Economic Growth

Jeremy Hunt Excerpts

Tuesday 14th November 2023 Commons Chamber

[The Chancellor of the Exchequer (Jeremy Hunt)]

It is an honour to speak in the first King’s Speech debate for more than 70 years. Her late Majesty was a figure of grace and continuity, and we now look forward to His Majesty the King leading us, as she did, through troubled times.

It is always a pleasure to debate with the shadow Chancellor, although in a whole year of my being Chancellor, this is the first time we have had an economy debate, and now we know why: she has been busy writing a book, or, rather, Wikipedia has been busy writing her book. Today, I see she has been busy copying and pasting Conservative language about tax. May I tell her gently that that will take her only so far? Conservative Members will never forget what happened under Gordon Brown, who she campaigned for: income tax up, national insurance up, stamp duty up, fuel duty up, pensions up and multiple other taxes up.

Let us turn to some of the shadow Chancellor’s assertions. She said that the economy was flatlining. What she did not tell the House was that since Labour left the economy in the deepest recession since the second world war, we in this country have grown faster than Spain, Portugal, Italy, France, the Netherlands, Austria, Germany or Japan. She did not mention that after a global pandemic and energy shock, our economy is nearly 2% bigger than it was pre-pandemic. That is higher, for example, than countries such as Germany, whose economy is only 0.3% larger, not least thanks to the furlough scheme introduced by my right hon. Friend the Prime Minister.

The shadow Chancellor also did not mention that when it comes to the fastest-growing industries, we are doing even better. In the last 13 years under Conservative Governments, we have built Europe’s largest tech sector—double the size of Germany’s and three times that of France; it is the third-largest in the world. We also have Europe’s largest life science sector, saving more lives than any other country globally with vaccines and treatments discovered in Britain. We have more offshore wind than anywhere in Europe bar Germany and Norway—it is the third-largest sector in the continent. We also have a world-leading creative industries sector, including Europe’s largest film and TV industry and a thriving publishing industry that has even produced a book written by the shadow Chancellor, which helpfully collates some fascinating information from the world wide web.

[Mr Betts]

The Chancellor talks about what he sees as some successes. Why does he not address the problems of small modular reactors? Sheffield Forgemasters in my constituency could be building SMRs, but it has been waiting for months for the Government to make a decision on a go-ahead for the right techniques. ITM Power, which is a leader in green hydrogen, is building plant in Germany, which is spending £7 billion on it in the next few years, while in this country we are spending £1 billion, so we are losing the international race on that.

[Jeremy Hunt]

The first big infrastructure decision that I took was on nuclear, when I assigned £700 million to Sizewell C. I completely agree with the hon. Member about the potential of SMR. That is why we set up a competition, and with the previous Energy Secretary I stipulated that it should finish by the end of this calendar year so that we can proceed as quickly as possible on SMR, because it could be an important part of our net zero future.

The shadow Chancellor’s central argument is that we can get growth only by borrowing £28 billion a year more. [Interruption.] Well, I was listening to her words. She may not have mentioned this in her speech, but on 9 October she said on the “Today” programme that she wanted to take borrowing “up”—her word. We delivered all those achievements in technology, life science, creative industries and advanced manufacturing industries during a time when we were cutting borrowing, which went down by 80% between 2010 and the start of the pandemic. That is the difference. Unlike Labour, the Conservatives know that we cannot borrow our way to growth. We have to do the hard work to support entrepreneurs and innovators, including by keeping their taxes down, which Labour has never wanted to do. Because we have done just that, the International Monetary Fund says that after inflation has been brought to target from the end of 2025, this country will have faster growth than France, Germany or Italy. No shortcuts; just hard work to get one of the fastest growth rates in Europe.

[Alan Brown]

On investment in renewable energy, EY has confirmed today that the UK has slipped further back on the attractiveness index, so it is now behind India, China and Australia. On offshore wind, the Chancellor knows that allocation round 5 was a disaster. What will he do to rectify that? On nuclear, he talks about SMRs being the future, but they are not. There is not a successful SMR anywhere in the world, and NuScale in the United States has just been abandoned after rising to an estimated cost of $9 billion.

[Jeremy Hunt]

I do not accept that we are not an extremely attractive place. We have third largest renewables sector in Europe and are the largest European provider of offshore wind. Can we do more? Yes, we can, particularly by improving access to the grid. The House should expect to hear more from us on that.

We had a lot of talk from the shadow Chancellor about the cost of living crisis, but she barely mentioned that the biggest pressure on the cost of living is caused by the rise in inflation—in fact, it did not get a mention at all in her conference speech. Because we have taken difficult decisions, inflation has fallen by 40% since its peak. Core inflation is now lower than in nearly half the entire EU membership. I say gently to her that if she were to reflate the economy by ramping up borrowing by £28 billion a year, prices would go up and families would end up paying more for their petrol, their food, their electricity and their mortgages. That is why that is the wrong approach.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

One issue on borrowing that has not been talked about is that it is now four years since this place agreed that we should regulate the buy now, pay later lenders. Under this Government’s watch, the number of people borrowing from these companies to make ends meet during the cost of living crisis has doubled, and 40% of those people are struggling and borrowing from other lenders to pay their debts, yet we have still seen no regulation at all from the Government. If the Chancellor wants to prove that he is actually on the side of the people and understands the bills that they have racked up paying for this Tory Government’s failures, will he finally commit to regulating these loan sharks?

[Jeremy Hunt]

As the hon. Member might have heard if she had been at oral questions, we are acting on this and have been consulting on a solution since March this year—I started that at the spring Budget—but we want to get the answer right. We want to crack down on rogue lenders but also ensure that the financing that appropriate people can offer responsibly is available.

I want to talk about the pressures on ordinary families, because the shadow Chancellor also talked about incomes and the tax burden on working families. What has happened since 2010 to adults on the lowest legally payable wage? When we took over from Labour, that wage was £5.93 an hour; today, it is £10.42 an hour. After inflation, gross pay for those on the lowest legally payable wage has gone up by 20%. The number of people on low pay, defined as less than two thirds of median hourly earnings, has halved. At the same time, because Conservative Governments want to make work pay, we increased the thresholds before which people start to pay tax or national insurance from £5,700 to £12,570. Take-home pay after tax for people on the adult main minimum wage has therefore gone up by more than 25% after inflation. That is a bigger percentage increase than for people on much higher incomes.

[Christine Jardine (Edinburgh West) (LD)]

Notwith-standing what the Chancellor has said, my constituents in Edinburgh West, like those in much of the rest of the country, were listening intently to the King’s Speech for a Bill or anything that might help them with the cost of food and specifically energy this coming winter, but there was nothing, and it has been admitted that the petroleum Bill will not do anything to help households in this country. Does he appreciate why ordinary working families think that the Government are simply out of touch?

[Jeremy Hunt]

With respect, I think the hon. Member needs to look at the facts. We have given an average of £3,300 in cost of living support to families across the country this year and last. In Scotland, 700,000 households have benefited from our cost of living payments, which have reached more than 1 million pensioners.

I want to return to my main point about the impact of making work pay. As a result of that change, not only have a lot of people been lifted out of poverty, but unemployment has gone down by a million, after going up by nearly half a million under Labour, and the unemployment rate has halved. That is the difference: if we make work pay, as the Conservatives do, we lift people out of poverty and put people into work.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

What would the minimum wage be worth now if the right hon. Member’s party had succeeded in its attempts to wreck the legislation when it was introduced by the last Labour Government?

[Jeremy Hunt]

I simply say that we did not just build on that reform but improved it massively more than Labour proposed, because we turned it into the national living wage, which is far more generous than the original minimum wage.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

According to the House of Commons Library, in 2022 the tax burden on the lowest income decile was 25.5%. On the top income decile, it was 12.5%. Is that fair?

[Jeremy Hunt]

Because we believe in a progressive tax system, we introduced the changes that I just outlined, which mean that people on the lowest legal wage are getting 25% more after tax. That is a significantly bigger increase than for people on higher deciles.

One of the main things the shadow Chancellor mentioned was her amendment on the OBR. I understand the political game of trying to draw attention to the mini-Budget, but she should know that the OBR is already legally required to publish two forecasts a year, as will happen under this Government at successive autumn statements and spring Budgets. Today’s proposal is dangerous because, despite what she says, it would hamper the Government when acting in an emergency, as we did in the pandemic. I will tell her why. Instead of taking decisive action, Governments would feel obliged to enter a 12-week process with the OBR in case the outcome of the independent process that she advocates made any crisis worse by highlighting a significant loosening of the fiscal rules.

What is most extraordinary about the amendment is that, at the same time that the shadow Chancellor tries to claim the mantle of fiscal responsibility in this House, only this morning she briefed the papers that she wants to unfreeze income tax thresholds—a £9 billion commitment—and make full expensing permanent, which is a £10 billion commitment. That is all without an OBR forecast in sight. That kind of irresponsibility from Labour is exactly why we set up the OBR in the first place.

This is an argument not just about jobs and work but about poverty. Labour tried to eradicate poverty by tinkering with the benefits system and Gordon Brown’s tax credits. We all remember the “poverty plus a pound” idea, whereby if someone just below the poverty threshold is given £1, they are somehow magically lifted out of destitution. Instead, the Conservative Government have reduced the numbers in absolute poverty after housing costs by 1.7 million people by making work pay and by reducing the number of children living in workless households, because they are five times more likely to be in absolute poverty than households in which the adults work. Making work pay is a moral duty and not just an economic necessity, as only Conservatives understand.

[Henry Smith (Crawley) (Con)]

Work is the best way to eliminate poverty. What are the Chancellor’s reflections on the fact that every Labour Government have left office with unemployment higher?

[Jeremy Hunt]

My reflection is quite simply that the Labour party does not understand how to lift people out of poverty. Labour Members do not like us talking about the fact that nearly 2 million people have been lifted out of absolute poverty under Conservative Governments, because that does not fit their austerity story, but the reality is that a Conservative Government have been responsible for a very important piece of social progress.

I want to turn to the autumn statement, because as we start to win the battle against inflation we can focus on the next stage, which is growth. Next week, we will see an autumn statement for growth. Because no business can expand without hiring additional staff, I will address labour supply issues to help fill the nearly 1 million vacancies we have, working with the excellent Secretary of State for Work and Pensions. That will build on the 30 hours of free childcare offer that I announced for all eligible children over nine months in the spring Budget. I will also focus on increasing business investment, because despite the fact that our growth has been faster than that of many of our European neighbours, our productivity is still lower.

[Holly Mumby-Croft (Scunthorpe) (Con)]

My right hon. Friend talks about growth and productivity, and he knows that it is my strong view that steel is an incredibly important material for growth here in this country. Will he reassure the very concerned steelworkers in Scunthorpe that he is concentrating on that, and working on it on our behalf?

[Jeremy Hunt]

My hon. Friend has talked to me consistently and powerfully since I became Chancellor about the issues facing the steel industry. She is a strong advocate for her constituents. It is at the top of my mind, as we try to chart a better future for British Steel. We will bear in mind the many comments she has made.

The shadow Chancellor said in her conference speech that she would remove the barriers to business investment, by

“backing the builders not the blockers”.

Only weeks later, her party promptly U-turned and became a blocker by watering down changes to the rules on nutrient neutrality, which would have unlocked the building of 100,000 homes. That is 100,000 families whose future is on hold because of Labour’s political games.

On top of all the measures in the autumn statement, we will have the Bills from the King’s Speech, including a trade Bill that will confirm our membership of the comprehensive and progressive agreement for trans-Pacific partnership, making us part of a group that wields a combined GDP of £12 trillion and a presence in the Indo-Pacific, where the majority of global growth will be. The Automated Vehicles Bill, which the shadow Chancellor mocked, will make the UK one of the first countries in the world to have a legal structure to allow driverless cars. The Digital Markets, Competition and Consumers Bill will modernise our digital laws to boost online shopping by making it safer. The Offshore Petroleum Licensing Bill will secure our energy independence by replacing imported oil and gas with domestically produced fuel as we transition to net zero.

The Leader of the Opposition called the King’s Speech something that will only bring more of the same. In a way, he is right: more growth, more jobs, more pay, more opportunity and more prosperity. We are not following the easy path of opening the national cheque book and maxing the country’s credit card by borrowing £28 billion a year more; we are taking a path that is more difficult, yes, but more durable, and one that will turn us into one of the most prosperous countries in Europe. I commend it to the House.

[Several hon. Members rose—]