Autumn Statement Resolutions

Harriett Baldwin Excerpts

Wednesday 22nd November 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

Today, the Chancellor confirmed what the British people already know—that there is nothing the Conservatives can say or do to hide their 13 years of failure. Government Members may have been patting each other on the back during the Chancellor’s statement, but the British people will not be celebrating. After everything that we have heard today: taxes will still be at their highest during peacetime; inflation is forecast to be higher in the years ahead than it was according to the Office for Budget Responsibility’s forecast in March; mortgage payments will still be rising for millions as their deals end; and after 13 years of low growth, we are still on a path of decline, with economic growth forecast for next year slashed by more than half.

Nothing that the Conservatives have said today will overcome the damage that they have done over the past 13 years. Nothing that they have said will overcome the cost of living crisis that families across the country are facing. Household incomes will still be 3.5% lower next year in real terms than before the pandemic, the biggest hit to living standards on record. Inflation has been upgraded in every year of the forecast period, with prices now set to be 7% higher at the end of the forecast period than the OBR forecast them to be in March. The truth is that working people are worse off under this Conservative Government.

I am sure the Chancellor will want people to focus on his announcement of a cut in the main rate of employee national insurance, but, frankly, coming after 25 tax rises in this Parliament alone, it is insulting to suggest that the British people will be fooled. Under the Conservatives, the tax burden is set to increase by £4,300 per household. Let us not forget, that, just two years ago, the Chancellor and the now Chief Secretary to the Treasury walked through the Division Lobby to put national insurance up. They may wish to forget that, but the British people will not. It is as if the Tories have nicked your car, but expect you to be grateful when they pay for your bus fare home.

After 13 years of low growth, and with taxes already at their highest level in more than 70 years, the British people will see straight through this Government’s desperate attempts to woo them. It had been rumoured that the Government were planning to cut inheritance tax in this statement. Of course, people want to be able to pass on what they have worked hard for to their children, but in the middle of a cost of living crisis, when families face rises in mortgage costs, in prices across the board, and in NHS waiting lists, we simply could not understand how the Conservatives saw that tax cut for the wealthiest 4% as a priority. The truth is that this would have been the wrong tax cut—

[Harriett Baldwin (West Worcestershire) (Con)]

On a point of order, Madam Deputy Speaker. Is it appropriate for the Opposition spokesman to be talking about measures that were actually not announced today?

[Madam Deputy Speaker (Dame Eleanor Laing)]

That is a perfectly reasonable point of order and I am grateful to the hon. Lady for raising it. I was listening carefully to the hon. Gentleman’s speech and had begun to think to myself, “That’s strange. The hon. Gentleman is addressing a point that was not in the Chancellor’s statement.” However, I have not stopped him, because—[Interruption.] I do not need any help, thank you very much. I have not stopped the hon. Gentleman because this is a very wide-ranging debate, and I have made the assumption that he was using an example of something that the Government decided not to do. Possibly he was about to state his agreement with the Government, or something along those lines. I was waiting to hear what he had to say.

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[Harriett Baldwin]

All our constituents who pay mortgages are concerned about the increase in rates. Did the hon. Member hear the Governor of the Bank of England accept yesterday, as he has in earlier Treasury Committee sessions, that it is the Bank of England taking independent decisions to tackle inflation that has led to those increases? The hon. Member is wrong to label them “Tory” mortgage increases.

[James Murray]

The Opposition accept the independence of the Bank of England, unlike some Government Members, but frankly that was a fairly shameless attempt by the hon. Member to distance herself from what the Government did to the economy last year in their disastrous mini-Budget. The British people will not forget, as they are still paying the price.

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[Harriett Baldwin (West Worcestershire) (Con)]

What a difference a year has made to this country’s finances and to the economy. Last year, our inflation rate was 11.1%; it is now down to 4.6%. It is still too high, but that is enormous progress, thanks to the independent Bank of England and the decisions taken in this Chamber a year ago to manage the public finances prudently, in a way that would not increase inflation. We need to reflect on the progress that we have made in our economy. From listening to the—I am not going to use unparliamentary language—speech of the Opposition spokesperson, the hon. Member for Ealing North (James Murray), we would not think that anything had changed from a year ago. Things have changed enormously.

This time last year, our economy was reeling from the energy shock caused by Putin’s evil invasion of Ukraine. It was thanks to the help given through the energy price cap that households were able to get through last winter. I do not need to remind the House how serious inflation is for the poorest households. It is the worst tax on our economy, our businesses, and people’s budgets. It is a truly evil problem, and it is right that it has been the No. 1 focus of the Prime Minister and the Government this year.

Clearly, with inflation at 4.6% there is still more to do. Yesterday, the Treasury Committee heard from the Governor of the Bank of England. The Bank of England is forecasting that we will get to a 2% handle, probably by the end of next year. That is in line with what the Office for Budget Responsibility is saying. Clearly, there are still risks to the upside. Energy prices continue to be volatile, but the Governor told our Committee yesterday that it is the inflation-busting hikes in rates that have generated the increased payments that our constituents are facing on their mortgages. Therefore, when the hon. Member for Ealing North says that these are Tory mortgage hikes, that is just throwing mud and trying to make it stick. It will not stick, however, because I am hopeful that rates are now high enough to bring inflation back down under control. In the analogy the Bank of England uses, we have marched to the top of Table mountain and are now walking across the top of the mountain, and the markets are now forecasting that the next rate change will be a decrease.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Does the hon. Lady remember the Budget of just over a year ago, which crashed the economy, sent interest rates spiralling and sent mortgage rates up? We must not forget that there is an interest rate premium in the UK over much of the rest of the western world, and that is forecast to remain for years to come because, sadly, it is down to the long-term mismanagement of the UK economy, which the Tory Government must take responsibility for.

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[Harriett Baldwin]

I am very glad the right hon. Gentleman made that intervention because it allows me to repeat the point of my argument. Of course I remember what happened, and we all saw it; it is thanks to the new Prime Minister and the measures that the Chancellor took this time last year that those effects have been worked through. We can see the progress not only in reduced inflation but in the OBR’s increasing its growth expectations—a year ago it was expecting a recession and now it is forecasting growth. The right hon. Gentleman makes my point: we have heard from the Governor, on the record, that those effects have dissipated and that the year has made all the difference.

[Kevin Foster (Torbay) (Con)]

Does my hon. Friend reflect, as I do, that the US federal rate is currently very similar to our own interest rate? Can Opposition Members explain what was the effect on the US economy?

[Harriett Baldwin]

My hon. Friend is absolutely right. Central banks around the world have lessons to learn from this recent bout of inflation, but I am comforted by the evidence we got yesterday from the Governor, which, while acknowledging there are still risks to the upside, shows that the world is on a trajectory of having dealt with this.

[Ian Blackford]

I am grateful to the hon. Lady and the hon. Member for Torbay (Kevin Foster) because they have made key points. We have heard lots today about growth, but the US has grown at an average rate of about 1% more than us over the last decade, and forecasts for its growth for the years to come are also higher. We need to get real about what growth looks like and what sustainable economic growth is, but the fact remains that UK interest rates are above those in the European Union and have remained above those of the western world for most of the last decade, and will remain above those of the rest of the world for many years to come.

[Harriett Baldwin]

The right hon. Gentleman might think the UK should join the euro, but I shall fight strongly against him on that campaign.

I want to return to the theme of what a difference a year has made in terms of the public finances. It is remarkable to see how the priorities in the autumn statement are being delivered. First, that is seen in reducing debt, something all on this side of the House are keen on otherwise we are just passing on the costs to our children and grandchildren. Last year’s forecast was 94.6%, which still feels uncomfortably high to me, and that is why I welcome that in today’s autumn statement debt is falling to 92.7% in the same year. I encourage the Chancellor to keep on moving in that direction.

The challenge now is to support growth, and non-inflationary growth above all. The Chancellor announced 110 measures. I have gone through the small print of the documentation, and I do not think I have got to the bottom of all 110 of them yet, but I hope we shall do so when we take evidence from him, the OBR and independent economists next week. I welcome that the OBR is revising growth up this year, however, and that the measures announced in the statement were taken through the lens of making sure inflation continues to decline.

Cutting tax is also an important priority because it rewards hard work, and it is good that earnings are again growing faster than inflation, which means households up and down the country are seeing disposable incomes rise once again.

We all know that work is the best route out of poverty. I cannot stress how important the announcement on the national living wage is, because it means that those working full time on the national living wage now have an income of over £22,000, taking them over the poverty line. With so many vacancies in our economy, that will give more people the opportunity to work their way out of poverty. So I thank the Chancellor for that reform, and for the fact that now the income of the lowest paid comes predominantly from work, whereas in 2010 the income of those on the lowest pay was primarily from welfare. We can be proud of that real shift.

I was pleased to hear measures about the grid in the autumn statement. Building sustainable domestic energy will require improving our grid, and building more renewables and new nuclear and domestic oil and gas.

I was very pleased to see the measures backing British businesses as well, because ultimately it is British businesses that will help our country grow and tackle the important productivity challenge and deliver more jobs and prosperity for the British people.

I look forward to encouraging the Chancellor to think about simplifying even more. There were some simplifications that I welcome in today’s autumn statement, particularly in terms of national insurance for the self-employed. I look forward to seeing the detail of the measures that will help our constituents invest their savings and get better rewarded for their pensions by being able to access advice more easily. Measures the Chancellor can take in terms of the advice guidance boundary will help enormously.

I welcome, too, the funding for a world class education. Schools in my constituency will welcome that record level of per pupil funding in real terms.

In conclusion, I am delighted to see many of these measures and look forward to scrutinising more of them in detail, and I am particularly pleased that the Chancellor did not heed the Opposition’s advice to borrow £28 billion more every year.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call Scottish National party spokesman Drew Hendry.