Oral Answers to Questions

Kwasi Kwarteng Excerpts

Tuesday 11th October 2022 Commons Chamber

[Karl MᶜCartney (Lincoln) (Con)]

10. What fiscal steps he is taking to support small and medium-sized enterprises.

[The Chancellor of the Exchequer (Kwasi Kwarteng)]

My hon. Friend will know that the growth plan really was a very strong package for business and for small and medium-sized enterprises, and I am sure that many of his constituents will appreciate the strong measures that we introduced.

[Mr Baron]

I refer Members to my entry in the Register of Members’ Financial Interests.

I welcome the Government’s growth agenda, notwithstanding the lack of reassurance to the markets, but will the Chancellor seriously consider lowering taxation on smaller businesses, despite the package that has already been announced? They are the engine room of the economy and employ most people in the private sector, and if cost savings are necessary, High Speed 2 and the streamlining of myriad quangos could be the first option.

[Kwasi Kwarteng]

I am very pleased to tell my hon. Friend that we are going to introduce the medium-term fiscal plan in three weeks’ time, but let us consider the measures that we have already introduced. National insurance hikes have been reversed, the corporation tax rise has been scrapped and the annual investment allowance remains at £1 million. These are measures that small businesses up and down the land have been very appreciative of.

[Ian Levy]

As my right hon. Friend will be aware, small businesses are the backbone of our local economy—none more than Catling Bakery in Cramlington, which has expanded from running a bakery to running a café and now a dessert bar. Would my right hon. Friend please assure me that this Government will do all they can to help these businesses thrive?

[Kwasi Kwarteng]

Absolutely right. Of course, we have also supported Catling Bakery which my hon. Friend mentions through an energy package—£60 billion for households and businesses for six months—which we absolutely felt it necessary to do.

[Mr Speaker]

I call Karl MᶜCartney.

[Karl MᶜCartney]

Thank you, Mr Speaker; it is like I never went away. I refer Members to my entry in the Register of Members’ Financial Interests.

Supporting businesses will always be a key pillar for growing our economy and, by association, our small and medium-sized businesses, of which there are many in Lincoln and more across our county of Lincolnshire. They should be at the forefront of the Government’s growth agenda. Devolved areas such as Teesside and the West Midlands have continually been successful in delivering for their areas. Greater Lincolnshire stands ready right now for a maximum devolution deal. Therefore, will the Treasury support any such deal for Greater Lincolnshire?

[Kwasi Kwarteng]

My hon. Friend knows that devolution is at the heart of the Government’s plans to level up and strengthen communities, and in the levelling-up White Paper the Government have fully committed to offering a devolution deal to every area that wants one by 2030.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Can I declare an interest to the Chancellor? I have actually worked in a small or medium-sized business. Unlike many people on these Benches, I have actually worked in manufacturing industry, and the manufacturing SMEs in my constituency are absolutely up against it with the cost of energy. What is he going to do to relieve them right now?

[Kwasi Kwarteng]

I think the hon. Gentleman makes a very good point and represents his constituency ably. In respect of small businesses, we have introduced a package —an energy price guarantee not only for households but for businesses—to the tune of £30 billion in the first six months. This is something that was absolutely necessary, and I am very proud of the fact that we acted very swiftly to protect businesses such as those in his constituency.

[Sarah Olney (Richmond Park) (LD)]

The Government’s failed mini-Budget sent interest rates soaring, which is already causing mortgage pain for millions, but rising borrowing costs are now threatening our high streets too. Small businesses in Richmond Park and across the UK are seeing their loan repayments spiral and their financing options dry up. We have already seen the highest number of company insolvencies since the financial crisis—more than 5,600 businesses closed in the second quarter of this year—and SME debt is now at a staggering £204 billion. Most of those businesses will not see a penny from the cut to corporation tax. What is the Chancellor—

[Mr Speaker]

Order. Come on—we cannot do that.

[Kwasi Kwarteng]

As I have stated a number of times already, the energy support package will help every single one of the businesses in the hon. Member’s constituency. I would be very pleased to see the Lib Dem growth plan. The anti-growth coalition carps from the side lines but it has nothing to say about growth.

[Chris Bryant (Rhondda) (Lab)]

The one thing businesses always want is security, and an understanding of what is going to happen for them next year. They are worrying about their borrowing costs for next year, and the Chancellor has already made that more difficult for them. He says he has a package for energy costs, but that lasts for only six months. Yesterday I spoke to a man who owns a leisure company. He said that his bill next year will go from £100,000 to £475,000, and that he will be closing. Why does the Chancellor not bring in a proper measure that will last more than six months?

[Kwasi Kwarteng]

The hon. Gentleman makes a fair point in respect of energy costs, and that is precisely why we intervened in the way that my right hon. Friend the Prime Minister announced only a couple of weeks ago. The package is £60 billion for households and businesses across the next six months. That is a generous package, and we are listening.

[Mr Speaker]

I call the SNP spokesperson, Alison Thewliss.

[Alison Thewliss (Glasgow Central) (SNP)]

Businesses of all sizes are struggling with Brexit, import costs, material costs, the weak pound against the dollar and the euro and increased wage and energy costs, and they still do not know what will happen when the Chancellor’s temporary reprieve ends in March. The clock is ticking. Calder Millerfield, a food manufacturing business in my constituency, has come back to me with its latest quote, with the relief applied. It is £944,000 per year, up from £160,000 last year. What will the Chancellor do to support manufacturing businesses now, because they will not survive those increases?

[Kwasi Kwarteng]

As I have stated, the energy price guarantee does help businesses in a large measure. Also, I am not going to take lectures from the SNP about growth. In Scotland, for every year from 2010 to 2019, growth was lower than in the rest of the United Kingdom. I will not take any lessons about supporting business from the hon. Lady.

[Mr Laurence Robertson (Tewkesbury) (Con)]

3. What recent discussions he has had with the Governor of the Bank of England on rising mortgage rates.

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[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

7. If he will publish an assessment by the Office for Budget Responsibility of the growth plan 2022 before 23 November 2022.

[The Chancellor of the Exchequer (Kwasi Kwarteng)]

The hon. Gentleman will have seen that I have brought forward the publication of the medium-term fiscal plan to 31 October.

[Jamie Stone]

I think the House will agree that the uncertainty over the date has not exactly helped forward planning on benefits. Any real cut in benefits will mean people not having enough money to buy food and clothing for their children, so does the Chancellor agree that increasing benefits in line with inflation is the only fair way forward? Indeed, it would be immoral to do otherwise. As the chief executive of Inverness citizens advice bureau pointed out to me, such benefit money is spent in the local economy and is a boost to what the Chancellor has talked about many times: growing the economy.

[Kwasi Kwarteng]

I am delighted to see that one member of the anti-growth coalition is focusing on growth. However, on the hon. Gentleman’s specific question, he will understand that the medium-term fiscal plan is coming out on 31 October, and I will not prejudge any measures in it.

[Robert Halfon (Harlow) (Con)]

Does my right hon. Friend agree that the levelling-up fund is an important part of the plan for growth, and has he seen Harlow Council’s levelling-up fund bid, which I wholeheartedly support? It would transform a derelict area of our town centre into a thriving cultural quarter with jobs and investment, tackling antisocial behaviour. Those abandoned buildings have blighted the heart of our town for far too long.

[Kwasi Kwarteng]

My right hon. Friend is a redoubtable and highly persuasive representative of his constituents. I would be happy to talk to him about what we can do together to help his great constituency.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Bank of England has had to intervene not once, not twice, but three times now. The impact on pension funds is very significant, and many of my constituents will be deeply worried. What assessment has the Chancellor made of the impact of potential additional pressures on the economy on public sector pensions and the damage to pension funds for pensioners up and down this country? Is that another reason why he did not want to publish the OBR’s forecast at the time of his mini-Budget?

[Kwasi Kwarteng]

The OBR will be fully scoring and giving a forecast ahead of the medium-term fiscal plan. I speak very frequently to the Governor of the Bank of England, who is absolutely independent and is very effectively managing what is a global situation.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Mel Stride (Central Devon) (Con)]

I very much welcome my right hon. Friend’s decision to bring forward the medium-term plan and the OBR forecast; he has listened, and he is right. However, may I caution him to reach out as much as he can across both sides of the House, to be certain that he can get through this House the measures he puts forward to underpin that forecast? Any failure to do so will unsettle the markets.

[Kwasi Kwarteng]

My right hon. Friend is absolutely right. He does a brilliant job of chairing his Committee and is full of wise counsel; he is absolutely right that we will and should canvass opinion widely ahead of the publication of the plan.

[Alison McGovern (Wirral South) (Lab)]

The OBR was the creation of a Conservative Government and was designed to curtail wishful thinking in economic policy, so does the Chancellor agree that it is unfortunate, to say the least, that we seem to have Cabinet Ministers briefing against the economic expertise of that independent institution?

[Kwasi Kwarteng]

As far as I am concerned—I speak to investors regularly about this—the OBR is an institution that commands wide respect, not only in the UK but across the world. Its independence, to me, is absolutely sacrosanct.

[Guy Opperman (Hexham) (Con)]

The energy price guarantee is an outstanding part of the growth plan. It is key, but far too few businesses and households know about it. May I urge the Chancellor to have a nationwide mail-out campaign, coupled with the Government taking the lead on the reduction of energy in all public buildings, as Germany and other countries are doing? That would have the twin benefits of saving consumers money and reducing taxpayer subsidies.

[Kwasi Kwarteng]

My hon. Friend makes an excellent suggestion. Obviously I am very careful not to make unfunded spending commitments on the Floor of the House, but his suggestion is very well made and we should look into it.

[Mr Speaker]

I call the shadow Minister.

[James Murray (Ealing North) (Lab/Co-op)]

The Chancellor’s refusal to publish OBR forecasts just over two weeks ago played a key role in falling confidence in the pound, rising borrowing costs and market panic. His woeful decision to avoid scrutiny by gagging the OBR helped to increase mortgage costs for working people, who are now paying the price for Conservative failure.

The Chancellor’s behaviour has been described by the former Bank of England Governor Mark Carney as “undercutting” economic institutions. Jonathan Haskel, a member of the Monetary Policy Committee, has made it clear that a

“sidelined OBR generates more uncertainty”.

Does the Chancellor accept that they are right?

[Kwasi Kwarteng]

As I have repeatedly said today, the OBR will have a fully forecasted and scored response to the medium-term fiscal plan in less than three weeks.

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[Stephanie Peacock (Barnsley East) (Lab)]

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

[The Chancellor of the Exchequer (Kwasi Kwarteng)]

This Government are relentlessly focused on growing the economy. Putin’s barbaric war in Ukraine continues to put pressure on gas prices so, with predictions of typical bills reaching between £4,000 and £6,500 a year, people needed immediate support to get them through this winter.

Last month we set out the growth plan, which will focus on breaking out of the high-tax, low-growth cycle in which we are currently trapped. This will put more money into people’s pockets and raise living standards for all our people. This week I wrote to my right hon. Friend the Member for Central Devon (Mel Stride) to inform him that I will set out the medium-term fiscal plan on 31 October, and I wish to remind the House that it will be accompanied by a full economic and fiscal forecast published by the Office for Budget Responsibility.

[Stephanie Peacock]

The Chancellor sat in a Cabinet that committed to increasing social security payments in line with inflation. Why will he not honour that promise?

[Kwasi Kwarteng]

As my right hon. Friend the Chief Secretary to the Treasury and I have repeatedly said, no decisions have been made. The usual statutory process is being undertaken, and we will have more detail at the time of the medium-term fiscal plan.

[Priti Patel (Witham) (Con)]

The Chancellor will know that Essex is a pro-growth county and a hub of economic growth. To support job creation and more economic growth, will he commit to funding the dualling of the A120 between Braintree and Marks Tey and, importantly, along the route that the county council, businesses and the local community have specified?

[Kwasi Kwarteng]

I pay tribute to my right hon. Friend for her role in the Cabinet and the Government. She is a fantastic colleague. I wish to confirm that the A120 between Braintree and the A12 remains under active consideration, alongside the rest of the third road investment strategy pipeline.

[Mr Speaker]

I call the shadow Chancellor, Rachel Reeves.

[Rachel Reeves (Leeds West) (Lab)]

Since the Chancellor’s disastrous mini-Budget just 18 days ago, we have seen wild swings in the value of the pound, gilt yields up 100 basis points in a single day and the Bank of England stepping in because of, in its words,

“a material risk to UK financial stability”.

The International Monetary Fund has now said that UK growth is to slow further next year. This is a British crisis, made in Downing Street; no Government are sabotaging their own country’s economic credibility as this Government are. Are the Chancellor and the Prime Minister the last people left on Earth who think their plan is working?

[Kwasi Kwarteng]

To pick up on a point, the IMF said today that the plan—the mini-Budget—has increased the forecast for growth. That is precisely the opposite of what the hon. Lady has said. It is very clear where we stand on this. We have pro-growth, pro-enterprise, pro-business Conservatives on one side and the anti-growth coalition on the other—they want to tax more and commit us to low growth.

[Rachel Reeves]

The Chancellor is in a dangerous state of denial, but the costs of these mistakes are all too real for everyone else: borrowing costs up; growth down; and mortgage payments set to increase by £500 a month. Now the Government scrabble around looking for cuts, hitting the most vulnerable and our public services. It does not need to be this way. Will the Chancellor put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the Budget?

[Kwasi Kwarteng]

Which of the tax cuts do the Opposition want to stop? Do they want to stop the cut in the basic rate? Are they committed to having a high tax economy? The other thing I suggest is that the hon. Lady should get her facts right; the IMF today has said that our growth is going up, not down.

[Caroline Ansell (Eastbourne) (Con)]

T4. Early results from my local business survey strongly suggest that a lower VAT rate would increase investment, which would boost recovery and growth in the hospitality sector in my beautiful constituency. Will my right hon. Friend be reviewing the case for a lower rate, to bring us back into line with some of our international competitors?

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[Theresa Villiers (Chipping Barnet) (Con)]

T7. It is a massive relief that the nightmare scenario of energy bills of £4,000, £5,000 or even £6,000 has been prevented by the energy price cap. Will the Government explain how they are reducing the cost to taxpayers of that scheme and stabilising the energy market for the future?

[Kwasi Kwarteng]

My right hon. Friend was 100% right to notice that the energy intervention was exactly the right thing. We are going to have a commitment to fiscal responsibility, which will stabilise the economic situation and picture, and I am sure that her constituents will fully understand what the growth plan is all about: putting more money into their pockets so that we can have a growing and dynamic economy.

[Allan Dorans (Ayr, Carrick and Cumnock) (SNP)]

T5. The Scottish Government announced yesterday that they will be doubling the December bridging payment granted to low-income families, to £260. The Child Poverty Action Group noted that this will make “a real difference” to households struggling with the cost of living crisis. What plans do the UK Government have to follow suit and bring in targeted measures for low-income households?

[Kwasi Kwarteng]

As my right hon. Friend the Chief Secretary said earlier, most of the measures that constitute the £37 billion intervention were targeted directly at the vulnerable constituents of all of us in this House. The energy price guarantee will also be greatly beneficial to people across our country who are suffering because of the cost of living. The Government are committed to a huge amount of intervention, and our top priority is making sure that everyone gets through challenging times as best they can.

[Laura Trott (Sevenoaks) (Con)]

T8. The Chancellor has provided families across Sevenoaks and Swanley with vital support for their energy bills. However, in the past year the price of heating oil has more than doubled for my more rural constituents who are off the mains gas grid. The £100 support is welcome, but will the Chancellor and the Business Secretary review the support in the light of those severe price rises?

[Kwasi Kwarteng]

Absolutely. I am in frequent contact with my right hon. Friend the Business Secretary, and we have sequestered and dedicated a pot to help people who are off the gas grid. We are happy to help my hon. Friend and her constituents in this challenging time.

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

T6. Given that the Bank of England is having to go even further to refinance the UK Government bond market, what discussions has the Chancellor had with the Pensions Regulator about the viability of defined benefit schemes and the devaluation of defined contribution schemes and annuities—or will workers have to pay for this?

[Kwasi Kwarteng]

My hon. Friend the Financial Secretary to the Treasury and I are engaged with all the regulators, particularly the Prudential Regulation Authority, and we will be absolutely committed to getting to the bottom of what has happened, particularly in the long-dated gilt market, which has been over-levered in the past few weeks.

[Mr Mark Harper (Forest of Dean) (Con)]

T9. The Chancellor has said that he will set out a fully costed plan to get debt falling as a proportion of GDP, and he has confirmed at the Dispatch Box that that will be done in just under three weeks’ time. This morning’s Institute for Fiscal Studies report suggested that in order to do so, there will need to be fiscal tightening of around £62 billion over the next four years. Does the Chancellor agree with that analysis? If, as I suspect is the case, he does not, will he set out why not?

[Kwasi Kwarteng]

As I have said repeatedly, I am not going to prejudge what is in the medium-term fiscal plan, which will be fully scrutinised not only by the OBR but, I am sure, by my right hon. Friend. I do not think that it is right for me to prejudge or anticipate those measures today.

[Christine Jardine (Edinburgh West) (LD)]

Despite the Chancellor’s confident words, the IMF is predicting that inflation will last longer in this country than in other similar economies. In my constituency of Edinburgh West, which has half the national average rate of unemployment and claimants, people are so concerned that more than half of them are talking about cutting their essential budgets, and, according to recent reports, 20% are concerned that they might have to turn to food banks for the first time. When will the Chancellor reassess the potential impact of this growth plan and accept that maybe he has got it wrong?

[Kwasi Kwarteng]

The IMF specifically said this morning that the 2023 forecast for growth in this country has gone up as a direct consequence of the mini-Budget. In respect of helping constituents up and down the land, we have already committed £37 billion of energy support this year and a further £60 billion to houses and businesses over the next six months, and we are committed to making sure that every one of our constituents gets through this winter as best they can.

[Sara Britcliffe (Hyndburn) (Con)]

Numerous residents such as those at Harwood Bar caravan park have been in touch with me about the £400 energy support scheme. The previous Chancellor confirmed that there was an equivalent scheme for those in caravan parks and park homes. Could the Chancellor please provide an update for my constituents in Hyndburn and Haslingden?

[Kwasi Kwarteng]

As I said in relation to heating oil, a pot of money is going to be reserved to help people who are off the grid. We have already made announcements about that, but I would be very happy to speak with my hon. Friend and my right hon. Friend the Business Secretary.

[Christian Matheson (City of Chester) (Lab)]

The upkeep of the Chester city walls costs about £600,000 a year, but that money has to come out of the local authority’s highways budget. Can the Government set aside a small amount of money to help local authorities with the stewardship of internationally important heritage assets?

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[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Chancellor was warned that unfunded tax cuts would force the Bank of England to increase rates and that is exactly what has happened. The Bank of England has said today that, in effect, the mini-Budget has caused a material risk to Britain’s financial stability. Can the Chancellor explain how people are supposed to pay their mortgages, which have gone up by £500 on average and £900 in London? What is he going to do about it, because it is not acceptable that his incompetence is risking people’s livelihoods?

[Kwasi Kwarteng]

I have two points to make on that. First, the Bank of England certainly did not say that the mini-Budget increased risk. Secondly, as rates are rising throughout the world, there is exposure. That is precisely why we thought that it was absolutely right to have the energy intervention, which is for two years—let us not forget that the Labour plan was for only six months —and to reduce the burden on people by reducing taxes.

[Steve Brine (Winchester) (Con)]

Talking to people working in the housing industry in Winchester, I have found that they are not convinced that the stamp duty reduction will help first-time buyers while inflation and particularly mortgage rates are creeping up. Lenders are coming back with some good rates, and the Chancellor will know that, but when he delivers his statement on 31 October, will he ensure that it has confidence at its heart and that it is—knowing him, it will be—a relentlessly positive statement, so that we can push confidence right the way through the market?

[Kwasi Kwarteng]

It will be relentlessly upbeat. These are challenging times, but we have to live within our means and there will be an absolute iron commitment to fiscal responsibility.

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

Will the Minister admit that, if the Government do not increase the guarantee credit component of pension credit in line with inflation this year, they are effectively cutting the incomes of our poorest pensioners when they need help most?

[Kwasi Kwarteng]

We are absolutely committed to fairness and to helping the most vulnerable in our society—we are always committed to that—and I will not prejudge or anticipate measures in the medium-term fiscal plan this afternoon.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Will my right hon. Friend confirm that the cuts to national insurance will help not only working households, but businesses and the public sector, such as schools?

[Kwasi Kwarteng]

My hon. Friend and constituency neighbour is absolutely right. The reversal of the planned increase in national insurance will help businesses, individuals and the institutions to which he refers.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Can the Chancellor state how much the investment zones are worth and how they will be funded?

[Kwasi Kwarteng]

There will be more detail about investment zones. My right hon. Friend the Secretary of State for Levelling Up, Housing and Communities will be updating the House on the specifics of the zones.

[Mr Speaker]

I call Mr Hollinrake for the final question.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Thank you, Mr Speaker. The UK has rightly frozen around £30 billion of Russian foreign currency reserves. A number of countries are moving from freezing those assets to seizing them to pay reparations to Ukraine. Will my right hon. Friend look at similar measures from the UK?

[Kwasi Kwarteng]

Those measures have been discussed in the past; I think my right hon. Friend the Member for Surrey Heath (Michael Gove) talked about that earlier in the year. Those schemes are always being looked at in the light of what is an increasingly bleak and volatile situation in Russia and Ukraine.