John Glen
Main Page: John Glen (Conservative - Salisbury)Department Debates - View all John Glen's debates with the HM Treasury
(1 year, 11 months ago)
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The Chief Secretary to the Treasury (John Glen)
I beg to move,
That—
(a) provision may be made increasing the rate at which energy (oil and gas) profits levy is charged to 35%,
(b) provision may be made reducing the percentage in section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022 (amount of additional investment expenditure) to 29%, and
(c) (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made for and in connection with extending the period for which the levy has effect until 31 March 2028.
In the face of coalescing global headwinds, we have delivered an autumn statement that provides the fairest and most effective way through to brighter days. We must rebuild the economy and repair public finances after the covid-19 crisis, the Ukraine war and rising debt interest costs.
We are not alone in dealing with these economic challenges—the euro area is facing inflation of 10.6%, interest rates have risen higher in the US, Canada and New Zealand, growth forecasts have fallen more in Germany, and one third of the global economy is forecast to be in recession this year or next—but it is with honesty, integrity and compassion that we will deal with the challenges that we face. It is only by doing so that we will curb rising prices, restore faith in our country’s economic credibility internationally and, ultimately, deliver growth.
Our international reputation is vital because it has a large impact on the price we pay to borrow as a country, but I recognise that many hon. Members are concerned primarily about what this means domestically for their constituents. We want to be honest with the public about the challenge and fair in our solutions. What does that mean? It means a focus on stability, growth and public services.
To provide a shelter for those most at risk from the economic winds, we are uprating pensions and benefits in line with inflation next year, based on September’s figure of 10.1%, fulfilling our pledge to the country to protect the pensions triple lock. In April, the state pension will increase in line with inflation: an £870 increase, the biggest ever cash increase in the state pension. The benefits uplift will cost £11 billion and will mean that 10 million working-age families see a much-needed increase next year. To increase the number of households that can benefit from this decision, the benefit cap will rise with inflation next year.
To support those on the lowest incomes, we are increasing the national living wage by 9.7% to £10.42, its largest ever cash increase. To continue helping households to pay for their energy use, we will levy a new tax on electricity generators and an even higher tax rate on oil and gas companies, which have been gifted higher profits simply because Putin’s barbaric invasion of Ukraine sent prices soaring.
Caroline Lucas (Brighton, Pavilion) (Green)
Although the increase in the windfall tax is certainly welcome, the changes to tax reliefs from January of next year will mean that a company spending £100 on upstream decarbonisation will be able to deduct £109.25 when calculating its levy. In other words, the taxpayer will be paying money to the oil and gas companies, rather than the Treasury receiving net money. Can the Chief Secretary explain how on earth that can be justified, particularly when there is an economic crisis and we need to decarbonise?
John Redwood (Wokingham) (Con)
Will the Treasury have a look at why the Bank is being allowed to lose £11 billion between now and March, by selling at a loss bonds that they do not need to sell, rather than managing its bond account well? Would that not be a good saving to make?
John Glen
I am, as ever, grateful to my right hon. Friend, and he made the same point when I was previously at the Dispatch Box. As he knows, the Bank of England is independent. He asks about quantitative tightening, and I am sure such matters will feature in conversations between the Chancellor and the Governor.
The new taxes will help to pay for the £55 billion of help for households and businesses with their energy bills, in one of the largest support plans in Europe. From April, we will continue the energy price guarantee for a further 12 months at a higher level of £3,000 a year for the average household.
Our support for public services means that, despite needing to find £55 billion in savings and tax rises, we are protecting the amount going into public services in real terms over the five-year period. Overall departmental spending will grow at an average of 3.7% a year over the 2021 spending review period. Departments will be required to find efficiency savings to manage pressures from inflation. After the spending review period, day-to-day spending will continue to grow in real terms, but slower than previously planned at 1% a year in real terms until 2027-28. We are launching an efficiency and savings review, which will include reprioritising lower-value and low-priority programme spending and reviewing the effectiveness of public bodies.
I now turn to our most vital public service, the NHS. The nation stood outside their homes and clapped for NHS workers every Thursday during the pandemic, and we did so because of their sacrifice during the historic pandemic. It is now incumbent on us to help address the issues they face, the workforce shortages and the pressures on the social care sector.
To recruit and retain our dedicated NHS workforce, the Department of Health and Social Care and the NHS will publish an independently verified plan for the number of doctors, nurses and other professionals we will need in five, 10 and 15 years’ time.
Carol Monaghan (Glasgow North West) (SNP)
Will the Minister confirm that the reason why we have such terrible bed-blocking and such terrible staff shortages in care homes and social care is because we cannot recruit from across Europe in the way we did before Brexit?
John Glen
I cannot account for what is happening in Scotland, but there are £1.5 billion of Barnett consequentials from the autumn statement. I have been clear with the House that the workforce plan is designed to set out transparently where the gaps are, and obviously it will be for various Government Departments to respond to that.
Sir Robert Neill (Bromley and Chislehurst) (Con)
I welcome the pragmatic tone the Government have adopted in this autumn statement. On the NHS workforce strategy, will my right hon. Friend bear in mind not just those who provide hospital care but, as has been highlighted by the Stroke Association and others, those who provide therapy and care for people with strokes and other such afflictions after they have been discharged? Such therapy and care is how we will get many of these people back into productive work in the economy, thereby reducing costs and the human suffering caused by strokes and similar conditions.
John Glen
My hon. Friend makes a very wise point about the interaction between effective care and a vibrant NHS workforce. We know about the significant changes to the character of the workforce, and we know about the patients who are not fully engaged. We need to get into that so that many of these people get back into work.
The 1.6 million employees who work in the social care sector are working extremely hard. Local authorities have rightly expressed concerns about their capacity to deliver the Dilnot reforms immediately, so we will delay their implementation for two years, allocating the funding to allow local authorities to provide more care packages. Members will recognise that only by expanding the capacity of the social care system will we free up some of the 13,500 hospital beds that are occupied by those who could and should be at home.
Jim Shannon
The hon. Member for Bromley and Chislehurst (Sir Robert Neill) referred to the Minister’s pragmatic approach. On nurses’ pay, if nurses go to work as agency staff, they automatically have a better wage structure. I say respectfully that when it comes to paying nurses, surely there must come a stage at which we need to pay them what they can get elsewhere, and thereby keep them. There will not be a crisis if we can keep our nurses.
Karin Smyth
The Minister said that local government has made appeals regarding social care implementation, which is obviously the responsibility of the Department of Health and Social Care. Has the Treasury made any assessment of the waste of money across local government since the Government made announcements about implementing the reforms and systems have been put in place? Has the Treasury considered who is going to deliver these magical packages of care without a workforce plan? In my extensive experience of delivering such projects, what will happen is that we will see tents in car parks again, new hotels being registered for spaces, and agency staff supporting the care packages on higher wages, thus costing the system more. We will be back here in six months’ time having not supported the workforce strategy, not properly recruited people and wasted more taxpayers’ money. What has the Treasury done in respect of the Department of Health and Social Care and local government about the efficiency of this particular measure?
John Glen
Let me take those points in turn. The hon. Member for Strangford (Jim Shannon) made a point about nurses’ salaries and the cost of not having that workforce in place. That is exactly what this work will do: we will look at the gaps and respond to the pay demands in due course.
The hon. Member for Bristol South asked what the Treasury has done in terms of the money that has already been expended in looking at the changes; I cannot give her a precise figure but I would be happy to write to her. The Treasury is focused on working closely with Patricia Hewitt, the Department of Health and Social Care and NHS England to grip this issue in the fullest possible way, recognising the interaction between hospitals and social care, to ensure that we have the best possible solution to deal with the challenges we face.
Members will recognise that only by expanding the capacity of the social care system will we free up hospital beds, so we are making up to £2.8 billion of extra funding available to the adult social care system in England. That will increase to £4.7 billion in 2024-25. We of course need the NHS to continue to look at where it can squeeze more out of every pound—not at the expense of those on the frontline, but so that we can deliver ever-greater care—yet even with efficiency savings we will not have the NHS we all want without more money so, because of the difficult decisions taken elsewhere, we will increase the NHS budget in each of the next two years by an extra £3.3 billion. Taken together, our actions will ensure that up to £8 billion of additional funding is made available for health and social care in 2024-25.
The NHS and schools in Scotland, Wales and Northern Ireland face equivalent pressures, so the Barnett consequentials of today’s announcement will mean an extra £1.5 billion for the Scottish Government, £1.2 billion for the Welsh Government and £650 million for the Northern Ireland Executive. We make this investment not just because it is the right thing to do but as a central plank of our economic policy.
Similarly, as my right hon. Friend the Chancellor said, an investment in education is an investment in growth. The foundation of our success lies in the classroom just as much as it is found in the boardroom. I was very pleased to see representations from my parliamentary neighbour, my right hon. Friend the Member for North West Hampshire (Kit Malthouse), who made that point very clearly, as did a number of colleagues.
We are not just going to protect the education budget; we are going to increase it. The core schools budget will rise by £2.3 billion in both of the next two years—2023-24 and 2024-25—restoring 2010 levels of per pupil funding in real terms. Not only is that the right thing to do, but it makes economic sense: more opportunity will not only reap a fairer society, but deliver a more prosperous economy.
Just as we look to improve opportunities for those aged 16 and under, we are determined to help people already in work to raise their incomes, progress in work and become financially independent. That is why we have uprated working age and disability benefits in line with inflation, at a cost of £11 billion. It is also why we will ask more than 600,000 more people on universal credit to meet a work coach, so that they can get the support they need to increase their hours or earnings, and we will invest an extra £280 million to crack down on benefit fraud and error over the next two years.
Peter Grant (Glenrothes) (SNP)
The job conditionality that the Minister has just referred to has been welcomed in certain sections of the right-wing press, whose agenda says that the only reason somebody is not working full time is that they are too lazy and would rather be on benefits. For the record, can he state categorically that that is not the way His Majesty’s Government regards people on benefits?
Dame Andrea Leadsom (South Northamptonshire) (Con)
In my opinion, the real issue in the UK is that there are some unintended hidden cliff edges, particularly for women with children. They want to work, but once they start working for 16 hours, a lot hangs off that, such as free school lunches for one child or free childcare for a two-year-old. If they start working more hours, they are worried that they might start losing all sorts of other benefits and will not be able to afford to work. It is not a question of who thinks people are too lazy, but there is a real question for the Treasury, which I hope will be considered, on how to resolve those unintended cliff edges.
John Glen
I thank my right hon. Friend for her observations; she is one of the most respected voices in the House on this subject, and I am happy to meet her to go into some detail on where we are and what she thinks can be done.
I will now turn to infrastructure, innovation and growth.
Geraint Davies (Swansea West) (Lab/Co-op)
Will the Minister give way on education?
Geraint Davies
The Minister will know that the Institute for Fiscal Studies has said that, had trend growth under the previous Labour Government continued until now, average wages would be £10,000 higher. He has just mentioned that his plan is to increase investment in education just up to the level Labour left it at in 2010, 12 years ago. What sort of growth plan is that? A hopeless one.
John Glen
I try to resist this sort of knockabout politics. The bottom line is that I have been very plain and clear with the House where the financial settlement takes us. I know we have increased the skills budget by 42% in cash terms. By any observation, there has been a significant investment. We can dispute how far it would have been possible to go, but I know that when we came into office in 2010 there were some challenges in the public finances.
Our plan is to achieve a highly skilled, highly paid economy; one in which where people are born does not determine where they end up. Yet the sad fact is that too often someone’s postcode does decide their future, and we have to change that. Connections will spread opportunity. By spreading opportunity, we will drive growth, and growth will drive higher living standards.
We are going to build the roads, rail, broadband and 5G infrastructure we need. That is why we will maintain our capital budgets at the same level in cash terms for the next three years. We will proceed with Sizewell C, making the initial £700 million investment, with contracts to be agreed in the coming weeks, subject to final Government approvals, because low-carbon, reliable energy will be at the heart of our modernised economy. On the issue of energy, we are also increasing our investment in energy efficiency measures, including making £6 billion of new Government funding available between 2025 and 2028.
We will deliver the core Northern Powerhouse Rail, HS2 to Manchester and East West Rail; we are building new hospitals as part of the new hospitals programme; and we are rolling out gigabit broadband. All these and more will be funded as promised, with over £600 billion of investment over the next five years, to connect our country and grow our economy. On top of that, we will proceed with round 2 of the levelling-up fund, at least matching the £1.7 billion spent in round 1. We will drive growth across the UK by working with the Scottish Government on the feasibility study for the A75, supporting the advanced technology research centre in Wales, and funding a trade and investment event in Northern Ireland next year.
Something that this Government, led by the Prime Minister, are extremely clear on is that we must maintain our seat at the table of science superpowers, so we will increase public funding for R&D to £20 billion by 2024-25. Innovation is in our DNA as a nation, and by deciding changes to EU regulations in our five growth industries—digital technology, life sciences, green industries, financial services and advanced manufacturing—we can capitalise on those strengths.
Alex Cunningham (Stockton North) (Lab)
On Thursday evening I had the privilege of attending the Chemical Industries Association annual dinner, where the principal speakers were ridiculing the Government for their lack of action on education, training and support for the industry, particularly on regulation, including the REACH regulation, which the Government want to have their own version of. Those in the industry are frightened about what the future holds for them. They are not talking about expansion and innovation; they are talking about survival. Why is that?
John Glen
I very much recognise that this country faces very difficult headwinds, as I said in the opening of my speech. Obviously the extensive support package that we have put out there for consumers and businesses will offer some relief from some of those pressures, but the major challenge we face as a country and an economy is a level of inflation that we have not seen for 41 years. The measures in this statement are designed to tackle that and, as the OBR recognises, make this recession shorter and shallower than it might otherwise have been.
I will now turn to the armed forces and security. We already know that Putin’s aggression has piled pain on citizens across the free world, as well as brave protesters in Russia. As President Ronald Reagan once said:
“Optimism comes less easily today, not because democracy is less vigorous, but because democracy’s enemies have refined their instruments of repression.”
Today there is still nothing certain about democracy’s victory, but if one thing does give me optimism, it is the courage of our armed forces, so we will continue to maintain the defence budget at at least 2% of GDP, to be consistent with the enduring NATO commitment. Of course, we also stand up for what we believe in through overseas aid. The OBR’s forecast shows a significant shock to the public finances, as I have set out, so it will not be possible to return to the 0.7% target until the fiscal situation allows, but I want to reassure the House that we remain fully committed to the target, and the plans that I have set out today assume that official development assistance spending will remain at around 0.5% for the forecast period.
Richard Drax (South Dorset) (Con)
Two per cent. for defence is simply not enough; 3% is far nearer the target. It was 5% in my day, and all the kit is much more expensive, so 3% is the minimum that we need to spend. Will my right hon. Friend tell the House when we will look at this again? I believe there will be another review of the review. When will that take place, and when will we have the Government’s final decision on what they are going to spend on our armed forces?
John Glen
I am grateful to my hon. Friend. The integrated review is under review at this time. That needs to be done urgently—I think in the next three or four months—to enable us to come to an assessment of what that means for our defence spending. But I will say that, as I know he will know, we did front-load a significant increase in the defence budget, of £24 billion, over this spending period. I would work on the basis that, while this must be our top priority, it must be based on an updated assessment of the need, in which there have been a lot of changes in recent times.
I am conscious of time. Opposition Members have said in recent days that we needed a statement that provided fairer choices for working people and a proper plan for growth. I maintain that this is what the autumn statement delivers: not a return to austerity, but a fair way to shelter from the economic storm and encourage its passing as soon as possible. As we weather it, we will do so with resilience and compassion, we will give a safety net to our most vulnerable, we will invest for future generations, and we will grow the economy and improve the lives of people across the United Kingdom.
Jonathan Ashworth
It is a particularly terrifying time for many households. The tragedy for the British people is that they now face recession, with half a million predicted to lose their jobs while enduring the sharpest drop in living standards on record, equivalent to £1,700 per household. What we got last week was an autumn statement that piles more tax on the British people and reduces the money available for the public services that the British people rely on.
The test for the Chancellor was whether his proposals were fair and whether they grew the economy. Let me turn to specific measures announced and assess whether he met those tests. First, on fairness, the Tories call themselves the tax cutters, but at the next election the economy will be smaller and taxes higher than at the last election. The freeze to income tax thresholds—in effect, tax rises by stealth—means that millions more are pulled into paying higher tax. It means that average earners in Britain face a sting of £500 more. Council tax is set to increase by £100 for a typical band E property.
Hidden away in the Office for Budget Responsibility’s report, on page 53—curiously, the Chancellor and the Chief Secretary forgot to mention it, but it is there—fuel duty is predicted to rise by 23% [Interruption.] This is from the OBR. The assumption in the Government’s financial plans is that they will raise over £5 billion from fuel duty, which is set to rise by 23% in four months’ time—12p per litre—as a result of the statement. Are the Government not raising £5 billion from fuel duty next March? Is that right?
Jonathan Ashworth
Where are the Government getting that £5.7 billion from, then, if not from putting 12p on a litre of fuel? Can the Chief Secretary tell us that? He is responsible for Government finances.
Jonathan Ashworth
I am afraid that the Government’s position is as clear as mud. The OBR says that the Government are raising £5.7 billion from fuel duty. If they are not raising £5.7 billion from fuel duty, they should tell us where that £5.7 billion is coming from. I thought that this lot had moved away from the reckless, irresponsible approach to the public finances, but it seems that with the Tories, nothing ever changes.
Let us be clear: people are paying not only more income tax, but more council tax, and we expect motorists to pay more for petrol and diesel. Never again can Conservative politicians stand in front of posters of double whammy boxing gloves or tax bombshells at election time, because the tax on working people combined with the wages that they are losing to the ravages of inflation mean that they are being squeezed until the pips squeak under this Conservative Government.