Fiscal Rules

Caroline Nokes Excerpts

Monday 28th October 2024 Commons Chamber

[The Chief Secretary to the Treasury (Darren Jones)]

With your permission, Madam Deputy Speaker, I would like to make a statement to the House about the action the Chancellor will take this week to fix the foundations and rebuild Britain.

Economic growth and modern public services can only be built on strong foundations. That is why this Government have brought political and economic stability back to Britain. After years of chaos from the Conservative party—chaos that cost families, businesses and public services dear—the British people are now rightly looking to this new Labour Government to clear up the mess from the last Government, fix the foundations and rebuild Britain. That is the change that my party promised the country, and it is the change that we will deliver.

To deliver that change, the fiscal rules that the Chancellor will set out this week will establish the basis for stable fiscal policy, meaning careful management of day-to-day spending and responsible long-term plans to invest and grow the economy.

As we committed to in our manifesto, the Government will have two robust fiscal rules that will guide the decisions we take. The first is our stability rule: we will pay for all day-to-day spending on public services from receipts. The budget was last in surplus under the last Labour Government, and this Labour Government will return the public finances to that position. The second is our investment rule, which will get debt falling as a proportion of our economy. It will ensure that we can secure the investment that our economy needs to grow, and to generate jobs and opportunities for people across the United Kingdom of Great Britain and Northern Ireland, while maintaining a strong fiscal anchor and ensuring that our debt burden falls over time.

The plans that we inherited from the last Government would have seen public sector investment decline to the lowest level in more than 10 years. The path of declining investment is the path of a declining nation, and we refuse to follow it. Instead, we will seize the huge opportunities of the future to support the enterprise and talent that this country creates.

The Government recognise that sustained public investment is a crucial driver of long-term economic growth, giving the private sector the confidence to invest too, but our ambitions for public sector investment must be balanced against the need to maintain debt on a sustainable trajectory and ensure that we invest every pound of taxpayers’ money responsibly. That is why I will deliver a 10-year national infrastructure strategy next spring, working with colleagues across Government, the nations and regions, and with our mayors and the private sector, to set out a robust long-term strategy for sound investment. That is also why our new approach to overlapping multi-year spending reviews will improve the way that we allocate and spend capital, and why the Chancellor of the Duchy of Lancaster and I will lead the new national infrastructure and service transformation authority, which will drive better delivery of major projects and infrastructure across the country. In addition, there will be the work of the new office for value for money and the National Audit Office. Those robust guardrails will ensure that our capital spending is value for money, and that our financial investments deliver a positive return for the Exchequer.

Finally, the Chancellor has been listening to the views of institutions such as the International Monetary Fund, and to expert economists. As she has set out, that is why the Treasury has been reviewing the right measure of debt to target in the fiscal rules ahead of the upcoming Budget. The details of that policy will be announced to the House in the Chancellor’s statement on Wednesday, alongside an economic and fiscal forecast produced by the independent Office for Budget Responsibility. In the usual way, the fiscal rules will be published in a draft charter for budget responsibility, on which Members will vote in due course. I commend this statement to the House.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Chief Secretary to the Treasury.

--- Later in debate ---

[Darren Jones]

I know that the Chancellor looks forward to giving evidence to the Treasury Committee following the Budget in the normal way. To answer the question, the national infrastructure strategy will, for the first time, bring together all the infrastructure and major project asks of Whitehall Departments into one place alongside the economic infrastructure assessments. This will inform the multi-year spending reviews, which will now overlap, so that when an election comes up, we do not again end up with a Government making no spending plans whatsoever, or announcing a load of projects when there is no money to pay for them. We are confident that this better approach to allocating capital will mean that investment under this Government will improve the productivity of our public services and the growth of our economy, and mean a better return for British taxpayers across the country.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Under the Conservatives, the fiscal rules changed five times in seven years, so a change to fiscal rules is not that unusual in and of itself. However, does the Minister agree that what would be completely unforgivable is a repeat of the Conservatives’ disastrous mini-Budget, in which they tried to pursue £40 billion of unfunded tax cuts, and which left a long shadow on our public finances? Will he assure us that any additional borrowing that the Government seek will only be for productive investment that will generate growth and fix our crumbling hospitals and schools?