Autumn Statement Resolutions

Lindsay Hoyle Excerpts

Monday 27th November 2023 Commons Chamber

[Several hon. Members rose—]

[Mr Speaker]

Order. Before I call John Redwood to speak, I inform the House that I apologise that I was absent at the beginning of today’s sitting due to a change in flight times after spending the last 30 hours meeting my counterparts in Israel and the Occupied Palestinian Territories following the devastating crisis in Israel and Gaza. I thank my counterparts for meeting me at this sad and difficult time.

My advice for Back Benchers is to take up to eight minutes. If we can try to work to that, we will get everybody in on the same basis.

[John Redwood (Wokingham) (Con)]

I have my business interests declared in the Register of Members’ Financial Interests.

Underneath the exchanges of words, I welcome the outbreak of agreement, given that the Labour party now strongly supports the idea of helping more people into work. I suspect that the Opposition will not vote against the main items in the autumn statement because they understand that the Government have had success in keeping so many people in work and promoting employment over the years, despite some extremely difficult situations. They also understand that that is an important thing for a responsible Government to do, and not just to get the benefit bill down. As Labour has eloquently said, life can be so much more worth while when people have suitable work, suitably supported, that gives them a sense of purpose and of contributing to their communities.

I wish to draw brief attention to the issue of getting inflation under control and the inadequacy of forecasts by the Office for Budget Responsibility and the Bank of England. It is extremely difficult for Ministers to conduct consistent policy when the forecasts are zinging around so much and giving different and often misleading ideas of what is feasible and what is not. I welcome the other place’s most recent report on the Bank of England, which highlights how the Bank has been unable to come up with realistic inflation reports over the last three years and has therefore taken inappropriate action. First, it loosened monetary policy in the covid recovery phase, and now its monetary policy is too tight as it seeks to adjust its past mistakes. I hope that the Bernanke review will get on with the important task of adjusting the Bank’s models and coming up with a better answer to help guide our counsels, and particularly those of our Ministers.

I find it odd that we have a Monetary Policy Committee that is not interested in money and credit. As the other place’s report suggests, perhaps it should look at putting money and credit into its thinking—more diversity of thought is recommended—and into the models to try to get them to work. What is the point of the committee sitting around trying to make decisions if the main data it is using—namely, what it thinks the inflation rate will be—can be massively out? It thought that the inflation rate would stay at a pretty consistent 2%, when it was en route to 11%. That was why, for many months, the Monetary Policy Committee did not take appropriate action to rein in potential inflation. Now it is pretty sure that inflation will come under control, but it still has had difficulties and is constantly having to change its inflation forecasts in the meantime, as has the OBR.

The review rightly points out that when looking at money and credit in the economy, we need to look at the experience elsewhere in the world. Of the five most important central banks of the world, including the Bank of England, those in Asia have lived through exactly the same big escalation in food and energy prices as a result of the dreadful war in Ukraine. The two major central bank economies in Asia are very vulnerable, because they import a lot of food and energy, but their inflation stayed around 2%, whereas the three western central banks, including the Bank of England, took much more aggressive monetary action, printing a lot of money and buying an awful lot of bonds, and experienced the inflation rate going up to around 10%. They should pause and ask why.

The review also rightly says that the Bank of England should be more accountable to Parliament—not to the Government, in any way to prejudice its independence—because it is in the process of losing us the most colossal sums of money. Successive Chancellors have guaranteed the Bank of England against all losses from their bond buying programmes, which started under Labour at the end of the first decade of the century and were escalated by the current Government in response to covid. We are now looking at a possible loss of £170 billion, based on the latest figures that it has revealed. Every penny of that has to be paid by the Treasury on behalf of taxpayers as and when it is incurred.

There is absolutely no need for the Bank of England to make those losses bigger and more immediate by wading into the markets at the moment and selling those bonds in a hurry, at very depressed prices—prices that the Bank has deliberately depressed in order to get interest rates higher. It could follow the European Central Bank, which wisely is not selling its bonds at a loss in the market but is awaiting their retirement when they fall due for repayment, when the losses will be less but it can still shrink the balance sheet, which is the main thing it wishes to do.

I hope the Government will look at that, because it has always been a dual-controlled policy: the bond buying required the signatures of successive Chancellors of the Exchequer. It is a matter of legitimate concern for this House when the losses are so colossal, and there is a direct impact on all public expenditure figures, public borrowing and so forth, excluding the Bank of England. As many in the debate will know, we look at the figures both cum the Bank the England and ex the Bank of England. The ex the Bank of England figures look very poor indeed.

I welcome measures in the autumn statement to promote more growth, which is crucial. The way to get inflation down faster is to promote more capacity, so any measure that gets us more capacity is welcome. That is why I am particularly keen that we be much kinder to the self-employed and small businesses. They can do more work immediately, but some of the tax penalties still weigh on them, preventing them from getting self-employed status or winning contracts, or preventing small businesses from growing quickly enough. I repeat my urging for Ministers to look at that: more capacity would be the best way to get inflation down.

I will put in one final plea to Ministers to find some money to cut the taxes on energy. They are making us extremely uncompetitive and are keeping inflation higher for longer. It would be a win-win to get some of the taxes on energy down.

[Mr Speaker]

We now come to the SNP spokesperson.

[Richard Thomson (Gordon) (SNP)]

Against a pretty horrendous economic backdrop, it was with bated breath and no little trepidation that we on the SNP Benches waited to see what the Chancellor would drop. The backdrop is certainly about as far removed as anyone could ever have hoped it would have been going into such a crucial period. Not only is GDP per capita still not above 2019 pre-pandemic levels, but the UK is expected to suffer the biggest fall in living standards since records began in the 1950s. Most people are expected to be worse off in 2027 than they were in 2019. Real incomes are also expected to be lower in 2027 than they were in 2019. A typical household will be worse off by approximately £694 per annum by 2027-28 as a result of the policies of this Conservative Government who are so adamant, in the face of all outcomes and facts, that they get the big decisions right. That is certainly not borne out by the outlook for the economy under their stewardship.

Sadly, there was nothing at all in the Chancellor’s statement that offered any kind of meaningful change for the millions of people in Scotland and elsewhere who are really struggling right now against that economic backdrop. Last week’s announcements were a clear reminder for people in Scotland, if any were needed, that we cannot hope to build a fair, dynamic economy while being tied to UK Governments who, through their actions, do not reflect the preferences, choices or values that people consistently express at the ballot box when they go to vote.

On the statement, there is the old proverb about the couple who stop for directions and are told, rather unhelpfully, “I wouldn’t be starting from here.” Let us not be in any doubt: we certainly would not wish to be starting from here. We would not wish to be labouring with the aftermath of Brexit, which has permanently given the UK economy the effect of trying to drive a car with the handbrake wedged firmly on. We certainly would not be coming off the back of the catastrophic Budget driven by the right hon. Members for Spelthorne (Kwasi Kwarteng) and for South West Norfolk (Elizabeth Truss), which blew up the economy. Despite that, and in spite of everything, the Chancellor did have slightly more headroom—about £20 billion—than had been forecast. The question was: how would he seek to put that to work?

I will start with the few positives I can find. The uplifting of benefits by 6.7% in line with the higher rate of inflation really is the least the Chancellor could have done. It will still leave too many people struggling and wondering how they are going to pay their bills. It was the very least that should have been done on uplifting the rate. Uplifting the local housing allowance was important. My party called for, and we welcome, allowing rates of housing benefit to be paid at rates that more closely match where the market actually is. A freeze in whisky duty certainly does not undo the damage of the spring Budget, where a 10.1% levy was whacked on the spirit, but at least it makes things no worse.

If the House will permit me, I would like to take the opportunity, while I have a captive audience on the Treasury Bench, to explain why whisky duty matters. The Scotch whisky industry supports 10,000 jobs in Scotland and 42,000 jobs across the whole of the UK. It also represents 25% of total UK food and drink exports. One would think that this is an industry that the Government would want to look after, nurture, take care of and give every possible opportunity to succeed. The level of duty affects domestic consumption and also affects the investment that goes into supporting those jobs. But here’s the rub: it also impacts how other jurisdictions in key markets, particularly the Asian markets, react, because many of them take their cue from the level of duty set by the UK Government. If they see the UK Government setting a rate of duty where there is a gigantic differential between indigenous spirits such as Scotch whisky and other drinks in the market, then they have absolutely no qualms about following suit. That depresses potential sales in key emerging markets and reduces the opportunities we have to drive growth and innovation in that key sector at home.

As for the bigger picture, nothing in the Chancellor’s statement offered meaningful change to the millions of people out there who are suffering at the moment. What the statement did offer was a clear reminder that, as I have said, the key powers over the commanding heights of the economy will do nothing for Scotland while they continue to remain under the control of Governments who do not share the values that people vote for. Sadly, as the soaring cost of household bills outpaces the limited help that was on offer in the statement, the reality is that what was offered is far too little, coming far too late for the squeezed majority of households.

The SNP set what I thought were some pretty basic fundamental tests for the statement: a relatively small number of asks that could nevertheless have made a big difference. We asked for a £400 energy rebate, something that the UK Government have sadly failed to provide although energy bills continue to be roughly double what they were in 2021—and moreover, the day after the statement the energy price cap was increased by a further 5%. We challenged the UK Government to match the council tax freeze by the SNP Government in Edinburgh, which will put a disproportionately high amount of money into the pockets of the lowest earners. We also challenged them to match the game-changing Scottish child payment of £25 a week, another measure that is putting thousands of pounds into the pockets of those who need it most. That payment was highlighted in a recent blog by the London School of Economics as one of the key reasons why the level of child poverty in Scotland—although far too high—is still significantly lower than it is in any other part of the UK.

The UK Government could also have given some respite to hard-pressed homeowners, many of whom are looking down the barrel of significant increases in their mortgage payments as a result of higher interest rates. They could have done that by introducing mortgage interest rate relief, but they chose not to do so.

For my part of Scotland, the north-east, we challenged the UK Government to match what the Scottish Government are doing in kick-starting the energy revolution, the green transition that we need—to match the £500 million set aside purely for the north-east—but we got nothing, although we know how crucial that energy transition is to ensuring fairness, retaining human capital and prosperity, and delivering the changes that not only our economy but our planet needs.

We are invited to believe that the goal of the statement was growth. Let me draw attention to two key areas in which the UK Government have, in my view, been found to be badly wanting. The first is capital spending. There are obviously pressures to maintain existing assets, as we all know from the emergence of the problems that reinforced autoclaved aerated concrete has caused in many public sector buildings constructed over the past 40 years. We can see the waste caused by overspending: the horrendous waste of money represented by some of the stations in central London on the Elizabeth line, a railway that did go ahead, and by the cancellation of HS2 and the bits of that line that did not go ahead. However, we need to recognise the importance not just of private sector capital expenditure, but of the key driving, galvanising force that capital expenditure from the Government and the public sector can have. It drives and encourages investment from the private sector, and, crucially, it increases the productive capacity of each and every one of us. It is therefore unfathomable that the UK Government should cut the Scottish Government’s capital budget by 6.7% between 2023-24 and 2027-28—a figure that will potentially become even higher if inflation persists at its current levels—all the while refusing to devolve long-term borrowing powers.

Secondly, there is a persistent negative when it comes to research and development. There are parts of the UK that punch pretty well above their weight in that regard, most obviously the south-east of England and London but also Scotland. However, there are other parts, such as the regions of England and also Wales, where R&D spending is significantly below the share of GDP, and also below the share of the population that might be expected to be able to attract it. Beyond that, the UK’s investment in research and development consistently lags that of EU competitors such as France and Germany, which is a major drag on long-term growth and economic opportunities for all our constituents.

Looking through the additional spends and revenues forgone as a result of the statement, it seems to me—I am happy to be proved wrong—that the Government are committing more to returning full business rates to the combined authorities in Greater Manchester and the west midlands than they are to research and development or anything that might drive that forward. Lest anyone assail me, I have absolutely no grudge against the west midlands of England or the Greater Manchester combined authority—more power to them! I do not know whether the Greater Manchester combined authority extends to Chorley, Mr Speaker—

[Mr Speaker]

We are in Lancashire.

[Richard Thomson]

Perhaps some reflected benefit will come through. Those authorities are entitled to every penny that they can get back from this Government, and I wish them well in that endeavour, but it pales in comparison with the strategic importance of research and development, in policy terms and numerically. Until the Government get to grips with the long-term lack of investment in our public sector, our human capital, our physical capital and our R&D, we can expect the country to lag behind.

It is no secret that I come here as a supporter of Scottish independence. I would dearly love to see Governments in Scotland being able to make their own budgets, constrained only by the limits of their own resources, their own choices, their own imaginations and their own political mandates, and with restrictions placed on them by nowhere else. But until that day comes, we are stuck with what this Government and potential UK Governments come forward with, which, I have to say, we find badly wanting.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

The House, on both sides, wants to get Britain growing, and that is a great statement of intent. I am delighted that the Opposition parties agree with the Government and the Conservative party on that. I hope they will also agree that it is important that people keep more of what they earn, because they have earned it, they deserve it and that is how we will create the right work incentives to grow the economy in the years ahead. I want to put on record my support for the changes to national insurance, which will be a really important step in delivering exactly that. The fact that 27 million people will be getting a tax cut and that someone employed on a wage of £35,000 will be £450 better off is an excellent step in the right direction, and I hope there will be more to come.

I also welcome the changes for the self-employed, because it is crucial that we focus not only on those employed in large businesses but on those who work for themselves. They are the strivers who get up every morning looking for new opportunities, not only for themselves but for their families and for our wider economy. It is also important for both groups, whether they are employed or self-employed, that there is fairness in the system, and that is why it is right that welfare is looked at again. It is important that this country has a safety net. Across the House, everyone agrees with that simple premise. Those who fall on hard times, those who find themselves in difficulties and those who have particular needs that mean they cannot work at a point in their life deserve our support, and I know that the country is with us on that. But those who do not seek work are the people that the Government are rightly looking at again. I know that the people out there who we work for, the people who pay taxes, are on the Government’s side as we ensure that those who do not seek work are not provided with the support of generous taxpayers across this country.

I also give credit to the Government for the abolition of the lifetime allowance, which was announced earlier than the autumn statement. Again, this is an important statement of intent because it creates the right incentives for people to be able to work in this country. That includes people who want to work longer, given that our health is consistently better and that we can work well into what was traditionally seen as retirement. By seeking to reverse the change, the Labour party is wrong. It would price out—tax out—doctors, policemen and teachers from public service at their peak. Labour’s plan to restore the lifetime allowance would cripple those who want to continue working and contributing to our economy and society, which is something that we should be welcoming; I certainly do.

I said that I hope this is a starting point and that the Government will go further—I believe it is crucial that they do. Although childcare is an important issue for many people in this country, family-friendly taxation is arguably more important. Many people choose to use informal forms of childcare, and many people want to spend more time with their children during their early years. Indeed, 74% of women polled say that they want to spend more time with their children, particularly before they start school, and two thirds want to spend all their time with their children before they start school, but they cannot because the support is not there in the tax system. That makes us an outlier—families are taxed about 26% more in this country than in our OECD counterparts. It is a question of fairness. Individuals pay less tax than the OECD average, but families pay more. I hope the Government will look at that in the months ahead. Indeed, I hope they will look at the excellent report from the Centre for Policy Studies, to which I happened to contribute, outlining some of the options.

The SNP spokesman, the hon. Member for Gordon (Richard Thomson), talked about the squeezed middle. It is crucial that tax thresholds—particularly the 40p threshold—are reviewed. It is wrong of the SNP to say that it is here in defence of the squeezed middle, when the squeezed middle are the ones being taxed the hardest north of the border.

We must go further, too, to prove that we are different from the SNP, and that we recognise that people who strive to progress in their career, who strive to earn more money, should be rewarded. I am led to believe that, had the 40p threshold remained index-linked from the time of Nigel Lawson, it would now be in the order of £80,000, so there is much further to go to make sure the threshold does not affect police sergeants, teachers with 10 years’ experience and the like. That was not its intended purpose. Again, if we are keen to make work pay, and if we are keen to create the right incentives in our economy for people to try to secure more hours, to secure a promotion or to set up their own business, we need to make sure the tax system reflects that.

In addition, those who have done the right thing all their lives by saving hard and putting their hard-earned money into their family home should not be penalised. It is crucial that the Government look again at lifting the inheritance tax threshold from £325,000 to perhaps £1 million, as was proposed by the former Chancellor, George Osborne, in 2007. This would simply do what the Conservative party says it has always wanted to do, and I hope the Front Bench will look at that in the months ahead.

I am conscious of time, so I will move on to spending reductions and capital receipts. When the Government cancelled High Speed 2, I wonder whether they considered privatising the operation, rather than selling off the land piecemeal. There is an opportunity here to build infrastructure for the future, but for the private sector to do it and for the Government to get a capital receipt now. I hope the Government would welcome that, because it is wrong to stymie infrastructure for the future, but it is right that taxpayers’ money is best spent on road projects across this country.

There is a huge amount of spending across Government. One example is in the Department for Transport, where a huge amount of money is being spent on so-called active travel. This is the left getting what it wants, which is everyone moving from their own private transport into Government-controlled transport, or being forced to walk or cycle in 15-minute neighbourhoods. That is not what the people of this country want. They do not want blanket 20 mph speed limits, so those are the sorts of cuts we should seek.

[Mr Speaker]

We now come to a maiden speech. I call Sarah Edwards.