Public Finances: Borrowing Costs

Darren Jones Excerpts

Thursday 9th January 2025 Commons Chamber

[Hon. Members]

Where is she?

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

I am always grateful to see Conservative Members welcome me to the House.

Financial markets are always evolving, as the shadow Chancellor knows, so there is a long-standing convention that the Government do not comment on specific financial market movements, and I will not break that convention today. Financial market movements, including changes in Government bond or gilt yields, which represent the Government’s borrowing costs, are determined by a wide range of international and domestic factors. It is normal for the price and yields of gilts to vary when there are wider movements in global financial markets, including in response to economic data.

In recent months, moves in financial markets have been largely driven by data and global geopolitical events, which is to be expected as markets adjust to new information. UK gilt markets continue to function in an orderly way. Underlying demand for the UK’s debt remains strong, with a generally well-diversified investor base. The Debt Management Office’s gilt sales operations continue to see strong demand. The latest auction, held yesterday, received three times as many bids as the amount on offer.

The Chancellor has commissioned from the Office for Budget Responsibility an updated economic and fiscal forecast for 26 March incorporating the latest data. Only the OBR’s forecast can accurately predict the effect on the public finances of any changes in financial markets or the economy, and I will not pre-empt that forecast. There should be no doubt of the Government’s commitment to economic stability and sound public finances. That is why meeting the fiscal rules is non-negotiable.

May I end by saying that I am pleased that the shadow Chancellor is holding this Government to account on our stewardship of the economy? It is important that he does so. He will remember when his party crashed the economy with unfunded tax cuts, unrealistic public spending plans and a clear disregard for the consequences on family finances. Families across the country are still paying the price for the Conservatives’ disastrous performance on the economy through higher mortgages and bills. If there was one clear reason why the Conservative party suffered such an historic defeat at the last general election, it was their performance on the economy. That is presumably why the shadow Chancellor himself admitted in December that the lack of trust in the Conservative party’s management of the economy has left a “deep and painful scar” in the pockets of every person across Britain.

Let me tell the House what has changed. In our first six months, this Labour Government have exposed the £22 billion black hole in the public finances. Not only have we exposed it, but we have dealt with it: the Chancellor’s autumn Budget protects working people, wipes the slate clean of the mess the Conservative party left the country in, and invests in our NHS and schools. We have given the independent Office for Budget Responsibility enhanced powers of oversight, in law, so that we never again get into the situation where that lot left the country: a £22 billion black hole in the public finances. We have set tough new fiscal rules that are non-negotiable, with a budget settlement for public services that they must all live within. We have kick-started growth in this country—this Government’s No. 1 mission —by unlocking investment and bringing forward reforms, such as those to planning and in the Mansion House speech.

May I say to the shadow Chancellor that that work stands in stark contrast to the negligent and shameful horror of a circus performance that the Conservative party in government unleashed on this country only a few years ago? Until he can come to the House with an apology for the British people, I will not take any lectures from the Conservative party about how to run the economy.

[Mr Speaker]

I call the shadow Chancellor of the Exchequer.

[Mel Stride]

The performance we have just seen was a slightly anxious and breathless one, which leads me to the question: where is the Chancellor? It is a bitter regret that at this difficult time and given these serious issues, she herself is nowhere to be seen.

In the last 48 hours, borrowing costs have reached a 27-year high, and it is the Chancellor’s decisions that have led us here. Before the election, the right hon. Lady promised that Labour would get debt falling, would not fiddle the figures, would not raise taxes and would grow the economy, but the economy is now flatlining. Survey after survey is showing that business confidence has simply evaporated, and at the Budget, the Chancellor hiked up taxes, increased borrowing by an average of £32 billion a year across the forecast, and conveniently adjusted her fiscal rules to allow her to do so.

Higher debt and lower growth are understandably now causing real concerns among the public, among businesses and in the markets, and despite what the Chief Secretary has said about international factors, the premium on our borrowing costs compared with German bonds recently hit its highest level since 1990. With those rising costs, regrettably, the Government may now be on course to breach their fiscal rules. The Chancellor has committed to no further tax rises, so does the right hon. Gentleman stand by her commitment not to increase taxes even further? If so, does that mean that the public should expect cuts to public service spending if the OBR judges that her fiscal headroom has evaporated?

There are media reports that the Chancellor will make an emergency intervention to soothe markets, but with no confirmation that such a statement will occur in this House. Will the right hon. Gentleman confirm that any such statement will be made first to Members in this House? Rates on Government bonds ultimately feed through to the broader credit market, so what estimates has the Treasury made of how recent market movements will impact mortgage costs and lending across the economy?

I will make one final point, Mr Speaker. Every pound that we spend on debt interest is money that we cannot spend on the public’s priorities. The Government’s decision to let rip on borrowing means that their own tax rises will end up being swallowed up by higher borrowing costs, at no benefit to the British people. Far from this Government laying the foundations for a stronger economy, the Chancellor is squandering the endeavours of millions of hard-working people up and down our country, who are now having to pay the price for yet another socialist Government taxing and spending their way into trouble. Does the right hon. Gentleman not now accept that it is time to change course?

[Darren Jones]

I am pleased that the right hon. Gentleman enjoyed my performance—I have not even had my first cup of coffee yet this morning. Let me answer some of his questions. [Interruption.] Conservative Members might like to listen, if the questions are so important to them.

The right hon. Gentleman asked me about the fiscal rules. As I said in my statement, those rules are non-negotiable. As the Chancellor set out at the Budget, we have two fiscal rules: first, that day-to-day spending should be met by tax receipts, and secondly, that debt should be falling as a share of the economy.

The right hon. Gentleman talked about the debt burden that this country has. Maybe we should reflect a little on why we have so much debt—[Interruption.] From pre-pandemic, Mr Speaker. Let us look at the burden of debt inherited by this Government from the Conservatives. From 2010 onwards, why did the last Government have to borrow so much money every single month, not just to invest but to pay the day-to-day bills? Because of an absolute failure to get growth into the economy. They could not make the numbers add up. They stacked up the country’s credit card and left it to the Labour party to deal with, and we are going to deal with it. That is why those fiscal rules are non-negotiable, and it is why public spending will be within the numbers set out at the Budget.

We are starting the spending review now, and it will conclude in June. Public services will have to live within their means—the Chancellor has been very clear about that. That is why with this Government, you get economic stability and absolute clarity on public spending. That is why the British people trust this party and booted that lot out of office.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

We all know that fiscal rules and certainty are vital for the markets and the good stewardship of the public finances, so will the Chief Secretary to the Treasury explain what process he will be going through as he conducts the spending review, and what notice he will give to Departments about extra cuts that they may have to make in order to meet the fiscal rules? In addition, when the Chancellor comes in front of the House for the OBR forecast in March, will she be making a fiscal statement at that point?

[Darren Jones]

I thank the Chair of the Select Committee for her question. As the House knows, we have started the second phase of the spending review, to set public sector budgets from 2026-27 onwards. The Chancellor confirmed in a written ministerial statement before the House rose for Christmas that there will be a forecast from the OBR and a statement on 26 March. As I said in my response, that will be the next time the OBR will give a view about the UK economy and the levels of funding for public services. Between the OBR forecast in March and the conclusion of the spending review in June, the House will be updated in the normal way.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Clive Jones (Wokingham) (LD)]

I recognise that the Chancellor has a very difficult job. She inherited an economy on its knees, following the Conservatives’ mismanagement of the economy, from their terrible trade deal—[Interruption.] That extends from their terrible trade deal with Europe, which is holding back businesses in Wokingham, to soaring inflation, stagnant growth and the Liz Truss mini-Budget, which hit so many mortgage holders across the country.

However, the Government seem to be repeating some of the same mistakes. Last night, the Treasury issued a statement saying that

“meeting the fiscal rules is non-negotiable”.

Will the Chief Secretary reassure this House that protecting the NHS and care is also non-negotiable, and will he rule out any cuts to those services as the Government try to balance the books? Will he work to repair our ties with Europe and cut trade-related red tape, especially in the face of Donald Trump and his oligarch allies such as Elon Musk?

[Darren Jones]

I thank the hon. Member for his question. He will note from the Prime Minister’s plan for change that the NHS is the subject of one of this Government’s key commitments, with commitments to get the elective waiting list down and to invest in the national health service so that we can do so. He will have heard that from the Chancellor at the Budget in the autumn, and he will see that it is a continued commitment from this Government. We can do that because of our commitment to the fiscal rules and because of our investment to grow the economy, which is the only route to long-term, sustainable public financing.

The hon. Member was very rudely groaned at by Conservative Members, but when it comes to their performance on the economy, it is not they who should be groaning, but the British people who should be groaning at them for what they did to their family finances.

[Dr Jeevun Sandher (Loughborough) (Lab)]

US bond rates are rising as well as those in the UK, with higher than expected inflation and interest rates. I note that Conservative Members have not mentioned that; perhaps they have not looked. The best way to make our debt sustainable is to invest to get growth growing, and to get expected inflation down by investing in clean energy. Does the Minister agree that our plans to invest in growth and in lower-price, cleaner energy is exactly the way to make our debt sustainable?

[Darren Jones]

My hon. Friend knows very well that this Government’s approach has been about stability, investment and reform: the stability we have brought following the chaos of the years under the Conservative party, as has been recognised by the British people and by the markets; the investment we have been unlocking, from our global investment summit all the way through to the work we have been doing in the Budget and since; and the reforms we are bringing forward—for example, planning reform—to make sure we can deliver infrastructure better in this country and unlock the investment that private capital has wanted to put forward in the UK for many years, but could not because of the chaos from the Conservatives when they were last in government.

[Mr Speaker]

I call the Father of the House.

[Sir Edward Leigh (Gainsborough) (Con)]

On 6 November, the Chancellor said:

“We have now set the envelope for spending for this Parliament, and we are not going to be coming back with more tax increases or, indeed, with more borrowing.”

I am sure, because the Chancellor is an honourable lady, that she will not be opening that envelope, putting her sticky fingers inside and coming out with more borrowing or tax increases. Will the Minister give an absolute assurance of no more tax increases or borrowing?

[Darren Jones]

I can absolutely assure the Father of the House that we are working through this spending review on the basis of the envelope set at the Budget. Public services will have to operate within the means that we are providing to them. The OBR forecast will come in March, which will give us the latest set of information, and we will work to that with Departments. This is why we have set up organisations such as the Office for Value for Money, why we have set tough productivity and efficiency targets for Departments and why we are investing in, for example, technology to improve the productivity of the public services we provide. Public services must live within their means, as set out in the Budget, and that is an absolute guarantee from this Government.

[Torsten Bell (Swansea West) (Lab)]

I thank the Chief Secretary for his response. I have just sat through Transport questions, or some of them, during which I repeatedly heard calls for more spending from Conservative Members, but they oppose every single tax rise to pay for that spending. Does the Chief Secretary agree that one of the lessons from global developments in recent days is that we must pay for day-to-day public spending through tax rises, however tough that is?

[Darren Jones]

I very much agree with my hon. Friend. We have to pay day-to-day bills with the income we generate day to day. The lesson that we learned from the Opposition was about what they were happy to do, but this Government are not. They were happy to announce plans and programmes to make promises to the British people, even though they knew they did not have the money to pay for it. That will never happen under this Labour Government.

[John Glen (Salisbury) (Con)]

When the Chancellor set the envelope for spending for this Parliament, and said to the Treasury Committee on 6 November that she would not come back for more tax increases or more borrowing, that was based on her assumptions about the cost of borrowing. Those are manifestly in significant doubt, to look at it in the most charitable way. I have sat in the Chief Secretary’s position, and I know he will want to equivocate and push decisions to the next OBR assessment and the next fiscal event, but the truth is surely this: this Government have to cut spending, increase taxes or borrow more. If the cost of borrowing is increasing, that moment will come sooner. Which of those choices is he inclined to make, and when will he tell the British people honestly what this Government have done?

[Darren Jones]

I have been clear to the House, as has the Chancellor, that the fiscal rules are non-negotiable. Public services will have to live within their means. We set the Budget in the autumn last year, and we have the OBR forecasts coming in March. Those are the numbers that Departments are working to in the spending review, and those are the numbers that we will hold public services to when we conclude the spending review in June.

[Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)]

We thought we knew the dire economic situation when the general election was called, but on entering government, we found the real consequences of the previous Tory Government’s addiction to unfunded spending announcements. The people of Newcastle upon Tyne Central and West are paying the consequences for the Truss-Kwarteng economic crash. With the imminent entry into the White House of a President also committed to significant unfunded tax cuts, the economic stability of the UK becomes even more important. Will my right hon. Friend confirm that this Government are absolutely committed to fiscal responsibility and rising living standards, and that the plan for growth will deliver both?

[Darren Jones]

I thank the Chair of the Science, Innovation and Technology Committee for her question. She will know that our first commitment in the Labour party manifesto at the last election was to fiscal responsibility. It is the bedrock of this Government and the bedrock of every decision we take. As the Prime Minister set out in his plan for change, the reason people will know the difference that a Labour Government make is that they will have more money in their pockets by the end of this Parliament than when it started.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

In yesterday’s extraordinary emergency statement from the Treasury to try to calm the markets, it paid tribute to the fact that the Government inherited the second-lowest debt in the G7. Is the reason the Government Front Bench is so empty today and the Chancellor has fled to China that she has realised that her Budget means she now is the arsonist?

[Darren Jones]

I must say I am rather surprised by the inflammatory language of the former Chair of the Treasury Committee, which is clearly no reflection of reality. The Chancellor is going on her trip to China. It has been well documented for many weeks, and it is an important visit for trade and investment in the UK economy. May I say that there was no emergency statement or emergency intervention? Those are make-believe words being propagated by Opposition Members. The Treasury responded to requests from journalists about headroom, as we might do in the normal way. There is no need for any emergency intervention, and there has not been one.

[Matthew Patrick (Wirral West) (Lab)]

One would think, from listening to Opposition Members, that they had not crashed our economy and presided over high taxes, high debts and falling living standards, which affect my constituents and, I expect, some of theirs, too. [Interruption.] That is the Tory cycle. Will the Minister confirm that the route out of that is growth, and that remains our No. 1 mission?

[Darren Jones]

My hon. Friend is right. May I offer some probably unwelcome advice to Opposition Members? The sooner they stop groaning and stop laughing about their performance when they were last in government, and the sooner they apologise for it, the sooner the British people might start listening to them again.

[Mr Joshua Reynolds (Maidenhead) (LD)]

Public services are at breaking point after the previous Government’s mishandling of the economy and budgets locally. However, does the Minister recognise that scaling back investment in vital public services risks even more devastating consequences for our local communities?

[Darren Jones]

At the autumn Budget, the Chancellor invested in frontline public services, because we recognise that people rely on them, but also because functioning public services are an important route to growth in the economy. If people are sick and cannot get to work, they need to be able to see a doctor in a timely fashion, so that they can get back to work. That is the priority of this Government, as well as investing in modernising our public services, so that they are fit for the future.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

My constituents suffered real hardship as a result of the disastrous mini-Budget pursued by the Conservative party. Does the Chief Secretary to the Treasury agree that in order to improve living standards for my constituents, we must stick to our fiscal rules, maintain fiscal discipline and invest in our public services?

[Darren Jones]

I very much agree. That is why fiscal stability and economic responsibility are at the heart of this Labour Government and the Chancellor’s agenda. Members on the Opposition Benches may want to pay attention to that.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

There is no point beating around the bush: the Chancellor has just lost over £9.9 billion of headroom, and stands on the cusp of breaking her own fiscal rules. She said last year that she would not come back for more tax rises. Will the Chief Secretary be honest and admit, just as the former Bank of England rate setter Martin Weale said today, that this leaves only the option of more austerity? Will he level with people about when and where the next round of cuts will fall?

[Darren Jones]

As I said, the fiscal rules are non-negotiable. The only reliable sources on future financing will be the OBR forecast on 26 March, the conclusion of the spending review in June, and the Budget, which the Chancellor will present in the autumn. The hon. Gentleman mentioned austerity, but I remind him that this Labour Government have given the Scottish Parliament the largest real-terms increase in funding since devolution. He should be grateful for that.

[Warinder Juss (Wolverhampton West) (Lab)]

This Labour Government have been in power for six months, and we are having to deal with 14 years of Conservative chaos. Does the Chief Secretary agree that the Government’s plan for change, which aims to provide a stable economy and raise living standards in every part of the United Kingdom, and has economic growth as the No. 1 mission, is the right approach to ensure that the United Kingdom can weather the global uncertainty that we face?

[Darren Jones]

My hon. Friend is absolutely right. Let me set out the difference that the British people will experience. At the end of 14 years of Conservative Government, they had higher mortgages, higher bills, a higher cost of living and public services on their knees. At the end of this Labour Government, pointing towards the next general election, as set out in the Prime Minister’s plan for change, they will have more money in their pocket, public services will be functioning again, and they will be proud once again of their Government, and of the British economy.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Having listened very carefully to the right hon. Gentleman’s responses, I believe that he is making a more significant statement than many of his colleagues might realise. By underlining that there will not be any tax or borrowing increases, he is, in effect, saying that austerity is back, because there is no way that the public finances can be remedied by another Budget of wishful thinking that pretends that increased borrowing and spending will produce growth. That is once again being proved by a Labour Government to be a false way of leading the economy.

[Darren Jones]

I am always grateful to the hon. Gentleman for thinking that I am making such substantive interventions, and for his continued support in that respect. This is not austerity, as he will know full well. Austerity was ideological cuts to public financing and the size of the state. It was 3% cuts, irrespective of what that meant for public services or for people across the country. That is far from what the Chancellor unveiled in her autumn Budget. That was the absolute opposite of austerity; we increased financing for frontline public services, and will continue to do so.

[Noah Law (St Austell and Newquay) (Lab)]

Will the Chief Secretary outline the steps that this Government have already taken to fix the fiscal foundations and put this country on a stronger footing for growth?

[Darren Jones]

My hon. Friend asks an important question. Why did we have to take that action? Why was this Government’s first Bill about fiscal responsibility? It was because of the mess that Conservative Members left this country in. That is why we have given the Office for Budget Responsibility stronger, independent powers of oversight in statute—something that the shadow Chancellor presumably welcomed, given his comments criticising Liz Truss and her Budget when he was Chair of the Treasury Committee. We brought that change forward, which the Conservative party failed to do. That is why we have set fiscal rules that are non-negotiable, why public services must live within their means, and why the Government’s absolute focus is on securing growth, investment, reform and long-term sustainability for public finances.

[Richard Tice (Boston and Skegness) (Reform)]

Is the Chief Secretary aware that the last two months’ GDP figures, for September and October, are both down? Is he aware that sterling is falling—in fact, almost collapsing? Confidence is falling and investors are fleeing. The only things going up are inflation, wasteful public spending and the cost of debt. Be under no illusion: we are heading towards a financial crisis. Will he ask the Chancellor to return from her ridiculous trip to China, to reverse course, and to cut daft spending and wasteful regulations, so that we can create some growth?

[Darren Jones]

I think the question was whether I was going to demand that the Chancellor come back from her trade trip to China. I will not, no.

[Katie White (Leeds North West) (Lab)]

Does the Chief Secretary agree that there is an irony in the Conservatives raising concerns about the cost of borrowing, when they oversaw debt rising from 64.7% of GDP to more than 96% of GDP and left a £22 billion unfunded black hole in public finances—and now continue to oppose the tough decisions that we are making on tax and spend to fix their mess?

[Darren Jones]

That is exactly why our fiscal rules are non-negotiable. While the Conservatives borrowed to pay the bills every month because they did not have enough money to pay for all their promises, this Government are investing in the future of our country, whether through reforming public services or investing in infrastructure and opportunities for growth. That is exactly the right approach to the economy; it is what our fiscal rules demand, and what we will be held to.

[Harriet Cross (Gordon and Buchan) (Con)]

Next has said that it will increase prices by 1%, directly because of the increases to national insurance contributions, and has warned of slowing growth. With business confidence plummeting, gilts at a 26-year high and growth stagnating, do the Government still maintain that they have an iron grip on public finances, or will they admit that their Budget has done exactly what the Conservatives warned: increase costs, increase prices and reduce growth?

[Darren Jones]

The question was whether the Government have an iron grip on public finances; the answer is yes.

[Perran Moon (Camborne and Redruth) (Lab)]

Meur ras ha myttin da, Mr Speaker. Does the Chief Secretary agree that the only way that we can wrest the economy out of the clutches of the Conservatives’ doom loop is to go for growth? The Government’s new industrial strategy will be a core foundation underpinning that growth.

[Darren Jones]

My hon. Friend is absolutely right. Our industrial strategy, through which we will invest alongside businesses and industries of the future, and our infrastructure strategy, which sets out how we will get Britain building again, are two examples of the Government playing their part by bringing economic and political stability. By, for example, reforming the planning system, we will unlock billions of pounds of private sector investment in UK plc—something that did not happen under the previous Government.

[Mr Paul Kohler (Wimbledon) (LD)]

I completely sympathise with the Chief Secretary about the incredible brass neck of the official Opposition. He talks about kick-starting growth, but can he give us any evidence that growth has been kick-started? Does he not realise that the only way to kick-start growth in the near future is to re-engage with Europe?

[Darren Jones]

The hon. Gentleman will know that this Government’s approach to stimulating growth in the economy is about stability, investment and reform—the political and economic stability the Chancellor has brought to this country; the investment from private sector partners, as well as from the state, where appropriate; and the reform of policy areas such as the planning system, or the financial services reform that the Chancellor set out in her Mansion House speech. He is also right, of course, that we need to improve our trading relationship with countries around the world, which is why the Chancellor is going to China today, and why we have begun negotiations with our friends in the European Union on how we can improve our relationship on a whole host of issues, including trade, energy, defence and security.

[Joe Morris (Hexham) (Lab)]

Does the Chief Secretary agree that the Conservatives, having added gutter politics to their fantasy economics and unfunded spending commitments, can no longer call themselves the party of decency in public life, and of sound money?

[Darren Jones]

Yes.

[Wendy Morton (Aldridge-Brownhills) (Con)]

It is deeply disappointing that the Chancellor is not here to answer questions in the House on such an important topic, so I shall have to ask my question to the Chief Secretary to the Treasury instead. It is quite a simple one. Will he stand by the Chancellor’s comment that she will not come back with more tax increases?

[Darren Jones]

I am sorry to disappoint the right hon. Member, but I will answer the question none the less. She asked me whether I stand by the Chancellor’s statements, and the answer is yes.

[Louise Jones (North East Derbyshire) (Lab)]

I want us to get serious for a minute here. [Interruption.] Many of my constituents in North East Derbyshire, who will have just heard the guffawing from the Opposition, have been really struggling with the cost of living crisis. They voted the Government in, and we are committed to restoring the foundations of our economy. Will the Minister assure me that we are doing everything we can to deliver on that promise?

[Darren Jones]

It is absolutely right that the Labour Government are bringing fiscal and economic stability back to this country, because we know that when you play fast and loose with the nation’s finances, you play fast and loose with family finances. That is what voters in every constituency experienced when the Conservatives were last in government. They will not experience that under this Labour Government.

[Graham Stuart (Beverley and Holderness) (Con)]

We are looking at higher interest rates, lower growth and a higher cost of borrowing to the Government; as my hon. and right hon. Friends have said, we are grateful to the Chief Secretary to the Treasury for being so honest with the House. It is clear that if he sticks to his word, there will not be any more borrowing, or any more tax rises. Given the numbers, that leaves only one option: cuts in public services. I wonder whether his colleagues behind him on the Government Benches realise that reality. What word other than “austerity” will he use to describe it?

[Darren Jones]

As I have said, it seems that the Conservative party is proud of its record on austerity. We do not support austerity, which was blind ideological cuts to public services—3% cuts—irrespective of the outcome for the people who rely on public services. The Chancellor increased investment in public services at the Budget in the autumn, and we will continue to increase investment in them, because we need to get them back on their feet, and they are an important foundation for economic growth. I am pleased that the right hon. Gentleman recognises my statements, and says that they are honest, because of course they are. I look forward to coming back to the House in future months and years to show him the progress that the Government are making.

[Sally Jameson (Doncaster Central) (Lab/Co-op)]

It is a relief for me and my constituents in Doncaster Central that we finally have a Labour Government providing economic stability and investing in the industry of the future. [Interruption.] It is all right for Conservative Members to chunter, but after the mess they made, a period of silence on their part is warranted. Will my right hon. Friend lay out the action that he will take to ensure that all regions of the country, including places like Doncaster and South Yorkshire, benefit from growth?

[Darren Jones]

My hon. Friend is right to point out that the Government are in the service of working people. What does that mean? It means that people’s lives—the money they have in their pocket, and the ability to pay the bills, get a roof over their head and seek opportunity—are at the very heart of what it means to be in the Labour party and in this Labour Government. Conservative Members might not have suffered from higher mortgage bills or worried about the cost of living during their supermarket shop each month, but people across the country did, and they suffered as a consequence of the Conservatives’ behaviour. I welcome my hon. Friend’s comment that they should have a period of silence while they learn the lessons.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

I think that I heard the Chief Secretary say that the Chancellor has not gone to China. Will he confirm first that she is still planning to go? Secondly, if she has not gone to China yet, why is she not here? Lots of people would like to hear from her. Thirdly, has the Chancellor talked to the Governor of the Bank of England about market turbulence at any point in the last seven days?

[Darren Jones]

The Chancellor is going to China, as has been well documented. Again, I am sorry that it disappoints the hon. Member that I am here. I refer him and his colleagues to the urgent question, which is about a statement on borrowing costs and public finances. He will know that I am the Minister for public finances, which is why I am here answering his questions.

[Gregor Poynton (Livingston) (Lab)]

Will the Chief Secretary to the Treasury confirm that the Government’s No. 1 mission is still growth? That is the only way that we can break out of the Tory inheritance of low growth, high borrowing, high taxes and squeezed living standards for people in my constituency in Livingston, and across the UK.

[Darren Jones]

My hon. Friend is absolutely right. His constituents will know from their family finances that they cannot just put the bills on the credit card every month without having a plan for how to pay it off. That is not a sustainable way to manage household finances, and it is the same for the country. One of the reasons why we have such a mess left to us by the Conservative party is that it did just that—borrow money every month to pay for the day-to-day bills, and stack up the promises. That is why in the end there were so many promises and not enough pounds to pay for them. That is not a way to run the economy or family finances. That is why fiscal responsibility is at the heart of the approach taken by the Chancellor and the Government. We will never play fast and loose with the nation’s finances, as the Conservative party did.

[Max Wilkinson (Cheltenham) (LD)]

According to media reports today, the former Member of Parliament for South West Norfolk is issuing cease and desist letters to those who have accused her of crashing the economy—[Interruption.] I hope I will not get one; Members will be conscious that I am being very careful with my wording. I wonder whether the Chief Secretary might wish to take advantage of parliamentary privilege to compare and contrast the impact of her disastrous mini-Budget with what is being discussed today.

[Darren Jones]

You will correctly tell me, Mr Speaker, that it would not be right for me to comment on legal proceedings, but I am happy to say that one of the huge lessons for the country, for the British voting public and perhaps, one day, for the Conservative party is that the actions that the Conservative party took were not just reckless and negligent, but had a direct impact on public finances in every single constituency. There was a direct connection: it was Conservative Ministers’ hubris, ego and lack of focus on working people that ruined the lives of people across the country. I say that today and I will say it every day, because the British people must never forget the recklessness of the Conservative party.

[Luke Murphy (Basingstoke) (Lab)]

I thank the Chief Secretary for his statement—

--- Later in debate ---

[Darren Jones]

It might have been legitimate for the Conservatives to say that their economic policy was to borrow for day-to-day costs—as they did. That could be a decision that they took. What is not forgivable is the fact that they reached a point at which they were making promises to the British people that they knew they did not have the money to pay for, and that is where the £22 billion black hole came from. They should be ashamed of their record on the economy, and they should apologise to the British people.

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

When will the Chief Secretary take responsibility for the actions of his own Government? We had a general election, and that is when the public held the previous Government to account. They gave their verdict, and the Labour party is in power now. What the public want is accountability for this Government’s reckless decisions: the national insurance increases are an attack on jobs; there has been an attack on the farming community; and business confidence is at an all-time low.

[Darren Jones]

The right hon. Gentleman may not wish to reflect on his party’s performance in government, but I am afraid he has to. Although this is a new Government—we have been in office for six months—the reality is that we are having to clear up the mess that the last Government left us. That is why we have to talk about it, and explain to the country why the actions taken by the Conservative party not only affected family finances, but decimated the British economy and pushed public services on to their knees. We are taking responsibility for clearing up their mess, and that is why we will keep talking about it.

[Kevin Bonavia (Stevenage) (Lab)]

A key ingredient of economic growth has to be responsible government. People in Stevenage and across the country are still paying the price for 14 years of irresponsible government—the terrible decisions, the mini-Budget—and now we have a party in opposition that still does not get it. Opposition Members responded to this party’s Budget by saying that they accepted the improvement in public services, but they would not say how they would pay for it. Can my right hon. Friend assure us that this Administration will be committed to responsible government for the rest of the parliamentary term?

[Darren Jones]

Yes, I can. There is no denying that the economic inheritance that we were given by the Conservative party makes life very difficult for us: it means that we have to take difficult decisions. The fiscal rules are non-negotiable and public services have to live within their means because that is that the bedrock of any approach in government. Is that going to be easy for us? No, it is not, but it is part of our responsibility in clearing up the mess left by the Conservatives, and from that we can build for the future, as is set out in the Prime Minister’s plan for change.

[Nick Timothy (West Suffolk) (Con)]

The issue here is spending. Will the Chief Secretary confirm that the Labour manifesto said that a Labour Government would increase spending by £9.5 billion a year, and the Treasury Red Book is increasing that to £76 billion? Is that not the issue?

--- Later in debate ---

[Darren Jones]

One of the issues was that the Conservative party made a whole list of unfunded spending commitments. They promised hospitals and train stations, they had unsettled pay disputes with public sector workers— I could go on and on. That is why the Chancellor took the decision at the Budget to wipe the slate clean, to deal with the mess that we inherited and then to bring forward the manifesto commitments that we set out at the election. If the hon. Gentleman wishes to see more detail about our public spending plans, he is very welcome to come to my statement in June.

[Jacob Collier (Burton and Uttoxeter) (Lab)]

Conservative Members talk about economic stability, but they seem to have forgotten that they were swapping out Chancellors every five minutes. Does the Chief Secretary agree that it is this Government who are restoring stability to our economy?

[Darren Jones]

Restoring economic and political stability is important. When the markets observed the behaviour of the Conservative party in government, it is no wonder they did not want to invest in the UK, and that is why the market crashed, to the detriment of working people across the country. It is very clear that under this Labour Government, not only do we have stable leadership; we have a stable set of policies in our plan for change and fiscal responsibility as the bedrock for the Chancellor’s action. That is a country people can believe in, trust in and invest in, unlike the country that was left to us by the Conservative party.

[Mr Andrew Snowden (Fylde) (Con)]

Every Labour Government leave office with unemployment higher and the economy in a worse condition than they inherited, but I think this Labour Government are taking the record for doing that the fastest—within just six months, we see borrowing costs spiralling out of control, GDP growth tanking and the bosses of some of the biggest recruitment firms in the UK warning of job postings plummeting and that a recession is just around the corner. I look forward to seeing how the Chancellor spins this period of employment on her CV in the future. If the Government breach their own fiddled fiscal rules so ingloriously and so quickly, who on the Treasury Bench is going to update their CV and take responsibility?

[Darren Jones]

The fiscal rules are non-negotiable, and they will be met.

[Lola McEvoy (Darlington) (Lab)]

Does the Minister agree that the reckless ideological austerity measures taken by the Conservative party in government have directly led to my constituents being significantly worse off and made it harder for them to get on in Darlington? Can he outline the impact that the new Office for Value for Money will have on the huge inefficiencies and waste that the last Government presided over?

[Darren Jones]

The Office for Value for Money is an important part of our spending review process, as we undertake for the first time in 17 years a zero-based review of every single pound of public spending. We should focus on that for a moment: not once under the last Conservative Government was there a zero-based review. Not once did they go line by line through every pound of taxpayers’ money and public spending to check it was being spent in the people’s interests. Not once did they think that was a responsible thing to do. That is the first thing we are doing in government.

[Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)]

At the back end of last year, borrowing figures were the second highest monthly figures on record. That was in no small part driven by the Chancellor’s decision to give inflation-busting pay rises to unions. Given that we have more union pay negotiations this year, should my constituents be braced for the Government giving into those union demands, at risk to taxpayers?

[Darren Jones]

I think the hon. Member might want to ask his constituents whether they appreciated their doctors and nurses being on strike for so long or whether they wanted them to be able to see their patients. He may want to ask his constituents whether they were grateful to have the trains not working for so many months because the train drivers were on strike. He may want to ask his constituents how pleased they were with the performance of their public services over the last 14 years of government. I think I know the answer they would give him. That is going to change under this Labour Government.

[John Slinger (Rugby) (Lab)]

On the economy, as with so much else, does my right hon. Friend agree that Conservative Members should sip from the elixir of personal responsibility and that the two words we most need to hear from them are, “We apologise”?

[Mr Speaker]

Order. Mr Stuart, I need no advice from you. I think you are on the Panel of Chairs, and I need to see some better behaviour if you are going to stay on it.

[Darren Jones]

Thank you, Mr Speaker. It is important, when you are paid by the House, to act responsibly; I agree with you.

My hon. Friend the Member for Rugby (John Slinger) makes a really important point, and Conservative Members who have their head in their hands may wish to listen to him. It will be important for the Conservatives to apologise for their behaviour before the British people start listening to them again, but for as long as they wish to grunt and groan and claim that everything was wonderful, the better for us, so long may it continue.

[Patrick Spencer (Central Suffolk and North Ipswich) (Con)]

I have heard that the Minister is the future, but all he wants to talk about is the past. The fact of the matter is that, today, borrowing costs are up, business confidence is down and growth is going nowhere. Is it not time to admit that this lefty economic experiment is not working? It is time to cut taxes and cut spending.

[Darren Jones]

I did not realise that the hon. Member knew my mum and that I am apparently the future. It is very kind of him to say so; very few have that in their thoughts. He talks about lefty experiments. Fiscal responsibility is not a lefty ideology. Economic responsibility is not a lefty ideological and political experiment; it is what the British people expect. One of the reasons why the Conservatives had such a historic defeat at the last election is that they lost all control and all sense when it came to the public finances. For a party that is supposedly the best-performing in western democracy, and which has had great leaders in the past, is it not a great shame what the Conservative party has become? Given its performance over 14 years and its descent into disinformation, I feel very sorry for Opposition Members.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

I hope that the Minister can quickly turn this situation around for my constituents and the country, and I wish him all the best in doing so. Given the challenges of business confidence and the markets, I had hoped that he would come to the House this morning with a plan that lays out the scope of the problem and the solution to fix it. Instead, he has spoken more about the Conservative party, rather than Labour’s plan for the economy. Is that because the Chancellor is not here today? When will she come back?

[Darren Jones]

I am very happy to set out the Government’s plan, as I have done repeatedly today. The hon. Member will have seen in the Chancellor’s Budget last autumn a clear plan to wipe the slate clean, to deal with the mess that we inherited, to protect working people, and to invest in our public services. He will have seen it in the Prime Minister’s plan for change, which sets out the direction of this Government over the years ahead. We will put more money in working people’s pockets across the country, get our public services back on their feet and make sure that this country is in a strong position. The hon. Member will know that the Government are working through our spending review, which I run as the responsible Minister. I have already confirmed that we will come back in June to confirm the spending plans for Departments, which will have to live within their means and in line with the fiscal rules in the years ahead. I cannot think what more he would want.

[Several hon. Members rose—]

[Katie Lam (Weald of Kent) (Con)]

Within the last week, has the Chancellor spoken to the Governor of the Bank of England about the impact of soaring borrowing costs?

[Darren Jones]

The Chancellor meets the Governor of the Bank of England on a regular basis and will continue to do so.

[Ben Obese-Jecty (Huntingdon) (Con)]

It has been widely reported that the Chancellor now faces a choice between raising taxes or cutting public spending if she is to stay within her non-negotiable fiscal rules. Given reports that she will now conduct group meetings with Ministers, rather than the less combative approach of one-to-one meetings conducted by the right hon. Gentleman, to discuss departmental cuts, it sounds as if Government spending is being dictated by the Ministers with the sharpest elbows. Can he reassure the House that there will not be any departmental cuts?

[Darren Jones]

I am pleased that the hon. Member can afford the subscription to Bloomberg News; I cannot, unfortunately, so I could not read the article to which he refers. He inadvertently asks me a question about the process of the spending review. [Interruption.] That was the question. We are embedding mission-led government, which is what the Prime Minister set out in his missions in his plan for change. That requires Departments to work together to make sure that they are absolutely focused on the delivery of the plan for change priorities, which is why the spending review is being done on a multilateral basis in a new way. I will be giving a speech on this issue in a couple of weeks’ time, and I will make sure that the hon. Gentleman gets an invitation.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for all his answers this morning. The UK’s public debt has risen sharply over the decades. At the moment, it is reaching levels not seen in the post-world war two era, meaning that a large proportion of our expenditure is focused on paying back, as opposed to public spending. I always try to be constructive, as the Minister knows. Nowhere will the impact—on health and education, for example—be greater than in Northern Ireland. I have a very specific question for the Minister: what discussions has he had with Departments, and particularly the Finance Department, at the Northern Ireland Assembly?

[Darren Jones]

I lead for the Treasury on inter-ministerial relationships with Finance Ministers in the devolved Governments. I regularly meet my counterparts, and I will meet them in Wales in the coming weeks to talk about our spending plans for the future.

Crown Estate Bill [Lords]

Darren Jones Excerpts

2nd reading
Tuesday 7th January 2025 Commons Chamber

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

I beg to move, That the Bill be now read a Second time. May I commend my hon. Friend the Member for Gloucester (Alex McIntyre) on his moving ten-minute rule Bill, which he just presented?

The purpose of the Crown Estate Bill is to bring legislation governing the Crown Estate into the 21st century. The Crown Estate is a commercial business, independent from government, that operates for profit and competes in the marketplace for investment, yet it is restricted in its ability to do so by legislation that has not been amended since 1961. With less ability to compete and to invest, it is less able to deliver returns for the public purse than it might otherwise be able to do.

Existing limitations on the Crown Estate’s powers have meant it has had to generate capital for investment by selling its assets, which is neither desirable nor sustainable. Under current legislation, the Crown Estate is constrained in its ability to support sustainable projects and to preserve our heritage for generations to come. These are the reasons why the Bill is necessary and why the Crown Estate has asked successive Governments for reforms.

The Bill has been expanded and improved during its passage in the other place, with requirements relating to sustainable development, GB Energy and the composition of the board. Fundamentally, the changes that the Bill proposes will give the Crown Estate new freedoms, including the power to borrow as their competitors can, enabling them to adopt a sustainable and competitive business model.

The Bill has two key objectives. First, it broadens the scope of activities that the Crown Estate can invest in, in order to support the delivery of its core purpose across net zero, nature recovery, economic growth and generating returns to the public purse. In its current form, it is predominantly a property estate and is significantly limited in its investment options. The Bill would provide it with the ability to invest more widely in new growth opportunities—for example, investing in the further mapping of our seabed. This will enable it to undertake significant de-risking activity, such as pre-consent surveys and supporting grid connections, thus increasing the frequency of leasing for offshore wind and supporting the clean energy transition.

[Stephen Flynn (Aberdeen South) (SNP)]

I hope the Minister will not hear much disagreement about the points he is making so eloquently. However, may I query why these provisions and powers, which he believes are relevant for the Crown Estate in England and Wales, are not also being provided to the Crown Estate in Scotland?

[Darren Jones]

As the right hon. Gentleman knows, Crown Estate Scotland is a separate organisation to the Crown Estate that is the subject of the Bill. Of course, we continue to have conversations and we will be pleased to talk to him and others about that issue for the future.

[Stephen Flynn]

On that point, will the Minister give way?

--- Later in debate ---

[Darren Jones]

I will make some progress.

The second objective of the Bill is to enable the Crown Estate to invest in capital-intensive projects more effectively. It does so by empowering the Crown Estate to reduce the size of the cash reserves it needs to hold, thereby expanding its ability to use its land and property assets far more efficiently.

[Mark Pritchard (The Wrekin) (Con)]

Let us be clear that this is a huge departure for the Crown Estate. The Bill basically allows it to go to the City and to raise capital based on its assets, most of which, as the Minister highlights, are property. As he knows, the sponsor Government Department for the Crown Estate is the Treasury, but investments go up and down. What if those investments go down? Who will be the guarantor for those liabilities? Will it be the taxpayer or the Crown Estate?

[Darren Jones]

I will come to a number of those points later in my speech. If I have not answered the right hon. Gentleman’s points as I get towards the end, I will take another intervention from him.

As a result of the changes in the Bill, the Crown Estate will be able to accelerate investment in redeveloping and decarbonising its Regent Street and historic London portfolio, as well as investing in projects to support science and innovation. The Bill will unlock potential investment of up to £1.5 billion in the science, technology and innovation economy over the next 15 years, building on the Crown Estate’s recent investment in the city of Oxford.

To reduce the size of its cash holdings and engage in more capital-intensive activity in the long term, the Crown Estate needs the ability to borrow, as its competitors currently can. Such borrowing will be from the Government or from other sources, but only with Treasury consent. Borrowing from the Government will be at commercial rates, meaning the interest the Crown Estate pays, funded from its own income, will outweigh the Government’s cost of borrowing the money they loan to the Crown Estate. This will enable the Crown Estate to build on its long track record of delivering significant revenues to the public purse year after year—it has delivered over £4 billion in the last decade.

[Mark Pritchard]

Is there not a potential conflict of interest? The Minister mentions GB Energy, a new national organisation introduced by Labour Government policy. Because of the Crown Estate’s partnership with the Treasury, the Government are encouraging the Crown Estate to invest in GB Energy, but what if people out there do not like that policy? What if GB Energy is a failure? It is there not a clear potential conflict of interest between the Crown Estate and the incumbent Government?

[Darren Jones]

The right hon. Gentleman is doing a brilliant job of anticipating sections in my speech. Once again, I will point at him when I come to the relevant section; in fact, it is the next section, so he is in luck.

There will be a memorandum of understanding in place between the Treasury and the Crown Estate that will govern how the borrowing powers will be exercised. Above all, the Crown Estate will be borrowing for investment, maximising the profits returned to the public purse. Any such borrowing will require Treasury consent and will be within our fiscal rules.

Given that the new powers will enable the Crown Estate to first draw on its cash holdings, it is not envisaged that these borrowing powers will be used until the end of the decade. As with any public sector borrowing, the Treasury will ensure that this is consistent with “Managing Public Money” principles to ensure value for money for the taxpayer. The fiscal impact of any Crown Estate borrowing will be fully considered, starting with this year’s spending review, to ensure it is consistent with our fiscal rules.

The Bill contains a set of necessary reforms, ensuring that the two key objectives can be met and that the Crown Estate can continue to operate effectively, both now and in the years ahead. It is composed of five key elements. First, it widens investment powers by removing existing restrictions on investing in the current Crown Estate Act 1961, and clarifies the Crown Estate’s ability to invest in complementary activities, such as research, digital technology and energy supply chains. Secondly, it grants the Crown Estate the power to borrow with Treasury consent. As well as generating returns for the public purse, the new ability to borrow will free it up to make better use of its existing assets, leveraging these to give it more room to invest.

Thirdly, the Bill makes amendments relating to the governance of the Crown Estate to provide legislative simplification and to bring it in line with best practice for modern corporate governance. By expanding the number of commissioners, the board will be able to better reflect the growing breadth of the Crown Estate business and ensure a greater range of expertise and diversity at board level. The Bill also requires the appointment of commissioners to advise on Wales, England and Northern Ireland, which will ensure that the board continues to act in the best interests of the areas in which it operates.

Fourthly, the Bill requires the commissioners to keep under review the impact of their activities on the achievement of sustainable development goals in the UK. It is important that progress towards national goals on the environment and climate, as well as wider considerations on society and the economy, continue to be at the core of the Crown Estate’s strategy.

Fifthly, the Bill requires the annual report to include a section on the activities of the commissioners under their recently announced partnership with Great British Energy. That will ensure that details of the partnership and the benefits it creates are publicly available, clear to all and subject to debate in this House when those reports are published.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I understand that the Minister is proposing that, in relation to the seabed, the Crown Estate will be a licensing authority for renewable energy projects and will now be able to invest in them too. The commissioners have a primary duty to maximise the return to the Crown Estate of any activity they undertake. To comply with the law, will the Crown Estate be compelled to side with renewable energy development at the expense of the fishing industry if, for example, there is a conflict between the siting of an offshore wind farm and the use of that sea by the fishing industry, and is that fair?

--- Later in debate ---

[Darren Jones]

That is a great question. I have no idea, so I will commit to writing to the right hon. Gentleman with an answer, if he will forgive me for not knowing.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

Will the Minister give way?

[Darren Jones]

Only if it is a question to which I know the answer.

[Melanie Onn]

I might be able to help a little with the question asked by the right hon. Member for Orkney and Shetland (Mr Carmichael). The Crown Estate has engaged in supporting the evidence and change programme that has brought the fishing industry and the renewables sector around the table to enable earlier planning to prevent some of the conflicts we have seen. My speech will highlight some good examples of where those plans and the evidence and change programme have started to be implemented. The industries are working together, hand in hand, to prevent the kind of conflict about which the right hon. Gentleman is rightly concerned.

[Darren Jones]

I am grateful to my hon. Friend for her help, which I hope gives the right hon. Member for Orkney and Shetland (Mr Carmichael) some reassurance, as it sounds eminently sensible.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Clause 3 covers this:

“The Commissioners must keep under review the impact of their activities on the achievement of sustainable development in the United Kingdom.”

This has been written into the Bill.

[Darren Jones]

I am continually grateful for the team effort, and I am grateful to my hon. Friends for having paid such close attention to the Bill.

[Mr Carmichael]

I am aware of the duty to keep this under review, but that will surely be overridden, because the primary duty remains to maximise the return for the Crown Estate. I am quite happy for the Crown Estate to be both a licensor and an investor, although there is something of a conflict of interest, but surely there needs to be more concern about the Bill’s impact on other seagoing industries. In a way, I fear that the Minister’s response to my initial question suggests this has not been given sufficient attention thus far.

[Darren Jones]

The right hon. Gentleman should not take my not knowing the answer as meaning that other people are not paying sufficient attention to the issue. He has asked a very technical question, and I commit to making sure an answer is made available to him and the House before the Bill goes to Committee.

The Bill currently places an obligation on the commissioners in relation to salmon farming, due to an amendment made in the other place. The Government do not believe this obligation would be effective or, indeed, appropriate, given that it relates to a devolved policy area. We therefore intend to seek to remove this measure in Committee.

The Bill has seven clauses. Clause 1 inserts two new measures into the Crown Estate Act 1961 to clarify and broaden the commissioners’ powers. It also removes section 3(4) of the 1961 Act, thereby removing limitations on the commissioners’ investment powers.

The two new measures grant a power to borrow, subject to Treasury consent, and clarify that the commissioners have the powers to do that which is connected, conducive or incidental to meeting their general functions, including enhancing and maintaining the Crown Estate and the returns obtained from it. This allows the Crown Estate to borrow from the National Loans Fund, the Treasury or otherwise, subject to Treasury consent, and authorises the Treasury to provide financial assistance to the commissioners or to provide loans from the National Loans Fund.

Clause 2 makes two amendments to modernise the Crown Estate’s governance, by increasing the maximum number of board members from eight to 12 and removing the requirement for the salaries and expenses of its commissioners to be paid out of voted funds.

Clause 3 requires the commissioners to keep under review the impact of their activities on the achievement of sustainable development in the United Kingdom. Clause 4 requires the commissioners’ annual report to include a specific report relating to the Crown Estate’s partnership with Great British Energy.

Clause 5 requires the commissioners to make assessments relating to salmon farms on Crown Estate land, and to refuse or revoke a licence for a salmon farm if the assessment determines that it may cause, or is causing, environmental damage, or if it raises significant animal welfare concerns.

[Stephen Flynn]

The Minister has mentioned GB Energy and the desire to get on with allowing the Crown Estate in England and Wales to borrow. He will not have forgotten that GB Energy is likely to be located in my Aberdeen South constituency, and many of its projects to drive the net zero agenda across the UK will come to fruition in Scotland. Will he provide a little clarity on why he believes these powers should apply to the Crown Estate in England and Wales, yet his Government are not legislating for the powers to be provided to Crown Estate Scotland? I am at a loss to understand the reasoning.

[Darren Jones]

The right hon. Gentleman will know that the ambitions for GB Energy are broader than those relating to the provisions of this Bill. On the connection between the Crown Estate and GB Energy in relation to this Bill, it is merely about the partnership that has already been announced to facilitate the investment opportunities that are available in relation to England, Wales, and Northern Ireland. I refer the right hon. Gentleman to my previous answer on Crown Estate Scotland.

[Steve Race (Exeter) (Lab)]

We have talked a little about Scotland and Wales, but does the Minister believe this Bill will stimulate greater economic growth in other areas and regions of the country? The south-west peninsula has a huge amount of wind energy potential, for example, so has he assessed what sort of investment opportunities might come from this Bill?

[Darren Jones]

I thank my hon. Friend for his excellent question. He will know from the work of ministerial colleagues in the Department for Energy Security and Net Zero that the enormous potential for offshore wind in the Celtic sea and off the south-west coast is currently largely untapped. A lot of the work that needs to be done to make those seabeds available, and to bring the interconnections onshore and on to the grid to make it viable for private sector investment, requires quite a lot of up-front work. The Bill will enable the Crown Estate, working in partnership with GB Energy, to identify opportunities to invest in things like supply chain and in preparation and planning for the seabed work, and to identify the cost profiles that might relate to the projects that are being developed. That will facilitate the deals that we wish to make with private sector suppliers to unlock those opportunities. We see this as an important enabling mechanism to take advantage of the opportunities we have in the south-west and other parts of the country.

Clause 6 requires the appointment of separate commissioners with responsibility for giving advice about England, Wales and Northern Ireland, noting, as I have on a number of occasions, that Crown Estate Scotland is a separate entity. It also grants Welsh Ministers and the Executive Office in Northern Ireland the right to be consulted on each of the appointments relating to those parts of the UK. Clause 7 sets out procedural matters relating to the Bill’s extent and commencement.

The Bill gives the Crown Estate the flexibility it needs to meet its core duty of enhancing and maintaining the value of the estate and the returns obtained from it. The Bill broadens the scope of the activities in which the Crown Estate can engage, enabling it to further invest in the energy transition, and it empowers the Crown Estate to invest in capital-intensive projects more effectively. Critically, these measures will unlock more long-term investment, increasing the Crown Estate’s contribution to creating high-quality jobs and driving growth across the United Kingdom.

This Bill delivers a targeted and measured enhancement to the Crown Estate’s powers and governance, modernising it for the 21st century, and I commend it to the House.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

Financial Assistance to Ukraine Bill

Darren Jones Excerpts

Committee of the whole House
Wednesday 18th December 2024 Commons Chamber

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

It is a pleasure to serve under your chairmanship today, Madam Chair.

We had a very constructive debate on Second Reading of the Bill. In particular, I wish to express my appreciation for the universal support that the House has shown for the provision of this vital funding. It is clearly a subject close to the hearts of many of us across the House. I look forward to further discussion on this important Bill today.

As the Committee is aware, the extraordinary revenue acceleration is an ambitious scheme designed to provide Ukraine with a total of $50 billion in additional support, to be repaid by the extraordinary profits generated on Russian sovereign assets held in the European Union. The United Kingdom’s contribution of £2.26 billion is joined by pledges from the United States, the European Union, Canada and Japan.

The Bill contains only two clauses. They are both straightforward. Clause 1 grants the Government the legal spending authority to fulfil the commitment we have made to provide Ukraine with the UK’s contribution to the extraordinary revenue acceleration. The clause empowers the Treasury or the Secretary of State to provide the Government of Ukraine with funds approved by Parliament as a result of the extraordinary revenue acceleration loans for Ukraine scheme, or

“any subsequent arrangements that are supplemental to or modify or replace those arrangements.”

Payments made under clause 1 will be those that are necessary to perform the UK’s commitment to the ERA scheme.

[Sir Julian Lewis (New Forest East) (Con)]

In of course welcoming the Government’s measures, I note that the Minister referred to the extraordinary interest from the frozen Russian assets. Have the Government permanently set their mind against any possible actual seizure of the assets themselves, perhaps in agreement with other G7 members or EU members?

[Darren Jones]

I thank the right hon. Member for his contribution. As we debated on Second Reading, this is a commitment across G7 partners and with the European Union to take action on the proceeds of the assets that are held. For other complicated legal reasons, there is no intention to seize those assets at this time.

[Stephen Gethins (Arbroath and Broughty Ferry) (SNP)]

I thank the Minister for his acknowledgement of the cross-party support for this measure, but to back up my colleague, the right hon. Member for New Forest East (Sir Julian Lewis), the $3 billion from the UK is generous and will make a difference, but the $300 billion in frozen assets would be utterly game changing. I accept the Minister’s argument at the moment about some of the more complicated legal issues. I know that he accepts the very serious situation that the Ukrainians are facing on the front, defending all of us. May I encourage him merely to continue to look at this issue and see whether he can work with G7 colleagues to find a way of unpicking the difficulties that he has highlighted?

[Darren Jones]

I welcome the hon. Gentleman’s encouragement, which I take in good faith. He will know that these matters are multilateral and subject to negotiation with other allies and G7 colleagues, but he will also know, as I am sure the whole House does, that we go into 2025 with a strength of resolve across those G7 countries to do all that we can to help Ukraine continue to mount its defence against the illegal invasion from Russia.

Any other payments beyond the extraordinary revenue acceleration loans to Ukraine or any other country that are unrelated to the ERA scheme are not covered by the provisions of the Bill; this money is in addition to other grants and payments that have been referred to in the House previously.

The clause contains provision for the UK to provide funding towards subsequent arrangements that are supplemental to, modify or replace the ERA. This provision allows for flexibility in the unlikely event that the scheme itself should significantly alter. It is not intended to be used without this change in circumstances.

Clause 2 simply sets out the short title of the Bill.

[Richard Fuller (North Bedfordshire) (Con)]

I thank the Minister for opening the debate. The Conservative Government were a vociferous advocate for mobilising Russia’s frozen sovereign assets to support Ukraine. We drove G7 and European partners to try to coalesce around the most ambitious solution possible to achieve that outcome. The announcement on 22 October marked progress on that journey and is a step in the right direction. We understand that the Government’s position is that the United Kingdom’s contribution should be earmarked for supporting Ukraine’s military expenditure, including on air defence, artillery and other equipment. The Opposition would support that. We need to persevere with our efforts to put Ukraine in the strongest possible position to counter Russia’s unprovoked and illegal invasion.

Matters since Second Reading have been fast moving, so let me pose some questions to the Minister. Since Second Reading, the United States has given Ukraine $20 billion, funded by the profits of frozen Russian assets. That economic support forms a significant part of the overall $50 billion package agreed by G7 member nations and announced in June. The US Treasury said that it had transferred the $20 billion to a World Bank fund, where it will be available for Ukraine to draw. Money handled by the World Bank cannot be used for military purposes.

The US Administration had initially hoped to dedicate half the money to military aid, but that would have required approval from Congress, which the President did not seek. Perhaps the Minister can update the House on what discussions the UK Government have had with the US Administration, Canada and the European Union about the use of funds provided for military purposes. Are any strings attached to the funds that will be provided by the UK? As the US has already provided its share of moneys anticipated in the G7 package, can the Minister advise the House on the timing of the UK’s contribution? I think it was made clear on Second Reading, but it would be helpful to have an update, given the move by the US since then.

As the Minister and the Government have advised, the loans that the UK will pay will form part of the extraordinary revenue acceleration loan agreement by the G7. The loans that the UK will provide will be repaid by the Ukraine loan co-operation mechanism, established by the European Union under regulation 2024/2773 on 24 October. The ability of the UK to have its loans repaid depends in large part on a decision by the European Union to maintain its freeze on Russian assets. The EU renews Russian sanctions every six months, and efforts to extend that to a three-year review cycle were rebuffed by Hungary earlier this year. Will the Minister confirm that there is a risk, in the event that the EU does not extend its sanctions on Russia, that the costs of the loan will be borne by UK taxpayers, and what mitigations he might consider if that situation arises?

Finally, the EU controls more than two thirds of Russia’s $300 billion of sovereign assets that have been frozen by western allies following Russia’s full-scale invasion of Ukraine. Of those EU-held frozen assets, 90% are held by the Belgian-based financial services company Euroclear. The profits from the EU-held assets, estimated to be between $2.6 billion and $3.2 billion per year, have been used to arm Ukraine and finance its post-war reconstruction. We understand that the EU’s top diplomat, Kaja Kallas, said in an interview with The Guardian on 12 December that the European Union should use the billions in frozen state assets to aid Ukraine. She emphasised that Ukraine had a legitimate claim for compensation, and described the Russian assets held in the EU as

“a tool to pressure Russia.”

The Minister responded to earlier interventions, but can he confirm the UK Government’s position? Has he discussed the matter with the EU and Belgium, and does he have any plans for the UK to go further on the use of those assets?

--- Later in debate ---

[David Taylor (Hemel Hempstead) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Bolton West (Phil Brickell). He has demonstrated why he will be such a valuable addition to the Foreign Affairs Committee, and I congratulate him on his election to it. I associate myself with his comments and those of other Members. We often find ourselves disagreeing over the smallest of details, so I am proud that we can all come together on an issue of such magnitude in unity with the people of Ukraine. Long may that cross-party support continue.

Earlier this year, as some Members may know, I had the privilege of visiting Ukraine. I went over with an Estonian charity, driving a couple of military pick-up trucks over from the UK as part of a much larger convoy that went into Kyiv. Those vehicles were handed over to the Ukrainian soldiers, and it brought home that there was not only support and solidarity in this country for Ukraine, but solidarity across the whole of Europe. That is why we are coming together on the measures in this Bill. Hopefully we will have an opportunity to go again, and I associate myself with the comments of my hon. Friend the Member for Leeds Central and Headingley (Alex Sobel). We were both on a call earlier, and I know that he and other Members have also made trips to Ukraine and been part of aid convoys to help people, and long may that continue.

This Bill is another tool in the arsenal when it comes to fighting one of the world’s greatest tyrants. Ukraine’s fight against Russian tyranny is not just for Ukraine’s sovereignty, but for the freedom and security of the whole of Europe. One striking thing in making that journey is realising just how flat Europe is. I know that seems a silly point, but it brings home that there is nothing stopping Putin at the borders of Ukraine if we do not stand up against him now. The fact that another of the world’s tyrants, Assad, is now cowering in Moscow demonstrates the importance of curtailing Russia’s aggression.

I am proud that this Government and the Government before have stood foursquare behind Ukraine. As other Members have said, the Bill will land a deafening blow on Putin’s war machine and unlock a £2.26 billion contribution from the UK to the extraordinary revenue acceleration scheme, which crucially will not be paid by Ukraine or by British taxpayers. It comes from dodgy cash from profits owned by sanctioned Russian assets held in the EU.

I associate myself with the comments of my hon. Friend the Member for Livingston (Gregor Poynton), who listed the various ways in which the previous Government and the current Government have supported Ukraine. Long may that continue. It is so important that we continue to stand four-square behind Ukraine for as long as it takes. I urge the Committee to do all in our power to ensure that the Bill receives Royal Assent as urgently as is feasible, especially as we approach winter, when the battle conditions will become even tougher. Finally, I use this opportunity to pay tribute to the Ukrainian forces fighting on the frontline, the British troops involved in training and equipping them and all those showing resilience in the face of Putin’s illegal war.

[Darren Jones]

In closing, I thank right hon. and hon. Members for their contributions. I thank my hon. Friends the Members for Leeds Central and Headingley (Alex Sobel), for Livingston (Gregor Poynton), for Cowdenbeath and Kirkcaldy (Melanie Ward), for Hexham (Joe Morris), for Bolton West (Phil Brickell) and for Hemel Hempstead (David Taylor) and the hon. Members for Solihull West and Shirley (Dr Shastri-Hurst) and for Arbroath and Broughty Ferry (Stephen Gethins), the shadow Chief Secretary to the Treasury, the hon. Member for North Bedfordshire (Richard Fuller), and the Minister of State, Foreign, Commonwealth and Development Office, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), for being here for this important debate.

--- Later in debate ---

[Sir Julian Lewis]

Among some of the excellent contributions we heard in this debate was the remark by the hon. Member for Livingston (Gregor Poynton) that if Putin is not seen to fail in Ukraine, British troops will ultimately end up being involved in some sort of conflict directly. Will the Minister take that message back to his Treasury colleagues? Some of us feel that the arguments about whether 2.5% of GDP should be spent now or in a couple of years’ time rather miss the point, because if we get to the stage where British forces are engaged, we will be spending far more than that. As a Treasury Minister, he should realise that investment in defence in peacetime can deter a much more expensive conflict.

[Darren Jones]

The Government’s position, as the right hon. Gentleman will know, is that we will set out the trajectory to 2.5% of GDP on NATO qualifying spend in 2025, following the conclusion of the strategic defence review and the spending review. He will also know that we fund our armed forces not just to be prepared, but to be ready to contribute. But clearly, I cannot comment on hypothetical scenarios in 2025. He was right to allude to contributions in the debate that rightly highlighted the Ukrainian armed forces on the battlefield fighting not just for their own country but for the security of Europe and the United Kingdom. I think we are all clear-eyed about that and, therefore, our responsibility to help them. That is why the Bill is one part of the package of support that we are putting in place and will continue to put in place over 2025.

I think I have answered most of the points substantively, and so I conclude my remarks.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Bill, not amended in the Committee, considered.

Third Reading

[Darren Jones]

I beg to move, That the Bill be now read the Third time.

Once again, I extend my gratitude to Members from across the House for contributing to today’s debate and facilitating the swift passage of the Bill. Today, and throughout the Bill’s passage so far, this House has made clear its strong feelings on the plight of the Ukrainian people. Members of all political stripes have spoken eloquently in favour of continued support for Ukraine in its ongoing fight against Russia’s tyrannical, unprovoked and illegal aggression. Since Russia’s full-scale invasion of Ukraine in February 2022, no matter which party has been in office, the UK Government have remained committed to fully supporting Ukraine for as long as it takes.

The G7 extraordinary revenue acceleration scheme and this Bill, which facilitates the UK’s contribution, are another demonstration of the UK delivering on that promise. Beyond the ERA, the UK has now committed £12.8 billion in military, humanitarian and economic support to Ukraine. Earlier this year, the Government announced that we will continue to provide guaranteed military support of £3 billion per year to Ukraine for as long as it takes, and our ERA commitment goes further still. As hon. Members will know, the Bill unlocks the UK’s contribution of £2.26 billion, which constitutes a fair and proportionate contribution to the scheme based on our GDP share within the G7 and EU. It remains crucial that we pass the Bill as swiftly as possible to begin disbursing funds this winter to meet Ukraine’s urgent needs. Taken together, the ERA will provide Ukraine with an additional $50 billion in support. I pay tribute to our G7 partners for their collective determination to bring the ERA to fruition in just a few short months. We all remain united in our support for Ukraine against Russian provocation.

We in this House recognise the sacrifice that the people of Ukraine are making. They are fighting not only for their own survival and national identity, but for the security of Europe and the United Kingdom. The Bill will enable the Government to provide Ukraine with the essential support it requires to continue its battle against Putin’s unjust and illegal aggression.

At this point, Madam Deputy Speaker, given that this is probably my last contribution to the House this year, I wish you and the House a very merry Christmas, and say to the Ukrainian people that we hold them all in our hearts over this difficult period. I commend the Bill to the House.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

Employer National Insurance Contributions

Darren Jones Excerpts

Wednesday 4th December 2024 Commons Chamber

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

The shadow Chancellor made a number of interesting points, and I will give him the courtesy of going through a number of them. He talked about how this Government are risking inflation, when his Government sent it spiralling to the highest level in a generation. He said that Labour Members are talking down the economy, when his Government crashed it. He said that Conservative Members disagreed with the measures in the Budget, specifically in relation to national insurance contributions, but not one alternative option was laid out in his speech.

The public have a right to know what his choices would be: would the Conservatives want to increase income tax on workers or VAT in the shops, or would they like to increase corporation tax again on business? Would they like to cut tens of billions of pounds from public services or borrow more money every single day to pay the bills, or continue to make a black hole in the public finances? He suggested that the Labour party’s transparency with the country about the £22 billion black hole that the Conservatives left was not real, but they know that they created it. The sooner they say sorry to the country, the sooner the public might start listening to them once again.

I will finish with a positive comment. The shadow Chancellor said that his party was a “job-creating machine”. I am very grateful for the number of former Conservative MPs they have released into the labour market, given how many vacancies we have filled.

In her Budget statement on 30 October, the Chancellor set out the difficult decisions that the Government needed to take on welfare, spending and tax. Those decisions were not just difficult but necessary, given the fiscal irresponsibility and economic mismanagement of the Conservative party over the past 14 years. I welcome a debate on the choices, as I hear Members say from a sedentary position, “Choices, choices, choices.” What are yours? You should set that out to this House and you—[Interruption.] The party opposite should set them out to the public.

[Madam Deputy Speaker]

Order. The Chief Secretary might like to reflect that when he says, “What are yours?”, it means, “What are mine?” They are not my choices. Can he please be careful not to use “you” and “yours”?

[Darren Jones]

Thank you, Madam Deputy Speaker. To be very clear and to correct the record, the Conservative party should tell the country what its choices are. I am all ears.

The Labour party inherited a mess and we, as a responsible party of government, have needed to take measures to fix the public finances, fund the national health service and other public services, and deliver economic stability. We have been determined to take those decisions while protecting working people, which was our manifesto commitment. That is why the Budget made no changes to income tax, the rate of VAT or the amount of national insurance working people will pay. As a result of our Budget, people will not see a penny more in tax on their payslips. Yet keeping those promises while getting the country back on track meant tough decisions elsewhere in the tax system—choices and decisions that we are willing to take.

[Graham Stuart]

Perhaps with the assistance of the Exchequer Secretary to the Treasury behind him, the right hon. Gentleman might be able to answer a question that other Treasury Ministers have not been able to: why did the OBR make a correction in table 3.2 in chapter 3? It was originally suggested that £5.5 billion would be provided for compensation

“to public sector employers and adult social care”.

That was then corrected to remove any reference to social care and the number was cut by £800 million. Can the right hon. Gentleman explain what caused the OBR to make that correction and when it was decided that social care was not worth support?

[Darren Jones]

The right hon. Gentleman might in future give me advance notice of specific references to documents so that I can refer to them. I cannot tell him about table 3.2 in the OBR document because it is not here, but we will of course get an answer to him. He may wish to consider why the OBR said that had the Conservative party been more transparent about its time in government, its forecast would have been materially different. The shadow Chancellor was unable to provide an answer to that in response to interventions from colleagues from around the House.

That inheritance is why, at the Budget, we took the decision to increase national insurance contributions for employers while increasing protections for small businesses and charities. The Government increased the main rate of employer secondary class 1 national insurance contributions from 13.8% to 15%.

[Several hon. Members rose—]

[Darren Jones]

I will give way in a second. We have decreased the secondary threshold for employers, which is the threshold above which employers begin to pay employer national insurance contributions on their employees’ salaries, from £9,100 to £5,000. At the same time, we have increased protection for small businesses by more than doubling the employment allowance from £5,000 to £10,500.

[Luke Taylor (Sutton and Cheam) (LD)]

The national insurance hike will impact on small businesses, which form the backbone of our local economies as fixtures on our high streets across London and across my Sutton and Cheam constituency, including in Worcester Park and North Cheam. Will the right hon. Gentleman join me in recognising that Small Business Saturday is this weekend? Does he agree that the Government might take this opportunity to rethink the national insurance hike and the impact on small businesses, which will be suffering this week and beyond?

[Darren Jones]

We have factored small businesses into the design of our policy, in terms of both employer national insurance contributions and our commitment to permanent lower rates for business rates than were given under the previous Government, as well as other support for the high street. We are also expanding eligibility to the employment allowance by removing the £100,000 eligibility threshold to simplify and reform employer NICs so that all eligible employers can now benefit.

Changes to the employment allowance mean that around 250,000 employers will see their national insurance contributions liability decrease, and more than 1 million will pay the same or less than they did previously. Overall, that means that more than half of businesses with NICs liabilities will either see no change or will gain overall from the package. That design was put in place specifically to protect the small businesses that the hon. Gentleman raises. That means that 865,000 employers will not pay national insurance at all, enabling them, for example, to employ up to four full-time workers on the national living wage and pay no employer NICs. Employers will also continue to benefit from employer NICs relief, including for hiring workers aged under 21 and apprentices aged under 25. To support veterans, the Government are extending the national insurance contributions relief for employers of qualifying veterans for one year to April 2026, and we have set aside funding to protect the spending power of the public sector, including the national health service, from the direct impacts of the changes.

Even after accounting for the impact of this change, the OBR expects real wages to rise by 3% between now and the end of the forecast period, but we recognise that there will be impacts on employers. While many small businesses and charities will be protected through employment allowance, others will have to contribute more. There will also be impacts beyond business, as the Office for Budget Responsibility has acknowledged.

[Mr Perkins]

My right hon. Friend and I spent many years in opposition, and have spoken in many Opposition day debates. Does he agree that when the Opposition move a motion like today’s, which says that the Government should not do something without making any alternative suggestion about what they should do, it is a sign that the Opposition have not worked out their answer to the question? At some point, I hope that the Opposition will be able to help the country and the Government by having some policies, but does he agree that, until they do, the Government will just have to crack on as best they can on their own?

[Darren Jones]

I agree with my hon. Friend, and I encourage Opposition Members to put forward proposals. I am all ears. I am willing to listen to them, but so far all we have is opposition and no policies. Maybe that will change in the future.

The motion claims that the Government have not set out any impact assessment of the policy change, but the Government published a tax information and impact note on 13 November that explained the Government’s assessment of the policy, including its impact on businesses and the economy more widely. This was a difficult choice, and it is not one that we have taken lightly, but it is the right choice given the dire economic inheritance that the Government faced upon taking office, and the need to fix our broken public services. As the Chancellor set out in the Budget, healthy businesses depend on a healthy NHS, and a strong economy depends on strong public finances.

[Wendy Morton (Aldridge-Brownhills) (Con)]

On the NHS and choices, does the right hon. Gentleman not accept that the Government have chosen to clobber organisations and charities such as air ambulances and the hospice movement—the very organisations whose help the Government will need to improve services for the general public? As we asked yesterday, will he consider an exemption?

[Darren Jones]

As my right hon. Friend the Health Secretary has made very clear, when the Labour party came into government the NHS was broken. Why? Because of actions taken by the Conservative party over the last 14 years. That is why the Government have to take decisions to get a grip of the public finances and our public services. The changes are necessary in order to draw a line under instability, so that businesses can plan for the future, and to ensure that the NHS will receive an extra £22.6 billion to deliver 40,000 extra elective appointments a week. That vital new funding will create an NHS that is there when we need it, and the Government will achieve that within our tough fiscal rules—rules that will bring an end to borrowing for day-to-day spending, which was completely out of control when the Conservative party was in government.

Madam Deputy Speaker, you might think that, having called for higher NHS spending over the weekend, the Opposition would recognise the need to take tough but necessary decisions on the public finances in order to pay for it, but it seemed from the speech of the shadow Chancellor that that is not the case. Perhaps the Opposition might take the opportunity today to explain how they will raise the £25 billion that the changes provide for, but which they will not support. How else do they intend to pay for the new appointments and better services that the funding offers? What tough decisions would they make to repair the public finances and put our economy on a sustainable footing?

The Opposition’s double standards on this issue only go to show why they are not trusted on the economy: they have given up any pretence of fiscal responsibility. We recognise that the decision to increase employer national insurance will have impacts. Although the changes to employment allowance will help to protect small businesses and charities, other measures mean that larger businesses and organisations will have to make difficult decisions. However, as the Chancellor set out, this was a once-in-a-generation Budget. The difficult decisions we took meant that we were able to wipe the slate clean from the previous Government’s economic and fiscal mismanagement. Public services will now need to live within their means on the budgets we have set for them for the rest of this Parliament.

The Budget delivered economic stability and fiscal responsibility so that we can take the steps necessary to boost investment, fix our public services and grow the economy. That fiscal responsibility is only possible when Governments are willing to take tough decisions. This Government will not shy away from those tough decisions and will do what is right to fix the foundations of our economy, despite the dire inheritance left by the Conservatives. The shadow Chancellor said we were hiding in the past and not facing the future. I say to him: we are running to the future, dealing with the challenges and delivering for the British people.

[Several hon. Members rose—]

--- Later in debate ---

[Paul Holmes (Hamble Valley) (Con)]

It is a pleasure to follow the hon. Member for Makerfield (Josh Simons). I rise to speak in favour of the motion on the Order Paper in the name of the Leader of the Opposition.

I do not rise to speak in this House because I think the Labour party’s Budget is vindictive, but I do think that the national insurance rise we are debating today is a proposal that runs right through the Labour party’s DNA. Labour drives down growth, when growth should be the No. 1 priority for public services. It taxes the wealth creators and the small businesses, it borrows and makes the economic situation worse, and it is always the Conservative party that has to pick up the pieces after Labour has targeted the poorest people and smallest businesses in our society and made them suffer.

Ultimately, the lack of growth that the Labour party and every Labour Member have signed up to means that public services will suffer, fewer jobs will be created and more businesses will close. I gently say to the Chief Secretary that he challenged us repeatedly to outline what we would do instead of this measure to make sure that we can fund public services, and I will tell him a few things that we would not do. [Interruption.] Well, I will tell him in a minute, and he can intervene and elaborate, and I will get an extra minute. As he asked me what we would do, I will tell him: we would increase growth, as was outlined by the OBR. We would have growth, and higher growth than this Government are proposing. However, what we would not be doing is borrowing as much as him and spending £9 billion on public sector pay rises for his trade union paymasters, funded from borrowing. Those are the things we would not do.

[Darren Jones]

The hon. Member tells the House that he would go for growth. How did that go when his party tried it last time?

[Paul Holmes]

I simply say—and the Chief Secretary should know this because he supposedly wrote the Budget that we voted on a couple of weeks ago—that growth forecasts were higher under the last Government than those of the Government for whom he is now leading in the Treasury. I say to the Government that business confidence is at the lowest it has been for years.

Oral Answers to Questions

Darren Jones Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Pamela Nash (Motherwell, Wishaw and Carluke) (Lab)]

25. What steps she plans to take to help improve living standards.

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

We plan to raise living standards by boosting economic growth to put more money in people’s pockets, and by developing a comprehensive strategy on child poverty to give every child the best start in life. Already, the independent Office for Budget Responsibility estimates that living standards will increase during this Parliament, at more than double the pace observed in the previous Parliament.

[Natalie Fleet]

Fourteen years of Conservative rule meant that we all saw child poverty levels rise. One in five children across the country now grows up in scarring poverty. A quarter of all children in Bolsover live in poverty. Can the Minister please set out the measures that this Labour Government will take to end this travesty?

[Darren Jones]

I thank my hon. Friend for her question. She will know that this Government, like every Labour Government, are committed to improving living standards right across the country. From 1 April 2025, the national living wage will increase by 6.7% to £12.21 per hour for eligible workers aged 21 and over. That represents an increase of £1,400 to the gross annual earnings of a full-time worker on the national living wage, and is expected to benefit around 3 million low-paid workers. My hon. Friend knows that the Government have set up a ministerial taskforce on child poverty, which will report in 2025.

[Pamela Nash]

In the Chancellor’s first ever Budget, she delivered over £1.5 billion for Scotland this year and £3.4 billion next year—the largest ever block grant settlement in the history of the Scottish Parliament. Unlike the Tories and the SNP, it is clear that this Labour Government are choosing investment over simply managing decline. Can the Minister share with the House a bit more detail about how the Budget will directly impact and improve the lives of people in my constituency of Motherwell, Wishaw and Carluke, and throughout Scotland?

[Darren Jones]

I thank my hon. Friend for her question. As she said, the Scottish Government’s spending review settlement for 2025-26 is the largest, in real terms, of any settlement since devolution began. The Scottish Government are receiving at least 20% more per person than equivalent UK Government spending in the rest of the United Kingdom. That translates to over £8.5 billion more in 2025-26 alone. This Labour Government are delivering for the people of Scotland by giving the Scottish Government the power and money to get on with the job, and it is for the SNP to be accountable for what it delivers for the Scottish people.

[Graham Stuart (Beverley and Holderness) (Con)]

Can the Minister confirm that of the £26.4 billion tax rise through the increase in employer NICs, £19 billion will come directly out of people’s pay packets? Secondly, can he confirm that the net amount that the Treasury will actually get from that £26.4 billion after behavioural change and public sector compensation is just £11 billion?

[Darren Jones]

The right hon. Gentleman seems to have forgotten the cost that working people paid as a consequence of his party’s actions in government, with inflation on house prices racing to 11%, the cost of living crisis, higher energy bills and a loss of grip on public spending. People suffered a direct cost in their disposable income because of the actions of the Conservative party. This Labour Government have wiped the slate clean, and we are getting a grip on public spending, fixing the foundations and delivering for working people.

[Bradley Thomas (Bromsgrove) (Con)]

Will the Chancellor admit, as she has already done in the media, that wages will be lower because of her jobs tax?

[Darren Jones]

This Government’s commitment to economic growth will improve living standards for people right across the country. I refer the hon. Member to my previous answer and suggest that his party might want to apologise before trying to lecture this Government on the change that we are delivering.

[Darren Paffey (Southampton Itchen) (Lab)]

10. What steps she is taking to increase long-term investment in the economy.

--- Later in debate ---

[Jacob Collier (Burton and Uttoxeter) (Lab)]

T4. The A50/A500 and Branston bridge in my constituency are just two examples of infrastructure projects that need investment. What investment is the Department making to improve our roads and infrastructure?

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

My hon. Friend has campaigned extensively on this issue in his constituency. I understand that National Highways continues to develop proposals to improve the A50/A500 corridor through Uttoxeter. That is part of the pipeline of projects for future road investment strategies. He will know that in the Budget, we invested £1.6 billion to maintain and renew the nation’s local roads. That includes a £500 million increase in 2025-26 alone.

--- Later in debate ---

[Stephen Gethins (Arbroath and Broughty Ferry) (SNP)]

On economic black holes, the Labour Mayor of London thinks that Brexit punched a £40 billion black hole in the public finances. A very simple question for the Chancellor: has leaving the EU been a net positive or a net negative for the public finances?

[Darren Jones]

The Government have no overall estimate of the impact of the UK’s exit from the EU, but the OBR has projected a 4% drop in productivity in the long term. That is why we are starting negotiations with the EU to improve trade in our mutual interest.

[Graeme Downie (Dunfermline and Dollar) (Lab)]

T8. The previous Government left a mess of £22 billion for us to clean up following their short-term decisions and absolute lack of investment in services. This Government are taking a different approach, with long-term investment for our economic success. Will the Chancellor work with me to find the £3 million of long-term investment in the port of Rosyth that is required to bring back a ferry between Rosyth and Dunkirk? That would bring 51,000 passengers a year to Scotland and take 8.1 million km of freight traffic off the road, and it has the support of large local employers such as Mowi and Amazon.

[Darren Jones]

The Government recognise that ports are an important route to growth, which is why the national wealth fund will deploy at least £5.8 billion into five priority manifesto sectors, including ports. I would be happy to meet my hon. Friend to discuss that specific constituency issue in due course.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

WealthTek was placed into administration by the Financial Conduct Authority after losing £80 million of its clients’ money. FCA-appointed administrators are now deducting fees from victims’ compensation. My constituents Dominic Knights and his wife have between them lost thousands of pounds. What is the Treasury doing to safeguard the £85,000 compensation limit?

--- Later in debate ---

[Mr Speaker]

Minister, you’re running out of road.

[Darren Jones]

The Government will always support local authorities to deliver good value for money road enhancements to support economic growth and improved connectivity. The Norwich western link road is currently the subject of a live planning application, so I am afraid that I cannot comment further on the specifics.

[Rupert Lowe (Great Yarmouth) (Reform)]

I cannot help but think that this morning has made for rather depressing listening. We hear this repetition about a £22 billion black hole, but we are dealing with very serious matters such as people’s employment. Ultimately I hear the Chancellor talking about a central planning agenda, but it is public services that are the problem; they are wasting money, and we must seriously consider that. Will the Chancellor accept, if the economy turns down next year, which it surely will, that she has made a mess of it?

--- Later in debate ---

[Jim Allister (North Antrim) (TUV)]

When the Windsor framework was introduced, it was accompanied by the boast that access to the EU single market would result in a huge increase in investment in Northern Ireland. Is the Chancellor aware that Invest NI has reported that there has been no upturn, and is that not because of the barrier presented by the Irish sea border to the bringing of raw materials into Northern Ireland from Great Britain?

[Darren Jones]

The Government are committed to increasing the flow of investment to every nation and region of the United Kingdom, and we will continue to work with the Northern Ireland Executive to deliver that for the people of Northern Ireland.

Financial Assistance to Ukraine Bill

Darren Jones Excerpts

2nd reading
Wednesday 20th November 2024 Commons Chamber

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

I beg to move, That the Bill be now read a Second time.

I am proud of the unity that this House has shown in its support for Ukraine. This support has been steadfast since the onset of Russia’s illegal full-scale invasion in February 2022, regardless of the party in office, and it remains so today. We in this House recognise that while Ukraine is on the frontline, it is fighting for democracy and security across Europe. I want to make it clear that this Government stand, and will continue to stand, in unwavering support of Ukraine with our G7 allies.

On 22 October, my right hon. Friends the Chancellor of the Exchequer and the Defence Secretary announced that the UK would contribute £2.26 billion to the G7 extraordinary revenue acceleration loans to Ukraine scheme, the ERA. This landmark agreement will provide Ukraine with a total of $50 billion in vital additional funding, allowing it to continue to fight back against Putin’s war machine. Crucially, these funds will be repaid not by Ukraine, but from the extraordinary profits made on sanctioned Russian sovereign assets held in the European Union.

This Bill simply provides the spending authority for the UK to contribute to the ERA scheme, enabling us to begin disbursing funds to Ukraine. It is another important demonstration of the UK’s commitment to backing Ukraine for as long as it takes. It will unlock our £2.26 billion contribution to the ERA, funding which is additional to all previous commitments.

The UK has long been at the forefront of support for Ukraine. Our total military, humanitarian and economic support pledged since February 2022 already stands at £12.8 billion. We have often been the first mover on military support in particular, which ranges from training over 47,000 Ukrainian military personnel to providing a squadron of Challenger 2 main battle tanks. Earlier this year, the Government announced that the UK would continue to provide guaranteed military support of £3 billion per year to Ukraine for as long as it takes.

But while we can be proud of what the UK has already done for Ukraine, Members of the House need no reminding that Ukraine’s military, budgetary and humanitarian needs continue to be grave. Existing support is not enough; we must go further still to ensure that Ukraine wins this war. We must do this alongside our allies. The ERA is an ambitious scheme, and represents a united G7 pledge, with contributions from the United States, the European Union, Canada and Japan. Our £2.26 billion constitutes a fair and proportionate contribution to the scheme based on the UK’s GDP share in the G7 and EU.

Each lender will now negotiate a bilateral loan with Ukraine to govern how the funds are distributed and spent within a collective framework agreed by the G7. Repayments from the profits on immobilised Russian assets will be redistributed to the G7 lenders from the EU in proportion to our contributions. The EU regulation providing for this is already in place.

The Government have assessed that Ukraine’s most pressing need is for military support. The UK’s contribution to the ERA is therefore earmarked for military procurement to bolster Ukraine’s capacity for self-defence. This support will help ensure that Ukraine can continue to withstand Russian aggression and fight back against it. The UK is committed to ensuring value for money for both the UK and Ukraine, including through exploring the use of existing UK-enabled procurement channels for Ukraine to purchase the equipment that it needs. Our funding will be delivered in three tranches over three financial years, with the first tranche intended to be delivered in early 2025.

The Bill has one simple purpose: to unlock the UK’s contribution to the ERA. It consists of one substantive clause, which seeks the authority of Parliament to spend the money on the UK’s contribution and make good on our commitment. The Bill is not intended to be used for any purpose beyond that, and it will not be used to spend above the £2.26 billion figure that has been announced. Our figure has been agreed with the G7 and caps have been built into the scheme at a G7 level through the EU repayment mechanism.

Although slim, this Bill is essential. Royal Assent is required before we can begin disbursing funds to Ukraine, and before we can receive any repayments from the profits being held in the European Union. It is therefore vital that we pass this Bill as quickly as possible, so we can begin disbursement this winter, as Ukraine’s needs are immediate. I hope that I can count on the support of the House to achieve this, and help us get this vital money into Ukraine’s hands as quickly as possible.

The $50 billion collectively delivered through the ERA lays down a marker to show that we will continue to stand with Ukraine for as long as it takes. Collectively, we will pursue every available means of making Russia pay for the damage it has done in Ukraine. I am proud to present the UK’s contribution to the scheme today, which will make an immediate tangible difference to Ukraine’s capacity to defend itself. This Bill facilitates that contribution, and I commend it to the House.

[Madam Deputy Speaker]

I call the shadow Minister.

Draft Local Loans (Increase of Limit) Order 2024

Darren Jones Excerpts

Wednesday 13th November 2024 General Committees

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

I beg to move,

That the Committee has considered the draft Local Loans (Increase of Limit) Order 2024.

It is a pleasure to serve under your chairmanship, Ms Vaz, and to bring forward the order for parliamentary approval. The order increases the aggregate limit on local loans through His Majesty’s Treasury’s Public Works Loan Board lending facility from the current level of £115 billion to £135 billion. As specified by the powers within the Public Works Loans Act 1875 and the National Loans Act 1968, those are loans to any local authority for any purpose for which the authority has the power to borrow. In accordance with the powers in the 1968 Act, His Majesty’s Treasury can increase the aggregate limit on outstanding loan debts through statutory instruments up to the maximum limit specified in the Act, which is currently set at £135 billion.

As of March 2024, the Public Works Loan Board’s stock of loans stood at £103.7 billion and is expected to increase further, broadly in line with forecasts for overall local authority borrowing. The Government are therefore bringing forward this statutory instrument to ensure that local authorities can continue to access lending from the Public Works Loan Board to support their capital investment plans and treasury management.

The Government recognise the valuable contribution that local authorities make to the social and economic infrastructure of this country and are committed to supporting local investment through the Public Works Loan Board. His Majesty’s Treasury will continue to work with the Ministry of Housing, Communities and Local Government to ensure that local authorities are borrowing in a prudent manner and not for speculative, for-profit investment, which is now prohibited through our Public Works Loan Board lending guidance. I stand ready to answer any questions from the Committee and look forward to receiving its support for this legislation.

--- Later in debate ---

[Darren Jones]

I am grateful to hon. Members for sharing their feedback on this statutory instrument and asking a number of questions. The rate of lending is broadly in line with market expectations; post pandemic, it reflects the fact that activity is now getting back to normal after the pandemic years, when fewer things could be done.

We are committed to the guidance on speculative investment and commercial lending, and that will remain in place. As a Treasury, we have general oversight of the Public Works Loan Board and the guidance and monitoring in respect of which the loans are taken out across the country. It is for local authorities, of course, in their own institutional capacity—through their own committees and audit functions—to look at the reasons for borrowing locally and see that that capital is being used well on the ground, but the Treasury has powers to intervene on particular loans and councils if concerns are raised.

Housing is, of course, a really important part of lending from the Public Works Loan Board, which is why we have extended the housing revenue account discount rate on lending for a further year, into financial year 2025-26.

Question put and agreed to.

4.37 pm

Committee rose.

Tax Credit, Child Benefit and Guardian's Allowance Rates

Darren Jones Excerpts

Wednesday 30th October 2024 Written Statements

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

The Tax Credits Act 2002 and the Social Security Administration Act 1992 place a statutory duty on His Majesty’s Treasury to review the rates of tax credits and child benefit each year in line with the general level of prices. There is a further statutory duty on the Treasury to increase guardian’s allowance in line with price growth. I have now concluded the review for the tax year 2025-26.

I have decided to increase child benefit rates in line with the consumer prices index for the year to September 2024, which is 1.7%. Guardian’s allowance will also increase by the same rate. This means that, from 7 April 2025:

The child benefit rate for the eldest child will increase from £25.60 to £26.05 per week;

The child benefit rate for other children will increase from £16.95 to £17.25 per week;

Guardian’s allowance will increase from £21.75 to £22.10 per week.

I have determined that there will be no need for changes to tax credits rates in the tax year 2025-26, as there will be no tax credits awards after 5 April 2025.

The new rates will apply across the United Kingdom. I will deposit the full list of these rates in the House Libraries shortly.

[HCWS174]

Oral Answers to Questions

Darren Jones Excerpts

Tuesday 29th October 2024 Commons Chamber

[Mr Tom Morrison (Cheadle) (LD)]

4. What fiscal steps she is taking to encourage investment in the northern powerhouse.

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

Investment—[Interruption.] I am delighted to be welcomed by those on the Opposition Benches, and am pleased to see them in their place as well. Investment is a key part of the Government’s growth mission, alongside stability and reform. By ensuring adherence to robust fiscal rules and respect for our economic institutions, we are building the confidence needed to deliver greater investment across the country.

[Mr Morrison]

I thank the Minister for that response. A key part of the northern powerhouse agenda was investment in our rail infrastructure, and residents in my constituency were excited that Cheadle train station finally got planning approval recently. However, recent talk of cuts to infrastructure investment has caused concern. Can the Minister assure us that Cheadle train station is safe and will go ahead?

[Darren Jones]

The Government are fully committed to ensuring that investment in all parts of the UK, including the north of England, creates growth and impact for working people. The north of England is home to crucial levers to achieve this, as evidenced by our recent announcements on Teesside and Merseyside, which will create thousands of jobs and secure long-term futures. The detail of individual projects will be confirmed in due course.

[Bill Esterson (Sefton Central) (Lab)]

The creation of the national wealth fund, and the record success of the £63 billion of investment announced at the investment summit, comes on top of investments that Ministers have just announced in carbon capture in the north-west. Those are examples of the success—

--- Later in debate ---

[Bill Esterson]

The successful investments announced are a great example of this Government delivering jobs and economic growth, in the north of England and across the country. Does my right hon. Friend agree that this is in stark contrast to the abysmal record of the Conservative party in its 14 years in government?

[Darren Jones]

My hon. Friend rightly points out that this country faces a choice: investment or decline. As we saw at the general election, it chose investment, and that is what the Government will deliver.

[Kevin Bonavia (Stevenage) (Lab)]

6. What steps she is taking to increase economic productivity.

--- Later in debate ---

[Anna Dixon (Shipley) (Lab)]

17. What steps she is taking to help ensure value for money in public spending.

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

The Government have launched a multi-year spending review to set out our long-term plans for public spending and to ensure that every pound of taxpayers’ money is spent effectively. The first phase of the spending review is due to report this week, alongside the Budget, and phase 2 will begin shortly after the Budget.

[Anna Dixon]

I thank my right hon. Friend for his response. Recent National Audit Office reports have revealed the extent of the Tories’ economic mismanagement over the past 14 years. That has put capital projects such as Bingley pool in my constituency at risk. As a member of the Public Accounts Committee, I will ensure that taxpayers’ money delivers value. Will the Minister assure me and my constituents that tomorrow’s Budget will be based on an honest assessment of the public finances, so that this Government can deliver on their promises?

[Darren Jones]

I thank my hon. Friend for her question. I can confirm that the Budget tomorrow will be an honest assessment of the mess left to this country by the Conservative party, but crucially our plans for clearing up the mess and then delivering the change we promised.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Given that, I assume, everyone in the Chamber has eaten at some point today, do we think that backing Britain’s farmers is a good use of public money, and given that there is a £2.4 billion budget for British farming, which the last Government underspent foolishly, recklessly and carelessly, will the Chief Secretary guarantee that at the very least the farming budget will be protected so that our farmers can carry on looking after our nature and feeding us?

[Darren Jones]

Actually, I did not have breakfast today, so I am looking forward to lunch, and I therefore welcome that short question from the hon. Member. This Government are committed to farming and rural affairs, and to the production of the food that they provide for us, which is important for security of supply as well as, in due course, for my lunch.

[Rebecca Long Bailey (Salford) (Ind)]

T1. If she will make a statement on her departmental responsibilities.

--- Later in debate ---

[Damien Egan (Bristol North East) (Lab)]

T3. I would like to ask a question that comes out of local government. One of the frustrations that I found after 14 years in local government was that short-term cuts can often end up costing more in the long run—an example that always comes to mind is youth services. What does the Chancellor make of the Local Government Association’s call for spending on prevention to be routinely considered in both Treasury and departmental spending decisions, and for better tracking of long-term outcomes?

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

My hon. Friend is right to point out the opportunities for improvement. As the Chancellor set out in her July statement, prevention will be at the heart of this Government’s new approach to public service reform. That will be set out in the spending review in the coming months.

[Helen Maguire (Epsom and Ewell) (LD)]

T5. Many households are facing homelessness due to increasing household costs. What support can the Chancellor provide to them?

[Mr Paul Foster (South Ribble) (Lab)]

T7. Prior to being elected to this place, I was the leader of South Ribble borough council in Lancashire, where we continually struggled to set meaningful budgets due to the fragmented, short-term policies of the previous Tory Government. Will Ministers please assure me that the proposals being considered in tomorrow’s Budget will see an end to the fragmented annual public sector funding allocations and a reintroduction of meaningful, forward-thinking, multi-year settlements?

[Darren Jones]

The Government recognise the significant pressures that all councils are facing. We are looking at consolidating funding streams for local authorities into the local government finance settlement, and we will work towards implementing our commitment to a multi-year financial settlement.

[Ben Maguire (North Cornwall) (LD)]

T6. During my SEND summit in Bodmin on Saturday, teachers and parents revealed the shocking extent of our broken special educational needs system in North Cornwall and across the county. Thousands are struggling to get the support to which they are entitled. What are Treasury Ministers doing to ensure that local councils and schools are properly resourced to deliver an effective SEND system, so that families finally get the support they need and deserve?

--- Later in debate ---

[Danny Beales (Uxbridge and South Ruislip) (Lab)]

A hundred councils in England have come together to call for five key changes to unlock much-needed investment in new council homes. They will welcome the news of £500 million of additional grant and changes to the right-to-buy rules, but one issue they also raise is housing revenue account debt and finance. Will Treasury Ministers look specifically at debt allocations and how HRA debt is accounted for, to unlock much-needed investment in council homes?

[Darren Jones]

Councils’ housing revenue accounts are a significant part of local authority finances, and it is therefore not right to exclude them from our fiscal rules, but I reassure my hon. Friend that this Government’s commitment to deliver 1.5 million new homes will be delivered.

[Mr Gregory Campbell (East Londonderry) (DUP)]

However “working people” is defined, does the Chancellor not accept that people on low incomes and part-time employees who earn up to £300 a week should be exempt from paying income tax?

Fiscal Rules

Darren Jones 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.

[Gareth Davies (Grantham and Bourne) (Con)]

I wondered whether the Chancellor’s announcement of changes to the fiscal rules would survive the weekend, given the five fictitious freeports that came and went. It was a cautionary tale about the uncertainty and confusion that can be created when policy is not announced in the proper way in Parliament. I welcome the delayed statement by the Chief Secretary to the Treasury, and I am grateful for advance sight of it.

Making a £50-billion announcement at an overseas conference, and not at a fiscal event in this House, has understandably and notably moved markets, creating further uncertainty for an already nervous business community. Although the Chancellor announced change last week, she did not provide any details about what that change would be—a common approach by Labour that is now coming back to bite them as the realities of government set in. The Prime Minister has admitted as much in recent days, speaking of the need to “embrace…fiscal reality” by adopting measures that were never listed in Labour’s manifesto. In fact, the Chancellor explicitly said before the election that she would not change the fiscal rules because that would be “to fiddle the figures”. By going ahead with this latest U-turn and broken promise, she has compromised trust and credibility ahead of her first Budget.

That joins the long list of promises already broken by the Labour Government in such a short time: the promise to cut energy bills by £300—broken; the promise that their manifesto was fully costed—broken; the promise to be on the side of pensioners—so obviously broken; and we know that their promise not to raise taxes on working people is about to be broken, too. Try as they might to sell a different story, just like Government bonds right now, people ain’t buying it.

We are left in the ludicrous position in which the UK—the sixth-largest economy in the world—does not have an operative definition of public debt. Quite understandably, markets have responded to this latest uncertainty by applying a premium to UK sovereign debt at a time when they have been discounting the sovereign debt of our international peers. The markets are also perplexed as to why these changes were announced without an accompanying OBR report. In the words of the Chancellor,

“Never have a Government borrowed so much and explained so little.”—[Official Report, 23 September 2022; Vol. 719, c. 941.]

The Government may think that this will all go unnoticed, and that most people do not know enough about the fiscal rules to know what is really going on here, but let me be very clear: the people will know about this. They will know it and feel it when interest rates stay higher for longer. Treasury advice to us was consistently clear: interest rates would stay higher if the rules were changed. What advice did Treasury officials give the Chief Secretary to the Treasury about the impact on interest rates? Does he agree with Paul Johnson of the Institute for Fiscal Studies, who said that the change will mean

“more debt, more debt interest”,

and that it is “no free lunch”?

Of course, we all want to see investment in our public services and infrastructure. We oversaw the largest ever increase in funding for the NHS, we increased defence spending to the highest levels since the cold war, and we attracted the second-greatest foreign direct investment in the world, but we sought that investment with a view to boosting productivity by investing in technology—that approach has now been scrapped by Labour—and spreading opportunity around this country through freeports and investment zones. This Labour Government are quick to spend but unwilling to explain.

Finally, on behalf of the British people, and the markets, which are watching this statement so very nervously, I ask the Chief Secretary to the Treasury: what definition of public debt is the UK offering to lenders today, and how much do the Government plan to borrow under an expanded definition? He will say that we have to wait for the Budget, but the Chancellor did not wait last week, so why should we?

[Darren Jones]

I am very fond of the hon. Gentleman, but he has some brass neck to stand up in this House and tell this Government how to behave after his party’s maladministration over the last 14 years. May I politely point out that he might be getting slightly ahead of himself? The Chancellor has not set out the detail of the fiscal rules in advance of the Budget; she will do it in this House, in the Budget on Wednesday, and I encourage him to wait for that information. He painted a picture of the country performing so well under his party’s leadership, but he may want to reflect on why he lost the last election so badly.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As Chair of the Treasury Committee, which has responsibility for scrutinising the Budget, I find the timing of this statement a bit frustrating, as we will have questions that presumably cannot be answered until Wednesday. Will the Chief Secretary explain how the guardrails will work? There is the national infrastructure and service transformation authority, the office for value for money and the National Audit Office. What role will each play in reassuring the markets, so that an autumn “sniffle”—that is PSNFL, or public sector net financial liabilities—does not become a winter cold?

[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?

[Darren Jones]

I thank the hon. Lady for her question and share her continued anger about the behaviour of the last Conservative Government, because as she and the whole House will know, our constituents are still paying the price of that Government’s chaos and failure. That is why the first Act of this Labour Government— the first Act that I took through this House—was the Budget Responsibility Act 2024, which locked in the power of the Office for Budget Responsibility to hold this Government and future Governments to account. If we ever again ended up in a position where Conservative Ministers decided to ignore independent checks and balances, the OBR would be able to report its view to this House independently, so that Parliament could hold that future Government to account. I end by pointing to our first fiscal rule, which is that we will pay for day-to-day spending with receipts. Again, that means that we will not end up in the situation that we were in under the last Government, when month after month, borrowing just paid the bills for which they did not put money aside.

[Dr Jeevun Sandher (Loughborough) (Lab)]

Fiscal rules are a tool for responsibility, and we should all welcome rules that help us to act responsibly and invest responsibly. The rules and the accounting definitions that underlie them are not matters of faith, preordained by the Almighty and passed to us on stone tablets; they are there to help us make responsible decisions. Does my right hon. Friend agree with me, and with the former chief economist of the Bank of England, the OECD, the International Monetary Fund and George Osborne’s former Treasury Minister, that we should welcome changes to the fiscal rules that promote investment?

[Darren Jones]

I will avoid the suggestion that we might go back to putting things on stone tablets if I may, but I will accept the invitation in my hon. Friend’s question, and say that after 14 years, we have seen the failure of the approach taken by the last Government. I noted in my statement that public sector investment would now have been at its lowest in 10 years, under the plans of the now Opposition. That has been a failure for the economy and for the British people, and this Government will rectify it.

[Neil O'Brien (Harborough, Oadby and Wigston) (Con)]

Before the election, the Chancellor said that she would not change the measure of debt in order to borrow more, but now she is talking about doing exactly that. Before the election, she said that she would not increase national insurance, but now she is talking about doing exactly that. Before the election, Labour steered people away from the idea that the Government would cut the winter fuel payment, but they have already done exactly that. They said, before the election, that they would not increase taxes on working people, but now they are planning to do exactly that. Does the Minister understand why so many of my constituents feel that they were misled?

[Darren Jones]

The hon. Member’s constituents will note at the Budget on Wednesday that this party honours its promises—the promises, set out in its manifesto, to protect working people. He might want to reflect on the way that his party failed his constituents at the last election before trying to lecture this Government.

[Mr Clive Betts (Sheffield South East) (Lab)]

I welcome measures that allow for more long-term investment to improve our economic performance and public services, but I would like my right hon. Friend to address two issues. Is housing one of the areas where more investment might be allowed, to help us achieve our target of 1.5 million more homes in this Parliament? Secondly, will he ensure that where there is public investment, we try to make that investment produce orders for UK companies, rather than many of the orders going abroad? That is the way to create real growth in our economy.

[Darren Jones]

We made a commitment to delivering 1.5 million homes, and we will do just that. On the second part of the question, the whole purpose of the national infrastructure strategy and the overlapping multi-year spending reviews is to give investors and suppliers confidence that when the Government say something will be delivered, it will, so they can invest and plan on that basis, to help improve the British economy. Frankly, they are starting from a position of complete dismay because of the failed promises of the last Government; we will rectify that.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

If we could stick with the here and now, what the Chancellor announced caused the bond markets to move almost immediately by almost 0.5%. That means that interest rates will stay higher for longer. Will the right hon. Gentleman confirm that that will cause hardship to today’s mortgage payers and tomorrow’s generation of taxpayers, because they will have to repay this extra debt?

[Darren Jones]

What I can confirm is that what affected interest rates and mortgage payments so severely was the chaotic behaviour of the hon. Gentleman’s party in government before the last election. That is why we have had to legislate to make sure that if they ever returned to Government, they could not behave in similar ways. We are taking a responsible approach to public spending, as I have set out today, and we will never return to the activities of his party in government.

[Noah Law (St Austell and Newquay) (Lab)]

There appears to be some confusion among those on the Opposition Benches when talking about their track record and about the records they have broken on the relationship between the nominal and the real. On the point about being realistic, does the Minister agree that in our reform of the fiscal rules, we must, unlike the last Government, provide that realism and stability and ensure that wild unfunded commitments, such as the abolition of national insurance, do not occur?

[Darren Jones]

My hon. Friend points rightly to the £22 billion black hole that we are having to clear up after the Tory party. In the Budget on Wednesday, the Chancellor will set out how we are resetting public finances and fixing the foundations, so that we can get on and deliver our manifesto.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

In outline terms, we welcome what the Government are seeking to do. It is important to raise the ability to generate capital infrastructure investment. Scotland invests 42% more than the UK average, and the UK average is 50% lower than the OECD average. That issue is a priority, but the Government’s move will fall on stony ground if on Wednesday the Chancellor continues with her priority to not lift people out of poverty and to go by exception after small businesses that take an income from that business by raising the cost of employment. With the four signal capital investment projects all being in England, I am moved to ask: what’s in this for Scotland?

[Darren Jones]

I am delighted to hear the hon. Gentleman tell the House that he welcomes the positive change that this Labour Government in Westminster are delivering to the Scottish people. I agree with him. On early announcements, I can point to GB Energy and the huge commitments we have made on energy infrastructure, which we know will be important to the Scottish people. We absolutely recognise that the Scottish economy has a huge contribution to make to the whole economy of Great Britain and Northern Ireland, and we look forward to working with the Scottish people to make that a reality.

[Matt Rodda (Reading Central) (Lab)]

I commend my right hon. Friend on his work on stability and investment. Would he like to say a little more about the challenging inheritance he has received from the previous Government, and just how dreadful that has actually been?

[Darren Jones]

I welcome my hon. Friend’s question. [Interruption.] I know that Opposition Members find it uncomfortable, but it is a matter of fact that we will return to time and time again, because the sheer truth of it is that the last Government made promise after promise to the British people, knowing that they did not have the money to pay the bills. It is shameful, and the sooner they come to the House and apologise for their behaviour, the better it might be for them in the long run.

[Nick Timothy (West Suffolk) (Con)]

If the Minister is so confident in his fiscal rules, will he take this opportunity to commit to the House that the 10-year gilt yield in this Parliament will not exceed the maximum it was over the past 10 years?

[Darren Jones]

The hon. Gentleman is trying to be clever, but he is inviting me to speculate on the Budget. He will have to wait until Wednesday.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Does the Minister agree that sustainable growth cannot come from short-termism and that the falls in public sector investment planned under the last Government would have exacerbated, rather than ameliorated, the economic chaos they got us into?

[Darren Jones]

My hon. Friend is right. We have a choice at this Budget either to continue with the failed policies of the previous Government or to change them. The British people will not be surprised that our decision is to change them, reflecting on the fact that the cut in investment under the previous Government has led to poor productivity in public services and a lack of growth in the economy. That serves nobody.

[Jim Allister (North Antrim) (TUV)]

This statement speaks of giving the private sector the confidence to invest. Can the Minister explain to the small businesses in my constituency how it will give them confidence if the first act of this Government is to soak them with further national insurance increases? Will that not dent confidence, rather than increase it, along with sustained high interest rates? When he speaks about multi-year spending reviews, does that mean that he now expects the devolved Governments to produce multi-year budgets, which is something that the Stormont Government have been reluctant to do?

[Darren Jones]

I obviously cannot speculate on the Budget, so I invite the hon. Gentleman to come back to the House on Wednesday for the answer to the first part of his question. On the second part, he might know that I lead for the Government on our relationship with the devolved Governments. I have met Finance Ministers from Scotland, Wales and Northern Ireland, most recently in Belfast, where we had a productive meeting. They were all very clear that the reset in the relationship between them and the Westminster Government was positive, given the failed relationships of the past. We made some progress in that meeting, and we will make further such progress in the Budget.

[Jon Trickett (Normanton and Hemsworth) (Lab)]

Is it not clear that the ruling economic orthodoxy has let this country down over many years? How else can we explain the fact that in 24 of the last 30 years, the UK spent less on investment than any other G7 country? In particular, in post-industrial areas like mine, the investment simply did not come. I encourage the Minister to break with the prevailing orthodoxy and ensure that we achieve the appropriate investment levels and direct that investment particularly to the north, the midlands and elsewhere.

--- Later in debate ---

[Darren Jones]

My hon. Friend has invited me to answer the question, “Why wasn’t there investment over the last decade or so?” Quite frankly, it is because of the choices of the Conservative party. This Labour party in government is taking a different set of decisions and we will set out the detail on Wednesday.

[Clive Jones (Wokingham) (LD)]

First, I declare my interest as a governor of the Royal Berkshire hospital, and I have a family member who is a shareholder in a health company. As Lord Darzi said, the Conservatives have failed to provide proper capital funding for our NHS. I thank the Secretary of State for Health and Social Care and the Minister for Secondary Care for their engagement with me and other MPs on the review of the new hospital programme. Will the Chief Secretary to the Treasury guarantee that the changes to the fiscal rules will mean that my constituents can see new and immediate funding for the Royal Berkshire hospital?

[Darren Jones]

The hon. Member asks me so politely, but he will know that I cannot guarantee anything in advance of the Budget. However, it sounds as though he has already experienced the positive way in which this Government are approaching how we will repair the NHS and get it back on its feet, both by getting junior doctors off the strike line and back into wards and by investing in hospitals for the future. I know that he will look forward to the announcements in the Budget on Wednesday.

[Tom Hayes (Bournemouth East) (Lab)]

Before I became an MP, I led services for very vulnerable people and, unfortunately, came into close contact with gaslighting. As a new MP, I am afraid that my contact with gaslighting is not diminishing, and I slightly despair at what I am seeing from Opposition Members. While I was out canvassing over the weekend and talking with residents on Ken Road in Southbourne, I met a constituent who said, “We knew it wasn’t going to be pretty and you were going to inherit a mess, and we knew that it would be a long haul to get things right. But we were sick and tired of politicians who weren’t taking the big decisions and investing in the long term.” Does my right hon. Friend agree that we should listen to more of our constituents, like the person I just mentioned, who happened to vote Labour on 4 July for the first time in her life?

[Darren Jones]

I thank my hon. Friend, and I thank his constituent for putting her trust in this Labour Government. As the Prime Minister said today, this Government will “run towards” the problems, as opposed to running away from them, as the Conservative party did. That will mean difficult decisions at the Budget on Wednesday to deal with the mess that we inherited, to reset public finances and to be able to start to deliver our manifesto. But this Government will take those decisions and we will announce the detail on Wednesday.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his statement. I want to ask what the legacy of this will be. Will he further outline how the change to the fiscal rules to allow for more efficient borrowing will not simply pass more debt on to, for example, my six lovely grandchildren and everybody else’s grandchildren, who already face a scaled-back welfare system and increased costs of living before they even earn their first pay cheque? How will the Minister’s so-called guardrails not simply be barriers to future generations owning their own homes and making ends meet? I am thinking of the ones who come after.

[Darren Jones]

I thank the hon. Member for his question. He and his constituents will know, as much as mine do, that the problem for this country before the election was that the last Government had to borrow each month to pay for bills that they did not have the money to pay for, and that they made a whole list of promises across the country that they knew they could not pay for. That is why we have the £22 billion black hole, and why our first fiscal rule is that day-to-day spending will be paid for from tax receipts by the Exchequer. We will put the public budget back into surplus so that we are not in a doom loop of borrowing and borrowing just to keep ahead of ourselves each month. Where the Government do borrow, we will do so for productive investment to modernise our public services and to get growth back into our economy.

[Zarah Sultana (Coventry South) (Ind)]

New research published this month by the Institute for Fiscal Studies shows that reversing the two-child benefit cap would lift 540,000 children above the absolute poverty line. There are no fiscal rules, only fiscal choices. While taskforces meet, more and more children in Coventry South and across the country are consigned to avoidable poverty. Will the Government acknowledge that, prioritise ending child poverty and finally scrap the pernicious two-child benefit cap?

[Darren Jones]

I share my hon. Friend’s commitment to wanting to tackle child poverty in this country—this party had a proud record on that when we were in government previously. That is why we have set up the child poverty taskforce, which reported last week, and our ambition is to reduce child poverty over the course of this Parliament. We will set out further measures in the Budget on Wednesday on how we intend to deliver that.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

I thank the Minister for his statement. Residents and businesses in my constituency absolutely share our ambition to get the country back on track, and acknowledge that the mission-led focus of the Government and the fiscal rules are at the core of that. They contrast that with 14 years of drift under the Conservatives, punctuated only by 49 days of utter chaos. However, residents and businesses in my area want to be reassured that they can be confident about our level of ambition, so will the Minister update us on how investors are responding to our focus and the maturity that we bring to the debate around the economy?

[Darren Jones]

I point my hon. Friend to our very successful international investment summit only a couple of weeks ago, when it was very clear from investors that bringing stability back to our politics and our economy has been long wanted. That is why we were able to commit to £63 billion of investment in the country at the summit, followed by another £10 billion of investment announced only a few days after. We intend to raise much more to invest in this country and to bring growth back to the economy.

[Emily Darlington (Milton Keynes Central) (Lab)]

Constituents in Milton Keynes voted for change because they see the consequences of the Conservative economic policy. They are suffering from the cost of living crisis and have seen this in their crumbling schools, the lack of GP appointments and the use of food banks just to make ends meet. Will the Chief Secretary reassure me and my constituents that we will end the Conservative use of payday loans just to keep the lights on and instead invest in new schools, new hospitals and new infrastructure, alongside making work pay, so that my constituents see their lives improve?

[Darren Jones]

With my hon. Friend’s reference to payday loans, she points to the behaviour of the previous Government. As I have told the House this afternoon, this Government, with their first fiscal rule, will take us to a place where we are not borrowing to pay the bills each month, as had happened for years under the Conservatives. Anyone managing their family finances at home knows that that is the right thing to do, and they will welcome the fact that this Government are bringing that sense of discipline back to the national economy, too.

[Richard Baker (Glenrothes and Mid Fife) (Lab)]

Will my right hon. Friend confirm that as part of their fiscal strategy and within the fiscal rules, the Government will utilise the national wealth fund to lever in private investment, along with public investment from the taxpayer, for key areas of growth in our economy, including, for example, renewables infrastructure, which is of such importance in Scotland?

[Darren Jones]

My hon. Friend knows that the test of a good Government is whether they can secure private sector investment to come alongside them—something that declined under the last Government. That is why the national wealth fund, which the Chancellor has announced, will secure billions of pounds of private sector investment, alongside public sector investment, in the industries of the future.

[Peter Swallow (Bracknell) (Lab)]

Does the Minister agree that the previous Government’s failure to invest not only damaged economic growth, but led to damage to our public services, with a broken NHS, special educational needs in crisis and local government on the brink?

[Darren Jones]

My hon. Friend will know, from speaking to his constituents during his campaign to be elected and since, that people’s experience of public services across the country shows the fact of the matter: after 14 years of failure from the Conservatives, our public services are on their knees. That is why they need a Government who will bring stability back to our economy, invest in public services and improve outcomes for people who rely on them and work in them.

[Mr Luke Charters (York Outer) (Lab)]

Following the disastrous mini-Budget, the Bank of England was forced to undertake emergency liquidity operations to reduce volatility in markets. Does my right hon. Friend agree that the investment summit’s record £63 billion shows that this Government are creating stable conditions for long-term investment, after years of political chaos from the Conservative party?

[Darren Jones]

I thank my hon. Friend for his excellent question, and I agree that £63 billion invested in this country was a sign of confidence, because investors around the world know that Britain is back after years of chaos.

[Torsten Bell (Swansea West) (Lab)]

It is good to hear about changes to address the big problem with our macroeconomic framework—the bias against new investment spending. May I draw the Chief Secretary’s attention to the other problem with the system, which acts as an incentive for Ministers not to manage well the assets that they already hold? I refer him to the 2017 sale of £3.5 billion-worth of student loans for just £1.7 billion. Will he reassure the House that the changes that he is making will ensure that we get value for money for the existing financial assets that we hold?

[Darren Jones]

I can give my hon. Friend that reassurance, and I point to the Office for Value for Money, which will work for us to ensure that we improve on behaviours of the past. I also point more broadly to the way that we manage our current assets. People have only to look at the state of our prisons, hospitals and schools, with reinforced autoclaved aerated concrete and roofs falling in, to know that after 14 years of cuts to investment, we cannot carry on like that. That is why people voted for change at the last election, and why we will deliver it.