Budget Resolutions

Debate between Harriett Baldwin and Ian Blackford

Wednesday 6th March 2024 Commons Chamber

[Harriett Baldwin]

I wholeheartedly endorse what my right hon. Friend said. She is right to highlight the importance of investment in childcare in helping female employment growth, which has been remarkably strong in the past 14 years. I am confident that the measures announced will allow us to make further progress with the increasingly non-inflationary growth capacity of the UK economy.

Other measures announced today will help on the growth front. Cutting national insurance is also a smart way to help growth. It not only puts more money in working people’s pockets—27 million people across this country will see an extra £900 a year in their bank account—but will make work more attractive. We have heard from the Office for Budget Responsibility that cutting national insurance has the biggest marginal impact on bringing people back into work; the figure from the last cut was 94,000. It will be interesting to see whether the OBR continues to expect this to have a significant impact. It is a really smart way to cut taxes for working people—and the measure is UK-wide, so the effect will be felt in Scotland as well.

I turn to the issue of debt falling. We can see that the bond markets have stabilised, and OBR numbers confirm progress on debt. I draw the House’s attention to a report that our Committee recently published on the Bank of England and its quantitative tightening. It is selling £100 billion of gilts into the market this year, and it has acknowledged that that increases the cost to the Exchequer of borrowing by between a tenth and a quarter of a percentage point. Our Committee wanted to flag up the impact that that could have, and to send a message to the independent Bank of England about some of the ways in which quantitative tightening has an impact on the real economy. As a cross-party Committee, we were obviously never going to agree on the level or scope of taxes, but one thing we have unanimity—

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

rose—

[Harriett Baldwin]

Does the right hon. Gentleman wish to intervene on the fact that the rate of tax is higher in Scotland?

[Ian Blackford]

I wish to raise a point about quantitative easing, which the hon. Lady mentioned. Obviously, there will be a very significant supply of gilts in the coming period, which will have an impact on yields. That will influence what the Bank of England does on the interest rate cycle, and crucially, it will make it difficult to see any material growth in the money supply, particularly in M4, in the coming period. That will have an impact on growth, given where we are.

Autumn Statement Resolutions

Debate between Harriett Baldwin and Ian Blackford

Wednesday 22nd November 2023 Commons Chamber

[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.

--- Later in debate ---

[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.

Women and the Economy

Debate between Harriett Baldwin and Ian Blackford

Wednesday 9th December 2015 Commons Chamber

[Harriett Baldwin]

I will make some progress. We want to make sure that the pay gap narrows further and faster. From next year, we will require large companies to publish differences in pay.

[Ian Blackford]

rose—

[Harriett Baldwin]

I do not have much time, so I will make a bit of progress. Some 56% of the people who have been taken out of income tax altogether—in other words, who have had a 100% reduction in their income tax—through our increases to the personal allowance are women. Some 58% of those who receive the state pension are women—I will address the point made by the hon. Member for Worsley and Eccles South (Barbara Keeley) in a moment—and we have protected that under the triple lock. Almost two thirds of the people who will benefit from our introduction of the national living wage are women. Since 2010, women’s employment has increased faster than in the three previous Parliaments combined.

Let us compare and contrast that with the record of the previous Labour Government, under which the number of unemployed women rose by more than 200,000, or 25%. The fastest way to damage the livelihoods of hard-working women and families is to lose control of the public finances. That is the damage that we have had to fix, and we are making sure that that catastrophic situation does not happen again.

I want to address some of the important points raised today in a range of speeches—speeches from the hon. Member for Lanark and Hamilton East (Angela Crawley), my right hon. Friend the Member for Basingstoke (Mrs Miller), the hon. Member for Sunderland Central (Julie Elliott), my hon. Friend the Member for South Ribble (Seema Kennedy), the hon. Member for Paisley and Renfrewshire South (Mhairi Black), my hon. Friend the Member for Eastleigh (Mims Davies), the hon. Member for Mitcham and Morden (Siobhain McDonagh), my hon. Friend the Member for Dudley South (Mike Wood), the hon. Member for Wirral South (Alison McGovern), my hon. Friend the Member for Lewes (Maria Caulfield), the hon. Member for Worsley and Eccles South (Barbara Keeley), my hon. Friend the Member for Portsmouth South (Mrs Drummond), the hon. Member for Brentford and Isleworth (Ruth Cadbury) and the hon. Member for Ross, Skye and Lochaber (Ian Blackford).

A number of people have mentioned part-time work. It is worth remembering that 80% of the people who work part time do so because they want to. However, I agree wholeheartedly with the Chair of the Women and Equalities Committee, my right hon. Friend the Member for Basingstoke, who said that she wanted greater equality in the form of more men working part time. There is evidence that that is beginning to happen, enabling parental leave opportunities to be shared more equally.

Guaranteed Income for Retirees

Debate between Harriett Baldwin and Ian Blackford

Tuesday 17th November 2015 Westminster Hall

[Harriett Baldwin]

My hon. Friend is right; the world where we obliged people to buy an annuity income with their retirement savings was not perfect. Often they did not shop around—the data from the Financial Conduct Authority suggest that about eight out of 10 consumers could have got a better deal by shopping around—so I cannot agree with what I believe was SNP policy. That seems to be to end the current situation where there is more flexibility, and once again to require people to buy an annuity. However, I recognise that Members across the House have concerns about customers and how they are supported as they make perhaps their most important long-term financial decision, other than purchasing a home.

[Ian Blackford]

I just want to clarify something. I absolutely share the concern that the annuity market was not working properly. Where there is a difference of opinion is that we believe that the market should be reformed. We need greater choice in the annuity market: for example, we need to think about how we explain index-linked products in the annuity market, and circumstances such as lower life expectancy must be reflected. We must consider those things in the light of experience of what has happened with pension freedom.

[Harriett Baldwin]

I thank the hon. Gentleman for that clarification. I agree that we need to evaluate the measures, which is why this is such a timely debate. It is extremely important that, as people take advantage of the new pension freedoms, they have the right information and the tools they need to make an informed and confident decision about their financial future. I recognise that there is a range of different circumstances and that one size does not fit all.

It might be helpful if I summarise some of the changes made over the past five years to the pension landscape to strengthen the finances of people in retirement. They include ensuring that there is no enforced retirement age at 65, and strengthening the first pillar of retirement income, the basic state pension, which now rises with a triple-lock—increasing by the greater of 2.5%, earnings or inflation every year. That has been very important cumulatively over the past five years—the income replacement of the state pension is now at its highest level since 1992—and we have pledged to continue that throughout this Parliament.

[Harriett Baldwin]

I assure the hon. Gentleman that I am just setting out the background. I will address the points that colleagues raised later in my speech.

The changes we are making to simplify the state pension are also important, because they are going to set a new level for the state pension that is higher than the means-tested threshold that we have had in this country historically. That is very important, because we do not want those who draw down their retirement savings to be thrown on to means-tested benefits. I believe I am right in saying that that is a crucial difference from the situation in Australia. We have also safeguarded support for older people in other ways, such as providing free bus passes, eye tests, television licences and so on.

The changes we made in April are an integral part of the whole landscape. I will describe for the benefit of all hon. Members what we think success for the reforms looks like: a vibrant and competitive retirement income market with a range of different products that give people the flexibility and security that is right for them, and well informed, engaged consumers who can access the guidance and advice they need. As more people are automatically enrolled in employer schemes, more people engage with the process. More than 5 million more people are now saving for a retirement income than were in 2010, and by the full roll-out in a couple of years’ time, we will have almost 9 million additional new savers through automatic enrolment, saving £15 billion a year more in aggregate.

[Ian Blackford]

I am grateful to the Minister for giving way; she is being very gracious with her time. As I said, we fully support auto-enrolment. It is fantastic that there has been an increase in saving and that both employers and employees are contributing, but will she reflect on the situation that could develop? People will have a greater ability to access the pension pot that they are saving into and take out cash at 55, but I am concerned that employers may be disincentivised from contributing to the pension scheme if they see that those who benefit from it can walk away with a cash pot at 55.

[Harriett Baldwin]

Methinks the hon. Gentleman is worrying too much. At this point, I think we will just welcome the fact that £15 billion a year more is going into pension saving in this country. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) can say to her generation that the earlier they start, the better, given the cumulative impact of the wonders of compound interest. Nevertheless, I take on board the point the hon. Gentleman made.

The hon. Gentleman said that providers may not have time to get ready and may not have the right kinds of products. In fact, providers have stepped up to the challenge: the systems requirements were admittedly very challenging, but more than 90% of people are now being offered flexibility within their existing scheme and something like a quarter of the largest firms are planning to launch new products in the next six months, so there has been real innovation and engagement with what customers want. We have moved away from the inflexibility of the old annuity market.

The hon. Gentleman highlighted the recent data from the ABI stating that £4.7 billion was paid out in the first six months. The first six months will not necessarily be representative of the settled state of the market, because obviously there has been a lot of pent-up demand, but it is fair to say that in that six-month period £2.5 billion has been invested in income drawdown products and £2.2 billion in annuities. That does not suggest that people are shying away from the annuity market, which we hope continues to be successful and an important part of people’s retirement planning. I am delighted that so many people have already taken advantage of the freedoms and that many providers have stepped up to deliver for their members.

Many hon. Members asked about Pension Wise, the Government’s free and impartial guidance service. It, too, is playing an important role. There have been more than 30,000 guidance appointments and 1.7 million hits on its website so far. Hon. Members alleged that only one in 10 people are making use of Pension Wise, but we dispute that in the sense that people will be getting financial advice, sometimes from a regulated adviser, or they may get information, guidance or advice through their provider. There is a range of different ways in which people can inform themselves; Pension Wise is one of them. It is free, impartial and backed by the Government.

Pension Wise prompts users to consider their life expectancy and any health issues and lifestyle factors they have, and it links to the Office for National Statistics life expectancy calculator, which I am sure everyone in the room has visited. All in all, that is excellent news, but we are always on the lookout for ways to make the service more useful. Last month’s report from the Work and Pensions Committee, of which the hon. Member for Paisley and Renfrewshire South is a member, was welcome. It noted the progress we have already made in ensuring that the reforms deliver for consumers, but made it clear that the job is not yet done.

In line with the Committee’s recommendations, we are considering a number of developments to make Pension Wise even more useful. For example, we are looking at how appointments can be tailored to individuals. In the summer Budget, we opened it up to people from the age of 50 onwards, and we are developing more online tools for the website and calculators that people can use to see how the new pension freedoms relate to their particular circumstances. We are trying to make the website more interactive, and the team has done a fantastic job in delivering that to such a tight timeframe. We are looking to amend the content of Pension Wise appointments to ensure they are more tailored to people in the 50 to 55 age bracket, who are not yet able to take advantage of the pension freedoms but want to start thinking about the options available to them.

The hon. Member for Torfaen (Nick Thomas-Symonds) rightly mentioned the financial advice market review. I am delighted to hear that he supports the initiative. The Treasury and the Financial Conduct Authority are reviewing what he called the advice gap—the fact that between guidance and paid-for financial advice, there is a gap for ordinary people who do not want to pay for a financial adviser or are not able to afford one at their stage in life. The aim of the review is to come up with a package of reforms, along the lines of those that the hon. Gentleman outlined, to ensure the financial advice market works for everybody. I hope he will write to the review with his recommendations.

Advice, in and of itself, is not enough. It is important that we supplement our guidance provision and review it on an ongoing basis. We must ensure that we make the most of Pension Wise, which focuses on pension freedoms, the Money Advice Service, which focuses on some of the other aspects of financial markets, and the Pensions Advisory Service, which is run out of the Department for Work and Pensions. We must make those services more effective for consumers. Alongside the financial advice market review, we are also looking at the guidance and hope to have some findings ahead of next year’s Budget, so that people get the help they need to take such important long-term decisions.

Several hon. Members mentioned scams, and the Work and Pensions Committee report also flagged that risk, which we recognise is not new. Pension scammers were previously trying to get people to take money out of their pensions before the age of 55, causing a lot of harm in the marketplace, but I agree that it is an important matter. Given that consumers have been given unprecedented freedom and choice in how they access their retirement savings, we appreciate that fraudsters will use that as an opportunity to try and exploit people. An effective strategy to target scams must bring together all the relevant parts of Government and work with providers to focus on both the prevention and the disruption of scams. That is what we are doing and will continue to do. We have set up Project Bloom, a multi-agency taskforce led by the National Crime Agency, which is joining up the various Departments involved, the regulators, anti-fraud groups and police forces to tackle scams. It is worth reiterating here how important it is that we remind consumers that they should never engage with anyone who telephones them out of the blue offering help with their pension. I encourage all hon. Members to get that message out widely in their communities. I emphasise that Pension Wise will never call without a consumer having previously asked them to.

The pensions regulators have their own pension scam campaigns to raise awareness of the issue. The FCA runs ScamSmart and the Pensions Regulator runs Scorpion. Warnings are sent out with paperwork from pension providers and both of them give advice to businesses and consumers on how to protect against scams. Pension Wise also alerts customers to the risk of scams during guidance sessions and on its website, and firms have a duty to flag the risk of investment scams, when appropriate, to their members as part of the FCA’s retirement risk warning rules. The hon. Member for Paisley and Renfrewshire South, who asked me about this during a Work and Pensions Committee hearing, wanted to know about some of the numbers. So far this year, since the pension freedoms were launched, incidents reported to Action Fraud are lower than the year before, but I completely agree with her that we must remain on top of this. To be frank, we have to be tough, because one scam succeeding is one too many.

Moving on to women who have been affected by the change in pension age, I am probably one of the few women affected who actually welcomes the fact that I will be able to do this wonderful job for longer, but I realise that not everyone feels that way. To respond to the questions from the hon. Member for Torfaen about the number of meetings that have been held, the number of updates and the transition protection and his Hansard reference, which shows what an effective researcher he is—he is a published biographer—I will defer to my colleague Baroness Altman, who will write to him with the details.

The hon. Member for Paisley and Renfrewshire South also asked about the Pension Wise data and when it will be published. In ministerial speak, I believe that the word is “shortly” so it should be up on the website soon. We will write to the Chair of the Work and Pensions Committee as soon as that happens so that he is the first to know.

I have responded to most hon. Members’ points, but I will remain on my feet in case anyone feels that they have not had a chance to ask their question or to get one answered.