Budget Resolutions

Joshua Reynolds Excerpts

Wednesday 6th November 2024 Commons Chamber

[Mr Gregory Campbell (East Londonderry) (DUP)]

On the sectors that will benefit, does the Secretary of State agree that the hospitality sector would benefit more from some honesty and openness? The Government announced a 6% increase for people on the minimum wage, many of whom are employed in the private hospitality sector, but while our constituents will pay for that, the Treasury will benefit by hundreds of millions of pounds, because almost all those minimum wage earners will become taxpayers overnight.

[Mr Reynolds]

The hon. Gentleman should recognise that the Chancellor did not make an announcement on personal tax thresholds, which, for some Conservative Members, was unexpected and reflected the difficult inheritance of the new Government. Labour Members are proud of the minimum wage, now called the living wage, which has been one of the most successful policies in the history of this country—and even some Conservatives claim credit or support the measure as a policy innovation.

There is no doubt about the burden on the hospitality sector, because if the living wage goes up for people employed in it, that is a business cost. We have to acknowledge that. What those businesses fundamentally need are customers who have some spending power to use their disposable income in those places. The rise is not without benefit, but I recognise that it is painful.

The future for this country, however, cannot be as a low-wage, low-productivity economy that does not give people the living standards they want. I have been on television many times talking about the stagnant wages of the last Government. I want wages to be higher. The doubling of the employment allowance in the Budget recognises the burden on those types of businesses, which can now employ up to four people on the living wage without any national insurance liabilities at all. We have to have a system that accommodates those burdens, but fundamentally this Government are in favour of higher wages, and we are not going to pull away from that in any measure.

[Ben Lake (Ceredigion Preseli) (PC)]

The Secretary of State is right to emphasise the importance of a well-funded public sector and well-provisioned public- sector organisations to economic growth. He will also be aware that questions remain about how much additional support public-sector organisations will receive to cover the additional costs of employer national insurance contributions. Does the Secretary of State expect or anticipate those employers to be compensated in full for those additional costs?

[Mr Reynolds]

The hon. Gentleman raises a legitimate point that is considerably outside the remit of the Department for Business and Trade. He is right to put that issue on the record. There will be opportunity for clarity in that space. I understand why, for his constituents, he will want to ask that question in the Budget debate.

As Members’ interventions have shown, the Budget is not just about a set of policies that will be to the advantage of larger businesses; they will also be important to our smallest start-ups and small and medium-sized enterprises, as well as for our oldest, biggest family firms. We have committed to hardwiring the views of small businesses into everything we do, and we have already started to do that. That is why in September, together with the Federation of Small Businesses, we announced robust measures to tackle late payments with a new fair payment code and tough, new rules on company reporting.

At the same time, we are reforming the British Business Bank to free up precious capital for SMEs to expand, to create new jobs, and to take ideas from design to development. The Chancellor’s Budget gives the green light to my Department to invest over £1 billion over the next two years so that the British Business Bank can widen access to finance for small businesses across the country. That includes over £250 million each year for small business loans programmes, like our start-up loans and the growth guarantee scheme.

As hon. Members will know and have asked about during the debate, while we are raising national insurance contributions, we have mitigated the impacts for small businesses by doubling the employment allowance to £10,500. That means 1 million small businesses will either be paying the same or less in national insurance contributions than they do now. That is why the Federation of Small Businesses has said that the

“Budget shows a clear direction in business policy now for the whole of this Parliament to target support at small businesses…prioritising everyday entrepreneurs working in local communities in all parts of the country.”

Through this new support for SMEs, the stability afforded by our new industrial strategy and the resetting of our trade relations, we are showing unequivocally that the UK supports business, wants to partner with business and is open for business.

That pro-worker, pro-business approach is already having a significant impact. Last month, hundreds of the world’s biggest firms and investors, from Blackstone to the BW Group, Haleon to Holtec, lined up at our international investment summit to back Britain and back this Government’s growth mission. That summit resulted in £63 billion of private investment commitments, more than double the amount secured by the previous Government last year—and in just 100 days. It will see billions of pounds flowing into our tech, digital, manufacturing and life sciences sectors, spurring growth in all four nations of the United Kingdom and creating almost 38,000 new jobs in the process.

We saw something else at that business and international investment summit: a ringing endorsement of this Government’s restoration of stability for the UK economy. IFM Investors said that it was

“very encouraged by the new government’s commitment to a long-term pro-investment mindset.”

Ørsted, a global leader in green energy, stated that the main reason it was investing more in the UK was because of our green energy targets. It recognised us as

“a government who wants work with business to enable the investments required.”

M&G went one step further. It said:

“The UK has a clear national mission to drive economic growth and back wealth creation across every region of the country.”

It welcomed our efforts to

“put the UK back on the investor map, showcase market opportunities and reinforce how business and government can work in partnership.”

Let there be no doubt, despite the dust the Opposition are trying to kick up, this is a Budget with stability at its core, which sets a course for growth and rebuilds Britain. The former Prime Minister’s response baulked at the wave of new investment this Budget ushers, but he could not be more wrong. While we are restoring economic stability and going for growth, we are keeping debt on a downward path. Indeed, on the back of the Budget, the IMF has said that it supports the reduction in the deficit over the medium term, including by sustainably raising revenue. It recognises what we on the Government Benches know to be true—the principal way to drive economic growth is to invest, invest and invest.

May I remind the Opposition that we have tried their way? All that did was stagnate wages, stifle growth and put the public finances into a £22 billion black hole, with nothing to show for it. We cannot cut our way out of a hole; we need investment to lift the economy up. Having endured the last Government lurching from crisis to crisis, the British people voted in July overwhelmingly for change. They voted for a Government that would set Budgets to serve their long-term interests, not serve the news cycle or election cycle. They voted for stability, for growth and to fix the foundations. That is exactly what this Budget delivers, and I commend it to the House.

[Several hon. Members rose—]