Oral Answers to Questions
Jeremy Hunt Excerpts(1 year, 2 months ago)
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Deidre Brock (Edinburgh North and Leith) (SNP)
The Chancellor of the Exchequer (Jeremy Hunt)
Good morning, Mr Speaker. Brexit was a choice made by the British people and it remains a big opportunity for the economy. Rather than relitigating that debate, this Government are committed to embracing those opportunities.
Dr Whitford
Prior to the EU referendum, the Bank of England warned that Brexit would seriously damage the UK economy, weakening the pound and causing inflation. The Government have now delayed import checks on animal and food products for the fifth time, because the costs would add to inflation. Does that mean the Chancellor finally accepts that Brexit is contributing to the UK’s cost of living crisis?
Jeremy Hunt
No, but of course we are sensitive about the timing of introducing those changes because of cost of living pressures. I am sad to have seen, since we last met in the House, the hon. Lady announce that she is stepping down; we have much in common on patient safety. On the NHS, she will know that because of Brexit an extra £14.6 billion is being directed to public services every year, including the NHS and including in Scotland.
Alison Thewliss
Adam Posen, a former member of the Monetary Policy Committee, has described Brexit as a
“trade war by the UK on itself”.
This unnecessary trade war has had a real impact on small businesses in my constituency such as Guild Antiques & Restoration, which has found that its orders from the EU have fallen off a cliff edge and its costs have increased. Scotland did not choose Brexit and we are all worse off as a result. What can the Chancellor do to fill the economic gaps his hard Brexit has caused?
Jeremy Hunt
There is a certain irony in the Scottish National party opposing Brexit at the same time as advocating a far more draconian separation for Scotland, including a new currency and border checks. On businesses in Scotland, as part of the UK, Scotland is now an independent coastal state for the first time in nearly half a century; the 21,000 people in Scotland who work in financial services are benefiting from the Brexit freedoms in the Edinburgh reforms; and there is extra support for Scottish pubs, because, for the first time, we have a lower beer duty relative to supermarkets.
Deidre Brock
It is not just Brexit trade barriers having a devastating impact on Scotland’s economy, because the loss of freedom of movement has hugely damaged our businesses’ ability to recruit staff. Many businesses have had to reduce their offer, cut their opening hours or close altogether. It is estimated that over the bank holiday UK pubs alone lost out on £22 million because of staff shortages. Does the Chancellor accept that small businesses such as those cannot keep picking up the tab for his Government’s disastrous Brexit? What is he doing to solve these staff recruitment problems?
Jeremy Hunt
May I gently say to the hon. Lady that this country has actually grown faster than France or Germany since we left the single market? This is a bit of a smokescreen for the SNP’s economic policies, which have led to more people out of work and fewer people in work in Scotland than in England.
Theresa Villiers (Chipping Barnet) (Con)
Leaving the EU gives us the opportunity to modernise our regulations and adapt them to local and national domestic interests, but we will seize the benefits of doing that only if we deliver on regulatory reform. So will my right hon. Friend drive that across Departments so that we can increase prosperity and raise living standards as a result?
Jeremy Hunt
No one knows more about regulatory reform than my right hon. Friend, who wrote an excellent booklet on it. We look at that booklet ahead of every fiscal event, be it autumn statement or Budget. I hope that she noticed in the Budget big reforms to our medicines regulation. We will continue to learn from the things she advocates.
Vicky Ford (Chelmsford) (Con)
For generations, Britain’s world leadership on financial services and financial markets has been a key part of our economy. I agree that the post-Brexit initiatives such as the Edinburgh review have made excellent strides on making sure that we keep that world leadership. May I encourage my right hon. Friend to look at the report from UK Finance on the tokenisation of markets, as being the world leader in that innovative area would reduce costs for investors, enable money to flow into less liquid assets and fundamentally unlock future growth?
Jeremy Hunt
I thank my right hon. Friend for her question. Thanks to the excellent work of the Economic Secretary to the Treasury, we have repealed 100 EU rules and regulations in the financial services sector, and we will look very closely at the opportunities when it comes to tokenisation.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
Last week, the Government admitted that their planned introduction of food import checks from the EU would lead to an increase in inflation, hitting the pockets of ordinary people during the worst cost of living crisis in our lifetimes. In the Labour party, we believe that a bespoke veterinary agreement would cut red tape from business and avoid pushing costs on to ordinary people. Are the Government planning to negotiate a veterinary agreement, and if not, why not?
Jeremy Hunt
I gently say to the hon. Lady, who I have a lot of time for, that the last thing business wants is the upheaval of a huge renegotiation of our trading arrangement with the EU, which is the largest tariff-free free trade deal by volume in the world.
Mr Speaker
I welcome the Scottish National party spokesperson to his place.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Thank you, Mr Speaker. The Chancellor claims that it is a success that inflation in the UK has risen higher and remains more stubbornly so than in the EU. Adam Posen, formerly of the Bank of England, has underlined that up to 80% of the UK’s additional inflation woes can be laid at the door of Brexit—something the Tories and Labour are united on. All the while, food price inflation is crushing household budgets. So why have this Government done nothing? Why have this Government learned nothing from countries such as France, which has worked with food suppliers to keep food prices capped to help those most in need?
Jeremy Hunt
I welcome the hon. Gentleman to his position. His constituency predecessor served as a Minister in the Treasury—whatever greatness the hon. Gentleman goes on to, I am sure he will not sully himself with that role. When it comes to inflation, we have a high level of imported food, like Germany; a high level of imported gas, like Italy; and low unemployment, like the United States. These factors have come together to give us the inflation rate we have. When it comes to growth, the hon. Gentleman will have noted last week’s numbers, which show that we have recovered better from the pandemic than France, Italy or Germany, and we are doing extremely well, despite all the pressures we face.
Drew Hendry
I notice that the Chancellor did not say anything about food inflation hurting families. Well, Tory and Labour “little Britain” attitudes do not stop at food price inaction. Energy costs are a key driver of inflation and costs for families. Energy bills are too high. The Spanish have taken bold steps by cutting VAT and introducing a social tariff to help their people. This Government plan to do nothing for this winter, which is particularly galling for people in Scotland who will continue to pay more for their energy than elsewhere in the UK. Will the Chancellor act on our demands for a £400 energy price grant to be introduced this winter?
Jeremy Hunt
Let me tell the hon. Gentleman what we are doing for his constituents, and indeed all the people of Scotland: around £3,000 of support for the average family up and down the country, including in Scotland; paying half people’s energy bills, on average; and a huge amount of support through the benefits system. Nearly £100 billion of support shows that we are stronger together.
Mary Kelly Foy (City of Durham) (Lab)
Simon Baynes (Clwyd South) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Investment zones are part of our industrial strategy to make sure that the benefits of our national strengths in our five growth priority sectors are spread throughout the UK.
David Duguid
I thank my right hon. Friend for his response. The north-east of Scotland has long been an exemplar of innovation in the fields of food and drink and energy, to name a few. Can he confirm that the north-east Scotland investment zone will lead to more innovation to promote these key industries not just in Aberdeen City, but in the wider north-east, including my constituency of Banff and Buchan?
Jeremy Hunt
I know that the Acorn carbon capture, usage and storage project is based at St Fergus in my hon. Friend’s patch, and that Banff and Buchan is within the north-east of Scotland region, which is one of two eligible areas and has been a long-standing global centre for excellence in clean energy, so I wish him every success as those discussions with the Scottish Government continue.
Simon Baynes
Does the Chancellor agree that my constituency of Clwyd South, that of my hon. Friend the Member for Wrexham (Sarah Atherton) and the rest of north-east Wales represent one of the best candidates for a new investment zone? Will he also consider making this cross-border, given our very close economic, commercial and cultural ties with the north-west of England?
Jeremy Hunt
I know there are some great businesses in my hon. Friend’s constituency—I much enjoyed meeting Robin and Helen Jones of Jones’ Village Bakery at a recent reception in No. 10, and I know they are going from strength to strength. I holidayed in Clwyd last year, and from the top of Moel Famau I saw a very impressive offshore wind farm. I completely agree that there is enormous potential in Clwyd for clean energy and, as discussions continue about investment zones, I wish him every success as well.
Dan Jarvis (Barnsley Central) (Lab)
The UK’s first investment zone is in South Yorkshire, where the Mayor is working hard to develop our world-leading advanced manufacturing and innovation district. I am sure the Chancellor will agree that if we are going to create a growth area, we need to make sure people can access the jobs there via transport links, particularly by bus. Will he make sure that included within the financial package available is money to assist with local public transport?
Jeremy Hunt
I very much enjoyed my visit to South Yorkshire to open that investment zone. It is incredibly impressive what is happening there and it was wonderful to welcome new investment by Boeing as part of that. The hon. Gentleman is right to talk about transport; that is why we involve local authorities in all our investment zone decisions. It is also vital to have universities involved, which is why the University of Sheffield is playing such a key role.
Mr Clive Betts (Sheffield South East) (Lab)
I was present on the day the Chancellor came to launch the investment zone in my constituency, and of course I too welcome the investment into Boeing there. Does he accept that one of the other areas for future development in the investment zone is small modular reactors? A consortium is being developed in Sheffield with Sheffield Forgemasters, Rolls-Royce and GE Hitachi Nuclear Energy to look at the future—not merely to develop the techniques for SMRs, but to start building SMRs in Sheffield. Would he be willing to look at that proposal and hopefully offer support for it?
Jeremy Hunt
I enjoyed meeting the hon. Gentleman when we opened that investment zone. Let me reassure him that I am a big supporter of nuclear and I am very excited about the potential of SMRs. There is a competition going on this year, which we hope will be completed by the end of the year, to assess the viability of the various SMR manufacturers, and we want to get going as quickly as we can.
Marco Longhi (Dudley North) (Con)
Elliot Colburn (Carshalton and Wallington) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
On Friday, the Office for National Statistics published an update to the UK’s GDP growth figures, which shows that the UK economy was 0.6% larger than pre-pandemic levels by the fourth quarter of 2021. It means that our economy had the fastest recovery from the pandemic of any large European economy, thanks to decisions such as furlough that protected millions of jobs. For that growth to continue, we need to halve inflation, which I am pleased to report is now nearly 40% below its 11% peak. I can also tell the House that I will deliver the autumn statement on 22 November.
Elliot Colburn
Staying on the subject of pubs, Carshalton and Wallington is also lucky to be home to some excellent pubs, including the Hope, which is this year’s Campaign for Real Ale Greater London pub of the year recipient. Will the Chancellor expand a bit more on the work that the Treasury is doing to support pubs not just in the tax system but further afield, and will he join me in wishing Carshalton and Wallington’s pubs good luck in the local pub of the year competition later on?
Jeremy Hunt
I very much wish my hon. Friend’s local pubs the best of luck in that competition, second only to my desire to encourage South West Surrey pubs to do well. I want to reassure him that we believe that pubs are central to our national life. That is why we have provided relief on business rates of up to 75% for pubs, and as we heard earlier, the Brexit pubs guarantee helps on their duty pricing.
Rachel Reeves (Leeds West) (Lab)
Last week, thousands of parents were told that their children’s schools were unsafe and at risk of collapse. The defining image of 13 years of Conservative government: classrooms propped up to stop the ceilings from falling in. Capital budgets have halved in real terms since 2010, with warnings ignored and repair programmes slashed. Do this Conservative Government take any responsibility for any of this?
Jeremy Hunt
Let me start by reassuring the right hon. Lady that the vast majority of pupils in the 156 schools affected are at school normally, and we are acting fast to minimise the impact on the rest.
Let me answer the more general question that the right hon. Lady raised. Yes, we made cuts in spending in 2010 because, as she knows well, the last Labour Government left this country with an economic crisis. Despite that crisis, the Department for Education budget has gone up by 15% in real terms, and overall capital spend—
Mr Speaker
Order. This is topicals. All your colleagues on both sides of the House want to get in. Topicals are meant to be very short, not a full debate between both sides. I say to everybody: think about others. I think we can move on. I call Rachel Reeves.
Rachel Reeves
I will repeat: capital budgets have halved in real terms since 2010. I understand—indeed, I know—that in the lead-up to the 2021 spending review, the Department for Education made a submission to the Treasury about the dangers of the deteriorating school estate, including from reinforced autoclaved aerated concrete. Those warnings were ignored by the then Chancellor—the current Prime Minister—and we have seen the consequences, so will today’s Chancellor do the right thing and publish the Department for Education’s submission to the last spending review?
Jeremy Hunt
Capital spending at the Department for Education went up 16% in real terms in that review. Is the difference not that, with the fastest recovery in Europe, the Conservatives build an economy that can pay for our schools and hospitals, and Labour runs out of money?
Richard Fuller (North East Bedfordshire) (Con)
Jeremy Hunt
It is very simply this: since 2010, we have become the strongest economy in Europe in film and television, life sciences and technology, and the opportunities are great with a Conservative Government.
Ian Lavery (Wansbeck) (Lab)
David Duguid (Banff and Buchan) (Con)
Jeremy Hunt
My hon. Friend is absolutely right to raise that issue. I actually had a breakfast with clean energy industry representatives this morning to discuss their concerns. There is a huge amount of potential investment, and he is right to say that maximising the use of our own oil and gas reserves during transition is a vital part of our energy security policy.
Caroline Lucas (Brighton, Pavilion) (Green)
Will the Chancellor consider introducing a windfall tax on banks’ excess profits? The profits of the big four banks for the first half of this year were up 700% compared with 2020, yet the Bank of England is forecast to pay out as much as £42 billion in interest on reserves to banks in 2023, at the same time as the Government have cut the level of surcharge on banks’ profits by 60%.
Mr Gregory Campbell (East Londonderry) (DUP)
Does the Chancellor accept that many people see income tax rates at the moment as exceptionally punitive, and does he also accept that there is a need to move as quickly as possible into a growth-based economy and to supercharge our economy in the United Kingdom?
Jeremy Hunt
As a Conservative, I want to bring taxes down as soon as we can afford to do so, and I am very proud that for the first time ever people can earn £1,000 a month without paying a penny of tax or national insurance.
Bob Blackman (Harrow East) (Con)
As we want to expand our financial services industry not only in this country but abroad, we need to build confidence among consumers that the right thing to do is invest. Does my hon. Friend therefore agree that it is vital that regulators respond to and deal with complaints to them and actually impose sanctions against those who breach the regulations?
Stephen Crabb (Preseli Pembrokeshire) (Con)
Over the summer ports have been bidding to the Government’s infrastructure fund to help them get ready for the delivery of the new floating offshore wind industry. May I encourage Ministers to look favourably on the bids from the Celtic sea ports of Milford Haven and Port Talbot, because those two ports are key to unlocking the enormous economic benefits of this new clean energy industry?
Jeremy Hunt
I am absolutely happy to do that, and I agree with my right hon. Friend about the enormous potential of those areas.
Daisy Cooper (St Albans) (LD)
Some GP practices are at risk of being priced out of city centres, including in places like St Albans, because of outdated Treasury rules that prevent integrated care boards from spending the money they want to on a GP practice location. Health Ministers have confirmed to me that their officials are happy to work with Treasury officials. May I ask for a personal assurance from Treasury Ministers that they will encourage their officials to look at this and resolve it by the end of this year at the absolute latest?
Saqib Bhatti (Meriden) (Con)
Andy Haldane, the former Bank of England chief economist, recently said in a Sky News interview that the Bank of England kept on printing money for longer than it needed to. It is clear that central banks across the world have been addicted to cheap money and that this has contributed to inflation across the world. Does the Chancellor agree that printing cheap and easy money has not been without consequence, and instead our monetary policy must focus on important growth factors such as productivity?
Jeremy Hunt
I agree with what my hon. Friend says. The Bank of England itself has said there were problems with its inflation forecasting. It is learning the lessons from that and we must support it every step of the way as it brings down inflation.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Sorry I was late today, Mr Speaker: British Airways cancelled my flight.
When the Chancellor’s predecessor, now the Prime Minister, was Chancellor there was huge fraud in the bounce back loans. Has he got any of that money back yet?
Jeremy Hunt
We are always ferociously determined to recover money obtained through fraud, but because of those bounce back loans we have the fastest recovery of any major European country.
James Sunderland (Bracknell) (Con)
I have recently been contacted by several self-employed constituents expressing concern about heavy fines being imposed for filing tax returns late even though no moneys are owed. Will the Treasury meet me with a view, perhaps, to reviewing this policy?
Consultation on tax incentives for occupational health
Jeremy Hunt Excerpts(1 year, 4 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The Government are consulting on the case for further support through the tax system to encourage greater employer provision of occupational health services, as a means of reducing labour market inactivity in the UK. The Government are also consulting separately on wider interventions to incentivise investment in and provision of occupational health and longer-term options to boost the workforce capacity to meet increased demand. Together these consultations will inform the Government approach to supporting occupational health provision and supporting individuals to remain and thrive in work.
The consultation is available on gov.uk.
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Fiscal Risks and Sustainability Report 2023
Jeremy Hunt Excerpts(1 year, 4 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The Office for Budget Responsibility’s (OBR) Fiscal Risks and Sustainability Report (FRS) [CP 870] has been laid today. It examines three main risks to the public finances through chapters on inactivity and health, energy and debt sustainability, as well as providing an update on the other risks in its fiscal risks register. This fulfils the OBR’s obligation to examine and report on the sustainability of, and risks to, the public finances as laid out in the Charter for Budget Responsibility. I would like to thank the OBR’s staff and the Budget Responsibility Committee for their efforts in producing this report.
As the OBR highlights in its report, the UK has, in common with other countries around the world, experienced a “rapid succession of shocks” in recent years. Putin’s illegal war in Ukraine has contributed to a surge in energy prices, driving higher inflation across the world. Central banks are raising interest rates to get global inflation under control, which has pushed up the cost of borrowing for families, businesses and Governments. The Government have acted to support households and businesses through these shocks, including most recently through energy support schemes and targeted cost of living support, while taking fiscally responsible decisions that ensure the public finances are on a sustainable footing and avoiding adding to inflationary pressure.
The FRS highlights the importance of tackling economic inactivity, as helping more people into work also reduces pressure on the public finances. The Government have already started to take action to address the rise in inactivity, including through the labour supply package announced at spring Budget 2023, which includes the new 30 hours a week of free childcare for working parents of nine-month to two-year-olds and a new disability employment programme. The OBR forecasts that this package will increase employment by 0.3% by 2027-28, with an overall impact on GDP of around 0.2% in the same year. This is the largest upward revision the OBR has made to potential output within its forecast as a result of fiscal policy decisions since its creation in 2010. In June, the NHS in England published the first ever long term workforce plan, which was developed by the NHS and backed by the Government. It sets out a path to put staffing on a sustainable footing and improve patient care and the Government are backing this plan with more than £2.4 billion funding over the next five years to deliver this planned transformation in NHS training and recruitment.
While energy prices have fallen back recently, they remain above pre-pandemic levels following Russia's invasion of Ukraine. In response, the Government are providing £94 billion of cost of living support, including direct help for energy bills across 2022-23 and 2023-24. Indeed, the OBR acknowledges in the FRS that the
“level of fiscal support with energy costs provided in the UK has been among the most generous in Europe”.
To increase the UK’s resilience to future energy price shocks, the Government are committed to transitioning to clean energy sources and is working to deliver tangible progress while bringing down energy bills. Between 1990 and 2021, the UK has cut emissions by 48% whilst growing the economy and decarbonising faster than any other country in the G7. The Government committed £30 billion of domestic public investment for the green industrial revolution at spending review 2021, as well as £6 billion for energy efficiency at autumn statement 2022 for the next spending review, and up to £20 billion for carbon capture usage and storage announced at spring Budget 2023. Over 80,000 green jobs across the UK economy are currently being supported or are in the pipeline as a result of new Government policies and spending since November 2020. What really matters is not just public investment, but total public and private investment. Since 2010, public and private investment alongside consumer levies has seen investment of £198 billion in our green industries. The Government have set out detail on the policies and programmes to reach net zero, including via the net zero strategy 2021, the net zero growth plan 2023, and specific sectoral strategies.
In common with many advanced economies, the UK’s level of debt remains elevated following recent global shocks, including the pandemic and energy prices. As the OBR highlights, Government spending on servicing this elevated level of debt is rising due to higher inflation and rising borrowing costs. The OBR notes that higher inflation will not erode the real value, or “inflate away”, debt. This highlights why it is important to deliver on the Prime Minister’s priority to get debt falling and to control borrowing to avoid adding inflationary pressures and risk prolonging higher inflation. That means taking difficult but responsible decisions on the public finances, including public sector pay, because more borrowing is itself inflationary.
While the start of this century has seen an increased frequency of global shocks as outlined above, there are also a wider set of risks to the public finances that the Government need to remain mindful of, which the OBR outlines in its fiscal risks register. The Government will respond to the FRS at a subsequent fiscal event, to provide an update on the actions being taken to mitigate the risks identified by the OBR.
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Financial Services Reforms
Jeremy Hunt Excerpts(1 year, 4 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
On 10 July 2023, I set out in a speech at Mansion House the Government’s progress in delivering a financial services sector that is globally competitive, while retaining our commitment to high international standards.
Building on the Edinburgh reforms announced in December 2022, the Mansion House reforms will enable our financial services sector to unlock capital for our most promising industries and increase returns for savers, supporting growth across the wider economy.
First, I announced a series of measures to boost outcomes for savers and increase funding liquidity for high-growth companies through reforms to the UK’s pension market.
Secondly, I set out ways the Government are incentivising companies to start and grow in the UK by strengthening our position as a listing destination.
Finally, I set out the Government’s action to seize the opportunities of the future by reforming and simplifying our financial services rulebook to ensure we have the most growth-friendly regulation of any financial services centre.
These plans have the potential to increase retirement income by over a £1,000 a year over the course of a career and unlock up to £75 billion of additional investment from defined contribution and local government pensions.
The full list of the measures launched at Mansion House, along with supporting technical documents, can be found at: https://www.gov.uk/government/collections/mansion-house-2023.
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Mortgage Charter
Jeremy Hunt Excerpts(1 year, 5 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Mr Speaker, last week the Bank of England increased interest rates to 5% as the UK, like other countries, grapples with high inflation. We are steadfast in our support for the independent Monetary Policy Committee as it takes whatever action is necessary to return inflation to the 2% target in the medium term.
None the less, I know that higher inflation and interest rates cause anxiety and concern for many families. That is why the Government are already supporting families with one of the largest support packages in Europe, worth £94 billion, or £3,300 per household on average. As interest rates rise, I will not take action that undermines the Bank of England’s monetary objectives, but where we can take non-inflationary measures to relieve the anxiety faced by families, we will do so. That is why on Friday, I met the UK’s principal mortgage lenders, alongside senior representatives from the Financial Conduct Authority and UK Finance, to agree new support for people struggling with their mortgage payments. At that meeting, I secured agreement from lenders to a new mortgage charter that sets out what support customers will receive, which we are publishing today. The charter has been signed by lenders covering 85% of the UK market, and provides support for two groups of people in particular.
The first group is those who are worried about their mortgage repayments. If they want to switch to an interest-only mortgage or extend their mortgage term to reduce their monthly payments, they will be able to do so, with the option of switching back to their original mortgage deal within six months without any affordability check or credit score impact. For most people, the right course of action will be to continue to make payments on their current mortgage. That will always be the best option, and will always mean that they pay less interest overall. However, this new measure means that people will be able to opt for a lower-cost approach for six months with full reversibility, giving them the peace of mind of knowing they can try out a new approach and still change their mind later.
The measure will take effect in the next few weeks. It means that a homeowner with a £200,000 property with £100,000 outstanding on their mortgage over 15 years can change their payments—with no immediate impact on their credit rating—by extending the mortgage term by 10 years, which could save over £200 a month, or moving to interest-only payments, which could save over £350 a month.
A further measure for this group of customers means that if they are approaching the end of a fixed-rate deal, they will be offered the chance to lock in a new deal with the same lender up to six months ahead. However, they will still be able to apply for a better like-for-like deal with the same lender, with no penalty if they find one, until their current deal ends. That will provide people with more flexibility and optionality to find the best deal for their circumstances.
The second group of people we are supporting is those who are at real risk of losing their home because they fall behind in their mortgage payments. Mortgage arrears and defaults remain at historically low levels, with under 1% of residential mortgages in arrears in 2023, and are at a level lower than just before the pandemic. None the less, for the families involved it is extraordinarily distressing to lose their house, so we will do all we can to support people who find themselves in such a challenging financial position.
As part of our strong regulatory framework for mortgage holders, banks and lenders already provide tailored support for anyone who is struggling and deploy highly trained staff to help such customers. Support offered includes temporary payment deferrals and part-interest part-repayment, as well as extending mortgage terms or switching to interest-only payments. To supplement that, we have agreed as part of the mortgage charter that in the extreme situation in which a lender is seeking to repossess a home, there will be a minimum 12-month period from the first missed payment before there is a repossession without consent. Anyone at all who is worried that they could be in this situation should know they can call their lender for advice without any impact whatsoever on their credit score. Lenders will also provide support to customers who are up to date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability test, and provide well-timed information when their current rate is coming to an end.
Taken together, these measures should offer comfort to those who are anxious about the impact of higher interest rates on their mortgages, and provide support to those who do get into any extreme financial difficulties. The mortgage market itself remains robust, and the average homeowner remortgaging over the last year had close to 50% loan to value, indicating that most people have considerable equity in their homes.
Tackling inflation is the Prime Minister’s and my No 1 priority. We said we would halve inflation not because it was an easy thing to do, but because it is the right thing to do, and we will not flinch in our resolve, because we know getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses. That is why we will seek to remove inflationary pressures in our economy, not stoke them. That is what the measures I have set out today will help to do, and I commend this statement to the House.
Rachel Reeves (Leeds West) (Lab)
Thank you, Mr Speaker. I would like to thank the Chancellor for advance sight of his statement this afternoon.
Families are worried sick to their stomach about what is happening at the moment, but the Prime Minister says, “Don’t worry—it will all be okay”. However, it is not going to be okay for the millions of homeowners who face an average increase in mortgage costs of £2,900 this year—all of this during a wider cost of living crisis. The Prime Minister told the country yesterday to hold its nerve, but where are people meant to find the money in the meantime to pay for the Tory mortgage bombshell? The Chancellor and the Prime Minister have not yet said.
For many, the Tory mortgage bombshell will mean holidays cancelled, family savings draining away and missing out on days spent with family and friends, but for others it could be much worse—not moving up the housing ladder, but heading down it through no fault of their own. The Chancellor does not need to take my word about how many people will be facing the Tory mortgage bombshell. He could speak to any of the 11,600 families in his own constituency who will be paying £450 more every month in mortgage costs alone as a result of this Conservative Government.
The Resolution Foundation estimates that millions of households will have to pay a combined total of £15.8 billion more in mortgage payments a year by 2026. That is just devastating. The Tories gambled last autumn with people’s livelihoods, and since then things have got worse, not better, yet Ministers take no responsibility for the damage that they have caused, and blame anything and everyone else. Again today, the Government claim that this is all due to global factors, yet the latest data show that a typical household in Britain are now paying over £2,000 more per year for their mortgage than in France, over £1,000 more per year than in Ireland or Belgium, and over £800 per year more than in Germany. The Chancellor is going to need a better scapegoat.
Labour set out our plans last week. Our measures were a requirement—yes, a requirement—because all lenders need to play their part when people are struggling. Our plan would have provided real help, but the Government have provided just a bad cover version. While many banks and building societies are doing the right thing by their customers, a voluntary set of measures is just not good enough. The Chancellor said today that the voluntary measures would cover 85% of the mortgage market, but what is his answer for the more than 1 million families who are missing out because their lender has not signed up to this scheme—tough luck? Just how bad does it have to get before the Chancellor recognises that mandatory action is needed to provide meaningful assistance?
I would like to ask the Chancellor the following questions. Can he confirm what consequences there are for firms who have not signed up to this scheme? Where is the plan for renters? The Chancellor did not even mention them in his statement, but many of them are paying higher rents because the mortgage costs of their landlords have gone up? Why does the Chancellor think that savers are not enjoying the full benefits from rising interest rates in the same way that mortgage holders are feeling the full pain? Why does the Chancellor think that the UK has the highest inflation in the G7, and does he still think the Government are on track with their target of halving inflation by the end of the year? How does the Chancellor think getting rid of house building targets will help increase home ownership? Finally, six days ago the Chancellor said that he was “proud” of this Government’s economic record. With energy bills twice as high as last year, food inflation close to 20% and millions hit by the Tory mortgage bombshell, is he seriously saying he is proud of that record?
People work hard to get on to the housing ladder, yet there is now a risk that dreams will become nightmares due to the decisions of this Conservative Government. The Chancellor today has come to the House with a watered-down package that does not meet the task of dealing with the Tory mortgage bombshell.
Jeremy Hunt
I will deal with the right hon. Lady’s specific points first. She says these measures should be mandatory, so why did Labour oppose the intervention power in the Financial Services and Markets Bill that would have made that possible? She said she wants action for savers, and I have indeed been talking to banks about action for savers and will keep the House updated. What she carefully did not mention is that we secured on Friday more than Labour committed to, because our measures provide protection for people who miss payments not for six months, but for 12 months.
The main point is that the right hon. Lady wants people to think she is fiscally responsible and will not take risks with inflation, so why on earth is she committed to borrowing £28 billion more a year when, as a former Bank of England economist, she should know that that will be inflationary and push up the cost of mortgages? Members need not listen to me; they should listen to people such as Paul Johnson of the Institute for Fiscal Studies, who said about Labour’s plans that
“additional borrowing both pumps more money into the economy, potentially”—[Interruption.]
The right hon. Lady might not want to hear this but this is what Paul Johnson says about Labour’s plans:
“additional borrowing both pumps more money into the economy, potentially increasing inflation, and also drives up interest rates.”
It is Labour’s mortgage bombshell, hidden in plain sight.
The right hon. Lady does not want people to notice the real comparison here, which is that her party faced an economic crisis in 2008, just as this Government did last year, but we are taking the difficult decisions to restore sound money and the public finances while they ducked each and every one of those decisions, ran out of money and left it to others to clear up the mess.
John Redwood (Wokingham) (Con)
Given that we do not want too much pressure on mortgage holders, who will be struggling, will the Government launch a series of supply-side measures to increase the supply of things that are short, to promote more home-grown food and home-produced energy, and above all to work with public sector employees and managers to have a productivity revolution in the public services where there has been a collapse in output?
Jeremy Hunt
As so often, my right hon. Friend is absolutely right and it is in supply-side measures that we see the long-term solution to the inflation problem that we and many other countries face. That is why the Budget was focused on labour supply measures such as a massive reduction in the cost of childcare—a reduction of up to 60% for families with young children—and it is why my right hon. Friend the Chief Secretary to the Treasury is launching the very productivity review my right hon. Friend the Member for Wokingham (John Redwood) has called for many times, to make sure we are getting better value for public money spent.
Stewart Hosie (Dundee East) (SNP)
With a debt to GDP ratio of 100%, the Chancellor was rather brave to talk about sound money. However, I welcome the statement and early sight of it. Notwithstanding the fact that it was described by Reuters as a package of limited relief measures, it is none the less necessary and welcome, with support from lenders, no repossession within 12 months of a missed payment, the chance to lock in a deal six months early, a temporary move to interest-only, and no impact on customer credit scores. The Chancellor’s words about anxiety and concern struck the right tone, unlike his Prime Minister yesterday.
However, that that does not begin to answer some of the fundamental questions. Given that the base rate drives the mortgage rate, and the base rate, as the Chancellor knows, is the primary tool that the Bank has to tackle rising inflation, is this now not the time to review the Bank of England’s targets and tools? Secondly, are the Government genuinely convinced that using a rising base rate to tackle input inflation caused by external shocks is the best approach we have, other than to tip the economy into recession, as some people are suggesting? I hope the Chancellor would agree that that would be an idiotic and catastrophic thing to do. Thirdly and finally, should we now not revert to forward guidance on base rates from the Bank of England, as we had under Mark Carney during the financial crisis? It may not affect the trajectory of interest rates and mortgage rates initially, although it might, but it would certainly provide certainty to business, retail and mortgage borrowers.
Jeremy Hunt
I often do not agree with what the right hon. Gentleman says, but I thank him for the constructive tone of his comments this afternoon, because he is absolutely right to talk about external shocks. He will know, as we do, that interest rates have gone up by similar amounts in the United States, Canada, Australia and New Zealand and that core inflation is higher in 14 EU countries. We need to look at all the tools at our disposal. Whether the Bank of England Governor issues forward guidance is a matter for the Governor, but I am sure he will have heard the right hon. Gentleman’s comments. It is important, because we respect and support the independence of the Bank of England, that I allow the Governor to make those judgments. I disagree with the right hon. Gentleman’s suggestion of reviewing the target for inflation. That target is the right target, and it is important that we give everyone confidence of our total commitment to hitting that target, which we will.
Sir Desmond Swayne (New Forest West) (Con)
Given the significant tightening in the measures of monetary growth, is the Chancellor absolutely sure that the Bank of England has got it right?
Jeremy Hunt
The Bank of England Governor himself has been very open about the fact that the Bank’s inflation forecasting has not been accurate, and it is conducting an independent review to see how it can do that better. It is clear that there have been some issues with how that process has worked, but what I would say to my right hon. Friend—
Mr Speaker
Order. The Chancellor should be making his remarks to the Chair.
Jeremy Hunt
Mr Speaker, you are absolutely right to correct me on that point. What I would say to you about the point raised is simply that in my dealings with the Bank of England, I have never once had any reason to question its resolve to hit the target, but we need to ensure that the forecasting is better.
Dame Angela Eagle (Wallasey) (Lab)
Some 8,600 families in Wallasey are facing increases in their mortgage bills of up to £1,800 in a year. That is a huge extra chunk of worry. I welcome the Chancellor’s statement, but does he not worry that the banks are being very slow to pass on interest rate rises to those who are saving, while almost immediately passing interest rate rises on to those who borrow? That makes the interest rate mechanism much less effective in dealing with the inflation situation. Did he notice, as I did, that the banks this autumn made more than £4 billion extra on the differential between those interest rates? Should he not have been much tougher on the banks? What will he to do to stop this profiteering?
Jeremy Hunt
The right hon. Lady is absolutely right. It is taking too long for the increases in interest rates to be passed on to savers, particularly with instant access accounts. The rates are more frequently being passed on to those with fixed-term and notice accounts. She is right that there is an issue there, which I raised in no uncertain terms with the banks when I met them. I am working on a solution, because it is an issue that needs resolving.
Sir Bill Wiggin (North Herefordshire) (Con)
My right hon. Friend will know that increasing liquidity in the housing market will give homeowners more options and choices. Will he look at reducing the burden of stamp duty to help both current and future homeowners?
Jeremy Hunt
I thank my hon. Friend for his comment. The level of stamp duty is, as with all taxation measures, kept under review. We make decisions at the time of fiscal events, whether autumn statements or spring Budgets, and we will continue to do that.
Sarah Olney (Richmond Park) (LD)
The root cause of soaring interest rates—other than the shambles of the mini-Budget—is the Government’s failure to control inflation. The Prime Minister took personal responsibility for halving inflation this year. Will the Chancellor explain why the Government are refusing to take obvious steps to tackle inflation such as reinstating energy support for farmers and businesses, cutting import costs for small businesses and bringing down the NHS waiting list to alleviate the squeeze on our workforce?
Jeremy Hunt
I find it strange that the hon. Member should be criticising the Government’s failure to tackle inflation when her party is suggesting a multi-billion-pound package of mortgage support that would increase inflation. I must say that the Liberal Democrats are positioning themselves brilliantly as the pro-inflation party.
Mark Pritchard (The Wrekin) (Con)
I welcome the new mortgage charter, but may I say, along with all Members across the House, that constituents are suffering and that they are very concerned? Many are having to choose between food, clothes and shoes and paying the mortgage or the rent, and decisions that we make here, either as the governing party or cross-party, are having a direct impact on individuals’ lives every single day. I join cross-party with the hon. Member for Wallasey (Dame Angela Eagle), who is absolutely right that, so often, when the base rate rises, lenders are quick to raise those interest rates on our constituents. Will my right hon. Friend ensure that when interest rates fall, as they surely will—hopefully they will soon; possibly in the autumn, but we will see—those reductions are passed on to our constituents as quickly as possible?
Jeremy Hunt
My right hon. Friend is right to draw attention to the human consequences of any economic shock. I am extremely proud that, under the Government since 2010, 1.7 million people have been lifted out of absolute poverty, including 400,000 children. That is why in the autumn statement we prioritised those facing the biggest challenges with a £94 billion package of support to help people through the cost of living crisis. But one thing that can definitely happen better than it is now is passing on increases in the base rate to savers.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
One reason nearly 10,000 of my constituents will be hit by the Tory mortgage bombshell is that many deals ending in this 12-month period were taken out when interest rates were below 2%; they are now at 5%. Will the Chancellor set out clearly his private analysis of the likely rises in arrears and repossessions over the next few months?
Jeremy Hunt
I do not have any private forecasts that I have not shared with the House. What I can say is that about 0.9% of families with mortgages are currently in arrears, and that is nearly four times fewer than in 2009.
Anna Firth (Southend West) (Con)
I thank the Chancellor for his statement. A third of my constituents have mortgages and will welcome this range of measures. Now that the majority of the mortgage market is fixed, not floating, does he agree that rising short-term interest rates will not necessarily result in falling inflation and that we need to look at other measures such as making sure that interest rate increases are passed on to savers so that they keep their money in the bank?
Jeremy Hunt
My hon. Friend is absolutely right. Notwithstanding the fact that 85% of mortgages are now fixed to some degree, an extra 1.2 million families will feel the increase in interest rates over the months between now and the end of the year. That will be felt by many families, but we should do everything in our power to tackle inflation, because in the end that is the only way to end the misery for so many people.
Richard Burgon (Leeds East) (Lab)
Many of the banks that the Chancellor has been talking about are raking in bumper profits by refusing to pass on higher interest rates to their savers. Surely, a windfall tax on those additional profits would allow the Government to provide mortgage holders with the kind of support they really need at this time. Before the Chancellor dismisses that idea, may I gently remind him that even Margaret Thatcher imposed such a windfall tax on banks’ excess profits?
Jeremy Hunt
I hear what the hon. Gentleman says, but he will be pleased to know that banks already pay a 3% surcharge on their corporation tax—they pay 3% more than everyone else—as well as a levy on their balance sheets.
Mr Philip Hollobone (Kettering) (Con)
I welcome the action that the Chancellor has taken on this issue. Increasing the flexibility of mortgage terms and conditions will provide welcome relief to homeowners who are struggling with anxiety at the present time. The mortgage charter sounds great. What obligations has he insisted on with the mortgage companies to get that information out to mortgage holders to inform them of the extra flexibility available?
Jeremy Hunt
My hon. Friend makes a good point. All lenders had some of those measures to a lesser or greater extent. What is significant about Friday is that they aligned their offer so that it is much easier to communicate to all families with mortgages. The charter has been agreed by 85% of the market, so a very large majority of mortgage lenders are agreeing to a simple set of terms that they will all follow so that it is easy for people to understand their rights.
Stella Creasy (Walthamstow) (Lab/Co-op)
The people watching this who have too much month at the end of their money need better and straight answers from the Chancellor. He has ducked the question about whether he thinks the Government will reach their own target to halve inflation, and he needs to be honest about what he thinks the consequences will be of only reaching an inflation target of 5%.
I join colleagues across the House who have raised concerns about the fact that the vast majority of mortgages are fixed. People facing the possibility of eviction even in a year’s time will be sick with worry. What assessment has he made of the impact if inflation only gets down to 5%? When will he learn the lessons from the energy companies, and not wait to hold the banks responsible for their role in all this?
Jeremy Hunt
I have a lot of respect for the hon. Lady, but she is being a little churlish about what the Government have done. I have not waited; I called in the banks and the lenders on Friday, and I got them to commit to a set of terms that will make life easier for 85% of families with mortgages if their mortgage comes up for renewal. On the Government’s target to halve inflation, both the Bank of England and the International Monetary Fund have said that we are on track.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
I have never forgotten the anxiety caused to my parents in the late 1980s, after they bought their current home and interest rates soared. Does my right hon. Friend agree that the package of measures that he has announced will help enormously to alleviate the anxiety that many households are feeling, without allowing rampant inflation to put my constituents’ dreams of home ownership even further out of reach?
Jeremy Hunt
I thank my hon. Friend for a thoughtful question. The measures agreed by the banks and principal lenders on Friday will make a big difference, particularly for people who are genuinely in arrears, who now know that their house will not be forcibly repossessed for 12 months. That is an important reassurance, and gives people longer to get their finances in order. It also encourages people who are worried about the impact on their credit score that the simple fact of having a conversation if they are in distress will not have any impact on it. For people in a similar situation to his parents, this is an important set of measures.
Brendan O’Hara (Argyll and Bute) (SNP)
In his statement, the Chancellor said that there will be a minimum 12-month period from the first missed payment before a repossession without consent. Does that come into effect from today, or will it apply retrospectively? What will that mean for hard-pressed families who, because of soaring costs, missed August but managed to pay September, October, November and December, and missed January? At what point does the clock start ticking on their repossession?
Jeremy Hunt
The agreement will take effect in the next few weeks, but the context of the agreement with the banks and lenders is one where they are agreeing to do everything they possibly can to give people longer to get their affairs in order so that repossessions are reduced or eliminated altogether. I think it will be a positive step forward.
Siobhan Baillie (Stroud) (Con)
I listened very carefully to the shadow Chancellor, because I want to hear serious ideas. The public are not daft; they can see there are incredible pressures across the world. But not only is Labour not coming up with ideas, it is breaking its own economic pledges. It made me think of the latest Labour councillor to step down, who said recently that she watched Keir Starmer’s leadership with increasing concern and frustration because of a “lack of policy” to help those most affected by the cost of living. Does my right hon. Friend agree with me? Will he say more about how we can keep working with lenders—so it is not just a one-off conversation—to create solutions to help with some of the problems ahead of us?
Jeremy Hunt
I am happy to give my hon. Friend that reassurance. I will continue to talk not only to the lenders but the regulators, who I am meeting later this week, to see if there are any areas at all where price reductions that should be passed on to consumers are not being passed on. I hope to update the House further.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I will put aside the fact that the Chancellor did not answer my right hon. Friend the Member for Leeds West (Rachel Reeves) on what happens to the 1 million people who are outside the 85% of mortgage providers, or why we have higher borrowing costs than France, Germany and Ireland. Some 9,200 families are affected by the increase in interest rates and the mortgages they are paying. We know, for example from the prompt payment codes, that voluntary codes have a limited impact, so who will monitor the compliance of the code? How many people will have to be disappointed by their lender before the Chancellor puts it in statutory form?
Jeremy Hunt
It is generous of the hon. Lady to put aside so many things. I will also put aside the fact that Labour opposed the powers that would have meant the mandatory imposition of the charter on the banks and lenders would have been possible. What I will say to her is that the charter will be monitored by the Financial Conduct Authority. It will take appropriate action if it thinks that banks and lenders are in breach of their statutory duties.
Jane Hunt (Loughborough) (Con)
I recently met constituents in The Wolds villages who have shared ownership arrangements for their properties with a housing association. They have never missed a payment. Please will my right hon. Friend confirm that the mortgage charter will assist those across the country with shared ownership schemes?
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
During the 2008 credit crunch, Plaid Cymru, as part of the One Wales Government, developed a mortgage rescue scheme. Through the co-operation agreement, we have now secured £40 million to support Welsh mortgage holders in difficulty. People look to Government to help them to keep their homes in a crisis. Will the Chancellor follow where Plaid Cymru led and implement direct protections for those hardest hit by interest rate increases?
Jeremy Hunt
We will do everything we possibly can to help people in difficulties, except measures that are themselves inflationary.
Mr Robin Walker (Worcester) (Con)
I welcome the fact that my right hon. Friend, in tackling this huge challenge, is determined not to increase inflation. Does he recognise, however, that with so many people owning their properties outright and not having a mortgage on them today, increasing the payment for people who save is a very important element in tackling inflation? I wish him every success in his further conversations to encourage the banks to pass on interest rates to savers.
Jeremy Hunt
My hon. Friend is absolutely right. If more people are encouraged to save, that is technically counter-inflationary and something to be encouraged.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
Due to the disastrous policies of Conservative Governments, including eventually crashing the economy, hard-working Brits, including people in my Slough constituency, are having to pay the price via painful premiums on their mortgage or rent. Why does the Chancellor think that the latest data shows that someone with a £200,000 loan is paying over £800 more annually in the UK than in Germany and over £2,000 more than somebody in France?
Jeremy Hunt
If the hon. Gentleman wants to look further at Europe, he will see that 14 EU countries have higher core inflation than we do. As for interest rate rises, they have been at similar levels in Australia, New Zealand, Canada and the United States.
Simon Fell (Barrow and Furness) (Con)
I thank my right hon. Friend for his statement and for his hard work in securing the new mortgage charter, which will give people certainty and comfort in globally uncertain times. The simplification of the terms and the coverage of 85% of the market are welcome, but what are my right hon. Friend’s views on the 15% who are not currently round the table, and what message does he think he should be sending to their customers?
Jeremy Hunt
We will be making big efforts to sign up any remaining lenders who have not subscribed to the charter. To reach a level of 85% over a period of four days is a good start, but we would love to get the other 15% on board. I should add that if they are not on board, that will make their mortgage offer less competitive from the viewpoint of the many thousands of families who will want to arrange their new mortgage with a lender who makes an effort to reduce the anxiety they may feel.
Justin Madders (Ellesmere Port and Neston) (Lab)
My constituents who are facing eye-watering increases in their mortgage repayments are asking—as have other Members—how they can square those increases with the increased profits that the banks and building societies are making, and are also asking whether this pain is for any gain. Inflation has not fallen in the way that the Government hoped. Is the current mortgage market not fundamentally different from that of the early 1990s, when we last had spiralling interest rates, and is this tool not merely hammering a group of people rather than tackling the core problem? Does the Chancellor believe there is an element of truth in that, and does he believe that there are other tools at his disposal to get inflation down?
Jeremy Hunt
The hon. Gentleman is entirely right to say that the mortgage market has changed, given that 85% of deals now involve a fixed-rate element, but I still think that interest rates are the most effective tool. Other countries that have used them are seeing their inflation starting to fall, and I would expect it to do so here.
Alison Thewliss (Glasgow Central) (SNP)
The mortgage crisis is not the only crisis over which this Government are presiding. According to StepChange Debt Charity, 45% of mortgage holders—some 7 million—are now struggling to keep up with all their other bills following the rise in interest rates. What conversations is the Chancellor having with companies providing other forms of consumer credit, and with debt advice charities which are giving support on the frontline to many people who have never had to call on their services before?
Jeremy Hunt
We continue to have conversations with everyone who is involved in relieving families who are in distress because of debt arrears, whatever they may be, but I think the most important help we can give people is cost of living support. The extension of the energy price guarantee has reduced people’s electricity bills, and means overall that we have paid about half people’s electricity bills over the last year.
Paula Barker (Liverpool, Wavertree) (Lab)
Last week the Bank of England confirmed that the rise in interest rates has been worst here in the UK, with overnight swaps—the key driver of mortgage rates—rising by twice as much in the UK as in the United States. What assessment have the Chancellor and his Department made of the reasons why the UK has been so much worse hit than other countries, and will he finally admit that that is the case? Will he also indulge me by explaining the difference between poverty and his new catchphrase, “absolute poverty”?
Jeremy Hunt
The hon. Lady may want to belittle the fact that 400,000 more children and 200,000 more pensioners have been taken out of absolute poverty, but I think that that is an important achievement, and I am proud of it. I also think the hon. Lady should recognise that the primary causes of the inflation we are seeing are international factors that are affecting many other countries, which is why we are also seeing interest rates rise across the world.
Mr Toby Perkins (Chesterfield) (Lab)
The 8,600 mortgage holders in Chesterfield whose mortgages have increased by an average of £1,900 a year will be very conscious that in the Chancellor’s responses he has been very happy to blame global factors, but that when he is asked about specific countries such as France and Germany—the major European nations where outcomes are not as bad as in the UK—he quickly deflects and says, “Let’s talk about Australia or Canada.” Will he answer the question that my right hon. Friend the Member for Leeds West (Rachel Reeves) asked? Will he explain why it is worse for my constituents in Chesterfield than it is in France, in Germany and in other countries he has been asked about?
Jeremy Hunt
The truth is that Members can pick countries in Europe where things have not been as severe as they have here, but they can also pick countries in Europe where things have been more severe, such as the 14 EU countries that have higher core inflation.
Bill Esterson (Sefton Central) (Lab)
The Chancellor is not going to get off with not answering that question. We are going to keep asking him again and again until he answers. Why is it that people are paying £800 less in Germany, £1,000 less in Ireland and Belgium, and £2,000 less in France than they are paying here? What is it that their Governments and their economies are doing differently—or is it just that they do not have the problem of 13 years of this Tory Government? What is behind it?
Jeremy Hunt
Let me give the same answer that I gave to the hon. Member for Chesterfield (Mr Perkins). Core inflation is higher in more than half the EU countries, so it is not just about us.
Beth Winter (Cynon Valley) (Lab)
We have had 13 interest rate rises in a row, yet little help for those in housing need, and 13 years of public sector pay cuts. All the Tory Government have done is double down on more real-terms pay cuts. When will this Government take action to tackle the cost of living crisis by raising incomes? Having bailed out the banks in 2008 and 2009 to the tune of hundreds of billions of pounds, should the Government not now deal with the causes of inflation by controlling bank profiteering and redistributing the extreme wealth that exists to the millions of people, including people in my constituency of Cynon Valley, who are suffering and at serious risk? They are petrified of losing their home through no fault of their own.
Jeremy Hunt
The hon. Lady is absolutely right to be concerned, as we all are, about families in her constituency who are worried about the impact of rising interest rates on their mortgage repayments. She is wrong to suggest that this Government have not been extremely generous in our cost of living payments, which at £94 billion are more, actually, than her party was calling for. If she wants to talk about the last 13 years, maybe she should reflect on why a Conservative-led Government were elected in 2010: it was to pick up the pieces of the terrible economic mess that her party left behind.
Chris Stephens (Glasgow South West) (SNP)
Citizens Advice Scotland has reported that requests for advice from people who are homeless or at risk of homelessness reached their highest ever level in May this year and were up 30% from May 2022. What additional measures is the Chancellor planning to protect the most vulnerable households from the impact of soaring interest rates on their mortgage repayments?
Jeremy Hunt
Let me tell the hon. Gentleman what we have done for those families. This year, families on means-tested payments will get a payment of £900, pensioner families will get a payment of £300 and families with someone who is disabled will get an extra payment of £150, alongside a lot of other measures.
Alex Cunningham (Stockton North) (Lab)
Two of my constituents face a near tripling of their mortgage payments to over £2,600 a month. It is easy for me to talk about the Tory mortgage bombshell and rightly blame the Government for crashing the economy, but what does the Chancellor have to say to my constituents? Why do they have to pick up the bill for Government incompetence?
Jeremy Hunt
What I would say to the hon. Gentleman’s constituents is that we are taking the difficult decisions to deal with inflation in this country, as other countries are doing. We will do what it takes, because dealing with inflation is the only way in the long run that we can stop more families going through what is happening to the constituents he mentions.
Helen Morgan (North Shropshire) (LD)
I have constituents whose mortgages were with Northern Rock when it collapsed back in 2008. They have been moved against their will to inactive lenders that have not allowed them to remortgage on fixed rates. They are now, and will continue to be, trapped paying variable rates for a long time. Is there any help for mortgage prisoners in the measures that the Chancellor has announced today?
Jeremy Hunt
The hon. Lady raises a very fair point. I will write to her with some details of what we are thinking in that area.
Rachael Maskell (York Central) (Lab/Co-op)
Private rents go up when mortgages go up, yet local housing allowance disparity is growing faster in places like York than anywhere else in the country. What process has the Chancellor set in train to review local housing allowance and the broader rental market, which is out of kilter in places like York compared with surrounding areas?
Jeremy Hunt
The hon. Lady is absolutely right to talk about the impact on renters because of the high prevalence of buy-to-let landlords and the pass-through effect. That is an area we are looking at in great detail, and I will write to her with some of the things we are looking at and planning to do.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
The Chancellor said in his statement that
“this new measure means that people will be able to opt for a lower-cost approach for six months with full reversibility, giving them the peace of mind of knowing they can try out a new approach and still change their mind later.”
Going back to mortgage prisoners, why does he not know about the assistance he is able to give them as Chancellor of the Exchequer? Why does he not have an answer to that question, given the statement he has just given?
Jeremy Hunt
It is a very complicated issue. I have said I will write to the hon. Member for North Shropshire (Helen Morgan), and I am also happy to write to the hon. Gentleman. If he is saying that we are doing nothing to help people who are struggling or worrying about mortgage repayments, I urge him to read the statement in full.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
The so-called mortgage time bomb will hit younger generations in particular, so what fiscal measures is the Chancellor considering to help younger generations and to address the intergenerational financial unfairness that exists in the UK?
Jeremy Hunt
The hon. Gentleman is right to draw attention to that issue, and I simply say that the biggest measure in the spring Budget was the childcare measure that will mean families with young children can get up to £6,500 of help with their childcare costs to help them go back to work. That will help those families and help to tackle inflation.
Jim Shannon (Strangford) (DUP)
I thank the Chancellor for his statement and for the clear help he is trying to provide. I very much welcome the move to ensure that, in the extreme situation of a repossession, there will be a minimum of 12 months from the first missed payment. Can he confirm whether it will be 12 months from any first missed payment or 12 months from a specific time? Some people may have missed a payment, say, five months ago and missed none since. If they lose their job or become ill, will this extension and compassion be shown if more than one payment is missed within a year? How will the Chancellor ensure that his goal of giving people time in exceptional circumstances is not circumvented by the banks and others?
Jeremy Hunt
The hon. Gentleman is right to raise this issue. I reassure him that banks are required by the FCA to offer a tailored solution to people who get into arrears, specific to their circumstances, to make sure that precisely the kind of thing he worries about does not happen.
Oral Answers to Questions
Jeremy Hunt Excerpts(1 year, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Richard Thomson (Gordon) (SNP)
The Chancellor of the Exchequer (Jeremy Hunt)
We know the pain that households up and down the country are going through as a result of the cost of living pressures at the moment, and have announced one of the largest support packages in Europe, worth around £3,300 per household this year and last.
Ian Byrne
The latest report from Which? highlights that even supermarkets’ own budget brands of food have increased in price by 26.6%. There are security locks on baby formula milk, at the same time as corporations are making vast profits. The Government have signed up to the United Nations’ sustainable development goal of eradicating poverty by 2030. Surely, in the light of those commitments, now is the time for the Chancellor to act. Will he cap essential food prices and tackle the grotesque profiteering in the food industry that is driving many of my constituents in Liverpool, West Derby into poverty?
Jeremy Hunt
I totally respect the hon. Gentleman for raising the concerns of his constituents in the way that he has done. I do not believe that capping prices is the right long-term solution, but we are doing a lot, including payments of £900 per household for people on means-tested benefits, £150 for households with someone disabled living in them and £300 for households with pensioners living in them, precisely because we want to help the people that the hon. Gentleman is talking about. I will be meeting the regulators next week to talk further about what needs to be done with respect to supermarkets.
Patricia Gibson
Over the weekend, the former Governor of the Bank of England, Mark Carney, spoke about how before the Brexit referendum, the Bank of England had set out that the likely consequences of Brexit were
“a weaker pound, higher inflation and weaker growth”.
Does the Chancellor think it is fair that the UK Government’s decision to ignore the stark warnings from the Bank of England are now being paid for by the households who can least afford it?
Jeremy Hunt
I am afraid that I do not buy this Brexit narrative from the SNP. Food price inflation has been around 20% in Germany, Sweden, Portugal and Poland in recent times, so this is not a UK-specific issue. We are all dealing with the consequences of Putin’s invasion of Ukraine and the aftermath of the pandemic, and we are all tackling it with one central focus, which is to bring down inflation as our overriding priority.
Richard Thomson
The former US Treasury chief said earlier this month that Brexit was a “historic economic error”, and described the UK Government’s economic policy as having been
“substantially flawed for some years”.
Will the Chancellor finally face up to what the rest of the world can see, and admit that leaving the world’s largest single market has not only had a significant impact on inflation, but a deleterious impact on household finances across the country?
Jeremy Hunt
The issue with that argument is that the UK has actually grown faster than France or Italy since we left the single market, and according to the managing director of the International Monetary Fund, the UK economy is “on the right track”.
Sir Jake Berry (Rossendale and Darwen) (Con)
I thank my right hon. Friend for all he has done for people in Rossendale and Darwen to help them through this cost of living crisis, but people are very concerned about what is being described as the mortgage bomb about to go off. Is now the time for him to look at reintroducing the bold Conservative idea of mortgage interest relief at source? If we do not help families now, all the other money that we spent to help them will have been wasted if they lose their home.
Jeremy Hunt
No one in Rossendale and Darwen could have a more doughty champion than my right hon. Friend, and I listen to what he says carefully, but I think he will understand that those schemes that involve injecting large amounts of cash into the economy right now would be inflationary. So much as we sympathise with the difficulties and will do everything we can to help people seeing their mortgage costs go up, we will not do anything that would mean we prolonged inflation.
Stewart Hosie (Dundee East) (SNP)
The cost of a two-year fixed mortgage in March 2021 was 2.57%; this week, it reached 6%. The Chancellor and the Economic Secretary have said there are no plans to change the Bank of England inflation target, meaning that the base rate that drives the mortgage rate will continue to rise as inflation stays stubbornly high, and mortgages will go up. In the absence of such a change, what do the Government plan to do to actually tackle the mortgage pain people are suffering?
Jeremy Hunt
First, I would say to the right hon. Member that he is talking about something that is being experienced across the world. In fact, interest rates have risen faster in the United States and Canada than they have here. The answer is that we will look at doing everything we can to help people under pressure, but we will not do things that would prolong the inflationary agony that people are going through. We have to be very careful, because a lot of the schemes that are being proposed would actually make inflation worse, not better.
Stewart Hosie
On the issue of inflation, the Office for Budget Responsibility said in March that inflation was due to peak at 2.9% at the end of this year. By May, the Bank of England had forecast that it would be 5% at the end of this year, so it had almost doubled in the space of two months. Given that headline inflation is still 8.7% and food inflation is 16.5%, will the Chancellor guarantee today that inflation will be halved to 5%, as promised by the Prime Minister in January of this year?
Jeremy Hunt
The IMF, the OBR and the Bank of England all predict that we will hit our target to halve inflation, and I give the right hon. Member this guarantee: we will stick to the plan to do so.
Laura Farris (Newbury) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
I have set out our national ambition to be the world’s next silicon valley. We are making good progress; last year we were ranked the world’s third largest technology market after the United States and China.
Alexander Stafford
Ultimate Battery in Thurcroft in Rother Valley is developing groundbreaking battery technologies and is on track to create 500 new jobs by 2025. What help can the Department give me and my constituents to help burgeoning businesses such as Ultimate Battery, to make Rother Valley and other places across the north technology hubs?
Jeremy Hunt
I thank my hon. Friend for his support for this really important sector in Rother Valley. We have a number of schemes, including £541 million of funding available in the Faraday battery challenge. We also have the £1 billion automotive transformation fund. As a result of the efforts that he and many others have made, we now get 40% of our electricity from renewable sources—the second highest in Europe—and much more progress is to come.
Laura Farris
I recently convened a roundtable in my constituency with the Minister for Science, Research and Innovation, my hon. Friend the Member for Mid Norfolk (George Freeman) and a number of science and tech businesses. Their No. 1 question was what fiscal support was available for their sector. I am aware that there are numerous schemes, grants and tax relief, but it was notable that they were not well understood by the businesses, and I could not find them published anywhere on the new Department’s website. Could my right hon. Friend put together and publish a package of all the support available to investors and innovators, and how it can be applied for, to maximise the potential of this vital new frontier in west Berkshire and beyond?
Jeremy Hunt
That is a fair point. I thank my hon. Friend for the fact that Newbury is a hotbed of technology businesses, with Roc Technologies, Stryker, Edwards Lifesciences and a range of other businesses that she gives a lot of support to. I will write to her listing all those things and I will make sure that it is available on the website of the Department for Science, Innovation and Technology.
Tim Farron (Westmorland and Lonsdale) (LD)
The tech sector in rural Cumbria depends on reliable broadband. Communities in Warcop, Sandford, Coupland Beck, Blea Tarn and Ormside in Westmorland have signed up to the community interest company and volunteer group B4RN to provide a gigabit connection for just £33 a month, but the communities have been suddenly designated a low priority area, which means that their vouchers have been removed, putting the whole project at risk. Will the Chancellor commit to supporting those communities, residents and businesses to ensure that they get the vouchers that they were initially promised?
Jeremy Hunt
I will happily look into what has happened. We strongly support all rural areas having access to gigabyte broadband, as an important part of our policy. We have made a lot of progress on that. I will look into detail of what is happening in the hon. Gentleman’s area and get back to him.
Ben Lake (Ceredigion) (PC)
Mr John Baron (Basildon and Billericay) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
We will not hesitate in our resolve to support the Bank of England as it seeks to strangle inflation in the economy, and the best policy is to stick to our plan to halve inflation. I also want to make sure that we do everything possible to help families paying higher mortgage rates in ways that do not themselves feed inflation, so later this week I will be meeting the principal mortgage lenders to ask what help they can give to people who are struggling to pay more expensive mortgages and what flexibilities might be possible for families in arrears.
Mr Baron
Despite being the gateway to most financial services in the City, I suggest that the London stock exchange is ailing, with CRH and Arm being the latest canaries in the coalmine. While welcoming the Edinburgh reforms, what further consideration has the Chancellor given to my suggestion that tax incentives be introduced to encourage our British pension funds—the big beasts—to invest more in UK equities, given that, since the financial crisis of 2008-09, they have reduced their exposure to equities by 90%, unlike in most other developed economies?
Jeremy Hunt
My hon. Friend always speaks extremely wisely on financial matters, and he is absolutely on the money when he talks about the opportunity that would present itself by unlocking £3 trillion of pension fund assets, many of which would get a better return for pensioners if they were invested more in our high-growth businesses, as well as that being a good outcome for the London stock market. All I will say is: watch this space.
Rachel Reeves (Leeds West) (Lab)
While the Government squabble over parties and peerages, mortgage products are being withdrawn and replaced by mortgages with much higher interest rates. This is a consequence of last year’s Conservative mini-Budget and 13 years of economic failure, with inflation higher here than in similar countries. Average mortgage payments will be going up by a crippling £2,900 this year, so where does the Chancellor think families will get the money to pay the Tory mortgage penalty?
Jeremy Hunt
At the autumn statement, we announced £94 billion of support to help families going through very difficult times. That is more support than was ever proposed by Labour. The answer to these pressures is not borrowing an extra £28 billion a year, as people like Paul Johnson are saying that more borrowing means higher inflation, higher interest rates and higher mortgage rates.
Rachel Reeves
Is the Chancellor for real? These are the real-life consequences of what is happening under the Conservative Government today, so do not try to pass the buck.
Let me bring this home. In Selby and Ainsty, 12,000 households will be paying, on average, £2,700 more on their mortgage. In Uxbridge and South Ruislip, 10,000 households will be paying, on average, £5,200 more. Each and every family know who is responsible for trashing the economy: the Conservative party. Will the Chancellor apologise for the harm that his Government have caused with the Tory mortgage penalty?
Jeremy Hunt
I am proud of our economic record, which has seen our economy grow faster than those of France and Japan since 2010, and at the same rate as Germany. Those mortgage holders in Selby, Uxbridge or Mid Bedfordshire will be paying even more for their mortgages if a Labour Government borrow £100 billion more in the next Parliament, and we will not let that happen.
Craig Tracey (North Warwickshire) (Con)
Ian Byrne (Liverpool, West Derby) (Lab)
Jeremy Hunt
I will be happy to write to the hon. Gentleman to talk to him about that initiative. We are making great progress in our schools—we have risen to fourth in the global league table for reading—but we can always do more.
Sir David Evennett (Bexleyheath and Crayford) (Con)
Jeremy Hunt
My right hon. Friend is absolutely right; the answer to inflation is to tackle it, not to make it worse.
Ian Lavery (Wansbeck) (Lab)
Jeremy Hunt
We understand the pressures that families are going through up and down the country, but we have responded with generous support this year and last of more than £3,000 for the average household. Not only that, but since 2010 the number of children in absolute poverty has fallen by 400,000.
Theresa Villiers (Chipping Barnet) (Con)
Chris Elmore (Ogmore) (Lab)
Jeremy Hunt
With respect to the hon. Gentleman, he should get his facts right before making that kind of suggestion. He got them wrong.
Anna Firth (Southend West) (Con)
In-person banking facilities are vital to everyone in Southend West, yet in recent years we have lost all but one of our bank branches. A new community-based post office banking hub model is being rolled out, so will the Minister support my efforts to get one of those into Leigh-on-Sea?
Matt Hancock (West Suffolk) (Ind)
I welcome the work that the Chancellor and the Prime Minister have done to promote work on artificial intelligence done here, and in developing an ecosystem for that. It is clear that the UK has an opportunity to lead on this, especially on regulation, if we get it right, but only if we seize that opportunity now. What is the Chancellor doing to make that happen?
Jeremy Hunt
My right hon. Friend is right to say this is a big opportunity. We are home to a third of Europe’s AI start-ups, but we are very aware of the risks of AI. The Government are hosting a global AI summit, with the support of President Biden, this autumn, to ensure we get that regulation absolutely right.
Sammy Wilson (East Antrim) (DUP)
Quite rightly, this Question Time has been dominated by questions about inflation and the cost of living. One policy that has not been mentioned is the Government’s net zero policy and the inflationary costs included in it, from green levies of £12 billion to the cost of strengthening the infrastructure and the favourable treatment given to renewable energy firms. While the Minister may condemn the Labour party for its £29 billion green policy spending plan, what is the cost of the Government’s net zero policies to consumers? Are they not picking their pockets dry?
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Ever-increasing food prices mean that some families are having to cut down on the amount they eat. Will the Minister support Labour’s plan to negotiate a new veterinary agreement for agriculture products to reduce the cost for food producers and bring down those crippling food prices?
Jeremy Hunt
We will always look at Labour policies, but they are normally not right.
Alun Cairns (Vale of Glamorgan) (Con)
Clear policy direction and a strong regulatory framework have led to the UK being the world’s leading centre in financial technology. Does my hon. Friend agree that the crypto industry offers the same opportunity for the UK to exploit?
Clive Efford (Eltham) (Lab)
In 2016, Exercise Cygnus tested the country’s preparedness for a pandemic. Was the Government’s response at that time adequate, and what can the Chancellor do in his current role to make sure that we are properly prepared in the future?
Jeremy Hunt
I am looking forward to answering questions about that tomorrow afternoon at the covid inquiry. We did what was recommended following Exercise Cygnus. Certainly, Ministers did what they were advised to do, but the operation was focused on pandemic flu. The question that we must ask ourselves is why we did not have a broader focus on the different types of pandemic that could have happened, such as covid.
Daisy Cooper (St Albans) (LD)
The Government’s business rates review last autumn was anything but fundamental, because it did not even look at the calculations for fair and maintainable trade, which are hammering the viability of pubs in St Albans. If the Chancellor has in fact abandoned his commitment for a fundamental review of business rates, which he himself called for last summer, will he at least look at the calculations for fair and maintainable trade before any more of our valuable pubs have to close?
Life Sciences Growth Package
Jeremy Hunt Excerpts(1 year, 5 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
On 26 May the Government announced a package of measures totalling over £650 million to drive growth and innovation in the life sciences sector.
The UK is rightly recognised as a world leader in life sciences; it is home to two of the top five universities in the world for life sciences and nearly a third of European life sciences start-ups. The sector is a key pillar of the economy, attracting the most foreign direct investment in Europe. It employs over 280,000 people across the UK, with 66% of these in high productivity, high wage jobs based outside London and the south east.
The Government are committed to making the UK the most attractive destination for life sciences companies and have developed a comprehensive package of policies spanning regulation, research and development (R&D), infrastructure, skills and planning which is aimed at driving investment, growth and innovation. To that end, we have announced:
The Government response to the Independent Review of Clinical Trials led by Lord O’Shaughnessy. The response announces five headline commitments where the Government are taking immediate action backed by £121 million of funding, including developing a clinical trial directory and establishing clinical trial acceleration networks. This will be followed by a more detailed implementation report in the autumn. These policies apply to England only.
The Government response to the Pro-innovation Regulation of Technologies Review on Life Sciences. The response accepts all the recommendations in the report and commits to delivering accelerated regulatory pathways for innovative products and technologies and establishing Centres of Excellence in Regulatory Science and Innovation (CERSIs) to provide regulators with access to additional skills and expertise. The review and response cover a range of policies, with varying territorial extents.
The development of an end-to-end Medtech pathway, including the innovative devices access pathway, to support innovators generating the evidence they need to support regulatory approval and National Institute for Health and Care Excellence (NICE) assessment to get innovative products helping patients faster. This policy applies UK-wide.
A new biomanufacturing fund of up to £38 million to incentivise investment and bolster the UK’s biomanufacturing capability for vaccines and other medicines, and a further £10 million to expand the transforming medicines manufacturing programme to support the development of manufacturing processes for next-generation vaccines and advanced therapies. This policy applies UK-wide.
An additional £6.5 million of funding on skills to secure the legacy of skills pilots delivered by the Cell and Gene Therapy Catapult to ensure we have the talent and skills to support our domestic medicines manufacturing capability. This policy applies UK-wide.
Further details regarding the mental health and addiction healthcare missions, including the allocation of £42.7 million to support new mental health treatments and set up new research centres in Liverpool and Birmingham, and £10 million to help develop new treatments for addiction. The Government have also announced the chairs of the mental health, addiction, and cancer missions. These policies apply UK-wide.
Reform and rebranding of the Academic Health Science Networks to become Health Innovation Networks. These will have an enhanced focus on working with local partners, ensuring innovation is identified and adopted at the local level to directly address the needs of those communities. This policy applies to England only.
A further £31 million in Government and industry backing for life sciences manufacturing, under the life sciences innovative manufacturing fund, taking combined investment since 2021 to £383 million. This policy applies UK-wide.
A new £154 million investment to significantly upgrade UK Biobank to meet increasing demand for this world leading biomedical research database. This will include the construction of a new purpose-built facility at Manchester Science Park to accommodate a new archive. This investment will increase sample throughput by four times, allowing for up to 1.2 million accesses per year. This policy applies UK-wide.
A call for proposals on the Government’s long-term investment for technology and science initiative, which will offer £250 million of Government support to spur the creation of new vehicles for pension schemes to invest in the UK’s high-growth science and technology businesses, benefiting the retirement incomes of UK pension savers and driving the growth of critical sectors like life sciences. This policy applies UK-wide.
Planning reforms to boost the supply of life sciences lab space, including consulting on factoring R&D considerations into planning decisions, working with stakeholders to update the planning practice guidance to help local authorities take fuller account of commercial land needs of businesses and making investment into the relevant sites more attractive by working with local planning authorities to encourage proactive planning tools, such as local development orders and development corporations, to bring forward development. This policy applies to England only.
The preferred route alignment for the third section of East West Rail between Bedford and Cambridge, including a direct link to the Cambridge Biomedical Campus, marking a significant step towards delivering the scheme and helping to drive growth and jobs in the life sciences “golden triangle”.
Overall this represents a comprehensive package to boost growth and investment in the sector across the UK, and help get innovative drugs and medicines to NHS patients faster.
Documents are available at:
https://www.gov.uk/government/publications/commercial-clinical-trials-in-the-uk-the-lord-oshaughnessy-review
https://www.gov.uk/government/publications/pro-innovation-regulation-of-technologies-review-life-sciences
https://www.gov.uk/government/publications/biomanufacturing-fund
Copies of the review documents and the Government responses will also be deposited in the Libraries of both Houses.
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Notification of Contingent Liability
Jeremy Hunt Excerpts(1 year, 6 months 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 has since commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022.
The previous Chancellor 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 16 January 2023, the total stock of assets held by the APF for monetary policy purposes has fallen from £851 billion to £821.3 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £821.3 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. If the liability is called, provision for any payment will 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.
[HCWS756]
Treasury
Jeremy Hunt Excerpts(1 year, 8 months ago)
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Jeremy Hunt
What I say to the hon. Lady, whom I greatly respect, is that we did a lot for public services in the autumn statement, including a £3 billion increase in the annual schools budget and an £8 billion increase in the annual health and care budget. We are always focusing on public services, and we do support a progressive tax system.
[Official Report, 21 March 2023, Vol. 730, c. 157.]
Letter of correction from the Chancellor of the Exchequer (Jeremy Hunt).
An error has been identified in the response I gave to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).
The correct response should have been:
Jeremy Hunt
What I say to the hon. Lady, whom I greatly respect, is that we did a lot for public services in the autumn statement, including a £2.3 billion increase in the annual schools budget and an £8 billion increase in the annual health and care budget. We are always focusing on public services, and we do support a progressive tax system.
Oral Answers to Questions
Jeremy Hunt Excerpts(1 year, 8 months ago)
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Philip Davies (Shipley) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Like all Conservatives, I believe in reducing the burden of taxation wherever possible, while always demonstrating a responsible approach to public finances.
Philip Davies
While I appreciate that this is largely as a result of the idiotic decision to lock down the country and the economy for the best part of two years, the Chancellor nevertheless finds himself presiding over a high-tax, high-spend, low-growth, quasi-socialist economy. When can those of us who remain Conservatives expect to see some tax cuts and a reduction in the burden of taxation?
Jeremy Hunt
I thank my hon. Friend for the inimitable way in which he asked his question. I hope that he was reassured to some extent by the £9 billion cut in the planned level of corporation tax in the Budget, and, if we make the arrangement for capital allowances permanent, as I should like to, that will give us the best investment incentives anywhere in the OECD.
Peter Grant (Glenrothes) (SNP)
May I be the first to defend the Chancellor, and indeed the shadow Chancellor, against any accusation of socialism?
Can the Chancellor explain why the Cameronbridge distillery in my constituency, which is a major employer in an area of high unemployment, faces an increase of about £350 million in its excise tax bill this year? That is more than the additional amount that the Chancellor claims to be giving to the whole of Scotland. Will he explain why my constituents, and the companies that employ my constituents, are having to contribute additional taxes to pay for his economic failure?
Jeremy Hunt
Let me gently say to the hon. Member that the freeze in alcohol duty which we introduced in the autumn of 2021, and which will continue until August this year, has constituted a £2.7 billion tax cut over four years. We do everything we can to help the vital Scottish whisky industry.
Harriett Baldwin (West Worcestershire) (Con)
There was a significant tax cut in the Budget that has been greatly welcomed by drivers in my constituency and elsewhere, namely the extension of the 5p cut in fuel duty and the freezing of the escalator, but does the Chancellor accept that by postponing that decision until an election year—next year—he is simply continuing the fuel duty fiction that our Committee has highlighted?
Jeremy Hunt
I am delighted that my hon. Friend welcomed the freezing of fuel duty, which means that over the period for which it has been frozen, the average motorist will have saved £200. There is a specific reason why I wanted to continue to freeze it this year: combined with the extension of the energy price guarantee, it will reduce CPI inflation by 0.7% in a year in which headline inflation is still over 10%.
Andrew Gwynne (Denton and Reddish) (Lab)
How is it fair that the Government are picking the pockets of working people through frozen income tax thresholds while at the same time allowing the super-rich non-doms to effectively opt out of paying tax in this country, which is costing us £3.2 billion this year?
Jeremy Hunt
Let me remind the hon. Gentleman what we have done for people on low incomes. Because of the increase in the income tax and national insurance thresholds which was completed last year, those on the average wage of £28,000 pay £1,000 less in tax and national insurance than they would have paid at 2010 levels—that is a tax cut that his party opposed at each and every stage.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Tom Randall (Gedling) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
The Government have provided unprecedented support to help households and businesses with energy costs, totalling £94 billion for households and £8 billion for businesses. That is more than £100 billion over 2022 and 2023.
Robbie Moore
One of my local foundry businesses based in Keighley, Leach & Thompson, has kindly contacted me to say that British Gas wants to charge it £41.50 a day as a standing charge and that its unit rate has doubled. That is having a dramatic impact on the business. The Government have helped with the unit charge, but will the Chancellor outline what steps he is taking to help support small and medium-sized businesses with the extortionate standing charges being quoted by energy companies?
Jeremy Hunt
I thank my hon. Friend for raising this issue, which I know is shared by many Members across the House. That is why on 9 January I wrote to Ofgem asking it to update me on its investigation into the business market, which is not a regulated market like the consumer market. It has replied saying that it has concerns. It is concerned about significant changes in standing charges, about an increasing number of suppliers asking for security deposits and raising the cost of those deposits, and about potential breaches of the rules of the energy bill relief scheme. It will get back to me with its solutions as soon as possible.
Julian Sturdy
When I was talking to businesses in York on Friday, they stressed to me that energy bills were still a major worry for many of them, especially in the hospitality sector, which is so important to our city. It is clear that the next six months will be critical for many of those businesses, so can the Chancellor provide any more targeted support, especially to the hospitality sector?
Jeremy Hunt
I ask my hon. Friend to keep me updated on what is happening with the hospitality sector in his constituency, but he will know that we have already introduced support for business rates, with a 75% reduction in business rates up to a cap of £110,000, and that the energy bills discount scheme is providing more than £8 billion of support over this year and last. We are doing everything we can.
Tom Randall
Does my right hon. Friend agree that a long-term energy strategy is critical to helping people with the cost of living? Will he outline what steps the Government are taking to enable this through the funding of nuclear energy?
Jeremy Hunt
My hon. Friend is absolutely right to raise this issue, as is my hon. Friend the Member for Ynys Môn (Virginia Crosbie), who does so on every single occasion she can. Nuclear is important because there will be times when the weather does not generate the energy we need from renewable sources. That is why we announced in the Budget that we are going ahead with Great British Nuclear and with the competition for small modular reactors, provided that an investigation this year finds that that is viable, and we will class nuclear power as environmentally sustainable, subject to consultation.
Christine Jardine (Edinburgh West) (LD)
A number of small businesses in my constituency are struggling with their energy costs, and two have recently gone to the wall, but major companies in the whisky sector are also struggling. The Chancellor says that the Government are doing what they can to support them, but does he appreciate that that is not how it feels in Scotland? This major industry, with its high-intensity use of energy in distilling, is facing a 10% increase, which will mean that something like 75% of the price of a bottle of whisky goes to the Exchequer. The industry does not feel like it is being helped. Does he appreciate that it feels like it is being kicked at a very difficult time?
Jeremy Hunt
I recognise the challenges that the distilling industry and many other industries are facing. That is why we are giving more than £100 billion of support to businesses and consumers, but I would say to the hon. Lady that Scotch whisky has received nine cuts or freezes in the last 10 Budgets, so we are doing everything we can.
Alison Thewliss (Glasgow Central) (SNP)
It is all fine and well for the Chancellor to say that he is in correspondence with Ofgem, but the business energy sector remains unregulated and many businesses in my constituency are stuck on very high tariffs because of the increase in prices, which have now to some degree gone down. What will he do about those people who are marooned on higher tariffs? It is costing their businesses dearly and those businesses may not even survive.
Jeremy Hunt
That is exactly why I wrote to Ofgem. Wholesale gas prices are now lower than they were before the Ukraine invasion. The hon. Lady is right to say it is not a regulated market and I want to find out from Ofgem what it thinks should happen to avoid precisely the problem she talks about.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
Many pubs and breweries are locked into energy bill contracts that are staggeringly high, and they are calling for an opportunity to renegotiate them. What further support will Ministers offer the sector with its energy bills, particularly recognising the financial impact that the increase in alcohol duty will have?
Jeremy Hunt
We are doing a great deal. As the hon. Lady will know, we set up a new scheme, the energy bills discount scheme, to help businesses in the coming year. As I mentioned to my hon. Friend the Member for York Outer (Julian Sturdy), we are also giving them 75% relief on their business rates. We will continue to do everything we can for this very important sector.
Henry Smith (Crawley) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
In addition to extending the energy price guarantee, and to help people further, cost of living payments for vulnerable households will kick in next year. We are also uprating benefits and increasing the national living wage to £10.42 an hour.
Henry Smith
What assessment has my right hon. Friend made of the saving a typical family will achieve as a result of his fuel duty measures announced in last week’s Budget?
Jeremy Hunt
I thank my hon. Friend for saying that. We think the average driver has saved about £200 in total since the 5p cut was introduced, but we are also introducing draught relief for beer drinkers in pubs and 30 hours of free childcare for young parents who are struggling with childcare costs. There are a lot of cost of living measures in the Budget.
Jim Shannon (Strangford) (DUP)
I thank the Chancellor for all he does, and for his hard work. It is more than just beer drinkers, of course. Carers who also work part time are precluded from receiving carer’s allowance if they earn just over the threshold. Will he consider uplifting the carer’s allowance earnings threshold in line with inflation?
Jeremy Hunt
I thank the hon. Gentleman for mentioning carers, who do an amazing job. It is fair to say that our NHS and care systems would fall over without the incredible job carers do. We will always keep under review what we can do to help these very important people.
Martin Vickers (Cleethorpes) (Con)
Chloe Smith (Norwich North) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
If we had the same economic inactivity rate as Holland, there would be 2.7 million more people in work, filling every vacancy in the economy nearly three times over. That is why we focused on the issue in the Budget.
Chloe Smith
I thank my right hon. Friend for that answer, and for the measures he set out in the Budget. I support the fiscal measures he has taken regarding the pensions lifetime allowance, which doctors in Norwich tell me will enable them to deliver more appointments and more operations. Can I go on to ask him, though, what he expects to see in the forthcoming state pension age review?
Jeremy Hunt
I thank my right hon. Friend for asking that question, and for all the work she has done in the Department for Work and Pensions on economic inactivity. As she knows, there is an ongoing statutory Government review of the state pension age, and that review will need to carefully balance important factors, including fiscal sustainability, the economic context, the latest life expectancy data, and fairness to both pensioners and taxpayers.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
One of the key ways to promote economic activity is to make sure that people have a stable, affordable roof over their head. Only last week a constituent visited me who cannot earn enough to be able to afford to rent privately in London, so he is restricted in how much he can work. Surely, if the Chancellor believes in growth, he must see the common sense in investing in social housing?
Jeremy Hunt
I do, but I also point out to the hon. Lady that we took a range of other measures in the Budget that will help such people, including increasing the help that we give them to find appropriate work, and helping those who have a long-term sickness or disability to get the support they need to get back into work. Doing all those things will make a big difference.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Chancellor of the Exchequer (Jeremy Hunt)
This Conservative Government believe in the virtue of work, and that is why last week’s Budget set out to remove barriers for long-term sick and disabled, for jobseekers, for older people with our pension tax reforms, and for parents with the biggest expansion of childcare in memory.
Alan Brown
With Orbital O2 in Orkney and MeyGen—the largest tidal stream site in the world—Scotland leads the way in tidal stream generation. That industry is at a stage where it needs to expand and scale up, but to do so, it needs a bigger ringfenced budget. In the renewables auction announced last week, the Government propose to halve the budget for tidal stream instead of increasing it. Will the Chancellor meet me to discuss the impact and the opportunities for business?
Jeremy Hunt
We are interested in giving support to all forms of renewable energy, and the Exchequer Secretary to the Treasury is very happy to meet the hon. Gentleman to discuss those issues further.
Gareth Johnson (Dartford) (Con)
Rachel Reeves (Leeds West) (Lab)
Confidence has been shaken by the recent bank failures and stock market falls across the world. Is the Chancellor confident that our ringfencing regime is adequate to protect taxpayers and depositors, when we have seen how fast these problems can spread? Can the Chancellor reassure the House that there are no other UK banks or subsidiaries that are vulnerable, and in light of recent developments, is he confident about the Financial Stability Board, or does it need to widen the number of banks regarded as systemically important?
Jeremy Hunt
I thank the shadow Chancellor for her question. The Government recognise that there is some volatility in the market, but we believe the UK financial system is fundamentally strong and UK banks are well capitalised. They now have core capital ratios that are three times higher than before the 2008 global financial crisis, but we continue to monitor the situation carefully.
Rachel Reeves
I thank the Chancellor for that response, and am pleased that he continues to monitor the situation carefully, but the collapse of Silicon Valley Bank UK shows how our vibrant start-up sector—particularly in life sciences and tech—had become reliant on a single financial institution. The impact of these bank failures may be that other banks become more risk averse, restricting lending and raising interest rates, resulting in a credit squeeze, possibly even beyond the start-up sector. That would damage an already weak economy, so how will the Chancellor monitor the situation there and ensure that businesses have access to the long-term capital that they need to grow and to thrive?
Jeremy Hunt
The right hon. Lady is absolutely right to raise that issue. I said in the Budget that I would return with a full solution to those issues in the autumn statement, but ahead of that we will be making announcements on: pension industry reform, because we want to unlock the £5 trillion of assets in the pension industry; reforms to help companies scale up, so that they do not feel they have to move to other countries when they want to list; and, reforms to green finance so that people can access the capital they need. All those things will be a part of a comprehensive solution that we will be announcing shortly.
Gary Sambrook (Birmingham, Northfield) (Con)
Mr Robin Walker (Worcester) (Con)
Jeremy Hunt
I thank my hon. Friend for his campaigning on this issue. He has long been a voice for reforms to childcare. He is absolutely right that this is one of the biggest sets of childcare reforms we have ever seen. That is why we are taking two and a half years to scale it up. We want to make sure that parents who want to take advantage of the new free hours offer can get the supply of childcare they need, and we will listen very carefully to what the Select Committee says.
Tonia Antoniazzi (Gower) (Lab)
Jeremy Hunt
It is not just about doctors leaving the profession, but doctors reducing their hours. The Royal College of Surgeons says that 69% of its members have reduced their hours as a result of the way that pension taxes used to work. Doctors themselves have welcomed the Budget warmly and as potentially transformative for the NHS.
Alexander Stafford (Rother Valley) (Con)
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Jeremy Hunt
What the hon. Member forgets is that it is not just doctors or, indeed, millionaires who want to save for a decent pension pot; it is ordinary people, and that is who we are on the side of in this Government. When it comes to reforms to the state pension age, we follow a process that balances the interests of taxpayers and the interests of pensioners, and also looks at life expectancy.
James Wild (North West Norfolk) (Con)
Given that the Chancellor has protected the new hospitals budget, may I express the huge frustration of my constituents at delays in the announcement that the RAAC-ravaged—reinforced autoclaved aerated concrete-ravaged—Queen Elizabeth Hospital in King’s Lynn will be part of the programme and urge that decisions are announced as soon as possible?
Jeff Smith (Manchester, Withington) (Lab)
Jeremy Hunt
It would be if his comment had not been quoted out of context, as the hon. Gentleman just did, because he also said that he could see in the Budget a growth plan and he strongly welcomed measures such as the childcare reform.
Priti Patel (Witham) (Con)
In the light of the current pressures on the international banking system, can the Chancellor give an assurance about and an update on the actions he will be taking to ensure that credit flows to small and medium-sized enterprises, our rural businesses and, indeed, start-ups, because at the end of the day they should never be penalised for the misdemeanours of large banks?
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Jeremy Hunt
What I say to the hon. Lady, whom I greatly respect, is that we did a lot for public services in the autumn statement, including a £3 billion increase in the annual schools budget and an £8 billion increase in the annual health and care budget. We are always focusing on public services, and we do support a progressive tax system.
Sir Desmond Swayne (New Forest West) (Con)
Will the Chancellor tweak the childcare initiative to enable families in which one parent wants to care for children full-time to have a realistic prospect of being able to afford to do so?
Jeremy Hunt
We think these reforms will make a big difference to all parents. Our priority is parents who want to work and who are prevented from working by the expense of the current system. I would remind my right hon. Friend that we still have a 15-hour free childcare offer for all parents, irrespective of whether they work, for three and four-year-olds.
Deidre Brock (Edinburgh North and Leith) (SNP)
Researchers at Warwick University and the London School of Economics estimate that the non-dom regime denies the Exchequer about £3.2 billion per year. Why did the Chancellor not take steps to abolish that in last week’s Budget, instead of creating more hoops for universal credit claimants to jump through?
Anthony Browne (South Cambridgeshire) (Con)
The Leader of the Opposition led his charge against the Budget by saying that the UK was the sick man of Europe, yet the IMF shows that the UK had the fastest-growing economy in the G7 not just last year but the year before, and that since the Conservatives came to power in 2010 the UK has had the fastest-growing economy of the major economies in Europe. Does my right hon. Friend the Chancellor agree that, although there are clearly major economic challenges, there are many reasons—not least the tech sector in South Cambridgeshire—to be confident about the future of the UK economy?
Jeremy Hunt
I completely agree and, thanks to the brilliant efforts of the tech sector in South Cambridgeshire, we have now become the third largest tech sector in the world, after the United States and China, thanks to the Conservative Government.
Dave Doogan (Angus) (SNP)
My constituent Fiona Cooper was seeking to close the national insurance contribution gaps in her pension just before retirement and was frustrated that the advice she got about her missing years from HMRC needed validating by the Department for Work and Pensions. Does the Chancellor agree that one set of numbers is the cornerstone of any enterprise, and is he also frustrated that she has been advised that she will need to close full years before she can close part years?
Dr Luke Evans (Bosworth) (Con)
The Chancellor and I sat for three years on the Health Committee hearing evidence of just how restrictive the pension rules were for the likes of doctors. The fact that he has now been able to make that change is fantastic. Will he take that approach to dealing with some of the other red tape around retention and recruitment for other professions in the health service because, as the British Medical Association said, it is making a real difference?
Jeremy Hunt
Few people know as much about this issue as my hon. Friend, given his background in the NHS. He is right, and I know that my right hon. Friend the Secretary of State for Health and Social Care is looking closely at the issue of retention, which has an equally important role to play.
Saqib Bhatti (Meriden) (Con)
Thanks to the quick thinking and quick moves by the Chancellor, the Prime Minister and the Treasury, the tech sector was saved from almost certain oblivion, and at no cost to the taxpayer. Can my right hon. Friend confirm that he is still ambitious for the tech sector, and can he confirm that the merger with HSBC will ensure that our fantastic tech sector, especially our start-ups, will have access to the funding they need?
Jeremy Hunt
My hon. Friend is right. We have a very good solution to the Silicon Valley bank issue with the HSBC takeover. In the long run, we would like our brilliant tech superstar companies to have more choice about how they finance their expansion, and we will bring forward plans to make sure that happens.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
On a point of order, Mr Speaker. The Minister said to me in her response that the Chief Secretary had just confirmed with her that we had signed the memorandum of understanding on regulatory co-operation with the EU. Could you please advise me whether she meant that both sides had signed and the agreement has been secured with the EU? I cannot find the details anywhere. Can you advise me where MPs are able to see the agreement?