The Secretary of State for Housing, Communities and Local Government (Angela Rayner)
This is a Budget with immediate action today and clear direction for the future. If we want to build a Britain where all people can live a good life and live it well, where everyone has control to shape their own lives for themselves, and where no one’s future is limited by where they are from, because the only ceiling is their own ambition, what we need is good growth in every postcode. However, we also know that people need a bit of breathing space right now, which is why we have announced targeted support for households this winter, and action to bring down the cost of essentials.
We are a Government with a clear theory of growth: retake control, and devolve power to places. We are fundamentally shifting where and how decisions are made by transferring powers, resources and functions to mayors, strategic authorities and local authorities across England, and we are working with the devolved Administrations of Scotland, Wales and Northern Ireland. That shift means that local leaders with skin in the game can target spending towards the biggest issues in their communities: new housing projects, infrastructure that cuts workers’ commutes, and investment in our town centres.
The fiscal devolution road map published alongside the Budget sets out a new funding model so that local leaders can rise to this challenge: by the end of the decade, local and regional government will retain 100% of the business rates income. It sets out plans for mayoral strategic authorities to receive a share of local income tax revenues from 2028, and details how the overnight visitor levy will work, as well as our plans to explore further fiscal devolution.
Andrew George (St Ives) (LD)
The right hon. Lady has said that she wants to ensure that there is good growth in every postcode and has referred to the business rating system, but in the Budget the Chancellor extended the tax loophole available to holiday lets in postcodes in Cornwall and other tourist areas. Is the right hon. Lady aware that billions of pounds are handed out to second-home owners who flip their properties to holiday letting in order to take advantage of a tax loophole? Would it not be far better to invest that money in social housing for local people in desperate housing need?
Angela Rayner
I know the hon. Gentleman has a private Member’s Bill on this issue, but the Budget provides an extra £1.5 billion for social housing, which I welcome. That takes the overall amount up to £40 billion in the next 10 years. We should welcome that investment.
At the Budget, we also announced £285 million of good growth funding, including incubator funding for areas that are yet to have a mayor, and plans for a £1.5 billion borrowing facility for mayors from 2028. This will give them access to the capital needed to back their local priorities and deliver growth in every postcode. We have also confirmed a £150 million uplift to mayoral capacity funding in 2027-28, to give them the resources they need as their range of powers grow. To support mayors, we are publishing guidance on place-based business cases. This represents a new approach to appraisal that puts local objectives and potential at the heart of decision making.
We recognise that too much of England is not covered by strategic authorities, so we remain committed to filling the gap. This is why I was delighted that we announced at the Budget that we are in the final stages of agreeing devolution deals in Devon, Plymouth and Torbay; Hertfordshire; Lancashire; Leicester, Leicestershire and Rutland; Stoke and Staffordshire; Surrey; Thames Valley; Kent and Medway; Wessex; and Cornwall. These areas will join Cheshire and Warrington; Cumbria; Sussex and Brighton; Hampshire and the Solent; Greater Essex; and Norfolk and Suffolk at the forefront of the Government’s ambitious programme to expand devolution.
Together, these agreements will mean that over 90% of England’s population is covered by a devolution agreement, with mayoral devolution reaching every part of the north. We will continue working with all remaining areas, including Bedfordshire, Luton and Milton Keynes, where there is broad agreement but not yet local consensus.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
The one county that the Secretary of State did not mention in her very long list is West Sussex, which has been waiting through two and a half years of dither and delay. Will she take this opportunity to tell me the plan for West Sussex?
Angela Rayner
I did just say that we are working with all remaining areas. We will continue to do so where we can find local consensus, because we are the party of devolution and believe in working with local leaders.
Later this year, we will publish our full plan for rewiring the state, which will outline a vision for devolution in England. The changes that we have announced are about devolution, not delegation. Where powers and functions are transferred, they will not be duplicated at the centre. This means that, over time, central Government will become smaller but more strategic.
Shockat Adam (Leicester South) (Ind)
The Secretary of State mentioned Leicester, Leicestershire and Rutland. Can she please give a date for when this devolution will happen? We are severely missing out on the funds and pots of money that are going elsewhere.
Angela Rayner
Again, we are working with local areas to make sure that we progress as quickly as possible. We are happy to engage with local leaders as part of that programme.
As we move towards a local government finance settlement, we will continue working with local leaders to plan and invest for the long term. I am clear that local government is the foundation of the public services on which neighbourhoods and communities rely, which are essential to our wider ambition to rewire the state.
Ayoub Khan (Birmingham Perry Barr) (Ind)
I wholeheartedly support regional mayors delivering for local communities. This Labour Government always promote localisation and devolution, but how will the Secretary of State ensure that regional mayors interact and work with local councillors? After all, local councillors are elected to represent their local neighbourhoods.
Angela Rayner
Our plans are about making sure that mayors work with local authorities. In fact, in my area in Greater Manchester, we have seen the combined authority have really good pulling power, with our economy doing better than other areas, so we want to see that across the whole nation.
That is why the Cabinet statement on rewiring the state committed to the financial sustainability of local authorities, and this Budget is the next step towards that. The upcoming local government finance policy statement will set out our next steps alongside the rewiring the state delivery plan. Good growth is growth that we can see and feel. We need to draw a line under a decade of drift during which the public realm was seen as sideshow to politics—[Interruption.] The hon. Member for Hinckley and Bosworth (Dr Evans) should know about sideshows.
Our high streets are where we catch up with friends for a coffee, and those businesses provide solid jobs at the heart of our communities. Those small moments of joy give us real hope, and that is why our strategy is giving hope back to the high streets. New powers, new funding and changes to the business rates system will provide much-needed relief for thousands of cafés, pubs and high street shops. We are freezing all retail, hospitality and leisure bills in real terms to protect them from above inflation increases for the next two years, and we are lifting the small business rate relief threshold for qualifying properties.
Connor Naismith (Crewe and Nantwich) (Lab)
My constituents will strongly welcome the decision to extend small business rate relief to many more businesses in the Crewe and Nantwich constituency, but they will also welcome the decision to remove small business rate relief from adult gaming centres and vape shops. Will my right hon. Friend join me in saying that this is an important step to incentivise the kind of businesses we want to see and disincentivise those we do not?
Angela Rayner
My hon. Friend is absolutely right. We are removing business rate relief for vape shops and adult gaming centres, and giving local authorities stronger tools to tackle business rates avoidance. At the Budget, we announced an extra 20% business rate cut for pubs and all but the largest live music venues. We will also introducing a general anti-avoidance rule for business rates at the earliest opportunity, and expanding what legal costs local authorities can claim when they are unsuccessful.
Jessica Toale (Bournemouth West) (Lab)
I really welcome the change to the business rates threshold, which will take hundreds of businesses in Bournemouth town centre out of paying rates. However, has my right hon. Friend considered the knock-on impact on business improvement districts, which often step up to fill the gap when councils cannot keep the streets clean or keep shopfronts looking nice? As more areas are coming out of rates, what are the Government doing to look at the impact on BIDs?
Angela Rayner
We have been taking forward a number of measures, such as the overnight visitor levy, and working with businesses. As devolution pushes down into local communities, I hope there will be a role for the public realm as well as for businesses and innovators and for those in the community and voluntary sector who do so much as volunteers in our local community.
More broadly, we are also moving Government buildings on to high streets and improving design standards, with a whole-of-Government plan to show the public that the best days of our high streets are yet to come.
Dr Lauren Sullivan (Gravesham) (Lab)
Gravesham is one of the youngest boroughs in Kent, but it is the fourth highest in the south-east for young people not in education, employment or training. Will the Secretary of State join me in welcoming the youth hubs on our high streets in Gravesham, so that young people can find a way back into education, employment and training?
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Before the Secretary of State responds, more than 84 Members are hoping to speak, so every minute we can give Back Benchers will go down well.
Angela Rayner
Noted, Madam Deputy Speaker. I really applaud what Gravesham is doing, especially for its young people.
The strategy is backed by £125 million to transform derelict buildings in our high streets, £65 million for community ownership funding and £10 million to deliver high street rental auctions. Alongside this, we are cracking down on illegitimate and illegal businesses, giving councils powers to limit vape shops and adult gaming centres, and reforming licensing.
The state of our town and city centres says so much about us, who we are as a country and whether we are on the right path. Getting our high streets back on track is a crucial step to giving Britain hope again. But this strategy is just one part of our plan to make people proud of their local area. Alongside it, we have confirmed plans for a new No. 10 North priority projects programme. This will unlock homes, jobs, investment and long-term economic growth, with No. 10 North working directly with new strategic authorities. The Budget will also accelerate the delivery of priority projects in West Yorkshire, the West of England and South Yorkshire. These include investment to expand the Leeds College of Building to accommodate over 2,000 new learners, crowding in around £350 million of private investment into Bristol Temple Quarter, and match-funding incubator space in the Don Valley Corridor.
We will continue to support growth in London, as one of the world’s most important cities, working with the Mayor of London to bring forward improvements to the transport network and towards a global city productivity plan. More widely, we have also confirmed that all 20 strategic authorities will be eligible for funding in the new co-operative development programme. This £10 billion programme is the biggest Government-backed boost to co-operatives for decades and shows how we are meeting our commitment to our sister party to double the size of the co-operative economy.
In the years ahead, we will continue to deliver the £5.8 billion Pride in Place programme, putting local residents in charge of change across almost 300 neighbourhoods. This month, we will see the next major milestone of the programme as we reach the deadline for phase 2 neighbourhoods to submit their 10-year plan. We will continue to work with the devolved Administrations in Scotland, Wales and Northern Ireland, confirming at the Budget the investment in the Edinburgh-Glasgow central belt, funding for the expansion of the M-SParc science park in Anglesey and of Cardiff Parkway station, and the £7.5 million of investment to grow AI and cyber industries in Belfast.
Our plans for good growth will shape the future of this country, but we also know that people need breathing space right now. Alongside radical reforms to reduce bills in the future, we have also announced a series of measures to tackle the cost of living and help make everyday life easier. We know that rising energy costs are going to be tough for a lot of households this winter. That is why we are removing VAT and standing charges from bills, freezing fuel duty and providing £100 per household for energy payments in council tax bands A to D in England. The measures are supporting up to 80% of households in England, and local authorities will get a discretionary fund of £100 million to provide further support to households most in need.
On top of that, we have taken action to make groceries cheaper by cutting import duties; increased the living wage and the minimum wage; extended parental leave; and ended the carer’s allowance cliff edge. We brought in higher tax-free mileage rates and boosted support for nurses, and we are making sure that pensioners in receipt of the full state pension will not have to pay tax.
Britain is a kind, caring nation where people take pride in looking out for each other. In 2026, in the world’s fifth-richest economy, everyone should have a roof over their head. That is why we will make sure that by Christmas this year everyone sleeping rough will be offered a route off the streets. Earlier this year, I announced £442 million for a new rough sleeping programme to meet that milestone. Support off the streets should not just be for Christmas, though, so we are almost doubling that figure with £432 million to keep that offer going for the next two years. That means continuing to help people off the streets, while preventing people from returning and giving them the support that they need. That is why we will make sure there is wraparound support for those people as well.
The Budget makes progress towards our commitment to deliver the biggest boost in council house building since the post-war period. We have announced that we will extend the preferential borrowing rate for councils on top of the £1.5 billion that I mentioned earlier. Our message to local leaders is, “Get ambitious, and we will back you all the way.”
The Ministry of Housing, Communities and Local Government’s planned AI tool, Assist, will be available to all councils in England by the end of 2027. We also announced the Your First Home scheme to help around 70,000 first-time buyers to get on the ladder. Good growth in every postcode is not just about fairness; it is the simple point that Britain is at its best when every area of the country can play its part. I am proud of this Government’s action, I am proud of our history, and I am proud of this Budget. I commend this statement to the House.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
The Exchequer Secretary to the Treasury (Dan Tomlinson)
It is a pleasure to close this Budget debate on good growth in every postcode. I thank Members from across the House for their contributions in today’s debate. In particular, I want to thank my hon. Friend the Member for Holborn and St Pancras (Sagal Abdi-Wali) for her fantastic maiden speech. She spoke powerfully of the “everyday way”, in her words, that people in her part of London look out for each other. I know that she will look out for her constituents every single day. I, along with Members from across the House, I am sure, warmly welcome her to the Labour Benches.
The Budget last week was a Budget to provide breathing space now and fresh hope for the future. It backed British business to unleash growth in every postcode and it kick-started the changes needed to put our country on a better course. It was also a Budget set against the backdrop of global economic storms, with trade tensions acting as a drag on global growth and Putin’s illegal invasion of Ukraine approaching the end of its fifth year. These shocks may be global, but the effects are being felt here at home.
According to the Office for Budget Responsibility, we will spend £14 billion more each year on debt interest compared with the previous forecast. The Government’s responsibility is, of course, to determine how to respond to that. We have chosen to respond by using some of the headroom, which was built up last year, to absorb the impacts of the war and to protect the economy and family budgets as much as possible. We have also chosen, crucially, to meet the fiscal rules in full, with borrowing falling in every year of the forecast.
Britain’s economic reputation was badly damaged under the Conservatives—so badly damaged, in fact, that the IMF publicly warned them to change course. The contrast now could not be clearer. The IMF said recently that the UK “stands out” as a country where we are taking
“action to reduce the debt and deficit”
and that action “has been taken decisively”. Despite the warnings from forecasters and the gloomsters on the Opposition Benches that our economy would slow down, Britain has defied expectations this year. The OBR has upgraded the UK’s growth forecast and in the first half of this year we had the joint-fastest growth in the G7. Productivity growth is up at 2.2% a year, compared with an average growth rate of 0.5% a year between 2015 and 2024.
Sir Ashley Fox
If everything is going so well, why is Britain paying more to borrow money than any other country in Europe?
Dan Tomlinson
The hon. Member is right to raise the fact that we are spending a large share of our budget on debt interest costs; £1 in every £10 is spent paying the interest on our debt. That was an increase that took place under the Conservatives after the spike in interest rates in 2022 under Liz Truss’s mini-budget, and the apprentice to Liz Truss is now the shadow Chancellor.
Real wages have risen more since the election than in the first 10 years of the Conservative Government. Opposition Members talked about the private sector in the economy. I would point out to them that whole-economy investment and business investment have grown by more in this Parliament so far than they did in the entirety of the last Parliament. We are turning the economy around from the hellscape it was under the previous Government.
We are building on our recent economic resilience through this Budget. We are delivering immediate measures to help with rising energy bills: a £100 household energy payment directly to those living in property bands A to D in England, alongside a reduction to 0% VAT on electricity until July. We are also abolishing gas standing charges on household energy bills, while extending the 5p fuel duty cut and the cut to red diesel. We are reducing bills by up to 25% for more than 10,000 eligible businesses from next April through the British industrial competitiveness scheme.
Bradley Thomas
If the picture is so rosy, can the Minister explain to me why, a couple of weeks ago, when I visited six businesses in my constituency, all in the hospitality sector, every single one of them said that they are not recruiting and nor have they recruited since the Government increased national insurance contributions? Why is he painting a picture that is different to reality? Why does he think they are not recruiting?
Dan Tomlinson
I cannot speak to the individual businesses in the hon. Member’s constituency, but I can point him to the forecast from the Office for Budget Responsibility that revises up employment by 200,000—employment increases every year of that forecast.
We are also making changes to support workers by increasing the national minimum wage and national living wage. We are increasing the higher mileage rate and making permanent the increase to the standard mileage rate announced earlier in the year, and we are backing our high street businesses, with retail, hospitality and leisure properties seeing their business rates either frozen in real terms, reduced or cut to zero next year.
The Secretary of State spoke powerfully and convincingly of the changes that this Government are making on devolution to drive good growth in every postcode, so I will not run through the points that she opened with. I was glad to hear that hon. Friends in constituencies where we will be extending devolution in England, particularly those towns and communities that missed out on the first wave of devolution under the previous Government, welcome that continued roll-out. It will mean that over 90% of England’s population is now on track to be covered by a strategic authority in the next couple of years.
The Opposition spokesperson, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), raised the issue of energy when opening the debate for the Opposition, and it is worth covering before we wrap up. At the Budget, the Chancellor set out a new pathway for energy that the 10-year plan will build on. Our priority is to bring energy costs down, to help business compete and to help families cope. Cheaper electricity will also boost electrification, increase our energy security and help decarbonise the whole economy.
First, we are addressing levies and policy costs on bills. The Opposition loaded £100 on to bills via levies; this Labour Government have already taken £150 off energy bills at the last Budget. The Chancellor when further last week, by drawing a line in the sand on levies. He has confirmed that there will be no new costs added to energy bills, with a comprehensive cost-control framework to follow at the spending review. He is also abolishing plans, first set out by the Opposition when in government, to add a further £10 a year to bills for hydrogen projects.
Secondly, we are backing network investment, adding new generation only if it is affordable and the grid can keep up. Between 2016 and 2020, network investment declined in real terms under the previous Government, just when it was clear that more intermittent power would mean that we need more capacity. Now that they are in opposition, the Conservatives have no serious energy policy left. Their only real answer is to retreat in full from net zero, banning people from being parliamentary candidates for the Conservative party if they support net zero by 2050. That is a big mistake, and one that I am confident the British people will reject at the next election.
In the Budget, we also committed to procuring clean power through the next auction round only if we are confident that it will lower bills. We will reform contracts for difference by allocation round 9 to support the lowest-cost system, fixing market distortions and siting assets in the right place. To Members who are committed to net zero on both the Government and Liberal Democrat Benches, let me be clear that it is only by getting electricity prices down, and ensuring that new clean power does not run ahead of the grid, that we can credibly achieve our net zero goals.
I will turn to a couple of points made by Members before I conclude. My hon. Friend the Member for Falkirk (Euan Stainbank) asked a number of questions about the Acorn project; I reassure him and Members on both sides of the House that the Government remain committed to Acorn and want to see it succeed. The change announced last week switches funding from grants to loans or equity stakes, which we hope will provide better value for money for the taxpayer. The existing partners confirmed that approach last week, setting out that the Budget announcement does not change Acorn’s current development programme. The relevant Minister in the Department for Energy Security and Net Zero will be meeting the developers later this week. Acorn is not the only scheme to be affected by recent prioritisation decisions. In fact, some schemes in England have been stopped entirely.
A number of Members on the Government Benches also raised the mineworkers’ pension scheme; they and others on these Benches have been relentless in their advocacy for mining communities. I particularly note the speech from my hon. Friend the Member for Amber Valley (Linsey Farnsworth). It was a powerful contribution, and it was heard loud and clear by those on the Treasury Bench. As my right hon. Friend the Chancellor said last week, he knows that the job is not done, and he will go on to ensure the full transfer of the guarantor’s fund. I know that he is working at pace to agree a way forward.
This is a Budget to deliver good growth in every postcode. It is underpinned by fiscal discipline, with borrowing falling in every year. It is the most decentralising Budget in modern British history, pushing power and resources out across the country. It marks an important moment in the history of UK energy policy, with a firm commitment to putting cheap electricity first. The Opposition added £100 to bills; we have taken £150 off. We are also drawing a line in the sand when it comes to new build costs.
This Budget supports businesses on the high street, taking 70,000 smaller high street properties out of business rates altogether; and in industry, by implementing a 25% discount to electricity bills for heavy users. Of course, we have also prioritised helping families now, with £100 off energy bills this winter for 20 million homes, funded through higher bank taxes, which the Opposition oppose. This is a big Labour Budget built on strong Labour choices—breathing space for today and fresh hope for the future.
Ordered, That the debate be now adjourned.—(Rachel Hopkins.)
Debate to be resumed tomorrow.