Oral Answers to Questions

Desmond Swayne Excerpts

Tuesday 4th March 2025 Commons Chamber

[Sir Desmond Swayne (New Forest West) (Con)]

10. What assessment she has made of the implications for her policies of the most recent figures for Government borrowing.

[The Chancellor of the Exchequer (Rachel Reeves)]

In the autumn I took the decisions to put our public finances back on a firm footing. The most recent GDP data showed that the economy grew by 0.4% in the final month of last year. As I have said on many occasions, our fiscal rules are non-negotiable. The Conservative party sent mortgage rates and business borrowing costs spiralling; we have returned stability to the public finances to give families and businesses the stability that they need.

[Sir Desmond Swayne]

The servicing cost is now twice what we are spending on defence, which the Chancellor is right to be increasing. What is her ambition for finding savings in the welfare budget?

[Rachel Reeves]

I agree that we need to get a grip of the welfare budget, which got out of control under the previous Conservative Government. Frankly, I am not going to take lectures from the Conservative party, which crashed the economy. Let me remind the House what the right hon. Gentleman said about the disastrous mini-Budget:

“I share entirely the free-market ideology that underpins the Chancellor’s statement…The Chancellor was right to be radical.”

He added:

“I rejoice at the two fingers the Chancellor has raised to socialist dogma and envy.”

I think that the financial markets and the British public have united in their view on the previous Government.

Oral Answers to Questions

Desmond Swayne Excerpts

Tuesday 21st January 2025 Commons Chamber

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

9. What assessment she has made of the implications for her policies of recent trends in the level of interest on Government debt.

[Sir Desmond Swayne (New Forest West) (Con)]

17. What assessment she has made of the potential impact of the autumn Budget 2024 on levels of debt interest spending.

[Sir Ashley Fox (Bridgwater) (Con)]

19. What assessment she has made of the potential impact of the autumn Budget 2024 on levels of debt interest spending.

--- Later in debate ---

[Rachel Reeves]

We inherited a high amount of debt from the previous Government, and we have to pay interest costs on that debt. The forecast I set out in the Budget in October showed that debt falling to a sustainable level. As I said, the OBR forecast will be published on 26 March, and I will make a statement at that time.

[Sir Desmond Swayne]

The Chancellor’s increased demand for Government borrowing drives up its price and crowds out investment by productive private enterprises, doesn’t it? [Hon. Members: “No.”]

[Rachel Reeves]

Let me have a go. There have undoubtedly been moves in global financial markets this year, and the UK is not immune to those movements. The OBR has not yet started its forecast. It will update that in due course, and I will make a statement on 26 March.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Desmond Swayne Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[James Murray]

I will make a bit of progress; I have been generous in giving way.

The choice that we have taken is difficult; it is not one that we have taken lightly. As I have fully acknowledged in the Chamber, the impacts of this measure will be felt beyond businesses, as the Office for Budget Responsibility has acknowledged. Let me put the decision in context and say what we could have done instead. We could have reversed the previous Government’s cuts to employee national insurance. Those cuts were simply not honest because they were based on a forecast that the OBR said would have been “materially different” if the true extent of the last Government’s cover-up had been known. We made a commitment to not increase the taxes that working people pay, and we have delivered on that promise and made a different choice.

[Sir Desmond Swayne (New Forest West) (Con)]

rose—

[James Murray]

I will give way; I am being too generous I think.

[Sir Desmond Swayne]

The manifesto said that Labour would not increase rates of national insurance contributions. The Minister is perfectly entitled to use the argument, “We never realised that it was this bad, so we have had to change what we said we would do”, but to pretend that Labour has not resiled on its manifesto promise is pure sophistry.

[James Murray]

In fact, it is both things: it is true that we have kept to our manifesto pledge of protecting working people by not increasing income tax, the national insurance that working people pay or VAT; at the same time, the situation is far worse than we thought it would be when we won the general election, with the £22 billion black hole and the fact that the OBR said that its forecast would have been “materially different” in March, had it known the true extent of the previous Government’s cover-up. Those are facts that the OBR put out there and from which we cannot hide.

--- Later in debate ---

[Richard Fuller]

The hon. Gentleman talks about the Conservative record. Shall I talk to him about our record on national insurance? In 2010, when Labour was last in office, it broke the economy and left a note saying that there was no money left. We did have to increase national insurance rates—but not by as much as is proposed today. Thereafter, we increased national insurance thresholds with inflation; these proposals do not do that. We introduced the employment allowance, which admittedly the Government are increasing. We then introduced national insurance reliefs for young workers. We increased national insurance income thresholds in 2022, 2023 and 2024. That is the Conservative record. We do not believe in the jobs tax: we do not think it helps growth, and we do not think that it will increase taxation.

[Sir Desmond Swayne]

rose—

[Richard Fuller]

I will make a bit more progress and then give way to my right hon. Friend.

If the Minister does not like the Resolution Foundation’s judgment on this tax, he should just listen to the Institute for Fiscal Studies, which said:

“Simple economic theory suggests that the incidence of employer NICs and employee NICs should be the same, at least in the long run. It is likely that the long-run incidence of both employer and employee NICs is predominantly on employees”.

The measures in the Bill represent by far the largest part of the tax grab in the October Budget. The Treasury Red Book assesses that these measures will raise £23.7 billion in the next financial year, rising to £25.7 billion, but the Minister knows that behavioural changes means that they will actually raise substantially less; the IFS estimates about £16 billion.

I note that in the Red Book there were three opportunities for this jobs tax to be referred to as “Delivering on our Promises”. There is:

“Delivering on our Promises—New Policy to Close the Tax Gap”,

“Delivering on our Promises—Collecting Tax That is Due”

and even the catch-all:

“Delivering on our Promises—Other Manifesto Tax Commitments”,

but the increase in national insurance contributions cannot be included in any of those, because Labour politicians hid their intentions from the British voters at the election.

Finance Bill

Desmond Swayne Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[Mel Stride]

My right hon. Friend makes a perceptive point, to which I will come momentarily, but first let me deal with VAT on private schools. We have already heard about the displacement effect—the behavioural effect—and the thousands of pupils who will have their education disrupted and the impact on their families, but does not this measure tell us all we need to know about socialism? Those who stretch to try to make ends meet to send their children to those schools are to be denied. Their aspiration is to be sacrificed on the altar of envy. Is it not as simple as that?

My right hon. Friend the Member for Beverley and Holderness (Graham Stuart) is right: the Budget will not create strong foundations for the future; it will create a vulnerable and brittle economy. The Chancellor has very little headroom against her fiscal targets. Against the stability target, because the Government have talked down the economy and gilt rates have responded in turn, it is conceivable that almost all that headroom has already disappeared. I will prophesy that, without doubt, perhaps if the forecasts turn in the wrong direction, or the pressure on departmental spending over the next two years becomes difficult for a profligate Labour Government, or because of some external factor, as my right hon. Friend suggested—maybe tariffs from Donald Trump’s America, or if his deficit-funded tax cuts lead to higher bond yields and higher interest rates here—I almost guarantee the House that, however it occurs, this Government will come back for more in due course.

[Sir Desmond Swayne (New Forest West) (Con)]

May I prophesy too?

[Mel Stride]

I will let my right hon. and gallant Friend prophesy.

[Sir Desmond Swayne]

To be fair to the Prime Minister, he made it absolutely clear that things would have to get worse. The difficulty is—this is my prophecy, if you like—that there is no prospect of them getting better thereafter.

[Mel Stride]

That is an extremely astute observation. The prophecy is that things will get tougher further down the line. It will then be the case that this Government took decisions that left us in a weak and vulnerable position to withstand them. Why has this happened? The Labour party has very little business experience. Very few Members on the Government Front Bench have started up a business or grown a company in any significant manner.

Oral Answers to Questions

Desmond Swayne Excerpts

Tuesday 29th October 2024 Commons Chamber

[Rachel Reeves]

We will set out more details in the Budget tomorrow, including the consequentials that will go to the Scottish Government.

[Sir Desmond Swayne (New Forest West) (Con)]

Investment requires a measure of optimism, not the collapse in business confidence that the Chancellor has engineered. She would have done better to stress some of the positives that she inherited, wouldn’t she?

[Rachel Reeves]

It is good to have an explanation of how to do my job from one of the Conservative Members who crashed our economy. Some £63.5 billion of investment into the UK was announced at our international investment summit—investment in life sciences, investment in data centres and digital, investment in clean energy—because businesses have confidence that this Government are bringing stability back to our economy and working with businesses to seize the opportunities. I am really excited about doing that in all parts of our country and working with business to do so.

Public Spending: Inheritance

Desmond Swayne Excerpts

Monday 29th July 2024 Commons Chamber

[Rachel Reeves]

We have had to make difficult decisions today to cancel road and rail infrastructure projects. These are not decisions we wanted to make, but if the money is not there, we cannot go ahead with those projects. It is as simple as that. The money has to be there and the sums always have to add up, because I will not make the mistakes of the previous Government and Liz Truss, crashing the economy and sending interest rates and mortgage rates spiralling for our constituents. That is why I have had to take these actions today to get a grip on public spending and public finances. I make no apology for that, but I recognise the damage it does to so many constituents with projects that they had expected to see happening.

[Sir Desmond Swayne (New Forest West) (Con)]

When the Chancellor’s legislation enables illegal entrants to leave their current accommodation, where will they go?

[Rachel Reeves]

Under the previous Government, no applications were being processed and so nobody was being sent home. We will process those applications and send people who have no right to be here back home.