Financial Statement and Budget Report
Jeremy Hunt Excerpts(1 year, 8 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Madam Deputy Speaker, in the face of enormous challenges, I report today on a British economy which is proving the doubters wrong. In the autumn, we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked. The International Monetary Fund says our approach means the UK economy is on the right track, but we remain vigilant and will not hesitate to take whatever steps are necessary for economic stability.
Today, the Office for Budget Responsibility forecasts that, because of changing international factors and the measures I take, the UK will not now enter a technical recession this year. It forecasts we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that is not all we have done. In the face of a cost of living crisis, we have demonstrated our values by protecting struggling families with a £2,500 energy price guarantee, one-off support and the uprating of benefits with inflation. Taken together, these measures are worth £94 billion over this year and next—one of the largest support packages in Europe. That averages over £3,300 of cost of living help for every household in the country.
Today, we deliver the next part of our plan: a Budget for growth. Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people and provides a safety net for older people, all while making our country one of the most prosperous in the world—prosperity with a purpose. That is why growth is one of the Prime Minister’s five priorities for our country. I deliver that today by removing obstacles that stop businesses investing, by tackling labour shortages that stop them recruiting, by breaking down barriers that stop people working and by harnessing British ingenuity to make us a science and technology superpower.
I start with the forecasts produced by Richard Hughes and his team at the independent Office for Budget Responsibility, whom I thank for their diligent work. They have looked in detail at the Prime Minister’s economic priorities. The first of those is to halve inflation. Inflation destroys the value of hard-earned pay, deters investment and foments industrial strife. This Government remain steadfast in our support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target. Despite continuing global instability, the OBR reports today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. That is more than halving inflation. High inflation is the root cause of the strikes we have seen in recent months. We will continue to work hard to settle those disputes, but only in a way that does not fuel inflation. Part of the fall in inflation predicted by the OBR happens because of additional measures I take today.
First, I recognise that even though wholesale energy prices have been falling, there is still enormous pressure on family finances. Some people remain in real distress and we should always stand ready to help where we can. So after listening to representations from Martin Lewis and other experts, I today confirm that the energy price guarantee will remain at £2,500 for the next three months. This means the £2,500 cap for the typical household will remain in place when energy prices remain high, ahead of an expected fall in prices from July. This measure will save the average family a further £160 on top of the energy support measures already announced.
The second measure concerns over 4 million households on prepayment meters. They are often the poorest households, but they currently pay more than comparable customers on direct debit. Ofgem has already agreed with suppliers a temporary suspension of forced installations of prepayment meters, but today I go further and confirm that we will bring their charges in line with comparable direct debit charges. Under a Conservative Government, the energy premium paid by our poorest households is coming to an end.
Next, I have listened to representations from my hon. Friends the Members for East Devon (Simon Jupp), for North Cornwall (Scott Mann), for Colne Valley (Jason McCartney) and for Central Suffolk and North Ipswich (Dr Poulter) about the risk to community facilities, especially swimming pools, caused by high costs. When times are tough, such facilities matter even more. [Interruption.] Today, I am—[Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. We want to hear what the Chancellor of the Exchequer is actually saying. Enough.
Jeremy Hunt
Today I am providing a £63 million fund to keep our public leisure centres and pools afloat. I have also heard from the charities Minister, my right hon. Friend the Member for Pudsey (Stuart Andrew), and his Secretary of State, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), about the brilliant work that third sector organisations are doing to help people struggling in tough times. They can often reach people in need that central or local government cannot, so I will give his Department £100 million to support thousands of local charities and community organisations to do their fantastic work.
I also note the personal courage of one of my predecessors, my right hon. Friend the Member for Bromsgrove (Sajid Javid), in talking about the tragedy of suicide and the importance of preventing it. We already invest a lot in this area, but I will assign an extra £10 million over the next two years—nearly a million pounds for every year that he has been in Parliament—to help the voluntary sector play an even bigger role in stopping more families experiencing that intolerable heartache.
My penultimate cost of living measure concerns one of our other most treasured community institutions, the great British pub. In December, I extended the alcohol duty freeze until 1 August, after which duties will go up in line with inflation in the usual way. But today I will do something that was not possible when we were in the EU and significantly increase the generosity of draught relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets. It is a differential a Conservative Government will maintain as part of a new Brexit pubs guarantee. [Hon. Members: “More.”] British ale is warm, but the duty on a pint is frozen. And even better, thanks to the Windsor framework negotiated by my right hon. Friend the Prime Minister, that change will now apply to every pub in Northern Ireland.
Finally, I have heard the representations from my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis), my right hon. Friend the Member for Witham (Priti Patel), my hon. Friend the Member for South Thanet (Craig Mackinlay) and The Sun newspaper about the impact on motorists of the planned 11p rise in fuel duty. I notice the party opposite called for a freeze on this duty. Somehow they forgot to tell the British people they have voted against every single fuel duty freeze for the last 12 years. Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty, so here is what I am going to do: for a further 12 months I am going to maintain the 5p cut and I am going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced.
Our energy price guarantee, fuel duty and duty on a pint, all frozen in today’s Budget. That does not just help families: it helps the economy too, because their combined impact reduces CPI inflation by nearly three quarters of a per cent. this year, lowering inflation when it is particularly high.
I now turn to the Prime Minister’s second priority, which is to reduce debt. Here too our plan is on track. Underlying debt is forecast to be 92.4% of GDP next year, then 97.3%, 94.6%, 94.8%, before falling to 94.6% in 2027-28. We are meeting the debt priority. And with a buffer of £6.5 billion, it means we are meeting our fiscal rule to have debt falling as a percentage of GDP by the fifth year of the forecast.
As a proportion of GDP, our debt remains lower than the USA, Canada, France, Italy and Japan and, because of the decisions I take today and the improved outlook for public finances, underlying debt in five years’ time is now forecast to be nearly 3 percentage points of GDP lower than it was in the autumn. That means more money for our public services and a lower burden for future generations—deeply held Conservative values which we put into practice today.
At the autumn statement, I also announced that public sector net borrowing must be below 3% of GDP over the same period. The OBR confirmed today that we are meeting that rule, with a buffer of £39.2 billion. In fact our deficit falls in every single year of the forecast, with borrowing falling from 5.1% of GDP in ’23-24, to 3.2%, to 2.8%, to 2.2% and 1.7% in ’27-28.
Even better, in the final two years of the forecast, our current budget is in surplus, meaning we only borrow for investment and not for day-to-day spending. Day-to-day departmental spending will grow at 1% a year on average in real terms after ’24-25 until the end of the forecast period. Capital plans are maintained at the same level set at the autumn statement. We will uprate tobacco duty and we will freeze the gross gaming duty yield bands. We are also maintaining the starting rate for savings and ISA subscription limits, and we will bring forward a range of measures to tackle promoters of tax avoidance schemes. Taken together, today’s measures lead to a slightly lower overall tax burden for the rest of the Parliament compared with the OBR’s autumn forecast. Other parties run out of money, but a Conservative Government are reducing borrowing and improving our public finances. By doing so, we are on track to halve inflation, get debt falling and grow our economy, which I turn to next.
Growth is the Prime Minister’s third priority and the focus of today’s Budget. Thirteen years ago, we inherited an economy that had crashed—[Interruption.] Opposition Members might want to listen to this, because since 2010, we have grown more than major countries like France, Italy or Japan, and about the same as Europe’s largest economy, Germany. We have halved unemployment, we have cut inequality and we have reduced the number of workless households by 1 million.
For the first time ever, because of rises in tax thresholds made by successive Conservative Chancellors, people in our country can earn £1,000 a month without paying a penny of tax or national insurance. The Labour party opposed those tax reductions, but they have helped lift 2 million people out of absolute poverty, after housing costs, including 400,000 pensioners and 500,000 children. That averages 80 pensioners and 100 children lifted out of poverty for every single day we have been in office.
Today, we face the future with extraordinary potential. The World Bank said that of all big European countries, we are the best place to do business. Global chief executives say that apart from America and China, we are the best country to invest in. We became the second country in the world to have a stock of foreign direct investment worth $2 trillion, and London has just pipped New York and 53 other global cities to be the best place in the world for female entrepreneurs.
Declinists are wrong about our country for another reason, which is our strength in new industries that will shape this century. Over the last 13 years, under Conservative leadership, we have become the world’s third trillion-dollar tech economy after the US and China. We have built the largest life sciences sector in Europe, producing a covid vaccine that saved 6 million lives and a treatment that saved 1 million more.
Our film and TV industry has become Europe’s largest, with our creative industries growing at twice the rate of the economy; our advanced manufacturing industries produce around half the world’s large civil aircraft wings; and thanks to a clean energy miracle, we have become a world leader in offshore wind. Other parties talk about a green energy revolution, so I gently remind them that nearly 90% of our solar power was installed in the last 13 years—showing it is the Conservatives who fix the roof when the sun is shining.
Let us turn now to what the OBR says about our growth prospects. In November, it expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023. That left many families feeling concerned about the future. But today, the OBR forecasts we will not enter a recession at all this year, with a contraction of just 0.2%. After this year, the UK economy will grow in every single year of the forecast period, by 1.8% in 2024, then 2.5%, 2.1%, and 1.9% in 2027. It also expects the unemployment rate to rise by less than one percentage point to 4.4%, with 170,000 fewer people out of work compared with its autumn forecast.
That return to growth has direct consequences for our role on the global stage. I am proud that we are giving the brave people of Ukraine more military support than anyone else in Europe. On Monday, we were able to go even further, with my right hon. Friend the Prime Minister announcing a £5 billion package of funding for the Ministry of Defence—an additional £2 billion next year and £3 billion the year after. Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11 billion to our defence budget over the next five years, and it will be nearly 2.25% of GDP by 2025.We were the first large European country to commit to 2% of GDP for defence, and we will now raise that to 2.5% as soon as fiscal and economic circumstances allow.
Following representations from the equally persuasive Minister for Veterans’ Affairs, I am today also increasing support for our brave ex-servicemen and women. We will provide a package worth over £30 million to increase the capacity of the Office for Veterans’ Affairs, support veterans with injuries returning from their service and increase the availability of veteran housing.
But to be Europe’s biggest defender of democracy, we must build Europe’s most dynamic economy. That means tackling our long-standing productivity issues, including two in particular which I address today: lower business investment and higher economic inactivity than other countries. Too often companies struggle to recruit, and even when they do, output per employee is lower. So today I set out the four pillars of our industrial strategy to address these issues. As colleagues will know from my Bloomberg speech, they all conveniently start with the letter E: enterprise, employment, education and everywhere. I start with everywhere—[Interruption.] Well, Opposition Members may not want to level up growth across the United Kingdom, but we do.
This Government were elected on a mandate to level up. We have already allocated nearly £4 billion to over 200 projects across the country through the first two rounds of the levelling-up fund. A third round will follow. Since we started focusing on levelling up, 70% of the growth in salaried jobs has come from outside London and the south-east, and today we take further steps. Canary Wharf and the Liverpool docks were two outstanding regeneration projects that happened under a previous Conservative Government. I pay tribute to Lord Heseltine for making them happen, because they transformed the lives of thousands of people. They showed what is possible when entrepreneurs, Government and local communities come together.
So today I announce that we will deliver 12 new investment zones—12 potential Canary Wharfs. In England, we have identified the following areas as having the potential to host one: west midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, east midlands, Teesside and, once again, Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland. To be chosen, each area must identify a location where it can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters. If the application is successful, it will have access to £80 million of support for a range of interventions, including skills, infrastructure, tax reliefs and business rates retention.
Working together with our formidable Levelling Up Secretary, I also want to give some further support to levelling up areas under the E of everywhere. First, I will invest over £200 million in high-quality local regeneration projects across England, including the regeneration of Tipton town centre and the Marsden New Mills redevelopment scheme. I am also announcing a further £161 million for regeneration projects in mayoral combined authorities and the Greater London Authority, and I will make over £400 million available for new levelling-up partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, south Tyneside and Bassetlaw.
Having listened to the case for better local transport infrastructure from many hon. Members, I can announce a second round of the city region sustainable transport settlements, allocating £8.8 billion over the next five-year funding period. Following a wet then cold winter, I have also received particularly strong representations from my hon. Friends the Members for North Devon (Selaine Saxby), for South West Devon (Sir Gary Streeter) and for Newton Abbot (Anne Marie Morris), as well as Councillor Peter Martin from my own constituency, about the curse of potholes. The spending review allocated £500 million every year to the potholes fund, but today I have decided to increase that fund by a further £200 million next year to help local communities tackle this problem.
For Scotland, Wales and Northern Ireland, this Budget delivers not only a new investment zone but an additional £320 million for the Scottish Government, £180 million for the Welsh Government and £130 million for the Northern Ireland Executive as a result of Barnett consequentials. On top of that, in Scotland I can announce up to £8.6 million of targeted funding for the Edinburgh festivals as well as £1.5 million funding to repair the Cloddach bridge. I will provide £20 million of funding for the Welsh Government to restore the Holyhead breakwater, and in Northern Ireland I am allocating up to £3 million to extend the tackling paramilitarism programme and up to £40 million to extend further and higher education participation.
But for levelling up to truly succeed, we need to unleash the civic entrepreneurship that is only possible when elected local leaders are able to fund and deliver solutions to their own challenges. That means giving them responsibility for local economic growth and the benefit from the upside when it happens. So this Government will consult on transferring responsibilities for local economic development from local enterprise partnerships to local authorities from April 2024.
I will also boost Mayors’ financial autonomy by agreeing multi-year single settlements for the west midlands and the Greater Manchester Combined Authority in the next spending review, something I intend to roll out for all mayoral areas over time. I have also agreed a new long-term commitment so that they can retain 100% of their business rates, something I also hope to expand to other areas. Investment zones, regeneration projects, levelling-up partnerships, local transport infrastructure and business rates retention—more control for local communities over their economic destiny, so we will level up wealth and opportunity everywhere.
Today’s priority is the Prime Minister’s promise to grow the economy. We have talked about making that growth happen everywhere, so I now move on to my second E—enterprise. We need to be—[Interruption.] Well, this has never been something of interest to the Labour party, but the Conservatives will not rest until we are Europe’s most dynamic enterprise economy, and under a Conservative Government that is exactly what has been happening. Since 2010, we have 1 million more businesses in the UK—a bigger increase than Germany, France or Italy—but I want another million and another million after that. So today I bring forward enterprise measures in these three areas: to lower business taxes, to reduce energy costs and to support our growth industries.
Let us start with business taxation. Conservatives know the importance of a competitive tax regime. We already have lower levels of business taxation than France, Germany, Italy or Japan, but I want us to have the most pro-business, pro-enterprise tax regime anywhere. Even after the corporation tax rise this April, we will have the lowest headline rate in the G7—lower than any period under the last Labour Government. Only 10% of companies will pay the full 25% rate, but even at 19% our corporation tax did not incentivise investment as effectively as countries with higher headline rates. The result is less capital investment and lower productivity than countries like France and Germany.
We have already taken measures to address this. For larger businesses, we had the super deduction, introduced by my right hon. Friend the Prime Minister, which ends this month. For smaller businesses, we increased the annual investment allowance to £1 million, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits. If the super deduction was allowed to end without a replacement, we would have fallen down the international league tables on tax competitiveness and damaged growth. As a Conservative, I could not allow that to happen.
Today, I can announce that we will introduce a new policy of full capital expensing for the next three years, with an intention to make it permanent as soon as we can responsibly do so. That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It is a corporation tax cut worth an average of £9 billion a year for every year that it is in place, and its impact on the economy will be huge. The OBR says that it will increase business investment by 3% for every year that it is in place. This decision makes us the only major European country with full expensing and gives us the joint most generous capital allowance regime of any advanced economy.
I understand that the Labour party is reviewing business taxes. Let me save it the bother. It puts them up, and we cut them.
I also want to make our taxes more competitive in our life science and creative industry sectors. In the autumn, I said I would return with a more robust research and development tax credit scheme for smaller research-intensive companies. Today, I am introducing an enhanced credit which means that if a qualifying small or medium-sized business spends 40% or more of its total expenditure on R&D, it will be able to claim a credit worth £27 for every £100 that it spends. That means an eligible cancer drug company spending £2 million on R&D will receive over £500,000 to help it to develop breakthrough treatments. That is a £1.8 billion package of support helping 20,000 cutting-edge companies who, day by day, are turning Britain into a science superpower.
The Government’s audio-visual tax reliefs have helped to make our film and TV industry the biggest in Europe. Only last month, Pinewood announced an expansion which will bring another 8,000 jobs to the UK. To give even more momentum to this critical sector, I will introduce an expenditure credit with a rate of 34% for film, high-end television and video games, and 39% for the animation and children’s TV sectors. I will maintain the qualifying threshold for high-end television at £1 million. Because our theatres, orchestras and museums do such a brilliant job at attracting tourists to London and the UK, I will extend for another two years their current 45% and 50% reliefs.
An enterprise economy needs low taxes, but it also needs cheap and reliable energy. We have already announced billions of support to help businesses reduce their energy bills through the energy bills relief scheme and the energy bills discount scheme. We have appointed Dame Alison Rose, chief executive of NatWest, to co-chair our national energy efficiency taskforce and help deliver our national ambition to reduce energy use by 15%. To support her efforts, I will extend the climate change agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures. But the long-term solution is not subsidy, but security. That means investing in domestic sources of energy that fall outside Putin’s or any autocrat’s control. We are world leaders in renewable energy, so today I want to develop another plank of our green economy: carbon capture usage and storage. I am allocating up to £20 billion of support for the early development of CCUS, starting with projects from our east coast to Merseyside to north Wales, paving the way for CCUS everywhere across the UK as we approach 2050. That will support up to 50,000 jobs, attract private sector investment and help capture 20 to 30 million tonnes of carbon dioxide per year by 2030.
We have increased the proportion of electricity generated from renewables from under 10% when we came into office to nearly 40%, but because the wind does not always blow and the sun does not always shine—even under the Conservatives—we will need another critical source of cheap and reliable energy, and that is nuclear. There have been no more powerful advocates for this than my hon. Friends the Members for Ynys Môn (Virginia Crosbie), for Copeland (Trudy Harrison), for Hartlepool (Jill Mortimer) and for Workington (Mark Jenkinson). They rightly say that increasing nuclear capacity is vital to meet our net zero obligations. To encourage private sector investment into our nuclear programme, I today confirm that, subject to consultation, nuclear power will be classed as environmentally sustainable in our green taxonomy, giving it access to the same investment incentives as renewable energy.
Alongside that will come more public investment. In the autumn statement, I announced the first state-financed investment in nuclear for a generation, a £700 million investment in Sizewell C. Today, I can announce two further commitments to deliver our nuclear ambitions. First, following representations from our energetic Energy Security Secretary, I am announcing the launch of Great British Nuclear, which will bring down costs and provide opportunities across the nuclear supply chain to help provide one quarter of our electricity by 2050. [Interruption.] It is so good to hear that the Labour party is in favour of nuclear energy. [Interruption.] It is just a shame that it never did any. Secondly, I am launching the first competition for small modular reactors. It will be completed by the end of this year and if demonstrated as viable we will co-fund this exciting new technology.
Finally, under the E of enterprise, I come to our innovation economy: a central area of national competitive advantage for the United Kingdom. Over the weekend, I worked night and day with the Prime Minister and the Governor of the Bank of England to protect the deposits of thousands of our most cutting-edge companies. We successfully secured the sale of the UK arm of Silicon Valley Bank to HSBC, so the future of those companies is now safe in the hands of Europe’s biggest and one of its most creditworthy banks. But those events show that we need to build a larger, more diverse financing system, where the benefits of investment in high-growth firms are available to more investors. I will return in the autumn statement with a plan to deliver that. It will include measures to unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list, and complete our response to the challenges created by the US Inflation Reduction Act.
When it comes to our innovation industries, however, I want to make progress on two areas today. Nigel Lawson made the City of London one of the world’s top financial centres by competitive deregulation. With our Brexit autonomy, we can do the same for our high-growth sectors. Today, I want to reform the regulations around medicines and medical technologies. We are lucky to have, in the Medicines and Healthcare products Regulatory Agency, one of the most respected drugs regulators in the world—indeed, the very first anywhere to license a covid vaccine. From 2024, it will move to a different model, which will allow rapid, often near-automatic sign-off for medicines and technologies already approved by trusted regulators in other parts of the world such as the United States, Europe and Japan. At the same time, it will set up a swift new approval process for the most cutting-edge medicines and devices to ensure that the UK becomes a global centre for their development. With an extra £10 million of funding over the next two years, they will put in place the quickest, simplest regulatory approval in the world for companies seeking rapid market access. We are proud of the life science sector, which received more inward investment than any in Europe last year. Today’s change will make the UK an even more exciting place to invest, using our Brexit freedoms and speeding up access for NHS patients to the very newest drugs.
Today, with our talented Science, Innovation and Technology Secretary, I also take measures to strengthen our position in artificial intelligence, where the UK hosts one third of all European companies. I am accepting all nine of the digital technology recommendations made by Sir Patrick Vallance in the review that I asked him to do in the autumn statement. I can report to the House that we will launch an AI sandbox to trial new, faster approaches to help innovators get cutting-edge products to market. We will work at pace with the Intellectual Property Office to provide clarity on IP rules so that generative AI companies can access the material they need. We will ask Sir Patrick’s successor, Dame Angela McLean, to report before the summer on options around the growth duty for regulators.
Because AI needs computing horsepower, I today commit around £900 million of funding to implement the recommendations of the independent “Future of Compute” review for an exascale computer. The power needed by AI’s complex algorithms can also be provided by quantum computing, so today we publish a quantum strategy, which will set out our vision to be a world-leading quantum-enabled economy by 2033, with a research and innovation programme totalling £2.5 billion.
I also want to encourage the best AI research to happen in the UK, so will award a prize of £1 million every year for the next 10 years to the person or team that does the most groundbreaking British AI research. The world’s first stored-program computer was built at the University of Manchester in 1948, and was known as the Manchester baby. Seventy-five years on, the baby has grown up, so I will call this new national AI award the Manchester prize in its honour. We want the UK to be the best place in Europe for companies to locate, invest and grow, so today’s enterprise measures strengthen our technology and life science sectors, invest in energy security and—for three years, but I hope permanently—cut corporation tax by £9 billion a year, to give us the best investment incentives of any advanced economy.
An enterprise economy can only grow if it can hire the people it needs, which brings me to my third pillar after everywhere and enterprise. [Interruption.] I said it was a growth budget. We are talking about the E of employment. I am going to talk about a difficult topic for the Labour party. Brexit was a decision by the British people to change our economic model. In that historic vote, our country decided to move from a model based on unlimited low-skill migration to one based on high wages and high skills. Today, we show how we will deliver that, with a major set of reforms. The OBR says that it is the biggest positive supply-side intervention that it has ever recognised in its forecast.
We have around 1 million vacancies in the economy but, excluding students, more than 7 million adults of working age are not in work. That is a potential pool of seven people for every vacancy. Conservatives believe that work is a virtue. We agree with the road haulage king Eddie Stobart, who said:
“The only place success comes before work is the dictionary.”
Today, I bring forward reforms to remove the barriers that stop people who want to work from doing so. I start with over 2 million people who are inactive due to a disability or long-term sickness. Thanks to the reforms courageously introduced by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), the number of disabled people in work has risen by 2 million since 2013. But even after that, we could fill half the vacancies in the economy with people who say that they would like to work, despite being inactive due to sickness or disability. With Zoom, Teams and new working models that make it easier to work from home, that is possible now more than ever.
For that reason, the ever-diligent Work and Pensions Secretary today takes the next step in his groundbreaking work on tackling economic inactivity. I thank him for that, and today we publish a White Paper on disability benefits reform. It is the biggest change to our welfare system in a decade. His plans will abolish the work capability assessment in Great Britain and will separate benefit entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.
Today, I am going further by announcing that, after listening to representations from the Centre for Social Justice and others, in England and Wales we will fund a new programme called universal support. This is a new, voluntary employment scheme for disabled people, where the Government will spend up to £4,000 a person to help them find appropriate jobs and put in place the support that they need. It will fund 50,000 places every single year.
We also want to help those who are forced to leave work because of a health condition such as back pain or a mental health issue. We should give them support before they end up leaving their job, so working with our Health Secretary, I am also announcing a £400-million plan to increase the availability of mental health and musculoskeletal resources, and expand the individual placement and support scheme. Because occupational health provided by employers has a key role to play, I will also bring forward two new consultations on how to improve its availability and double the funding for the small company subsidy pilot.
Another group that deserves particular attention is children in care. They, too, should be given all possible help to make a normal working life possible when they reach adulthood. Often, they depend on foster families, who do a brilliant job, so today I am nearly doubling the qualifying care relief threshold to £18,140 which will give a tax cut to a qualifying carer worth an average of £450 a year. I will also increase the funding that we provide to the Staying Close programme by 50%, to help more care leavers into employment, and I will support young people with special educational needs and disabilities with a £3-million pilot expansion of the Department for Education’s supported internship programme, to help those people to transition from education into the workplace. No civilised society can ignore the contribution that can be made by those with challenging family circumstances, a long-term illness or a disability, so today we remove the barriers that we can, with reforms that strengthen our society as well as our economy.
The next set of employment reforms affects those on universal credit without a health condition, who are looking for work or on low earnings. There are more than 2 million jobseekers in this group—more than enough to fill every vacancy in the economy. Independence is always better than dependence. [Interruption.] With some exceptions, Madam Deputy Speaker. That is why a Conservative Government believe that those who can work, should. Sanctions will be applied more rigorously to those who fail to meet strict work search requirements or choose not to take up a reasonable job offer. For those working low hours, we will increase the administrative earnings threshold from the equivalent of 15 hours to 18 hours at national living wage for an individual claimant, meaning that anyone working below that level will receive more work coach support, alongside a more intensive conditionality regime.
The next group of workers I want to support are those aged over 50. My younger officials have termed these people “older” workers, although as a 56-year-old I prefer the term “experienced”. Fully 3.5 million people of pre-retirement age over 50 are not part of the labour force—an increase of 320,000 since before the pandemic. We now have the 23rd highest inactivity rate for over 55s in the OECD. If we matched the rate of Sweden, we would add more than 1 million people to our national labour force.
Madam Deputy Speaker, I say this not to flatter you, but older people are the most skilled and experienced people we have. [Hon. Members: “Oh!”] No country can thrive if it turns its back on such a wealth of talent and ability. But for too many, turning 50 is a moment of anxiety about the cliff edge of retirement rather than a moment of anticipation about another two decades of fulfilment. I know this myself. After I turned 50, I was relegated to the Back Benches and planned for a quiet life, but instead I decided to set an example by embarking on a new career in finance.
Jeremy Hunt
It’s going well, thank you. So today I take three steps to make it easier for those who wish to work longer to do so.
First, we will increase the number of people who get the best possible financial, health and career guidance ahead of retirement by enhancing the Department for Work and Pensions’ excellent mid-life MOT strategy. It will also increase by fivefold the number of 50-plus universal credit claimants who receive mid-life MOTs from 8,000 to 40,000 a year.
Secondly, with the Secretary of State for Education, my right hon. Friend the Member for Chichester (Gillian Keegan), who has a deep personal commitment to this area, we will introduce a new kind of apprenticeship, targeted at the over 50s who want to return to work. They will be called returnerships and operate alongside skills boot camps and sector-based work academies. They will bring together our existing skills programmes to make them more appealing for older workers, focusing on flexibility and previous experience to reduce training length.
Finally, I have listened to the concerns of many senior NHS clinicians, who say unpredictable pension tax charges are making them leave the NHS just when they are needed most. The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the autumn statement. But ahead of that, I do not want any doctor to retire early because of the way pension taxes work. It is an issue I have discussed not just with the current Secretary of State for Health and Social Care, my right hon. Friend the Member for North East Cambridgeshire (Steve Barclay), but a former Health Secretary who kindly took a break from WhatsApping his colleagues to consider it.
As Chancellor, I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons. So today I will increase the pensions annual tax-free allowance by 50%, from £40,000 to £60,000. Some have also asked me to increase the lifetime allowance from its £1 million limit. But I have decided not to do that. Instead I will go further and abolish the lifetime allowance altogether. It is a pension tax reform that will stop over 80% of NHS doctors from receiving a tax charge, incentivise our most experienced and productive workers to stay in work for longer, and simplify our tax system, taking thousands of people out of the complexity of pension tax. [Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. Just because the Chancellor of the Exchequer is either unpopular or popular, we still need to keep the noise down because we still have to hear what he has to say. He has more to say.
Jeremy Hunt
This is a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers. That is the E of the employment pillar of today’s growth budget.
Which brings me to the final pillar of our growth plan. After employment, enterprise and everywhere, I turn to the E of education. Over more than a decade, this Conservative Government have driven improvement in our education system. We have risen by nearly 10 places in the international league tables for English and maths since 2015.
In the autumn statement, I built on this progress with an extra £2.3 billion annual investment to our schools. We are reviewing our approach to skills with Sir Michael Barber. We have set out our plans to transform lifelong learning with a new lifelong loan entitlement and my right hon. Friend the Prime Minister announced plans to make maths compulsory until 18. But today I want to address an issue in our education system that is bad for children and damaging for the economy. It is an issue that starts even before a child enters the gates of a school. Today I want to reform our childcare system.
We have the one of the most expensive systems in the world. Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.
For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers, such as Denmark and the Netherlands. If we matched Dutch levels of participation, there would be more than 1 million additional women working. And we can do that.
So today I announce a series of reforms that start that journey. I begin with the supply of childcare. We have seen a significant decline in childminders over recent years— down 9% in England in just one year. But childminders are a vital way to deliver affordable and flexible care, and we need more of them. I have listened to representations from my hon. Friend the Member for Stroud (Siobhan Baillie) and decided to address this by piloting incentive payments of £600 for childminders who sign up to the profession, rising to £1,200 for those who join through an agency.
I have also heard many concerns about cost pressures facing the sector. We know that is making it hard to hire staff and raising prices for parents, with around two thirds of childcare providers increasing fees last year alone. So we will increase the funding paid to nurseries providing free childcare under the hours offer by £204 million from this September, rising to £288 million next year. That is an average of a 30% increase in the two-year-old rate this year, just as the sector has requested.
I will also offer providers more flexibility in how they operate in line with other parts of the UK. So alongside that additional funding, we will change minimum staff-to- child ratios from 1:4 to 1:5 for two-year-olds in England as happens in Scotland, although the new ratios will remain optional with no obligation on either childminders or parents to adopt them.
I want to help the 700,000 parents on universal credit who, until the reforms I announced today, had limited requirements to look for work. Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. So for any parents who are moving into work or want to increase their hours, we will pay their childcare costs upfront. And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.
I turn now to parents of school-age children, who often face barriers to working because of the limited availability of wraparound care. One third of primary schools do not offer childcare at both ends of the school day, even though for many people a job requires it to be available before and after school. To address this, we will fund schools and local authorities to increase the supply of wraparound care so that all parents of school-age children can drop their children off between 8 am and 6 pm. Our ambition is that all schools will start to offer a full wraparound offer, either on their own or in partnership with other schools, by September 2026.
Today’s childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it. Taken together with earlier Conservative reforms, they amount to the most significant improvements to childcare provision in a decade. But if we really want to remove the barriers to work, we need to go further for parents who have a child under 3. For them childcare remains just too expensive.
In 2010, there was barely any free childcare for under-fives. A Conservative-led Government changed that, with free childcare for three and four-year-olds in England. It was a landmark reform, but not a complete one. I do not want any parent with a child under five to be prevented from working if they want to, because it is damaging to our economy and unfair, mainly to women, so today I announce that in eligible households in which all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three and four-year-olds, but for every single child over the age of nine months.
The 30 hours offer will now start from the moment maternity or paternity leave ends. It is a package worth on average £6,500 every year for a family with a two-year- old child using 35 hours of childcare every week, and it reduces their childcare costs by nearly 60%. Because it is such a large reform, we will introduce it in stages to ensure that there is enough supply in the market. Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping about half a million parents. From September 2024, that 15 hours will be extended to all children from nine months up, meaning that a total of nearly 1 million parents will be eligible. From September 2025, every single working parent of under-fives will have access to 30 hours of free childcare per week.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. Mr Perkins, stop it.
Jeremy Hunt
Today we complete a landmark Conservative reform. We help the economy, transform the lives of thousands of women and build a childcare system comparable to the best, with a major early years reform for our education system—the E of education, alongside the three other pillars of our growth plan: enterprise, employment and everywhere.
In November we delivered stability; today it is growth. We are tackling the two biggest barriers to businesses growing—investment incentives and labour supply—with the best investment incentives in Europe and the biggest ever employment package. For disabled people, more help; for older people, barriers removed; for families feeling the pinch, fuel duty frozen, beer duty cut and energy bills capped; and for parents, 30 hours of free childcare for all under-fives. Today we build for the future, with inflation down, debt falling and growth up. The declinists are wrong and the optimists are right. We stick to the plan because the plan is working. I commend this statement to the House.
Madam Deputy Speaker
I thank the Chancellor of the Exchequer for his Budget statement. [Interruption.] I hope the House will settle down, please. Under Standing Order No. 51, the first motion, entitled—[Interruption.] The bad behaviour is now on the Government side of the House! Let us have a bit of decorum, please, while we go through the necessary procedure.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Stamp duty land tax (transaction funded with the assistance of a subsidy) (motion no. 39);
(b) Fuel duties (excepted machines) (motion no. 44);
(c) Rates of tobacco products duty (motion no. 46);
(d) Late payment interest (value added tax) (motion no. 57);
(e) Charities (value added tax etc) (motion no. 65).—(Jeremy Hunt.)
Question agreed to.
Oral Answers to Questions
Jeremy Hunt Excerpts(1 year, 9 months ago)
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Marco Longhi (Dudley North) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Mr Speaker, I did check that my Department still exists before coming along today, and you will be pleased to know that the great ship of state that is the Treasury sails serenely on.
In December, I announced the Edinburgh reforms, which take forward the Government’s ambition for the UK to be the world’s most innovative and competitive global financial centre.
Marco Longhi
Can the Chancellor please describe any relationships, or plans for them, to deliver the United Kingdom as a global financial hub, especially given the lack of equivalence with the EU?
Jeremy Hunt
I am very happy to do that for my hon. Friend. The flexibilities that we have since leaving the EU mean that we are able to do the Solvency II reforms, which mean that potentially £100 billion of extra investment will go into UK companies. Indeed, the whole of the Edinburgh reforms give us the opportunity to rethink our regulatory structures so that we do not just remain the world’s second largest exporter of financial services, but go from strength to strength.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
Concerns have been raised that legislation furthering deregulation of the financial sector is paving the way for an economic crash. Revocation of rules on commodity trading is a key concern. What steps has the Chancellor taken to ensure the Financial Services and Markets Bill, when passed, does not cause economic mayhem?
Jeremy Hunt
We have taken enormous trouble in our Edinburgh reforms package to make sure that we learn the lessons of the 2008 financial crash, but I would say to the hon. Member that financial services employ 21,000 people in Scotland. In fact, we called this set of reforms the Edinburgh reforms because they will be good not just for London, but for the whole of the UK.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Chancellor of the Exchequer (Jeremy Hunt)
Busy day for me. With permission, I would like to answer this with question 16.
Leaving the EU has enabled the UK to realise an array of economic opportunities—not just the Solvency II reforms, but 71 trade deals with non-EU countries worth £240 billion to the UK economy in 2021.
Steven Bonnar
I thank the Chancellor for that answer, but analysis by Bloomberg estimates that Brexit is costing the UK £100 billion a year in lost output. The Office for Budget Responsibility forecasts the UK economy will be 4% smaller in the medium term, again due to the impacts of Brexit. The Centre for Economic Performance has warned that Brexit has added almost £6 billion on to UK food bills in the two years to the end of 2021. How much more damage will need to be done before this Government take off the red, white and blue goggles and see the reality that Brexit is an economic drag of disastrous proportions for the countries of the UK?
Jeremy Hunt
And very important, too, if I may say so.
There is a certain irony in the SNP opposing Brexit at the same time as advocating separation for Scotland, which would have a far bigger impact. But as the hon. Member has talked about our economic performance, since we left the single market, our growth has actually been higher than that of France or Germany. There are other things that have happened since then as well, but I do not think it is the doom and gloom that he suggests.
Mr Sheerman
Last week, I was a bit unkind to one of the Treasury team, and can I apologise for that? I shall be very nice this morning.
Does the Chancellor agree with former Home Secretary Amber Rudd? Yesterday, she said that in order to be a Conservative today you have to have a few drinks and then say that Brexit actually works, or if you have really had a few drinks you can admit it does not work. Could we on all Benches admit that we are poorer in this country because of Brexit and do something about it?
Jeremy Hunt
All I would say is that, if Labour really are against Brexit, they should have the courage of their convictions and say they want to re-join the EU. That is the problem: because they do not believe they can make a success of it, they will never be able to run the British economy under it.
Anthony Browne (South Cambridgeshire) (Con)
I welcome the fact that this Government are so committed to making the UK an innovation nation that they have just today set up a whole new Government Department to promote innovation, science and technology. I have about 400 life science companies in my constituency, and there are some reservations about the reform to the research and development tax credit, introduced to try to tackle fraud in the sector. Can my right hon. Friend reassure them that the Government are still committed to supporting research and development companies while tackling fraud?
Jeremy Hunt
My hon. Friend is a formidable advocate for that sector and I do want to give him that reassurance. That is why we protected our R&D budget in the autumn statement at its highest ever level. We are continuing to look at how we can support the R&D small companies sector without allowing that fraud to happen. Thanks to his campaigning and the work of this Conservative Government, last year, we became only the third trillion-dollar tech economy in the whole world.
David Morris (Morecambe and Lunesdale) (Con)
May I thank the Chancellor for awarding Morecambe £50 million for the Eden project? It will transform my whole community. My question is about VAT tapering. When I was David Cameron’s small business tsar—a very long time ago—I came up with a formula for VAT tapering. Would my right hon. Friend like to meet me to talk about that further?
Jeremy Hunt
First, I congratulate my hon. Friend on his extraordinary campaigning for Eden Project North, which is a model for MPs standing up for their constituencies; he deserves huge congratulations on that. I will happily look at his proposals on VAT tapering. We already have the highest VAT threshold in the G7, but anything we can do to help small businesses, this Conservative Government always do.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
In the next financial year there will be a number of measures to help households with the lowest incomes, including a £900 cost of living payment, a 10.1% increase in benefits in line with inflation, and an increase in the national living wage to £10.42 an hour, which represents an extra £1,600 for someone in full-time work.
Dr Mullan
Notwithstanding the collective amnesia on the Opposition Benches, those of us on the Government Benches remember that when we took office in 2010, roughly £1 in every £4 spent by the Labour Government had been borrowed; nor will we forget being told “There is no money left.” Does my right hon. Friend agree that we are only able to take the steps he has outlined—as well as the steps we took during the pandemic—because of careful management of public finances by successive Governments?
Jeremy Hunt
My hon. Friend is entirely right. It is because we took difficult decisions to reduce the deficit by 80% in the period leading up to the pandemic that we were able to allocate £400 billion of help to families and businesses during the pandemic and £99 billion to families during the energy crisis, which means an average of £3,500 per family this year and next. There is a phrase for that: it is “fixing the roof while the sun is shining”.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
A plethora of economic statistics highlight UK inequality and how it affects households. In Ireland, the poorest 5% of the population are 63% richer than their equivalents in the UK. In France, the lowest-earning third earn 20% more than their UK equivalents, while the middle-income third earn 25% more. Low-income households in Germany are 21% richer than those in the UK. No wonder the workers are striking! Why are the Government maintaining a system that keeps workers in the UK poorer than their equivalents in France, Germany and Ireland? Why are they not paying the workers, and why are they not sorting out the strikes?
Jeremy Hunt
That is exactly why we are taking difficult decisions to give this country a high-skill, high-wage economy—measures that the Scottish National party opposed at every step.
Sir David Evennett (Bexleyheath and Crayford) (Con)
Kate Hollern (Blackburn) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Ten days ago, I announced the four pillars of our plan to transform productivity and make the UK one of the most prosperous countries in Europe. They all begin with the letter “e”, to help Opposition Members remember them easily: an enterprise economy with low taxation; world-class education and skills; high levels of employment, to reduce our dependence on migration; and growth spread everywhere, from South West Surrey to Leeds to Chorley.
Kate Hollern
Does the Chancellor recognise that it is his responsibility to deliver what people want, which is a fair tax system where everybody plays by the same rules? Will he disclose how many Government Ministers have personally benefited from non-dom tax status over the years, and how many have used overseas offshore trusts to reduce the taxes that they owe Britain?
Jeremy Hunt
I can tell the hon. Lady that, since 2010, no Member of Parliament has been allowed to benefit from non-dom status.
Rachel Reeves (Leeds West) (Lab)
Last week, Shell announced profits of £32 billion, the highest in its 115-year history. Today, BP announced profits of £23 billion, the highest in its history. Meanwhile, in April, energy bills for households will go up by £500. The cost of living crisis is far from over, so will the Government follow our lead and impose a proper windfall tax to keep people’s energy bills down.
Jeremy Hunt
I am glad that the right hon. Lady asked about windfall taxes, because our plans raise more money than she was advocating in the autumn, and they are also balanced and fair. Anything higher will stop investment, increase dependence on Putin and increase energy prices. I am afraid that it is more clean energy with the Conservatives and more expensive bills with Labour.
Rachel Reeves
There we go again: the Government shielding the energy companies and asking ordinary families and businesses to pay more. Shell has spent more on share buybacks than it has invested in renewables. Last year, BP’s dividends and share buybacks were 14 times higher than investment in low carbon energy. The Government are allowing energy companies to make profits that are the windfalls of war, while ordinary families and businesses pay the price. Is it not the case that the Tories cannot solve the cost of living crisis because they are the cost of living crisis?
Jeremy Hunt
No, Mr Speaker. The total tax take from that sector is £80 billion over five years, which is more than the entire cost of funding the police force. The shadow Chancellor can play politics, but we will be responsible because we want lower bills, more investment in transition and more money for public services, such as the police.
Greg Smith (Buckingham) (Con)
Jeremy Hunt
I discussed this issue with my right hon. Friend when she was the Secretary of State for Work and Pensions. I would be delighted to engage with her further ahead of the Budget to tap into any sensible ideas she has in this important area.
Carol Monaghan (Glasgow North West) (SNP)
Jeremy Hunt
What I can confirm is that there will be no tax cuts funded by borrowing. I can also confirm that those of us on this side of the House, unlike those on the hon. Member’s side, believe in lower taxes.
Andrew Selous (South West Bedfordshire) (Con)
Mrs Emma Lewell-Buck (South Shields) (Lab)
The recent inquiry by the child of the north all-party parliamentary group found that, under this Government, children in the north live in greater poverty, many in destitution, and that that problem is likely to keep growing. Why is it that, when it comes to children, this Government’s mission is always to level down rather than level up?
Jeremy Hunt
I gently say to the hon. Lady that there has been less poverty and inequality under this Government. We demonstrated that in the autumn statement, with a huge package of support—£99 billion—for houses and families up and down the country, targeted at the lowest paid.
James Wild (North West Norfolk) (Con)
Given the serious condition of the Queen Elizabeth Hospital in King’s Lynn, does the Chancellor agree that it would be better value for money to build a new hospital rather than to patch this one up? Will the Treasury back the plan by the Department of Health and Social Care to do just that and include it in the new hospitals programme?
Jeremy Hunt
My right hon. Friend is right to raise that issue. That is why I met Martin Lewis and the six big mortgage lenders before Christmas. We are very alive to those concerns and will monitor the situation closely.
Richard Burgon (Leeds East) (Lab)
It would cost around £1 billion to give nurses an inflation-matching pay rise. Scrapping the non-dom tax avoidance scheme used by the super-rich would raise more than £3 billion. Why, then, is the Chancellor putting non-doms before nurses?
Kit Malthouse (North West Hampshire) (Con)
When the Chancellor acceded to the Treasury throne, he appointed a panel of four advisers drawn from the City. Has the panel met, has he added anybody from small business or industry, and where can we find the minutes, please?
Jeremy Hunt
The economic advisory council has met, I believe, three times. I will write to my right hon. Friend with the details of what was discussed.
Charter for Budget Responsibility
Jeremy Hunt Excerpts(1 year, 9 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Today I have laid before Parliament the Charter for Budget Responsibility. The charter sets out the new fiscal framework announced at autumn statement 2022 and codifies the Government’s commitment to responsible management of the public finances. The fiscal rules ensure that policy keeps the public finances on a sustainable path, requiring that debt falls as a share of the economy over the forecast.
The charter was first published in draft on 17 November 2022. No further changes have been made to the charter since it was published in draft.
A debate and vote in the House of Commons on the updated charter will be scheduled in due course.
[HCWS526]
Asset Purchase Facility
Jeremy Hunt Excerpts(1 year, 9 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The Monetary Policy Committee (MPC) of the Bank of England (“the Bank”) decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the asset purchase facility (APF) for monetary policy purposes 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 its monetary policy purposes on 1 November 2022.
On 28 September 2022 the authorised maximum total size of the APF was increased by £100 billion from £866 billion to £966 billion to allow for the Bank to undertake a time-limited financial stability intervention in long-dated and index-linked gilt markets, which took place between 28 September 2022 and 14 October 2022. Purchases under this intervention totalled £19.3 billion.
On 4 November the Governor and I agreed to reduce the maximum size of the APF by £80 billion from £966 billion to £886 billion to reflect the unused portion of the recent financial stability related APF expansion. Separately, on 22 November 2022, the authorised maximum size of the APF was reduced by £15 billion from £886 billion to £871 billion to reflect the reduction in the stock of assets held by the APF for its monetary policy purposes since 5 May 2022.
On 29 November 2022, the Bank began to unwind its financial stability related gilt portfolio which it completed on 12 January 2023. I welcome the successful unwind of this portfolio which I note has been completed in a timely and orderly manner. I have therefore agreed with the Bank to decrease the authorised maximum size of the APF by a further £20 billion, from £871 billion to £851 billion, which reduces the size of the contingent liability associated with the APF’s indemnity.
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.
[HCWS501]
Oral Answers to Questions
Jeremy Hunt Excerpts(1 year, 10 months ago)
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Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Chancellor of the Exchequer (Jeremy Hunt)
Merry Christmas to you and your staff, Mr Speaker; as your fourth Chancellor of the year, I sincerely hope that I am here this time next year to wish you merry Christmas as well.
The Government are very conscious that these are tough times for businesses as well as families. That is why in the autumn statement I announced, among many other measures, a package of business rates support worth £13.6 billion over the next five years, including a 75% relief for retail, hospitality and leisure properties. That will help thousands of businesses in Scotland.
Neale Hanvey
A very merry Christmas to you and yours, Mr Speaker, and a happy new year to boot.
My constituency of Kirkcaldy and Cowdenbeath plays host to energy giants Shell and ExxonMobil; Seagreen and Berwick Bank wind farms, which supply 2.8 million homes in England with energy, are just off our coastline. In such a land of energy plenty, it is perverse that so many people live in poverty and that businesses struggle to survive. Kirkcaldy ice arena is the oldest rink in the United Kingdom and home to the Fife Flyers ice hockey team. It survived world war two, fire, the financial crash and covid, but in energy-rich Scotland it is struggling to pay its unavoidable energy costs. What targeted support is the Chancellor going to make available for energy-dependent companies such as the rink? Will he meet me to discuss how best to tackle the problem?
Jeremy Hunt
We have announced a package of support for businesses this winter worth nearly £20 billion; it will help businesses throughout the United Kingdom, including in Scotland. It includes special measures for energy-intensive industries. We will shortly announce plans that will take effect from next April.
Jessica Morden (Newport East) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Because of these unprecedented and difficult times, the Government have chosen to make more than £100 billion of additional support available to families this winter and next winter, on top of increasing the national living wage by a record 9.7% and uprating benefits by inflation.
Jessica Morden
Businesses do not know what Government help, if any, will be available for energy bill support from April next year. They include nursing homes, supported housing schemes and older people’s schemes, which have been able to pass on lower costs to vulnerable residents. Without help, costs will significantly increase for those vulnerable people and affect the long-term viability of care and support services. What are the Government doing to address the issue?
Jeremy Hunt
I am very grateful that the hon. Lady asked that question. She is absolutely right; a number of businesses, charities and organisations such as care homes are extremely vulnerable because of the big increase in energy prices. All I would say is that she should look at what the Government have done this winter. With around £18 billion of support, we have demonstrated that we are aware of those concerns. Early in the new year, we will bring forward an appropriate package on what will happen from next April.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Andy Carter (Warrington South) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
We have reaffirmed our commitment to help hard-pressed families this winter with support for energy bills. We have introduced a range of measures to help those families, including capping energy bills at £3,000 this year and £2,500 next year.
Gerald Jones
The End Fuel Poverty Coalition has called for an immediate ban on the installation of prepayment meters made under court warrants, because of fears that energy suppliers are using them to disconnect the poorest and most indebted customers by the back door, and it claims that transferring households to prepayment meters often prompts people in debt to self-disconnect. Citizens Advice said that an extra 450,000 people could be switched to prepayment meters by the end of the year because of debt, and a record number of people could not afford to top-up their prepayment meters—the eighth time that record has been broken in the past nine months. This is a crisis made in Downing Street, and it is having a grave impact on a growing number of the most vulnerable households in my constituency and across the country. What will the Chancellor do to support people in that grave situation?
Jeremy Hunt
I thank the hon. Gentleman for raising that issue. There are 4.1 million people across the country on prepayment meters, and the Ofgem energy price cap covers all prepayment meter customers and ensures that they pay a fair price for their energy. Licence conditions require energy suppliers to provide extra support for those customers because, as the hon. Gentleman said, we recognise how vulnerable they are. We will continue to monitor the situation over the months ahead, because we are aware of the extreme vulnerabilities of that group.
Cat Smith
A great number of my constituents who live in park home sites such as Willowgrove park in Knott End-on-Sea or Smithy Park in Winmarleigh, as well as boat dwellers on the Galgate marina, are concerned about their energy bills but seem to have been forgotten about by the Government. When is the £400 payment of support likely to be made to people in park homes and on boats, and what support will be available from April onwards?
Jeremy Hunt
I am grateful to the hon. Lady for asking that question because I have a number of park home residents in my constituency. The answer is that they can apply online for that support from January.
Andy Carter
I have heard from many voluntary groups in Warrington South, including organisations, such as the Scouts and Guides, that provide important extra-curricular activities for young people’s development, especially after the impact of the pandemic on their education and wellbeing. What steps are the Government taking to support charity and voluntary organisations, many of which have seen their energy costs increase by five times over the past year?
Jeremy Hunt
I am grateful to my hon. Friend for standing up for businesses and charities in Warrington, as he always does so ably. As he knows, this winter the energy business relief scheme is providing £18 billion of support for businesses and charities, and early in the new year we will announce how that support will continue after April. I reassure my hon. Friend that we are particularly concerned about the impact on charities, which see their costs go up but without a corresponding ability to increase their income.
Harriett Baldwin (West Worcestershire) (Con)
I wish you, Mr Speaker, your team and the Treasury team a merry Christmas. Has the Chancellor had a chance to read the Treasury Committee’s report, published last week, about the welcome that we give to the cost of living support that he has announced for next winter? Did he also note our points about the potential cliff edges in that £900 support, and the recommendations we made to spread those payments more evenly over the course of next winter?
Jeremy Hunt
I wish my hon. Friend and all members of the Treasury Committee a merry Christmas. I have read a summary of their report, but I have saved the entire document for my Christmas reading, and I am immensely looking forward to that. The most important thing is that we are offering extra support for people who are vulnerable—support that amounts to £13 billion next year—and that comes before the support with people’s energy bills and a lot of other measures. My hon. Friend makes a very important point about cliff edges, which we will reflect on carefully.
Tom Hunt (Ipswich) (Con)
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Chancellor of the Exchequer (Jeremy Hunt)
My Christmas wish for the economy is that 2023 is the year when we bring down inflation, and that means staying the course outlined in the autumn statement and giving people as much help as we can with the cost of living crisis. I am pleased that, yesterday, my hon. Friend the Exchequer Secretary to the Treasury was able to announce that we are freezing alcohol duty for a further six months.
Neale Hanvey
This morning, I met nurses on the picket lines outside St Thomas’s Hospital. They do not want to be there, the unions do not want them to be there and the public do not want them to be there, but we understand why they are: it is because of the Government’s inflexibility over pay. The Government have deep pockets for bankers and their bonuses, dodgy personal protective equipment and fly-by-night Prime Ministers who blow up the economy. I took the Chancellor at his word when I was with him on the Health and Social Care Committee. Now that he holds the purse strings, will he enter into discussion with the unions and unlock this untenable situation?
Jeremy Hunt
I enjoyed working with the hon. Gentleman on the Select Committee. One thing that we both said needed to happen was to have an independently reviewed workforce plan for the NHS, so he will be pleased that I was able to announce that in the autumn statement.
Elliot Colburn (Carshalton and Wallington) (Con)
Mr Pat McFadden (Wolverhampton South East) (Lab)
The end of the year is a moment for reflection, so let us look at the Government’s report card: a Tory mini-Budget that crashed the economy, waiting lists and times at record highs, trains delayed and cancelled all over the place, billions wasted on dodgy contracts, and a reshuffle policy that means everyone in the Conservative party gets to be famous for 15 minutes. Why is it that when nothing is working under the Tories, even at this time of seasonal gift giving, they still insist on making everyone else pay the price for their Government’s failures?
Jeremy Hunt
First of all, may I wish the shadow Chancellor, the right hon. Member for Leeds West (Rachel Reeves), a merry Christmas in her absence and a speedy recovery from the lurgy that I gather she has? I look back on the last 12 years of this Conservative Government with a great deal of pride. What the right hon. Gentleman never likes to mention in his comparisons is that Labour had a golden economic inheritance from the Conservatives in 1997 and left us with an economy that had run out of money. What have we done? We are the third highest-growing economy in the G7.
Duncan Baker (North Norfolk) (Con)
Jeremy Hunt
The hon. Lady is right about the importance of retention. That is why we are pleased to have 32,000 more nursing staff than at the start of the Parliament, which takes us some way towards our 50,000 additional nursing staff target. When there is a cost of living crisis, as we have at the moment, the best way to resolve this is an independent process. It is an independent process; when I was Health Secretary, it often made rulings that were not comfortable. The best way to resolve the situation is to respect that process.
Sir Edward Leigh (Gainsborough) (Con)
Pensioners are increasingly worried about the fact that, although they have paid high—and now higher—taxes all their life, the service they get from the NHS seems to get worse. Will my right hon. Friend consider an idea put forward and implemented by his great predecessor, Ken Clarke, to give tax relief on private health insurance for pensioners? If we were to have a meeting, could he invite his hon. Friend the Exchequer Secretary, who campaigned for this idea before higher office silenced him?
Jeremy Hunt
My right hon. Friend always asks important and challenging questions. I do not agree with the way forward that he has outlined, but Ken Clarke revolutionised our education system by introducing Ofsted, which has led to a massive increase in standards in our schools. That was the reason I introduced the Ofsted system in our hospitals through the Care Quality Commission, which is also seeing a big improvement in standards.
Ian Paisley (North Antrim) (DUP)
God’s richest blessings to you in this Christmas season, Mr Speaker.
My constituent, who owns a small business, paid VAT on goods that they had ordered and brought back to Northern Ireland, only to receive a second VAT bill from the Republic of Ireland because of the Northern Ireland protocol. That makes doing business totally unaffordable. A previous Prime Minister said that businesses could tear these documents up. Can my constituent tear these documents up?
Munira Wilson (Twickenham) (LD)
A few months ago, the Chancellor promised at the Dispatch Box that he would make a further announcement about the energy bill relief scheme before Christmas. Nothing has yet been forthcoming. Small businesses, charities and schools in my constituency either face going under or face huge deficits in the coming year. Will he confirm when he will make a further announcement about support for businesses, the public sector and charities, and whether this House will have the opportunity to scrutinise it?
Jeremy Hunt
I can absolutely confirm that the House will not have to wait very long for that announcement—and yes, it will have a chance to scrutinise the announcement in detail.
Richard Graham (Gloucester) (Con)
As well as reassuring financial markets and bringing down mortgage rates, the autumn statement did a great deal to help consumers and businesses through winter energy prices. When my right hon. Friend comes to announce what further help might be available for businesses after March, will those in the Treasury also highlight the opportunities for business from the increased business rate discounts for the hospitality and leisure sectors that will come in the spring?
Jeremy Hunt
We will certainly do that. I know that the 75% discount we announced for retail, hospitality and leisure businesses will make an enormous difference to businesses in Gloucester, as will the £2.5 billion annual discount in business rates overall as we make the transition to the new system.
Caroline Lucas (Brighton, Pavilion) (Green)
A very Merry Christmas, Mr Speaker.
With oil and gas companies making grotesque profits from high global prices, it is beyond belief that the Chancellor does not scrap the so-called investment allowance announced in the autumn statement, which means that companies are still able to claim £91.40 in tax relief for every £100 invested in oil and gas infrastructure. Will he now come clean about the cost to the taxpayer of this perverse and utterly unjustified subsidy?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Over the weekend, an anonymous Conservative MP admitted to a newspaper:
“We’ve got no ideas and people feel abandoned.”
This was an
“economy that’s in recession with 10 per cent inflation”
and
“possibly one of the least successful governments in modern Europe.”
My constituents are going into Christmas poorer as a consequence of 12 years of Conservative government. Is the Chancellor proud of that?
Jeremy Hunt
I am very proud of the fact that, having inherited an economy that was bankrupted by the hon. Lady’s party, we have given it one of the strongest growth rates in the developed world.
Dave Doogan (Angus) (SNP)
I know that the Chancellor has invested in public health personally, but may I urge him to invest, in a fiscal sense, in beer and alcohol duty, and to create a differential between off-sales and on-sales? On-sales are where jobs and tax and employment are generated, and off-sales are where all the harmful drinking comes from.
Financial Services
Jeremy Hunt Excerpts(1 year, 11 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
In the autumn statement, I set out the Government’s strategy for boosting growth by investing in our people, in the infrastructure that connects our country, by creating the right environment for business investment, and by supporting our world-leading financial services companies and innovators. Alongside this, I identified five growth sectors—one being financial services—for which the Government will prioritise the review of retained EU law, to ensure we identify changes that will support these sectors to grow.
I am today setting out a bold collection of reforms taking forward the Government’s vision for an open, sustainable, and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens. These reforms will create jobs, support businesses, and power growth across all four nations of the UK.
The UK is one of the world’s leading financial centres and our financial services sector is one of the engines of the UK’s economy. Financial and related professional services employ over 2.3 million people, two thirds of whom are outside of London, with hubs in Belfast, Birmingham, Cardiff, Edinburgh, Glasgow, Leeds, and Manchester.1 In 2021, the financial services sector contributed £173.6 billion to the UK economy, 8.3% of total economic output.2
The announcements being made today build on the reform agenda the Government are taking forward through the Financial Services and Markets (FSM) Bill. The Government’s approach recognises and protects the foundations on which the UK’s success as a financial services hub is built: agility, consistently high regulatory standards, and openness. This approach will ensure that the sector benefits from dynamic and proportionate regulation, and that consumers and citizens benefit from high-quality services, appropriate consumer protection, and a sector that embraces the latest technology.
I have set out below details of the measures being taken forward, which I look forward to delivering in close collaboration with our vibrant financial services sector.
A competitive marketplace promoting effective use of capital
Building a smarter regulatory framework for the UK
The Government have today published their policy statement “Building a smarter financial services framework for the UK”. A copy will be deposited in the Library. This is an ambitious plan for repealing retained EU law in financial services and replacing it with a new framework tailored to the UK, embracing the new opportunities presented by our position outside the EU.
Our approach includes:
Publishing draft statutory instruments to demonstrate how the Government can use the powers within the FSM Bill to reform the prospectus and securitisation regimes and to ensure the Financial Conduct Authority (FCA) has sufficient rulemaking powers to regulate payments services and e-money. Overhauling the prospectus regime will enable the Government to implement recommendations from Lord Hill’s UK listing review, helping to widen participation in the ownership of public companies, simplify the capital raising process for companies on UK markets, and make the UK a more attractive destination for initial public offerings. The Government are also committed to working with the FCA and Prudential Regulation Authority (PRA) to bring forward relevant reforms identified in HM Treasury’s 2021 review of the securitisation regulation.
Plans to repeal the regulations for the European long-term investment fund (ELTIF), without replacement. This reflects the fact that no ELTIFs have been established in the UK, removing unnecessary retained EU law, and that the newly established long-term asset fund (LTAF) regime provides a fund structure better suited to the needs of the UK market. Firms have already begun to seek FCA authorisation for funds taking advantage of this new structure.
Publishing the short selling regulation review, a call for evidence on the UK’s regime for regulating short selling, with the aim of putting in place a regulatory regime tailored to the UK, which supports market integrity and bolsters the competitiveness of UK financial markets.
Publishing PRHPs and UK retail disclosure, a consultation on a proposed alternative framework for retail disclosure in the UK. Following the repeal of the packaged retail and insurance-based investment products (PRIIPs) regulation, the new framework for retail disclosure in the UK will work more effectively with the UK’s dynamic capital markets and foster more informed retail investor participation.
Publishing the information requirements in the payment account regulations consultation which examines proposals to remove unnecessary customer information requirements related to bank accounts imposed by the EU in the payment accounts regulations. This would reduce unnecessary regulations on banks, freeing them up to better meet the needs of UK customers.
Updating banking regulation and the ringfencing regime
The Government will bring forward secondary legislation in 2023 to improve the functionality of the ringfencing regime. These reforms, in response to the independent review on ringfencing and proprietary trading, will benefit customers, the financial services industry, and the economy, while maintaining appropriate financial stability safeguards. The Government will also issue a public call for evidence in the first quarter of 2023 to review the practicalities of aligning the ringfencing and resolution regimes.
The PRA intends to consult on removing rules for the capital deduction of certain non-performing exposures (NPEs) held by banks. This would allow the PRA to apply a judgment-led approach to address the adequacy of firms’ provisioning for NPEs, help to simplify the UK rulebook and avoid the unnecessary gold plating of prudential standards. Such an approach would be possible only because of our regulatory freedoms outside the EU.
The PRA intends to consult on removing rules for the capital deduction of certain non-performing exposures (NPEs) held by banks. This would allow the PRA to apply a judgement-led approach to address the adequacy of firms’ provisioning for NPEs, help to simplify the UK rulebook, and avoid the unnecessary gold plating of prudential standards. Such an approach would only be possible because of our regulatory freedoms outside the EU. The Government will also legislate, when parliamentary time allows, to amend the Building Societies Act 1986 to give building societies in the UK greater flexibility to raise wholesale funds, enabling them to grow and compete on a more level playing field with retail banks, while retaining their mutual model. As part of this, the Government will also modernise relevant corporate governance requirements in line with the Companies Act 2006.
Ensuring a regulatory focus on growth and competitiveness
The Government are legislating through the FSM Bill to introduce new secondary objectives for the FCA and PRA to provide for a greater focus on growth and international competitiveness while maintaining their existing primary objectives. To further support this aim, I will today lay before Parliament new remit letters for the FCA and the PRA which will set clear, targeted recommendations for how the regulators should have regard to the Government’s economic policy.
Separately, the Government and regulators will separately commence a review of the senior managers and certification regime in Q1 2023. The Government will launch a call for evidence to look at the legislative framework of the regime, and the FCA and PRA will review the regulatory framework. The Government’s call for evidence will be an information gathering exercise to garner views on the regime’s effectiveness, scope and proportionality, and to seek views on potential improvements and reforms.
Wholesale markets reforms
The Government are committed to strengthening the UK’s position as a world-leading wholesale capital markets centre, and is taking forward reforms to the markets in financial instruments directive (MiFID) framework through the wholesale markets review. Measures in the FSM Bill deliver key elements of this. To further support this agenda, the Government:
Will today lay before Parliament the Markets in Financial Instruments (Investor Reporting) (Amendment) Regulations 2022, which will remove burdensome EU requirements related to reporting rules. This also builds on the reforms brought forward through the Markets in Financial Instruments (Capital Markets) (Amendment) Regulations 2021 laid in June 2021.
Will bring forward secondary legislation in Q1 2023 to remove burdens for firms trading commodities derivatives as an ancillary activity, for example, when manufacturers seek to fix the future price of their purchases of specific raw materials.
Are committing, alongside the FCA, to having a regulatory regime in place by 2024 to support a consolidated tape for market data. A consolidated tape will bring together market data from multiple platforms into one continuous feed. This will improve market efficiency, lower costs for firms and investors, and make UK markets more attractive and competitive.
Will launch the investment research review: an independent review of investment research and its contribution to UK capital markets competitiveness. The review is part of the Government’s wider commitment to enhance the UK’s ability to attract companies to list and grow.
Will establish a new industry-led accelerated settlement taskforce to explore the potential of faster settlement of financial trades in the UK. Reducing settlement times from the current industry standard of two days could reduce counterparty risk and increase operational efficiency. The taskforce will bring together industry stakeholders to recommend an approach that works for the UK.
Unlocking investment to drive growth across the whole economy
The UK’s financial services sector is an engine for growth across all four nations of the UK. The Government are therefore bringing forward measures that will unleash the sector to drive investment and growth.
The Government set out their plans to reform Solvency II at autumn statement, unlocking more than £100 billion pounds for UK insurers to invest in long-term productive assets. HM Treasury is working with BEIS to deliver the recommendations made to Government as part of the secondary capital raising review, and more broadly on reforms to corporate governance, to further enhance the attractiveness of UK public markets.
Going further, the Government announce today that they:
Will, in early 2023, consult on new guidance to the local government pension scheme (LGPS) in England and Wales on asset pooling. The Government will also consult on requiring LGPS funds to ensure they are considering investment opportunities in illiquid assets such as venture and growth capital, as part of a diversified investment strategy.
Are committed to accelerating the pace of consolidation so that no pension savers are left in poorly governed and underperforming schemes. In the new year DWP will lead the way by consulting on a new value for money framework, alongside the FCA and the Pensions Regulator, which will set required metrics and standards in key areas such as investment performance, cost and charges and quality of service that all schemes must meet.
Will amend the tax rules for real estate investment trusts (REITs). With effect from April 2023, new rules will remove the requirement for a REIT to own at least three properties, where they hold a single commercial property worth at least £20 million; and amend the rule that applies to properties disposed of within three years of significant development activity, to ensure that this rule operates in line with its original intention.
Have today published a technical consultation, VAT treatment of fund management: consultation, which sets out proposals for legislative reform intended to codify existing policy to give legal clarity and certainty, not to make policy changes. The consultation seeks input on whether the proposed changes achieve this objective.
A world leader in sustainable finance
The Government are ensuring that the financial system plays a major role in the delivery of the UK’s net zero target, and are acting to secure the UK as the best place in the world for responsible and sustainable investment. The UK is the world’s premier financial centre for sustainable finance.
The Government are acting to ensure the UK retains global leadership in this rapidly growing sector. To deliver on their commitment to align the financial services sector with net zero and to support the sector to unlock the necessary private financing, the Government:
Will publish an updated green finance strategy early 2023.
Will consult in Q1 2023 on bringing environmental, social, and governance (ESG) ratings providers into the regulatory perimeter. HM Treasury will also join the industry-led ESG data and ratings code of conduct working group, recently convened by the FCA, as an observer. These services are increasingly a component of investment decisions, and the Government want to ensure improved transparency and good market conduct.
A sector at the forefront of technology and innovation
Our regulatory framework for financial services must support innovation and leadership in emerging areas of finance. To ensure the sector is prepared to embrace and facilitate the adoption of cutting-edge technologies, the Government are:
Setting up a financial market infrastructure sandbox in 2023, and is legislating to implement this in the FSM Bill. This will enable firms to test and adopt new technology and innovations, such as distributed ledger technology, in providing the infrastructure services that underpin markets.
Working with the regulators and market participants to bring forward a new class of wholesale market venue, which would operate on an intermittent trading basis. This highly innovative approach would be a global first and would act as a bridge between public and private markets, boosting the UK as a destination for all companies to get the investment they need to create jobs and grow.
Legislating in the FSM Bill to establish a safe regulatory environment for stablecoins—which may be used for payments—and ensure the Government have the necessary powers to bring a broader range of investment-related cryptoasset activities into UK regulation.
Publishing their formal response to the consultation on expanding the investment manager exemption to include cryptoassets, which will facilitate their inclusion in the portfolios of overseas funds managed in the UK. The Government intend for this change to be made through HMRC regulations this year
Bringing forward a consultation in the coming weeks to explore the case for a central bank digital currency—a sovereign digital pound—and consult on a potential design. The Bank of England will also release a technology working paper setting out cutting-edge technology considerations informing the potential build of a digital pound.
Delivering for consumers and businesses
The Government are committed to a financial services sector that supports the real economy and will continue to work with the regulators and industry to ensure that the sector is delivering for people and businesses across the UK. The Government:
Have published a consultation, Reforming the Consumer Credit Act 1974. By modernising the regulation of consumer lending, reform will update consumer protections and ensure they work well in a modern and increasingly digital economy. It will also increase accessibility of credit products by allowing firms to better serve consumers through more innovative credit products.
Have consulted on reforms to remove well-designed performance fees from the pensions regulatory charge cap and will lay regulations early in the new year. This will provide clarity for industry and ensure pension savers can benefit from investing in UK innovation.
Are committed to working with the FCA to examine the boundary between regulated financial advice and financial guidance, with the objective of improving access to helpful support, information and advice, while maintaining strong protections for consumers.
I am confident that the measures announced today, in tandem with the work taken forward through the FSM Bill, will deliver for this key growth sector, and the people and businesses that rely upon it.
Documents relating to all announcements can be found on gov.uk www.gov.uk/government/collections/financial-services-the-edinburgh-reforms.
1 TheCityUK calculations based on Nomis, “Business register and employment survey: open access”, (May 2022), available at:
https://www.nomisweb.co.uk/query/construct/components/date.asp?menuopt=13&subcomp=
2 House of Commons Library “Financial services: contribution to the UK economy”: https://commonslibrary.parliament.uk/research-briefings/sn06193/
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Bank of England Asset Purchase Facility
Jeremy Hunt Excerpts(1 year, 11 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The 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 APF—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 then Chancellor agreed a joint approach with the Governor, 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.
On 4 November the Governor and I agreed to reduce the maximum size of the APF from £966 billion to £886 billion, to reflect the unused portion of the recent financial stability-related APF expansion. Since 5 May 2022, the total stock of assets held by the APF for monetary policy purposes has fallen from £866.6 billion to £851.6 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £871 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.
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Autumn Statement
Jeremy Hunt Excerpts(1 year, 11 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future, so today we deliver a plan to tackle the cost of living crisis and rebuild our economy. Our priorities are stability, growth and public services. We also protect the vulnerable, because to be British is to be compassionate and this is a compassionate Conservative Government.
We are not alone in facing these problems, but today we respond to an international crisis with British values. We are honest about the challenges and we are fair in our solutions. Yes, we take difficult decisions to tackle inflation and keep mortgage rates down, but our plan also leads to a shallower downturn, lower energy bills, higher growth, and a stronger NHS and education system.
There are three priorities then today: stability, growth and public services. I start with stability. High inflation is the enemy of stability. It means higher mortgage rates, more expensive food and fuel bills, businesses failing and unemployment rising. It erodes savings, causes industrial unrest and cuts funding for public services. It hurts the poorest the most and eats away at the trust upon which a strong society is built.
The Office for Budget Responsibility confirms that global factors are the primary cause of current inflation. Most countries are still dealing with the fallout from a once-in-a-century pandemic. The furlough scheme, the vaccine roll-out and the response of the NHS did our country proud, but they all have to be paid for. The lasting impact on supply chains has made goods more expensive and fuelled inflation. This has been worsened by a made-in-Russia energy crisis.
Putin’s war in Ukraine has caused wholesale gas and electricity prices to rise to eight times their historic average. Inflation is high here, but higher in Germany, the Netherlands and Italy. Interest rates have risen here, but faster in the US, Canada and New Zealand. Growth forecasts have fallen here, but fallen further in Germany. The International Monetary Fund expects one third of the world’s economy to be in recession this year or next.
So the Bank of England, which has done an outstanding job since its independence, now has my wholehearted support in its mission to defeat inflation and I today confirm we will not change its remit. But we need fiscal and monetary policy to work together, and that means the Government and the Bank working in lockstep. It means, in particular, giving the world confidence in our ability to pay our debts. British families make sacrifices every day to live within their means, and so too must their Government because the United Kingdom will always pay its way.
I understand the motivation of my predecessor’s mini-Budget and he was correct to identify growth as a priority, but unfunded tax cuts are as risky as unfunded spending, which is why we reversed the planned measures quickly. As a result, Government borrowing has fallen, the pound has strengthened and the OBR says today that the lower interest rates generated by the Government’s actions are already benefiting our economy and public finances. But credibility cannot be taken for granted and yesterday’s inflation figures show we must continue a relentless fight to bring it down, including a rock solid commitment to rebuild our public finances.
Richard Hughes and his team at the OBR today lay out starkly the impact of global headwinds on the UK economy, and I am enormously grateful to him and his team for their thorough work. The OBR forecasts the UK’s inflation rate to be 9.1% this year and 7.4% next year. It confirms that our actions today help inflation to fall sharply from the middle of next year. It also judges that the UK, like other countries, is now in recession. Overall this year, the economy is still forecast to grow by 4.2%. GDP then falls in 2023 by 1.4%, before rising by 1.3%, 2.6% and 2.7% in the following three years. The OBR says higher energy prices explain the majority of the downward revision in cumulative growth since March. It also expects a rise in unemployment from 3.6% today to 4.9% in 2024, before falling to 4.1%.
Today’s decisions mean that, over the next five years, borrowing is more than halved. This year, we are forecast to borrow 7.1% of GDP, or £177 billion; next year, 5.5% of GDP, or £140 billion; then by 2027-28, it falls to 2.4% of GDP, or £69 billion. As a result, underlying debt as a percentage of GDP starts to fall from a peak of 97.6% in 2025-26 to 97.3% in 2027-28.
I also confirm two new fiscal rules. The first is that underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period. The second is that public sector borrowing over the same period must be below 3% of GDP. The plan I am announcing today meets both rules.
Today’s statement delivers a consolidation of £55 billion, and means inflation and interest rates end up significantly lower. We achieve this in a balanced way. In the short term, as growth slows and unemployment rises, we will use fiscal policy to support the economy. The OBR confirms that, because of our plans, the recession is shallower and inflation is reduced. Unemployment is also lower, with about 70,000 jobs saved as a result of our decisions today. Then, once growth returns, we increase the pace of consolidation to get debt falling. This further reduces the pressure on the Bank to raise interest rates, because as Conservatives we do not leave our debts to the next generation.
So this is a balanced path to stability, tackling inflation to reduce the cost of living and protect pensioner savings, while supporting the economy on a path to growth. But it means taking difficult decisions. Anyone who says there are easy answers is not being straight with the British people. Some argue for spending cuts, but that would not be compatible with high-quality public services. Others say savings should be found by increasing taxes, but Conservatives know that high-tax economies damage enterprise and erode freedom. We want low taxes and sound money, but Conservatives know that sound money has to come first, because inflation eats away at the pound in people’s pockets even more insidiously than taxes. So with just under half of the £55 billion consolidation coming from tax, and just over half from spending, this is a balanced plan for stability.
I turn first to our decisions on tax. I have tried to be fair by following two broad principles: first, we ask those with more to contribute more; and secondly, we avoid the tax rises that damage growth. Although my decisions today do lead to a substantial tax increase, we have not raised headline rates of taxation, and tax as a percentage of GDP will increase by just 1% over the next five years.
I start with personal taxes. Asking more from those who have more means that the first difficult decision I take on tax is to reduce the threshold at which the 45p rate becomes payable from £150,000 to £125,140. Those earning £150,000 or more will pay just over £1,200 more in tax every year. We are also taking difficult decisions on tax-free allowances. I am maintaining at current levels the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years, taking us to April 2028. Even after that, we will still have the most generous set of tax-free allowances of any G7 country.
I am also reforming allowances on unearned income. The dividend allowance will be cut from £2,000 to £1,000 next year, and then to £500 from April 2024. The annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 next year, and then £3,000 from April 2024. Those changes still leave us with more generous allowances than countries such as Germany, Ireland, France, and Canada.
Because the OBR forecasts that half of all new vehicles will be electric by 2025, to make our motoring tax system fairer, I have decided that from then electric vehicles will no longer be exempt from vehicle excise duty. Company car tax rates will remain lower for electric vehicles, and I have listened to industry bodies and will limit rate increases to 1 percentage point a year for three years from 2025.
The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-Budget will remain in place but only until 31 March 2025. After that, I will sunset the measure, creating an incentive to support the housing market, and the jobs associated with it, by boosting transaction during the period when the economy most needs it.
I now turn to business taxes. Although I have decided to freeze the employers national insurance contributions threshold until April 2028, we will retain the employment allowance at its new higher level of £5,000. That means that 40% of all businesses will pay no NICs at all. The VAT threshold is already more than twice as high as the EU and OECD averages. I will maintain it at that level until March 2026.
My right hon. Friend the Prime Minister successfully negotiated a landmark international tax deal to make sure that multinational corporations, including big tech companies, pay the right tax in the countries where they operate. I will implement those reforms, making sure that the UK gets our fair share. Alongside further measures to tackle tax avoidance and evasion, that will raise an additional £2.8 billion by 2027-28.
I have also heard concerning reports of abuse and fraud in research and development tax relief for small and medium-sized enterprises, so I have decided today to cut the deduction rate for the SME scheme to 86% and the credit rate to 10% but increase the rate of the separate R&D expenditure credit from 13% to 20%. Despite raising revenue, the OBR has confirmed that those measures will have no detrimental impact on the level of R&D investment in the economy. Ahead of the next Budget, we will work with industry to understand what further support R&D-intensive SMEs may require.
I turn next to windfall taxes. I have no objection to windfall taxes—[Hon. Members: “Ah!”]—if they are genuinely about windfall profits caused by unexpected increases in energy prices. But—[Interruption.] I know that Opposition Members are getting excited at the talk of windfall taxes. Can I just say that any such tax should be temporary, not deter investment and recognise the cyclical nature of energy businesses? So, taking account of that, I have decided that from 1 January until March 2028 we will increase the energy profits levy from 25% to 35%. The structure of our energy market also creates windfall profits for low-carbon electricity generation, so we have decided to introduce, from 1 January, a new, temporary 45% levy on electricity generators. Together, those measures will raise £14 billion next year.
Finally, I turn to business rates. It is an important principle that bills should accurately reflect market values, so we will proceed with the revaluation of business properties from April 2023, but I will soften the blow on businesses with a nearly £14 billion tax cut over the next five years. Nearly two thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit. That will include a new Government-funded transitional relief scheme, as called for by the CBI, the British Retail Consortium, the Federation of Small Businesses and others, benefiting around 700,000 businesses.
Our plan for the cost of living delivers lower inflation, lower mortgage rates, a shallower downturn and lower unemployment, but it also involves public spending discipline, so I turn next to how we protect public services through a challenging period. The Prime Minister’s vision for the country has at its heart a strong NHS and world-class education. We know that a strong economy depends on strong public services, so we will protect them as much as we can as we deliver our plan for stability and growth.
We do have to take difficult decisions on public finances, so we are going to grow public spending, but we are going to grow it more slowly than growth in the economy. For the remaining two years of the spending review, we will protect the increases in departmental budgets that we have already set out in cash terms and then grow resource spending at 1% a year in real terms in the three years that follow. Although Departments will have to make efficiencies to deal with inflationary pressures in the next two years, this decision means that overall spending in public services will continue to rise in real terms for the next five years.
Before I turn to our plans for schools and the NHS, I start with two other areas of spending. The Department for Work and Pensions has a critical role in supporting people into work, and I am proud to live in a country with one of the most comprehensive safety nets anywhere in the world. But I am also concerned that we have seen a sharp increase in economically inactive working-age adults of about 630,000 people since the start of the pandemic. Employment levels have yet to return to pre-pandemic levels, which is bad for businesses who cannot fill vacancies and bad for people missing out on the opportunity to do well for themselves and their families, so the Prime Minister has asked the Work and Pensions Secretary to do a thorough review of issues holding back workforce participation, to conclude early in the new year.
Alongside that, I am also committed to helping people already in work to raise their incomes, progress in work and become financially independent. So we will ask over 600,000 more people on universal credit to meet with a work coach so that they can get the support that they need to increase their hours or earnings. I have also decided to move back the managed transition of people from employment and support allowance on to universal credit to 2028, and will invest an extra £280 million in the DWP to crack down on benefit fraud and error over the next two years. The Government’s review of the state pension age will be published in early 2023.
Our security at home depends on our security overseas, so I turn next to defence and other international commitments. The privilege of being this country’s Foreign Secretary showed me first-hand the enormous respect in which this country is held, because the United Kingdom is and has always been a force for good in the world. Nothing sums that up more than the courage of our armed forces; men and women risk their lives every day in defence of our territory and our belief in freedom. Alongside them, I salute the citizens of another country right on the frontline of that fight today: the brave people of Ukraine. The United Kingdom has given them military support worth £2.3 billion since the start of Putin’s invasion, the second highest contribution in the world after the United States, which demonstrates that our commitment to democracy and open societies remains steadfast. In that context, the Prime Minister and I both recognise the need to increase defence spending. But before we make that commitment, it is necessary to revise and update the integrated review, written as it was before the Ukraine invasion. I have asked for that vital work to be completed ahead of the next Budget and today I confirm that we will continue to maintain the defence budget at at least 2% of GDP to be consistent with our NATO commitment.
Another important international commitment is to overseas aid. The OBR’s forecasts show a significant shock to public finances, so it will not be possible to return to the 0.7% target until the fiscal situation allows. We remain fully committed to that target, and the plans I have set out today assume that official development assistance spending will remain around 0.5% for the forecast period. As a percentage of GNI, we were the third highest donor in the G7 last year, and I am proud that our aid commitment has saved thousands of lives around the world. I look forward to working closely with the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), now rightly back in his place in Cabinet, to make sure that we continue to play a leadership role in tackling global poverty.
The United Kingdom has also been a global leader on climate change, cutting emissions by more than any other G20 country. But with the existential vulnerability we face, now would be the wrong time to step back from our international climate responsibilities, so I also confirm that, despite the economic pressures, we remain fully committed to the historic Glasgow climate pact agreed at COP26, including a 68% reduction in our own emissions by 2030.
I turn to education. Being pro-education is being pro-growth. But providing our children with a good education is not just an economic mission, it is a moral mission, one to which my right hon. Friend the Prime Minister has always been deeply committed. Thanks to the efforts of successive Conservative Education Ministers, in particular my right hon. Friends the Members for Surrey Heath (Michael Gove) and for Bognor Regis and Littlehampton (Nick Gibb), we have risen nine places in the global league tables for maths and reading in the last seven years.
I still, however, have concerns that not all school leavers get the skills they need for a modern economy. But for the first time ever, this country has a Conservative Education Secretary, my right hon. Friend the Member for Chichester (Gillian Keegan), who left school at 16 to become an apprentice, and knows first-hand why good skills matter. There are many important initiatives in place, but as Chancellor I want to know the answer to one simple question: will every young person leave the education system with the skills they would get in Japan, Germany or Switzerland? So, I have appointed Sir Michael Barber to advise me and my right hon. Friend the Education Secretary on the implementation of our skills reform programme.
As we raise the skill levels of our school leavers, I want also to ensure that, even in an economic crisis, the improvement in school standards continues to accelerate. Some have suggested putting VAT on independent school fees as a way of increasing core funding for schools, which would raise about £1.7 billion. But according to certain estimates, that would result in up to 90,000 children from the independent sector switching to state schools, giving with one hand only to take away with another.
So instead of being ideological, I am going to be practical: because we want school standards to continue to rise for every single child, we are going to do more than protect the schools budget—we are going to increase it. I can announce today that next year and the year after, we will invest an extra £2.3 billion per annum in our schools. Our message to heads, teachers and classroom assistants is: thank you for your brilliant work. We need it to continue, and in difficult economic circumstances, a Conservative Government are investing more in the public service that defines all our futures.
The service we depend on more than any other is the NHS. As a former Health Secretary, I know how hard people are working on the frontline and how much they are struggling after the pandemic. The biggest issues are workforce shortages and pressures in the social care sector, so today I address them both.
On staff shortages, the former Chair of the Health and Social Care Committee put forward the case for a long-term workforce plan. He even wrote a book about it, which I have read. [Laughter.] I have listened carefully to his proposals and I believe that they have merit, so the Department of Health and Social Care and the NHS will publish an independently verified plan for the number of doctors, nurses and other professionals we will need in five, 10 and 15 years’ time, taking full account of the need for better retention and productivity improvements.
I have also listened to extensive representations about the challenges facing the social care sector. It did a heroic job looking after children, disabled adults and older people during the pandemic. Its 1.6 million employees work incredibly hard, but even outside the pandemic, the increasing number of over-80s is putting massive pressure on their services.
I also heard the very real concerns from local authorities, particularly about their ability to deliver the Dilnot reforms immediately, so I will delay the implementation of this important reform for two years, allocating the funding to allow local authorities to provide more care packages. I also want the social care system to help free up some of the 13,500 hospital beds that are occupied by those who should be at home, so I have decided to allocate for adult social care additional grant funding of £1 billion next year and £1.7 billion the year after. Combined with savings from the delayed Dilnot reforms and more council tax flexibilities, this means an increase in funding available for the social care sector of up to £2.8 billion next year and £4.7 billion the year after. That is a big increase.
How we look after our most vulnerable citizens is not just a practical issue but one that speaks to our values as a society, so today’s decision will allow the social care system to deliver an estimated 200,000 more care packages over the next two years—the biggest increase in funding under any Government of any colour in history.
The NHS budget has been increased to record levels to deal with the pandemic, and today I am asking the NHS to join all public services in tackling waste and inefficiency. We want Scandinavian quality alongside Singaporean efficiency, and both better outcomes for citizens and better value for taxpayers. That does not mean asking people on the frontline, often exhausted and burned out, to work harder, which would not be possible or fair, but it does mean asking challenging questions about how to reform all our public services for the better. So with respect to the NHS, I have asked the former Health Secretary and chair of the Norfolk and Waveney integrated care system, Patricia Hewitt, to help me and the Health Secretary to achieve that by advising us on how to make sure that the new integrated care boards, the local NHS bodies, operate efficiently and with appropriate autonomy and accountability. I have also had discussions with NHS England about the inflationary pressures on their budgets.
I recognise that efficiency savings alone will not be enough to deliver the services we all need, so, because of difficult decisions taken elsewhere today, I will increase the NHS budget, in each of the next two years, by £3.3 billion. The chief executive of NHS England, Amanda Pritchard, has said that this should provide sufficient funding for the NHS to fulfil its key priorities. She has said that it shows the Government are serious about their commitment to prioritise our NHS. With £3.3 billion for the NHS and £4.7 billion for social care, there is a record £8 billion package for our health and care system. That is a Conservative Government putting the NHS first.
The NHS and schools in Scotland, Wales and Northern Ireland face equivalent pressures, so the Barnett consequentials of today’s decisions mean an extra £1.5 billion for the Scottish Government, £1.2 billion for the Welsh Government, and £650 million for the Northern Ireland Executive. That means more resources for the schools and hospitals in our devolved nations next year, the year after and every year thereafter.
Our support for public services means that despite needing to find £55 billion in savings and tax rises, we are protecting the amount going into public services in real terms over the five-year period; but if we are to sustain our public services and avoid a doom loop of ever higher taxes and ever lower dynamism, we need economic growth, so I now turn—[Interruption.] Opposition Members have never been interested in growth, but we on this side of the House are. [Interruption.]
Mr Speaker
Order. I want to get to the end of the autumn statement, like the rest of the people of this country.
Jeremy Hunt
Let us start with a difficult message for the party opposite: you cannot borrow your way to growth. Sound money is the rock upon which long-term prosperity rests; but it is not enough on its own. Our plan is designed to build a high-wage, high-skill economy that leads to long-term prosperity. In his Mais lecture, my right hon. Friend the Prime Minister identified the keys to doing that: people, capital and ideas. Today’s increase in the education budget demonstrates our commitment to people and skills, and I will now outline three further growth priorities: energy, infrastructure and innovation.
Cheap, low-carbon, reliable energy must sit at the heart of any modern economy, but Putin’s weaponisation of international gas prices has helped to drive the cost of our national energy consumption right up. This year we will be spending an extra £150 billion on energy compared to pre-pandemic levels, the equivalent of paying for an entire second NHS through our energy bills.
In 2019, a third of global emissions came from energy supply, so unless we act radically to change our approach, we will both bankrupt our economy and harm our planet. Over the long term, there is only one way to stop ourselves being at the mercy of international gas prices: energy independence combined with energy efficiency—energy independence so neither Putin nor anyone else can use energy to blackmail us, and energy efficiency to reduce demand and climate impact as much as possible.
Britain is a global leader in renewable energy. Last year, nearly 40% of our electricity came from offshore wind, solar and other renewables. Since 2010, our renewable energy production has grown faster than any other large country in Europe. But we need to go even further, with a major acceleration of home-grown technologies like offshore wind, carbon capture and storage, and, above all, nuclear. This will deliver new jobs, industries and export opportunities, and secure the clean, affordable energy we need to power our future economy and reach net zero. So today I can announce the Government will proceed with the new nuclear power plant at Sizewell C.
Subject to final Government approvals, the contracts for the initial investment will be signed with relevant parties, including EDF, in the coming weeks. This will create 10,000 highly skilled jobs and provide reliable, low-carbon power to the equivalent of 6 million homes for 50 years. Our £700 million investment is the first state backing for a nuclear project in over 30 years and represents the biggest step in our journey to energy independence.
But energy efficiency is just as important, so today we set our country a new national ambition: by 2030 we want to reduce energy consumption from buildings and industry by 15%. Reducing demand by this much means, in today’s prices, a £28 billion saving from our national energy bill, or £450 off the average household bill. This must be a shared mission, with families and businesses playing their part—but so will the Government play our part.
In this Parliament, we are already planning to invest in energy efficiency a total of £6.6 billion. Today I am announcing new funding, from 2025, of a further £6 billion —doubling our annual investment to deliver this new national ambition. Our commitment to the British people is, over time, to remove this single biggest driver of inflation and volatility facing British businesses and consumers. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy will publish further details on our energy independence plans and launch a new energy efficiency taskforce shortly.
If a modern economy needs secure, clean and affordable energy, it also needs good roads, rail, broadband and 5G infrastructure. Such connections matter because they allow wealth and opportunity to spread to every corner of the country. That is why infrastructure is our second growth priority. Thanks to decisions by this Conservative Government, right now workers right across the country are building or maintaining thousands of miles of roads and railways, installing mobile masts and broadband cables to connect the remotest parts of rural Britain, building and repairing hospitals, and constructing new wind turbines in the North sea.
When looking for cuts, capital is sometimes seen as an easy option, but doing so limits not our budgets but our future. So today I can announce that I am not cutting a penny from our capital budgets in the next two years, and I am maintaining them at that level in cash terms for the following three years. That means that although we are not growing our capital budget as planned, it will still increase from £63 billion four years ago to £114 billion next year and £115 billion the year after, and will remain at that level—more than double what it was under the last Labour Government.
Smart countries build on their long-term commitments rather than discarding them, so today I confirm that because of this decision, alongside Sizewell C, we will deliver the core Northern Powerhouse Rail, HS2 to Manchester, East West Rail, the new hospitals programme and gigabit broadband roll-out. All these and more will be funded as promised, with over £600 billion of investment over the next five years to connect our country and grow our economy.
Our national Conservative mission is to level up economic opportunity across the country. That, too, needs investment in infrastructure, so I will proceed with round 2 of the levelling-up fund, at least matching the £1.7 billion value of round 1. We will also drive growth across the UK by working with the Scottish Government on the feasibility study for the A75, supporting the advanced technology research centre in Wales and funding a trade and investment event in Northern Ireland next year.
But to unlock growth right across the country, we need to make it easier for local leaders to make things happen without banging on a Whitehall door. Our brilliant Mayors such as Andy Street and Ben Houchen have shown the power of civic entrepreneurship. We need more of this inspirational local leadership, so today I can announce a new devolution deal that will bring an elected Mayor to Suffolk, and deals to bring Mayors to Cornwall, Norfolk and an area in the north-east to follow shortly. We are also making progress towards trailblazer devolution deals with the Greater Manchester Combined Authority and the West Midlands Combined Authority, and soon over half of England will be covered by devolution deals. Taken together, that £600 billion investment in our future growth represents the largest investment in public works for 40 years, so our children and grandchildren can be confident that this Conservative Government are investing in their future.
Along with energy and infrastructure, our third growth priority is innovation. We have a national genius for innovation. Britain is the land of Newton, Darwin, Fleming, Faraday, Franklin, Gilbert and Berners-Lee, the home of three of the world’s top 10 universities, and the country with the largest life sciences and technology sectors in Europe. Thanks to successive Conservative Governments, we remain a science superpower. I salute the work of the former Chancellor George Osborne, of my right hon. Friend the Member for Tunbridge Wells (Greg Clark) and of the Science Minister, my hon. Friend the Member for Mid Norfolk (George Freeman), for laying the vital foundations to make this possible.
21st-century economies will be defined by new developments in artificial intelligence, quantum technologies and robotics, but we need to be better at turning world-class innovation into world-class companies. As a former entrepreneur—I had to get that in somewhere—I want to combine our technology and science brilliance with our formidable financial services to turn Britain into the world’s next silicon valley.
We learned from the success of Nigel Lawson’s big bang in 1986 that smart regulatory reform can spur investment from all over the world, so today, using our Brexit freedoms, I confirm the next steps in our supply-side transformation. By the end of next year, we will decide on and announce changes to EU regulations in our five growth industries: digital, life sciences, green industries, financial services and advanced manufacturing. I have asked the chief scientific adviser Sir Patrick Vallance, who did such a brilliant job in the pandemic, to lead our work on how to do this.
The second lesson of Nigel Lawson’s big bang is that the most important driver of global success is not tax subsidies but competition, so we will legislate to give the Digital Markets Unit new powers to challenge monopolies and increase the competitive pressure to innovate. To further spur competition, I have listened to requests from businesses, and today I am removing import tariffs on over 100 goods used by UK businesses in their production processes, from car seat parts to bicycle frames.
I will also change our approach to investment zones, which will now focus on leveraging our research strengths by being centred on universities in left-behind areas, to help to build clusters for our new growth industries. My right hon. Friend the Levelling Up Secretary will work with Mayors, devolved Administrations and local partners to achieve this, with the first decisions announced ahead of the spring Budget.
I have heard some speculation that we might cut the research and development budget today, but I believe that that would be a profound mistake. In our 2017 manifesto, we announced a target to invest 2.4% of our GDP in R&D; the latest Office for National Statistics data suggests that the UK is close to meeting that target. I want to go further, so today I am protecting our entire research budget and confirming that we will increase public funding for R&D to £20 billion by 2024-25 as part of our mission to make the United Kingdom a science superpower.
Nigel Lawson’s big bang inspires us today, but nearly 40 years on we must stay true to its mission to make the UK the world’s most innovative and competitive global financial centre, so to further support investment across our economy, I also announce that we are publishing our decision on Solvency II, which will unlock tens of billions of pounds of investment for our growth-enhancing industries.
Our three priorities for growth are energy security, investment in infrastructure, and a plan to turn the United Kingdom into the world’s next silicon valley, transforming British intellectual genius into British commercial success. But alongside British genius, we must remember another great national quality: British compassion. The final part of our plan protects the most vulnerable, and it is to that that I now turn.
Strong public finances are not just to make accountants happy. It is because we took difficult decisions in 2010 that we could afford record funding increases for the NHS, the landmark furlough scheme and now the energy price guarantee. Today, the discipline that we have shown means that we can provide targeted support to help our most vulnerable citizens with the cost of living.
One of the biggest worries for families is energy bills. I pay tribute to my predecessor, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), and to the former Prime Minister, my right hon. Friend the Member for South West Norfolk (Elizabeth Truss), for their leadership in this area. This winter, we will stick with their plan to spend £55 billion to help households and businesses with their energy bills—one of the largest support plans in Europe. From April, we will continue the energy price guarantee for a further 12 months at a higher level of £3,000 per year for the average household. With prices forecast to remain elevated throughout next year, this will mean an average of £500 of support for every household in the country.
At the same time, for the most vulnerable, we will introduce additional cost of living payments next year of £900 to households on means-tested benefits, £300 to pensioner households and £150 for individuals on disability benefit. We will also provide an additional £1 billion of funding to enable a further 12-month extension to the household support fund, helping local authorities to assist those who might otherwise fall through the cracks. For those households that use alternative fuels such as heating oil and liquefied petroleum gas to heat their homes, I am today doubling the support from £100 to £200, which will be delivered as soon as possible this winter. Before the end of this year, we will also bring forward a new targeted approach to support businesses from next April.
But I want to go further to support the people most exposed to high inflation. Around 4 million families live in the social rented sector—almost one fifth of households in England. Their rents are set at 1% above the September inflation rate, which means that on current plans they are set to see rent hikes next year of up to 11%. For many, that would just be unaffordable, so today I can announce that this Government will cap the increase in social rents at a maximum of 7% in 2023-24. Compared with current plans, that is a saving for the average tenant of £200 next year.
This Government introduced—[Interruption.] I thought they cared about the most vulnerable! This Government introduced the national living wage, which has been a giant step in eliminating low pay, so today I am accepting the recommendation of the Low Pay Commission to increase it next year by 9.7%. This means that, from April 2023, the hourly rate will be £10.42, which represents an annual pay rise worth over £1,600 to a full-time worker. It is expected to benefit over 2 million of the lowest-paid workers in our country, and it keeps us on track for our target to reach two thirds of median earnings by 2024. It is the largest increase in the UK’s national living wage ever.
There have been some representations on keeping the uplift to working-age and disability benefits below the level of inflation given the financial constraints we face, but that would not be consistent with our commitment to protect the most vulnerable, so today I commit to uprating such benefits by inflation, with an increase of 10.1%. That is an expensive commitment, costing £11 billion, but it means that 10 million working-age families will see a much-needed increase next year, which speaks to our priorities as a Government and our priorities as a nation. On average, a family on universal credit will benefit next year by around £600. To increase the number of households that can benefit from this decision, I will also exceptionally increase the benefit cap by inflation next year.
Finally, I have talked a lot about the British values of compassion, hard work, dignity and fairness, but there is no more British value than our commitment to protect and honour those who built the country we live in, so to support the poorest pensioners I have decided to increase pension credit by 10.1%, which is worth up to £1,470 for a couple and £960 for a single pensioner in our most vulnerable households, but the cost of living crisis is harming not just our poorest pensioners but all pensioners.
Because we have taken difficult decisions elsewhere today, I can also announce that we will fulfil our pledge to the country to protect the pension triple lock. In April, the state pension will increase in line with inflation, an £870 increase, which represents the biggest ever increase in the state pension. To the millions of pensioners who will benefit from this measure, I say: “Now and always, this Government are on your side.”
There is a global energy crisis, a global inflation crisis and a global economic crisis, but the British people are tough, inventive and resourceful. We have risen to bigger challenges before. We are not immune to these headwinds but, with this plan for stability, growth and public services, we will face into the storm. There may be a recession made in Russia, but there is a recovery made in Britain, and we commit to our plan today with British resilience and British compassion.
Because of the difficult decisions we take today, we will strengthen our public finances, bring down inflation, protect jobs and build the first state-backed nuclear power station in 30 years. We will continue with the biggest programme of capital investment in 40 years, protect standards in schools, cut NHS waiting times, fund social care, cap energy bills and support those on benefits. We will protect workers with the biggest ever increase in the national living wage, and we will protect our pensioners with the tiple lock and the biggest ever increase in the state pension.
This is a balanced plan for stability, growth and public services. It shows that you do not need to choose either a strong economy or good public services. With the Conservatives, and only with the Conservatives, you get both. I commend this statement to the House.
Rachel Reeves (Leeds West) (Lab)
I thank the Chancellor for his statement.
Here we are, the end of 2022. Three Prime Ministers, four Chancellors and four Budgets later, where do we find ourselves? In a worse place than we started the year, with inflation spiralling, growth plunging and living standards falling. Britain is a great country with fantastic strengths but, because of this Government’s mistakes, we are being held back. What people will ask themselves at the next election is, “Are me and my family better off with a Conservative Government?” And the answer is no.
The mess we are in is the result of 12 weeks of Conservative chaos and 12 years of Conservative economic failure: growth dismal, investment down, wages squeezed and public services crumbling. And what does the Chancellor have to offer today? More of the same, with working people paying the price for his failure. The Chancellor should have come here today to ask for forgiveness. At the very least, he could have offered an apology but, no, instead he says his predecessor was correct in his analysis at the mini-Budget that put our economy into freefall. All the country got today was an invoice for the economic carnage that this Government have created. Never again can the Conservatives be seen as the party of economic competence.
It has been clear for weeks what the Government want to do. Step one: blame global factors. Step two: pretend the mini-Budget has nothing to do with any of them. Step three: portray the Chancellor and the Prime Minister as the people who can clear up the mess of their party’s own making. And step four: attempt to lay some so-called traps for the Labour party. They have even had George Osborne in to advise them on how to party like it is 2010.
But this is not a game. This is about people’s lives and livelihoods. This is about people’s ability to pay the mortgage, to pay the rent and to pay the bills after 12 years of Conservative stagnation that have left our country so much worse off. It is about the fact that, when the global storm hit, we were uniquely exposed because of the choices that the Conservatives made.
Nobody doubts that the covid pandemic and the war in Ukraine have had profound implications, and the whole House is united in its condemnation of Russia’s aggression, but Britain’s problems started before the covid pandemic and before Russia’s illegal invasion of Ukraine. The UK has grown by an average of 1.4% a year under the Conservatives, compared with 2.1% a year in the previous Labour years. We are the only G7 economy that is still poorer than before the pandemic.
As the Governor of the Bank of England told the Treasury Committee yesterday, the US has grown by 4.2% since the pandemic and the GDP of eurozone countries is 2.1% higher, yet the UK is 0.7% smaller than at the start of the pandemic. We are not recovering; we are heading into recession, as the OBR confirmed today. The Governor described these differences as dramatic and stark. How does the Chancellor describe them, and how does he explain them?
This is the price of a decade of Tory choices and economic failure, and it is set to continue, with the IMF forecasting that, of the 38 most industrialised economies, the UK will have the slowest growth of any of them in the next two years. The Chancellor is saying today that he will be honest, so let us be honest. No one was talking about cuts to public spending two months ago, and no other advanced economy is cutting spending or increasing taxes on working people as it heads into recession. This Government have forced our economy into a doom loop, where low growth leads to higher taxes, lower investment and squeezed wages, with the running down of public services, all of which hits economic growth again. Instead of learning from the mistakes of the last decade, they are simply repeating them. We need to break free from this vicious cycle of stagnation, with fairer choices and a proper plan for economic growth.
The Chancellor and Prime Minister are trying to convince us that Britain faces problems that are nothing to do with them and that the mini-Budget, which imposed a Tory mortgage premium, put pensions in peril and trashed our reputation around the world, was all just a bad dream. It is their Bobby Ewing strategy, with Downing Street as “Dallas”. Old cast members return as if nothing has happened, with tangled plot lines to keep the audience, but the truth is that the series has lost all credibility and everyone knows it is long past time that it was cancelled. The problem for the British people is that this is not a dream. This is the everyday nightmare of Tory Britain.
The Conservatives would have us believe that they are not responsible for the last 12 years of failure. In doing so, they take the British people for fools. Millions are already worried sick about how to make ends meet and now face the added stress of higher mortgage payments, the prospect of home ownership becoming more and more remote, and rents going through the roof.
What does that mean? Family holidays cancelled, savings depleted, hopes for the future replaced by sleepless nights, and all of that on top of the fact that the average worker is earning less today than when the Tories came to power 12 years ago. The Government have presided over the biggest wage squeeze in centuries. This was a crisis made in Downing Street and it is ordinary working people who are paying the price.
As I was coming into Westminster today, I read a timely warning from the police about pickpockets in the area. They warn:
“You may have an idea of what a pickpocket looks like but they’re far less likely to stand out in a crowd than you might think…they may work in teams to distract the target…One of their tactics is…where a thief will appear to be over-friendly…while pickpocketing you.”
I must report that in the last hour the Conservatives have picked the pockets, purses and wallets of the entire country, as the Chancellor has deployed a raft of stealth taxes taking billions of pounds from ordinary working people—a Conservative double whammy that sees frozen tax thresholds and double-digit inflation erode the real value of people’s wages.
Just one of those freezes in the personal allowance will cost the average earner more than £600, making it even harder to make ends meet. At the same time, the Government are forcing local councils to put up council tax. The Chancellor seems to have confirmed today a council tax bombshell worth £100 for a typical band D property, taking council tax for such properties above £2,000 for the first time. Local people, including those with Conservative councils, will be forced to pay more because of the destruction that the Conservatives have wreaked on our economy.
This comes at a time when councils are already in dire straits because of cuts made by Conservative Governments. They probably sat around the tables in Downing Street thinking that this was some clever trick, but no one is to blame except the Government that have been in power for 12 years—not local authorities, but this Tory Government—for more taxes, more inflation and higher mortgages. Instead of tricks and stealth taxes, why do they not have a proper economic plan for Britain that puts working people at its heart? Why do they refuse to have a real industrial strategy that gives business certainty, unlocks investment and means that Britain can once again lead the world in the industries of the future?
The Chancellor is trying to claim that today’s statement is fair, yet we learn that of all the things that he could save from the wreckage of the kamikaze Budget that he chooses to press ahead with, it is their plan to lift the cap on bankers’ bonuses. At a time when he is urging wage constraints for everybody else, how can he remotely claim that that is fair?
After weeks of, “Will he? Won’t he?”, we learn today that the Chancellor will not, after all, be clamping down on non-doms—tax free income for millionaires while millions face frozen tax allowances and council tax highs. How can he possibly claim that this is fair? He refuses to act, and I wonder why. Maybe that was the only policy that he cannot get signed off by No. 10 Downing Street. I say if you make Britain your home, you should pay your taxes here.
What about the private equity managers, earning millions, who benefit from a tax break on their bonuses, which means that they pay far less tax as a proportion of their incomes than ordinary hardworking people? Did the Chancellor close that loophole today and make sure that they pay their fair share of tax? He did not. He made ordinary working people pay the price instead.
Time and again we have seen how quick the Conservatives are to raise taxes on working people. The Chancellor has even compared himself to Scrooge. He is asking working people to take the hit, with less money in their pockets in the run up to Christmas, but also for years to come. But if you are a banker, a non-dom or a private equity manager, do not worry: Scrooge has not cancelled your Christmas. [Interruption.]An hon. Member asks from a sedentary position, “What about taxes?” Well, non-doms do not pay taxes—that is the whole point. The Government could close that loophole today.
And that is before we even get on to the energy giants. After months of resistance from this Prime Minister, the Government have finally been dragged, kicking and screaming, to extend the windfall tax that Labour has been calling for since January. Yet they still leave billions of pounds on the table, profits that are the windfalls of war, because they have failed to close a huge loophole that they created that hands out massive tax breaks to those oil and gas giants for doing the things that they were going to do anyway.
For those wondering why some energy giants have paid no windfall tax in the last quarter, despite record profits and eye-watering bills for consumers, the answer is that decisions that this Prime Minister made when he was Chancellor, confirmed by the current Chancellor, let the energy giants off the hook once again.
The Government have announced plans for energy bills next year, but bill payers will still see prices go up next spring, leaving far too many people wondering how they will make ends meet. For every pound of windfall tax left on the table, people are faced with higher prices on their bills. The Tories’ failure on energy goes back much further. They closed down gas storage, blocked onshore wind and solar, and slashed support for home insulation.
Today the Chancellor says that he will act on energy efficiency, but I am afraid that is all far too late. We called for the insulation of 2 million homes a year more than 12 months ago. That could cut bills by £1,000 not just for one year, but for every year to come, and they did nothing. Insulation levels in 2021 were 20 times lower than in 2010 because of their neglect, and now he proposes a package, but we have to wait until 2025 for them to act. Why? People are facing a bills crisis now. Years and years will have gone by while he sits back. Millions of families could have been helped and they have not been.
And still the Government block renewable power, such as onshore wind, that could bring energy bills down, create good jobs in all parts of the country, and ensure that Britain can lead the way in the industries of the future. Clean power is the right solution to the energy price crisis, but, yet again, the Conservatives have failed. They have failed to protect us from future shocks, failed to tackle the cost of living crisis, and failed to take the decisions in our country’s national interest. It is because they have failed to grow the economy that they are having to bring forward yet another statement with tax rises and spending cuts.
The last Prime Minister and Chancellor embarked on a reckless sugar rush that abandoned fiscal rectitude, and the Conservatives all cheered for it, but the current Prime Minister and Chancellor have given up on growth altogether. How do we know? It is because the Office for Budget Responsibility has seen their plans and downgraded growth in the months and years ahead. Achieving the levels of growth that this country needs is not like flicking on a switch. We need a serious long-term plan to get our economy growing again, powered by the talents and efforts of millions of ordinary working people and thousands of businesses. We need a fairer, greener, more dynamic economy, creating good jobs in every part of the country—in homegrown renewables, in green hydrogen, in carbon capture and storage—with Labour’s green prosperity plan and a modern industrial strategy where Government work hand in hand with business, properly fixing business rates so that small businesses and our high street businesses thrive again, fixing the holes in the Government’s Brexit deal to help UK businesses to trade and compete in the world, and ensuring that Britain is the best place in which to start and grow a business. That is what a Labour Government will do.
While our public services are struggling and working people are being stretched, the rampant waste and cronyism from this Government continue apace. It does not seem to concern the Chancellor that his Government dished out £3.5 billion of contracts to friends and donors of the Conservative party. The latest Prime Minister spent so much time when he was Chancellor practising his signature for his glossy Instagram graphics that he failed to put in place even the most simple checks on covid support. That is why the former Treasury Minister, Lord Agnew, described the current Prime Minister’s fraud failures as “schoolboy errors”. The Prime Minister left the doors to the vaults wide open to organised criminals and drugs gangs who helped themselves to £6.7 billion of taxpayers’ money—money that the Government are failing to retrieve.
Last month, it was slipped out that the Taxpayer Protection Taskforce, set up to get this money back, is being wound down. The Government have just given up and the Conservatives are turning yet again to our crucial public services to make up the money. The fraudsters may think that they have got away with it, but a Labour Government will hunt them down for everything that they have taken from the taxpayer. The country is sick of being ripped off by the Tories; we want our money back.
It is because of Tory failure that our crumbling public services are set to suffer even more. Ordinary people lose yet again. Never before have people paid so much in tax and yet got so little in return. At the weekend, the Chancellor admitted that the NHS was already on the brink of collapse. With 7 million people on NHS waiting lists, how much longer will that list get? Three in 10 people are leaving education without GCSE English and maths. What will that do to our society and our future economy? Why do the Tories have an ideological objection to putting VAT on school fees, which the Chancellor himself admits would raise £1.7 billion? By their actions it is clear that the Government do not value our public services or the contribution of those working in them. What do we hear today? Reviews on schools, the NHS workforce, social care and waste, but what we need is action. Now is the time for delivery, not more reviews.
The Chancellor had previously said that one of his biggest regrets as Health Secretary was failing to fix social care. Today, he has further delayed the Government’s much-promised social care cap. This is yet another broken promise, after 12 years of Tory failure on social care. The Tories have trashed our public services and the statement today has proved that they are doing nothing to turn that around.
The Conservatives have crashed our economy, given up on growth and sent inflation through the roof and, as usual, it is ordinary working people who are paying the price. It is a familiar tune. Every mortgage they raise, every cut they make, every tax they hike, the Conservatives are costing you. What have we heard today? Yet more excuses and unfair choices. They have failed to tackle the cost of living crisis. They have failed to show how they will fix our public services. They have failed to show how they will deliver growth. They have no plan for the future of our country. After everything we have heard today, and after 12 long years of Tory failure, the conclusion we must come to is that Britain can no long afford a Conservative Government.
Jeremy Hunt
Today, we have announced tax rises and spending cuts of £55 billion. We can debate the reasons, but to govern is to choose and the shadow Chancellor did not answer the simplest of questions: does she back the need for a package of this size to bring down inflation? If Labour cannot answer, it is not fit to govern.
The shadow Chancellor says that it is the Government’s fault, but with a made-in-Russia recession, a once-in-a-century pandemic, higher inflation in Europe, bigger cuts to growth in Germany, bigger interest-rate hikes in America, to blame this on a mini-Budget that was cancelled in three weeks is just not credible. Nor are her facts right. She said that the Government are making the recession worse. Well, today, the independent Office for Budget Responsibility says that we are making it shallower, saving 70,000 jobs.
The shadow Chancellor says that this is austerity 2.0, but, in the 2010 Parliament, spending fell about 3% a year. In this Parliament, even in the next two years, it will rise 3% a year. There is £11 billion for the NHS and schools. It is not just more for our public services; it is massively more than she has ever promised. Then she talked about our record over 12 years, so let us do that: growth higher than Germany, France, Italy or Japan; the lowest unemployment for nearly 50 years; good or outstanding schools up by a quarter; and 4 million more patients in good or outstanding hospitals. In other words, growth up, employment up, school standards up and NHS funding up. Because she will not back this package, the British people today know that, under Labour, it is inflation worse, cost of living worse, unemployment worse and competitiveness worse. If we want stability, growth and funding for public services, the choice is plan or no plan. We have a plan. Where is hers?
Harriett Baldwin (West Worcestershire) (Con)
It is good to see the return of the forecast from the official Office for Budget Responsibility. We all remember why a Conservative Government had to set it up. We will have the OBR in front of our Committee next Tuesday, when we can question the underlying assumptions of the forecast.
I welcome the fact that the Chancellor confirmed today that his announcements go with the grain of what the Bank of England is trying to do in bringing down inflation. That surely is the most important economic challenge for our country at the moment. But can he elaborate a bit more on his thinking? He has tasked the Secretary of State for Work and Pensions with helping back into work those who have left the workforce and he has announced welcome support for those on the welfare system of £900 next year. Can he talk us through his thinking on some of those cliff edges and incentives to work?
Jeremy Hunt
I welcome my hon. Friend to her chairmanship of the Select Committee; I know she will do a brilliant job. She makes an important point. It is essential that we work hand in glove with the Bank of England to bring down inflation. Today, the OBR confirmed that inflation is lower because of the decisions we take. She is right to focus on the worrying increase in the economically inactive, which is not just causing supply chain problems for businesses, but driving inflation. That is why we are lucky to have an excellent Work and Pensions Secretary who will make this his top priority in the work he is doing for the Prime Minister and who will bring his conclusions to this House as soon as possible.
Alison Thewliss (Glasgow Central) (SNP)
The current Chancellor comes here today as the seventh Chancellor in seven years, and a mere 55 days after the last Chancellor came to this House to present his chaotic mini-Budget. His predecessor managed to crash the economy in 26 minutes; this Chancellor has spent the past 53 minutes trying to patch up those mistakes. The reality is that we will all be living with the disastrous consequences of Trussonomics for some time to come.
The Chancellor has brought forward new targets because he is failing to meet the old ones. His difficult choices are of nothing compared with what many of our constituents face. The Tories spent the summer squabbling in a leadership contest when they should have been preparing for the difficult winter ahead. Now the UK is £30 billion worse off because of the incompetence of the Conservative party. Scotland is paying a heavy price indeed for being in this Union.
The Tories are attempting to cut their way out of a recession. It will not work. Public sector workers deserve a proper pay rise to face the cost of living crisis that the Tories have created, and the Scottish Government do not have the same flexibility as this Chancellor to borrow or make changes in-year. Their existing budgets have already been squeezed and reprioritised and there is nothing left to cut.
The Chancellor says Scotland will get £1.5 billion in Barnett consequentials, yet the Scottish Government’s budget is worth £1.7 billion less than when it was introduced last December. Scotland is being short-changed yet again. Will he listen carefully to what John Swinney has asked for and provide the funding Scotland deserves?
The Chancellor is proposing fiscal tightening on a scale not seen since George Osborne—and we are still living with the real consequences of those poverty-inducing policies: the two-child limit, the rape clause, the brutal benefits sanctions. The Glasgow Centre for Population Health has been clear that the previous round of Tory austerity caused 330,000 excess deaths. More of the same from this Chancellor is a price society cannot afford.
Restoring the triple lock and uprating benefits by inflation is not some victory to be celebrated. Barnardo’s has described it as a “minimum first step”. The rate of inflation announced by the Chancellor is not the actual rate of inflation now—nor, perhaps, will it be the rate of inflation by the time the measure comes into force. Again, the Government are not keeping step with the cost of living. Any compassionate Government with an ounce of humanity would not have to be dragged to make such a decision.
The Chancellor talks about uprating the benefit cap—he should scrap the benefit cap. In Scotland, we have introduced the groundbreaking Scottish child payment and increased it to £25 per child per week, now up to the age of 16. There is no two-child limit in Scotland, because we value every child and want them all to have the best future. Will he commit to the same?
The Chancellor mentioned nothing in his statement for those struggling on no recourse to public funds, and nothing either for asylum seekers trying to survive on just 40 quid a week. Will he increase that support or, better yet, allow them to work and to contribute, as so many want to do?
Inflation is running at 11.1%, a 41-year high. For those in lower-income households, the Resolution Foundation says it runs at 12.5%, as more of their income goes on the essentials. The price of food is up 16.4% in a year, with basics such as bread, milk and pasta all increasing and squeezing household budgets. Combining that with the soaring cost of energy, households are finding it impossible to make ends meet.
Cornwall Insight has estimated that the energy price cap next year may come in at an eye-watering £3,702. I appreciate what the Chancellor has said about energy support, but his energy support package must be wider and deeper. It must lift those who are stuck on prepayment meters and make sure they can turn the heating on. Will he listen to National Energy Action, which is calling for a targeted energy price guarantee, similar to a social tariff, set at £1,500 annually until October 2024?
National Energy Action says that should be for all households on means-tested benefits and disability benefits, those in receipt of attendance allowance and carers allowance and those who are living on less than two thirds of the median household income, and it should be targeted to people living in areas of multiple deprivation. We all know that energy bills will not be reducing any time soon. The Chancellor must ensure that people get the help they need to stay safe and warm.
Insulation schemes should have happened already. The UK Government cut back dramatically on schemes while the Scottish Government invested. More than 100,000 homes in Scotland have been made more energy efficient, while the UK Government have ignored the problem. Now they say, “Wait until 2025.” It is not even jam tomorrow; it is, “Huddle under a blanket for three years until we get to you.” It is absolutely ludicrous.
Will the Chancellor consider not a rent cap, but a rent freeze to help renters, as the Scottish Government have done? For those struggling with their mortgages, will he do all he can to encourage banks to support their customers, and will he fix and expand the restrictive support for mortgage interest scheme, to make it more accessible to those who need it?
There is little in this statement to give hope to businesses. Many that managed to survive the pandemic are now struggling to keep going. Increased labour and energy costs, supply chain difficulties and the crash in the pound have all made a difficult situation so much worse.
I have raised many times in this place the impossibly high contracts that companies are having to sign for their energy bills right now, and the Chancellor was not at all clear how he expects them to keep going once the reprieve finishes in the spring. Companies cannot wait any longer for answers, because for too many it will be too much. We know insolvencies are already on the rise, and with companies going bust, rising unemployment will inevitably follow.
We know that recession has a bigger impact on younger workers. When we look at the Chancellor’s statement, the minimum wage rates are still lagging behind for younger workers. They are being discriminated against on the basis of their age, and that continues to be unacceptable.
There was also nothing in the Chancellor’s statement about carbon capture and storage in the north-east of Scotland. Why not? There was a 45% hike on electricity generators—more than on oil and gas—which will hammer Scotland’s renewables sector.
I will give the Chancellor some opportunities to bring some cash into the UK Government’s coffers. The London School of Economics says that ending the non-dom status could bring in £3.2 billion of additional tax. Taxing dividends at the same rate as income from work would stand to raise more than £6 billion a year.
For some time now, big companies have been engaging in significant share buybacks. Oil and gas, financial services and other companies are using share buybacks because their mega-profits are more than they know what to do with. Those profits are not being invested in new development; they are simply being creamed off. It is estimated that FTSE 100 firms are now due to return £55.5 billion to their shareholders via share buybacks this year.
The Institute for Public Policy Research estimates that a one-off 25% windfall tax on share buybacks of FTSE-listed companies could raise £11 billion in a single year. Even if companies were discouraged from buying back shares under the scheme, it would lead to higher reinvestment in development rather than profits. Why would the Chancellor pass up such an economic opportunity?
The Chancellor should also grow the tax base by increasing immigration and improving the lot of those who have already done us the significant honour of coming to live, work and study in our communities. We should thank them, not tell them they are not welcome. It is beyond time that the UK had a sensible, grown-up conversation about immigration. We on the SNP Benches are clear that immigration is an economic good. The OBR forecasts that higher net migration reduces pressures on Government debt over time. The Chancellor should consider that.
Finally, I come to the policy that unites all the Unionist parties in this House: Brexit. The Tories, Labour, the Lib Dems—all Brexiteers now, fully committed to this futile project of deliberate self-destruction. Dr Swati Dhingra of the Bank of England’s Monetary Policy Committee told the Treasury Committee yesterday:
“It’s undeniable now that we’re seeing a much bigger slowdown in trade in the UK”
than in the rest of the world. Wages are lower, business investment is lower, and the UK is underperforming in both imports and exports. That political choice has brought us here today, to the Chancellor’s decisions, which will affect us all but will hit the least well off the very hardest.
The economist Michael Saunders said this week:
“If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget”.
Put that on the side of a bus.
Scotland did not vote for this. We did not choose austerity and we did not choose Brexit. The OBR says that living standards are to fall by 7% over the next two years. It ought to be of no surprise to anybody that just shy of half of Scots think the UK will not exist in its current form in the next five years. This is a UK so weak that no one would wish to join it. Scotland cannot be forced to stay in broke, broken Brexit Britain.
Jeremy Hunt
I thank the hon. Lady for her comments. She is complaining about economic instability damaging business in Scotland, but she supports the most destabilising policy of all: separation from the United Kingdom. She complained about Brexit, but 1 million voters in Scotland voted for Brexit, and we are implementing the will of the British people. Behind the sparring in this House, we actually have very good relations with the Scottish Government. My right hon. Friend the Chief Secretary to the Treasury has already met John Swinney, the Finance Minister, and we have good co-operation.
I need to correct the hon. Lady on one point. She said that we are not investing in energy efficiency. What I said—if she listened to my words—is that in this Parliament we are spending £6.6 billion in energy efficiency, and a further £6 billion from 2025. I understand that separation means more to her than anything else in politics, but families in Scotland heard other things today. They heard about the £600 million for the Scottish NHS, £385 million for schools and more than £4 billion to help Scottish families with their energy bills, on top of £4 billion to build the latest frigates. That is because we are more than neighbours; we are family, and Conservatives always back families.
Mrs Theresa May (Maidenhead) (Con)
I welcome and commend my right hon. Friend’s and the Government’s commitment to sound money and sound public finances. I also welcome the commitment my right hon. Friend has given to innovation and R&D in developing and rebuilding our economy, but could I ask him to go further and look again at the definition of what qualifies as R&D for tax credits? I think more can be done to boost our economy for the future.
Jeremy Hunt
I thank my right hon. Friend for the tremendous support she gave to science and innovation when she was Prime Minister. That is very much something we want to build on as we go forward. We are looking at all the taxes around R&D relief, which we want to encourage. There has been a certain amount of abuse, but we particularly want to encourage use of the relief among small companies, which can often be the most innovative, so I will take away her comments and maybe talk to her separately about what can be done better.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Chancellor has unveiled large numbers —or numbers that seem large—but let us be clear: that £3.3 billion a year is not even Osbornesque funding for the NHS. It is not enough to keep the NHS standing still. Will he level with us and tell us what percentage of the NHS budget that is?
Jeremy Hunt
I actually remember the Parliament from 2010 to 2015 because I was Health Secretary for quite a big chunk of it. I apologise to the hon. Lady, given the important role she plays in this House, for not being able to do that kind of maths in my head, but I can tell her that in that period, the NHS budget went up by 0.1% a year, and this is a lot more than that.
Sir Peter Bottomley (Worthing West) (Con)
The Chancellor will have noticed that Labour Members laughed when he talked about stability, growth and public services. Those who are watching our proceedings will have noticed, as will he, that when he was making his announcements about how we will ease the burden on the poorest and give opportunities to those who most need them, those Members were silenced. People around the country will give backing to his approach. We may have arguments about details, but the key point is to get stability and growth, and to defend public services.
Jeremy Hunt
I thank my hon. Friend the Father of the House. He is right. What I have discovered in the short time that I have been doing this job is that although one might arrive thinking that decisions about money are about numbers and spreadsheets, they are actually about values. Today, I have tried to express our values not just as a Conservative party but as a country. That means protecting the most vulnerable.
Sarah Olney (Richmond Park) (LD)
This cost-of-chaos Budget will cause untold pain for everyone, with soaring mortgages, unfair tax hikes and further cuts to our struggling public services. This Conservative Government have plunged the economy into chaos, and now they are forcing ordinary families to pay for their incompetence. For an average family, it will mean thousands of pounds in increased taxes and bills, yet their local services are being cut while their real-terms pay is decreasing. My question to the Chancellor is simple: who voted for this? It certainly was not the British people.
Jeremy Hunt
I think the hon. Lady must have written her speech before actually listening to what I said. She talked about soaring mortgages, but she might have heard the OBR confirm today that because of the decisions we have taken, inflation will be lower, and that means less pressure on interest rates and less pressure on mortgages. The truth is that the people of this country voted for a Conservative Government because they know that we will take the tough and difficult decisions necessary to deal with a global pandemic, a global energy crisis and a global economic crisis, and that is what we have done today.
Sajid Javid (Bromsgrove) (Con)
The Chancellor rightly talked about the importance of global headwinds—we have seen two 100-year events in just the last three years. I commend him on his autumn statement, which has risen to the challenge that he has set out. He said rightly how important growth is; we know that it is the only way to improve opportunity and social mobility in our country in the long term. He has rightly protected investment in skills, capital infrastructure and R&D, but can he say a little more about how he will ensure that such investment is spent wisely and for the maximum possible impact?
Jeremy Hunt
I thank my right hon. Friend—I always listen very carefully to what he says because of his enormous experience in economic posts in Government and in spending posts. The reason why growth matters is that it is not often something that can be delivered in one or two years—a long-term strategy is needed. I talked about Nigel Lawson’s big bang in 1986, but that actually took decades to come to fruition and turn London and the UK into one of the world’s great centres for financial services. Every Government have a duty to lay those foundations and make sure that, as far as possible, there is cross-party support for what they do.
Sir Stephen Timms (East Ham) (Lab)
I am puzzled by the Chancellor’s position on his predecessor’s mini-Budget. He appeared to acknowledge its foolhardiness but then attempt to defend it. I agree with him about the importance of tackling inactivity, and we on the Work and Pensions Committee look forward to discussing that with the Secretary of State on Wednesday week. I am relieved that working-age benefits and pensions are to be uprated in line with inflation, and I welcome—at last—the uprating of the benefit cap, which, logically, should happen every year. Will he also uprate the local housing allowance, which has been frozen since the pandemic at a time when rents have surged?
Jeremy Hunt
I will write to the right hon. Gentleman on the latter point. On the mini-Budget, let me be very clear that I agree with its priority of growth and with the energy price guarantee, which has given relief to thousands of families, but I do not agree with unfunded tax cuts.
Mr David Davis (Haltemprice and Howden) (Con)
This is one of the most difficult circumstances in memory in which an autumn statement has been delivered, so I congratulate the Chancellor on a remarkably skilful statement. Of course, fiscal responsibility is incredibly important, but one of the risks that goes with it is that of worsening a recession, so it is particularly important that on small businesses, investment and innovation, he came up with a radical new agenda for growth. When he delivers his Budget in the spring—after, I hope, gas prices and financial markets have stabilised—will he reinforce that agenda for growth?
Jeremy Hunt
My right hon. Friend always speaks wisely on these issues. I think that if we are going to go to the British people as a party that can deliver a plan for our economy, they need to see that we have made progress in the growth agenda, and they need to see where this country is going to excel, not just in the next two years but in the next 20, 30 or 40 years. They will reward the party that demonstrates that it understands how to do that—that is what we do know.
Dame Margaret Hodge (Barking) (Lab)
The Chancellor claimed in his statement that he was being fair and protecting the vulnerable. I think that those claims were false and that his measures simply entrench inequality. Freezing income tax bands hurts low earners much more than high earners, and the real-terms cuts to public services hit the poorest and the most vulnerable. He had choices. Why could he not tax income enjoyed from wealth at the same rate as income earned from work? Why could he not reform national insurance so that high earners and people of pensionable age pay a fair contribution? Why did he not address the inequities of the council tax system, whereby a Hartlepool homeowner whose property is valued at £150,000 pays more in council tax than a Westminster homeowner whose property is worth £8 million, and why oh why did he not insist that His Majesty’s Revenue and Customs does something about the £14.4 billion that it loses every year through avoidance and evasion? Does the Chancellor accept that his callous cuts and harsh hikes will do nothing to fix our unfair tax system?
Jeremy Hunt
I have enormous respect for the right hon. Lady, but I do not think that those comments really did her justice. These were £11 billion of spending increases for the NHS and schools, which will make an enormous difference to schools and hospitals in her constituency, as they will in mine. On many of her points, I have some agreement with what she said, and we have actually moved in her direction—on wealth taxes, for example. This is, I think, the biggest ever fall in the capital gains tax allowance. It is a very big change. With respect to high earners, we have had a big tax increase for anyone on the 45p rate—£1,000 a year for anyone on over £150,000—and we are publishing distributional analysis that shows the impact of all these decisions, which shows that the biggest gainers are people on low incomes.
Dame Andrea Leadsom (South Northamptonshire) (Con)
I congratulate my right hon. Friend on walking a tightrope very carefully. I think he has made a positive financial statement, but I ask him to look at energy in particular from the perspective of every family. Individual families need to reduce their own energy bills and energy usage. There is so much that can be done. I commend to him the 1922 Committee’s work looking at how individuals can do things such as putting a timer on their Economy 7 boiler and reducing the temperature of their hot water. There are things that families could do for themselves, and the Chancellor could of course require energy suppliers to do much more by going house to house to help people who are really struggling this winter.
Jeremy Hunt
As ever, my right hon. Friend speaks very wisely. Today’s statement was long, and I did not have time to go into the details, but my right hon. Friend the Business Secretary will announce a plan very much along the lines that she describes. It is a kind of new contract with families up and down the country. We are giving £106 billion of support to bring down energy bills this year and next. We are helping people, but we are also saying, “We need you to also do things to help improve energy efficiency.” That is why the national plan to reduce energy efficiency by 15% is so important. We are asking people to help themselves by taking the kind of measures that she mentions, so that when we are not able to offer sustained support people’s energy bills are lower.
Several hon. Members rose—
Chris Bryant (Rhondda) (Lab)
That was a bit of a surprise, Madam Deputy Speaker. I do not think that you carried the House there.
This is really grim. The public finances are in a really difficult situation, and even more importantly the OBR figures show that disposable income for households will fall after what the Chancellor has done today by 7% over the next two years. Will he confirm that that is the biggest fall in our history? That means families not being able to afford things, and that is, in the end, at the doorstep of No. 10, is it not?
Jeremy Hunt
The first part of what the hon. Member said is broadly correct. There will be a very big fall—[Interruption.] Would Members like me to answer the question or not? There will be a big fall in disposable income, but the OBR says that the measures that I took today mitigate that, reducing the effect by around 25%. That is very important, but to say that somehow this has nothing to do with a global pandemic and a war in Ukraine—
Jeremy Hunt
Yes. The hon. Member said it was at the doorstep of No. 10. I think that is to ignore the reality staring him in the face.
Philip Dunne (Ludlow) (Con)
I congratulate my right hon. Friend on the exceptionally skilful delivery and content of his statement. I point particularly to the work that he was just touching on in response to the question from my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) about energy efficiency. He has today set an interim target to reduce energy demand in this country by 15% by 2028. That is the first time that we have done that, as far as the Environmental Audit Committee, which I chair, is aware. It plugs a gap in the energy security strategy, which did not address reducing demand. I urge him, in his discussions with the Secretary of State for Business, Energy and Industrial Strategy, to ensure that when the work of the energy efficiency taskforce is designed, there is engagement with the industry that has to deliver the reduction—unfortunately, neither the Treasury nor his predecessors in BEIS have done that adequately in previous schemes—to ensure that the scheme will endure, and actually work and deliver reductions at a household level.
Jeremy Hunt
My right hon. Friend understands this extremely well, and he has done very good work with his Committee. This is a national ambition, which means that the Government and every family in the country need to work together to reduce our national energy bill by tens of billions of pounds, to meet our climate change commitments, and to reduce the average bill in this country at today’s prices by nearly £500. It is really worth doing, and we are putting our money where our mouth is with billions of pounds more investment.
Ben Lake (Ceredigion) (PC)
The Chancellor rightly acknowledged that inflationary pressure on the budgets of public services is severe, and has an impact on the delivery of key services. He announced an additional £1.2 billion for the budget of the Welsh Government. Will he explain whether that is real-terms increase to the budget? If not, how does he expect budgets in Wales to meet the rising cost of living?
Jeremy Hunt
Because of the way the Barnett consequentials work, this is a cash amount that the Welsh Government will receive, but if they do what the English Government are doing with schools and hospitals —[Interruption.] If they do what the United Kingdom Government are doing in England with schools and hospitals, there will be a real-terms increase in Welsh schools and hospitals.
Dr Liam Fox (North Somerset) (Con)
I congratulate my right hon. Friend on a balanced and skilful statement prioritising fiscal stability. He will be aware that some of us believe that the Bank of England maintained monetary conditions that were too loose for too long, but that it would also be a mistake to maintain monetary conditions that are too tight for too long. Can he therefore confirm that the anti-inflationary measures that he has taken today will mean that the pressure to raise interest rates will be minimised, and that there is a much greater chance that they will fall earlier than would otherwise have been the case?
Jeremy Hunt
My right hon. Friend is absolutely right to focus on this issue, because every 1% increase in interest rates is about £850 more on the average mortgage, so it is hugely important to families up and down the country. The OBR has said that the measures that we have taken today will mean that inflation is lower than it would otherwise have been. That means that the Bank of England is under less pressure to increase interest rates, which for reasons that he knows are such a worry for so many families.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Governor of the Bank of England said yesterday to the Treasury Committee that the mini-Budget has damaged our reputation internationally. He told us:
“People have said, ‘We did not think the UK would do this.’”
Why does the Chancellor not accept that it is because his party has destroyed our economic credibility and crashed the economy that the British people are now having to pay, in tax rises and public service cuts, the £55 billion of consolidation that he is talking about?
Jeremy Hunt
I have been pretty straightforward about saying that there were mistakes in the mini-Budget, and within three weeks we reversed them. Long-term gilt yields, which are the thing that really drive the cost of borrowing for the country, are down to the levels they were at before the mini-Budget, and to try to say that all the problems we face now are a result of decisions that were reversed in three weeks does not stand any scrutiny at all.
Sir William Cash (Stone) (Con)
My right hon. Friend argued for sound money and sound foundations. Would he be good enough to explain how it is that High Speed 2 will continue beyond Birmingham at a verifiable cost of at least £40 billion, when every independent report on HS2 condemns the project and confirms that phase 2 will make rail services to all west coast destinations north of Birmingham much worse? I ask him to make a clear commitment to keep this matter under review at all costs; it is in the national interest.
Jeremy Hunt
My hon. Friend is right that the increases in the budget for HS2 are disappointing, but a strong economy needs to have consistency of purpose, and that means saying we will make sure that we are a better connected country. The lack of those connections is one of the fundamental reasons for the differences in wealth between north and south, which we are so committed to addressing. There is a bigger issue about the way that we do infrastructure projects: it takes too long, and the budgets therefore get out of control. We are just not very good at it, and we have to sort it out.
John McDonnell (Hayes and Harlington) (Lab)
May I take the Chancellor back to the housing issue? Housing is often the canary in the mine when assessing how people are faring in difficult circumstances. Last year, there was a 500% increase in mortgage repossession orders and a 160% increase in repossession orders from private landlords. Will the Chancellor come back with a package of measures that will assist people in getting through this housing crisis? It could include the issue that was raised earlier with regard to benefit caps. Mayors across the country are also asking for rent control powers, and we may need a mortgage interest assistance package as we go through this period.
Jeremy Hunt
I listen carefully to what the right hon. Gentleman says. Despite our political differences, I respect the fact that he is concentrating on a very difficult issue. Local housing allowance rates for 2023-24 will be maintained at the elevated rates agreed for 2020-21. I will continue, as the economic situation deteriorates, to monitor carefully the issues around mortgage repossessions. I have already had a number of discussions internally in the Treasury, and as necessary, I will come back to this House with further measures.
Damian Green (Ashford) (Con)
I congratulate the Chancellor on his statement. In particular, I welcome the fact that he listened to his own representations about the need for an NHS workforce plan. I also welcome the increase in money for social care, which is desperately needed. May I urge him to take a leaf out of his own book and start to develop a workforce plan for the social care sector as well, which is equally needed?
Jeremy Hunt
My right hon. Friend is probably one of the most knowledgeable people in this House when it comes to the social care sector, and he campaigned very hard for it in government. He is absolutely right: we do need a long-term plan for the social care workforce as well, and I will do what I can to turn my attention to that when we have set one up for the NHS.
John Cryer (Leyton and Wanstead) (Lab)
Two thirds of children living in poverty also live in working households. That is before the drop in income that is being projected, which my hon. Friend the Member for Rhondda (Chris Bryant) raised. By the end of this Parliament, will that figure be greater or lower than it is now?
Jeremy Hunt
I would hope it would be lower, but I point out that the needs of people in that situation have been at the front of our mind in making today’s decisions. Uprating the national living wage means up to £1,600 extra for people on low incomes. The extra £900 that people on means-tested benefits will receive next year will make a big difference, and the increase in the pension rate by inflation is £870, so we are very much thinking about those people.
Dr Julian Lewis (New Forest East) (Con)
I welcome what the Chancellor just said about his focus on mortgages and avoiding repossessions. On the need not to send the wrong signal about defence expenditure, I note that he skilfully linked that to a future defence review. When would that defence review come to fruition, and in the meantime will he guarantee that there would be no real decrease in defence expenditure?
Jeremy Hunt
I would expect my right hon. Friend to look forensically at any comment that I make about defence. I was very clear in my words, first, that the Prime Minister and I recognise the need to increase defence spending, and secondly, that the update to the integrated review needs to happen before the spring Budget. This is not pushing something into the long grass; it is making sure we get the decisions right.
Ian Paisley (North Antrim) (DUP)
The £650 million of Barnett consequentials announced for Northern Ireland will go some way to plugging the gap that has been left by an inept Finance Minister in Northern Ireland. We welcome that; it only goes some way to plugging that gap, but it recognises that without Westminster firepower, Northern Ireland would be in a considerably worse-off place.
The energy payments are woefully inadequate for a lot of people in Northern Ireland. One thousand litres of oil in Northern Ireland costs over £900 today— £300 will not cut it. For the third time, could the Chancellor outline for us when those payments will actually be made to Northern Ireland? Secondly, with regard to the “next silicon valley” proposal, does he accept that unless the handbrake of the Northern Ireland protocol is replaced, Northern Ireland will not benefit from that proposal?
Jeremy Hunt
First, on the opportunity to be the world’s next silicon valley, I want Northern Ireland to be a central part of that. In fact, we have agreed to explore funding a trade and investment event in Northern Ireland, to attract more inward investment into the Province for that very reason. I am aware that when it comes to fuel poverty issues, it is a different situation in Northern Ireland. I have had a number of discussions with my officials, and I am aware that energy consumption patterns are slightly different. I will write to the hon. Gentleman with details on that, and I am happy to engage with him separately.
Greg Clark (Tunbridge Wells) (Con)
I congratulate the Chancellor on his meticulous and positive statement, which will be very well received in the science and technology communities. When we invest in research and development, we lay down a path to high-paid jobs, discoveries that change people’s lives and export earnings. The commitment that he has made is the biggest increase in R&D funding in the history of this country. Will he work with the Business Secretary to develop a strategy through which businesses can invest alongside the commitment he has made today, so that we can get the most out of that commitment?
Jeremy Hunt
There has been no stronger backer of science and research and development than my right hon. Friend, and I will absolutely make that commitment. There are a lot of elements in the industrial strategy he put together that we can learn from and weave into what we do next. He is right: this cannot happen with Government money alone. We need to work in partnership with brilliant British innovators and make the most of the incredible opportunity we have.
Sir George Howarth (Knowsley) (Lab)
Instead of shifting the cost on to local authorities and hard-pressed council tax payers, why did the Chancellor not look at the possibility of using the £10 billion that goes on buy to let, for example, to fund much-needed improvements in social care and other public policy areas?
Jeremy Hunt
We did not shift the burden of funding on to local authorities; it has always been a shared responsibility. As the right hon. Gentleman heard from my statement, we are putting £1 billion into social care next year and £1.7 billion the year after. Taken together, that £4.7 billion is the biggest ever increase in the social care budget. I recognise that there are big pressures and a need for reforms in that sector, but this is a very positive start.
Theresa Villiers (Chipping Barnet) (Con)
I thank the Chancellor for the announcement on schools funding, which, as he knows, is something that I raised with him as being crucial. Can he also confirm that, if current forecasts about economic recovery and inflation prove to be overly pessimistic, we will move more quickly than he has announced today towards delivering a lower-tax economy?
Jeremy Hunt
My right hon. Friend is an immensely experienced colleague. She is right to point out that there is always inaccuracy in any forecast, and there is always variation from fiscal event to fiscal event, so we keep all those decisions under review in the round. I think it is still important to have forecasts—that is better than not to have them—but we keep all those decisions under review.
Jeremy Corbyn (Islington North) (Ind)
May I take the Chancellor back to the issues of housing, which other hon. Members have raised? Raising the local housing allowance merely in line with inflation does not necessarily help many people on benefits living in the private rented sector, particularly in constituencies such as mine where, generally speaking, many of those people end up being exported away from the area in which they live. It is more important to give local authorities the power to introduce rent controls in areas of very high private sector rent. Excessive rent levels are the biggest problem that many people, particularly young people, face in their lives.
Yesterday, the Secretary of State for Levelling Up, Housing and Communities made an interesting and helpful statement on the issues of safety within all housing. His remarks mean that much more inspection will have to be done by local authorities. Will the Chancellor ensure that local authorities are sufficiently funded to increase the levels of public health inspection to provide a safe living environment for people in all housing situations?
Jeremy Hunt
These are very important issues. Obviously, the safety of properties in the private rented sector is extremely important. I am not a fan of rent controls, because I am worried that that would reduce the supply of housing to the private rented sector. I point out to the right hon. Gentleman, however, that we lifted the local housing allowance during the pandemic to help people and we are keeping it at that higher level.
Steve Brine (Winchester) (Con)
People will note the trademark calm and decency of my right hon. Friend today in his credible autumn statement. The current Chair of the Health and Social Care Committee agrees with his predecessor, who I am glad agrees with himself, in welcoming the independent verified workforce plan that is, of course, the rock upon which we will build a sustainable future NHS.
I welcome the additional social care funding of £7 billion over the next two years, which, as the Chancellor knows, was a recommendation of the Committee, and the £3.3-billion uplift in the NHS budget for the next three years. I ask him—he knows where I am going to go with this—to work with us to push his colleagues in the Department and in the NHS on the long-promised cancer plan. The sharp rise in cancer waits that we are seeing at the moment have a devastating impact on people’s lives, but they also have a domino effect that is understandably having an impact on care across the NHS.
Jeremy Hunt
I welcome my hon. Friend to his role as Chair of the Health and Social Care Committee. I know that he will do a brilliant job and that he will hold me and the Secretary of State for Health and Social Care to account strongly and tenaciously on everything to do with cancer and public health. I welcome that, because they are very important areas.
Mr Clive Betts (Sheffield South East) (Lab)
To come back to social care, in the Chancellor’s previous role as Chair of the Health and Social Care Committee, he will remember arguing for a £7-billion increase in social care funding. Will he confirm that today’s package is nothing like that? Will he further confirm that much of it is coming from council tax increases, which give most to the richest councils and take proportionately most from the poorest households? Finally, will not the rest of local government face real-terms cuts to essential services? This is austerity mark 2, with the prospect of financial collapse for many councils up and down the country.
Jeremy Hunt
I have to say that I think local councils are welcoming today’s announcement because the biggest item of expenditure that worries them the most is their social care budgets, and this is the biggest-ever increase in the social care budget. I am pleased that the hon. Gentleman has read the report into social care that the Health and Social Care Committee produced when I was the Chair—I sometimes worry whether people actually read the reports—and he is right to point to that £7-billion figure. That was made up of about £5 billion in core funding and £2 billion for the Dilnot reforms. Today, we are delivering nearly that £5 billion of funding and the Dilnot reforms will happen at a later stage, so it is not everything at once, but it is broadly consistent with what I recommended.
Mr Robin Walker (Worcester) (Con)
I welcome my right hon. Friend’s correct focus on putting education and skills at the heart of his statement. I was one of many Conservative Members who wrote to ask him to protect the schools budget, and he has gone further than that with the additional £2 billion over each of the next two years. That is welcome, but can he confirm that it is his assessment and that of the Department for Education that that will allow schools to fund the increase in teaching pay that has been recommended and the increase in non-teaching pay that they will face as a result of a rising living wage?
Jeremy Hunt
Those are details—within the structures we have, we give schools a lot of autonomy as to how they spend their budgets—but I am happy to write to my hon. Friend on those specific issues. Campaign organisations said that schools needed £2 billion a year, and this is £2.3 billion a year, so I think we have met people’s concerns.
Stephanie Peacock (Barnsley East) (Lab)
Last year, the then Chancellor raised the universal credit work allowance for low-paid workers, describing it as a “tax cut”. Can the Chancellor confirm whether he has frozen the work allowance today?
Jeremy Hunt
What I can confirm is that people on universal credit will see an inflation uplift that will be worth about £600 to the average family; people on benefits will receive £900 of support; pensioners will receive £300; and disabled people will receive £150. There will also be £500 off the average fuel bill. We are thinking about those people front and centre.
Iain Stewart (Milton Keynes South) (Con)
I congratulate the Chancellor on making capital transport projects a central pillar of the future growth strategy. Will he be reprioritising any of the schemes that are in development? He correctly mentioned East West Rail, which would be an excellent choice. As the new Chair of the Transport Committee, it would be useful to have some clarity on which projects he is prioritising. On his other transport announcement about the extension of vehicle excise duty to electric vehicles, will the revenue from that be hypothecated for the roads budget, as is VED on existing vehicles?
Jeremy Hunt
My hon. Friend has campaigned hard for East West Rail and I am happy to confirm that, as a result of the difficult decisions that we have taken today in the round, it will proceed. It will make an enormous difference to our country, because of the connectivity that it will provide between two of the greatest universities in the world. It is a very important step forward for the country. With regard to the extension of VED to electric cars, which we are doing at the point at which half of all cars sales in the UK will be of electric cars, it asks people who have electric cars for £165 a year. Given that we have spent £2.5 billion on electric car charging points, I do not think that that is an unreasonable request.
Caroline Lucas (Brighton, Pavilion) (Green)
The Chancellor said that he would be honest about the challenges we face, so it is frankly extraordinary that he could speak for almost an hour without once acknowledging the economic catastrophe of Brexit. According to the OBR, it will slash productivity by 4%; it has delivered a 15% drop in trade; there will be a 14% drop in investment; it will increase food prices by 6%; and it will deliver lower wages, workforce shortages and the highest inflation in the G7. When will he name the elephant in the room? When will he start to address that and reverse some of the damage that it is doing?
Jeremy Hunt
I do not deny for one second that Brexit will be a change in our economic model, but whether we make a success of it is up to us. This Government will make a success of it and make it a tremendous opportunity.
Anthony Browne (South Cambridgeshire) (Con)
I congratulate my right hon. Friend the Chancellor on this carefully crafted and balanced autumn statement, where he managed to fill the fiscal black hole without raising the headline rates of tax, as well as protecting education, the health service and pensioners. All the research institutes in my constituency will very much welcome the commitment to keep R&D funding going up to £20 billion a year. I look forward to grilling him on some of the details when he appears before the Treasury Committee.
My constituency is the life sciences capital of Europe, but it suffers acutely from a shortage of nurses and doctors. I have been working with medical groups to try to push for higher levels of training with up to 15,000 places a year for doctors, so I welcome the fact that the Chancellor agrees with himself and wants to introduce a long-term NHS workforce plan. Can he confirm whether one of its objectives will be to ultimately make the UK self-sufficient in the training of nurses and doctors?
Jeremy Hunt
Absolutely, because the NHS as it stands at the moment would fall over without the brilliant contribution made by doctors and nurses born or trained overseas. I think it is about 24% of doctors in the NHS at the moment. We always welcome international exchanges, but in the end a huge health organisation such as the NHS—the biggest health organisation in the world—should be training the number of doctors and nurses that it needs itself. With a 2 million shortage of doctors worldwide, there is no other alternative.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It is funny that the same Tories, who are today congratulating the Chancellor, 55 days ago lined up to congratulate his predecessor on the disastrous mini-Budget of what he correctly described as the “English Government” —a sign of things to come. However, the question that is being asked by people in Lewis, Harris, Uist and Barra is: when exactly are the Government paying the off-grid fuel support for the likes of those with central heating oil? It is now mid-November. We need the dates, and we need this to happen.
Jeremy Hunt
We do, and we are working on that. We will make sure it is paid as quickly as possible.
Darren Henry (Broxtowe) (Con)
I thank the Chancellor for his statement today. It is right, of course, that we focus on stabilising the economy and improving growth, while ensuring support is in place for the most vulnerable in our society. This statement has set out to achieve that, but there were two points of particular concern to my constituents in Broxtowe. One was the triple lock, so I was delighted that that remains. The other was investment in infrastructure and transport in the east midlands, and I did not hear anything about that. The east midlands has the lowest investment in transport infrastructure year on year. Could the Chancellor lay out how the east midlands will benefit from his statement today?
Jeremy Hunt
I thank my hon. Friend for his question. The detailed decisions about what we do with respect to infrastructure in the east midlands will follow, but I want to reassure him that we have not made big cuts in our capital budget. We have protected it at the very high levels it was increased to by a previous Conservative Government. As a result, we will be in a better position to support regions such as the east midlands than we would have been had we made the mistake of mortgaging our future by cutting our capital spend.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
After crashing the economy and inflicting on my Slough constituents and others higher mortgages, higher rents and the highest inflation for over 40 years, the latest Prime Minister and his Chancellor have embarked, without any mandate, on austerity 2.0 and they have decided to inflict yet more painful tax rises. In his autumn statement, the Chancellor kept referring to “global factors”, so can he point to just one other advanced economy that is raising taxes at the same scale as us here in the UK?
Alberto Costa (South Leicestershire) (Con)
Chancellor, you have agreed to meet me and other Leicestershire colleagues to discuss the worrying situation that Leicestershire County Council has been facing for years when it comes to its financing. While I greatly welcome your autumn statement today—
Alberto Costa
While I greatly welcome his autumn statement, will the Chancellor tell the House today—and, indeed, those at Leicestershire County Council, who are listening to proceedings—how his autumn statement will help them with their finances?
Jeremy Hunt
I have talked to my hon. Friend on a number of occasions about the problems with Leicestershire County Council’s financial situation. What all councils say is that the biggest pressure on their budgets is adult social care, and I think today’s announcement will be welcomed by them for that reason. However, I am very aware of the particular issues in Leicestershire, and I am happy to keep engaging with him on them.
Jess Phillips (Birmingham, Yardley) (Lab)
On the NHS point, will the Chancellor expand on whether the increase is in real terms? I spent 17 hours on a hard chair with my father in A&E last week, and I have heard a lot of talk about how the vulnerable are going to be defended by this Government. To follow on from the point about Leicestershire County Council, the vast majority of vulnerable people’s funding—such as vulnerable women who are victims of domestic and sexual violence—comes from local authorities, from the Home Office budget and from the Justice budget. Every single one of those budgets has been squeezed today, so will the Chancellor guarantee that those vulnerable people, unlike my father, will actually be looked after, and that there is not a single cutback to an already dreadful service that leaves criminals on our streets and vulnerable people in danger?
Jeremy Hunt
The hon. Member speaks incredibly powerfully, and I hear every word she says—[Interruption.] I heard someone shouting, “12 years”. We have actually had the third fastest growth in the G7 over the last 12 years, and that means we are in a better position to fund public services than we would otherwise have been. I will take away what the hon. Member says, and I will write back to her.
Andrew Jones (Harrogate and Knaresborough) (Con)
I congratulate my right hon. Friend on his statement, and on the important points he has made about the global challenges we are facing, but also on how support will be provided to those who need it most. Can I ask him about capital budgets? There has been some concern in the infrastructure sector that projects may be halted, so I welcome the focus on infrastructure investment as a driver of economic growth and of social and environmental progress. Will he be supporting these plans with skills programmes and apprenticeship programmes to ensure that the sector will deliver them with efficiency?
Jeremy Hunt
My hon. Friend knows these issues extremely well, having been a Transport Minister. We need better transport infrastructure, and what we have said today makes that possible, but he is absolutely right that we also need to improve the skills in our economy. We have had a lot of change in our ambitions for skills, with I think a lot of very positive things such as the Augar review, but we need to make sure we deliver them, and that is why I have asked Sir Michael Barber to advise me and the Education Secretary as to what we need to do.
Naz Shah (Bradford West) (Lab)
Today, the Chancellor had an opportunity, which he has missed, like his predecessor—the one before the last one, mind—to enact recommendations from the Transport Committee and to give Bradford a station. Instead, the Government have engaged in an exercise in rebranding, while short-changing the people of Bradford. Why does the Chancellor not just be honest with the people of Bradford, and call this what it actually is? This is not Northern Powerhouse Rail; this is the greatest ever train robbery of the north.
Jeremy Hunt
What I would say to the hon. Lady is that she should think about what we have done for her constituents in Bradford. When it comes to transport, we have protected the capital budgets that in the end will solve the problems she is talking about. We have also found £500 of support for the average household for their fuel bill next year. We have found more money for schools, hospitals and GP surgeries in Bradford. That will make a difference, and she should welcome that.
John Penrose (Weston-super-Mare) (Con)
Can I say how good it is to see the Chancellor channelling his inner Nigel Lawson by referencing not only the big bang, but his attempt to get the next big bang to happen, particularly with supply-side reforms for five key STEM—science, technology, engineering and maths— sectors, plus the much-needed roll-out of the powers for the digital markets unit in the Competition and Markets Authority? May I urge him to provide us with dates as soon as possible for when these are going to take place, because many of them are overdue and much needed? Can I further press him that there is a further supply-side reform to do with open data, which could be at least as big as any of the others he has announced today and transformational across large swathes of the rest of our economy?
Jeremy Hunt
I always listen to my hon. Friend on matters such as supply-side reforms and, indeed, long-term competitiveness. I want to reassure him that, while it is a long-term aspiration to become the world’s next silicon valley, we want to put those foundations in place next year. That is why, in those five growth sectors, I said that we will review and decide on changes to all the EU regulations that affect our growth industries in the next calendar year to make sure that we put those foundations in place fast.
Wendy Chamberlain (North East Fife) (LD)
The Federation of Small Businesses says that business confidence is at its lowest rate since the pandemic, and in the Chancellor’s oral statement today there was no mention of energy support for business. All the written statement says is that businesses can expect significantly lower support. I have businesses, including care homes, in North East Fife that are facing closure as a result. In the terms of reference, also published by the Government today, for the review, it says there is a very high bar. The Chancellor must have a fair idea of what that means. Can he share it with us and businesses?
Jeremy Hunt
We absolutely want to think about care homes and small businesses in the hon. Lady’s constituency, and in mine, and we are spending roughly £18 billion on the support we are giving this winter. We are doing a lot as a Government, but we want people to have certainty and to know what the support will be next April. We need businesses to help themselves as much as we help them, which is why they need to play their part in important energy efficiency measures. Our intention is to announce that business support before Christmas.
Virginia Crosbie (Ynys Môn) (Con)
This Government’s commitment to Sizewell C and large-scale nuclear is welcome, and it was noted that Labour’s shadow Chancellor failed to mention nuclear. When will the launch of Great British Nuclear be announced, and will its scope include large-scale gigawatt nuclear at sites such as Wylfa in my constituency, as well as small modular reactors?
Jeremy Hunt
There is no more formidable advocate for big nuclear investment on Ynys Môn than my hon. Friend. Indeed, when I went on a family holiday to Ynys Môn this summer, she tried to persuade me to visit the potential site of a nuclear power station with my children. I apologise that I did not take her up on the offer, but it shows her commitment. My right hon. Friend the Business Secretary will be making an announcement soon on things such as the launch of Great British Nuclear—I hope before Christmas, but if not just afterwards—because we want to crack on with our nuclear programme.
Helen Hayes (Dulwich and West Norwood) (Lab)
For the first time in decades women are leaving the workforce, largely to take up caring responsibilities for their families. In that context, it is astonishing that the Chancellor did not mention childcare once during his statement. Childcare is vital social and economic infrastructure. The status quo is holding back women, and holding back our economy. What will the Chancellor do about it?
Jeremy Hunt
I am very aware of the pressures and issues of childcare. The £4.7 billion increase in the social care budget will make a difference to people with caring responsibilities, with potentially another 200,000 packages, but I want to return to this issue and I take what the hon. Lady says very seriously.
Richard Drax (South Dorset) (Con)
I have huge sympathy for my right hon. Friend. We are facing severe financial challenges for the reasons he explained so well, but Members on both sides of the House are promising to spend billions and billions more pounds. I remind the House that it is the private sector, and hardworking people through their taxes, who pay for Government expenditure. Does my right hon. Friend agree that raising taxes on both risks stifling the growth and productivity that he and I both want, and that would counter the recession we are now in?
Jeremy Hunt
My hon. Friend is right to make the case for a lightly taxed dynamic economy, and I would like to bring taxes down from their current level. We are faced with the necessity of doing something fast to restore sound money and bring inflation down from 11%, which is why we have made difficult decisions today. But yes, my hon. Friend is absolutely right: there is no future for this country unless we get back on the path to being a lower taxed economy.
Steve McCabe (Birmingham, Selly Oak) (Lab)
As we have seen, the Tory party might learn more from its mistakes if it wasn’t so busy denying them, and I congratulate the Chancellor on a wonderful, “not me, guv” performance. In the interests of candour, will he confirm that what he told the House today is that after 12 years in power, the Tory plan is to cut around £27 billion from public spending?
Jeremy Hunt
I confirm that what the hon. Gentleman said is wrong. The plans I announced today show that we are protecting public spending in real terms over the next five years.
Peter Aldous (Waveney) (Con)
I congratulate my right hon. Friend on his statement. I welcome the protection that he has announced for the most vulnerable, Government support for Sizewell C, the announcement of a devolution deal for Suffolk, the appointment of Sir Michael Barber to prepare a skills reform programme so that the many and not the few can participate in the proceeds of growth, and the Chancellor’s commitment to a step change in the UK’s efficiency programme. May I highlight the enormous potential that the Lowestoft port investment zone can play as a centre of excellence for low-carbon industry, and urge him to give full consideration to the proposal that will be forthcoming ahead of the March Budget?
Jeremy Hunt
My hon. Friend is a formidable advocate for Lowestoft and the Lowestoft port investment zone. The process for deciding where the investment zones are will be decided by the Secretary of State for Levelling Up, Housing and Communities, but I will pass on my hon. Friend’s comments to him.
Kenny MacAskill (East Lothian) (Alba)
The Chancellor rightly spoke a lot about compassion. In that regard, will he write to Ofgem and direct it that the manifest injustice of higher standing charges for those with prepayment meters must be ended and a social tariff invoked? On unregulated fuel, businesses in my constituency are hanging on by their fingertips, and waiting until next year might be too late. Will he undertake to backdate any payment or benefit?
Jeremy Hunt
I reassure the hon. Gentleman that the business support for companies this winter is happening. There is no waiting until Christmas; it is happening now and we have made that clear. We have said we will announce before Christmas the support that will come into place from next April. I am very aware of the issue of standing charges. I am concerned about it, and I will write back to the hon. Gentleman on that.
Rehman Chishti (Gillingham and Rainham) (Con)
I thank the Chancellor for the announcements on the national health service, and he said that we are committed to our new hospitals programme. May I also thank him for the fantastic work he did when he was Health Secretary to help transform Medway Hospital in my constituency? He visited Medway Hospital, and he knows that Medway and north Kent have some of the highest health inequalities in the country, and Medway had some of the areas hit hardest by covid. We urgently need a new hospital. We are all among equals here and we want a fair allocation of resources. How will those criteria be applied, because under any criteria, Medway urgently needs a new hospital?
Jeremy Hunt
My hon. Friend was an extraordinary advocate for Medway Hospital when I was Health Secretary. That is continuing, and rightly so. I will take away what he says. I am not sure about the exact situation with respect to a new hospital in Medway, but I will write back to him.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The statement proposes council tax increases to top up social care funding, but the Chancellor must be aware that in Salford, the 18th most deprived local authority, with a current list of 27,000 people accessing council tax reduction support, any increases would raise only nominal funds, and the pain would be felt by residents on a huge scale. How will Salford pay for its social care, and what support will the Chancellor provide to mitigate the impact on those who cannot afford council tax increases?
Jeremy Hunt
The hon. Lady is right to raise those concerns. Flexibility on council tax is only part of the way we are funding the £4.7 billion increase in the social care budget. Part of it is coming from the delay in the Dilnot reforms, and part of it—£1 billion and then £1.7 billion—is coming from central Government coffers. We recognise those concerns. This package is designed in its entirety to give maximum possible support to the most vulnerable people, and I hope it will be welcomed in her constituency.
Robbie Moore (Keighley) (Con)
Last week I met residents of Moor Help in Long Lee, attended a coffee morning to speak with constituents in Silsden town hall, met Ilkley Good Neighbours, and had several constituency meetings in Keighley. All were asking me for the pensions triple lock to be protected, so I thank the Chancellor on their behalf. Will he confirm that by protecting pensioners with the triple lock, the Government will be providing the biggest ever cash increase to the state pension?
Jeremy Hunt
I absolutely confirm that, and it was the right thing to do. We are also giving lots of other help to pensioners, including £500 off their fuel bills on average across the country, and an extra payment of £300 for all pensioner households to help with cost of living pressures next year. That is on top of existing help such as the winter fuel payment.
Amy Callaghan (East Dunbartonshire) (SNP)
The first round of austerity contributed to more than 300,000 excess deaths. The Government have made a political choice to impose austerity 2.0. Instead of increasing the benefit cap, will the Chancellor scrap the cap on benefits? If not, why not?
Jeremy Hunt
It is lovely to see the hon. Member back in the House. We are doing everything that we can to help people on benefits, including a £900 one-off payment next year to help with cost of living pressures, an average of £500 off their energy bills and, if they are working, the increase in the national living wage, which is worth up to £1,600. That will really help her constituents.
Mr Philip Hollobone (Kettering) (Con)
When the Chancellor was Health Secretary, he kindly visited Kettering General Hospital, which is the No. 1 local issue in the Kettering Constituency. He will understand the importance that local people attach to the promised £396 million redevelopment of the hospital. The first 10% of that investment is now under way. Will he confirm that the bulk of the investment was always going to be in the period from 2025 to 2030 under health infrastructure plan 2 funding, and that Kettering hospital remains in that programme?
Jeremy Hunt
It is not possible to be Health Secretary without visiting Kettering hospital and my hon. Friend is a formidable advocate for it. I remember the visit well, with how crowded the hospital was and why there is such a big need for a new hospital. We are committed to the new hospitals programme, and I will write to him with precise details about where Kettering stands in that process.
Judith Cummins (Bradford South) (Lab)
For absolute clarity, is the Chancellor confirming today that Transport for the North’s preferred option for Northern Powerhouse Rail with a stop in Bradford is now scrapped under this Conservative Government?
Jeremy Hunt
I am confirming that core Northern Powerhouse Rail will go ahead and that we are protecting our capital budget so that we can make as many other worthwhile additions to our transport infrastructure as possible.
Mark Pawsey (Rugby) (Con)
My constituents in Rugby and Bulkington will not enjoy the tough decisions that the Chancellor has had to make today, but they will understand the need for sound finances after the huge expenditure that the country has made on the pandemic and supporting people with their energy costs as a consequence of the war in Ukraine. They will also want to know that businesses will continue to invest to grow and to create jobs. Will he speak about the incentives that still exist for businesses to do exactly that?
Jeremy Hunt
I am happy to do that. My hon. Friend is quite right to raise those issues. We are doing a lot of short-term things, including help with energy bills as well as business rates. As we move to a new business rates system, we are freezing the levels at which business rates can increase and introducing a 75% discount next year for retail, hospitality and leisure businesses. Fundamentally, as a Conservative Government, we know that we cannot flourish as an economy without flourishing small businesses, and we will back them to the hilt.
Dame Nia Griffith (Llanelli) (Lab)
The Chancellor mentioned innovation, and a modern steel industry is vital to our future prosperity, so will he earmark the £200 million originally contributed in good faith by steel producers and now returned to the UK Government from the EU research fund for coal and steel to set up a UK steel innovation fund to develop the steel technologies that we need to drive growth and work towards net zero?
Jeremy Hunt
I will happily look into that issue and write to the hon. Member. She will know that one of the growth industries that I identified was advanced manufacturing. There is much that we can do to ensure that the steel industry is competitive in this country, and we want it to have a bright future.
Laura Farris (Newbury) (Con)
Nothing corrodes living standards like runaway inflation, so I congratulate my right hon. Friend on the priority that he has given to tackling inflation and bringing it down next year. However, until that moment comes, there is huge pressure on household incomes. I have been working closely with Citizens Advice West Berkshire, and its No. 1 ask was for means-tested benefits to be uprated in line with inflation, so I welcome that announcement as well as the unprecedented equivalent increase in the national living wage. Will he ensure that his Department and the Department for Business, Energy and Industrial Strategy continue to work hand in glove with HMRC on that small number of rogue employers who try to avoid their statutory wage obligations?
Jeremy Hunt
That is a good question. I will happily write back to my hon. Friend with what we are doing and what we can do. I would like her to pass on my thanks to Citizens Advice West Berkshire for the incredibly important work that it is doing to support people through a difficult period.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
This is a Budget of austerity 2.0, is it not? Of course, different decisions could have been made. The Chancellor could have decided to abolish the upper limit on national insurance, raising more than £30 billion and solving adult social care in one fell swoop along with the crisis in council funding. He chose not to do so but instead to burden poorer people and working people. On housing and energy specifically, he has said that he will freeze local housing allowance, which is a freeze at the 30th percentile from two or three years ago—it was last uplifted just at the beginning of the pandemic. Will he please review that decision along with how people living in blocks of flats who receive communal energy have received no support for their energy bills? They need that desperately to come through, and he has promised it before.
Jeremy Hunt
As I have explained, we increased local housing allowance at the start of the pandemic—significantly—and we are keeping it at that higher level. He talks about difficult decisions. I would say that there is one difficult decision on the table today: do we do what is necessary to tackle inflation? On the Government side of the House, the answer is yes.
James Wild (North West Norfolk) (Con)
I welcome the commitment in my right hon. Friend’s statement to the new hospital building programme. Given the statement yesterday by the Secretary of State for Health and Social Care that he would deal with the concrete cancer that means that the Queen Elizabeth Hospital in my constituency has 3,000 props holding up its roof, will he reassure people in North West Norfolk that the Government will make the urgent decisions to build the new QEH?
Jeremy Hunt
I have visited the QEH and absolutely understand the concerns that my hon. Friend is talking about. I will write to him about what is happening, but we do commit today that we will protect the new hospital programme. We do want to spend very important money in our capital programme in the NHS.
Brendan O'Hara (Argyll and Bute) (SNP)
My rural, economically fragile constituency has been battered by a Brexit that we did not vote for resulting in the loss of European markets for our abundant seafood and meat products. What we also have in abundance is wind and water, which lash in from the Atlantic; something that we have learned not just to live with but to harness and benefit from. Why on earth has the Chancellor decided to tax electricity generators at a 10% higher rate than oil and gas producers? If there is a 91% investment allowance for the oil and gas sector, what is the figure for the renewables sector?
Jeremy Hunt
I have had wonderful holidays in the hon. Member’s constituency and can attest to the high levels of wind and water there. It is one of the most beautiful parts of the country. The windfall tax rate on electricity generators is calculated to ensure that we tax only genuine windfall profits. It is reasonable to do that. Overall, these taxes will raise about £54 billion, and this year and next year we will spend more than £100 billion to support people with their energy bills. It will only kick in at £75 a unit, which is a generously high level.
Greg Smith (Buckingham) (Con)
I absolutely agree with my right hon. Friend when he talks about the inflationary pressures coming from the aftershocks of the pandemic and the war in Ukraine. We see that at the fuel pumps and, more significantly, our haulage and logistics sector sees it with the enormous level of taxation on diesel in particular driving inflation to get food and goods on to our shelves. As he prepares for the March Budget, will he look at the inflationary impact of fuel duty on top of the high cost of diesel and see whether we can reduce it?
Jeremy Hunt
I assure my hon. Friend that I will absolutely do that. We have a little time, and I know that fuel duty is an important issue to him and many other colleagues.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
The Prime Minister said he was going to deliver Northern Powerhouse Rail in full. With the Chancellor’s announcement this morning, Hull remains excluded from Northern Powerhouse Rail for the next 30 years, in stark contrast to the go-ahead on the Oxford to Cambridge line. Could the Chancellor just explain to me and my constituents why the last areas to see investment in infrastructure are the first areas to have it ruled when this Tory Government crash the economy?
Jeremy Hunt
As the hon. Lady knows, the economy has been growing faster than France, Germany, Italy and Japan over the last 12 years, so that is not a fair characterisation. What I am able to do, because of the difficult decisions we have taken today, is largely protect the capital budget, which means we can do more to improve infrastructure to Hull and other parts of England. That is the right thing to do. I would just say to her that if we did not take the difficult decisions we are taking today, we would never be able to improve our transport infrastructure. We do not want that, which is why we are taking difficult decisions that her party is not supporting.
Simon Baynes (Clwyd South) (Con)
I congratulate the Chancellor on his skilful and compassionate autumn statement. I welcome the additional funding of £1.2 billion for Wales. Can the Chancellor reassure vulnerable residents in my constituency that Government assistance with their very high energy bills will continue as long as it is needed, so we protect them to the very best of our ability?
Jeremy Hunt
That is absolutely what we want to do, and that is why today we are announcing that the energy price guarantee will continue, supporting my hon. Friend’s constituents in an average household by about £500 during the course of next year. Going forward, because these are multibillion pound programmes, we need people to work together with the Government to also improve their energy efficiency. The other thing the Business Secretary will announce shortly is a long-term energy independence and energy efficiency plan which, if we implement it, will bring down the average fuel bill by another £500.
Ian Mearns (Gateshead) (Lab)
In his statement, the Chancellor said that because of difficult decisions in 2010, the Government could then go on to do several things. However, places like Gateshead are still living with the drastically detrimental consequences of those 2010 decisions. The decision to incrementally withdraw revenue support grant from councils means that my own local authority is £179 million per year worse off now than it was in 2010. Many local authorities with a low council tax base are in exactly the same boat. We are worried about austerity 2.0, but we are also very, very worried about the continuing consequences of austerity 2010. So, after 12 years, when will the Government do something about local government finance to prove to people in Gateshead that the words “levelling up” are not just empty rhetoric?
Jeremy Hunt
The hon. Gentleman is absolutely right to say how important the levelling up programme is. The economic growth we have had since 2010 means we are able to invest in capital projects today. The levelling up round 2 fund will be protected and possibly increased from the £1.7 billion invested in levelling up round 1. We are absolutely committed to connecting areas like Gateshead into the national economy, which means that wealth spreads.
Anna Firth (Southend West) (Con)
I congratulate the Chancellor on how skilfully he has handled the toughest budget for 40 years, and thank him for listening to representations which I have made to him directly to protect pensioners and increase school funding for Southend schools. Can he confirm that as a result of restoring the triple lock, all 18,000 pensioners in Southend West will get not only continued help with their energy bills but the biggest cash increase ever in their pensions next April?
Jeremy Hunt
I can. My hon. Friend advocates formidably for pensioners and other constituents in Southend. The inflationary increase in the state pension is worth on average £860. There will also be a £300 payment to pensioners next year to help with cost of living pressures and for an average house a £500 reduction in their fuel bill at today’s prices. She can tell her constituents that that package shows a Conservative Government who care about our most vulnerable citizens.
Munira Wilson (Twickenham) (LD)
The Chancellor rightly claimed that education is not just an economic mission but a moral mission, so can he explain to the House why he is still able to find £6.5 billion in tax cuts for the biggest banks over the next five years, but no money to expand free school meal provision, when 800,000 children living in poverty are not even entitled to a hot meal at school? Hungry children cannot learn. So much for his moral mission.
Jeremy Hunt
Where the hon. Lady and I agree is on the importance of education, and the importance of supporting children and lifting families out of poverty. Where we disagree is on the role of banks, which create enormous wealth for this country and actually help to fund our NHS and schools by the corporation taxes they pay.
Paul Holmes (Eastleigh) (Con)
I congratulate the Chancellor on bringing forward an autumn statement that focuses on the long-term stability this country needs. My constituency has a large number of park home sites, which rely on communal accounts or individual liquid petroleum gas bottles. Will the Chancellor confirm that LPG used to heat park homes, not just standard-build homes, will be covered by the announcement of the doubling of the payment, and will he make sure that the payments to the constituents who need them most are efficient and delivered as quickly as possible?
Jeremy Hunt
I am very happy to confirm both those points. I have park homes in my own constituency.
Barbara Keeley (Worsley and Eccles South) (Lab)
From his time as Chair of the Health and Social Care Committee, which we are hearing about plenty in this statement, the Chancellor knows that NHS England spends a ludicrous amount on detaining autistic people and people with learning disabilities in inappropriate and often substandard in-patient care. I know the Chancellor understands this.
Barbara Keeley
He is nodding. He himself said, during the Committee’s inquiry into this issue, that the level of community provision is totally inadequate. Will he listen to himself again and commit to looking into this issue with the Health and Social Care Secretary, so that we are no longer throwing money away on substandard care when autistic people and people with learning disabilities could be living happier lives in the community?
Jeremy Hunt
The hon. Lady and I have talked about these issues many times and may I just say, across the political divide, that it has been a privilege to work with her on social care issues and to see the concern she has in public and in private about all these issues? I agree that it is a scandal that we have so many people detained in secure accommodation who could be in the community. I absolutely will work with my right hon. Friend the Health Secretary to see what can be done.
Rachel Maclean (Redditch) (Con)
The Worcestershire Acute Hospitals NHS Trust, with which I know my right hon. Friend is very familiar, is delaying returning chemotherapy services to the Alex—the Alexandra Hospital in Redditch—even though the pandemic is over. That means really sick cancer patients are having to travel to Kidderminster for their essential therapy. I strongly welcome the £3.3 billion investment he is providing today for the NHS, so can he confirm that there are really no financial or funding reasons for the trust not to return those services to Redditch, where they are so desperately needed?
Jeremy Hunt
Cancer patients in Redditch will have heard loud and clear that they have a formidable advocate in their MP. I will happily look into that specific issue, but the broader point is that the chief executive of NHS England says today that the funding we have found for the NHS is sufficient for it to deliver its core purposes, even despite the inflationary pressures. Of course, cancer services are core services.
Chris Stephens (Glasgow South West) (SNP)
Can I ask the Chancellor about his policy on public sector pay, because not much was said about that? Will he first of all look at the nonsensical position that the UK Government—not the English Government—have more than 200 separate pay bargaining units for civil service pay? That seems a nonsensical position. There are far too many civil servants having to utilise food banks to survive month to month. Can he tell us what pay increase those who work for UK Government Departments can expect for the coming year, or will they also pay the price for the mistakes of his predecessor?
Jeremy Hunt
What I can tell the hon. Gentleman is that families in the UK, including families in Scotland and in his own constituency, will get an enormous amount of help this year and next, including if they are on the lowest legal wage, the national living wage, with an increase in their income of up to £1,600. If they are on means-tested benefits, they will get an increase of £900 and if they are a pensioner they will get the triple lock increase of £870. I could go on. The autumn statement knits together as a statement designed to help people on low pay, including in the public sector.
Rob Butler (Aylesbury) (Con)
The Chancellor has rightly reminded us that the economic challenges we face are driven primarily by global events, especially Russia’s invasion of Ukraine, and that has necessitated the difficult and painful decisions that he has had to make. He emphasised the need to continue to invest in infrastructure. That is especially important in Aylesbury, where there is a massive amount of house building and we desperately need link roads to alleviate traffic congestion and improve air quality. Within the budgets that have been approved, will my right hon. Friend enable Buckinghamshire Council to have as much flexibility as possible to deliver those roads, which are so essential for our town’s sustainable growth?
Jeremy Hunt
I thank my hon. Friend for his advocacy for Aylesbury. My basic view is that we should give as much flexibility as we can to local authorities to deliver local infrastructure projects, and significantly more than they currently have. I hope to come forward in the months ahead with ways to progress that. I will write to him on the specific issue of a link road.
Mick Whitley (Birkenhead) (Lab)
Local authorities all over the country are at breaking point, with Conservative- run Kent and Hampshire County Councils warning this week that they face the very real prospect of bankruptcy. The challenge is especially acute at Wirral Council, which is grappling with a shortfall of nearly £50 million next year, driven in no small part by a drastic cut in central Government grant funding since 2010. Does the Chancellor accept that his proposals to allow local authorities to hike council tax risks forcing people in the most deprived communities, such as Birkenhead, to pay even more in return for ever-diminishing services? Will he commit to providing more direct financial assistance to local authorities so that they can continue to provide those services, which will be so essential in helping local towns such as Birkenhead?
Jeremy Hunt
Local authorities have requested this package, particularly the two-year delay in the Dilnot reforms. Although those reforms are very important, we will not implement them, but we will leave the funding that was set aside for them with local authorities. That will help his council and many other councils.
Richard Graham (Gloucester) (Con)
I welcome the Chancellor’s commitment today to the triple lock, public services in general and health and education specifically. On the proposal from the previous Chair of the Health and Social Care Committee for an NHS staffing plan—he may recall that I supported that—will my right hon. Friend work with the Health Secretary to find ways to encourage more home-grown doctors, nurses and nursing associates to be trained locally, not least in the new University of Gloucestershire health teaching campus? Thanks to the levelling-up fund, that will open before long close to our Gloucestershire Royal Hospital.
Jeremy Hunt
My hon. Friend is a brilliant MP for Gloucester. I do not want to pre-empt what the independently verified workforce review will say, but we will need all the places that are now training doctors and nurses, including Gloucester, to train more in the future.
Stephen Flynn (Aberdeen South) (SNP)
Is it higher mortgage rates, higher energy bills, higher food bills, higher fuel bills, public sector cuts, a recession or the boorach of Brexit that best represents the strength of the Union?
Jeremy Hunt
What represents the strength of the Union is £4 billion being spent to build the new frigates in Scotland and £4 billion being spent to support Scottish families with the cost of energy bills.
Rachael Maskell (York Central) (Lab/Co-op)
The scale of wage restraint resulting from today’s autumn statement will accelerate York’s housing crisis. What measures in the statement will secure a greater supply of affordable housing for local people, not investors, in my constituency?
Jeremy Hunt
The hon. Lady makes an important point. I am in constant discussion with the Secretary of State for Levelling Up, Housing and Communities about the importance of housing policy creating new houses for people on low incomes. However, on wages overall, the £4.7 billion for the social care sector, for which she advocates, will make a significant difference in that area.
Wera Hobhouse (Bath) (LD)
The Chancellor’s statement is forcing everybody to pay the price for the puncturing of the economy by his Conservative Government, and I put Brexit very much at the core of the problem. Everybody is paying except the big oil and gas companies, because there are still massive tax loopholes for companies drilling for new fossil fuels. Let me ask him this serious question: who is his statement benefiting—the renewable energy companies or the fossil fuel sector?
Jeremy Hunt
The renewable energy companies and people in the traditional energy sector are paying a windfall tax, and as a result, we can have more money for doctors, nurses and people in social care up and down the country. That means that we are investing in the NHS in a way that was not possible when we were in coalition with the Liberal Democrats in 2010.
Paula Barker (Liverpool, Wavertree) (Lab)
Will the Chancellor confirm how the living standards of UK households have been forecast to change between this year and next by the Office for Budget Responsibility? Does he think it is acceptable that real household average incomes are set to fall on his watch?
Jeremy Hunt
A fall in household incomes because of the international headwinds will be extremely challenging, and today’s statement is designed to address that. The OBR has said that we will help to mitigate the fall in living standards by the actions we are taking today.
Kirsten Oswald (East Renfrewshire) (SNP)
People watching the Chancellor’s statement will be very vexed by the fact that he seems to be pretending that the Tories’ disastrous mini-Budget and their race-to-the-bottom Brexit have absolutely nothing to do with the problems that people face. That is simply not the case. As we have heard, the OBR forecasts that real household disposable income will fall by more than 7% over the next two years. People are facing a very difficult time, so why is the Chancellor not taking the kind of action that the Scottish Government are to protect families in this difficult situation? Why is he not making the choice to introduce something like the Scottish child payment, which will make such a difference? And why are his political choices so focused on those who least need them?
Jeremy Hunt
My political choices are focused on helping Scottish schools and Scottish hospitals, with £1.5 billion more to support them. I think they need that money, so that is where we have a difference of opinion.
Ellie Reeves (Lewisham West and Penge) (Lab)
A constituent who is an A&E doctor told me about an elderly lady who was admitted to hospital from a house that she could not afford to heat. She had a temperature of 26°C and died shortly after. I am pleased that the Chancellor has finally extended the windfall tax, but Labour has been calling for that for months. Does he accept that the delay has had very real consequences for people and that the Government should have taken up Labour’s stance far sooner?
Jeremy Hunt
I do not accept that for one second, because these are terrible tragedies on which we have acted very quickly, with support worth £62 billion this year to help families deal with fuel price increases and support next year that will save families £500 off their average bill at today’s prices. We are doing everything we possibly can, because we do not want to be a country where that kind of thing happens.
Helen Morgan (North Shropshire) (LD)
I recently did a 12-hour shift with west midlands ambulance service. Every paramedic I spoke to told me that the current crisis in response times was because of bed-blocking, which is caused by the problem in social care. Given that the Local Government Association is forecasting a shortfall of £3.4 billion next year and £4.5 billion the year after that just to stand still, does the Chancellor feel confident that he is improving the situation with today’s announcements? Will he clarify how much the average council tax payer is expected to put towards that?
Jeremy Hunt
It feels as though the hon. Lady might have written that question before she heard the statement and not changed it. We talked about a £4.7 billion increase in the social care budget, which is targeted at ending the bed-blocking that the paramedics she talked to were so worried about. That is the biggest increase in social care funding in history. As I said, sadly, we were not able to do that when we were in coalition with her party.
Janet Daby (Lewisham East) (Lab)
Does the Chancellor not have a responsibility to set out all major tax cuts? He seems to have slipped out a tax cut for the banks. Will he confirm that he is cutting the bank surcharge from 8% to 3%?
Jeremy Hunt
We are reducing the bank surcharge because we are increasing corporation tax from 19% to 25%, so banks are contributing to our having more money for the NHS and schools in the hon. Lady’s constituency.
Patrick Grady (Glasgow North) (Ind)
Where in the Chancellor’s statement is support for low-paid freelance and self-employed people, particularly those in the arts and creative sectors? Do not difficult times call for innovative solutions, such as the basic income guarantee for artists that is currently being piloted by the Republic of Ireland—which, incidentally, is a small independent member of the European Union?
Jeremy Hunt
We have announced a lot of measures to help people on low incomes. Anyone in receipt of means- tested benefits will receive £900 to help them with the cost of living, along with the inflation-linked uplift in universal credit, which is about £600, and about £500 to help them with their heating costs next year, at today’s prices. So there is a lot of help. However, if the hon. Gentleman is saying we should do more to support the creative industries which are so important to this country, I absolutely agree. I used to be the Culture Secretary, and I will do everything I can as Chancellor.
Zarah Sultana (Coventry South) (Lab)
Four million children live in poverty in our country: that is one in three kids. Today the Chancellor could have tackled that. He could have extended free school meals to all primary schoolchildren, guaranteeing that they would get a decent meal every day. That would cost £1 billion a day, which could be paid three times over by closing the non-dom tax loophole, but the Chancellor did not extend free school meals or close that loophole. He talked about tough choices, so let me ask him this: was it a tough choice to protect this tax-dodging loophole and deny meals to kids living in poverty?
Jeremy Hunt
It was a tough choice to increase taxes by £25 billion, largely for the well-off, so that we could find more money for schools in the hon. Lady’s constituency.
Peter Grant (Glenrothes) (SNP)
Far the best way to take people out of poverty is to pay them a decent wage so that they never get into poverty. I see that the Chancellor is nodding. Why has the nodding Chancellor announced today that the minimum wage will fall behind the cost of living? The Tories’ pretendy-kiddy-on living wage is even more pretendy-kiddy-on than it was before—a real-terms pay cut for the 2 million lowest-paid earners in the United Kingdom. What assessment, if any, has the Chancellor made of how long he expects it to be before every single worker in the United Kingdom has a legally guaranteed right to that most basic of employment rights, a decent wage that is enough to live on?
Jeremy Hunt
We may have political disagreements on the Union, but I hope the hon. Gentleman will welcome the fact that we have made enormous progress with our national living wage. Today’s announcement means that for someone working full time it will go up by £1,600, which will help a great many of his constituents—and that is before all the other help that we are giving with heating costs—fuel costs—for people on means-tested benefits. So I think we are doing a lot, and we will continue to look at whether we can do more.
Rachel Hopkins (Luton South) (Lab)
I refer the House to my entry in the Register of Members’ Financial Interests.
Today, in response to the Chancellor’s statement, the Conservative chair of the Local Government Association said:
“We have been clear that council tax has never been the solution to meeting the long-term pressures facing services—particularly high-demand services like adult social care, child protection and homelessness prevention. It also raises different amounts of money in different parts of the country unrelated to need and adds to the financial burden facing households.”
Does the Chancellor agree with that, and will he commit himself to working on a fair funding formula for local authorities, including police and fire services, which we have heard little about today?
Jeremy Hunt
We always keep our funding formula under review, but I am absolutely certain that the person whom the hon. Lady has quoted will have welcomed the fact that there was a £4.7 billion increase in the money for social care, which is the biggest financial pressure for local authorities.
Richard Foord (Tiverton and Honiton) (LD)
Thanks to recent Conservative chaos, people are now facing both higher taxes and underfunded local services. More than 150,000 people across Devon are currently on an NHS waiting list. For example, Ann Newbury from Honiton had to wait more than three years for her operation. Can the Chancellor tell me that the Government will recruit enough new NHS staff to ensure that people in Devon will not have to wait so long for operations?
Jeremy Hunt
The hon. Gentleman may have heard me say that we are going to have an independently verified long-term workforce plan to ensure that we are training enough doctors and nurses in Devon and, indeed, all over the country, and I think it is incredibly important for us to do that.
Kim Johnson (Liverpool, Riverside) (Lab)
Poverty is a political choice, and the Chancellor had the opportunity to take millions of children out of poverty with his Budget today, including children in my constituency. That has not happened, and the increase in benefits will not happen until April next year. Can the Chancellor tell the House what families are going to do when they are talking about heating or eating this winter?
Jeremy Hunt
This year we have supported the poorest families with £1,200 to deal with an exceptional increase in the cost of living. We have the household support fund, which we are giving to councils so that they can help to ensure that people do not fall between the cracks, and there is money for the NHS and care system, which is also targeted at the most vulnerable and people living in poverty.
We are doing a great many things today. There is always more that we can consider, but strong public services need a strong economy, and that is what you get with the Conservatives.
Madam Deputy Speaker (Dame Eleanor Laing)
And the prize for patience and perseverance goes—as so often—to Margaret Ferrier.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
I thank the Chancellor for his statement, and for remaining in the Chamber to answer all the Members’ questions—especially the last question!
I wrote to the Chancellor on behalf of my constituents about the triple lock, and I thank him for listening to their pleas, but a decade of benefit cuts has meant that families are struggling financially. Will the Chancellor consider allowing families to access more of their benefit entitlement in the face of the cost of living crisis, and will he reduce the maximum amount that can be deducted from universal credit for debt repayments at least to 15% of the standard allowance?
Jeremy Hunt
I thank the hon. Lady for her patience in waiting all this time to ask her question. The issues that she has raised are going to be looked at by the Secretary of State for Work and Pensions in the review that he is conducting for the Prime Minister on the increase in the number of economically inactive adults and what we can do to improve incentives, but today we have announced—exceptionally—an increase in the benefit cap to ensure that the families who depend most on the benefits system are given all the extra help that we are promising today.
Madam Deputy Speaker
I thank the Chancellor for his statement, and I thank everyone who, for three hours and five minutes, has held him to account at the Dispatch Box.
Autumn Statement: Charter for Budget Responsibility
Jeremy Hunt Excerpts(1 year, 11 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Today I have published a draft updated charter for budget responsibility, a copy of which has been deposited in the Libraries of both Houses. Copies are also available in the Vote Office and Printed Paper Office. The draft sets out the new fiscal framework announced at autumn statement 2022.
The updated charter will be laid before Parliament, and a debate and vote scheduled, in due course.
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Oral Answers to Questions
Jeremy Hunt Excerpts(1 year, 12 months ago)
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Andrew Jones (Harrogate and Knaresborough) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
The Government have taken decisive action to support millions of households with the energy price guarantee, which caps the cost of energy at £2,500 for the average household. We are also spending £37 billion to support millions of low-income households.
James Grundy
Will my right hon. Friend tell me what the average household energy bill would have been if the Government had not intervened to help hard-working families across Britain?
Jeremy Hunt
I thank my hon. Friend for his informative question, because it allows me to say that with the energy price guarantee at £2,500, the average saving for consumers across the country—including his constituents in Leigh, for whom he is a formidable advocate—is £700.
Andrew Jones
I have received correspondence from park home residents about the £400 of support with their bills. I recognise and welcome the measures to limit prices, but these households are seeing their electricity bills go up alongside the cost of their heating oil or gas bottles. Can my right hon. Friend assure me that his Department and the Department for Business, Energy and Industrial Strategy are working together to get support to park home residents before the end of the year?
Jeremy Hunt
I, too, have park home residents in my constituency. It is very important that we treat them fairly and give them the help that we are giving others, so we have set up the energy bills support scheme alternative funding as a way of helping them. It is designed to give them the equivalent of the £400 that we are giving to people with more normal energy consumption patterns. I will write to my hon. Friend with more details.
Sammy Wilson (East Antrim) (DUP)
BBC Radio 4 erroneously claimed this morning that energy payments to consumers in Northern Ireland would be held up because of the non-operation of the Assembly as a result of the Northern Ireland protocol. Ministers have worked with the Minister for the Economy in Northern Ireland and have made commitments that payments will be made before Christmas, but some senior civil servants seem to be seeking to use non-payment as a lever to get the Assembly back into operation. Will the Chancellor confirm, first, that money is available for the package; secondly, that the energy companies are ready to deliver it; and thirdly, that the Government will keep their commitment to ensure that payments are made before Christmas? Will he also investigate whether civil servants are interfering in the political process in Northern Ireland?
Jeremy Hunt
I assure the right hon. Gentleman that we are absolutely determined to ensure that support gets out to everyone in the United Kingdom as quickly as possible this Christmas. I am absolutely not aware of any delay of the kind that he suggests, but I will happily make inquiries to make sure of that.
Nick Smith (Blaenau Gwent) (Lab)
The cold weather payment is a lifeline for those on low incomes, but the current £25 rate was set in 2008. Today, it should be worth £37. Will the Chancellor collaborate with the Secretary of State for Work and Pensions and look into updating the figure in the light of the energy crisis?
Jeremy Hunt
I can reassure the hon. Gentleman that I have had extensive discussions with our excellent new Work and Pensions Secretary about how we support people on low incomes—precisely the vulnerable people that he is talking about. He will have to wait until Thursday for the details of our plan, but we have said that, in a very difficult time, protecting the most vulnerable will be our top priority.
James Murray (Ealing North) (Lab/Co-op)
Two years ago, in a video entitled “Rishi Explains: Green Home Grants”, the current Prime Minister enthusiastically took credit for the green homes grant scheme. Six months later, the scheme collapsed and £1 billion was cut from its budget. The truth is that we have the draughtiest homes in Europe, but when it comes to insulating homes, the Government are nowhere to be seen. If the Government had followed our plan last year, 2 million of the coldest homes could already have been upgraded, saving households more than £2 billion on energy bills this year alone. Home insulation should be a no-brainer. Will the Chancellor explain why the Government will not follow Labour’s plans and get on with it?
Jeremy Hunt
There are all sorts of bigger reasons why we do not want to follow Labour’s plans, not least because they would bankrupt the economy. On the scheme to help people to insulate their homes, the picture that the hon. Gentleman presents is not correct. We are spending billions of pounds to help hundreds of thousands of families up and down the country to insulate their homes. We completely recognise that that is a vital part of our long-term energy policy.
Alison Thewliss (Glasgow Central) (SNP)
I welcome this latest Chancellor to his place. Many of our constituents, such as my constituent Angela, have seen their bills double. Angela’s gas bill has gone up from £130 to £260 a month. She lives in a tiny, two-bedroom flat on carer’s allowance and personal independence payment, with a son who has a disability, and she simply cannot afford these bills. Cornwall Insight has estimated that come March, when the energy support ends, the price cap will rise to £3,700. There has been talk of targeting support after that, but National Energy Action has pointed out the risk that many people who are already suffering in fuel poverty will be excluded. What reassurance can he give people out there whose bills are already unaffordable about what will happen in March?
Jeremy Hunt
I want to reassure the hon. Lady. My right hon. Friend the Chief Secretary to the Treasury spoke to John Swinney, the Scottish Finance Minister, yesterday. We are thinking very carefully about all these issues, but to correct any misunderstanding, let me add that the energy price support that we give to families will not end next April, and I will announce on Thursday what that support will be.
Siobhan Baillie (Stroud) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Inflation is the enemy of stability and this Government have acted decisively to bear down on it, including through the energy price guarantee, which will take up to 5% off the headline rate.
Ben Everitt
I was very grateful for the Chancellor’s time last week when he listened to feedback from businesses in Milton Keynes about the economic situation and the situation they are in. As well as support for households, businesses, schools and councils, the main thing that came through all the things I managed to feed back to him last week was the need for certainty so that businesses can invest, forecast and plan. Will the package that he announces on Thursday contain a long enough period so that businesses can put that planning and investment into our economy, and we can grow our way to prosperity?
Jeremy Hunt
My hon. Friend is absolutely right; having run a business myself, I know that that certainty and stability is what gives the confidence to invest. I want to reassure him that what I talk about on Thursday will include our plan for growth over the next five years as well as our plan for stability. Both matter, but in the end, as Conservative Members know, wealth is not created by Governments—it is created by businesses.
Laura Farris
I know that my right hon. Friend is working intensively to ensure that the United Kingdom can meet its current spending obligations, but can he confirm that the same prudence extends to our national debt? Throughout the summer, my right hon. Friend the Prime Minister said repeatedly that we cannot allow debt to spiral and we cannot burden future generations with further debt. Does my right hon. Friend share the Prime Minister’s commitment and will he use his statement on Thursday to set out a pathway to debt reduction?
Jeremy Hunt
My hon. Friend will know that Margaret Thatcher said that there is nothing moral about spending money you do not have, precisely because of what my hon. Friend says: it passes the burden on to future generations to pay it back. Currently, our debt to GDP ratio is about 98% and we are spending debt interest of £22 billion more in the year to date than at the same time last year—that is more than the entire budget of the Home Office. So I absolutely agree with her.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Our growth rate in the 12 years since 2010 has been just 1.4%, which is lower than the OECD average, and behind that of the USA, Canada and Germany. The public should have an answer to this: why does the Chancellor think that is?
Jeremy Hunt
What the public know is that unemployment is the lowest for nearly half a century under a Conservative Government.
Chris Bryant (Rhondda) (Lab)
Energy inflation and food inflation are already making the finances of schools and local authorities almost unsustainable, with many in real fear of going bust in the next few months. May I urge the Chancellor, as he is thinking about Thursday, not to push this all down on to council tax, because many of the poorest areas of the country have the highest level of need and the fewest people who can afford to make additional contributions? So it would be entirely counterproductive to do that, and the ratchet effect could make local authorities even more unsustainable.
Jeremy Hunt
I hear what the hon. Gentleman says. It is going to be a very difficult announcement on Thursday, because we are going to be asking everyone to contribute more. But we will be asking people who have more to contribute even more, and that will be reflected in our decisions on council tax and every other tax as well.
Dr Julian Lewis (New Forest East) (Con)
I was encouraged by the Economic Secretary’s answer to the question from my right hon. Friend the Member for Ludlow (Philip Dunne) about mortgages. I know that the Chancellor believes that the restoration of economic stability is essential for mortgages to come under control in the future, but will he confirm that he will bring in imaginative plans to protect people who took out mortgages in good faith and now find them unaffordable?
Jeremy Hunt
I can absolutely give my right hon. Friend that confirmation. Indeed, I intend to meet a group of lenders later this month to discuss that very issue.
Mr Gregory Campbell (East Londonderry) (DUP)
I think people understand the difficult choices that they and their Chancellor face come Thursday, but will the Chancellor ensure that the small and medium-sized enterprises across the United Kingdom that provide the backbone of our economy and employment opportunities are not forgotten?
Jeremy Hunt
I can absolutely give the hon. Gentleman that undertaking. We must remember that, for those businesses, very often the most insidious taxes are those that they have to pay before making any kind of profit, because those are the taxes that can make them go under. As the Conservative party—the party of small business—we will think very hard about their needs.
Peter Grant (Glenrothes) (SNP)
Governments do not create wealth, says the Chancellor. Well, this Government certainly do not, nor did any of their predecessors.
Can the Chancellor tell us at what point in his predecessor’s so-called plan for growth did he realise that it was a recipe for economic disaster? If, like everyone on the Opposition Benches, he realised that before his predecessor had sat down, why did it take him so long to speak up about it?
Jeremy Hunt
I did actually reverse most of those measures within three days of becoming Chancellor, so, among my many failings, the one thing I cannot be accused of doing is being slow to change things.
Kit Malthouse (North West Hampshire) (Con)
As I understand it, the Chancellor is basing his fiscal strategy on Office for Budget Responsibility forecasts, but does he agree that the only thing we know for certain about those forecasts is that they are wrong?
Jeremy Hunt
We know that all economic forecasts are inaccurate, but that does not mean that it is better not to have a forecast than to have one. In defence of the OBR, I would say that its forecasts are more accurate than the Government forecast that we used to use before it.
Dan Jarvis (Barnsley Central) (Lab)
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
I will be speaking for rather a long time on Thursday—
Jeremy Hunt
May I start again and say that, subject to your agreement, Mr Speaker, I may be talking for rather a long time on Thursday, so I will be brief today? I will just say that, despite the difficulty of the package I will be announcing, I will sadly not be drinking any whisky as I do so.
Rushanara Ali
I thank the Chancellor for the work he is doing and congratulate him on his new post. We hope that he lasts the week, or maybe the fortnight. The Government scandalously allowed organised criminals and fraudsters to take billions of pounds of public money through covid loan fraud as a result of the lack of proper checks. Estimates suggest that that has cost taxpayers £33 billion. Why should hardworking people pay for the Prime Minister’s fraud failures when he was Chancellor, and for the mini-Budget fiasco of the former Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss), who crashed the—
Mr Speaker
Order. These are topical questions and are meant to be brief.
Jeremy Hunt
Of course, there are lessons to be learned about the way those schemes were administered, but I am very proud that unemployment remains at a 50-year low because of the decisions that the Prime Minister took on the furlough scheme and Government-backed loans. That was the right thing to do.
Sir David Evennett (Bexleyheath and Crayford) (Con)
I regularly visit small businesses and entrepreneurs across my constituency of Bexleyheath and Crayford. They are the backbone of our local economy, but like families, they have been badly hit by the cost of living. Will my right hon. Friend reassure me that this Government will do all they can to help small businesses across the country to thrive?
Jeremy Hunt
That is what Conservatives are all about so I am happy to give him that assurance. It is not just words; it is action: the halving of business rates for most retail, hospitality and leisure businesses; the freezing of the multiplier on business rates; the furlough scheme; the Government-backed loans and the energy price support that we are giving businesses. All that is because this Government back business.
Rachel Reeves (Leeds West) (Lab)
Today’s numbers show that real wages are down £1,000 a year. The Chancellor himself has admitted that the NHS is on the brink of collapse, and he is preparing for more stealth taxes on working people later this week. Getting our economy firing on all cylinders is essential for fixing this mess, so will the Chancellor tell the House where the UK is projected to finish in OECD growth rates over the next year?
Jeremy Hunt
May I say what a pleasure it is to do my first questions session with the right hon. Lady? I will very happily tell her about the international situation. Inflation is higher in Germany, the Netherlands, the eurozone and Italy. Our growth forecasts are falling less than the forecasts in Germany. Interest rates since the pandemic have gone up less here than in America, Canada and New Zealand.
“Despite what some…suggest, the recession has not been restricted to the UK, nor did it begin here.”—[Official Report, 24 March 2010; Vol. 508, c. 249.]
Those are not my words, but those of Alistair Darling in 2010. If the right hon. Lady wants to be the next Chancellor, she should listen to the last Labour Chancellor.
Rachel Reeves
It would be nice if the Chancellor tried to answer some of the questions.
Out of 38 advanced OECD economies, the UK is forecast to finish last. That is 38th out of 38. All industrialised economies have had to face covid and the consequences of Russia’s illegal war, yet our country is trailing behind because of Conservative choices and Conservative failure. There is an alternative. Why does not the Chancellor match Labour’s ambitions for British industries in hydrogen, insulation, carbon capture, solar, nuclear and wind power to create new jobs here in Britain?
Jeremy Hunt
We will have many exchanges, so I ask the hon. Lady, when she picks a statistic about next year’s growth, not to do so too selectively because this year, we have the fastest growth in the G7. Since 2010, we have had the third highest growth rate in the G7, and we have the lowest unemployment for more than 40 years. That is because Conservatives take the difficult decisions that are necessary to make our economy thrive.
Andrew Selous (South West Bedfordshire) (Con)
Alison Thewliss (Glasgow Central) (SNP)
Thank you, Mr Speaker. Austerity is a damaging Tory political choice, which is responsible for 330,000 excess deaths. A responsible and compassionate Government would explore all options to avoid it. Will the Chancellor consider taxing share buy-backs, as the US and Canada have done? The Institute for Public Policy Research and Common Wealth have pointed out that oil and gas, financial services and other companies have funnelled their mega-profits into share buy-backs. Does the Chancellor agree that that is inexcusable when he wants to hike taxes on working people and slash public services?
Jeremy Hunt
The hon. Member had better listen to what we say on Thursday before she jumps to conclusions. We will approach the difficult situation that we face progressively. We will ask those who have more to give more. I advise her not to talk down the financial services and energy industries, which employ thousands of people in Scotland.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Jeremy Hunt
My hon. Friend is absolutely right to point to the challenge of the past two years. Nationally, we are spending £140 billion more on energy. That is almost like supporting an entire second NHS. We have to have a long-term solution that is about energy independence and energy efficiency.
Ben Lake (Ceredigion) (PC)
David Linden (Glasgow East) (SNP)
Jeremy Hunt
We are looking carefully at that issue, and I would be happy for the hon. Gentleman to meet one of my Ministers.
Alexander Stafford (Rother Valley) (Con)
I welcomed the Chancellor’s predecessor to Rother Valley in the summer, to show him Dinnington high street and the money that was needed to upgrade it. He agreed to meet me further about levelling up. Will the Chancellor come to Rother Valley and Dinnington high street to see the levelling-up fund money that we need when the bid is in, and will he look kindly on our bid and make sure the whole of Rother Valley is levelled up?
Sarah Champion (Rotherham) (Lab)
Jeremy Hunt
I believe it will do that, because the cost of living crisis is at the top of our minds. We recognise the hard work that public servants do in a whole range of sectors and, as I know, with my background, in the health service as well. We must tread a fine line, however, because if we give inflation-busting pay awards to people who may deserve them and may be working extremely hard, that will fuel further inflation. We need to get the right long-term solution that brings down the root cause of people’s anger, which is over-high inflation.
Richard Fuller (North East Bedfordshire) (Con)
The Bedford to Cambridge section of East West Rail is rated “unachievable” by the Infrastructure and Projects Authority and a “waste of taxpayers’ money” by the Business Secretary, and growth in the Ox-Cam arc does not depend on it. Can the Chancellor use the autumn statement to finally clear the uncertainty around this deeply flawed project?
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Chancellor just mentioned my good friend Lord Alistair Darling. He should also look at the recent speech made in Huddersfield by another former Chancellor, Sir John Major. His analysis of what has happened to our economy since the Conservatives took over in 2010 is an absolute masterclass in what has gone wrong and what needs to be put right. Will the Chancellor read it and think about it before Thursday?
Jeremy Hunt
I always listen very carefully to anything that Sir John Major says. I know that he took difficult decisions that put the economy in excellent shape. The one thing that I do not want to do is bequeath it to a Labour Government.
Sir Edward Leigh (Gainsborough) (Con)
As the Chancellor prepares for his autumn statement, will he remember the good voters of middle England—people who have rarely, if ever, been on benefits and who have worked all their lives for their mortgage and pension pot? They fear that more and more of them will be dragged into becoming higher rate taxpayers and that their pension pot will be attacked so that the state can get larger and more can be spent on those on benefits.
Jeremy Hunt
Absolutely. I say to my right hon. Friend that it is the good voters of middle England who want us to be a country that pays its way, that does not borrow at the expense of future generations, and that can be trusted when it comes to sound money. That is what we will deliver.
Deidre Brock (Edinburgh North and Leith) (SNP)
Skyrocketing inflation, much of it caused by calamities on the Government Benches, means that the Scottish Government’s annual budget is worth up to £900 million less than it was just a few weeks ago. When will the UK Government devolve more borrowing powers to Scotland, so we can give the extra, desperately needed assistance to those struggling the most in our country?
Dr Julian Lewis (New Forest East) (Con)
Given that we both agree on the need for a substantial increase in defence spending, does the Chancellor accept that any immediate, necessary freeze on it should not prejudice the goal of 3% of GDP in the medium term?
Jeremy Hunt
Let me just say to my right hon. Friend that he and I both agree on the vital responsibility of any Government to defend their shores and their peoples, and we are committed to doing what it takes to make sure we do that.
Caroline Lucas (Brighton, Pavilion) (Green)
In a letter to the Chancellor last week, Lord Deben, the chair of the Climate Change Committee, said clearly that demand reduction is “now the biggest gap” in UK energy policy. Will Thursday’s autumn statement include an emergency investment of at least £3.6 billion over the course of this Parliament, so we can finally roll out the long-awaited and very overdue home insulation programme that this country needs?
Jeremy Hunt
Lord Deben speaks extremely wisely on environmental and climate change issues, and we would always take what he says with the utmost seriousness.