Oral Answers to Questions
Rachel Reeves Excerpts(6 months, 2 weeks ago)
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Rachel Reeves (Leeds West) (Lab)
At the Budget, the Chancellor set out his intention to abolish national insurance—a £46 billion annual commitment with no clear plan as to how it would be paid for. One way to do it would be to merge income tax and national insurance. Does the Chancellor agree with analysis from the House of Commons Library that shows that merging those two would increase income tax by 8p in the pound?
Rachel Reeves
That is strange, because the day after the Budget, the Chancellor told Sky News that
“you can end that unfairness of taxing work: you can merge income tax and national insurance.”
The late Chancellor, Nigel Lawson—the Prime Minister’s hero—warned that merging them would
“destroy the contributory principle and create many losers, especially among the elderly.”
In fact, a retired pensioner with an average occupational pension income of £198 a week would pay an additional £738 a year in tax. Is the reason that the Conservatives will not come clean not that they are planning to pick pensioners’ pockets to fund the abolition of national insurance?
Jeremy Hunt
If the right hon. Lady listened to my comments carefully, and I do not always give her credit for that, she would know that our policy is to abolish employees’ national insurance, and that means we want to bring it down to zero. If Labour’s strategy is to win the election by frightening pensioners with fake news stories, I would just say that Britain deserves better.
Oral Answers to Questions
Rachel Reeves Excerpts(8 months, 1 week ago)
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Rachel Reeves (Leeds West) (Lab)
After the Budget, the Chancellor wrote to Conservative party members telling them that the Government planned to abolish national insurance. The Economic Secretary said that “national insurance will vanish”, and the Prime Minister said it was his “ambition” to abolish it. Will the Chancellor confirm whether he asked the Office for Budget Responsibility to cost the Government’s unfunded plan to abolish national insurance contributions?
Jeremy Hunt
I am very glad that the right hon. Lady asks about national insurance cuts, because first she supported them, then she abstained in the Lobby, and now she appears to be against them—like the bankers’ bonus tax, which she was strongly in favour of and then strongly against; like £28 billion of borrowing, which she was strongly in favour of and then strongly against. Is not the actual truth that, where Labour should have an economic policy, there is just a black hole filled with platitudes?
Rachel Reeves
The Chancellor did not even attempt to answer the question. The chair of the OBR told the Treasury Committee the week after the Budget:
“It was not a measure given to us to cost”.
Even the Chancellor’s predecessor, the right hon. Member for Spelthorne (Kwasi Kwarteng), who was sacked for his own kamikaze Budget, said, “If you’re going to reduce taxes, you have to show at least partially where the money’s going to come from.” So I ask the Chancellor: where will the money come from? Will it come from cuts to the NHS, the state pension and public services? Will it come from increasing taxes, including for pensioners? Or will it come from increasing borrowing? Which one, Chancellor?
Jeremy Hunt
Even Torsten Bell from the left-leaning Resolution Foundation said that the right hon. Lady’s argument that this was a mini Budget-style black hole was nonsense, because we specifically said that we would not fund national insurance cuts from increasing borrowing or cutting spending on public services. I gently ask her, if she wants to put on the mantle of fiscal rectitude, where is Labour going to find literally billions of pounds to fund unfunded spending pledges, from grid decarbon-isation to NHS waiting lists? We all know what that will lead to: higher taxes, like under every Labour Government in history.
UK Economy
Rachel Reeves Excerpts(9 months, 1 week ago)
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Rachel Reeves (Leeds West) (Lab)
(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the UK economy entering recession.
The Economic Secretary to the Treasury (Bim Afolami)
High inflation remains the biggest barrier to growth, which is why halving it is still our top priority. Thanks to decisive action supported by the Government, inflation has fallen from over 11% to 4%. The Bank of England is forecasting that it will fall to around 2% by early summer, in only a matter of months, which is much faster than previously thought.
It is important to put all this in context. Just over a year ago, the Bank of England was forecasting the longest recession in 100 years. That has not happened, and the British economy has proved resilient in the face of unprecedented shocks. Forecasters, including the Bank of England and the International Monetary Fund, agree that growth will strengthen over the next few years, with the IMF forecasting that we will grow faster than Japan, Germany, France, Italy and many others, on average, over the next five years. Wages have been higher than inflation for six months in a row, unemployment remains very low, and we are backing British business by delivering the biggest business tax cut in modern British history and rewarding work by cutting taxes for working people.
These are all reasons to be positive about the economy turning a corner. If we stick to our plan, we can be confident of seeing pressures reduce for families and of achieving healthy economic growth. At the autumn statement, we unveiled 110 growth measures, including unlocking £20 billion of business investment. This includes a substantial labour market package, delivering a tax cut to national insurance for 27 million people, as well as reforming pensions and extending investment zones. The real risk to economic growth and prosperity in this country is the fact that the Labour party has no plan for growth—no plan at all. While they may pretend that they have abandoned their £28 billion pledge, they are still committed to their damaging 2030 energy policy, which, as the Leader of the Opposition has said, costs £28 billion. All of us across this House know what that means: higher taxes and lower growth with Labour.
Rachel Reeves
The Chancellor should be here explaining why Britain has fallen into recession. Will the Minister explain why he has been left to answer these questions, and where exactly the Chancellor is? The Chancellor should be accountable to MPs and to our constituents, and answer for his failure in the House. What an insult to all those people who go to work every day and experience the reality of 14 years of Conservative economic failure that he has simply failed to turn up.
Does the Minister accept that the Prime Minister’s promise to grow the economy is now in tatters? Will the Minister explain why the economy is now smaller than when the current Prime Minister entered 10 Downing Street? Does the Minister accept the misery that this Government have caused homeowners with their kamikaze Budget, leaving a typical family renewing their mortgage paying an additional £240 every single month?
The Chief Secretary is also notable for her absence today, and was last seen refusing or simply failing to recognise that their target measure of debt as a share of GDP is rising, not falling. Following her rebuke this morning from the chair of the UK Statistics Authority about misleading the public, can the Minister inform the House whether the Chief Secretary will again be relying on incompetence as her best defence?
It is not good enough. The whole country knows that the economy is not working for working people under the Conservatives. It is time for change. If the Government seriously think everything is fine, why do they not take their record of failure and let the British people decide?
Bim Afolami
I am coming to that.
The right hon. Lady started by talking about the Chancellor; as Economic Secretary, I am perfectly entitled to answer on behalf of the Department and I will do so today. The main thrust of her remarks was on growth; let me deal with that in detail.
The first point to recognise is the international context that we all find ourselves in. [Interruption.] It happens to be true. For example—to describe that international context—10 EU countries were in recession in 2023. In relation to forecasts, the Office for Budget Responsibility’s original forecast was that there would be a contraction of 1.5% in the economy; we have significantly outperformed that. As I have said, the Bank of England forecast the longest recession in 100 years; we have significantly outperformed that. On wages, I think this is the sixth month in a row when wages have been higher than inflation, which, as I have said, we have more than halved.
On the Chief Secretary, what she was explaining is that we were and are meeting our fiscal rule, which is that debt will be falling in the fifth year of the forecast excluding the Bank of England. That is what she explained, and that is what I am reiterating for the House. [Interruption.]
Labour Members do not like hearing this, but they have absolutely no plan on the economy. We have been clear about our plan, and it is starting to bear fruit with wages, with cutting taxes for working people starting in January, with higher business investment as a result of our full expensing in the autumn statement. The shadow Chancellor does not have to take it from me; the Office for Budget Responsibility said that the two fiscal events in 2023—the Budget and the autumn statement—would represent the largest increase to GDP that it has ever scored. What I say to her and the House is this: our plan is working; stick with the plan and do not throw it away with the Opposition.
Oral Answers to Questions
Rachel Reeves Excerpts(9 months, 3 weeks ago)
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Rachel Reeves (Leeds West) (Lab)
Last week, at Prime Minister’s questions, when asked about the Tory mortgage penalty, the Prime Minister boasted that someone coming off a fixed-rate mortgage
“will be able to save hundreds of pounds.”—[Official Report, 31 January 2024; Vol. 744, c. 857.]
But the small print was that they had to add many years to their mortgage. Three million people have been coming off fixed-rate mortgage deals this year and last, so does the Chancellor agree with the Prime Minister that British homeowners have never had it so good?
Jeremy Hunt
The way we are helping families with mortgages is not just through the mortgage charter, which is a lifeline to many families, but by bringing down inflation. We have been having a few pops about Labour’s confusion about its £28 billion policy, but the real reason we are against it is that going on a borrowing splurge pushes up inflation, pushes up interest rates and makes mortgages more expensive.
Rachel Reeves
It is under a Conservative Government that interest rates, inflation and mortgage costs have gone up. The Government need to take responsibility because, after 14 years, this out-of-touch Government are making it harder for ordinary people to get on. If the Chancellor decides to campaign in next week’s by-elections, what will he say to the 3,100 people in Wellingborough who are remortgaging and paying £210 more on their mortgages every month, and to the 2,800 people in Kingswood paying £270 more a month because of the Conservative mortgage penalty?
Jeremy Hunt
What I will say to them is that responsible, difficult decisions, the vast majority of which the shadow Chancellor opposed, have seen the inflation rate more than halve and interest rates likely to have peaked. Last year, we built more houses in one year than in any single year under the previous Labour Government. We are doing everything we can to help bring down mortgage rates, but a £28 billion borrowing spree will make them worse not better.
Autumn Statement
Rachel Reeves Excerpts(1 year ago)
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Rachel Reeves (Leeds West) (Lab)
Today the Chancellor has lifted the lid on 13 years of economic failure. We were told that this was to be an autumn statement for growth, but the economy is now forecast to be £40 billion smaller by 2027 than the Chancellor said back in March. Growth has been revised down next year, the year after, and the year after that too. The Chancellor claims that the economy has turned a corner, yet the truth is that, under the Conservatives, growth has hit a dead end.
What has been laid bare today is the full scale of the damage that this Government have done to our economy over 13 years, and nothing that has been announced today will remotely compensate. We see mortgages rising, taxes eating into wages, inflation high, with prices still going up in the shops, public services on their knees, and too many families struggling to make ends meet. As the sun begins to set on this divided, out-of-touch, weak Government, the only conclusion that the British people will reach is this: after 13 years of the Conservatives, the economy is simply not working and, despite all the promises today, working people are still worse off.
The centrepiece of today’s autumn statement is a cut in the headline rate of national insurance. I am old enough to remember when the Prime Minister wanted to put up national insurance. As recently as January last year he said:
“We must go ahead with the”
increase in the—
“health and care levy. It is progressive, in…that the burden falls most on those who can most afford it.”
Utter nonsense. It was a tax on working people, and we opposed it for that very reason. Yet again, the Prime Minister is left arguing against himself.
In response to last year’s autumn statement, I warned that the Government were pickpocketing working people through stealth taxes. I have long argued that taxes on working people are too high. Indeed, I said in my conference speech that I want them to be lower. From the Conservatives’ failure to uprate income tax or national insurance bands to their forcing councils to raise council tax, they have pushed the costs of their failure on to others. The British people will not be taken for fools—they know that what has been announced today owes more to the cynicism of a party desperate to cling on to power than to the real priorities of this high tax, low growth Conservative Government—so we can forgive taxpayers for not celebrating when they see the truth behind today’s announcements.
Going into the statement, the Government had already put in place tax increases worth the equivalent of a 10p increase in national insurance, so today’s 2p cut will not remotely compensate for the tax increases put in place by this Conservative Government. The fact is that taxes will be higher at the next election than they were at the last. This is the legacy of the Conservatives, and that is their record.
The Chancellor and the Prime Minister have spent the last two weeks marching their MPs up a hill only to march them down again on inheritance tax. Let us not forget that when they realised that they had money to spend—[Interruption.]
Mr Speaker
Order. Mr Cairns, I have heard you chirping all the way through. Either go and get yourself that cup of tea or be quiet.
Rachel Reeves
When the Government realised that they had money to spend, their first instinct was a tax cut for millionaires. In the end, even they realised that they could not get away with it in the middle of a cost of living crisis. Will the Chancellor tell the House whether cutting inheritance tax is a decision delayed or a decision abandoned?
This autumn statement for growth is now the 11th Conservative economic growth plan from the fifth prime minister, the seventh Chancellor and the ninth Business Secretary. What do those numbers add up to? According to the most recent GDP data, a big fat zero. That is zero growth in the most recent data for the third quarter of this year. The Chancellor mentioned some countries that we are outperforming in growth, but I could not help but notice that he failed to mention any of the many advanced economies that have grown faster than the UK. Over the last 13 years of this low-growth Conservative Government, the UK languishes in the bottom third of OECD countries when it comes to growth. There are 27 OECD economies that have grown faster than us in the 13 years since 2010: the US, Australia, Canada, Sweden, Slovenia and 22 others. In fact, over the next two years, no fewer than 177 economies are forecast by the IMF to grow faster. [Interruption.]
Mr Speaker
It bothers me. I am not being funny. I expect courtesy to be shown to the shadow Chancellor of the Exchequer. Those who do not wish to give that courtesy, please go and find something else to do. My constituents are interested, even if yours are not.
Rachel Reeves
Next year, we are forecast to be the slowest growing economy in the whole of the G7. When it comes to economic growth, under the Tories, we are more world-following than world-beating.
Let us look at how the Conservatives’ record on growth compares to Labour’s record on growth. Under the Conservatives, GDP growth has averaged 1.5% a year. With Labour, it grew by an average of 2% a year in the 13 years that we were last in office. Had the economy continued to grow at the rate it did under Labour, it would now be £150 billion bigger. What is the Government’s economic record? Lower growth and higher borrowing, with debt more than doubling—it is now at almost 100% of GDP. That is a product of their failures over 13 years. A Tory Government who have failed on growth, failed on debt, failed on levelling-up and failed on the cost of living, too. Now they expect the British people to believe them when they say they will turn it all around, when they are the problem, not the solution.
If we are going to grow the economy, we must get more people into work. Let me be clear: people who can work, should work. That is why we have long argued that the work capability assessment needs replacing, because right now it is discouraging people from seeking work. But there is a wider problem that yet again the Government are failing to face up to. Britain is the only country in the G7 where the employment rate still has not returned to pre-pandemic levels, with the increase in the number of people out of the workforce due to long-term health issues costing the taxpayer a staggering £15.7 billion a year. NHS waiting lists have swelled to 7.8 million—an additional half a million since the Prime Minister said he was going to cut them—and 2.6 million people are out of work due to long-term sickness.
A healthy nation is critical to a healthy economy. That is why Labour has pledged to cut hospital waiting lists, investing an additional £1.1 billion a year to deliver 2 million more appointments, scans and operations. It will be funded by abolishing the non-dom tax status and replacing it with a modern scheme for people genuinely living in the UK for short periods. But, once again, we see that that policy has been vetoed by the Prime Minister. The best way to get people back to work is to get our NHS working, but the reality is you can never trust the Tories with our NHS.
The Chancellor has made great fanfare about public sector efficiency and value for money. That is from a Government who have blown £140 million on a discredited Rwanda scheme and yet are not able to send a single asylum seeker there, £7.2 billion of money lost on fraud during the pandemic—all those cheques were signed by the former Chancellor, the current Prime Minister—and £8.7 billion on personal protective equipment that has been written off. High Speed 2 is costing £57 billion, with not a single piece of track going north of Birmingham. No one can trust the Tories with taxpayers' money.
It says it all that after 13 years of Tory Government, there are still nearly 12,000 NHS computers running on outdated software that is vulnerable to cyber-attacks. Ten years ago, when he was Health Secretary, the now Chancellor promised a paperless NHS by 2018, yet today, in 2023, 26 NHS trusts are still using fax machines. Why on earth should people who experience deteriorating public services under this Conservative Government trust them to fix that, when his six years as Health Secretary make him one of the biggest architects of failure? Mr Speaker,
“if you put your hands into people’s pockets and take money out of them, and they do not see visible improvements in the services they receive, they get very angry indeed.”—[Official Report, 14 September 2021; Vol. 700, c. 851.]
Those are not my words but the Chancellor’s words two years ago. I agree with him. The Tories have had 13 years to improve public services and they have failed. This is too little and too late.
I do welcome the Chancellor’s announcement of additional funding to tackle antisemitism and Islamophobia to keep our communities safe, as well as the additional money for the Holocaust Educational Trust. There is no place for hate in our society, and I know that across the House we will work together to eliminate it.
The Chancellor calls this an autumn statement for growth, but it is Labour that has led the agenda on growth. Today, we see that the Conservatives have released their own poor cover version of what we have already announced. The Chancellor is talking about unlocking capital by reforming pensions, but Labour would go further, encouraging investment in British start-up and scale-up firms and introducing measures to ensure the consolidation of pension funds, so that our pensions system gets better returns for savers and for the UK economy.
On planning, the Conservatives are following Labour’s lead on taking money off bills for communities that host grid infrastructure and on speeding up planning decisions. What has taken them so long? Labour will get Britain building again, with a once-in-a-generation set of reforms to accelerate the building of our country’s national infrastructure and to build housing, too. We will fast-track battery factories, our life sciences and 5G technology, to grow our economy and provide good jobs in every part of our country.
We welcome the Chancellor’s announcement that he will make full expensing permanent—another thing that we have been calling for. But that does not make up for the years of uncertainty that businesses have faced, with taxes going up and down like a yo-yo. Small and medium businesses, which play a pivotal role in growing our economy, are left exposed to the Tories’ economic volatility. Labour’s partnership with business will get our economy firing on all cylinders. That is why this week we established a new British infrastructure council, with key investors in the UK economy focused on unlocking private investment by addressing the delivery challenges that businesses face when investing in Britain. Through Labour’s new national wealth fund, we will work alongside the private sector to back the growth of British industries, so that we can make the crucial transition to a zero-carbon economy. For every pound of public investment, we will leverage in three times as much private investment, while also getting a return for taxpayers. Labour’s plan will boost our economy, get debt falling and make working people better off.
If we listened to Members on the Government Benches, we would believe that the cost of living crisis was behind us. But inflation is still double the Bank of England’s target rate. I know the importance of low and stable inflation from my time as an economist at the Bank of England. It is welcome that the Chancellor has accepted this year’s recommendations from the Low Pay Commission—which we set up—on the minimum wage, but the reality of the Conservatives’ record is that average wages for working people have been held back. Under this Government, real average weekly wages have increased by just 3% in 13 years, compared with a 27% increase under the last Labour Government—worth an additional £120 every week for someone going out to work every day. Today is Equal Pay Day, so it is important to recognise that the living standards of working women have also been held back by a gender pay gap that I am determined to close.
The Chancellor and the Prime Minister say that the cost of living crisis has been dealt with. Everything might look a little better 10,000 feet up in a helicopter, but down here on planet Earth, people are approaching Christmas and the year ahead with worry and trepidation. The cost of living crisis has hit us harder because Tory mismanagement has left us so exposed. Some 11 million UK households do not have enough savings to cover three weeks of living expenses if they need it. Working families have been skating on thin ice for too long. As their resilience has been eroded, so has our national economy’s. Let us not forget that this Government oversaw the closure of our critical gas storage facilities, which left our country more exposed to huge fluctuations in international energy markets. The former Prime Minister—that is, four Prime Ministers ago—cut energy efficiency programmes, leading to higher bills for homeowners.
Just last year, we saw the true cost of the Conservatives when their kamikaze Budget crashed the economy, leading to market turmoil, pensions in peril and a spike in interest rates. Some 1.6 million families will see their mortgage deals end this year. Those re-mortgaging since July have seen their payments rocket by an average of £220 every month. Next year, 1.5 million families will face a similar fate. The Conservatives’ economic recklessness inflicted a Tory mortgage penalty on families across the country. In Wellingborough, families with a mortgage will be expected to find an additional £190 every single month. In Richmond, north Yorkshire, homeowners face £200 more a month on their mortgage. In the Chancellor’s own constituency—though maybe not for long—families with a mortgage will see an average increase of £420 a month because of this Conservative Government’s economic failure. Given increased costs for landlords—the Chancellor knows something about that—renters are paying a high price, too.
The truth is that working people just do not have that sort of money lying around. This is what we have come to after 13 years of Conservative Government. This is the record upon which people will judge the Conservatives at the next election. Tory economic recklessness is not a thing of the past. The British people are still paying the price. We say, never again. Last week, Labour tabled an amendment to the King’s Speech to put our fiscal lock into law. It would prevent a repeat of last year’s economic horror show, yet the Tories voted against it. It is clear that today, Labour is the party of economic and fiscal responsibility. What have the Conservatives learned? Absolutely nothing.
The country is crying out for change. A decaying Government can change their personnel but they have failed to change the direction of our country. In 13 years, we have had seven Chancellors. He would not run a business like this; he cannot run a country like it, either. The Prime Minister cannot even promise that this Chancellor will be in place at the next election. We have all heard the reports: when they first came together, it was a fairytale marriage, but one year on, the relationship has hit the rocks. The pair have grown apart, with rumours running rife that the Prime Minister already has his eyes on someone else.
Whoever this Prime Minister picks as Chancellor, the truth is that Britain is and will be worse off under the Conservatives. They have held back growth, crashed our economy, increased debt, trashed our public services, left businesses out in the cold and made life harder for working people. Our country cannot afford five more years of the Conservatives. The ravens are leaving the tower when even Saatchi & Saatchi says that the Tories are not working. The questions that people will ask at the next election, and after today’s autumn statement, are simple: do me and my family feel better off after 13 years of Conservative Government? Do our schools, hospitals and police work better after 13 years of Conservative Government? In fact, does anything in Britain work better today than when the Conservatives came into office 13 years ago? We all know that working people are worse off under the Conservatives, with growth down, mortgages up, prices up, taxes up and debt up. Their time is up. It is time for change—a changed Labour party to lead Britain and to make working people better off.
Jeremy Hunt
I am afraid that the shadow Chancellor has shown once again that Labour has nothing credible to say on the economy. She tells the papers this morning that she will accept these measures, as one would expect from a copy and paste shadow Chancellor. In all sincerity, I particularly welcome her conversion to supporting full expensing, which she voted against in the House; copying and pasting in the national interest is welcomed on the Government Benches. She compared growth rates under Labour and the Conservatives, but she carefully omitted one fact: Labour inherited a golden legacy from the Conservatives, and proceeded to trash the economy before handing it over.
On growth, the right hon. Lady did not like it when I reminded her that, under the Conservatives, we have grown faster than any other major European economy. She says she is now converted to Conservative supply-side reforms on welfare, so I look forward to her voting with us in the Lobby on those, but her main policy is a demand-side boost to growth, increasing borrowing by £28 billion a year, with absolutely no plans to repay it. The shadow Chief Secretary to the Treasury, the hon. Member for Bristol North West (Darren Jones), does not appear to be in his place. This morning he asked for more action on inflation. Well, the first thing Labour could do is drop its damaging inflationary plan to ramp up borrowing.
On the NHS, despite our having more doctors and nurses, and more patients treated in good or outstanding hospitals, what the right hon. Lady did not mention is that the only place where NHS funding has been cut—not once but twice—is Wales, with the longest hospital waits in Britain.
Perhaps we should talk about what has happened after 13 years, when we repaired Labour’s damage: unemployment down, poverty down, crime down, low pay down, schools funding up, NHS funding up, jobs up, growth up. Conservatives know that lower tax is the path to higher growth and today we make a start.
Economic Growth
Rachel Reeves Excerpts(1 year ago)
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Rachel Reeves (Leeds West) (Lab)
I beg to move an amendment, at the end of the Question to add:
“but respectfully regret that the Gracious Speech fails to include legislative proposals to prevent a repeat of the economic fallout from the September 2022 Growth Plan, by amending the Budget Responsibility and National Audit Act 2011 to give the Office for Budget Responsibility the power to produce and publish forecasts for any Government fiscal event which includes tax and spending decisions with long-term effects over a threshold to be specified in a new Charter for Budget Responsibility.”
It is fair to say that the UK is not exactly gripped with excitement at the contents of the Conservative Government’s King’s Speech. It is as if Ministers have rummaged down the back of the sofa and found legislative loose change, a broken biro, some old Bills covered in fluff and even an old Prime Minister. In this current Tory era of three-word slogans, the country is thinking not, “Five more years!” but, “Is that it?”
It is clear what the Government’s approach is in the run-up to that election. They have given up on trying to improve the country, so all they can now do is attempt to divide it. But they will fail because the Conservatives simply do not understand the priorities, hopes and values of the people of Britain today. After five Prime Ministers—one of them recycled—and seven Chancellors since 2010, the Conservatives find changing personnel rather easier than changing our country for the better.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I am listening to the right hon. Lady’s speech about values. The values of my constituents are such that they are calling for an immediate ceasefire in Gaza. Does she support those values?
Rachel Reeves
We have just had an hour and a half’s worth of questions on that issue. I am going to focus on how to grow the economy and tackle the cost of living crisis.
I wish that today we were debating the Government’s significant economic reforms and new measures to get our economy back on track after 13 years of Tory economic failure—but there weren’t any. Their big tax reform is to consult on bringing in a new duty on vapes. Their big energy Bill does not even lower people’s energy bills. In fact, a third of the Bills in the King’s Speech are reheated from the previous Session. How out of touch must the Prime Minister be to peer down from 10,000 feet up in his helicopter and conclude that everything is going so well that there is no need for legislation and Government action to help unlock growth? This is the final King’s Speech before the general election, and yet this set of proposals will not quicken the pulse, get the economy roaring or lift people’s living standards. Where is the ambition? Where is the plan?
As the British Chambers of Commerce has pointed out:
“The King’s Speech opened with an aspiration to increase economic growth—but it failed to outline how that will happen.”
Samantha Dixon (City of Chester) (Lab)
Does my right hon. Friend share the concern of many that rather than improving, economic growth is forecast to go into reverse next year under the Tories? Does she agree that this new Tory economic failure does not bode well for people’s living standards next year?
Rachel Reeves
I thank my hon. Friend for that intervention. She will have seen that the forecasts published by the Bank of England just over a week ago show that the economy is expected to flatline not just throughout the rest of this year but all through next year as well.
There is something quite apt, even revealing, about the Conservatives wanting to use this King’s Speech to protect the users of driverless cars from the damage they might inflict on others. The Conservative Government have been driving quite dangerously for 13 years. The current named driver of the vehicle—the third in four years—is nowhere to be seen, but there will be no protection for the Prime Minister or his party from voters’ verdicts at the general election, whenever that comes.
The Government’s King’s Speech was a lost opportunity for our country. There was no legislation to reform the antiquated planning process and accelerate decisions around our critical national infrastructure. Instead, planning processes continue to hold back the success of our offshore wind sector, life sciences and 5G. There were no pension reforms to encourage growing British companies to stay here instead of being forced abroad for funding, which contributes to the UK’s stagnating growth. There was no serious plan to help get energy bills down. The energy price cap has increased by half in this Parliament, yet the Energy Secretary has admitted that the Government’s energy Bill
“wouldn’t necessarily bring energy bills down”,
whereas Labour has plans for clean power by 2030, a national wealth fund, insulating homes to lower bills, and the creation of GB Energy.
There is no focus from the Government on industrial strategy or on putting an industrial strategy council on a statutory footing to help drive the growth and investment that we need. Instead, the Government reach for sticking plasters when important sectors hit crisis. We need positive, long-term plans to make the most of our assets and create good-quality jobs here in Britain.
Jim Shannon (Strangford) (DUP)
I commend the right hon. Lady for her strong and wise words. Like me and others in the House, she believes that the life sciences sector can grow and do much more. In 2019, the pharmaceutical sector alone provided 18% of research and development spending. There are almost 600,000 jobs in the industry and it contributes £36.9 billion in gross value added to GDP. Does the right hon. Lady agree that if we are to ensure that everyone can gain from life sciences, there must be better distribution across all of this great United Kingdom of GB and NI, and that NI must be a part of that?
Rachel Reeves
I could not agree more with the hon. Gentleman. Our life sciences sector is key for Great Britain and Northern Ireland, and yet too many businesses are looking to relocate, including to the Republic of Ireland, but we want those jobs and those investments here in Britain.
There was no legislation in this King’s Speech for fairer tax measures. The Chancellor and the Prime Minister have been so quick to raise taxes—they have done so 25 times between them—that we now have the highest tax burden in 70 years. It is the biggest tax hike ever in a single Parliament, with working people and businesses hit hard, yet the Government allow unjustifiable tax loopholes to remain. I believe that if people make Britain their home, they should pay their taxes here, too. That is why we will abolish the non-dom tax status and introduce a modern scheme for people who are genuinely living in the UK for short periods. Why is it so hard for this Prime Minister to say the same?
There was no legislation in this King’s Speech to increase security at work or to update employment rights. Having confidence to plan a family’s future should be not a luxury but something that working people deserve, and we need to grow our economy from the bottom up and the middle out. If an economy is not working for working people, it is not working at all. This King’s Speech has no serious plans for tackling the cost of living crisis or for growing the UK economy.
The Conservative economic failures are piling up high: a failure on growth; a failure on infrastructure investments; a failure on the cost of living; a failure on public services; and a failure on tax. The responsibility for such disappointment and damage has been a Conservative team effort these past 13 years. The Government cannot get our economy back on track or make our country better off. The Conservatives cannot and have not tackled the cost of living crisis because they are the cost of living crisis.
Andrew Western (Stretford and Urmston) (Lab)
Does my right hon. Friend agree that we are still paying the price of the failed Tory policies since 2010 that have weakened our NHS, stripped funding from our local council services and stopped Labour’s school repairs programme?
Rachel Reeves
I thank my hon. Friend for that intervention. The truth is that the combination of austerity, which was five Prime Ministers ago, Brexit without a plan—which relates to most of them—and the kamikaze Budget has contributed to the parlous state of our economy and the cost of living crisis that we are enduring today.
This is a party led—and I say “led” in the loosest sense of the word—by a Prime Minister with no mandate whatsoever and with no authority or vision for the future. This Prime Minister appears to be spending more time polishing his CV in conversation with Elon Musk than fighting for the livelihoods of manufacturing workers in Scunthorpe, Port Talbot and Derby.
And it is the previous Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss), who still sets the tune for so many in the Conservative party. She wanted to scrap the bankers’ bonus cap in the kamikaze Budget last year, and that has now been dutifully delivered by this Prime Minister and this Chancellor. When the previous Prime Minister called this year for delaying the timetable for new electric cars by five years, undermining both the net zero consensus and the British automotive industry, this Prime Minister and this Chancellor delivered. Today, the former Prime Minister’s so-called growth commission is setting out its demands for next week’s autumn statement, oblivious to the damage already done. Will the Chancellor tell the House whether he agrees with the person who appointed him to do the job he is now doing and her proposals to slash corporation tax, abolish inheritance tax, abolish stamp duty and other unfunded commitments that make last year’s mini-Budget look like small fry, with tax cuts announced totalling £80 billion?
Labour will never gamble with the livelihoods of working people, as the Conservatives have. Labour’s economic approach is built on a rock of fiscal responsibility, with respect for taxpayers’ money. We will work in partnership with industry to bring about the change that our country so desperately needs. We know what the Tories did last autumn. They blew up our economy with their reckless, unfunded promises and a trashing of our economic institutions. It was a collective failure from the Tories. It was not just one bad apple, but a whole orchard of irresponsibility. The Conservative leadership contest of summer 2022 produced a sum total of £200 billion of unfunded promises. The Chancellor did not want to be left out. His leadership candidacy might not have been as successful or lasted as long as he may have wished, but there was still time for him to make almost £80 billion of unfunded commitments himself on corporation tax, business rates and defence, with no idea how those commitments would be funded.
Following the leadership election last year, Conservative Cabinet Ministers tried to blindfold the nation and global financial markets by preventing the Office for Budget Responsibility from publishing its assessments. The Conservatives knew that the truth would hurt, but they continued to gamble with the livelihoods of our country. The pound crashed, pensions were put in peril and interest rates soared. Working people were made to pay the price for the Conservatives’ kamikaze Budget and reckless eagerness to cut the taxes of the wealthiest few. It was reckless, it was irresponsible, and with Labour it will never happen.
The result is an average Conservative mortgage penalty of £220 each and every month for hard-working homeowners. This out-of-touch Government do not have a clue about what that really means for people. That is a lot of money to try to find from nowhere each and every month. It means holidays cancelled, spending cut back and life made harder. Some families are having to downsize, and others who have been trying to get on the housing ladder for years have had their dreams snuffed out. Meanwhile, rents rise as landlords see their mortgages go up and want to pass the costs on.
Mr Clive Betts (Sheffield South East) (Lab)
My right hon. Friend is making a good point about housing costs and the shortage of housing in this country. Is it not therefore astounding that, given the climate we are in, there is not one single word about housing in the whole King’s Speech? There is not a single word about the shortage of housing or the rising costs of housing, no long-term proposals to build on this vague commitment of 300,000 homes, and no idea how to build them.
Rachel Reeves
My hon. Friend speaks powerfully on what he knows well. On top of the big challenges with house building and the Government getting rid of their housing targets, the number of homeowners in arrears on their mortgage is also up a staggering 18% compared with a year ago. The Conservatives are no longer the party of home ownership. Higher housing costs are the last thing people need in a painful cost of living crisis. It should never have happened in the first place, and it must never happen again.
Jack Brereton (Stoke-on-Trent South) (Con)
Will the right hon. Lady enlighten us on the Labour party’s views on our precious green belt, because my constituents are terrified that a Labour Government will build houses all over it?
Rachel Reeves
Labour’s approach is brownfield-first. We also know that there is land designated as green belt that is no such thing. For example, there is a petrol station in Tottenham that people cannot get planning permission for, because it is classified as green belt. People want that land built on, and I think we can all agree across the House that we need reforms to allow that to happen, but this Government scrapped the house building target. Home ownership is falling under the Conservatives. The Conservatives were once the party of home ownership; they can no longer claim that mantle. It is Labour today that is the party of home ownership and of aspiration for working families.
Today the Conservatives can show that they have learned a lesson from last year. They can back Labour’s commitment to strengthen the Office for Budget Responsibility in our amendment. We believe that where a fiscal event is making significant and permanent tax and spending changes, the OBR should be able to freely and independently publish a forecast of the impact of those changes. No Government of the day should be able to stop it from doing so. In the event of an emergency, where changes must be introduced at speed and a forecast cannot be produced in time, the OBR would be allowed to set a date for when it can publish a forecast. The public should be able to read an independent assessment on the health of our economy, to understand the consequences of proposals and to see the prices on the menu.
The amendment should not be remotely controversial, and I look forward to seeing Conservative MPs and Ministers joining us in supporting this sensible measure today. If they do not, it will show that they have not learned a thing, and that the Conservatives continue to present a real and present danger to our economy.
What will be the legacy of 13 years of this Conservative Government? They have damaged our economy, trashed our public services, failed to invest in the industries of the future, squeezed people’s living standards and caused a calamitous cost of living crisis. A Labour Government will clean up that mess. We will clamp down on waste and fraud from the pandemic, because the country is sick of being ripped off and we want our money back. We will tax fairly, spend wisely and grow the economy. We will get the NHS back on its feet. The Conservatives have broken our public services before, but Labour Governments have fixed them in the past, and we will do so again.
As bad as the public finances are under the Conservatives, there will always be choices, so we will abolish the non-dom tax status and use that money to help our NHS tackle record waiting times and introduce free breakfast clubs for all primary school-aged children. We will close the tax loophole that gives private equity managers a huge tax break. We will close the tax loopholes benefiting private schools, which gain from not having to pay VAT and business rates, and use that money to support the 93% of children attending our state schools. If the Conservatives want to have a fight over who is most aspirational for our young people when the ceilings are crumbling in our schools, I say bring it on.
After 13 years of Conservative Government, the questions that people will be asking at the next election are simple: “Do my family and I feel better off after 13 years of Conservative government? Do our schools, our hospitals and our transport infrastructure work better than when the Conservatives came to office 13 years ago? In fact, does anything in Britain work better today than when the Conservatives came to office?” The answer is a resounding no. This King’s Speech is not remotely up to the task of changing our country for the better and meeting the challenges head on.
Real change cannot come from five more painful years under the Conservatives, but only from a fresh start with Labour. The Labour party is the only party of economic responsibility and with the ability to provide the change of direction and confidence that our country needs. As this King’s Speech shows, this desperate, decaying Government are out of ideas, out of excuses and increasingly out of time. If the Prime Minister and Chancellor are so confident about the Conservatives’ record, let us take it to the ballot box and let the British people decide.
Oral Answers to Questions
Rachel Reeves Excerpts(1 year ago)
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Rachel Reeves (Leeds West) (Lab)
I welcome all the new Ministers to their roles and wish them well in them. The covid inquiry is uncovering unsavoury examples of Government mismanagement. We already know that Ministers ignored warnings that their business loan schemes were vulnerable to organised crime, yet the Prime Minister left the vaults open to fraudsters. Will the Chancellor update the House on the latest estimates of taxpayers’ money lost to fraud from the covid support schemes?
Jeremy Hunt
I am happy to tell the shadow Chancellor that as of September 2023, HMRC’s compliance effort on covid-19 support schemes, which started when the schemes were set up in spring 2020, had prevented the payment of or recovered the overpayment of more than £1.6 billion of grants.
Rachel Reeves
I thank the right hon. Gentleman for that answer, but according to the House of Commons Library’s most recent numbers, covid fraud losses total a staggering £7.2 billion—that is bigger than the fiscal headroom that he had in his spring Budget. More stories are coming to light about companies with undeclared interests and personal protective equipment contracts not delivering to the standards required. Ahead of the autumn statement, will he confirm that the Government have also had to write off more than £8.7 billion from pandemic PPE contracts?
Jeremy Hunt
Let me say two things. First, we have no quarter with any incidence of fraud. We have commenced 51 criminal investigations into suspected fraud cases and there have been a total of 80 arrests so far. Let me also say that during the pandemic we introduced £400 billion of support to businesses and families up and down the country and, according to the latest figures from the Office for National Statistics, the result is that our economy is nearly 2% bigger than pre-pandemic, while Germany’s, for example, is only 0.3% bigger.
Oral Answers to Questions
Rachel Reeves Excerpts(1 year, 2 months ago)
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Rachel Reeves (Leeds West) (Lab)
Last week, thousands of parents were told that their children’s schools were unsafe and at risk of collapse. The defining image of 13 years of Conservative government: classrooms propped up to stop the ceilings from falling in. Capital budgets have halved in real terms since 2010, with warnings ignored and repair programmes slashed. Do this Conservative Government take any responsibility for any of this?
Jeremy Hunt
Let me start by reassuring the right hon. Lady that the vast majority of pupils in the 156 schools affected are at school normally, and we are acting fast to minimise the impact on the rest.
Let me answer the more general question that the right hon. Lady raised. Yes, we made cuts in spending in 2010 because, as she knows well, the last Labour Government left this country with an economic crisis. Despite that crisis, the Department for Education budget has gone up by 15% in real terms, and overall capital spend—
Mr Speaker
Order. This is topicals. All your colleagues on both sides of the House want to get in. Topicals are meant to be very short, not a full debate between both sides. I say to everybody: think about others. I think we can move on. I call Rachel Reeves.
Rachel Reeves
I will repeat: capital budgets have halved in real terms since 2010. I understand—indeed, I know—that in the lead-up to the 2021 spending review, the Department for Education made a submission to the Treasury about the dangers of the deteriorating school estate, including from reinforced autoclaved aerated concrete. Those warnings were ignored by the then Chancellor—the current Prime Minister—and we have seen the consequences, so will today’s Chancellor do the right thing and publish the Department for Education’s submission to the last spending review?
Jeremy Hunt
Capital spending at the Department for Education went up 16% in real terms in that review. Is the difference not that, with the fastest recovery in Europe, the Conservatives build an economy that can pay for our schools and hospitals, and Labour runs out of money?
Mortgage and Rental Costs
Rachel Reeves Excerpts(1 year, 5 months ago)
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Rachel Reeves (Leeds West) (Lab)
I beg to move,
That this House is extremely concerned that, under this Conservative Government, average mortgage costs will be increasing by £2,900 per year, with a typical household in the UK paying over £2,000 more per year than in France and over £1,000 more than in Ireland and Belgium, and that renters face huge increases in rent payments; condemns the Government for its slowness in acting to support millions of homeowners and renters and so alleviate the impact of its policies; calls on the Government to bring in mandatory measures, as the current voluntary measures could lead to around one million homeowners missing out on support, and to immediately adopt measures to ease the mortgage crisis and halt repossessions by guaranteeing support from lenders for struggling mortgage borrowers and strengthening the rights of renters; in particular calls on the Government to require lenders to allow borrowers to switch to interest-only mortgage payments for a temporary period, to lengthen the term of their mortgage period, to reverse any support measures when requested and to make mandatory repossession restrictions; and further calls on the Chancellor of the Exchequer to instruct the Financial Conduct Authority to urgently issue guidance that the credit score of borrowers should be unaffected by any temporary switches to interest-only mortgage payments or lengthening of their mortgage period and to introduce a renters’ charter that would end no-fault evictions immediately.
Throughout Britain, families are experiencing the harsh, rolling impacts of the Tory mortgage bombshell. Last autumn, the Tories’ mini-Budget crashed the pound; they trashed our economic institutions and left our country’s reputation in tatters, with higher mortgage rates as the consequence. The current Prime Minister and the latest Chancellor have not turned the situation around. For families across Britain, things are getting worse, not better. The Prime Minister is now lecturing the country to “hold our nerve”. It is easier to hold your nerve when you do not have to pay the price of the Tory mortgage bombshell.
What are the consequences? Millions of households will be hit by the bombshell, paying, collectively, a total of £15.8 billion more in mortgage payments by 2026. That will be an additional £240 per month, on average, for those re-mortgaging. In the constituency of the Chief Secretary to the Treasury, the right hon. Member for Salisbury (John Glen), the figure is higher still, with 9,700 households there facing payments, on average, of £280 per month more—or £3,400 per year. People can hold their nerve all they like, but how does the Minister think that is going to pay the mortgage or the rent?
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
My right hon. Friend is making a good introduction. Is it not the case that all this money that will be lost by households does not go to help anyone but the Tories’ friends in the banks, who, of course, have presided over those neo-liberal policies that trashed our economy?
Rachel Reeves
I thank my hon. Friend for that intervention. I will come on to the ways in which we can better protect people, but many banks are doing the right thing and trying to support their customers. It is important that all lenders take the action that is needed, which is why we need the Government to make that charter a requirement, not a voluntary agreement.
These devastating increases in mortgage rates will damage people’s plans for the future and deny many their dreams. In plenty of cases, they will mean more lives and hopes ruined. Citizens Advice said this week that many of its clients with mortgages have seen their finances “fall off a cliff”, with more and more people struggling to afford the essentials, such as food and heating. But it is not their fault: they have done nothing wrong.
For James, from Selby, the Tory mortgage bombshell is going to cost him and his family £400 more each month. That is nearly an extra £5,000 a year, but he cannot find that money and so he and his family have no choice but to sell their house and downsize. He has just told his children that they are going to have to start sharing bedrooms because they cannot afford to live in their home. Can the Minister explain why James and his family are having to pay the cost of this Tory Government’s failures?
Margaret Greenwood (Wirral West) (Lab)
My right hon. Friend is making excellent remarks. Does she agree that this situation is having a devastating impact not only on people with mortgages, but on renters, because landlords are passing on the costs to them? Does she agree that we need no-fault evictions to be scrapped immediately?
Rachel Reeves
I very much thank my hon. Friend for that intervention. She is absolutely right: the people being hit are those who are having to re-mortgage; those who are on floating rates and are just seeing their payments automatically go up; first-time buyers who want to be on the housing ladder but, because of this bombshell, are not able to get on it; and renters, who are paying the higher mortgage payments of their landlords. She is right to say that we need Labour’s renters charter, in order to do a number of things, including ending no-fault evictions.
Families facing the increasing squeeze from their rising mortgages are now having to confront that stress and anxiety day in, day out. For many, this will mean that their family holidays are cancelled this year; they will watch hard-earned savings drain away; and they will decide that they can no longer afford to spend money on days out with friends and family. For others, it could be much worse, with them not moving up the housing ladder, but slipping down it, through no fault of their own. The scale of the impact of all of this is devastating.
Jim Shannon (Strangford) (DUP)
I commend the right hon. Lady and the Labour party for bringing this debate forward. Every one of us, including my constituents, is dealing with the same problems. Some people contacted me last week to say that their mortgage rates are going up from £400 to £800, while others have said that theirs are going up from £600 to £1,200. It is just impossible to find that amount of money. Does she think that perhaps the Government—I look to them when I say this—should be looking at mortgage tax relief? That is one direct method of helping people to retain their houses and their dream of home ownership, and to survive this crisis.
Rachel Reeves
The hon. Gentleman speaks powerfully and I recognise those stories of people seeing their mortgages double because of what is happening. I will come on to the solutions proposed by the Labour party, but it is important that money is not injected into the economy at this time. If that happened, interest rates would go up even more, crippling the hopes and opportunities of exactly those we want to help. I will come on to the solutions that we propose shortly.
Over the next few years, 7.5 million families will be hit by the Tory mortgage bombshell, month after month after month. That is why it is essential that greater mortgage flexibility and support from lenders must be mandatory, not voluntary as the Government have put forward.
Consumer champion Martin Lewis warned the Government about mortgage market issues last year, and he now says “the timebomb has exploded”, yet under the Government’s scheme, 1 million households are missing out. What is the Government’s response to them? Tough? It is up to the discretion and the goodwill of their lender? That is not good enough.
Although it is welcome, as I said, that many lenders are stepping up and doing the right thing, the scheme cannot be voluntary. That is why, when Labour set out our mortgage package last week, we made sure that that would be compulsory, across the board, and required of lenders. That is right: required of lenders. Without that clarity and confidence, families are rightly anxious about what comes next and how it will affect them.
Imran Hussain (Bradford East) (Lab)
My hon. Friend is making an excellent speech, highlighting the real situation facing many of our constituents as we sit here today. In my constituency, 9,000 families will see a mortgage increase of up to £1,400, on top of struggling to put bread and butter on the table and keep up with energy costs. All we hear from the Prime Minister is that they should hold their nerve. Frankly, that is rich coming from somebody who is never going to be in that position. Does my hon. Friend agree with me that rather than finding solutions, what this Tory Government and the Prime Minister are demonstrating is that they are completely out of touch with people’s real problems today?
Rachel Reeves
My hon. Friend speaks powerfully on behalf of the people of Bradford East, a constituency that I know well and that I know will be badly affected, not just by the Tory mortgage bombshell but by the cost of living increases as well.
Catherine West (Hornsey and Wood Green) (Lab)
My constituent’s mortgage has gone up from £1,950 to £3,000. She spent an agonisingly stressful time waiting for that deal to come through, but if she had made the deal today, it would have been £3,500. Does my hon. Friend agree that that is too much stress for one family to take?
Rachel Reeves
My hon. Friend is absolutely right. People who live in Hornsey and Wood Green, where house prices are high, will see a big increase in their payments. When rates go up from below 2%, which is what many people were paying, to above 6%, there will be huge increases. It is through no fault of my hon. Friend’s constituents, or any of our constituents, that they are in that position, which is what is so frustrating.
I remember a time—you may as well, Madam Deputy Speaker—when the Tory party used to preach personal responsibility, yet this Government are taking no responsibility for the devastation that they have caused. Where is the apology for the Tory mini-Budget? Where is the apology to those paying hundreds of pounds more a month in mortgage payments, or to those at risk of losing their homes? There is nothing.
Let us just imagine for a moment that a group of people working in an office, a supermarket or a factory burn the place down. Everyone else who works there is told that they have to pay to clean up the mess and that that payment will carry on for years. The next day, the arsonists turn up to work again, expecting to be paid as normal and, not only that, they are furious if someone even brings up the incident of the fire with them. That would be preposterous and outrageous, and yet it is precisely what the Government are doing. “Inflation? Oh, that was nothing to do with us. It was all global events. It was those public sector workers asking for a pay rise. It was the Bank of England. It definitely was not anything to do with us.” That is what we hear from this Government. Well, we know what the Tories did last autumn was totally outrageous. The country will not forgive or forget the scale of the harm that the Tories have caused to the economy and to families up and down our country.
The Government say that this is happening everywhere, so let us look at what is happening in Europe. The latest data comparing interest rates among our European neighbours show that a household in Britain, with a £200,000 mortgage, is now paying over £2,000 per year more for its mortgage than in France, over £1,000 a year more than in Ireland or Belgium, and £800 more than in Germany. That impact on families in Britain reflects the choices made by this Tory Government.
To make matters worse, after 13 years of the Tory Government being in power, average real wages are still lower than they were in 2010. Many families have faced one financial pressure after another. Energy bills are twice as high as a year ago. The weekly food shop is astronomical. On top of all that, higher mortgages and higher rents are the last thing they needed. No one is reassured by the suggestion from the Prime Minister that he is “100% on it”. After 13 years in power, it is clearer by the day that the Tories are the problem, not the solution.
The truth of the matter is that we have the highest inflation in the G7, with core inflation rising and interest rates rising too. We are in a weaker position than many as a consequence of Tory choices that have left our economy lacking resilience and security in the face of shocks, including global ones. Banning onshore wind, closing our gas storage facilities and scrapping the home insulation programme have all contributed to higher bills, higher costs and less security.
A patchwork Brexit deal full of holes is making goods such as food more expensive, with the prospect that that could get worse at the end of this year, with new import checks and costs. What is the Government’s latest idea? One of the Chancellor’s economic advisers called last week for the Bank of England to “create a recession”, adding:
“They have to create uncertainty and frailty."
Will the Minister tell us whether the Chancellor agrees with that advice from his advisers? If not, why is taking advice from them?
A Labour Government would be built on the firm foundations of economic responsibility, with strong fiscal rules. We would negotiate a bespoke British food and farming agreement with our trading partners, while staying out of the single market and customs union. We would lift the ban on onshore wind and reform antiquated planning rules, working in partnership with businesses and trade unions to invest in the jobs and industries of the future, protect our energy security and reduce our energy bills. That is what is needed to get our economy on sustainable and stable path, so that families are not grappling with a cost of living crisis created by this Tory Government.
If ever there were proof that the Government do not have the answers that our country needs, it is what is happening on housing. The Conservatives once claimed to be the party of home ownership: not any more. Home ownership is falling. It is not because of just their failure to require lenders to provide mandatory support for mortgage holders, although that would certainly help today. Incredibly, the Prime Minister has scrapped house building targets in the face of pressure from some of his councillors and Back Benchers. The consequence of the Tory Government’s policy is now to push the prospect of home ownership for young people and families starting out in life even further away.
Kim Johnson (Liverpool, Riverside) (Lab)
My right hon. Friend is making excellent points, particularly about young people being priced out of the property market. Does she agree that we need to overhaul the housing system to include better rights for renters and more council housing?
Rachel Reeves
My hon. Friend makes a really important point, because the Tory mortgage bombshell is experienced whether people have a mortgage or not. Renters are seeing huge increases in their rents—on average 10% in the last year—in Liverpool and around the country. That is why Labour’s renters charter is so important right now.
Treasury Ministers remain ignorant or indifferent to the plight of the renters whom my hon. Friend spoke about. A Labour Government would bring in a renters charter, ending no-fault evictions, and introduce a four-month notice period. Renters right now are exposed to their landlords passing the higher costs of their mortgages on to their tenants. Yet it is not clear whether the voluntary package, which the Chancellor described yesterday, includes buy-to-let mortgages. Will the Government tell the House and the country what they think the consequences of that will be? Labour would rebalance the housing market towards first-time buyers and towards renters. We would bring in a comprehensive mortgage guarantee scheme, stopping overseas investors buying whole developments off plan, and introduce our tough private renters charter.
The Tory mortgage bombshell could not come at a worse time for family finances—right in the middle of a cost of living crisis. Our country is being made to pay the growing price of Tory economic failure. People cannot afford this Tory Government. We have seen mistake after mistake, wrong decisions taken for the wrong reasons, and the Government never standing up for working families and refusing to take responsibility for the problems that they have created. The only thing that the Tories have to offer is desperate excuses for the state of the country after 13 years of their Government.
At the next election, people will be asking this question: are me and my family better off after 13 years of Conservative Government? The answer to that is a resounding no. The last thing that our country needs is this Tory mortgage bombshell. The country needs security for working people. That is what Labour will deliver. We are on to the third Prime Minister of this Parliament. If this Government had any decency, they would call a general election and let the people decide who they want to stand up for them and lead our country.
Mortgage Charter
Rachel Reeves Excerpts(1 year, 5 months ago)
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Rachel Reeves (Leeds West) (Lab)
Thank you, Mr Speaker. I would like to thank the Chancellor for advance sight of his statement this afternoon.
Families are worried sick to their stomach about what is happening at the moment, but the Prime Minister says, “Don’t worry—it will all be okay”. However, it is not going to be okay for the millions of homeowners who face an average increase in mortgage costs of £2,900 this year—all of this during a wider cost of living crisis. The Prime Minister told the country yesterday to hold its nerve, but where are people meant to find the money in the meantime to pay for the Tory mortgage bombshell? The Chancellor and the Prime Minister have not yet said.
For many, the Tory mortgage bombshell will mean holidays cancelled, family savings draining away and missing out on days spent with family and friends, but for others it could be much worse—not moving up the housing ladder, but heading down it through no fault of their own. The Chancellor does not need to take my word about how many people will be facing the Tory mortgage bombshell. He could speak to any of the 11,600 families in his own constituency who will be paying £450 more every month in mortgage costs alone as a result of this Conservative Government.
The Resolution Foundation estimates that millions of households will have to pay a combined total of £15.8 billion more in mortgage payments a year by 2026. That is just devastating. The Tories gambled last autumn with people’s livelihoods, and since then things have got worse, not better, yet Ministers take no responsibility for the damage that they have caused, and blame anything and everyone else. Again today, the Government claim that this is all due to global factors, yet the latest data show that a typical household in Britain are now paying over £2,000 more per year for their mortgage than in France, over £1,000 more per year than in Ireland or Belgium, and over £800 per year more than in Germany. The Chancellor is going to need a better scapegoat.
Labour set out our plans last week. Our measures were a requirement—yes, a requirement—because all lenders need to play their part when people are struggling. Our plan would have provided real help, but the Government have provided just a bad cover version. While many banks and building societies are doing the right thing by their customers, a voluntary set of measures is just not good enough. The Chancellor said today that the voluntary measures would cover 85% of the mortgage market, but what is his answer for the more than 1 million families who are missing out because their lender has not signed up to this scheme—tough luck? Just how bad does it have to get before the Chancellor recognises that mandatory action is needed to provide meaningful assistance?
I would like to ask the Chancellor the following questions. Can he confirm what consequences there are for firms who have not signed up to this scheme? Where is the plan for renters? The Chancellor did not even mention them in his statement, but many of them are paying higher rents because the mortgage costs of their landlords have gone up? Why does the Chancellor think that savers are not enjoying the full benefits from rising interest rates in the same way that mortgage holders are feeling the full pain? Why does the Chancellor think that the UK has the highest inflation in the G7, and does he still think the Government are on track with their target of halving inflation by the end of the year? How does the Chancellor think getting rid of house building targets will help increase home ownership? Finally, six days ago the Chancellor said that he was “proud” of this Government’s economic record. With energy bills twice as high as last year, food inflation close to 20% and millions hit by the Tory mortgage bombshell, is he seriously saying he is proud of that record?
People work hard to get on to the housing ladder, yet there is now a risk that dreams will become nightmares due to the decisions of this Conservative Government. The Chancellor today has come to the House with a watered-down package that does not meet the task of dealing with the Tory mortgage bombshell.
Jeremy Hunt
I will deal with the right hon. Lady’s specific points first. She says these measures should be mandatory, so why did Labour oppose the intervention power in the Financial Services and Markets Bill that would have made that possible? She said she wants action for savers, and I have indeed been talking to banks about action for savers and will keep the House updated. What she carefully did not mention is that we secured on Friday more than Labour committed to, because our measures provide protection for people who miss payments not for six months, but for 12 months.
The main point is that the right hon. Lady wants people to think she is fiscally responsible and will not take risks with inflation, so why on earth is she committed to borrowing £28 billion more a year when, as a former Bank of England economist, she should know that that will be inflationary and push up the cost of mortgages? Members need not listen to me; they should listen to people such as Paul Johnson of the Institute for Fiscal Studies, who said about Labour’s plans that
“additional borrowing both pumps more money into the economy, potentially”—[Interruption.]
The right hon. Lady might not want to hear this but this is what Paul Johnson says about Labour’s plans:
“additional borrowing both pumps more money into the economy, potentially increasing inflation, and also drives up interest rates.”
It is Labour’s mortgage bombshell, hidden in plain sight.
The right hon. Lady does not want people to notice the real comparison here, which is that her party faced an economic crisis in 2008, just as this Government did last year, but we are taking the difficult decisions to restore sound money and the public finances while they ducked each and every one of those decisions, ran out of money and left it to others to clear up the mess.