Oral Answers to Questions

Tobias Ellwood Excerpts

Tuesday 7th May 2024 Commons Chamber

[The Exchequer Secretary to the Treasury (Gareth Davies)]

The hon. Member is entirely right. That is why we froze fuel duty at the last fiscal event: a measure that costs £6.5 billion and will save the average driver £50.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

May I place on record my thanks to the Chancellor, who in his Budget devoted funds to Bournemouth for a police violence reduction unit? Does he agree that these units have a track record up and down the country of tackling knife crime by not just seeing extra police on the frontline, but engaging with schools to ensure that youths and students understand the folly of carrying a knife in the first place?

[Jeremy Hunt]

My right hon. Friend is absolutely right: violence reduction units reduce crime and save lives. I want to thank him, because he was one of the first colleagues who, ahead of the Budget, brought to my attention how impressive the results are. As a result, I was able to make it a national policy in the Budget.

Hospitality Sector: Fiscal Support

Tobias Ellwood Excerpts

Wednesday 31st January 2024 Westminster Hall

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I am grateful to have caught your eye, Ms Bardell, and am pleased to see the Minister in his place. I am passionate about tourism, not just because I represent the best seaside resort in the country, but because my first job when my party was in opposition was as shadow tourism Minister. I am pleased that we are having this debate today.

Bournemouth is a vibrant, family-friendly seaside resort. We have three pillars to our economy: financial services, thanks to J.P. Morgan; creative industries, thanks to our fantastic Bournemouth universities; and tourism. Since the arrival of the railway in the 1870s, our part of the world has developed into one of the UK’s leading destinations for domestic and international tourists.

From the Bournemouth International Centre, with which parliamentarians will be familiar from conferences, to the Russell-Cotes museum, the Bournemouth symphony orchestra and AFC Bournemouth, who are doing so well in the premier league and are still in the FA cup, there are so many reasons to visit. Bournemouth is proud to host the National Coastal Tourism Academy, which I hope the Minister will visit. It also has miles of spacious, sandy beaches, from Studland to Hengistbury Head, which is ranked among the 25 best in the world and the fifth best in Europe. All those things have helped Bournemouth to become one of the most popular, family-friendly resorts in the country, and they are complemented by the vibrant night-time economy, with pubs, restaurants, bars and clubs attracting thousands in the evening.

There is no doubt that hospitality plays a vital part in the local economy. A quarter of all visitors to Dorset come to Bournemouth. Tourism is a critical component of Bournemouth’s prosperity: it represents 15% of the local economy, with a contribution of more than £500 million. It supports more than 15,000 jobs, both directly and through the supply chain.

As other hon. Members have mentioned, the impact of covid was colossal, and the hospitality sector’s economic output dropped by 90%. The furlough scheme was welcome; nevertheless, 10% of the hospitality industry closed, never to recover. What saved many businesses in the hospitality sector was reducing VAT to 5% for food, drink, accommodation and attractions. The Government made it clear that that was always going to be temporary, with a planned gradual increase to 12.5% and then back to 20%. The hospitality industry, particularly in Bournemouth, is starting to recover—no thanks to the local council, which wants to ditch the local air festival, our flagship tourism event, and to abandon the blue flag schemes and build on car parks.

Numbers are returning to pre-pandemic levels, but solid, permanent recovery will not be achieved if VAT stays at 20%. Today, licensed premises continue to shut at an alarming rate; indeed, more are closing than opening. VAT has gone up and down over the past few decades. In the years leading up to the 2008 financial crash, the UK maintained a VAT rate lower than in many other European states, at around 17.5%. After the crash, when VAT was slashed across Europe to encourage spending and stimulate economies, it was raised to 20% here.

My simple but critical call to action today is “Please listen to the hospitality sector, which is screaming out that VAT is too high, as more and more businesses are seriously impacted and unable to handle the increased costs of food, fuel and pay. Minister, please, please reconsider the decision to raise VAT back to 20%. Otherwise, you will face ever more business closures and you will subsequently raise less tax for the Exchequer.” The maths is very simple. Cutting VAT will mean more hospitality businesses staying open and thriving. That will lead to an increase in corporation tax income, because if their profits are higher, they will pay more tax.

I end by simply saying that Bournemouth illustrates the importance of hospitality: it gives a place a sense of identity and personality and helps bind a community together. Let’s support our hospitality sector. Let’s reduce VAT to 10%.

--- Later in debate ---

[Hannah Bardell (in the Chair)]

Order. If Members at the back would like to make an intervention and have it on the record, I am sure we would all be very interested. If they do not, perhaps they could keep their comments quiet so that the rest of us can hear Mr Nicolson deliver his speech.

[Mr Ellwood]

On a point of order, Ms Bardell. This is Westminster Hall; this is not “Just a Minute”, but if it was “Just a Minute”, that contribution would probably have been a deviation.

[Hannah Bardell (in the Chair)]

I say kindly to the right hon. Gentleman that whether in Westminster Hall or the main Chamber, that is not a matter for the Chair; that is a matter of opinion. The right hon. Gentleman is entitled to his opinion, but it is not a matter for the Chair.

--- Later in debate ---

[Nigel Huddleston]

I suspect I could spend the whole of this debate answering Members’ questions rather than going through my speech, much to the chagrin of my officials. Again, I understand the request. Many hon. Members pointed out that I was the one making these requests to the Treasury not so very long ago, for all the reasons they outlined, but we all recognise that we have to find the balance.

The point about dynamic modelling is really important. I will come on to VAT in a moment, but we must recognise that one of the biggest challenges of all requests for VAT relief is whether it will be passed on. There is not a 100% fantastic record of that happening in the hospitality and tourism sector or across the board, for understandable reasons. Cash flow was key during the pandemic, so not everybody was able to pass on the VAT reductions. When it comes to future requests for VAT reductions, we must be absolutely confident that they will be passed on, and that applies to multiple sectors.

[Mr Ellwood]

The Minister is being very generous in giving way. My right hon. Friend the Member for Witham (Priti Patel) mentioned the forthcoming Budget. Is there anything the Minister can tease us with? Can we look forward to anything in the Budget to support the hospitality industry?

[Nigel Huddleston]

I do love it when former Ministers try to tempt me in that way, knowing full well what the answer will be. What I can say is that we are listening.

I have gone off script for the past few minutes to try to respond to hon. Members, who have spoken eloquently and with real consideration of the challenges with their asks. There are no easy answers, given the challenging financial services. I and the other Treasury Ministers, and certainly the Chancellor and the Prime Minister, are always listening. We are always open to listening to evidence-based information. In that context, I cannot make any hints or promises about what may be in the upcoming Budget, but I can say that the view and opinion of the hospitality sector, especially as embodied by talented people such as Kate Nicholls at UKHospitality, and many others right across the UK, is valued. The sector used to be incredibly fragmented, and therefore did not have the voice it has now. Now, the sector comes in with credible, decent asks that need to be assessed with evidence. The voice of the hospitality sector has never been stronger in Government. I applaud all the lobbyists and groups for doing that.

--- Later in debate ---

[Nigel Huddleston]

Various pieces of internal and external analysis have been released. We all know anecdotally from experiences in our constituencies that it literally did save businesses around the country. As I said, the Treasury keep tax policy under review all the time—that is a mantra, but it is true. The message I want to get across to colleagues today is that this will not be an easy choice. I understand the asks and we understand the impact, and there are various points of modelling, but it would not be an easy option. I repeat the caution that pass-through is vital when it comes to VAT relief. That did not happen wholly last time, but I understand why, as some of it was cash flow.

[Mr Ellwood]

Everybody understands the passion with which the Minister is pushing this. I do hope, as I teased last time, that he is having private conversations with the Treasury and making the mathematical case very clear. A business that closes does not pay any VAT at all. A business that thrives because VAT has been reduced somewhat can then pay more corporation tax. That is the mathematical formula that we would like to see, which I think has been presented by UKHospitality, and which justifies reducing VAT to 10% in the hospitality sector.

[Nigel Huddleston]

My right hon. Friend makes a logical point. I assure him that I am listening, but I am not making any promises.

I will refer to a couple of other areas that hon. Members mentioned. I appreciate the tone adopted by the hon. Member for Stirling. He recognised that there are things that the sector is requesting and looking for that Scotland, Wales and other countries are not able to deliver. That does not mean that any of us are not sympathetic; it is about the balance of the support package that we need to deliver. Like many today, he commented on both business rates and VAT.

My hon. Friend the Member for St Austell and Newquay has one of the most beautiful constituencies in the country, but also, as he said, one of those that is most reliant on this sector. He raised a variety of points, and he and I have had ongoing conversations about this subject, because he is such a champion of it. His point about the ongoing efforts to make sure that we get more inbound tourists outside London is pivotal. There are various opportunities and measures: VisitEngland, VisitBritain, VisitScotland, VisitWales, Discover Ireland and Discover Northern Ireland all do a fantastic job of helping to support and enable that tourism, plus there is a key role for our transport system.

My hon. Friend is right, however, that about 50% of all inbound tourism spend is within the M25. That is great, and we are not saying that that should be less; we are saying that we want it to be “London plus”. That is a key part of the tourism strategy, and I assure my hon. Friend that we are talking about this on an ongoing basis with DCMS and the Tourism Minister.

The hon. Member for York Central (Rachael Maskell) highlighted issues in her fantastic constituency, which I have had the pleasure of visiting on multiple occasions. She highlighted the importance of heritage in the tourism and hospitality ecosystem, and also mentioned flooding. She may or may not be aware that there are opportunities for businesses that are severely impacted by flooding under what is called a “material change in circumstances”. Working with the valuation office, there are opportunities to see, on a case-by-case basis, whether some relief is available. She might want to see whether some of the businesses impacted could consider that, as well as other support measures that we have provided for those impacted by flooding.

My hon. Friend the Member for Totnes (Anthony Mangnall) raised multiple points. He highlighted the upside of some of the trade deals that we are doing, so his constituency is now probably going to be flooded by Australian barmen and barwomen over the next few years. That is not necessarily a bad thing; I wonder whether they are better cocktail waiters and waitresses than he was.

My hon. Friend also raised the important point that, although the headline rates of VAT in some of our European friends’ countries may be lower, there is often a sting in the tail of quite considerable—startlingly high, in some cases—tourism tax, sometimes at a very local level. There is not a huge amount of evidence to suggest that that works either. There is always a balance, and although something may look like a beneficial tax rate system, one only has to scratch beneath the surface to find that there is something a bit more to it.

Oral Answers to Questions

Tobias Ellwood Excerpts

Tuesday 19th December 2023 Commons Chamber

[The Exchequer Secretary to the Treasury (Gareth Davies)]

The hon. Gentleman is quite right that life sciences is one of the key growth industries for this country. I would be happy to meet him to discuss all the things we are doing for the sector, particularly in Northern Ireland.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

Our economy continues to be impacted by the war in Ukraine and denial across the Black sea, and we now must brace ourselves for further economic shocks as global shipping avoids the Red sea. Does the Minister agree that we should be protecting these shipping lanes? Our Navy is now too small by half to protect our maritime interests, so will he now look at investing in our surface fleet to protect our economy?

[Jeremy Hunt]

As my right hon. Friend knows, I have long believed in the importance of investing in our armed forces, but that ultimately depends on a strong economy that will pay for sustained investment, and that is what is happening under this Government.

Economic Update

Tobias Ellwood Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

I have listened carefully to what the hon. Gentleman has said, as I did to my right hon. Friend the Member for Forest of Dean (Mr Harper), and we will certainly look carefully at what can be done for off-grid properties.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I welcome the necessary but vigorous course corrections that my right hon. Friend has introduced. He began his statement by describing the central responsibilities of any Government. They also include security: the defence of Britain, supporting our allies and standing up to our adversaries, as we have done in Ukraine. He knows that the world is getting more dangerous, not less, so will he commit to continuing the promise of 3% of GDP on the Defence spend?

[Jeremy Hunt]

It will not have been a secret to my right hon. Friend that I am sympathetic to that, because I campaigned for it very loudly and visibly when I was a Back Bencher, but all these things have to be sustainable. Any increase in Defence spending has to be an increase that we can sustain over many years. I agree with him entirely that the duty of a Government is to provide security for the population, in all senses of the word.

Economic Situation

Tobias Ellwood Excerpts

Wednesday 12th October 2022 Commons Chamber

[Chris Philp]

We do not plan to defer the tax measures, because we think that having an internationally competitive tax system is important, as it will help to encourage businesses and successful individuals to locate here in the United Kingdom, rather than anywhere else. I used to be technology Minister, and tech businesses can choose whether they locate here, in New York, San Francisco, Singapore, South Korea or anywhere else in the world. We want them to choose the United Kingdom, which is why competitive tax rates and the right regulatory environment are important.

[Mr Tobias Ellwood (Bournemouth East) (Ind)]

Britain has embraced globalisation arguably more than other nations over the past couple of decades. About half of our GDP is subject to international headwinds, but the world is getting more dangerous, not less. The Minister mentioned Ukraine. May I suggest that any future fiscal statement is run by the National Security Council for comment and perhaps recommendations, which might include organising a United Nations safe haven around the port of Odesa, so that the grain ships can get out, helping to reduce the price of food and inflation in this country?

[Chris Philp]

I thank my right hon. Friend for his suggestion about Odesa. I know that he is an expert in military matters and matters of international diplomacy, and that he has been to Ukraine in the past 12 months. I will pass his suggestion on to my colleagues.

Budget Resolutions

Tobias Ellwood Excerpts

Wednesday 27th October 2021 Commons Chamber

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I join my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) in appreciating the enthusiasm and constructive effort that have been put into this Budget. It is thanks to the wisdom of the stewardship during covid that the Chancellor has been able to provide such a positive Budget today. The Red Book is just out, as is the OBR publication, and the Chancellor sat down only a couple of hours ago, so there is much to digest.

From the perspective of Bournemouth, which very much values tourism and hospitality, the cuts to air passenger duty, alcohol duty and fuel duty are not just welcome, but appreciated. The cuts to business rates are particularly appreciated by the hospitality industry; they will make such a difference to the impact on the sector, which has been hit so hard by covid.

I was also pleased to see that effort had been put into the net zero strategy. I wish COP26 well, but we can only expect other nations to agree to reductions in CO₂ emissions if we lead by example. We have done well to cut our emissions to date, and I welcome other initiatives such as investment in electric vehicle technology, efforts to insulate homes better, and the carbon capture and storage programmes, but in my view this is not enough if we really want to move the scale. I strongly urge the Government—and I am pleased to see the Chief Secretary in his place—to advance the modular nuclear reactor programme, which is something in which we excel across the world: this is what Rolls-Royce does. The reactors cost about £2 billion per unit, and one can be made in a factory every six months. We can not only reduce the CO₂ emissions in this country but help other countries around the world, including our Commonwealth friends, who may find it very difficult to reduce their CO₂ emissions.

Let me turn to the wider picture. I welcome the increase in aid spending to 0.7% of gross national income, and I am pleased to have been part of the noise that was made to try to encourage the return to 0.7%. The Chancellor’s domestic focus on energising the post-covid economy is understandable and has of course been welcomed, but while we have been distracted by covid, the world has become increasingly dangerous, and the difficulties that we have been facing in the wider security context of today are due to a global security issue. It is because of covid that the Budget has been affected, but nowhere does the Budget, the Red Book or indeed the OBR deal with security and its impact on the Budget itself.

As I have said in the past, there is a 1930s feel to the world, with rising authoritarianism, western institutions unable to cope with errant nations, the absence of western leadership, and—as Afghanistan illustrated—a lack of strategic patience and ambition to hold the international peace. I remind the House of the 10-year rule, adopted in 1919: the assumption that there would be a decade in which to identify and prepare for future threats. Today, demands on our armed forces are increasing and the storm clouds are beginning to gather overseas, yet we currently remain on a peacetime defence budget. I hope that, if global security continues to deteriorate, the Chancellor will return to the House to announce an increase in defence spending. It falls to me to report to the House that the defence budget is the only budget that I can identify that is being cut today, in comparison with those of all other Departments.

A key part of the Chancellor’s speech was his comment that we want to live in a country where the response to every question is not, “What are your Government going to do about it?” I entirely agree with his premise. There are limits on what the Government can and should do, but I strongly believe that security is the Government’s responsibility, and I am sad to see that, in real terms, the defence budget has been cut—ever so slightly, but it has definitely been diminished.

Defence spending is overstretched. It includes space and cyber-security, which is having an impact on the three conventional services. The Army is being forced to cut the number of tanks, armoured fighting vehicles and troops. The Royal Air Force is cutting the number of heavy lift aircraft and the number of F-35s—our new fighter aircraft; we were supposed to buy 138, and we are buying only 48—and the Navy is cutting the number of frigates. Cutting the defence budget at this point is a grave mistake, which our competitors will note, and it sends the wrong message, post Afghanistan, about our commitment and appetite to play a more influential role on the international stage.

Page 7 of the Red Book states:

“The Budget…builds on the government’s vision of Global Britain as a problem-solving and burden-sharing nation, globally competitive and firmly committed to an open and resilient international order.”

It goes on to say:

“In the coming years, the UK will continue to catalyse action from the international community to address the most pressing global issues”.

Perhaps it was just a printing error, but it seems that the Government are not interested in doing that now.

We need to address this. We face continued unparalleled economic uncertainty, but we also face growing global instability. From where I sit, I see the world becoming more siloed and countries becoming more protectionist. As nations retreat from global exposure, our world is absolutely getting more dangerous, not less. I ask that as we grow in economic confidence, we address the real security concerns that are in front of us. For me, that is what global Britain needs to be about.

0.7% Official Development Assistance Target

Tobias Ellwood Excerpts

Tuesday 8th June 2021 Commons Chamber

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I very much welcome this debate today and I congratulate my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell). It will help widen our understanding of how British overseas aid commitments work and also our soft power, which allows us to speak with such authority on the international stage and goes in part to justify our seat on the UN Security Council. It is also plays a pivotal role in supporting our economy and strengthening our national and international security, which is what I wish to focus on today. I will just say that for too long our aid programmes worked in isolation of wider Government strategies, often without a British flag to even acknowledge their origins. We have come some way, but I would be the first to say that taxpayers’ money must be wisely spent. As a former soldier, I was saddened and horrified to see the failure to utilise our aid programmes in both Afghanistan and Iraq; we won the war but we lost the peace. Hard power and soft power are two sides of the same coin, and we will need a lot more of both over the next decade—this is something the G7 summit will doubtless attempt to address. Our world is on a worrying trajectory, with rising authoritarianism, growing extremism and the new challenges of climate change and defeating a brutal pandemic that continues to damage economies and take lives, but the west has become risk averse, with an absence of leadership and resolve to address these issues alongside weakened international institutions that are no longer able to defend our rules-based order.

This G7 summit offers an opportunity for Britain to step forward as we have done in the past when other nations hesitated, but when we step back, we not only cause hardship, as we have heard today; we also leave a worrying vacuum that gets filled either by extremists in such places as Yemen and Somalia or more specifically by Russia and China, who pursue very different bilateral relationships that will most likely ensnare yet more nations into economic programmes they can ill afford. China has weaponised its soft power to extend its influence economically, militarily and technologically across Asia and now Africa. Nations are increasingly obliged to look west or east for assistance, and we are progressively seeing our word splinter into two competing geopolitical spheres of influence. That is the face of the new cold war that looms ahead, and this is not the time to reduce our soft power footprint.

We understand the huge bill of £400 billion that the Treasury faces, but if this is all about the money, why not learn from what we did after the war and ring-fence this debt, rather than using austerity measures to balance the books before the next general election? Our last war debt was finally paid off in Gordon Brown’s era as Prime Minister. We should do this in the same way. We should find a fiscal instrument that allows us to manage the books more sensibly here today. As our history shows, we are that Churchillian nation that steps forward when others hesitate. I say this to the House from a security perspective: the next decade is going to get extremely bumpy indeed. The US is once again keen to play its part on the global stage, so in the spirit of global Britain, let us be that reliable ally, let us stay firm and let us honour our manifesto commitment.

Better Jobs and a Fair Deal at Work

Tobias Ellwood Excerpts

Wednesday 12th May 2021 Commons Chamber

[Mr Tobias Ellwood (Bournemouth East) (Con)]

Thank you, Madam Deputy Speaker. You articulate why it is so important for us all to return to this Chamber in person, as I hope we will before too long.

I am thankful to be able to address the Queen’s Speech, which is significant not just in mapping out the legislative programme, promoting UK strengths, building businesses and jobs and so forth, but in marking the transition from managing covid-19 to actually defeating it and returning to some form of normality. Simply put, the 2019 election manifesto was put on hold as the focus tilted towards economic intervention and of course the amazing vaccine roll-out, so that we are finally able to come to terms with this pandemic. Now, however, we can return to that agenda.

The incredible electoral success that we had on Thursday, marked not least by the totemic win in Hartlepool, confirmed something so important for us Conservatives: that we are adapting, and learning to advance and appeal way beyond our normal areas. We are not just connecting but cementing bonds in parts of the country where I never thought we would be able to do so. That is very much a positive, but it is now time to prove that levelling up is not just a slogan and that it is, in fact, a philosophy.

The legislation in the Queen’s Speech that we have heard in the last couple of days allows us to do just that, with a united approach, but building on regional and complementary strategies. There is limited time to discuss that in today’s debate. I will focus on one particular aspect, which I hope the Minister will perhaps comment on in his wind-up, to do with the Northern Ireland legislation. I tried to pursue a solution to the vexatious claims that have troubled veterans for decades and I was never able to find the legal instrument that would allow us to support veterans alone.

The Queen’s Speech mentioned that there will be consideration of advancing a truth and reconciliation process that looks to support those on both sides of the aisle. I absolutely believe that that is the way forward. We cannot just support one side of the argument. That is against international humanitarian law. It would also never pass the Northern Ireland Assembly. These are very difficult questions, but if we are to build on the good work of the Good Friday agreement and finally conclude this, I hope that the Government will make it a priority.

More widely, covid-19 has cast a dark shadow over all our lives. Our nation has been tested before, but certainly we have come through it even stronger and more united. However, the post-covid world that we now wake up to is very different from the pre-pandemic world that we remember. Our adversaries and competitors have taken full advantage of this global distraction to further their own agendas. As I have reminded the House many times, global threats are increasing. The world is getting more dangerous than during the cold war. Why? Because of the diversity and complexity of those threats, and the rise of states pursuing a very different interpretation of international world order.

There is a 1930s feel to where we are today, with weak global institutions, rising powers, global economic challenges, and of course a lack of western co-ordination. I put it directly to the Prime Minister: “You now have the opportunity, as we emerge from covid-19 not only to rebuild Britain but to help a latterly risk-averse and distracted west to regroup and re-establish what we stand for, what we believe in and what we are willing to defend.” I pose the question: “Do you think the world will be safer or more dangerous over the next five years?” Privately, we all know the answer to that.

How we handle the changing international dynamics over the next five years will likely have repercussions for the rest of the century. So I say to the Prime Minister that with the empowered mandate that Government now have, they must use this opportunity, as the cloud of covid starts to pass, not only to rebuild and strengthen Britain but, as we host the G7 group of nations, to commit to playing a more concerted leadership role on the international stage. I give warning that if we do not invest more in our hard and soft power, we will lose our influence as a force for good on the international stage.

UK-EU Future Relationship Negotiations and Transition Period

Tobias Ellwood Excerpts

Monday 7th December 2020 Commons Chamber

[Penny Mordaunt]

I can give my hon. Friend those assurances. The Prime Minister has been very clear on that point and the EU negotiating team will recognise that it is a point from which we will not move.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

My right hon. Friend knows more than most how increasingly unstable our complex world is becoming. Does she agree that the threats we face, from both state and non-state actors, do not recognise international borders or the membership of political unions, and that no decision taken this week should diminish our collective security responsibility?

[Penny Mordaunt]

I agree with my right hon. Friend absolutely. It is one thing I have never accepted about what has been said about the EU’s negotiating position. I do not believe that member states would tolerate their own citizens being put in the way of greater harm. The security and defence co-operation we have between member states and ourselves is highly valued, and I think that would be recognised by all member states in that respect.

Spending Review 2020 and OBR Forecast

Tobias Ellwood Excerpts

Wednesday 25th November 2020 Commons Chamber

[Rishi Sunak]

I am glad the right hon. Gentleman gives me an opportunity to thank my fantastic team of civil servants in the Treasury, who have been extraordinary in their hard work and creativity throughout this crisis, and have remained so over the past few weeks in concluding the spending review. I put on record my thanks to them.

Unsurprisingly, my numbers are slightly different to those of the right hon. Gentleman. According to the ONS, before this crisis even started in 2019, there existed at least a 7% pay premium between the public and private sectors after accounting for characteristics and pensions. That gap no doubt has been exacerbated and widened over the past six to 12 months as a result of widening pay inequality between public and private sector pay. That is why I believe it is fair to take the approach we have, but I share with him a desire to protect those on lower incomes, which is why those 2.1 million people who earn less than £24,000 will receive a pay rise of £250.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I commend the Chancellor for having to make some very difficult decisions, but as President-elect Biden commits to a new era of western leadership, here we are about to mark the start of our G7 presidency by cutting our overseas aid budget. Downgrading our soft power programmes will leave vacuums in some of the poorest parts of the world that will further poverty and instability. It is likely to see China and Russia extending their authoritarian influence by taking our place. Will my right hon. Friend concede that we cannot genuinely claim to be global Britain, or claim to be serious about creating post-conflict strategies for countries such as Libya and Yemen—strategies that could lead to greater UK prosperity —when our hard power is not matched by our soft power? Will he meet me to discuss how these dated rules governing overseas aid should be updated?

[Rishi Sunak]

My right hon. Friend will I am sure welcome the very significant increase in our defence budget, which he has campaigned for to fix many of the issues of the past. He also alluded to our ability to help lots of different parts of the world in lots of different ways; Libya was one example that he gave. He will know that we are the fifth largest contributor to the UN’s peacekeeping operations. He makes a good point about aid rules. For example, we spend about half a billion pounds every year on peacekeeping and security operations in countries such as Libya, Mali, Somalia, Sudan and the Democratic Republic of Congo. That spending, that difference we make on the ground and that security that we bring to some of the world’s poorest places is not currently counted as overseas development aid.