Charter for Budget Responsibility

John Glen Excerpts

Monday 6th February 2023 Commons Chamber

[The Chief Secretary to the Treasury (John Glen)]

I beg to move,

That the Charter for Budget Responsibility: Autumn 2022 update, which was laid before this House on 26 January, be approved.

Before I start my remarks, I pay tribute to my predecessor, Mr Robert Key, the former Member for Salisbury, who sadly died on Friday. Robert was a Member of Parliament for 27 years, a distinguished parliamentarian and former Minister, and a dedicated Anglican. I put on record my affection for him; my thoughts and prayers are with his wife Sue and the rest of his family.

The charter for budget responsibility is, at its heart, about how we chart a course for growth. It is a blueprint for managing the public purse responsibly. It is a path to cement stability in our economy and invest in public services. It is, in the current economic climate, about acknowledging that public finances remain vulnerable and knowing the risks that arise from debt being close to historic highs. This Government take these risks extremely seriously and believe that stable public finances are a key ingredient in the success of our economy, both today and in the future, in the south and the north, for the elderly and our youngest. This charter sets out this Government’s approach to managing the nation’s money so that everyone can see we are being prudent with the nation’s finances.

We debate this charter today in the face of difficult economic times. Like many countries, the UK faces the twin challenges of a recession and high inflation, as global energy prices have been exacerbated by Putin’s war in Ukraine. We have turned the corner in the fight against inflation that has plagued nations across Europe. Inflation has now started to fall, with inflation in the UK lower than many EU countries. A warmer winter has helped keep a lid on energy prices that jolted upwards following Putin’s illegal war in Ukraine. There is, however, a challenging road ahead. The International Monetary Fund says that 90% of advanced economies are predicted to see a decline in growth this year, and that is why we are taking action to support the economy through these extremely challenging times.

[John Redwood (Wokingham) (Con)]

Does the Minister not think there is some difficulty in trying to steer the economy on the basis of a five-year forward debt forecast when the official forecasters have been more than £100 billion out in two of the last three years, and £75 billion out this year with a one-year forecast?

[John Glen]

I will address the provisions of the charter and my right hon. Friend’s point directly in a few moments. As the Chancellor set out last week, we have a credible plan to generate economic growth by getting people back into employment, reinvigorating a culture of enterprise and continuing to drive up standards in education, and ensuring that that happens everywhere. The Chancellor’s plans to generate growth need to be underpinned by sustainable public finances, but the global economic shocks we have faced mean that borrowing remains high. We are expected to borrow £177 billion this year—double pre-pandemic levels. That is contributing to ever larger public debt.

Along with high debt in a time of rising inflation and interest rates comes the £120.4 billion we are projected to spend this year on debt interest alone. Let me remind the House why that is. For almost two years, in the face of a historic pandemic, we took unprecedented, bold, decisive action to support people, jobs and the economy. We rolled out vaccines at a world-leading pace, we paid 80% of people’s wages, and we gave grants to businesses to help cover their bills. The costs of inaction in the face of covid-19 do not bear thinking about. I am proud to represent a Government who took the big decisions to keep the public and the economy healthy.

As inflation rose to figures we have not seen in more than 40 years, led primarily by increasing energy prices, we again took action to safeguard the nation by contributing to people’s bills. Nobody in this Government would argue that that is not money well spent, but we are also cognisant of the facts. At nearly 100% of GDP, public debt is at its highest level since the early 1960s. It would not be sustainable to continue to borrow at current levels indefinitely. If debt interest spending were a Department, its departmental budget would be second only to the Department of Health and Social Care. Not only does that direct our resources away from vital public services, but for those of us who have paid attention to the economy, it is clearly unsustainable in the long run. It is unsustainable because increasing debt leaves us more vulnerable to changing interest rates and inflation. For every percentage point increase in interest rates, the annual spending on debt will increase by £18.2 billion. That is money we could be using to invest in schools or hospitals and in the transition to net zero.

Aside from investing in the services that we need and that so many rely upon, there is another important moral point to debt. Letting our debt increase is simply racking up debt on the nation’s credit card and handing the bill to our children and grandchildren. We are not alone in our ambition to reduce debt as a share of GDP over the medium term—Germany, Canada and Australia have made similar commitments. It is not just numbers on a spreadsheet; it will have a material impact on the lives and living standards of those who have not yet been born.

Instead, we choose a responsible, fair approach. We are demonstrating fiscal discipline, which will support the Bank of England in bringing inflation down. That is carefully balanced against the need to support the most vulnerable and to protect vital public services. At the autumn statement we announced a series of difficult decisions worth around £55 billion to get debt down, while ensuring that the greatest burden falls on those with the broadest shoulders.

All Members will hope that, having faced the pandemic, war in Europe and a bout of rising prices, we will have seen the worst of this economic storm. The truth, however, is that we do not know exactly what lies ahead, and we need to create the room to respond comprehensively in the future, should another shock occur. Last year my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) came to this place to approve rules to guide us on a path to strengthen the public finances after the worst of the pandemic had passed. By the third year of the forecast, in 2025-26, those rules require underlying debt—that is, public sector net debt excluding the impact of the Bank of England—as a percentage of GDP to be falling and everyday spending to be paid for through taxation by the same year.

Since then the context has changed yet again. To continue protecting the most vulnerable and investing in public services, the Chancellor updated the fiscal rules at the autumn statement, and we are updating the charter for budget responsibility. It will give everyone the confidence and certainty that we are going to repair our public finances. It will provide the foundation for long-term growth. In following them, we will be able to get debt down while protecting the public services upon which we all rely. The rules require that we reduce the deficit so that debt falls as a share of the economy in five years’ time. Expenditure on welfare will continue to be contained within a predetermined cap and margin set by the Treasury unchanged from the level set in 2021. I am pleased to say that the Office for Budget Responsibility confirmed in November that we are on track to meet all our rules, with debt falling and the deficit below 3% GDP in the target year of 2027-28.

Aside from the fiscal rules, the charter remains unchanged. We continue to be at the forefront of financial management through our monitoring and management of the broader public sector balance sheet. The independent Office for Budget Responsibility provides transparency and credibility via its economic and fiscal forecasts. Many colleagues have remarked on the important principle that our fiscal plans are transparent, fully costed and accompanied by an independent assessment of the economic and fiscal implications. The Government agree with this principle. There may of course be extraordinary circumstances where that cannot be the case, as we saw during the pandemic, and it was right not to delay announcing critical help for households and businesses, but in normal times major fiscal announcements should be made with one of the OBR’s two forecasts. As is usual, the spring Budget on 15 March will be accompanied by a full OBR forecast.

This updated charter puts stability first. It sets a credible plan to deliver on the Prime Minister’s key promises to get debt falling and to halve inflation, and it fosters the conditions for growth. It continues our historic support for households, as it allows us to increase the national living and minimum wage and pensions. It maintains gross investment at record levels in innovation, infrastructure and education. We have protected the most vulnerable and vital public services, and we are protecting the economy. After making the difficult decisions at the autumn statement, today we have a choice: we can sit idly by and let our economy slip into disrepair, or we can secure the foundations of our future by protecting the foundations of our economy. For those reasons, I commend this motion to the House.

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[John Glen]

It is a privilege to close this debate on behalf of the Government. I thank those who contributed to the debate, including the distinguished Chair of the Select Committee, who highlighted some of the issues and presumptions of Government policy. I cannot comment on what will happen with fuel duty, as that will be the Chancellor’s decision. I thank the right hon. Member for Dundee East (Stewart Hosie) for his contribution, in which he seemed to suggest more targets and a poverty of ambition on behalf of the Government, and I can assure him that that is not the case.

I would like to respond to my right hon. Friend the Member for North West Hampshire (Kit Malthouse), who made a number of observations about the independence of the OBR; its certification and validation role; and the iterative process and whether that compromised the apparent independence of the Treasury. He described economics as not just an art or a science but even psychology. I can confirm that the OBR’s remit is unchanged: it is the Government’s official forecaster. But—as he notes and I am pleased to confirm—the Treasury maintains considerable analytical capability to support the policy advice to Ministers, and it does a very good job of it too. There is a clear separation between the OBR and policymaking, but it is a matter of securing credibility for those policies, and I think he would agree with me that that is a very important point.

[Kit Malthouse]

I guess the issue is: whose forecasts are they? If the OBR produces forecasts and Treasury officials say, “Well, Chancellor, we have looked over the forecasts and we think they are right,” that is qualitatively different, in the public’s mind, to the Treasury producing a forecast and the OBR saying to the public, “Well, we have looked over them and we think they are right.” While it does say that the Treasury reserves the right to disagree with the OBR, the nature of the iterative process presumably means that will never happen, because they agree before anything is published.

[John Glen]

What we can agree is that the budget responsibility committee has discretion over all judgments underpinning its forecasts. Of course, there is obviously a range of views—my right hon. Friend the Member for Wokingham (John Redwood) is always clear in his disagreements with what the OBR may or may not forecast—but what we are saying is that there is validity in and a need for an official forecast, and that is what we have.

With respect to the shadow Chief Secretary, the right hon. Member for Wolverhampton South East (Mr McFadden), before he gets a little too complacent he should be wary of the £90 billion of uncosted net spending commitments that his party has made since the turn of the year. I think the OBR would be very interested in what we would find there.

The charter represents our bedrock to prosperity. It will get debt falling but invest in the future. It will rebuild our fiscal buffers, bolster our economic fundamentals and deliver for the whole country. A vote for this charter is a vote for sustainable public finances, and that is why I commend the motion to the House.

Question put and agreed to.

Resolved,

That the Charter for Budget Responsibility: Autumn 2022 update, which was laid before this House on 26 January, be approved.

Business of the House (8 fEBRUARY)

Ordered,

That at the sitting on Wednesday 8 February, notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on

(1) the Motion in the name of Secretary Suella Braverman relating to Police Grant Report not later than three hours after the commencement of proceedings on that Motion, and

(2) the Motions in the name of Secretary Michael Gove relating to Local Government Finance not later than three hours after the commencement of proceedings on the first such Motion or six hours after the commencement of proceedings relating to Police Grant Report, whichever is the later; proceedings on those Motions may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Penny Mordaunt.)

Oral Answers to Questions

John Glen Excerpts

Tuesday 20th December 2022 Commons Chamber

[John Penrose (Weston-super-Mare) (Con)]

3. What recent assessment he has made of the effectiveness of the Financial Conduct Authority in protecting customers from loyalty penalties in the insurance market.

[The Chief Secretary to the Treasury (John Glen)]

The Government welcome the Financial Conduct Authority’s pricing rules, introduced in January this year, which require insurers to offer a renewal price no greater than the price the firm would offer to a new customer for the same policy. The Financial Conduct Authority has confirmed there is no evidence of widespread non-compliance with those rules.

[John Penrose]

The FCA’s cheap and, we hope, effective measures to stop insurance company customers being ripped off is in stark contrast to the energy price cap, which was introduced for exactly the same reason, but has not held down the price of energy and has larded hundreds of pounds of extra hedging costs on to every household’s energy bills to boot. Since the Treasury is spending vast amounts of taxpayers’ cash on energy subsidies at the moment, will my right hon. Friend speak to the Secretary of State for Business, Energy and Industrial Strategy about replacing the failed energy cap with a version of the FCA’s much cheaper and more effective approach as soon as energy prices return to normal?

[John Glen]

I am very happy to look at that question further. The Government previously considered, but rejected, asking Ofgem to implement a relative rather than an absolute price cap in energy markets, which would have similarly prevented energy suppliers from charging those large differentials, because it was judged that it was more likely to distort competition in the fixed-term tariff market. As ever, I am happy to continue the conversation with my hon. Friend and I know he will take the matter up further with the regulator.

[Mr Speaker]

We now come to the SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

Subsequent to the changes to the insurance market to protect people from the loyalty payment, the Chancellor announced his Edinburgh reforms to wider financial services regulation and a great many consultations. At a quick glance, many of them closed very quickly—on 5 February, 17 February, 3 March, 5 March and 17 March. Given that the Treasury Select Committee warned over a decade ago that the Government

“needs to take the time required to get its reform of financial regulation right”,

how can we be convinced that the rather painful lessons of the financial crash have not been forgotten?

[John Glen]

For four and a half years, I was the Economic Secretary to the Treasury, and many of those reforms were baked up over a lot of consultation with industry over many months. The Edinburgh reforms represent an incremental advance on those reforms and have high prudential regulatory standards very much at their core.

[Stewart Hosie]

I will come to that, because the Minister is absolutely right. I did quote from a 2010 report. But in June this year, the Treasury Committee, in its report on the future of financial services regulation, warned:

“Weakening standards could reduce the financial resilience of the UK’s financial system and undermine international confidence in that system and the firms within it.”

Given the intention to review capital requirements, and the new remit letters and secondary objectives for the Prudential Regulation Authority and the FCA, how will the Chancellor and the Minister ensure the regulatory focus on stability is maintained?

[John Glen]

I gave evidence to that inquiry and I heartily agree with its conclusions. Stability is at the core of the regulators’ objectives, but so is the need to look at the competitive landscape across the globe and ensure that the UK, with the city of London as a global hub for financial services, evolves and remains competitive, taking account of the risks but also developing frameworks in line with expectations, so that we can remain that world-leading global hub.

[Peter Grant (Glenrothes) (SNP)]

5. What recent assessment he has made of the potential impact of his policies on levels of poverty in Scotland.

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[Mark Eastwood (Dewsbury) (Con)]

6. What fiscal steps his Department is taking to level up communities.

[The Chief Secretary to the Treasury (John Glen)]

The Treasury is making significant investments to level up communities across the UK—101 towns, including Dewsbury, will benefit from more than £3.2 billion from the towns fund, supporting long-term economic and social regeneration. Of course, communities will also benefit from the £4.8 billion levelling-up fund, the £2.6 billion shared prosperity fund and the £250 million community ownership fund.

[Mark Eastwood]

The decision on the £47 million Penistone line levelling-up fund bid is due to be announced shortly. Can my right hon. Friend assure me that this important round 2 category 1 bid will be subject to the same financial considerations and eligibility as bids submitted in round 1?

[John Glen]

I can absolutely reassure my hon. Friend that all round 2 bids are undergoing a robust and thorough assessment through that decision-making process. That is consistent with the approach taken in round 1. Of course, the individual decisions will be made in due course in the very near future.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

One way the Government could level up low-income families with young children is through healthy start vouchers. This year, I have tabled four written questions asking what the take-up rate of that scheme has been since digitisation in April, but the Government have been unable to give me an answer, despite the fact that we are eight months on and in the middle of a cost of living crisis. How do the Government know what the take-up rate of the scheme is and whether it is working in balancing out inequalities?

[John Glen]

I obviously cannot answer that specifically, but I can say that the Government have, over recent weeks, shown the commitment to helping the most vulnerable across the United Kingdom. But I take the hon. Lady’s question seriously, and I am very happy to look into that and to work with colleagues across Government to find an answer.

[Kevin Foster (Torbay) (Con)]

As the Minister will know, fiscal steps in investment zones can help to boost and level up communities—I am thinking in particular of Paignton in South Devon, where South Devon College and the photonics industry exist side by side. Will he meet me to discuss how that initiative could help to support growth in Paignton?

[John Glen]

I am very happy to meet my hon. Friend, who is, as ever, fighting strongly for his constituents. As he knows, the investment zones are designed to be a meaningful mechanism to catalyse growth, sometimes, although not exclusively, through university, looking at where we can find clusters across the United Kingdom to drive the economy forward.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Clearly, we need to level up on housing. In my constituency, many people just cannot afford a private rented home or to own their own home, and we need more social housing, but that is not possible without Government subsidy. What is the Treasury considering to make sure that people who desperately need a permanent roof over their head can get it?

[John Glen]

We are working very closely with the Department for Levelling Up, Housing and Communities to look at specific interventions. We have just released an extra amount of capital money to work alongside the Ukraine support scheme. But I totally recognise that this is a critical issue, and we will make further announcements about it in due course at the next fiscal event.

[Jason McCartney (Colne Valley) (Con)]

I fully support my hon. Friend the Member for Dewsbury (Mark Eastwood) in his levelling-up bid for the Penistone line, as it goes through my constituency, with stations in Brockholes and Honley. I also have my own levelling-up bid to regenerate a disused mill in Marsden for commercial space. These bids are good not only for connectivity and regeneration, but for the economy, because they create jobs and growth. Does the Minister agree that this allocation of funding therefore makes sense?

[John Glen]

I absolutely agree with my hon. Friend—perhaps unsurprisingly. The Government have developed a bespoke and objective index of priority places. We are very keen for this investment to work effectively, wherever it is. I very much respect the representations he has made this morning for the bid in his own constituency.

[David Linden (Glasgow East) (SNP)]

An important part of levelling-up communities is to invest in the community transport network. Last week, I visited Shettleston-based Community Transport Glasgow alongside Councillor Laura Doherty. They were telling me that they were having real difficulty attracting volunteers because of HMRC rules around mileage rates. Is that something that the Government are willing to look at? Will the Minister be willing to meet me and Community Transport Glasgow to discuss that issue?

[John Glen]

We keep these matters under review, but I am sure my colleague the Financial Secretary, who takes a close interest in these matters, will follow up in the appropriate way.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

7. What steps his Department is taking to help ensure value for money in public spending.

[The Chief Secretary to the Treasury (John Glen)]

Value for money is a central priority for the Government and at the heart of every decision we take. The Government take our responsibility for managing the public purse seriously. The Government recently launched the efficiency and savings review, and that will help to keep spending focused on the Government’s priorities and manage pressures from higher inflation. It will include renewing our efforts to drive efficiency, tackle waste and re-prioritise spending away from lower value and lower priority programmes.

[Mrs Hodgson]

I hear what the Minister has just said, but he will be as aware as I am that, in the 2020-21 annual report from the Department of Health and Social Care, the Government wrote off a total of £8.7 billion-worth of the personal protective equipment they had acquired in the first year of the pandemic. When families are facing a choice between heating and eating this Christmas, does the Minister understand the real public anger that people are facing these difficulties at this time, when the Government are having such rampant waste of public money?

[John Glen]

I acknowledge that figure in that report, but it refers to the write-down that was necessary following a situation where we acquired a lot of PPE at a time of acute demand and shortage of supply. It was an adjustment for that. Of course, 97% of all PPE was suitable for use in healthcare and non-healthcare settings. While I take the general point that the hon. Lady is making about concern for the most vulnerable in communities, which has been addressed by the £37 billion of support we have put in this year, those are the facts around the figure that she raises.

[Mary Glindon]

Figures suggest that at least £3 billion has been spent on agency staff in the civil service over the past three years, plugging the gaps in our public sector at a huge premium to employment agencies. With Public and Commercial Services Union members in the civil service now out on strike for fair pay and terms and conditions, and thousands of contingency staff already drafted in to break the strikes, can the Minister say how much this dispute is costing the taxpayer? Does he agree that it is a false economy not to give these dedicated public servants a decent cost of living pay rise?

[John Glen]

Strikes are obviously very regrettable, and we as Ministers work closely with civil servants day in, day out, and we very much value the contribution they make to government. I will be looking carefully with Secretaries of State in the coming weeks at efficiencies across government and how we can get the economy, the country and public finances in the best possible place as we move forward through the pay review round next year.

[Sir Christopher Chope (Christchurch) (Con)]

Are the Government not just paying lip service to the need to get improved productivity in public services? For example, the NHS produced an internal report in April on its efficiency, or lack of productivity. I requested that that report be made available in the Library more than one month ago, and I have not even had a reply to the question. Why are the Government not more open with Members about the need for productivity improvements?

[John Glen]

I can be very open with my hon. Friend today. We are absolutely committed to driving forward productivity across the economy and in the public sector. I will look into the specific question he has not had answered. That will involve conversations with the Secretary of State for Health and Social Care, as well as across the Cabinet.

[Mr Speaker]

I just remind everybody that Members’ letters must be answered when they put requests in, please. We now come to the shadow Minister.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I echo the good wishes to you, Mr Speaker, to the Minister and to the whole House for a very happy Christmas.

Last year, the then Prime Minister and the then Chancellor, who is now the Prime Minister, announced a star chamber to crack down on waste and fraud in public expenditure. How often has the star chamber met, and how much of the £6.7 billion estimated to have been lost to covid fraud and error has been recovered?

[John Glen]

As the right hon. Gentleman knows, we have instituted a range of interventions, investing in His Majesty’s Revenue and Customs fraud prevention measures to embed those in business as usual. I have been in post for the past eight weeks, and I will be having a series of meetings in January.

[Mr McFadden]

The Minister could not tell us whether the star chamber has met at all.

On top of all the examples that have been cited today, the rescue of the energy company Bulb is estimated by the Office for Budget Responsibility to be costing another £6.5 billion, partly as a result of our hedge fund Prime Minister’s failure to hedge against rising energy prices. Why do the Government not show more respect for public money and chase down every penny of these losses before putting up taxes for 30 million people at a time when the public already face the biggest cost of living crisis for generations?

[John Glen]

I agree with the right hon. Gentleman about the imperative of chasing down all waste. The Government are providing continued funding for the Bulb Energy special administration regime while the sale of Bulb’s customers to Octopus is pursued by the energy administrator as an exit route from the SAR, but I will look at what the right hon. Gentleman said and reflect carefully on what we can do further.

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

8. Whether he has had recent discussions with the Secretary of State for Education on the potential merits of increasing student maintenance loans in line with actual rather than forecast levels of inflation.

[The Chief Secretary to the Treasury (John Glen)]

Treasury Ministers meet regularly with Ministers at the Department for Education to discuss matters of shared interest, including student finance. The Government are considering options for changes to loans and grants for 2023-24, and an announcement will follow in due course.

[Steve McCabe]

The Institute for Fiscal Studies reports that the real value of maintenance loans is the lowest for seven years. Rents, which account for 45% of bills, are rising; food costs are rising; one in 10 students are using a food bank; and 80% say they cannot make ends meet. Why does the Minister not make his Christmas present a proper increase in the level of maintenance loans? Because it is a loan, he would not even have to pay for it.

[John Glen]

I thank the hon. Gentleman for his question. I have a lot of respect for him and I recognise the issue that he refers to. Of course, many higher education providers have hardship funds that students can apply to, and there is £261 million—a quarter of a billion pounds—of student premium funding available this year to support disadvantaged students. On the specific issue of the uprating, of course there needs to be a delay to operationalise those additional sums. That is at the core of the issue. However, as I said, the Department for Education will report on the matter in due course.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

9. What recent steps he has taken to ensure fairness in the application of the tax system.

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[Tom Hunt (Ipswich) (Con)]

15. What steps he is taking to increase funding for the education sector.

[The Chief Secretary to the Treasury (John Glen)]

At spending review 2021, the Department for Education was allocated a total of £87 billion, providing a cash increase to our education system of about £18 billion by 2024-25. Young people and adults benefited from the biggest long-term settlement for post-16 education in England since 2015. Of course, at the recent autumn statement, an additional cash increase of £2 billion was provided for both 2023-24 and 2024-25.

[Tom Hunt]

There have been significant improvements in special educational needs and disabilities provision in Ipswich in the last few years. Just last week, the Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Claire Coutinho), was at the Sir Bobby Robson School, which has 66 new places. Suffolk has had 1,000 new SEND places since 2019, and all of that is because of the investment that my right hon. Friend just mentioned. However, it is ever so slightly frustrating that Suffolk is still unfairly funded compared with other areas, including not just London but Norfolk, where a SEND pupil will get £99 more per head than those in Suffolk. I want young people with SEND in Norfolk to have every chance, but there is no reason why young and vulnerable people in Suffolk and Ipswich should get any less funding and investment. Will he commit to reviewing the bizarre quirk that means that Suffolk SEND kids get less than kids elsewhere?

[John Glen]

My hon. Friend is somewhat of an expert in the subject. I agree that it is critical that we get it right. Decisions on the distribution of high-needs funding are a matter for the Department for Education, but I reassure him that, as a result of the additional funding announced at the autumn statement, Suffolk’s high-needs funding is increasing by 11% per pupil in 2023-24 compared with this year. The Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Claire Coutinho), who has responsibility for children, families and wellbeing, will be happy to meet my hon. Friend to describe and discuss the different mechanisms of allocation and, indeed, how the high-needs formula works across different local authorities.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

A merry Christmas to everybody when it comes. What steps is the Minister taking to review further education funding for people with disabilities? It is very important that people have equal opportunities across the United Kingdom and that our education system has inclusion at its core.

[John Glen]

I completely agree with the hon. Lady, and I am working with colleagues in different Departments looking at the challenges to help people back into the workplace. It is particularly difficult when people need support for such a range of needs and conditions. We must treat everyone as an individual and be ever more creative in the solutions that we bring forward. I look forward to working with her and colleagues in Government to try to assist in improving the situation.

[Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)]

T1. If he will make a statement on his departmental responsibilities.

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[Mary Glindon (North Tyneside) (Lab)]

T2.   Further to my previous question on best value in the public sector, can the Minister confirm how much money the civil service strike is costing the taxpayer and whether any cost-benefit analysis has been carried out on the merits of giving civil servants a decent pay rise?

[The Chief Secretary to the Treasury (John Glen)]

The cost of strikes is always regrettable. It is regrettable to those who rely on the services that those individuals deliver.

[Dame Maria Miller (Basingstoke) (Con)]

T6. Hampshire Hospitals NHS Foundation Trust is waiting for Treasury allocations to be made that would allow the start of a public consultation on our new hospital in Basingstoke, funded by the Government’s flagship hospital infrastructure plan. Can my right hon. Friend confirm when Basingstoke might be getting news on those allocations—perhaps even an early Christmas present?

[John Glen]

I am sorry that I cannot give an early Christmas present. Allocations from that funding are the responsibility of the Secretary of State for Health and Social Care. I encourage my right hon. Friend to speak to the Health Secretary, who is working hard with the Treasury and other parts of Government to look at capital projects across the whole of health. Announcements will be made in due course, early in the new year, I hope.

[Vicky Foxcroft (Lewisham, Deptford) (Lab)]

T5. Changes to the eligibility criteria for the warm home discount mean that those in receipt of disability living allowance, personal independence payment and attendance allowance can no longer claim it. I am sure the Minister will tell me that disabled people are being compensated via the two disability cost of living payments, but new research by YouGov has found that millions of disabled people are spending this winter living in cold and damp homes. What is he doing to ensure that no disabled person has to choose between eating and heating?

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[Richard Fuller (North East Bedfordshire) (Con)]

The Chancellor was absolutely right in Edinburgh to include environmental, social and governance ratings agencies within the regulatory perimeter. But will he ensure that in the guidance, ESG objectives are consistent with the long-term actuarial goals of pension funds, to ensure that money is available in 20 or 30 years’ time, when people wish to retire?

[John Glen]

My hon. Friend is an expert in this area. He is absolutely right to point to that concern. We must ensure joined-up regulatory innovation to make sure there are no unforeseen circumstances. He puts his finger on a very important point.

[Rachael Maskell (York Central) (Lab/Co-op)]

I refer to my entry in the Register of Members’ Financial Interests. The Chancellor knows that a workforce plan cannot work if the Government cannot retain staff in the NHS. We cannot retain staff in the NHS if we do not pay them—that is why they are out on strike today. Will the Chancellor, instead of hiding behind the pay review body, admit that the Government set the remit for the pay review body? The only way to end this dispute is for Government to sit down with the trade unions and negotiate.

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[Alicia Kearns (Rutland and Melton) (Con)]

Merry Christmas, Mr Speaker.

Rural poverty is devastating, but it is often hidden by the relative affluence of surrounding rural areas. To ensure that councils have the funding that they need to support those who are living in rural poverty, will the Chancellor and his officials meet me to discuss putting social mobility into funding formulas alongside deprivation, to get councils what they need and to end rural poverty?

[John Glen]

I would be very happy to meet my hon. Friend. Representing a rural constituency myself, I totally understand the tension in fully reflecting the needs of a sometimes diverse set of communities. I am happy to meet her to discuss the matter further.

[Dame Margaret Hodge (Barking) (Lab)]

A happy Christmas to everybody.

The latest estimate that I have seen is that the Government’s failure to clamp down on tax havens in our overseas territories and Crown dependencies has cost us £65 billion—almost half what we spend on the NHS, or a third of our education budget. Does the Chancellor agree that our public finances would be in a far better shape, our taxes would be far lower and our tax system would be far fairer if we had cracked down on our tax havens?

[John Glen]

We always need to be vigilant about tax evasion and work closely with the overseas territories and Crown dependencies on those matters. A lot of progress on registers has been made in recent years, and more is due to be made. I will continue to reflect carefully and work with the Economic Secretary on further improvements to get things to where they need to be.

[Sir Robert Buckland (South Swindon) (Con)]

Does the Chancellor agree that investor confidence in the United Kingdom will be increased only if we bring forward the overdue reforms to the law of corporate criminal liability? If so, will he and the Treasury support further amendments to the Economic Crime and Corporate Transparency Bill, including those that would implement the Law Commission’s recommendations to create further “failure to prevent” offences?

[Mike Amesbury (Weaver Vale) (Lab)]

Will Treasury Ministers work with Transport Ministers to give Avanti West Coast’s customers an early Christmas present by removing the contract from it, putting it into public ownership and saving the taxpayer an absolute fortune?

[John Glen]

I recognise the significant concerns about the delivery of that service. I am in ongoing conversations with the Secretary of State for Transport to look at what more can be done.

[Nick Fletcher (Don Valley) (Con)]

The people of Doncaster will be eternally grateful for the help that they received through the pandemic and for what they are receiving through the cost of living crisis, but Doncaster still needs a new hospital. Although money is tight, will the Chancellor meet me with the Secretary of State for Health and Social Care to see how we can achieve that goal in the new year?

[John Glen]

I am more than happy to meet my hon. Friend again to discuss the matter in detail. As I mentioned in my reply to my right hon. Friend the Member for Basingstoke (Dame Maria Miller), the situation with the capital programmes is under urgent review across the country. I hope that further announcements will be made in the new year, but I will certainly meet my hon. Friend anyway.

[Munira Wilson (Twickenham) (LD)]

A few months ago, the Chancellor promised at the Dispatch Box that he would make a further announcement about the energy bill relief scheme before Christmas. Nothing has yet been forthcoming. Small businesses, charities and schools in my constituency either face going under or face huge deficits in the coming year. Will he confirm when he will make a further announcement about support for businesses, the public sector and charities, and whether this House will have the opportunity to scrutinise it?

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

Asylum seekers, who are at the very sharpest end of the cost of living crisis, have seen only a 13p increase in asylum support payments. Will the Chancellor uprate that? It should not fall to brilliant charities like Refuweegee to ensure that asylum seekers get a Christmas this year.

[John Glen]

I think that communities up and down the country are doing amazing work to support, in particular, the Ukrainian visitors who came here this year at very short notice. We have just agreed a new package of support with the Department for Levelling Up, Housing and Communities, which gives guarantees going forward into next year.

Public Service Pensions and Judicial Offices Act 2022: Treasury Directions

John Glen Excerpts

Thursday 15th December 2022 Written Statements

[The Chief Secretary to the Treasury (John Glen)]

The Government are committed to public service pensions which are fair to public sector workers. In 2015 (2014 for local government workers in England and Wales), reforms were made to public service pension schemes in England and Wales to provide workers with fairer pensions arrangements and to make the pension schemes more sustainable and affordable for the longer term. These reforms followed the recommendations of the Independent Public Service Pensions Commission. The Government believe the 2015 changes to public service pensions balanced the interests of public service workers, employers and taxpayers fairly.

However, when the reforms were introduced, they provided “transitional protections” which allowed members who were close to retirement to remain in the previous scheme (the legacy scheme). In December 2018, the Court of Appeal found that these transitional protections in the judicial and firefighters’ pension schemes gave rise to unlawful discrimination (the McCloud and Sargeant case).

The Public Service Pensions and Judicial Offices Act 2022 was enacted to remedy the discrimination identified by the courts. The Act provides a retrospective remedy, such that affected members are treated as if they had always been in the legacy scheme for their period of remediable service, as well as providing affected members a choice of which pension benefits they wish to receive for that period when those benefits are put into payment. The detail of the retrospective remedy for affected members will be set out in scheme regulations made under the Act for each affected pension scheme. The retrospective remedy is due to come into force by 1 October 2023.

The Act provides for HM Treasury to make directions to set out how schemes must exercise the powers provided in the Act in making scheme regulations. The Government have made and published Treasury directions today and they are available at https://www.gov.uk/government/publications/public-service-pensions-and-judicial-offices-act-2022-treasury-directions.

The directions ensure that scheme regulations for the public service schemes can implement a comprehensive remedy for affected members. The directions provide for consistent treatment across the public service pension schemes to enable schemes to return members to the position they would have been in had the discrimination not arisen. The publication of the Treasury directions today enables the responsible authorities—the Secretaries of State with responsibility for the public service schemes and the Welsh and Scottish Ministers for the devolved schemes—to proceed to develop and consult their stakeholders on scheme regulations to deliver the remedy in each of the public service schemes. Following consultation, the Secretaries of State responsible for the pension schemes for the NHS, teachers, local government workers and police in England and Wales, firefighters in England, the UK armed forces and the civil service in Great Britain, will then make and lay secondary legislation in Parliament. Scheme regulations must come into force by 1 October 2023.

[HCWS452]

Autumn Statement Resolutions

John Glen Excerpts

Monday 21st November 2022 Commons Chamber

[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 Glen]

One of the guiding principles of taxation in that sector—of these windfalls—has been a desire to retain an incentive for capital investment. What the hon. Lady says is an enduring reality of what we have done.

[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 (Strangford) (DUP)]

rose—

[Karin Smyth (Bristol South) (Lab)]

rose—

[John Glen]

I will give way to the hon. Gentleman first and then to the hon. Lady.

[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.

[John Glen]

I give way to the hon. Member for Bristol South (Karin Smyth).

[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?

[John Glen]

My view is that we want to maximise the productive capacity of the labour force that exists in this country. That means doing everything we can to encourage people to take the opportunities that exist across the economy.

[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?

[John Glen]

I shall give way one more time, and then I shall make some progress.

[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.

--- Later in debate ---

[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?

[John Glen]

As the right hon. Gentleman knows, that is an assumption made by the OBR. As the Government confirmed over the weekend, that is not Government policy.

[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.

[John Glen]

The Government’s position is clear: the OBR has made assumptions but it has not made policy. In due course, the Government will set out our plans.

[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.

Tax Credits and Child Benefit: Review of Rates

John Glen Excerpts

Thursday 17th November 2022 Written Statements

[The Chief Secretary to the Treasury (John Glen)]

The Tax Credits Act 2002 and the Social Security Administration Act 1992 place a statutory duty on His Majesty’s Treasury to review the rates of tax credits and child benefit each year in line with the general level of prices. There is a further statutory duty on the Treasury to increase guardian’s allowance in line with price growth. I have now concluded the review for the tax year 2023-24.

I have decided to increase tax credits and child benefit rates in line with the consumer price index (CPI) for the year to September 2022. Guardian’s allowance will also increase by the same rate. This means that:

The majority of elements and thresholds in working tax credit and child tax credit, including all disability elements, will increase by 10.1% from 6 April 2023. This means, for example, that the basic element of working tax credit will increase from £2,070 to £2,280 per year. In line with established practice and the Office for Budget Responsibility’s expectations in their welfare forecast, the maximum rate of the childcare element, the family element, the withdrawal rate and disregards in tax credits will remain unchanged.

All rates of child benefit, plus guardian’s allowance, will increase by 10.1 % from 10 April 2023. This means, for example, that the child benefit rate for the eldest child will increase from £21.80 to £24 per week.

The new rates will apply across the United Kingdom. I will deposit the full list of these rates in the Libraries of both Houses shortly.

[HCWS372]

Oral Answers to Questions

John Glen Excerpts

Tuesday 15th November 2022 Commons Chamber

[Yasmin Qureshi (Bolton South East) (Lab)]

2. What recent estimate he has made of levels of (a) public and (b) private investment in Bolton.

[The Chief Secretary to the Treasury (John Glen)]

The Government have made significant recent public investment in Bolton. For example, the first round of the levelling-up fund invested £20 million to create the Bolton College of Medical Sciences, and Bolton received £22.9 million from the towns fund to support its long-term economic and social regeneration. On the second part of the hon. Lady’s question, the Government do not routinely make estimates of private investment in towns.

[Yasmin Qureshi]

Last week, I met the chief executive of Bolton and Bury citizens advice bureau. Among the many pieces of work that it does, it employs money advisers. However, the Money and Pensions Service—the arm’s length body that funds citizens advice bureaux—is set to lose 10% of its funding. For my local branch, that means about £22,000, or the cost of one member of staff. With demand for its services doubling, given the energy and cost of living crises, how can the Chancellor push through those callous cuts to a scheme that supports some of the poorest and most vulnerable in Bolton? Will he reverse those cuts?

[John Glen]

The hon. Lady refers to the Money and Pensions Service. During the pandemic, additional Government grants were made available to support debt advisers. Some of that money was not used. There has been an attempt to look at how that money is distributed, but I would be happy to take this matter back and refer it to the Economic Secretary to see what can be done to give clarification.

[Sir Jake Berry (Rossendale and Darwen) (Con)]

It is not just in Bolton but in the adjoining area of Darwen and Rossendale that we welcome public sector investment, such as the Darwen town deal, which is investing £100 million. However, we are keenly interested to hear what those on the Treasury Bench will do to support capital investment, particularly in manufacturing businesses. We hope that in the forthcoming autumn statement the Government will give some support to our great manufacturers in Lancashire.

[John Glen]

My right hon. Friend is absolutely right; it is critical that we maintain capital investment, use that money efficiently, focus on outputs and outcomes, and ensure that we set the conditions for growth in the economy.

[James Grundy (Leigh) (Con)]

3. What recent steps his Department has taken to support families with the cost of energy bills.

--- Later in debate ---

[Ben Bradley (Mansfield) (Con)]

5. If he will bring forward measures in his autumn statement to increase financial support for local councils.

[The Chief Secretary to the Treasury (John Glen)]

The Government are committed to ensuring that local authorities are able to deliver vital public services. At the spending review last year, we provided councils with the largest annual increases in core funding in over a decade, and the Chancellor will set out further information on the Government’s fiscal approach at the autumn statement on Thursday.

[Ben Bradley]

If we are ever to have a sustainable set of council services, we have to move money upstream into services that can help us tackle rising demand. That is the non-statutory stuff—prevention services in communities, such as children’s services or youth centres, for example—but when budgets are tight, those non-statutory services are often the first to go, which removes councils’ ability to intervene and manage demand. With that in mind, what can my right hon. Friend do to support councils by ensuring that we take a long-term approach to managing those public services rather than adopting counter-productive plans based only on short-term budget pressures?

[John Glen]

First, I would like to thank my hon. Friend for the four-page letter that he sent to the Secretary of State, which I have studied carefully. He makes some sensible suggestions and recognises the dynamics of different pots being used effectively within local government, and as a local authority leader himself, he is obviously on the frontline addressing these budgets. In last year’s spending review we put money into supporting families and family hubs, and provided £500 million of “start for life” investment, but he makes a sensible point and on Thursday he will see how we are going to make that money work.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

My local authority of Hackney has suffered cuts of nearly 50% over the last decade or so, but it nevertheless delivers efficient public services. Money given to good local authorities can be more cost-effective and better value for money for the taxpayer, so will the Minister consider that as the Chancellor approaches Thursday?

[John Glen]

Absolutely, I will. Of course, it is not just about the cash settlement; it is about the interaction with other pots of money that are being spent, particularly in the health service, which is at the top of my mind and the Chancellor’s mind as we concentrate on what to do on Thursday.

[Mr Toby Perkins (Chesterfield) (Lab)]

8. What recent assessment he has made of the affordability of housing for first-time buyers.

--- Later in debate ---

[Imran Hussain (Bradford East) (Lab)]

T5.   Earlier this year, Bradford submitted a levelling-up fund bid—the only bid developed from the grassroots up by local community groups—to build three new community-led health centres that would deliver transformational benefits for Bradford and act to reverse the crippling health inequalities that we face. Ahead of the announcement on Thursday, does the Chancellor see that if he does not back grassroots, community-led transformational projects like this, it is clear that the Government’s levelling-up agenda is truly dead?

[The Chief Secretary to the Treasury (John Glen)]

The Government are completely committed to levelling up. As the hon. Gentleman knows, there is a second round of bids for the levelling-up fund. The results will be announced in due course, but he has made a very effective representation on behalf of his constituents and local authority.

[Bob Blackman (Harrow East) (Con)]

As chairman of the all-party parliamentary group on personal banking and fairer financial services, I have been in protracted correspondence with the Financial Conduct Authority about the Blackmore Bond scandal. Despite receiving more than 30 complaints and a whistleblower producing evidence, the FCA refused to investigate. I realise that it predates my hon. Friend’s appointment, but will he investigate this and force the FCA to take action?

--- Later in debate ---

[Alexander Stafford (Rother Valley) (Con)]

I welcomed the Chancellor’s predecessor to Rother Valley in the summer, to show him Dinnington high street and the money that was needed to upgrade it. He agreed to meet me further about levelling up. Will the Chancellor come to Rother Valley and Dinnington high street to see the levelling-up fund money that we need when the bid is in, and will he look kindly on our bid and make sure the whole of Rother Valley is levelled up?

[John Glen]

I am aware of my hon. Friend’s outstanding bid, and I would be happy to visit him to discuss the needs of his community and all the work he has done over the last couple of years to stand up for his constituents and secure investment in his community.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

T8.   My constituent registered with a regulated firm and invested in the financial product that an FCA-regulated broker recommended. My constituent and her father both lost money on the fraudulent product that the broker recommended. Does the Minister agree that the FCA should step in and support victims of scams, and will he empower and instruct the FCA and other regulators to be more aggressive in their support of the defrauded?

--- Later in debate ---

[Nicola Richards (West Bromwich East) (Con)]

OnSide’s youth centres do an incredible job of transforming people’s lives, and I think young people in my constituency deserve that opportunity too. Will the Chancellor support my calls for the levelling-up fund to be spent on that important project in West Bromwich?

[John Glen]

I am aware of the outstanding bid from my hon. Friend’s constituency. I cannot reveal the outcome of the deliberations on that competitive process, but I will be looking carefully at her bid and liaising with other Ministers on the outcome of that round.

[Sarah Champion (Rotherham) (Lab)]

T9. Last week, over 100,000 civil servants from the Public and Commercial Services Union voted to take industrial action following attacks on their jobs. For the first time ever, the Royal College of Nursing has voted to strike over pay. Lecturers, health workers, teachers, postal and transport workers—all people who aim to support this country—are suffering because of the cost of living crisis and the former Prime Minister’s £30 billion ideological rant. The autumn statement needs to show that working people are being listened to. Will it do that, or will it just punish them?

--- Later in debate ---

[Deidre Brock (Edinburgh North and Leith) (SNP)]

Skyrocketing inflation, much of it caused by calamities on the Government Benches, means that the Scottish Government’s annual budget is worth up to £900 million less than it was just a few weeks ago. When will the UK Government devolve more borrowing powers to Scotland, so we can give the extra, desperately needed assistance to those struggling the most in our country?

[John Glen]

I spoke about such matters with Jon Swinney, in my second conversation with him since appointment three weeks ago, last evening. We discussed a range of matters, and I will always try to be as constructive as I can to find ways forward when the whole of the United Kingdom faces the inflationary scourge everywhere.

[Dr Julian Lewis (New Forest East) (Con)]

Given that we both agree on the need for a substantial increase in defence spending, does the Chancellor accept that any immediate, necessary freeze on it should not prejudice the goal of 3% of GDP in the medium term?

UK Infrastructure Bank Bill [Lords]

John Glen Excerpts

2nd reading
Tuesday 1st November 2022 Commons Chamber

[The Chief Secretary to the Treasury (John Glen)]

I beg to move, That the Bill be now read a Second time.

The UK Infrastructure Bank Bill will finalise the bank’s set-up and ensure that it is a long-lasting, enduring institution. The Bill will set out its objectives to tackle climate change and support regional and local economic growth in legislation, as well as giving the bank a full range of spending and lending powers, so that it can benefit communities across the country and help the UK achieve its net zero goals. The bank is already having an impact. Since summer 2021, when the UK Infrastructure Bank became operational, 10 deals worth close to £1.1 billion have been done, including providing financing for a new £500 million fund that could double the amount of subsidy-free solar power in the UK.

This is a Bill for the whole UK. Thanks to £22 billion-worth of capacity, the bank will be able to support infrastructure investment and the levelling up of the whole UK. The bank represents a step change in the Government’s ability to crowd in private sector capital and to address the economic and climate challenges the country faces. The UKIB will focus on prioritising investments where there is an under-supply of private sector financing, which we expect will unlock a further £18 billion of investment.

Before I go on, I would like to thank my noble Friend Baroness Penn for her work in bringing the Bill through the other place. The Bill has already undergone thorough scrutiny, as Members would expect, and I look forward to discussing it further today and in Committee in a few weeks’ time.

It is worth remembering why we set up the UKIB. Four years ago, the National Infrastructure Commission published its national infrastructure assessment. It recommended that the UK create its own domestic bank if funding for economic infrastructure was to be lost from the European Investment Bank. As Members will recall, the UK did lose its EIB funding, worth around £5 billion a year. However, I would like to be clear that this is not intended to be and is not a direct replacement for the EIB funding, which, given its very broad remit, at times crowded out private sector funding. There was widespread consensus that we would need to bring forward plans for the UKIB, which we did, and I pay tribute to my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who played an instrumental role in bringing those plans to fruition.



When establishing the bank, we were cognisant of three specific recommendations from the NIC. First, that there would be governance to safeguard the operational independence of the bank. We will come on to it later, but one of the key purposes of the Bill is to protect exactly that. It will make it impossible for the Government to simply dissolve or sell the bank without further legislation. We will also be unable to alter its core objectives on climate change and regional and local economic growth.

Secondly, the bank should provide finance to economic infrastructure in cases of market and co-ordination failures, catalysing innovation. We all know that infra- structure projects take a long time and cost a lot of money, and I want to see more private investment in such projects. Often, however, the private sector does not provide enough finance to emerging innovative technologies that have a higher risk profile—for example, net zero technologies or those that are in areas of the UK that do not historically get financing.

[John Redwood (Wokingham) (Con)]

Can the Chief Secretary explain why the bank is investing in a very expensive cable electricity link between the United Kingdom and Germany, given that we are in the same time zone and have similar weather, and both countries are chronically short of electricity capacity? It does not sound like a good idea to me.

[John Glen]

I will not be able to comment on specific investments. As I said, a series of investments have been made in the last 12 months, and I would be happy to correspond with my right hon. Friend and put him in touch with the bank so that the logic behind that decision can be explored with him.

[Richard Fuller (North East Bedfordshire) (Con)]

May I broaden out the question the Chief Secretary has just answered? Can he explain the oversight of the bank? There will be a report after a certain number of years, but will it be regulatory oversight, oversight by Parliament or oversight by the Treasury?

[John Glen]

I am grateful to my hon. Friend for the work that he did in the Treasury in recent months as my successor as Economic Secretary.

The board of the bank has been filled over the summer so that the right expertise has come in to oversee the investments and metrics for success. They will be accountable through normal processes and accountable to Parliament. Indeed, the chairman and chief executive of the bank have made themselves available to Parliament through the process of this legislation, and I attended meetings with them earlier this year with Members of the House of Lords. I know that they are willing to be scrutinised on the logic of their evolving processes and remit so that they can capture the wisdom of this House and the other place.

With regard to the climate change objectives, significant public and private investment will be needed to achieve the UK’s infrastructure policy goals, and low-carbon investment will need to be significantly scaled up to deliver net zero. That is highlighted by the fact that the UK’s core infrastructure—power, heat and transport networks—account for more than two thirds of UK emissions. Without the bank, the private sector is likely to focus its investment on lower-risk technologies and sectors, and we will not achieve regional and local economic growth without better infrastructure in every region of the country.

Disparity in infrastructure across the country has been identified as a key driver of economic inequalities, and central to the Government’s ambitions to level up is setting up new institutions boosting productivity, pay, jobs and living standards. The bank will help to grow the private sector and support it to deliver opportunities in parts of the country where they are lacking. Without intervention, the private sector is likely to continue to target geographic areas that have historically received higher levels of private capital. Targeted advice, support and challenge from the bank can help raise ambition and boost the capability of regional and local government as they tackle complex infrastructure projects.

Finally, the NIC recommended that the bank be set up in 2021. As I have already mentioned, the bank has been operational since last summer and has £22 billion of capacity. The bank is also operating across the UK and has already invested in each of our four nations. I am pleased that each Government have supported the bank, and discussions for a legislative consent motion are progressing well.

In that context, I come to the provisions of the Bill. It will complete the setting up of the bank as an operationally independent institution. It is a short Bill of 11 clauses, broadly split across three areas. First, the Bill enshrines the bank’s objectives and activities in legislation to provide clarity for the bank and the market on the bank’s long-term purpose. That is covered in clause 2, which includes the bank’s core objectives; its activities, including providing finance for the private sector and public authorities; and a definition of infrastructure.

The definition of infrastructure is inclusive and based on existing definitions in the Infrastructure (Financial Assistance) Act 2012 and the United Kingdom Internal Market Act 2020. Crucially, given the bank’s scope, we have focused the definition on economic infrastructure. As a result of the Bill’s passage through the Lords, we included energy efficiency in the definition to clearly signal policy intent. I am sure that we will discuss that further in this debate and in Committee.

I highlight that we have taken a power to amend the activities and definition of infrastructure to allow the bank to keep pace with an innovative market. We have not, however, taken the same power to amend the bank’s objectives. That is vital in providing clarity to the market and to ensure that the bank is not fundamentally changed without further primary legislation.

Secondly, the Bill will allow the bank to provide financial assistance to the private and public sector including, crucially, giving the bank the power to lend directly to local authorities in Great Britain and to the Northern Ireland Executive. That is covered under the bank’s activities in clause 2 and further defined in clause 10 and clause 5, which allows the Treasury to put the bank into funds.

It is important to note that the bank will be able to lend directly to each UK nation, including their local authorities. In the case of Northern Ireland, we have designed the bank to be able to lend directly to local authorities and the Northern Ireland Executive. That accounts for the fact that the Northern Ireland Executive hold responsibility for most capital infrastructure projects that would be the responsibility of local authorities in the rest of the United Kingdom. As I said at the beginning of my remarks, this is a Bill for the whole UK.

[Richard Fuller]

One of the objectives is that the bank should make a positive financial return. Can my right hon. Friend explain to the House why that is not in the Bill?

[John Glen]

I would be very happy to look into that matter and respond to my hon. Friend at the end. It is probably deemed to be unnecessary, but I will give absolute clarity, or the Exchequer Secretary will when he closes.

Thirdly, the Bill supports the operational independence of the bank by setting out clear governance and accountability in how it will be run. That is covered by the remaining clauses, including board requirements in clause 8, reporting requirements in clause 6, a review of the bank that will also look into its additionality in clause 9, and the ability for the Treasury to issue a strategic steer in clause 3 or a direction in clause 4.

Although the bank is still in its infancy, it is already taking a leading role in the clean infrastructure market. Over time, we expect the bank to catalyse new markets of infrastructure by crowding in private capital to help meet our climate change ambitions and level up across the UK. In much the same way that the EIB helped to catalyse the offshore wind market, where the UK is now a global leader, the UKIB will help to catalyse the infrastructure markets and technologies of the future.

Indeed, the Bill will be at the heart of our focus on our long-term energy security. It will help the Government to deliver more renewables, including more offshore wind. I have no doubt that the bank will grow to be a sophisticated and adaptive tool, which will allow the Government to quickly place capital behind the projects that this country needs. I reiterate to hon. Members on both sides of the House and to the wider public that we have designed the bank to endure and be a long-lasting institution that will deliver the long-term priorities on which we all depend. I greatly look forward to this afternoon’s debate and to drawing on the expertise of hon. Members on both sides of the House.

Economic Responsibility and a Plan for Growth

John Glen Excerpts

Wednesday 19th October 2022 Commons Chamber

[Andrew Griffith]

I am not sure that I can fully accept what the hon. Member says, but the Government are committed to the independence of our institutions. It is very important that people understand that. Both the Bank of England and the Office for Budget Responsibility have a valuable role to play, which is why when the Chancellor presents his forecast to the House in just eight parliamentary days’ time he will ensure that it has been fully presented to, and signed off by, the Office for Budget Responsibility.

[John Glen (Salisbury) (Con)]

I recognise the value of stability and predictability. Given the changes to the corporation tax rate, and given that under the previous Administration my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) was going to reduce the bank corporation tax surcharge from 8% to 3%, could the Minister confirm the Government’s intentions, and the assessment made of the effect for banks on competitiveness in financial services?

[Andrew Griffith]

I thank my hon. Friend, and pay tribute to my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) for all that he did to put the economy in a strong position, and to navigate the very difficult shoals of the unprecedented covid pandemic.

[Andrew Griffith]

I will make a little progress and then give way. As the Chancellor said, at this point all measures remain on the table. My hon. Friend the Member for Salisbury (John Glen) will indulge me if I do not announce that policy at the Dispatch Box today. His point is well understood, and others have made it to me, as Financial Secretary.

[John Glen]

May I simply point out that, if the rate is retained as an 8% surcharge, banks will be paying 33%? When added to the employment costs for national insurance, they may have issues in terms of competitiveness. If that is necessary, could the Minister please make it clear to banks and the markets, so that they can plan for the future?

[Andrew Griffith]

As I said a moment ago, we have just eight sitting days now until the statement. Part of my role is to stay in very close touch with our highly valued banking community, and to continue to drive the competitiveness of the United Kingdom as a place for the financial services sector to make the prodigious contribution to the economy that Conservative Members particularly value. As the Chancellor said, we will continue to prioritise fiscal stability, and the United Kingdom will always pay its way. We will fund our promises, and we remain committed to fiscal discipline. That means that we will do whatever is necessary to ensure that debt as a share of the economy comes down in the medium term.

Health and Social Care Levy (Repeal) Bill

John Glen Excerpts

2nd reading
Tuesday 11th October 2022 Commons Chamber

[Chris Philp]

I do not think that the Government in Wales complained too loudly when they were provided with extra money to fund social care in Wales. On the hon. Member’s point about page 27 of the growth plan, he is right that it is a target, but it is a target accompanied by a plan to deliver it. There is a clear path to how we will achieve the increase in growth that I referred to.

Let me return to the repeal of the health and social care levy. To be clear, the Bill will repeal the legislation from last year, reversing the temporary increase in national insurance contributions from 6 November—in just a few weeks’ time. Additionally, it will ensure that no new levy comes into force in April 2023. Members will understand that it takes a little time for His Majesty’s Revenue and Customs and businesses to prepare their systems for such tax changes. That is why we chose 6 November as the date of implementation, but that will ensure that the extra money gets into people’s pockets as quickly as possible.

That brings me to the rationale for why we are repealing the levy. First, it is so that people can keep more of their own money, particularly at this time when that is so critical with the cost of living. In Treasury questions earlier today, many Members on both sides of the House referred to the cost of living challenges, most of which follow from Putin’s illegal invasion of Ukraine. By reducing this tax and urgently alleviating the tax burden on our constituents, that will immediately assist with cost of living pressures. I am not saying that it will solve them, but it will certainly assist with them.

[John Glen (Salisbury) (Con)]

I, too, congratulate my right hon. Friend on his new role.

I acknowledge the narrative of growth and the therapeutic effect of the combination of supply-side reforms and tax cuts to generate growth. My concern is the interval between his assertions today and the medium-term fiscal strategy that will be announced on 31 October, and the markets’ confidence in that interval. Today we see a welcome announcement by the International Monetary Fund on the enhancement to growth, but we also see reference to the enduring effect of inflation. We have also seen in recent weeks the effect of interest rate changes on the cost of living challenges for families up and down this country. Will my right hon. Friend please take account of the interaction of those two conflicting realities?

[Chris Philp]

I thank my hon. Friend for his question. I pay tribute to him for his extraordinary service as City Minister. I think I am right in saying that he is the longest-serving City Minister ever—I think it was four years—and, I should say, he is the best to date. I pay tribute to him for his long and distinguished service.

My hon. Friend raised a couple of points. One was the interaction between the announcements and the OBR’s scoring. There was a desire to get the growth plan done quickly and with a sense of urgency, and the energy price guarantee was something we wanted to do straight away. Families were genuinely worried. They had huge anxiety about the prospect of facing £6,000 or £7,000 bills this winter. We wanted to take that off the table immediately. We also wanted to alleviate the tax burden that we are discussing today as quickly as we could. By doing this so quickly, assuming the Bill passes, on 6 November—in just a few weeks’ time—our constituents will be alleviated of this burden at this time of cost of living challenges.

As companies make decisions about where to invest—in the UK or elsewhere—they can do so in the knowledge that corporation tax in the UK will remain low. That is why we acted so quickly. I do, however, recognise my hon. Friend’s point about the need for market confidence, and that is why my right hon. Friend the Chancellor announced just yesterday that the medium-term fiscal plan would be brought forward from 23 November to 31 October. He recognised exactly the point that my hon. Friend made and similar points made by my right hon. Friend the Member for Central Devon (Mel Stride), the Chair of the Treasury Committee.

The point about inflation came up repeatedly in Treasury questions earlier. We should be clear that we are in a global interest rate up cycle. In, for example, the United States of America, base rates set by the Federal Reserve have increased by three percentage points this year—from 0.25% in January to 3.25% now. The equivalent interest rate set by the Bank of England, the base rate, has also increased, but only by two percentage points from 0.25% to 2.25%. So we have seen higher base rate increases in the USA in the year to date than we have here. As a consequence, the base rate in the USA is a full percentage point higher than in the United Kingdom, and we should keep that international context firmly in mind.

As I explained, we are repealing the levy so that people can keep more of their own money and so that we can help with the cost of living challenges at this time as a matter of urgency on 6 November and not delay any longer. I and the Chancellor think it is also important to boost incentives to work. We want to make sure that working is as attractive as possible and, by lowering the taxes on work, I believe that we will do that.

The Growth Plan

John Glen Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

I was very surprised to hear the hon. Lady mention energy, given the SNP’s appalling record in that regard. I am very open to her ideas, but I very much recommend that she pursue nuclear power, of which there is a great tradition in Scotland.

[John Glen (Salisbury) (Con)]

I very much welcome the aspirations for growth; all Governments and all Conservative Chancellors should have their minds focused on sustainable growth. I welcome the measures on the EIS and the SEIS, which were planned. I note the economic logic behind the bankers’ bonus cap change, but in my four and a half years as City Minister, the biggest concern that banks had was the overall tax burden. I urge the Chancellor to keep his focus on its global competitiveness. Finally, in an era of grave uncertainty about inflation, there is clear concern in the markets about the irreconcilable realities of having monetary tightening at the same time as fiscal loosening. I would welcome the Chancellor’s observations and his reassurance to the markets at this time.

[Kwasi Kwarteng]

My hon. Friend is absolutely right to say that bankers are concerned about the overall tax burden. That is why many of the bankers in the City of London are going to Paris: because they pay 30% tax there. That is a legitimate thing, and it is why we have reduced tax levels.

With respect to monetary and fiscal policy, my hon. Friend will know that monetary policy is the responsibility of the Bank and is targeted on inflation. The fiscal course that we have charted has absorbed two exogenous shocks, in the form of covid-19 and the Russian invasion of Ukraine. It is entirely appropriate in both those circumstances to have a looser fiscal policy to steer our path through those shocks. There is an entire logic to those positions.