Life Sciences Growth Package
Jeremy Hunt Excerpts(1 year, 11 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
On 26 May the Government announced a package of measures totalling over £650 million to drive growth and innovation in the life sciences sector.
The UK is rightly recognised as a world leader in life sciences; it is home to two of the top five universities in the world for life sciences and nearly a third of European life sciences start-ups. The sector is a key pillar of the economy, attracting the most foreign direct investment in Europe. It employs over 280,000 people across the UK, with 66% of these in high productivity, high wage jobs based outside London and the south east.
The Government are committed to making the UK the most attractive destination for life sciences companies and have developed a comprehensive package of policies spanning regulation, research and development (R&D), infrastructure, skills and planning which is aimed at driving investment, growth and innovation. To that end, we have announced:
The Government response to the Independent Review of Clinical Trials led by Lord O’Shaughnessy. The response announces five headline commitments where the Government are taking immediate action backed by £121 million of funding, including developing a clinical trial directory and establishing clinical trial acceleration networks. This will be followed by a more detailed implementation report in the autumn. These policies apply to England only.
The Government response to the Pro-innovation Regulation of Technologies Review on Life Sciences. The response accepts all the recommendations in the report and commits to delivering accelerated regulatory pathways for innovative products and technologies and establishing Centres of Excellence in Regulatory Science and Innovation (CERSIs) to provide regulators with access to additional skills and expertise. The review and response cover a range of policies, with varying territorial extents.
The development of an end-to-end Medtech pathway, including the innovative devices access pathway, to support innovators generating the evidence they need to support regulatory approval and National Institute for Health and Care Excellence (NICE) assessment to get innovative products helping patients faster. This policy applies UK-wide.
A new biomanufacturing fund of up to £38 million to incentivise investment and bolster the UK’s biomanufacturing capability for vaccines and other medicines, and a further £10 million to expand the transforming medicines manufacturing programme to support the development of manufacturing processes for next-generation vaccines and advanced therapies. This policy applies UK-wide.
An additional £6.5 million of funding on skills to secure the legacy of skills pilots delivered by the Cell and Gene Therapy Catapult to ensure we have the talent and skills to support our domestic medicines manufacturing capability. This policy applies UK-wide.
Further details regarding the mental health and addiction healthcare missions, including the allocation of £42.7 million to support new mental health treatments and set up new research centres in Liverpool and Birmingham, and £10 million to help develop new treatments for addiction. The Government have also announced the chairs of the mental health, addiction, and cancer missions. These policies apply UK-wide.
Reform and rebranding of the Academic Health Science Networks to become Health Innovation Networks. These will have an enhanced focus on working with local partners, ensuring innovation is identified and adopted at the local level to directly address the needs of those communities. This policy applies to England only.
A further £31 million in Government and industry backing for life sciences manufacturing, under the life sciences innovative manufacturing fund, taking combined investment since 2021 to £383 million. This policy applies UK-wide.
A new £154 million investment to significantly upgrade UK Biobank to meet increasing demand for this world leading biomedical research database. This will include the construction of a new purpose-built facility at Manchester Science Park to accommodate a new archive. This investment will increase sample throughput by four times, allowing for up to 1.2 million accesses per year. This policy applies UK-wide.
A call for proposals on the Government’s long-term investment for technology and science initiative, which will offer £250 million of Government support to spur the creation of new vehicles for pension schemes to invest in the UK’s high-growth science and technology businesses, benefiting the retirement incomes of UK pension savers and driving the growth of critical sectors like life sciences. This policy applies UK-wide.
Planning reforms to boost the supply of life sciences lab space, including consulting on factoring R&D considerations into planning decisions, working with stakeholders to update the planning practice guidance to help local authorities take fuller account of commercial land needs of businesses and making investment into the relevant sites more attractive by working with local planning authorities to encourage proactive planning tools, such as local development orders and development corporations, to bring forward development. This policy applies to England only.
The preferred route alignment for the third section of East West Rail between Bedford and Cambridge, including a direct link to the Cambridge Biomedical Campus, marking a significant step towards delivering the scheme and helping to drive growth and jobs in the life sciences “golden triangle”.
Overall this represents a comprehensive package to boost growth and investment in the sector across the UK, and help get innovative drugs and medicines to NHS patients faster.
Documents are available at:
https://www.gov.uk/government/publications/commercial-clinical-trials-in-the-uk-the-lord-oshaughnessy-review
https://www.gov.uk/government/publications/pro-innovation-regulation-of-technologies-review-life-sciences
https://www.gov.uk/government/publications/biomanufacturing-fund
Copies of the review documents and the Government responses will also be deposited in the Libraries of both Houses.
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Notification of Contingent Liability
Jeremy Hunt Excerpts(2 years ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The independent Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the Asset Purchase Facility by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and has since commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022.
The previous Chancellor agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.
Since 16 January 2023, the total stock of assets held by the APF for monetary policy purposes has fallen from £851 billion to £821.3 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £821.3 billion.
The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.
A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.
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Treasury
Jeremy Hunt Excerpts(2 years, 1 month ago)
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Jeremy Hunt
What I say to the hon. Lady, whom I greatly respect, is that we did a lot for public services in the autumn statement, including a £3 billion increase in the annual schools budget and an £8 billion increase in the annual health and care budget. We are always focusing on public services, and we do support a progressive tax system.
[Official Report, 21 March 2023, Vol. 730, c. 157.]
Letter of correction from the Chancellor of the Exchequer (Jeremy Hunt).
An error has been identified in the response I gave to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).
The correct response should have been:
Jeremy Hunt
What I say to the hon. Lady, whom I greatly respect, is that we did a lot for public services in the autumn statement, including a £2.3 billion increase in the annual schools budget and an £8 billion increase in the annual health and care budget. We are always focusing on public services, and we do support a progressive tax system.
Oral Answers to Questions
Jeremy Hunt Excerpts(2 years, 1 month ago)
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Philip Davies (Shipley) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Like all Conservatives, I believe in reducing the burden of taxation wherever possible, while always demonstrating a responsible approach to public finances.
Philip Davies
While I appreciate that this is largely as a result of the idiotic decision to lock down the country and the economy for the best part of two years, the Chancellor nevertheless finds himself presiding over a high-tax, high-spend, low-growth, quasi-socialist economy. When can those of us who remain Conservatives expect to see some tax cuts and a reduction in the burden of taxation?
Jeremy Hunt
I thank my hon. Friend for the inimitable way in which he asked his question. I hope that he was reassured to some extent by the £9 billion cut in the planned level of corporation tax in the Budget, and, if we make the arrangement for capital allowances permanent, as I should like to, that will give us the best investment incentives anywhere in the OECD.
Peter Grant (Glenrothes) (SNP)
May I be the first to defend the Chancellor, and indeed the shadow Chancellor, against any accusation of socialism?
Can the Chancellor explain why the Cameronbridge distillery in my constituency, which is a major employer in an area of high unemployment, faces an increase of about £350 million in its excise tax bill this year? That is more than the additional amount that the Chancellor claims to be giving to the whole of Scotland. Will he explain why my constituents, and the companies that employ my constituents, are having to contribute additional taxes to pay for his economic failure?
Jeremy Hunt
Let me gently say to the hon. Member that the freeze in alcohol duty which we introduced in the autumn of 2021, and which will continue until August this year, has constituted a £2.7 billion tax cut over four years. We do everything we can to help the vital Scottish whisky industry.
Harriett Baldwin (West Worcestershire) (Con)
There was a significant tax cut in the Budget that has been greatly welcomed by drivers in my constituency and elsewhere, namely the extension of the 5p cut in fuel duty and the freezing of the escalator, but does the Chancellor accept that by postponing that decision until an election year—next year—he is simply continuing the fuel duty fiction that our Committee has highlighted?
Jeremy Hunt
I am delighted that my hon. Friend welcomed the freezing of fuel duty, which means that over the period for which it has been frozen, the average motorist will have saved £200. There is a specific reason why I wanted to continue to freeze it this year: combined with the extension of the energy price guarantee, it will reduce CPI inflation by 0.7% in a year in which headline inflation is still over 10%.
Andrew Gwynne (Denton and Reddish) (Lab)
How is it fair that the Government are picking the pockets of working people through frozen income tax thresholds while at the same time allowing the super-rich non-doms to effectively opt out of paying tax in this country, which is costing us £3.2 billion this year?
Jeremy Hunt
Let me remind the hon. Gentleman what we have done for people on low incomes. Because of the increase in the income tax and national insurance thresholds which was completed last year, those on the average wage of £28,000 pay £1,000 less in tax and national insurance than they would have paid at 2010 levels—that is a tax cut that his party opposed at each and every stage.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Tom Randall (Gedling) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
The Government have provided unprecedented support to help households and businesses with energy costs, totalling £94 billion for households and £8 billion for businesses. That is more than £100 billion over 2022 and 2023.
Robbie Moore
One of my local foundry businesses based in Keighley, Leach & Thompson, has kindly contacted me to say that British Gas wants to charge it £41.50 a day as a standing charge and that its unit rate has doubled. That is having a dramatic impact on the business. The Government have helped with the unit charge, but will the Chancellor outline what steps he is taking to help support small and medium-sized businesses with the extortionate standing charges being quoted by energy companies?
Jeremy Hunt
I thank my hon. Friend for raising this issue, which I know is shared by many Members across the House. That is why on 9 January I wrote to Ofgem asking it to update me on its investigation into the business market, which is not a regulated market like the consumer market. It has replied saying that it has concerns. It is concerned about significant changes in standing charges, about an increasing number of suppliers asking for security deposits and raising the cost of those deposits, and about potential breaches of the rules of the energy bill relief scheme. It will get back to me with its solutions as soon as possible.
Julian Sturdy
When I was talking to businesses in York on Friday, they stressed to me that energy bills were still a major worry for many of them, especially in the hospitality sector, which is so important to our city. It is clear that the next six months will be critical for many of those businesses, so can the Chancellor provide any more targeted support, especially to the hospitality sector?
Jeremy Hunt
I ask my hon. Friend to keep me updated on what is happening with the hospitality sector in his constituency, but he will know that we have already introduced support for business rates, with a 75% reduction in business rates up to a cap of £110,000, and that the energy bills discount scheme is providing more than £8 billion of support over this year and last. We are doing everything we can.
Tom Randall
Does my right hon. Friend agree that a long-term energy strategy is critical to helping people with the cost of living? Will he outline what steps the Government are taking to enable this through the funding of nuclear energy?
Jeremy Hunt
My hon. Friend is absolutely right to raise this issue, as is my hon. Friend the Member for Ynys Môn (Virginia Crosbie), who does so on every single occasion she can. Nuclear is important because there will be times when the weather does not generate the energy we need from renewable sources. That is why we announced in the Budget that we are going ahead with Great British Nuclear and with the competition for small modular reactors, provided that an investigation this year finds that that is viable, and we will class nuclear power as environmentally sustainable, subject to consultation.
Christine Jardine (Edinburgh West) (LD)
A number of small businesses in my constituency are struggling with their energy costs, and two have recently gone to the wall, but major companies in the whisky sector are also struggling. The Chancellor says that the Government are doing what they can to support them, but does he appreciate that that is not how it feels in Scotland? This major industry, with its high-intensity use of energy in distilling, is facing a 10% increase, which will mean that something like 75% of the price of a bottle of whisky goes to the Exchequer. The industry does not feel like it is being helped. Does he appreciate that it feels like it is being kicked at a very difficult time?
Jeremy Hunt
I recognise the challenges that the distilling industry and many other industries are facing. That is why we are giving more than £100 billion of support to businesses and consumers, but I would say to the hon. Lady that Scotch whisky has received nine cuts or freezes in the last 10 Budgets, so we are doing everything we can.
Alison Thewliss (Glasgow Central) (SNP)
It is all fine and well for the Chancellor to say that he is in correspondence with Ofgem, but the business energy sector remains unregulated and many businesses in my constituency are stuck on very high tariffs because of the increase in prices, which have now to some degree gone down. What will he do about those people who are marooned on higher tariffs? It is costing their businesses dearly and those businesses may not even survive.
Jeremy Hunt
That is exactly why I wrote to Ofgem. Wholesale gas prices are now lower than they were before the Ukraine invasion. The hon. Lady is right to say it is not a regulated market and I want to find out from Ofgem what it thinks should happen to avoid precisely the problem she talks about.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
Many pubs and breweries are locked into energy bill contracts that are staggeringly high, and they are calling for an opportunity to renegotiate them. What further support will Ministers offer the sector with its energy bills, particularly recognising the financial impact that the increase in alcohol duty will have?
Jeremy Hunt
We are doing a great deal. As the hon. Lady will know, we set up a new scheme, the energy bills discount scheme, to help businesses in the coming year. As I mentioned to my hon. Friend the Member for York Outer (Julian Sturdy), we are also giving them 75% relief on their business rates. We will continue to do everything we can for this very important sector.
Henry Smith (Crawley) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
In addition to extending the energy price guarantee, and to help people further, cost of living payments for vulnerable households will kick in next year. We are also uprating benefits and increasing the national living wage to £10.42 an hour.
Henry Smith
What assessment has my right hon. Friend made of the saving a typical family will achieve as a result of his fuel duty measures announced in last week’s Budget?
Jeremy Hunt
I thank my hon. Friend for saying that. We think the average driver has saved about £200 in total since the 5p cut was introduced, but we are also introducing draught relief for beer drinkers in pubs and 30 hours of free childcare for young parents who are struggling with childcare costs. There are a lot of cost of living measures in the Budget.
Jim Shannon (Strangford) (DUP)
I thank the Chancellor for all he does, and for his hard work. It is more than just beer drinkers, of course. Carers who also work part time are precluded from receiving carer’s allowance if they earn just over the threshold. Will he consider uplifting the carer’s allowance earnings threshold in line with inflation?
Jeremy Hunt
I thank the hon. Gentleman for mentioning carers, who do an amazing job. It is fair to say that our NHS and care systems would fall over without the incredible job carers do. We will always keep under review what we can do to help these very important people.
Martin Vickers (Cleethorpes) (Con)
Chloe Smith (Norwich North) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
If we had the same economic inactivity rate as Holland, there would be 2.7 million more people in work, filling every vacancy in the economy nearly three times over. That is why we focused on the issue in the Budget.
Chloe Smith
I thank my right hon. Friend for that answer, and for the measures he set out in the Budget. I support the fiscal measures he has taken regarding the pensions lifetime allowance, which doctors in Norwich tell me will enable them to deliver more appointments and more operations. Can I go on to ask him, though, what he expects to see in the forthcoming state pension age review?
Jeremy Hunt
I thank my right hon. Friend for asking that question, and for all the work she has done in the Department for Work and Pensions on economic inactivity. As she knows, there is an ongoing statutory Government review of the state pension age, and that review will need to carefully balance important factors, including fiscal sustainability, the economic context, the latest life expectancy data, and fairness to both pensioners and taxpayers.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
One of the key ways to promote economic activity is to make sure that people have a stable, affordable roof over their head. Only last week a constituent visited me who cannot earn enough to be able to afford to rent privately in London, so he is restricted in how much he can work. Surely, if the Chancellor believes in growth, he must see the common sense in investing in social housing?
Jeremy Hunt
I do, but I also point out to the hon. Lady that we took a range of other measures in the Budget that will help such people, including increasing the help that we give them to find appropriate work, and helping those who have a long-term sickness or disability to get the support they need to get back into work. Doing all those things will make a big difference.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Chancellor of the Exchequer (Jeremy Hunt)
This Conservative Government believe in the virtue of work, and that is why last week’s Budget set out to remove barriers for long-term sick and disabled, for jobseekers, for older people with our pension tax reforms, and for parents with the biggest expansion of childcare in memory.
Alan Brown
With Orbital O2 in Orkney and MeyGen—the largest tidal stream site in the world—Scotland leads the way in tidal stream generation. That industry is at a stage where it needs to expand and scale up, but to do so, it needs a bigger ringfenced budget. In the renewables auction announced last week, the Government propose to halve the budget for tidal stream instead of increasing it. Will the Chancellor meet me to discuss the impact and the opportunities for business?
Jeremy Hunt
We are interested in giving support to all forms of renewable energy, and the Exchequer Secretary to the Treasury is very happy to meet the hon. Gentleman to discuss those issues further.
Gareth Johnson (Dartford) (Con)
Rachel Reeves (Leeds West) (Lab)
Confidence has been shaken by the recent bank failures and stock market falls across the world. Is the Chancellor confident that our ringfencing regime is adequate to protect taxpayers and depositors, when we have seen how fast these problems can spread? Can the Chancellor reassure the House that there are no other UK banks or subsidiaries that are vulnerable, and in light of recent developments, is he confident about the Financial Stability Board, or does it need to widen the number of banks regarded as systemically important?
Jeremy Hunt
I thank the shadow Chancellor for her question. The Government recognise that there is some volatility in the market, but we believe the UK financial system is fundamentally strong and UK banks are well capitalised. They now have core capital ratios that are three times higher than before the 2008 global financial crisis, but we continue to monitor the situation carefully.
Rachel Reeves
I thank the Chancellor for that response, and am pleased that he continues to monitor the situation carefully, but the collapse of Silicon Valley Bank UK shows how our vibrant start-up sector—particularly in life sciences and tech—had become reliant on a single financial institution. The impact of these bank failures may be that other banks become more risk averse, restricting lending and raising interest rates, resulting in a credit squeeze, possibly even beyond the start-up sector. That would damage an already weak economy, so how will the Chancellor monitor the situation there and ensure that businesses have access to the long-term capital that they need to grow and to thrive?
Jeremy Hunt
The right hon. Lady is absolutely right to raise that issue. I said in the Budget that I would return with a full solution to those issues in the autumn statement, but ahead of that we will be making announcements on: pension industry reform, because we want to unlock the £5 trillion of assets in the pension industry; reforms to help companies scale up, so that they do not feel they have to move to other countries when they want to list; and, reforms to green finance so that people can access the capital they need. All those things will be a part of a comprehensive solution that we will be announcing shortly.
Gary Sambrook (Birmingham, Northfield) (Con)
Mr Robin Walker (Worcester) (Con)
Jeremy Hunt
I thank my hon. Friend for his campaigning on this issue. He has long been a voice for reforms to childcare. He is absolutely right that this is one of the biggest sets of childcare reforms we have ever seen. That is why we are taking two and a half years to scale it up. We want to make sure that parents who want to take advantage of the new free hours offer can get the supply of childcare they need, and we will listen very carefully to what the Select Committee says.
Tonia Antoniazzi (Gower) (Lab)
Jeremy Hunt
It is not just about doctors leaving the profession, but doctors reducing their hours. The Royal College of Surgeons says that 69% of its members have reduced their hours as a result of the way that pension taxes used to work. Doctors themselves have welcomed the Budget warmly and as potentially transformative for the NHS.
Alexander Stafford (Rother Valley) (Con)
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Jeremy Hunt
What the hon. Member forgets is that it is not just doctors or, indeed, millionaires who want to save for a decent pension pot; it is ordinary people, and that is who we are on the side of in this Government. When it comes to reforms to the state pension age, we follow a process that balances the interests of taxpayers and the interests of pensioners, and also looks at life expectancy.
James Wild (North West Norfolk) (Con)
Given that the Chancellor has protected the new hospitals budget, may I express the huge frustration of my constituents at delays in the announcement that the RAAC-ravaged—reinforced autoclaved aerated concrete-ravaged—Queen Elizabeth Hospital in King’s Lynn will be part of the programme and urge that decisions are announced as soon as possible?
Jeff Smith (Manchester, Withington) (Lab)
Jeremy Hunt
It would be if his comment had not been quoted out of context, as the hon. Gentleman just did, because he also said that he could see in the Budget a growth plan and he strongly welcomed measures such as the childcare reform.
Priti Patel (Witham) (Con)
In the light of the current pressures on the international banking system, can the Chancellor give an assurance about and an update on the actions he will be taking to ensure that credit flows to small and medium-sized enterprises, our rural businesses and, indeed, start-ups, because at the end of the day they should never be penalised for the misdemeanours of large banks?
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Jeremy Hunt
What I say to the hon. Lady, whom I greatly respect, is that we did a lot for public services in the autumn statement, including a £3 billion increase in the annual schools budget and an £8 billion increase in the annual health and care budget. We are always focusing on public services, and we do support a progressive tax system.
Sir Desmond Swayne (New Forest West) (Con)
Will the Chancellor tweak the childcare initiative to enable families in which one parent wants to care for children full-time to have a realistic prospect of being able to afford to do so?
Jeremy Hunt
We think these reforms will make a big difference to all parents. Our priority is parents who want to work and who are prevented from working by the expense of the current system. I would remind my right hon. Friend that we still have a 15-hour free childcare offer for all parents, irrespective of whether they work, for three and four-year-olds.
Deidre Brock (Edinburgh North and Leith) (SNP)
Researchers at Warwick University and the London School of Economics estimate that the non-dom regime denies the Exchequer about £3.2 billion per year. Why did the Chancellor not take steps to abolish that in last week’s Budget, instead of creating more hoops for universal credit claimants to jump through?
Anthony Browne (South Cambridgeshire) (Con)
The Leader of the Opposition led his charge against the Budget by saying that the UK was the sick man of Europe, yet the IMF shows that the UK had the fastest-growing economy in the G7 not just last year but the year before, and that since the Conservatives came to power in 2010 the UK has had the fastest-growing economy of the major economies in Europe. Does my right hon. Friend the Chancellor agree that, although there are clearly major economic challenges, there are many reasons—not least the tech sector in South Cambridgeshire—to be confident about the future of the UK economy?
Jeremy Hunt
I completely agree and, thanks to the brilliant efforts of the tech sector in South Cambridgeshire, we have now become the third largest tech sector in the world, after the United States and China, thanks to the Conservative Government.
Dave Doogan (Angus) (SNP)
My constituent Fiona Cooper was seeking to close the national insurance contribution gaps in her pension just before retirement and was frustrated that the advice she got about her missing years from HMRC needed validating by the Department for Work and Pensions. Does the Chancellor agree that one set of numbers is the cornerstone of any enterprise, and is he also frustrated that she has been advised that she will need to close full years before she can close part years?
Dr Luke Evans (Bosworth) (Con)
The Chancellor and I sat for three years on the Health Committee hearing evidence of just how restrictive the pension rules were for the likes of doctors. The fact that he has now been able to make that change is fantastic. Will he take that approach to dealing with some of the other red tape around retention and recruitment for other professions in the health service because, as the British Medical Association said, it is making a real difference?
Jeremy Hunt
Few people know as much about this issue as my hon. Friend, given his background in the NHS. He is right, and I know that my right hon. Friend the Secretary of State for Health and Social Care is looking closely at the issue of retention, which has an equally important role to play.
Saqib Bhatti (Meriden) (Con)
Thanks to the quick thinking and quick moves by the Chancellor, the Prime Minister and the Treasury, the tech sector was saved from almost certain oblivion, and at no cost to the taxpayer. Can my right hon. Friend confirm that he is still ambitious for the tech sector, and can he confirm that the merger with HSBC will ensure that our fantastic tech sector, especially our start-ups, will have access to the funding they need?
Jeremy Hunt
My hon. Friend is right. We have a very good solution to the Silicon Valley bank issue with the HSBC takeover. In the long run, we would like our brilliant tech superstar companies to have more choice about how they finance their expansion, and we will bring forward plans to make sure that happens.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
On a point of order, Mr Speaker. The Minister said to me in her response that the Chief Secretary had just confirmed with her that we had signed the memorandum of understanding on regulatory co-operation with the EU. Could you please advise me whether she meant that both sides had signed and the agreement has been secured with the EU? I cannot find the details anywhere. Can you advise me where MPs are able to see the agreement?
Financial Statement and Budget Report
Jeremy Hunt Excerpts(2 years, 1 month ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Madam Deputy Speaker, in the face of enormous challenges, I report today on a British economy which is proving the doubters wrong. In the autumn, we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked. The International Monetary Fund says our approach means the UK economy is on the right track, but we remain vigilant and will not hesitate to take whatever steps are necessary for economic stability.
Today, the Office for Budget Responsibility forecasts that, because of changing international factors and the measures I take, the UK will not now enter a technical recession this year. It forecasts we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that is not all we have done. In the face of a cost of living crisis, we have demonstrated our values by protecting struggling families with a £2,500 energy price guarantee, one-off support and the uprating of benefits with inflation. Taken together, these measures are worth £94 billion over this year and next—one of the largest support packages in Europe. That averages over £3,300 of cost of living help for every household in the country.
Today, we deliver the next part of our plan: a Budget for growth. Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people and provides a safety net for older people, all while making our country one of the most prosperous in the world—prosperity with a purpose. That is why growth is one of the Prime Minister’s five priorities for our country. I deliver that today by removing obstacles that stop businesses investing, by tackling labour shortages that stop them recruiting, by breaking down barriers that stop people working and by harnessing British ingenuity to make us a science and technology superpower.
I start with the forecasts produced by Richard Hughes and his team at the independent Office for Budget Responsibility, whom I thank for their diligent work. They have looked in detail at the Prime Minister’s economic priorities. The first of those is to halve inflation. Inflation destroys the value of hard-earned pay, deters investment and foments industrial strife. This Government remain steadfast in our support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target. Despite continuing global instability, the OBR reports today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. That is more than halving inflation. High inflation is the root cause of the strikes we have seen in recent months. We will continue to work hard to settle those disputes, but only in a way that does not fuel inflation. Part of the fall in inflation predicted by the OBR happens because of additional measures I take today.
First, I recognise that even though wholesale energy prices have been falling, there is still enormous pressure on family finances. Some people remain in real distress and we should always stand ready to help where we can. So after listening to representations from Martin Lewis and other experts, I today confirm that the energy price guarantee will remain at £2,500 for the next three months. This means the £2,500 cap for the typical household will remain in place when energy prices remain high, ahead of an expected fall in prices from July. This measure will save the average family a further £160 on top of the energy support measures already announced.
The second measure concerns over 4 million households on prepayment meters. They are often the poorest households, but they currently pay more than comparable customers on direct debit. Ofgem has already agreed with suppliers a temporary suspension of forced installations of prepayment meters, but today I go further and confirm that we will bring their charges in line with comparable direct debit charges. Under a Conservative Government, the energy premium paid by our poorest households is coming to an end.
Next, I have listened to representations from my hon. Friends the Members for East Devon (Simon Jupp), for North Cornwall (Scott Mann), for Colne Valley (Jason McCartney) and for Central Suffolk and North Ipswich (Dr Poulter) about the risk to community facilities, especially swimming pools, caused by high costs. When times are tough, such facilities matter even more. [Interruption.] Today, I am—[Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. We want to hear what the Chancellor of the Exchequer is actually saying. Enough.
Jeremy Hunt
Today I am providing a £63 million fund to keep our public leisure centres and pools afloat. I have also heard from the charities Minister, my right hon. Friend the Member for Pudsey (Stuart Andrew), and his Secretary of State, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), about the brilliant work that third sector organisations are doing to help people struggling in tough times. They can often reach people in need that central or local government cannot, so I will give his Department £100 million to support thousands of local charities and community organisations to do their fantastic work.
I also note the personal courage of one of my predecessors, my right hon. Friend the Member for Bromsgrove (Sajid Javid), in talking about the tragedy of suicide and the importance of preventing it. We already invest a lot in this area, but I will assign an extra £10 million over the next two years—nearly a million pounds for every year that he has been in Parliament—to help the voluntary sector play an even bigger role in stopping more families experiencing that intolerable heartache.
My penultimate cost of living measure concerns one of our other most treasured community institutions, the great British pub. In December, I extended the alcohol duty freeze until 1 August, after which duties will go up in line with inflation in the usual way. But today I will do something that was not possible when we were in the EU and significantly increase the generosity of draught relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets. It is a differential a Conservative Government will maintain as part of a new Brexit pubs guarantee. [Hon. Members: “More.”] British ale is warm, but the duty on a pint is frozen. And even better, thanks to the Windsor framework negotiated by my right hon. Friend the Prime Minister, that change will now apply to every pub in Northern Ireland.
Finally, I have heard the representations from my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis), my right hon. Friend the Member for Witham (Priti Patel), my hon. Friend the Member for South Thanet (Craig Mackinlay) and The Sun newspaper about the impact on motorists of the planned 11p rise in fuel duty. I notice the party opposite called for a freeze on this duty. Somehow they forgot to tell the British people they have voted against every single fuel duty freeze for the last 12 years. Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty, so here is what I am going to do: for a further 12 months I am going to maintain the 5p cut and I am going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced.
Our energy price guarantee, fuel duty and duty on a pint, all frozen in today’s Budget. That does not just help families: it helps the economy too, because their combined impact reduces CPI inflation by nearly three quarters of a per cent. this year, lowering inflation when it is particularly high.
I now turn to the Prime Minister’s second priority, which is to reduce debt. Here too our plan is on track. Underlying debt is forecast to be 92.4% of GDP next year, then 97.3%, 94.6%, 94.8%, before falling to 94.6% in 2027-28. We are meeting the debt priority. And with a buffer of £6.5 billion, it means we are meeting our fiscal rule to have debt falling as a percentage of GDP by the fifth year of the forecast.
As a proportion of GDP, our debt remains lower than the USA, Canada, France, Italy and Japan and, because of the decisions I take today and the improved outlook for public finances, underlying debt in five years’ time is now forecast to be nearly 3 percentage points of GDP lower than it was in the autumn. That means more money for our public services and a lower burden for future generations—deeply held Conservative values which we put into practice today.
At the autumn statement, I also announced that public sector net borrowing must be below 3% of GDP over the same period. The OBR confirmed today that we are meeting that rule, with a buffer of £39.2 billion. In fact our deficit falls in every single year of the forecast, with borrowing falling from 5.1% of GDP in ’23-24, to 3.2%, to 2.8%, to 2.2% and 1.7% in ’27-28.
Even better, in the final two years of the forecast, our current budget is in surplus, meaning we only borrow for investment and not for day-to-day spending. Day-to-day departmental spending will grow at 1% a year on average in real terms after ’24-25 until the end of the forecast period. Capital plans are maintained at the same level set at the autumn statement. We will uprate tobacco duty and we will freeze the gross gaming duty yield bands. We are also maintaining the starting rate for savings and ISA subscription limits, and we will bring forward a range of measures to tackle promoters of tax avoidance schemes. Taken together, today’s measures lead to a slightly lower overall tax burden for the rest of the Parliament compared with the OBR’s autumn forecast. Other parties run out of money, but a Conservative Government are reducing borrowing and improving our public finances. By doing so, we are on track to halve inflation, get debt falling and grow our economy, which I turn to next.
Growth is the Prime Minister’s third priority and the focus of today’s Budget. Thirteen years ago, we inherited an economy that had crashed—[Interruption.] Opposition Members might want to listen to this, because since 2010, we have grown more than major countries like France, Italy or Japan, and about the same as Europe’s largest economy, Germany. We have halved unemployment, we have cut inequality and we have reduced the number of workless households by 1 million.
For the first time ever, because of rises in tax thresholds made by successive Conservative Chancellors, people in our country can earn £1,000 a month without paying a penny of tax or national insurance. The Labour party opposed those tax reductions, but they have helped lift 2 million people out of absolute poverty, after housing costs, including 400,000 pensioners and 500,000 children. That averages 80 pensioners and 100 children lifted out of poverty for every single day we have been in office.
Today, we face the future with extraordinary potential. The World Bank said that of all big European countries, we are the best place to do business. Global chief executives say that apart from America and China, we are the best country to invest in. We became the second country in the world to have a stock of foreign direct investment worth $2 trillion, and London has just pipped New York and 53 other global cities to be the best place in the world for female entrepreneurs.
Declinists are wrong about our country for another reason, which is our strength in new industries that will shape this century. Over the last 13 years, under Conservative leadership, we have become the world’s third trillion-dollar tech economy after the US and China. We have built the largest life sciences sector in Europe, producing a covid vaccine that saved 6 million lives and a treatment that saved 1 million more.
Our film and TV industry has become Europe’s largest, with our creative industries growing at twice the rate of the economy; our advanced manufacturing industries produce around half the world’s large civil aircraft wings; and thanks to a clean energy miracle, we have become a world leader in offshore wind. Other parties talk about a green energy revolution, so I gently remind them that nearly 90% of our solar power was installed in the last 13 years—showing it is the Conservatives who fix the roof when the sun is shining.
Let us turn now to what the OBR says about our growth prospects. In November, it expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023. That left many families feeling concerned about the future. But today, the OBR forecasts we will not enter a recession at all this year, with a contraction of just 0.2%. After this year, the UK economy will grow in every single year of the forecast period, by 1.8% in 2024, then 2.5%, 2.1%, and 1.9% in 2027. It also expects the unemployment rate to rise by less than one percentage point to 4.4%, with 170,000 fewer people out of work compared with its autumn forecast.
That return to growth has direct consequences for our role on the global stage. I am proud that we are giving the brave people of Ukraine more military support than anyone else in Europe. On Monday, we were able to go even further, with my right hon. Friend the Prime Minister announcing a £5 billion package of funding for the Ministry of Defence—an additional £2 billion next year and £3 billion the year after. Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11 billion to our defence budget over the next five years, and it will be nearly 2.25% of GDP by 2025.We were the first large European country to commit to 2% of GDP for defence, and we will now raise that to 2.5% as soon as fiscal and economic circumstances allow.
Following representations from the equally persuasive Minister for Veterans’ Affairs, I am today also increasing support for our brave ex-servicemen and women. We will provide a package worth over £30 million to increase the capacity of the Office for Veterans’ Affairs, support veterans with injuries returning from their service and increase the availability of veteran housing.
But to be Europe’s biggest defender of democracy, we must build Europe’s most dynamic economy. That means tackling our long-standing productivity issues, including two in particular which I address today: lower business investment and higher economic inactivity than other countries. Too often companies struggle to recruit, and even when they do, output per employee is lower. So today I set out the four pillars of our industrial strategy to address these issues. As colleagues will know from my Bloomberg speech, they all conveniently start with the letter E: enterprise, employment, education and everywhere. I start with everywhere—[Interruption.] Well, Opposition Members may not want to level up growth across the United Kingdom, but we do.
This Government were elected on a mandate to level up. We have already allocated nearly £4 billion to over 200 projects across the country through the first two rounds of the levelling-up fund. A third round will follow. Since we started focusing on levelling up, 70% of the growth in salaried jobs has come from outside London and the south-east, and today we take further steps. Canary Wharf and the Liverpool docks were two outstanding regeneration projects that happened under a previous Conservative Government. I pay tribute to Lord Heseltine for making them happen, because they transformed the lives of thousands of people. They showed what is possible when entrepreneurs, Government and local communities come together.
So today I announce that we will deliver 12 new investment zones—12 potential Canary Wharfs. In England, we have identified the following areas as having the potential to host one: west midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, east midlands, Teesside and, once again, Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland. To be chosen, each area must identify a location where it can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters. If the application is successful, it will have access to £80 million of support for a range of interventions, including skills, infrastructure, tax reliefs and business rates retention.
Working together with our formidable Levelling Up Secretary, I also want to give some further support to levelling up areas under the E of everywhere. First, I will invest over £200 million in high-quality local regeneration projects across England, including the regeneration of Tipton town centre and the Marsden New Mills redevelopment scheme. I am also announcing a further £161 million for regeneration projects in mayoral combined authorities and the Greater London Authority, and I will make over £400 million available for new levelling-up partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, south Tyneside and Bassetlaw.
Having listened to the case for better local transport infrastructure from many hon. Members, I can announce a second round of the city region sustainable transport settlements, allocating £8.8 billion over the next five-year funding period. Following a wet then cold winter, I have also received particularly strong representations from my hon. Friends the Members for North Devon (Selaine Saxby), for South West Devon (Sir Gary Streeter) and for Newton Abbot (Anne Marie Morris), as well as Councillor Peter Martin from my own constituency, about the curse of potholes. The spending review allocated £500 million every year to the potholes fund, but today I have decided to increase that fund by a further £200 million next year to help local communities tackle this problem.
For Scotland, Wales and Northern Ireland, this Budget delivers not only a new investment zone but an additional £320 million for the Scottish Government, £180 million for the Welsh Government and £130 million for the Northern Ireland Executive as a result of Barnett consequentials. On top of that, in Scotland I can announce up to £8.6 million of targeted funding for the Edinburgh festivals as well as £1.5 million funding to repair the Cloddach bridge. I will provide £20 million of funding for the Welsh Government to restore the Holyhead breakwater, and in Northern Ireland I am allocating up to £3 million to extend the tackling paramilitarism programme and up to £40 million to extend further and higher education participation.
But for levelling up to truly succeed, we need to unleash the civic entrepreneurship that is only possible when elected local leaders are able to fund and deliver solutions to their own challenges. That means giving them responsibility for local economic growth and the benefit from the upside when it happens. So this Government will consult on transferring responsibilities for local economic development from local enterprise partnerships to local authorities from April 2024.
I will also boost Mayors’ financial autonomy by agreeing multi-year single settlements for the west midlands and the Greater Manchester Combined Authority in the next spending review, something I intend to roll out for all mayoral areas over time. I have also agreed a new long-term commitment so that they can retain 100% of their business rates, something I also hope to expand to other areas. Investment zones, regeneration projects, levelling-up partnerships, local transport infrastructure and business rates retention—more control for local communities over their economic destiny, so we will level up wealth and opportunity everywhere.
Today’s priority is the Prime Minister’s promise to grow the economy. We have talked about making that growth happen everywhere, so I now move on to my second E—enterprise. We need to be—[Interruption.] Well, this has never been something of interest to the Labour party, but the Conservatives will not rest until we are Europe’s most dynamic enterprise economy, and under a Conservative Government that is exactly what has been happening. Since 2010, we have 1 million more businesses in the UK—a bigger increase than Germany, France or Italy—but I want another million and another million after that. So today I bring forward enterprise measures in these three areas: to lower business taxes, to reduce energy costs and to support our growth industries.
Let us start with business taxation. Conservatives know the importance of a competitive tax regime. We already have lower levels of business taxation than France, Germany, Italy or Japan, but I want us to have the most pro-business, pro-enterprise tax regime anywhere. Even after the corporation tax rise this April, we will have the lowest headline rate in the G7—lower than any period under the last Labour Government. Only 10% of companies will pay the full 25% rate, but even at 19% our corporation tax did not incentivise investment as effectively as countries with higher headline rates. The result is less capital investment and lower productivity than countries like France and Germany.
We have already taken measures to address this. For larger businesses, we had the super deduction, introduced by my right hon. Friend the Prime Minister, which ends this month. For smaller businesses, we increased the annual investment allowance to £1 million, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits. If the super deduction was allowed to end without a replacement, we would have fallen down the international league tables on tax competitiveness and damaged growth. As a Conservative, I could not allow that to happen.
Today, I can announce that we will introduce a new policy of full capital expensing for the next three years, with an intention to make it permanent as soon as we can responsibly do so. That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It is a corporation tax cut worth an average of £9 billion a year for every year that it is in place, and its impact on the economy will be huge. The OBR says that it will increase business investment by 3% for every year that it is in place. This decision makes us the only major European country with full expensing and gives us the joint most generous capital allowance regime of any advanced economy.
I understand that the Labour party is reviewing business taxes. Let me save it the bother. It puts them up, and we cut them.
I also want to make our taxes more competitive in our life science and creative industry sectors. In the autumn, I said I would return with a more robust research and development tax credit scheme for smaller research-intensive companies. Today, I am introducing an enhanced credit which means that if a qualifying small or medium-sized business spends 40% or more of its total expenditure on R&D, it will be able to claim a credit worth £27 for every £100 that it spends. That means an eligible cancer drug company spending £2 million on R&D will receive over £500,000 to help it to develop breakthrough treatments. That is a £1.8 billion package of support helping 20,000 cutting-edge companies who, day by day, are turning Britain into a science superpower.
The Government’s audio-visual tax reliefs have helped to make our film and TV industry the biggest in Europe. Only last month, Pinewood announced an expansion which will bring another 8,000 jobs to the UK. To give even more momentum to this critical sector, I will introduce an expenditure credit with a rate of 34% for film, high-end television and video games, and 39% for the animation and children’s TV sectors. I will maintain the qualifying threshold for high-end television at £1 million. Because our theatres, orchestras and museums do such a brilliant job at attracting tourists to London and the UK, I will extend for another two years their current 45% and 50% reliefs.
An enterprise economy needs low taxes, but it also needs cheap and reliable energy. We have already announced billions of support to help businesses reduce their energy bills through the energy bills relief scheme and the energy bills discount scheme. We have appointed Dame Alison Rose, chief executive of NatWest, to co-chair our national energy efficiency taskforce and help deliver our national ambition to reduce energy use by 15%. To support her efforts, I will extend the climate change agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures. But the long-term solution is not subsidy, but security. That means investing in domestic sources of energy that fall outside Putin’s or any autocrat’s control. We are world leaders in renewable energy, so today I want to develop another plank of our green economy: carbon capture usage and storage. I am allocating up to £20 billion of support for the early development of CCUS, starting with projects from our east coast to Merseyside to north Wales, paving the way for CCUS everywhere across the UK as we approach 2050. That will support up to 50,000 jobs, attract private sector investment and help capture 20 to 30 million tonnes of carbon dioxide per year by 2030.
We have increased the proportion of electricity generated from renewables from under 10% when we came into office to nearly 40%, but because the wind does not always blow and the sun does not always shine—even under the Conservatives—we will need another critical source of cheap and reliable energy, and that is nuclear. There have been no more powerful advocates for this than my hon. Friends the Members for Ynys Môn (Virginia Crosbie), for Copeland (Trudy Harrison), for Hartlepool (Jill Mortimer) and for Workington (Mark Jenkinson). They rightly say that increasing nuclear capacity is vital to meet our net zero obligations. To encourage private sector investment into our nuclear programme, I today confirm that, subject to consultation, nuclear power will be classed as environmentally sustainable in our green taxonomy, giving it access to the same investment incentives as renewable energy.
Alongside that will come more public investment. In the autumn statement, I announced the first state-financed investment in nuclear for a generation, a £700 million investment in Sizewell C. Today, I can announce two further commitments to deliver our nuclear ambitions. First, following representations from our energetic Energy Security Secretary, I am announcing the launch of Great British Nuclear, which will bring down costs and provide opportunities across the nuclear supply chain to help provide one quarter of our electricity by 2050. [Interruption.] It is so good to hear that the Labour party is in favour of nuclear energy. [Interruption.] It is just a shame that it never did any. Secondly, I am launching the first competition for small modular reactors. It will be completed by the end of this year and if demonstrated as viable we will co-fund this exciting new technology.
Finally, under the E of enterprise, I come to our innovation economy: a central area of national competitive advantage for the United Kingdom. Over the weekend, I worked night and day with the Prime Minister and the Governor of the Bank of England to protect the deposits of thousands of our most cutting-edge companies. We successfully secured the sale of the UK arm of Silicon Valley Bank to HSBC, so the future of those companies is now safe in the hands of Europe’s biggest and one of its most creditworthy banks. But those events show that we need to build a larger, more diverse financing system, where the benefits of investment in high-growth firms are available to more investors. I will return in the autumn statement with a plan to deliver that. It will include measures to unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list, and complete our response to the challenges created by the US Inflation Reduction Act.
When it comes to our innovation industries, however, I want to make progress on two areas today. Nigel Lawson made the City of London one of the world’s top financial centres by competitive deregulation. With our Brexit autonomy, we can do the same for our high-growth sectors. Today, I want to reform the regulations around medicines and medical technologies. We are lucky to have, in the Medicines and Healthcare products Regulatory Agency, one of the most respected drugs regulators in the world—indeed, the very first anywhere to license a covid vaccine. From 2024, it will move to a different model, which will allow rapid, often near-automatic sign-off for medicines and technologies already approved by trusted regulators in other parts of the world such as the United States, Europe and Japan. At the same time, it will set up a swift new approval process for the most cutting-edge medicines and devices to ensure that the UK becomes a global centre for their development. With an extra £10 million of funding over the next two years, they will put in place the quickest, simplest regulatory approval in the world for companies seeking rapid market access. We are proud of the life science sector, which received more inward investment than any in Europe last year. Today’s change will make the UK an even more exciting place to invest, using our Brexit freedoms and speeding up access for NHS patients to the very newest drugs.
Today, with our talented Science, Innovation and Technology Secretary, I also take measures to strengthen our position in artificial intelligence, where the UK hosts one third of all European companies. I am accepting all nine of the digital technology recommendations made by Sir Patrick Vallance in the review that I asked him to do in the autumn statement. I can report to the House that we will launch an AI sandbox to trial new, faster approaches to help innovators get cutting-edge products to market. We will work at pace with the Intellectual Property Office to provide clarity on IP rules so that generative AI companies can access the material they need. We will ask Sir Patrick’s successor, Dame Angela McLean, to report before the summer on options around the growth duty for regulators.
Because AI needs computing horsepower, I today commit around £900 million of funding to implement the recommendations of the independent “Future of Compute” review for an exascale computer. The power needed by AI’s complex algorithms can also be provided by quantum computing, so today we publish a quantum strategy, which will set out our vision to be a world-leading quantum-enabled economy by 2033, with a research and innovation programme totalling £2.5 billion.
I also want to encourage the best AI research to happen in the UK, so will award a prize of £1 million every year for the next 10 years to the person or team that does the most groundbreaking British AI research. The world’s first stored-program computer was built at the University of Manchester in 1948, and was known as the Manchester baby. Seventy-five years on, the baby has grown up, so I will call this new national AI award the Manchester prize in its honour. We want the UK to be the best place in Europe for companies to locate, invest and grow, so today’s enterprise measures strengthen our technology and life science sectors, invest in energy security and—for three years, but I hope permanently—cut corporation tax by £9 billion a year, to give us the best investment incentives of any advanced economy.
An enterprise economy can only grow if it can hire the people it needs, which brings me to my third pillar after everywhere and enterprise. [Interruption.] I said it was a growth budget. We are talking about the E of employment. I am going to talk about a difficult topic for the Labour party. Brexit was a decision by the British people to change our economic model. In that historic vote, our country decided to move from a model based on unlimited low-skill migration to one based on high wages and high skills. Today, we show how we will deliver that, with a major set of reforms. The OBR says that it is the biggest positive supply-side intervention that it has ever recognised in its forecast.
We have around 1 million vacancies in the economy but, excluding students, more than 7 million adults of working age are not in work. That is a potential pool of seven people for every vacancy. Conservatives believe that work is a virtue. We agree with the road haulage king Eddie Stobart, who said:
“The only place success comes before work is the dictionary.”
Today, I bring forward reforms to remove the barriers that stop people who want to work from doing so. I start with over 2 million people who are inactive due to a disability or long-term sickness. Thanks to the reforms courageously introduced by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), the number of disabled people in work has risen by 2 million since 2013. But even after that, we could fill half the vacancies in the economy with people who say that they would like to work, despite being inactive due to sickness or disability. With Zoom, Teams and new working models that make it easier to work from home, that is possible now more than ever.
For that reason, the ever-diligent Work and Pensions Secretary today takes the next step in his groundbreaking work on tackling economic inactivity. I thank him for that, and today we publish a White Paper on disability benefits reform. It is the biggest change to our welfare system in a decade. His plans will abolish the work capability assessment in Great Britain and will separate benefit entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.
Today, I am going further by announcing that, after listening to representations from the Centre for Social Justice and others, in England and Wales we will fund a new programme called universal support. This is a new, voluntary employment scheme for disabled people, where the Government will spend up to £4,000 a person to help them find appropriate jobs and put in place the support that they need. It will fund 50,000 places every single year.
We also want to help those who are forced to leave work because of a health condition such as back pain or a mental health issue. We should give them support before they end up leaving their job, so working with our Health Secretary, I am also announcing a £400-million plan to increase the availability of mental health and musculoskeletal resources, and expand the individual placement and support scheme. Because occupational health provided by employers has a key role to play, I will also bring forward two new consultations on how to improve its availability and double the funding for the small company subsidy pilot.
Another group that deserves particular attention is children in care. They, too, should be given all possible help to make a normal working life possible when they reach adulthood. Often, they depend on foster families, who do a brilliant job, so today I am nearly doubling the qualifying care relief threshold to £18,140 which will give a tax cut to a qualifying carer worth an average of £450 a year. I will also increase the funding that we provide to the Staying Close programme by 50%, to help more care leavers into employment, and I will support young people with special educational needs and disabilities with a £3-million pilot expansion of the Department for Education’s supported internship programme, to help those people to transition from education into the workplace. No civilised society can ignore the contribution that can be made by those with challenging family circumstances, a long-term illness or a disability, so today we remove the barriers that we can, with reforms that strengthen our society as well as our economy.
The next set of employment reforms affects those on universal credit without a health condition, who are looking for work or on low earnings. There are more than 2 million jobseekers in this group—more than enough to fill every vacancy in the economy. Independence is always better than dependence. [Interruption.] With some exceptions, Madam Deputy Speaker. That is why a Conservative Government believe that those who can work, should. Sanctions will be applied more rigorously to those who fail to meet strict work search requirements or choose not to take up a reasonable job offer. For those working low hours, we will increase the administrative earnings threshold from the equivalent of 15 hours to 18 hours at national living wage for an individual claimant, meaning that anyone working below that level will receive more work coach support, alongside a more intensive conditionality regime.
The next group of workers I want to support are those aged over 50. My younger officials have termed these people “older” workers, although as a 56-year-old I prefer the term “experienced”. Fully 3.5 million people of pre-retirement age over 50 are not part of the labour force—an increase of 320,000 since before the pandemic. We now have the 23rd highest inactivity rate for over 55s in the OECD. If we matched the rate of Sweden, we would add more than 1 million people to our national labour force.
Madam Deputy Speaker, I say this not to flatter you, but older people are the most skilled and experienced people we have. [Hon. Members: “Oh!”] No country can thrive if it turns its back on such a wealth of talent and ability. But for too many, turning 50 is a moment of anxiety about the cliff edge of retirement rather than a moment of anticipation about another two decades of fulfilment. I know this myself. After I turned 50, I was relegated to the Back Benches and planned for a quiet life, but instead I decided to set an example by embarking on a new career in finance.
Jeremy Hunt
It’s going well, thank you. So today I take three steps to make it easier for those who wish to work longer to do so.
First, we will increase the number of people who get the best possible financial, health and career guidance ahead of retirement by enhancing the Department for Work and Pensions’ excellent mid-life MOT strategy. It will also increase by fivefold the number of 50-plus universal credit claimants who receive mid-life MOTs from 8,000 to 40,000 a year.
Secondly, with the Secretary of State for Education, my right hon. Friend the Member for Chichester (Gillian Keegan), who has a deep personal commitment to this area, we will introduce a new kind of apprenticeship, targeted at the over 50s who want to return to work. They will be called returnerships and operate alongside skills boot camps and sector-based work academies. They will bring together our existing skills programmes to make them more appealing for older workers, focusing on flexibility and previous experience to reduce training length.
Finally, I have listened to the concerns of many senior NHS clinicians, who say unpredictable pension tax charges are making them leave the NHS just when they are needed most. The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the autumn statement. But ahead of that, I do not want any doctor to retire early because of the way pension taxes work. It is an issue I have discussed not just with the current Secretary of State for Health and Social Care, my right hon. Friend the Member for North East Cambridgeshire (Steve Barclay), but a former Health Secretary who kindly took a break from WhatsApping his colleagues to consider it.
As Chancellor, I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons. So today I will increase the pensions annual tax-free allowance by 50%, from £40,000 to £60,000. Some have also asked me to increase the lifetime allowance from its £1 million limit. But I have decided not to do that. Instead I will go further and abolish the lifetime allowance altogether. It is a pension tax reform that will stop over 80% of NHS doctors from receiving a tax charge, incentivise our most experienced and productive workers to stay in work for longer, and simplify our tax system, taking thousands of people out of the complexity of pension tax. [Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. Just because the Chancellor of the Exchequer is either unpopular or popular, we still need to keep the noise down because we still have to hear what he has to say. He has more to say.
Jeremy Hunt
This is a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers. That is the E of the employment pillar of today’s growth budget.
Which brings me to the final pillar of our growth plan. After employment, enterprise and everywhere, I turn to the E of education. Over more than a decade, this Conservative Government have driven improvement in our education system. We have risen by nearly 10 places in the international league tables for English and maths since 2015.
In the autumn statement, I built on this progress with an extra £2.3 billion annual investment to our schools. We are reviewing our approach to skills with Sir Michael Barber. We have set out our plans to transform lifelong learning with a new lifelong loan entitlement and my right hon. Friend the Prime Minister announced plans to make maths compulsory until 18. But today I want to address an issue in our education system that is bad for children and damaging for the economy. It is an issue that starts even before a child enters the gates of a school. Today I want to reform our childcare system.
We have the one of the most expensive systems in the world. Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.
For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers, such as Denmark and the Netherlands. If we matched Dutch levels of participation, there would be more than 1 million additional women working. And we can do that.
So today I announce a series of reforms that start that journey. I begin with the supply of childcare. We have seen a significant decline in childminders over recent years— down 9% in England in just one year. But childminders are a vital way to deliver affordable and flexible care, and we need more of them. I have listened to representations from my hon. Friend the Member for Stroud (Siobhan Baillie) and decided to address this by piloting incentive payments of £600 for childminders who sign up to the profession, rising to £1,200 for those who join through an agency.
I have also heard many concerns about cost pressures facing the sector. We know that is making it hard to hire staff and raising prices for parents, with around two thirds of childcare providers increasing fees last year alone. So we will increase the funding paid to nurseries providing free childcare under the hours offer by £204 million from this September, rising to £288 million next year. That is an average of a 30% increase in the two-year-old rate this year, just as the sector has requested.
I will also offer providers more flexibility in how they operate in line with other parts of the UK. So alongside that additional funding, we will change minimum staff-to- child ratios from 1:4 to 1:5 for two-year-olds in England as happens in Scotland, although the new ratios will remain optional with no obligation on either childminders or parents to adopt them.
I want to help the 700,000 parents on universal credit who, until the reforms I announced today, had limited requirements to look for work. Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. So for any parents who are moving into work or want to increase their hours, we will pay their childcare costs upfront. And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.
I turn now to parents of school-age children, who often face barriers to working because of the limited availability of wraparound care. One third of primary schools do not offer childcare at both ends of the school day, even though for many people a job requires it to be available before and after school. To address this, we will fund schools and local authorities to increase the supply of wraparound care so that all parents of school-age children can drop their children off between 8 am and 6 pm. Our ambition is that all schools will start to offer a full wraparound offer, either on their own or in partnership with other schools, by September 2026.
Today’s childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it. Taken together with earlier Conservative reforms, they amount to the most significant improvements to childcare provision in a decade. But if we really want to remove the barriers to work, we need to go further for parents who have a child under 3. For them childcare remains just too expensive.
In 2010, there was barely any free childcare for under-fives. A Conservative-led Government changed that, with free childcare for three and four-year-olds in England. It was a landmark reform, but not a complete one. I do not want any parent with a child under five to be prevented from working if they want to, because it is damaging to our economy and unfair, mainly to women, so today I announce that in eligible households in which all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three and four-year-olds, but for every single child over the age of nine months.
The 30 hours offer will now start from the moment maternity or paternity leave ends. It is a package worth on average £6,500 every year for a family with a two-year- old child using 35 hours of childcare every week, and it reduces their childcare costs by nearly 60%. Because it is such a large reform, we will introduce it in stages to ensure that there is enough supply in the market. Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping about half a million parents. From September 2024, that 15 hours will be extended to all children from nine months up, meaning that a total of nearly 1 million parents will be eligible. From September 2025, every single working parent of under-fives will have access to 30 hours of free childcare per week.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. Mr Perkins, stop it.
Jeremy Hunt
Today we complete a landmark Conservative reform. We help the economy, transform the lives of thousands of women and build a childcare system comparable to the best, with a major early years reform for our education system—the E of education, alongside the three other pillars of our growth plan: enterprise, employment and everywhere.
In November we delivered stability; today it is growth. We are tackling the two biggest barriers to businesses growing—investment incentives and labour supply—with the best investment incentives in Europe and the biggest ever employment package. For disabled people, more help; for older people, barriers removed; for families feeling the pinch, fuel duty frozen, beer duty cut and energy bills capped; and for parents, 30 hours of free childcare for all under-fives. Today we build for the future, with inflation down, debt falling and growth up. The declinists are wrong and the optimists are right. We stick to the plan because the plan is working. I commend this statement to the House.
Madam Deputy Speaker
I thank the Chancellor of the Exchequer for his Budget statement. [Interruption.] I hope the House will settle down, please. Under Standing Order No. 51, the first motion, entitled—[Interruption.] The bad behaviour is now on the Government side of the House! Let us have a bit of decorum, please, while we go through the necessary procedure.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Stamp duty land tax (transaction funded with the assistance of a subsidy) (motion no. 39);
(b) Fuel duties (excepted machines) (motion no. 44);
(c) Rates of tobacco products duty (motion no. 46);
(d) Late payment interest (value added tax) (motion no. 57);
(e) Charities (value added tax etc) (motion no. 65).—(Jeremy Hunt.)
Question agreed to.
Oral Answers to Questions
Jeremy Hunt Excerpts(2 years, 3 months ago)
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Marco Longhi (Dudley North) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
Mr Speaker, I did check that my Department still exists before coming along today, and you will be pleased to know that the great ship of state that is the Treasury sails serenely on.
In December, I announced the Edinburgh reforms, which take forward the Government’s ambition for the UK to be the world’s most innovative and competitive global financial centre.
Marco Longhi
Can the Chancellor please describe any relationships, or plans for them, to deliver the United Kingdom as a global financial hub, especially given the lack of equivalence with the EU?
Jeremy Hunt
I am very happy to do that for my hon. Friend. The flexibilities that we have since leaving the EU mean that we are able to do the Solvency II reforms, which mean that potentially £100 billion of extra investment will go into UK companies. Indeed, the whole of the Edinburgh reforms give us the opportunity to rethink our regulatory structures so that we do not just remain the world’s second largest exporter of financial services, but go from strength to strength.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
Concerns have been raised that legislation furthering deregulation of the financial sector is paving the way for an economic crash. Revocation of rules on commodity trading is a key concern. What steps has the Chancellor taken to ensure the Financial Services and Markets Bill, when passed, does not cause economic mayhem?
Jeremy Hunt
We have taken enormous trouble in our Edinburgh reforms package to make sure that we learn the lessons of the 2008 financial crash, but I would say to the hon. Member that financial services employ 21,000 people in Scotland. In fact, we called this set of reforms the Edinburgh reforms because they will be good not just for London, but for the whole of the UK.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Chancellor of the Exchequer (Jeremy Hunt)
Busy day for me. With permission, I would like to answer this with question 16.
Leaving the EU has enabled the UK to realise an array of economic opportunities—not just the Solvency II reforms, but 71 trade deals with non-EU countries worth £240 billion to the UK economy in 2021.
Steven Bonnar
I thank the Chancellor for that answer, but analysis by Bloomberg estimates that Brexit is costing the UK £100 billion a year in lost output. The Office for Budget Responsibility forecasts the UK economy will be 4% smaller in the medium term, again due to the impacts of Brexit. The Centre for Economic Performance has warned that Brexit has added almost £6 billion on to UK food bills in the two years to the end of 2021. How much more damage will need to be done before this Government take off the red, white and blue goggles and see the reality that Brexit is an economic drag of disastrous proportions for the countries of the UK?
Jeremy Hunt
And very important, too, if I may say so.
There is a certain irony in the SNP opposing Brexit at the same time as advocating separation for Scotland, which would have a far bigger impact. But as the hon. Member has talked about our economic performance, since we left the single market, our growth has actually been higher than that of France or Germany. There are other things that have happened since then as well, but I do not think it is the doom and gloom that he suggests.
Mr Sheerman
Last week, I was a bit unkind to one of the Treasury team, and can I apologise for that? I shall be very nice this morning.
Does the Chancellor agree with former Home Secretary Amber Rudd? Yesterday, she said that in order to be a Conservative today you have to have a few drinks and then say that Brexit actually works, or if you have really had a few drinks you can admit it does not work. Could we on all Benches admit that we are poorer in this country because of Brexit and do something about it?
Jeremy Hunt
All I would say is that, if Labour really are against Brexit, they should have the courage of their convictions and say they want to re-join the EU. That is the problem: because they do not believe they can make a success of it, they will never be able to run the British economy under it.
Anthony Browne (South Cambridgeshire) (Con)
I welcome the fact that this Government are so committed to making the UK an innovation nation that they have just today set up a whole new Government Department to promote innovation, science and technology. I have about 400 life science companies in my constituency, and there are some reservations about the reform to the research and development tax credit, introduced to try to tackle fraud in the sector. Can my right hon. Friend reassure them that the Government are still committed to supporting research and development companies while tackling fraud?
Jeremy Hunt
My hon. Friend is a formidable advocate for that sector and I do want to give him that reassurance. That is why we protected our R&D budget in the autumn statement at its highest ever level. We are continuing to look at how we can support the R&D small companies sector without allowing that fraud to happen. Thanks to his campaigning and the work of this Conservative Government, last year, we became only the third trillion-dollar tech economy in the whole world.
David Morris (Morecambe and Lunesdale) (Con)
May I thank the Chancellor for awarding Morecambe £50 million for the Eden project? It will transform my whole community. My question is about VAT tapering. When I was David Cameron’s small business tsar—a very long time ago—I came up with a formula for VAT tapering. Would my right hon. Friend like to meet me to talk about that further?
Jeremy Hunt
First, I congratulate my hon. Friend on his extraordinary campaigning for Eden Project North, which is a model for MPs standing up for their constituencies; he deserves huge congratulations on that. I will happily look at his proposals on VAT tapering. We already have the highest VAT threshold in the G7, but anything we can do to help small businesses, this Conservative Government always do.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
In the next financial year there will be a number of measures to help households with the lowest incomes, including a £900 cost of living payment, a 10.1% increase in benefits in line with inflation, and an increase in the national living wage to £10.42 an hour, which represents an extra £1,600 for someone in full-time work.
Dr Mullan
Notwithstanding the collective amnesia on the Opposition Benches, those of us on the Government Benches remember that when we took office in 2010, roughly £1 in every £4 spent by the Labour Government had been borrowed; nor will we forget being told “There is no money left.” Does my right hon. Friend agree that we are only able to take the steps he has outlined—as well as the steps we took during the pandemic—because of careful management of public finances by successive Governments?
Jeremy Hunt
My hon. Friend is entirely right. It is because we took difficult decisions to reduce the deficit by 80% in the period leading up to the pandemic that we were able to allocate £400 billion of help to families and businesses during the pandemic and £99 billion to families during the energy crisis, which means an average of £3,500 per family this year and next. There is a phrase for that: it is “fixing the roof while the sun is shining”.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
A plethora of economic statistics highlight UK inequality and how it affects households. In Ireland, the poorest 5% of the population are 63% richer than their equivalents in the UK. In France, the lowest-earning third earn 20% more than their UK equivalents, while the middle-income third earn 25% more. Low-income households in Germany are 21% richer than those in the UK. No wonder the workers are striking! Why are the Government maintaining a system that keeps workers in the UK poorer than their equivalents in France, Germany and Ireland? Why are they not paying the workers, and why are they not sorting out the strikes?
Jeremy Hunt
That is exactly why we are taking difficult decisions to give this country a high-skill, high-wage economy—measures that the Scottish National party opposed at every step.
Sir David Evennett (Bexleyheath and Crayford) (Con)
Kate Hollern (Blackburn) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Ten days ago, I announced the four pillars of our plan to transform productivity and make the UK one of the most prosperous countries in Europe. They all begin with the letter “e”, to help Opposition Members remember them easily: an enterprise economy with low taxation; world-class education and skills; high levels of employment, to reduce our dependence on migration; and growth spread everywhere, from South West Surrey to Leeds to Chorley.
Kate Hollern
Does the Chancellor recognise that it is his responsibility to deliver what people want, which is a fair tax system where everybody plays by the same rules? Will he disclose how many Government Ministers have personally benefited from non-dom tax status over the years, and how many have used overseas offshore trusts to reduce the taxes that they owe Britain?
Jeremy Hunt
I can tell the hon. Lady that, since 2010, no Member of Parliament has been allowed to benefit from non-dom status.
Rachel Reeves (Leeds West) (Lab)
Last week, Shell announced profits of £32 billion, the highest in its 115-year history. Today, BP announced profits of £23 billion, the highest in its history. Meanwhile, in April, energy bills for households will go up by £500. The cost of living crisis is far from over, so will the Government follow our lead and impose a proper windfall tax to keep people’s energy bills down.
Jeremy Hunt
I am glad that the right hon. Lady asked about windfall taxes, because our plans raise more money than she was advocating in the autumn, and they are also balanced and fair. Anything higher will stop investment, increase dependence on Putin and increase energy prices. I am afraid that it is more clean energy with the Conservatives and more expensive bills with Labour.
Rachel Reeves
There we go again: the Government shielding the energy companies and asking ordinary families and businesses to pay more. Shell has spent more on share buybacks than it has invested in renewables. Last year, BP’s dividends and share buybacks were 14 times higher than investment in low carbon energy. The Government are allowing energy companies to make profits that are the windfalls of war, while ordinary families and businesses pay the price. Is it not the case that the Tories cannot solve the cost of living crisis because they are the cost of living crisis?
Jeremy Hunt
No, Mr Speaker. The total tax take from that sector is £80 billion over five years, which is more than the entire cost of funding the police force. The shadow Chancellor can play politics, but we will be responsible because we want lower bills, more investment in transition and more money for public services, such as the police.
Greg Smith (Buckingham) (Con)
Jeremy Hunt
I discussed this issue with my right hon. Friend when she was the Secretary of State for Work and Pensions. I would be delighted to engage with her further ahead of the Budget to tap into any sensible ideas she has in this important area.
Carol Monaghan (Glasgow North West) (SNP)
Jeremy Hunt
What I can confirm is that there will be no tax cuts funded by borrowing. I can also confirm that those of us on this side of the House, unlike those on the hon. Member’s side, believe in lower taxes.
Andrew Selous (South West Bedfordshire) (Con)
Mrs Emma Lewell-Buck (South Shields) (Lab)
The recent inquiry by the child of the north all-party parliamentary group found that, under this Government, children in the north live in greater poverty, many in destitution, and that that problem is likely to keep growing. Why is it that, when it comes to children, this Government’s mission is always to level down rather than level up?
Jeremy Hunt
I gently say to the hon. Lady that there has been less poverty and inequality under this Government. We demonstrated that in the autumn statement, with a huge package of support—£99 billion—for houses and families up and down the country, targeted at the lowest paid.
James Wild (North West Norfolk) (Con)
Given the serious condition of the Queen Elizabeth Hospital in King’s Lynn, does the Chancellor agree that it would be better value for money to build a new hospital rather than to patch this one up? Will the Treasury back the plan by the Department of Health and Social Care to do just that and include it in the new hospitals programme?
Jeremy Hunt
My right hon. Friend is right to raise that issue. That is why I met Martin Lewis and the six big mortgage lenders before Christmas. We are very alive to those concerns and will monitor the situation closely.
Richard Burgon (Leeds East) (Lab)
It would cost around £1 billion to give nurses an inflation-matching pay rise. Scrapping the non-dom tax avoidance scheme used by the super-rich would raise more than £3 billion. Why, then, is the Chancellor putting non-doms before nurses?
Kit Malthouse (North West Hampshire) (Con)
When the Chancellor acceded to the Treasury throne, he appointed a panel of four advisers drawn from the City. Has the panel met, has he added anybody from small business or industry, and where can we find the minutes, please?
Jeremy Hunt
The economic advisory council has met, I believe, three times. I will write to my right hon. Friend with the details of what was discussed.
Charter for Budget Responsibility
Jeremy Hunt Excerpts(2 years, 3 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Today I have laid before Parliament the Charter for Budget Responsibility. The charter sets out the new fiscal framework announced at autumn statement 2022 and codifies the Government’s commitment to responsible management of the public finances. The fiscal rules ensure that policy keeps the public finances on a sustainable path, requiring that debt falls as a share of the economy over the forecast.
The charter was first published in draft on 17 November 2022. No further changes have been made to the charter since it was published in draft.
A debate and vote in the House of Commons on the updated charter will be scheduled in due course.
[HCWS526]
Asset Purchase Facility
Jeremy Hunt Excerpts(2 years, 3 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
The Monetary Policy Committee (MPC) of the Bank of England (“the Bank”) decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the asset purchase facility (APF) for monetary policy purposes by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and has since commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for its monetary policy purposes on 1 November 2022.
On 28 September 2022 the authorised maximum total size of the APF was increased by £100 billion from £866 billion to £966 billion to allow for the Bank to undertake a time-limited financial stability intervention in long-dated and index-linked gilt markets, which took place between 28 September 2022 and 14 October 2022. Purchases under this intervention totalled £19.3 billion.
On 4 November the Governor and I agreed to reduce the maximum size of the APF by £80 billion from £966 billion to £886 billion to reflect the unused portion of the recent financial stability related APF expansion. Separately, on 22 November 2022, the authorised maximum size of the APF was reduced by £15 billion from £886 billion to £871 billion to reflect the reduction in the stock of assets held by the APF for its monetary policy purposes since 5 May 2022.
On 29 November 2022, the Bank began to unwind its financial stability related gilt portfolio which it completed on 12 January 2023. I welcome the successful unwind of this portfolio which I note has been completed in a timely and orderly manner. I have therefore agreed with the Bank to decrease the authorised maximum size of the APF by a further £20 billion, from £871 billion to £851 billion, which reduces the size of the contingent liability associated with the APF’s indemnity.
The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.
A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.
[HCWS501]
Oral Answers to Questions
Jeremy Hunt Excerpts(2 years, 4 months ago)
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Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Chancellor of the Exchequer (Jeremy Hunt)
Merry Christmas to you and your staff, Mr Speaker; as your fourth Chancellor of the year, I sincerely hope that I am here this time next year to wish you merry Christmas as well.
The Government are very conscious that these are tough times for businesses as well as families. That is why in the autumn statement I announced, among many other measures, a package of business rates support worth £13.6 billion over the next five years, including a 75% relief for retail, hospitality and leisure properties. That will help thousands of businesses in Scotland.
Neale Hanvey
A very merry Christmas to you and yours, Mr Speaker, and a happy new year to boot.
My constituency of Kirkcaldy and Cowdenbeath plays host to energy giants Shell and ExxonMobil; Seagreen and Berwick Bank wind farms, which supply 2.8 million homes in England with energy, are just off our coastline. In such a land of energy plenty, it is perverse that so many people live in poverty and that businesses struggle to survive. Kirkcaldy ice arena is the oldest rink in the United Kingdom and home to the Fife Flyers ice hockey team. It survived world war two, fire, the financial crash and covid, but in energy-rich Scotland it is struggling to pay its unavoidable energy costs. What targeted support is the Chancellor going to make available for energy-dependent companies such as the rink? Will he meet me to discuss how best to tackle the problem?
Jeremy Hunt
We have announced a package of support for businesses this winter worth nearly £20 billion; it will help businesses throughout the United Kingdom, including in Scotland. It includes special measures for energy-intensive industries. We will shortly announce plans that will take effect from next April.
Jessica Morden (Newport East) (Lab)
The Chancellor of the Exchequer (Jeremy Hunt)
Because of these unprecedented and difficult times, the Government have chosen to make more than £100 billion of additional support available to families this winter and next winter, on top of increasing the national living wage by a record 9.7% and uprating benefits by inflation.
Jessica Morden
Businesses do not know what Government help, if any, will be available for energy bill support from April next year. They include nursing homes, supported housing schemes and older people’s schemes, which have been able to pass on lower costs to vulnerable residents. Without help, costs will significantly increase for those vulnerable people and affect the long-term viability of care and support services. What are the Government doing to address the issue?
Jeremy Hunt
I am very grateful that the hon. Lady asked that question. She is absolutely right; a number of businesses, charities and organisations such as care homes are extremely vulnerable because of the big increase in energy prices. All I would say is that she should look at what the Government have done this winter. With around £18 billion of support, we have demonstrated that we are aware of those concerns. Early in the new year, we will bring forward an appropriate package on what will happen from next April.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Andy Carter (Warrington South) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
We have reaffirmed our commitment to help hard-pressed families this winter with support for energy bills. We have introduced a range of measures to help those families, including capping energy bills at £3,000 this year and £2,500 next year.
Gerald Jones
The End Fuel Poverty Coalition has called for an immediate ban on the installation of prepayment meters made under court warrants, because of fears that energy suppliers are using them to disconnect the poorest and most indebted customers by the back door, and it claims that transferring households to prepayment meters often prompts people in debt to self-disconnect. Citizens Advice said that an extra 450,000 people could be switched to prepayment meters by the end of the year because of debt, and a record number of people could not afford to top-up their prepayment meters—the eighth time that record has been broken in the past nine months. This is a crisis made in Downing Street, and it is having a grave impact on a growing number of the most vulnerable households in my constituency and across the country. What will the Chancellor do to support people in that grave situation?
Jeremy Hunt
I thank the hon. Gentleman for raising that issue. There are 4.1 million people across the country on prepayment meters, and the Ofgem energy price cap covers all prepayment meter customers and ensures that they pay a fair price for their energy. Licence conditions require energy suppliers to provide extra support for those customers because, as the hon. Gentleman said, we recognise how vulnerable they are. We will continue to monitor the situation over the months ahead, because we are aware of the extreme vulnerabilities of that group.
Cat Smith
A great number of my constituents who live in park home sites such as Willowgrove park in Knott End-on-Sea or Smithy Park in Winmarleigh, as well as boat dwellers on the Galgate marina, are concerned about their energy bills but seem to have been forgotten about by the Government. When is the £400 payment of support likely to be made to people in park homes and on boats, and what support will be available from April onwards?
Jeremy Hunt
I am grateful to the hon. Lady for asking that question because I have a number of park home residents in my constituency. The answer is that they can apply online for that support from January.
Andy Carter
I have heard from many voluntary groups in Warrington South, including organisations, such as the Scouts and Guides, that provide important extra-curricular activities for young people’s development, especially after the impact of the pandemic on their education and wellbeing. What steps are the Government taking to support charity and voluntary organisations, many of which have seen their energy costs increase by five times over the past year?
Jeremy Hunt
I am grateful to my hon. Friend for standing up for businesses and charities in Warrington, as he always does so ably. As he knows, this winter the energy business relief scheme is providing £18 billion of support for businesses and charities, and early in the new year we will announce how that support will continue after April. I reassure my hon. Friend that we are particularly concerned about the impact on charities, which see their costs go up but without a corresponding ability to increase their income.
Harriett Baldwin (West Worcestershire) (Con)
I wish you, Mr Speaker, your team and the Treasury team a merry Christmas. Has the Chancellor had a chance to read the Treasury Committee’s report, published last week, about the welcome that we give to the cost of living support that he has announced for next winter? Did he also note our points about the potential cliff edges in that £900 support, and the recommendations we made to spread those payments more evenly over the course of next winter?
Jeremy Hunt
I wish my hon. Friend and all members of the Treasury Committee a merry Christmas. I have read a summary of their report, but I have saved the entire document for my Christmas reading, and I am immensely looking forward to that. The most important thing is that we are offering extra support for people who are vulnerable—support that amounts to £13 billion next year—and that comes before the support with people’s energy bills and a lot of other measures. My hon. Friend makes a very important point about cliff edges, which we will reflect on carefully.
Tom Hunt (Ipswich) (Con)
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Chancellor of the Exchequer (Jeremy Hunt)
My Christmas wish for the economy is that 2023 is the year when we bring down inflation, and that means staying the course outlined in the autumn statement and giving people as much help as we can with the cost of living crisis. I am pleased that, yesterday, my hon. Friend the Exchequer Secretary to the Treasury was able to announce that we are freezing alcohol duty for a further six months.
Neale Hanvey
This morning, I met nurses on the picket lines outside St Thomas’s Hospital. They do not want to be there, the unions do not want them to be there and the public do not want them to be there, but we understand why they are: it is because of the Government’s inflexibility over pay. The Government have deep pockets for bankers and their bonuses, dodgy personal protective equipment and fly-by-night Prime Ministers who blow up the economy. I took the Chancellor at his word when I was with him on the Health and Social Care Committee. Now that he holds the purse strings, will he enter into discussion with the unions and unlock this untenable situation?
Jeremy Hunt
I enjoyed working with the hon. Gentleman on the Select Committee. One thing that we both said needed to happen was to have an independently reviewed workforce plan for the NHS, so he will be pleased that I was able to announce that in the autumn statement.
Elliot Colburn (Carshalton and Wallington) (Con)
Mr Pat McFadden (Wolverhampton South East) (Lab)
The end of the year is a moment for reflection, so let us look at the Government’s report card: a Tory mini-Budget that crashed the economy, waiting lists and times at record highs, trains delayed and cancelled all over the place, billions wasted on dodgy contracts, and a reshuffle policy that means everyone in the Conservative party gets to be famous for 15 minutes. Why is it that when nothing is working under the Tories, even at this time of seasonal gift giving, they still insist on making everyone else pay the price for their Government’s failures?
Jeremy Hunt
First of all, may I wish the shadow Chancellor, the right hon. Member for Leeds West (Rachel Reeves), a merry Christmas in her absence and a speedy recovery from the lurgy that I gather she has? I look back on the last 12 years of this Conservative Government with a great deal of pride. What the right hon. Gentleman never likes to mention in his comparisons is that Labour had a golden economic inheritance from the Conservatives in 1997 and left us with an economy that had run out of money. What have we done? We are the third highest-growing economy in the G7.
Duncan Baker (North Norfolk) (Con)
Jeremy Hunt
The hon. Lady is right about the importance of retention. That is why we are pleased to have 32,000 more nursing staff than at the start of the Parliament, which takes us some way towards our 50,000 additional nursing staff target. When there is a cost of living crisis, as we have at the moment, the best way to resolve this is an independent process. It is an independent process; when I was Health Secretary, it often made rulings that were not comfortable. The best way to resolve the situation is to respect that process.
Sir Edward Leigh (Gainsborough) (Con)
Pensioners are increasingly worried about the fact that, although they have paid high—and now higher—taxes all their life, the service they get from the NHS seems to get worse. Will my right hon. Friend consider an idea put forward and implemented by his great predecessor, Ken Clarke, to give tax relief on private health insurance for pensioners? If we were to have a meeting, could he invite his hon. Friend the Exchequer Secretary, who campaigned for this idea before higher office silenced him?
Jeremy Hunt
My right hon. Friend always asks important and challenging questions. I do not agree with the way forward that he has outlined, but Ken Clarke revolutionised our education system by introducing Ofsted, which has led to a massive increase in standards in our schools. That was the reason I introduced the Ofsted system in our hospitals through the Care Quality Commission, which is also seeing a big improvement in standards.
Ian Paisley (North Antrim) (DUP)
God’s richest blessings to you in this Christmas season, Mr Speaker.
My constituent, who owns a small business, paid VAT on goods that they had ordered and brought back to Northern Ireland, only to receive a second VAT bill from the Republic of Ireland because of the Northern Ireland protocol. That makes doing business totally unaffordable. A previous Prime Minister said that businesses could tear these documents up. Can my constituent tear these documents up?
Munira Wilson (Twickenham) (LD)
A few months ago, the Chancellor promised at the Dispatch Box that he would make a further announcement about the energy bill relief scheme before Christmas. Nothing has yet been forthcoming. Small businesses, charities and schools in my constituency either face going under or face huge deficits in the coming year. Will he confirm when he will make a further announcement about support for businesses, the public sector and charities, and whether this House will have the opportunity to scrutinise it?
Jeremy Hunt
I can absolutely confirm that the House will not have to wait very long for that announcement—and yes, it will have a chance to scrutinise the announcement in detail.
Richard Graham (Gloucester) (Con)
As well as reassuring financial markets and bringing down mortgage rates, the autumn statement did a great deal to help consumers and businesses through winter energy prices. When my right hon. Friend comes to announce what further help might be available for businesses after March, will those in the Treasury also highlight the opportunities for business from the increased business rate discounts for the hospitality and leisure sectors that will come in the spring?
Jeremy Hunt
We will certainly do that. I know that the 75% discount we announced for retail, hospitality and leisure businesses will make an enormous difference to businesses in Gloucester, as will the £2.5 billion annual discount in business rates overall as we make the transition to the new system.
Caroline Lucas (Brighton, Pavilion) (Green)
A very Merry Christmas, Mr Speaker.
With oil and gas companies making grotesque profits from high global prices, it is beyond belief that the Chancellor does not scrap the so-called investment allowance announced in the autumn statement, which means that companies are still able to claim £91.40 in tax relief for every £100 invested in oil and gas infrastructure. Will he now come clean about the cost to the taxpayer of this perverse and utterly unjustified subsidy?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Over the weekend, an anonymous Conservative MP admitted to a newspaper:
“We’ve got no ideas and people feel abandoned.”
This was an
“economy that’s in recession with 10 per cent inflation”
and
“possibly one of the least successful governments in modern Europe.”
My constituents are going into Christmas poorer as a consequence of 12 years of Conservative government. Is the Chancellor proud of that?
Jeremy Hunt
I am very proud of the fact that, having inherited an economy that was bankrupted by the hon. Lady’s party, we have given it one of the strongest growth rates in the developed world.
Dave Doogan (Angus) (SNP)
I know that the Chancellor has invested in public health personally, but may I urge him to invest, in a fiscal sense, in beer and alcohol duty, and to create a differential between off-sales and on-sales? On-sales are where jobs and tax and employment are generated, and off-sales are where all the harmful drinking comes from.
Financial Services
Jeremy Hunt Excerpts(2 years, 5 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Jeremy Hunt)
In the autumn statement, I set out the Government’s strategy for boosting growth by investing in our people, in the infrastructure that connects our country, by creating the right environment for business investment, and by supporting our world-leading financial services companies and innovators. Alongside this, I identified five growth sectors—one being financial services—for which the Government will prioritise the review of retained EU law, to ensure we identify changes that will support these sectors to grow.
I am today setting out a bold collection of reforms taking forward the Government’s vision for an open, sustainable, and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens. These reforms will create jobs, support businesses, and power growth across all four nations of the UK.
The UK is one of the world’s leading financial centres and our financial services sector is one of the engines of the UK’s economy. Financial and related professional services employ over 2.3 million people, two thirds of whom are outside of London, with hubs in Belfast, Birmingham, Cardiff, Edinburgh, Glasgow, Leeds, and Manchester.1 In 2021, the financial services sector contributed £173.6 billion to the UK economy, 8.3% of total economic output.2
The announcements being made today build on the reform agenda the Government are taking forward through the Financial Services and Markets (FSM) Bill. The Government’s approach recognises and protects the foundations on which the UK’s success as a financial services hub is built: agility, consistently high regulatory standards, and openness. This approach will ensure that the sector benefits from dynamic and proportionate regulation, and that consumers and citizens benefit from high-quality services, appropriate consumer protection, and a sector that embraces the latest technology.
I have set out below details of the measures being taken forward, which I look forward to delivering in close collaboration with our vibrant financial services sector.
A competitive marketplace promoting effective use of capital
Building a smarter regulatory framework for the UK
The Government have today published their policy statement “Building a smarter financial services framework for the UK”. A copy will be deposited in the Library. This is an ambitious plan for repealing retained EU law in financial services and replacing it with a new framework tailored to the UK, embracing the new opportunities presented by our position outside the EU.
Our approach includes:
Publishing draft statutory instruments to demonstrate how the Government can use the powers within the FSM Bill to reform the prospectus and securitisation regimes and to ensure the Financial Conduct Authority (FCA) has sufficient rulemaking powers to regulate payments services and e-money. Overhauling the prospectus regime will enable the Government to implement recommendations from Lord Hill’s UK listing review, helping to widen participation in the ownership of public companies, simplify the capital raising process for companies on UK markets, and make the UK a more attractive destination for initial public offerings. The Government are also committed to working with the FCA and Prudential Regulation Authority (PRA) to bring forward relevant reforms identified in HM Treasury’s 2021 review of the securitisation regulation.
Plans to repeal the regulations for the European long-term investment fund (ELTIF), without replacement. This reflects the fact that no ELTIFs have been established in the UK, removing unnecessary retained EU law, and that the newly established long-term asset fund (LTAF) regime provides a fund structure better suited to the needs of the UK market. Firms have already begun to seek FCA authorisation for funds taking advantage of this new structure.
Publishing the short selling regulation review, a call for evidence on the UK’s regime for regulating short selling, with the aim of putting in place a regulatory regime tailored to the UK, which supports market integrity and bolsters the competitiveness of UK financial markets.
Publishing PRHPs and UK retail disclosure, a consultation on a proposed alternative framework for retail disclosure in the UK. Following the repeal of the packaged retail and insurance-based investment products (PRIIPs) regulation, the new framework for retail disclosure in the UK will work more effectively with the UK’s dynamic capital markets and foster more informed retail investor participation.
Publishing the information requirements in the payment account regulations consultation which examines proposals to remove unnecessary customer information requirements related to bank accounts imposed by the EU in the payment accounts regulations. This would reduce unnecessary regulations on banks, freeing them up to better meet the needs of UK customers.
Updating banking regulation and the ringfencing regime
The Government will bring forward secondary legislation in 2023 to improve the functionality of the ringfencing regime. These reforms, in response to the independent review on ringfencing and proprietary trading, will benefit customers, the financial services industry, and the economy, while maintaining appropriate financial stability safeguards. The Government will also issue a public call for evidence in the first quarter of 2023 to review the practicalities of aligning the ringfencing and resolution regimes.
The PRA intends to consult on removing rules for the capital deduction of certain non-performing exposures (NPEs) held by banks. This would allow the PRA to apply a judgment-led approach to address the adequacy of firms’ provisioning for NPEs, help to simplify the UK rulebook and avoid the unnecessary gold plating of prudential standards. Such an approach would be possible only because of our regulatory freedoms outside the EU.
The PRA intends to consult on removing rules for the capital deduction of certain non-performing exposures (NPEs) held by banks. This would allow the PRA to apply a judgement-led approach to address the adequacy of firms’ provisioning for NPEs, help to simplify the UK rulebook, and avoid the unnecessary gold plating of prudential standards. Such an approach would only be possible because of our regulatory freedoms outside the EU. The Government will also legislate, when parliamentary time allows, to amend the Building Societies Act 1986 to give building societies in the UK greater flexibility to raise wholesale funds, enabling them to grow and compete on a more level playing field with retail banks, while retaining their mutual model. As part of this, the Government will also modernise relevant corporate governance requirements in line with the Companies Act 2006.
Ensuring a regulatory focus on growth and competitiveness
The Government are legislating through the FSM Bill to introduce new secondary objectives for the FCA and PRA to provide for a greater focus on growth and international competitiveness while maintaining their existing primary objectives. To further support this aim, I will today lay before Parliament new remit letters for the FCA and the PRA which will set clear, targeted recommendations for how the regulators should have regard to the Government’s economic policy.
Separately, the Government and regulators will separately commence a review of the senior managers and certification regime in Q1 2023. The Government will launch a call for evidence to look at the legislative framework of the regime, and the FCA and PRA will review the regulatory framework. The Government’s call for evidence will be an information gathering exercise to garner views on the regime’s effectiveness, scope and proportionality, and to seek views on potential improvements and reforms.
Wholesale markets reforms
The Government are committed to strengthening the UK’s position as a world-leading wholesale capital markets centre, and is taking forward reforms to the markets in financial instruments directive (MiFID) framework through the wholesale markets review. Measures in the FSM Bill deliver key elements of this. To further support this agenda, the Government:
Will today lay before Parliament the Markets in Financial Instruments (Investor Reporting) (Amendment) Regulations 2022, which will remove burdensome EU requirements related to reporting rules. This also builds on the reforms brought forward through the Markets in Financial Instruments (Capital Markets) (Amendment) Regulations 2021 laid in June 2021.
Will bring forward secondary legislation in Q1 2023 to remove burdens for firms trading commodities derivatives as an ancillary activity, for example, when manufacturers seek to fix the future price of their purchases of specific raw materials.
Are committing, alongside the FCA, to having a regulatory regime in place by 2024 to support a consolidated tape for market data. A consolidated tape will bring together market data from multiple platforms into one continuous feed. This will improve market efficiency, lower costs for firms and investors, and make UK markets more attractive and competitive.
Will launch the investment research review: an independent review of investment research and its contribution to UK capital markets competitiveness. The review is part of the Government’s wider commitment to enhance the UK’s ability to attract companies to list and grow.
Will establish a new industry-led accelerated settlement taskforce to explore the potential of faster settlement of financial trades in the UK. Reducing settlement times from the current industry standard of two days could reduce counterparty risk and increase operational efficiency. The taskforce will bring together industry stakeholders to recommend an approach that works for the UK.
Unlocking investment to drive growth across the whole economy
The UK’s financial services sector is an engine for growth across all four nations of the UK. The Government are therefore bringing forward measures that will unleash the sector to drive investment and growth.
The Government set out their plans to reform Solvency II at autumn statement, unlocking more than £100 billion pounds for UK insurers to invest in long-term productive assets. HM Treasury is working with BEIS to deliver the recommendations made to Government as part of the secondary capital raising review, and more broadly on reforms to corporate governance, to further enhance the attractiveness of UK public markets.
Going further, the Government announce today that they:
Will, in early 2023, consult on new guidance to the local government pension scheme (LGPS) in England and Wales on asset pooling. The Government will also consult on requiring LGPS funds to ensure they are considering investment opportunities in illiquid assets such as venture and growth capital, as part of a diversified investment strategy.
Are committed to accelerating the pace of consolidation so that no pension savers are left in poorly governed and underperforming schemes. In the new year DWP will lead the way by consulting on a new value for money framework, alongside the FCA and the Pensions Regulator, which will set required metrics and standards in key areas such as investment performance, cost and charges and quality of service that all schemes must meet.
Will amend the tax rules for real estate investment trusts (REITs). With effect from April 2023, new rules will remove the requirement for a REIT to own at least three properties, where they hold a single commercial property worth at least £20 million; and amend the rule that applies to properties disposed of within three years of significant development activity, to ensure that this rule operates in line with its original intention.
Have today published a technical consultation, VAT treatment of fund management: consultation, which sets out proposals for legislative reform intended to codify existing policy to give legal clarity and certainty, not to make policy changes. The consultation seeks input on whether the proposed changes achieve this objective.
A world leader in sustainable finance
The Government are ensuring that the financial system plays a major role in the delivery of the UK’s net zero target, and are acting to secure the UK as the best place in the world for responsible and sustainable investment. The UK is the world’s premier financial centre for sustainable finance.
The Government are acting to ensure the UK retains global leadership in this rapidly growing sector. To deliver on their commitment to align the financial services sector with net zero and to support the sector to unlock the necessary private financing, the Government:
Will publish an updated green finance strategy early 2023.
Will consult in Q1 2023 on bringing environmental, social, and governance (ESG) ratings providers into the regulatory perimeter. HM Treasury will also join the industry-led ESG data and ratings code of conduct working group, recently convened by the FCA, as an observer. These services are increasingly a component of investment decisions, and the Government want to ensure improved transparency and good market conduct.
A sector at the forefront of technology and innovation
Our regulatory framework for financial services must support innovation and leadership in emerging areas of finance. To ensure the sector is prepared to embrace and facilitate the adoption of cutting-edge technologies, the Government are:
Setting up a financial market infrastructure sandbox in 2023, and is legislating to implement this in the FSM Bill. This will enable firms to test and adopt new technology and innovations, such as distributed ledger technology, in providing the infrastructure services that underpin markets.
Working with the regulators and market participants to bring forward a new class of wholesale market venue, which would operate on an intermittent trading basis. This highly innovative approach would be a global first and would act as a bridge between public and private markets, boosting the UK as a destination for all companies to get the investment they need to create jobs and grow.
Legislating in the FSM Bill to establish a safe regulatory environment for stablecoins—which may be used for payments—and ensure the Government have the necessary powers to bring a broader range of investment-related cryptoasset activities into UK regulation.
Publishing their formal response to the consultation on expanding the investment manager exemption to include cryptoassets, which will facilitate their inclusion in the portfolios of overseas funds managed in the UK. The Government intend for this change to be made through HMRC regulations this year
Bringing forward a consultation in the coming weeks to explore the case for a central bank digital currency—a sovereign digital pound—and consult on a potential design. The Bank of England will also release a technology working paper setting out cutting-edge technology considerations informing the potential build of a digital pound.
Delivering for consumers and businesses
The Government are committed to a financial services sector that supports the real economy and will continue to work with the regulators and industry to ensure that the sector is delivering for people and businesses across the UK. The Government:
Have published a consultation, Reforming the Consumer Credit Act 1974. By modernising the regulation of consumer lending, reform will update consumer protections and ensure they work well in a modern and increasingly digital economy. It will also increase accessibility of credit products by allowing firms to better serve consumers through more innovative credit products.
Have consulted on reforms to remove well-designed performance fees from the pensions regulatory charge cap and will lay regulations early in the new year. This will provide clarity for industry and ensure pension savers can benefit from investing in UK innovation.
Are committed to working with the FCA to examine the boundary between regulated financial advice and financial guidance, with the objective of improving access to helpful support, information and advice, while maintaining strong protections for consumers.
I am confident that the measures announced today, in tandem with the work taken forward through the FSM Bill, will deliver for this key growth sector, and the people and businesses that rely upon it.
Documents relating to all announcements can be found on gov.uk www.gov.uk/government/collections/financial-services-the-edinburgh-reforms.
1 TheCityUK calculations based on Nomis, “Business register and employment survey: open access”, (May 2022), available at:
https://www.nomisweb.co.uk/query/construct/components/date.asp?menuopt=13&subcomp=
2 House of Commons Library “Financial services: contribution to the UK economy”: https://commonslibrary.parliament.uk/research-briefings/sn06193/
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