Employer National Insurance Contributions
John Glen Excerpts(2 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Danny Beales (Uxbridge and South Ruislip) (Lab)
The issue at the crux of the debate is one of economic responsibility. It is about a choice whether to invest or to let further decline take place in our public services.
They say a week is a long time in politics. Well, four months is clearly still not long enough for the Conservatives to have learned any lessons from the last general election about why they might be sitting on the Opposition Benches and we might be sitting on the Government Benches. They crashed the economy, wasted billions of pounds of taxpayers’ hard-earned money and ran the NHS into the ground. They then called an early election to run away from the mess that they knew this Government would inherit.
As legislators, we need to be honest with the electorate about the trade-offs and challenges this country faces, and we cannot simultaneously rebuild our public services and cut taxes at the same time. As has been said, there is no magic money tree—we saw with the disastrous Liz Truss mini-Budget the impacts of a Government who do not understand those facts.
John Glen (Salisbury) (Con)
I recognise there are political differences across the House, but the hon. Gentleman surely has to be concerned about the overall impact of the decision on national insurance on the ability and inclination of those who invest in the real economy to generate the wealth and tax revenues that will sustain the economy going forward. Surely he can recognise that the decisions made by his Government are having a negative effect on growth, which will mean more taxes and more borrowing.
Danny Beales
I thank the right hon. Gentleman for that rather long intervention. I must say that the Conservatives do not understand the economy. If someone cannot get a train to work, they cannot work; if they cannot get a hospital appointment, they cannot work. Time and again, I hear from employers that they want investment, stability, and for their employees to be able to contribute in the workplace. To separate public services and the private sector into two diametrically opposed parts of the economy is what the Conservatives did for 14 years. They cut public services time and again, and we all face longer-term costs because of that fact.
The Labour Government understand that. Sadly, the Conservative party still does not. The choice we are still hearing is for continuing austerity. No one in this country voted for that and no one on the Labour Benches, at least, wants that. We want NHS waiting lists to fall. We want crumbling schools rebuilt, and investment in our vital public services and armed forces.
Farming and Inheritance Tax
John Glen Excerpts(2 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
James Murray
To address the right hon. Gentleman’s point, we recognise that agricultural and business property relief play an important role in supporting family farms, but the full unlimited exemption from inheritance tax has simply become unsustainable. The four most recent years-worth of data make clear why. The data shows that a very small number of agricultural property relief claimants, including those who claim business property relief too, benefited from a very significant amount of relief. In total, 47% of the Exchequer cost of the relief went to the top 7% of claims. To be clear what that means, I will put it another way. For every 14 or so estates, the top one among them claimed half the total relief.
John Glen (Salisbury) (Con)
Let me tell the Minister what concerns me most. There has not been an impact assessment, but if the major driver for the Government, whether we accept it or not, was to raise some money from this source, why were other more effective mechanisms not used, such as business roll-over relief, where a business could be sold in another context and rolled over into buying the land, deferring capital gains tax? If that mechanism had been used, the money would have been taken from much wealthier people who were not actually producing food in the first place. Now, we are capturing a massive proportion of small family farms completely unnecessarily, because due consideration of better alternatives was not done by the Minister.
James Murray
I reassure the right hon. Gentleman, for whom I have a lot of respect personally, that we carefully considered how to calibrate the policy to ensure that significant relief from inheritance tax is still available to family farms, while at the same time fixing the public finances in as fair a way as possible.
James Murray
I have confidence in the way in which we have calibrated the policy. As I said to the right hon. Member for Salisbury (John Glen), it has balanced the need to retain significant, generous provision of inheritance tax relief for family farms with ensuring that, at the same time, we fix the public finances in the fairest way possible.
John Glen
The hon. Gentleman is being very generous with his time. In view of the point that has just been made by my right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson), will he not consider, at the very least, looking at some dispensation for farmers above a certain age, given the lack of time that they will have to plan for this intervention? The truth is that someone who is near retirement age will be faced with the prospect of 10 years of all their projected profits being eaten up by this tax, which will mean that the farm cannot go to the next generation. The hon. Gentleman must surely look at some mitigations to deal with that reality for so many farmers who are concentrated in that older age group.
James Murray
We know that individual circumstances will vary. Any individual who is concerned about their specific tax liability should obviously consult an accountant or financial adviser. We would not know, from a thumbnail sketch, whether that person had any inherited nil rate bands, what their liabilities were, what decisions they had made about gifting, and so on. A huge number of factors will play into this, and it is right for individuals to seek specific advice. Things that are said in this Chamber may be creating undue anxiety, when people should be looking into the detail.
John Glen (Salisbury) (Con)
It is a privilege to contribute to the debate. I represent Salisbury and south Wiltshire, which has a large number of farmers. A large number of them visited me here in the House of Commons and, a week later, I had the largest meeting of farmers I have ever had in Salisbury. They were gravely disappointed and concerned about the implications of this Budget measure. It was a shock, because it was widely expected that this measure would not be on the table when the Labour Government came in.
One of the greatest privileges of my career was to spend most of the past eight years—six and a half of them—in the Treasury in various roles. I was PPS to a Chancellor, Philip Hammond, and then I was Economic Secretary and Chief Secretary. I understand the dynamic between spending Departments and the Treasury in the run-up to a Budget, and I have a serious degree of sympathy for the Ministers who were in DEFRA in the run-up to this Budget, but when APR and BPR were put on the table in front of me and my ministerial colleagues at numerous points during our time in the Treasury, we said no.
I acknowledge—I am trying to be as reasoned and as reasonable as I can—that other choices would have had to be made, and I recognise the difficulty of those choices. We faced difficulties when we came into government in 2010 with a 10% deficit. This Government had a different set of challenges, although I would dispute some of the numbers. However, I want to keep my remarks focused on the measure at hand.
The reason I would never have wanted to progress the removal of APR and BPR was that that policy was the product of a technical desktop economist’s view of tax raising. It was not an option when one took into account the reality of what would actually happen to the rural economy and the implications for farming. A number of colleagues have rehearsed excellent examples where farms of quite modest size but serious capital value would be massively compromised by that policy, even with an opportunity to repay that inheritance tax interest-free over 10 years, as the Chancellor said to the Select Committee. I acknowledge that—it is standard practice for this sort of relief—but given the profitability of the typical farm, it is just not a realistic prospect.
I have had some dealings in the past with the farming Minister, the hon. Member for Cambridge (Daniel Zeichner), and I genuinely have a great deal of respect for him—I do not want to embarrass him by saying anything more. He has a large number of issues to deal with, and I think all of us in this House want to see some clarity around the land use framework, and how we reconcile the question of where we build more homes with the challenges of renewable energy. However, we have to keep in focus the core function of our farmers, which is to produce food. I recognise the point made in an intervention earlier, and I am not suggesting that the Government are going to say, “We are going to have solar farms everywhere,” but we do need to have a coherent farming policy as a whole and a land use strategy that people understand.
The issue with this policy is that it is going to decimate the number of family farms unless there is a significant increase in thresholds, there is an age limit on when the policy applies, or an alternative tax mechanism like business asset roll-over relief is examined by the Treasury. Unless those changes happen—and there is time to consider those changes before the legislation comes before this House, which will probably be at the end of next year—we in this country are going to be in real trouble with the legacy of this decision. I urge the Minister’s colleagues in the Treasury to think again and come back with better proposals for their colleague.
Financial Services: Mansion House Speech
John Glen Excerpts(1 month ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Tulip Siddiq
I thank my hon. Friend for her question. She has done an enormous amount of work in this area, and I applaud her for that. She was instrumental in the Government taking our initial steps to regulate the “buy now, pay later” sector. There is a need for “buy now, pay later” during a cost of living crisis, and people will access those companies’ products, but I have brought this under FCA control so far, and have regulated to ensure that it is safer, and that people do not store up a huge amount of debt that they cannot pay back. The consultation is open until 29 November, and I ask her to urge others to feed into it to ensure that we get this policy right; that was not done by the previous Government. I will bring forward legislation as quickly as possible, but I thought it was important to hear what people and the industry had to say, because we want to regulate properly. She is being patient, and I ask her to be a bit more patient; our intention is to make the sector as well regulated as possible under the FCA.
John Glen (Salisbury) (Con)
I warmly welcome much of what was announced last week—the work on listings, mutuals and the remit refresh—but I say to the hon. Lady and the Minister for pensions that there is considerable reticence in the pensions industry when it comes to many of the drivers of change highlighted last week. We need a complete cultural shift and change in appetite from those who lead the pensions industry. I urge her to keep under review the fiscal incentives, and the transparency and accountability rules, so that we can see the performance gap that results from not making some of these changes. I look sympathetically on the aspirations that she has set out today, and I wish her well as she moves forward with these critical changes, which should have a lot of support from across the House.
Tulip Siddiq
I know that the right hon. Member did a huge amount of work in the financial services sector while he was in office. The civil servants still talk about how amazing he was—much to my dismay sometimes! We agree that there needs to be a change in appetite in this place. Transparency is top of the list, as the Minister for Pensions just whispered in my ear. We thank the right hon. Member for his constructive approach on the review, and urge him to tell the people he knows in the sector to respond to and feed in to the consultation.
Business Property Relief and Agricultural Property Relief
John Glen Excerpts(2 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Joe Morris (Hexham) (Lab)
I congratulate the hon. Member for Gordon and Buchan (Harriet Cross) on securing this debate. We have already spoken briefly in an all-party parliamentary group meeting about the similarities between our constituencies. She and I both know the importance of a thriving agricultural sector, the jobs it provides, and the almost undefinable contribution it makes to the character of the constituency and to a community.
I am concerned because farmers in my constituency have told me that they have been dealing with the chaos of the economy for the last 14 years. They have been dealing with crashing consumer confidence and an international trading situation in this country that simply is not conducive to the long-term success of the agricultural sector. For example, the Australia and New Zealand trade deal was a betrayal of the sheep farmers in my constituency in particular and has threatened their long-term business prospects. I hope that the Minister not only responds to the points made in this debate but talks about how we can make sure that the economy is stable, secure and on firm foundations, and that we never again see our farmers sold down the river as they once were.
John Glen (Salisbury) (Con)
Would the hon. Gentleman acknowledge that the Canadian deal has not been signed in the last 18 months in order to take account of the agricultural sector’s concerns in particular? The pressing, immediate concern for which the Minister must provide a resolution today is how this Government are disposed towards agricultural property relief and business property relief. That is their concern now. The hon. Gentleman is making a political point—whatever happened previously, we have to focus on his Government’s responsibility in the coming two weeks.
Dr Rupa Huq (in the Chair)
I have just been reminded by the Clerk that it is very unusual for a shadow Cabinet member to speak in a Westminster Hall debate as a Back Bencher. I will allow Joe Morris to respond, but apparently that is not the done thing.
Dr Rupa Huq (in the Chair)
It is not the Opposition Chief Whip’s decision; it lies with the Chairman of Ways and Means. Our rule book says that it is highly unusual. I will allow Joe Morris to respond, but hopefully there will not be a back and forth between the shadow Cabinet and Back Benchers.
Joe Morris
I thank the right hon. Gentleman for his highly unusual intervention. I will make a brief university point and say that it is highly unusual to have a Mansfield College MP intervene on a Mansfield College MP; it is probably the first time that has happened in this Parliament.
Joe Morris
I take the right hon. Gentleman’s point. I am glad that the last Government learned some of the lessons of the Australia trade deal and implemented them. It is important that we get an answer on APR and BPR. I am making a slightly political point, and I hope the right hon. Gentleman will humour me for it, but it is important that we maintain that international trade is an ongoing piece and the agricultural sector does not exist in isolation. None of these reliefs exist in isolation. Farming, more than anything, is an industry with concerns that sit between the Treasury, the Department for Environment, Food and Rural Affairs and the Department for Business and Trade. More than almost any other industry, it is reliant on good cross-party and cross-departmental working, and we need to ensure that the Government do that. I hope that we do not consider these things just in isolation but overall and together, and we must ensure that the Government are working towards securing them.
One of the main concerns that I picked up from my constituency is the inability of consumers to distinguish between British and foreign produce when it is badged up the wrong way. I hope the Treasury will listen to representations on how we can combat that kind of false advertising when foreign produce is repackaged as UK produce. How we keep the family farm going, and how we ensure that small farms are able to continue to produce in the Tyne valley, is deeply concerning to me. I have spoken to a lot of local farmers about land loss and about large corporations buying up prime agricultural land and using it to—I think it is fair to say—greenwash. That is genuinely a national issue that requires cross-party cohesion and cross-party solutions. My own hackneyed political point scoring is not going to help in that, but in the long term and in this Parliament, I would always welcome working to address that. However, I urge the Minister to remember that farms are businesses and they need long-term consumer confidence. They need an overall business climate that rewards investment and entrepreneurialism, but not one that is not built on sand. They need one that is built on secure, stable foundations and that is open to serious cross-party working.
When we look at how we get the rural economy growing, it is really important that both land-owning farms and tenant farms in particular can continue to employ people and that there is money going out of those farms into the local economy. I have spoken to my constituents: they have had to take certain crops out of production to grow those that need less manpower. They would have employed people to work those fields or work that livestock, but they have been forced to change by often badly designed initiatives from DEFRA, and we need to work cross-party to ensure that those initiatives are better designed in future. They have been forced into those measures that, over the course of many years, slowly bring their workforce down and lead to less money coming into the local economy. In his response, I hope the Minister can ensure that the Treasury hears the pleas of rural communities. This issue is genuinely a concern across parties, and my constituents are very concerned about the ongoing removal of prime agricultural land from food production.
Public Service Pension Schemes: Quadrennial Valuations
John Glen Excerpts(1 year, 2 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (John Glen)
There are currently more than 6 million active members of the public service pensions schemes, which cover the NHS, teachers, the armed forces, the police, firefighters, local government workers, the judiciary and civil servants. Valuations of the public service pension schemes are undertaken every four years. The valuations are important as they ensure that the full costs of each scheme are understood and fully recognised by Government, and that there is a fair balance of risk between members and taxpayers with regard to the cost of providing the schemes.
This valuation is the first time that a reformed cost control mechanism will be used. Following a review by the Government Actuary and a public consultation, the cost control mechanism has been reformed to address concerns around its not meeting its original objectives. The objectives are to protect the Exchequer, and by extension taxpayers, from unforeseen costs; to maintain the value of public service pension schemes to members; and to provide stability and certainty on member benefit and contribution levels. The reforms mean that the mechanism now only assesses costs associated with the post-2015 reformed schemes, increases the margin by which costs need to vary from the target in order for benefit, or member contribution, changes to be required from 2% to 3% of pensionable pay, and includes an “economic check” such that changes will only happen if the costs would still be outside the same margin had the impact of changes in long-term economic assumptions been included. The Public Service Pensions Act 2013, when taken together with regulations made under it and the Public Service Pensions and Judicial Offices Act 2022, provides for the introduction of these reforms.
On 31 August 2023, HM Treasury published a document that sets out how the valuations are to be conducted for this valuation cycle[1]. The document sets a range of assumptions that Departments and the Scottish and Welsh Governments must use in finalising their valuations of public service pension schemes. The document allows public service employers, Departments and scheme administrators to complete their valuations and prepare for the implementation of new employer contribution rates and take any necessary steps with respect to cost control mechanism results. The publication of this document follows a statutory consultation with the Government Actuary, which concluded in August 2023. Copies of this document, the 2023 Directions, have been placed in the Houses of Parliament Libraries.
A key factor which influences the valuation results of all unfunded schemes is a reduction in the SCAPE—superannuation contributions adjusted for past experience —discount rate which is used to express schemes’ future pension payments as a present-day cost, based on the Office for Budget Responsibility’s forecast of long-term GDP growth. The updated SCAPE discount rate was announced in March 2023 and is expected to cause increases to employer contribution rates. This is because pension payments paid in the future will be discounted at a lower rate and therefore have a higher value in today’s terms. HM Treasury has committed to provide funding, for all centrally funded employers, for increases in employer contribution rates resulting from the 2020 valuations as a consequence of changes to the SCAPE discount rate.
The outcomes of the valuations are expected to be confirmed later this year via the publication of each scheme’s valuation report. Changes to employer contribution rates will be implemented with effect from 1 April 2024, and any changes to benefits required to bring a scheme back to target cost would apply retrospectively from 1 April 2023. An additional process operates in the local government pension scheme (LGPS) (England and Wales) run by the LGPS England and Wales Scheme Advisory Board.
[1] https://www.gov.uk/government/publications/public-service-pensions-2020-valuations
[HCWS1051]
Oral Answers to Questions
John Glen Excerpts(1 year, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Philip Davies (Shipley) (Con)
The Chief Secretary to the Treasury (John Glen)
The Chancellor launched the efficiency and savings review in the autumn statement to focus on the Government’s priorities and identify ways in which to work more efficiently and help to manage budgetary pressures from higher inflation. The Secretary of State for Transport and I discussed the costs of HS2 during the review, which helped to inform the decision to rephase certain parts of the project as part of balancing the nation’s books.
Philip Davies
The travel between north and south is the bit of transport infrastructure that works; it is the travel across the north that does not work. What would the cost of HS2 have to reach for the Government to conclude that it no longer represents value for money for the taxpayer, or are the Government pursuing the essentially socialist policy that they will keep paying for this ridiculous white elephant irrespective of the final bill?
John Glen
I took the precaution of researching my hon. Friend’s interest in this subject, and I note that he was issuing challenges on it 14 years ago. The Government remain—as they were then—fully committed to delivering HS2 and the integrated rail plan. This is a long-term investment that will bring our biggest cities closer to each other. It will boost productivity, and will provide a low-carbon alternative to cars and planes for many decades to come. As my hon. Friend knows, we are also working, through the IRP, on a £96 billion package to improve inter-regional rail connections, which obviously affects his constituents.
Graham Stringer (Blackley and Broughton) (Lab)
Does the Minister agree that this country’s performance on productivity has been pitiful over the last 10 years? There has been virtually no improvement in productivity, and one reason for that is our lack of investment in national infrastructure. Slowing down HS2 is a bad move when it comes to improving our infrastructure, and it is years since we agreed to a third runway at Heathrow. Does the Minister agree that if we are to improve our productivity, we have to invest in infrastructure?
John Glen
I can agree with the hon. Gentleman that the investment of £600 billion in infrastructure in all parts of the country to which the Government are committed is critical to easing the productivity challenge that has faced successive Governments, and the Chancellor will introduce measures in the autumn statement to address it further.
Greg Smith (Buckingham) (Con)
HS2’s costs have ballooned since it was first conceived under the last Labour Government. As my right hon. Friend has said, owing to pressure from the Treasury the project has had to be rephased, and trains will now go from west London—not central London—to a station not in central Birmingham, which negates the benefits that the scheme’s proponents said it would bring. With costs ballooning still further, we just cannot afford it, can we?
John Glen
I am sorry, but I do not agree with my hon. Friend. I certainly recognise that infrastructure investments of this scale and with this level of ambition are never easy to deliver. I have set out the changes to the profile of the investment, but all the key elements are still on track, and we will continue to work with the Department for Transport to ensure that that remains the case.
John Spellar (Warley) (Lab)
Is the Minister not also concerned about cost-benefit analysis? Have not assumptions behind the pattern of business travel demand been changed dramatically by the pandemic, working from home and video conferencing? Is the Minister satisfied that the Department for Transport has properly re-evaluated HS2 to take account of such changes?
John Glen
Yes, I am content with that. I recognise those changes in patterns of behaviour when it comes to the use of public transport, but we also face cost of living challenges. That is why we are working so closely with the Department for Transport to, for example, continue investment in buses over the next two years, and continue to spend £200 million on capping fares to £2 outside London. We must bear in mind, however, that continued investment in transport infrastructure is key to greater connectivity across the United Kingdom and dealing with the economic growth imperative.
Esther McVey (Tatton) (Con)
It has been reported over the last couple of days that accommodating HS2 will mean fewer trains between the north and London. One station affected is Wilmslow in my constituency. Does the Minister agree that were that to happen, HS2 would no longer be value for money or good for the north? It would certainly take longer and cost my constituents more.
John Glen
HS2 is going to happen. The question is what additional investments across other parts of the rail infrastructure might benefit my right hon. Friend’s constituents additionally and more directly. I set out with the integrated rail plan the £96 billion package to improve rail connections, and many elements of that will have a direct impact on her constituents in Cheshire.
Andrew Bridgen (North West Leicestershire) (Reclaim)
As the Minister is well aware, North West Leicestershire has suffered under the blight of HS2 for more than a decade, and the whole project has recently been declared to be undeliverable. It has been unaffordable for some considerable time. Will he urge his colleagues in Government to cancel the remainder of the eastern leg and reallocate just a small portion of that budget so that we can reopen the Ivanhoe line?
John Glen
I recognise that the hon. Gentleman has strong views on this, and I know that he has been personally affected by it in the past. The project, although it has been rephased, will continue. There are a number of issues involved in ensuring tight management of that budget, and I am working closely with the Department for Transport to see that that happens.
Nadia Whittome (Nottingham East) (Lab)
Mary Kelly Foy (City of Durham) (Lab)
The Chief Secretary to the Treasury (John Glen)
The Government are committed to supporting individuals to live healthier lives. High inflation is the greatest immediate economic challenge that we must address. The Government have made it a priority to halve inflation this year. We are on the path back to the target of 2% and consumer price index inflation fell to 6.8% in July. We will continue to work with all Departments to deal with the inflationary pressures they face.
Mary Kelly Foy
Being unable to pay for essentials such as food, heating and rent has an impact on physical and mental health. It can lead to delayed diagnosis, malnutrition and serious mental health problems. As the former Health Secretary will know, prevention is better than cure, but austerity flies in the face of a preventative approach. What discussions has the Chancellor had with the Secretary of State for Health and Social Care to ensure that the NHS has prevention at its heart? Will we see a rise in funding in the autumn statement?
John Glen
Yes, I have frequent conversations with the Secretary of State and other Ministers about health budgets. We will be increasing the public health grant to £3.575 billion for the next financial year. That is to ensure that we have that real-term funding protection over the next two years, but there are a number of other interventions that we are making on delivering services more effectively, ensuring that we have the provision of additional staff with the long-term workforce plan for the NHS. None the less, I do recognise the challenges that a post-covid NHS faces in terms of the legacy of demand that is yet unmet. We are continuing to work to bring down waiting lists and we have seen significant progress recently, particularly with two-year and 18-month lists.
Mr Philip Hollobone (Kettering) (Con)
A key part of improving the public health and wellbeing of my local residents in Kettering is the redevelopment of Kettering General Hospital. Can the Chief Secretary to the Treasury confirm that the £400 million-plus redevelopment of KGH remains on track for completion by 2030, and that the standardisation of the design of the 40 new hospitals will help to reduce costs and increase deliverability?
John Glen
Kettering General Hospital is always at the top of my mind when I come to Treasury questions, but the bigger challenge, as my hon. Friend rightly points out, is how we ensure the efficiency of the expenditure of every pound of taxpayers’ investment in the health estate. I shall continue to work with the Secretary of State on that plan for the 40 hospitals to make sure that we achieve that.
Derek Twigg (Halton) (Lab)
In the many discussions that the Minister says he has had with the Secretary of State for Health and Social Care, what figure did they discuss with him that he estimates inflation will be at in the next financial year?
John Glen
There are a range of forecasts, but we have to deal with the reality. I am trying to ensure that, across all of the decisions that Secretaries of State make, we reprioritise effectively and deliver frontline services, but I do not have a number for the hon. Gentleman this afternoon.
Jonathan Gullis (Stoke-on-Trent North) (Con)
People in Stoke-on-Trent North, Kidsgrove and Talke find that mental health is a huge barrier to getting back into work and obviously helping to produce economic growth. That is something that the Chancellor is reported to have been considering carefully over the summer recess. My friend James Starkie and I have launched a No Time To Wait campaign to use some existing health and social care funding to get specialist mental health nurses into GP surgeries to help support people in a more preventive way—something the hon. Member for City of Durham (Mary Kelly Foy) asked about earlier. What support will the Treasury give to help the Department of Health and Social Care to enact those plans?
John Glen
My hon. Friend always has constructive suggestions in this difficult area. The Chancellor brought forward a number of interventions in the Budget to get people back into work after some of the behavioural shifts that we saw following the pandemic. We look forward to continuing to work with my hon. Friend on solutions for his community.
David Duguid (Banff and Buchan) (Con)
Ian Lavery (Wansbeck) (Lab)
The Chief Secretary to the Treasury (John Glen)
I do not accept that characterisation at all. I do understand the impact of mesothelioma, as my father died of it, but this Government have invested £15 billion to keep schools safe since 2015, and the Chancellor has set out other figures as well.
Mr Philip Hollobone (Kettering) (Con)
Mary Glindon (North Tyneside) (Lab)
John Glen
I have not heard that matter raised before, but I am very happy to take it back and correspond with the hon. Lady on it. Obviously, we have taken advice on the state pension age and have made clear our policies previously, but I am happy to look at any specific cases she raises.
David Duguid (Banff and Buchan) (Con)
John Glen
Dialogue is ongoing on this matter and I can confirm that we will continue to work on this in the coming weeks.
Saqib Bhatti (Meriden) (Con)
Andy Haldane, the former Bank of England chief economist, recently said in a Sky News interview that the Bank of England kept on printing money for longer than it needed to. It is clear that central banks across the world have been addicted to cheap money and that this has contributed to inflation across the world. Does the Chancellor agree that printing cheap and easy money has not been without consequence, and instead our monetary policy must focus on important growth factors such as productivity?
Treasury
John Glen Excerpts(1 year, 5 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ian Mearns (Gateshead) (Lab)
I am a little concerned about the £1.425 billion to be found from within the Department for Education’s existing budget between now and 2025, with £525 million this financial year and a further £900 million in the next financial year. Will the Minister be a bit more specific about exactly where that will be taken from within the Department’s budget to meet the teachers’ pay increase? While of course we welcome the fact that the Government are honouring the teachers’ pay review body recommendations, let us not forget that the envelope for the review bodies is set by the Government in the first place. There is something else going on in this situation: we currently have a recruitment and retention crisis among our teaching workforce, with something like 20% of newly qualified teachers leaving after three years and 40% leaving after five years. Nobody goes into teaching because of the money, but it always helps, and a rise in line with inflation would certainly help.
John Glen
I thank the hon. Gentleman for his question. I think he welcomes what we have decided to do with the 6.5% pay increase, which leaves a typical teacher with £44,300. We are reprioritising within the Department for Education’s existing budget to deliver the additional funding to schools, but we are protecting core schools funding and frontline services. We have put in additional sums of money through the spending review and subsequent fiscal events: £330 million in 2023-24 and £550 million in 2024-25. The numbers add up, and he will recognise that.
[Official Report, 13 July 2023, Vol. 736, c. 533.]
Letter of correction from the Chief Secretary to the Treasury, the right hon. Member for Salisbury (John Glen).
An error has been identified in my response to the hon. Member for Gateshead (Ian Mearns).
The correct response should have been:
John Glen
I thank the hon. Gentleman for his question. I think he welcomes what we have decided to do with the 6.5% pay increase, which leaves a typical teacher with £44,300. We are reprioritising within the Department for Education’s existing budget to deliver the additional funding to schools, but we are protecting core schools funding and frontline services. We have put in additional sums of money to fully fund this pay award: £525 million in 2023-24 and £900 million in 2024-25. The numbers add up, and he will recognise that.
Public Sector Pay
John Glen Excerpts(1 year, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (John Glen)
With permission, I will make a statement on the steps His Majesty’s Government are taking to deliver sound money while providing a fair deal to public sector workers. Today, I can announce that the Government have accepted the headline recommendations of the independent pay review bodies in full. We are doing this while abiding by sound money, which, as the Chancellor said at Mansion House on Monday this week, is our No. 1 focus.
We cannot grow our economy or reduce the heavy burden of national debt without first cutting high, persistent inflation. Inflation makes every person in this country poorer. It is the most insidious tax rise there is, and that is why the Prime Minister has made it this Government’s priority to halve it this year. Inflation is currently at 8.7% in May, and core inflation stood at 7.1% in the 12 months to May 2023—the highest for 30 years. It is making everything from groceries and clothes to petrol and transport more expensive, so we must and we will do everything we can to tackle inflation.
The best tax cut there is is a cut to inflation, and that means we must take responsible decisions on the public finances, including public sector pay, because more borrowing is itself inflationary. According to recent International Monetary Fund estimates, advanced economies that increased public expenditure by 1 percentage point, which would mean £25 billion for the UK, saw inflation rise by half a percentage point. Yet our decision is responsible because, unlike some unsustainable demands, we have delivered awards that do not further fuel inflation and make the inflationary environment worse.
We said we would accept the outcome of the public pay review bodies, and that is exactly what we will do. We will do so because we are proud of our world-class public servants and owe them a debt of gratitude for their service through the last few years, including through the pandemic. Our police officers work tirelessly to keep this country safe, our armed forces defend us, our doctors and nurses make sacrifices to save lives, and our teachers go to school day in, day out to educate our children. All of them, and many more across many sectors, play a vital role in society.
With these contributions in mind, new teachers will start on at least £30,000. The lowest-paid armed forces will see a pay rise of over £2,000, and the starting salary of a junior doctor will rise by more than £3,000. That comes alongside our “Agenda for Change” deal, which delivered a 5% pay rise, along with one-off awards worth more than £3,600 for the average nurse and more than £3,700 for the average ambulance worker.
Specifically, this means policing will receive a 7% headline uplift. NHS consultants, speciality and specialist doctors, salaried dentists and salaried GPs will receive uplifts of 6% this year. Junior doctors will also receive a 6% uplift, as well as an additional consolidated £1,250 increase. Prison officers in the operational bands will receive a pay increase of 7%, with larger increases for support grades. Armed forces will receive a 5% uplift, with an additional consolidated £1,000 increase.
Our 6.5% pay award for teachers will be fully funded, with the Government providing £525 million of additional funding for schools in 2023-24 and a further £900 million in 2024-25. In order to achieve this, we are reprioritising within the Department for Education’s existing budget to deliver this additional funding to schools while protecting frontline services.
Alongside generous uplifts, today’s deal strikes a balance. It is a fair deal, which recognises the anxiety caused by cost of living pressures, supports recruitment and retention, and delivers one of the highest settlements in three decades. However, it is also fiscally responsible, and delivers pay rises that are broadly in line with the private sector. It would be neither fair nor affordable to meet unsustainable demands for pay rises well into double digits. To do so would be fiscally irresponsible, increasing national debt, passing the buck to future generations, weakening the foundations of our economy and further fuelling inflation.
There will be no new borrowing or spending to fund the awards. More borrowing would simply add more pressure on inflation at exactly the wrong time, risking higher interest rates and higher mortgage rates. Instead, the awards will be funded through a combination of the significant provision for pay that was made at the last spending review, greater efficiency, and reprioritisation. Departments will be reprioritising within existing budgets and driving further efficiencies to focus spending where it delivers the greatest value.
We will also take sound choices to maximise income. We plan to increase the rates of the immigration health surcharge, which have been frozen for the past three years, despite high inflation and wider pressures facing the economy and the system in general, to ensure that it covers the full healthcare costs of those who pay it. Under our plans, the main rate will increase to £1,035, and the discounted rate for students and under-18s will increase to £776. That increase to the surcharge will help to fund the pay rise for doctors.
At the same time, we will increase fees across a range of immigration and nationality routes, including for people coming here to live, work and study at a time of record high migration numbers. Specifically, that means increasing the cost of work visas and visit visas by 15%, and increasing the cost of study visas, certificates of sponsorship, settlement, citizenship, wider entry clearance, leave to remain and priority visas by at least 20%. We are also equalising costs for students and those using a priority service, so that people pay the same whether they apply from within the UK or from outside the UK. That will help to cover more of the cost of the migration and border system, allowing the Home Secretary to divert more funding to police forces to help fund the pay rise for the police. We will cut back on civil service recruitment in the Ministry of Defence until March 2025, helping to fund the pay rise for our armed forces.
The Government’s carefully calibrated approach to avoid increasing inflation could not be more different or further away from the economic platform offered by the Labour party. Labour’s proposals for an unfunded £28 billion a year spending spree in the second half of the next Parliament would deal a huge blow to our country’s collective efforts to tackle inflation. Members do not have to take my word for it, because we already have the view of the independent Institute for Fiscal Studies. Its director, Paul Johnson, said just a few weeks ago that additional borrowing would pump more money into the economy, potentially increasing inflation and driving up interest rates.
The action we have taken today is the most responsible way forward, striking a balance between the demands of our public sector workers and the needs of our country and economy. Industrial action has postponed more than 600,000 hospital appointments, cost our children more than 1 million days of teaching, and damaged the productivity and growth that we so clearly need in these challenging times. We have introduced and expanded this with the Strikes (Minimum Service Levels) Bill, which will limit the impacts of industrial action on the lives and livelihoods of ordinary people, who should be able to access key services during industrial action. The Bill gives us the power to set minimum service levels across key public services, such as healthcare, fire and rescue, public transport and education, and it gives us the right tools to deal with any ongoing disputes.
We must deliver on the Prime Minister’s pledge to cut inflation, so we will continue to chart the course of sound money, to the benefit of all, while making fair pay awards—awards that do not fuel inflation—to our public sector workers.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I thank the Chief Secretary to the Treasury for the advance copy of his statement. Let me begin by praising the efforts of our NHS staff, teachers, police officers and members of the armed forces. The nurse who looks after someone when they are ill, the teacher who opens up new horizons for a pupil, the soldiers and police officers who keep us safe—we owe them all a great debt of gratitude. They are what make the good society, and we all rely on the public services they provide every day. Like all workers, they deserve a decent pay rise, and like all workers, they are living in a wider economic context.
The Government set out a plan at the start of the year, and then the economy intervened on their plan. They say that a plan does not survive contact with the enemy, but this Government’s plan has not even survived contact with reality. Just a couple of hours before the Chief Secretary to the Treasury gave us his statement, we heard news that the UK economy shrank in size last month. Even more worryingly, that comes after four years in which there has been no meaningful economic growth at all. Today’s Office for Budget Responsibility fiscal risk report describes what it calls a “disappointing decade” for economic growth. That disappointing decade means that, in reality, incomes for households, including the workers we are speaking about today, have stagnated and sometimes fallen. The country is less prosperous and more exposed to shocks than it should be, and that is the backdrop to today’s statement.
Ministers want to claim that all these problems are global, but inflation in the UK is the highest in the G7. Every month when the figures come out, they are higher than expected. Core inflation was up last month, not down. Food prices are rising 20% faster in the UK than in France, and three times faster than in the United States. Low growth, high prices, creaking public services—that is the legacy we have after 13 years of the Conservatives in power, with longer waiting times and waiting lists, and more than 3 million days lost to industrial action this year alone.
In his statement, the Chief Secretary to the Treasury talked of sound money, but the Government’s failings on public services have become economic failings too. Let me give the House one example. As the OBR pointed out in its risk report today, if we got labour force participation back to pre-covid levels by reducing ill health, we could reduce borrowing by £18 billion. The long waiting lists and waiting times are not just a health issue, but an economic issue. After the Conservative party put a bomb under mortgage rates last autumn, UK homeowners are now paying £2,000 a year more than those in France, £1,200 a year more than those in Belgium, and £800 a year more than those in Germany. It is not all global.
The Chief Secretary to the Treasury made a contrast with the Labour party, but Labour’s record on public services, which are at the heart of his statement, was investment and reform in the NHS, shorter waiting times and waiting lists, the highest levels of public satisfaction with the NHS since its foundation in 1948, and a fraction of the days lost to industrial disputes that we have seen under this Government. We also had better economic growth. When it comes to sound money, I remind the right hon. Gentleman that if we had continued with Labour’s rate of economic growth, the Treasury would be tens of billions of pounds a year better off than it is today.
What is the Government’s estimate of the impact on public services of funding the rises in the way he has set out? The Chief Secretary to the Treasury talked of “reprioritising”. Does that mean that the Government will cut back on capital investment in schools and hospitals in order to fund those increases? What is the estimated impact of the civil service recruitment freeze that he announced for the Ministry of Defence? What will be the impact on the NHS recovery programme that has been set out, and what will it mean for the shocking level of waiting lists and waiting times that we see under this Government? He said there would be no new money, but he also said that the pay rise for teachers was fully funded with new money. Which is it, and can he clarify the two things that he said in his statement about that?
The economic backdrop colours everything in this statement. It is no longer a matter of judging whether the Conservative Government will fail; the fact is that they have already failed. That is why the general election cannot come soon enough.
John Glen
It is not clear to me or, I think, to the House as a whole whether the right hon. Gentleman accepts the Government’s acceptance of the pay review bodies’ recommendations in full today. He seems to have written his speech as a general critique of the Government’s economic policy, without addressing what matters most to public sector workers up and down the country, which is that we have listened carefully to the evidence-based advice, as is typical over the past 13 years, and agreed with all those recommendations.
The right hon. Gentleman paints a picture of the last Labour Government and projects forward, as if it were utopia. That is why Labour did not win the 2010 general election and why one of my predecessors said there was no money left. Labour did not take those difficult decisions between 2008 and 2010, and that was the situation we were in when, I believe, he was attending Cabinet.
The right hon. Gentleman made some other observations about the economy. I am aware of the record growth over the past two years. I acknowledge the challenges we face at this point in time, and I have set them out in full with respect to inflation, but we have gone through a pandemic, where we borrowed significant sums of money. When we came out of that pandemic, we found ourselves in the first war in Europe for several generations. That is the context that the people of this country understand.
I have set out clearly all the implications for each workforce, and there will obviously be a series of written ministerial statement from each Government Department. The right hon. Gentleman also sets out some questions about waiting lists. I recognise the challenges faced in the NHS, which is why it is one of the Prime Minister’s top priorities. We have made real progress with the virtual elimination of the two-year waits, and 18-month waits are down by 90%, but I acknowledge that there is more work to be done. The £2.4 billion invested in the workforce plan will make a considerable contribution to that. The productivity review that the Chancellor tasked me with leading a few weeks ago will look further at how we can drive more efficiencies in how we spend public money.
I will finish my initial response by reiterating to the House that the decisions we have made today mean no new borrowing, no cuts to the frontline, no new taxes and no negative impact on inflationary pressures.
Steve Brine (Winchester) (Con)
My right hon. Friend the Chief Secretary can have some clarity from me: I think this is fair when we consider, as the Government must, the whole economy, and I think it is proportionate, so I welcome it. Does he agree that the NHS settlement has to be seen alongside the Budget announcement on pensions, as well as the NHS long-term workforce plan? Will he undertake to work with all pay review bodies going forward to get us to a more ordered place, where the mandate is given in the autumn and the response is heard in the spring Budget?
John Glen
My hon. Friend makes some sensible points, and he is absolutely right on the pension changes that we announced in the Budget, which the British Medical Association had been for a long time asking for, and it welcomed them. For clarity, I should make it clear that health and care workers remain exempt from the immigration health surcharge. He speaks a lot of wisdom about potential refinements to the timetable, and we will look at those carefully.
Peter Grant (Glenrothes) (SNP)
I thank the Chief Secretary for an advance copy of his statement. It was noticeable that in his initial statement he did not mention the fact that the British economy has been at a standstill since before the pandemic. It was noticeable that neither he nor the shadow Chief Secretary, the right hon. Member for Wolverhampton South East (Mr McFadden), want to admit the part that Brexit has played in that. Everybody has been affected by covid and the war in Ukraine, but only one state in Europe is suffering from the self-inflicted damage of Brexit, and that is why economic growth in the European Union is and will continue to be higher than here.
While we certainly welcome the news that the Government have finally decided to honour the pledge on public sector pay, will the Chief Secretary acknowledge that in almost every single case the pay increases being offered to public sector workers will be less than increases in the cost of living, so in real terms they are a cut? Will he acknowledge that in almost every case the Scottish Government have already settled with our essential public sector workers in Scotland, in almost every case with a substantially higher pay deal and in most cases—certainly throughout our NHS—without a single day being lost through strike action? What are the Scottish Government getting right that this Government find so difficult?
One of the biggest challenges facing the economy is a shortage of workers, so what a brilliant move to address that by charging essential workers more to come here and contribute to our economy. Can we have full details of the increases to immigration fees, including a full statement of the expected economic impact, including an indication of the likely impact on immigration numbers? Will we be driving away essential workers and causing more damage to the economy simply to feed the right-wing fantasies of the Daily Mail and the Express? Given that there is almost unanimous agreement in Scotland that we need more immigration, not less, is it not time for the Scottish Parliament, answerable to the Scottish people, to be given the powers to decide on the immigration policies we need, rather than constantly being dragged down by the failed policies of this United Kingdom Government? Does he accept that rampant inflation and stagnant economic growth are not essential, but are deliberate political choices of this failed Government?
John Glen
I thank the hon. Gentleman for his questions. I think we can agree to disagree on some of that. What we have to understand is that if we look at the growth levels over the past two years in the G7, this economy and this country have performed well. He makes a number of points. People are getting weary of this constant refrain around Brexit. There are people who voted for Brexit and people who did not; it has happened, and we will now take every step we can to maximise the benefits and opportunities and the greater discretion that we have consequential of that decision.
With respect to the specific questions about visa fees, I am sure that my colleagues in the Home Office will publish those in due course. This is a carefully calibrated decision; it is not motivated by political dogma. It is a clear decision to take necessary steps to avoid additional borrowing, and to meet the outcomes and the numbers that derive from the PRBs, which give evidence-based advice to the Government. This is a careful set of judgments. Clearly they will not please everyone, but we have to make decisions in the interests of the whole economy at this time.
Richard Fuller (North East Bedfordshire) (Con)
It was revealing that the shadow Chief Secretary, the right hon. Member for Wolverhampton South East (Mr McFadden) could not tell the House whether Labour was in favour of the pay awards or against them. Perhaps he is not sure whether Labour Members will be joining strikers who are stopping my constituents from receiving healthcare or their children from getting to school. My right hon. Friend is absolutely right that constituents have a right to expect productivity improvements to match these pay increases. Can he explain to the House a bit more about what the next steps with the productivity review will be?
John Glen
Yes, I can. I have written to every spending Minister in the past week. I will be having conversations with them and wider representatives about what can be done differently to drive savings and more productivity from the taxpayers’ money that we spend across Whitehall. To return to my hon. Friend’s previous point, I draw his attention and that of the House to what the International Monetary Fund said. For every additional £25 billion of spending, that is 0.5% on inflation. If Labour’s plan is to spend an additional £28 billion—Labour might say that it will be a bit later on in the Parliament, and it might be an attempt to outwit the Government on the massive leadership that we have shown on green finance and the green economy—that would be inflationary. The shadow Chief Secretary, the right hon. Member for Wolverhampton South East needs to come to terms with that, because the British people will in due course.
Daisy Cooper (St Albans) (LD)
Wealth creation and health creation are two sides of the same coin, so it is hardly surprising that the Office for Budget Responsibility has said that economic inactivity has increased as many more people are citing ill health as the main reason for not working. When every single part of our economy—whether farming, hospitality, science or engineering—is struggling to recruit the international talent that it needs, why on earth are this Government about to take this anti-business measure of increasing the cost of recruiting people from abroad through an increased health surcharge, rather than reversing the tax cuts for the big banks, closing the loopholes in the windfall tax and clamping down on tax avoidance, as the Liberal Democrats have called for?
John Glen
We have got record levels of migration at this time. At the Budget, we set out a clear plan to get more people in this country back into the workplace, with a number of interventions through the Department for Work and Pensions and the health service. We have had to make a fine judgment around those fees in the context of not borrowing any more money. If the Liberal Democrats wish to be taken seriously as a party of government, they will have to make the numbers add up.
Mr Philip Hollobone (Kettering) (Con)
I welcome the Chief Secretary’s statement. Would he be kind enough to confirm for teachers in Kettering that the 6.5% pay increase recommended by the independent pay review body will deliver the biggest pay increase for teachers in 30 years, that the new starting salary for teachers of £30,000 will be at its highest ever level and that the Government will be fully funding the pay award so that schools do not have to raid their own budgets to honour it?
John Glen
As ever, my hon. Friend is spot on. Everything that he said is absolutely correct. This is a significant pay settlement for teachers, and I hope that in due course we will learn that striking workforces will end their action and we can look forward with confidence to the autumn term.
Jon Trickett (Hemsworth) (Lab)
The Minister’s statement proposes that the pay rises offered, which are less than the rate of inflation for every single one of the millions of people who work hard for our public services, will be paid for effectively by what he calls a productivity drive. Is it not the case that productivity in Tory hands means cuts to services and reductions in staff? Why did the OBR say this morning that, on our present track, we will finish up with a debt 300% of our GDP? When he talks about sound money, it simply is not true, is it?
John Glen
I do not accept the hon. Member’s characterisation of the long-term fiscal risk to the economy. What I do accept is that we need to take tough decisions. It seems to me that he is saying what a significant tranche of the Labour party still believes: we can borrow, borrow, borrow and, in due course, if Labour ever gets into government, it will raise taxes sequentially, as happened previously.
Bob Blackman (Harrow East) (Con)
I warmly welcome my right hon. Friend’s statement. Given that almost every single one of the public sector union leaders has called for the Government to accept the pay review offer, does he agree that the unions should immediately cease strike action, get back to work and provide the service that the public need?
John Glen
I absolutely agree. That is indeed what we expect to see in the coming days. This is a tough decision based on evidence as well as what is right for the economy and the public sector as a whole. I hope that that is what happens in the coming hours and days.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
The truth is, the UK is in real trouble, and it is our constituents through sky-high mortgage rates and food prices who are paying the price. Our public finances are more exposed to rising inflation than other comparable countries. The UK has borrowed twice the inflation-linked bonds of any other Government. What the Government pay to borrow has risen by 2%, compared to the G7 average of 0.5%. The OBR says that UK Government debt is forecast to rise by 3.1% of GDP this year, compared with average falls of 1.8% in other European countries. Will the Minister come clean with the House and our constituents about just how close his Government have driven us to the economic precipice?
John Glen
I do not accept virtually anything that he said. What I do accept is that the whole of the world is dealing with massive inflation pressures, and if we look across the continent of Europe, we see very similar figures. Of course, they differ in some respects, but the Government are determined to bring inflation down, and today’s decisions are another contribution on that journey to halve inflation this year.
Scott Benton (Blackpool South) (Ind)
Millions of our hard-working public servants will welcome the settlement, which is fair both to them and, crucially, to the taxpayer. Can the Minister update the House on what steps he will be taking to eliminate public sector waste to ensure that the settlements are sustainable for the taxpayer?
John Glen
The first step today has been to ensure that we are not borrowing any more to make the settlement work. The productivity review that will take place in the coming days and weeks leading up to the autumn statement will be a key element of that. I have not wanted to set a target for that, because I will be looking everywhere to find better ways of spending taxpayers’ money to ensure that we deliver the services and commitments we set out at the spending review in the most efficient and effective way.
Ian Mearns (Gateshead) (Lab)
I am a little concerned about the £1.425 billion to be found from within the Department for Education’s existing budget between now and 2025, with £525 million this financial year and a further £900 million in the next financial year. Will the Minister be a bit more specific about exactly where that will be taken from within the Department’s budget to meet the teachers’ pay increase?
While of course we welcome the fact that the Government are honouring the teachers’ pay review body recommendations, let us not forget that the envelope for the review bodies is set by the Government in the first place. There is something else going on in this situation: we currently have a recruitment and retention crisis among our teaching workforce, with something like 20% of newly qualified teachers leaving after three years and 40% leaving after five years. Nobody goes into teaching because of the money, but it always helps, and a rise in line with inflation would certainly help.
John Glen
I thank the hon. Gentleman for his question. I think he welcomes what we have decided to do with the 6.5% pay increase, which leaves a typical teacher with £44,300. We are reprioritising within the Department for Education’s existing budget to deliver the additional funding to schools, but we are protecting core schools funding and frontline services. We have put in additional sums of money through the spending review and subsequent fiscal events: £330 million in 2023-24 and £550 million in 2024-25. The numbers add up, and he will recognise that.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I recently joined the Public and Commercial Services Union at East Kilbride’s Centre One tax office for its campaign on fair pay. Many told me that they were struggling on minimum wages. We have dedicated public servants who, with the cost of living, are struggling to make ends meet. Does the Minister share my concern that much more must be done to secure a fair pay deal that is acceptable to those who are working on the frontline?
John Glen
I say respectfully to the hon. Lady that we have taken a number of interventions and made a number of decisions across the board, and that does not just mean a single percentage—I set out the percentages across different workforces in some detail—and sometimes, such as within education, those distributions are designed to give more uplift to those at the lower levels. I am happy to correspond with her on anything specific that she wants to bring to my attention, obviously within the devolution framework.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
I thank the Chief Secretary for his statement. The average time that it takes a first-time buyer to save for a deposit has climbed to a record high of 10 years, often meaning that only the most privileged in society can afford to get a foot on the housing ladder. With wages stagnating and high rents hindering saving, what steps are the Government taking to support individuals wishing to purchase their first property?
John Glen
The Government have an extensive programme led by the Secretary of State for Levelling Up, Housing and Communities. I am sure that he would be happy to set out the further work he is doing in advance of the autumn statement.
Madam Deputy Speaker (Dame Rosie Winterton)
I thank the Chief Secretary for his statement.
Armed Forces and Firefighters Pension Schemes
John Glen Excerpts(1 year, 5 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (John Glen)
Public service pension schemes (PSPS) are a crucial and valued part of public sector remuneration. One of the valuable features of these defined-benefit schemes is provisions to ensure that accrued pensions of active and deferred members are adjusted at a rate set out in statute that is not dependent on investment returns. Depending on the scheme of which they are a member, the accrued pension of an active member of the career average revalued earnings (CARE) PSPS introduced from 2014 and 2015 is revalued each year by an amount equal to the change in CPI, CPI+X% or average weekly earnings (AWE).
The process for this revaluation is set out at section 9 of the Public Service Pensions Act (PSPA) 2013. This legislation specifies that it is achieved through a Treasury order made in each year for the period, which
“may determine the change in prices or earnings in any period by reference to the general level of prices or earnings estimated in such manner as the Treasury consider appropriate.”
In practice, accrued pensions of active PSPS members have been revalued in April of each year based on Office for National Statistics (ONS) estimates of the September-to-September increase in CPI for the previous year for most schemes, or based on ONS estimates of the September-to-September increase in AWE for the 2015 firefighters’ pension scheme (FPS) in England and its devolved equivalents and the 2015 armed forces pension scheme (AFPS). ONS practice is to publish each year a provisional AWE figure for the September-to-September increase in November, followed by a revised figure in December.
During work leading up to the laying of the Treasury revaluation order published in April 2023, it was noted that the Treasury revaluation orders for 2021 and 2022 specified an AWE figure based on provisional ONS figures, rather than revised ONS figures, which had been used in previous Treasury revaluation orders from 2015 to 2020. Although the legislation setting out the revaluation of PSPS does not specify a figure of AWE growth to be used for the purposes of revaluation, it is the Government’s view that the previous practice of using revised ONS estimates should have been maintained in 2021 and 2022. The Government thus intend to correct the position affecting those currently active, deferred and pensioner members who were in active service in one of the affected PSPS at any point between 1 April 2020 and 31 March 2022. This will ensure all members receive the correct amount of pension. For a member who was in active service throughout the entire period, their accrued pension up to 31 March 2022 will be up to around 0.6% larger following this change. This change in pension value will not affect the benefit entitlement of those who were active members of the legacy pension schemes for the armed forces or firefighters during the years in question if they choose legacy design benefits under the upcoming choice exercise to remedy the discrimination identified by the McCloud/Sargeant litigation.
The corrected pension benefit amounts for affected PSPS members will be provided through scheme regulations made under section 3(2)(a) of the PSPA 2013. As these regulations will be specific to the affected schemes, they will be consulted on and legislated for by the Home Office and the Ministry of Defence for the 2015 FPS England and the 2015 AFPS respectively. It will be for the Scottish and Welsh Governments to make similar changes to firefighters’ pension schemes in those countries. The FPS in Northern Ireland is fully devolved; therefore, it will be for the relevant authorities there to take forward any similar change for the FPS in Northern Ireland.
The revised position and regulation change announced in this statement will only uplift an affected PSPS member’s accrued benefits. The Government intend to consult and legislate to implement these changes as quickly as is feasible.
[HCWS921]
Mortgage and Rental Costs
John Glen Excerpts(1 year, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (John Glen)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“welcomes the Government’s drive to halve inflation, grow the economy and reduce debt; particularly welcomes the Government’s new Mortgage Charter which has been agreed by 85 per cent of the residential mortgage market and will provide support to mortgage holders through new commitments and flexibilities to help borrowers who are anxious about rising interest rates; notes the extensive package of cost of living support to help families with rising prices, worth an average of £3,300 per household including direct cash payments to the eight million most vulnerable households; and further believes that Labour’s policies to manage the economy would be inflationary, lead to higher interest rates and put more pressure on mortgage holders and renters.”
After two decades of low inflation, the world has been confronted with a bout of fast-growing prices, and we are not alone. As a result of rising prices, central banks around the world, including in the United States, Japan, New Zealand and the European Union, have been raising interest rates in order to force down the rate of price rises. As all Members will be aware, last week, the Bank of England’s independent Monetary Policy Committee raised rates to 5%. Let me say at the outset that the Bank of England and its Monetary Policy Committee has the full support and confidence of this Government, and will continue to do so as it takes whatever action is necessary to return inflation to the 2% target in the medium term. As the Chancellor was clear when addressing this place yesterday, he will not take action that undermines the Bank of England’s monetary objectives.
Gareth Thomas (Harrow West) (Lab/Co-op)
The Minister will be aware that the latest data on mortgage rates specifically shows that, since the mini-Budget, they have increased faster here in the UK than in the US. That gap in mortgage rates means that someone here with a mortgage of £200,000 will be paying £1,000 a year more than in the US. What is the Minister’s explanation for that?
John Glen
I am here to account for what has happened in the UK. Obviously, there are differences—[Interruption.] If I may answer. There are differences across the EU and the US. What I am telling the House, which is quite transparently clear, is that inflationary pressures are affecting all economies at the moment, and it is my responsibility to account for what we are doing as a Government.
John Glen
I wish to make more progress.
Where there are non-inflationary measures that we can take to relieve the anxiety faced by families, we will do so and we will do everything we can to address the situation. That is why, on Friday, the Chancellor met the UK’s principal mortgage lenders, alongside senior representatives from the Financial Conduct Authority and UK Finance, to agree new support for those struggling with their mortgage payments.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I am grateful to the Minister for giving way. Can he give an answer to my right hon. Friend the Member for Leeds West (Rachel Reeves), who asked whether the mortgage charter, which the Chancellor announced yesterday, will cover buy-to-let mortgages? Why exactly has the Chancellor not made that mandatory?
John Glen
I will come on to set out in detail what arrangements we have made. As the Chancellor set out pretty clearly yesterday, we will hear in the next couple of weeks the details of that agreement, which includes a growing number of lenders—it currently covers 85% of lenders in the country.
John Glen
I wish to make some more progress and then I will take some interventions in a moment.
At that meeting on Friday, the Chancellor secured agreement from lenders to a new mortgage charter, which we published yesterday. It sets out what support customers will receive. We are proud to say that, over the weekend, more lenders signed up to the charter, and we encourage further lenders to join that 85% of mortgage market providers.
The charter provides support for two groups of people in particular. The first group is those who are worried about their mortgage repayments. If they want to switch to an interest-only mortgage or extend their mortgage term to reduce their monthly payments, they will be able to do so with the option of switching back to their original mortgage deal within six months without a new affordability check or affecting their credit score.
For most people, the right course of action will be to continue to make payments on their current mortgage. Keeping up full repayments means that they will pay less interest overall. But this new measure means that people will be able to opt for a lower-cost approach for six months with full reversibility, giving them the peace of mind of knowing that they can try out a new approach and still change their mind later on.
Paula Barker (Liverpool, Wavertree) (Lab)
I thank the Minister for giving way. He is being very generous with his time.
With not all the mortgage market covered by the charter, there is a worry that around 1 million households could miss out on the support. Can the Minister guarantee that the measures that were outlined will be available to everyone struggling with their mortgage payments, not just those who happen to have a mortgage with one of the banks that is on the list of those that have cosy chats with the Chancellor?
John Glen
I hope that more and more lenders will be added to those 85% of providers. The details will be known in the next few weeks. This comes on top of the FCA’s rules around lenders having to take an individual approach to the circumstances of their customers, especially those trying to find a way through when they fall into difficulty.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Will the Minister give way?
John Glen
No, I wish to make a bit more progress. I will come back to the hon. Lady in a moment.
This measure will take effect in the next few weeks and it means that a homeowner with £100,000 outstanding on their mortgage over 15 years can change their payments—with no impact on their credit rating—by extending the mortgage term by 10 years, which could save them over £200 a month, or by moving to interest-only payments, which could save them more than £350 a month. A further measure for this group of customers means that, if they are approaching the end of a fixed-rate deal, they will have the chance to lock in a new deal with the same lender up to six months ahead. However, they will still be able to apply for a better like-for-like deal with the same lender, with no penalty, if they find one when their current deal ends.
Emma Hardy
I understand why the Minister wants to have a voluntary charter, but does he agree that what we are actually seeing from the banks—this was raised on the Treasury Committee—is that they are very quick to raise interest rates on mortgages, but not so quick to raise them on savings? The difference between the interest rates being raised on mortgages and those being raised on savings is around 50%, which is completely unfair. When the Chancellor meets the banks, will he also add to the conversation the unfairness that exists when it comes to interest rates on savings? That is why I am reporting back to the Minister on the need to mandate this—because we cannot always assume that the banks will act in the interests of their customers.
John Glen
I thank the hon. Lady for her point. As the Chancellor said yesterday, he did raise that with lenders on Friday. We will continue to work closely with them on those disparities where they exist. My colleague the Economic Secretary to the Treasury, who is responsible for the relationship with financial services institutions, will also be attending to this issue. It is right that, with interest rates rising, banks should be looking to put as much of that rise as possible on to the savings rates that they offer to consumers.
Imran Hussain
Time and time again the Minister seems to be ducking the central issue in this debate, which is that the charter the Government have proposed will not cover millions of people and will not provide support. Why will he not instead subscribe to the Labour position today and require all lenders to do it, so that everybody can get support? Answer the question Minister.
John Glen
I appreciate the passion with which the hon. Gentleman presents his point, but we have made an agreement with the FCA and with lenders, and in the next couple of weeks the details will be available for consumers and mortgage holders up and down the country. As I say, we have already moved from three quarters to 85% of lenders and I expect others to join in due course. We will continue to have dialogue with the FCA and to look at further ways to help consumers.
The purpose of our intervention is to provide people with more flexibility and optionality to find the best deal for their circumstances. Mortgage arrears and defaults remain at historically low levels, with less than 1%—I think it is 0.86%—of residential mortgages in arrears in 2023, a lower level than just before the pandemic.
Paul Holmes (Eastleigh) (Con)
We heard the shadow Chancellor outline the utopian elements of her compulsory scheme. Can the Chief Secretary outline which scheme goes further—our scheme, which is not mandatory but delivers 12 months before repossessions happen, or the Labour Party’s mandatory scheme?
John Glen
My hon. Friend makes a wise point, and I will come on to talk about some of the other measures in a moment. For those families involved, it is extraordinarily distressing to lose their home, so we will do all that we can to support people who find themselves in such a challenging financial position.
Barbara Keeley (Worsley and Eccles South) (Lab)
Will the Minister give way?
John Glen
No, I am going to finish answering the previous point.
As part of our strong regulatory framework for mortgage holders, banks and lenders already provide tailored support for anyone struggling, and they deploy highly trained staff to help those customers. Support offered includes temporary payment deferrals and part interest, part repayment, as well as extending mortgage terms or switching to interest-only payments. To supplement that, we agreed as part of the mortgage charter on Friday that, in the extreme situation in which a lender is seeking to repossess a home, there will be a minimum 12-month period from the first missed payment before there is a repossession without consent. I believe that that goes rather further than what the Opposition were suggesting.
Barbara Keeley
This crisis is already having an impact on renters too, and the Chief Secretary is not touching on that in his speech. I have a constituent on a rolling private tenancy who is worried sick that her landlord is going to evict her. She is worried about ending up in a hostel with her teenage daughter. She works full time and pays her way. That situation is shared by so many. Does the Chief Secretary not agree that there should be support for renters, and that the way to achieve it is to back Labour’s renters charter, including the halt to no-fault evictions and a four-month notice period for landlords?
John Glen
I do not accept that, but I do accept that there are challenging situations for our constituents up and down the country. That is why this Government have intervened and are working in this way with lenders to find a constructive package of interventions to meet the situation those constituents are in.
Anyone who is worried that they could be in those difficult situations should know that they can call their lender for advice without any impact whatsoever on their credit score. Lenders will also provide support to customers who are up to date with payments to switch to a new mortgage deal at the end of their existing fixed-rate deal without another affordability test, and provide well-timed information when their current rate is coming to an end. Taken together, those measures should offer some comfort to those who are anxious about the impact of high interest rates on their mortgage and provide support to those who get into extreme financial difficulties.
Catherine West
May I return briefly to the point made by my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley)? Last time I asked the Economic Secretary to the Treasury about the number of renters estimated to be impacted by this situation, he did not have an answer. Do Ministers on the Treasury Front Bench have an answer today on how many renters will be affected by this crisis?
John Glen
The interventions we have made provide significant scope for assistance. To find an accurate number would be very difficult, but we will continue to work with industry and with lenders to find maximum flexibility and interventions to support them at this difficult time. While we roll out those measures, tackling inflation remains the No. 1 priority of the Prime Minister and the Government. Inflation makes every person in this country poorer and it has to be tackled head-on.
Notwithstanding that, I am fully alive to the fact that some people remain in real distress. I assure hon. Members and their constituents that we will always stand ready to help where we can. That is why at the Budget we announced that the energy price guarantee would be extended for a further three months. That extension was funded in part by the energy profits levy that this Government introduced last year, recognising that profit levels in the sector had increased significantly due to those very high oil and gas prices, caused by global circumstances—including, of course, Russia’s invasion of Ukraine.
Alongside holding down energy bills, freezing fuel duty, increasing universal credit and raising the national living wage and pensions, we are giving up to £900 in cost of living payments to households on means-tested benefits. Taking those measures together, the Government are already supporting families with one of the largest support packages in Europe, worth £3,300 per household on average.
The Government’s approach makes targeted interventions to protect the most vulnerable, while maintaining a laser-like focus on tackling inflation. I believe that that stands in sharp contrast to some of the policies offered by opposition parties. The Liberal Democrats are calling for a £3 billion mortgage protection fund, which would simply pour fuel on the fire of inflation, making it harder to bring prices down. That would be such a damaging move that it is apparently even too extreme for those on the Labour Front Bench to contemplate.
However, I would say that the Labour party is not without its own flaws when it comes to offering unfunded inflationary policies. The media reports that the right hon. Member for Doncaster North (Edward Miliband) has had his wings clipped by the Leader of the Opposition for his excessive spending proposals, but in reality the shadow Chancellor is only slightly delaying Labour’s £28 billion spending spree to the second half of the next Parliament—an amended timetable, but the same reckless policy.
We said that we would halve inflation, not because it was an easy thing to do, but because it was the right thing to do. History and the best economic insights that we have today tell us that the best way to beat inflation is to stick to our plan, backing the Bank of England’s monetary policy decisions. We will stick to the plan, because it is the only way we can give relief to families and reprieve to businesses. As we have done before, we will face down these economic challenges while supporting the most vulnerable and setting us up for economic growth.
Since a Conservative Government came into power in 2010, the UK economy has grown more than those of major countries such as France, Italy, or Japan, and about the same as Europe’s largest economy, Germany, which is now in recession. We have halved unemployment, cut inequality and reduced the number of workless households by 1 million. We have protected pensioners, those on low incomes and those with disabilities. We will now overcome this inflationary period, and offer a helping hand to those who need it as we do so.
Madam Deputy Speaker (Dame Rosie Winterton)
Before I call the SNP spokesperson, I think I will have to give some firm guidance about time limits. My initial guidance would be six minutes, just so the first speaker on the Government side is aware.