19:20 - The House divided: - Ayes: 165 / Noes: 342 - Question accordingly negatived.
The Chief Secretary to the Treasury (Darren Jones)
I congratulate the shadow Chancellor on another theatrical performance—one that I know we all enjoyed across the House. I remember fondly his previous attempts to weave the story of “Alice in Wonderland” into his contributions. The only conclusion I can draw today is that he has not found his way out of the rabbit hole just yet.
The shadow Chancellor made a number of points where he seemed to rewrite history. It was all the fault of Russia invading Ukraine, with not one mention of Liz Truss—“Who’s that? We’ve never heard of her.” When asked why, if everything was so hunky-dory under the Conservatives, they suffered such an historic loss, the answer was, “Oh, I don’t know.” There was no answer to the question. We had hope when he said, “I will tell the House what I would do differently.” I sat and listened carefully, and the grand reveal: “I would focus on productivity.” Well, I think the Conservatives said that before, and how did that go? Not one policy, suggestion or apology for their record—not one thing.
In contrast, this Government were elected with an historic landslide and on a mandate of change. [Interruption.] Conservative Members question our historic landslide, but they should look at the number of seats we have on our side of the House, and how many they have on theirs. I encourage them to remember that the aim of the game is to get Members in this House. It was an historic landslide for the Labour party at the last election, elected on the promise of change—to put pounds in the pockets of working people and to deliver for the renewal of Britain.
At the Budget last year we fixed the foundations, stabilising the public finances and putting Britain back on the road to growth, after 14 years of Conservative waste and decline. [Interruption.] I know that the Conservatives do not want to hear it, but every time one of them gets up to speak—we have heard it already—it is as if they have forgotten about the £22 billion black hole they left in the public finances. Rather than act to fix it, they called an election, ran away and left it for us to clear up their mess. This Labour Government will never repeat the mistakes of the Conservative party.
Graham Stuart
The Chief Secretary said the name of the game is to get the maximum number of seats. I gently suggest to him that that is not the name of the game; the name of the game is to serve the British people and honour the promises we make to them. [Interruption.] He thinks that is amusing. If he wants to know where his vast majority came from, it came with a series of promises that, one by one, he is breaking.
Darren Jones
I roll my eyes because, evidently, all my hon. Friends put themselves forward and stood to serve the country. As my right hon. Friend the Prime Minister has made very clear, he changed the Labour party to make sure that we put the country first. The right hon. Gentleman makes the case that the name of the game is not to get Members elected to this House; if that is the case, he obviously played the game very well, because the Conservatives failed to do that miserably.
At the Budget, we took the decisions necessary to stabilise the public finances and give our public services a vital injection of cash to start to turn around the years of decline that members of the public across the country know: NHS waiting lists growing, schools crumbling, the prisons crisis, and project after project being cancelled or delayed. That investment was underpinned by changes to the tax system to make it fairer and more sustainable, while protecting working people against higher taxes in their payslips.
Wendy Morton (Aldridge-Brownhills) (Con)
I wonder whether the right hon. Gentleman could help me out by explaining what a working person is.
Darren Jones
A working person is someone who goes to work, and in our manifesto we made a very clear commitment to protect working people through the taxes they pay on their pay slips—which is something that we experience when we go to work.
However, we did more than that. We ended tax breaks for private schools to help fund new teachers and raise education standards, supporting more than 90% of children in state schools to achieve and thrive. We removed the outdated concept of domicile status from the tax system, so that all long-term residents of the United Kingdom pay their fair share of taxes here. We ensured that the UK tax system remains internationally competitive, reforming the tax treatment of carried interest. We took further action by raising the higher rates for additional dwellings for stamp duty land tax to support first-time buyers and main home movers, giving them a competitive advantage. We made changes to the energy profits levy to ensure that oil and gas companies contribute to the clean energy transition. In the Budget last autumn the Government introduced the most ambitious package ever to close the tax gap, ensuring that more individuals and businesses pay the taxes they owe.
Stuart Anderson (South Shropshire) (Con)
The Chief Secretary talks about the Budget. I have spoken to small businesses across my constituency that are feeling the impact of last year’s tax rises, and they are concerned about uncertainty and a lack of clarity. Does he really understand the impact that last year’s attacks on small businesses are having, and how devastating they are for our constituents?
Darren Jones
Of course we engage with businesses, small and large, week in, week out, as Ministers in the Treasury, across Government, and in our constituency capacities. As Members know, the introduction of the employer national insurance contributions was weighted with changes in the threshold for payment with the aim of reducing the burden on smaller businesses. We recognised that we were honouring our promise to working people not to increase the headline rates of employee income tax or national insurance in their pay slips.
Like other benefits that replace income, the state pension is taxable, but the personal allowance will continue to exceed the basic and full new state pension, which means that pensioners whose sole income is the full new state pension or basic state pension without any increments will not pay any income tax. The state pension continues to be the foundation of the support available to pensioners, backed by this Government’s commitment to the triple lock. This year more than 12 million pensioners have benefited from a 4.1% increase in their basic or new state pension, which means that under this Government those on a full new state pension will receive an additional £470. The full new state pension is currently projected to go up by around £1,900 over the course of this Parliament, on the basis of the latest forecast from the Office for Budget Responsibility.
I note that Members of opposition parties have not opposed these spending plans. They have not said that they think the NHS should get less money this year, or that we have too many teachers, nurses or police officers. If they support our spending plans, I simply ask: how would they pay for them?
Melanie Ward
Like many of my constituents, I welcome the investment that was announced by the Chancellor at the time of the spending review for the long-awaited regeneration of Kirkcaldy town centre, a town centre that went only one way under 14 years of Conservative rule and 18 years of the SNP. They talk about support for small businesses, but what really happened is clear. Does my right hon. Friend agree that it has only been possible to do this because of the decisions that we have made to raise revenue?
Darren Jones
I wholeheartedly agree with my hon. Friend, who is an excellent champion for her constituency. She is right to point out that the investment announced for her constituency was a consequence of the decisions made by this Chancellor and this Labour Government to invest in the renewal of Britain.
Mr Louie French (Old Bexley and Sidcup) (Con)
I am not sure what financial qualifications the Chief Secretary has, if any, but last week’s reports suggested that, privately, Ministers are briefing their Back Benchers that they will introduce a wealth tax without calling it a wealth tax. Can he confirm whether or not that is true?
Darren Jones
That is a slightly odd question, but I can definitely confirm that any tax changes, one way or the other, will be announced by the Chancellor at the Dispatch Box in the normal way in the autumn.
As I say, Conservative Members are welcome to come forward with suggestions about how they might pay for the decisions that this Government have taken. Maybe they disagree with our fiscal rules, which are our assurance to the financial markets that we will live within our means and reduce Government debt.
John Glen (Salisbury) (Con)
The right hon. Gentleman is being generous in giving way. One area the Opposition would be looking at is a coherent reform of the welfare system so that, by changing the pathway to entitlement to benefits, we get that whole budget under control, which would make a meaningful difference to the fiscal position that the Government are in.
Darren Jones
As the right hon. Gentleman knows, my colleagues in the Department for Work and Pensions, with the Stephen Timms review and other work, are taking those measures forward.
Madam Deputy Speaker (Caroline Nokes)
Order. The Chief Secretary is the third Minister or shadow Minister to refer to a colleague by name. It seems to be a bad afternoon for it.
Darren Jones
Madam Deputy Speaker, it is because the review is named after the Member, which led to my naming him, but the Timms review will be taking forward that work and coming forward with proposals in due course.
If Conservative Members wish to challenge the fiscal rules, I invite them to do so. Do they instead think it would be wise to let debt balloon year on year, as they did, to pay for the day-to-day costs of Government, ultimately spending more and more on debt interest and less on the priorities of working people? In contrast, our fiscal rules are non-negotiable, and they are the foundation for stability and investment.
The first rule is for stability—that day-to-day Government spending should be paid for through tax receipts—which is the sound economic choice and also the fair choice, because it is not right to expect our children and future generations to pay for the services we rely on today. This first rule allowed my right hon. Friend the Chancellor, at the Budget last year, to allocate £190 billion more to the day-to-day running of our public services over the course of this Parliament.
The second fiscal rule has enabled this Government to invest in Britain’s economic renewal while getting public debt on a downward path. This rule has allowed the Chancellor to increase public investment by over £100 billion in the autumn and a further £13 billion this spring—investment to rebuild our transport network, our defence capabilities and our energy security. In short, it is investment to grow our economy, improve living standards and put more money into the pockets of working people in every part of the country.
Sir Andrew Mitchell (Sutton Coldfield) (Con)
I can make a very short speech today, Madam Deputy Speaker, because my right hon. Friend, the shadow Chancellor, in his brilliant speech at the beginning of this debate, set things out so clearly. There are common themes running through both Opposition debates today. The first is that the Government have lost control of expenditure and the second one, which I want to develop very briefly, is that the Executive have failed to listen with appropriate care to what people in this House have said.
On the first of these points, my right hon. Friend the Member for Salisbury (John Glen) said in an eloquent intervention just a few minutes ago that the Government need to work out how to fix last week’s fiasco with the welfare Bill. Far from saving money, this is virtually now another spending measure. It is important to remember that as the former Chancellor my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) set out clearly, had we been successful in winning the last election, we would have reduced the number of working-age welfare recipients to pre-covid levels, thus saving £49 billion by the end of this Parliament.
The reason I focus on this welfare issue is that it is welfare expenditure with which this Government must get to grips, and they have failed to learn the lessons of the past. I was a very junior welfare Minister in what was then the Department of Social Security between 1995 and 1997. I learned two very important rules, which this Government would do well to consider. On both, it is clear that welfare reform is extremely difficult. The first is that we cannot take away from poor people benefits that they are already receiving. I think I am right in saying that no Conservative Government have ever reduced disability benefits in payment. But Labour did not absorb that vital lesson, which is why they got into so much trouble last week.
The second rule is that if a Government want to reduce the benefits bill, there are only really two ways of doing it. The first is to freeze the level of benefits; that has been done in the past, and it means not falling into the trap that the Government fell into last week. The second is to narrow the gateway into those benefits for future recipients. I urge the Government to absorb these important rules, because they will have to return to the issue of welfare expenditure if they are to make any progress at all on the economy.
I hugely praise the rebellion last week by Labour Back Benchers. They have hopefully taught the Executive a most useful lesson: listen to Back Benchers with respect and close attention. As a former Chief Whip, however, I deprecate rebellions unless I am involved in them. It usually takes years for the Executive to get into the habit of treating their Back Benchers with contempt and derision as unelected Downing Street special advisers strut up and down Whitehall, but this lot—this Government —managed to accomplish it extraordinarily quickly. They have learned the hard way not to treat their Back Benchers and elected Members with so little respect.
Tom Hayes (Bournemouth East) (Lab)
Since working at Oxfam and campaigning for tax justice, I have admired the right hon. Gentleman’s work. Were the Conservative party to listen to him, the right hon. Member for Salisbury (John Glen) and the right hon. Member for Wetherby and Easingwold (Sir Alec Shelbrooke), it could find its way back to a centrist position, which would be of benefit to our country. Will he acknowledge that this Government had a difficult inheritance; that since we came to power, we have faced a changed world, with tariffs, trade wars, sluggish global growth, rising authoritarianism and democratic backsliding; and that as a result, this Government have a harder job? Will he acknowledge that, so we can start to think about how we take forward shared improvements?
Sir Andrew Mitchell
The hon. Gentleman brings me elegantly to my final point. Having praised Labour Back Benchers and encouraged them to speak out, my one ask is that they now stand up for the election pledge, clearly set out in their manifesto, to restore development spending to 0.7%. I ask them to show the same zeal and enthusiasm as they did on welfare for bringing back the 0.7%. Inexplicably and astonishingly, their Prime Minister has cut the figure from the 0.5% they, alas, inherited from us down to 0.3%, and it is already causing massive difficulties, of which the hon. Member, with his background in Oxfam, will be fully aware.
When the House comes back in September, I urge the hon. Member, particularly given his experience, to join other Back Benchers in saying to the Executive, “We will not put up with this. We said in our election manifesto that we would restore development spending to 0.7%, and in the same way that we showed the Government Front Benchers that they could not proceed as they planned with welfare, they cannot proceed as they plan to with development spending.” I urge Labour Back Benchers to ensure that this rethink takes place in the autumn, when the folly of what has happened will be even clearer.
Several hon. Members rose—
The Exchequer Secretary to the Treasury (James Murray)
I listened very carefully to the shadow Minister. He has clearly been taking theatrical lessons from his colleague the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride). Indeed, I have listened to all his colleagues during this debate, and frankly they have quite some cheek. They speak from the Opposition Benches, yet they failed to reflect honestly, even once, on why they are on that side of the House.
The reason why the Conservatives are in opposition is that they not only ran our public services into the ground, but had given up on fiscal responsibility, which is critical for stability, investment and growth. When we won the election last year, it was our task to restore that responsibility and fix the £22 billion black hole in the public finances, which was a legacy of the previous Government’s waste and delay. [Interruption.] I know they hate to be reminded of it, but that is the truth. That is what we inherited. As my right hon. Friend the Chief Secretary to the Treasury said in opening the debate, we acted on that without delay on taking office. At last year’s Budget, the Chancellor acted decisively to stabilise the public finances and lay the foundations for investment in growth after 14 years of Tory decline. Rather than shirking responsibility, we took the necessary decisions to raise taxes and made the necessary choices to ensure that our NHS, schools and other vital public services received the funding they needed to get back on their feet.
I thank all the hon. Members whom the shadow Minister mentioned in his summing-up speech, as well as my hon. Friends the Members for Glasgow East (John Grady), for Kensington and Bayswater (Joe Powell), for Bolton West (Phil Brickell), for Rugby (John Slinger), for Alloa and Grangemouth (Brian Leishman), and for Loughborough (Dr Sandher).
Many hon. Members spoke about the choices that we have had to make as a Government. Let me be clear that while many of the decisions on tax have been difficult—we recognise that they have had consequences—we took every opportunity to make them as fair as possible. That is why, at last year’s Budget, we decided to end non-dom tax status and tax breaks for private school fees. It is also why we increased air passenger duty on private jets, raised stamp duty for those buying second homes, extended the oil and gas levy, and chose to raise capital gains and inheritance tax. It is why His Majesty’s Revenue and Customs implemented the biggest package of measures to close the tax gap that this country has ever seen. Those measures will ensure that everyone, including the wealthiest, pay the tax that they owe.
Those choices have been the right ones to restore the public finances and get public services back on their feet, yet the Conservatives, the Lib Dems and Reform—who surprisingly are not here—all voted against our Finance Act 2025, which started to put our choices into action. They have refused time and again to support the decisions we have taken on tax, while refusing to say what funding for public services they would oppose as a result. The choices I have mentioned and other difficult choices we have made, such as the decision around employers’ national insurance, have been necessary to meet our fiscal rules.
Let me be clear why those fiscal rules are so important, and why, under this Government, they will always be non-negotiable. The fiscal rules introduced by the Chancellor last year are this Government’s assurance to the markets that we will live within our means and pay our Government debt. They are not only crucial to keeping debt payments under control, but enable us to invest in the future of our country. Thanks to the Chancellor’s fiscal rules—the stability rule and the investment rule—we have been able to boost capital investment by £120 billion, compared with the previous Government’s plans. That investment will improve transport infrastructure, deliver more social and affordable housing, bring down bills through energy security, unlock further private sector investment and, most importantly, improve the lives of working people across Britain by making people better off.
Without our plans to balance the books and get debt falling, our £120 billion of extra investment would not be possible, and taxpayers would see ever more of their money being spent on debt interest payments. We have taken the tough but fair and necessary choices to repair our public finances, so that we can rebuild our schools, our hospitals and our frontline services across the country.
As many right hon. and hon. Members have said today, if Conservative Members disagree with our approach, maybe they can tell us whether they would cut spending on schools, hospitals or defence, or perhaps they can tell us which taxes they would raise instead. Rather than do that, the Conservatives and Reform are competing with each other to inherit the mantle of Liz Truss. They both blindly make unfunded promises on tax—promises that we all know would force up interest payments for families across Britain and cause economic chaos, which would hit working people hardest. The British people want security, stability, public services that work again, and more money in their pocket, and only Labour Members and this Labour Government are prepared to take the decisions that are necessary to make that happen.
Question put.