Oral Answers to Questions
Jeremy Hunt Excerpts(6 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Improving public sector productivity is a major focus for this Government, which is why I announced £4.2 billion of funding to make our public services more efficient in the Budget.
John Penrose
As a former Health Secretary, my right hon. Friend will know that evidence-based medicine transformed health productivity, systematically cutting out ineffectual treatments and replacing them with ones that worked better. Using the evaluation task force and the What Works centres to do the same for other public services, including back to work programmes, prisoner rehabilitation and early interventions for supported families, could be the productivity-improving silver bullet that he needs, so can I urge him to beat a path to their door?
Jeremy Hunt
My hon. Friend is right to talk about the What Works programme, which has delivered more than 500 trials and is recognised internationally. There are some very good example in the NHS of what is working, including the NHS app. That is now used by 75% of NHS patients—including 17,000 over-90s, so let no one assume that older people are not internet savvy.
Clive Efford (Eltham) (Lab)
Some £8.7 billion was wasted on defective personal protective equipment during the covid crisis, much of it paid to people associated with the Conservative party. People did not have to be Conservative party members to benefit from the fast track, but it did not half help. What is the Chancellor doing to get public money back from those people who sold that defective equipment to the NHS, and does it not just show that we cannot trust the Tories with public money?
Jeremy Hunt
What it shows is that we took very difficult decisions in the pandemic to speed up access to PPE for frontline workers, who were literally dying at the time—but there should be no hiding place whatsoever for anyone who commits fraud on taxpayers, which is why there have been over 100 arrests.
Darren Jones (Bristol North West) (Lab)
The only productivity improvement we have seen from this Government is the awarding of wasteful contracts. On top of all the PPE waste that my hon. Friend the Member for Eltham (Clive Efford) referred to, there are still £1 billion-worth of unresolved PPE contracts that this Government awarded, but that have not been delivered on. Only one company, PPE Medpro, is facing legal action. Why are the Government not taking legal action against the other companies that have not delivered on their contract with members of the public?
Jeremy Hunt
Let me be clear: there is absolutely no hiding place for anyone, whether they are connected to the Conservative party, the Labour Party or any other party. If they have defrauded the taxpayer, we will go after them.
Darren Jones
The Chancellor says that he is making progress, and that there is no hiding place, but that money belongs to our public services. The Government know that the contracts have not been delivered on, but they will not reveal the names of the companies and the contracts that have not been delivered on. If there is no hiding place, why would the Chancellor not name them today?
Jeremy Hunt
Because we are taking legal action, and as the hon. Gentleman knows full well, when we take legal action, that information belongs to the police.
Maggie Throup (Erewash) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
The spring Budget delivered personal tax cuts, including cuts to national insurance, for 29 million workers. That means that someone on the average salary has the lowest effective personal tax rate since 1975, and that is the lowest effective tax rate of any G7 country.
Maggie Throup
While responsible tax cuts, such as the £900 cut to national insurance contributions, are welcome, can my right hon. Friend update the House on when we can expect VAT to be abolished on high-factor sunscreen? That would not only help to protect more people from one of the leading causes of preventable cancer, but could save the NHS approximately £55 billion.
Jeremy Hunt
My hon. Friend and I have talked about this issue on many occasions. She will know that high-factor sunscreen is on NHS prescription for certain conditions and is VAT-free when dispensed by a chemist. With my Chancellor hat on, I should say that we have had £50 billion of requests for VAT relief since Brexit. It is great to have the freedom to make those changes, but we have to be honest about the trade-offs. In particular, we must ensure that if we do apply reliefs, the benefits are fed through to consumers.
Sammy Wilson (East Antrim) (DUP)
This weekend, I spoke to a constituent who has invested heavily in a restaurant in my constituency over the last 15 years. He was in desperation because his business, like two other businesses that have already closed in the town, is being crushed by VAT, business rates and increases in corporate taxes. He finds that he can no longer sustain a business that has become the love of his life. Does the Chancellor realise that the tax burden he is imposing on small and medium-sized businesses is crushing this economy?
Jeremy Hunt
We are doing everything we can to support small businesses. Businesses like the one that the right hon. Gentleman mentions have received, for two years in a row, a 75% discount on their business rates. That is a massive leg up for businesses recovering from the pandemic. We have also made sure that any increases in corporation tax apply only to larger businesses. There is only one major party in British politics that wants to bring down the tax burden for businesses, and it is the Conservative party.
Chris Loder (West Dorset) (Con)
Nadia Whittome (Nottingham East) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Over the last two years, cost of living support has totalled £96 billion, or an average of £3,400 per household. As a result, living standards, which were predicted to fall 2% last year, rose by nearly 1%, and we are on track to reach pre-pandemic living standards two years early.
Mrs Drummond
I welcome the support that the Government have provided throughout covid and the recent energy crisis for my constituents in Meon Valley—I thank the Government. It has made a huge difference to people’s domestic budgets, but now inflation is falling and the economy is improving, can we look forward to the Government’s continued support with a range of fiscal steps, including cutting taxes?
Jeremy Hunt
We can absolutely do that. I thank my hon. Friend for pointing out that the biggest single thing we can do to help people with cost of living pressures is to bring down inflation. That seems to be something that escaped the shadow Chancellor this morning, when she said it was not a big deal to get inflation down to its target. It is a very big deal for families facing a cost of living crisis, and she needs to know that inflation falls by design, not by accident.
Nadia Whittome
The Chancellor can talk all he wants about inflation falling, but this is little comfort to my constituents who are still struggling to make ends meet. Even with the national insurance cut, annual post-tax earnings for the average family remain on course to be £380 lower at the start of 2025 than they were in 2021—a gap not predicted to close until 2029. This means yet more years of lost wage growth, so when will the Government get serious about tackling the low-wage, insecure work that they have allowed to become the norm in this country?
Jeremy Hunt
Could I suggest, if the hon. Member really thinks that inflation falling from 11% to 3.2% is little comfort to her constituents, that she might want to talk to a few more of them, because actually it is the biggest single thing that we can do to deal with cost of living pressures. If she says, “What are we doing to tackle the scourge of low pay?” we have abolished it by raising the national living wage to £11.44 this year alone. For someone working full-time, that will mean an increase in their pay of £1,800.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
The shadow Chancellor often likes to ask what has improved over the past 14 years, so I thought I would update the House on some of the latest statistics about the British economy. According to UN conference data, we have now overtaken France, the Netherlands and Japan to become the world’s fourth largest exporter. The International Monetary Fund says that we will grow faster over the next six years than France, Italy, Germany or Japan, and there are 200,000 more people in work compared with a year ago, which means that, for every single day Conservative Governments have been in office since 2010, there are 800 more people in work, many of whom will be very pleased that we are sticking to our plan.
Debbie Abrahams
We should add to the Chancellor’s statistics that we have the widest economic inequalities in Europe. Last week, Professor Sir Michael Marmot published new analysis showing significant increases in health inequalities—how long we live, and how long we live in good health—and that is particularly the case between the north and south-east England. That is of course driven by the economic inequalities that I have just referred to. What assessment has the Chancellor undertaken on the loss in productivity directly as a result of that increase in health inequalities?
Jeremy Hunt
If the hon. Lady is concerned about economic inequalities, she will be horrified to know that they were even worse under the last Labour Government. They have been reduced under this Government. When it comes to health inequalities, it is this Government who are phasing out smoking for everyone under the age of 14—one of the biggest single things in a generation that will reduce health inequalities and mean that poorer people live longer.
John Penrose (Weston-super-Mare) (Con)
Jeremy Hunt
I can confirm that we are very alive to cost of living pressures caused by fuel duty. In fact, we spent £6.4 billion freezing the duties on fuel, which will save the average motorist £50 over the coming year.
Rachel Reeves (Leeds West) (Lab)
At the Budget, the Chancellor set out his intention to abolish national insurance—a £46 billion annual commitment with no clear plan as to how it would be paid for. One way to do it would be to merge income tax and national insurance. Does the Chancellor agree with analysis from the House of Commons Library that shows that merging those two would increase income tax by 8p in the pound?
Rachel Reeves
That is strange, because the day after the Budget, the Chancellor told Sky News that
“you can end that unfairness of taxing work: you can merge income tax and national insurance.”
The late Chancellor, Nigel Lawson—the Prime Minister’s hero—warned that merging them would
“destroy the contributory principle and create many losers, especially among the elderly.”
In fact, a retired pensioner with an average occupational pension income of £198 a week would pay an additional £738 a year in tax. Is the reason that the Conservatives will not come clean not that they are planning to pick pensioners’ pockets to fund the abolition of national insurance?
Jeremy Hunt
If the right hon. Lady listened to my comments carefully, and I do not always give her credit for that, she would know that our policy is to abolish employees’ national insurance, and that means we want to bring it down to zero. If Labour’s strategy is to win the election by frightening pensioners with fake news stories, I would just say that Britain deserves better.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Kerry McCarthy (Bristol East) (Lab)
Jeremy Hunt
What I would say to those families is that the most damaging thing of all is to have inflation at 11%. Now we have reduced it to 3.2%, and indeed we expect it to go lower. Interest rates are also starting to fall. If the hon. Member is worried about families in her constituency, she might be extremely worried by the shadow Chancellor saying that if interest rates fall, it is somehow not a big deal. It really is.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
May I encourage my right hon. Friend the Chancellor to revisit his decision to change the tax arrangements of furnished holiday lets in rural constituencies such as my own? Those businesses make an important contribution to the local economy, provide jobs and enhance the tourism offering. Indeed, they stop depopulation rather than adding to it. His decision is creating much concern among those who operate such businesses.
Mr Tobias Ellwood (Bournemouth East) (Con)
May I place on record my thanks to the Chancellor, who in his Budget devoted funds to Bournemouth for a police violence reduction unit? Does he agree that these units have a track record up and down the country of tackling knife crime by not just seeing extra police on the frontline, but engaging with schools to ensure that youths and students understand the folly of carrying a knife in the first place?
Jeremy Hunt
My right hon. Friend is absolutely right: violence reduction units reduce crime and save lives. I want to thank him, because he was one of the first colleagues who, ahead of the Budget, brought to my attention how impressive the results are. As a result, I was able to make it a national policy in the Budget.
Andrew Gwynne (Denton and Reddish) (Lab)
Jeremy Hunt
The hon. Gentleman is absolutely right to say that the Government are taking this issue very seriously, and we completely understand that speed is of the essence. It is now only a matter of days before the report will be published; we have always said that we want to publish our response very quickly after that and I assure the hon. Gentleman that we will not hang around.
Nick Fletcher (Don Valley) (Con)
The best way for a business to thrive and for customers to receive a great service is for companies to employ individuals on merit. Does the Chancellor agree that the recent overreach by the Financial Conduct Authority and the Prudential Regulation Authority regarding their equality, diversity and inclusion policies is a step too far, and that it is inevitable that those policies will have a negative effect on us all?
Jeff Smith (Manchester, Withington) (Lab)
Jeremy Hunt
The hon. Gentleman knows perfectly well that he has taken my comments out of context. I will tell him what is really out of touch: the shadow Chancellor saying it is not a big deal if inflation falls.
Ian Levy (Blyth Valley) (Con)
Cramlington has a world-leading pharmaceutical company, Organon, which employs 700 people and produces medicine for the UK market as well as abroad, with a particular focus on women’s health. Will my right hon. Friend the Chancellor please meet me to discuss the impact on pharmaceutical investment?
Wera Hobhouse (Bath) (LD)
Soaring rent costs are the biggest reason why my constituents in Bath are struggling. The average monthly rent in Bath and north-east Somerset has risen by more than £200 in the past three years. What support will the Government give to people who rent in the private sector?
Jeremy Hunt
That is why we need to build more houses. The hon. Lady will be reassured to know that we are building record numbers of houses—in fact, more in the last year than in any single year under the previous Labour Government.
Andrew Rosindell (Romford) (Con)
I would like the Chancellor of the Exchequer to know that high business rates are having a devastating effect on small and medium-sized businesses in historic market towns, such as Romford, that are large retail centres. As the Government are business friendly, will he please look at ways to reduce the burden of business rates on local businesses in constituencies like mine?
Jeremy Hunt
May I say what a pleasure it is to be asked a question by my hon. Friend? I think this is the first time it has happened since he has been back. There is no more formidable a champion for Romford. He speaks about business rates, and we have indeed been doing what we can to bring them down at every fiscal event.
Jim Shannon (Strangford) (DUP)
What steps have been taken to support pensioners to know what benefits they are possibly entitled to? I understand that 1.4 million people access pension credit, but a great many more are entitled to it.
Jeremy Hunt
Further to that point of order, Mr Speaker. The hon. Lady may have misunderstood me. What I said was that economic inequality had fallen since the last Labour Government.
Notification of Contingent Liability
Jeremy Hunt Excerpts(6 months, 1 week ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The independent Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the Asset Purchase Facility by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022. The sales of corporate bonds ceased on 6 June 2023, with the majority of the portfolio sold. A small number of remaining short maturity corporate bonds were held through to maturity and these have since all fully matured on 5 April 2024. Therefore, the APF is now comprised solely of gilts.
The Chancellor at the time agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.
Since 3 November 2023 when I last reduced the maximum authorised size of the APF, the total stock of assets held by the APF for monetary policy purposes has fallen further from £750.9 billion to £704.2 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £704.2 billion, which is now comprised entirely of gilts.
The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. Provision for any payment due under the liability will continue to be sought through the normal supply procedure.
A full departmental minute has been laid in Parliament providing more detail on this contingent liability.
[HCWS435]
Oral Answers to Questions
Jeremy Hunt Excerpts(7 months, 3 weeks ago)
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Giles Watling (Clacton) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
At the spring Budget, the Government announced a package of tax reliefs for our world-leading creative industries worth £1 billion over the next five years, including a 40% relief on business rates for eligible film studios in England and enhanced tax reliefs for visual effects.
Giles Watling
As we know, the UK’s cultural offer is world-beating and, particularly through the performing arts, the UK projects soft power across the globe. While welcoming the progressive tax breaks for our incredible film industry, it would appear that our far-reaching, high-end television offer has been left behind in the recent Budget. Does my right hon. Friend have plans to redress this deficit to ensure that the UK remains first on screens around the world?
Jeremy Hunt
No one knows more about high-end TV than my hon. Friend. Whoever said that politics is showbusiness for ugly people was absolutely wrong in his case. I will take away what he says and consider high-end television as a potential future Budget measure.
Tim Farron (Westmorland and Lonsdale) (LD)
The Chancellor will be aware of the award-winning film “The Windermere Children”, which talks about the legacy of those Jewish children who survived the death camps in central Europe and made a new life for themselves on the banks of Lake Windermere at Troutbeck Bridge. For the last several years, there has been an ongoing exhibition on their legacy at Windermere library, and now we look to build a lasting memorial alongside a rebuilt Lakes School at Troutbeck Bridge.
Will the Chancellor be interested in meeting the families of the Windermere children, and those behind the new build and the provision of a new lasting memorial to their legacy, at Windermere at some point in the foreseeable future?
Jeremy Hunt
That is a very tempting offer, and I will see whether my diary permits me to visit the hon. Gentleman in his constituency. I have not seen the film, but I have seen a film on a holocaust theme called “The Zone of Interest”, which is a remarkable British-led film that I thoroughly recommend to him.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Clive Lewis (Norwich South) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
The economy is beginning to turn a corner after a series of unprecedented shocks. Inflation has more than halved, GDP grew in January and the economy is on a path to long-term growth.
Chi Onwurah
The economy has grown at a snail’s pace under the Tories, but that snail is still 30% faster nationally than in the north-east, despite our strengths in clean energy, manufacturing, science and health. On average, my constituents are £11,500 worse off that they would have been had the economy grown at the same rate that it grew under Labour. Is it any wonder that the Public Accounts Committee found no compelling evidence of levelling up? Is a vote for the Tories not a vote for continued economic failure?
Jeremy Hunt
It is not, because we have grown faster than Spain, Portugal, France, Italy, Germany and multiple other countries since 2010. With respect to the north-east in particular, the hon. Lady is absolutely right to say that our vision is to spread growth into every corner of the country. That is why, in the last three months alone, both the Prime Minister and I have been to the Nissan factory in Sunderland to mark its decision to make two electric car models in the UK. Just last week, we announced the opening of a massive new film studio in Sunderland that will bring more than 8,000 jobs to the north-east.
Clive Lewis
According to the LSE’s Grantham Research Institute, the Government’s current programme for investment to mitigate the worst effects of climate change will still see climate change damage to the UK increase from 1.1% of GDP to 3.3% by 2050 and 7.4% by the end of the century. To put it into context, that is the United Kingdom’s entire social care budget of around £25 billion. The Climate Change Committee has said that the current approach to adaptation
“falls far short of what is required.”
Has the Treasury made any attempt to assess the cost to GDP, the public finances and jobs of failing to invest for climate adaptation?
Jeremy Hunt
We listen very carefully to what the Climate Change Committee says, and we are absolutely committed to net zero. In fact, a Conservative Government passed the law requiring Governments to commit to net zero. The hon. Gentleman will know that we have just become the first major industrialised country to decarbonise by more than 50% since 1990. As well as the costs, we are also mindful of the economic opportunities, which is why we are investing billions of pounds in our clean energy transformation.
Sir Oliver Heald (North East Hertfordshire) (Con)
My right hon. Friend will be aware that my constituency, which has Cambridge to the north, has fantastic new industries such as Johnson Matthey in Royston, which is at the forefront of hydrogen. We have pharma companies to the south and some of the best film studios in the world in Hertfordshire. Is he consciously trying to back those successful industries of the future so that our children and grandchildren have fantastic opportunities for the future?
Jeremy Hunt
That is absolutely what we are trying to do. Film and TV is a good example here, as it has now become an offshoot of the technology industry. Films such as “Barbie” have been filmed in Hertfordshire but have the look of the Californian sunshine; they can withstand the British rain because of the use of high-tech devices that simulate Californian sunshine, even in my right hon. and learned Friend’s constituency. What he sets out is our absolutely our plan and we will stick with it.
Richard Fuller (North East Bedfordshire) (Con)
In response to covid, this Government introduced the furlough scheme, and delivered and funded the world’s first vaccine. In response to the energy price spike, this Government introduced comprehensive support for families. The Office for Budget Responsibility, so beloved of the shadow Chancellor, had its long-range forecast for 2025 to 2028 showing GDP increasing every year, GDP per capita increasing every year, average earnings increasing every year in real terms and productivity increasing in real terms. So does the Chancellor agree that when the shadow Chancellor says that we face a 1979 moment, she is right: a choice between a Labour party still in hock to its union bosses and a Conservative party committed to growth?
Jeremy Hunt
I have nothing to add to my hon. Friend’s brilliant list of statistics, except to cite another independent organisation, the International Monetary Fund, which says that in the next five years this country, under Conservative leadership, will grow faster than France, Germany, Italy and Japan.
James Murray (Ealing North) (Lab/Co-op)
The British people are paying the price for 14 years of Conservative economic failure, with lower wages, higher taxes and public services on their knees. Time and again, the Conservatives hide behind international factors and take no responsibility for their failures. Yet figures from the OECD confirm that the UK is the only G7 advanced economy now in recession and, according to the IMF, our economy is forecast to have the second slowest growth in the G7 this year. So can the Chancellor tell us: why is the UK so far behind other major economies under the Conservatives?
Jeremy Hunt
Well, it is not, because it is actually growing faster than France, Germany and a bunch of other countries. However, I am glad that the hon. Gentleman mentioned 14 years, because we can look at what has happened under 14 years of Labour in Wales, where unemployment is higher, NHS waiting lists are longer, school standards are worse and growth is lower. What is Labour’s reaction to that terrible record? It has just promoted the Economy Minister to First Minister.
Paul Blomfield (Sheffield Central) (Lab)
Andrew Bridgen (North West Leicestershire) (Ind)
The Chancellor of the Exchequer (Jeremy Hunt)
With your permission, Mr Speaker, I would like to update the House on living standards in the UK. The most recent data suggest that despite a tough couple of years caused by the pandemic and the energy crisis, living standards will return to their pre-covid peak next year: a full two years earlier than originally predicted by the OBR. They have risen by £1,700 a household in real terms since 2010, and this year’s cut in national insurance will increase living standards by 1%. In other words, to coin a phrase, now is not the time to go back to square one.
Andrew Bridgen
Given that the Prime Minister has been forced to abandon his plans for an election on 2 May and could soon be facing a leadership challenge, does the Chancellor of the Exchequer believe that his Budget landed well with the public or even his colleagues on the Government Benches?
Jeremy Hunt
I say very simply to the hon. Gentleman, who used to be an hon. Friend, that the Budget will mean that the UK economy will grow faster than that of France, Germany, Italy or Japan in the next five years. That is doing the right thing for the country.
Anna Firth (Southend West) (Con)
Rachel Reeves (Leeds West) (Lab)
After the Budget, the Chancellor wrote to Conservative party members telling them that the Government planned to abolish national insurance. The Economic Secretary said that “national insurance will vanish”, and the Prime Minister said it was his “ambition” to abolish it. Will the Chancellor confirm whether he asked the Office for Budget Responsibility to cost the Government’s unfunded plan to abolish national insurance contributions?
Jeremy Hunt
I am very glad that the right hon. Lady asks about national insurance cuts, because first she supported them, then she abstained in the Lobby, and now she appears to be against them—like the bankers’ bonus tax, which she was strongly in favour of and then strongly against; like £28 billion of borrowing, which she was strongly in favour of and then strongly against. Is not the actual truth that, where Labour should have an economic policy, there is just a black hole filled with platitudes?
Rachel Reeves
The Chancellor did not even attempt to answer the question. The chair of the OBR told the Treasury Committee the week after the Budget:
“It was not a measure given to us to cost”.
Even the Chancellor’s predecessor, the right hon. Member for Spelthorne (Kwasi Kwarteng), who was sacked for his own kamikaze Budget, said, “If you’re going to reduce taxes, you have to show at least partially where the money’s going to come from.” So I ask the Chancellor: where will the money come from? Will it come from cuts to the NHS, the state pension and public services? Will it come from increasing taxes, including for pensioners? Or will it come from increasing borrowing? Which one, Chancellor?
Jeremy Hunt
Even Torsten Bell from the left-leaning Resolution Foundation said that the right hon. Lady’s argument that this was a mini Budget-style black hole was nonsense, because we specifically said that we would not fund national insurance cuts from increasing borrowing or cutting spending on public services. I gently ask her, if she wants to put on the mantle of fiscal rectitude, where is Labour going to find literally billions of pounds to fund unfunded spending pledges, from grid decarbon-isation to NHS waiting lists? We all know what that will lead to: higher taxes, like under every Labour Government in history.
Nickie Aiken (Cities of London and Westminster) (Con)
Jill Mortimer (Hartlepool) (Con)
Jeremy Hunt
I would be delighted to do that. The independent Resolution Foundation said that, because of measures that this Government have taken, pensioners are £1,000 better off in real terms than in 2010. We did two things specifically in the Budget: we put £6 billion into the NHS, which is used more by pensioners than anyone else; and we backed workers’ tax cuts to support growth in the economy, which means that we can continue to fund the triple lock for many years to come.
Paul Blomfield (Sheffield Central) (Lab)
Mr Speaker
Order. These are topical questions, and I want to get to the Members who have not yet been called.
Jeremy Hunt
I thank my hon. Friend for her excellent question. She is right that it is not just the lowest effective tax rate for someone on average earnings since 1975, but the lowest headline tax rate and the lowest tax rate in the G7. That is the fundamental divide in British politics: taxes have gone up, and on the Government Benches we do not think that we have to accept the status quo; on the Opposition Benches they do. Why is that? Because lower taxes mean higher growth.
Dame Nia Griffith (Llanelli) (Lab)
Jeremy Hunt
May I gently correct the hon. Lady? As I said, living standards have risen by £1,700 per household since 2010, and the number of people in absolute poverty is down by 1.7 million. She is right to talk about the debt pressures that people face, which is why in the Budget we abolished the £90 fee for debt relief orders, having talked to Citizens Advice.
Will Quince (Colchester) (Con)
The proposed changes to wine duty will add huge costs and complexity to business. Further to my Westminster Hall debate, will my hon. Friend meet me and representatives of wine businesses to hear their concerns, and make permanent the easement that is due to end on 1 February next year?
Sarah Owen (Luton North) (Lab)
Jeremy Hunt
Let me say to the hon. Lady, who I very much enjoyed working with on the Select Committee, that our record is 800 more people in work for every single day of Conservative government since 2010. What will wreck that is Labour’s new deal for workers, which the president of the CBI says will destroy the job-creating machine that the UK has become.
James Sunderland (Bracknell) (Con)
I commend the Treasury for good fiscal policies that have resulted in inflation falling significantly since the pandemic. When might we see a commensurate fall in interest rates?
Jeremy Hunt
I am very sorry to disappoint my hon. Friend, but Chancellors never comment on decisions made by the Bank of England on interest rates. What I can say is that the Office for Budget Responsibility predicted at the Budget that inflation would fall to around target in the next few months. That gives the best possible prospect of interest rates starting to fall.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (Ind)
Last night on BBC’s “Newsnight”, it was clear that the needs of Wales, in particular on health, are not met in the UK. When has the UK Government ever given England Barnett consequentials based on needs in Wales, Scotland or Northern Ireland? Surely the model of spending under which the Government in England decides for England, and everyone else gets a consequential of that, must end. Nordic countries do not calculate spend as a percentage of their neighbours’ spend. Why is the spending of Scotland, Wales and Northern Ireland dependent on what England decides to spend?
Dame Diana Johnson (Kingston upon Hull North) (Lab)
Does the Chancellor accept that he has caused a great deal of anxiety and further distrust among those who have been infected and affected by the contaminated blood scandal by not making any provision in his Budget for compensation, although the recommendations for compensation were made to the Government last April?
Jeremy Hunt
I gently say to the right hon. Lady that I stand by every word I said when I gave evidence, twice, to the infected blood inquiry. The Government have an absolute moral responsibility, not just to pay the compensation owed, but to pay it as speedily as possible.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I would like to join the Economic Secretary to the Treasury and my hon. Friend the Member for Southend West (Anna Firth) in discussing the closure of banks. Barclays bank, in particular, is both shameful and shameless in this regard. Does my hon. Friend agree that we need full transparency on the decisions made by Link and the Financial Conduct Authority? Something we learned yesterday that may be of interest to those in Chorley, Mr Speaker, is that the criteria take into consideration only the town plus areas within a 1 km circumference. That is not how the rural economy works. Will the Economic Secretary work with me to ensure that the criteria take into account the wider economy?
Financial Statement and Budget Report
Jeremy Hunt Excerpts(8 months, 1 week ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
As we mourn the tragic loss of life in Israel and Gaza, the Prime Minister reminded us last week of the need to fight extremism and heal divisions, so I start today by remembering the Muslims who died in two world wars in the service of freedom and democracy. We need a memorial to honour them, so following representations from my right hon. Friend the Member for Bromsgrove (Sir Sajid Javid) and others, I have decided to allocate £1 million towards the cost of building one. Whatever your faith, colour or class, this country will never forget the sacrifices made for our future.
In recent times, the UK—and the UK economy—has dealt with a financial crisis, a pandemic and an energy shock caused by war in Europe, yet despite the most challenging economic headwinds in modern history, under Conservative Governments since 2010 growth has been higher than in every large European economy, unemployment has halved, absolute poverty has gone down, and there are 800 more people in jobs for every single day that we have been in office. [Interruption.] Of course, interest rates remain high as we bring down inflation, but because of the progress we have made, because we are delivering the Prime Minister’s economic priorities, we can now help families not just with temporary cost of living support, but with permanent cuts in taxation. We do that to give much needed help in challenging times, and because Conservatives know that lower tax means higher growth, and higher growth means more opportunity, more prosperity and more funding for our precious public services. [Interruption.]
Madam Deputy Speaker
Order. The Chancellor has hardly said anything—[Interruption.] Order. You cannot get excited yet. Other people want to hear what the Chancellor has to say. It matters, so we will have a bit of good behaviour, please.
Jeremy Hunt
Thank you, Madam Deputy Speaker.
If we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration; it can only come by building a high-wage, high-skill economy—not just higher GDP, but higher GDP per head.
That is the difference. The Labour party’s plans would destroy jobs, reduce opportunities and risk family finances with spending that pushes up taxes. Instead of going back to square one, the policies I announce today mean more investment, more jobs, better public services and lower taxes in a Budget for long-term growth.
I start with the updated forecasts from the Office for Budget Responsibility, for which I thank Richard Hughes and his team. First, inflation. When the Prime Minister and I came into office, it was 11%. The latest figures show—[Interruption.]
Madam Deputy Speaker
Order. This is not amusing any more. We need to hear what the Chancellor has to say. I can tell who is making the noise, and you simply will not get a chance to speak later. That is the end of it.
Jeremy Hunt
When the Prime Minister and I came into office, inflation was 11%, but the latest figures show it is now 4%—more than meeting our pledge last year to halve it. Today’s forecasts from the OBR show it falling below the 2% target in just a few months’ time, nearly a whole year earlier than forecast in the autumn statement.
That did not happen by accident. Whatever the pressures, and whatever the politics, a Conservative Government, working with the Bank of England, will always put sound money first. We also understand that tackling inflation, while necessary, is painful. It means higher interest rates and a period of lower growth, so we have given the average household £3,400 in cost of living support over the past two years. Doing so makes economic as well as moral sense. The OBR predicted real household disposable income per person would fall by 2% in the past year; instead, after that support, it is on track to rise by 0.8%.
Today, I take further steps to help families with cost of living pressures, starting with measures to help the poorest families. We have already abolished higher charges for electricity paid by those on prepayment meters, increased the local housing allowance and raised benefits by double the expected inflation. Today, I focus on those falling into debt. Nearly 1 million households on universal credit take out budgeting advance loans to pay for more expensive emergencies such as boiler repairs or help getting a job. To help make such loans more affordable, I have decided to increase the repayment period for new loans from 12 months to 24 months.
For some people—[Interruption.] I thought Labour Members cared about people on the lowest incomes, but trust them not to want to hear about debt. For some people the best way to resolve debt is through a debt relief order, but getting one costs £90, which can deter the very people who need them most, so, having listened carefully to representations from Citizens Advice, I today relieve pressure on around 40,000 families every year by abolishing that £90 charge completely.
Next, the household support fund. It was set up on a temporary basis and due to conclude at the end of this month. Having listened carefully to representations from the Joseph Rowntree Foundation, the Trussell Trust, the right hon. Member for East Ham (Sir Stephen Timms), my right hon. Friend the Member for Suffolk Coastal (Dr Coffey) and my hon. Friends the Members for Colchester (Will Quince) and for Ruislip, Northwood and Pinner (David Simmonds) among others, I have decided that, with the battle against inflation still not over, now is not the time to stop the targeted help that it offers. We will therefore continue it at current levels for another six months.
Next, I turn to a measure that will help businesses and households more broadly. In the autumn statement I froze alcohol duty until August of this year. Without any action today, it would have been due to rise by 3%. However, I have listened carefully to my right hon. Friends for Altrincham and Sale West (Sir Graham Brady) and for Vale of Glamorgan (Alun Cairns), and to my hon. Friend the Member for Moray (Douglas Ross), who is a formidable champion of the Scottish whisky industry. I also listened to Councillor John Tonks from Ash—a strong supporter of the wonderful Admiral pub—who pointed out the pressures facing the industry. Today, I have decided to extend the alcohol duty freeze until February 2025. That will benefit 38,000 pubs across the UK, on top of the £13,000 saving that a typical pub will get from the 75% business rates discount that I announced in the autumn. We value our hospitality industry. We are backing the great British pub.
Another cost that families and businesses worry about is fuel. The shadow Chancellor complained about the freeze on fuel duty. Labour has opposed it at every opportunity. The Labour Mayor of London wants to punish motorists even more with his ultra low emission zone plans. However, lots of families and sole traders depend on their car. If I did nothing, fuel duty would increase by 13% this month, so instead I have listened to my right hon. Friend the Member for Witham (Priti Patel), my hon. Friends the Members for Stoke-on-Trent North (Jonathan Gullis) and for Dudley North (Marco Longhi) and others, as well as to The Sun newspaper’s “Keep it Down” campaign. I have as a result decided to maintain the 5p cut and freeze fuel duty for another 12 months. That will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250. Taken together with the alcohol duty freeze, that decision also reduces headline inflation by 0.2 percentage points in 2024-25, allowing us to make faster progress towards the Bank of England’s 2% target.
There can be no solid growth without solid finances. An economy based on sound money does not pass its bills to the next generation. When it comes to borrowing, some believe that there is a trade-off between compassion and fiscal responsibility. They are wrong. It is only because we responsibly reduced the deficit by 80% between 2010 and 2019 that we could provide £370 billion to help businesses and families in the pandemic. Labour opposed our plans to reduce the deficit every single step of the way, but, to be fair, they were consistent. In coalition, the Lib Dems supported controlling spending, but now they say that they would prop up a party that will turn on the spending taps. It is the difference between no plan and no principles—and I am delighted that, for once, the right hon. Member for Kingston and Surbiton (Ed Davey) is here to hear that.
Today, we say something different: there is nothing compassionate about running out of money. With the pandemic behind us, we must once again be responsible and build up our resilience to future shocks. That means bringing down borrowing so we can start to reduce our debt, and today’s figures confirm that is happening. Ahead of my first autumn statement in 2022, the OBR forecast that headline debt would rise to above 100% of GDP. Today, it says that it will fall in every year, to just 94% by 2028-29. According to the OBR, underlying debt—which excludes Bank of England debt—will be 91.7% in 2024-25, then 92.8%, 93.2% and 93.2%, before falling to 92.9% in 2028-29, with final year headroom against debt falling of £8.9 billion. Our underlying debt is therefore on track to fall as a share of GDP, meeting our fiscal rule, and we continue to have the second lowest level of Government debt in the G7, lower than that of Japan, France or the United States.
We also meet our second fiscal rule—for public sector borrowing to be below 3% of GDP—three years early. Borrowing falls from 4.2% of GDP in 2023-24 to 3.1%, then 2.7%, 2.3%, 1.6%, and 1.2% in 2028-29. By the end of the forecast, borrowing is at its lowest level of GDP since 2001. None of that, of course, would be possible if Labour implemented its pledge to decarbonise the grid five years early, by 2030; by its own calculations, that costs £28 billion a year to do. Last month, after flip-flopping for months, Labour said that it is not going to spend the £28 billion after all, but will somehow meet its pledge. “Somehow” can only mean one thing: tax rises on working families. Same old Labour!
Today, in contrast, a Conservative Government bring down taxes with borrowing broadly unchanged—in fact, borrowing is slightly lower than in the autumn statement. The fact that we are bringing borrowing down is of particular importance to one very special person: Sir Robert Stheeman is the outgoing chief executive of the Government’s Debt Management Office, and after 20 years of exceptional public service, he is in the Gallery. Thank you, Sir Robert.
I now turn to growth. Just after I became Chancellor, the OBR expected GDP to fall by 1.4% in the following year; in fact it grew, albeit slowly. Now the OBR expects the economy to grow by 0.8% this year and 1.9% next year, which is 0.5% higher than its autumn forecast. After that, growth rises to 2.2%, 1.8%, and 1.7% in 2028. [Interruption.] Opposition Members do not want to hear this, but these are the facts. Since 2010, we have grown faster than Germany, France or Italy—the three largest European economies—and according to the International Monetary Fund, we will continue to grow faster than all three of them in the five years ahead. Surveys by Lloyds and Deloitte show that business confidence is returning. In other words, because we have turned the corner on inflation, we will soon turn the corner on growth.
Today’s OBR forecasts also show that we have made good progress on the Prime Minister’s three economic priorities. Compared to when the three pledges were made, inflation has halved, debt is falling in line with our fiscal rules, and growth is fully 1.5 percentage points higher than predicted. [Interruption.] Labour Members do not have a growth plan, so they might as well listen to ours. As growth returns, our plan is for economic growth, not growth sustained through migration, but growth that raises wages and living standards for families—not just higher GDP, but higher GDP per head. That means sticking to our plan, with a Budget for long-term growth: more investment, more jobs, better public services and lower taxes.
I start with investment. Economists say that stimulating investment is the most effective way to raise productivity, and therefore wages and living standards. Since 2010, we have been doing just that. Business—[Interruption.] Labour Members might want to listen to what I am about to say, because business investment has risen from an average of 9.3% of GDP under Labour to 9.9% under the Conservatives. This year, it will be 10.6% of GDP. That is £30 billion more business investment than if it had continued at Labour levels, and it is still going up.
In the short period since the autumn statement, Nissan has announced that it will build two new electric car models in the UK. Microsoft and Google have announced data centres worth over £3 billion. Thanks to my right hon. Friend the Business Secretary, the global investment summit unlocked £30 billion of investment. In fact, since 2010, greenfield foreign direct investment has been higher here than anywhere else in Europe, and for the last three years the UK has had the third highest levels in the world after the United States and China—and we are not stopping there.
In the autumn statement, I announced that we would introduce permanent full expensing, a £10 billion tax cut for businesses that gives the UK the most attractive investment tax regime of any large European or G7 country. It was welcomed by over 200 business leaders, with the CBI saying it was a game changer and the single most transformational thing we could do to fire up the British economy. Today, I take further steps to boost investment. Having listened to calls from the CBI, Make UK and the British Chambers of Commerce, we will shortly publish draft legislation for full expensing to apply to leased assets, a change I intend to bring in as soon as it is affordable.
We will also help small businesses, which is something close to my heart. As well as the business rates support, and the work on prompt payments that I announced in the autumn, I will provide £200 million of funding to extend the recovery loan scheme as it transitions to the growth guarantee scheme, helping 11,000 small and medium-sized enterprises access the finance they need. Following representations from the Federation of Small Businesses, as well as my hon. Friends the Members for Loughborough (Jane Hunt), for Southend West (Anna Firth), and for Rother Valley (Alexander Stafford), I will reduce the administrative and financial impact of VAT by increasing the VAT registration threshold from £85,000 to £90,000 from 1 April—the first increase in seven years. That will bring tens of thousands of businesses out of paying VAT altogether, and encourage many more to invest and grow.
I now move to measures to address historical under-investment in our nations and regions. Since we started levelling up in 2019, two thirds of all new salaried jobs created have been outside London and the south-east. We have announced 13 investment zones and 12 freeports, which continue to attract investment—including recently, thanks to the efforts of Mayor Ben Houchen, from the Pneuma Group, which is investing £15 million into the Tees Valley investment zone.
Today, working with the Levelling-Up Secretary, I devolve further power to local leaders, who are best placed to promote growth in their areas. I can announce the north-east trailblazer devolution deal, which provides a package of support for the region potentially worth over £100 million. I will devolve powers to Buckinghamshire, Warwickshire and the most beautiful county in England, Surrey. I see the Leader of the Opposition smiling because, like me, he is a Surrey boy. I know he has been taking advice from Lord Mandelson, who yesterday rather uncharitably said he needed to “shed a few pounds”. Ordinary families will shed more than a few pounds if that lot get in. If he wants to join me on my marathon training, he is most welcome.
Today, we continue to spread opportunity throughout the country by allocating £100 million of levelling-up funding to areas including High Peak, Dundee, Conwy, Erewash, Redditch and Coventry to support cultural projects in these communities. That is alongside support for capital projects across the country, including in Bingley. We are expanding the long-term plan for towns to 20 new places, including Darlington—home of the Treasury’s fantastic Darlington economic campus—Coleraine, Peterhead, Runcorn, Harlow, Eastbourne, Arbroath and Rhyl, providing each with £20 million of funding to invest in community regeneration over the next decade. We will provide £15 million in new funding to the West Midlands Combined Authority to support culture, heritage and investment projects, on the recommendation of our go-getting Mayor, Andy Street, and we will allocate £5 million to renovate hundreds of local village halls across England, so that they can remain at the heart of their communities.
Because this is a Conservative and Unionist Government, we will also set aside funding to support the SaxaVord spaceport in Shetland and an agrifood launchpad in mid-Wales, and funding to support Northern Ireland’s businesses in expanding their global trade and investment opportunities. As a result of the decisions we take today, the Scottish Government will receive nearly £300 million in Barnett consequentials; there will be nearly £170 million for the Welsh Government and £100 million for the Northern Ireland Executive. [Interruption.] I do appreciate that a tax-cutting Budget is very uncomfortable for the biggest tax-raisers in the United Kingdom. We also want to level up opportunity across the generations, including by building more houses for young people, and we are on track to deliver over 1 million homes in this Parliament.
Last week, the Levelling-Up Secretary allocated £188 million to supporting projects in Sheffield, Blackpool and Liverpool. Today I go further, allocating £242 million of investment to Barking Riverside and Canary Wharf, which together will build nearly 8,000 houses; Canary Wharf will also be transformed into a new hub for life science companies. We are launching a new £20 million community-led housing scheme that will support local communities in delivering the developments that they want and need. I am pleased to announce the next steps for Cambridge to reach its potential as the world’s leading scientific powerhouse. I confirm that there will be a long-term funding settlement for the future development corporation in Cambridge at the next spending review; there will be over £10 million invested in the coming year to unlock delivery of crucial local transport and health infrastructure.
The final levelling-up measures I announce today support north Wales, of which I have many happy childhood memories. In Mold, following representations from my hon. Friend the Member for Vale of Clwyd (Dr Davies), we will help fund the renovation of Theatr Clywd. I can announce that this week, the Government have reached agreement on a £160 million deal with Hitachi to purchase the Wylfa site in Ynys Môn and the Oldbury site in south Gloucestershire. Ynys Môn has a vital role in delivering our nuclear ambitions, and no one should take more credit for today’s announcement than my tireless, tenacious and turbocharged hon. Friend the Member for Ynys Môn (Virginia Crosbie). More investment by large businesses, more support for small businesses, promoting investment in our nations and regions—all part of a Budget for long-term growth that sticks to our plan to deliver more jobs, better public services and lower taxes.
I turn to one of the most powerful ways to attract investment: supporting our most innovative industries. Outside the US, we have the most respected universities, the biggest financial services sector and the largest tech ecosystem in Europe. We have double the artificial intelligence start-ups of anywhere else in Europe, double the venture capital investment, and a tech economy now double the size of Germany’s and three times the size of France’s. We are on track to become the world’s next silicon valley.
In today’s Budget for long-term growth, I take further steps to attract investment to our technology-related industries. I want our brilliant tech entrepreneurs to not just start here, but stay here, including when the time comes for a stock market listing, so we will build on the Edinburgh and Mansion House reforms to unlock more pension fund capital. We will give new powers to the Pensions Regulator and the Financial Conduct Authority to ensure better value from defined contribution schemes by judging performance on overall returns, not cost.
We will make sure that there are vehicles to make it easier for pension funds to invest in UK growth opportunities, so I am today publishing the names of the winners of the LIFTS—long-term investment for technology and science—competition. But I remain concerned that other markets, such as Australia, generate better returns for pension savers, with more effective investment strategies and more investment in high-quality domestic growth stocks. So I will introduce new requirements for defined-contribution and local government pension funds to disclose publicly their level of international and UK equity investments. I will then consider what further action should be taken if we are not on a positive trajectory towards international best practice.
I also want to create opportunities for a new generation of retail investors to engage with public markets, so we will proceed with a retail sale for part of the Government’s remaining NatWest shares this summer, at the earliest opportunity, subject to supportive market conditions and value for money. We will continue to explore how savers could be allowed to take their pension pots with them when they change job. We will make it easier for people to save for the long term with a new British savings bond, delivered through National Savings and Investments, offering savers a guaranteed rate, fixed for three years.
Today, following calls from over 200 representatives of the City and our high-growth sectors, I will reform the ISA system to encourage more people to invest in UK assets. After a consultation on its implementation, I will introduce a brand-new British ISA, which will allow an additional £5,000 annual investment for investments in UK equity, with all the tax advantages of other ISAs. That will be on top of existing ISA allowances and will ensure that British savers can benefit from the growth of the most promising UK businesses, as well as supporting those businesses with the capital to expand.
I now turn to our other growth industries, starting with clean energy. We want nuclear to provide up to a quarter of our electricity by 2050. As part of that, I want the UK to lead the global race in developing cutting-edge nuclear technologies. I can therefore announce that Great British Nuclear will begin the next phase of the small modular reactor selection process, with companies now having until June to submit their initial tender responses. Our brilliant Secretary of State for Energy Security and Net Zero will also allocate up to £120 million more to the green industries growth accelerator, to build supply chains for new technology, ranging from offshore wind to carbon capture and storage. By January next year, as promised in the autumn statement, we will have a new, faster connections process to the grid up and running. In advanced manufacturing we have announced a further £270 million of investment into innovative new automotive and aerospace research and development projects, building the UK’s capabilities in zero-emission vehicle and clean aviation technologies.
I now turn to our creative industries. We have become Europe’s largest film and TV production centre, with Idris Elba, Keira Knightley and Orlando Bloom all filming their latest productions here. Studio space in the UK has doubled over the last three years and, at the current rate of expansion, next year we will be second only to Hollywood globally. In the autumn statement I committed to providing more tax relief for visual effects in film and high-end TV. I can today confirm that we will increase the rate of tax credit by 5%, and remove the 80% cap for visual effects costs in the audio-visual expenditure credit. Having worked closely with the Secretary of State for Culture, Media and Sport, and listened carefully to representations from companies such as Pinewood, Warner Bros. and Sky Studios, we will provide eligible film studios in England with a 40% relief on their gross business rates until 2034. Having heard representations from the British film industry, Pact, and indeed the Prime Minister, we will introduce a new tax credit for UK independent films with a budget of less than £15 million. For our creative industries more broadly, we will provide £26 million of funding to our pre-eminent theatre, the National Theatre, to upgrade its stages.
I particularly want to recognise the contribution of our creative industries and the tourism that comes from orchestras, museums, galleries and theatres. In the pandemic, we introduced higher 45% and 50% levels of tax relief, which were due to end in March 2025. They have been a lifeline for performing arts across the country. Today, in recognition of their vital importance to our national life, I can announce that I am making those tax reliefs permanent at 45% for touring and orchestral productions, and 40% for non-touring productions. Lord Lloyd Webber says that this will be a once-in-a-generation transformational change that will ensure Britain remains the global capital of creativity.
I suspect that the new theatre reliefs may be of particular interest to the shadow Chancellor, who seems to fancy her thespian skills when it comes to acting like a Tory. The trouble is that we all know how her show ends: higher taxes, like every Labour Government in history—[Interruption.] I am delighted that Labour Members are cheering the fact that Labour Governments always put up taxes. They are right!
I want to mention our life sciences sector, where we will support research by medical charities into diseases such as cancer, dementia and epilepsy with an additional £45 million, including £3 million for Cancer Research UK. But I have long believed that we should be manufacturing medicines as well as developing them, so I can today also announce a brand-new investment by one of our greatest life science companies, AstraZeneca, led by mon ami the irrepressible Sir Pascal Soriot. AstraZeneca made its covid vaccine available to developing countries at cost, as a result saving over 6 million lives. Today, because of the Government’s support for the life sciences sector, it has announced plans to invest £650 million in the UK to expand its footprint on the Cambridge biomedical campus, and fund the building of a vaccine manufacturing hub in Speke in Liverpool. That is more investment and better jobs in every corner of the country in a long-term Budget for growth from a Conservative Government.
One of the biggest barriers to investment is businesses not being able to hire the staff they need. The economy today has around 900,000 vacancies. It would be easy to fill them with higher migration, but with over 10 million adults of working age who are not in work, that would be economically and morally wrong. Those who can work should work, and I have tackled that issue in every Budget and autumn statement I have delivered. A year ago, I abolished the pensions lifetime allowance, which had pushed doctors and others to take early retirement. Ask any doctor what they think about Labour’s plans to bring it back and they will say, “Don’t go back to square one.” In the autumn, with the help of our superb Secretary of State for Work and Pensions, we announced the back to work plan, which will support 1 million adults with medical conditions and reduce the number of people assessed as not needing to work by two thirds.
A year ago, I also announced the biggest ever expansion of childcare—[Interruption.] Just listen. Extending the 30-hour free childcare offer to all children of working parents from nine months. [Interruption.] We have not had a childcare plan from Labour, so Opposition Members might want to listen to ours. Our plan will mean an extra 60,000 parents enter the workforce in the next four years—a tremendous achievement for the Education Secretary, who I think is doing an effing good job. Today, following representations from many people, including the CBI, I announce measures to support the childcare sector to make the new investments it now needs to make. I am guaranteeing the rates that will be paid to childcare providers to deliver our landmark offer for children over nine months old for the next two years. That is more people in work and more jobs, sticking to our plan in a long-term Budget for growth.
I now turn to public services. [Interruption.] I thought they were supposed to be interested in public services—[Interruption.] I can wait.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. A little bit of murmuring is normal, but I should not be able to hear what Members are saying over there. That is clearly out of order. Let us have some courtesy.
Jeremy Hunt
Thank you, Madam Deputy Speaker.
Good public services need a strong economy to pay for them, but a strong economy also needs good public services. In 2010, schools in the UK were behind Germany, France and Sweden in the OECD’s PISA—programme for international student assessment—education rankings for reading and maths. Now, after Conservative reforms, we are ahead of them. Burglaries and violent crime have halved in the last 14 years after we invested in 20,000 more police officers. Our armed forces remain the most professional and best-funded in Europe, with defence spending already more than 2% of GDP. We are providing more military support to Ukraine than nearly any other country, and our spending will rise to 2.5% as soon as economic conditions allow. The NHS is still recovering from the pandemic but has 42,000 more doctors and 71,000 more nurses than it did under Labour—that is 250 more doctors and 400 more nurses for every single month that we have been in office.
Resources matter, of course, which is why, despite all the economic shocks we have faced, overall spending on public services has gone up since 2010—in the case of the NHS, by more than a third in real terms. Although spending has continued to rise every year, public sector productivity still remains below pre-pandemic levels by nearly 6%. This demonstrates that the way to improve public services is not always more money or more people; we also need to run them more efficiently. We need a more productive state, not a bigger state.
In autumn 2022, I set day-to-day spending to increase by 1% a year in real terms over the next Parliament. Some say that is not enough and we should raise spending by more, and others say it is too much and we should cut it to improve efficiency—neither are right. It is not fair to ask taxpayers to pay for more when public service productivity has fallen; nor would it be wise to reduce that funding, given the pressures that public services face. So I am keeping the planned growth in day-to-day spending at 1% in real terms, but we are going to spend it better. [Interruption.] The Opposition do not have a plan for public services, as with everything else, so why not listen to ours?
Today I am announcing a landmark public sector productivity plan that restarts public service reform and changes the Treasury’s traditional approach to public spending. I start with our biggest and most important public service: the NHS. One of my greatest privileges was to be Health Secretary. Thanks to the NHS, I have three gorgeous children, the oldest of whom has been patiently listening in the Gallery. The NHS is, rightly, the biggest reason most of us are proud to be British, but the systems that support its staff are often antiquated. Doctors, nurses and ward staff spend hours every day filling out forms when they could be looking after patients. [Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. I do not like to interrupt the Chancellor, but Mr Streeting, you are too close to me to be shouting that loudly. If you want to shout that loudly, you should go away and sit up there. I apologise for interrupting the Chancellor.
Jeremy Hunt
When patients do not show up or one member of a team is ill, operating theatres are left empty despite long waiting lists. When we published the NHS long-term workforce plan, I asked the NHS to put together a plan to transform its efficiency and productivity. I wanted better care for patients, more job satisfaction for staff and better value for taxpayers. Making changes on the scale we need is not cheap. The investment needed to modernise NHS IT systems so they are as good as the best in the world costs £3.4 billion, but it helps unlock £35 billion of savings—ten times that amount—so in today’s Budget for long-term growth, I have decided to fund the NHS productivity plan in full.
With that new investment, we will slash the 13 million hours lost by doctors and nurses every year to outdated IT systems. We will cut down and potentially halve form filling by doctors by using artificial intelligence. We will digitise operating theatre processes, allowing the same number of consultants to do an extra 200,000 operations a year. We will fund improvements to help doctors read MRI and CT scans more accurately and quickly, speeding up results for 130,000 patients every year and saving thousands of lives, something that I know would have delighted my brother Charlie, who I recently lost to cancer.
We will improve the NHS app so that it can be used to confirm and modify all appointments, reducing up to half a million missed appointments annually and improving patient choice. We will set up a new NHS staff app to make it easier to roster electronically and end the use of expensive off-framework agencies. As a result of this funding, all hospitals will use electronic patient records, making the NHS the largest digitally integrated healthcare system in the world. Today’s announcement doubles the amount the NHS is investing on digital transformation over three years.
On top of this longer-term transformation, we will also help the NHS meet pressures in the coming year with an additional £2.5 billion. That will allow the NHS to continue its focus on reducing waiting times and brings the total increase in NHS funding since the start of the Parliament to 13% in real terms. The NHS was there for us in the pandemic, and today with nearly £6 billion of additional funding, a Conservative Government are there for the NHS.
The head of the NHS, Amanda Pritchard today said that this investment shows that
“the government continues to back the NHS”.
She said that, as a result of the investment, the NHS can commit to delivering 1.9% annual productivity growth over the next Parliament, more than double the average productivity growth in public services between 2010 and 2019.
But today is not just about the NHS. I want this groundbreaking agreement with the NHS to be a model for all our public services. Across education, the police, the courts and local government, I want to see more efficient, better-value and higher-quality public services, so today I can announce that in the next spending review, the Treasury will do things differently. We will prioritise proposals that deliver annual savings within five years equivalent to the total cost of the investment required, and today we make a start with some excellent proposals.
Violence reduction units and hotspot policing have prevented an estimated 136,000 knife crimes and other violent offences, as well as over 3,000 hospital admissions. Every crime costs money, so we will provide £75 million to roll that model out in England and Wales. Police officers waste around eight hours a week on unnecessary admin. With higher productivity, we could free the equivalent of 20,000 police officers over a year. We will spend £230 million rolling out time-saving and money-saving technology that speeds up police response times by allowing people to report crimes by video call and, where appropriate, use drones as first responders.
Too many legal cases, particularly in family law, should never go to court, and it would cost us less if they did not, so we will spend £170 million to fund non-court resolution, reduce reoffending and digitise the court process. Too many children in care end up being looked after by unregistered providers that are much more expensive, so we will invest £165 million over the next four years to reduce that cost by increasing the capacity of the children’s homes estate.
Special educational need provision can be excellent when outsourced to independent sector schools, but also expensive, so we will invest £105 million over the next four years to build 15 new special free schools to create additional high-quality places and increase choice for parents. We will also put in place a plan to realise the tens of billions of savings recommended in an excellent speech by the head of the National Audit Office.
The OBR says that a 5% increase in public sector productivity would be the equivalent of about £20 billion in extra funding. With these plans, we can deliver that and more. If we ensure that they are cash-releasing savings, as we are committed to doing, it will be possible to live with more constrained spending growth without cutting services valued by the public. So with the energy and drive of my talented Chief Secretary to the Treasury, we launch our public sector productivity plan in today’s Budget for long-term growth: more investment, more jobs, better public services and—one more thing—lower taxes.
Keeping taxes down matters to Conservatives in a way that it never can for Labour. We believe that in a free society the money people earn does not belong to the Government; it belongs to them, and if we want to encourage hard work, we should let people keep as much of their own money as possible. Conservatives look around the world at economies in North America and Asia and notice that countries with lower taxes generally have higher growth. Economists argue about cause and correlation, but we know that lower-taxed economies have more energy, more dynamism and more innovation. We know that is Britain’s future, too.
Before I explain how we will bring down taxes, I will start with some measures to make our system simpler and fairer. To discourage non-smokers from taking up vaping, we are today confirming the introduction of an excise duty on vaping products from October 2026 and publishing a consultation on its design. Because vapes can also play a positive role in helping people quit smoking, we will introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking. I will make a one-off adjustment to rates of air passenger duty on non-economy flights only to account for high inflation in recent years, and I will provide HMRC with the resources it needs to ensure that everyone pays the tax they owe, leading to an increase in revenue collected of over £4.5 billion across the forecast period.
Next, I turn to property taxation. In recent months, following tenacious representation from my hon. Friends the Members for St Austell and Newquay (Steve Double), for North Devon (Selaine Saxby), for Cities of London and Westminster (Nickie Aiken), for Torbay (Kevin Foster) and for Truro and Falmouth (Cherilyn Mackrory), I have been looking closely at our furnished holiday lettings tax regime. I am concerned that that regime is creating a distortion meaning that not enough properties are available for long-term rental by local people. So to make the tax system work better for local communities, I am going to abolish the furnished holiday lettings regime.
I have also been looking at the stamp duty relief for people who purchase more than one dwelling in a single transaction, known as multiple dwellings relief. I see the deputy leader of the Labour party, the right hon. Member for Ashton-under-Lyne (Angela Rayner), paying close attention, given her multiple dwellings—[Interruption.] She—[Interruption.]
Madam Deputy Speaker
Order. Too much excitement. We have not actually heard—because we cannot hear—what the Chancellor is trying to say. [Interruption.] Okay, I can hear who is shouting, and they will not get to speak later.
Jeremy Hunt
I am sorry to disappoint the right hon. Member, but multiple dwellings relief was not actually designed for her; it was intended—[Interruption.]. It was intended to support investment in the private rented sector, but an external evaluation found no strong evidence that it had done so, and that it was being regularly abused, so I am going to abolish it.
Finally, as part of our look at property taxation in this Budget, both the Treasury and the OBR have looked at the costs associated with our current levels of capital gains tax on property and concluded that if we reduced the higher 28% rate that exists for residential property, we would in fact increase revenues because there would be more transactions. For the first time in history, both the Treasury and the OBR have discovered their inner Laffer curve. So today I will reduce the higher rate of property capital gains tax from 28% to 24%—that really is for you, Angela. [Laughter.] I now—[Interruption.]
Madam Deputy Speaker
Order. I have had enough from Opposition Members and I am definitely not having it from Government Members.
Jeremy Hunt
I now turn to oil and gas. Unlike the Labour party, we want to encourage investment in the North sea, so we will retain generous investment allowances for the sector. Following representations from my hon. Friend the Member for Banff and Buchan (David Duguid), we will also legislate in the Finance Bill to abolish the energy profits levy should market prices fall to their historical norm for a sustained period of time. But because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits, so I will extend the sunset on the energy profits levy for an additional year to 2029, raising £1.5 billion.
Next, I turn to the taxes paid by those who are resident in the UK but not domiciled here for tax purposes. [Hon. Members: “Ah!”] This is a category of people known as non-doms. Nigel Lawson wanted to end the non-dom regime in his great tax reforming Budget of 1988, which is where I suspect the Labour party got the idea from. I, too, have always believed that provided we protect the UK’s attractiveness to international investors, those with the broadest shoulders should pay their fair share. After looking at the issue over many months, I have concluded that we can indeed introduce a system that both is fairer and remains competitive with other countries, so the Government will abolish the current tax system for non-doms, get rid of the outdated concept of domicile—[Interruption.] I aim to please all parts of the House in all my Budgets. We will replace—[Interruption.]
Madam Deputy Speaker
Order. This is impossible. [Interruption.] Order. Could you please shout more quietly? [Laughter.]
Jeremy Hunt
We will replace the non-dom regime with a modern, simpler and fairer residency-based system. From April 2025, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency: a more generous regime than at present, and one of the most attractive offers in Europe. But, after four years, those who continue to live in the UK will pay the same tax as other UK residents. Recognising the contribution of many of these individuals to our economy, we will put in place transitional arrangements for those benefiting from the current regime. That will include a two-year period in which individuals will be encouraged to bring wealth earned overseas to the UK, so it can be spent and invested here—a measure that will attract onshore an additional £15 billion of foreign income and generate more than £1 billion of extra tax.
Overall, abolishing non-dom status will raise £2.7 billion a year by the end of the forecast period. The Opposition planned to use that money for spending increases, but today a Conservative Government make a different choice. We use that revenue to help cut taxes on working families. Many of those families depend on child benefit, but the way that we treat child benefit in the tax system is confusing and unfair. It is a lifeline for many parents because it helps with the additional costs associated with having children. When it works, it is good for children, good for parents, and good for the economy because it helps people into work.
We currently withdraw child benefit when one parent earns over £50,000 a year. That means that two parents earning £49,000 a year receive the benefit in full, but a household earning a lot less than that does not if just one parent earns over £50,000. Today I set out plans to end that unfairness. Doing so requires significant reform to the tax system, including allowing HMRC to collect household-level information. We will therefore consult on moving the high-income child benefit charge to a household-based system, to be introduced by April 2026. But because that is not a quick fix, I make two changes today to make the current system fairer.
Following representations from my hon. Friends the Members for Penistone and Stocksbridge (Miriam Cates), for Carshalton and Wallington (Elliot Colburn), for Bassetlaw (Brendan Clarke-Smith) and for West Worcestershire (Harriett Baldwin), along with many others, I confirm that from this April, the high-income child benefit charge threshold will be raised from £50,000 to £60,000. We will raise the top of the taper at which it is withdrawn to £80,000. That means that no one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether. Because of the higher taper and threshold, nearly half a million families with children will save an average of £1,300 next year. According to the OBR, this change will see an increase in hours among those already working to the equivalent of 10,000 more people entering the workforce. More investment, more jobs, better public services and lower tax.
There is one further set of changes that I want to make today. The way we tax people’s income is particularly unfair. Those who get their income from having a job pay two types of tax: national insurance contributions and income tax. Those who get it from other sources pay only one. This double taxation of work is unfair. The result is a complicated system that penalises work instead of encouraging it. If we are to build a high-wage, high-skill economy not dependent on migration and to encourage people not in work to come back to work, we need a simpler, fairer tax system that makes work pay. That is why I cut national insurance contributions in the autumn. By reducing the penalty on work, the OBR said that that tax cut would lead to the equivalent of 94,000 more people in work. In other words, it would fill more than one in 10 vacancies throughout the economy. Lower taxes, more jobs and higher growth.
Today, because of the progress that we have made in bringing down inflation, because of the additional investment flowing into the economy, because we have a plan for better and more efficient public services, and because we have asked those with the broadest shoulders to pay a bit more—[Interruption.]
Madam Deputy Speaker
Order. Mr Perkins—[Interruption.] I can manage, thank you very much. I have heard you five times. I have let you get away with it, but that is enough. One more strike and you’re out.
Jeremy Hunt
I know how hard it is for the Opposition to listen to arguments for lower taxes. That is the difference.
Because we have asked those with the broadest shoulders to pay a bit more, today I go further. From 6 April, employee national insurance will be cut by another 2p, from 10% to 8%, and self-employed national insurance will be cut from 8% to 6%. That means an additional £450 a year for the average employee, or £350 for someone who is self-employed. When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year, and 2 million of the self-employed will get a tax cut averaging £650. Those changes will make our system simpler and fairer, and will grow our economy by rewarding work. The OBR says that, when combined with the autumn reduction, our national insurance cuts will mean the equivalent of 200,000 more people in work—filling one in five vacancies, and adding 0.4% to GDP and 0.4% to GDP per head.
This is the second fiscal event in which we have reduced employee and self-employed national insurance. We have cut it by one third in six months without increasing borrowing and without cutting spending on public services. That means that the average earner in the UK now has the lowest effective personal tax rate since 1975. Their effective taxes are now lower than in America, France, Germany or any G7 country. Because Conservatives believe that making work pay is of the most fundamental importance, and because we believe that the double taxation of work is unfair, our long-term ambition is to end this unfairness. When it is responsible, when it can be achieved without increasing borrowing and when it can be delivered without compromising high-quality public services, we will continue to cut national insurance as we have done today, so that we truly make work pay.
We stick to our plan with a Budget for long-term growth. It delivers more investment, more jobs, better public services and lower taxes. However, dynamism in an economy does not come from Ministers in Whitehall but from the grit and determination of people who take risks, work hard and innovate—not Government policies but people power. It is to unleash people power that today we put this country back on a path to lower taxes: a plan to grow the economy versus no plan; a plan for better public services versus no plan; a plan to make work pay versus no plan. Growth up, jobs up and taxes down. I commend this statement to the House.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Stamp duty land tax (first-time buyers’ relief: new leases acquired on bare trust) (motion no. 8);
(b) Stamp duty land tax (registered providers of social housing) (motion no. 9);
(c) Stamp duty land tax (purchases by public bodies) (motion no. 10);
(d) Value added tax (late payment interest and repayment interest) (motion no. 22).—(Jeremy Hunt.)
Madam Deputy Speaker (Dame Eleanor Laing)
As many as are of that opinion say Aye—[Hon. Members: “Aye!”] Of the contrary, No—[Hon. Members: “No!”] [Interruption.] Order. Let me explain, for the clarification of the House, that the Question on the provisional collection of taxes is asked at this stage. All Members will have the opportunity, having heard the debate in detail, to vote on each of the motions on Tuesday 12 March, at the end of the Budget debate. I would hesitate to call a Division at this point, when the House and the world is awaiting the response from the Leader of the Opposition. [Interruption.]
I will put the Question again, and if it is very clear to me that there are more Ayes than Noes, I will take the decision on the voices. The Question is—
Oral Answers to Questions
Jeremy Hunt Excerpts(9 months ago)
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Mrs Flick Drummond (Meon Valley) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Mr Speaker, may I add my comments to yours yesterday about His Majesty the King? I wish him and his family well, as well as saluting his courage in being so open about his condition.
At the autumn statement last year, I announced an ambitious growth package, which will boost business investment by about £20 billion a year. We are making full expensing permanent, which the CBI welcomed as a game changer that will fire up the British economy.
Mrs Drummond
I also welcome those measures. Business rates are among the biggest issues for small businesses in Meon Valley, so I welcome the Chancellor’s £4.6 billion package of support in the autumn statement. However, following covid, there are a number of empty offices where landlords are still having to pay business rates. Does the Chancellor have any measures to support those who are struggling with a lack of income to pay business rates?
Jeremy Hunt
My hon. Friend is absolutely right to highlight the pressures caused by business rates. That was why in the autumn statement we introduced the 75% discount for retail, hospitality and leisure. All I would say is that the reason we were able to introduce those large cuts in business rates was that we did not embark on a spending spree of £28 billion a year, which is Labour’s policy on Mondays, Wednesdays and Fridays, but not apparently on Tuesdays, Thursdays and Saturdays.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I will try to be nice to the Chancellor, but he seems to be living in a parallel universe. If he came to Huddersfield and talked to my businesses and manufacturers, he would find them at the lowest ebb that I can ever remember. It is time that the stimulus was there to make people invest and create jobs. Get on with it, Chancellor!
Jeremy Hunt
If that was being nice, I am relieved that I have not seen the other type of questions that the hon. Member asks. I agree that manufacturing is central to our economic fortunes, which is why it was good news that last year we overtook France to become the eighth-largest manufacturer in the world. But we have gone even further: in the autumn statement, we announced a £4.5 billion manufacturing strategy to give further support to make our manufacturers the best in the world.
Anthony Mangnall (Totnes) (Con)
Yesterday, we had the pleasure of discussing the very many benefits from the autumn statement, including research and development grants and simplification of the tax code. However, I wonder whether the Chancellor might go a little further and see whether cutting VAT for the tourism and hospitality sector, perhaps by 10% over five years, would be advisable to help the economy across the United Kingdom.
Jeremy Hunt
My hon. Friend is an assiduous supporter of the many pubs, restaurants and shops in Devon, and I commend him for that support. We will, of course, keep all those measures under review ahead of the Budget.
Kirsten Oswald (East Renfrewshire) (SNP)
Hair salons are a vital mainstay of our high streets, but many employers are worried about the sustainability of their businesses; a huge issue is their tax bills, with VAT a significant concern, making further business investment very difficult. Cutting VAT to 10% would make an important difference to local businesses, high streets and apprentice training. Will the Chancellor look at doing that to support all our local economies?
Jeremy Hunt
I will always look at anything that helps businesses to grow and expand. I set up and ran my own business for 14 years. Can I gently say to the hon. Lady that it is slightly incongruous to argue for lower taxes when the SNP has given Scotland the highest taxes in the United Kingdom?
Greg Smith (Buckingham) (Con)
Christine Jardine (Edinburgh West) (LD)
The Chancellor of the Exchequer (Jeremy Hunt)
We announced 110 growth measures in the autumn statement. Taken together with the measures in the spring Budget, the independent Office for Budget Responsibility says that they will have the biggest impact on output that it has ever measured in a fiscal event, increasing GDP by 0.5% by 2028-29.
Christine Jardine
The UK economy is set for slower growth than previously thought. The International Monetary Fund predicts that next year we will have the second worst growth in the G7. In Scotland, the SNP has increased taxes, which we have heard about already, and Scots now face six bands. Stagnation there is even worse, and businesses and households in my constituency need reassurance. Will the Chancellor tell us what he will do to give confidence to people up and down the country that we will soon see economic growth?
Jeremy Hunt
May I gently correct the hon. Lady on the IMF? It said that over the next four years, UK growth will be higher than in Germany, France, Italy and Japan. I agree about SNP tax rises, but I point out that the Liberal Democrats have some tax rises of their own. They want to increase capital gains tax, which would be incredibly damaging for Scotland’s financial services industry, which employs thousands of people.
Jonathan Gullis (Stoke-on-Trent North) (Con)
Has the Chancellor had the opportunity to look at the New Conservatives’ budget proposal, a budget for families? It has a six-point plan, with two points to help unlock growth, particularly for the many small, family-run businesses in places such as Stoke-on-Trent North, Kidsgrove and Talke. Those plans to increase the VAT registration threshold to £250,000 and to abolish the IR35 reforms would surely help us unlock the growth of our great nation.
Jeremy Hunt
I have been talking with my hon. Friend about these issues recently. In fact, we were discussing increasing the VAT threshold only last night—such are the interesting evenings I have in this job! We will look seriously and carefully at any measures that help small businesses. They are the lifeblood of the country.
Rachel Hopkins (Luton South) (Lab)
Sam Tarry (Ilford South) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Removing the bankers’ bonus cap was a decision made by the independent Prudential Regulation Authority, which has long said that the cap was completely ineffective; it did not limit pay or make banks safer.
Sam Tarry
The cap on bankers’ bonuses might have been a great newspaper headline, but it did little to tackle the City’s excesses. Financial institutions quickly changed remuneration packages and structures so that risk takers still receive substantial pay-offs, sometimes even taking them through offshore mechanisms. Does the Chancellor agree that what we need is enhanced regulation to mitigate excessive risk taking in the square mile? That could require, beyond merely capping bonuses, a move toward an alignment of interests focused on the form of bonus payments, share allocations and deferred amounts, and robust clawback mechanisms for those who have behaved maliciously, in order to deter misconduct in the square mile more effectively?
Jeremy Hunt
I suspect that when the hon. Gentleman tabled his question, he was not expecting that the biggest supporter of abolishing the bankers’ bonus cap was not the Chancellor but the shadow Chancellor. I hear what he says, and indeed those are some of the reasons we abolished it, because it was not working. If Labour is going to change its mind on that policy, may I ask—just to take a totally random example—when will it change its mind about the planned £28 billion of additional borrowing?
Alan Brown (Kilmarnock and Loudoun) (SNP)
Theresa Villiers (Chipping Barnet) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
I would like to update the House on a couple of data releases published since our last oral questions. Total greenfield foreign direct investment since 2010 has not just been higher than that of France, Germany and Italy, but in the past two years has overtaken that of China to be the second highest in the world. Yesterday’s labour force survey said that unemployment fell to a quarterly average of 3.9%, meaning that unemployment has halved and Conservative Governments have overseen the creation of more than 800 jobs every day since 2010.
Theresa Villiers
Can the Treasury find funds for an increased pay offer for junior doctors? I completely agree that we must safeguard the public finances and have regard to affordability, but if ever a group deserved a pay rise, it is junior doctors, and we need to get the dispute settled.
Jeremy Hunt
As my right hon. Friend knows, as Health Secretary I campaigned for extra money for the NHS to make sure that we could pay NHS staff fairly, but I do believe that junior doctors have had a very fair offer—one that is higher than was recommended by the independent pay review body and is about double the rate of this year’s predicted inflation. I know that the Health Secretary is willing to talk about anything else that could help make their working conditions better.
Rachel Reeves (Leeds West) (Lab)
Last week, at Prime Minister’s questions, when asked about the Tory mortgage penalty, the Prime Minister boasted that someone coming off a fixed-rate mortgage
“will be able to save hundreds of pounds.”—[Official Report, 31 January 2024; Vol. 744, c. 857.]
But the small print was that they had to add many years to their mortgage. Three million people have been coming off fixed-rate mortgage deals this year and last, so does the Chancellor agree with the Prime Minister that British homeowners have never had it so good?
Jeremy Hunt
The way we are helping families with mortgages is not just through the mortgage charter, which is a lifeline to many families, but by bringing down inflation. We have been having a few pops about Labour’s confusion about its £28 billion policy, but the real reason we are against it is that going on a borrowing splurge pushes up inflation, pushes up interest rates and makes mortgages more expensive.
Rachel Reeves
It is under a Conservative Government that interest rates, inflation and mortgage costs have gone up. The Government need to take responsibility because, after 14 years, this out-of-touch Government are making it harder for ordinary people to get on. If the Chancellor decides to campaign in next week’s by-elections, what will he say to the 3,100 people in Wellingborough who are remortgaging and paying £210 more on their mortgages every month, and to the 2,800 people in Kingswood paying £270 more a month because of the Conservative mortgage penalty?
Jeremy Hunt
What I will say to them is that responsible, difficult decisions, the vast majority of which the shadow Chancellor opposed, have seen the inflation rate more than halve and interest rates likely to have peaked. Last year, we built more houses in one year than in any single year under the previous Labour Government. We are doing everything we can to help bring down mortgage rates, but a £28 billion borrowing spree will make them worse not better.
Bob Blackman (Harrow East) (Con)
Caroline Lucas (Brighton, Pavilion) (Green)
Jeremy Hunt
I am sure the hon. Lady understands that I cannot talk about what will be in the Budget ahead of the Budget because no decisions have been made. I celebrate with her that the UK recently became the first major economy in the world to decarbonise by more than 50%, ahead of France, Germany, Japan and the United States.
Harriett Baldwin (West Worcestershire) (Con)
If the Chancellor had an ambition to spend an additional £28 billion a year on something, will he explain to the House what level of tax that would impose on ordinary households?
Jeremy Hunt
I thank my hon. Friend for asking that question. I am curious to know where that figure of £28 billion has come from, but as she has asked the question, I will tell her that, if we were to stick to the fiscal rules, as the Labour party claims it will do, to increase spending by £28 billion would mean increasing income tax by 4% or increasing corporation tax, which Labour says it will cap, by 8%.
Kenny MacAskill (East Lothian) (Alba)
Sir Sajid Javid (Bromsgrove) (Con)
The Chancellor will be aware of a proposal from the World War Muslim Memorial Trust to establish a memorial at the National Memorial Arboretum, honouring an estimated 750,000 Muslims who have fought for the British armed forces, with tens of thousands of them paying the ultimate sacrifice. Previous Budgets have supported memorials that honour those who have given us the freedoms that we enjoy. May I ask the Chancellor to personally consider this proposal and help make it a reality?
Jeremy Hunt
My right hon. Friend is absolutely right: we must remember and honour the sacrifices made by those of all nationalities and religions who fought for our freedom, including, I believe, nearly 150,000 Muslims who died in the second world war. My officials would be happy to engage with him to identify how best the Government can help make this vision a reality.
Helen Morgan (North Shropshire) (LD)
Martin Vickers (Cleethorpes) (Con)
My right hon. Friend and his colleagues will be aware of the challenges that businesses and households face in coastal communities. As the Budget approaches, may I urge him to be ever mindful of how we maintain the vitality of the economies in our coastal areas?
Jeremy Hunt
I absolutely will; that is a core part of the levelling-up agenda, and my hon. Friend will be pleased to know that, since we started on that agenda, two thirds of all new jobs created have been outside London and the south-east. We will continue to look at any proposals he may have in that respect.
Paul Blomfield (Sheffield Central) (Lab)
Imran Hussain (Bradford East) (Lab)
Regardless of what the Chancellor tells us, the reality remains that people in Bradford are worse off after 14 years of this Government. Healthcare, GPs and dentists are less accessible, homes are more expensive, colder and riddled with mould, jobs are less secure and badly paid, with stagnating wages, and household savings have been wiped out by rising food, water, energy and fuel bills. Ahead of the last Budget he will deliver before the general election, will the Chancellor apologise for 14 years of disaster that have devastated our communities?
Jeremy Hunt
Let me tell the hon. Gentleman some positive messages he can take home to his constituents in Bradford: violent crime and burglaries have been halved, school standards are up, the NHS has more doctors and nurses than ever in history and real after-tax income for people on the minimum wage or national living wage is up by 30% if they are working full time.
Peter Gibson (Darlington) (Con)
Can my hon. Friend tell me how many staff are now employed across the eight Departments based at the Darlington Economic Campus? What progress is being made on naming the new building “William McMullen House”?
Dame Diana Johnson (Kingston upon Hull North) (Lab)
The Chancellor knows jolly well that in April 2023 Sir Brian Langstaff made his final recommendations on compensation for those infected and affected by the contaminated blood scandal. The Chancellor also gave evidence in July to Sir Brian and said that work was under way. In December, this House voted for a compensation body to be set up. I would like the Chancellor to answer my question, please, not a junior Minister, and explain exactly what is going on in the Treasury, what work is being undertaken and whether there will be an announcement in the Budget.
Jeremy Hunt
With great respect to the right hon. Lady, who has campaigned formidably on this issue, I do not think she is giving a fair representation of what the Government have done. I stand by every word I said as a Back Bencher, and as Chancellor I have tried to do everything I can to speed the process up. She has not mentioned that the Government have already given £100,000 to the families affected. We have accepted the moral importance of the duty to give compensation, and we will now work with colleagues in the other place to make her amendment workable.
Oral Answers to Questions
Jeremy Hunt Excerpts(10 months, 3 weeks ago)
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Virginia Crosbie (Ynys Môn) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Merry Christmas, Mr Speaker. Today is the funeral of former Chancellor Lord Darling, and if I may, I will make some comments about that in my topicals statement. Anglesey freeport will be a national and international hub for trade, innovation and commerce, regenerating communities by attracting new business, and spreading jobs, investment and opportunity.
Virginia Crosbie
Nadolig llawen pawb. I was delighted that the Chancellor extended freeport tax reliefs in England in his autumn statement. Does he agree that if those extensions are realised in Wales, it will give companies the confidence to invest and help deliver the £1 billion investment, and thousands of jobs forecast for our Anglesey freeport? Will he join me in thanking all those at the Isle of Anglesey County Council and Stena Line who worked so hard recently to submit the outline business case?
Jeremy Hunt
I am happy to join my hon. Friend in thanking all those involved in promoting the Anglesey freeport, which we think may create 5,500 jobs. We are working closely with the Welsh Government to agree on how the 10-year window to claim reliefs can be extended across freeports in Wales. I pay tribute to my hon. Friend, who has done more than anyone to put Ynys Môn on the map.
Andrew Bridgen (North West Leicestershire) (Reclaim)
Thank you very much for doing the funnies, Mr Speaker.
Freeports can certainly be a catalyst of economic growth and prosperity in north Wales and the east midlands, but they must be in the right place. Putting a freeport in North West Leicestershire, which already enjoys some of the highest economic growth in the country, has low unemployment, and is capable of filling its industrial sites without incentives, makes little sense. Will the Chancellor agree to meet me to discuss better alternatives for the east midlands than the Diseworth freeport site?
Jeremy Hunt
I would be happy to ask one of my colleagues to meet the hon. Gentleman to discuss why freeports are not appropriate in his part of Leicestershire.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Wendy Morton (Aldridge-Brownhills) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Thanks to the difficult decisions the Government have taken on inflation and debt, the autumn statement this year was able to deliver the biggest package of tax cuts to be scored since 1988.
Mr French
I very much welcome the tax cuts recently announced by the Chancellor and hope to see more announced soon, especially a rise in the higher rate threshold. As the Conservatives look to reduce the tax burden on working people, does the Chancellor share my concern that £28 billion-a-year unfunded spending commitments would likely see taxes rise and lead to higher interest rates if Labour were ever in government?
Jeremy Hunt
It is not just me but Paul Johnson of the Institute for Fiscal Studies who, when talking about Labour’s plan, has said that
“additional borrowing…drives up interest rates”,
which is, of course, a back-door tax rise on families with mortgages. But as it is Christmas, perhaps I could explain it this way: if Santa borrowed £28 billion, he might have more toys to give out this year, but he would also have debt interest to pay and fewer toys to give out next year.
Caroline Ansell
Record funding is going in to support the cost of childcare, to allow more parents to stay in the workforce. This is very welcome, but the tax burden on single-earner households puts the choice to be a stay-at-home parent beyond the reach of too many. Raising the youngest generation must count as a top investment, so may I ask my right hon. Friend the Chancellor what recent analysis has been undertaken on the transferable allowance? At up to £252 per annum, it is currently not designed to facilitate that choice.
Jeremy Hunt
I thank my hon. Friend for her question. As she knows, the marriage allowance is currently £1,260 per year, and it has been fixed at 10% of the personal allowance since it was introduced in 2015. On this side of the House, we believe it should be a woman’s choice, and we want to make that choice as real as possible for every family. For that reason, we think the best thing we can do is to bring down the taxes paid by working people to put more money into the family budget, and we were happy to make a start on that in the autumn statement.
Wendy Morton
Like many of us in this place, I am a big supporter of Small Business Saturday, and it is important to remember that small businesses are the backbone of local communities all year round. Many are unlikely to be able to take advantage of the Chancellor’s very generous and welcome expensing package, so what additional measures will he continue to consider to support all businesses great and small, including perhaps even corporation tax reductions?
Jeremy Hunt
I thank my right hon. Friend for her question. She will know that 70% of trading businesses only pay the lower corporation tax rate of 19%. That covers the vast majority of small businesses. I used to run my own business; I ran it for 14 years before I came into Parliament. I could not agree with her more: small businesses are the backbone of the British economy, which is why we are tackling the scourge of low payments and we rolled over the 75% discount on retail, hospitality and leisure business rates in the autumn statement.
Valerie Vaz (Walsall South) (Lab)
Will the Chancellor confirm how much higher the tax burden is forecast to be at the end, compared with at the start, of this Parliament?
Jeremy Hunt
What I can confirm is that, as a result of the measures I took in the autumn statement, it will be lower at the end of the scorecard period than it would otherwise have been, and a lot lower than it would be under any Labour Government.
Derek Twigg (Halton) (Lab)
May I ask the Chancellor how many middle-income taxpayers have been paying the higher rate of tax since 2019?
Jeremy Hunt
I am happy to write to the hon. Gentleman with the exact numbers, but for people on low incomes—people being paid the lowest legally payable wage—their post-tax real income has gone up by 30% since 2010, because the Conservative party believes in making work pay.
Patrick Grady (Glasgow North) (SNP)
Why is the fiscal situation strong enough to cut national insurance, but not strong enough to return the overseas aid budget to 0.7% of GNI?
Jeremy Hunt
Because the way we return the overseas aid budget to 0.7% is to grow the economy. By cutting national insurance, we put nearly 100,000 more people into the national workforce, filling nearly one in 10 vacancies in companies up and down the country.
Jeff Smith (Manchester, Withington) (Lab)
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Today is the funeral of Lord Darling, who will be greatly missed by many in this House, as well as by Maggie and his family. Civil servants are known for being good at concealing their private feelings about more challenging Ministers, but that was never necessary with Alistair Darling. He was Chief Secretary to the Treasury and then Chancellor during the global financial crisis, and despite the many stresses and strains of that period, he was uniformly admired and much loved for his kindness, decency and dry sense of humour. He took decisions in that period that have stood the test of time and put him on the small list of Chancellors whom history will remember for wise decision making in an unprecedented crisis. We will always remember him.
Finally, Mr Speaker, may I wish you and all the staff in the House a merry and peaceful Christmas?
Dr Cameron
I, too, send my full sympathy. I also wish everyone across the House a merry Christmas.
Industry has fully supported the Prime Minister’s vision of the UK becoming a cryptocurrency hub, but many licensed companies are still finding it difficult to open bank accounts here. So will the Chancellor meet the all-party group on crypto and digital assets to discuss what progress can be made on digital Britain?
Jeremy Hunt
I am grateful to my hon. Friend for asking that question, because the UK, and London in particular, has become the global crypto hub. To make sure that the market can really take off in the way that was intended—in a responsible way—we need to regulate it, which is why we have introduced regulations on stablecoins and on the promotion of crypto services. My hon. Friend the Economic Secretary to the Treasury would be more than happy to meet her.
Darren Jones (Bristol North West) (Lab)
Merry Christmas to you and to the House, Mr Speaker. Let me start by thanking the Chancellor for his kind words about the late Lord Darling, which I think show the gratitude of Members from across the House for his lifetime of public service.
The public have a right to know why so many billions of pounds of their taxes have been wasted by this Government. Baroness Mone has claimed today that Conservative Ministers knew about her personal connections to the company PPE Medpro from the very beginning. So why did the Government not correct the record when a misleading picture was being painted in the media about Baroness Mone’s personal connection to PPE Medpro in the first place?
Jeremy Hunt
I am not going to comment on allegations by Baroness Mone or, indeed, on the individual case, but let me say this: we put together a taskforce of more than 1,000 people that opened 46,000 investigations and so far has made more 80 arrests, so we will stop at nothing to tackle fraud and bring to justice anyone who was responsible for wrongdoing. But what we did in a moment of extreme crisis was to make sure that we got personal protective equipment to the frontline as quickly as we could, and had we not done so many more lives would have been lost.
Darren Jones
We all know that Baroness Mone’s enrichment via PPE Medpro is subject to an investigation, but that does not allow Ministers to refuse to answer questions here in the House today. So let me ask another: Baroness Mone’s husband, Doug Barrowman, alleged that in November 2022 he was approached by a Government official asking if they would
“pay more for the other matter to go away.”
Is that specific and incredibly serious claim now being investigated and, if so, by whom?
Jeremy Hunt
If the hon. Gentleman has any evidence of people behaving improperly or illegally, he should tell the police, and he will get the full support of this Government and the whole House in bringing the matter to justice. But let me just say to him that any responsible Opposition should understand that in a crisis there is a trade-off between speed and taking longer to prevent fraud, and we took the right decision to save as many lives as possible.
Greg Smith (Buckingham) (Con)
Sir Stephen Timms (East Ham) (Lab)
Jeremy Hunt
I recognise the important role the household support fund has played. As my right hon. Friend the Chief Secretary to the Treasury said earlier, no decisions have been made about what will happen going forward. There were a lot of anti-poverty measures in the autumn statement, including increasing benefits next year by double the rate of inflation, increasing the full-time national living wage by £1,800 a year and increasing the local housing allowance, providing an average of an extra £800 to 1.6 million households.
Harriett Baldwin (West Worcestershire) (Con)
Janet Daby (Lewisham East) (Lab)
Jeremy Hunt
I do not know the details of the issue raised by the hon. Lady, but I assure her that the Treasury is ferocious in its determination to ensure that every penny of the public’s money is spent wisely.
Mr Rob Roberts (Delyn) (Ind)
Tim Loughton (East Worthing and Shoreham) (Con)
Jeremy Hunt
As I go to carol services over the festive period, I will make sure that I am suitably inspired by what the three wise men brought to the crib. I can tell my hon. Friend that I am actually visiting our gold reserves this week, so I will see at first hand just how important they are.
Rachael Maskell (York Central) (Lab/Co-op)
Right now, council leaders up and down the country are having to make very difficult decisions on cutting vital services—not because of profligacy, but because of Government cuts to their funding. What steps is the Chancellor taking to ensure that local authorities—such as that in York, which is the lowest-funded area—are adequately funded?
Mr Speaker
Order. We had this last time with you. I’m sorry, but I am trying to be generous because it is Christmas. Do not take advantage of other Members; I still have others to get in. It is just not fair, and it is very selfish to carry on when I have asked you not to. I do not find it acceptable. I look forward to the apology shortly. Would someone like to answer that question, briefly?
Jeremy Hunt
I thank my right hon. Friend for his question and for his campaigning on these issues. I just note that on electric vehicle manufacturing alone, the Society of Motor Manufacturers and Traders says that in the past year we have had more investment pledged for UK electric vehicles than in the previous seven years combined.
Jim Shannon (Strangford) (DUP)
The life sciences sector is worth £2.4 billion to the Northern Ireland economy. What steps have been taken, with counterparts in the Northern Ireland Assembly, to increase funding for employment within this worthy sector?
Mr Tobias Ellwood (Bournemouth East) (Con)
Our economy continues to be impacted by the war in Ukraine and denial across the Black sea, and we now must brace ourselves for further economic shocks as global shipping avoids the Red sea. Does the Minister agree that we should be protecting these shipping lanes? Our Navy is now too small by half to protect our maritime interests, so will he now look at investing in our surface fleet to protect our economy?
Jeremy Hunt
As my right hon. Friend knows, I have long believed in the importance of investing in our armed forces, but that ultimately depends on a strong economy that will pay for sustained investment, and that is what is happening under this Government.
Richard Fuller (North East Bedfordshire) (Con)
Will the Chancellor update the House on how he plans to move forward with some of the key recommendations from Lord Harrington’s review into foreign direct investment in the UK?
Jeremy Hunt
I am happy to do that. In fact, I hosted a reception for Lord Harrington and the people responsible for that review last week. We will start by increasing the budget of the Office for Investment so that it can give a more bespoke service to potential overseas investors.
Peter Gibson (Darlington) (Con)
We are all mindful of the need to control public finances and slim the civil service, but can my right hon. Friend reassure my constituents that the Darlington Economic Campus will receive the jobs that were promised, and will he give consideration to my proposal to name their permanent home of DEC William McMullen House, in recognition of the sacrifice William made for people of Darlington?
Martin Vickers (Cleethorpes) (Con)
My right hon. Friend is well aware of the threat to thousands of jobs at Scunthorpe steelworks and many more in the supply chain that supports it, all of which would have a devastating effect on the economy of northern Lincolnshire. Can he and his colleagues in the Department for Business and Trade bring a speedy conclusion to the negotiations and lift the cloud over Scunthorpe?
Jeremy Hunt
I thank my hon. Friend for his campaigning on that issue and reassure him that we in the Treasury completely understand how vital steel is to the future of his area and to his constituents. We will continue to do everything we can to resolve the situation as quickly as possible.
Autumn Statement
Jeremy Hunt Excerpts(11 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Jeremy Hunt)
I come today with good news: it is my wife’s birthday and, unlike me, she is looking younger every year.
I turn to the statement. After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track. We have supported families with rising bills, cut borrowing and halved inflation. Rather than a recession, the economy has grown. Rather than falling as predicted, real incomes have risen. Our plan for the British economy is working, but the work is not done. Others proposed a more short-term approach, but we have not made unaffordable pay offers to the unions, we have not stopped new oil and gas exploration, and we have not increased borrowing by £28 billion a year. That would have pushed inflation up just when we need to bring it down. Instead, under this Prime Minister, we take decisions for the long term.
In today’s autumn statement for growth our choice is not big government, high spending and high tax, because we know that that leads to less growth, not more. Instead, we reduce debt, cut taxes and reward work. We deliver world-class education, we build domestic sustainable energy, and we back British business with 110 growth measures. Do not worry; I am not going to go through them all—[Interruption.] Well, I will if you like! In summary, they remove planning red tape, speed up access to the national grid, support entrepreneurs raising capital, get behind our fastest-growing industries, unlock foreign direct investment, boost productivity, reform welfare, level up opportunity to every corner of the country, and cut business taxes.
The Office for Budget Responsibility says that the combined impact of these measures will raise business investment, get more people into work, reduce inflation next year and increase GDP, but Conservatives also know that a dynamic economy depends on the energy and enterprise of people more than any diktats or decisions by Ministers, so today’s measures do not just remove barriers to investment; they reward effort and work. I will go through the measures in three parts. In the first, I will use updated OBR forecasts to show the progress that we are making against the Prime Minister’s economic priorities. The second part will set out growth measures to back British business. Finally, I will conclude with measures to make work pay.
Before I start with the forecasts, I want to express my horror at the murderous attack on Israeli citizens on 7 October and the subsequent loss of life on both sides. I will remember for the rest of my life, as I know many other hon. Members will, being taken to Auschwitz by the Rabbi Barry Marcus and the remarkable Holocaust Educational Trust. I am deeply concerned about the rise of antisemitism in our country, so I am announcing up to £7 million over the next three years for organisations such as the Holocaust Educational Trust to tackle antisemitism in schools and universities. I will also repeat the £3 million uplift to the Community Security Trust. When it comes to antisemitism and all forms of racism, we must never allow the clock to be turned back.
I now move on to the OBR’s economic and fiscal forecasts, and I thank Richard Hughes and his team for their sterling work in preparing them. Three of my right hon. Friend the Prime Minister’s five pledges at the start of the year were economic: to halve inflation, grow the economy and reduce debt. Today I can report to the House that we are delivering on all three.
Let’s start with inflation. The shadow Chancellor did not mention it in her conference speech. My conference speech was before hers, so all she had to do was a bit of copying and pasting, which I have heard she is good at. But it speaks volumes that during the worst global inflation shock for a generation, it did not even get a mention. Well, if controlling inflation isn’t a priority for Labour, it is for us.
When the Prime Minister and I took office, inflation was at 11.1%; last week, it fell to 4.6%. We promised to halve inflation and we have halved it. Core inflation is now lower than in nearly half of the economies in the EU, and the OBR says that headline inflation will fall to 2.8% by the end of 2024, before falling to the 2% target in 2025. I will not take risks with inflation, and the OBR confirms that the measures I take today make inflation lower next year than it would otherwise have been. I thank the independent Bank of England Monetary Policy Committee for its crucial role in bringing inflation down, and we will continue to back it to do whatever it takes until the job is done. But as we do, we will continue to support families in difficulty, and today I add four further measures to help with the cost of living.
First, for those on the lowest incomes, I understand the concerns some have about the effect on work incentives of matching benefit increases to inflation, and I know there has been some speculation that we would increase benefits next year by the lower October figure for inflation. But cost of living pressures remain at their most acute for the poorest families, so instead the Government have decided to increase universal credit and other benefits from next April by 6.7%, in line with September’s inflation figure, an average increase of £470 for 5.5 million households next year—vital support to those on the very lowest incomes from a compassionate Conservative Government.
Secondly, because rent can constitute more than half the living costs of private renters on the lowest incomes, I have listened closely to many colleagues as well as the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice UK and the Joseph Rowntree Foundation, who said that unfreezing the local housing allowance was an “urgent priority”. I will therefore increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year.
Thirdly, although I am going to increase duty on hand-rolling tobacco by an additional 10% above the tobacco duty escalator, I know that for many people going to the pub has become more expensive. I have listened closely to the persuasive arguments on alcohol duties from my hon. Friend the Member for Moray (Douglas Ross) and my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), fierce champions of the Scotch whisky industry. I have also listened to defenders of the great British pint such as my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) and my hon. Friend the Member for Buckingham (Greg Smith), to Councillor Jane Austin who is a big supporter of the Jolly Farmer pub in Bramley in my constituency, and indeed to The Sun newspaper. So as well as confirming our Brexit pubs guarantee, which means the duty on a pint is always lower than in the shops, I have decided to freeze all alcohol duty until 1 August next year; that means no increase in duty on beer, cider, wine or spirits.
Finally, pensioners. The triple lock has helped to lift 250,000 older people out of poverty since it was instituted by a Conservative Government in 2011 and has been a lifeline for many during a period of high inflation. There have been reports that we would uprate it by a lower amount, to smooth out the effect of high public sector bonuses in July, but that would have been particularly difficult for 1 million pensioners whose only income is from the state.
So instead, today we honour our commitment to the triple lock in full. From April 2024, we will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year. That is one of the largest ever cash increases to the state pension, showing that a Conservative Government will always back our pensioners.
Including today’s measures, our total commitment to easing cost of living pressures has risen to £104 billion. That includes paying around half the cost of the average energy bill since last October and amounts now to an average of £3,700 per household. We are able to do that only because we reduced the deficit by 80% ahead of the pandemic, which the Labour party might reflect on, having opposed us every step of the way.
Next, I turn to my right hon. Friend the Prime Minister’s pledge to reduce debt. Before I took difficult decisions at last year’s autumn statement, debt was predicted to rise to almost 100% of GDP by the end of the forecast. Since then, the economy has outperformed expectations and I have taken difficult decisions to reduce borrowing. As a result, headline debt is now predicted to be 94% of GDP by the end of the forecast.
The OBR today forecasts that underlying debt will be 91.6% of GDP next year, 92.7% in 2024-25 and 93.2% in 2026-27, before declining in the final two years of the forecast to 92.8% in 2028-29. That is lower in every year compared with forecasts in the spring. We therefore meet our fiscal rule to have underlying debt falling as a percentage of GDP in the final year of the forecast, with double the headroom compared with the OBR’s March forecast. We will continue to have the second lowest Government debt in the G7—lower than the United States, Canada, France, Italy or Japan.
I turn to borrowing. The right hon. Member for Leeds West (Rachel Reeves) said that when it comes to borrowing, she “will take it up” by £28 billion a year. Indeed, she has opposed every decision we have made to reduce our borrowing. The Government will bring borrowing down, because, as the late Lord Lawson said, borrowing is just a deferred tax on future generations.
I see the Leader of the Opposition shaking his head. In fact, we have something in common: both he and I wanted to make a Jeremy Prime Minister. In fairness, his party and mine are probably equally relieved that we failed but, whereas this Jeremy is growing the economy, his Jeremy would have crashed it.
The numbers show the contrast. According to the OBR, borrowing is lower this year and next, and on average across the forecast by £0.7 billion every year compared with the spring Budget forecasts. It falls from 4.5% of GDP in 2023-24 to 3.0%, 2.7%, 2.3%, 1.6% and 1.1% in 2028-29. That means we also meet our second fiscal rule that public sector borrowing must be below 3% of GDP, not just by the final year, but in almost every year of the forecast.
Some of that improvement is from higher tax receipts from a stronger economy, but we also maintain a disciplined approach to public spending. As I set out in the spring Budget, resource spending will increase by 1% a year from 2025-26 in real terms, and we are sustaining the record 2020 increase in capital spending in cash terms until the end of the forecast. Within this, we will meet our NATO commitment to spend 2% of GDP on defence—critical at a time of global threats to the international order, most notably from Putin’s evil war in Ukraine.
We also support a group of people to whom we owe our freedom: our brave veterans. I will extend national insurance relief for employers of eligible veterans for a further year, and provide £10 million to support the Veterans’ Places, Pathways and People programme. I thank our excellent Minister for Veterans’ Affairs, my right hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), for his championing of their cause.
We have shown that we are prepared to increase funding for vital public services, with record numbers of police officers, doctors, nurses and teachers. We are nearly doubling the numbers of doctors and nurses we train, having given the NHS its first ever long-term workforce plan, as I promised a year ago. We are also tackling the biggest single preventable cause of mortality that the NHS has to deal with by bringing forward plans for a smokefree generation.
However, alongside extra funding and support, we need to see reform. We need a more productive state, not a bigger one. That is why I want the public sector to increase productivity growth by at least half a percent. a year—the level at which the size of our state starts to reduce as a proportion of GDP. I have already announced plans to cap and reduce the size of the civil service to pre-pandemic levels. I pay tribute to the excellent former Chief Secretary to the Treasury, my right hon. Friend the Member for Salisbury (John Glen), who started our brilliant public sector productivity programme. That will now be pursued by his formidable successor, my hon. Friend the Member for Sevenoaks (Laura Trott), who has already been with me to meet police, fire and ambulance personnel to understand why bureaucracy is holding them back.
Through that vital work, we will ensure that, over time, the growth in public spending is lower than the growth in the economy, while always protecting the services that the public value. I will also provide His Majesty’s Revenue and Customs with the resources it needs to ensure that everyone pays the tax they owe, raising an additional £5 billion across the forecast period.
My right hon. Friend the Prime Minister also promised to grow the economy. Since 2010, despite inheriting what was then the worst recession since the second world war, Conservative Administrations have presided over faster growth than many of our major competitors, including Spain, Italy, France—[Interruption.] Well, the Opposition do not like to hear this, but let me tell them the list: Spain, Portugal, France, Italy, Netherlands, Austria, Germany and Japan. We have grown faster than all of them since 2010.
However, all those countries have faced a pandemic and an energy shock. As a result, last autumn the OBR forecast a recession in which the economy would shrink by 1.4% this year. Instead, it grew—in fact, it has grown faster than the euro area. Revised numbers from the Office for National Statistics now say that the economy is 1.8% larger than it was pre-pandemic. Looking ahead, the OBR expects the economy to grow by 0.6% this year and 0.7% next year. After that, growth rises to 1.4% in 2025, then 1.9%, 2%, and 1.7% in 2028.
If we want those numbers to be higher, we need higher productivity. The private sector is more productive in countries such as the United States, Germany and France because it invests more—on average 2 percentage points more of GDP every year. The 110 measures that I take today help to close that gap by boosting business investment by £20 billion a year. They do not involve borrowing more and ramping up debt, as some advocate. Instead, they unlock investment, with supply-side reforms that back British business in the following areas.
First: skills. No economy can prosper without investing in the potential of its people. Despite strong opposition, we took the difficult decisions to reform our schools. England’s nine to 10-year-olds are now the fourth best readers in the world, and since 2015, our 15 to 16-year-olds have risen seven places in the OECD rankings for maths— not least thanks to the efforts of my brilliant right hon. Friend the Member for Bognor Regis and Littlehampton (Nick Gibb). However, 9 million adults in England still have low basic literacy or numeracy skills, so last month the Prime Minister set out the new advanced British standard to ensure that all school leavers reach minimum standards in maths and English.
While the Labour party wants to reduce the number of apprentices, we want to increase it. Following engagement with Make UK and others, I am announcing a further £50 million of funding over the next two years to pilot ways to increase the number of apprentices in engineering and other key growth sectors where there are shortages. [Hon. Members: “Is that it?”] There are 110 of these measures, so be patient, folks.
I will move on to planning. It takes too long to approve infrastructure projects and business planning applications. Many businesses say that they would be willing to pay more if they knew their application would be approved faster. Therefore, from next year, working with the Secretary of State for Levelling Up, Housing and Communities, I will reform the system to allow local authorities to recover the full costs of major business planning applications in return for being required to meet guaranteed faster timelines. If they fail, fees will be refunded automatically, with the application being processed free of charge—a prompt service or your money back, just as would be the case in the private sector.
Many planning applications are for house building. The Leader of the Opposition told us that he wanted to be a builder, not a blocker. That did not last long: just a few months later, Labour blocked reforms to the rules on nutrient neutrality, shamelessly preventing 100,000 houses from being built. Conservatives, on the other hand, are the builders, with more homes being completed in 2021-22 than in any single year of the last Labour Government.
Today, we take further decisions to unlock the building of more homes. We will invest £110 million over this year and next to deliver high-quality nutrient mitigation schemes, unlocking 40,000 homes. We will invest £32 million to bust the planning backlog and develop fantastic new housing quarters in Cambridge, London and Leeds, which will lead to many thousands of additional dwellings. We will allocate £450 million to the local authority housing fund to deliver 2,400 new homes, and we will consult on a new permitted development right to allow any house to be converted into two flats provided the exterior remains unaffected.
It is also taking too long for clean energy businesses to access the electricity grid, so after talking to businesses such as National Grid, Octopus Energy and SSE, we today publish our full response to the Winser review and the connections action plan. These measures will cut grid access delays by 90% and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure. Taken together, those planning and grid reforms are estimated to accelerate around £90 billion of additional business investment over the next 10 years.
Next, on foreign direct investment, I am extremely grateful to Lord Harrington for his excellent report on how to increase foreign direct investment. We accept all his headline recommendations. In particular, we will put in place a concierge service for large international investors modelled on the best such services offered by our competitors, and we will increase funding for the Office for Investment to deliver it.
I now turn to reforms to pension funds that will increase the flow of capital going to our most promising growth companies in a way that also improves outcomes for savers. I will take forward my Mansion House reforms starting with measures to consolidate the industry. By 2030, the majority of workplace defined contribution savers will have their pension pots managed in schemes of over £30 billion, and by 2040 all local government pension funds will be invested in pools of £200 billion or more. I will support the establishment of investment vehicles for pension funds to use, including through the LIFTS competition—the long-term investment for technology and science competition, a new growth fund run by the British Business Bank—and by opening the Pension Protection Fund as an investment vehicle for smaller defined benefit pension schemes.
I will also consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose to do so, meaning that people can move to having one pension pot for life. These reforms could unlock an extra £75 billion of financing for high-growth companies by 2030 and provide an extra £1,000 a year in retirement for an average earner saving from 18. Alongside this, I am proposing further capital market reforms to boost the attractiveness of our markets and make sure the UK remains one of the most attractive places to start, grow and list a company. As part of this, I will explore options for a NatWest retail share offer in the next 12 months, subject to market conditions and achieving value for money. It’s time to get Sid investing again.
I now turn to measures to support our most innovative industries. In the last decade under the Conservatives, we have grown to become the third largest technology sector in the world—double the size of Germany and three times the size of France. We have the biggest life sciences industry in Europe, and we are Europe’s third largest generator of renewable electricity after Germany and Norway, and the eighth largest manufacturer in the world. When it comes to tech, we know that artificial intelligence will be at the heart of any future growth, and I want to make sure that our universities, scientists and start-ups can access the compute power they need. As such, building on the success of the supercomputing centres in Edinburgh and Bristol, I will invest a further £500 million over the next two years to fund further innovation centres to help make us an AI powerhouse.
Our creative industries already support Europe’s largest film and TV sector. This year’s all-Californian blockbuster “Barbie” was filmed in the constituency of my hon. Friend the Member for Watford (Dean Russell)—where, of course, the sun always shines. Even more could be invested in visual effects if we increased the generosity of the film and high-end TV tax credits, so I will today launch a call for evidence on how to make that happen.
British-discovered vaccines and treatments saved more lives across the world during the pandemic than those from any other country, and I am incredibly proud of our life sciences industry. To further support research and development, I am creating a new, simplified R&D tax relief that combines the existing R&D expenditure credit and small and medium-sized enterprise schemes. I will also reduce the rate at which loss-making companies are taxed within the merged scheme from 25% to 19%, and lower the threshold for the additional support for R&D-intensive loss-making SMEs that I announced in the spring to 30%, which will benefit a further 5,000 SMEs. And because 2028 marks the centenary of the invention of penicillin by Alexander Fleming, I am giving £5 million to Imperial College and Imperial College Healthcare NHS Trust to set up a Fleming centre to inspire the next generation of world-changing innovations.
International investors say that the biggest thing we could do for our advanced manufacturing and green energy sectors is announce a longer-term strategy for their industries, so with the Secretaries of State for Business and Trade and for Energy Security and Net Zero, I am today publishing those plans. I confirm that we will make available £4.5 billion of support over the five years to 2030 to attract investment into strategic manufacturing sectors. That includes: £2 billion of support for zero-emission investments in the automotive sector, which has been warmly welcomed by Nissan and Toyota; £975 million for aerospace, building on decades of success from firms such as Airbus and Rolls-Royce; and £520 million for life sciences, building on the strength of world-class British pharma companies such as AstraZeneca and GSK. We will also provide £960 million for the new green industries growth accelerator, focused on offshore wind; electricity networks; nuclear; carbon capture, utilisation and storage; and hydrogen. Those targeted investments will ensure that the UK remains competitive in sectors where we are already leaders, and innovative in sectors where we are not. Taken together, that support will attract an estimated £2 billion of additional investment across our fastest-growing innovation sectors every year over the next decade.
One reason why we support our manufacturing and clean energy sectors is that they help to level up growth across the United Kingdom, so I now turn to further levelling-up measures. In the spring, I announced that we would deliver 12 new investment zones—12 mini Canary Wharfs—where Government, industry and research institutes will collaborate across the UK. Since then, the Exchequer Secretary, my hon. Friend the Member for Grantham and Stamford (Gareth Davies), has done outstanding work across Government to bring that vision to fruition. Following tenacious representations from my hon. Friend the Member for Ynys Môn (Virginia Crosbie)—no Chancellor’s speech would be complete without a mention of my hon. Friend—and from the unstoppable Mayor of Tees Valley, I have today decided to extend the financial incentives for investment zones and the tax reliefs for freeports from five years to 10 years. I will also set up a £150 million investment opportunity fund to catalyse investment into that programme.
On Monday, I confirmed that there will be a new investment zone in West Yorkshire. Today, having listened to representations from the west midlands salesman-in-chief Andy Street, as well as my hon. Friends the Members for Mansfield (Ben Bradley) and for Bury North (James Daly), I am announcing three further investment zones focused on advanced manufacturing in the west midlands, east midlands and Greater Manchester. Together, local partners expect that those investment zones will help catalyse over £3 billion of private investment and 65,000 new jobs. Having listened to my hon. Friends the Members for Wrexham (Sarah Atherton) and for Clwyd South (Simon Baynes), I can announce a second investment zone in Wales in the fantastic region of Wrexham and Flintshire, which I will visit tomorrow.
We are publishing new devolution deals with four areas, including Hull and East Yorkshire, and offering devolved powers to even more county areas. One of those areas will be the leafiest and most charming county in the country, namely Surrey, where of course the Leader of the Opposition grew up—we do not get everything right. On Monday, we saw the announcement of £1 billion of funding through round 3 of the levelling-up fund, supporting projects following the campaigning efforts of Members from Keighley, Dewsbury, Doncaster, Scunthorpe—and of course, Mr Speaker, Chorley. I can also confirm that we will proceed with over £50 million of funding for high-quality regeneration projects in communities such as Bolsover, Monmouthshire, Warrington and Eden Valley, all of which have particularly effective local MPs as their champions. Because we are proudly the Conservative and Unionist party, I am announcing £80 million for the new levelling-up partnerships in Scotland, £500,000 to support the Hay festival in Wales, and £3 million of additional funding to support the successful tackling paramilitarism programme in Northern Ireland.
I turn next to small businesses—I ran my own for 14 years, and have always known that every big business was a small business once. The Federation of Small Businesses says that the biggest thing I could do to help its members is end the scourge of late payments. We passed the Procurement Act 2023, which means that the 30-day payment terms that are already set for public sector contracts will automatically apply throughout the subcontractor supply chain, but from April 2024 I will also introduce a condition that any company bidding for large Government contracts should demonstrate that it pays its own invoices within an average of 55 days. That number will reduce progressively to 30 days.
Any small business will also say that the biggest frustration it faces is the tax it pays before making a penny of profit, not least business rates. The Government have already taken a third of properties completely out of rates through small business rates relief. We have frozen the tax rate for the last three years, at a cost of £14.5 billion; we have removed downwards caps from transitional relief; and for retail, hospitality and leisure businesses, we have introduced a one-year 75% discount on business rates up to £110,000. Those measures have saved the average independent shop over £20,000. It is not possible to continue with temporary support measures forever, but while the standard multiplier—which applies to high-value properties—will rise in line with inflation, I have today decided that we will freeze the small business multiplier for a further year.
Following extensive discussions with the FSB and many colleagues in this House, I have also decided to extend the 75% business rates discount for retail, hospitality and leisure for another year. This will save the average independent pub over £12,800 next year and, at a cost of £4.3 billion, is a large tax cut that recognises the role of pubs and high street shops in our communities. I thank my hon. Friends the Members for Stockton South (Matt Vickers), for Barrow and Furness (Simon Fell) and for East Devon (Simon Jupp) for their tenacious campaigning on this issue.
Finally, I turn to the smallest of all businesses—those run by the self-employed. These are the people who literally kept our country running during the pandemic: the plumbers who fixed our boilers in lockdowns, the delivery drivers who brought us our shopping and the farmers who kept food on our plates. As part of our plans to grow the economy, I want to reform and simplify taxes paid by the self-employed, so today I am announcing a major reform of one of those taxes. It is one most people have not heard of, but it is a big deal for those who have to pay it.
Class 2 national insurance is a flat-rate compulsory charge, currently £3.45 a week, paid by self-employed people earning more than £12,570, which gives state pension entitlement. Today, after careful consideration and in recognition of the contribution made by self-employed people to our country, I can announce that we are abolishing class 2 national insurance all together, saving the average self-employed person £192 a year. Access to entitlements and credits will be maintained in full and those who choose to pay voluntarily will still be able to do so, but this change simplifies and cuts tax for nearly 2 million self-employed people, while protecting the interests of those on the lowest pay.
Because we value their work, I am also taking one further step for the self-employed. They also pay class 4 national insurance at 9% on all earnings between £12,570 and £50,270. Today, I have decided to cut that tax by one percentage point to 8% from April. Taken together with the abolition of the compulsory class 2 charge, these reforms will save around 2 million self-employed people an average of £350 a year from April.
We are backing small businesses by freezing their business rates, extending retail, hospitality and leisure relief, abolishing compulsory class 2 national insurance payments and reducing class 4 national insurance by one percentage point in today’s autumn statement for growth. Small businesses work so hard for us, and a Conservative Government today are working hard for them.
I turn now to my final measure to back British business. As I have said, since 2010 we have seen the second highest growth in investment of any G7 country. However, if we are to raise productivity, we need to increase business investment further. In 2021, my right hon. Friend the Prime Minister introduced the super-deduction for large businesses to further stimulate business investment, and this spring I introduced full expensing for three years. This means that for every £1 million a company invests, it gets £250,000 off its tax bill in the very same year.
The CBI, Make UK, the British Chambers of Commerce, Energy UK and 200 other business leaders from companies including BT Openreach, Siemens and Bosch, have said that making this measure permanent would be the “single most transformational” thing I could do for business investment and growth. The Centre for Policy Studies says it would
“maximise business investment, boost productivity and deliver…higher levels of GDP”.
But because it costs £11 billion a year, I made it clear that I would only do so when it was affordable. Well, with inflation halved, borrowing down and debt falling, today I deliver on that promise: I will today make full expensing permanent. That is the largest business tax cut in modern British history. It means we have not just the lowest headline corporation tax rate in the G7, but its most generous capital allowances.
The OBR says this will increase annual investment by around £3 billion a year and a total of £14 billion over the forecast period. We on this side of the House know that the way to back British business is not to borrow more or subsidise more, but to increase the incentives to invest. We do that today by introducing one of the most generous tax reliefs anywhere in the world, with a huge boost to British competitiveness in an autumn statement for growth—skills, planning and infrastructure reform, pension fund reform, support for innovation industries, levelling up, backing small business and full expensing.
Under Labour, business investment was 9.3% of GDP in real terms. Since 2010, it has been 9.8% of GDP. But today we go further because, taken together, the overall impact of today’s growth measures will be to increase business investment in the UK economy by around £20 billion a year within the decade—nearly 1% of GDP at today’s level. This is the biggest ever boost for business investment in modern times, a decisive step towards closing the productivity gap with other major economies, and the most effective way we can raise wages and living standards for every family in the country.
As well as backing business, Conservatives know that you need to back the people without whose effort no businesses can succeed: the entrepreneur taking risks, the builder working weekends, the nurse working nights, and the jobseeker leaving benefits behind. I will therefore conclude with three further supply-side reforms designed to improve the incentives to work in a modern, dynamic economy.
I begin with welfare, and I want to start by thanking the outstanding Work and Pensions Secretary for his help in developing these reforms. He builds on the work of my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), who introduced universal credit. Those reforms helped reduce unemployment, which has fallen by over 1 million, but Opposition Members, to their shame, voted against them 30 times. They think compassion is about giving money; we think it is about giving opportunity.
However, post pandemic, we still have over 7 million adults of working age, excluding students, who are not working, despite there being 1 million vacancies in the economy. Many can and want to work, but our system makes that too hard. In the spring Budget, I announced 30 hours of free childcare for working parents of one and two-year-olds. That plan, still opposed by the party opposite, starts rolling out in April. It will help tens of thousands of parents return to work without having to worry about damaging their career prospects.
Today, we focus on helping those with sickness or disability and the long-term unemployed. Every year, we sign off over 100,000 people on to benefits with no requirement to look for work because of sickness or disability. That waste of potential is wrong economically and wrong morally. So with the Secretary of State for Work and Pensions, last week I announced our back to work plan. We will reform the fit note process so that treatment rather than time off work becomes the default, we will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic, and we will spend £1.3 billion over the next five years to help nearly 700,000 people with health conditions find jobs. Over 180,000 more people will be helped through the universal support programme, and nearly 500,000 more people will be offered treatment for mental health conditions and employment support.
Over the forecast period, the OBR judges that these measures will more than halve the flow of people who are signed off work with no work search requirements. At the same time, we will provide a further £1.3 billion of funding to offer extra help to the 300,000 people who have been unemployed for over a year without any sickness or disability. But we will ask for something in return. If, after 18 months of intensive support, jobseekers have not found a job, we will roll out a programme requiring them to take part in mandatory work placement to increase their skills and improve their employability. If they choose not to engage with the work search process for six months, we will close their case and stop their benefits.
Taken together with the labour supply measures I announced in the spring, the OBR says we will increase the number of people in work by around 200,000 by the end of the forecast period, permanently increasing the size of the economy. I know that some on the Opposition Benches would prefer to fill those vacancies in a different way; they hanker after a more liberal immigration regime or even dream of bringing back free movement. But Conservatives say that we should unlock the potential we have right here at home. We do that with the biggest set of welfare reforms in a decade in today’s autumn statement for growth.
If we are to incentivise work, we must also tackle low pay. People who get up early, put in the hours and work hard for their families deserve to be paid fairly. Since 2010, those on the minimum wage—now the national living wage—have seen their hourly wage go up from £5.80 an hour to £10.42 an hour. That is a real-terms increase of more than 20%. Because we have also doubled the threshold at which they pay tax or national insurance, their after-tax income has gone up not by 20%, but by 25%—more than for any other income group.
Today, I confirm that we will go further and accept the Low Pay Commission’s recommendation to increase the national living wage by 9.8% to £11.44 an hour. That is the largest-ever cash increase in the national living wage, worth up to £1,800 for a full-time worker. Since the national living wage has been introduced, the proportion of people on low pay—defined as earning less than two thirds of national median hourly income—has halved, but at the new rate of £11.44 an hour it delivers our manifesto commitment to eliminate low pay altogether. That means that by next year someone working full time on the national living wage will see their real take-home, after-tax pay go up not by 25%, but by 30% compared with 2010.
And that is the difference: the Labour party tried to reduce poverty by tinkering with benefits and tax credits—they wanted to move people from just below the poverty line to just above it—but Conservatives know that the best way to tackle poverty is through work. By reforming the welfare system, reducing the number of workless households and tackling low pay, we have helped lift 1.7 million people out of absolute poverty since 2010, because a central part of our plan for growth is to make work pay.
I move to the final supply-side measure in today’s autumn statement for growth. Because of the difficult decisions that we have taken in the last year, today’s OBR forecast shows that borrowing will be lower than forecast in the spring, debt as a proportion of GDP will be lower than forecast in the spring, inflation will continue to fall and our fiscal headroom has doubled. I said I would cut taxes when we could, but only responsibly and only in a way that did not fuel inflation. The OBR today confirms that I can deliver a package that does that.
For businesses, I have today delivered the biggest business tax cut in modern British history, with the most competitive investment allowances of any large economy. For the self-employed, I have simplified and reformed their taxes by abolishing the compulsory class 2 charge and cutting class 4 national insurance. But high employment taxes on 27 million people working in the public and private sectors also disincentivise the hard work that we should be encouraging. On top of income tax at 20%, they pay 12% national insurance on earnings between £12,570 and £50,270. That is a 32% marginal tax rate. If we want people to get up early in the morning, if we want them to work nights, and if we want an economy where people go the extra mile and work hard, we need to recognise that their hard work benefits us all.
So today I am going to cut the main 12% rate of employee national insurance. If I cut it by one percentage point to 11%, that would be an extra £225 in the pockets of the average worker every year. But instead I am going to go further and cut the main rate of employee national insurance by two percentage points, from 12% to 10%. That change will help 27 million people. It means that someone on the average salary of £35,000 will save over £450. For the average nurse, it is a saving of £520. For the typical police officer, it is a saving of £630 every single year. I would normally bring in such a measure for the start of the new tax year in April, but instead I will tomorrow introduce urgent legislation to bring it in from 6 January, so that people can see the benefit in their payslips at the start of the new year.
The OBR says that reducing a tax on work means more people in work, and it says that today’s measures on national insurance alone will lead to the equivalent of 94,000 full-time employees in our economy, because lower tax means higher growth. That is the difference between those of us on this side of the House and those on that side. In 13 years, Labour raised taxes in every single Budget, but Conservatives cut taxes when we responsibly can, and today we do just that. We cut taxes to help bigger businesses invest. We cut taxes to help smaller businesses grow. We cut taxes for the self-employed who keep our country running, and from January we cut taxes for 27 million working people whose hard work drives our economy forward.
The best universities, the cleverest scientists and the smartest entrepreneurs have given us Europe’s most innovative economy, but we can be the most prosperous too. In the face of global challenges, we have halved inflation, reduced our debt and grown our economy. As a country, we are sticking to a plan that is working. This autumn statement for growth will attract £20 billion of additional business investment a year in the next decade, bring tens of thousands of people into work and support our fastest growing industries, in a package that leaves borrowing lower, leaves debt lower and keeps inflation falling. We are delivering the biggest business tax cut in modern British history, the largest ever cut to employee and self-employed national insurance, and the biggest package of tax cuts to be implemented since the 1980s. It is an autumn statement for a country that has turned a corner; an autumn statement for growth. I commend it to the House.
Rachel Reeves
Next year, we are forecast to be the slowest growing economy in the whole of the G7. When it comes to economic growth, under the Tories, we are more world-following than world-beating.
Let us look at how the Conservatives’ record on growth compares to Labour’s record on growth. Under the Conservatives, GDP growth has averaged 1.5% a year. With Labour, it grew by an average of 2% a year in the 13 years that we were last in office. Had the economy continued to grow at the rate it did under Labour, it would now be £150 billion bigger. What is the Government’s economic record? Lower growth and higher borrowing, with debt more than doubling—it is now at almost 100% of GDP. That is a product of their failures over 13 years. A Tory Government who have failed on growth, failed on debt, failed on levelling-up and failed on the cost of living, too. Now they expect the British people to believe them when they say they will turn it all around, when they are the problem, not the solution.
If we are going to grow the economy, we must get more people into work. Let me be clear: people who can work, should work. That is why we have long argued that the work capability assessment needs replacing, because right now it is discouraging people from seeking work. But there is a wider problem that yet again the Government are failing to face up to. Britain is the only country in the G7 where the employment rate still has not returned to pre-pandemic levels, with the increase in the number of people out of the workforce due to long-term health issues costing the taxpayer a staggering £15.7 billion a year. NHS waiting lists have swelled to 7.8 million—an additional half a million since the Prime Minister said he was going to cut them—and 2.6 million people are out of work due to long-term sickness.
A healthy nation is critical to a healthy economy. That is why Labour has pledged to cut hospital waiting lists, investing an additional £1.1 billion a year to deliver 2 million more appointments, scans and operations. It will be funded by abolishing the non-dom tax status and replacing it with a modern scheme for people genuinely living in the UK for short periods. But, once again, we see that that policy has been vetoed by the Prime Minister. The best way to get people back to work is to get our NHS working, but the reality is you can never trust the Tories with our NHS.
The Chancellor has made great fanfare about public sector efficiency and value for money. That is from a Government who have blown £140 million on a discredited Rwanda scheme and yet are not able to send a single asylum seeker there, £7.2 billion of money lost on fraud during the pandemic—all those cheques were signed by the former Chancellor, the current Prime Minister—and £8.7 billion on personal protective equipment that has been written off. High Speed 2 is costing £57 billion, with not a single piece of track going north of Birmingham. No one can trust the Tories with taxpayers' money.
It says it all that after 13 years of Tory Government, there are still nearly 12,000 NHS computers running on outdated software that is vulnerable to cyber-attacks. Ten years ago, when he was Health Secretary, the now Chancellor promised a paperless NHS by 2018, yet today, in 2023, 26 NHS trusts are still using fax machines. Why on earth should people who experience deteriorating public services under this Conservative Government trust them to fix that, when his six years as Health Secretary make him one of the biggest architects of failure? Mr Speaker,
“if you put your hands into people’s pockets and take money out of them, and they do not see visible improvements in the services they receive, they get very angry indeed.”—[Official Report, 14 September 2021; Vol. 700, c. 851.]
Those are not my words but the Chancellor’s words two years ago. I agree with him. The Tories have had 13 years to improve public services and they have failed. This is too little and too late.
I do welcome the Chancellor’s announcement of additional funding to tackle antisemitism and Islamophobia to keep our communities safe, as well as the additional money for the Holocaust Educational Trust. There is no place for hate in our society, and I know that across the House we will work together to eliminate it.
The Chancellor calls this an autumn statement for growth, but it is Labour that has led the agenda on growth. Today, we see that the Conservatives have released their own poor cover version of what we have already announced. The Chancellor is talking about unlocking capital by reforming pensions, but Labour would go further, encouraging investment in British start-up and scale-up firms and introducing measures to ensure the consolidation of pension funds, so that our pensions system gets better returns for savers and for the UK economy.
On planning, the Conservatives are following Labour’s lead on taking money off bills for communities that host grid infrastructure and on speeding up planning decisions. What has taken them so long? Labour will get Britain building again, with a once-in-a-generation set of reforms to accelerate the building of our country’s national infrastructure and to build housing, too. We will fast-track battery factories, our life sciences and 5G technology, to grow our economy and provide good jobs in every part of our country.
We welcome the Chancellor’s announcement that he will make full expensing permanent—another thing that we have been calling for. But that does not make up for the years of uncertainty that businesses have faced, with taxes going up and down like a yo-yo. Small and medium businesses, which play a pivotal role in growing our economy, are left exposed to the Tories’ economic volatility. Labour’s partnership with business will get our economy firing on all cylinders. That is why this week we established a new British infrastructure council, with key investors in the UK economy focused on unlocking private investment by addressing the delivery challenges that businesses face when investing in Britain. Through Labour’s new national wealth fund, we will work alongside the private sector to back the growth of British industries, so that we can make the crucial transition to a zero-carbon economy. For every pound of public investment, we will leverage in three times as much private investment, while also getting a return for taxpayers. Labour’s plan will boost our economy, get debt falling and make working people better off.
If we listened to Members on the Government Benches, we would believe that the cost of living crisis was behind us. But inflation is still double the Bank of England’s target rate. I know the importance of low and stable inflation from my time as an economist at the Bank of England. It is welcome that the Chancellor has accepted this year’s recommendations from the Low Pay Commission—which we set up—on the minimum wage, but the reality of the Conservatives’ record is that average wages for working people have been held back. Under this Government, real average weekly wages have increased by just 3% in 13 years, compared with a 27% increase under the last Labour Government—worth an additional £120 every week for someone going out to work every day. Today is Equal Pay Day, so it is important to recognise that the living standards of working women have also been held back by a gender pay gap that I am determined to close.
The Chancellor and the Prime Minister say that the cost of living crisis has been dealt with. Everything might look a little better 10,000 feet up in a helicopter, but down here on planet Earth, people are approaching Christmas and the year ahead with worry and trepidation. The cost of living crisis has hit us harder because Tory mismanagement has left us so exposed. Some 11 million UK households do not have enough savings to cover three weeks of living expenses if they need it. Working families have been skating on thin ice for too long. As their resilience has been eroded, so has our national economy’s. Let us not forget that this Government oversaw the closure of our critical gas storage facilities, which left our country more exposed to huge fluctuations in international energy markets. The former Prime Minister—that is, four Prime Ministers ago—cut energy efficiency programmes, leading to higher bills for homeowners.
Just last year, we saw the true cost of the Conservatives when their kamikaze Budget crashed the economy, leading to market turmoil, pensions in peril and a spike in interest rates. Some 1.6 million families will see their mortgage deals end this year. Those re-mortgaging since July have seen their payments rocket by an average of £220 every month. Next year, 1.5 million families will face a similar fate. The Conservatives’ economic recklessness inflicted a Tory mortgage penalty on families across the country. In Wellingborough, families with a mortgage will be expected to find an additional £190 every single month. In Richmond, north Yorkshire, homeowners face £200 more a month on their mortgage. In the Chancellor’s own constituency—though maybe not for long—families with a mortgage will see an average increase of £420 a month because of this Conservative Government’s economic failure. Given increased costs for landlords—the Chancellor knows something about that—renters are paying a high price, too.
The truth is that working people just do not have that sort of money lying around. This is what we have come to after 13 years of Conservative Government. This is the record upon which people will judge the Conservatives at the next election. Tory economic recklessness is not a thing of the past. The British people are still paying the price. We say, never again. Last week, Labour tabled an amendment to the King’s Speech to put our fiscal lock into law. It would prevent a repeat of last year’s economic horror show, yet the Tories voted against it. It is clear that today, Labour is the party of economic and fiscal responsibility. What have the Conservatives learned? Absolutely nothing.
The country is crying out for change. A decaying Government can change their personnel but they have failed to change the direction of our country. In 13 years, we have had seven Chancellors. He would not run a business like this; he cannot run a country like it, either. The Prime Minister cannot even promise that this Chancellor will be in place at the next election. We have all heard the reports: when they first came together, it was a fairytale marriage, but one year on, the relationship has hit the rocks. The pair have grown apart, with rumours running rife that the Prime Minister already has his eyes on someone else.
Whoever this Prime Minister picks as Chancellor, the truth is that Britain is and will be worse off under the Conservatives. They have held back growth, crashed our economy, increased debt, trashed our public services, left businesses out in the cold and made life harder for working people. Our country cannot afford five more years of the Conservatives. The ravens are leaving the tower when even Saatchi & Saatchi says that the Tories are not working. The questions that people will ask at the next election, and after today’s autumn statement, are simple: do me and my family feel better off after 13 years of Conservative Government? Do our schools, hospitals and police work better after 13 years of Conservative Government? In fact, does anything in Britain work better today than when the Conservatives came into office 13 years ago? We all know that working people are worse off under the Conservatives, with growth down, mortgages up, prices up, taxes up and debt up. Their time is up. It is time for change—a changed Labour party to lead Britain and to make working people better off.
Jeremy Hunt
I am afraid that the shadow Chancellor has shown once again that Labour has nothing credible to say on the economy. She tells the papers this morning that she will accept these measures, as one would expect from a copy and paste shadow Chancellor. In all sincerity, I particularly welcome her conversion to supporting full expensing, which she voted against in the House; copying and pasting in the national interest is welcomed on the Government Benches. She compared growth rates under Labour and the Conservatives, but she carefully omitted one fact: Labour inherited a golden legacy from the Conservatives, and proceeded to trash the economy before handing it over.
On growth, the right hon. Lady did not like it when I reminded her that, under the Conservatives, we have grown faster than any other major European economy. She says she is now converted to Conservative supply-side reforms on welfare, so I look forward to her voting with us in the Lobby on those, but her main policy is a demand-side boost to growth, increasing borrowing by £28 billion a year, with absolutely no plans to repay it. The shadow Chief Secretary to the Treasury, the hon. Member for Bristol North West (Darren Jones), does not appear to be in his place. This morning he asked for more action on inflation. Well, the first thing Labour could do is drop its damaging inflationary plan to ramp up borrowing.
On the NHS, despite our having more doctors and nurses, and more patients treated in good or outstanding hospitals, what the right hon. Lady did not mention is that the only place where NHS funding has been cut—not once but twice—is Wales, with the longest hospital waits in Britain.
Perhaps we should talk about what has happened after 13 years, when we repaired Labour’s damage: unemployment down, poverty down, crime down, low pay down, schools funding up, NHS funding up, jobs up, growth up. Conservatives know that lower tax is the path to higher growth and today we make a start.
Several hon. Members rose—
Jeremy Hunt
I thank my hon. Friend, who speaks very wisely about the economy as Chair of the Treasury Committee. The OBR is very specific about that. It says that the measures I take today will permanently increase GDP by 0.3% and that the measures I took in the spring Budget will permanently increase GDP by 0.2%. Taken together, those measures will increase GDP by 0.5%.
Jeremy Hunt
I think the hon. Gentleman prepared his comments for the autumn statement that he wanted me to deliver, rather than the one that I actually delivered. For example, he complained about the tax burden being the highest for seven years, but what he did not say was that in Westminster we have taken difficult decisions and cut taxes, whereas in Scotland the SNP ran out of money and had to raise them. He talked about punishing the most vulnerable, but just look at the measures that we have taken. He talked about renters, but did not mention the fact that we have increased the local housing allowance, which will mean £800 of help for 1.6 million of our poorest people. He did not mention the fact that we have increased benefits by 6.7%, which is double next year’s expected inflation, and have increased the state pension through the triple lock by 8.5%, nearly three times next year’s predicted inflation.
Here is the most uncomfortable truth for the SNP. They have been in power in Edinburgh for longer than the Conservatives have been in power in Westminster, but Scottish GDP is still lower, Scottish employment is still lower, and Scottish inactivity is still higher. The reason is for that is very simple. They focus on separation, while we focus on growth. I know what is better for families in Scotland, who will today see us getting growth going, cutting taxes, and backing Scottish business.
Sir Peter Bottomley (Worthing West) (Con)
The Citizens Advice office covering my constituency will be grateful for that fact that the local housing allowance has been changed. The people who supply drink, and drinkers, will be pleased that alcohol duty is being frozen, at least for the time being. That will help drinkers, and will also not increase inflation.
I am glad that the Chancellor pointed out to the shadow Chancellor that the only time the Labour Government did really well was when they obeyed the Conservative rules between 1998 and 1999, before they let go of the valves and drove the economy to the point at which, when we took over, they were spending £4 for every £3 of Government revenue.
May I now ask the Chancellor to respond, not today but in time, to an injustice done to 500,000 pensioners overseas? Anne Puckridge, who was born five years before the Chancellor’s father, served in intelligence in the Navy, the Army and the Royal Air Force during the war, and retired to Calgary on a pension of £72 a week. It is still £72, instead of £156. That is an injustice which needs attention, and I hope Anne Puckridge will get it and we will have proposals that will enable us to change this bad situation.
Jeremy Hunt
I thank the Father of the House for his comments, and I will look into the issue of overseas pensioners as he requested. If I may, I will write to him, but I am also happy to talk to him about it. May I also thank him for his comments about what happened in 1997? Then as now, the Labour party was trying to say that its economic policies were basically the same as those of the Conservatives, but the reality was quite different. Because Labour did not fix the roof when the sun was shining, the recession after the financial crisis was much worse.
Dame Angela Eagle (Wallasey) (Lab)
The Chancellor did not mention the freezing of tax thresholds, which is due to rake in £52 billion in the next six years. Was that an omission, or is he leaving the freeze in place?
Jeremy Hunt
I have never hidden the fact that we took difficult decisions a year ago, such as freezing the thresholds, in order to get borrowing under control and in order to tackle inflation. However, because the economy since then has outperformed the expectations of nearly every independent body, we are able this time to reduce the tax burden, and I choose to reduce the things that will boost growth.
John Redwood (Wokingham) (Con)
Let me first declare my business interests.
I welcome the measures to promote more investment and more growth, which is vital. We have lost about 800,000 self-employed people since February 2020. The national insurance measure will help a bit, but will my right hon. Friend look again at the way in which IR35 prevents them from expanding their businesses and getting contracts? The measures to promote the growth of small businesses are also welcome, but the VAT threshold acts as a strong disincentive to expand a business when it reaches a certain point.
Jeremy Hunt
I thank my right hon. Friend. I had extensive discussions with him in the run-up to the statement, including many discussions about the self-employed. Indeed, it was partly his advocacy of the role of the self-employed that made me so enthusiastic about making the national insurance changes that I was able to make.
I hear what my right hon. Friend says about IR35. We took our decision partly because of concerns about avoidance, but I am happy to look at that again. As for the VAT threshold, many other colleagues have made the same point. We do have the highest threshold in any major European country, and, indeed, any G7 country, but there is always this issue of the cliff edge, and my right hon. Friend is right to draw my attention to it.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Can the Chancellor confirm that living standards will drop by 3% in the next year?
Jeremy Hunt
What I can confirm to the hon. Lady is that a year ago they were predicted to fall by 3.7%, and now the OBR says that they will increase this year by 2.5%.
Alberto Costa (South Leicestershire) (Con)
The people of Blaby and Glen Parva were listening attentively to the Chancellor’s welcome statement. They will go to the polls on 21 December for two by-elections, a county council and a ward by-election. What positive message has the Chancellor for the residents, the businesses, the pensioners and all the people of working age in Blaby and Glen Parva about his welcome financial statement?
Jeremy Hunt
What I would say to the businesses in Blaby and Glen Prva is that for every single small business we have frozen business rates, and we are rolling over a 75% discount on business rates for every pub, restaurant and high-street shop for another year. We want to do everything possible to back small businesses, because they are the lifeblood of our communities.
Sarah Olney (Richmond Park) (LD)
This statement is a deception from the Chancellor after years of unfair tax hikes. Under this Conservative Government, economic growth is flatlining and public services are on their knees. This year, 400,000 people are still on NHS waiting lists, having been on them when the Chancellor made last year’s autumn statement. These people have been cruelly let down. In his statement last year, the Chancellor said:
“you do not need to choose either a strong economy or good public services.”—[Official Report, 17 November 2022; Vol. 722, c. 856.]
Will he look the British people in the eye and admit that he has given them neither?
Jeremy Hunt
I think that the hon. Lady should be careful with her language when she is saying things like that. I am very clear when it comes to growth. We have grown faster than any major European economy since 2010. Yes, while interest rates are higher—as they need to be, because we are bringing down inflation—growth is more subdued, but if the hon. Lady listens to, for example, those in the International Monetary Fund, who are independent commentators, she will hear them say that when we have got inflation back down to target, we will have higher growth than France, Italy and Germany. When it comes to the NHS, we put an extra £3.3 billion into the NHS budget in the autumn statement last year. With doctors’ strikes happening in most of the period since then, it has been difficult to make progress on waiting lists, and I hope that the hon. Lady will address her comments to those doctors if she is going to be consistent.
Jesse Norman (Hereford and South Herefordshire) (Con)
It is a pleasure to speak from the Back Benches for the first time in a while. I massively welcome the statement, and particularly the emphasis that the Chancellor has given to skills and the superb work that has been done by the Department for Education at the same time. In Herefordshire, we worry about the pollution in our River Wye. Will he consider talking further with the Secretary of State for Environment, Food and Rural Affairs about whether some package could be put in place to support the long-term improvement of that river?
Jeremy Hunt
I congratulate my right hon. Friend on his sterling work as a Minister. When it comes to pollution in the River Wye, he will know that the Government have made changes requiring the water companies to invest more than £50 billion in the years ahead, but he, like me, wants to see faster progress and I will happily give him any support I can.
Sir Stephen Timms (East Ham) (Lab)
I welcome the Chancellor’s announcement on benefit uprating. It is not, as he claimed, a mark of compassion but it is at least delivering the essential minimum, and I congratulate the Secretary of State for Work and Pensions on achieving that. For the past three years, the household support fund has enabled local councils to provide an important safety net for families facing the greatest hardship. Will there be a household support fund next year?
Bob Blackman (Harrow East) (Con)
That answer was quicker than I expected! My right hon. Friend proposes a whole series of planning reforms. One of the problems for local authorities up and down the country is a lack of planning officers to determine those planning applications, and it will clearly take time to recruit and train new people. There is also a risk that the premium service for large-scale developments will mean planning officers switching to those roles rather than determining the day-to-day planning applications. Does my right hon. Friend understand that we will need to recruit more people? Does this need legislation, and what is the timeframe for him to introduce these changes?
Jeremy Hunt
My hon. Friend asks an important question. I want to assure him that I have had extensive discussions with the Communities Secretary to ensure that we implement these reforms in a way that does not lead to unintended consequences. The most important thing is that by allowing the biggest applications to have full cost recovery with respect to local councils, we can start to get more resources, which will mean that we can train up more planning officers and avoid delays not just for the bigger applications but for all of them.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
Does the Chancellor agree that the Prime Minister was wrong last year to try to increase national insurance?
Jeremy Hunt
What the Prime Minister wanted to do then is what he has delivered as Prime Minister, which was to find a way to deliver extra funding to the NHS. What we as Conservatives believe is that taxing the economy more lightly will lead to higher growth, meaning that we can fund our public services better.
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am sure that the people of the Cotswolds will welcome enormously many of the measures in this statement, but can I just mention one subject that is dear to my heart, the tourist tax? There was no mention in my right hon. Friend’s excellent statement of the tourist tax. British tourists going abroad spend billions of pounds, benefiting those countries, yet the figures show that we actively discourage high-spending tourists from coming from abroad to benefit our shops and hospitality venues.
Jeremy Hunt
I reassure my hon. Friend that we want to do everything possible to make our tourism and retail industry competitive. We want to encourage international visitors. We changed policy on this issue a year ago because it cost around £2.5 billion a year and we did not think we could afford to continue it, but we are looking again at the numbers in the light of the most recent data and we can see what has happened to comparative shops in Paris and Milan. We will review this to see if it is still that expensive, and I hope that it is not.
Sammy Wilson (East Antrim) (DUP)
Many of the measures in the statement today will have spending consequences that will apply to England and Wales. I welcome many of them, because they are growth measures, such as getting the long-term unemployed and long-term sick into work, helping the creative industries and supporting business rates. Will the Chancellor confirm that those measures will be subject to Barnett consequential payments, and if they are, will the freeze on Barnett consequential payments to Northern Ireland apply?
Jeremy Hunt
I can confirm that for reserved matters there obviously would not be Barnett consequentials, but where matters are not reserved, there would be consequentials. Our priority in funding for Northern Ireland remains the restoration and return of a locally elected and accountable Executive, but in the meantime we will continue to support the Province in every way we can.
Sir Jacob Rees-Mogg (North East Somerset) (Con)
Has my right hon. Friend given any consideration to, and has the Treasury carried out any analysis of, the effect on economic policy of mistaken forecasts from the Office for Budget Responsibility?
Jeremy Hunt
I thought my right hon. Friend might ask a question of that ilk. I would gently say to him that not just the OBR found that its forecasts were wrong; nearly every commentator as well as the Bank of England and the International Monetary Fund did too. I am pleased to say that, in every single case, they have found the British economy has outperformed their expectations.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I also welcome the increase in social security uprating by September’s inflation rate, but I agree with the Chair of the Select Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms), that it is the bare minimum. I am incredibly concerned about the proposals for a workfare approach. The Chancellor will be aware that Errol Graham weighed four and a half stone when he was found in his flat, having starved to death. That was because there had been no contact from Department for Work and Pensions officers and he had not been able to respond, so they just stopped his support. Given this, and given that so many Secretaries of State for Work and Pensions have said that we do not have a statutory safeguarding duty, what is the estimate of the number of social security claimants who will die as a consequence of these measures?
Jeremy Hunt
I know that the hon. Lady would not ask me to comment on an individual case, but I say to her that what we are introducing is not workfare; it is support to help people into work. We are spending £2.5 billion over the next five years to help more than 1 million people. We think that that is the route out of poverty and away from dependency.
Mr Robin Walker (Worcester) (Con)
I welcome the Chancellor’s comment that a world-class education is essential for economic growth, and there are many measures to welcome, including the extra funding for the Holocaust Educational Trust, the £50 million for apprenticeships and the tax cuts of more than £600 for teachers. Of course, many people working in education will also welcome the nearly 10% increase in the national living wage, but it will put great pressure on schools employing teaching assistants and on our nurseries, which we are so keen to expand and support. Can I urge the Chancellor to engage closely with the sector and with the Department for Education to make sure that we can meet those pressures when it comes to funding high needs in our schools and to growing the early years sector?
Jeremy Hunt
My hon. Friend is a big expert on education and I always listen to what he says. He is right to say that the average teacher will see an increase of £630 in their take-home pay next year because of the 2% cut in national insurance contributions. When it comes to the national living wage, I absolutely hear what he says, but for many schools and nurseries the issue is recruitment—finding people to fill the roles. This change will make that much easier.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
The Chancellor mentioned support for carbon capture and storage and for hydrogen, and the Prime Minister earlier spoke of support for the oil and gas sector. The Chancellor will be all too aware of this morning’s announcement of the intended closure of the Grangemouth oil refinery, which represents a huge 4% of Scottish GDP and provides hundreds of jobs. What discussions has he had with the Energy Secretary, with Petroineos or with the Scottish Government with the aim of trying to stop this closure before its disastrous impact can come to pass?
Jeremy Hunt
We are obviously monitoring the situation extremely carefully, but it is our priority to support the oil and gas and refinery industries. We have made some big changes to do that, and we would welcome support from both sides of the House in doing so.
Mr John Baron (Basildon and Billericay) (Con)
I commend the Chancellor for the compassion and enterprise incentives that shine through his statement. I thank him for the UK retail disclosure framework, although I have not seen the detail, and for the promise of a statutory instrument to resolve the legislative issues with cost disclosure for investment companies. Can he assure me that that will correct the over-zealous regulation that is making investment companies look unduly expensive and thereby restricting investment?
Jeremy Hunt
I have had many discussions with my hon. Friend on this issue and he is absolutely right. There is a danger with over-zealous regulation that people are focused more on cost than on performance. Like him, I want to resolve the issue.
Barbara Keeley (Worsley and Eccles South) (Lab)
The Chancellor talked about the creative industries but then announced only that he would look at improving film and high-end TV tax credits. The cultural tax reliefs continue to help our orchestras, theatres, museums and galleries to survive, and they protect jobs. At the 2023 Budget, he extended the uplifted rate of relief until March 2024, after which it will taper, but sadly he also introduced changes to limit what cultural organisations can claim for. Orchestra tax relief is a critical source of income; without it, some orchestras say they could fold, with musicians losing their jobs. Will he look not just at film and high-end TV tax credits but at all the cultural tax reliefs and how they can continue to support jobs in our creative industries?
Jeremy Hunt
Having only just delivered the autumn statement I do not want to pre-empt what might be in the spring Budget, but there will be another fiscal event before the end of the financial year in which all these things will be looked at. With respect to orchestras, which are fantastically important to our cultural landscape, I will just say that the typical person playing in an orchestra will get a £450 increase in post-tax pay next year, and that will help them greatly.
Alun Cairns (Vale of Glamorgan) (Con)
I congratulate my right hon. Friend on his statement, which will make a significant difference to investment levels, employment and living costs, recognising that it is all in the context of the cost of covid and the energy shock brought about by the conflict in Ukraine—that is something we often forget. May I pass on to him the appreciation of the beer and pub sector? The freeze in duty and continuation of the reduction in business rates is exactly what the sector asked for, and it is an early Christmas present to the many of us who want to celebrate in great style as we approach the festive season. Will my right hon. Friend please continue to engage with those in the sector and listen to what they have to say, so that they can share their investment ambitions?
Jeremy Hunt
I commit to my right hon. Friend that I will not just continue to engage with the sector, but continue to enjoy the odd glass of Penderyn, which is my favourite whisky.
Clive Efford (Eltham) (Lab)
Can the Chancellor confirm that, after today’s tax cuts, we will still have the highest tax burden for 70 years—up £4,000 per household on pre-pandemic levels—when we go into the next general election?
Jeremy Hunt
What I can confirm is that after today’s measures we will have the lowest income tax burden for someone on average pay in the G7—lower than Japan, America, France, Germany, Italy and Canada.
Vicky Ford (Chelmsford) (Con)
Our economy is growing rather than receding due to investment, innovation and millions of hard-working individuals across the country, as well as a Government who have focused on tackling inflation. Does the Chancellor agree that, on this side of the House, we get it that no country can spend its way to prosperity?
Jeremy Hunt
My right hon. Friend is absolutely right. High inflation is destabilising for an economy: it stops businesses investing, it stops families spending, and it causes misery to people who see the cost of their weekly shop go through the roof. That is why it has been our No. 1 priority. It would be great if it were Labour’s, too.
Keir Mather (Selby and Ainsty) (Lab)
It is frankly embarrassing that the Chancellor and the Prime Minister have spent this afternoon celebrating inflation staying 2% above target, while families in Selby and Ainsty face 10% food inflation every time they use the supermarket. What message does the Chancellor think his celebrations send to those hard-working families?
Jeremy Hunt
It is not celebrating that has halved inflation from 11.1% a year ago; it is hard work and difficult decisions, which unfortunately were mainly opposed by Labour.
Scott Benton (Blackpool South) (Ind)
I commend the Chancellor for his statement, which delivers for the people of Blackpool. Five thousand of my constituents will benefit from a boost to the national living wage and 12,000 pensioners in my constituency will be £900 per year better off, while those in work will be £450 better off as a result of the cut to national insurance. Does he agree that this is only possible because of the difficult long-term decisions that this Government have taken—an approach that stands in stark contrast to the tax, borrowing and spending offered by the Opposition?
Jeremy Hunt
The shadow Chancellor cannot hear these things too many times. She loves copying and pasting our policies, and there is another that she could merrily get copying and pasting. Here is the reason why my hon. Friend is absolutely right—[Interruption.] Let me tell the shadow Chancellor the reason—it is very straightforward. We had an economic crisis thanks to the energy shock and the pandemic; Labour had an economic crisis because of what happened in the financial markets. The difference is that we took tough decisions to bring back fiscal responsibility and they ducked every single one.
Rachael Maskell (York Central) (Lab/Co-op)
The biggest disparity in local housing allowance comes from the geography of broad rental market areas. In York, given the way these things are calculated, LHA is £650 but there is a £983 cost on top of that for a property. It is not working, so will the Chancellor review the BRMA?
Jeremy Hunt
I am happy to discuss that matter with the Secretary of State for Work and Pensions. I recognise that the hon. Lady has campaigned on the issue sincerely for some time. I will say, though, that the decision to increase local housing allowance to the 30th percentile will help 1.6 million families with an extra £800. I hope she recognises that that will make a difference.
Greg Smith (Buckingham) (Con)
From tax cuts for 27 million workers to incentives for business to grow, support for pensioners and a continued lifeline for our great British pubs and pints, I warmly welcome the good start that my right hon. Friend has made on reducing the tax burden as we recover from the pandemic and the energy shock. I thank him in particular for the recognition he has shown to the self-employed, not just by reforming class 2 and class 4 national insurance contributions to make them fairer, but by sending the signal that, just as the self-employed were an integral part of our recovery from the time the Labour party crashed the economy when they were last in government, we now need as many people as possible to take the step to start their own enterprise and help this country grow.
Jeremy Hunt
I could not agree more with my hon. Friend. The whole purpose of our approach is to make it easier for people who are prepared to take risks to work hard, and no one exemplifies those values better than the self-employed. I thank him for being one of this country’s greatest defenders of the great British pint.
Marsha De Cordova (Battersea) (Lab)
It really is a scandal that disabled people are being punished yet again for this Government’s economic failures, with today’s announcements of more cruel and callous cuts, and the announcement that they will be forced to work from home. Evidence shows that sanctions do not incentivise people to work but are harmful and counterproductive. The Chancellor’s plan will only further erode the social security safety net, following 13 years of austerity, the war waged against disabled people and the hostile environment. Does he not understand that his plan will only punish disabled people, pushing them further away from the labour market and leading to poorer health outcomes?
Jeremy Hunt
With the greatest respect to the hon. Lady, let me say that we introduced a plan to help disabled people to get back into work, as many of them say they would like to do, and in just four years it has got 1.4 million disabled people back into jobs.
Ben Bradley (Mansfield) (Con)
I welcome an autumn statement from the Chancellor that cuts taxes, invests in growth, seeks to shrink the size of the state and reforms welfare. It will go down well with the vast majority of my constituents who voted for a Conservative Government in 2019, and I very much welcome it too. I particularly thank him for his continued commitment to our east midlands investment zone and freeport, where he has listened to stakeholders in extending the time for and adding more investment to our major growth plans. Will he continue to work with us in the region to ensure that, alongside our development company and our new east midlands combined authority, we are able to properly harness these tools to deliver an amazing regional growth strategy and all the growth and investment that he wants to see?
Jeremy Hunt
I thank my hon. Friend for his role in the transformation of the east midlands, through his other responsibilities in the councils there. Levelling up will work only if we harness the enterprise and ideas of local civic leaders, and he is a fantastic example of that.
Wendy Chamberlain (North East Fife) (LD)
Today is Equal Pay Day, which means, because of the gender pay gap, it is the day on which women, based on their average earnings, stop being paid compared with men, who continue to be paid to the end of the year. More concerning is the pension gap, which is 35% and means female pensioners stop being paid on 26 August. That is often because older women have chosen, and sacrificed their earning potential, to care for loved ones. When will the Government consider reforming carer’s allowance, which is currently an active disincentive to carers going into work? When we will start addressing this cliff edge, rather than making it shorter and sharper?
Jeremy Hunt
I am always happy to engage with any hon. Members if they have concerns about the way the benefits system operates in terms of disincentivising people who would like to work but cannot do so. Caring responsibilities are an area that she has raised and I am happy to engage with her on that outside this House.
Mike Kane (Wythenshawe and Sale East) (Lab)
Cumulatively, Manchester City Council’s and Trafford Council’s cuts since 2010 have been £443 million and £288 million respectively. The Local Government Association says that the funding gap will be £4 billion in the next two years. Was there anything in this statement that will stop the continuing crumbling of our local services?
Jeremy Hunt
The hon. Gentleman is omitting the fact that in the autumn statement a year ago, when I was having to make big cuts in public spending going forward, I found an increase of £4.7 billion from next year for adult social care, which will make an enormous difference to every council in the country.
Stephen Farry (North Down) (Alliance)
Further to the Chancellor’s answer on Northern Ireland and Barnett consequentials, he will be aware that Northern Ireland is facing an unprecedented budget crisis. Will he therefore confirm that he is open to discussions on a fiscal floor and an invest-to-save transformation package for any potential restored power sharing Executive?
Jeremy Hunt
The UK Government will continue to do everything we can to support the restoration of power sharing in the Province. All I will say is that the Treasury is actively involved in all those discussions.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
In recognition of the impact of electricity pylon development on properties, the Chancellor announced compensation of £1,000 per property per year for 10 years. Does the policy apply in Wales? If it does not, will the Welsh Government receive funding for developments where they have competence, such as the one in the Tywi valley in my constituency? Regardless of that, he knows that the fall in property values will be far more than the compensation, so would it not be better to remove detriment by cable ploughing, at a comparative cost to traditional pylon development?
Jeremy Hunt
My understanding is that this will apply to Wales in exactly the same way as it applies to the rest of the UK. As for how we do this, we need to work out the most sensible, proportionate and balanced way of solving the problem of having to double our electricity generation between now and 2050. We are going to have to do things differently as a result.
Imran Hussain (Bradford East) (Lab)
We are in the worst cost of living crisis that we have ever seen. The key takeaway from the just four measures the Chancellor announced to tackle the crisis is not investing in deprived communities, ensuring the richest pay their fair share or spreading economic growth across the whole country, but a commitment to stop a pint getting more expensive. Just what is that supposed to do for my constituents, who face crippling mortgage payments, who are paying 30% more for food, whose wages are stagnating and whose homes have been unaffordable to heat?
Jeremy Hunt
I think the hon. Gentleman has looked at the statement selectively, because our support for people struggling with cost of living pressures has risen, as a result of my decisions, to £104 billion. Let me just go through this: pensioners are going to get an increase next year that is three times the rate of inflation; people on benefits are going to get an increase in their benefits that is double inflation; people who are renting and on low incomes are going to see an £800 increase, on average, through the local housing allowance; and anyone on the lowest legally payable wage, where they are working full-time, could see an extra £1,800 from increases in the national living wage.
Alan Brown (Kilmarnock and Loudoun) (SNP)
As a so-called “prudent Chancellor”, he cancelled HS2 to Manchester because of the spiralling costs of that project. Yet despite the cost of the likes of Hinkley Point C rising from £18 billion to £33 billion, and the fact that there is no successful EPR—European pressurised reactor—project in the world, he has today confirmed yet again a blank cheque for the nuclear industry. Sizewell C is likely to cost £40 billion and he has a taxpayer 20% stake in it. If it is good enough for HS2, why does he not scrap Sizewell C and save us from that nuclear financial disaster?
Jeremy Hunt
Because if we want to get to net zero, we are going to have to have more renewable energy and, unfortunately for the hon. Gentleman and for me, there are days when the sun does not shine and the wind does not blow.
Sam Tarry (Ilford South) (Lab)
We have the lowest investment in the G7; on the Government’s own figures, it has fallen further and further. Currently, public sector investment is scheduled to fall by £14 billion in real terms over the next five years. Without serious investment in public services, we cannot hope to improve productivity, which the Chancellor spoke about today. We cannot just demand that people go back to work, and work harder and harder to compensate for this. We need £10 billion to match the OECD’s average public investment annual spend as a share of GDP. I would like to hear from the Chancellor why he has not taken the opportunity today to align ourselves with the rest of the G7?
Jeremy Hunt
Let me gently remind the hon. Gentleman that business investment has grown by more since 2010 than it grew under the Labour Government; we have the second highest growth in the G7, with ours faster than any country’s except America.
Claudia Webbe (Leicester East) (Ind)
The unionised manufacturing base of my constituency has long been diminished, having been replaced not by technology, innovation and good decent, modern jobs, but by fast fashion, sweatshops and unscrupulous employers. This is all exploited by brands like Boohoo and retailers who are in a race to the bottom for ever-increasing profits, all while their supply chains fail to pay the minimum wage. What action will be taken to regulate to ensure that brands and retailers are held to account for the sustainable outcomes of their products in their supply chains and for wage justice for the people who make their goods? What action will be taken to tackle those British brands and retailers who threaten to seek cheaper labour overseas in order to avoid paying the new minimum wage that the Chancellor has just announced?
Jeremy Hunt
If the hon. Lady has any examples of people not paying the national living wage who are legally obliged to do so, she should tell the authorities and we will sort it out. I just say to her that we have just overtaken France to become the eighth largest manufacturer in the world. We are making progress in the right direction, and the measures announced today will mean that we go even further.
Madam Deputy Speaker (Dame Eleanor Laing)
The prize for perseverance goes to Deidre Brock.
Deidre Brock (Edinburgh North and Leith) (SNP)
Thank you, Madam Deputy Speaker. The Chancellor announced £960 million for a new green industries growth accelerator focused on offshore wind; electricity networks; nuclear; carbon capture, usage and storage; and hydrogen. But there was no mention of reliable, clean, cheaper energy sources such as tidal or pump storage hydro. Why not?
Jeremy Hunt
We are always open to investing in new technologies, and in this country we are extremely good at developing them. We will continue to look at all new opportunities, including things like tidal.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motion:—Rates of tobacco products duty (motion no. 1).—(Jeremy Hunt.)
Question agreed to.
Oral Answers to Questions
Jeremy Hunt Excerpts(12 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Patrick Grady (Glasgow North) (SNP)
The Chancellor of the Exchequer (Jeremy Hunt)
UK food inflation has been driven largely by global factors and has already fallen from 19.6% to 12.3%, and external forecasts expect it to continue to fall.
Alison Thewliss
Between March 2021 and April 2023, the cost of first infant formula increased by 24%, on average, with the cheapest formula on the market increasing by 45%. That is an absolute catastrophe for families who rely on infant formula, but a bonanza for the formula companies, which are making significant profits out of this. Can the Chancellor tell me why he believes it is right for companies to profit while families struggle to feed their babies?
Jeremy Hunt
The hon. Lady is absolutely right to draw attention to the pressures on families caused by very high food inflation in a number of areas, but I can tell her that the Competition and Markets Authority, which undertook a review of the groceries sector earlier this year, has not yet found evidence that high food price inflation is being driven by weak competition. But it is continuing its review and looking at the supply chain, and we will wait to hear what it says.
Deidre Brock
Recent research showed that the most significant decline in UK children’s height in the global ranking came after the UK coalition Government launched their austerity programme in 2010. An expert in child growth rates at the Great Ormond Street Institute of Child Health said of that 30-place drop in ranking that austerity
“has clobbered the height of children in the UK.”
What lessons has the Chancellor learned from the UK Government’s previous disastrous errors of judgment in this area, and how will he be supporting vulnerable groups in the future?
Jeremy Hunt
The lesson I have learned is straightforward: if we had not reduced the deficit by 80% between 2010 and the start of the pandemic, we would not have been able to help families across the United Kingdom with payments of more than £3,000, on average, including 700,000 households in Scotland and more than 1 million pensioners.
Patrick Grady
Even if the inflation rate is falling, food prices are still going up considerably. The Joseph Rowntree Foundation reckons that they have gone up at least twice as fast as the value of benefits since September 2021. At the very least, can the Chancellor commit to ensuring that the Department for Work and Pensions has enough resource to raise benefits at least in line with September’s inflation rate?
Jeremy Hunt
The Secretary of State for Work and Pensions is doing his review at the moment to decide the correct amount by which to uprate benefits. If the hon. Gentleman looks at this Government’s record, he will see that we took the decision a year ago to uprate benefits by inflation, and we committed to £94 billion of measures to help families get through the cost of living crisis.
Greg Smith (Buckingham) (Con)
Food inflation will only get worse if our self-sufficiency in food production drops. Will my right hon. Friend consider fiscal measures to discourage the transfer of food-producing land to other uses such as solar industrial installations?
Jeremy Hunt
My hon. Friend is right to say that our food industry is very important to food security. We need to keep the priorities constantly under review. Nature is a very important part of that, but so too is food production.
Jeremy Hunt
I can tell the hon. Gentleman that we had the supermarkets in over the summer to make sure that they were doing everything they could to bear down on food price inflation. However, the correct way for politicians to look at this is at arm’s length. We have the independent Competition and Markets Authority, which does a rigorous job and often does things that politicians disagree with, and it is looking at the issue right now.
Drew Hendry
In Canada, Ministers met the five largest grocery chains to get commitments on stabilising food prices. Other Governments are doing similar things. France’s Finance Minister held extensive talks with the food industry to get it to commit to freezing or cutting prices on 5,000 everyday products. Is it not the case that, for people facing crushing food bills in Scotland and across the nations of the UK, this Westminster Government are doing absolutely nothing?
Jeremy Hunt
I think £94 billion of support to help families up and down the country, including with food prices and energy prices, is a rather different answer from saying that we are doing nothing.
David Duguid (Banff and Buchan) (Con)
Chris Elmore (Ogmore) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Our policies are increasing economic growth, as the Office for Budget Responsibility confirmed following last year’s autumn statement and the spring Budget, but the only way to secure higher, sustainable, long-term growth is to bring down inflation.
Chris Elmore
The OBR judged the Chancellor’s last Budget to have no overall long-term impact on the level of potential productivity. Does he expect the OBR to make a similar judgment of his next Budget?
Jeremy Hunt
I remind the hon. Gentleman of what the OBR actually said about the spring Budget:
“the overall impact on GDP is around 0.2 per cent in 2027-28. This is the largest upward revision we have made to potential output within our five-year forecast as a result of fiscal policy decisions taken by a Government”.
Martin Vickers (Cleethorpes) (Con)
Economic growth in northern Lincolnshire will be severely impacted if changes go ahead at British Steel’s Scunthorpe works, which will result in redundancies and a massive impact on the supply chain. Will my right hon. Friend give an assurance that the Government will not proceed with any support for those changes until a full economic assessment of the impact on the local area has been carried out?
Jeremy Hunt
I thank my hon. Friend and, indeed, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for their extensive lobbying on this very important issue. I have had meetings with him and her, and with many others, to discuss it. I reassure him that we are absolutely committed to steel production in the United Kingdom, and to making sure that any changes that are necessary support the local communities that depend on steel production.
Darren Jones (Bristol North West) (Lab)
I welcome the Chief Secretary to the Treasury, the hon. Member for Sevenoaks (Laura Trott) to her place. I look forward to holding her to account.
Last month, the Chancellor’s National Infrastructure Commission said that in order to unlock the billions of pounds of private investment that is available to get our economy growing, we need a Government who can “make good decisions, fast.” Why does the Chancellor think his Government have been making bad decisions slowly for quite so long?
Jeremy Hunt
It might help the hon. Gentleman if I tell him some of the facts on infrastructure. Since we made some reforms to the asset pooling framework in 2015, UK and global infrastructure investment by pension funds has grown from £1 billion to around £27 billion, and the Solvency 2 reforms could potentially unlock a further £100 billion-worth of investment.
Darren Jones
That, Mr Speaker, was a list of very slow decisions still being badly taken. The Labour party has a raft of plans available to help drive economic growth and investment in every corner of our country, from speeding up the grid to accelerating planning for critically important infrastructure. Today, I am making them available to the Chancellor for free. Would he like them, or would he rather call a general election?
Jeremy Hunt
Unfortunately, nothing is free from the Labour party. Funding plans by increasing borrowing by £28 billion a year leads to higher bills for families, higher energy prices and higher mortgages.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
In my speech at Mansion House in July, I announced reforms to boost pensions, increase investment in UK businesses, and improve UK capital market competitiveness. Those reforms could result in over £1,000 a year of additional retirement income and unlock £75 billion-worth of investment in high-growth businesses.
David Simmonds
Many local authorities have given the investment managers for their pension funds a mandate to invest in infrastructure. What plans does my right hon. Friend have to encourage greater infrastructure investment by UK public sector pension funds?
Jeremy Hunt
I thank my hon. Friend for his interest in this issue—of course, he has great experience of local government. Working with the former Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), who I see is in the Chamber, we announced major reforms in July to help local government pension funds lead the way in the transformation we are looking for, in particular by sending a direction that they should invest in pools worth more than £50 billion. That will make it easier for them to have the expertise necessary to invest in infrastructure.
Nadhim Zahawi
I welcome the proposals that my right hon. Friend the Chancellor made in his Mansion House speech, which will increase investment in the United Kingdom. In his upcoming autumn statement, I implore him to build on his Budget announcement with a policy that was originally advocated for in a paper by the Adam Smith Institute, a think-tank I am proud to be patron of, as is set out in my entry in the Register of Members’ Financial Interests. I implore him to make full expensing permanent and to scrap the hated factory tax.
Jeremy Hunt
I have a very small bone to pick with my right hon. Friend, because when I became Chancellor I was hoping to say that I was the first Chancellor who was once an entrepreneur, but he pipped me to the post. However, he is absolutely right to say how important it is to have competitive business investment taxes. I was very proud in the spring Budget to introduce full expensing for three years, which gives us some of the most competitive business taxes in the OECD. Only five other countries do that, and I will of course keep under review any possibility to extend that tax break.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (Ind)
Is investment not needed in the UK given that 13 years of Tory rule have resulted in a £137 billion UK deficit? Meanwhile independent Ireland has a €10 billion surplus from its economic growth and investment. That is an Ireland without the oil or natural resources of Scotland, which is now about to start a sovereign wealth fund. Where did the failing crisis-hit UK go wrong and independent Ireland go right? The clue, by the way, is in the question.
Jeremy Hunt
I find that a very curious question. If the hon. Member is proud of Scotland’s natural resources, why does he want to cancel North sea oil and gas exploration, which is the very thing that can give families across the United Kingdom security from the energy shocks we have seen from things such as the invasion of Ukraine?
Tim Farron (Westmorland and Lonsdale) (LD)
There is encouraging news in that the Pension Insurance Corporation has recently announced that it is going to invest in helping to support the building of 1,200 new affordable homes in this city. Does the Chancellor agree that pension funds could be a very important source of capital for developing social rented housing around the country—Eden Housing Association, South Lakes Housing, and Westmorland and Furness Council, for example? Will he look at the rules and bring in greater incentives for pension investment funds to invest in affordable housing across the country?
Jeremy Hunt
We are already working on proposals in that very area. Broadly speaking, we have one of the most robust and resilient pension fund sectors in the world, but we are doing a lot of work to remove the barriers to investing back into the UK. Things such as affordable housing, infrastructure and our growth businesses are areas of great potential.
Marco Longhi (Dudley North) (Con)
Marco Longhi (Dudley North) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
As we have a debate this afternoon, I will limit my comments to welcoming my outstanding new colleagues. The new Chief Secretary to the Treasury, my hon. Friend the Member for Sevenoaks (Laura Trott), will brilliantly solve the problem of how we stop the state expanding, building on the work of her wonderful predecessor, my right hon. Friend the Member for Salisbury (John Glen). The new Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), will single-handedly ensure that the City and stock market remain competitive, building on the superb foundations laid by his predecessor, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith). The job of the new Financial Secretary to the Treasury, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), will be to work out how to bring taxes down, following in the footsteps of his excellent predecessor, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins), who as Health Secretary will no doubt be trying to push them up.
Marco Longhi
There is widespread consensus that growth is essential to the economy. With 800,000 fewer self-employed in the economy post covid and post IR35, does the Chancellor agree that increasing the VAT threshold to £250,000 for new registrations would boost growth and be a net gain in revenue terms in the long run?
Jeremy Hunt
I thank my hon. Friend for raising the support we give to small businesses. As he will know, supporting small businesses, particularly by rolling over the retail, hospitality and leisure business rates discount of 75%, was a major feature of the autumn statement. We will continue to keep under review anything that we can do to help our small businesses.
Rachel Reeves (Leeds West) (Lab)
I welcome all the new Ministers to their roles and wish them well in them. The covid inquiry is uncovering unsavoury examples of Government mismanagement. We already know that Ministers ignored warnings that their business loan schemes were vulnerable to organised crime, yet the Prime Minister left the vaults open to fraudsters. Will the Chancellor update the House on the latest estimates of taxpayers’ money lost to fraud from the covid support schemes?
Jeremy Hunt
I am happy to tell the shadow Chancellor that as of September 2023, HMRC’s compliance effort on covid-19 support schemes, which started when the schemes were set up in spring 2020, had prevented the payment of or recovered the overpayment of more than £1.6 billion of grants.
Rachel Reeves
I thank the right hon. Gentleman for that answer, but according to the House of Commons Library’s most recent numbers, covid fraud losses total a staggering £7.2 billion—that is bigger than the fiscal headroom that he had in his spring Budget. More stories are coming to light about companies with undeclared interests and personal protective equipment contracts not delivering to the standards required. Ahead of the autumn statement, will he confirm that the Government have also had to write off more than £8.7 billion from pandemic PPE contracts?
Jeremy Hunt
Let me say two things. First, we have no quarter with any incidence of fraud. We have commenced 51 criminal investigations into suspected fraud cases and there have been a total of 80 arrests so far. Let me also say that during the pandemic we introduced £400 billion of support to businesses and families up and down the country and, according to the latest figures from the Office for National Statistics, the result is that our economy is nearly 2% bigger than pre-pandemic, while Germany’s, for example, is only 0.3% bigger.
Andrew Selous (South West Bedfordshire) (Con)
Jeremy Hunt
I will take this question as well because my hon. Friend has lobbied me personally on this issue. Literally no one in this House has worked harder on it than he has. I have an example of the very problem he is talking about in my own constituency. He is right that it takes too long for housing development capital to reach NHS primary care projects. We will look into the issue carefully.
Kim Leadbeater (Batley and Spen) (Lab)
Jeremy Hunt
I am answering a lot of the topical questions today because I have a new team. I want to reassure the hon. Lady that we are very aware of the financial pressures that local authorities are under. I am having extensive discussions with the Communities Secretary.
Harriett Baldwin (West Worcestershire) (Con)
On the Conservative Benches we all agree that the way to sustainable economic growth without inflation is through business investment. It is early days, but I wonder whether we have indications of how well full expensing is working for encouraging business investment in this country. Is the Chancellor considering making that full expensing permanent next week at the autumn statement?
Jeremy Hunt
I welcome my hon. Friend’s interest in the topic. One of the reasons why our productivity is 15% lower than Germany’s, for example, is that it invests 2% more as a proportion of its GDP than we do in the UK. Improving the rate of business investment is one of the most effective ways to boost productivity and people’s real disposable income. We are proud of what we introduced in the spring Budget, and we will continue to see whether it is possible to extend it further.
Mr Virendra Sharma (Ealing, Southall) (Lab)
Jeremy Hunt
With the Work and Pensions Secretary I continue to keep under review all the things that have an impact on poverty rates. We are proud to have made progress in reducing the number of people living in absolute poverty after housing costs by 1.7 million since 2010. When it comes to homelessness, we are investing £2 billion over the next three years. Rough sleeping is down 35% since its peak.
Mr John Baron (Basildon and Billericay) (Con)
I refer Members to my entry in the Register of Member’s Financial Interests. The Chancellor has acknowledged that investment trusts, which make up one third of all FTSE 250 companies, are being plagued by misguided cost disclosure legislation, which is making them appear unduly expensive. That is restricting investment and does not happen in any other country. In addition to the positive dialogue between us and with the Financial Conduct Authority, will he consider supporting the First Reading of Baroness Altman’s private Member’s Bill in the other place next week, which helps to address this issue? Will he also address it in his autumn statement?
Jeremy Hunt
I welcome my hon. Friend’s expertise in this area, which is of great benefit to the House and to me as I consider fiscal measures. As we are so close to the autumn statement, I would say that the way that we treat costs in our investment and pension funds industries is not optimal, and we need to reform it.
Alex Cunningham (Stockton North) (Lab)
Jeremy Hunt
My right hon. Friend the Member for Salisbury (John Glen) did an excellent job and we all salute his brilliant work. If he were here now, he would remind the hon. Gentleman that we have the lowest tax burden of any European country in the G7.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
I know that the Chancellor is aware of just how important the whisky industry is to the economy of rural Scotland. It was very disappointing that the policy of a duty freeze was not continued in the Budget. Can he offer any reassurance that we will return to the policy of duty freeze in the autumn statement, and in next year’s Budget?
Jonathan Gullis (Stoke-on-Trent North) (Con)
While the shadow Chancellor was busy scrolling through Wikipedia to copy and paste, the actual Chancellor has to look no further than the New Conservatives tax plan, which outlines scrapping the IR35 reforms, increasing the VAT registration threshold to £250,000, and delivering on the Prime Minister’s pledge when he was Chancellor to bring a 1p cut in income tax in 2024.
Jeremy Hunt
I thank my hon. Friend for adding to the litany of options I have in front of me for the autumn statement. What I can say to him is what I said in my party conference speech: we are committed to lowering the tax burden and will do so as soon as it is responsible to do so.
Samantha Dixon (City of Chester) (Lab)
Jeremy Hunt
Can I say gently to the hon. Lady that interest rates have gone up by 3% in the UK since then? That is just above the United States and just below the eurozone, so this is a global phenomenon. There is no short cut to bringing down interest rates. We have to support the Bank of England as it bears down on inflation and then we can bring mortgage rates down.
Dr Luke Evans (Bosworth) (Con)
Will the Chancellor look at the red tape around the apprenticeship levy? Many businesses in my area, such as Asda, Amazon and DPD, all say that they want to take on more apprenticeships but that the red tape around how they spend the money is very difficult. This is something that he could change overnight, and really help to grow and boost our economy.
Jeremy Hunt
I thank my hon. Friend for drawing attention to the apprenticeship levy, which has been a tremendous success in bringing a rigour to technical qualifications that was not there before. We are very open to reforms to the apprenticeship levy, providing they stick to the fundamental principle that any investment is not in in-house training that would otherwise have happened, but in transferrable, passport-able training that someone can take with them if they move to another business.
Rachael Maskell (York Central) (Lab/Co-op)
Jeremy Hunt
I will not pre-empt what I am going to say next week, but I will say to the hon. Lady that, as a former Health Secretary, I am well aware of the pressures on NHS dentistry and its importance to all our constituents.
Mr Ranil Jayawardena (North East Hampshire) (Con)
Given that inheritance tax is the least popular of all taxes at every income decile and that scrapping it would not be inflationary, will my right hon. Friend consider doing so?
Jeremy Hunt
That was a very nice try, but my hon. Friend will have to wait for a week.
Gareth Thomas (Harrow West) (Lab/Co-op)
Opt-out savings are a little like auto-enrolment in pensions. They help those on lower incomes to save for a crisis—for the proverbial rainy day. Given that more than 9 million people in this country are in work with no savings at all, will the Chancellor note the impressive results of a small trial of the opt-out savings system in Manchester, and encourage its expansion?
Jeremy Hunt
I would be happy to do that. The hon. Gentleman is right: if we are to grow faster as an economy, the other side of the coin is we that need to save more, and we should be encouraging everyone in all income groups to do so.
Greg Smith (Buckingham) (Con)
Will my right hon. Friend seek to fix the anomaly that sees man-made fully synthetic fuels taxed at the same rate as their fossil equivalents?
Jeremy Hunt
I shall be happy to look into that issue in detail and get back to my hon. Friend.
Alison McGovern (Wirral South) (Lab)
Yesterday in the House, in the context of Labour’s plan for a health service, the Secretary of State for Work and Pensions referred to the “poor old non-doms”. Does the Chancellor agree with his colleague that people who live in this country but do not pay their taxes here can be accurately described as poor?
Jeremy Hunt
Because we attract wealth creators from all over the world—and this may be uncomfortable for those on the Opposition Benches—we generate huge amounts of tax revenue. Financial services pay for half the cost of running the NHS. I am in favour of getting everyone to pay their fair share of tax, but I will not make reforms that mean less tax revenue for the NHS.
David Linden (Glasgow East) (SNP)
The Westminster-made cost of living crisis is having a devastating impact on household incomes, particularly in Broomhouse, where many young homeowners are seeing mortgage prices soaring. Will the Chancellor use the autumn statement to introduce mortgage interest tax relief to help people across Glasgow to deal with the cost of living crisis?
Jeremy Hunt
As the hon. Gentleman knows, we have taken enormous steps over the past year to help families throughout Scotland to deal with cost of living pressures. If he really thinks that people in Scotland believe that this was a “made in Westminster” problem, when we have experienced an invasion of Ukraine and a global pandemic, I simply say to him in return that after 16 years of SNP rule, GDP per head in Scotland is lower, productivity is falling, employment is lower, and inactivity is higher—[Interruption.]
Mr Speaker
Members need to give me a good reason not to bring them in at the end again: be careful! Let us come to the statement—[Interruption.] Angus, you’ll find the door, I think, in a minute.
Economic Growth
Jeremy Hunt Excerpts(12 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
It is an honour to speak in the first King’s Speech debate for more than 70 years. Her late Majesty was a figure of grace and continuity, and we now look forward to His Majesty the King leading us, as she did, through troubled times.
It is always a pleasure to debate with the shadow Chancellor, although in a whole year of my being Chancellor, this is the first time we have had an economy debate, and now we know why: she has been busy writing a book, or, rather, Wikipedia has been busy writing her book. Today, I see she has been busy copying and pasting Conservative language about tax. May I tell her gently that that will take her only so far? Conservative Members will never forget what happened under Gordon Brown, who she campaigned for: income tax up, national insurance up, stamp duty up, fuel duty up, pensions up and multiple other taxes up.
Let us turn to some of the shadow Chancellor’s assertions. She said that the economy was flatlining. What she did not tell the House was that since Labour left the economy in the deepest recession since the second world war, we in this country have grown faster than Spain, Portugal, Italy, France, the Netherlands, Austria, Germany or Japan. She did not mention that after a global pandemic and energy shock, our economy is nearly 2% bigger than it was pre-pandemic. That is higher, for example, than countries such as Germany, whose economy is only 0.3% larger, not least thanks to the furlough scheme introduced by my right hon. Friend the Prime Minister.
The shadow Chancellor also did not mention that when it comes to the fastest-growing industries, we are doing even better. In the last 13 years under Conservative Governments, we have built Europe’s largest tech sector—double the size of Germany’s and three times that of France; it is the third-largest in the world. We also have Europe’s largest life science sector, saving more lives than any other country globally with vaccines and treatments discovered in Britain. We have more offshore wind than anywhere in Europe bar Germany and Norway—it is the third-largest sector in the continent. We also have a world-leading creative industries sector, including Europe’s largest film and TV industry and a thriving publishing industry that has even produced a book written by the shadow Chancellor, which helpfully collates some fascinating information from the world wide web.
Mr Betts
The Chancellor talks about what he sees as some successes. Why does he not address the problems of small modular reactors? Sheffield Forgemasters in my constituency could be building SMRs, but it has been waiting for months for the Government to make a decision on a go-ahead for the right techniques. ITM Power, which is a leader in green hydrogen, is building plant in Germany, which is spending £7 billion on it in the next few years, while in this country we are spending £1 billion, so we are losing the international race on that.
Jeremy Hunt
The first big infrastructure decision that I took was on nuclear, when I assigned £700 million to Sizewell C. I completely agree with the hon. Member about the potential of SMR. That is why we set up a competition, and with the previous Energy Secretary I stipulated that it should finish by the end of this calendar year so that we can proceed as quickly as possible on SMR, because it could be an important part of our net zero future.
The shadow Chancellor’s central argument is that we can get growth only by borrowing £28 billion a year more. [Interruption.] Well, I was listening to her words. She may not have mentioned this in her speech, but on 9 October she said on the “Today” programme that she wanted to take borrowing “up”—her word. We delivered all those achievements in technology, life science, creative industries and advanced manufacturing industries during a time when we were cutting borrowing, which went down by 80% between 2010 and the start of the pandemic. That is the difference. Unlike Labour, the Conservatives know that we cannot borrow our way to growth. We have to do the hard work to support entrepreneurs and innovators, including by keeping their taxes down, which Labour has never wanted to do. Because we have done just that, the International Monetary Fund says that after inflation has been brought to target from the end of 2025, this country will have faster growth than France, Germany or Italy. No shortcuts; just hard work to get one of the fastest growth rates in Europe.
Alan Brown
On investment in renewable energy, EY has confirmed today that the UK has slipped further back on the attractiveness index, so it is now behind India, China and Australia. On offshore wind, the Chancellor knows that allocation round 5 was a disaster. What will he do to rectify that? On nuclear, he talks about SMRs being the future, but they are not. There is not a successful SMR anywhere in the world, and NuScale in the United States has just been abandoned after rising to an estimated cost of $9 billion.
Jeremy Hunt
I do not accept that we are not an extremely attractive place. We have third largest renewables sector in Europe and are the largest European provider of offshore wind. Can we do more? Yes, we can, particularly by improving access to the grid. The House should expect to hear more from us on that.
We had a lot of talk from the shadow Chancellor about the cost of living crisis, but she barely mentioned that the biggest pressure on the cost of living is caused by the rise in inflation—in fact, it did not get a mention at all in her conference speech. Because we have taken difficult decisions, inflation has fallen by 40% since its peak. Core inflation is now lower than in nearly half the entire EU membership. I say gently to her that if she were to reflate the economy by ramping up borrowing by £28 billion a year, prices would go up and families would end up paying more for their petrol, their food, their electricity and their mortgages. That is why that is the wrong approach.
Stella Creasy (Walthamstow) (Lab/Co-op)
One issue on borrowing that has not been talked about is that it is now four years since this place agreed that we should regulate the buy now, pay later lenders. Under this Government’s watch, the number of people borrowing from these companies to make ends meet during the cost of living crisis has doubled, and 40% of those people are struggling and borrowing from other lenders to pay their debts, yet we have still seen no regulation at all from the Government. If the Chancellor wants to prove that he is actually on the side of the people and understands the bills that they have racked up paying for this Tory Government’s failures, will he finally commit to regulating these loan sharks?
Jeremy Hunt
As the hon. Member might have heard if she had been at oral questions, we are acting on this and have been consulting on a solution since March this year—I started that at the spring Budget—but we want to get the answer right. We want to crack down on rogue lenders but also ensure that the financing that appropriate people can offer responsibly is available.
I want to talk about the pressures on ordinary families, because the shadow Chancellor also talked about incomes and the tax burden on working families. What has happened since 2010 to adults on the lowest legally payable wage? When we took over from Labour, that wage was £5.93 an hour; today, it is £10.42 an hour. After inflation, gross pay for those on the lowest legally payable wage has gone up by 20%. The number of people on low pay, defined as less than two thirds of median hourly earnings, has halved. At the same time, because Conservative Governments want to make work pay, we increased the thresholds before which people start to pay tax or national insurance from £5,700 to £12,570. Take-home pay after tax for people on the adult main minimum wage has therefore gone up by more than 25% after inflation. That is a bigger percentage increase than for people on much higher incomes.
Christine Jardine (Edinburgh West) (LD)
Notwith-standing what the Chancellor has said, my constituents in Edinburgh West, like those in much of the rest of the country, were listening intently to the King’s Speech for a Bill or anything that might help them with the cost of food and specifically energy this coming winter, but there was nothing, and it has been admitted that the petroleum Bill will not do anything to help households in this country. Does he appreciate why ordinary working families think that the Government are simply out of touch?
Jeremy Hunt
With respect, I think the hon. Member needs to look at the facts. We have given an average of £3,300 in cost of living support to families across the country this year and last. In Scotland, 700,000 households have benefited from our cost of living payments, which have reached more than 1 million pensioners.
I want to return to my main point about the impact of making work pay. As a result of that change, not only have a lot of people been lifted out of poverty, but unemployment has gone down by a million, after going up by nearly half a million under Labour, and the unemployment rate has halved. That is the difference: if we make work pay, as the Conservatives do, we lift people out of poverty and put people into work.
Steve McCabe (Birmingham, Selly Oak) (Lab)
What would the minimum wage be worth now if the right hon. Member’s party had succeeded in its attempts to wreck the legislation when it was introduced by the last Labour Government?
Jeremy Hunt
I simply say that we did not just build on that reform but improved it massively more than Labour proposed, because we turned it into the national living wage, which is far more generous than the original minimum wage.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
According to the House of Commons Library, in 2022 the tax burden on the lowest income decile was 25.5%. On the top income decile, it was 12.5%. Is that fair?
Jeremy Hunt
Because we believe in a progressive tax system, we introduced the changes that I just outlined, which mean that people on the lowest legal wage are getting 25% more after tax. That is a significantly bigger increase than for people on higher deciles.
One of the main things the shadow Chancellor mentioned was her amendment on the OBR. I understand the political game of trying to draw attention to the mini-Budget, but she should know that the OBR is already legally required to publish two forecasts a year, as will happen under this Government at successive autumn statements and spring Budgets. Today’s proposal is dangerous because, despite what she says, it would hamper the Government when acting in an emergency, as we did in the pandemic. I will tell her why. Instead of taking decisive action, Governments would feel obliged to enter a 12-week process with the OBR in case the outcome of the independent process that she advocates made any crisis worse by highlighting a significant loosening of the fiscal rules.
What is most extraordinary about the amendment is that, at the same time that the shadow Chancellor tries to claim the mantle of fiscal responsibility in this House, only this morning she briefed the papers that she wants to unfreeze income tax thresholds—a £9 billion commitment—and make full expensing permanent, which is a £10 billion commitment. That is all without an OBR forecast in sight. That kind of irresponsibility from Labour is exactly why we set up the OBR in the first place.
This is an argument not just about jobs and work but about poverty. Labour tried to eradicate poverty by tinkering with the benefits system and Gordon Brown’s tax credits. We all remember the “poverty plus a pound” idea, whereby if someone just below the poverty threshold is given £1, they are somehow magically lifted out of destitution. Instead, the Conservative Government have reduced the numbers in absolute poverty after housing costs by 1.7 million people by making work pay and by reducing the number of children living in workless households, because they are five times more likely to be in absolute poverty than households in which the adults work. Making work pay is a moral duty and not just an economic necessity, as only Conservatives understand.
Henry Smith (Crawley) (Con)
Work is the best way to eliminate poverty. What are the Chancellor’s reflections on the fact that every Labour Government have left office with unemployment higher?
Jeremy Hunt
My reflection is quite simply that the Labour party does not understand how to lift people out of poverty. Labour Members do not like us talking about the fact that nearly 2 million people have been lifted out of absolute poverty under Conservative Governments, because that does not fit their austerity story, but the reality is that a Conservative Government have been responsible for a very important piece of social progress.
I want to turn to the autumn statement, because as we start to win the battle against inflation we can focus on the next stage, which is growth. Next week, we will see an autumn statement for growth. Because no business can expand without hiring additional staff, I will address labour supply issues to help fill the nearly 1 million vacancies we have, working with the excellent Secretary of State for Work and Pensions. That will build on the 30 hours of free childcare offer that I announced for all eligible children over nine months in the spring Budget. I will also focus on increasing business investment, because despite the fact that our growth has been faster than that of many of our European neighbours, our productivity is still lower.
Holly Mumby-Croft (Scunthorpe) (Con)
My right hon. Friend talks about growth and productivity, and he knows that it is my strong view that steel is an incredibly important material for growth here in this country. Will he reassure the very concerned steelworkers in Scunthorpe that he is concentrating on that, and working on it on our behalf?
Jeremy Hunt
My hon. Friend has talked to me consistently and powerfully since I became Chancellor about the issues facing the steel industry. She is a strong advocate for her constituents. It is at the top of my mind, as we try to chart a better future for British Steel. We will bear in mind the many comments she has made.
The shadow Chancellor said in her conference speech that she would remove the barriers to business investment, by
“backing the builders not the blockers”.
Only weeks later, her party promptly U-turned and became a blocker by watering down changes to the rules on nutrient neutrality, which would have unlocked the building of 100,000 homes. That is 100,000 families whose future is on hold because of Labour’s political games.
On top of all the measures in the autumn statement, we will have the Bills from the King’s Speech, including a trade Bill that will confirm our membership of the comprehensive and progressive agreement for trans-Pacific partnership, making us part of a group that wields a combined GDP of £12 trillion and a presence in the Indo-Pacific, where the majority of global growth will be. The Automated Vehicles Bill, which the shadow Chancellor mocked, will make the UK one of the first countries in the world to have a legal structure to allow driverless cars. The Digital Markets, Competition and Consumers Bill will modernise our digital laws to boost online shopping by making it safer. The Offshore Petroleum Licensing Bill will secure our energy independence by replacing imported oil and gas with domestically produced fuel as we transition to net zero.
The Leader of the Opposition called the King’s Speech something that will only bring more of the same. In a way, he is right: more growth, more jobs, more pay, more opportunity and more prosperity. We are not following the easy path of opening the national cheque book and maxing the country’s credit card by borrowing £28 billion a year more; we are taking a path that is more difficult, yes, but more durable, and one that will turn us into one of the most prosperous countries in Europe. I commend it to the House.
Several hon. Members rose—
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Jeremy Hunt Excerpts(1 year ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The independent Monetary Policy Committee (MPC) of the Bank of England (“the Bank”) decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the Asset Purchase Facility (APF) by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and has since commenced sales of gilts acquired for monetary policy purposes on 1 November 2022. The Bank commenced the sale of corporate bonds on 28 September 2022 and has since sold the majority of its holdings, with a small number remaining due to mature by April 2024.
The Chancellor at the time agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.
Since 28 April 2023 when I last reduced the maximum authorised size of the APF, the total stock of assets held by the APF for monetary policy purposes has fallen further from £821.3 billion to £750.9 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £750.9 billion.
The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. Provision for any payment due under the liability will continue to be sought through the normal supply procedure.
A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.
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