Sir Ashley Fox (Bridgwater) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
When we entered office, debt was at highs not seen since the 1960s. My commitment to the fiscal rules is non-negotiable, and we will drive debt down to a sustainable level. There have been movements in global financial markets, and the UK is not immune. The Office for Budget Responsibility will produce a forecast in the usual way, and I will respond with a statement to Parliament on 26 March. I will not be giving a running commentary on that forecast.
Mr Holden
Labour came to office promising to kick-start growth. Instead, it has kicked growth into the gutter. Over the last few months we have seen some of the slowest growth in the G7—in the actual figures rather than the projections. Where will the money for the public sector and public services come from with zero economic growth?
Rachel Reeves
Yesterday’s PwC report shows that the UK is the second most attractive place in the world to invest for global CEOs—it is the first time in 28 years that we have been in that position in the league table. And the International Monetary Fund forecast on Friday that the UK will be the fastest-growing major economy in Europe next year.
Dr Evans
Last time I raised the markets’ concerns about debt with the Chancellor, she told me to “get real.” What is real is that the cost of debt interest is over £10 billion. What is real are the three choices she has: to increase taxes on people and businesses in Earl Shilton, Burbage and across the country; to cut services for people in Hinckley, Donisthorpe and across the country; or to borrow on the country’s credit card. Will she now be real with the public and tell them which of the three it is going to be?
Rachel Reeves
We inherited a high amount of debt from the previous Government, and we have to pay interest costs on that debt. The forecast I set out in the Budget in October showed that debt falling to a sustainable level. As I said, the OBR forecast will be published on 26 March, and I will make a statement at that time.
Sir Desmond Swayne
The Chancellor’s increased demand for Government borrowing drives up its price and crowds out investment by productive private enterprises, doesn’t it? [Hon. Members: “No.”]
Rachel Reeves
Let me have a go. There have undoubtedly been moves in global financial markets this year, and the UK is not immune to those movements. The OBR has not yet started its forecast. It will update that in due course, and I will make a statement on 26 March.
Sir Ashley Fox
Since coming to office, the Chancellor has increased taxes by £40 billion and borrowing by £30 billion and her Employment Rights Bill has increased the costs of employers by a further £5 billion. Does she accept that her decisions have led to a loss of confidence in the British economy and an increase in our borrowing costs?
Rachel Reeves
I do not think the borrowing costs in every major country in the world can be explained by the decisions made by this Government. As I said to the hon. Member for Hinckley and Bosworth (Dr Evans) last week, the hon. Gentleman has to get real. There have been global movements in financial markets that have affected the United Kingdom, but if he looks at the PWC report from yesterday, the most recent report on market confidence, global CEOs see the UK as the second best place in the world to invest, after the US.
Peter Swallow (Bracknell) (Lab)
The International Monetary Fund forecasts that the UK is set to be the fastest-growing major economy in Europe, which one would have thought Conservative Members would welcome. I know my right hon. Friend the Chancellor will not be satisfied until residents in Bracknell, and across the country, feel the benefits of economic improvement in their pay packets and their day-to-day lives, so will she set out what more she can do to ensure we tackle the cost of living and fix the economic mess we have inherited from the Conservatives?
Rachel Reeves
After 14 years of stagnant growth and the decline in living standards during the last Parliament, my hon. Friend is absolutely right that we must turn around that performance. That is what this Government are determined to do. The planning and infrastructure Bill will come to Parliament shortly, followed by the pensions Bill, which will unlock long-term pension capital and make it easier for businesses to get things done in this country.
Mark Garnier (Wyre Forest) (Con)
The Chancellor makes reference to the PWC report, but half of the survey in that report was done before the Budget. The Chancellor and I spent a very happy three years sitting next to each other at the Treasury Committee, and she was incredibly good at demanding straight answers from the witnesses that came in front of the Committee. She has already been asked questions about the fact that the fiscal headroom is only £10 billion and the increase in the cost of borrowing is now going to go through the roof so, at some point, she will have to raise taxes, cut investment or increase debt. Which will it be?
Rachel Reeves
The headroom in our Budget was larger than the headroom that we inherited from the previous Government, so we have put aside more money for changes in economic prospects. The OBR has not yet done its forecast, which will take a whole variety of factors into account, and we will make decisions based on that. I have been really clear that our fiscal rules are non-negotiable because, unlike the Conservatives, we are determined to meet the fiscal rules, not break them time and again.
Daisy Cooper (St Albans) (LD)
The rising cost of borrowing will bring more misery to mortgage holders, with reports suggesting that some mortgage holders could pay an extra £500 a year. Given that potential global trade tensions could further affect the UK’s financial stability, what assurances will the Government provide that UK lenders remain in a strong position to support households and small businesses?
Rachel Reeves
Labour and Liberal Democrat Members are mindful of the last Government’s impact on mortgage borrowing costs for many of our constituents, and we are determined to tackle the cost of living crisis. As the hon. Member knows, I have written to financial regulators, including the Financial Conduct Authority, about regulating for growth, not just for risk, so that we can help more people get on the housing ladder and help grow our economy.
Emily Darlington (Milton Keynes Central) (Lab)
The Chief Secretary to the Treasury (Darren Jones)
The Government remain committed to restoring ODA spending to 0.7% of GNI as soon as fiscal circumstances allow. The latest OBR forecasts show that the ODA fiscal tests are not due to be met within this Parliament, but we will continue to monitor future forecasts closely and each year we will review and confirm, in accordance with the International Development (Official Development Assistance Target) Act 2015, whether a return to spending at 0.7% of GNI on ODA is possible.
Emily Darlington
I thank the Minister for protecting the level of ODA given the fiscal situation we inherited, but there are more wars going on in the world than at any time since world war two. Will he review the fiscal formula, which he and the Chancellor rightly voted against when put forward by the previous Government, put the ODA budget on a long-term settlement, and meet me to discuss how we can improve UK safety through the ODA budget?
Darren Jones
I thank my hon. Friend for her question on a topic that I know she has great expertise in. She will know that it is important that spending across Departments, whether on military, humanitarian or economic support, is aligned with our ODA spending. The multi-year spending review is under way, and we will confirm budgets in June for the years ahead. As I have confirmed, we will come back to the House every year to review and confirm the fiscal tests as they relate to 0.7% of GNI on ODA.
Monica Harding (Esher and Walton) (LD)
Given that the Office for Budget Responsibility forecasts that the fiscal test of returning to 0.7% will not be met in this Parliament, and that there has been no equivalent uplift to the £2.5 billion that the Conservatives put to spend on in-country refugee costs, are the Minister and this Labour Government content to have presided over a real-terms cut to the ODA budget compared with the previous Conservative Government?
Darren Jones
One of the issues, to which the hon. Lady alludes, is that under the last Administration, when they lost control of the borders and the asylum system, the cost of hotels to house asylum seekers waiting for their decision was included in the ODA definition of spending. That is why the Home Secretary is working at pace to reduce that backlog as quickly as possible, and we are making much more significant progress than the previous Administration did in many years.
David Taylor (Hemel Hempstead) (Lab)
To follow on from the Minister’s answer, Members will be reminded of the fact that ODA costs spent in the UK are now at record levels, thanks to the last Government. That should not be the case. ODA should be spent, as much as possible, in the world’s poorest countries. What steps are the Government taking to help the Home Office bring down those costs so that more aid can be spent where it is truly needed?
Darren Jones
My hon. Friend is absolutely right. That is why both dealing with the Home Office backlog in processing claims and returns and working with counterparts in the Ministry of Justice to ensure that the tribunal process is up to speed are intrinsically important to the ODA budget. Under the last Administration, crucial ODA for bilateral aid in countries around the world that were in desperate need of it was cut at short notice because of their mishandling of the asylum system. That will not happen under this Government.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
I know that Members on the Treasury Bench attach great importance to the international development budget, not least because I recall that the Chancellor of the Exchequer supported my efforts to stop the 0.7% being cut by my own Government, even winding up the debate with great skill and flair. Will Treasury Ministers therefore follow in the footsteps of the Chancellor’s predecessor, my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt), and top up the budget with an additional £2.5 billion so that the Foreign Office and the Government can achieve their own international development objectives?
Darren Jones
I thank the right hon. Gentleman, as I am sure the Chancellor does, for his kind words. A key part of the test on ODA spending in terms of fiscal circumstances requires those circumstances to improve. One of the reasons we are in this problem in the first place is because of the mess the previous Administration left this country in. We are working hard to turn that around.
Helen Maguire (Epsom and Ewell) (LD)
The Parliamentary Secretary to the Treasury (Torsten Bell)
Too many parts of the country and too many families have felt the devastating effects of flooding in recent months, not least in South Wales and in the hon. Member’s constituency. The Government have committed £2.4 billion over the next two years to increase community flood resilience. Everyone in this House recognises that flooding is a challenge that will be with us for years to come, and we will set out further plans at the spending review.
Torsten Bell
We take very seriously the need to protect communities from flooding and to deliver on our commitments on climate in the years ahead. It is important that we consider both principles and that is what the Department for Environment, Food and Rural Affairs and the Department for Energy Security and Net Zero are doing.
Helen Maguire
Thank you, Mr Speaker. Recent flooding in Leatherhead left footpaths near essential services such as train stations overflooding with sewage. In Leatherhead, there are no alternative options to divert water. Given the importance of long-term flood preparations, will the Chancellor commit to securing funding for flood defences beyond 2025-26?
Torsten Bell
The hon. Member will know that specific flood defence schemes will be considered in the normal way. When it comes to funding beyond 2025-26, those will be decisions on overall levels of funding that are taken in the spending review later this year.
Torsten Bell
I think that remark was directed at the hon. Member in a previous life.
We have committed to 100% first year allowances and to maintaining that going forward, but unless we deliver secure energy, generated at home through cheap renewables, there is no energy security to be had in the years ahead.
Alison Hume (Scarborough and Whitby) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
The Government are better targeting these reliefs to make them fairer. The latest figures for 2021-22 show that the top 7% of claims are counted for 40% of the total value of agricultural property relief.
Helen Morgan
The Chancellor will know that one of the biggest factors holding back the rural economy is poor public transport. When I visited the jobcentre in Oswestry last year, I was told that one of the biggest impediments to people finding a job is that they cannot get away from where they live because of poor public transport. Can she update me on the discussions that she has had with her colleagues in the Department for Transport over reinstating projects such as the Oswestry to Gobowen railway line and step-free access at Whitchurch railway station?
Rachel Reeves
At the Budget, we introduced sustainable transport settlements, with £650 million of funding for local transport, and confirmed an extension of the UK shared prosperity fund, providing £900 million to local authorities to invest in local growth. We also announced money in the Budget for some trailblazer projects to help those furthest from the labour market back into work. On the specific issues around transport in her constituency, I am very happy to set up a meeting for her with the relevant Minister.
Dr Gardner
The A50/500 growth corridor, a significant transport corridor in my constituency of Stoke-on-Trent South, enjoys an extraordinary concentration of advanced manufacturing, including anchor companies such as JCB and Michelin. With modest targeted investment in transport, energy and digital infrastructure, this vital corridor could generate £12 billion in gross value added and create 18,000 jobs. Will the Chancellor meet me to discuss the targeted investment needed to develop a detailed growth plan for this vital industrial artery and help deliver it on this Government’s mission for growth?
Rachel Reeves
I thank my hon. Friend for the work that she has put into this proposal and for her commitment to delivering growth in her constituency of Stoke. On a recent visit, I had the opportunity to meet JCB in the region and see its important work, particularly on the use of hydrogen. I encourage my hon. Friend to meet the Minister for Services, Small Businesses and Exports—I am happy to set up that meeting—whose portfolio includes local growth. The Government are committed to driving growth in the midlands, which is why I confirmed funding for the west midlands investment zone at the autumn Budget and also confirmed an extension of the UK shared prosperity fund.
David Williams
I warmly welcome the recent investment of an extra £20 million for our buses and an extra £11 million to fix our broken roads across Stoke-on-Trent and Staffordshire. Does the Chancellor agree that continuing to invest in our roads and public transport is an excellent way to keep our communities connected and to increase job opportunities to boost our local economy?
Rachel Reeves
It is great to see two strong advocates for Stoke in the Chamber today. A number of local authorities and, indeed, Labour mayors have raised with me bus procurement and the importance of buses for the local economy. I look forward to working with them, particularly David Skaith in York and North Yorkshire and Steve Rotheram in Liverpool, to boost bus services in communities, and particularly rural communities, to support jobs in the UK. At the Budget, I allocated more than £1 billion for local bus services, and that includes £712 million for local authorities to support and improve bus services in the next financial year.
Jonathan Davies
Museums make an important contribution to our cultural life, but also to our economy. The Arts Council and the Museums Association found that net expenditure on museums and galleries has decreased by almost 40% in real terms since 2009. I welcome the Chancellor’s recognition that the creative industries are key to delivering growth and that national museums were given support in the recent Budget, but what steps can the Government take to support regional civic museums, such as Derby museum, which did not benefit from that funding?
Rachel Reeves
The Culture Secretary was pleased that the creative industries were one of the sectors included in our industrial strategy. She hosted an event with members of the creative industries taskforce in Newcastle just last week to emphasise the importance of having good cultural offers and art and museums in local communities. I am happy to sort out a meeting for my hon. Friend with the relevant Minister to discuss access to the arts and culture in Mid Derbyshire.
Mrs Lewell-Buck
As my right hon. Friend knows, South Shields is a gorgeous coastal tourist town. We pride ourselves on our small businesses and our strong hospitality industry, but she will also know they are struggling after years of neglect by the Conservatives. To help those businesses, will she outline what consideration she has given to reducing VAT on our hospitality, leisure and tourism sectors?
Rachel Reeves
I thank my hon. Friend for that question. I remember a very nice dinner of fish and chips with her in her constituency just a few years ago, and she is a strong advocate for local businesses in South Shields. In the Budget, we were able to extend business rates relief to the retail, hospitality and leisure sector of 40% for the next financial year and then to move it on to a fairer footing, so that high street businesses and smaller businesses pay fairer rates of business tax compared with, for example, the online giants.
Alison Hume
The bus manufacturer Alexander Dennis builds innovative electric buses, employing 800 people in Scarborough. The Chancellor has spoken about the need for public procurement to take better account of employment and environmental standards. As bus services are brought back into the control of mayors and local authorities, will the Government use public procurement to back British companies such as Alexander Dennis to boost economic growth?
Rachel Reeves
My hon. Friend is a good advocate for businesses, including Alexander Dennis in Scarborough. The Government will soon publish a new national procurement policy statement, which will set out our priorities for public procurement in support of our mission to grow the economy. In addition to the answer I gave my hon. Friend the Member for Stoke-on-Trent North (David Williams), we recognise the importance of buses in growing our economy by getting people to work, but also the opportunities to use public procurement to buy more buses made in this country, supporting good jobs here in Britain.
Dame Harriett Baldwin (West Worcestershire) (Con)
Former Chair, Mr Speaker, but thank you very much for calling me.
It is clear that we all want to see economic growth in rural areas and across the UK, but I am concerned that some of the measures in the Chancellor’s Budget are having the opposite effect. Which statistic worries her most: the fact that we are at a 20-year high for business closures, or the 100% increase in millionaires leaving the UK?
Rachel Reeves
I have already outlined some of the positive numbers, including the upgrade in the IMF forecast, the PwC report and the fact that the economy had returned to growth in the most recent data and inflation is falling. Instead of talking our country down, I will be banging the drum to bring in investment and jobs to our country.
Josh Babarinde (Eastbourne) (LD)
A new hospital in Eastbourne would help to drive economic growth in my town and across rural Sussex, but years of Tory tumbleweed and, I am afraid, yesterday’s announcement mean that it will not be delivered and built until 2041. Will the Chancellor accelerate the release of funds to the Department of Health and Social Care to bring forward the building of our new hospital, to support patients in Eastbourne and beyond, and of course to support wider economic growth?
Rachel Reeves
I recognise the strength of feeling about this issue. We were left a terrible situation by the previous Government, with a £22 billion black hole in the public finances and the promise of things for which absolutely no money had been put aside. We have now done the responsible thing by reviewing the programmes that we inherited from the previous Government. That means that the timetable for some projects has had to be pushed back, but it is because the previous Government made promises knowing that the cheque would bounce.
Saqib Bhatti (Meriden and Solihull East) (Con)
Businesses in my constituency and across the country are still reeling from the Chancellor’s damaging Budget. She made a commitment at the Confederation of British Industry conference that she would not come back for more taxes. Does she stand by that commitment?
Rachel Reeves
I had to do a once-in-a-generation Budget in October to fix the mess in the public finances left by the previous Government. I will never have to do a Budget like that again because we have now fixed that terrible inheritance.
Sammy Wilson (East Antrim) (DUP)
Devastating changes to inheritance tax, increased environmental costs because of net zero policies, and diversion of farming support to foreign countries—with those kinds of policies, how does the Chancellor ever expect to generate economic growth in rural areas?
Rachel Reeves
Bringing stability back to our economy by fixing the public finances is the No. 1 thing we can do to help businesses to grow, alongside our planning reforms to make it easier to build things in Britain and our reforms to the pension system to help businesses access long-term patient capital. As for agricultural property relief, the latest figures show that the top 7% of claims—117 claims—accounted for 40% of the total value of the relief, costing the taxpayer £219 million. We cannot afford to carry on like that, which is why we made those progressive and fair reforms in the Budget.
James Wild (North West Norfolk) (Con)
Farming’s vital role in growing our rural economy, growing our food and protecting the countryside is threatened by Labour’s family farm tax. The self-proclaimed “iron Chancellor” is proving herself to be the tin-eared Chancellor, ignoring evidence from the National Farmers Union and others showing that the tax is based on flawed assumptions. Ahead of Saturday’s farming day of unity, rather than threatening family farms, will she speak to farmers, think again and withdraw those damaging proposals?
Rachel Reeves
The problem with the Conservatives is that they support increased spending in vital areas but they have not supported any of the tax increases necessary to pay for them, which, frankly, is why we are in the situation we are in today, having inherited a £22 billion black hole in the public finances. The hon. Gentleman will know that in the Budget we announced £5 billion for the farming budget over two years— including the largest funding directed at sustainable food production and nature recovery in this country’s history—and £60 million to support farmers affected by flooding.
Antonia Bance (Tipton and Wednesbury) (Lab)
The Exchequer Secretary to the Treasury (James Murray)
The UK carbon border adjustment mechanism will be introduced in 2027. It will ensure that imports face a carbon price that is comparable with domestic products, giving UK industry the confidence to invest without its decarbonisation efforts being undermined. UK steel producers will continue to benefit from high levels of free allowances in the UK emissions trading system until at least the end of 2026, protecting them against carbon leakage via high-emission imports.
Antonia Bance
Newby Foundries and Alucast in my constituency of Tipton, Wednesbury and Coseley have raised with me the impact of the UK CBAM coming into effect later than, and differing from, the EU CBAM. This could threaten domestic steel production and make the export of metal products to the EU more difficult. Can the Minister please support the UK’s steel and metal finishing industries by reassuring me that the UK CBAM will not be weaker than the EU CBAM, and will he meet me and other steel MPs to discuss this?
James Murray
As I have set out, the UK CBAM will mitigate the risk of carbon leakage by placing a carbon price on some of the most emissions-intensive industrial goods imported into the UK, including in the iron and steel sector. The UK CBAM is designed for the UK context, and in some areas, its emissions scope is wider than the EU CBAM—in respect of indirect emissions, for instance. The first CBAM industry working group was held earlier this week, and I understand that a representative of the UK steel sector attended. I will make sure that my officials continue to engage with the industry sectors most affected, and I am very happy to discuss this further with my hon. Friend.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Heavy industry, whether it is steel, ceramics or so many other areas, is totally dependent on low energy costs. The trajectory is that energy costs are rising, especially in industry, whether as a result of regulation or world markets. Many other countries are doing more to protect their heavy industries by making sure they can have low input costs for energy. What more can the Minister do to protect our heavy industry in the future?
James Murray
The No. 1 thing for industry and households is to bring down the cost of energy. That is why we are investing in renewable home-grown energy for the future, to make sure we have energy independence, energy security and, crucially, lower bills for those households and businesses.
Bradley Thomas (Bromsgrove) (Con)
The Economic Secretary to the Treasury (Emma Reynolds)
This Government are committed to tackling money laundering. Money laundering through cash-based high street businesses is a known issue, and the Treasury works closely with law enforcement agencies to monitor trends in criminality and ensure resources are deployed towards the most significant threats.
Bradley Thomas
Hard-working shopkeepers and entrepreneurs across the country, including in Bromsgrove and the villages, play by the rules and pay their taxes. What is the estimated loss of revenue to the Exchequer from money laundering in retail environments in towns and villages across the country, and what are the Government doing to crack down on this?
Emma Reynolds
It is right that we take a robust approach to money laundering, and we have a tailored approach to cash deposit limits to reflect the differences in needs and risk profiles across businesses’ customer bases. I am committed to working with the Financial Conduct Authority and others to ensure we strike the right balance—one that allows businesses to continue their operations but also ensures that we assess the risk posed by those who might be using their businesses to launder money.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
What additional support can the Government offer to Customs and Excise, local authorities and police forces in gathering supporting evidence that can then be provided to His Majesty’s Revenue and Customs? High street money launderers are brazen fronts for significant criminal enterprises.
Emma Reynolds
We take this issue very seriously. The Treasury owns the money laundering regulations, but the FCA has a key role as a major supervisor, and we work very closely with the criminal enforcement agencies. Of course, those agencies are independent, but we are absolutely committed to clamping down on money laundering.
Richard Baker (Glenrothes and Mid Fife) (Lab)
Nick Smith (Blaenau Gwent and Rhymney) (Lab)
The Chief Secretary to the Treasury (Darren Jones)
This Government recognise the contributions that miners made to the prosperity of the nation and the challenging circumstances in which they worked. That is why the Government agreed to transfer the investment reserve fund to members of the mineworkers’ pension scheme, so that the mineworkers who powered our country receive a fairer pension.
Richard Baker
Does my right hon. Friend agree that ending the injustice of the mineworkers’ pension scheme is great news not only for the 849 former mineworkers in my constituency who will benefit, but for the economies of the local communities where they live, which were left behind by the previous Government? Will he and his colleagues in government continue to engage with the trustees of the British Coal staff superannuation scheme to ensure that, in the same way, the funds built up in that scheme are used for the benefit of its members?
Darren Jones
I thank my hon. Friend for his question and his work on behalf of his constituents. He may know that, in the previous Parliament, I and colleagues worked on the mineworkers’ pension scheme through the Business and Trade Committee to lay the ground for the initiatives that this Government were quickly able to implement on coming into government. Unfortunately, that work had not yet been done for the British Coal staff superannuation scheme, which is why Ministers are meeting the scheme’s trustees to consider the options.
Nick Smith
This is an important issue for south Wales families. My uncle Jacky was a deputy at Cwm Marine pit and my uncle Georgie was a deputy at Oakdale. Sadly, they have now passed, but they were members of the British Coal pension scheme. Many of their mining friends will be in their 80s and 90s, and their pensions deserve uplifting, so will the Minister please commit to making good progress here? Time is running out for the men and women who fired our industrial past.
Darren Jones
I thank my hon. Friend for raising that question on an issue that I know is deeply important to him, his constituents and his family, and on which he has worked for many years. The Government are actively considering proposals from the scheme’s trustees, and we will set out the next steps in due course. My hon. Friend the Minister for Industry in the Department for Business and Trade will be working on the detail, and I will be meeting her shortly to consider the options.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
I have significant former mining areas in the Douglas valley and Upper Nithsdale in my constituency. Constituents there are concerned about the British Coal scheme, because many people in that scheme actually worked underground before being promoted into other jobs. To ensure fairness in the implementation of this Government policy, will the Minister make sure that the timescale on which they are compensated is the same as that for those in the other scheme?
Darren Jones
I thank the right hon. Member for his question, and I think “fairness” is the right word. That is why we worked in opposition to try to persuade the last Government to act on the mineworkers’ pension scheme, but we failed because the last Government did not think this was an urgent issue for them to consider. The Labour Government have implemented this change at our first Budget, and that is fairness in action. We will continue to work with trustees of the BCSSS, and we will come back with further options in due course.
Mr Speaker
Let us go to the Member for that well-known mining area of Strangford.
Jim Shannon (Strangford) (DUP)
Mr Speaker, I spoke to the Minister beforehand, so he knows where I am coming from with my question.
I understand that some families of those affected who have passed away have retired to Northern Ireland, and they deserve their pensions. That being the case, has the right hon. Gentleman had an opportunity to ascertain the numbers of those in Northern Ireland who will qualify for such pensions, and will he chase up those people to ensure they get the moneys they deserve?
Darren Jones
I thank the hon. Member for his question. I am afraid I have not had time to do so since he told me 35 minutes ago that he was going to ask that question, but I have heard it clearly. I will take that away and come back to him in course.
Bobby Dean (Carshalton and Wallington) (LD)
Steve Darling (Torbay) (LD)
The Exchequer Secretary to the Treasury (James Murray)
The Government announced a range of measures at the autumn Budget to support SMEs, including in the retail, hospitality and leisure sectors. They include more than doubling the employment allowance, freezing the small business rates multiplier, extending RHL relief to 40%, maintaining the small profits rate and reducing the duty on qualifying draught products, which represent 60% of alcoholic drinks sold in pubs.
Bobby Dean
The Labour manifesto committed to replacing the business rates system. However, last week at the Treasury Committee, the Minister seemed to rule out the kind of comprehensive reform that the Liberal Democrats and others have been campaigning for, and indicated that there might only be a tinkering around the edges of rates and reliefs. Can the Minister confirm today whether the Government still intend to replace the business rates system, or will they just be tinkering around the edges of this broken system?
James Murray
I think that retail, hospitality and leisure businesses, which are the backbone of our high street, might object to the idea of permanently lower tax rates as “tinkering around the edges”. That is a fundamental change that we want to bring in from April 2026 to make sure they have stability, certainty and permanently lower rates. Alongside it are our wider ambitions in the “Transforming Business Rates” discussion paper, which I invited the hon. Gentleman to read and respond to at last week’s Treasury Committee.
Michael Wheeler
I draw Members’ attention to my declaration in the register of interests.
Retail is an important part of the economy in my constituency, which includes many wonderful independent businesses. Will, who runs the excellent Wandering Palate in Monton, wrote to me about the challenges he is facing. Will the Minister outline the measures the Government are taking to support small business owners like Will in my constituency and across the country to enable our high streets to thrive?
James Murray
I thank my hon. Friend for his question and for referencing Wonderful Palate, the business in his constituency. I do not know the details of the rateable value of that property, but I point the owner to the fact that we are retaining small business rate relief, freezing the small business multiplier next year and extending the retail, hospitality and leisure relief in 2025-26. I also point the owner of that business and other businesses to our future plan, as I mentioned, to have permanently lower tax rates for retail, hospitality and leisure businesses with values of below £500,000, as well as to consider reforms to small business rate relief to better support businesses that want to expand into a second premises.
Steve Darling
What consideration have Ministers given to exempting the seasonal tourism industry from the national insurance hikes set to kick in this summer? That would benefit Paignton zoo and Splashdown in the Torbay constituency.
James Murray
We set out the details of our decision to increase the rate of national insurance contributions from employers and to reduce the threshold, and we have added the different benefit we will give, particularly to small businesses and charities, by more than doubling the employment allowance. The employer national insurance contribution changes were among the toughest we took in the Budget, but they were necessary to repair the public finances and deliver the economic stability that is so crucial for investment and growth.
Mr Speaker
We have had the former Chair of the Treasury Committee, so let’s now have the current Chair.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
My hon. Friend the Exchequer Secretary rightly said that small and medium-sized enterprises are a vital part of our high streets and our economy, and one of the biggest changes is, of course, the change to business rates. He was not tempted at the Select Committee last week to give more detail on the timeframe for that, but many businesses want certainty about business rates as they go forward. May I tempt him to give an indication of the Government’s thinking about how quickly this change might be introduced and whether the small business rate relief is likely to survive or to be subsumed into a new regime?
James Murray
I thank the Chair of the Select Committee for her questions. If she did not succeed in tempting me at the Select Committee, I doubt she will succeed today, but I can reassure her that the decisions we have set out about introducing the permanently lower business rate for RHL—retail, hospitality and leisure—properties below a £500,000 rateable value will be coming in from April 2026. Specifically in relation to small business rate relief, I can confirm that the Government are committed to retaining that. One of the options we are looking at in our “Transforming business rates” discussion paper is how to support businesses that want to expand into a second premises, thereby growing the business, because at the moment there is the cliff edge where they lose small business rate relief.
Richard Fuller (North Bedfordshire) (Con)
Confidence on Britain’s high streets is sliding faster than the Chancellor will be down the ski slopes of Davos later today. With retail sales down—rather than up, as expected in the run-up to Christmas—and with the British Retail Consortium saying that two thirds of stores will raise prices to cover her national insurance increases, when will the Minister accept that the Chancellor’s economic strategy of raising taxes and increasing regulations is not working?
James Murray
I am glad to know that the shadow Minister’s morning was well spent cooking up that line about the Davos ski slopes. What he will know, and what sectors across the economy will know, is that having a stable economy is a prerequisite for the investment we need to get the economy growing. That is why we had to take difficult decisions at the autumn Budget, including those to increase the rate of employer national insurance contributions. Alongside that increase, however, we more than doubled the employment allowance and set out our plans to have permanently lower tax rates for high street RHL properties from April 2026.
Daisy Cooper (St Albans) (LD)
A number of small high street businesses will be hit hard by the Government’s jobs tax and the dramatic reduction in business rates relief, and House of Commons Library research that I commissioned shows that from April 2026 the Government’s reforms to business rates could leave small and independent businesses in effect subsidising the big chains. Will the Chancellor meet me and a delegation of small and independent businesses from St Albans so that we can make the case for fairer reforms and for wholesale reform of the broken business rates system?
James Murray
One of the problems with the Liberal Democrats is that they support all our spending plans, but they do not support any of the tax changes to fund them. This is a prime example. When we talk about increasing employer national insurance contributions, we acknowledge that that was one of the toughest decisions we took at the Budget, but it was necessary to fix the public finances and provide support for those public services, which I note the Liberal Democrats are very keen to support.
Frank McNally (Coatbridge and Bellshill) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
When I became Chancellor, there was a £22 billion black hole in the public finances. We simply could not carry on like that, which is why I have taken control of our public finances and made growth the No. 1 priority of the Government to improve living standards.
In December, I launched the second phase of our spending review, where for the first time in 17 years every single pound of taxpayer money will be investigated line by line to ensure that it is being spent well. The spending review will set resource or day-to-day departmental budgets until 2028-29 and capital departmental budgets until 2029-30. On 11 June, when we conclude the review, I will present departmental budgets to the House.
Frank McNally
The recent drop in the rate of inflation is welcome news for those facing financial pressures across Coatbridge and Bellshill, as is the expectation that the UK will become the fastest growing economy in Europe. What further action is my right hon. Friend taking, working in partnership with Cabinet colleagues, to ensure that working families continue to see prices fall and living standards rise?
Rachel Reeves
I thank my hon. Friend for that question. I know that the cost of living has a deep impact on all our constituents, including in Coatbridge and Bellshill. Like my hon. Friend, I was pleased to see the reduction in inflation last week. The Bank of England’s independence is sacrosanct to carry on those efforts. In addition, we increased the minimum wage in the Budget, we have reformed universal credit to reduce deductions and we have extended the household support fund, all to help ensure that working families have more money in their pockets.
Mel Stride (Central Devon) (Con)
A moment ago, the right hon. Lady spoke about the importance of spending money wisely, so in the light of the Treasury Committee’s conclusion that her new Office for Value for Money is a waste of money, does she agree that one of its early actions should be to abolish itself in order to save money?
Rachel Reeves
I was pleased to appoint Tom Hayhoe to run the Office for Value for Money—somebody who has a track record of delivering value for money for taxpayers. What the Government want to scrap is giving contracts to friends and donors, because that was a colossal waste of money instigated by the Conservative party.
Mel Stride
The Chancellor’s answer was an answer, but I do not think that it connected in any way with my question. Could I perhaps ask her about national insurance hikes? A full two thirds of the revenues raised through Labour’s job tax is simply going on servicing the additional debt being run up by this profligate Government. Given that, does she really believe that the catastrophic effects of that tax on businesses right up and down the country are a price worth paying?
Rachel Reeves
We inherited a £22 billion black hole in the public finances, and we set out the detail of that at the time of the Budget. It was essential to close that gap to bring stability back to the public finances. That required difficult decisions, but they were the right decisions to ensure that our country has the stability that it lacked for so many years and under so many different Prime Ministers and Chancellors under the Conservative party.
Steve Yemm (Mansfield) (Lab)
The Chief Secretary to the Treasury (Darren Jones)
I thank my hon. Friend for raising this issue, which clearly is important to him and his constituents. I confirmed to the House today that the Minister for Trade in the Department for Business and Trade is working with the trustees of the BCSSS to consider options. I will meet the Minister to look at those options and provide further updates to the House in due course.
Olly Glover (Didcot and Wantage) (LD)
The Exchequer Secretary to the Treasury (James Murray)
During the passage of the National Insurance Contributions (Secondary Class 1 Contributions) Bill, we set out clearly how the scheme would work to reimburse costs for public departments or local government. That measure is in line with what the previous Government attempted to do with the health and social care levy. Where third-party private contractors are engaged, those costs will be considered by local government or other public sector organisations in the round.
Brian Leishman (Alloa and Grangemouth) (Lab)
Rachel Reeves
This Government cannot account for the decisions made by the Conservative party, but we have created the Office for Value for Money, to ensure value for money when we use taxpayer’s money.
Mr Speaker
Order. Mr Lowe, topical questions are meant to be short and punchy. I am sure that you are very good at that normally.
James Murray
One of my key priorities as Exchequer Secretary and the Minister with responsibility for HMRC is to oversee a programme of transformation at HMRC to improve its customer service, to digitise the service, to close the tax gap and to ensure that we have the modern, reformed service that we need for the future.
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
James Murray
As my hon. Friend set out, decisions on eligibility for covid-19 financial support were taken by the previous Government. The current Government have no plans to assess the financial compensation scheme, but the covid-19 inquiry has recently launched its module to investigate the economic response to the pandemic. The Government are committed to learning from its findings.
Sir Edward Leigh (Gainsborough) (Con)
When I visited St Barnabas hospice in Lincoln recently, the chief executive told me that it was having to pay £350,000 extra every year to cover the national insurance increase. I do not expect an answer now, but as we all agree that palliative care is so important and we want to encourage it, and the Terminally Ill Adults (End of Life) Bill started its Committee stage today, will the Government keep that increase for hospices under review?
Rachel Reeves
The Health Secretary set out the settlement for hospices just before Christmas to ensure that they have the money they need, including to compensate for the national insurance increase, but I am happy to arrange a meeting for the right hon. Gentleman with the relevant Health Minister.
Josh Simons (Makerfield) (Lab)
The Parliamentary Secretary to the Treasury (Torsten Bell)
My hon. Friend is a powerful advocate for his constituents, and particularly for those who have suffered in recent weeks, including others across Greater Manchester. As I set out earlier, the Government have put in £2.4 billion to ensure flood resilience over the next two years; as he will be aware, future decisions on flood defence funding will be taken in the spending review in the normal way. I know that he will continue to be a powerful advocate for his constituents.
Tim Farron (Westmorland and Lonsdale) (LD)
Schools in Westmorland have been told that they will have to meet the costs of teacher pay rises next year, at least in part, from existing funds and by making efficiencies. Does the Chancellor not understand that all that is available to schools in my constituency is sacking teachers and merging classes? Will she instead commit to fully funding the teachers’ pay rise and other cost increases, so that our schools can do the job that they are meant to do?
Darren Jones
The hon. Gentleman knows that in order for us to restore public finances and put them on a firm foundation, departmental settlements have to reflect the cost of the civil servants they employ; that is how the Departments are working. As the Chancellor has previously confirmed, the Department for Education has received money to cover the cost of running the education system, and the details will be provided to schools in the normal way in due course.
Gill German (Clwyd North) (Lab)
Darren Jones
I thank my hon. Friend, who is an important champion for the Welsh economy. Wales can and will play a vital part in our growth mission. Our two Labour Governments continue to work together as we review the position inherited from the Conservative Government, including on rail infrastructure, and decisions will be set out in the spending review in June.
Alex Easton (North Down) (Ind)
Will the Chancellor advise businesses in my constituency that are having to make staff unemployed and stop expansion plans in order to pay for her increases in employer national insurance contributions?
James Murray
We have been clear since the Budget that the decision to raise employer national insurance contributions was one of the toughest we have taken as a Government, and we recognise that it has consequences for businesses. However, we think all businesses will benefit in future from the economic stability that this decision will bring; it will drive investment and growth across the country.
Chris McDonald (Stockton North) (Lab)
Rachel Reeves
I join my hon. Friend in congratulating Intasite on its 10th anniversary as a business, and on the rapid growth it is enjoying. The announcement we were able to make last year on the carbon capture and storage work in Teesside will be a big driver of jobs and growth there, and I look forward to working with him and local businesses in Stockton to make that a reality.
Sir Oliver Dowden (Hertsmere) (Con)
Does the Chancellor of the Exchequer propose funding the reported £9 billion bill to the Mauritians for the continued use of Diego Garcia through higher taxes, more borrowing or spending cuts?
Rachel Reeves
We are in discussions with the new Administration in the United States around the future of Diego Garcia. We will set out details in the spending review, as the right hon. Gentleman would expect.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is estimated that 148,000 people had their lives cut short between 2010 and 2020 as a result of austerity measures; on top of that, poor health led to more than £13 billion in lost productivity under the previous Government. What are my right hon. Friend’s estimates of the different choices, and the impact that they will have on the health of the nation and economic growth?
Rachel Reeves
I thank my hon. Friend for that question. I know she studies closely the work of Professor Michael Marmot on life expectancy and the impact of health inequalities on our country. At the Budget, we increased the minimum wage. In addition, we extended the household support fund and reduced the amount that could be taken in deductions from universal credit, all to try to put more money in the pockets of ordinary working people, to reduce some of those inequalities and tackle the cost of living crisis.
Jerome Mayhew (Broadland and Fakenham) (Con)
One of my GP surgeries called me this morning to highlight the impact of the rise in national insurance contributions, which will cost it £40,000. It can only respond by freezing cost of living pay increases for all its support staff. Does the Chancellor finally accept that working people up and down the country are paying the price for her tax rises?
James Murray
What we accept is that the difficult decisions we took at the Budget enabled extra funding to be put into the NHS. GP surgeries have had a funding settlement that considers all the pressures on them in the round.
Sonia Kumar (Dudley) (Lab)
My constituency has a proud industrial heritage, with manufacturing still worth £1 billion a year to the local economy from sectors that account for nearly 10% of the UK’s total economic output. What steps have the Government taken to promote the growth of the manufacturing sector and ensure that towns like Dudley continue to build on their industrial traditions?
Rachel Reeves
I thank my hon. Friend for that question, and for the work she does to support and promote businesses in Dudley. Through our modern industrial strategy, and the targeting of eight sectors in which there is huge potential for growth, we will work with businesses right across the country on, for example, reform of the planning system to make it easier for them to build, and reform of the pension system to get funding for businesses, including those in Dudley, that are looking to grow and expand.
Dave Doogan (Angus and Perthshire Glens) (SNP)
Neither the US Federal Reserve nor the EU Central Bank are engaged in active quantitative tightening, but the Bank of England is. The Bank of England is costing the public finances in the region of £13 billion a year as a result of a fire sale of UK Government bonds. Last time I spoke to the Chancellor about that, she said that that was because of the Bank of England’s operational independence, which we all value, but that is not a licence for impunity. What discussions will she have with the Bank of England about releasing UK Government debt in a way that benefits everybody in the UK?
The Economic Secretary to the Treasury (Emma Reynolds)
It is our view that it is absolutely right that the Bank of England has operational independence. That is in line with international standards and what is happening in jurisdictions around the world, including in the United States and the eurozone.
Callum Anderson (Buckingham and Bletchley) (Lab)
Recent developments in the UK investment trust sector have once again shone a light on the crucial role that retail investors play in our financial markets. In her Mansion House speech last November, the Chancellor rightly prioritised leveraging domestic pension capital to drive the Government’s economic growth mission. Does the Minister agree that greater retail participation in UK financial markets also supports growth and democratises wealth, and will she meet me to discuss how the Government can better support access to financial markets for individuals, including in my constituency?
Emma Reynolds
I am always happy to meet my hon. Friend, who is a near constituency neighbour. We absolutely agree that retail investment is crucial. I want more progress on the advice guidance boundary and targeted support. I will be working closely, in my new role, with the Financial Conduct Authority to take that forward.
Sarah Olney (Richmond Park) (LD)
Residents in my constituency will have been extremely concerned to read the news this morning that the Chancellor plans to announce next week the expansion of Heathrow. I invite her to tell us, on the Floor of the House this morning, yes or no: will the Government back expansion at Heathrow?
Rachel Reeves
I am not going to comment on leaks. I will say that the Government are absolutely committed to growing our economy, and making this a great place for businesses to invest in and trade.