to highways authorities to achieve the same effect, short of primary legislation itself.
No one really likes roadworks. They are sometimes a necessary evil of modern life. Nevertheless, the spirit of this Bill is to try to ensure that where they are really necessary, we expedite them as quickly as practicable, with as little disruption as possible. I promised my constituents when seeking re-election that if they returned me to Parliament, I would seek to reintroduce my Roadworks (Regulation) Bill, and I am keeping my word to them today. This is not a partisan issue; it is something on which I hope all Members of Parliament—and, even more important, their constituents—can agree. So let us collectively “Can the Cones”, and keep the traffic flowing as much as we practically can. I commend the Bill to the House.
Question put and agreed to.
Ordered,
That Mr Mark Francois, Mr Richard Holden, Greg Smith, Mrs Emma Lewell-Buck, Sir Desmond Swayne, Andrew Rosindell, Sir John Whittingdale, Lewis Cocking, Sir Bernard Jenkin, Andrew Griffith, Sir Roger Gale and Jim Shannon present the Bill.
Mr Mark Francois accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 11 July 2025, and to be printed (Bill 118).
Ways and Means
Budget Resolutions
Income Tax (Charge)
(1 day, 18 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Liz Kendall)
The first Labour Budget in 14 years—the first ever Budget delivered by a woman Chancellor—shows the difference that this Labour Government are already making. We are fixing the foundations of the public finances to bring the stability that our economy needs, putting more money into people’s pockets after the worst Parliament for living standards on record, beginning to turn the corner on our vital public services, with more appointments in the NHS and more teachers in our schools, and making the long-term investments in infrastructure and skills that our country needs in order to grow our economy and seize the jobs and opportunities of the future.
In the Department for Work and Pensions, the message from this Budget is clear: we will tackle the unacceptable levels of fraud that we have inherited, because every pound of taxpayers’ money must be wisely spent and go to those who need help the most. We will drive up opportunity in every corner of the country with our plan to get Britain working, because this Labour Government believe that work is the key to building a better life and to growing our economy. We have made a start on driving down poverty too, because, unlike Conservative Members, we know that children cannot fulfil their potential without food in their bellies and a roof over their heads, and our country cannot fulfil its potential when the talents of so many bright children and young people are being denied.
Getting a grip on the public finances is the first step in delivering all these changes. Without strong foundations, we cannot deliver a thriving economy, decent public services or sustainable increases in living standards for families and pensioners. We did not choose to inherit the mess that we found in the public finances and our public services, but we have chosen to level with the public about the scale of the challenges and how we intend to deal with them.
Conservative Members have still not faced up to their responsibility for the state in which they left the country. There is a £22 billion black hole in the public finances this year, with billions of pounds overspent on a failing asylum hotel system. New hospitals, roads and train stations were announced, without the money to pay for them. Vital compensation schemes for infected blood and the Horizon scandal were set up, without the funds to deliver them. The country’s reserves were spent three times over.
That is before we even get to the state of our public services. Millions of patients have been left waiting for NHS treatment, often in agony and pain. Victims have been left waiting months or even years for justice in our courts. Our prisons are overflowing, and our schools literally crumbling. As my right hon. Friend the Chancellor of the Duchy of Lancaster has said, this could have been a Budget where we looked at the state of the country but ducked the difficult decisions. We could have tried to kid the voters, paper over the cracks and then hope that something better somehow comes along. But we chose not to do that, because that is precisely the approach that got us into this mess in the first place, and because in politics, as in life, you do not deal with a problem by ignoring it, ducking it or pandering to it; you deal with problems by facing them head on.
We have chosen to get the public finances back on track, to protect the payslips of working people, to start turning the corner on our public services and to invest in the long-term infrastructure our country needs. In order to deliver that, we have made tax changes, which is never easy to do, and asked some businesses and wealthier people to pay some more. Hand in hand with this balanced approach, however, the Chancellor has set out tough new productivity, efficiency and savings targets of 2% this year for every single Department. Under this Labour Government, investment in our public services will always go hand in hand with reform, because we cannot keep spending taxpayers’ money on the same problems without changing the way we tackle them, and because public expectations and developments in AI and new technologies are transforming the way people interact in many aspects of their lives, and the public sector must respond to those changes, too.
The need for reform in our system of employment support and social security is urgent and it is real. I want to spell out clearly and honestly for the House the facts of the previous Government’s legacy of failure. Some £35 billion of taxpayers’ money has been lost to fraud and error since the pandemic—now standing at £10 billion a year. Our employment rate is still not back to pre-pandemic levels, making us unique in the G7 group of wealthy countries, and not in a good way. We have near-record levels of people trapped out of work due to long-term sickness—a staggering 2.8 million people, with rates far higher in some parts of the country such as the midlands and the north—and 420,000 more households are predicted to claim universal credit health benefits over the next five years, increasing from a third to a half of all universal credit claims. That is the legacy of the Conservatives. One in eight of all our young people are not in education, employment or training, with all the terrible long-term consequences we know that brings.
It is not just the economic cost of this failure that is unacceptable, with a predicted £26 billion increase in sickness and disability benefits over the next five years. Above all, there is the human cost to individuals and communities when millions of people are denied the opportunity to work and earn a decent standard of living, to make connections, to get skills and to build chances for a better life, with all the benefits that that brings. We do not accept that as the future for our country or our fellow citizens.
Instead, we choose a different path. It starts with our determination to deliver value for money for every pound of taxpayers’ money, so we will bring forward a new plan to drive down fraud and error in the welfare system. Our new Fraud, Error and Debt Bill will update the Department for Work and Pensions’ powers for the first time in 20 years, so that we can keep up with the new ways that fraudsters, including organised criminal gangs, are using to take public money, and so that our powers are brought into line with other public bodies such as His Majesty’s Revenue and Customs.
We will use technology to alert us to people trying to scam the system, and to prevent errors from happening in the first place. We will recruit 3,000 more staff to crack down on fraudsters, with a focus on serious case reviews, and we will bring in new powers to recover debt, all with independent oversight and a guarantee that a human being will always take the final decision in any fraud case, to give everyone confidence in the system—something that the Conservatives utterly failed to do.
Jim Shannon (Strangford) (DUP)
Many of us understand the need to have a more focused fraud law, and that is very important, but every other week people I represent come along to me and say that they have been overpaid for their employment and support allowance, their personal independence payments or their disability living allowance. They find themselves in an incredibly difficult position, not because they are trying to defraud or take money away from anyone; it is just a simple issue of their getting it wrong. What will be done to protect those people? This is really important. We are going to have a new fraud law, but let us make sure that we protect the innocent people who make a mistake.
Liz Kendall
I absolutely agree with the hon. Gentleman. The technology we will put in place will be precisely so that we drive down not only fraud but errors in the system. He will know, for example, that we are trialling a new system for carers in which we text them if they are about to go over their allowance, so that we do not have the scandalous overpayments that caused such a problem under the previous Government.
The second major reform that we will bring in is our plan to get Britain working again. Our White Paper, which will be published in the coming weeks, will bring forward the biggest reforms to employment support in a generation, backed by an additional £240 million of investment. This will help us meet our ambition to achieve an 80% employment rate and to turn what is in reality a Department for welfare into a genuine Department for work. First, we will create a new jobs and careers service, overhauling our jobcentres so that they no longer focus predominantly on monitoring and assessing benefits but are a genuine employment service working with employers, colleges, public services and local leaders to help people to get work and get on in work.
Secondly, we will devolve powers to Mayors and local areas to join up the fragmented patchwork system of employment, skills and, crucially, health support to drive down economic inactivity and drive up employment, boosting jobs and growth in every corner of the country—because the man, or even woman, in Whitehall does not know what is best in Leicester, Liverpool or Leeds. Last, but by no means least, we will bring forward our new youth guarantee, so that every young person is earning or learning—no ifs, no buts—because we do not accept having a generation of young people without the skills or jobs they need to succeed, and we will never write off young people before they have even begun.
Our determination to help people get work and keep work does not stop there. I know only too well from my constituents and my friends how often women in their 50s and beyond are now caring for elderly and disabled relatives but wanting to work at the same time. I am proud that we are giving family carers the biggest ever boost to the amounts they can earn while still receiving carer’s allowance. That will allow them to increase their hours to the equivalent of 16 hours at the national living wage, so that they can balance work and family life. This comes on top of the independent review into the scandalous overpayment of carer’s allowance that I have already announced, led by the former chief executive of Disability Rights UK, Liz Sayce, to ensure that we learn the lessons from what happened so that it never happens again. As a lifelong champion of family carers, I am proud that we have made that announcement. Our plan to get Britain working is crucial to driving up opportunity and driving down poverty—a key priority of this Labour Government.
The fact that over 4 million children are now growing up poor, with more than 800,000 living in households forced to rely on food banks, is a stain on our society. My right hon. Friend the Education Secretary and I have already set out the framework for our bold, ambitious, cross-Government strategy to tackle child poverty. We will publish the results in the spring, but we will not wait to act, particularly for those facing the deepest poverty.
We have extended the household support fund and discretionary housing payments, with an additional £1 billion this year, so that local authorities can help families and pensioners who face the greatest hardship. Furthermore, we have introduced our new fair repayment rate to cap the level of debt repayments that can be taken from universal credit, putting an average of £420 a year into the pockets of 1.2 million of the poorest households, which will lift thousands of children and families out of poverty. When I was chair of Feeding Leicester, food banks told me that debt driven by universal credit deductions was one of the biggest reasons why people had to use food banks, which is why I know this is such an important change.
We are also substantially increasing the income of pensioners who have worked hard all their lives and who deserve security in retirement. Our commitment to the pension triple lock throughout this Parliament means that spending on the state pension is forecast to rise by over £31 billion. This includes a more than £470 rise in the new state pension from next April.
Unlike the previous Government, who left over 800,000 pensioners missing out on the pension credit to which they are entitled, we are delivering the biggest-ever drive to increase uptake. For the first time, we are contacting 120,000 people on housing benefit who may be eligible for pension credit and, to guarantee even greater uptake, we will merge pension credit and housing benefit for new claimants from 2026. The Conservatives first promised this in 2011, but they never delivered. That is the difference a Labour Government make.
There is still much more to do, but this Budget starts to turn the corner: fixing the foundations of our economy and public services, driving up opportunity and driving down poverty in every corner of the land. We are honest about the challenges we face and optimistic about the opportunities ahead. This is a real plan for real change. I commend this Budget to the House.
Mel Stride (Central Devon) (Con)
The Labour party pledged at the last election to usher in a new form of politics based on transparency and integrity. When pressed, Labour Members ruled out a large number of tax rises. One of these taxes, as the Labour manifesto explicitly stated, was national insurance:
“we will not increase National Insurance”.
Yet, only a few short weeks later, what has happened in this Budget? Employers’ national insurance contributions have been raised, which is a direct breach of the Labour manifesto. Do not take my word for it—Paul Johnson, the head of the Institute for Fiscal Studies, has said exactly the same.
Of course, despite being at the scene of the crime, the Government have since hidden behind their alibi that, somehow, putting up employers’ national insurance contributions will have no impact on working people, but that is simply untrue.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Will the right hon. Gentleman give way?
Mel Stride
My right hon. Friend is a sensible man to give way to, and I will do so in a moment.
The Chief Secretary to the Treasury recently admitted on Sky that putting up national insurance for employers will directly impact working people—of course it will. The Office for Budget Responsibility lays out in black and white that the consequence will be over 50,000 fewer jobs, with about 70% of the cost of this increase in taxation ultimately being borne by those who work, through lower wages. Are these not working people?
The Secretary of State mentioned her youth guarantee and the importance of youth. I simply observe that youth unemployment fell by over 40% under the previous Government, whereas it rose by over 40% under the last Labour Government. That is how successful the Labour party is.
Of course, because both the rate and the threshold have been increased, the national insurance increase will disproportionately impact those on lower wages, including the youngest workers.
Sir Edward Leigh
I warmly congratulate the new shadow Chancellor on his appointment. It is richly deserved, given his tremendous work as Secretary of State for Work and Pensions in getting people back to work.
In opening this debate, the Secretary of State said that she is only attacking wealthy people. My right hon. Friend the Member for Central Devon (Mel Stride) is talking about working people, so will he emphasise that our party stands four-square behind working farmers? These people, with only 250 acres, just want to pass on their business to their son, but they are being cruelly attacked by this Government.
Mel Stride
My right hon. Friend is right that this is another broken promise. At the general election, the now Secretary of State for Environment, Food and Rural Affairs gave an unequivocal guarantee to farmers across the country that there was no question of farms being brought into inheritance tax. There is a good reason for the exemptions and relief, because if inheritance tax is levied on family farms that are passed down to another generation, those farms will have to be broken up, with parts sold off to pay the tax.
I am glad that my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) mentioned this, because the OBR has said that, by 2030, this measure will raise the princely sum of £520 million, which is enough to run the national health service for just one day. Has a more modest sum ever raised so much misery? I think not.
The Chancellor assured us that she will not fiddle the figures by changing the fiscal targets, yet we have seen the fiscal targets changed to allow this Government to borrow an additional £140 billion.
This is not a good time for the Secretary of State to talk about pensioners, but she mentioned them at the end of her speech. They were so badly let down by the means-testing of the winter fuel payment, and they were not told in advance to expect anything like it. Ten million pensioners across the country will lose up to £300 as a consequence of this measure. The Government claim that only the wealthiest, only the millionaires, will be affected, but two thirds of pensioners below the poverty line will have this benefit removed.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I am grateful to the new shadow Chancellor for giving way. I could be wrong, but was he not the Secretary of State who took through the legislation to suspend the triple lock—the one and only time it has been suspended—which has since cost pensioners £500 a year every year?
Mel Stride
We fought for the “triple lock plus” in our manifesto, which would have spared millions of pensioners from being dragged into income tax, many for the first time, under this Government’s arrangements. There were, as the hon. Gentleman knows, particular circumstances in October 2022, including inflation surging above 11%.
What are the broad effects of this Budget? The tax burden will rise to the highest level in the history of our country—higher than in 1948, when we first started to collect the data. We will be borrowing a staggering £140 billion over the next five years. What are the consequences of that, apart from passing on debt to future generations, who will have to pay it by way of higher taxation in the future? It is the crowding-out of private business investment, which this Government say they are eager to drive up.
If we look at OBR’s forecast from the spring Budget last year and for inflation in every year under this Budget, it is higher in every single year. Why? Because there has been a huge fiscal splurge, particularly in the first two years of the forecast, that will require a monetary response, so interest rates will stay higher for longer. That will mean, the OBR estimates, an extra 0.25% on mortgages—or over £400 extra for the average family, up and down the country. According to the OBR’s forecast, wages will stagnate across the period, with lower real household disposable income than under the spring forecast, when the Conservative party was in government.
I am surprised that the Secretary of State raised the subject of living standards. The Joseph Rowntree Foundation estimates:
“The average family will be £770 worse off in real terms by October 2029 compared with today.”
I am also surprised that she raised the issue of poverty. When we were in government, we faced so many lectures from Labour Members, while we were bringing poverty down—the number of pensioners in absolute poverty fell by 200,000.
Mel Stride
The number of children in poverty fell by 100,000 in total. I will come to the record of this Government in a moment, but first I give way to the Secretary of State.
Liz Kendall
Figures from the Department that the right hon. Gentleman used to be responsible for show clearly that 700,000 more children now live in relative poverty after housing costs. Does he accept that? Yes or no?
Mel Stride
As the right hon. Lady knows full well, it is accepted that the key measure is absolute poverty after housing costs. She cannot flit between one measure and another when it suits her. The reality is that it is projected that 100,00 more children and 300,000 more adults will be in poverty as a consequence of the Budget.
Mel Stride
How can I finally resist the hon. Gentleman, who is just itching to make some point about integrity? The Floor is his.
Neil Coyle
The shadow Chancellor raises the issue of integrity and he talks about poverty. Many disabled people live in poverty. When he was Secretary of State for Work and Pensions, he told the House that there would be no investigation into the Department for Work and Pensions for unlawful treatment of disabled people. Does he owe this House, or does he owe disabled people, an apology?
Mel Stride
I stand by our record when I was Secretary of State for Work and Pensions, particularly on the support that the Department gave to the disabled, not least the results that we achieved in encouraging and helping them into work, which is the best possible outcome.
When there has been such a perpetration of deceit, there must be the alibi—the smokescreen—which is, of course, the fictitious, confected black hole of £22 billion. Labour Members rubbed their hands in glee when the OBR said it would be looking into the matter. It reported back, on the day of the Budget, and what did it find? It found that it was not able to legitimise that black hole of £22 billion, and came up with a figure for in-year fiscal pressure that was below half that. It observed that if it had been focused on that figure at the time of the spring Budget, conversations would have been held, and it is conceivable that the number would have been smaller still.
From our experience in government, we know that it is quite normal practice to manage in-year fiscal pressures, and to net off the underspends against the overspends. In reality, this black hole is “a dead parrot”. It has ceased to be. If it was not nailed to its perch, it would be “pushing up the daisies”. Far from being just “shagged out” after a prolonged squark, Madam Deputy Speaker, it is dead: the black hole is “an ex-parrot”.
Luke Murphy (Basingstoke) (Lab)
I am grateful to the shadow Chancellor for giving way. Based on his performance, everyone on the Government Benches heartily welcomes his promotion. Does he accept that the OBR says in the letter he mentions that its forecast would have been “materially different”?
Mel Stride
I have just explained exactly what the OBR said. It said that it does not legitimise the black hole—the £22 billion, which has been repeated yet again from the Government Front Bench.
Opportunities were missed in this Budget, not least around driving up productivity. We know that Labour Governments spend money. We know that Labour Governments tax people a lot—that is what they do. What they do not do is spend the money with any strings attached. There has been a 14% pay rise for train drivers and 22% for junior doctors, but not one suggestion that there might be improvements in productivity to accompany that spending. That is unlike the Conservative party when we were in office: under my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt), we had a very clear, fully funded plan for the national health service and a long-term workforce plan to drive up productivity.
Let me come to the issue of welfare. It is gratifying to hear the Secretary of State confirm that the Labour party is going ahead with some of the more important reforms that we brought forward, such as that to the work capability assessment.
Mel Stride
The Minister for Employment shakes her head, but my understanding is that while the Government may say they will make some changes, they are quite happy to take the savings that are baked into the OBR’s forecast. The Secretary of State is right to clamp down on fraud, but it is important that she does not misrepresent the fact that the approach she is taking is exactly the same as the approach we were bringing forward to do that.
The reality is that some DWP budgets are growing to an extent that they need to be arrested in order for us to have a successful economy. If we were able to hold the number of people of working age with a health or disability component to their benefit at the level it is now for the next five years, there would be a saving of about £14 billion; if we were able to get it back to where it was before the pandemic, over £30 billion would be saved. When the Conservative party was in government, we had a clear plan to begin to address that issue. We have heard nothing from the Government about how they will tackle that fundamental fact.
What we have had from the Government on welfare expenditure is the announcement that the welfare cap will be set, at the end of the scorecard period, at 5% above the OBR’s forecast for spending on those benefits. That is not a restraint; that is permission—an invitation—to spend ever more on welfare without hitting the cap. The Government have no plan and the taxpayer will continue to pay for it.
So what do we have to show for this Budget? Compared with the spring: lower growth, lower living standards, lower wages, higher taxes, higher borrowing, and increased interest rates and mortgages. This is a Budget of broken promises, and when the dust has finally settled and this lot have gone, as we step over the fallen—the former farmers, the pensioners, the one-time businesspeople, the poor and the vulnerable—there we will find the shattered remains of the working people of this country, betrayed by a party that lied to them, and they will never forget it.
Several hon. Members rose—
Madam Deputy Speaker
Order. Members can observe how many people want to speak in the debate, so following the completion of all Front-Bench speeches, I will impose an immediate six-minute time limit to start with. I call Gill Furniss.
Gill Furniss (Sheffield Brightside and Hillsborough) (Lab)
Back in July Britain voted to turn the corner on 14 years of failure at the hands of the Conservative party: 14 years of unfunded tax cuts for the wealthiest, 14 years of austerity that left working people to pick up the bill and 14 years of our public services crumbling. This Budget is a breath of fresh air that delivers on what people voted for, with £1.4 billion to rebuild schools, £30 million for breakfast clubs and an extra 2 million NHS appointments.
Today I want to speak about an issue that is very close to my heart: further education. Before entering Parliament, I worked in further education and saw at first hand the transformational impact it can have. I have seen adults of all ages, some of whom have struggled with even basic literacy and numeracy, make major strides forward and go on to university and high-quality jobs. A thriving FE sector is also vital to meet the challenges of the future. Decarbonisation and new technologies, like AI, are already revolutionising our workforce, and the CBI has found that nine in 10 people will need to reskill in this decade alone. We are in the midst of a skills shortage, with businesses struggling to fill highly skilled positions and instead recruiting from abroad. These are no longer the skills of the future but the skills of today, and we already have the infrastructure ready to go to meet the challenge, with hundreds of colleges filled with thousands of experts teaching countless subjects.
My constituency is home to two exemplary FE institutions: the Sheffield college and Longley Park sixth form. I pay tribute to all their staff, who go above and beyond to give students the best support possible. There are exciting developments happening in Sheffield. The Sheffield college will soon open its new advanced technology centre—a state-of-the-art facility that will play a key role in meeting the skills needs of employers, accelerating our green skills strategy, and supporting growth in the local and regional economy. The success of the sector is all the more impressive when we consider the funding challenges it has endured. On the last Government’s watch, spending per college student fell by 5% in real terms, but this Government have shown that they understand their value, and I am so pleased to see in the Budget the commitment of an extra £300 million for further education.
This Government are filled with expertise in further education. I am delighted to see Baroness Smith of Malvern appointed as Minister for Skills. Her wealth of knowledge and experience means that she will be a strong voice for the value of further education in the skills agenda. I also welcome the steps that the Government are taking to deliver on our manifesto commitment to create a flexible growth and skills levy; the investment of £40 million will help to ensure that apprenticeships, with decent employment at the end, are available for people of all skillsets.
Employers have long called for reform of the apprenticeship levy, which many have found to be inflexible and unfit for purpose. We need a new system that works for employers and workers alike, and which has further education at its heart. I am pleased that this Government are taking immediate action in this area and backing it up with real investment. This will be a major step forward in a new relationship between employers, the workforce and further education—all working together to build a workforce that is fit for the future.
This Government’s steadfast focus is delivering economic growth in every corner of the country—something that has been lacking in my constituency for far too long. I look forward to the establishment of Skills England to help upskill the workforce nationwide, working alongside our fantastic further education sector to succeed.
Steve Darling (Torbay) (LD)
The fact is that the new Government have inherited an economic shambles thanks to the previous Government. The Office for Budget Responsibility identified a yawning £10 billion gap in the finances—that cannot be disputed. I am proud that we have a cradle-to-grave welfare state, but there are a couple of areas that I fear the Government failed to tackle in the Budget. Failure to tackle the two-child cap will leave 1.6 million children still in need, so I hope the Government will address that as a matter of urgency. In respect of the winter fuel allowance, I am still getting dozens of emails from residents who are unable to claim support because they are just above the threshold, and who are worried as the winter starts to kick in. Again, I hope that the Government will come forward with some amelioration to support those who most need it: our pensioners in need.
One area of the Budget I particularly welcome is the investment in our health service. For us Liberal Democrats, our NHS is a cornerstone of society and a way of improving Great Britain. Clearly, we would not have gone about it in the same way—we would have drawn down money from big banks and giant tech—and the way it is being done will result in some challenges, which I will come to later.
In my constituency, Torbay hospital remains highly challenged because we do not know where we are as far as the Government’s programme for renewing hospitals is concerned. Only 6% of the hospital is currently fit for purpose, and there are almost 700 sewage leaks, some which have an impact on clinical areas and therefore affect the hospital’s ability to serve our community. I cannot believe that the Secretary of State will allow a hospital with regular sewage leaks impacting residents to continue in its current state, so I look forward to the confirmation of funding for Torbay hospital.
GPs are the service that many residents come up against when reaching out to our NHS, yet the changes to national insurance contributions are set to hit them hard. They are small businesses, and it seems that they are the canary in the coalmine for a number of other small businesses across the United Kingdom. In correspondence with me, they highlight that there could be cuts in services and that their plans to grow their service to the community will be seriously affected.
As colleagues have stated, the elephant in the room—the issue that the Budget failed to address—was social care. I am concerned that the Government have to date failed to deal with social care, but we look forward to working with them—we want to work across the parties—to drive a proper way forward for social care. The expanded earnings threshold settlement for carer’s allowance is extremely welcome, but the cliff edge needs sorting as a matter of urgency. Elsewhere in the social care sector, I have been contacted by companies such as Bay Care, which gives domiciliary support and is worried about the impact of the change to NICs on its ability to support people, as well as nursing and other residential care services that are on the edge of viability and are also impacted by that change.
Over the weekend, I reached out to probably 15 businesses across Torbay to gauge the impact of the Budget on them. They were disappointed that business rates had not received the reform that we Liberal Democrats had hoped for. It needs root-and-branch reform; tinkering with it is not the answer. Businesses have seen their utility bills treble. A number of businesses are struggling with covid debts that remain outstanding. A manufacturer —we do not have many of those in Torbay—told me that he is fearful that the business’s top office elsewhere in the world will ask it to consider offshoring to Taiwan some of the manufacturing that happens in Torbay at the moment.
I was particularly interested to hear from businesses in the hospitality sector, which we have a lot of in the west of England. Hotels and B&Bs are all really concerned that we will see a significant reduction in employment, and Paignton zoo tells me that the national insurance threshold being lowered to £5,000 will hit them hard. I fear that these national insurance proposals will rip the heart out of the tourism industry in the west of England.
Harpreet Uppal (Huddersfield) (Lab)
Thank you, Madam Deputy Speaker. It is a privilege to deliver my maiden speech in this very important Budget debate. It is the honour of my life to represent my home town of Huddersfield.
I would like to start by paying tribute to my predecessor, Barry Sheerman, who served the people of Huddersfield for 45 years. I am sure that he will not mind me saying that he was the Member of Parliament for longer than I have been alive. I particularly commend Barry for his role as the Chair of the Education Committee, for his instrumental campaign to improve seatbelt laws, and for his work on air quality and clean energy. He also worked with local mum Stacey Rodgers to improve gas safety after the sad death of her young son Dominic by carbon monoxide poisoning. Barry leaves a lasting legacy of public service.
Huddersfield has long been a town of innovation, resilience and diversity, with young people looking for opportunities, workers fighting for better conditions and wages, local businesses supporting growth in the local economy, and families seeking security and hope for their children. For centuries, Huddersfield was renowned across the world for its production of high-quality textiles, standing as a national symbol of innovation, hard work and prosperity. When my dad first arrived in west Yorkshire from India in the 1960s, he went to work in the textile mills, and he spent most of his career as a weaver at the Huddersfield firm C&J Antich & Sons. The “made in Huddersfield” brand in textiles continues to represent excellence. I could not make this speech without mentioning Dixons Milk Ices—not ice cream, but milk ices. For generations, this family-run business has been raising Huddersfield’s children and adults on its iconic milk ices, and that includes me.
Huddersfield is home to many sporting triumphs. The famous meeting at the George Hotel in 1895 led to the creation of the greatest sport: rugby league. We are deeply proud of that heritage and of our Huddersfield Giants. Between 1923 and 1926, Huddersfield Town football club was one of the first clubs to be crowned league champions in three successive seasons—yes, Madam Deputy Speaker, this was ahead of Arsenal. More recently, Huddersfield native Caden Cunningham celebrated a silver medal at the Paris Olympics. We are very proud of him. Our renowned Huddersfield Choral Society and Lawrence Batley theatre reflect the town’s deep cultural heritage. The Huddersfield and Deighton carnivals light up our town on an annual basis, and it has been great to see Huddersfield Mela back too. Our interfaith forums bring together people of all faiths and none, as do our churches, gurdwaras, mosques, temples and community buildings.
Of course, we are the birthplace—shared with Colne Valley—of Harold Wilson. His statue stands proudly in front of Huddersfield’s spectacular train station to remind us of the difference that a man from Huddersfield made as Prime Minister: the creation of the Open University; the white heat of technology; the abolition of the death penalty; and social reforms in education, health and housing, and in gender and race equality. We have a lot to be proud of.
But I also know from speaking with residents on the campaign trail that Huddersfield, like many towns across the country, faces challenges, and there is no doubt that our town centre needs a bit of TLC. I was therefore delighted that last week the Chancellor announced commitments to secure funding for the trans-Pennine upgrade, Huddersfield open market and the Penistone line. I know that the previous Government shared in that. Construction is also under way to improve our town centre, alongside the national health innovation campus of the University of Huddersfield.
Our potential is huge, but that growth has to be felt in all corners of Huddersfield. It has to be about skills as well as infrastructure, and the people of Huddersfield must be front and centre. I am therefore delighted that we are increasing the minimum wage and seeing increased funding for our NHS. It is also important that we finally fix our social care system. My late mum was a care worker, and I saw the difference that she made every day. We must now fight for her colleagues—[Hon. Members: “Hear, hear.”]—to ensure that they have the pay and conditions that they deserve; I had to pull myself together there. I am glad that this is a priority for our Labour Government.
Teenagers and young people across Huddersfield and the country have been dealt a tougher hand than previous generations. We must work to halve knife crime and youth violence, but beyond policing the focus should be on creating positive environments where young people can grow and thrive. The youth guarantee will be really important. I will work with local organisations such as Positive Steps and Conscious Youth, which do fantastic work on the ground. As I speak about children and young people, I am also thinking of children in Gaza, Ukraine and Sudan. We must use every tool in front of us to ensure that young people in all countries affected by war and conflict are able to grow up in peace.
My journey to this House is one that speaks to the values of opportunity and fairness. Like many in Huddersfield, my family worked hard to give me the chance to succeed. At Fartown high school, my teacher Mrs Perry pushed me and my ambitions, and a Labour Government helped me on my way. I am determined to repay that debt.
Gareth Bacon (Orpington) (Con)
It is a great pleasure to follow the hon. Member for Huddersfield (Harpreet Uppal), who made a heartfelt and moving maiden speech. She will clearly be a doughty champion for her constituents in the years to come, and I wish her well in this House.
It has been barely five days since the Chancellor laid her first Budget before the House, and it was worse than anyone could have imagined. Far from protecting working people, it has punished workers, businesses, entrepreneurs and investors—the very people who help us to prosper as a country. It has spooked the markets. The cost of borrowing has gone up significantly, and debt interest will be higher as a result. So much for restoring stability. The Institute of Directors described it as a
“painful Budget for business”,
and the OBR has downgraded its growth projections for the next five years, and says that inflation will creep up again, which in turn means that interest rates will stay higher for longer, as will people’s mortgages. The IFS has warned that Labour’s national insurance hike will hit low-paid jobs the hardest, and will force firms to cut salaries, cut hiring and raise prices. So much for protecting working people.
Astoundingly, for a Government who claim that they are all about economic growth, while private companies have seen their taxes hiked overnight, the public sector will be protected and given much more funding. Public services are important—no one would claim otherwise—but the wealth of this nation is built not by the Government but by private enterprise and entrepreneurs. It is the innovation, ingenuity and enterprise of the private sector that creates opportunity, growth and prosperity. The Government should recognise and reward it, not stifle and punish it.
This was a Budget of broken promises. During the election, the Labour party promised voters 50 times that it would not raise taxes on working people. The Prime Minister promised it. The Chancellor promised it. The entire Front Bench promised it. Indeed, it was there for all to see, in black and white in their manifesto, but despite all their promises, they have raised taxes by £40 billion to an all-time high.
That has been done on the backs of working people, on the backs of those who own a business, on the backs of those who take risks, invest in the UK and create jobs, on the backs of those who have worked hard and saved to own property or shares, on the backs of those who work in agriculture, and on the backs of those who send their children to independent schools. The Labour party does not think that those people are working people, but they are, and they will not forget it. None of this should come as a surprise, of course. We know, given the farcical verbal knots that they have tied themselves in over the past few weeks, that Labour Front Benchers cannot even define what a working person is.
The British people have been betrayed, and everyone can see what the Labour Government have done. It is very clear that they had planned all along to jack up our taxes but would not come clean. They made all sorts of promises during the election—they were going to steady the ship and achieve the highest sustained growth in the G7—and said that all their policies were “fully costed” and “fully funded.” However, as soon as they got into power, they invented the so-called black hole, which no one believes exists, and which even the OBR has refused to legitimise. They have wasted no time in fiddling the rules so that they can borrow billions more for their lavish spending, subjecting the British people to misery through record tax rises.
The British people will not forget what is being done to them. Those high-tax, high-spend policies will not protect working people. The prioritisation of trade union donors over small businesses and pensioners will not protect working people. The deliberate punishment of risk takers and job creators will not protect working people. But at this stage, it is not too late. It is not too late to apologise to the British public and rescue them from this disaster. It is not too late to listen to people who have experience of the real world —those who have set up their own businesses, taken risks and employed people, and created wealth and growth. It is not too late to change course, so the Government should show some humility and do so.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Sadik Al-Hassan to make his maiden speech.
Sadik Al-Hassan (North Somerset) (Lab)
Thank you, Madam Deputy Speaker. I congratulate hon. Friends who have made excellent and moving maiden speeches so far—they have set a high bar today and over the past few weeks—but we have, as they say, saved the best until almost last. I thank the people of North Somerset for the trust that they have placed in me. I promise them that I will not, for a moment, stop fighting to fulfil the promises that I have made to them.
As a pharmacist, I campaigned on a platform of rebuilding the NHS. Having worked in pharmacies across the area over the past two decades, I have seen at first hand the decline of community pharmacies in many towns across the country. That is why I was proud to see in the Budget such a strong commitment from my right hon. Friend the Chancellor to rebuilding our NHS, with the largest increase in funding—outside the pandemic—since 2010. No one on the Labour Benches doubts the enormity of the task ahead, or the challenges that we may encounter along the way, but the Chancellor has put us on a road to renewal with this Budget, and I am sure that many of my colleagues in the healthcare sector will be grateful to her for that.
North Somerset is more than just where Somerset gives up and Bristol begins. We are the home of the first mass production of penicillin, of one of the oldest cinemas in the UK, and—perhaps our proudest achievement—of the discovery of the Ribena blackcurrant. In the west of my constituency lies Portishead, known across the country for its beautiful marina and lively fish and chips trade, which, rumour has it, stretches all the way back to the town’s Roman founders.
Next, I pay tribute to Clevedon in the south of my constituency. As a pharmacist, I take great pride in telling the House that Clevedon has the distinct honour of being the site of the first large-scale production of penicillin, enabling its use as a vitally important medicine in world war two and undoubtedly saving countless lives. Although the world of pharmacy has matured somewhat since then, Clevedon continues its proud pharmacological heritage with a number of truly outstanding local pharmacies that do the community proud, such as the Well pharmacy, where I had the distinct honour of working not too long ago.
Finally, but by no means least of the major towns in North Somerset, there is of course Nailsea. A little-known fact about Nailsea is that it is so named because at one point it was an island, which is somewhat surprising given how far inland it is. Leaving behind its ancient island status, Nailsea really began to boom in the 19th century, when it became home to one of the largest glassworks in the country, relics of which are still treasured by collectors across the world.
Although all those who have had the pleasure of visiting North Somerset agree that it is a beautiful and blessed place, it is also an unequal place. Neighbourhoods in my constituency are among the most and least deprived areas of England. Among our countless idyllic villages is Long Ashton, the birthplace of Ribena—a drink much beloved across the country, not least by my children. Another of our gems is Pill, which, despite the name, does not have a pharmaceutical history. At one point, Pill’s small footprint boasted 21 pubs, which would no doubt have celebrated the Chancellor’s cut to alcohol duty at the weekend. No tour of our green and pleasant land would be complete without Tyntesfield, which is, in my unbiased opinion, the greatest National Trust site—and that is really saying something. That beautiful Georgian house is a delight for all across the south-west.
North Somerset boasts the unique honour of being home not only to one of the busiest airports in the country, but to a major port. Those twin pillars of infrastructure in the south-west are the foundations of our local economy. In recent years, Bristol airport overtook Glasgow airport to become the eighth busiest airport in the UK. The Royal Portbury dock is no slouch either, handling over 7 million tonnes of cargo a year. I am sure that both have a long and prosperous future ahead of them.
I pay tribute to my predecessor, Dr Liam Fox. Although I may not have shared his views on Europe, I know that we were aligned in our mutually held passion for the North Somerset constituency, which he represented for 32 years and through eight elections—a record that many of us who are new to the House are no doubt keen to replicate. My predecessor was particularly proud of his championing of Down’s syndrome, for which he shepherded a private Member’s Bill through Parliament.
No maiden speech on North Somerset would be complete without a mention of the Portishead railway line. First opened in 1867, the line proved a vital link in connecting the people of North Somerset to Bristol, and then to the wider country. For nearly 25 years now, the campaign to reopen the line has raged fiercely in my constituency, and I want to reassure my constituents that I intend to fight tooth and nail to see that project across the line after decades of false starts.
I first got into politics as a town councillor in Emersons Green, only for my wife to become a district councillor shortly thereafter. Now that I am an MP, I dread to think how she will one-up me this time. [Laughter.] I jest, and in reality, during the long weeks of campaigning this summer, my dad, wife and two children proved to be my bedrock, providing me with an endless source of strength, and I am and always will be eternally grateful to them.
I thank the House for indulging me and the people of North Somerset for putting their trust in me. Every day I will come to this Chamber and fight to put North Somerset on the map and deliver for all those who call that beautiful green pocket of England home.
Madam Deputy Speaker (Ms Nusrat Ghani)
One should never underestimate one’s wife.
Greg Smith (Mid Buckinghamshire) (Con)
I congratulate the hon. Member for North Somerset (Sadik Al-Hassan) on a powerfully delivered maiden speech and wish him well in this House. I thank him for his kind words about his predecessor, Dr Liam Fox, who was a true champion of this House.
The Budget of broken promises came as a hammer blow to communities up and down the land, but before I get into the detail of that, and in the interest of balance and fairness, I would like to thank the Chancellor for one of the measures in it. Following FairFuelUK’s campaign, The Sun’s “Keep It Down” campaign, and indeed, the campaign led by my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti), the freeze on fuel duty, which the last Conservative Government implemented for so many years, will continue. It is very apparent to me that petrol and diesel are overtaxed as it is, and working people up and down the land absolutely depend on being able to afford a tank of fuel to get the kids to school, go to work and go about their daily lives. As a request ahead of next year’s Budget, I ask the Chancellor to consider fixing a double taxation in the system: the point at which VAT is applied to petrol and diesel. At the moment, it is applied after fuel duty, rather than before; we therefore pay VAT not just on the petrol and diesel itself, but on the fuel duty that has been put on top of it.
There is so much to dislike in this Budget of broken promises, beginning with the increase in employers’ national insurance contributions, which is a direct tax on jobs. It is a tax on small and large businesses alike, and it is a tax on our general practitioners—I am sure I am not alone in this House in already having correspondence on this issue with many of the GPs in my constituency. There is the perversity of putting bus fares up to £3, scrapping the Conservatives’ £2 bus fare cap. Working people up and down the land rely on buses; it is only in Labour’s world that putting the bus fare up means getting more people to work. The £40 billion tax hike is going to lead to higher inflation, lower wages and increased Government debt.
For my constituency of Mid Buckinghamshire, though, the very worst part of this Budget was the full-frontal attack on our farmers and agricultural communities. The changes to agricultural property relief will cause family farms up and down the land to have to sell such a huge proportion of their farm in order to meet that tax bill that those farms themselves may well become unviable.
Jim Shannon
I commend the hon. Gentleman on that comment. Every farmer in Northern Ireland will be impacted by this change. The Ulster Farmers’ Union—I declare an interest as a member—has said that the change is universally discredited and universally opposed. The threshold for agricultural relief for farms should have been higher—perhaps £4 million or £5 million, not £1 million, which brings everybody into the equation.
Greg Smith
As ever, the hon. Gentleman has hit the nail exactly on the head. In its briefing, which I am sure all Members have received, the National Farmers Union points out that the Treasury’s own figures on who will get caught up in the APR changes are fundamentally wrong, because they include a lot of very small-scale areas—perhaps a private residence with one or two fields or a very small number of livestock. That is not what any of us would define as a working farm. In reality, when all those family farms are brought into the numbers, the vast majority of our food producers who contribute to food supply chains will get caught up in those changes.
When the Chancellor was on the BBC on Sunday morning, she said that the individual claim for agricultural property relief is now £1 million, but if a farm is owned by two people, that allowance could be transferred to the other person. Some confusion needs to be ironed out here, because unlike the nil-rate band and residential nil-rate band, the policy paper entitled “Summary of reforms to agricultural property relief and business property relief” published on 30 October this year states that
“any unused allowance will not be transferable between spouses and civil partners.”
Perhaps in summing up the Minister can clear up that confusion caused by the Chancellor on the Kuenssberg show.
The APR changes are not the only changes that will hammer our farming families and agricultural communities. I am sure there is a joke somewhere along the lines of “When is a pick-up truck not a pick-up truck?”, but it is no laughing matter for farmers. For them, it is just a basic bit of equipment that they need to operate, but this Government are hammering them on the cost of that equipment if it happens to have rear seats. As I raised earlier today in this House during the urgent question, the Government’s carbon tax will put up the price of fertiliser by between £50 and £75 a tonne. Either that is going to have a direct impact on the cost of food, or the Government are asking farmers—already operating on incredibly tight margins, often with no profit at all—just to swallow that extra cost. I urge them to reconsider.
Other measures in the Budget that are clearly wrong and the Government must U-turn on include VAT on private school fees. The vast majority of parents I talk to in my constituency who choose to send their children to independent schools scrimp and save and make sacrifices in order to give their children that opportunity. An additional 20% in fees makes that unaffordable for those parents, and when I talk to representatives of independent schools in my constituency some are saying that they can see a path to having to close their doors. I know that a lot of Labour Members would probably quite like that outcome, but the reality is that it will be denying children opportunity and denying parents choice, and it will have the knock-on impact of class sizes in my kids’ school—and, I am sure, every other hon. Member’s kids’ school in the state sector—going up. That will cause overcrowding and put pressure on our state schools. This is all before I come on to the other problems in this Budget, not least the cruel attack on our pensioners through the withdrawal of the winter fuel payment.
Lastly, just to prove how bizarre and simply unserious the Government are about value for money, they have chosen someone as their new value-for-money tsar who is inextricably linked to one of the most inefficient and wasteful projects ever to come out of the British state: HS2. How on earth can someone so linked to that project be considered an arbiter of value for money?
Madam Deputy Speaker (Ms Nusrat Ghani)
We now come to another maiden speech. I call Andrew Ranger.
Andrew Ranger (Wrexham) (Lab)
Diolch yn fawr, Madam Deputy Speaker. I am grateful for the opportunity to make my maiden speech during this important debate. It is a pleasure to follow the hon. Member for Mid Buckinghamshire (Greg Smith), and also to follow the great maiden speeches from my hon. Friends the Members for Huddersfield (Harpreet Uppal) and for North Somerset (Sadik Al-Hassan).
I stand here humbled and privileged to be the Member for Wrexham, and to serve every single one of my constituents to the best of my ability—they deserve nothing less. The first Labour Budget for nearly 15 years is a major part of how this Government will put the interests of the people of Wrexham, Wales and the UK first. It is fixing the foundations of the economy and the public services that we all rely on; increasing pay for thousands of workers in Wrexham; making long-awaited improvements to workers’ rights; providing more support for carers and struggling families; addressing historical injustices such as the mineworkers’ pension scheme and the infected blood scandal; and ensuring the safety of coal tips in Wales.
During the election, I promised my constituents that I would fight for fairer funding for Wales. This Budget will deliver the largest settlement for Wales since the start of devolution, all alongside a programme of investment in our infrastructure and our workforce and to support businesses. As someone who has both run my own business and helped others to start up and run theirs, I know that most of all they want stability and the ability to plan ahead. As much as anyone else they rely on good infrastructure and public services alongside a skilled and productive workforce. This Budget is the start of ensuring that we deliver that. Indeed, on the same day as the Budget was announced, new investments were made in my local football club, which Members may have heard of, and in Wrexham Lager—dare I say the world’s best lager, and the UK’s oldest lager brewery.
Many will have seen and heard a lot about Wrexham in recent years, but I am sure there are those who want to know more. Wrexham is situated in the north-east of Wales, on the border with north-west England. Following the recent boundary changes, my constituency is much changed after it inherited most of the old Clwyd South constituency. Proud of our Welsh identity, which is core to the people of Wrexham, we also have strong links to the north-west of England, both socially and economically. Wrexham has a long history of coalmining, iron and steelmaking; those are the rocks on which the community was built, and which in many ways still influence it to this day. The communities that built up around those industries form a circle of villages around the city, with the rolling hills of the lower Dee valley to the east—dominated by farming and rural communities—and the wilder and more dramatic landscape of the foothills of the Clwydian mountain range to the west.
The coal and steel industries are long gone, but their importance to Wrexham is not forgotten. Great community organisations such as the Wrexham Miners Project ensure that the story of Wrexham’s past is kept alive and passed on to younger and future generations. Ninety years ago this year, one of the UK’s worst ever coalmining disasters happened in Wrexham, at Gresford in 1934, when 266 men lost their lives and only 11 of the bodies were recovered. This was a time when profits were put before people and workers’ rights and safety were a secondary consideration. Every year, the community comes together to remember those tragic events that shaped the lives of so many others.
Community is at the heart of Wrexham—it is its strength. So many people and organisations help others every day and take pride in the place where they live. There are so many to mention, from Wrexham Litter Pickers—a wonderful volunteer group who work hard to keep our streets tidy—to places such as Lle Hapus that bring people together, and so many others. Wrexham has welcomed people from around the world who have chosen to come and live there. We have a strong Polish community, which has been in Wrexham since the second world war, a thriving Portuguese community, and many others who make a significant contribution.
Wrexham is now a major manufacturing centre, with many well-known international brands based in the city, such as Kellogg’s, JCB and others. Our local brewing industry has seen a resurgence in recent years, with Wrexham Lager once again active and exporting across the world, alongside the likes of the Magic Dragon Brewery and others, plus hundreds of small businesses, which are the backbone of our economy. Wrexham is also home to many festivals, such as Focus Wales, and we look forward to welcoming the National Eisteddfod back to Wrexham next year. We also celebrate strong military links, with an Army barracks still located in the city and a proud history of service.
Of course, I could not talk about Wrexham and not mention football. Wrexham association football club is the third oldest professional association football club in the world, and our home ground, the Racecourse, is the world’s oldest international football stadium that still hosts international matches. Much in the spotlight recently, the club has an illustrious history. I know that certain Members of the House are Arsenal supporters, and in Wrexham we still take great pride in knocking out the then first division champions from the FA cup in 1992 and earning a reputation as giant killers. Of course, today Wrexham is a team transformed, since Hollywood stars Ryan Reynolds and Rob McElhenney bought the club a few years ago. The difference they have made to the club and to Wrexham in just a short time is remarkable—back in the Football League after a 15-year absence, our first league title in 45 years, and back-to-back promotions.
Before I end, I would like to pay tribute to my predecessors. Sarah Atherton was the Conservative Member for Wrexham until the election this year. She was the only Conservative ever to represent Wrexham and the first woman to do so. I also pay tribute to her for the work she does for veterans. Simon Baynes gave great service to his constituents in Clwyd South.
Finally, I pay tribute to Ian Lucas, my Labour predecessor, who served in this House for 18 years, often sitting on the Benches wearing a Wrexham AFC tie, serving as a Minister and shadow Minister, and on Select Committees, most latterly on an inquiry into disinformation and social media. Diolch yn fawr, Madam Deputy Speaker.
Several hon. Members rose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. After the next speaker at six minutes, I will drop the limit to three minutes each.
John Glen (Salisbury) (Con)
What a great privilege it is to be sitting on the Back Benches and able to make a contribution freely after 12 years on the Front Bench, as a Parliamentary Private Secretary or Minister.
I pay tribute to the hon. Member for Wrexham (Andrew Ranger) for his maiden speech and acknowledge what a wonderful experience it was to visit Wrexham about 10 months ago, as part of the Places for Growth work that I was involved in in the Cabinet Office.
I hope that I can use the freedom I now have to speak candidly about some of the experiences I had in government. I want to make some remarks about that experience and the legacy of the last five years, talk about growth enablement, make some observations about some of the Budget measures related to that matter, and also speak for a few moments about unforeseen risks and my concerns about whether the Budget will give us the space as a country to deal with those risks.
Five years ago, an election was called, with an outcome a few weeks later—I certainly did not think that three months after that we would be shutting down the economy because of covid. I was in the Treasury with my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), and we quickly had to institute the bounce back loans and the furlough scheme—exceptional infusions of cash for public services to keep the economy going. Consequentially, tax levels had to rise, and of course we had a spirited debate this year about those levels of taxation.
Those of us who have been through several elections recognise that, given the politics of elections, there is a trade-off between candour and obfuscation. I observe that, after this Budget, the gap is wider than normal, and the assertion about the £22 billion black hole has not been legitimised. I look forward to addressing some of those issues on the Treasury Committee in the coming days.
The Government’s core argument, though, is that there is a level of investment required to secure growth through improvements in productivity and by dealing with the lack of investment in recent years. I wish them well with that, because it is in the interests of our whole economy to see greater productivity, but I am profoundly concerned about some of the choices that have been made. There seems to be a surge of investment in the next two years, but serious questions about the settlements for non-protected Departments thereafter.
I am concerned about the decisions made on public sector wage settlements and the precedent deemed to be given for other workforces in subsequent years to seek greater settlements without conditionality. Unless we drive higher productivity in the public sector, as well as encouraging investment in the private sector, we will not see the growth that we hope for. I am also worried about the costs—nearly £5 billion—of the Employment Rights Bill, and about the tax increases for those who employ people in this country. But I wish the Government well.
The theme of today’s debate is some of the reforms needed to look after the interests of working people. We have seen a surge in the number of working-age people who are not in gainful employment. About 12 years ago, we decided in this House, rightly, to ensure parity of esteem between those experiencing mental health problems and those with physical health problems. But in truth, our benefits system has not adequately interrogated how to deal with intermittent mental health problems. We will have to work together constructively for the right settlement to get those people back into work. We must put the emphasis on what people can do, rather than what they cannot do, and ensure that people who are partially fit for work are encouraged back into work.
Finally, I want to address our capacity, further to this Budget, to deal with shocks. In February 2022, we thought we were coming out of covid. I was at a meeting in my neighbouring constituency of Andover, and Putin’s Ukraine incursion happened. We had massive inflation and had to find £90 billion overnight. My concern is that there is not enough capacity to deal with the shocks that we could see in a very uncertain world—the energy shock might occur again.
I want to be as constructive as I can be from where I now sit—that is a responsibility of His Majesty’s loyal Opposition—but I am concerned that a number of the decisions in this Budget will not lay the foundations for the more productive, higher-growth economy that is expected and wanted, and I am very concerned about there not being enough in reserve for what we may face.
Cat Smith (Lancaster and Wyre) (Lab)
The theme of today’s debate is the effect of the budget on working people. In the UK, it is estimated that 17 million working days are lost each year due to alcohol-related sickness. It is not just days lost; it is also decreased productivity, because alcohol abuse can lead to employees arriving late for work and being absent more often. Some workplace cultures encourage drinking—I think on that point, colleagues, we have to take a look at our own workplace. As we sit here, imagine for a moment that every seat in the Chamber was full but that, instead of seeing our colleagues, we could see the faces of those lost to alcohol harm. That is the reality: every week, the equivalent of this entire Chamber dies because of alcohol.
Just before the election was called, I was informed that as a district, Lancaster has the highest rate of alcohol-related deaths in England. That led me to look more into the issue in the hope of finding solutions to it. I discovered that since 2010, deaths from alcohol across the UK have risen by 42%. One of the main reasons is that alcohol has become much more affordable, due to successive Governments cutting alcohol duty rates—short-sighted and naive decision making that is out of step with the evidence that has come from experts for years. The knock-on effect on our public finances and wider economy is clear. The Institute of Alcohol Studies recently found that alcohol harm costs our society more than £27 billion a year.
Fortunately, however, there is also abundant evidence about what works to reduce alcohol consumption and harm, while raising much-needed revenue for vital public services. The World Health Organisation identifies tackling alcohol affordability as the most effective and cost-effective way of reducing alcohol harm across the world. Alcohol duty is best placed to do that, and has the advantage of also raising revenue for the Treasury. The duty revenue should cover the costs of harm, but currently it covers barely half the cost of the harm to society.
My plea to those on the Government Front Bench is that they stop placating the multi-billion-pound alcohol industry under the guise of helping pubs. Almost every time duty rates have been cut, Chancellors have proclaimed it as a victory for pubs—but that simply is not true. It helps supermarkets far more, allowing them to maintain much cheaper prices on alcohol. The only time in recent decades that that gap did not grow was under the last Labour Government, which introduced a duty escalator, increasing duty above inflation each year. During that period, the death rate from alcohol steadily fell.
Although I welcome the vast majority of the content of this Budget, I implore those on the Government Front Bench to look again at the cost of alcohol to our society and at how we address deaths from alcohol.
Martin Vickers (Brigg and Immingham) (Con)
I am afraid that, for those of us who can remember the 1970s, we appear to have gone back in time, with a Labour Government increasing borrowing, increasing spending and, of course, increasing our taxes. There was a little improvement during the Tony Blair years, as he seemed at least to recognise that we have to create wealth before we can spend it, but this Budget clearly indicates that the Government have failed that test. Budgets often unravel in four or five days; this one unravelled in four or five hours. Many hon. Members will have read the article in today’s Times by Sir James Dyson. Hopefully Labour Members will take note of his comments. It is clear that the Government are set on a course that will most certainly not deliver on their growth agenda.
My constituency is very industrial and takes in the south bank of the Humber, containing two oil refineries, chemical industries, logistics and much more. It also contains the largest port in the country by tonnage, Immingham, and I cannot fail to mention the port of Grimsby; I only have one ward of Grimsby in my constituency, but Grimsby was the world’s largest deep-sea fishing port and is now still reliant on fish supplies, as thousands are employed in fish processing.
Grimsby is also a major centre for the renewable energy sector. As we transition towards clean energy production, we have developed a network of training and skills institutions to prepare the younger generation for jobs in that sector. However, I must offer a word of caution: Ministers should have less zeal and more realism in trying to meet stretched targets.
We have a large rural hinterland where people toil to put food on our table. It is a constituency where tens of thousands work hard for a living. Today’s debate is about protecting working people. The working people I represent are resilient and self-reliant, but they do expect some support and protection from their Government. What they want are good public services in exchange for their taxes.
We have had a large tax hike on businesses, and we know that many parts of the health sector will have to pay enormous increases in employer’s contributions. Hon. Members across the House will have heard from doctors, from pensioners, from GPs and from farmers who are desperately concerned about what is coming. I urge the Government to protect jobs and reverse their damaging proposals. Only then will they truly be able to say that they are protecting working people.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I would like to place on the record my congratulations to my hon. Friends the Members for North Somerset (Sadik Al-Hassan), for Wrexham (Andrew Ranger) and for Huddersfield (Harpreet Uppal) on their amazing maiden speeches today.
I listened on Wednesday to the contribution from the hon. Member for West Worcestershire (Dame Harriett Baldwin)—I notified her that I was going to quote her speech—who said that this was
“a Budget of the public sector, by the public sector, for the public sector.”—[Official Report, 30 October 2024; Vol. 755, c. 854.]
She said that as though it were a bad thing. I urge the Government to reject the false dichotomy being set up by the Conservative party, in which investment in the public sector is somehow a drain on the national expenditure, and putting money into our public services is somehow inherently bad for our society and our state.
When I speak to businesses, yes, they raise with me their concerns about national insurance increases— I think businesses have done so with every Member across this House, and it would be foolish to suggest otherwise—but they also ask me questions like, “Can you fix the A50 so we can expand and get more things moving down from JCB?” and “Can you get some proper mental health support so we can get workers back to work quicker when they are struggling with their mental health?” They tell me that they struggle with the supply of skilled young people and are asking desperately for investment in skills to make sure that there is a ready pipeline of young people who can do those jobs. It is therefore completely fatuous to suggest that the investment that this Government are putting into the public sector will be in some way detrimental to the growth of our economy and the success of our private industry.
Gareth Snell
No, there is no time—I am terribly sorry.
I say this as one of those pesky trade unionists the Conservative party seems in such opposition to: when the Conservatives talk about the significant pay for trade unions, first of all, it is not for the trade unions, but for the members of those trade unions, all of whom are working people. Most of them live in Conservative Members’ constituencies, and some of them may have even voted for them—sadly, not all trade unionists vote Labour. However, their pay goes into their pockets, and from there it goes on to their high streets and the shops in their communities. It is not hoarded away as offshore wealth. It is not put into some clever accountancy scheme. It is used to buy kids’ school shoes. It is used to buy Saturday morning breakfast in the local café. It goes back into the economy in a way the Conservatives simply seem to misunderstand.
In the short time I have remaining, I say to the Government: please do not listen to the siren voices that suggest that the investment we are putting in is bad for our economy. It is not. It is good for our state, it is good for our country and it is good for our economy.
Robin Swann (South Antrim) (UUP)
I want to bring a Northern Ireland point of view on this Budget. First, I thank the Government for the £11.8 billion they have allocated for the infected and affected victims of the infected blood scandal, but I question whether it is enough and whether they will now deliver it at pace. It is unfortunate that the right hon. Member for Salisbury (John Glen) is no longer in his place, because I know the work he did on that previously as Paymaster General. I also welcome the moneys for the postmasters, but I ask the Government why there is still no recognition of or assurances for our WASPI women—the Women Against State Pension Inequality—despite the recommendation of the Parliamentary and Health Service Ombudsman and the pre and post-election photo opportunities taken by both the Government and the Opposition.
Health is devolved and, while I welcome the significant funding that health has been given here in England, I ask the Treasury to consider ringfencing the Barnett consequential that will go to health in Northern Ireland. I noticed that the Parliamentary Under-Secretary of State for Northern Ireland met our health trusts and health unions prior to the Budget, so it would be interesting to know exactly what the Northern Ireland Office is doing in regard to our health service in Northern Ireland.
It is also noticeable that our Northern Ireland Office has received a 66% increase in its allocation. I would question whether that is an indication that the Northern Ireland Office intends to be more hands-on, and exactly what it is going to fund in Northern Ireland with those moneys. I want to ensure that that is scrutinised by this House and is used in support of strategies that are implemented and supported by all the parties in the Northern Ireland Executive.
It has been said that the national health service will be exempt from the rise in employer national insurance contributions, but I seek clarification from the Treasury in respect of social care in Northern Ireland. I note that the Chancellor said that additional moneys would be delivered to local authorities so that the additional cost could be covered by social care providers here in England, but social care in Northern Ireland is paid for by our health service and our health trusts. I ask what contributions, and what considerations, the Treasury has put into that allocation so that there is equity across the piece. I also support the comments that the hon. Member for Torbay (Steve Darling) made about the challenges facing our GPs, our community pharmacies, our dentists, our social care providers, and the voluntary and community sector that supports our health service.
Martin Rhodes (Glasgow North) (Lab)
Because of the limits on time, I will mostly keep my comments to one sector of the economy: the cultural sector, which is very significant in the Glasgow North constituency.
I very much welcome the measures in the Budget to support the arts, culture and creative industries by implementing the 45% and 40% rates of theatre, orchestra, museum and galleries tax relief from April next year. Those measures, along with the Government’s recognition of the creative and arts sector’s contribution to the economy, are so important. That is particularly clear in my constituency, given the presence of important venues and institutions including Scottish Opera, King Tut’s, the National Theatre of Scotland, the Royal Conservatoire, the Royal Scottish National Orchestra, the Theatre Royal, the Pavilion, the King’s theatre, the Kelvingrove art galleries, the Hydro, the School of Art, the Mitchell library, BBC Studioworks, the Gallery of Modern Art, the Glasgow Royal concert hall, the Hunterian Museum and the Riverside Museum, to name just some.
It is very easy to think of the sector in terms of performers—dancers, singers, musicians; those on the stage and those in front of the cameras—but there are also very many skilled professionals employed in the sector: the sound technicians, the costume design teams, the camera operators, the lighting engineers, the archivists, the conservation experts, the prop makers and the stage managers, along with the teams in front of house, facilities, security and so on. The sector adds to the rich and diverse cultural life of the city, but it also adds to the local economy, drawing visitors to the city, employing thousands of people and creating customer demand for nearby businesses.
The Budget presented to the House last week delivers the largest settlement for the Scottish Government in the history of devolution. It is a clear and tangible sign of the importance of Scotland to this Government—a Government committed to delivering for Scotland and for all of the UK. This is how we deliver for working people: with the end of the era of austerity, raising much-needed cash for our under-resourced public services and delivering a pay rise for 200,000 of the lowest-paid Scots.
I recognise that much of policy on culture and the arts is devolved. With the record settlement in this Budget, it is time for the Scottish Government to play fair by the sector, and to finally end the blame game and end their waste and financial mismanagement. They have the powers and the resources; they need to deliver to ensure that the working people of Glasgow and Scotland truly benefit from this transformative Budget.
Sir John Hayes (South Holland and The Deepings) (Con)
Aristotle said that the state exists to advance the wellbeing of its members; a state that fails to advance its people’s wellbeing is not merely a state that acts badly, but an institution that has failed to achieve its defining purpose. Such a positive vision of the state requires strong institutions that are able to act, with a Government accountable to the people but free to take actions driven by what Disraeli understood to be the social welfare of the people.
A Chancellor who hides behind the supposedly impartial pronouncements of the OBR is incapable of delivering real, meaningful change. Restoring accountability in practice requires two parallel processes: first, political control of decision making must be rebuilt; secondly and equally importantly, a greater sense that the public have a stake in society—and by implication the state that serves it—must be engendered.
Restoring political accountability means removing what the economist and writer Dan Davies has termed “accountability sinks”: the mechanisms that ensure that nobody is to blame when things go wrong. Accountability sinks are one of the greatest banes of modern life, from automated call centres to computers that say no to applications for loans or other financial services. They are a matter of design, not accident. In the private sector, they can shield organisations from legal liability, as happened in the Post Office scandal. A decision made by an individual is much more open to question than one that is the consequence of a general policy.
In the public sphere, accountability sinks often shield politicians and other public servants from genuine accountability for Government policy. Privatisation, contracting out and private finance initiatives have all been used as ways of shifting responsibility from Government to market forces. The establishment of an independent Bank of England with an arbitrary inflation target is a classic example of a generalised policy that has replaced specific individual decision making and responsibility. Similarly, the Office for Budget Responsibility was established explicitly to protect the Treasury from taking responsibility for Budget forecasting. As Davies notes, the role of the courts and international bodies is similar.
Sir Julian Lewis (New Forest East) (Con)
Is my right hon. Friend suggesting that we ought to replace those bodies and have the Government re-adopt responsibility for economic policy in the round, such as by setting targets for inflation, instead of saying, “It’s all down to an unelected body”?
Sir John Hayes
Absolutely. Restoring accountability means reversing many of the processes that have been taken as read in recent years. Democracy is dependent on clear lines of accountability, but in the past 40 years they have been either diluted or displaced. Is it any wonder that the public feel disillusioned with the exercise of power as a result?
The British economy has suffered more at the hands of neoliberal globalisation than those of most of our competitors. Foreign ownership of UK public firms has risen from just over 10% in 1990 to 55% in 2020. Ownership has become remote and unaccountable to workers, customers and even shareholders. Credit creation has facilitated the growth of private equity and leveraged buy-outs. Private equity firms have been able to take on vast amounts of debt in order to take over businesses.
Our economy is controlled by oligarchies careless of their customers and their employees. The result has been to make all other business objectives secondary to the imperative of having enough cash to survive. As Davies puts it, the debt burden “creates an ultimatum”: if companies do not put their efforts into making profits, they go bust. Our constituents can see the increasing power of unaccountable globalist enterprises and can see the Government’s inability to do anything about it, just as farmers can see that the Government’s policy on inheritance is completely belied by the fact that most asset-rich farms do not make a lot of money. It is not about assets; it is about income. Such disillusionment is socially corrosive, but it is justifiable when the most important economic decisions are taken by commercial entities with no regard for the needs and values of the people.
Turning the ship around requires radical concerted action, not just platitudes. We need a new economic model—one that harnesses the power of the state to break up the power of rentier capitalism and restore an economy that works for society, not against it. Fraternal economics is the means; popular wellbeing is the end.
Callum Anderson (Buckingham and Bletchley) (Lab)
I must say that I am not quite sure how I can follow that. I congratulate my hon. Friends the Members for Huddersfield (Harpreet Uppal), for North Somerset (Sadik Al-Hassan) and for Wrexham (Andrew Ranger) on their excellent maiden speeches.
I am pleased to add my support to the Budget that my right hon. Friend the Chancellor put forward last week. It provides a fresh start for our families in the towns, villages and cities that comprise the constituency of Buckingham and Bletchley. Given this Labour Government’s dire economic inheritance, the Budget has done a great job not only of addressing the immediate challenges that my constituents face, but more importantly of laying the foundations for a resilient economy that will spread opportunity and deliver the down payment that we need on the Government’s ambition to tackle child poverty.
To understand why this Budget is so crucial, we need to take a moment to recognise the scale of the economic and social challenge that we face. Since the financial crisis, the UK’s productivity has grown at just 0.7% per year—a sharp drop from the 2.1% annual growth rate that we saw in the 14 years beforehand. While other advanced economies have experienced a similar slowdown, the UK has been hit particularly hard, not least as a result of the previous Government’s shying away from taking the proper long-term decisions for our economy. This has led to the UK’s productivity being 28% lower than that of the United States and far lower than that of our European competitors such as France and Germany.
For many working people across the country and in my constituency, the consequences are stark, with a loss of almost £11,000 a year in potential wages over the past 15 years. Members across the House will have seen how that has manifested itself in rising child poverty and in the routine use of food banks, which my right hon. Friend the Secretary of State for Work and Pensions mentioned. That is why measures such as the fair repayment rate and the extension of the household support fund are so vital, as they provide the lifeline that families in my constituency and across the country so desperately need.
Another key issue correctly identified by the Chancellor is the low level of public and private investment in the UK compared with our peers. For almost my entire lifetime, the UK has been a laggard in that area—we have been at the bottom of the G7 rankings for public and private investment for 24 of the past 30 years. I am pleased that this Budget represents a vital first step in correcting course, with a credible package of investment in infrastructure, schools and hospitals. That includes East West Rail in my constituency, and my constituents in Bletchley and Winslow are looking forward to the opportunities from that. I am pleased to support this Budget. It gives working people and their families a hand up, builds strong foundations and ensures that our economy will be competitive in the long run.
Mr Peter Bedford (Mid Leicestershire) (Con)
The Budget we saw last week was the most anti-aspirational Budget of modern times. It is a bad Budget for growth, jobs and working people. First, let us consider its impact on small and medium-sized businesses, many of which are staffed by working people. The £40 billion tax bombshell, combined with the additional regulation in the Employment Rights Bill, will place a massive burden on businesses, and we will only see more of them close over the coming years. Whatever industry people are in, there are now significantly higher taxes and regulatory burdens than we have ever seen. The ludicrous hike in employer national insurance contributions will lead to many businesses no longer employing new people and having to slash jobs. That is not in the interests of working people. The last Conservative Government played a crucial role in reducing unemployment throughout the UK. The Labour Government have torn that up just a few months into office. Let us be clear that having fewer jobs is not in the interests of working people.
The left like to portray capital gains tax as a tax that only affects the richest in society. However, that is simply not true. Ordinary working people who save and invest and make a modest profit on small shareholdings, or who maybe have a second home for their pension, will see their taxes rise as a result of this Budget. That is not in the interests of working people. It is the politics of envy unleashed.
Having recently secured a Westminster Hall debate on the pub and hospitality sector, which was well attended by Members from all parts of the House, I welcome the penny cut to draft beer. However, that reduction is purely academic if people do not have a pub to go to. This Government have failed to extend the 75% rate relief that the last Government put in place for the sector. The residents of Mid Leicestershire are deeply concerned that this Government’s measures will damage the economy, rather than create growth.
Finally, VAT on education is perhaps one of the meanest policies that this Government have brought in. It will not only affect those who have the wealth to send their children to public schools, but impact those in the state sector, putting additional burdens on our children’s futures.
To conclude, this is not a Budget for aspiration. What is the point in someone setting up their own business? What is the point in saving to pay for their children’s education? What is the point in keeping their family-run farm? Today, we have a Government lacking in any ideas to boost aspiration. Instead, we have the politics of envy at play.
Josh MacAlister (Whitehaven and Workington) (Lab)
On 4 July, the British people voted decisively for one clear promise: the promise of change. The Budget delivers on that promise. We have change, from years of short-termism, unmanaged decline and a weak, unbalanced economy with anaemic growth, to a long-term plan for the future of Britain that invests in the British people, our public services and our infrastructure.
The theme of today’s debate is protecting working people, so I put on record my strong support for two particular measures. First, I support the substantial increase in the minimum wage for all workers, but in particular the massive 18% boost for apprentices. That is a pay rise of £1,800 a year for an apprentice working 30 hours a week. I have more apprentices in my constituency than most, because of our nuclear industry, so that minimum wage rise will make a considerable difference.
Secondly, I support the Government’s £240 million investment to tackle the root causes of economic inactivity and to support people back into work. The large number of people, particularly young men, who have fallen out of the labour market since the pandemic is an enormous social and economic problem. I know that the Front-Bench team will grip that problem with the resources that this Budget provides.
I will also make a wider point about investment and getting Britain building again. The Conservative plan was for public investment in this Parliament to decline sharply. Low public investment has been a feature of our economic formula for years, and the results are well known: poor infrastructure, low productivity and sluggish growth. A boost of £100 billion over the next five years will begin to reverse the under-investment we have seen from the Conservatives and act as a magnet to attract significantly more private investment.
The key question is how we put that money to use in generating growth. Taking west Cumbria as an example, we have a coastal railway line that runs from Carlisle to Barrow through my constituency. If we upgrade that line, we get 1,500 extra jobs and £1 billion of gross value added to the UK economy. To realise the benefits of high levels of public investment and the jobs that come with it, we also need planning reform. Without that, the public investment commitment in the Budget will get caught in a web of delays, diversions and high costs.
The Budget is welcome. It is one measure that the Government have taken, and there are a series of others, including planning reform, that will help get Britain back on track.
Vikki Slade (Mid Dorset and North Poole) (LD)
There is no doubt that the Conservative Government left our public services in tatters and the NHS on life support. This Government were left with no choice but to make tough decisions. I understand that, having led a council that had been Conservative-run. Important decisions about employee pay were delayed, there were vanity projects and money wasted, and reserves were slashed so badly that the council was on the verge of bankruptcy. However, to govern is to choose, and I am shocked by the short-sightedness of some of the decisions made in last week’s Budget.
It is true that the average worker will not see a tax rise on their payslip, but their employer will now be calculating whether there will be any pay rises at all next year or whether to issue some of their workers with their P45. Shops, pubs and cafés facing increases in national insurance and the national minimum wage are already struggling as households deal with cost of living pressures and from their own rising prices for energy and for stock, and they were promised full reform of business rates. Instead, their costs will skyrocket as their 75% business rate relief is slashed to 40%. Granted, the relief has been made permanent, but where is the commercial landowner levy or the charge on the internet giants? Surely taxing the wealthiest would be fairer, rather than hitting small businesses with a tax that takes no account of profits or purpose?
I said it last week, and I will say it again now: rental auctions and compulsory purchase changes may in theory get the markets moving, but if businesses in high streets such as Wareham in my constituency of Mid Dorset and North Poole cannot afford to trade, the high street cannot redefine its purpose.
I, like my colleagues, have been contacted by businesses, public sector organisations and charities sharing their calculations of the impact of the national insurance changes. Corfe Mullen dental practice recently recruited a graduate dentist specifically to serve the child NHS population, boosting capacity in my area. The increase in NI for staff has wiped out half her annual salary. If we are to stop dentists leaving the NHS, we need exemptions for them now. Julia’s House children’s hospice has calculated that its NI increase is £242,000 a year. Shockingly, Tops nursery, which has several early years settings in my constituency, has calculated an increase of half a million pounds, without any additional increase in childcare funding.
The Lib Dems have called for taxes on energy giants and the big banks. We agree that those with the broadest shoulders should pay more, but this Budget has mistaken whose shoulders are broad, so I ask the Government for urgent consideration of two things: first, rethinking the national insurance change to exempt organisations allied to the NHS and education, such as GPs, hospices and nurseries, and instead to get the extra money from big banks and share buybacks; and secondly, to postpone the reduction of retail, hospitality and leisure relief until full business rate reform is ready to keep our high streets alive.
Luke Murphy (Basingstoke) (Lab)
I congratulate my hon. Friends the Members for Huddersfield (Harpreet Uppal), for North Somerset (Sadik Al-Hassan) and for Wrexham (Andrew Ranger) on their excellent maiden speeches. As the first ever Labour MP for Basingstoke, I am proud to champion the first Labour Budget in 14 years, delivered by the first ever female Chancellor. I also congratulate the right hon. Member for North West Essex (Mrs Badenoch) on her election as leader of His Majesty’s official Opposition. As the first black woman to lead a major political party, she has achieved a significant milestone.
I will focus on three key points. The first is to recognise that the Budget represents a crucial shift away from the failed policies of the last 14 years. As my hon. Friend the Member for Swansea West (Torsten Bell) has said, the risks in continuing down the same path were immense economically, socially and politically. The previous Parliament saw living standards decline, the lowest growth and highest inflation in the G7, and sky-rocketing hospital and housing waiting lists. The new Leader of the Opposition has claimed that the public now expect too much from government, but my constituents in Basingstoke have lost faith that the state can deliver even the most basic of public services after 14 years of neglect.
That brings me to my second point: the Budget is about fixing our public finances and repairing our public services. Our first fiscal rule ensures that day-to-day spending is sustainably funded, which is essential given the chaos of the Conservatives’ mini-Budget. Crucially, however, our rules allow for increased public investment: an approach welcomed by the International Monetary Fund. Unlike the Conservatives, who, as others have mentioned, planned to cut public investment by a third, we believe in investing in housing, schools and infrastructure. Their opposition to new investments reveals their desire to return us to a path of decline that voters rejected just a few months ago. The Budget will lead to more NHS appointments and better healthcare, more teachers and improved education, and more secure, affordable housing for all.
Finally, the Budget protects and delivers for working people in Basingstoke, just as we promised in our manifesto. The increase in the national living wage will mean £1,400 more for a full-time worker on the living wage. We are addressing the legacy of poverty left by the previous Government, with one in five children in Basingstoke living in relative poverty. Changes to the repayment rate of universal credit will make over a million of the UK’s poorest households £420 better off from next April.
The Budget signifies a decisive move towards a fairer, more prosperous future for Basingstoke and for Britain. Those on the Opposition Benches will regret their opposition to the Budget. I am proud to support it.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
I start by welcoming the fact that this is the first Budget presented by a female Chancellor. The House should be proud of that. I also send my thanks to the Prime Minister for acknowledging the former leader of the Conservative party and his heritage as a second-generation Indian. This place is symbolic not just here but around the world.
I am going to shift tone, if I may. [Laughter.] The Budget is incredibly punitive for small businesses. I come from a small business background, and I applaud those who are brave enough to set up their own business. A lot of the time, those small businesses are one-man bands, reliant on family members or friends to support them. Today, I probably would not set up a small business, because off the back of this Budget we have destroyed ambition in our country. The Budget absolutely feeds into supporting public sector workers, but as Sir James Dyson said in The Times today, how can we encourage the entrepreneurs of tomorrow to start their businesses today?
Politics is about choices. My party spent the summer trying to convince the electorate that Labour was going to raise their taxes—we thought that it was, and indeed we told the public that. The Budget raises taxes on working people, on pensioners, on wealth creators and on farmers. I think that farmers and the NFU knew there would be an issue when only 87 words of the Labour manifesto referred to farming. The Budget sends a message that ambition is something not to foster.
With regard to the tax burden, we see an increase in capital gains tax and inheritance tax, the removal of stamp duty support for first-time buyers and the unfreezing of income tax bands. This is a Budget that penalises ambition.
I am conscious of time, so I want quickly to focus on three local issues in South West Herts. On defence spending, I am lucky enough to represent Northwood NATO base in my constituency. While I applaud the Government’s investment in defence and supporting our Ukrainian allies, I gently point out that the Budget will actually see a decrease in the percentage of GDP spent on defence, let alone a pathway to spending 2.5%.
Harriet Cross (Gordon and Buchan) (Con)
Does my hon. Friend agree that at this time when the world is more dangerous than it has ever been, any reduction in defence spending is the wrong way to go?
Mr Mohindra
My hon. Friend is spot on. [Interruption.] I hear comments from Government Members that it is not a reduction. My Government and my party’s manifesto committed to 2.5%. I look forward to the Government committing to that level in future spending reviews, and ideally going higher.
The second local issue is independent schools. I believe that this is a policy of envy. When the Government are burdening independent schools with VAT and increases in business rates, they are forcing families who are just about affording current tuition fees to make the choice to go to the state school sector. Now, if there was capacity in the state school sector, I would happily applaud that, but when a shadow Minister confirmed during the general election campaign that class sizes would increase, that for me was a warning that the Labour party knew what it was doing. Unfortunately, residents of South West Hertfordshire will come to feel that in things such as SEND support—helping those who are most in need—which are subsidised by the private sector.
Finally, on Watford general hospital, I look forward to the Health Secretary coming back in the spring with his review. Following on from my question at Prime Minister’s questions in October, that is critical for my constituents.
Gill German (Clwyd North) (Lab)
I could not have been more pleased to hear the Chancellor’s game-changing Budget last week, putting an end to the cynical short-termism of the previous Government and taking on the long-term challenge of rebuilding Britain to be the fairer, more equitable society that we know it can be. Today, what an absolute tonic it was to hear from our Secretary of State for Work and Pensions, who is serious about driving up opportunity and driving down poverty and has a serious plan to do so. No more tinkering at the edges and no more blame game with the very people who deserve our support, but a practical, people-centred plan to get Britain working and to support and empower the most vulnerable for the long term.
People in my constituency of Clwyd North have much to welcome in what the Secretary of State said. There is the £470 rise this year alone in the state pension through retaining the triple lock, despite the financial inheritance left to us by the Conservatives. The significant increase in the earnings threshold for eligibility for carer’s allowance is welcome news for 3,000-plus family carers in my constituency, as are the valuable consequential funds gained by Wales through the extension of the household support fund to support those struggling most with household costs.
If I may, I would like to celebrate the two measures that resonate most with me as a result of my journey to this House through teaching in our classrooms and working with our communities in local government. They are the £240 million package to open up opportunities to all those left behind to get into work and to get on in work, and the fair payment rate for universal credit, which is relied on so much by those in and out of work. Deductions will be capped at 15% rather than the crippling 25%, which stops too many families from ever getting their heads above water.
Our children, families and communities deserve a fighting chance. Only a joined-up, person-centred approach can achieve that, which is why I am delighted to see the dawn of the “Get Britain Working” White Paper, enabled by this Budget. At last, we have a Government who are putting investment front and centre of rebuilding our country—investment in infrastructure, business and, crucially, in our people. It is about time. Our people are our greatest asset. This is a Budget—
Blake Stephenson (Mid Bedfordshire) (Con)
Let me start with some positives, because I do not want the Government to think that I do not recognise the challenges that they face. I welcome the efforts to tackle NHS maintenance backlogs, which will help constituents in Mid Bedfordshire who use Luton and Dunstable hospital and Bedford hospital. I welcome the Government’s commitment to improving rural broadband and funding for flood defences and nature restoration. As the MP for the Marston Vale line, I look forward to constructive engagement on East West Rail, making sure that communities in my constituency are heard through the consultation process later this year.
I welcome the fact that this Government acknowledge the importance of economic growth, but I am concerned that, beyond acknowledging it, there is nothing really in the Budget to deliver it. Despite the warm words and platitudes of the Labour party during the election campaign, this is a deeply socialist Budget, with an ever-increasing share of our economy moving into the ambit of Government, only to be distributed by Government into areas that are unproductive of economic growth.
Sir John Hayes
My hon. Friend makes an excellent point about growth. The elephant in the room is productivity. He will know from the House of Commons Library figures that productivity fell in the past year, and we are lagging behind many competitive countries. In both public sector and private sector productivity, it is critical that we take further steps to develop skills to drive growth.
Blake Stephenson
I agree that productivity is essential, and everyone in the House needs to focus on it.
This is a dishonest and a damaging Budget. This Government promised that they would protect working people; instead, they have delivered a Budget that is tough on work and tough on the causes of work. This is a Budget that taxes employment, with 1 million employers now set to lose out. Combined with an estimated £5 billion cost of expansive employment rights, our economy will be less flexible and starved of risk capital, jobs and investment in our communities. This is a job-cutting Budget.
This is a Budget that attacks our farming families, our rural economy and our rural communities—men and women working hard day in, day out, in some of the most challenging economic circumstances, at considerable risk and with low margins, all to put food on our tables three times a day. We simply would not survive without our farmers—it is that simple. But this Government are choosing to hit those very people with a family farm tax, which will drive asset disposals, splitting up land farmed by the same families for generations. It will discourage the next generation from taking up the mantle, and tear apart the communities that these farms are integral to. Last year, the now Prime Minister said:
“Every day seems to bring a new existential risk to British farming.”
Today, the existential risk is this socialist Government.
This Budget fundamentally attacks the heart of economic growth. It crowds out private investment and reduces real business investment by £25 billion. The OBR notes:
“by the forecast horizon, government spending comprises a larger part of little-changed real GDP.”
When the Government promised growth, the British people might have hoped that it would be growth in the wealth of our country, not just the size of the state. Their own words sum that up best—the Budget says:
“Rewarding work with a fair wage is the best way to improve living standards”.
This Budget achieves none of that. Instead, it delivers lower real wages, lower real household disposable income, higher inflation and higher mortgage rates. After the Budget, the Chancellor told the British public that working people will not face higher taxes in their payslips, but she knows that is not true. More than 4 million extra taxpayers will be dragged into tax because she has kept the freeze on tax thresholds.
Catherine Fookes (Monmouthshire) (Lab)
I congratulate my right hon. Friend the Chancellor not only on being the first woman ever to deliver a Budget to this House, but on being the first Chancellor to deliver a joined-up, grown-up Budget in 14 years.
Representing a Welsh constituency, I am proud that this Budget provides the largest funding boost—£21 billion —that Wales has received since devolution. That is proof, if ever that were needed, that only two Labour Governments working together will ever properly listen to, understand and fight to meet the needs of the people of Wales, who have been ignored, belittled or attacked by generations of Conservatives. We all know that our broken public services would collapse overnight without the selfless dedication of the countless women and men who, day in and day out, serve as unpaid carers. I am particularly pleased that the Budget has raised the amount by nearly £200 a month that carers can earn before losing out on carer’s allowance.
Turning to agriculture, as co-chair of the all-party parliamentary group for farming, and having grown up on a small family farm, I know there has been much disquiet over the changes to agricultural property relief. I have been in constant communication with our excellent local NFU policy staff since the Budget, and I am listening to their concerns and feeding them directly back to DEFRA. It is unsurprising that farmers are worried, given that many journalists and the Conservative party have unfortunately been selectively focusing on a £1 million figure that does not reflect the reality of the policy.
Let me seek to reassure small family farmers and repeat the words of the Exchequer Secretary to the Treasury, my hon. Friend the Member for Ealing North (James Murray) last week, who said:
“The total value of a farm should not be confused with the value being passed on at death. Multiple family members can own part of a farm. For example, if an individual jointly owns a farm worth £3 million with their partner, only £1.5 million is in their estate at death.”
Those are wise words, which will give comfort to many who have been misled by selective and mischievous comments on the Budget. With the additional £500,000 relief for each partner if there is a property on the farm, a farm worth up to £3 million may still pay zero inheritance tax. Yes, this Budget recognises that family farms form part of the backbone of rural communities, but it also recognises that our rural communities rely every bit as much on strong, functioning public services.
This historic Budget calls time on austerity, and brings stability back.
Susan Murray (Mid Dunbartonshire) (LD)
Thank you, Madam Deputy Speaker, for allowing me to make my first contribution to a UK Budget debate. I refer to my entry in the Register of Members’ Financial Interests. I congratulate Members on the Government Benches on their excellent maiden speeches.
I was pleased to hear the Chancellor’s plans for reparations for the infected blood scandal and the post office Horizon scandal, but I was disappointed that there was no mention of compensation for WASPI women, despite the health service ombudsman’s report, which was published in March. I trust that will be addressed in the very near future.
My constituency of Mid Dunbartonshire has an ageing population, which is to be celebrated, but it brings with it higher numbers of patients with increased frailty and greater healthcare needs. Mid Dunbartonshire has a wealth of charities and community groups that support carers, offer peer support and support mental health, and generally reduce demand on statutory services and prevent costs for the NHS. The increase in employers national insurance will inevitably hit them hard, and it is vital that they are protected from additional taxes if these services are to continue. The same is true for small and medium-sized businesses in Mid Dunbartonshire, which are so vital to our local economy, providing jobs that break the cycle of disadvantage.
I welcome the increase in capital funding for Scotland in the Budget. Given the increase, it is finally time to see the development of the much-needed new Milngavie health and care centre. This project echoes the Government’s plans to create community-focused health hubs, which are key to preventing costs for the NHS. Residents and health professionals in Bearsden and Milngavie desperately need the new health and care centre. GPs, dentists, allied health professionals and third-sector support ensure the health of our community and protect our hospitals from avoidable pressures.
The co-operation between the Scottish Government and the UK Government is vital to ensuring appropriate funding reaches Scotland for devolved health and care services. Working cross-party will surely improve the effectiveness of solutions. I urge the Government to consider the Liberal Democrats’ fully costed plans to increase capital and revenue funding for the NHS and care. The people in Mid Dunbartonshire and the rest of the UK are counting on us to save our NHS. Improving care services is a key part of tackling this crisis.
Clive Efford (Eltham and Chislehurst) (Lab)
I welcome the Budget; it begins the change that people voted for at the general election. It is a move away from laissez-faire under the Tories to an active Government who will be on the side of ordinary people and act in the common good.
I also welcome, as the chair of the all-party parliamentary group on haemophilia and infected blood, the money for compensation in the contaminated blood scandal. The £11.8 billion is very welcome. It is remarkable that, after all the debates, statements and questions we had over so many years in this House, the previous Government never set aside a penny for the compensation scheme. I note from the Red Book that the £11.8 billion for contaminated blood is to be spent over five years. I just say to my hon. Friends on the Government Front Bench that that is a long time for people to wait for justice. I hope that does not slow down the interim payments and final settlements. Too many have died along the way. We cannot let anything get in the way of these people receiving justice.
I agree with the changes to non-dom status and inheritance tax, but they do not begin to deal with the imbalance in the growth of wealth between the top 1% who own so much wealth and the ordinary people. Over the last 14 years, the Conservatives have done nothing to address that imbalance. We must recognise that we do not tax wealth in the way that we tax work, which has created intolerable inequality. Since the 1980s, the wealth of the richest has risen from three times the national income to almost eight times. The top fifth of the country owns 63% of the wealth, while the bottom fifth have only 0.5%. The top 1% are 41 times richer than anyone else.
Despite that growth in wealth, wealth taxes have not increased as a share of overall taxation or as a share of GDP. This is the politics not of envy, but logic. If we do not invest an appropriate proportion of the wealth created by our nation in our public services and infrastructure, our universities and research, our police and courts, and much, much more, we diminish our country. Surely, that downward spiral will also be an incentive for those who, we are told, will go overseas if we tax them too much. We must ensure that we go where the money is and where it has been going over the past 40 years. It is time for us to address the imbalance between how we tax wealth and how we tax work. The Budget has set us on the right road, but we need to go further.
Zöe Franklin (Guildford) (LD)
I want to raise two specific issues in relation to the Budget, but we on the Liberal Democrat Benches are pleased to see the investment in the NHS. It does feel, however, like the Government have given with one hand and taken away with the other.
First, I express my deep disappointment, and that of my constituents, at the lack of mention of the two-child benefit cap. The two-child limit has trapped hundreds of thousands of children in poverty. This was the Government’s opportunity to end this unfair and regressive policy, yet they have chosen not to. My colleagues and I will continue to campaign to scrap the policy, as it would be one of the quickest and most cost-effective ways to lift children out of poverty and would have enormous long-term benefits for children, society and our economy.
Secondly, I join other Members in raising an issue relating to business. After the long years of a Conservative Government who did not understand business, there was a genuine optimism from businesses across my constituency that the new Government would be different. However, the 8.7% hike to employers’ national insurance contributions has been a deeply unwelcome surprise. In the days since the Budget, I have spoken to small business owners in my constituency, including an independent pharmacy owner, and each has shared with me how the hike will have a hugely detrimental impact on their business, and will impact their employees. In fact, this afternoon I received from a resident a deeply distressing email that illustrates this very issue:
“As of today, I have been made redundant. The primary reason cited in my redundancy interview was the increased financial burden on my employer due to tax rises and National Insurance increases imposed by Labour. These measures have directly undermined the ability of my small business employer to sustain full-time staff, leaving me, and likely many others, without employment. This sudden and destabilising change has left me not only angry but fearful for the future. I am concerned that I may struggle to find new employment for the very reasons that cost me my last job.”
This could have been a Budget of growth and fair taxation that truly protected the most vulnerable. Instead, it is a Budget of what I hope are unintended consequences, consequences that it is not too late to prevent if the Government are willing to listen, work with MPs on these Benches, and rethink elements of the Budget that can and should be improved.
Imran Hussain (Bradford East) (Ind)
I never cease to be amazed by Conservative MPs, in particular former Ministers. It is like the last 14 years never happened: they never crashed the economy, they never put 4 million children into poverty, they never devastated our communities. I hear Opposition Members talk about how the Budget destroys aspiration and ambition. What about the young people in our constituencies whose aspiration and ambition they destroyed for 14 years? What about the 4 million children they put into poverty? What about the working families who, for the last 14 years, they made use food banks? Did they not have aspiration and ambition? Did they wake up one day and decide to go and use food banks?
The shadow Chancellor, the right hon. Member for Central Devon (Mel Stride) has held very prominent positions in this House, but today he came out with pure fiction from some parallel universe. I ask him seriously to consider that. I have worked with him in the past, but I really do not think that he has done it justice. The Opposition should have had the decency to apologise for 14 years of failure, but we have not heard one acknowledgment of that. Do we think their constituents really buy that? Are the people out there suddenly going to forget the 14 years of devastation they brought to our communities?
I welcome the Budget. After 14 years, it provides real investment—over £25 billion—in our NHS, so that my constituents and the constituents of all Members will not have to wait weeks on end before they can see a GP. It provides billions for education, so that every child in my constituency will have the best start in education and the best start in life. I would of course like the Budget to go further to address poverty. I look forward to working with Ministers, because there is a journey still to travel. This is just the foundation.
Jim Allister (North Antrim) (TUV)
When the Chancellor introduced her Budget, one thing she said was that change must be felt. This Budget will be felt, but, in many instances, not in a good way. My constituency is peppered with small businesses employing 10 or 12 people. They are the victims of this Budget, because they are now going to be soaked with additional tax on jobs, and that will not bring change that will be felt in a good way; it will diminish employment in my constituency. My constituency also has many family farms, and they too will not feel this Budget in a good way, because inheritance tax will put many of their futures in jeopardy. Family farms are asset rich, but more often than not they are cash poor, so how on earth will they ever meet the huge imposition that has been placed on them?
Robin Swann (South Antrim) (UUP)
The average farm income in the past year in Northern Ireland was £27,345, which does not exactly leave those family farms a lot of slack. It does not leave them much to live on, let alone meet inheritance tax bills.
Jim Allister
That illustrates my point. It shows how impossible and unfair it is to say to family farms—and it does not take a lot of acreage to be worth £1 million—“You may have the assets, you do not have the income, but you must pay the inheritance tax to HMRC.” What do those farmers do? They sell off part of the farm, and what does that do? It diminishes the food production, and it diminishes the viability of the farm. That will be how this Budget will be felt in many family farms. Similarly, it will be felt in a negative way by new homebuyers because of the stamp duty threshold reductions: new purchasers will now pay significantly more in tax to buy a new home.
As for the Budget allocation for Northern Ireland, back in 2012 the Government accepted a national barometer of need. Through Professor Holtham, it set out what was needed in each part of this nation. What £100 could buy in public services in England was then translated—because other areas were smaller—into what it would cost to buy the same amount in the rest of the United Kingdom: £105 in Scotland, £115 in Wales and £121 in Northern Ireland. Yes, according to the block grant transparency document this Budget provides for Wales £120 per £100 in England, but in Northern Ireland we continue to be just at need. Why is there that uplift for some parts of the United Kingdom and not for others? We in Northern Ireland also have no guarantee of meeting need beyond 2026-27. That is not assured in this Budget. I ask for my constituents what has been afforded to the constituents of Wales, an uplift on need so that they can see their public services provided properly.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Interventions prevent other colleagues from contributing, so let us be mindful.
Ruth Cadbury (Brentford and Isleworth) (Lab)
As Chair of the Transport Committee, I will focus my remarks on transport, a sector that is essential to delivering the Labour Government’s missions on growth and decarbonisation and to improving our health. On those, the Conservatives dodged the tough decisions and kicked the can down the potholed road. As the Chancellor said, just as in 1945 and 1997, it is up to the Labour party to clear up their mess.
I welcome the investment for the HS2 tunnel to Euston, the trans-Pennine route upgrade, East West Rail and the Marston Vale line. I am delighted that combined authorities, local councils and directly elected Mayors will receive funding for supertrams and mass-transit projects. The £485 million for Transport for London for rolling stock on the Piccadilly and Elizabeth lines will be particularly welcome in my constituency and across London, but also in Derby and Goole, where the jobs are being created and protected. My Committee will take great interest in how those projects are delivered. We hope that they will be completed on time, on budget, and in a way that will help the UK to catch up and compete with the best transport systems around the world.
Colleagues on both sides of the House have told me about the importance of local bus services, whether for work, study or shopping, and they are a lifeline for town centres. I welcome the £1 billion funding boost, and the fact that bus services are being put into the hands of local communities. I am pleased that a bus fare cap has been retained and that next month’s cliff edge has been avoided, but I hope that the Government will soon come up with a long-term solution for the revenue funding of buses across England, outside London.
Motorists will welcome the freezing of fuel duty. The previous Transport Committee, however, concluded that the Government
“must start an honest conversation with the public”
on how to maintain funding for roads and other essential public services as electric vehicle use increases and the use of fossil-fuel vehicles decreases. That will mean a decline in fuel duty for the Exchequer, so I hope that the Front Benches will work together on this challenge, which will only become ever more urgent.
As for the role of transport in decarbonisation, I am pleased that the Chancellor is increasing air passenger duty on private jets, but I hope that the Government will also address the electricity grid capacity challenge to ensure that there is adequate power when and where it is needed, to provide—among other things—confidence in electric vehicle take-up. This was a major infrastructure issue ducked by the last Government.
I am pleased that the Chancellor has seized the mantle of investment to put our country on a strong footing for the future.
Caroline Voaden (South Devon) (LD)
It is an honour to speak in this debate in response to the first ever Budget delivered by a female Chancellor.
There is no doubt that the Government had some tough decisions to make after inheriting a mess caused by the reckless economic mismanagement of the previous Government, but we are also still reeling from the economic disaster into which that Government pushed us with their Brexit fantasy. Yesterday’s OBR report estimates that Brexit will cost the UK 4% of GDP per year, with imports and exports down by 15%. The predicted GDP growth of 2% next year pales in comparison. If we are serious about economic growth, we absolutely must improve our trading relationship with Europe, and we in this House need to be brave enough to have that conversation—but back to the Budget.
Along with my Liberal Democrat colleagues, I am glad that the Chancellor has listened to our calls for investment and support for the NHS, and promised a cash injection to start repairing the damage done to local health services. I also welcome the £1 billion of capital investment. My local hospital in Torbay represents the ultimate Liberal Democrat case study of despair, with sewage leaking inside the hospital—more than 700 times at the last count. Investment to deal with rotting and broken buildings is vital, and will ultimately help to put our creaking country back on its feet.
The lack of discussion about social care is a gaping hole, and Liberal Democrats have been calling loudly for a cross-party conversation. Free personal care could deliver annual savings for the NHS of up to £3.3 billion by 2031. Yes, it will cost money, but it is this kind of investment that we need to repair our health service.
In the spirit of offering constructive opposition to the new Government, I want to highlight two issues that will affect my constituency considerably. The first is agricultural property relief. Having seen the front pages, I am sure that the Chancellor is well aware of the distress and fury that this has caused in rural communities such as my constituency. It is simply tin-eared to say, “We cannot afford farmers to die tax-free.” We cannot afford to lose more farms: they are the backbone of our rural economy, and they are fundamentally important for national food supply.
The second issue is the tax relief offered to the hospitality, leisure and tourism sector. Those businesses have struggled to recover since the pandemic, while carrying the burden of rising energy prices, interest rates and staff shortages. We urge the Government to go further on business rates reform by fundamentally overhauling a system that is destroying our high streets and town centres. The Liberal Democrats believe that there are much fairer ways to raise the money needed than by hitting small businesses. Our manifesto sets out our calls for a fairer tax system, including raising money by reversing the Conservatives’ tax cuts for the big banks, all by asking the tech companies and the oil and gas companies to pay more. The Government could also have gone further on capital gains tax for the top 0.1%.
Mr Mark Sewards (Leeds South West and Morley) (Lab)
I congratulate my hon. Friends the Members for Huddersfield (Harpreet Uppal), for North Somerset (Sadik Al-Hassan) and for Wrexham (Andrew Ranger) on their excellent maiden speeches. I also congratulate my right hon. Friend the Chancellor on delivering what I have concluded is one of the most consequential Budgets in a generation. In this Budget, we have reset the nation’s finances and wiped the slate clean so that we can deliver the change that we promised in the general election.
Given the dire state of the public finances, we have had to take some very difficult decisions to balance the books, but, as we set out in our manifesto, we will never play fast and loose with the public finances and we will deliver economic stability, unlike the Conservative party. Despite the circumstances we inherited, there is so much in this Budget that will change our country for the better: record investment in the NHS, a pay rise for 3 million workers, fully funded compensation for victims of the Post Office scandal and the infected blood scandal, the biggest ever increase in carer’s allowance, and so much more. It is a down payment on the change that we offered the electorate at the general election.
Given the time constraints, I will focus on education. As a former maths teacher, I am all too familiar with the problems that plague our state schools. For a long time, school staff have been stretching themselves extremely thin to meet the needs of their students, like butter spread over too much bread. I have seen it at first hand. It should not be this hard, so I welcome with open arms the investment in education. The £2.3 billion increase to the core schools budget will increase funding per pupil in real terms. This Budget commits us to recruit thousands of new teachers in key subjects. Every child deserves to be taught by a qualified teacher in every subject.
Students also deserve to be taught in school buildings that will not collapse, so the announcement of £2.1 billion to improve the condition of the school estate is very welcome. I have met parents in my constituency, from Farnley and Robin Hood to Wortley and Tingley, and I have heard about their experiences of the special educational needs and disabilities system. Some of their stories are devastating. As a teacher, I have seen that the system is failing, so the £1 billion announced by the Chancellor for SEND provision is a big step in the right direction for families across Leeds South West and Morley. Every child with SEND or otherwise deserves the opportunity to succeed in education.
This Budget lays the foundations to rebuild education and to rebuild Britain. It is a Budget that unapologetically invests in Britain’s future. The people of Leeds South West and Morley voted for change in July. This Budget delivers that and then some.
Calum Miller (Bicester and Woodstock) (LD)
If there was one phrase that occurred repeatedly on the doorstep in Bicester and Woodstock during the general election, it was, “I’ve always voted Conservative, but I’m never doing that again.” Voters talked about a cost of living crisis, high interest rates raising mortgages and rents, and stealth taxes hitting low-income pensioners, all of which they blamed on Conservative Ministers who were more interested in holding office than governing well. I am in no doubt that this new Labour Government inherited a poisoned chalice and have, as the Chancellor said in her speech, faced some tough choices.
Today’s debate is focused on protecting working people. My constituents in Bicester and Woodstock have shared their views on how well the Chancellor’s choices have met that goal. Most prominent in the Chancellor’s tax changes were the increases to employers’ national insurance contributions. I spoke to the owners of a small café and leisure business in my constituency. They employ a small team of staff, many of whom have been with the business for years. Few of them work full time, and some are students or school pupils who work one shift. Given the increase in employers’ NICs and the failure to reform business rates, the owners told me that this Budget will take them to the edge financially. I regret that the Chancellor did not listen to the Liberal Democrats’ recommendations to raise taxes from those with the broadest shoulders, reverse the tax cut that the Conservatives gave to the big banks, and levy a modest tax on social media companies. The Chancellor said there would be no tax rises for working people, but small business owners in my constituency would disagree.
Two weeks ago, the National Audit Office reported that the SEND system was broken. In the urgent question on that report, I spoke about Zak, who lives in my constituency and whose young life has been deeply affected by the shortcomings in the SEND system. Both of Zak’s parents have had to stop work and move on to universal credit so that they can care for and educate Zak at home. I welcome the £1 billion in new funding to help local authorities address SEND deficits, but we need to do more. We need a much more ambitious approach to improve the support we give young people and their families.
The Liberal Democrats support the Chancellor’s commitment to public sector investment after years of neglect under the previous Government, so I welcome her confirmation that she has committed to funding the East West Rail project, which runs through my constituency. However, the documents provided by the Treasury and the Department for Transport do not clarify whether a share of that new funding will be ringfenced to keep open London Road in Bicester, which connects our town. Since 2021, as a county councillor and now as an MP, I have been pressing East West Rail and Ministers to commit to funding that. In that time, there have been four Prime Ministers and five Rail Ministers. I hope this new Government will now commit to finding solutions that will avoid Bicester being cut in two.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
May I start by extending a huge congratulations to everybody who has given their maiden speech today? I also congratulate my right hon. Friend the Work and Pensions Secretary on her opening speech, and the Chancellor on her Budget.
This was an incredibly progressive Budget. It recognised the real hardship that families on low incomes have faced over the last 14 years and addressed them by extending and uplifting the living wage, and by reducing deductions for those on universal credit and the standard allowance, which are a significant burden on people on the lowest incomes, including those in work. Ultimately, what we will do on increasing the personal tax allowance will be important for increasing people’s incomes.
Getting Britain back to work is an important endeavour, and I entirely support it. We must recognise that we have nearly 3 million people of working age who are not in work, education or training because they are not well. Over the past decade, and particularly over the past seven years, we have seen declines in life expectancy and healthy life expectancy in areas like mine, particularly for women. That means that people who are expected to work are not in a position to work. The investment in the NHS will make a massive difference by addressing our ill health—we are a poorly nation—but it will also mean that we can help to grow our economy.
I want to touch on a report that was produced six years ago but is still relevant today—indeed, the relevance of its analysis has probably increased. The 2018 “Health is Wealth” report by the Northern Health Science Alliance argued that in order to improve our productivity and growth, we must improve our health. Those eminent epidemiologists and public health academics brought the evidence together to enable them to make those estimations, and they calculated that improving the health of the north to the level of the rest of England would increase productivity by £13.2 billion a year, so I urge the Government to consider updating this piece of work, and also to consider how we can ensure that our NHS allocations reflect the health needs in these areas.
Sarah Bool (South Northamptonshire) (Con)
This is a Budget of broken promises. Some 88% of my constituency is agricultural land. The reforms to agricultural property relief and business property relief will effectively be the end of the family farm. On Back British Farming Day two months ago, Labour Members proudly stood by the Massey Ferguson outside the Palace, but farming is more than a photo opportunity. Careful environmental stewardship that comes from long-term family ownership is put at risk by this policy. The impact also extends to tenant farmers. If the availability of land to rent is reduced as a result of carving up all our small farms, new entrant farmers who will begin their careers on let holdings are denied their opportunity to start, just at the point when we should be encouraging them for the future. I urge hon. and right hon. Members, as well as anyone else watching this debate, to join the thousands of others who are signing our petition to stop this.
The village pub is another core pillar of my rural constituency. I spoke recently in Westminster Hall about the essential importance of these institutions to the rural way of life, and about how this Government should continue the 75% business rate relief, so I am very disappointed to see that this rate will be cut to 40%, particularly at a time when many rural pubs are struggling to remain viable.
And all of this is while the Chancellor increases employer national insurance contributions, causing great distress in the hospitality industry. This tax hike will result in jobs lost, small and medium-sized businesses squeezed, and enterprise damaged. The Chancellor appears to be punch-drunk on Labour’s election victory, but the British public are going to suffer the ultimate hangover.
Can I also stress one point for caution? As the vice-chair of the all-party parliamentary group on investment fraud and fairer financial services, I appreciate that the Chancellor wants to ensure that everyone pays what they owe and in a timely fashion, but I urge the Government to ensure that any victims of historical pension and investment fraud are protected. Enforcement action against victims should be suspended and HMRC should be instructed to use its wide discretion in debt forgiveness. HMRC should focus on pursuing those who orchestrated the schemes and on recovering stolen funds from the fraudsters, rather than targeting the victims.
The markets dislike this Budget and my constituents will be penalised by this Budget, so who wants this Budget? Is this really what Labour Members wanted? I ask the many Labour Members who now represent rural constituencies: did they stand for election to end the family farm? Did those who owe their seats to the pensioners who showed up in huge numbers at the polling stations stand for election to make them cold this winter? We on this side will not relent in our opposition to this catalogue of broken promises.
Emily Darlington (Milton Keynes Central) (Lab)
First, I would like to congratulate those who made their maiden speeches, representing fantastic places right across the UK. Given today’s theme of protecting working people, I thought it would be worth reminding Conservative Members of the real impact of the last 14 years of failure: 3 million people using food banks, more than 700,000 children plunged into poverty, mortgage costs nearly doubled, the worst pay rises since the 1950s, disabled people committing suicide due to reforms to their benefits, mental health worse than at any time on record, more people sleeping rough and more families without their own home. The Conservative party continues to deny, to justify and to refuse to apologise to those people right across the country and in my constituency of Milton Keynes Central.
It is time for a new deal for the people of the UK. In fact, that is what they voted for, and just as new deals have historically pulled countries out of darkness, this Budget aims to do the same. President Roosevelt said:
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
Like FDR’s plan, that is what this Budget does. It immediately gives economic relief by increasing the minimum wage, raising carer’s allowance thresholds, making the benefit system more understanding of individual circumstances and allocating £1 billion to those with special educational needs. It also makes sure that we are funding our recovery, as well as funding and prioritising science and innovation, further education, infrastructure, affordable housing, lowering energy costs and expanding childcare. And it also promises to build back better, with reform to our public services.
After 14 years of failure under the Conservative opposite, this Budget will provide ambition, hope and stability for Britain and its people.
Mr Gideon Amos (Taunton and Wellington) (LD)
Last week’s Budget and its investment in the national health service is, of course, welcomed by the Liberal Democrats, just as we welcome the clawing back of money for carers where, in many cases, the Government made mistakes. The raising of the earnings limit is also very welcome, as my hon. Friend the Member for Torbay (Steve Darling) made clear.
In Taunton and across Somerset, we are waiting to hear about Musgrove Park hospital. Temporary buildings built for the US army in 1940 still serve as its maternity unit. In the summer, 30° heat causes staff to faint, and rain seeps through holes in the roof during the rest of the year. We are waiting to hear whether that project will make it into the £3.1 billion investment plan, as we hope it will. The hospital needs to know so that it can plan.
I recognise that the Government are seeking to provide investment certainty and stability of economic policy, which is something we have not seen in this country in recent years. That aim, at least, is a world away from the empty stunts of the previous Conservative Government, who promised Taunton a whole new hospital, which was not founded on any kind of reality. That was a disgrace, and we need a more stable investment landscape.
Investment is welcome, but it has to drive growth and bring in private sector investment. The opening of Wellington and Cullompton stations is an absolute priority for my constituency. No other project is so close to the end of its detailed design and has such a strong benefit-cost ratio—3.67, according to Treasury figures. The knock-on benefits for housing, transport, employment and investment are huge. Sadly, however, the project is on hold. With 2% inflation on a £25 million project, it has cost us £1,600 every day since the pause in July.
The Chancellor told me from the Dispatch Box in July that Wellington station will go ahead, and I hope that I will not be disappointed. Having said that, even while I have been sitting in the Chamber, the Minister for Rail has deferred and cancelled a meeting with MPs on rail projects, which is an alarming development that I hope will soon be reversed. The Government have also saved £2.5 billion by scrapping two big road projects in Somerset, which means that the Henlade and Thornfalcon bypass really must happen.
Finally, as my hon. Friends have said, the burden of this investment should not fall on small businesses. It should fall on the big banks, the big energy companies and the social media giants. That is what the Liberal Democrats will work towards.
Sally Jameson (Doncaster Central) (Lab/Co-op)
I am proud that our Labour Government are taking crucial steps towards fixing the foundations of our economy, while protecting working people and supporting struggling households. We were elected on a manifesto of change, and last week we proved to our constituents that we will make good on that promise.
What is so important, and what struck me about the Budget, is the commitment to justice—justice for the victims of the infected blood scandal and the Post Office Horizon IT scandal, who will now receive the compensation they deserve, and, crucially for my constituents in Doncaster Central, justice for our former mineworkers on the mineworkers’ pension scheme who will now get the money that is rightfully theirs. I pay tribute to my hon. Friend the Member for Barnsley South (Stephanie Peacock) for her long-standing campaign on this matter. Having spoken not too long ago to some miners from Markham Main, who powered our country, I know how much it means to right that historical injustice, and I am proud that it is a Labour Government that have done so.
I am also thrilled to see our Labour Government progress our industrial future and commit such a high level of investment in green energy projects. That funding will support those skilled job opportunities that industrial cities like Doncaster need. The British jobs bonus will help support clean power businesses that offer good jobs, such as Clean Power Hydrogen in Doncaster, which not only offers skilled work opportunities but supports the production of green hydrogen. The Budget offers Doncaster the chance to once again power the country and bolsters our industrial offering. The green transition is not just about climate change and protecting our planet; it also provides an opportunity for growth, offers a skills revolution and provides opportunities that will keep our city and country powered well into the future.
Growth in cities like mine will be critical in the coming years for us to set up an economy of the future that benefits every corner and region of the country. I will, of course, be fighting over the coming days, weeks, months and years to ensure that Doncaster and South Yorkshire businesses get their fair share, because the funding and prosperity we deserve was long denied under the last Government. We deserve to thrive, to be a part of Britain’s drive to become a clean energy superpower and to dominate the global race in that growing, vital industry.
Ben Obese-Jecty (Huntingdon) (Con)
This Labour Government pledged that taxes would not be increased on working people, but they could not even stick to that. It does not matter how cleverly worded their manifesto was, these tax raises are undoubtedly not in the spirit of the sentiment on which Labour’s entire election campaign was founded.
Small businesses have been left reeling by the measures imposed on them. Duncan Blake is a GP at the Priory Fields practice in Huntingdon. I recently visited the practice and discussed some of the challenges it faces. He warned how the increase in national insurance contributions and the lowering of the thresholds will serve only to undermine access and patient care, in addition to the significant financial pressures that GP practices already face. Practices such as Priory Fields are wedded to the NHS and dependent upon it for funding. There is no ability to increase prices to absorb increased costs. GP practices are not eligible for employment allowance, so will bear the full brunt of these rises. Why are the Government not treating GP practices like other parts of the NHS and reimbursing those costs?
Rebecca Paul (Reigate) (Con)
Does my hon. Friend agree that the increase in employer national insurance contributions will impact charities, as well as businesses and GP surgeries? They include the Children’s Trust in Tadworth, in my constituency, which is a leading charity that provides support to children with brain injury. That charity now needs to find an additional significant—
Madam Deputy Speaker (Caroline Nokes)
Order. Interventions must be brief. I think the hon. Lady has made her point.
Ben Obese-Jecty
I agree with my hon. Friend.
In my constituency, farmers have been left reeling by the Government’s ruinous family farms tax that effectively ends the family farm through their reckless slashing of agricultural property relief, yet the Government repeatedly claimed there would be no tax rises on “working people”. Are the Government honestly suggesting that farmers are not “working people”? Those on the Government Benches made repeated assurances over the past year. The duplicity of the Labour party on this issue is breathtaking. At last year’s Country Land and Business Association conference, the now Environment Secretary stated that
“we have no intention of changing APR.”
The CLA has said that the change could harm 70,000 UK farms, declaring it a “betrayal” that
“puts dynamite beneath the livelihoods of British farming.”
The Prime Minister and the Environment Secretary were more than happy to leverage support from the countryside, with glossy photoshoots of rambling around the countryside in designer wellies. Indeed, the Prime Minister was very eager to make his pitch to rural communities during his Country Life article and photoshoot in September last year, in which he said:
“The need for stability now is urgent: farmers need to plan for the long term more than ever before.”
I doubt farmers were expecting that long-term planning to include being forced to sell 20% of their farms, making them unviable, or taking a 20% loan to cover those costs, potentially saddling the next generation with debts that farming is not profitable enough to repay.
Only yesterday, the Chancellor stated on the BBC that:
“Only a very small number of agricultural properties will be affected”.
A £1 million farm is 100 acres. According to DEFRA’s agricultural facts summary, published the day after the Budget, on 31 October, the average UK farm size is just over 200 acres. How can the Chancellor make her claim when the relevant Government Department has itself contradicted her position?
Given the speed and alacrity with which the Secretary of State for Energy Security and Net Zero has covered the countryside with solar panels, it should come as no surprise that the Government are so eager to force farmers out of business, freeing up swathes of the countryside to be sold to developers for more of the same. The Government will be forced into rowing back on this policy, whether it be now or after the visual spectacle of demonstrating farmers blockading Parliament Square with tractors. I urge the Government to do the right thing now, rather than being forced to do so in a few weeks.
Mr Luke Charters (York Outer) (Lab)
This weekend I held a surgery at a great place called the St Giles’ centre in Copmanthorpe. The day started with a coffee morning and ended with a beer festival. Thankfully, I was not misunderstood when requesting a strong brew, but sadly I heard some sobering stories from my constituents. I met one constituent stuck in housing full of damp, another battling for an education, health and care plan, and a sub-postmaster yet to receive compensation; these are the everyday tragedies that our constituents face after 14 years of failure. The Budget mattered to them because they have been let down for far too long, and this historic Budget—the first ever delivered by a woman—rose to the challenge. Working people want the Government to give them bang for their buck. We said that we would protect working people’s payslips, and that is exactly what we did.
Let me start with education. I know the pressure that schools faced under the Tories, not least because my wife is a genuinely inspirational teacher, so I am pleased that we have turned the page, with a £2.3 billion increase in the core schools budget, the recruitment of new teachers and action on the reinforced autoclaved aerated concrete crisis. A constituent recently wrote to me about their child, who has been unable to attend full school full time since the start of 2023 due to insufficient funding to support their additional needs. Due to the crisis in special educational needs and disabilities funding, as every day goes by that child loses crucial opportunities to develop key social skills, but the extra £1 billion of funding—a 6% real-terms increase—that we have committed to will change that. Our schools will get the support they need under this Labour Government.
My right hon. Friend the Secretary of State for Work and Pensions opened today’s debate, and I know that the Labour Government, as they did from 1997 to 2010, will do everything in their power to bring down poverty. I am also delighted that extra resource will be dedicated to tackling fraudsters, after the Crown Prosecution Service recently prosecuted an advanced organised crime group that defrauded taxpayers in an industrial-scale benefits fraud. I welcome the anti-fraud funding announcement.
I am proud that the Government are making the most of a tough economic inheritance and meeting the needs of my constituents. I do, however, welcome the previous comments of the right hon. Member for North West Essex (Mrs Badenoch) on Budgets. She praised fuel duty freezes, backed building more homes, welcomed extra pothole funding and supported increasing the national living wage, so I presume that during her first appearance at the Dispatch Box as Leader of the Opposition on Wednesday, she will welcome this Budget. Our Budget is a downpayment to get our future back; it will protect working people, and we should be proud of it.
Wera Hobhouse (Bath) (LD)
This year, in Bath alone, more than 4,000 patients waited over 12 hours in A&E. Getting seen quickly can be a matter of life and death, and with a lot of extra funding now coming forward, my constituents in Bath must see tangible change quickly. I welcome the extra investment in the NHS, but I would have liked to have heard direct mention of eating disorder services in the Budget.
Eating disorders are a national emergency. They have the highest mortality rate among mental health disorders, and there are over 1.2 million sufferers in the UK. The illness has seen an alarming rise, especially since covid, yet the current services and funding are a fraction of what is required. Between 2015 and 2019, for example, eating disorders accounted for just 1% of the UK’s mental health research funding. Charities are becoming completely overwhelmed amid NHS capacity issues. The charity SWEDA in my constituency saw a 150% increase in people seeking support in 2023 compared to pre-pandemic figures. We cannot depend on charities to plug the gap. It is unforgivable that since the urgent referral waiting time targets for child and adolescent eating disorder services were set in 2021, they have never been achieved.
At the end of 2023-24, more than 10,000 children had entered treatment for an eating disorder, but 12% of them were waiting over three months—three times the target for a routine referral. Even more alarmingly, an access and waiting times standard does not even exist for adults. Delays to eating disorder treatment can be fatal. Some sufferers are now being told that they are too ill to be treated, and the only treatment offered is palliative care. This is tragic and totally unacceptable. Eating disorders are treatable and sufferers can make a full recovery. It is shameful beyond words to give up on them. I urge the Government to take eating disorders seriously and ensure that services are meeting the needs of sufferers, and that the funding that is so desperately needed is made available.
I would like to say more about care providers, but I do not have time. I urge the Government to look at them in the round, not just to make exemptions for public service providers.
Deirdre Costigan (Ealing Southall) (Lab)
I congratulate the new Leader of the Opposition on her election. She says that she will be honest about what her party got wrong over the last 14 years, but I listened to her on TV yesterday and all that she would admit was that under her party standards had started to slip. Standards had started to slip? That is the understatement of the decade. Seven million people on NHS waiting lists, taxes at a 70-year high and mortgages shooting up by hundreds of pounds overnight. That is not standards slipping; that is taking a wrecking ball to our public services and our economy. That is why people voted for change.
This Labour Budget starts to deliver that change. Instead of austerity, we are choosing investment in public services. Instead of economic chaos, we are choosing growth, and to pay for it—because clearing up the Conservatives’ mess has to be paid for—we are choosing to protect working people’s pay packets, with no increase in national insurance or income tax in working people’s pay packets. In fact, all of the 7,200 people in Ealing Southall who are on the national minimum wage will receive more money in their pay packet because of this Labour Budget. Raising the youth rate to £10 an hour is a great first step towards achieving equality for young workers in Ealing Southall, and hundreds of carers in Ealing Southall will be able to earn more money and still get their allowance.
Last month, I visited west Ealing jobcentre, which is the biggest in west London. More than 170 staff work there, but when I asked what help a disabled person could get to go back to work they did not have an answer. As a trade unionist, I represented disabled workers for many years. So many of them wanted to work but were pushed out of their job because there was no support. There are 3 million people off work on a long-term sickness absence. Many would love to work, but the health service is not set up to support them and jobcentres do not have the right tools to help. That is why I welcome this Labour Budget’s investment of £240 million to get Britian working. Many of my constituents in Ealing Southall want a job, but they need help with English and with their CV, and they need mental health support, so the Secretary of State’s plan to bring jobcentres, careers services, skills providers and health services together will make a huge difference.
Today’s debate is about working people, but litter and fly-tipping are so important to my residents, and well run councils such as Ealing are facing severe budget pressures. The spring comprehensive spending review is an opportunity to ensure that Ealing has the resources to deliver for residents, from cleaning the streets to social care. Austerity and economic chaos were the choices of the previous Conservative Government. If the Opposition would like to make different choices, this is their chance to put those choices forward. We have heard nothing today. This Labour Government are proudly and purposely choosing growth, choosing investment in public services, and choosing to protect working people’s pay packets.
Saqib Bhatti (Meriden and Solihull East) (Con)
The Chancellor’s Budget last week was a shocking demonstration of economic illiteracy. The Government often speak about growth, but all the Budget showed was a disdain for wealth creators, and it betrayed family businesses and farmers—reminiscent of the damage that the Labour party caused in the 1970s. Conservative Members know that we cannot tax our way to growth. My constituents in Meriden and Solihull East are particularly dismayed by the trail of broken manifesto commitments, and the highest debt burden and tax burden, with taxes being put up by £40 billion. They are particularly angry about the disdain shown for our rural communities and small businesses. The Government often talk about them being the lifeblood of our communities, but that is more than just a slogan.
I will focus on farming in the limited time I have. As the proud representative of a number of family farms, I speak on behalf of many constituents who are appalled by the Budget. Our farmers work seven days a week, 365 days a year, to keep food on our tables, and they nurture our green and pleasant land. They work no matter the weather, and are vulnerable to it like no other workers in any other industry in the country. The Chancellor argues that the tax on family farms is necessary to support our public services, but she clearly fails to recognise that those farms also provide a public service. They put food on our tables, ensure our food security and protect our rural heritage.
The Chancellor’s betrayal of our rural communities through the family farm tax will have damaging consequences for farmers and everyone in the country. I welcome the interventions from Jeremy Clarkson and the NFU president Tim Bradshaw, who today made arguments about the deepening mental health crisis in our rural communities. The Chancellor must recognise that farming is not a hobby or pastime for the landed classes; it is an engine that drives our food security and sustains our rural communities. Farmers do not have huge bank accounts to pay death tax bills. The Budget will lead to an exodus of farmers, undermining our food security and making everyone more vulnerable to global instability. We should not be surprised by the measures. The Labour party included only 87 words on the farming industry in its manifesto, which I thought was particularly disrespectful.
I would talk about the billions that our small businesses contribute to our high streets, but I will talk instead about fuel duty. My hon. Friend the Member for Mid Buckinghamshire (Greg Smith) was very kind to mention me earlier, but there were 73 Conservative Members of Parliament who wrote to the Chancellor, and 131,000 people signed the petition. Just two weeks ago, Government briefings revealed that they were going to raise fuel duty by 7p. We were able to force a U-turn and protect the freeze on fuel duty.
What does this Labour party stand for? It does not stand for small businesses on the high street, it does not stand for our farms or rural communities, it does not stand for hard-working families, and it certainly does not stand for working people.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
I congratulate hon. Friends who have made maiden speeches today.
I am proud to stand in support of this Labour Budget—the first Labour Budget in 14 years, and the first ever Budget presented by a female Chancellor. The Budget delivers the largest settlement for the Scottish Government in the history of devolution. It means an additional £1.5 billion for the Scottish Government to spend in this financial year, and an additional £3.4 billion next year. The UK Labour Government are delivering a total of £47.7 billion for Scotland’s budget in 2025-26. It is notable that on yet another day of debate on the Budget, not a single Scottish National party Member has chosen to grace these green Benches.
The Budget keeps our promises to the people of Scotland, ends the era of austerity and provides billions for investment in our public services. It is a truly redistributive Budget that ensures that those who have the least benefit the most. The word “redistribution” will not be welcome for some Opposition Members, but the vast majority of my Paisley and Renfrewshire South constituents do not have the luxury of private jet travel. They would be happy with an improvement to the bus service between Johnstone and Paisley, which, of course, the Scottish Government at Holyrood might be able to deliver if they choose to invest this record-breaking settlement in our public services.
I welcome the 6.7% increase in the national living wage—a massive improvement—delivered in the Budget. That means an extra £1,400 on average for a full-time worker, and is a significant move towards delivering a genuine living wage—one that will directly benefit over 3,800 people across Renfrewshire.
The SNP must now ensure that the additional funding is provided directly to our local public services and reaches the frontline to bring down the waiting lists in our NHS, raise attainment in our schools and bridge the £585 million budget gap facing our local councils in Scotland. I commend the Budget to the House.
Manuela Perteghella (Stratford-on-Avon) (LD)
While I welcome aspects of the Budget, including investment in the NHS and the review of carer’s allowance, I want to express my deep concern about the negative impact that this Budget will have on family farms and rural communities. Farmers in my constituency are already navigating immense financial challenges, from the rising cost of machinery and equipment to punishing weather patterns—repeated heatwaves and flooding—and now face increases in national insurance contributions and changes to agricultural property relief. For Derek Wilkinson, one of the hard-working farmers in my constituency, the increases to national insurance contributions could mean £490,000 in extra costs this year alone, reducing the amount of money available for investment in the farm.
With the changes to agricultural property relief, the Government risk imposing a family farm tax that could sound the death knell for countless small family-owned farms across the UK. Farming is a way of life, often passed on from generation to generation, but the next generation of farmers faces a tax bill just to be able to continue to farm. These changes are not only unfair, but deeply short-sighted: without support, family farms will increasingly fall into the hands of large multinational corporations, eroding our rural communities and threatening our domestic food security. For example, as one of my family farming constituents wrote to me today, land value is much higher than the earning capacity it holds. If my constituent were to sell part of their land or another asset to pay the tax bill, that would render their business unviable.
Farmers are not only custodians of the land: they are the backbone of our rural economy, yet under this Budget, they will be forced to make painful cuts or, in the worst cases, sell their land. The Government should focus on reversing tax cuts for the big banks and asking large corporations such as the social media giants to pay their fair share, rather than placing the burden on hard-working farmers and rural businesses. If we truly value our farmers, we must protect not only their ability to continue to farm and plan for succession, but Britain’s proud tradition of small, independent family farms—farms with roots stretching back generations. Farmed land is not merely a financial asset: it is a legacy of community, stewardship, sustainability and high standards of food production. We must stand by our rural communities and ensure family farms have the support they need to thrive for generations to come, so I urge the Government to review their policy so that family farms are not penalised.
Sarah Hall (Warrington South) (Lab/Co-op)
This is a Budget for change—a Budget that recognises the need to fix the foundations of our economy. For too long, millions of people across the country have been denied opportunities to work and build a better life. Too many children are growing up in poverty, harming their life chances. In Warrington South, there are now 1,000 more children in poverty than there were in 2015, and more than 68% of those children come from a home where a parent works. Sadly, in some parts of my constituency, child poverty rates are as high as 43%.
But poverty is not just a statistic: behind every number is a person. Poverty is a barrier that stands between potential and reality—between dreams and opportunity —and it is unacceptable that there are parents and carers in Warrington South who go hungry just to ensure their children can have an evening meal. Poverty affects every aspect of a person’s life, from their average life expectancy to their general health, their social wellbeing, what grades they can achieve at school and their ability to contribute to society. Across Warrington South and across the country, people were badly let down by the last Government, with their legacy of economic chaos, falling living standards and broken public services. I therefore welcome this Government’s plans to tackle these issues, driving down poverty and rebuilding our public services.
This is a Budget that protects the payslips of working people and will boost pay for over 3 million of the lowest-paid workers, with an increase to the minimum wage. It is a plan to get Britain working again, with trailblazing devolution agreements in work and skills, and more than £20 billion of additional funding for the NHS to cut waiting times, increase appointments and help to get people back to work—I look forward to meeting with the Health Secretary to discuss Warrington hospital. We will employ more teachers to support the next generation to achieve their full potential, and roll out breakfast clubs across the country, because no child should go to school hungry.
We are supporting people across Warrington South by preserving the pension triple lock and increasing pensions, reducing the cap on deductions from universal credit, increasing carer’s allowance and providing more than £1 billion in household support funding, allocating an additional £1.8 billion to expand childcare, and allocating additional funding to transform the apprenticeship levy into a growth and skills levy. In July, this country voted for change. We voted to treat people with dignity and respect, to lift up the vulnerable and to offer hope and opportunity for all. This Budget marks the first steps in a new direction. We will fix the foundations and rebuild our public services.
Sir Ashley Fox (Bridgwater) (Con)
This is an old Labour Budget. It increases spending by £70 billion a year, funded by an extra £40 billion in taxes and £30 billion in borrowing—I am sure the right hon. Member for Islington North (Jeremy Corbyn) is very proud of the Chancellor. This will lead to higher inflation, higher interest rates and higher national debt—not my words, but the view of the Office for Budget Responsibility.
If the British people had voted for such a Budget, I would not like it, but I would not complain. In its manifesto, the Labour party said it would increase spending by £11 billion. It said its proposals were fully costed and fully funded. That is the mandate on which it was elected. So where does the figure of £70 billion come from? Even if we believe the fairy story of the black hole, 11 plus 22 does not equal 70. When my party said that Labour’s plans would mean a tax rise worth £2,000 for every working family, the Chancellor called us liars. In fairness, we were wrong. The actual figure turns out to be £3,600. Ever since the election, the Chancellor has repeated the canard that her poor economic inheritance justifies these enormous tax and spending increases, but we know that Labour always intended to increase taxes and borrowing by far more than it admitted to the British public.
This is a Budget of broken promises that will hit my constituency hard. Bridgwater is home to many small and medium-sized businesses. Those SMEs are run by people who work hard, generate wealth and provide employment for others in their community. Their reward from Labour is a tax rise that will cost them £758 a year to employ someone earning the new minimum wage. That will reduce the number of people employed. It will reduce private investment.
Labour’s increase in inheritance tax is a spiteful attack on those with family businesses and farms. It is an attack on aspiration and enterprise. This Government have little understanding that even modest farms require a great deal of capital in the form of land, buildings and machinery. If this is taxed at 20% on the death of the owner, that will lead to family farms being broken up, which will damage our rural communities and undermine Britain’s food security. Labour’s policies will damage Britain and make us all the poorer.
Paul Waugh (Rochdale) (Lab/Co-op)
It is clear that a lot of Tories do not like this Budget, but that is not because it raises taxes—because after all, they themselves raised taxes to a post-war high. Why do they not like it? They do not like it because this Budget exposes their model of a low-pay, low-investment economy—a model that has totally failed. It failed to produce anything other than anaemic growth, dire productivity and broken public services. Among the few mea culpas uttered by those on the Opposition Benches in the last few days was the admission that the last Government had indeed “wasted huge amounts of money”, but just as damning are the huge amounts of talent and potential that they wasted. Under this Budget, people who want to work will get the work, the pay and the dignity they deserve.
The Tories let down parents who have been held back by a lack of affordable, costed childcare. They let down young people on the minimum wage—I am delighted that the minimum wage is now rising to £10 an hour for 18 to 20-year-olds. They let down people in work on universal credit, people struggling to feed their families. In Rochdale, the number of children in relative poverty rose from 45% in 2022 to a staggering 49% in 2023. Most damning of all, however, is the spiralling economic inactivity that the Conservatives presided over: a record 2.8 million people locked out of work due to long-term sickness. That is just one reason why the £22 billion this Budget directs to the NHS is desperately needed.
By grinding down our public services, the last Government piled cost upon cost for ordinary people. Think of the number of people forced to spend thousands of pounds going private for a hip or knee op, an operation they should have had for free on the NHS. Think of the thousands of pounds-worth of damage to cars caused by potholes on roads left to rot. Think of those forced to fork out for a taxi to get to work, to the shops or to hospital because their local bus has not turned up or the train has been cancelled. Think of all the experienced talent leaving the NHS, our schools and our police forces because their pay was cut in real terms and they face crippling staff shortages on a daily basis. Those are the people to whom we owe a debt of gratitude and investment.
The new Leader of the Opposition claimed yesterday that partygate had been “overblown”, yet the defining image of partygate was low-paid cleaners and security staff in No. 10 having to clean up the vomit, the broken bottles and the wine stains left behind by an entitled few. This Government now have to clean up the financial mess that the Tories have left behind and fix the public services that they broke.
John Milne (Horsham) (LD)
This Budget was strongly promoted as a blueprint for growth, so it has come as a considerable surprise to find that the growth forecast for the second half of this Parliament has actually gone down. Somewhere hiding here is a much better Budget trying to get out. The Government have tried to target what are supposed to be bastions of wealth and privilege, but caught in the crossfire are all kinds of people they never meant to touch. The winter fuel payment cut is supposed to fall on wealthy pensioners who do not really need the money, but it will also hit vulnerable people on a basic £11,500 state pension. VAT on private schooling is supposed to tax the Etons and Harrows of the world, but it also hits hundreds of small schools such as Pennthorpe preparatory school in my constituency, which plays a key role in providing for SEND children, and Christ’s Hospital, a remarkable school that takes 70% of its pupils from disadvantaged backgrounds. The changes in inheritance tax are aimed at wealthy farmers, but also threaten to wipe out a fantastic tradition of family farming that has literally shaped our countryside over generations.
Wherever we look, there is just too much collateral damage, but the biggest rise, the one that is doing all the heavy lifting, is the jump in employers’ national insurance. Surely it was not the Chancellor’s intention to undermine GP surgeries, hospices, independent care homes and growing businesses, yet that is exactly what is set to happen. I realise that the last Government left so many public services in crisis that it would be impossible to fix everything at once. They raided vital investment funds for day-to-day spending. They never understood that strong public services are just as essential to economic growth as business-friendly regulations. The last Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), behaved recklessly when he twice cut employee national insurance rates in the teeth of warnings from the International Monetary Fund. He dug the hole, and now the country has slid gently into it.
However, swinging from one ideological extreme to another is not the solution. This Budget feels suspiciously like Labour circa 2000, but at that time the country was in better shape, and the same plan will not work twice. This Budget is a serious attempt to deal with the crisis in public services, and I respect that, but the original vision has been lost in translation. This is a growth Budget, but without the growth. I urge the Chancellor to refocus around her original first principle: growth.
Kirith Entwistle (Bolton North East) (Lab)
This Budget sets out the first steps in the Work and Pensions Secretary’s plan to drive up opportunity and drive down poverty in every corner of the land. The choices made in this House have real and lasting consequences. The state of our country today is a direct result of the actions of the Conservative party over the past 14 years.
In my short time as an MP, I have received thousands of pieces of correspondence from constituents. A young man who recently wrote to me was thrilled to have passed his driving theory test, yet the system simply cannot accommodate him: the earliest appointment for a practical test is six months away. I have heard from a father who has been trying for two years to find an NHS dentist who will register his young daughter as a patient. I have had an email from a woman with severe mobility issues who is trapped in her front room while stuck on a waiting list for suitable social housing. Even if a house becomes available, she will have to compete with other residents because there simply are not enough affordable homes.
Those examples paint a picture of life in Britain after 14 years of Conservative failings. Now, under this Labour Government and with this new Budget, there is at last a glimpse of hope. I am delighted that the Budget will bring £25 billion into our NHS. Together with my fellow Bolton Members of Parliament, I am determined to fight for local dentist services and to secure development at Royal Bolton hospital, especially in the maternity unit, where RAAC has been detected.
I also highlight the £5 billion for house building and £3.4 billion for the warm homes plan. This investment will provide access to quality affordable housing for working people, a transformative change for families in my constituency. Following discussions with the Minister responsible for local growth and building safety, my hon. Friend the Member for Nottingham North and Kimberley (Alex Norris), I am incredibly proud to announce that we finally have sign-off for investment in Bolton town centre. After much uncertainty and confusion caused by the previous Government, this funding will be transformative for Bolton. I am pleased to see this Government taking towns like mine seriously.
Finally, we promised not to raise taxes on working people’s payslips, and we have kept that promise. I am pleased to share that over 8,700 people in Bolton North East will see a pay rise because of the increase in the minimum wage. Our choices matter, and this Budget is how we choose to deliver change. This is a Budget that invests in our future, revitalises our NHS and builds a fairer, more ambitious Britain.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. I plan to call the first Front-Bench spokesman at 9.40 pm. That means that many hon. Members will not get in, but there will be more Budget debate opportunities tomorrow and on Wednesday.
I will reduce the speaking limit to two minutes after the next speaker. I call Nick Timothy.
Nick Timothy (West Suffolk) (Con)
What a relief, Madam Deputy Speaker—thank you.
Before the election, Labour promised to increase taxes by £8.5 billion, spending by £9.5 billion and borrowing by £3.5 billion, but last week it raised taxes by £40 billion, spending by £76 billion and borrowing by £36 billion. There is no mandate whatever for this Budget. I agree with one claim made by the Chancellor: our economy does need investment to grow. The pity is that her Budget will fail to do it.
The Red Book says that the capital budget for the Department for Transport will be cut by 3.1% by 2025-26. The Chancellor says that she wants to crowd in private investment, but the OBR says that her Budget crowds it out. We know that much of the public investment will be wasted on the Energy Secretary’s schemes. The Chancellor is giving him borrowed billions to guarantee returns to investors for technologies that the market does not back. Because the Chancellor has changed the accounting rules—something that in opposition she said she would not do—we know that the cost of failed investments will be hidden and they will be presented as assets with fictional value.
This is where the Chancellor is leading us into dangerous territory. She has already made Government borrowing more expensive, and the bond markets are trickier than they were. British pension funds now own only about a quarter of outstanding gilts. Demand is falling as defined-benefit schemes have closed and existing schemes mature. The value of gilts needing to be sold each year is about £140 billion, which is 5% of GDP, and gilt yields have risen since the Budget. Even if interest rates are cut this week, they will stay higher for longer because of her decisions.
And for what? The Chancellor admits that growth in GDP per capita will average only 1.2% a year for the rest of the decade. She is taxing family farms. She is taxing businesses and GPs. She is taxing jobs, and businesses are already planning to reduce headcount. We know she will be back for more, because she will not cut departmental budgets as she forecasts from 2026-27.
We know that the priority is not growth. If it were, the Chancellor would not have announced such a relentlessly anti-business Budget. Instead, the priority is Labour’s own vested interests, because if public sector productivity is the goal, why hose money at the unions without linking pay to reform and why make it easier to strike? Where is the supply-side plan to reduce the cost of building infrastructure? There is no sign that the Government want to strip back the layers of regulation, when its beneficiaries are Labour-supporting vested interests such as environmental and administrative lawyers.
This Budget does not fail because of its dishonesty and absence of mandate, but because it fails in its own terms. It taxes and borrows and spends, and its own small print says that it will fail to improve growth, wages, public services and the public finances.
Sonia Kumar (Dudley) (Lab)
Every child deserves access to quality, tailored education, and this Budget will better equip schools and early years settings to deliver it. In Dudley, 14% of children and young people have SEND support, which is 2 percentage points higher than the average. The Government are investing £1 billion in SEND, which is crucial and a welcome step towards a more inclusive future for all children. SEND funding is not just investment in education; it is a foundation for a compassionate society where every child can thrive.
This Budget is not just about education; it is about other public services too, including the NHS. Our NHS is the bedrock of community wellbeing, and additional funding is critical to address the increasing demand from an ageing population and the lasting effects of the pandemic. At the Dudley Group NHS foundation trust, nearly 50,000 people are waiting to start treatment, with only 57% of those patients seen within 18 weeks, compared with the NHS target of 92%. Those delays place a heavy burden on families and individuals alike. By investing in primary care, mental health services and essential technological upgrades, we are equipping the NHS to reduce waiting times and improve service delivery, which will not only improve individuals’ lives, but reinforce the workforce and productivity.
Dudley College of Technology’s centre for advanced manufacturing and engineering technology is perfectly positioned to lead the way in bridging the skills gap. It will anchor the industrial strategy and train the next generation in high-skilled jobs, transforming Dudley into a hub where tradition meets innovation. Through these investments, Dudley can become a central player in the UK’s journey to sustainable growth, bolstering our economy and creating high-paid jobs that attract talent. After years of stagnant growth, it is time to push forward with this Budget.
Lisa Smart (Hazel Grove) (LD)
My constituents will have been listening to the Chancellor last week and hoping for some specifics on new money for our hospital. Stepping Hill remains the No. 1 concern raised with me in my inbox and on the doorstep. It has a reported repairs backlog of more than £130 million, which is a sad legacy of the last failed Government. We have seen buildings having to be knocked down because they were no longer safe. We have video footage of medics having to wade through flooded corridors because of burst pipes, and within the past fortnight a couple have shared photos with me of a light fitting that fell from the ceiling in the delivery suite during active labour, only minutes before the baby arrived. We were disappointed to get a letter from the Minister for Secondary Care, the hon. Member for Bristol South (Karin Smyth), in the past couple of weeks to say that the Government were unable to commit the funding needed to fix the problem. We have had some encouraging indications from the Chancellor about funding, but there is a lack of clarity on what this Budget means for Stepping Hill.
Our health and social care system is in crisis. We need to ensure that everyone can see a GP within seven days and that we support our hospices and fund dental services, and we should not subject GPs, hospices and dentists to a substantial tax rise, as the Budget has done. We need to prevent people from needing to go into hospital in the first place and enable them to leave when they are medically fit to do so, rather than have them waiting on a ward for far too long for a social care placement to be sorted for them. Real action on social care is essential, because without it, the NHS crisis will not end. I encourage the Government to urgently start cross-party talks to make social care sustainable.
As the Lib Dem home affairs spokesperson, I was hoping to hear more about proper community and neighbourhood policing. If I had had another couple of minutes, I would have made an incisive point about bus fares.
Phil Brickell (Bolton West) (Lab)
The Budget is a strong first step in delivering a better future for our country, for towns such as Westhoughton, Horwich, Blackrod and Bolton, and for restoring the trust that is so vital for our democratic system. After all, this is a Budget that will increase the national living wage—by £1,400 for a full-time worker—and invest £25.6 billion in the NHS so that my constituents can access health services when and where they need them instead of waiting hours on end, as well as cracking down on fraud, tax avoidance and waste so that every penny of taxpayers’ money is put to good use.
Fully funding the electrification of the Bolton to Wigan train line will make a tremendous difference to the rail network for those travelling to work and to see loved ones in my constituency. I commend the Government for committing to investing in public infrastructure across the Bolton borough.
Parents, teachers and school staff across my constituency have told me time and again that current funding for education is simply inadequate. That is why I am so pleased to see an extra £1 billion for special educational needs, the breakfast club budget tripled, and a £2.3 billion increase in the core schools budget. I particularly welcome the additional £1.4 billion allocated to rebuild 500 schools, noting that St Bernard’s Roman Catholic primary school in my constituency was found to contain aerated concrete.
The Conservative party increased taxes to their highest rates for working people in more than 70 years, so I welcome the raising of much-needed cash for public services by putting up taxes on unearned wealth, but that does not mean that the Budget is anti-business—not at all. As someone who worked for over a decade in the private sector, I know that a strong, business-friendly economy is needed to deliver prosperity for working people and decent public services. The Government are making tough choices, but fair choices. I commend them to the House.
Robbie Moore (Keighley and Ilkley) (Con)
I start by putting on the record my sheer admiration for a constituent of mine, Clive Smith, who was chair of the Haemophilia Society and has long fought for compensation following the infected blood scandal. This has been a long and painful journey for many, and I welcome the measures for victims in the Budget, building on the measures announced by the previous Administration.
Last night I spoke to a family-run business in my constituency that has been operating for over two decades. During the general election, the Labour party in Keighley and Ilkley knocked on my constituent’s door and promised that a Labour Government would back businesses like hers, and she believed it. Like many people across the country, she was reassured time and again that this so-called Government of service would not raise taxes on working people like her. As a result of last week’s Budget, my constituent now faces tax increases of over 130%. That complete hammer blow on a local family business in my constituency could force her to freeze wages, raise prices and even consider the business’s future, all to the detriment of those same working people that the Labour party in my constituency promised to represent.
That will be the reality not only for my constituent but for many other businesses right across the country. The Federation of Small Businesses, the Institute of Directors, the British Beer and Pub Association, Family Business UK, UKHospitality and Make UK—the list goes on—have all made it clear and warned businesses that the Budget will hit them hard. The independent Office for Budget Responsibility said that 76% of costs incurred by the rise in employers’ national insurance will be passed on to workers, and the Joseph Rowntree Foundation estimated that the average family business would be £770 worse off, yet we have Cabinet members constantly saying that everything is okay.
Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)
Like my hon. Friends, during the election campaign my team and I knocked on tens of thousands of doors and spoke to people struggling with the cost of living and to local residents genuinely worried about the future. They were worried about affording rent, about mortgage costs and about the path forward for their children, especially those with special educational needs and disabilities. We listened and promised change— and what a change Wednesday’s Budget is. It is a Budget that is fair and responsible. It is a Budget that fixes the foundations, stabilises our economy and paves the way to deliver our manifesto. It is a Budget with a clear route to protecting working people, including the 8,700 employees living in Wolverhampton North East who are paid at or below the national minimum wage.
Today, more than 33% of children in my constituency live in poverty. This Budget triples spending for breakfast clubs so that children can start the day fit to learn. A £500 million investment in council housing will start to address the housing crisis, which is critical for nearly 8,000 residents on the City of Wolverhampton council’s bidding list, where only 260 properties become available per month. Additionally, the state pension will rise by £470 for many of our 17,000 pensioners. Thanks to the triple lock, pensioners will be better off.
I am proud to support a Budget that puts workers and their families firmly first, and with no increase on taxes in workers’ payslips. This Government will deliver real change and fulfil our manifesto promise to rebuild our country.
Sarah Dyke (Glastonbury and Somerton) (LD)
This is a Budget of inequality. It seems that the Chancellor decided to deliver two Budgets: one for people in cities and another for rural communities such as Glastonbury and Somerton. Somerset is home to more farmers and food producers than anywhere else in the country. The Government’s choice to swap the agricultural property relief for the family farm tax will be disastrous for people living in my constituency and for our rural economy.
The announcement has left many farmers in my constituency reeling about the future viability of their family farms. Let us imagine what it must feel like to be potentially the one who closes the farm gate for the very last time, after generations of putting investment, innovation, love, blood, sweat and tears into a business. Well, I know how that feels, because my brother is in exactly that position. I have listened to my farming friends and neighbours, who are desperately anxious that this could be the final nail in the coffin for their cherished businesses.
The Labour party is not the natural party of farmers. I fear that its misunderstanding of agricultural communities has been reflected in its policies. APR plays a significant role in the economic viability and continuity of family farms. It existed to provide confidence to families who rely on their farm as their main income source, so that the next generation could continue to provide for both their families and the nation.
Some farmers who are nearing retirement, if they have the time, the money or the foresight, may be able to swallow some of the Government’s new family farm tax, with careful succession planning. I say some farmers, because many will not make it to retirement. It is their families that I am most worried about. Agriculture is the most dangerous industry in Britian. Farmers are 21 times more likely to have fatal accidents than those who are working in any other industry.
Mr Jonathan Brash (Hartlepool) (Lab)
This is a Budget of aspiration. Unlike for the past 14 years, it aligns itself with the aspirations of ordinary working people. For a Hartlepool constituent hoping to live in a safe, secure and thriving community, the £21 million regeneration programme in the Budget meets their aspirations. For the 4,000 Hartlepool residents living on the minimum wage, desperately in need of a pay rise, this Budget meets their aspirations. For the thousands of carers whose aspiration is to be able to care for their loved ones and still make ends meet, this Budget meets their aspirations.
For the parents, pupils and teachers at St Helen’s school—specifically name checked by the Chancellor in her speech—who aspire to have a building that is not crumbling around them, this Budget mees their aspirations. For a small business—the lifeblood of Hartlepool’s economy—the doubling of the employment allowance meets their aspirations. For a working family trying to get by, this Budget, with its expansion of free breakfast clubs, the extension of the household support fund and the freezing of fuel duty, meets their aspirations.
The Labour party is in the service of working people. This Budget aligns itself with those working people and their aspirations, in Hartlepool and across this country, and I commend it to the House.
Harriet Cross (Gordon and Buchan) (Con)
If I had time, I would focus on the increase in whisky duty, and the impact on our farmers and small businesses, but I will focus on the oil and gas sector, which is so crucial to the north-east of Scotland and my constituency.
As expected, the oil and gas sector was a target for tax in the Budget. I welcome that first year allowances were retained, but other measures were announced that, although well trailed, will severely damage the energy sector. Whether it is increasing the energy profits levy by 3%, which will lead to a 78% tax rate on our oil and gas businesses, extending the windfall tax to 2030 or removing investment allowances, each will compound the investment difficulties facing the sector, and will impact investment and future jobs. The changes to the windfall tax and allowances will see the Treasury receive 83% of cashflow from oil and gas, with companies taking home just 17%. That is the highest share of any Government compared to other comparable offshore mature basins globally.
The punitive taxation on our oil and gas sector puts current, real jobs and career opportunities in the north-east of Scotland at risk. Working people, who are the same people with the skills and expertise that we need for our energy transition, are not being protected by the Budget. The windfall tax and the removal of investment allowances also hit homegrown UK-based companies the hardest—the ones that have emerged and grown in north-east Scotland, and the ones that usually have an almost exclusively UK-based workforce. All their profits are subject to the windfall tax because their investments are all in the North sea. That is unlike multinationals, which can buffer the worst impacts of the windfall taxes with their overseas investments, so the changes are mostly hurting our homegrown businesses, which we should all want to protect the most.
Apsana Begum (Poplar and Limehouse) (Ind)
The Budget has delivered a long-overdue increase in the living wage, welcome measures to tackle tax avoidance and money for public services. However, the reality is that there are widespread fears that the investment is not on the scale needed. And that is before we consider the further 2% cuts on Departments now being imposed. We need a complete re-set. Introducing a wealth tax could have been one way of beginning to deliver.
I have already had lots of representations from constituents raising concerns about today’s topic of social security—for example, the choice to cut social security in real terms, given that the uplift does not match forecasted inflation; the continuation of the Conservatives’ freeze on personal tax allowance to 2028; and the reintroduction of the freeze on local housing allowance. The sad reality is that millions will still be left unable to cover essentials.
In east London, we know this very well. We have some of the highest rates of child poverty in the entire country. Last year, the safer neighbourhood team in my borough found that the most shoplifted item was Calpol. That is an utterly devastating statistic, reflecting heartbreaking desperation. In that light, I ask the Government to rethink the measures to scrap immunity for low-value shoplifting. The Budget was an opportunity to deliver the change that is so needed, but disappointingly punitive measures, such as the two-child limit, the benefit cap and the sanctions regime remain.
In the short time I have remaining, I want to say something about disability benefits. The commitment to delivering the previously planned savings is more than alarming. The truth is that the way disabled people have been treated by the Department for Work and Pensions since 2010 will go down in history as a terrible and inexcusable crime. There is extensive evidence about the serious harm caused to people subjected to dehumanising assessments and sanctions, including reports of deaths directly related to the social security regime. We need a long-term overhaul of the social security system. It is not fit for purpose. I urge the Government to really look at that in detail going forward.
Max Wilkinson (Cheltenham) (LD)
Thank you, Madam Deputy Speaker, for saving the best till last, as Cheltenham is always.
Because I am a liberal of generous spirit, I will begin by thanking Ministers. I thank them for listening to the many appeals I have made since my election that they study the case study for investment in Cheltenham’s cyber-security industry. After a lot of talk and being led a merry dance by the previous Government, we finally have guaranteed funding of £20 million for the Golden Valley development. My wholehearted thanks go to Ministers. On a broader point about cyber-security, I look forward to hearing more about the future cyber resilience funding in due course. Ministers know that the growth in our economy will stick much more easily if it is underpinned by cyber-security.
Alongside being a cyber-security hub, my constituency also benefits from a thriving hospitality industry. Sadly—and this is not such good news for Ministers—many of those businesses are now fearing the impact of changes to national insurance. They fear becoming a vessel for money to make its way from customers to the Exchequer, with little left over to pay their own wages.
The £22 billion of investment for the NHS is to be welcomed, and I hope that in Cheltenham it will ensure the reopening of our birth unit and a reduction in A&E waiting times at Cheltenham General and Gloucestershire Royal hospitals. Representatives of the care sector have been in touch with me over the weekend: local authority fees, they tell me, are expected to rise by less than 5% —below the minimum wage increase, and that is before national insurance rises are accounted for. One chief executive told me that
“providers will close down and reduce residential and nursing capacity”
at a time when we need exactly the opposite to happen.
There are also concerns from the primary care sector. I heard this weekend from Dr Bob Hodges, the chair of the Gloucestershire local medical committee, who said that the most likely result of the Budget changes to national insurance was that the money to fund increased national insurance costs was likely to come
“straight out of the pot from which GPs are paid”.
He said that risked burning good will, with knock-on impacts on morale and working practices, and he feared that over time it would reduce the number of working GPs.
I started with thanks. Let me end by urging Ministers to reconsider some of those points.
Mims Davies (East Grinstead and Uckfield) (Con)
It is a privilege to close this debate on behalf of His Majesty’s loyal Opposition. It has been about protecting working people. Given that many Labour Members again forgot to mention the pandemic and the war on our continent, I have had to meet some of their remarks with a degree of incredulity.
This Budget consists purely of broken promises, showing that this new Government have transparently left their integrity in tatters. As we heard from my hon. Friend the Member for Keighley and Ilkley (Robbie Moore), many people feel that they have been hoodwinked by Labour—and people do not forget. We can see what breaking promises does; it decimated the Liberal Democrats some time ago, although unfortunately, like ragwort, the comeback kids are back with a bang.
Let me turn to some of what has been said today. The Secretary of State for Work and Pensions spoke about new support for carers, and I think we all very much welcome that, but where is the update on the disability action plan? If the Minister for Social Security and Disability, the right hon. Member for East Ham (Sir Stephen Timms), were still sitting on the Opposition Front Bench, he would be asking me the same thing. Further updates on the disability strategy would be very welcome.
I congratulate the Members who made their maiden speeches today. The hon. Member for Huddersfield (Harpreet Uppal) spoke about the importance of young people and the importance of the upgrades to connectivity—many of us with rural constituencies would agree with what she said. The hon. Member for North Somerset (Sadik Al-Hassan) spoke about the impact on pharmacies and the fact that part of his constituency used to be an island, but he also said that the constituency contained the greatest National Trust site in the country. Absolutely not, with Standen, Nymans and Sheffield Park in my own constituency. I also congratulate, and say “Croeso” to, the new hon. Member for Wrexham (Andrew Ranger), who talked about a very famous football club and the work that his predecessor Sarah Atherton had done on veterans, which I think was very praiseworthy.
So much more was said today by Members on both sides of the House. My right hon. Friend the Member for Salisbury (John Glen) talked about his freedom, but also about the concern about a “sugar rush” contained in the Budget. My hon. Friend the Member for Brigg and Immingham (Martin Vickers) spoke about the importance of the fishing industry and the renewable energy sector, and asked what was the reality when it came to protecting working people. My hon. Friend the Member for Mid Leicestershire (Mr Bedford) talked about the concern that was felt about the taxing of education, saying that the Budget was bad for small and medium-sized businesses and that it was about the politics of envy. It seems that Labour Members do not like it described as a socialist Budget, which I find concerning, as the Prime Minister has confessed that he is a socialist. It is a rather odd rejection.
The hon. Member for Paisley and Renfrewshire South (Johanna Baxter) made a very loyal speech and rightly welcomed new money for Scotland. She championed redistribution, but if we tax our way to diminished growth, there is nothing to share or invest. We should all be reminded of that.
My hon. Friend the Member for West Suffolk (Nick Timothy) said that there is no mandate for this Budget. It is wasting money on the energy sector, fiddling the accounting figures and heading into dangerous territory.
I have given some responses to what we have heard in the Chamber. Despite many loyal speeches from Labour Members, even the Chancellor and the Chief Secretary to Treasury cannot deny that this is a Budget of broken promises. Frankly, it is a work of pure fiction, as some have described it. It builds on a fully costed “shamfesto”, because there is no chance of actually delivering it.
Those on the Treasury Bench should consider the wall-to-wall evidence from the Institute for Fiscal Studies, the OBR and the Joseph Rowntree Foundation, all of which agree that working people will pay the price of this Budget. The Joseph Rowntree Foundation estimates that the average family will be £770 worse off in real terms by October 2029—frankly, that is nothing to crow about. Wages will be stagnant or indeed reduced, jobs will be lost, pensioners have been betrayed, and young people have been left in the lurch. Food prices will stay high and the energy sector will be wrecked, as my hon. Friend the Member for Gordon and Buchan (Harriet Cross) said.
There is a depressing future for our country, because this Budget does nothing for working people. It is a Budget that attacks the countryside and pits the public sector versus the private sector, all while leaving interest rates higher for longer. In fact, the pub group Fuller’s has today warned the Business Secretary that companies in the sector now face an avalanche of costs. Hospitality is quaking, and it is a very concerning Budget. In fact, the Chancellor herself admitted that Labour’s job tax, as she has called it, will have an impact on wage growth. That is backed up by the OBR, which concludes that 76% of the total cost will be felt by working people. Real household disposable income will be 1.25% lower by 2029. Disgracefully, that will affect part-time workers, 6 million of whom are women.
Let us look at the childcare sector, which is vital for women. It provides employment but, crucially, also enables women to go back out to work. Some nurseries are saying that costs will rise by up to £60,000 for their businesses, adding up to 10% to every childcare bill sent out.
In my constituency, I have Faversham House and the Prime Service Group, which I met on Friday. People had their heads in their hands. Family businesses have been in touch in their droves. I wonder whether Labour Members have ever opened their emails or, indeed, gone back to talk to people on their high streets. The Budget will affect key sectors and, crucially, business confidence.
As we head into the next few days of this Budget debate, Dr Brien of the Social Security Advisory Committee has set out his concerns about the impact of the changes to the winter fuel payment, not least the processing of pension credit claims. Questions remain unanswered by the Secretary of State. Welfare reform has been left open-ended, creating uncertainty for millions of claimants who are waiting to hear an update on the Buckland review, autistic employment, and the Lilac review into SMEs and supporting entrepreneurship among disabled people and those with health conditions.
This Budget takes us back to the ’70s. The reality is that we will all pay the price for Labour’s 1970s-style Budget. The Government have claimed that they have taken the difficult decisions. No, they have not. They have left those decisions to their own constituents—those who are working out staff redundancies, the impact on their business and whether they can take on new staff members. Despite the loyal speeches, this is not a Budget for protecting working people; it is a desperately sad, destabilising set of Budget resolutions, record spending, record debt and a record tax burden, all for very little growth. I urge the Government to think again and to listen to all of their and our constituents.
The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)
I am proud that last week we saw the first Labour Budget in almost 15 years delivered for the first time by a woman, my right hon. Friend the Chancellor. This was recognised by my hon. Friends the Members for Monmouthshire (Catherine Fookes), for Basingstoke (Luke Murphy) and for Paisley and Renfrewshire South (Johanna Baxter), and indeed by Members across the House including the hon. Members for South West Hertfordshire (Mr Mohindra) and for South Devon (Caroline Voaden).
This is a Budget for jobs, opportunities, investment and economic growth that drives down poverty and protects the payslips of working people. It is a Budget that invests in skills and our economic foundation and delivers the change that we promised during the election. Crucially, it is a Budget that restores economic stability and begins the vital work needed to rebuild our public services, which were left in a state of ruin by the Conservatives. The NHS, schools, roads, affordable housing: that is the difference that a Labour Government make.
This was a lively debate with many contributions from across the House and I want to congratulate all hon. Members, even if I did not agree with them all, on keeping to strict time limits of two or three minutes. I particularly welcome my three hon. Friends who gave excellent maiden speeches. My hon. Friend the Member for Huddersfield (Harpreet Uppal) spoke movingly and proudly about her late mum’s role as a care worker, and spoke proudly about the industrial and sporting heritage of her constituency. My hon. Friend the Member for North Somerset (Sadik Al-Hassan) spoke proudly of his constituency being home to the first mass production of penicillin. His experience as a pharmacist will be very valuable to this House. My hon. Friend the Member for Wrexham (Andrew Ranger) explained that Wrexham association football club is the third oldest in the world. That was news to me, and I was glad to hear about that. He also said that his constituency is home to the world’s oldest lager brewery and to other thriving breweries and major manufacturing companies. I would like to thank my hon. Friends for those maiden speeches.
Many hon. Friends and Members across the House welcomed the Government’s allocation of funding to two vital compensation schemes: those for the contaminated blood scandal and the Horizon Post Office scandal. The previous Government talked about those schemes but did not allocate any money for them.
I know that many hon. and right hon. Members are concerned about the changes to agricultural property relief, so I want to say something about these changes and in particular to answer the hon. Member for Mid Buckinghamshire (Greg Smith), one of my neighbours. A couple who jointly own a farm will be able to pass on land and property valued up to £3 million to a child or a grandchild tax-free. That is made up of £1 million when they combine their standard £500,000 tax-free allowances and an additional £1 million tax-free allowance each for agricultural property inheritance. I hope that gives some comfort to hon. Members across the House. At least the former Chancellor but one, Kwasi Kwarteng, was honest about the track record of the previous Government when he said last week:
“We Tories have to be honest—Rachel Reeves is dealing with our mess”.
This is a once-in-a-generation Budget that turns the page on Tory austerity and economic chaos. In addition to the £20 billion black hole in our public finances, with the last Government spending Treasury reserves three times over, there is also a record number of people relying on food banks, 700,000 more children growing up poor, the biggest increase in economic inactivity in the UK for 40 years, millions on NHS waiting lists, crumbling schools and overflowing prisons. We are determined to fix these problems.
Many hon. Friends mentioned the increase to the national living wage that we have introduced, by 6.7% to £12.21 per hour, which will be a pay rise for 3.5 million people across the country. We are also moving towards a single national minimum wage for all eligible adults, starting with the biggest-ever increase to the rate of pay for 18 to 20-year-olds, which will help nearly 200,000 young people—that is a difference that a Labour Government will make. In addition, our youth guarantee will help young people to fulfil their potential and follow their dreams.
Sir John Hayes
I am grateful to the hon. Lady for giving way, as she does not have much time. As an economist, she knows that it is not what we spend but what we get for it—it is value for money that counts. What is she specifically doing about productivity, which is a perennial problem in many countries, including our own?
Emma Reynolds
First, we want to escape the doom loop of low growth and low productivity that we inherited from the previous Conservative Government. Each Department will have to meet a 2% productivity challenge. This is not a cut to departmental spending but a Treasury requirement to ensure better productivity across the civil service.
Our Get Britain Working White Paper, which we will announce in the coming weeks, will set out reforms to our jobcentres and will empower local leaders to tackle economic inactivity in their towns and cities. This is backed by £240 million of new funding for 16 trailblazer projects. It is because we recognise that many working people face extra barriers to taking up work or increasing their hours that the Chancellor announced the biggest-ever rise in the earnings limit for carer’s allowance to help carers balance work and caring responsibilities. That is a difference that a Labour Government will make.
We will also tackle poverty and help those most in need, which is why this Budget extends the household support fund in England and discretionary housing payments in England and Wales. After conversations with the Trussell Trust, the Joseph Rowntree Foundation and many others, we are introducing our new fair repayment rate, which will reduce the cap on deductions from universal credit from 25% to 15% of the standard allowance. This will help 700,000 of the poorest households with children. And because people who have worked hard and saved all their lives deserve security and dignity, we are maintaining the triple lock, which will see state pension rises of around £1,700 over the course of this Parliament.
This is the first Labour Budget in almost 15 years. We shun the choices of the last Conservative Government. They chose low growth, low productivity and decline in our public services. We choose investment and growth, restoring economic stability, fixing the foundations, rebuilding the NHS and our other public services, pushing forward with a decade of national renewal, recruiting more teachers, bringing down NHS waiting times, building more affordable homes and, yes, filling more potholes.
This is a Budget that makes a choice about rebuilding our public services, rebuilding Britain and investing in vital infrastructure. This is a Budget that invests in the future of our country, and I commend it to the House.
Ordered, That the debate be now adjourned.—(Anna Turley.)
Debate to be resumed tomorrow.
Business without Debate
Newport Chartist Commemorations: Strengthening Democracy
(1 day, 18 hours ago)
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Jessica Morden (Newport East) (Lab)
I am back, Madam Deputy Speaker. I am grateful to Mr Speaker and to you, Madam Deputy Speaker, for having granted this debate on exactly the night when the Newport rising took place 185 years ago. It was a night on which thousands of working people from across the south Wales valleys marched on the Westgate hotel, in my constituency, in the fight for the vote and the right of ordinary people to have their voices heard. Earlier this evening, at Newport cathedral, the annual commemoration took place at the unmarked graves of ten of more than 20 chartists who lost their lives that night. I am grateful to my friend and parliamentary neighbour, my hon. Friend the Member for Newport West and Islwyn (Ruth Jones), for covering the other end of the M4 by being there tonight and having said some lovely things, I hear.
The Newport rising was the last armed rebellion against authority in Britain. We are proud of our Chartists and proud of the role they played in shaping our modern democracy. I have called the debate tonight to honour the sacrifice of our local heroes, the Gwent Chartists, who remind us that the freedoms and democratic rights we enjoy today were secured by ordinary men and women. It comes on the eve of the United States’ election, when democracy feels fragile around the world and faith in politics in this country is low. It is incumbent on our new Labour Government to work to restore faith in politics through the way we act and in the reforms we propose.
Jim Shannon (Strangford) (DUP)
I commend the hon. Lady for securing the debate. It is an important occasion, as she has expressed. As a proud working-class man, I am thankful for the members of the Newport Chartists, who did what good men do to secure democracy; they put it all on the line. Does the hon. Lady agree that their deaths brought forward the battle for a vote for all, which we often take for granted today? Does she agree that we need to educate our children about the battles for the chance to vote in order to instil the mentality that voting is a privilege, fought for with blood, sweat and tears?
Jessica Morden
I thank the hon. Gentleman for his intervention—I could not have put it better myself. I thank all the hon. Members who have turned up for the debate this evening. It seems to be quite popular for an Adjournment debate at 10 pm on a Monday night, and for that I am most grateful.
The Chartist movement of the 1830s and 1840s was the first mass working-class movement and was born, in part, out of unhappiness with the Great Reform Act 1832. Passed on the third time of asking by the pro-reform Whig Government, the Act was limited in its ambition to extend the franchise, and ultimately left most working-class people still without the right to vote. The grassroots campaign behind the push for reform in the early 1830s included organised working and middle-class groups, who advocated for widening the right to vote to all tax-paying men and more. However, the campaign disbanded following the passage of the disappointing Great Reform Act. Those undelivered demands for reform would go on to form part of the “People’s Charter”, from which Chartism derives its name.
Max Wilkinson (Cheltenham) (LD)
Does the hon. Lady agree with me that if the “People’s Charter” was drawn up today, it would include having proportional voting systems to elect Members of this House?
Jessica Morden
I will not be drawn on that particular question, but I reflect on the fact that we have a partly proportional system in Wales.
Chartism was a movement based not on ideologies or theories, but on the sense of disconnect between the lives and unaddressed struggles of working people, and the lives of those purporting to represent them. The Chartists’ demands were simple: that all men—men—over 21 had the vote; that voting should take place by secret ballot; that constituencies should be of equal size; that Members of Parliament should be paid; that the property qualification for becoming a Member of Parliament should be abolished; and that parliamentary elections be held every year—gulp! The Chartists put together a petition to Parliament with those demands in June 1839. The petition travelled to organised branches and meetings across the country, gathering 1,280,000 signatures. It ended up measuring almost 3 miles.
Laurence Turner (Birmingham Northfield) (Lab)
I am grateful to my hon. Friend for securing this debate. With her permission, I would also like to commemorate for the record the events in Birmingham in 1839, when reaction and the gathering radicalism that first found expression in the Birmingham Political Union—which did so much to shape the “People’s Charter”—combined and ignited into the Bull Ring riots, which led to soldiers patrolling the streets as far south as my constituency, such was the fear that the contagion would spread. One hundred and eight-five years later, when people are still protesting and dying for their political rights from Ukraine to Iran, does she agree that the spirit that motivated Chartism remains living, immediate and essential?
Jessica Morden
I am so glad that my hon. Friend managed to mention the Birmingham Political Union; it was in my original draft, but I knew that with interventions I would not have time to mention it. I agree wholeheartedly with his points.
Despite all the Chartists’ efforts, the first petition was rejected by 235 votes to 46, leading to fury and unrest across the country, including in Newport. In November of that year, John Frost, a draper, town councillor, magistrate and briefly the mayor of Newport, led thousands of Chartist sympathisers from across the south Wales valleys on a march down to Newport. The Chartists marched in three columns from three directions—one from Blackwood, one from Nantyglo and another from Pontypool—with a plan to take the town at dawn. Scuppered by heavy rain, a planned meeting in Rogerstone was delayed, and Jones and his men from Pontypool never arrived. As a result, the final march into Newport happened in daylight hours, with the men arriving at around 9.30 am.
As actor Julian Lewis Jones told Newport marchers on Saturday night:
“Uncertain of what awaited them. They faced muskets and bayonets, the cold sting of the night, and the looming threat of death. Even in the face of all this, they marched. They marched because they believed in something greater than themselves: the right of every person to be heard, the right to shape their own destiny...the right to vote. Stories of their journey are few and far between, but we know it was wet and cold. Their boots squelched on the waterlogged ground, their rain-soaked coats clinging to weary shoulders. Each of these men were ordinary people: miners, farmers, artisans, labourers—driven by their cause.”
Emily Darlington (Milton Keynes Central) (Lab)
Does my hon. Friend agree that we should thank and be grateful to academic historians and lay historians who have kept the Chartist history alive, like my uncle, Les James?
Jessica Morden
I absolutely agree with my hon. Friend in commending Les James; I spent much of Saturday afternoon with Chartist historians, and it is great that she mentions Les.
On the way down through the Gwent valleys and to the town centre, some of the Chartists were arrested and detained at the Westgate hotel in the centre of Newport. This spurred on Chartists from the nearby industrial towns, many of whom were armed, with the intent of freeing their fellow Chartists.
Catherine Fookes (Monmouthshire) (Lab)
Not many Members in this House may know that at the time of the Newport rising, Newport was in fact part of Monmouthshire, so my hon. Friend and I have very strong links between our constituencies. Does she agree that this Labour Government are continuing the great work of strengthening our democracy by giving the vote to 16 and 17-year-olds as the Welsh Labour Government have already done in Wales?
Jessica Morden
I thank my lovely hon. Friend and constituency next-door neighbour; I am coming to that point, and I absolutely agree with her.
When the Chartists arrived at the Westgate, a firefight ensued between the marchers and soldiers deployed to protect the hotel. No one knows who fired the first shot. More than 20 Chartists were shot and killed with dozens more injured, and 10 of the bodies lie to this day in unmarked graves around the site of Newport cathedral. The three leaders of the Newport rising—John Frost, William Jones and Zephaniah Williams—were arrested, tried for treason, and sentenced to death. They had intended to inspire a domino effect of uprisings across the country, and they were regarded as working-class heroes and martyrs.
Following outcry from the public, and even from the Lord Chief Justice, the three Chartist leaders’ death sentences were later commuted to transportation for life to Australia. Frost would eventually be unconditionally pardoned, receiving a triumphant welcome back to Newport on his return. He continued to campaign for democratic reform until his death in 1877.
Eventually, five of the six demands set out in the “People’s Charter” were delivered. I am sure that parliamentary colleagues and our constituents alike will be pleased, following our experience of facing four general elections in nine years, that the sixth demand—the prospect of annual elections—was not carried forward.
Jessica Morden
I ought to make some progress so that the Minister has time to speak.
We are proud of our Chartist heritage in Newport. It is always moving to join political colleagues from across Newport, and constituents of all ages and backgrounds, for the annual commemoration. This year was no different. After a day of events in Newport’s city centre last Saturday, and the annual Chartist convention at the cathedral, which I had the pleasure of chairing in the afternoon, more than 1,500 people joined the Newport rising march, flaming torches held high—they are quite scary—following in the footsteps of the Chartists, from Belle Vue Park down Stow Hill to the Westgate, before heading to a night of Chartist-themed performances from Reality Theatre at The Cab and a night of live music at the Corn Exchange with Adwaith.
The Newport rising festival is a real highlight of Newport’s calendar. Huge thanks to the Newport rising group, particularly David Daniel, Melinda Drowley and the Our Chartist Heritage charity for their work in putting the programme together. It seems to grow every year, and the group has a permanent hub now in our city centre, but the Chartist heritage belongs not just to Newport. There is a mini-exhibition of Chartist history in the corridor on the way to the Public Gallery, which includes a photograph of John Frost taken shortly after his return to the UK from Australia after having been pardoned. I echo the call by the late, great Paul Flynn, the former Member for Newport West, who regularly bemoaned the lack of representation of working-class and progressive movements and their history in this Palace. In a business question in 2011, he said:
“Certain elements in our constitution are well represented in the Palace of Westminster with statues, portraits and stained-glass windows, but there is almost a total absence of memorials to progressive groups, such as the Chartists…that did so much to shape all that is best in our modern democracy.”—[Official Report, 14 July 2011; Vol. 531, c. 496.]
Perhaps we might take the opportunity of the 185th anniversary of the Newport rising to ensure that lesser-celebrated parts of our heritage are reflected among the many wonders across the parliamentary estate.
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
I thank the hon. Member for bringing forward tonight’s debate so that we can pay a special tribute to the role that Wales has played in forming our democracy over the years, but is she not concerned that the proposed new system for elections in Wales, whereby one vote will return six Senedd Members, threatens to undermine the spirit of democracy as the Chartists understood it?
Jessica Morden
I am sure that it does not. I will not be drawn into talking about the Welsh elections in tonight’s debate, but it is a system that has been devised by the Welsh Senedd and voted on, and I am sure that it is one in which people will be able to participate fully when the elections come in 2026.
The message of the Chartists is more important than ever, especially today, on the eve of the US elections and amid global turmoil. We have witnessed Russia’s invasion of Ukraine, electoral uncertainty in Moldova, increasing threats to Taiwan from China, and more. Threats to democracy globally are manifesting in different ways but all combining to make people feel that politics and democracy cannot fix anything, yet having our say, from voting to engaging with our politicians, taking part in public consultations or demonstrating, matters and makes a difference. We live in a world where more people than at any time in history are able to have a say in who makes the rules. As all of us who sit in this place say, every vote counts and can make a difference. I know that the Foreign Secretary and his fellow Ministers will hold to account, and take action against, those who seek to cynically undermine and degrade the integrity of democracies around the world, including our own, and support those fighting to protect them.
Closer to home, 185 years after the Newport rising, working people used those same hard-won rights this summer to return a majority of Labour MPs in each nation and region of Great Britain, delivering a Government determined to change our country. For the first time in 14 years, I am proud to be part of a Labour Government in Westminster who will, over the course of the next five years, deliver on our manifesto promises to double down on the Chartist legacy, to strengthen our democracy in the interests of working people, and to restore public trust in politics as a force for good.
Jim Shannon
The hon. Lady epitomises the very thing that the Newport Chartists stood for, and I congratulate her on that. What she refers to affected everywhere in the United Kingdom. The people of Northern Ireland realised that they should also try to achieve working-class rights, so what people did in Newport meant the same for us in Northern Ireland.
Jessica Morden
I agree, and I thank the hon. Member for making that point.
This Government will respond to the struggles of working people, and will not duck the necessary but difficult decisions for fear of being unpopular. We will follow the example set by our Welsh Labour Government by extending the right to vote in all elections to 16 and 17-year-olds. If someone can leave school, work full time and join the Army, they can be trusted to have their say in the country’s future. This Government have already introduced the House of Lords (Hereditary Peers) Bill to remove hereditary peers, because power should not be the inherent right of a select and aristocratic few. This Government will establish an independent ethics and integrity commission, strengthen the role of the independent adviser on ministerial standards, update the ministerial code, modernise and reform House of Commons procedures, ban MPs’ second jobs, address the inconsistencies in voter ID rules that prevent people from voting, and introduce an elections Bill.
I am proud that the previous Labour Government brought in devolution to Wales and Scotland. It is significant that, for the first time in 14 years, we have a UK Prime Minister committed not to the failed Tory experiment of muscular Unionism, but to returning powers to those with skin in the game, so that we are more directly answerable and intimately connected to local people and their needs, and to a Labour Government in Westminster working with, rather than against, our Welsh Labour Government to deliver for the people of Wales. That is a big change. If the Chartists taught us anything, it is that Westminster does not always know best.
I warmly welcome the private Member’s Bill of my hon. Friend the Member for Edinburgh North and Leith (Tracy Gilbert), which would bring consistency in voter registration by enabling the Welsh and Scottish Governments to allow online applications for proxy and postal votes in local elections. It would be good if the Minister gave more detail on the Government’s plan to strengthen the integrity of elections and encourage wider participation.
Our constituents would expect no less from the United Kingdom than for national and regional leaders to work together to change our country and build a better future. The establishment of the Council of the Nations and Regions is a welcome step to ensure that, while we are delivering on our commitments to push power out of Westminster, we do not repeat the mistakes of “devolve and forget”. Can the Minister reassure me that that new engagement framework will be regular and reliable and will not fade with time?
On this 185th anniversary of the Newport rising, let us remember the legacy that those involved in it left us: a vote, a voice and, more than that, a vision—a vision for the future that challenges us to protect those freedoms and use them powerfully to confront injustice, build unity and keep hope alive for all. Let us ensure that the new Labour Government carry forward the 19th century Gwent Chartists’ legacy in delivering those important reforms to make our democracy fit for the 21st century. As the Member for Newport East, I will be proud to support them.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rushanara Ali)
I thank my hon. Friend the Member for Newport East (Jessica Morden) for securing this important debate and for her work to promote the democratic rights of both her constituents and the wider public.
As my hon. Friend said, on this day in 1839, 185 years ago, protests erupted in Newport when up to 5,000 Chartists marched on the town to demand fair voting rights. The Chartist movement emerged in 1836 among working-class men who felt disappointed by the Reform Act 1832, which had not extended the vote beyond those who owned property. It quickly spread around the country among men who felt disenfranchised by the democratic systems of the time and wanted an equal vote to those who owned property. Here in London, men were inspired to join the movement.
As my hon. Friend pointed out, the Newport rising ended tragically, with up to 24 Chartists killed and over 50 more wounded. Today, we remember the efforts of the Chartists to advance and widen participation in our democracy, as do the people of Newport, who celebrate in the Newport rising festival every year. While the movement was strongest between 1838 and 1848, its legacy and ambitions were lasting: further reforms were passed in 1867 and 1884, and by 1918 five of the Chartists’ six demands were achieved. We owe a huge debt of gratitude to the Chartists, as well as those who followed in their footsteps, for the work they did to build our democratic system, which is admired around the world. As my hon. Friend eloquently pointed out, the south Wales Chartists were renowned for their efforts during the Newport rising, highlighting the need for long-awaited change.
Max Wilkinson
Does the Minister agree that one of the long-awaited changes that is needed is reform to the upper House here in Parliament, and that we are long overdue a fully elected Chamber?
Rushanara Ali
The hon. Member will know that the last Labour Government were the Government who began reform in the Lords, and we set out our plans in our manifesto.
The Chartists fought tirelessly for all men over 21 to have the vote, irrespective of status, something that was not supported by any legislation at the time. It is impossible to speak of these achievements without also recognising the efforts of the suffragette movement. The suffragettes have been an inspiration to women only in the UK but across the world. We would not be here without their courage and sacrifice. They fought tirelessly for women’s right to vote and participate in our democracy.
The right to democratic participation is a defining aspect of our great nation. Just as the Chartists and the suffragette movement helped to secure democracy and democratic freedoms at home, so too has Britain played a vital role in promoting those freedoms abroad, particularly where they have been under threat. During the second world war, we stood by our allies in Europe who were threatened by authoritarianism, and today—as has been mentioned—we are supporting our allies in Ukraine who are fighting to protect their own democracy and freedom. We have advocated for building democratic institutions that are inclusive, effective and enduring. I know from my own family’s experience of the birth of Bangladesh the important role that this Parliament has played in speaking out for the democratic freedoms of people in other countries, such as in my country of birth in the 1971 war of independence.
Rushanara Ali
I am afraid I have to conclude in just a few minutes—apologies.
This Government will continue to promote our cherished democratic principles and values. We will enfranchise those who are aged 16 and 17, as set out in our manifesto. The Chartist movement reminds us of the importance of giving a voice to those who do not have one. That is why we are expanding the electoral franchise to enable young people to participate in our vibrant democracy.
That is not all we want to do: our manifesto commitments include improving voter registration rates and protecting the security of our democracy. We are committed to ensuring that all who are entitled to vote are able to do so. That means making sure that all legitimate, secure forms of identification are accepted at polling stations. To that end, we have recently brought forward legislation to add the armed forces veterans card to the list of accepted forms of identification, further supporting our veterans to successfully participate in our democracy.
Rushanara Ali
I would like to make some more progress, because there is quite a lot to cover.
In addition to those aims, our ongoing review of the 2024 general election will help to establish what went well and any further improvements that need to be made. Overall, this Government’s priorities are centred on the commitment to strengthen the integrity of elections and encourage wider participation in the democratic process, ensuring that every eligible voter can participate in our democracy with confidence.
I thank my hon. Friend the Member for Newport East for securing this important debate and all Members who have contributed. Today we look back at the significance of the Chartists and the events in Newport on 4 November 1839 in shaping our democracy. At a time when, as my hon. Friend pointed out, democracies face huge pressures around the world, we draw inspiration from the Chartists, and from the Newport rising, for their fight for our democratic freedoms.
Richard Foord
I am grateful to the Minister for giving way. I genuinely congratulate the Government on some of the progressive changes they are making to extend the franchise. As Edmund Burke said in the 18th century, to conserve, we have to reform. Indeed, it is probably fair to say that some Conservative Members would have done well to be here this evening to hear about some of the progressive reforms that this Government are making.
Rushanara Ali
I am grateful to the hon. Member for making that point. He is absolutely right. It is quite striking to not see a single Conservative Member here, although I am encouraged by the attendance of other hon. Members and my hon. Friends this late into the evening.
I pay tribute to Members of Parliament for the work they do to talk to young people in their constituencies. Most Fridays, we visit schools in our constituencies and talk to them about this House and our democratic institutions. That is really important. School councils and young mayors play a powerful role in engaging citizens in our democracy. The role of citizenship education, which the last Labour Government introduced, in teaching young people about our institutions is vital.
We all have a collective responsibility to implant knowledge, respect and awareness of our democratic traditions—of our history, our heritage, and the sacrifices of the Chartists, the suffragettes, and the many others who built our democracy and inspired other democracies around the world—so that we can protect our systems, our democratic traditions, and our institutions. That is the commitment of this Government. We will work hard to protect and strengthen our democracy, and to make sure that it is resilient and constantly evolving, as we have said in relation to the actions we are taking, to ensure that modernisation happens as the need arises—some of that relates to my earlier points about voter registration.
As we move forward and look at taking further actions, I hope there will be ongoing engagement with Members from across the House, including my hon. Friend the Member for Newport East. I pay tribute to her for securing this debate because it is important that we share, not only with our own citizens but with others around the world, the great traditions and achievements of people in the past, particularly the Chartists, as well as the suffragettes—the precious gift they have given us of the freedoms that we enjoy now. We must do everything we can to build on what was achieved by the Chartists and those incredible movements. In that spirit, I look forward to working with colleagues to make sure that we continue to strengthen our democracy.
Question put and agreed to.
Written Corrections
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Ministerial Corrections
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Education
(1 day, 18 hours ago)
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Catherine McKinnell
One of the first differences that we made on coming into office was moving the special educational needs and disabilities remit within the schools sector.
[Official Report, 24 October 2024; Vol. 755, c. 406.]
Written correction submitted by the Minister for School Standards, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell):
Catherine McKinnell
One of the first differences that we made on coming into office was moving the special educational needs and disabilities remit within the schools group.
Catherine McKinnell
I will raise the important point she has made with my colleague in the Department of Health who has responsibility for apprenticeships.
[Official Report, 24 October 2024; Vol. 755, c. 418.]
Written correction submitted by the Minister for School Standards, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell):
Catherine McKinnell
I will raise the important point she has made with my colleague in the Department for Education who has responsibility for apprenticeships.
House of Lords
Olympic and Paralympic Games: Team GB
(1 day, 18 hours ago)
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Lord Bassam of Brighton
To ask His Majesty’s Government what steps they are taking to support the continued success of Team GB at the Olympic and Paralympic Games, and to ensure that there is community benefit from such participation.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I am delighted that this Government will continue to support the successes of Team GB and Paralympics GB. The Chancellor has confirmed that a multiyear investment will mean that a total of £344 million will be invested in Olympic and Paralympic success over the next cycle. This will support the teams through to the 2028 Olympic Games and provide excellent foundations for the 2032 Games and beyond.
Lord Bassam of Brighton (Lab)
My Lords, that is more excellent Budget news; it keeps coming. However, how people watch and are inspired by our sporting heroes is changing. During the Paris 2024 Olympics and Paralympics, the BBC had over 67 million online catch-up requests. The next two Olympics and Paralympics will be in totally different time zones. The listed events regime protects live TV viewing but does not prevent digital or on-demand clip rights being hidden behind a paywall. Can the Minister confirm the completion of the 2022 review covering this and help find a way to protect digital and on-demand clips so that everybody can enjoy LA 2028 and Brisbane 2032 despite being in a different time zone, and also be inspired?
Baroness Twycross (Lab)
My noble friend makes a good point about changing viewer habits. It is important that sporting events of national importance remain available for people to view for free in years to come. Both the Olympic and Paralympic Games are rightly group A-listed events, which means that live coverage must be offered to at least one free-to-air broadcaster. I can reassure my noble friend that we will continue to consider the issue that he raises on digital rights; we will look to set out our position on that in due course.
Baroness Sater (Con)
My Lords, we all congratulate the successes of Team GB at both the Olympics and Paralympics. However, we must recognise the importance of supporting grass-roots sport, which helps generate essential participation. Does the Minister agree that it is vital that we have early identification and effective delivery of talent from the grass roots, schools and clubs to ensure that all-important talent pathways thrive?
Baroness Twycross (Lab)
Yes, I would agree with the noble Baroness. Alongside the UK’s sports funding increase, the Government have also committed in our Autumn Budget to support elite and grass-roots sport by investing in multi-use facilities across the UK and scaling up work so that DCMS can deliver on plans for the UK and Ireland to host the 2028 UEFA European Football Championship.
Baroness Keeley (Lab)
My Lords, I declare my interests as in the register. In praising Team GB Olympic and Paralympic athletes for their continued success, I want to mention our Olympic head coach for athletics, the wonderful Paula Dunn. On community benefit from sport, in my former constituency in Salford, investment in the park tennis project has revitalised old tennis courts and is bringing people of all ages back to tennis. So I want to ask my noble friend the Minister: will the Government continue to invest in grass-roots facilities, including tennis and padel courts, particularly in areas of higher deprivation?
Baroness Twycross (Lab)
The importance of grass-roots sports facilities cannot be overstated. As I said in response to the previous question, the Government committed in the Autumn Budget to support grass-roots sport by investing in multi-use facilities across the UK. That will enable people such as those referred to by my noble friend to get the start in those sports that they need.
Lord Wigley (PC)
My Lords, will the Minister join me in congratulating the swimmers in both the Olympics and the Paralympics on once again doing very well? However, does she accept that disabled swimmers in particular can achieve their maximum potential only if facilities are available locally? With many local authorities under financial pressure, swimming pools are being closed. Can she give a commitment that the Government will do everything they can, in England for themselves and in co-operation in Wales, Scotland and Northern Ireland, to ensure that the resources are there to maintain swimming pools so that we can maintain this record well into the future?
Baroness Twycross (Lab)
I agree. I learned how to swim in a swimming pool in south London, where my father literally threw me in at the deep end—which I am not sure is an accepted approach to teaching swimming now. This is an issue that has gone on for some time and we are acutely aware of the issue that the noble Lord refers to.
Baroness Finlay of Llandaff (CB)
My Lords, following the excellent example in Paris of the Paralympics, which apparently were modelled on the London Olympics and the tone that we set, will the Government recognise that, to have young people coming through who are able to perform, we need to have rapid provision of specialist prostheses for those children? We need specialist wheelchairs for them to be able to participate. Our ordinary services need to recognise that, when those children have the potential to become Paralympians, they need rapid access to highly specialised equipment to enable them to perform.
Baroness Twycross (Lab)
I have the privilege of giving the House a demonstration of how I have moved around the country: I now live near Stoke Mandeville, and Buckinghamshire is the home of the Paralympics. Nobody in your Lordships’ House can be in any doubt of the acute crisis facing the NHS. I recognise the issue that the noble Baroness raises and will speak to my noble friend Lady Merron about it.
Lord Parkinson of Whitley Bay (Con)
My Lords, the whole Commonwealth is grateful to Glasgow for stepping in to host the next Commonwealth Games in 2026 and we wish Glasgow every success, as it had in 2014. However, many sporting bodies around the world have expressed concern at the reduction in the number of sports being included—seven fewer than the last time Glasgow played host. Among those that have been cut are diving, part of every Commonwealth Games since 1930; badminton, squash and table tennis, meaning there will be no racquet sports; cricket; hockey; the triathlon, and more. With the Games already billed as low-cost and smaller-scale, how are the Government supporting Glasgow to ensure that the Games are a success and that they too inspire new generations of people in a wide range of sports?
Baroness Twycross (Lab)
The Commonwealth Games are a clear and key part of the elite pathway in many sports. They are a really important event, which is why the Government have agreed to provide up to £2.3 million of contingency funding to support the safety and security required. We anticipate that Glasgow 2026 will deliver over £100 million of inward investment to the city through the Games. That will support economic and social benefits for Glasgow but also be an inspiration for future generations to come.
Lord McNally (LD)
My Lords, the Minister should be very grateful to her father: being thrown in at the deep end is very good training for ministerial life. Has she thought that this might also be a time for some socialist planning? Should not those individual sports that receive the benefits of the lottery and other grants have plans to make sure that they are fit and ready to take up any upturn in interest caused by the Olympics? There are often reports of sports clubs not being ready when interested people start applying.
Baroness Twycross (Lab)
Being thrown in the deep end definitely prepares one for ministerial life. I will look into what specific arrangements are undertaken, but I would assume that the sports covered in these major tournaments would then anticipate an upturn. I will look into what happens and what more can be done to make sure that they are available for people when they express an interest.
Lord Wrottesley (Con)
My Lords, now that a fiscal event has taken place, will His Majesty’s Government urgently review the strategy for the UK’s hosting of major and mega sporting events, given that opportunities have already been, and will in future be, missed if no review immediately takes place? I declare an interest as, earlier this year, we lost the opportunity to host the International Ice Hockey Federation men’s world championship. That would have brought in over £56 million of economic benefit to the UK—not a bad return on investment—and, specifically, would have helped the levelling-up agenda by supporting regions in the north.
Baroness Twycross (Lab)
I am aware of the issue that the noble Lord raises. However, we are clear that hosting major events contributes to inspiring future generations and to the economy. We have a number of tournaments coming up, such as Euro 2028, the Women’s Rugby World Cup next year and other future events. I hope that we will be able to have more success in relation to the ice hockey next time than we did this time.
Scotland
(1 day, 18 hours ago)
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Lord Cameron of Lochiel
To ask His Majesty’s Government what steps they are taking to strengthen Scotland’s position within the United Kingdom.
The Lord Privy Seal (Baroness Smith of Basildon) (Lab)
My Lords, the people of Scotland deserve Governments who work together and are focused on delivering for them. Within the UK, Scotland will be the powerhouse for our clean energy mission, with Great British Energy’s headquarters being based there. We will restore decision-making over the allocation of structural funds to representatives of Scotland and we will champion Brand Scotland at home and abroad.
Lord Cameron of Lochiel (Con)
Of course, one way to strengthen Scotland’s position within the United Kingdom is to support our key industries. However, last week’s Budget saw a 2.7% increase in spirits duty—a move described as a betrayal by the Scotch Whisky Association. The whisky sector sustains thousands of jobs, mainly in Scotland’s most rural and remote communities. Can the Minister explain why this Government have chosen to punish such an iconic industry?
Baroness Smith of Basildon (Lab)
My Lords, if the noble Lord checks back to past Budgets, I think he will find that previous Chancellors from his side of the House put more of an increase on Scotch whisky, whereas this was an increase in line with RPI. If he looks at the Budget overall, he will see that the amount awarded to Scotland is actually significantly greater than at any other time since devolution.
Lord Browne of Ladyton (Lab)
My Lords, under this Government’s predecessor, with the SNP in government in Scotland, the relationship between Holyrood and Westminster was at best uneasy and too often characterised by mutual suspicion and sometimes open acrimony. Given Labour’s record on devolution, what lessons have been drawn from last month’s inaugural meeting of the Council of the Nations and Regions on resetting the relationship between the Scottish and UK Governments, which of course is a manifesto pledge?
Baroness Smith of Basildon (Lab)
My Lords, we have thought about this a lot and, going forward, it is key to how we work across government. It goes back to the idea that we are stronger together. Unless both Governments work together, in the interests of the people of Scotland, we will not get the best outcomes for them. I think it also means, as my noble friend will be aware, that devolution does not mean that the British Government should abdicate their responsibilities to Scotland. We have a very strong role, and we remain committed to strengthening the union.
Lord Bruce of Bennachie (LD)
My Lords, does the Minister accept that for many people in Scotland, especially young people and businesses, the benefits of being part of the United Kingdom would be considerably strengthened if the Government’s reset with the European Union included accepting the youth mobility scheme, rejoining Erasmus, securing flexible visa arrangements for our creative industries and working to rejoin the single market?
Baroness Smith of Basildon (Lab)
My Lords, that question goes a little wider than anticipated, but I admire the noble Lord’s ingenuity. The important thing for young people and older people across the UK is to know that they have a Government who work with the devolved Governments in their best interests. That is what has been lacking for some time.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, can the Leader of the House confirm that this is the best settlement in real terms since the Scottish Parliament was set up, and yet the services in education, health and other devolved areas are deteriorating in Scotland? Will the Government do everything possible to stop the Scottish Government spending money on vanity projects, such as “Air Miles” Angus—their pretend Foreign Secretary—travelling the equivalent of three times around the world already? Can they make sure that every penny the Scottish Government get is spent on devolved areas?
Baroness Smith of Basildon (Lab)
I think my noble friend hits the nub of the issue. Yes, he is right, and I am happy to agree with him: it is the largest real-terms Budget settlement for the Scottish Government in the history of devolution. It is £1.5 billion in this financial year and will be £3.4 billion in the next. The point he made is that how that money is spent is really important. We have seen poorer outcomes in Scotland for people in the National Health Service, with longer waiting lists, and educational standards have not increased as they should. This is where that money should be focused—to deliver real benefits for the people of Scotland.
Lord Stirrup (CB)
My Lords, would the Leader agree that the presence of one of the RAF’s main operating bases on the Moray Firth and one of the Navy’s at Faslane, along with a number of Army units, reflect the strategic importance of Scotland within the union? They bring significant economic benefit to those areas, a situation that would be greatly enhanced if this Government could ever get around to funding defence of the realm adequately.
Baroness Smith of Basildon (Lab)
There is always a sting in the tail, is there not? We do recognise the contribution they make, both to the defence of the country and the economy. The Government remain committed to reaching 2.5% GDP defence spend. The noble and gallant Lord will be aware, as will the House after the sterling efforts of my noble friend Lord Livermore, that we have been left with a £22 billion black hole—
Baroness Smith of Basildon (Lab)
The party opposite may not like it, but the reality is that we have to get the finances of this country on a stable footing, and I can assure the House that that is what we shall do.
Lord McNicol of West Kilbride (Lab)
My Lords, what discussions have His Majesty’s Government had with the Scottish Government following the launch last month of the UK industrial strategy? Have the specific Scottish commitments in it, on medicine manufacturing, offshore wind and the Advanced Forming Research Centre in Strathclyde, been welcomed by the Scottish Government?
Baroness Smith of Basildon (Lab)
My Lords, if they have not, they should be. The industrial strategy is the core of our mission for economic growth, and the meetings so far have been very positive. We have published the Green Paper, which will kick-start our programme on this. It is a modern industrial strategy for the days and years ahead for this country. It will be published next spring, and it will be in line with the multiyear spending review. Unless we take advantage and make the most of growth across the whole of the UK, we will deny the people of Scotland and of this country the benefits of a strong economy that they deserve.
The Earl of Kinnoull (CB)
My Lords, the last quarterly report on intergovernmental relations between the four Governments was produced by the Department for Levelling Up, Housing and Communities, as it then was, and it arrived in December last year. Will these quarterly reports still be produced? Will they move to the Cabinet Office?
Baroness Smith of Basildon (Lab)
I do not have a precise answer for the noble Earl, but I will look into this. It is important that this is at the heart of government, with the responsibility lying there. I am confident that we will find a way of making progress and of marking that progress in a way that is easily understood. I will take a precise note of the noble Earl’s question and come back to him with a fuller answer.
Lord Fox (LD)
My Lords, the reason behind the breakdown in the relationship that the noble Lord pointed out was that, through the last Parliament, there was a continual flow of legislation that trod on the toes of the devolution process. The noble Baroness knows well that the common frameworks process was set up explicitly to deal with these kinds of issues. Can she update your Lordships’ House on where we are with the common frameworks and when we will see them back in the process of making sure that toes do not get trodden on again?
Baroness Smith of Basildon (Lab)
The noble Lord makes an important point. In some ways it is the opposite—the other side of the coin—to that made by the noble Lord, Lord Foulkes. We have reserved and devolved matters, and it is about making sure that we stick to our responsibilities and work together. The only way this works is with each Government having respect for the other and working together, so I assure him that that is what we seek to do and will continue to do.
Baroness Liddell of Coatdyke (Lab)
My Lords, is the noble Baroness aware that £47.7 billion was given to the Scottish Government last week—the highest amount in history? Will she join me in congratulating the Chancellor on that distinctive amount of money? But will she also call into question some of the expenditure mentioned by the noble Lord, Lord Foulkes, on vanity projects, rather than turning round the economy of Scotland, as it deserves? Incidentally, the money was made available because of a former Member on this side of the House, Joel Barnett—Lord Barnett—and it was supposed to be only a short-term measure, but it has been about 40 years now.
Baroness Smith of Basildon (Lab)
My Lords, it sometimes feels like 40 years can go by in the blink of an eye in your Lordships’ House. I remember Lord Barnett well. The noble Baroness is absolutely right: the real-terms increase of £3.4 billion next year takes Scottish funding to £47.7 billion—the largest settlement ever in devolution history. Of course, that is on top of the £125 million confirmed for GB Energy. We have also committed funds to Brand Scotland, which will promote investment opportunities in Scotland. The noble Baroness’s basic point is important: the additional money is supposed to directly benefit the people of Scotland, in the economy, health and education. We look forward to working with the Scottish Government to make sure that that is the case.
Pension Credit
(1 day, 18 hours ago)
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Baroness Stedman-Scott
To ask His Majesty’s Government what steps they are taking to ensure every pensioner who is eligible for Pension Credit receives it.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, the Government want all eligible pensioners to apply for pension credit. The Government have written to pensioners providing advice about claiming pension credit following the change to the winter fuel payment, alongside a range of other creative media campaigns. We are engaging directly with pensioners as well as with stakeholders, including devolved Governments, councils and charities, in a joint effort to raise awareness through our combined networks and channels.
Baroness Stedman-Scott (Con)
I say to the noble Lord: feel free. Having run a pension credit campaign, I can understand what the Minister is undertaking. Do the Government intend to guarantee that the DWP has the capacity to deal with what could well be a rapid uptake of applications for pension credit—with all the extra administration needed to process the claims —after this Government’s shameful decision to deprive pensioners who need it most of their winter fuel payment?
Baroness Sherlock (Lab)
My Lords, on that final point, which, obviously, I cannot let go, the poorest pensioners are protected because those on pension credit will still have access to the winter fuel payment.
On the bulk of the noble Baroness’s question, we continue to operate good service levels. Around 500 additional staff have now been brought in to support processing during the recent surge in pension credit claims. Processing times may increase; we have advised customers who apply that it could take nine weeks to process their claims. However, anyone who applies before the deadline of 21 December can have their application backdated, which means not only that they will get winter fuel payments but that they may well get pension credit on top of that.
Lord Palmer of Childs Hill (LD)
My Lords, I compliment the Minister on the work being done to make people claim pension credit they should have claimed before, in order to try to make up for the rather strange removal of the winter fuel allowance. Can she tell the House when—if we have not reached this point already—the amount of pension credit that was not being claimed before is going to exceed the amount notionally saved from the winter fuel allowance? If that point has not yet been reached, when will it be reached?
Baroness Sherlock (Lab)
My Lords, I was so with the noble Lord for the first 20 seconds—all the way. I am grateful for his congratulations to the department, and I shall take them back to my colleagues, who are doing a brilliant job on this front. We have written to around 12 million pensioners about the change to the winter fuel allowance, so a lot of work has been done out there to encourage people to apply—and it is having an effect. We have seen a 152% increase in pension credit claims received by the DWP in the eight weeks following the announcement on the winter fuel payment compared to the eight weeks before, and that will be updated towards the end of the month.
On the costs at the end, obviously, a lot of these claims have to be processed and we will not know for some time down the road. However, it is very clear that the DWP wants everybody who is eligible to do so to claim pension credit. As I have said before, if we end up with more people claiming the money to which they are entitled, that is a good thing. Pensioners deserve the money to which they are entitled.
Lord Davies of Brixton (Lab)
My Lords, I apologise to the House and to the noble Baroness, Lady Stedman-Scott, for jumping in too quickly. My noble friend the Minister gave the figure of 500 additional staff in an Answer to a Written Question from me earlier in the Session. What was not clear from her reply was when the 500 extra staff would be in post and fully trained to provide the service required to achieve the take-up of pension credit that we all want to see.
Baroness Sherlock (Lab)
As I understand it, the staff are mainly being redeployed from within retirement services and the DWP. It is not uncommon for staff to get moved around to different areas of the department as the need moves and flows during the year. Some of those are already in place, and some are going straight in because they are already experienced in dealing with pension credit and need no training. Others who need specific training on dealing with those claims are being moved across—but we are already doing this.
Lord Watts (Lab)
My Lords, does the Minister agree with me that it is hard to take lessons from the Opposition, who in government oversaw the biggest increase in poverty and homelessness—and then they have the cheek to lecture this side about poverty?
Baroness Sherlock (Lab)
My Lords, it is true that the last Labour Government lifted more than 1 million pensioners out of poverty and that the number of pensioners in relative poverty has increased by around 300,000 since 2010-11. However, on the pension credit, I think we are all of one mind. We want to encourage everybody out there who is eligible for pension credit to claim the money and claim it as soon as possible. Please put the word out.
Lord Naseby (Con)
Is the Minister aware that we are dealing with some really quite elderly people? Therefore, the response, in terms of their ability to go online, for example, is likely to be very low, so why on earth are we establishing a terminal date of 21 December? Secondly, am I right in understanding from the Minister that we are taking on 500 extra civil servants to handle this demand? Is that not a complete farce, when really it would have been much simpler to leave the winter fuel allowance where it was for all our pensioners, all of whom have paid taxes over the years—and many of those families have lost loved ones in the Second World War and the subsequent Korean War?
Baroness Sherlock (Lab)
My Lords, I apologise to the noble Lord if I was not clear in my last answer—I acknowledge that I speak too quickly on occasion. Many of those 500 staff are being redeployed from within the department. It is not unusual for people to move to different areas of the Department for Work and Pensions, moving on to campaigns as needed. The noble Lord is absolutely right, and of course, there is a very wide range of pensioners. There are many in this Chamber who may technically be of state pension age but who are highly computer literate and more than able to use the online campaigns. The online form is incredibly simple: if somebody applies online, the maximum number of questions they will have to answer is 48, and for some it is as few as 35.
Baroness Sherlock (Lab)
It is a lot, but they include “name” and “date of birth”, so give us a bit of a break here. That said, there are days, I acknowledge, when some of these are beyond me. The great thing is that if you phone the helpline, it is equivalent to doing it online, because the person at the other end is putting the stuff in for you. If you do not want to do computers, you can phone and someone will take you through it. The satisfaction rates are very high. Finally, those who are really struggling can apply with the help of somebody from DWP or from a charity. In extreme cases, someone from DWP will even visit people at home. We will do what it takes to get people to apply for the money to which they are entitled.
Baroness Ludford (LD)
My Lords, my noble friend Lord Palmer did not get an answer to his very legitimate question on when the cost of the claims for pension credit that we hope will be made will cancel out the saving from the winter fuel payment, factoring in the 500 extra staff in particular. It is fair to ask that question and to wonder whether there is a bit of conflict of interest here: if lots more people apply for pension credit, the £1.5 billion saving that has been headlined disappears.
Baroness Sherlock (Lab)
My Lords, when the costings on this policy were done, the Explanatory Memorandum made it clear that the expectation was that it would save £1.3 billion in this financial year and £1.5 billion a year after that. That saving was on the assumption that pension credit would increase by five full percentage points, and it was net of any other DWP benefits that might go with that. Until we exceed that point, the savings are still there. We will not know where this lands until all the claims are in and processed. I simply say, finally, that I want everybody who is eligible for this to claim it. If we end up with more people getting not just the winter fuel payment but the pension credit, that can be worth an awful lot of money. The average pension credit award for a single pensioner is around £72 a week. This is worth having.
Lord Dodds of Duncairn (DUP)
My Lords, the noble Baroness will be aware that these matters are devolved to the Northern Ireland Assembly and Executive, but we are affected as much as any other part of the UK by the cuts to the winter fuel allowance and short uptake of the pension credit. What has been done to liaise with the Northern Ireland Executive to ensure that pensioners in Northern Ireland will have the same advancements, encouragements and incentives to apply for pension credit?
Baroness Sherlock (Lab)
My Lords, my department is working very closely with the devolved Administrations, including with colleagues in Northern Ireland, to make sure that campaigns for take-up are out there. However, the core issues around, for example, state pension are reserved.
Budget: Taxes and Borrowing
(1 day, 18 hours ago)
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Baroness Penn
To ask His Majesty’s Government what assessment they have made of the impact of the Budget on levels of taxes and Government borrowing.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, the Budget raises taxes by £40 billion as we repair the public finances and rebuild our public services. Borrowing falls from 4.5% of GDP this year to 2.1% of GDP by the end of the forecast. The current budget moves into surplus from 2027-28, ensuring that we do not borrow to fund day-to-day spending.
Baroness Penn (Con)
My Lords, after delivering the biggest tax-raising Budget on record, the Chancellor rightly said at the weekend that she was wrong to rule out those tax rises ahead of the election. She also said that this Budget
“wiped the slate clean … set the spending envelope for the remainder of this Parliament”,
and that
“we don’t need to increase taxes further”.
Will the Minister repeat the Chancellor’s reassurances today and rule out any further tax rises in future Budgets, or should we not believe what the Chancellor has said this time round either?
Lord Livermore (Lab)
We had to take some very difficult decisions in the Budget. They were the right decisions to clear up the mess that we inherited from the party opposite, to rebuild the NHS after years of neglect, to choose investment and not decline, and to keep our promises to working people. However, the noble Baroness is absolutely right and of course I agree with what the Chancellor said. This was a very significant Budget, because of the need to repair the public finances and rebuild our public services simultaneously. We have now wiped the slate clean, meaning we never have to do a Budget like this again. The noble Baroness asks about tax, and I point out that we have kept every single promise that we made on tax. Her Government, when she was a Treasury Minister, froze income tax thresholds, costing working people nearly £30 billion. We could have extended that but we chose not to.
Lord Spellar (Lab)
My Lords, is it not the case that the last Government’s plans would have taken tax as a share of GDP to 37.1%? Even then, they subsequently announced, but failed to account for, billions of additional public spending while promising unrealistic tax cuts. Does my noble friend agree that last week’s Budget measures were necessary to fill the last Government’s black hole and get this country back on track?
Lord Livermore (Lab)
My noble friend is absolutely right in what he says. We faced a £22 billion black hole at the heart of our public finances, which we had to take steps to address. We also faced promises for compensation payments, which the previous Government had completely failed to put a single pound behind, and we had to repair public services simultaneously. In the process, though, we kept every single one of our manifesto commitments to restore stability, invest in our public services and protect working people.
Baroness Kramer (LD)
My Lords, the Budget basically ignored social care providers, even though the sector is on its knees and taking the NHS with it. Will the Minister take seriously the need to exempt care providers from the increase in employers’ NICs?
Lord Livermore (Lab)
The noble Baroness is absolutely correct: we had to take some very difficult decisions on tax. We have acknowledged that the impacts of those measures will be felt beyond business. We have chosen to compensate the public sector with £5.1 billion, to ensure that there is sufficient funding to support our vital public services, including the NHS. On social care, the Government have provided a significant funding top-up to local government, which can be used for pressures, including adult social care.
Viscount Hailsham (Con)
My Lords, the Minister will know that the OBR has forecast that growth will peak at 2% in 2025 and thereafter fall back, after 2026, to around 1.5%. Does the Minister regard that as a satisfactory outcome of a Budget that imposed £40 million in taxes?
Lord Livermore (Lab)
It was £40 billion in taxes. The noble Viscount is right that growth was one of the biggest failures of the previous Government, and we are absolutely determined to turn that around. We cannot undo the damage of the past 14 years in just one Budget. The OBR has said that growth is largely unchanged over the Parliament; that is in the context of a Budget with some very difficult decisions on tax to clear up the mess that we inherited. Of course, we need to go further and we need to go faster. That is why we are doing planning reform, pension reform and skills reform, all of which will boost growth and none of which is included in the OBR’s forecast. Let us remember that, under the previous Government, we were the only G7 country with investment below 20% of GDP. Our growth rate was dismal by OECD standards. Their Brexit deal imposed new trade barriers on business equivalent to a 13% increase in tariffs for manufacturing and 20% for services. They crashed the economy, with interest rates peaking at 5.25%.
Lord Patel (CB)
My Lords, does the Minister agree that the Budget failed to address the financial difficulties faced by the higher education sector?
Lord Eatwell (Lab)
My Lords, the noble Lords opposite have some difficulty in understanding the arithmetic of coming through the black hole of £22 billion. Even if they cannot do the arithmetic, they can see that the prisons are full, waiting lists in the NHS are the highest they have ever been, schools are crumbling and there is a lack of police on the streets. It is their failure. Would the Minister agree that that is the core of the failure that this Budget is designed to correct? Is there not one important word missing in statements from the party opposite? That word is “sorry”.
Lord Livermore (Lab)
I 100% agree with my noble friend. It is incredibly striking that, in everything we have heard from the party opposite, not once has it apologised for the record we inherited. One of the reasons this is a once in a generation Budget is that we have had to simultaneously repair public finances and rebuild public services. That is why it is such a historic Budget. My noble friend is absolutely right that what we have not heard from those in the party opposite is an alternative. Would they not have repaired the public finances? Would they not have prioritised working people? Would they now cut funding to the NHS and schools?
Baroness Vere of Norbiton (Con)
My Lords, the Labour Government are taking money from pensioners this winter, taxing family farms on the death of a loved one, and hiking taxes on the hospice and care sectors, all while handing out inflation-busting pay rises to train drivers with no strings attached. Can the Minister confirm that this practice will stop and that there will be no more above average inflation pay rises without an agreement on productivity improvements and reform?
Lord Livermore (Lab)
I can. We said exactly that in the Budget.
Lord Sikka (Lab)
My Lords, I have long said that government debt is overstated, and I am surprisingly supported by a man called Jacob Rees-Mogg. On 2 August 2022, he effectively said that the balance at that time of £875 billion of quantitative easing—the amount owed by the Government to the Government—should not be included in the national debt. Its exclusion would reduce public debt to 60% of GDP, meaning that the Government would have more headroom to borrow, invest and grow the economy. Does the Minister agree?
Lord Livermore (Lab)
I absolutely agree with the importance of investment to the economy, which is why we have set out an investment rule which enables exactly that. The Government’s number one commitment is to economic and fiscal stability, which is why we have put in place those robust fiscal rules. It is interesting to note that average borrowing over the next five years will be 2.6% of GDP compared to 5.6% of GDP over the previous 14 years.
Lord Deben (Con)
My Lords, the Minister told the House that there were no promises broken in the Budget. The Secretary of State for Defra, which looks after agriculture, promised farmers that there would be no tax on inheritance. Why has he not resigned?
Lord Livermore (Lab)
On inheritance tax, currently the largest estates pay a lower effective tax rate than the smaller estates. I do not think that that can be right. Agricultural property relief is given on top of the normal inheritance tax thresholds. Individuals can pass up to £500,000 to a direct descendant, and then agricultural property relief would provide a further £1 million tax-free allowance. This means a couple can pass on up to £3 million tax free. Above that, there is a 50% discount on inheritance tax, so a rate of only 20% applies, and any liability can be paid in 10 yearly instalments. This seems to me to be pretty fair in the context of the decisions we have taken and in the context of what everyone else in society gets.
Lord Wallace of Saltaire (LD)
This Budget provided only a limited increase in defence spending, under circumstances in which the Ukraine war is depleting British stocks and our Armed Forces are under very considerable strain. If the Government were to consider that they needed to increase defence spending further, and to raise tax for that, would they be confident that the Conservative Party would support that, or do they think they would oppose it?
Lord Livermore (Lab)
I cannot speak for those in the Conservative Party—and it does not seem that they can speak for themselves either right now. It is very unclear what they would do at all in response to this Budget. We have set out a path for defence spending that fully meets our commitments, and we will set out a path to 2.5% in due course.
Education (Values of British Citizenship) Bill [HL]
Monday 4th November 2024
(1 day, 18 hours ago)
Lords ChamberRead Full debate Education (Values of British Citizenship) Bill [HL] 2024-26 View all Education (Values of British Citizenship) Bill [HL] 2024-26 Debates Read Hansard Text
Lord Harries of Pentregarth (CB)
My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Bank Resolution (Recapitalisation) Bill [HL]
Monday 4th November 2024
(1 day, 18 hours ago)
Lords ChamberRead Full debate Bank Resolution (Recapitalisation) Bill [HL] 2024-26 View all Bank Resolution (Recapitalisation) Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 2-R-I Marshalled list for Report - (31 Oct 2024)
15:53 - Division on Amendment 2 - Ayes: 247 / Noes: 125 - Amendment 2 agreed.
17:13 - Division on Amendment 7 - Ayes: 125 / Noes: 155 - Amendment 7 disagreed.
Lord Livermore
Member’s explanatory statement
See the explanatory statement for my second amendment to Clause 1.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, in moving government Amendment 1, I shall speak also to government Amendment 4. The Government have tabled these amendments after considering the concerns raised in Grand Committee by the noble Baronesses, Lady Noakes, Lady Bowles, and Lady Vere, and the noble Lord, Lord Vaux. I am extremely grateful to all of them for all of the points they have raised.
Reflecting in particular on the points made by the noble Baroness, Lady Noakes, the Government have decided to clarify in the Bill whose expenses can be covered by a recapitalisation payment from the Financial Services Compensation Scheme. I am grateful to the noble Baroness for her engagement on this matter since Grand Committee.
The Bill as introduced permitted a recapitalisation payment to cover the expenses that the Bank of England or another person has incurred, or might incur, in connection with the recapitalisation of the firm in resolution. These amendments replace that broad formulation with “relevant person”, then specify that “relevant person” means the Treasury, a bridge bank or an asset management vehicle. They further specify that “bridge bank” and “asset management vehicle” have the meanings given by Sections 12 and 12ZA of the Banking Act 2009 respectively.
In Grand Committee, the noble Baroness, Lady Noakes, indicated that she had no objection to the Treasury, the Bank of England and its entities having certain expenses covered by the new mechanism, but that this should be specified in the Bill. These amendments tabled by the Government seek to do just that; I hope that she and other noble Lords will be able to support them.
In Grand Committee, the noble Baroness, Lady Noakes, also asked questions about the specific expenses that would be in scope under the terms of the Bill. On this point, I should be clear that the Government maintain the position set out in Grand Committee: it is important that the Bill is not overly prescriptive, allowing the Bank to respond flexibly when costs arise. I refer to the explanations given in Grand Committee, in the Government’s response to the consultation and in the draft updates to the code of practice of the types of expenses that will be expected to be covered. The Government maintain that it is prudent to ensure that there is broad provision to cover these potential additional costs. Ultimately, it should be borne in mind that the alternative may be for such costs to be met by the taxpayer.
By way of reassurance, I reiterate that, in determining whether to include certain ancillary expenses in its request for funding, the Bank of England is subject to the usual obligations under public law to act in a way that is reasonable and proportionate. In addition, the legislation does not allow the Bank of England or any other person to claim expenses that arise exclusively for preparing for a Bank insolvency. The draft updates to the code of practice also set out that the Government would expect any final report on the use of the mechanism to explain why certain expenses were considered reasonable and necessary.
I hope that the Government’s approach as set out in these amendments addresses the points raised by noble Lords in Grand Committee, and that noble Lords will feel able to accept them. I beg to move.
Baroness Noakes (Con)
My Lords, I spoke in Committee. I draw attention to my interests as included on the register; in particular, I hold shares in a number of banks that could be affected by the contents of this Bill.
I thank the Minister for the comprehensive letters that he wrote to Members who took part in Committee—and, indeed, for the subsequent meeting that he organised. I also thank the Treasury for publishing the draft extra chapter for the code of practice, which has been very helpful to those of us trying to work through the Bill.
I certainly support the two amendments to which the Minister has just spoken, which go some way to limiting the wide power in new Section 214E(2), but I have some further questions for the Minister, building on the comments he has just made. These amendments constrain to whom payments can be made under that new subsection but they do not do anything to constrain the types of expenses that can be incurred. In Committee, I tried to explore what happens if litigation or regulatory actions arise in relation to issues that had occurred prior to the resolution action being taken but which do not emerge until a little later. We did not get very far, so I will spend just a couple of minutes on them here.
I am talking about material litigation or regulatory action. There could be shareholder litigation, which happened after RBS was bailed out by the Treasury. There could also be other kinds of issues that result in both regulatory action and civil litigation, as happened in relation to Libor, for example. Today’s hot issue is vehicle financing commissions, following the Court of Appeal’s decision recently, and no one knows how much it will cost.
Before this Bill, the working assumption was that smaller banks would be placed into the insolvency procedure and that, in that event, the kind of liabilities I am talking about would likely be extinguished as part of the insolvency because there would simply be insufficient money there to pay for them. However, once the recapitalisation power is used, it opens up the possibility that the Bank of England could use the power to raise capital in order to pay for litigation or regulatory costs that had arisen and were crystallising after the recapitalisation event.
The issue of litigation was raised by my noble friend Lord Moylan at Second Reading, and the Minister wrote to him on 21 August. The letter confirmed that litigation costs could well be covered through the use of the recapitalisation power. The Minister expressed this in terms of it being
“a judgement to be taken at the time, noting that the alternative could be to use public funds instead”.
From the perspective of the financial sector, which will be picking up the costs using the power—then doubtless passing them on to their customers—the alternative is using not public funds but the insolvency procedure. If we let the insolvency procedure take its course, at least nine times out of 10, those costs will not be met at all. So, that is the heart of the problem from the financial sector’s point of view.
I have not tabled an amendment on Report because it is very difficult to table one that would cover all eventualities. The redraft of the code of practice does not appear to deal with this issue either, whether in relation to expenses per se—in the terms of the new subsection we are discussing—or in relation to which liabilities the Bank should allow to go into the bridge bank. Today, I am seeking that the Government recognise that this is an issue and that it should be dealt with somehow as part of the code of practice.
I accept, as I have throughout, that there may be public interest reasons for avoiding the bank insolvency procedure, and for settling historical liabilities through the recapitalisation power, but the public interest test is a rather slippery concept and gives no real comfort to those who are expected to pick up the tab. I hope that the Minister will accept that this new power must not become a blank cheque to avoid bank insolvency and to pick up all kinds of costs that would otherwise fall by the wayside. I look forward to hearing what reassurances he can give.
Baroness Vere of Norbiton (Con)
My Lords, I too thank the Minister for the recent letters and documents he published in relation to the Bill. It was incredibly helpful to have them for the House to scrutinise the Bill properly. I am also grateful for these sensible amendments, which clarify the persons to whom the Bill’s measures apply as they relate to expenses. They are a bit technical, but they are improvements to the Bill and I am particularly pleased that the Minister has listened to concerns from across the House, including from my noble friends Lady Noakes and Lord Moylan.
I listened with great interest to the points raised by my noble friend Lady Noakes, and I urge the Minister to note what she said. I hope that some of these issues might be resolved in some way, either through the code of practice or by other means, as she seemed to me to make an awful lot of sense. However, on this basis, we support the Government’s amendments.
Lord Livermore (Lab)
My Lords, I am grateful to noble Lords for their contributions today and, as I said previously, in Committee. As I said at the start of this debate, the purpose of the Government’s amendments is to clarify whose expenses may be covered under the mechanism in the Bill. I hope that noble Lords will be able to accept the amendments, and I am grateful to both noble Baronesses for saying that they will.
I will respond to the points raised by the noble Baroness, Lady Noakes. As she said, I wrote previously to the noble Lord, Lord Moylan, on this matter. I will briefly repeat some of the points I made to him. In relation to litigation being brought against the authorities themselves, the Bill allows the Bank of England to request that funds from the Financial Services Compensation Scheme cover expenses that have been incurred by it or by the Treasury, a bridge bank or an asset management vehicle in connection with the recapitalisation or the use of the stabilisation power. This may include litigation costs arising from the recapitalisation or use of the stabilisation power, such as from challenges to decisions made by the authorities.
Any decision to request Financial Services Compensation Scheme funds for these purposes would be a decision for the Bank of England to take, but I stress that, in making this decision, the Bank of England would consider all relevant factors, including the fact that the alternative may be to use public funds. I note what the noble Baroness, Lady Noakes, said on that point. A decision to use insolvency depends on whether the conditions for resolution action are not met. If the conditions for action are met, public funds would be the alternative for covering these costs instead of FSCS funds.
I hope that the points I have made demonstrate that the Government have engaged in good faith with the concerns raised by noble Lords and have sought to address them where it has proved possible to do so. These amendments put beyond doubt which parties’ expenses may be covered by the new mechanism, and I hope that noble Lords will support them.
Baroness Vere of Norbiton
“(2A) The Bank of England must not require the scheme manager to make a recapitalisation payment if it has directed the financial institution to maintain an end-state Minimum Requirement for Own Funds and Eligible Liabilities (MREL) exceeding minimum capital requirements.”Member’s explanatory statement
This amendment seeks to prohibit the use of FSCS funds to recapitalise large financial institutions, defined as those which have reached end-state MREL.
Baroness Vere of Norbiton (Con)
My Lords, throughout the passage of this Bill, the issue of the size of the bank for which this new mechanism can be used has attracted significant comment and debate. In a letter to all noble Lords introducing the Bill, the Minister stated: “This Bill enhances the resolution regime to respond to the failure of small banks”. Yet that is not what the Bill does. The regime in the Bill is not restricted to small banks or even to small and medium-sized banks; it can be used for all banks, even the very largest. Despite the letter from the Minister on introduction, the Government have maintained their position that the mechanism should be available for use for the resolution of a bank of any size, including the very largest.
Using this mechanism in those circumstances would be astonishingly costly for banks and their customers, not only in the year in which the levy is first implemented but for many years thereafter, adding to a long-term and significant burden on the banking sector and its consumers. I concede that the Government clarified in a policy statement that the mechanism would be used for the largest banks only in exceptional circumstances, but the mechanism being given a statutory footing by the Bill will only ever be used, on a bank of any size, in exceptional circumstances. Therefore, I take only a small amount of comfort from the published statement.
As the noble Baroness, Lady Bowles, said in Committee, there is no differentiation in the Bill on bank size. It should be limited by a defined measure. My amendment, supported by the noble Baronesses, Lady Bowles and Lady Noakes, and the noble Lord, Lord Vaux, seeks to deliver that definition by making it clear that the Bill does not apply to banks that have reached end-state MREL—that is, the very largest banks in the UK. It would mean that only small and medium-sized banks, and those on the MREL glide path, can be supported by the mechanism. I believe that was the Government’s original intention.
My amendment is fairly simple. It does what it says on the tin. I will listen very carefully to what the Minister has to say when he comes to wind up.
Lord Vaux of Harrowden (CB)
My Lords, I add my support to Amendment 2 tabled by the noble Baroness, Lady Vere. From the outset of this process, the Bill was intended to cover only small banks. That was made clear in almost the first paragraph of the original consultation. It was then extended and now covers all banks, regardless of size. I thank the Minister for making sure that the draft code of practice was published by the Treasury before Report; it has been incredibly helpful in this process, and we are all very grateful for that. The draft code of practice is clear that the resolution mechanism is designed primarily to support the resolution of small banks and that the Bank of England will not assume use of the new mechanism when setting a preferred resolution strategy of bail-in and the corresponding MREL requirements of a large bank.
So why does the Bill cover large banks? The argument from the Government seems to be along the lines of, “Well, it might be useful to have this flexibility”. That does not seem a very strong argument. As we have heard, larger banks are required to hold additional capital resources, known as MREL, effectively to ensure that they are able to bail themselves out—a process known as bail-in. If the Government are not confident that the MREL regime is sufficient for those larger banks, they should be looking to strengthen that regime rather than extending a measure that is designed specifically for smaller banks whose failure would not create systemic risk, to act as a further insurance policy for the big banks.
I am afraid that unless the Minister can come up with a stronger argument than he has so far, I will be minded to support the noble Baroness, Lady Vere, should she decide to test the opinion of the House.
Baroness Noakes (Con)
My Lords, I add my support to my noble friend’s amendment.
If the power were used on a bank that had already achieved the MREL set for it, that use of the mechanism would raise questions about whether MREL and the minimum capital requirements had been set correctly—and whether there had been a regulatory failure. In either event, the Bank is conflicted, whether through the setting of MREL in its capacity as a resolution authority or through setting capital levels through its PRA arm. I am clear that the Bank should not have the power to cover up regulatory failure, which this unconstrained provision allows. There is no way for the Treasury to stop the Bank using the power other than by using the power of direction that exists but has never been used in the existence of the Bank since nationalisation. Unconstrained powers are unhealthy. That is why I support my noble friend’s amendment.
Baroness Bowles of Berkhamsted (LD)
My Lords, I concur with what other noble Lords have said about this amendment: that is why I have added my name. It cannot be left as a possibility for any size of bank; if it needs to apply to a larger bank, perhaps the MREL level should have been set higher. We have this rather unusual situation in the UK where we set MREL at a much lower level; it is set at about a quarter of the level of other countries. If there is a nervousness about needing to use it for a bank that is a little bit larger, perhaps some other fundamentals about where MREL is being set are wrong.
The premise of this Bill is based on it being an alternative to insolvency, where that would have been the normal end result. Maybe the compensation scheme would have had to pay out on deposit guarantees and so there is the happy thought that the money could be perhaps put to different use this way round. But the assumption should still be insolvency and we need a public interest test before we go looking at the Financial Services Compensation Scheme. It is already an extraordinary event—so how extraordinary are extraordinary events? I do not think one can layer extra extraordinariness on top of it: there has to be a line somewhere.
We do not know how many dips into the Financial Services Compensation Scheme there are going to be. In insolvency, there is one dip for the deposits that are guaranteed. It does not say that there cannot be multiple dips. There is already the notion that there is this enormous pot of money. Maybe it looks like a bank tax—and everybody hates banks and it is a pot to raid—but it is a very good way to cause more issues within the wider banking sector. Frankly, it is unfair if there are not some bounds somewhere. So I think this is the right one and, if the Minister is not going to incorporate the amendment, which I think would be a jolly good idea, we on these Benches will be supporting the noble Baroness, Lady Vere.
Lord Eatwell (Lab)
My Lords, my colleagues from the Financial Services Regulation Committee are rather confused on two issues; that is very unusual, but they do seem to be. First, there is the idea that somehow, if MREL were exceeded in a financial crisis, that would be a regulatory failure. The only way to prevent such a regulatory failure is to have MREL at 100%; that is to avoid the total failure of the financial system. That would be a disaster for lending in this country. At the moment, MREL is set at levels that are deemed to be a reasonable buffer under circumstances that might reasonably, even in extremis, be expected to occur. As we saw in 2008-09, even events that are deemed to be events that would occur only once in a millennium can occur several times in a week in a severe financial crisis. An MREL which can never be exceeded is 100% and if my colleagues are seeking to impose that on the British financial system, I would be very surprised.
The other point that seems to be neglected—it is why I deem this amendment to be irrelevant—is that my colleagues should recall that, in one of the letters from the Financial Secretary, he pointed out there was a cap on the amount that would be raised from the financial compensation scheme for these purposes. That cap, as I recall, was £2.5 billion. In those circumstances, £2.5 billion would never be sufficient to deal with the collapse of one of the big banks. So the cap itself defines these regulations as fitting only relatively small banks.
Baroness Kramer (LD)
My Lords, perhaps I could be helpful at this point. That £2.5 billion is certainly not in the Bill. If that is the argument being made by the noble Lord, Lord Eatwell, is it an interesting one but not one that the Government have grasped.
Perhaps I should clarify the issue of the threshold at which MREL kicks in, because that was the point to which my noble friend Lady Bowles referred. The UK demands MREL or bail-in bonds as the mechanism for resolution in the case of the failure of a much smaller bank than in any other country across the globe. The differential between us and everybody else is very large. That, we assume, is why the Government want to keep this mechanism available for banks that have been required to have MREL: they are trying to deal with that small to medium-sized group that, quite frankly, should probably never be in the MREL group in the first place.
Lord Livermore (Lab)
My Lords, I am grateful to all noble Lords, and to my noble friend Lord Eatwell for the points that he made. The scope of firms in relation to which the mechanism can be applied has been a key issue in all our deliberations to date. I am very grateful to noble Lords for their engagement on this topic since Grand Committee.
As I stated then, the Government’s policy intention is for the mechanism provided by the Bill to be used primarily to support the resolution of smaller banks. We have reaffirmed that intention by including it in the updates to the special resolution regime code of practice, drafts of which have now been published and shared with noble Lords. The Bank of England must have regard to the code of practice when exercising its resolution powers, and this is set out in statute.
The Treasury is involved in the exercise of any resolution powers, either by being required to provide a response to consultation or by consent. Nevertheless, the Government maintain that it is right for the Bill to contain some flexibility for the Bank of England to be able to use the mechanism more broadly in some circumstances. That is because firm failures can be unpredictable and there could be circumstances in which it would be appropriate to use the mechanism on other firms. To repeat the example I gave in Grand Committee, this may be especially relevant in situations where a small bank has grown but is still in the process of reaching its end-state MREL requirements. Firms in this position would have at least some MREL resources to support recapitalisation, but the new mechanism could be used to meet any remaining shortfall if judged necessary. Without the proposed mechanism, there will be a potential gap in this scenario, creating risks to public funds and financial stability.
There is, of course, a counterargument here that the scope could instead be constrained, such that firms on the glide path to their full MREL requirement remain in scope of the mechanism but firms that have met their end-state MREL are excluded. The Government note that this is the desired intent of the noble Baroness’s amendment and it is an argument that we have considered carefully.
Ultimately, noting what has been set out in the code of practice and the strong expectation that the mechanism will be used on small banks, the Government’s view is that it is still right for the tool to have additional flexibility for unpredictable circumstances. To narrow the scope would constrain the Bank of England’s optionality, particularly where it might be necessary to supplement the resources bailed in with additional capital resources.
I note that these are considered unlikely outcomes, rather than a central case. However, given the uncertainty and unpredictability of a crisis scenario, the Government consider it important to avoid constraining that optionality.
None of the Bank of England’s other stabilisation powers are constrained for use on a specific type of in-scope firm and that the choice of stabilisation option used remains a decision for the Bank of England to take, having considered the resolution conditions and objectives. The Government believe that it is right for a similar approach to be taken in relation to the new mechanism. To be clear, the Government’s clear view remains that this mechanism should be intended for smaller banks and that the Bank of England should not assume the use of this mechanism for larger firms. In that regard, I agree with the noble Baroness on the crux of the issue she is raising. The Government simply do not wish to hard-wire that principle into the Bill.
Since we last debated this issue in Grand Committee, the Bank of England has published a consultation on proposed changes to the MREL regime. These proposals include the removal of the additional MREL requirement associated with the transactional accounts threshold for being set to the transfer strategy, given the availability of FSCS funds under the mechanism in the Bill as an alternative. There are currently only a limited number of firms with a transfer strategy, and firms with such a strategy would typically be expected to have a relatively small balance sheet. As such, the proposed change to the MREL regime is modest, consistent with the policy intention for the Bill mechanism to be intended primarily for smaller banks and it has the additional benefit of seeking to ensure that the MREL regime is proportionate for growing firms.
I reiterate the message delivered in the Written Ministerial Statement I made on the day the Bank of England’s consultation was published. As I have already said, the Government and the Bank of England agree that the Bank should not assume use of the new mechanism when setting a preferred resolution strategy of bail-in and corresponding MREL requirements for larger banks.
Recognising the level of interest rightly expressed in Peers being able to scrutinise the changes to the code of practice before the Bill begins its passage in the other place, the Government published updates of that document on 15 October. Notably, on the issue of scope, these updates to the code of practice explicitly state that the Bank of England will not assume use of the new mechanism when setting a preferred resolution strategy of bail-in and the corresponding MREL requirements for a large bank. Those updates to the code also made it clear that the Bank of England is still expected to abide by the so-called 5% and 8% rules in the case of larger banks.
I hope the explanations I have given have been helpful. Throughout the commitments I have given today and in Committee, in publishing draft updates to the code of practice, in the Written Ministerial Statement and in the engagement I have had with noble Lords, I have sought to reassure noble Lords on the question of scope, the primary intention for the mechanism in the Bill and the importance of maintaining flexibility for the Bank of England to act in the public interest. I recognise that I may not have been successful and that strong views remain, but I hope that the noble Baroness may feel able to withdraw her amendment as a result.
Baroness Vere of Norbiton (Con)
My Lords, I am grateful to all noble Lords who have contributed to this debate, particularly those who have spoken in favour of my amendment. This has been the subject of numerous discussions with the Minister. I listened carefully to what he had to say, and I still cannot quite understand why the Government will not accept this amendment and are unfortunately still using terms such as “It is the strong expectation that it would be used for X, Y, Z-type of bank”, or “It’s primarily for smaller banks”. That does not give me comfort, as we may be storing up significant challenges for the future. Therefore, I am not encouraged by the Minister’s response, and I wish to test the opinion of the House.
Lord Sikka
“(3A) Before exercising the power in subsection (1), the Bank and the scheme manager must assess whether they consider that there should be a clawback of any part of executive remuneration from the previous 12 months.”Member's explanatory statement
This amendment seeks to address potential moral hazards through requiring the Bank and scheme manager to take directors’ pay and bonuses into consideration when a recapitalisation payment is made.
Lord Sikka (Lab)
My Lords, a wise man once said that history repeats itself, first as tragedy and secondly as farce. So it is with successive Governments’ obsession with going easy on the banking industry. We are sleepwalking into the next financial crash, but this modest amendment seeks to check some of the moral hazards by imposing personal costs on bank directors through a possible clawback of their remuneration.
History shows that moral hazards give rise to heavy economic and social costs. The secondary banking crash of the mid-1970s forced the state to bail out banks and insurance and property companies. We have had a banking crisis every decade since the 1970s but Governments continue to indulge the City of London. The big bang, the Financial Services Act 1986 and the Banking Act 1987 formalised light-touch regulation. Then came the banking crash of 2007-08. The obedient state dutifully provided £133 billion of cash and £1,029 billion of guarantees to bail out banks. It also provided £895 billion of quantitative easing to support capital markets.
The reforms that were introduced after the crash have been gradually reversed and the race to the bottom is accelerating. The regulators once again have the secondary objective of promoting the growth and competitiveness of the industry. The Bank of England has watered down the capital requirement rules that were meant to shock-proof the banking system from another 2007-08 style crash. Banks would now have to increase their current capital buffers by less than 1% to abide by the Basel 3.1 standards. That is down from the previous proposal for a 3.2% rise last year, as the Government are now more interested in getting the banks to help to promote growth.
Research by my colleagues at Sheffield University shows that between 1995 and 2015 the scandal-ridden finance industry made a negative contribution of £4,500 billion to the UK economy. No questions have been asked about that, and Governments have done their best to conceal the criminal activities of banks. Documents relating to the 1991 closure of the Bank of Credit and Commerce International are still a state secret. No one has explained why in 2012 the Chancellor and the regulators urged US authorities to go easy on HSBC after it admitted in writing to “criminal conduct”, along with money laundering for criminals. To this day, no Statement about that has been made to Parliament. However, in Committee on the Bill, the Minister urged the House to trust the regulators.
Due to the absence of personal sanctions, there is no urgency for dealing with banking fraud. Thousands of people suffered from frauds at HBOS; these date back to 2003. The Government washed their hands of the matter and left it to Lloyds Bank to investigate its own failures. Dame Linda Dobbs was appointed by Lloyds Bank in 2017 and a report was promised by 2018. To date, no report has been published and no regulator or Minister has inquired into the reasons for the delay or done anything to help the victims of those frauds.
Despite warnings, swathes of banking remain unregulated. The shadow banking system, which is now bigger than retail banking and is enmeshed with the regulated sector, remains unregulated. The cap on bankers’ bonuses has been abolished and bankers are free to be reckless as they pursue personal riches. This Bill ensures that the banks will be bailed out, therefore there are even fewer incentives for the directors to behave in a responsible way. There are virtually no pressure points on directors to curb predatory practices and it takes years to disqualify any company director. Prosecutions for predatory practices are rare and the Government say that the prisons are already full, so we cannot send these people to prison either.
On 5 September, in opposing my amendment during Committee, the Minister said that
“it is a key principle of the resolution regime that natural and legal persons should be made liable under the civil or criminal law in the UK for their responsibility for the failure of the institution. This is delivered by Section 36 of the Financial Services (Banking Reform) Act 2013, which provides for a criminal offence where a senior manager of a bank has taken a decision which caused the failure of a financial institution”.—[Official Report, 5/9/24; col. GC 41.]
Following that exchange, on 12 September 2024 I tabled a Written Question to the Ministry of Justice. The reply on 23 September said:
“The Ministry of Justice Court Proceedings Database has not recorded any prosecutions under section 36 of the Financial Services (Banking Reform) Act 2013 since its introduction”.
There is no pressure on directors; they are not prosecuted —although they may get some honours.
I am not really persuaded that there are sufficient pressure points upon bank directors to curb predatory practices. I urge the Government to accept my modest amendment. The Government can stand up to the banking industry or perhaps, one day, they may well have to pick up the tab from the next banking crash. I beg to move.
Baroness Vere of Norbiton (Con)
My Lords, I thank the noble Lord, Lord Sikka, for bringing his amendment and for explaining it so well. We on these Benches are concerned that a statutory requirement to make assessment of potential clawbacks of executive pay may simply hinder the efficient use of the recapitalisation mechanism, which of course usually has to be done in a very timely fashion. Having considered his amendment, we feel that it would not be an improvement to the Bill and will not be supporting it.
Lord Livermore (Lab)
My Lords, the amendment tabled by my noble friend Lord Sikka replicates the one he tabled in Committee. I hope that my noble friend will therefore forgive me for repeating some of the points that I made when we discussed this amendment then.
Amendment 3 seeks to ensure that the Bank of England and the Financial Services Compensation Scheme consider whether there should be a clawback of executive pay and bonuses from a failed firm before using the new mechanism. Although the bank resolution regime does not set out powers allowing the Bank of England to claw back money from management, it does provide it with an extensive and proportionate set of powers to impose consequences on the management of a failed firm in resolution.
First, we expect that any existing shareholder equity would be cancelled or transferred when a firm is placed into resolution. This ensures that the firm’s owners bear losses, which is an important principle of the resolution regime. In many circumstances, this will affect directors and management who hold shares or other instruments of the failed firm.
Lord Sikka (Lab)
My Lords, I thank the noble Baroness, Lady Vere, for her comments and the Minister for his detailed reply. I am not really persuaded by either of their replies. I feel that this is an important question and there are still no effective checks on the moral hazard created by institutionalised bailouts of the banking sector.
I have made my point and it has gone on the public record. I hope no Government live to regret not accepting this amendment, but given that there is a lack of support, I beg leave to withdraw it.
Lord Livermore
“(4A) In subsection (2)(b), “relevant person” means—(a) the Treasury,(b) a bridge bank, or(c) an asset management vehicle.(4B) In this section, “bridge bank” and “asset management vehicle” have the meanings given by sections 12 and 12ZA, respectively, of the Banking Act 2009.”Member's explanatory statement
This amendment, together with my first amendment to Clause 1, clarifies the persons (in addition to the Bank of England) in respect of whose expenses a recapitalisation payment may be made.
Lord Vaux of Harrowden
“(6) When the Bank exercises its power in subsection (1), the Bank must make a report to the Chancellor of the Exchequer within 28 days of the date of any recapitalisation payment being made.(7) The report must comply with any requirements specified by the Treasury, but must include—(a) the reasons why the Bank decided to make a recapitalisation payment in preference to allowing the financial institution to go into insolvency;(b) a breakdown of the costs referred to in subsection (2);(c) a comparison of the expected recapitalisation payment or payments that will be paid by the Financial Services Compensation Scheme, compared with the expected costs to the Scheme in an insolvency process.(8) The Bank must make a further report to the Chancellor of the Exchequer within three months of the date of the sale of the institution to a private sector purchaser, or the sale, closure or winding up of the institution or bridge bank, providing such information as the Treasury may require, including the breakdown of the actual recapitalisation payment or payments and the reasons for any differences to the expected costs referred to in subsection (7)(b).(9) The Chancellor of the Exchequer must lay a copy of each report under subsection (7) or (8) before Parliament.”Member’s explanatory statement
This amendment is intended to ensure that the reasons for decisions of the Bank to follow a resolution process in preference to an insolvency process are explained and the explanation laid before Parliament, both at the time of the decision and once the resolution process has been completed, and that the costs can be compared to what would have been expected if the institution had been placed into insolvency.
Lord Vaux of Harrowden (CB)
My Lords, this group covers reporting and accountability to Parliament on the use of the resolution mechanism, which was probably the greatest area of discussion in Committee. The Bill gives significant rights to the Bank of England to impose costs on the banking industry. It can only be right, therefore, that the Bank should have to explain the reasons for its decisions and the outcome to both the Treasury and Parliament.
A number of concerns have been expressed throughout the process, and again today, about how the Bank might use the mechanism. At Second Reading, the noble Lord, Lord Macpherson of Earl’s Court, said:
“I can foresee circumstances where the Bank will choose to recapitalise a small bank rather than put it into a bank insolvency process, less because it is in the national interest and more as a way of minimising the reputational damage of regulatory failure”.—[Official Report, 30/7/24; col. 914.]
The noble Baroness, Lady Noakes, said something similar earlier today. The noble Lord and others have pointed out that there is nothing in the Bill that would incentivise the Bank to control the expenses of the process; again, we discussed this to an extent earlier. Those expenses will be picked up by the FSCS, by the wider financial services industry and, ultimately, by the customers of that industry.
As we have just seen, the Government have tabled amendments to clarify that last point, which we have already discussed—but the point remains. Fears, which I share, have been raised that this resolution mechanism could become the default, rather than insolvency. I believe—others share this view, I think—that, in principle, a failing institution should be allowed to fail unless it is in the public interest for it to be bailed out. The draft code attempts to deal with this but the concern remains.
For all these reasons, it is essential that the Bank should have to explain its decisions and that Parliament should have the ability to scrutinise those decisions. For that reason, I have tabled Amendment 5, which would require the Bank to make a report to the Chancellor that must then be laid before Parliament every time a recapitalisation payment is made. The amendment sets out some minimum requirements for what the report should cover, including why the Bank chose to make a recapitalisation payment rather than allowing the institution to go into insolvency; the costs that will be incurred; and how those costs compare to the costs the FSCS would incur in an insolvency situation. It would also require a final report explaining what actually happened—and, if different, why—at the end of the resolution process.
Since I tabled Amendment 5, I am pleased to say that the Government have issued the draft code of practice—for which we are all grateful, as I said—and tabled Amendment 8. I am extremely grateful to the Minister for his constructive approach on this. Given that the two together deal with most of the areas covered by my Amendment 5, I will not push that.
However—there is always a “but” in these things—there is one important omission in the Minister’s Amendment 8. Although it requires the Bank to report within three months of any recapitalisation payment, it does not require a final report on what actually happened at the end of the resolution process. Although the resolution will happen quickly in many cases—the example of Silicon Valley Bank, where it happened over the weekend, is a good one—that may not always be the case. Under these rules, a bank can be put into a bridge bank for up to two years, which can be extended further. We can have multiple recapitalisation periods during that period, so the process can last a number of years. If the Bank reports within three months of each payment, we may never see a report on what actually happened at the end—for example, if the failing institution is put into insolvency two years later.
It is essential that the Chancellor and Parliament have an opportunity to review how the resolution worked out and, most importantly, to ensure that any relevant lessons are learned. So I have tabled Amendment 9, as an amendment to the Minister’s amendment, to cover that point. I think that this may have been the Minister’s intention all along, but I cannot agree with him that his amendment, as drafted, actually achieves this. On the report it requires, his amendment says:
“The Bank must report to the Chancellor of the Exchequer about … the exercise of the power to require a recapitalisation payment to be made, and … the stabilisation power and the stabilisation option to which the payment relates”.
Nowhere does it talk about what happened at the end, which could be a number of years later.
I am alive to the concern that we should not have too many potentially repetitive reports, so my amendment would have effect only if the reports published by the Bank, in accordance with the Minister’s amendment, do not cover the final resolution results. I hope that this is not controversial and that the Minister will be able to accept Amendment 9 to his amendment. However, as I say, it is essential that the final outcome of any resolution is made transparent and open to scrutiny.
If the Minister is unwilling to accept my proposal, or accepts the principle but does not like some of the detail—he has mentioned to me that he is not terribly keen on the three-month timeframe—perhaps he could commit to coming back at Third Reading with his own version of the amendment that satisfies the guaranteed requirement to report on the final outcome. He can tweak it as he likes on timing and things—I cannot get too excited about that—but, if he is not prepared either to accept it or to do that, I will be minded, I am afraid, to test the opinion of the House on Amendment 9 when the time comes.
The other amendments in this group relate to notifying the relevant committees of both this House and the other place of the use of the recapitalisation power. The amendments tabled by the Minister, as well as the amendments to his amendments tabled by the noble Baroness, Lady Noakes, arose from amendments that the noble Baroness put down in Committee. I am pleased that the Government have accepted those amendments. However, all the amendments do is say that the committees must be notified. Those committees need something to look at; it makes it all the more important that we have the reports we are talking about, both on the use of the recapitalisation power and on what finally happens, at the end of the day. I beg to move.
Baroness Noakes (Con)
My Lords, I have Amendments 11 to 13 in this group; they are amendments to the Government’s Amendment 10, to which the noble Lord, Lord Vaux, has referred. Before I address those amendments, I shall refer briefly to the reporting amendments in this group. I certainly praise the Government for bringing forward their Amendment 8, as well as for beefing up the code of practice on reporting. However, I agree with the noble Lord, Lord Vaux, that the issue of the final report made by the Bank of England is outstanding; I therefore support his Amendment 9.
On Amendments 10 to 13, I start by thanking the Minister for listening to the case, made in Committee, that parliamentary committees should be notified of the use of the bank recapitalisation power. I had tabled an amendment that named the Treasury Select Committee in the other place and the Financial Services Regulation Committee in your Lordships’ House; this was supported in Committee by fellow Members of the latter committee, as noble Lords might imagine. I retabled my amendment for Report—the noble Baroness, Lady Bowles, and the noble Lord, Lord Vaux, added their names—but the Government then tabled Amendment 10, which was similar in principle to my amendment but drafted using the language of the Financial Services and Markets Act 2023. That Act did not refer to the Financial Services Regulation Committee for the simple reason that it did not exist at the time—indeed, it was that Act that led to creation of that committee. So, following the helpful meeting that we had with the Minister, I was told that the Government were happy to refer directly to the Financial Services Regulation Committee. They suggested that this be achieved by my tabling amendments to the Government’s amendments. So I hope that, when the Minister gets up to speak to his amendment, he will confirm that he accepts my Amendments 11 to 13.
Noble Lords who have joined the House in the past eight years might be mystified by the reference to the Chairman of Committees in my Amendment 13. Although the House has not used the title since 2016, the post to which we now refer as the Senior Deputy Lord Speaker technically remains the Chairman of Committees. One learns something every day in Parliament.
Let me conclude by saying that I hope the principle of requiring notification to the Treasury Select Committee in the other place and your Lordships’ Financial Services Regulation Committee is now regarded as a precedent for any future creation of significant or unusual powers granted to the Bank of England or any of the other regulators in future. The strength of parliamentary accountability for those bodies, with their massive powers, must always be maintained—and, indeed, enhanced.
Baroness Bowles of Berkhamsted (LD)
My Lords, I think that everything that needs to be said about these amendments has probably already been said. I have added my name where I could; one came in very late, so I could not. I congratulate the noble Baroness, Lady Noakes, on her diligence in getting the committee name in properly so that everybody knows where to go, with all these hundreds of people who are going to be reading this legislation. Nevertheless, we are an institution, as it were, so it is good to see our name there.
I also congratulate the noble Lord, Lord Vaux, on his diligence in hounding to a conclusion the final report, because it is, as he said, very important. In the meeting we had recently, those present from the Bank of England wondered why we might want this and suddenly nodded when I said, “Because otherwise Parliament may never find out what really happened”: that is what it is all about. They might think we do not want to know, many years on, if it is a long period. The sorts of people who sit on these committees do want to know, because we are the ones who have to learn and have to ask the questions, to make sure that it is not going wrong again. It is very important, and I hope the Minister will accept it. If votes are called, these Benches will be supporting the noble Lord, Lord Vaux.
Baroness Vere of Norbiton (Con)
I am enormously grateful to all noble Lords who have spoken today. I too add my thanks to the noble Lord, Lord Vaux, for tabling his amendment. This group epitomises what is so good about your Lordships’ House: a lot of movement has happened to date on these issues from the Minister, and we are grateful for his engagement and for the fact that we have been able to get a little further down the road. However, like terriers with very sharp teeth, noble Lords are not quite willing to let it go just yet, and I too support the amendments in the name of the noble Lord, Lord Vaux, and of course those of my noble friend Lady Noakes, who has also done a fantastic job in ensuring that the issues she raised, and which most noble Lords agreed with in Committee, come to the fore. Helpfully, the noble Lord, Lord Vaux, has tabled Amendment 9, which plugs a big gap, and I hope the Minister will accept that and the amendments in the name of my noble friend Lady Noakes.
Lord Livermore (Lab)
My Lords, this large group includes a number of the Government’s proposed amendments to the Bill. I begin by responding to the amendment from the noble Lord, Lord Vaux, which is intended to ensure that there is transparency about the Bank’s use of the new mechanism. It does this by creating a requirement for the Bank to report to the Chancellor of the Exchequer within 28 days on certain matters where a recapitalisation payment is made, and for the Chancellor of the Exchequer to lay these reports in Parliament.
I assure noble Lords that the Government recognise absolutely the importance of transparency and accountability regarding the new mechanism and appreciate the strength of feeling in the House. The debates at Second Reading and in Committee were helpful and constructive and have informed the Government’s approach. The Government therefore agree that there should be an explicit requirement for the Bank of England to report to the Chancellor when it uses the new mechanism. To that end, government Amendment 8 means that the Bank of England must report to the Chancellor about the use of the mechanism in any circumstances where it is used.
The Government’s amendment outlines two elements to reporting. First, it would require the Bank of England to produce a final report at a time to be specified by the Treasury. This is intended to be a comprehensive account of the use of the new mechanism and to include an assessment of the relative costs to insolvency. Secondly, the amendment would require the Bank to provide an interim report within three months of using the mechanism in the event that a final report has not been provided within that time. This would ensure a prompt initial public justification for the use of the new mechanism, even if further details would follow later.
Government Amendment 14 would require the code of practice to include guidance on what should be included in the reports. Taking these points together, the Government’s approach has a broadly similar intent to that of the noble Lord’s amendment. However, there are some points of detail where the Government have taken a different approach in order to avoid unintended consequences. In particular, while recognising the importance of clear reporting arrangements, the Government believe that it is critical that the timing and content of any reports do not complicate a successful resolution.
I would highlight two challenges with the approach set out in Amendment 5 from the noble Lord, Lord Vaux. First, the Government believe that requiring an initial report as soon as 28 days after using the mechanism is likely to be too soon. As noble Lords know, the complexity of firm failures mean that they may not always be fully resolved within a short period of time. This is particularly the case when using the bridge bank tool, which is anticipated to be an interim step before an eventual sale. It is possible that a resolution process remains ongoing 28 days following a firm failure. It is therefore important that sufficient time is allowed so that the Bank can focus on its primary function of maintaining financial stability through managing the failure of the firm, before turning to the process of reporting. The Government therefore believe that providing an interim report within three months is a more proportionate approach to take, allowing the Bank more time to ensure that an interim report is as meaningful as possible while still ensuring that the Chancellor and Parliament are updated on use of the mechanism in short order.
This takes me to my second point, which is that disclosing certain information too early in the resolution process, especially information relating to the relative costs of different options such as insolvency, risks complicating a resolution because such information is either incomplete or highly sensitive. Regarding the noble Lord’s proposal to require an initial report to disclose certain costs, it is worth noting that when conducting the resolution conditions assessment, the Bank of England would make an assessment of the costs that the Financial Services Compensation Scheme may incur if the firm was placed into insolvency. However, by virtue of necessity, this would be only an initial assessment based on the information available at the time. It is therefore important that the Bank of England’s assessment of relative costs is reported on only once the resolution is fully complete. This will ensure that the Treasury, Parliament and industry are provided with a comprehensive and accurate account.
In addition, if the firm was in a bridge bank, as it may well be after just 28 days, the early disclosure of this interim financial information could complicate negotiations regarding a sale, especially if it was subsequently revised. It may also be market sensitive and increase speculation about the failed firm during a period of heightened sensitivity. Ultimately, therefore, the Government see risks in requiring the Bank to report too early and in too much detail during a highly unpredictable and sensitive situation. This is in part why the existing reporting provisions within the Banking Act in relation to resolution require reports as soon as reasonably practicable only after a year has passed.
The Government have sought to reconcile these different issues in our proposed amendment, while recognising the important substantive point of principle raised by the noble Lord, Lord Vaux. First, the Government have proposed an interim report to be provided within three months. While it is possible that a resolution process may not have concluded by this point, as the FSCS is likely to levy firms within this timeframe, it seems reasonable to expect the Bank to provide a public justification of the decision to use the new mechanism by this point. I note that, alongside the notification requirement covered in government Amendment 10, which I will turn to shortly, this will ensure that the Treasury and Parliament have a prompt explanation of why resolution has been undertaken.
Secondly, the Government’s amendment means that the Bank of England must provide a separate final report, in the event that this has not already been provided within three months of using the mechanism. This final report is where the Bank would outline its assessment of the relative costs of different options. This reflects the points that I have already made, namely that the Government believe that the key reporting obligation should fall once the resolution process has concluded. This reduces the risk that disclosure frustrates that process and ensures that any report can be meaningful.
To support this approach, the Government have also tabled an amendment requiring guidance on the content of such reports to be included in the code of practice. This will ensure that there is clear public understanding of the key issues that any interim or final report is expected to cover. As I have noted, both interim and final reports would be expected to provide a justification for the use of the mechanism, and as set out in the current draft of the code of practice, the final report would need to set out an assessment of the costs if the firm had entered insolvency. The current draft updates to the code of practice also make clear that the Government expect to require the Bank of England to provide an explanation of why ancillary costs were considered reasonable and prudent.
I am grateful for the helpful engagement that I have had with the noble Lord, Lord Vaux, who has rightly emphasised the importance of the Bank of England providing a comparison of the expected and actual costs in its final reports. I am happy to reassure the noble Lord that the Government intend to request that the Bank of England include this in final reports and will ensure that the final updates to the code of practice reflect this.
The noble Lord, Lord Vaux, has also tabled Amendment 9 to require the Bank to produce a report three months after the resolved firm has been sold or otherwise closed. I understand that the intent of this similarly reflects a desire to ensure that the Bank of England is compelled to report after a resolution process has fully concluded and provide an assessment of how the expected impacts of its actions compared to the actual events that took place in resolution. The Government of course appreciate the importance of the Bank of England reporting promptly. Reflecting on the noble Lord’s proposal, the Government intend to further update the code of practice to make clear that, where feasible and appropriate, the Treasury would expect the Bank of England to report soon after the sale or closure of the resolved firm.
The Government believe that it would be preferable not to put this expectation into legislation. This reflects the point I have already made: that the Bank of England should be required to provide final reports with the more detailed assessments only at the appropriate moment. While the Government do expect, as I have said, the Bank of England to be in the position to report soon after the end of the resolution process, this cannot always be guaranteed. For example, in the case of selling a firm, it may not have been possible in all cases to complete the full post-resolution independent valuation process within three months of a sale. I believe the Government’s approach still captures the intent of the noble Lord’s amendment, which is to ensure that full reports following the conclusion of a resolution process are presented expediently, with some discretion for the Treasury to ensure that reports are still provided only at the right moment.
I hope that, taken together, the Government’s amendments address the noble Lord’s concerns on both the timing and the content of reports, while retaining the flexibility necessary to avoid unintended consequences. On the specific additional point raised by the noble Lord’s Amendment 9, I agree of course with his intention and I will be happy to update the code of practice to this effect. However, the Government believe it would be preferable not to put this into legislation. I would be happy to consider this matter further and discuss it with my honourable friend the Economic Secretary to the Treasury, but I cannot give any firm additional commitments at this stage.
Turning to government Amendment 10, on notifying Parliament when using the power, I note that both the noble Baroness, Lady Noakes, and the Government tabled similar amendments on the theme of parliamentary scrutiny. I am extremely grateful to the noble Baroness for raising this issue and for her engagement on the matter; I am especially grateful to her for agreeing to withdraw her original amendment. The Government’s amendment reflects the point made by noble Lords in Grand Committee concerning parliamentary notification and the creation of the Financial Services Regulation Committee in your Lordships’ House as a result of passing the Financial Services and Markets Act 2023.
Building on that innovation in parliamentary scrutiny and accountability, the Government’s amendment seeks to harness the role played by that committee, as well as the Treasury Select Committee. It requires the Bank of England to notify the chairs of both committees as soon as reasonably practicable after the new mechanism under the Bill has been used. It includes provisions to future-proof this requirement following use of the new mechanism, such that if the names or functions of those committees change, the requirement for the Bank of England to notify the relevant committees by which those functions are exercisable would still stand.
The noble Baroness, Lady Noakes, has rightly argued that the Government’s amendment requires some tweaking, in particular to refer to the Financial Services Regulation Committee in the House of Lords by name. I am grateful to the noble Baroness for bringing this to my attention, and I note her amendments to the Government’s amendment—Amendments 11, 12 and 13—which attempt to address this point. I am of course very happy to agree to those amendments being made.
I hope that the Government’s approach across all the issues debated in this group demonstrates that the issue of accountability to Parliament is being taken seriously, ensuring that there will be transparency in use of the new mechanism. In particular, I hope that the Government’s amendments on the new reporting requirements address the noble Lord’s concerns on both the timing and content of the reports, while retaining the flexibility necessary to avoid unintended consequences. On the basis of these points, I hope noble Lords will be able to support both the Government’s amendments and those tabled by the noble Baroness, Lady Noakes, and I respectfully ask the noble Lord, Lord Vaux, to withdraw his amendment.
Lord Vaux of Harrowden (CB)
My Lords, first, I thank all noble Lords who have taken part in this debate, and the Minister for his constructive approach to it. I take on board everything he said about Amendment 5, which is why, as I have already indicated, I do not intend to push it to a vote.
However, I take issue with the Minister’s thinking it is appropriate that the relative costs of the recapitalisation process versus the insolvency process are looked at only after the event, at the very end of the process. It is quite important that we see why the Bank made decision it made at the time it made it, and that it has not reverse-engineered the results and facts to justify what it did. So I am not totally sure that I fully agree with the Minister on that point. Be that as it may, I am not going to push Amendment 5, because Amendment 8, along with the code of practice, covers most of what is needed.
However, as to Amendment 9, I am afraid that I did not hear anything particularly new there. The Minister has confirmed that his intention is that the reporting should cover the final result of the resolution process, which, as I say, could be a number of years later—but that is not what government amendment 8 says. The amendment specifically refers to
“the exercise of the power to”
recapitalise and
“the stabilisation power and stabilisation option to which”
it
“relates”.
It does not refer anywhere to what happens at the end. It is all very well saying that it might go in the code of practice and that there is an expectation that this will happen, but this is a really important issue.
We must know what actually happened, to be able to see how that compares with what we were told was going to happen, and to be able to learn the lessons arising from that. With the best will in the world, it may not be the Minister who is at the Treasury whenever this is used. I absolutely believe and trust that he would do exactly the right thing, but whoever comes next might not. It is important that this is in the Bill.
I am afraid that I intend to divide the House when the time comes, but in the meantime, I beg leave to withdraw the amendment.
“(6) When discharging its functions in respect of the exercise of recapitalisation payments under this section, the Bank of England must observe the competitiveness and growth objective.(7) The competitiveness and growth objective is facilitating, subject to aligning with relevant international standards—(a) the international competitiveness of the economy of the United Kingdom (including in particular the financial services sector), and(b) its growth in the medium to long term.”
Baroness Bowles of Berkhamsted (LD)
My Lords, I will speak principally to Amendment 7 in this group, which has also been signed by the noble Baronesses, Lady Vere and Lady Noakes. Amendment 6 was my first attempt, when I was worried that defined first and secondary objectives were not already specified in connection with resolution. In fact, there are a whole load of objectives that have to be balanced in Section 4 of the Banking Act 2009. However, I then hit upon the formulation of claim 7, to make it agree with how it had been rendered in FiSMA 2000. I am suggesting that this is a secondary objective to all the existing ones, and the formulation is the one with which we are already familiar.
We on these Benches are not always certain of the merits of the competitiveness and growth objective, which is what I am inserting into the Bill here, in respect of the resolution authority. Our concern is that in other places, it might return to too much of the animal spirit that led to the financial crisis, but here, it has a different and particular role. The Bank has to balance all the Section 4 objectives to get the best results, and, in its resolution capacity, it is not really in a situation to be prey to animal spirits.
When it comes to the Financial Services Compensation Scheme as a source of funds, as we have already said, there are no bounds, or at least no written ones. How many dips into it can be made if the first one is not enough? How big can those dips be, compared to what might have been needed to compensate depositors if the Bank had gone bust instead? What happens if there are multiple resolution events in a narrow period of time? For how many years can the extra levy be put on to the banking sector in order to pay back the scheme? As the noble Baroness, Lady Noakes, has said before, how can we be certain that, years later, it is not called upon again in connection with some kind of legal action?
All these things are left open for the Bank of England resolution authority to decide and to do its best on. It will, of course, receive advice from the PRA, which has to consider what is an affordable levy for the industry, but it is receiving advice from a body which has in one sense just failed, and to which it is always close. It is advice that it does not actually have to take, either.
The only lever—other than the one suggested in the amendment of the noble Baroness, Lady Noakes, a requirement to minimise cost—is to impose the objective of competitiveness, which in this instance means affordability, and for that to be imposed on the resolution authority itself. It is secondary to everything else, so it cannot kick the other objectives into touch in any way; it is just making sure that there is a small reality check about what this does to other banks, especially in the circumstance that this is not the only bank or that this is not the only dip into the fund.
So, this is an instance where the secondary competitiveness and growth objective is relevant, and I hope the Minister can see his way to accepting it. If not, I shall probably seek to test the opinion of the House. I beg to move.
Baroness Noakes (Con)
My Lords, I have Amendment 16 in this group and added my name to Amendment 7, to which the noble Baroness, Lady Bowles of Berkhamsted, just spoke. As she indicated, the two amendments are related in that the imposition of unnecessary costs, which is the target of my Amendment 16, will do nothing to help the financial sector grow, be competitive or, indeed, support the real economy.
I fully supported the growth and competitiveness objectives introduced for the PRA and the FCA in the Financial Services and Markets Act 2023, and I am very glad that the Chancellor of the Exchequer has given her support to those. But I hope that the Government will want to go further and make all regulators, and indeed all other public sector bodies, pay attention to growth and competitiveness. Extending this to other organisations is important, particularly in the financial services universe, as they were not included within the competitiveness and growth objective in the 2023 Act.
One of those omitted at that time—perhaps we should have spotted it during the passage of the Financial Services and Markets Act—was the Bank of England in its capacity as a resolution authority. The noble Baroness, Lady Bowles, has had to confine her amendment to the use of the bank recapitalisation power because of the Long Title of the Bill. But the competitiveness and growth objective ought to apply to the Bank as the resolution authority in toto, not simply when it exercises the new bank recapitalisation power but also when, for example, it is setting MREL levels.
My Amendment 16 adds a special resolution objective to the seven already listed in Section 4 of the Banking Act 2009, and it requires the Bank to consider the minimisation of costs borne by the financial sector when the recapitalisation power is used. It is not an absolute requirement, as it would be just one of eight objectives, and it is for the Bank to determine, under the 2009 Act, how to balance those various objectives.
When it is using the power, the Bank is playing with other people’s money. Ultimately, it is the money of those of us who are customers of the banks, because at the end of the day the money that flows through the banks will end up being borne by customers, and it is only right that the Bank should have regard to the minimisation of costs that are ultimately borne by the banks’ customers.
In Committee I tabled an amendment that focused on the costs being borne through the FSCS not exceeding the counterfactual of the bank insolvency procedure to which the Bank should be paying regard in any event. My amendment today is a less complex test and is simply designed to act as a reminder to the Bank that it should treat other people’s money as carefully as it treats its own. If it does that, it should also help to keep the sector competitive and to help it grow. I hope that the Minister will agree that this amendment is right in principle and that it responds to a number of concerns expressed by several respondents during the consultation on the power over the last year or so.
Lord Vaux of Harrowden (CB)
My Lords, I support both the amendments in the names of the two noble Baronesses who have just spoken. I probably have a slight preference for Amendment 16 on the expenses—it is more direct—but we need something in the Bill that reminds the Bank of England that it is spending other people’s money, and that it needs to do that carefully and with care. These amendments are aimed primarily at that end, so I support them both.
Baroness Kramer (LD)
My Lords, I will speak briefly in support of Amendment 7 in the names of the noble Baronesses, Lady Bowles, Lady Noakes and Lady Vere, but I am not as minded to support Amendment 16 for the following reasons. Some in this House will know that I dislike intensely the competitiveness and growth objective that has been attached to the PRA and the FCA. If you were going to set out a pattern to repeat the crash of 2007-08, those two objectives would be essential paving stones on that route, so I do not look to attach that particular amendment to the Bank of England in its overall resolution role in, for example, setting MREL. It should be setting MREL to reduce risk, not to follow the lowest common denominator in the international banking arena.
Ironically, if you take the growth and competitiveness secondary objective and just apply it to recapitalisation, it turns on its head and becomes a risk-reduction tool, because it basically limits the ability of the collapse of one bank to then infect all the other banks within the system. That seems to me to be a risk-reduction strategy, so I am very much in favour of the way in which it has been crafted under Amendment 7. I say that to reassure others in this House who may be afraid that playing fast and loose with the competitiveness and growth agenda is always a risk-increasing agenda rather than a risk-reduction agenda. In this narrow role, it works in the opposite direction.
Baroness Vere of Norbiton (Con)
I rise briefly to speak to Amendment 7 in the name of the noble Baroness, Lady Bowles of Berkhamsted, and Amendment 16 in the name of my noble friend Lady Noakes.
On Amendment 7, I will not reiterate the points raised. I deeply appreciated the explanation by the noble Baroness, Lady Kramer, as to how she got to her supportive position. From our perspective, we feel that Amendments 7 is a reasonable objective that would ensure the Bank facilitates the international competitiveness of the UK economy and economic growth in the medium term—that is very clear. It also has the ability to look at the level of risk within the banking sector over the medium term. Given the Government’s stated objective of focusing on economic growth, I am very interested to hear the Minister’s view on these amendments.
Amendment 16 in the name of my noble friend Lady Noakes, which I have signed, seeks to minimise the net costs recouped from the banking sector via this mechanism. Again, it is a very sensibly drafted amendment that would improve the Bill, and I look forward to hearing the Minister’s response.
Lord Livermore (Lab)
My Lords, I start by noting that the Government fully understand the concerns raised by noble Lords regarding the objectives the Bank of England should adhere to when taking resolution action.
Amendments 6 and 7 tabled by the noble Baroness, Lady Bowles, seek to ensure that the Bank of England considers growth and competitiveness when using the new mechanism, by introducing a new objective that the Bank of England would need to consider. In the case of Amendment 6 this would be alongside the existing special resolution objectives, while in the case of Amendment 7 it would be a secondary objective. This objective would be to facilitate the competitiveness and growth of the UK economy, subject to aligning with relevant international standards.
I appreciate wholly the intent of the noble Baroness’s amendments. The Government have reflected carefully on this issue in the weeks running up to Report. Growth and competitiveness are, of course, fundamental priorities for this Government. The Government are resisting these amendments because, while we understand and appreciate their intent, they would pose challenges within the specific context of this Bill. I intend to make three main points—about the wider context of the Bill; the particular challenges a new objective may pose in the case of the new mechanism; and the steps the Government are taking to ensure that costs to industry are properly considered.
First, I note that the aim of the Bill is to enhance the resolution regime, but in a way that avoids making more fundamental changes to the regime or to the way in which the Bank of England exercises its resolution powers. This reflects a key conclusion from the Government’s consultation, which is that the regime already broadly works well. This was demonstrated by the successful resolution of Silicon Valley Bank UK.
As noble Lords are aware, the resolution regime has been developed over a number of years to align with international best practice. The relevant authorities have invested considerable time and energy in contingency planning to use the existing powers within their existing framework of objectives. As it stands, the regime therefore reflects a carefully calibrated judgment about the key priorities that should be considered in what is an emergency, firm-specific failure scenario.
Baroness Bowles of Berkhamsted (LD)
I thank the Minister for his explanation. I have some sympathy for the position in which he finds himself, which is the usual one with the Bank of England: you cannot touch it or interfere with it, and it is infallible. You cannot occupy its mind with even a tiny other thought, as it might distract it from the resolution that it has in mind. I find that quite concerning.
Yes, we have the code of conduct and other things that are not in the Bill, but we are dealing with something a little different here. It is ruled by a public interest test, but what about the private interest test? You are using private funds to replace public funds, so there is a big difference. Some little corner of the mind of the Bank of England’s resolution authority has to register that point: private funds are replacing public funds—a special tax on the banking sector to help keep its competitors going.
Imagine you started doing this with grocery stores; what would they think about it? It is quite remarkable. It is not using private funds, by agreement, for a deposit guarantee in the public interest—that would be a specific amount that has previously been agreed—it is stretching the piece of elastic when you do not know how long it is and you are not prepared to have another little test. I find that unacceptable. Something is needed there.
I intend to press my Amendment 7 to a vote and to beg leave to withdraw Amendment 6. If the Minister can find a better way of doing that—this is a private interest test to go alongside the public interest test—he might come up with a better amendment, but this was the best that I could find for now, just to put something in the Bill that shows that we acknowledge what we are doing. This is a momentous precedent, and to say that we cannot have something in the Bill that acknowledges that is a very bad state of affairs. Where will it take us next? I beg leave to withdraw Amendment 6.
“(6) As a secondary objective to the special resolution objectives in section 4 of the Banking Act 2009, when discharging its functions in respect of the exercise of recapitalisation payments under this section, the Bank of England must observe the competitiveness and growth objective.(7) The competitiveness and growth objective is facilitating, subject to aligning with relevant international standards—(a) the international competitiveness of the economy of the United Kingdom, and(b) its growth in the medium to long term.”
Baroness Bowles of Berkhamsted (LD)
I wish to test the opinion of the House.
Lord Livermore
“ReportingIn the Financial Services and Markets Act 2000, after section 214E (as inserted by section 1 of this Act) insert—“214EA Recapitalisation payment: report(1) This section applies where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E.(2) The Bank must report to the Chancellor of the Exchequer about—(a) the exercise of the power to require a recapitalisation payment to be made, and(b) the stabilisation power and the stabilisation option to which the payment relates.(3) The report (“the final report”) must—(a) comply with such requirements as to content, and(b) be provided within such period or at such time,as the Treasury may specify.(4) The Bank must provide an interim report if—(a) the period specified under subsection (3)(b)is a period of more than 3 months beginning with the day on which the Bank requires the recapitalisation payment in question (“the first 3 months”), or the time specified under subsection (3)(b)is after the first 3 months, and(b) the Bank does not provide the final report within the first 3 months.(5) An interim report must—(a) comply with such requirements as to content as the Treasury may specify, and(b) be provided within the first 3 months.(6) Subject to subsection (7), the Chancellor of the Exchequer must lay each report, and any interim report, before Parliament.(7) The Chancellor of the Exchequer may omit from the report, and any interim report, any information which the Chancellor of the Exchequer considers it would not be in the public interest to publish.”” Member's explanatory statement
This new Clause imposes a reporting requirement on the Bank of England when it requires a recapitalisation payment to be made.
Lord Vaux of Harrowden
“(5A) Unless already covered by the final report under subsection (3), the Bank must make a further report to the Chancellor of the Exchequer within three months of the date of the sale to a private sector purchaser of the financial institution to which the recapitalisation payment relates, or the sale, closure or winding up of the financial institution or bridge bank to which the recapitalisation payment relates, complying with such requirements as to content as the Treasury may specify.”
Lord Vaux of Harrowden (CB)
My Lords, I have had the opportunity to consider further, based on the discussions that we have had. The Minister made some helpful commitments to discuss the matter further with his boss back at the Treasury and that the issue would be covered in the code of conduct going forward. On that basis, I will not press my amendment.
Lord Livermore
“Notification to Parliamentary CommitteesIn the Financial Services and Markets Act 2000, after section 214EA (as inserted by section (Reporting) of this Act) insert—214EBNotification to Parliamentary Committees(1)Where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E, the Bank must, as soon as reasonably practicable, notify in writing the chair of each relevant Parliamentary Committee that it has done so.(2)The relevant Parliamentary Committees are—(a)the Treasury Committee of the House of Commons, and(b)the Committee of the House of Lords which—(i)is charged with responsibility by that House for the purposes of this section, and(ii)has notified the Bank that it is a relevant Parliamentary Committee for those purposes.(3)The reference to the Treasury Committee of the House of Commons—(a)if the name of that committee is changed, is to be treated as a reference to that committee by its new name, and(b)if the functions of that committee (or substantially corresponding functions) become functions of a different committee, is to be treated as a reference to the committee by which those functions are exercisable.(4)Any question arising under subsection (3) is to be determined by the Speaker of the House of Commons.”Any question arising under subsection (3) is to be determined by the Speaker of the House of Commons.””Member's explanatory statement
This new Clause requires the Bank of England to notify relevant Parliamentary Committees when it requires a recapitalisation payment to be made.
Baroness Noakes
“(b) the Financial Services Regulation Committee of the House of Lords”
(b) the Chairman of Committees of the House of Lords, in relation to committees of the House of Lords.”
Lord Livermore
“Code of practiceIn the Banking Act 2009, in section 5 (code of practice), after subsection (2) insert—“(2A) The code must include guidance on the contents of a report, and of any interim report, under section 214EA of that Act (recapitalisation payment: report).””Member’s explanatory statement
This new Clause require the Treasury to include, in a code of practice under section 5 of the Banking Act 2009, provision relating to the content of reports about recapitalisation payments.
Lord Vaux of Harrowden
“Treatment of recapitalisation payments on a winding up(1) In section 215 of the Financial Services and Markets Act 2000 (rights of the scheme in insolvency), after subsection (2A), insert—“(2AB) Any recapitalisation payment made by the scheme manager under section 214E in respect of a bank, building society or investment firm is to be treated, in the event of such bank, building society or investment firm or associated bridge bank being wound up, as a debt due to the scheme manager from that bank, building society or (as the case may be) investment firm.”(2) In Schedule 6 of the Insolvency Act 1986 (categories of preferential debts), after paragraph 15AA, insert—“15AB Any debt owed by the debtor to the scheme manager of the Financial Services Compensation Scheme under section 215(2AB) of the Financial Services and Markets Act 2000.””Member's explanatory statement
This amendment creates a mechanism that would allow the FSCS to recover its money in preference to creditors who would otherwise have no right to be bailed out. This mirrors the existing treatment of stabilisation payments made by the FSCS in Clause 215 (2A) of FSMA 2000.
Lord Vaux of Harrowden (CB)
My Lords, we come to the end of this process; I am sure everyone will be relieved. I rise to speak to my Amendment 15, which is a somewhat technical and perhaps even slightly nerdy amendment, but it deals with an important wrinkle within this Bill.
When a failing bank is recapitalised under this Bill, the money is paid, by the Financial Services Compensation Scheme, partly to the Bank of England to cover the costs of the Bank and other parties, and the rest is then injected, as equity, into the failing bank by the Bank of England. In the case of the Bank putting the failing institution into a bridge bank, the recapitalisation is intended to cover the likely costs of the bridge bank for a full year. This has some quite important unintended consequences.
To give a simple example, if it is expected that the bridge bank will be sold quickly, but this does not happen for some reason, and, shortly afterwards, the Bank of England decides to put it into insolvency, it would still have a year’s worth of Financial Services Compensation Scheme money injected into it. We could then have a situation where that money gets used to pay off the liabilities of the bridge bank; these would be liabilities that, had it gone into insolvency in the first place, would not, and should not, have been paid.
This has two consequences. First, creditors who would otherwise have received nothing may get paid out just because of the recapitalisation. That is not the intention of this Bill, but it is the consequence. Secondly, it becomes highly unlikely, if not impossible, that the FSCS could ever recover any of its money in such a situation; it would be last in line to receive the money, after everyone else has been paid off, because its money would have been turned into the equity of the bank. Again, that does not feel right.
Clause 2 sets out that the Bank of England must reimburse any part of any recapitalisation payment that is not needed to cover the costs and expenses of the resolution. However, what I have just explained means that in reality Clause 2 is, in effect, redundant. There is no realistic chance, as it is structured, that any money could ever be recovered for the FSCS. It would go to pay off the creditors who should not otherwise have been paid off.
Baroness Noakes (Con)
My Lords, I added my name to the amendment but I am glad that the noble Lord, Lord Vaux, will not be pressing it because, as he explained, there are difficulties with it.
I pay tribute to the noble Lord for chasing this issue down because it is a very real issue that could arise in certain defined circumstances, as he explained. I am not convinced that the solution of simply transferring assets into the bridge bank actually works. The complexities of a bank mean that you have liabilities—that is how you fund yourself from market sources—and in practice it may well be difficult. I hope the Government will take this away and find a way of minimising the likelihood that that ever happens, whether in the code of practice or otherwise, in discussion with the Bank of England.
Baroness Kramer (LD)
My Lords, the point that the noble Lord, Lord Vaux, has been making is significant and crucial in shaping the way in which the Bank of England approaches the resolution of banks when they fail.
Unlike the noble Baroness, Lady Noakes, I think there is a potential path of looking at the sale of the assets rather than the sale of the equity. That is the normal practice that one would follow in order not to transfer liabilities over to the new recovering entity. I fully understand all the complexities, and I hope the Minister will take this up with the Bank of England in his discussions. It requires a lot more work but it could get us out of some very nasty traps in future, and it will be more likely to do so if there has been thought beforehand rather than it being a reaction in a situation of emergency.
Baroness Vere of Norbiton (Con)
I wholeheartedly support the noble Lord, Lord Vaux, in his work in this area. Over the course of our scrutiny of the Bill, we have had some happy and quite nerdy discussions around this amendment. It is clear to me that it is a complicated situation. There is clearly an issue to be solved, but unfortunately the issue may not be exactly the same for each case of resolution that one might be addressing, so it needs further thought.
I am pleased that we will not be voting on this, but I impress upon the Minister that if there is something we can do in this area, whether that be in the code of practice or by other mechanisms, it is important. It is unconscionable to me that, because a particular entity goes down the route of resolution rather than insolvency, certain creditors could be significantly better off. That cannot happen and we must do something about it.
Lord Livermore (Lab)
My Lords, the amendment tabled by the noble Lord, Lord Vaux, seeks to give the Financial Services Compensation Scheme rights with respect to the recapitalisation payment, in the event that the firm in resolution is subsequently placed into insolvency or wound up, by then requiring it to be treated as a debt. It also seeks to grant the Financial Services Compensation Scheme super-preferred status in the creditor hierarchy with respect to that debt, enabling it to recover that claim in an insolvency process before other unsecured creditors, uncovered depositors and shareholders.
I am grateful to the noble Lord for the constructive engagement that I have had with him on this matter prior to this debate, and I am especially grateful for his time and expertise on it. I assure him that my officials and I have spent considerable time considering the concerns that he raises, and I shall set out the Government’s position.
The Government’s concern about the amendment is that it could frustrate the primary intention of the Bill to achieve recapitalisation in a way that restores financial stability and, as such, could potentially result in the resolution failing. The Government’s view is that the amendment could create uncertainty as to how such a payment would be perceived by the market when a firm was operating, rather than only in the unlikely circumstance of the firm winding up.
The effect of the amendment would be to create a shadow claim on the recapitalisation. Potential purchasers, investors and unsecured lenders to the firm would be aware that in the event of insolvency a new debt would materialise above them in the creditor hierarchy. Indeed, the shadow claim would follow the firm in perpetuity for as long as it was a going concern, even after the resolution was complete and the firm had been sold to a buyer.
It would also follow the firm even where the original shareholders and creditors were no longer involved with the business, creating a series of risks. That raises a number of potential issues. First, it could inhibit the sale of the firm in resolution. While the insolvency position would not be a primary consideration for potential buyers, it would naturally be part of the potential purchaser’s due diligence to understand the risk to its investment in a subsequent failure. That risk may be substantially greater with the existence of this debt, which may in turn impact potential interest in purchasing the firm and any purchase price.
Secondly, both while the firm was in the bridge bank and once it had been sold, current and potential future creditors and investors in the firm could be deterred from investing in and engaging with the firm for similar reasons. That would frustrate a key goal of the resolution, which is to maintain continuity. For example, uncovered depositors would have an additional incentive to withdraw deposits as they may perceive a potential risk to the seniority of their claim in insolvency. Thirdly, it could potentially undermine restoring market confidence in the resolved firm.
As a result of the issues that I have outlined, the amendment could make it more expensive to run the firm, putting it at a competitive disadvantage. It may perpetuate the circumstances that the resolution is intended to address; namely, uncertainty around how and to whom potential future losses would fall. It may also make it difficult to secure the agreement of directors, who may not be comfortable running a firm under such a shadow while it was in a bridge bank.
In addition, existing legislation means that instruments may currently be classified only as common equity tier 1, the highest form of capital, if they are not subject to any arrangement, contractual or otherwise, that enhances the seniority of claims in insolvency or liquidation. The noble Lord’s amendment would mean that a capital injection arising from a recapitalisation payment under the Bill may not count as the highest form of capital, as it creates a seniorised claim for the Financial Services Compensation Scheme in the event of a subsequent insolvency. That brings into doubt whether it would have the desired effect of restoring market confidence in the firm.
Overall, the effect of granting the Financial Services Compensation Scheme a super-preferred claim over the recapitalisation payment, even if only at the point of insolvency, would be to increase the risk of the resolution not achieving its objectives. Therefore, while the Government absolutely understand the noble Lord’s concerns, we have concluded, for the reasons I have outlined, that the amendment may end up doing more harm than good.
I appreciate that this is a matter that the noble Lord feels extremely strongly about, but I hope this explanation has provided some clarity over the risks attached to the amendment and that as a result he feels able to withdraw it.
Lord Vaux of Harrowden (CB)
My Lords, I thank every noble Lord who has taken part in this short debate. It is a fairly nerdy and technical subject, and the Minister has just described very well why it is a complicated situation. I am sorry that he was unable to say that the Government would keep it under review —to keep an eye on the situation—because there is a problem. This process could lead to creditors being preferred unreasonably over the FSCS money in some circumstances, and that is not desirable. It comes back to some of the moral hazard points that the noble Lord, Lord Sikka, made earlier as well, albeit in a different context, so I am sorry that the Minister was unable to say anything on that front.
I agree with the Minister that it is complicated and that there probably are unintended consequences to my amendment. I again urge him to keep this under review and to look at whether anything might be done on it under the code of conduct. On that basis, I beg leave to withdraw the amendment.
Water (Special Measures) Bill [HL]
Monday 4th November 2024
(1 day, 18 hours ago)
Lords ChamberRead Full debate Water (Special Measures) Bill [HL] 2024-26 View all Water (Special Measures) Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 17-III Third marshalled list for Committee - (31 Oct 2024)
Lord Roborough
“(8A) All fines imposed on the undertaker or its employees under this section by—(a) the Secretary of State,(b) the Welsh Ministers, or(c) another relevant authoritymust be gathered together and once per annum be used to reduce all customers’ bills by an equal amount per customer.(8B) Any reduction applied under subsection (8A) must be separately disclosed within the customer’s statement of account.”
Lord Roborough (Con)
My Lords, I welcome the noble Baroness, Lady Bakewell of Hardington Mandeville, back to her place. Her contributions have been missed on earlier days in Committee.
The main focus of the Bill is on improving the health of our rivers, and that aim will likely lead to a larger number of punishable offences. In its manifesto, Labour set out its plans to impose severe fines on water companies that failed to meet the expected standards, but it did not establish what would be done with that additional income. Amendment 70 seeks to put in place a system whereby the fines imposed on water companies and their employees—by this Government, the devolved Governments or, in fact, any other relevant authorities—are collected. Then, once a year, the income from these fines could be used to reduce customer bills.
In government we created the water restoration fund, which sees the money collected by the Treasury from fines and penalties and then channelled into improving the water environment. However, we sit here today with consumers facing pressure on their water bills as part of the inflationary environment that has created the cost of living crisis, as well as the cost of investing to improve water quality. It seems appropriate that fines and penalties should be returned to those consumers and identified by a separate line in their bills, making it clear that the regulator is taking action to punish wrongdoing and that money is returned to the consumer as a consequence.
An amendment such as this would benefit so many individuals and resolve how additional income from stricter fines is applied. It is not a subject that the Bill adequately addresses, as the noble Baroness, Lady Bakewell of Hardington Mandeville, has recognised in other amendments. Does the Minister agree that the money from the fines should be used to benefit the consumer through mechanisms such as the water restoration fund that we implemented when in government or by using the sum to reduce customer Bills, as this amendment suggests? As such, will the Minister confirm that the penalties will not return to the Treasury under this Government? I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I apologise to the Committee and the Minister for my absence on the first and second days in Committee. I regret that an attack of Covid meant that I was confined to quarters and unable to travel to London. I did, however, watch the debate on both days on parliamentlive.tv and was therefore able to hear the nuances of the contributions, which you do not always get by reading Hansard. I thank the noble Lord, Lord Roborough, for his comments.
A seminar of all the devolved Administrations once a year, to discuss how to return all fines to the relevant customers, will do nothing to fix the problems of inadequate investment in crumbling and inadequate infrastructure. I am sympathetic to the need to keep customers’ bills to an acceptable level. Consumers should not have to pay for the inadequacies of the water boards to ensure that problems are fixed. I do not see why an annual gathering of the devolved Administrations or other authorities will be sufficient to refund bill payers in a timely fashion.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, I thank the noble Lord, Lord Roborough, for raising this important issue and tabling Amendment 70, which speaks to the administration of fines. I too welcome the noble Baroness, Lady Bakewell of Hardington Mandeville, back to her rightful place. I hope that she is now completely recovered, but I also congratulate the noble Earl, Lord Russell, on doing such a sterling job in her absence.
I emphasise that the money from civil penalties imposed by the Environment Agency and fines issued by the court go to the Government’s Consolidated Fund. This is in line with other enforcement regimes under the Regulatory Enforcement and Sanctions Act 2008. On the use of penalty funds, the water restoration fund, which launched in April this year, is reinvesting water companies’ environmental fines and penalties into projects to improve the water environment. Up to £11 million of funding from fines and penalties accrued since 2022 was made available on a competitive basis to support a range of water restoration projects. Defra is continuing to work with His Majesty’s Treasury regarding the reinvestment of water company penalties and fines, because while the Budget has of course now been announced, decisions have not yet been taken on all departmental spending.
I assure noble Lords that there are existing procedures in place to ensure that customers are reimbursed for poor performance. As the economic regulator, Ofwat sets specific performance targets for water companies and, where these are not met, companies must reimburse customers through lower water bills in the next financial year. I will give an example: as a result of Ofwat’s annual performance assessment process, it is requiring 13 companies to return £157 million to customers for underperformance in the financial year 2023-24.
Ofwat also has powers which ensure that companies return money to customers for failings related to specific breaches. For example, in 2019 Southern Water returned £123 million to its customers as a result of an Ofwat enforcement case. I hope that the noble Lord is therefore content that this amendment is not necessary, as we believe it would duplicate existing protections.
Lord Roborough (Con)
My Lords, I am grateful for the comments from the Minister. It is perhaps not the fullest reassurance that I was looking for about the future destination for fines and penalties. Amendment 70 is, by its nature, a probing amendment and I look forward to further discussions with the Minister.
Baroness Hayman of Ullock
“(11) Section 5(6) also applies for the purposes of this section.”Member’s explanatory statement
This amendment provides that Clause 6 applies to water supply and sewerage licensees only in relation to their licensed activities.
Earl Russell
“Power to revoke licencesAfter section 17R of the Water Industry Act 1991 insert—“17S Power to revoke licencesThe Authority may revoke a water supply and sewerage licence (WSSL) with six months’ notice.””Member’s explanatory statement
This amendment provides Ofwat with the power to remove a water supply and or sewerage licence with six months’ notice.
Earl Russell (LD)
My Lords, this group of amendments is on water company ownership. In preparing for this Bill, my Whips’ Office briefing note said that, in some circumstances, Ofwat could take no fewer than 25 years to revoke a water licence. When I read this, I found it hard to believe that this was the case, so I had to go away and have a look at it myself.
I note that different conditions apply to household water companies and retail or business suppliers, as retail suppliers operate within a different market, and that this is an extremely complex area of legislation. I understand that Ofwat can take up to 25 years to revoke the licence of a water company in some cases where it is in breach of its licence conditions. My amendment is a probing one. I want to be certain that it is possible for licences to be revoked much earlier than 25 years for matters such as sewage spills and failures to invest in infrastructure. I am also interested in looking at whether six months is a feasible timeframe for revoking licences in the cases of the worst sewage spill offenders.
It is unacceptable that, in 2023, for example, water companies dumped 54% more sewage in our lakes, rivers and coastal areas than they did in the previous year. This amounted to some 464,000 incidents and some 3.6 million hours of untreated sewage discharges in England alone, yet few water and sewage discharge licences have been revoked as a direct result of sewage spills.
The Government have given a clear commitment to make improvements, and this Bill contains many measures that we welcome. The framework for these proposed improvements is one where the Government are passing this Bill to bring in more immediate measures in order to hold the water companies to account and to strengthen the powers of the regulators. This is being done now while the water commission undertakes deeper, more fundamental thinking to make further recommendations in due course.
The Government’s argument is based on the belief that Ofwat can be supported, strengthened and remade to be an effective regulator. The arguments I want to discuss relate to the ultimate sanction of revoking water and sewage discharge licences. If Ofwat is to be effective, the ultimate sanction must act as a real deterrent against illegal and improper behaviour. I fully recognise that my suggestion of changing this to six months may not work and may need a rethink; I would be more than happy to discuss this with the Minister if it is of interest. I recognise that there is a need to balance the needs of water companies, their investors and customers, as well as to ensure continuity of supply.
I will be honest: I know that there are many different licences and conditions for revoking them, and that this is a complex area. The conditions for a quick termination, applying to the issues of a special administrator and bankruptcy, are welcome. My concerns relate more to the broader, far from general, form of deterrence for water companies doing what they have been doing up to now with no real comeback, such as siphoning funds off to shareholders while failing to meet the required levels of investments, falsifying self-reporting of sewage discharges and failing to prevent sewage spills.
I want this amendment to lead to a brief discussion on the licence conditions in place now. I seek reassurance from the Government that they will have a look at these powers, look at how they are used in practice and consider whether any changes are required as part of this Bill. I do this as there are no real changes to any of the licence termination conditions; I wondered whether this was a mistake or oversight. The imposition of tougher prison sentences and higher fines are welcome measures, but what happens if these measures alone failed to regulate companies’ behaviour?
For comparison, the revocation of licences in other regulated sectors appears generally to happen on a much quicker timescale. Can the Minister give the rationale behind leaving the 25 years in statute, and can she give examples of Ofwat acting much earlier in relation to lack of investment or pollution incidents? What is the average time for revoking a water and sewage licence?
I beg to move.
Baroness Jones of Moulsecoomb (GP)
My Lords, I will speak to three amendments in this group: Amendments 97, 98 and 99. This weekend saw tens of thousands of people marching for clean water in London. It was the most amazing event. It was a chance for me to speak to people who agree with me—as opposed to being here in your Lordships’ House, where not many people agree with me.
Baroness Jones of Moulsecoomb (GP)
I am sorry. Thank you; it is lovely to see the noble Baroness, Lady Bakewell, back in her place.
All three of my amendments are intended to be helpful—that is, to help the Government regulate the water industry properly and end the 30 years of fleecing bill payers while dumping sewage into our waterways. It is an absolutely unforgivable three decades of abuse of the system.
Amendment 97 would prohibit the Government bailing out shareholders and creditors of water companies in the event of special administration. Amendment 98 would allow the Government to take back control with public ownership of water companies, but it is only an option. It is an option that I believe the Government could use as a lever in their negotiations with the water companies, so I think it is worth putting it back in the Bill. Amendment 99 would allow water companies to be put into special administration for failing on environmental issues, such as leaks and sewage spills.
What strikes me about these issues is that the public are demanding that this is sorted, but the Government are giving us half measures. I am concerned that that will not bring the sort of change we need. There is a democratic shortfall here because polls tell us that 82% of the public want to end privatised water, but only a few of us in Parliament are willing to consider it. To me, this suggests that the Government are out of step with the public, which is very concerning for me; I would like the Labour Government to last longer than one term because I really do not want to see another Conservative Government in my lifetime. There is, of course, a fear among many campaigners that this Bill will raise their water bills by enabling the Government to bail out and reward the people who got us into this mess in the first place.
I thank the noble Baroness, Lady Parminter, and the noble Lord, Lord Sikka, for signing Amendment 97. It is essential that the Government do not bail out the water companies in such a way that they simply hand money to shareholders and creditors and let them start afresh, behaving in the same way but perhaps with a little more regulation. Amendment 97 would prohibit this so that the public purse does not underwrite the casino capitalism and financial engineering that has been going on in the water sector. We have a ridiculous situation where the debt is being traded by hedge funds, which are gambling on water bills going up in future to finance a bailout. If these companies fail, let us instead bring them into public ownership and democratic control. The shareholders and creditors took a gamble on greed when the companies used £75 billion since privatisation to pay dividends rather than invest. Let them take the hit.
Amendment 98 would allow the Government to set out how they will bring water companies into public ownership. The Greens are deeply disappointed that the Government have ruled this out. I do not understand any sort of ideological addiction to private ownership of a public service such as this, particularly when it is not even a competitive market. It is a monopoly, and it is time it stopped.
I have heard the Government say that private investment is essential, but it is simple maths that, if we stop paying dividends and debt payments, that frees up 40% of people’s water bills to be invested in fixing the sewerage system and building more reservoirs. The Government have been using overinflated estimates from the water industry—a figure of some £90 billion—to claim that public ownership would be too expensive, but actually, it is the complete opposite: it is privatised water that is too expensive to continue. Water company shareholders have spent decades sucking out the profits while loading debt on to the balance sheets and hiking people’s bills. That is inevitable, as free market economics simply does not work without competition. Thatcher turned a public monopoly into a cash cow for people who are greedy. Unless amended, this legislation does nothing to stop that continuing for another decade. I want the Government to at least have the power to bring the companies into public ownership. If they rule out that option, the Government will make any taxpayer bailout a lot more expensive, as a potential buyer has the upper hand in all negotiations.
Lord Sikka (Lab)
My Lords, I will speak to Amendments 97, 99 and 102. I congratulate the noble Baroness, Lady Jones of Moulsecoomb, on her speech. I fully support Amendment 97.
It is interesting that, following an article in the Telegraph, on 19 September, the Government issued a press release in which they said:
“These powers would never be used to pay bondholders, shareholders or creditors … we do not expect customers to pay the price for water companies’ mismanagement … The new measures in the Water Bill will protect taxpayers”.
At the same time, the Explanatory Notes state, on Clause 10, that the Secretary of State “may provide financial assistance” to companies. It is hard to see how these statements can be reconciled. I hope the Minister will tell us what kind of financial assistance the Government envisage providing to water companies while they are being restructured. Their being restructured means that they are already financially, environmentally and morally bankrupt, so why provide financial assistance?
In the debate last week, the Minister said that water companies are “private companies”. If they are, they should be fully exposed to the laws of capitalism, with absolutely no bailout of any kind. Why are we making these special provisions to indulge them and, presumably, write down some of the debt? This was a key assumption made by the last Government in what was code-named Project Timber. Information leaked out that it was talking about how the Government, presumably, may write the debt of Thames Water down to merely 40% of the amount owed.
Whenever we talk about not bailing out shareholders and bondholders, or refer to public ownership, the Government’s immediate response is to say that it will cost billions of pounds. I once again invite the Minister to show me the Government’s calculations—I will happily critique them for free and talk about whether those numbers make any sense. Will the Minister accept my challenge and please publish the numbers?
The Government also say that it would be hard to reintegrate the companies. We are doing it for railway companies, so why can we not do it for water companies? What exactly would be the hardship? Every day, there are numerous mergers and takeovers in the corporate sector, and they are easily integrated and rewired. I hope that the Minister will explain this. I would particularly like to see the calculations of what the cost of public ownership would be, so that we can then start looking at this and talking about the optimum solution.
I hope the Minister will not refer me, as she did previously, to the 2018 Social Market Foundation report. It fetched a number out of thin air and said it was worth about £90 billion—the following year, this was contradicted by Moody’s, which said it was only £14.5 billion. Since then, as we know, a lot of shares of water companies have become worthless and the debt has junk status, so it is easy to let the normal rules of capitalism apply.
I support the noble Baroness, Lady Jones, on Amendment 99. I will say a little more about Amendment 102. Currently, water companies can violate rules and legal limits on sewage dumping ad infinitum. They can easily do cost-benefit analyses and see that it is cheaper to pay fines for illegal practices than to invest in infrastructure and act responsibly. This boosts profits, dividends and executive pay, while the public picks up the cost of unplugged leaks, sewage dumping, health hazards, and the destruction of biodiversity and marine life. To some, such costs are just externalities, but the public sees this as abuse, as clearly shown by yesterday’s mass demonstration in London.
The puny financial penalties have not curbed the predatory practices. The Minister promises us that there will be more and says that the executives may be prosecuted—that is, if they can wait another 20 years to have their cases heard, as there is already a backlog of 60,000 cases in the Crown Court. The result is that the whole industry is now under the control of entities that have criminal convictions. Wastewater companies in England and Wales have been convicted 1,109 times since 1989. The dismal roll-call is as follows: United Utilities has 205 convictions, Thames Water has 187, South West Water has 174, Anglia Water has 128, Yorkshire Water has 125 and Southern Water has 119. Perhaps the Minister would care to name a pristine water company—never mind pristine water, just a pristine water company. That would be helpful.
There are no pristine, honourable, responsible or ethical water companies, but successive Governments continue to indulge them and give them monopolies in an essential public good. What would happen if 10 major food or medicine companies were convicted of 1,109 crimes that they knowingly committed? They would be shut down and consumers would sue them, but regulators in the water industry do no such thing. Indeed, Ministers make excuses, and successive Ministers have done nothing.
My amendment requires that habitual offenders be placed into special administration, if two or more criminal convictions are secured in a five-year period. This is akin to yellow and red cards in football. The first yellow card is a warning, effectively saying, “Don’t do it again. Mend your ways. Clean up your act”. If no heed is taken, the second yellow card, which is effectively a red card, would follow, and the companies would be placed into special administration.
It is often claimed that shareholders are passive. The threat of special administration for abusive practices would encourage them to actively invigilate companies and their boards and take an interest in their governance. For far too long, companies have got away with abuses; my amendment would ensure that there were serious consequences for them. If the Minister does not accept my amendment, can she say how many convictions water companies need before they are considered unfit and improper to own crucial infrastructure?
Lord Roborough (Con)
My Lords, I shall speak to Amendment 73, moved by the noble Earl, Lord Russell. I thank the noble Earl, the noble Lord, Lord Sikka, and the noble Baroness, Lady Jones of Moulsecoomb, for their contributions.
On these Benches, we have grave concerns about these amendments. While it is important that the water sector operates with integrity, we fear the amendments may have unintended consequences that could destabilise the industry and ultimately be detrimental to the public and the environment.
On Amendment 73, the power to revoke a water company’s licence is one of great consequence and must be exercised judiciously. An abrupt removal of a licence, without sufficient consideration of the ramifications for infrastructure and service continuity, could leave customers vulnerable and lead to service interruptions. It would also be a very substantial barrier to private sector investment. Investors must be able to have confidence that they will be able to enjoy returns on their investments without elevated risk of loss of licence. Should such an amendment be included in this Bill, it would lead to a much higher cost of capital for the industry and higher consumer bills as a consequence. While we appreciate the intent to hold companies accountable, we suggest exploring whether there are more balanced approaches to achieving compliance, without risking instability.
Amendment 97 raises further concerns. The possibility of cancelling debt in the event of special administration proceedings could create moral hazard. This amendment, while aiming to protect consumers from the fallout of financial mismanagement, might inadvertently incentivise risky financial behaviour by companies under the impression that their debts could be forgiven in times of crisis. The bankruptcy route already allows debt to be repaid in part or renegotiated in an orderly manner, respecting the contractual rights of all creditors. This would not be desirable.
As for Amendment 98, this is a matter of significant complexity. We must not overlook the potential costs and operational challenges associated with such transfers. The water industry requires immense resources, infrastructure investment and technical expertise. A shift to public ownership would strain government resources and create operational challenges. We support the Government in not wishing to see a return to public ownership of the industry.
I wish to address Amendments 99 and 102. These amendments would empower the Government to put companies into special administration if they breached certain environmental conditions or held criminal convictions. While we wholeheartedly support stringent environmental standards and rigorous compliance, it is essential that these mechanisms do not inadvertently undermine the ability of water companies to continue their core operations. The amendments could place companies in special administration for relatively minor infractions, which may not warrant such a severe response.
We must be careful not to adopt measures that could disproportionately impact employees, customers and investors who depend on the water industry. I thank noble Lords for tabling these amendments and regret that we cannot support them—and could not even before the noble Baroness, Lady Jones, gave her views on my party.
Baroness Hayman of Ullock (Lab)
I thank noble Lords for the suggested amendment in relation to water company ownership.
I come first to Amendment 73, in the name of the noble Earl, Lord Russell. The intention of the amendment is to provide Ofwat with the power to remove a water supply or sewerage licence with six months’ notice. I want to emphasise that the Government’s priority is to ensure that customers have a safe and stable supply of water. We are concerned that the proposed amendment could jeopardise this.
There are already established measures to replace an existing sewerage undertaker, by way of licence removal, under certain scenarios. For example, while it is true that an undertaker’s appointment is made for a period of at least 25 years, I can reassure noble Lords that it is not true that appointments cannot be terminated until 25 years have passed. If an undertaker cannot carry out its functions, Ofwat has powers to terminate the appointment, provided that a replacement can be identified and that the undertaker consents.
Baroness Jones of Moulsecoomb (GP)
Before the Minister sits down, I had better clarify: I want another Labour Government only if I cannot have a Green Government. On the issue about having monopolies where market forces do not operate, can she see that there are inherent problems in having monopolies on something such as water—or any public service that we all need?
Baroness Hayman of Ullock (Lab)
I completely get the noble Baroness’s point. I would hope that, when we do the review, we look completely across all the issues to do with a water company, including the way it behaves because of the way it is set up, and that that should be part of any consideration. By the time we have reported, I am sure the noble Baroness will be very happy to have another Labour Government.
Earl Russell (LD)
I thank the Minister for her responses on this group. Mine was a probing amendment and I appreciate her response. I fully recognise that there would be issues with six months as a period, but I think it is important that we have a discussion about the power of revoking licences. I appreciate that the Government are keeping that under review. On Amendment 97, I appreciate what she says about the courts and their powers in all this: that was a welcome response. On Amendment 98 on the public ownership of water companies, I think her response to the noble Lord, Lord Sikka, giving those figures and calculations, was useful in moving that debate forward. Obviously, there are costs involved in that and in the Government supporting failing water companies as well. I know that these are difficult matters. Of course, on our Benches we want to have public ownership of water companies, and we will continue to support that, but I thank the Minister for her inclusive responses and I beg leave to withdraw the amendment.
Baroness Hayman of Ullock
(a) it is held by a water undertaker or sewerage undertaker, or(b) it is held by a water supply licensee or sewerage licensee, within the meaning of the Water Industry Act 1991, for the purposes of the activities to which its water supply licence or sewerage licence relates;”Member's explanatory statement
This amendment provides that Clause 7 applies to water supply and sewerage licensees only in relation to their licensed activities.
Member's explanatory statement
This amendment is consequential on the Minister’s previous amendment.
Baroness Hayman of Ullock
“but, in relation to water supply licensees and sewerage licensees, includes those functions only so far as performed in respect of the activities to which their licences relate.””Member’s explanatory statement
This amendment provides that Clause 8 applies to water supply and sewerage licensees only in relation to their licensed activities.
Lord Roborough (Con)
My Lords, Clause 10 risks unfairly burdening consumers with costs likely stemming from earlier regulatory and management failures. Involving consumers to compensate for governmental losses would turn customers into de facto guarantors for companies, which contradicts consumer protection principles. As my noble friend Lord Remnant argued earlier in Committee:
“Clause 10 gives the Secretary of State the power to modify a water company licence in order to recover any shortfall in costs for the Government from its consumers. New subsection (4) extends this recourse to all other companies in the sector”.—[Official Report, 28/10/24; col. 1000.]
My noble friend addressed his comments to concerns over the impact on other companies in the sector, with which we agree. My concerns today are with the impact on consumers.
The clause provides no substantial safeguards to prevent excessive or unjustified charge increases. It grants broad powers to the Secretary of State to implement
“such amounts as may be determined”,
without clearly defined criteria or caps on those amounts. This vagueness opens the door to unlimited increases in bills for consumers at a time when cost of living pressures are high. Consumers rely on water services as a fundamental utility and trust is paramount in sectors with limited provider choice. By involving consumers in recovering losses associated with government interventions, the clause risks eroding public trust in the water industry. Why should the Government be able to depart from a consumer pricing model that the regulator has determined to be adequate for providing the service? Why should the consumer face surcharges due to the fault of others?
Clause 10 lacks clarity on how funds raised from consumers will be used or justified beyond the broad purpose of offsetting special administration order loss. Consumers have a right to transparency in any additional costs that they face, particularly when those costs arise from governmental action rather than direct service improvements. Without a clear, transparent breakdown of how these funds will be applied, consumers may view these measures as an arbitrary tax rather than a justified expense.
Permitting the Secretary of State to intervene in pricing to recoup government-incurred costs sets a disturbing precedent. It also highlights the importance of this debate in that the Government feel able to set themselves undefined and unaccountable pricing powers that are not available to the private sector. Is this not why the sector must remain privately owned and accountable rather than in the hands of government or some mysterious public benefit structure?
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, it is a while since I have taken part in proceedings where a stand part debate has been used to try to remove clauses of a Bill. On our Benches, our departed colleague Lord Greaves was very fond of this measure to enable him to make detailed speeches railing against the Government of the day’s proposed legislation.
The noble Lord, Lord Roborough, has set out his case eloquently for why he believes that Clauses 10 and 11 should be removed from the Bill. Clause 10 refers to England, and Clause 11 offers the same powers to Welsh Ministers. Both clauses are complex and deal with the recovery of losses. I respect the motives of the noble Lord, who appears to be on the side of the water industry and the bill payers at the same time. However, when 15,000 people from around the country are prepared to give up their Sunday to come to London to join a protest against the action of the water companies, I fear that he may have misjudged the mood of the water company bill payers. The public are rightly furious that, while their water and sewage bills have increased, the infrastructure has not been improved, but directors’ bonuses and shareholders’ dividends have not reflected the poor service that some water companies have given. I say “some” water companies, because some are performing well and do meet their targets; unfortunately, it is the ones that do not do so that we hear about on a continual basis.
Removing from the Bill the two clauses, which would have seen some balance being provided to enable costs to be recovered from those water companies that have failed to deliver on their Ofwat targets, is to give a signal to bill payers that the poor service that they have received is acceptable. If Clauses 10 and 11 are removed from the Bill, there would be no clarity on what is happening or how recompense would be achieved. I am therefore afraid that, on the Lib Dem Benches, we are unable to oppose these clauses standing part of the Bill.
Baroness Hayman of Ullock (Lab)
My Lords, I thank the noble Lord, Lord Roborough, for his interest in Clauses 10 and 11 and also thank the noble Baroness, Lady Bakewell, for her support for them standing part. A special administration regime—or SAR—enables a company that provides vital public services to be put into administration in certain circumstances to ensure that the public service will continue to be provided pending rescue or transfer to new owners. An SAR would be required only when there is evidence that a company is insolvent or in serious breach of its statutory duties. It is the ultimate enforcement tool in Ofwat’s regulatory toolkit and, as such, as I said in the last debate, the bar is set high.
Although government has had the powers to place water companies into special administration for over three decades, it is important that we regularly update legislation to reflect modernisation of law and experiences in other sectors. If a SAR occurs, government funding would be required to cover the costs of a special administration, including both operational and capital expenditure—for example, ensuring that statutory environmental obligations were met, as well as for paying the cost of the special administrator.
In the unlikely event that the proceeds of a sale or the repayments agreed as part of a rescue at the end of a SAR are insufficient to cover repaying government funding, there is a risk of a funding shortfall. Clauses 10 and 11 introduce a flexible power, allowing the Secretary of State and Welsh Ministers to recover any shortfall in funding in a manner that is appropriate to the circumstances. They allow for modification of water company licences to recover any shortfall in financial assistance provided in a water industry SAR. These clauses will align the water industry SAR regime with the energy sector. Without this power, there is a risk that taxpayers will foot the bill for the water industry SAR.
The Secretary of State and Welsh Ministers will be able to decide whether or not they should use this power and the rate at which the shortfall should be recovered from customers. This will include which group of customers it should be recovered from—for example, all water company customers, a subset of the sector, or only customers whose water company went into a SAR.
Although the power is flexible, the design of a recovery mechanism will be subject to consultation with all relevant sector stakeholders. The Government must consider these views and explain our approach accordingly. If a SAR occurs and this power is ever required, this will allow a decision to be made, and be consulted upon, on what the fairest cost recovery option is, based on the evidence and circumstances at the time.
I reiterate that the shortfall recovery mechanism does not mean that customers end up paying for water companies’ failures. Any intervention that would increase customer bills would be considered very seriously and as a last resort. In the first instance, the Government would seek to recoup all the funds spent on financing the SAR through the sale or rescue of the water company after the administrators’ conclusion. This new power would be utilised only if it were not possible to recover what the Government spent funding the administration. If there was a shortfall, Ministers would then decide whether they felt that it was appropriate to exercise this power.
This power would allow the Secretary of State to decide, subject to consultation, the rate at which the shortfall should be recovered from customers and which group of customers it should be recovered from, as I just mentioned. This will ensure that the shortfall recovery mechanism is always implemented in a way that ensures that costs are recovered fairly. I hope that noble Lords agree that this power is essential to protect taxpayers’ money in the event of a SAR, and that these clauses should stand part of the Bill.
Lord Roborough (Con)
My Lords, the noble Baroness, Lady Bakewell of Hardington Mandeville, may have misunderstood me. Far from speaking in favour of the water industry, I am seeking additional protection for the consumer and companies that have not fallen into a SAR.
The Minister has not fully reassured me that the powers in this clause are necessary. The Government perhaps should stand as guarantor, not the innocent. That this measure is very unlikely to be used is not in itself reassuring to me, but at this stage I will not press my opposition to the clauses standing part.