Oral Answers to Questions
Lindsay Hoyle Excerpts(11 months, 1 week ago)
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Jeremy Hunt
I am happy to join my hon. Friend in thanking all those involved in promoting the Anglesey freeport, which we think may create 5,500 jobs. We are working closely with the Welsh Government to agree on how the 10-year window to claim reliefs can be extended across freeports in Wales. I pay tribute to my hon. Friend, who has done more than anyone to put Ynys Môn on the map.
Andrew Bridgen (North West Leicestershire) (Reclaim)
Thank you very much for doing the funnies, Mr Speaker.
Freeports can certainly be a catalyst of economic growth and prosperity in north Wales and the east midlands, but they must be in the right place. Putting a freeport in North West Leicestershire, which already enjoys some of the highest economic growth in the country, has low unemployment, and is capable of filling its industrial sites without incentives, makes little sense. Will the Chancellor agree to meet me to discuss better alternatives for the east midlands than the Diseworth freeport site?
Laura Trott
The right hon. Member raises an excellent question. The SNP Government are yet to clarify when this ringfenced money will be returned. I hope they will do so this afternoon at the Budget.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
May I echo your comments, Mr Speaker, with Christmas wishes for all the House staff, your staff and Members? The UK Government’s attempt to overhaul the EU subsidy scheme has left English farmers 50% worse off in cash terms than in 2020. While the Scottish Government have sought to protect our farmers’ payments, can the Minister guarantee that the UK Government will not try to undermine their payments and devolution by back-door use of the United Kingdom Internal Market Act 2020?
Laura Trott
I note that the hon. Member did not answer my question, nor that of the right hon. Member for Orkney and Shetland (Mr Carmichael) about when the ringfenced money will be returned.
Mr Speaker
Order. Questions are normally to the Minister, not the other way around.
Laura Trott
Very good point, but I still maintain that the hon. Member needs to clarify that matter. It is up to the Scottish Government if they would like at any point to top up the amount that goes to Scottish farming. I encourage them to do so this afternoon at the Budget.
Bim Afolami
I am not sure that I quite accept my hon. Friend’s characterisation of the banking industry, but I am happy to meet him and discuss the problems he outlined in relation to specific businesses and access to bank accounts.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
Before I ask my question, I want to convey the apologies of the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves). She is delivering the eulogy at Alistair Darling’s funeral today.
I want to say a few words about Alistair Darling—I am sure you will agree, Mr Speaker—a dedicated public servant, who was respected across both Houses. He led the country’s economic response to the global financial crisis with integrity, honesty and sound judgment, and we will all miss him. [Hon. Members: “Hear, hear!”]
As my hon. Friend the Member for Manchester, Withington (Jeff Smith) just said, nearly 6,000 bank branches have closed since 2015, and only 30 banking hubs are up and fully running. That has left countless people financially excluded and affected lots of small businesses. I ask the Minister once again: will he accelerate the roll-out of banking hubs properly? Why are his Government not doing anything to reverse the decline of the great British high street?
Laura Trott
During the pandemic our priority was absolutely clear: to get PPE to the frontline as quickly as possible. There was an unprecedented global increase in demand for PPE during the emergency response to the pandemic and items were procured at pace. The Department of Health and Social Care continues to seek to recover fraud losses to ensure that public funds are protected.
James Murray (Ealing North) (Lab/Co-op)
Throughout the pandemic, people across the country made extraordinary and heart-wrenching sacrifices, yet as they did so, a small minority were instead making millions of pounds by ripping off the taxpayer. With conflicts of interest, defective goods and exorbitant profit margins, it has been greedy and grubby and this Conservative Government have enabled it all. As taxpayers, we want our money back, so Labour will create a covid corruption commissioner to chase down every pound we can. Does the Minister have any idea just how angry people are that our country has been taken for a ride?
Jeremy Hunt
I am grateful to my hon. Friend for asking that question, because the UK, and London in particular, has become the global crypto hub. To make sure that the market can really take off in the way that was intended—in a responsible way—we need to regulate it, which is why we have introduced regulations on stablecoins and on the promotion of crypto services. My hon. Friend the Economic Secretary to the Treasury would be more than happy to meet her.
Darren Jones (Bristol North West) (Lab)
Merry Christmas to you and to the House, Mr Speaker. Let me start by thanking the Chancellor for his kind words about the late Lord Darling, which I think show the gratitude of Members from across the House for his lifetime of public service.
The public have a right to know why so many billions of pounds of their taxes have been wasted by this Government. Baroness Mone has claimed today that Conservative Ministers knew about her personal connections to the company PPE Medpro from the very beginning. So why did the Government not correct the record when a misleading picture was being painted in the media about Baroness Mone’s personal connection to PPE Medpro in the first place?
Philip Dunne (Ludlow) (Con)
Since the Prime Minister’s speech on net zero in September, Nissan has announced a £2 billion investment in Sunderland, which comes hot on the heels of Tata’s £4 billion investment in batteries. EDF Masdar has announced an £11 billion investment in offshore wind in Dogger Bank. In his autumn statement, the Chancellor announced a tripling of tidal energy contracts for difference. We had 11 hydrogen projects announced last week. There are six companies bidding for small modular reactors. [Interruption.] Is it not the case that, hot on the heels of yesterday’s announcement of a £6 billion allocation of energy efficiency funding and the carbon border adjustment mechanism—
Mr Speaker
Order. We had this last time with you. I’m sorry, but I am trying to be generous because it is Christmas. Do not take advantage of other Members; I still have others to get in. It is just not fair, and it is very selfish to carry on when I have asked you not to. I do not find it acceptable. I look forward to the apology shortly. Would someone like to answer that question, briefly?
Jeremy Hunt
I thank my right hon. Friend for his question and for his campaigning on these issues. I just note that on electric vehicle manufacturing alone, the Society of Motor Manufacturers and Traders says that in the past year we have had more investment pledged for UK electric vehicles than in the previous seven years combined.
Autumn Statement
Lindsay Hoyle Excerpts(1 year ago)
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Mr Speaker
Before I call the Chancellor, it may help the House if I set out how proceedings on the autumn statement will unfold. Once the Chancellor has delivered his statement, copies of the resolutions relating to the statement will be made available in the Vote Office and online. I will then call the shadow Chancellor and other hon. Members to ask questions. This will follow the usual pattern for a ministerial statement. At the end of questions on the statement, the Chancellor will be called to move a motion under section 5 of the Provisional Collection of Taxes Act 1968. The question on that motion must be put without debate.
We will then proceed to a debate on the autumn statement resolutions. A Minister will move the first of the resolutions and open the debate. The debate will take place over three days, concluding on Monday. At the end of the debate on Monday, the question on the first of the resolutions will be disposed of. The questions on the remaining resolutions will then be taken formally without further debate.
The Chancellor of the Exchequer (Jeremy Hunt)
I come today with good news: it is my wife’s birthday and, unlike me, she is looking younger every year.
I turn to the statement. After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track. We have supported families with rising bills, cut borrowing and halved inflation. Rather than a recession, the economy has grown. Rather than falling as predicted, real incomes have risen. Our plan for the British economy is working, but the work is not done. Others proposed a more short-term approach, but we have not made unaffordable pay offers to the unions, we have not stopped new oil and gas exploration, and we have not increased borrowing by £28 billion a year. That would have pushed inflation up just when we need to bring it down. Instead, under this Prime Minister, we take decisions for the long term.
In today’s autumn statement for growth our choice is not big government, high spending and high tax, because we know that that leads to less growth, not more. Instead, we reduce debt, cut taxes and reward work. We deliver world-class education, we build domestic sustainable energy, and we back British business with 110 growth measures. Do not worry; I am not going to go through them all—[Interruption.] Well, I will if you like! In summary, they remove planning red tape, speed up access to the national grid, support entrepreneurs raising capital, get behind our fastest-growing industries, unlock foreign direct investment, boost productivity, reform welfare, level up opportunity to every corner of the country, and cut business taxes.
The Office for Budget Responsibility says that the combined impact of these measures will raise business investment, get more people into work, reduce inflation next year and increase GDP, but Conservatives also know that a dynamic economy depends on the energy and enterprise of people more than any diktats or decisions by Ministers, so today’s measures do not just remove barriers to investment; they reward effort and work. I will go through the measures in three parts. In the first, I will use updated OBR forecasts to show the progress that we are making against the Prime Minister’s economic priorities. The second part will set out growth measures to back British business. Finally, I will conclude with measures to make work pay.
Before I start with the forecasts, I want to express my horror at the murderous attack on Israeli citizens on 7 October and the subsequent loss of life on both sides. I will remember for the rest of my life, as I know many other hon. Members will, being taken to Auschwitz by the Rabbi Barry Marcus and the remarkable Holocaust Educational Trust. I am deeply concerned about the rise of antisemitism in our country, so I am announcing up to £7 million over the next three years for organisations such as the Holocaust Educational Trust to tackle antisemitism in schools and universities. I will also repeat the £3 million uplift to the Community Security Trust. When it comes to antisemitism and all forms of racism, we must never allow the clock to be turned back.
I now move on to the OBR’s economic and fiscal forecasts, and I thank Richard Hughes and his team for their sterling work in preparing them. Three of my right hon. Friend the Prime Minister’s five pledges at the start of the year were economic: to halve inflation, grow the economy and reduce debt. Today I can report to the House that we are delivering on all three.
Let’s start with inflation. The shadow Chancellor did not mention it in her conference speech. My conference speech was before hers, so all she had to do was a bit of copying and pasting, which I have heard she is good at. But it speaks volumes that during the worst global inflation shock for a generation, it did not even get a mention. Well, if controlling inflation isn’t a priority for Labour, it is for us.
When the Prime Minister and I took office, inflation was at 11.1%; last week, it fell to 4.6%. We promised to halve inflation and we have halved it. Core inflation is now lower than in nearly half of the economies in the EU, and the OBR says that headline inflation will fall to 2.8% by the end of 2024, before falling to the 2% target in 2025. I will not take risks with inflation, and the OBR confirms that the measures I take today make inflation lower next year than it would otherwise have been. I thank the independent Bank of England Monetary Policy Committee for its crucial role in bringing inflation down, and we will continue to back it to do whatever it takes until the job is done. But as we do, we will continue to support families in difficulty, and today I add four further measures to help with the cost of living.
First, for those on the lowest incomes, I understand the concerns some have about the effect on work incentives of matching benefit increases to inflation, and I know there has been some speculation that we would increase benefits next year by the lower October figure for inflation. But cost of living pressures remain at their most acute for the poorest families, so instead the Government have decided to increase universal credit and other benefits from next April by 6.7%, in line with September’s inflation figure, an average increase of £470 for 5.5 million households next year—vital support to those on the very lowest incomes from a compassionate Conservative Government.
Secondly, because rent can constitute more than half the living costs of private renters on the lowest incomes, I have listened closely to many colleagues as well as the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice UK and the Joseph Rowntree Foundation, who said that unfreezing the local housing allowance was an “urgent priority”. I will therefore increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year.
Thirdly, although I am going to increase duty on hand-rolling tobacco by an additional 10% above the tobacco duty escalator, I know that for many people going to the pub has become more expensive. I have listened closely to the persuasive arguments on alcohol duties from my hon. Friend the Member for Moray (Douglas Ross) and my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), fierce champions of the Scotch whisky industry. I have also listened to defenders of the great British pint such as my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) and my hon. Friend the Member for Buckingham (Greg Smith), to Councillor Jane Austin who is a big supporter of the Jolly Farmer pub in Bramley in my constituency, and indeed to The Sun newspaper. So as well as confirming our Brexit pubs guarantee, which means the duty on a pint is always lower than in the shops, I have decided to freeze all alcohol duty until 1 August next year; that means no increase in duty on beer, cider, wine or spirits.
Finally, pensioners. The triple lock has helped to lift 250,000 older people out of poverty since it was instituted by a Conservative Government in 2011 and has been a lifeline for many during a period of high inflation. There have been reports that we would uprate it by a lower amount, to smooth out the effect of high public sector bonuses in July, but that would have been particularly difficult for 1 million pensioners whose only income is from the state.
So instead, today we honour our commitment to the triple lock in full. From April 2024, we will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year. That is one of the largest ever cash increases to the state pension, showing that a Conservative Government will always back our pensioners.
Including today’s measures, our total commitment to easing cost of living pressures has risen to £104 billion. That includes paying around half the cost of the average energy bill since last October and amounts now to an average of £3,700 per household. We are able to do that only because we reduced the deficit by 80% ahead of the pandemic, which the Labour party might reflect on, having opposed us every step of the way.
Next, I turn to my right hon. Friend the Prime Minister’s pledge to reduce debt. Before I took difficult decisions at last year’s autumn statement, debt was predicted to rise to almost 100% of GDP by the end of the forecast. Since then, the economy has outperformed expectations and I have taken difficult decisions to reduce borrowing. As a result, headline debt is now predicted to be 94% of GDP by the end of the forecast.
The OBR today forecasts that underlying debt will be 91.6% of GDP next year, 92.7% in 2024-25 and 93.2% in 2026-27, before declining in the final two years of the forecast to 92.8% in 2028-29. That is lower in every year compared with forecasts in the spring. We therefore meet our fiscal rule to have underlying debt falling as a percentage of GDP in the final year of the forecast, with double the headroom compared with the OBR’s March forecast. We will continue to have the second lowest Government debt in the G7—lower than the United States, Canada, France, Italy or Japan.
I turn to borrowing. The right hon. Member for Leeds West (Rachel Reeves) said that when it comes to borrowing, she “will take it up” by £28 billion a year. Indeed, she has opposed every decision we have made to reduce our borrowing. The Government will bring borrowing down, because, as the late Lord Lawson said, borrowing is just a deferred tax on future generations.
I see the Leader of the Opposition shaking his head. In fact, we have something in common: both he and I wanted to make a Jeremy Prime Minister. In fairness, his party and mine are probably equally relieved that we failed but, whereas this Jeremy is growing the economy, his Jeremy would have crashed it.
The numbers show the contrast. According to the OBR, borrowing is lower this year and next, and on average across the forecast by £0.7 billion every year compared with the spring Budget forecasts. It falls from 4.5% of GDP in 2023-24 to 3.0%, 2.7%, 2.3%, 1.6% and 1.1% in 2028-29. That means we also meet our second fiscal rule that public sector borrowing must be below 3% of GDP, not just by the final year, but in almost every year of the forecast.
Some of that improvement is from higher tax receipts from a stronger economy, but we also maintain a disciplined approach to public spending. As I set out in the spring Budget, resource spending will increase by 1% a year from 2025-26 in real terms, and we are sustaining the record 2020 increase in capital spending in cash terms until the end of the forecast. Within this, we will meet our NATO commitment to spend 2% of GDP on defence—critical at a time of global threats to the international order, most notably from Putin’s evil war in Ukraine.
We also support a group of people to whom we owe our freedom: our brave veterans. I will extend national insurance relief for employers of eligible veterans for a further year, and provide £10 million to support the Veterans’ Places, Pathways and People programme. I thank our excellent Minister for Veterans’ Affairs, my right hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), for his championing of their cause.
We have shown that we are prepared to increase funding for vital public services, with record numbers of police officers, doctors, nurses and teachers. We are nearly doubling the numbers of doctors and nurses we train, having given the NHS its first ever long-term workforce plan, as I promised a year ago. We are also tackling the biggest single preventable cause of mortality that the NHS has to deal with by bringing forward plans for a smokefree generation.
However, alongside extra funding and support, we need to see reform. We need a more productive state, not a bigger one. That is why I want the public sector to increase productivity growth by at least half a percent. a year—the level at which the size of our state starts to reduce as a proportion of GDP. I have already announced plans to cap and reduce the size of the civil service to pre-pandemic levels. I pay tribute to the excellent former Chief Secretary to the Treasury, my right hon. Friend the Member for Salisbury (John Glen), who started our brilliant public sector productivity programme. That will now be pursued by his formidable successor, my hon. Friend the Member for Sevenoaks (Laura Trott), who has already been with me to meet police, fire and ambulance personnel to understand why bureaucracy is holding them back.
Through that vital work, we will ensure that, over time, the growth in public spending is lower than the growth in the economy, while always protecting the services that the public value. I will also provide His Majesty’s Revenue and Customs with the resources it needs to ensure that everyone pays the tax they owe, raising an additional £5 billion across the forecast period.
My right hon. Friend the Prime Minister also promised to grow the economy. Since 2010, despite inheriting what was then the worst recession since the second world war, Conservative Administrations have presided over faster growth than many of our major competitors, including Spain, Italy, France—[Interruption.] Well, the Opposition do not like to hear this, but let me tell them the list: Spain, Portugal, France, Italy, Netherlands, Austria, Germany and Japan. We have grown faster than all of them since 2010.
However, all those countries have faced a pandemic and an energy shock. As a result, last autumn the OBR forecast a recession in which the economy would shrink by 1.4% this year. Instead, it grew—in fact, it has grown faster than the euro area. Revised numbers from the Office for National Statistics now say that the economy is 1.8% larger than it was pre-pandemic. Looking ahead, the OBR expects the economy to grow by 0.6% this year and 0.7% next year. After that, growth rises to 1.4% in 2025, then 1.9%, 2%, and 1.7% in 2028.
If we want those numbers to be higher, we need higher productivity. The private sector is more productive in countries such as the United States, Germany and France because it invests more—on average 2 percentage points more of GDP every year. The 110 measures that I take today help to close that gap by boosting business investment by £20 billion a year. They do not involve borrowing more and ramping up debt, as some advocate. Instead, they unlock investment, with supply-side reforms that back British business in the following areas.
First: skills. No economy can prosper without investing in the potential of its people. Despite strong opposition, we took the difficult decisions to reform our schools. England’s nine to 10-year-olds are now the fourth best readers in the world, and since 2015, our 15 to 16-year-olds have risen seven places in the OECD rankings for maths— not least thanks to the efforts of my brilliant right hon. Friend the Member for Bognor Regis and Littlehampton (Nick Gibb). However, 9 million adults in England still have low basic literacy or numeracy skills, so last month the Prime Minister set out the new advanced British standard to ensure that all school leavers reach minimum standards in maths and English.
While the Labour party wants to reduce the number of apprentices, we want to increase it. Following engagement with Make UK and others, I am announcing a further £50 million of funding over the next two years to pilot ways to increase the number of apprentices in engineering and other key growth sectors where there are shortages. [Hon. Members: “Is that it?”] There are 110 of these measures, so be patient, folks.
I will move on to planning. It takes too long to approve infrastructure projects and business planning applications. Many businesses say that they would be willing to pay more if they knew their application would be approved faster. Therefore, from next year, working with the Secretary of State for Levelling Up, Housing and Communities, I will reform the system to allow local authorities to recover the full costs of major business planning applications in return for being required to meet guaranteed faster timelines. If they fail, fees will be refunded automatically, with the application being processed free of charge—a prompt service or your money back, just as would be the case in the private sector.
Many planning applications are for house building. The Leader of the Opposition told us that he wanted to be a builder, not a blocker. That did not last long: just a few months later, Labour blocked reforms to the rules on nutrient neutrality, shamelessly preventing 100,000 houses from being built. Conservatives, on the other hand, are the builders, with more homes being completed in 2021-22 than in any single year of the last Labour Government.
Today, we take further decisions to unlock the building of more homes. We will invest £110 million over this year and next to deliver high-quality nutrient mitigation schemes, unlocking 40,000 homes. We will invest £32 million to bust the planning backlog and develop fantastic new housing quarters in Cambridge, London and Leeds, which will lead to many thousands of additional dwellings. We will allocate £450 million to the local authority housing fund to deliver 2,400 new homes, and we will consult on a new permitted development right to allow any house to be converted into two flats provided the exterior remains unaffected.
It is also taking too long for clean energy businesses to access the electricity grid, so after talking to businesses such as National Grid, Octopus Energy and SSE, we today publish our full response to the Winser review and the connections action plan. These measures will cut grid access delays by 90% and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure. Taken together, those planning and grid reforms are estimated to accelerate around £90 billion of additional business investment over the next 10 years.
Next, on foreign direct investment, I am extremely grateful to Lord Harrington for his excellent report on how to increase foreign direct investment. We accept all his headline recommendations. In particular, we will put in place a concierge service for large international investors modelled on the best such services offered by our competitors, and we will increase funding for the Office for Investment to deliver it.
I now turn to reforms to pension funds that will increase the flow of capital going to our most promising growth companies in a way that also improves outcomes for savers. I will take forward my Mansion House reforms starting with measures to consolidate the industry. By 2030, the majority of workplace defined contribution savers will have their pension pots managed in schemes of over £30 billion, and by 2040 all local government pension funds will be invested in pools of £200 billion or more. I will support the establishment of investment vehicles for pension funds to use, including through the LIFTS competition—the long-term investment for technology and science competition, a new growth fund run by the British Business Bank—and by opening the Pension Protection Fund as an investment vehicle for smaller defined benefit pension schemes.
I will also consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose to do so, meaning that people can move to having one pension pot for life. These reforms could unlock an extra £75 billion of financing for high-growth companies by 2030 and provide an extra £1,000 a year in retirement for an average earner saving from 18. Alongside this, I am proposing further capital market reforms to boost the attractiveness of our markets and make sure the UK remains one of the most attractive places to start, grow and list a company. As part of this, I will explore options for a NatWest retail share offer in the next 12 months, subject to market conditions and achieving value for money. It’s time to get Sid investing again.
I now turn to measures to support our most innovative industries. In the last decade under the Conservatives, we have grown to become the third largest technology sector in the world—double the size of Germany and three times the size of France. We have the biggest life sciences industry in Europe, and we are Europe’s third largest generator of renewable electricity after Germany and Norway, and the eighth largest manufacturer in the world. When it comes to tech, we know that artificial intelligence will be at the heart of any future growth, and I want to make sure that our universities, scientists and start-ups can access the compute power they need. As such, building on the success of the supercomputing centres in Edinburgh and Bristol, I will invest a further £500 million over the next two years to fund further innovation centres to help make us an AI powerhouse.
Our creative industries already support Europe’s largest film and TV sector. This year’s all-Californian blockbuster “Barbie” was filmed in the constituency of my hon. Friend the Member for Watford (Dean Russell)—where, of course, the sun always shines. Even more could be invested in visual effects if we increased the generosity of the film and high-end TV tax credits, so I will today launch a call for evidence on how to make that happen.
British-discovered vaccines and treatments saved more lives across the world during the pandemic than those from any other country, and I am incredibly proud of our life sciences industry. To further support research and development, I am creating a new, simplified R&D tax relief that combines the existing R&D expenditure credit and small and medium-sized enterprise schemes. I will also reduce the rate at which loss-making companies are taxed within the merged scheme from 25% to 19%, and lower the threshold for the additional support for R&D-intensive loss-making SMEs that I announced in the spring to 30%, which will benefit a further 5,000 SMEs. And because 2028 marks the centenary of the invention of penicillin by Alexander Fleming, I am giving £5 million to Imperial College and Imperial College Healthcare NHS Trust to set up a Fleming centre to inspire the next generation of world-changing innovations.
International investors say that the biggest thing we could do for our advanced manufacturing and green energy sectors is announce a longer-term strategy for their industries, so with the Secretaries of State for Business and Trade and for Energy Security and Net Zero, I am today publishing those plans. I confirm that we will make available £4.5 billion of support over the five years to 2030 to attract investment into strategic manufacturing sectors. That includes: £2 billion of support for zero-emission investments in the automotive sector, which has been warmly welcomed by Nissan and Toyota; £975 million for aerospace, building on decades of success from firms such as Airbus and Rolls-Royce; and £520 million for life sciences, building on the strength of world-class British pharma companies such as AstraZeneca and GSK. We will also provide £960 million for the new green industries growth accelerator, focused on offshore wind; electricity networks; nuclear; carbon capture, utilisation and storage; and hydrogen. Those targeted investments will ensure that the UK remains competitive in sectors where we are already leaders, and innovative in sectors where we are not. Taken together, that support will attract an estimated £2 billion of additional investment across our fastest-growing innovation sectors every year over the next decade.
One reason why we support our manufacturing and clean energy sectors is that they help to level up growth across the United Kingdom, so I now turn to further levelling-up measures. In the spring, I announced that we would deliver 12 new investment zones—12 mini Canary Wharfs—where Government, industry and research institutes will collaborate across the UK. Since then, the Exchequer Secretary, my hon. Friend the Member for Grantham and Stamford (Gareth Davies), has done outstanding work across Government to bring that vision to fruition. Following tenacious representations from my hon. Friend the Member for Ynys Môn (Virginia Crosbie)—no Chancellor’s speech would be complete without a mention of my hon. Friend—and from the unstoppable Mayor of Tees Valley, I have today decided to extend the financial incentives for investment zones and the tax reliefs for freeports from five years to 10 years. I will also set up a £150 million investment opportunity fund to catalyse investment into that programme.
On Monday, I confirmed that there will be a new investment zone in West Yorkshire. Today, having listened to representations from the west midlands salesman-in-chief Andy Street, as well as my hon. Friends the Members for Mansfield (Ben Bradley) and for Bury North (James Daly), I am announcing three further investment zones focused on advanced manufacturing in the west midlands, east midlands and Greater Manchester. Together, local partners expect that those investment zones will help catalyse over £3 billion of private investment and 65,000 new jobs. Having listened to my hon. Friends the Members for Wrexham (Sarah Atherton) and for Clwyd South (Simon Baynes), I can announce a second investment zone in Wales in the fantastic region of Wrexham and Flintshire, which I will visit tomorrow.
We are publishing new devolution deals with four areas, including Hull and East Yorkshire, and offering devolved powers to even more county areas. One of those areas will be the leafiest and most charming county in the country, namely Surrey, where of course the Leader of the Opposition grew up—we do not get everything right. On Monday, we saw the announcement of £1 billion of funding through round 3 of the levelling-up fund, supporting projects following the campaigning efforts of Members from Keighley, Dewsbury, Doncaster, Scunthorpe—and of course, Mr Speaker, Chorley. I can also confirm that we will proceed with over £50 million of funding for high-quality regeneration projects in communities such as Bolsover, Monmouthshire, Warrington and Eden Valley, all of which have particularly effective local MPs as their champions. Because we are proudly the Conservative and Unionist party, I am announcing £80 million for the new levelling-up partnerships in Scotland, £500,000 to support the Hay festival in Wales, and £3 million of additional funding to support the successful tackling paramilitarism programme in Northern Ireland.
I turn next to small businesses—I ran my own for 14 years, and have always known that every big business was a small business once. The Federation of Small Businesses says that the biggest thing I could do to help its members is end the scourge of late payments. We passed the Procurement Act 2023, which means that the 30-day payment terms that are already set for public sector contracts will automatically apply throughout the subcontractor supply chain, but from April 2024 I will also introduce a condition that any company bidding for large Government contracts should demonstrate that it pays its own invoices within an average of 55 days. That number will reduce progressively to 30 days.
Any small business will also say that the biggest frustration it faces is the tax it pays before making a penny of profit, not least business rates. The Government have already taken a third of properties completely out of rates through small business rates relief. We have frozen the tax rate for the last three years, at a cost of £14.5 billion; we have removed downwards caps from transitional relief; and for retail, hospitality and leisure businesses, we have introduced a one-year 75% discount on business rates up to £110,000. Those measures have saved the average independent shop over £20,000. It is not possible to continue with temporary support measures forever, but while the standard multiplier—which applies to high-value properties—will rise in line with inflation, I have today decided that we will freeze the small business multiplier for a further year.
Following extensive discussions with the FSB and many colleagues in this House, I have also decided to extend the 75% business rates discount for retail, hospitality and leisure for another year. This will save the average independent pub over £12,800 next year and, at a cost of £4.3 billion, is a large tax cut that recognises the role of pubs and high street shops in our communities. I thank my hon. Friends the Members for Stockton South (Matt Vickers), for Barrow and Furness (Simon Fell) and for East Devon (Simon Jupp) for their tenacious campaigning on this issue.
Finally, I turn to the smallest of all businesses—those run by the self-employed. These are the people who literally kept our country running during the pandemic: the plumbers who fixed our boilers in lockdowns, the delivery drivers who brought us our shopping and the farmers who kept food on our plates. As part of our plans to grow the economy, I want to reform and simplify taxes paid by the self-employed, so today I am announcing a major reform of one of those taxes. It is one most people have not heard of, but it is a big deal for those who have to pay it.
Class 2 national insurance is a flat-rate compulsory charge, currently £3.45 a week, paid by self-employed people earning more than £12,570, which gives state pension entitlement. Today, after careful consideration and in recognition of the contribution made by self-employed people to our country, I can announce that we are abolishing class 2 national insurance all together, saving the average self-employed person £192 a year. Access to entitlements and credits will be maintained in full and those who choose to pay voluntarily will still be able to do so, but this change simplifies and cuts tax for nearly 2 million self-employed people, while protecting the interests of those on the lowest pay.
Because we value their work, I am also taking one further step for the self-employed. They also pay class 4 national insurance at 9% on all earnings between £12,570 and £50,270. Today, I have decided to cut that tax by one percentage point to 8% from April. Taken together with the abolition of the compulsory class 2 charge, these reforms will save around 2 million self-employed people an average of £350 a year from April.
We are backing small businesses by freezing their business rates, extending retail, hospitality and leisure relief, abolishing compulsory class 2 national insurance payments and reducing class 4 national insurance by one percentage point in today’s autumn statement for growth. Small businesses work so hard for us, and a Conservative Government today are working hard for them.
I turn now to my final measure to back British business. As I have said, since 2010 we have seen the second highest growth in investment of any G7 country. However, if we are to raise productivity, we need to increase business investment further. In 2021, my right hon. Friend the Prime Minister introduced the super-deduction for large businesses to further stimulate business investment, and this spring I introduced full expensing for three years. This means that for every £1 million a company invests, it gets £250,000 off its tax bill in the very same year.
The CBI, Make UK, the British Chambers of Commerce, Energy UK and 200 other business leaders from companies including BT Openreach, Siemens and Bosch, have said that making this measure permanent would be the “single most transformational” thing I could do for business investment and growth. The Centre for Policy Studies says it would
“maximise business investment, boost productivity and deliver…higher levels of GDP”.
But because it costs £11 billion a year, I made it clear that I would only do so when it was affordable. Well, with inflation halved, borrowing down and debt falling, today I deliver on that promise: I will today make full expensing permanent. That is the largest business tax cut in modern British history. It means we have not just the lowest headline corporation tax rate in the G7, but its most generous capital allowances.
The OBR says this will increase annual investment by around £3 billion a year and a total of £14 billion over the forecast period. We on this side of the House know that the way to back British business is not to borrow more or subsidise more, but to increase the incentives to invest. We do that today by introducing one of the most generous tax reliefs anywhere in the world, with a huge boost to British competitiveness in an autumn statement for growth—skills, planning and infrastructure reform, pension fund reform, support for innovation industries, levelling up, backing small business and full expensing.
Under Labour, business investment was 9.3% of GDP in real terms. Since 2010, it has been 9.8% of GDP. But today we go further because, taken together, the overall impact of today’s growth measures will be to increase business investment in the UK economy by around £20 billion a year within the decade—nearly 1% of GDP at today’s level. This is the biggest ever boost for business investment in modern times, a decisive step towards closing the productivity gap with other major economies, and the most effective way we can raise wages and living standards for every family in the country.
As well as backing business, Conservatives know that you need to back the people without whose effort no businesses can succeed: the entrepreneur taking risks, the builder working weekends, the nurse working nights, and the jobseeker leaving benefits behind. I will therefore conclude with three further supply-side reforms designed to improve the incentives to work in a modern, dynamic economy.
I begin with welfare, and I want to start by thanking the outstanding Work and Pensions Secretary for his help in developing these reforms. He builds on the work of my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), who introduced universal credit. Those reforms helped reduce unemployment, which has fallen by over 1 million, but Opposition Members, to their shame, voted against them 30 times. They think compassion is about giving money; we think it is about giving opportunity.
However, post pandemic, we still have over 7 million adults of working age, excluding students, who are not working, despite there being 1 million vacancies in the economy. Many can and want to work, but our system makes that too hard. In the spring Budget, I announced 30 hours of free childcare for working parents of one and two-year-olds. That plan, still opposed by the party opposite, starts rolling out in April. It will help tens of thousands of parents return to work without having to worry about damaging their career prospects.
Today, we focus on helping those with sickness or disability and the long-term unemployed. Every year, we sign off over 100,000 people on to benefits with no requirement to look for work because of sickness or disability. That waste of potential is wrong economically and wrong morally. So with the Secretary of State for Work and Pensions, last week I announced our back to work plan. We will reform the fit note process so that treatment rather than time off work becomes the default, we will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic, and we will spend £1.3 billion over the next five years to help nearly 700,000 people with health conditions find jobs. Over 180,000 more people will be helped through the universal support programme, and nearly 500,000 more people will be offered treatment for mental health conditions and employment support.
Over the forecast period, the OBR judges that these measures will more than halve the flow of people who are signed off work with no work search requirements. At the same time, we will provide a further £1.3 billion of funding to offer extra help to the 300,000 people who have been unemployed for over a year without any sickness or disability. But we will ask for something in return. If, after 18 months of intensive support, jobseekers have not found a job, we will roll out a programme requiring them to take part in mandatory work placement to increase their skills and improve their employability. If they choose not to engage with the work search process for six months, we will close their case and stop their benefits.
Taken together with the labour supply measures I announced in the spring, the OBR says we will increase the number of people in work by around 200,000 by the end of the forecast period, permanently increasing the size of the economy. I know that some on the Opposition Benches would prefer to fill those vacancies in a different way; they hanker after a more liberal immigration regime or even dream of bringing back free movement. But Conservatives say that we should unlock the potential we have right here at home. We do that with the biggest set of welfare reforms in a decade in today’s autumn statement for growth.
If we are to incentivise work, we must also tackle low pay. People who get up early, put in the hours and work hard for their families deserve to be paid fairly. Since 2010, those on the minimum wage—now the national living wage—have seen their hourly wage go up from £5.80 an hour to £10.42 an hour. That is a real-terms increase of more than 20%. Because we have also doubled the threshold at which they pay tax or national insurance, their after-tax income has gone up not by 20%, but by 25%—more than for any other income group.
Today, I confirm that we will go further and accept the Low Pay Commission’s recommendation to increase the national living wage by 9.8% to £11.44 an hour. That is the largest-ever cash increase in the national living wage, worth up to £1,800 for a full-time worker. Since the national living wage has been introduced, the proportion of people on low pay—defined as earning less than two thirds of national median hourly income—has halved, but at the new rate of £11.44 an hour it delivers our manifesto commitment to eliminate low pay altogether. That means that by next year someone working full time on the national living wage will see their real take-home, after-tax pay go up not by 25%, but by 30% compared with 2010.
And that is the difference: the Labour party tried to reduce poverty by tinkering with benefits and tax credits—they wanted to move people from just below the poverty line to just above it—but Conservatives know that the best way to tackle poverty is through work. By reforming the welfare system, reducing the number of workless households and tackling low pay, we have helped lift 1.7 million people out of absolute poverty since 2010, because a central part of our plan for growth is to make work pay.
I move to the final supply-side measure in today’s autumn statement for growth. Because of the difficult decisions that we have taken in the last year, today’s OBR forecast shows that borrowing will be lower than forecast in the spring, debt as a proportion of GDP will be lower than forecast in the spring, inflation will continue to fall and our fiscal headroom has doubled. I said I would cut taxes when we could, but only responsibly and only in a way that did not fuel inflation. The OBR today confirms that I can deliver a package that does that.
For businesses, I have today delivered the biggest business tax cut in modern British history, with the most competitive investment allowances of any large economy. For the self-employed, I have simplified and reformed their taxes by abolishing the compulsory class 2 charge and cutting class 4 national insurance. But high employment taxes on 27 million people working in the public and private sectors also disincentivise the hard work that we should be encouraging. On top of income tax at 20%, they pay 12% national insurance on earnings between £12,570 and £50,270. That is a 32% marginal tax rate. If we want people to get up early in the morning, if we want them to work nights, and if we want an economy where people go the extra mile and work hard, we need to recognise that their hard work benefits us all.
So today I am going to cut the main 12% rate of employee national insurance. If I cut it by one percentage point to 11%, that would be an extra £225 in the pockets of the average worker every year. But instead I am going to go further and cut the main rate of employee national insurance by two percentage points, from 12% to 10%. That change will help 27 million people. It means that someone on the average salary of £35,000 will save over £450. For the average nurse, it is a saving of £520. For the typical police officer, it is a saving of £630 every single year. I would normally bring in such a measure for the start of the new tax year in April, but instead I will tomorrow introduce urgent legislation to bring it in from 6 January, so that people can see the benefit in their payslips at the start of the new year.
The OBR says that reducing a tax on work means more people in work, and it says that today’s measures on national insurance alone will lead to the equivalent of 94,000 full-time employees in our economy, because lower tax means higher growth. That is the difference between those of us on this side of the House and those on that side. In 13 years, Labour raised taxes in every single Budget, but Conservatives cut taxes when we responsibly can, and today we do just that. We cut taxes to help bigger businesses invest. We cut taxes to help smaller businesses grow. We cut taxes for the self-employed who keep our country running, and from January we cut taxes for 27 million working people whose hard work drives our economy forward.
The best universities, the cleverest scientists and the smartest entrepreneurs have given us Europe’s most innovative economy, but we can be the most prosperous too. In the face of global challenges, we have halved inflation, reduced our debt and grown our economy. As a country, we are sticking to a plan that is working. This autumn statement for growth will attract £20 billion of additional business investment a year in the next decade, bring tens of thousands of people into work and support our fastest growing industries, in a package that leaves borrowing lower, leaves debt lower and keeps inflation falling. We are delivering the biggest business tax cut in modern British history, the largest ever cut to employee and self-employed national insurance, and the biggest package of tax cuts to be implemented since the 1980s. It is an autumn statement for a country that has turned a corner; an autumn statement for growth. I commend it to the House.
Rachel Reeves (Leeds West) (Lab)
Today the Chancellor has lifted the lid on 13 years of economic failure. We were told that this was to be an autumn statement for growth, but the economy is now forecast to be £40 billion smaller by 2027 than the Chancellor said back in March. Growth has been revised down next year, the year after, and the year after that too. The Chancellor claims that the economy has turned a corner, yet the truth is that, under the Conservatives, growth has hit a dead end.
What has been laid bare today is the full scale of the damage that this Government have done to our economy over 13 years, and nothing that has been announced today will remotely compensate. We see mortgages rising, taxes eating into wages, inflation high, with prices still going up in the shops, public services on their knees, and too many families struggling to make ends meet. As the sun begins to set on this divided, out-of-touch, weak Government, the only conclusion that the British people will reach is this: after 13 years of the Conservatives, the economy is simply not working and, despite all the promises today, working people are still worse off.
The centrepiece of today’s autumn statement is a cut in the headline rate of national insurance. I am old enough to remember when the Prime Minister wanted to put up national insurance. As recently as January last year he said:
“We must go ahead with the”
increase in the—
“health and care levy. It is progressive, in…that the burden falls most on those who can most afford it.”
Utter nonsense. It was a tax on working people, and we opposed it for that very reason. Yet again, the Prime Minister is left arguing against himself.
In response to last year’s autumn statement, I warned that the Government were pickpocketing working people through stealth taxes. I have long argued that taxes on working people are too high. Indeed, I said in my conference speech that I want them to be lower. From the Conservatives’ failure to uprate income tax or national insurance bands to their forcing councils to raise council tax, they have pushed the costs of their failure on to others. The British people will not be taken for fools—they know that what has been announced today owes more to the cynicism of a party desperate to cling on to power than to the real priorities of this high tax, low growth Conservative Government—so we can forgive taxpayers for not celebrating when they see the truth behind today’s announcements.
Going into the statement, the Government had already put in place tax increases worth the equivalent of a 10p increase in national insurance, so today’s 2p cut will not remotely compensate for the tax increases put in place by this Conservative Government. The fact is that taxes will be higher at the next election than they were at the last. This is the legacy of the Conservatives, and that is their record.
The Chancellor and the Prime Minister have spent the last two weeks marching their MPs up a hill only to march them down again on inheritance tax. Let us not forget that when they realised that they had money to spend—[Interruption.]
Mr Speaker
Order. Mr Cairns, I have heard you chirping all the way through. Either go and get yourself that cup of tea or be quiet.
Rachel Reeves
When the Government realised that they had money to spend, their first instinct was a tax cut for millionaires. In the end, even they realised that they could not get away with it in the middle of a cost of living crisis. Will the Chancellor tell the House whether cutting inheritance tax is a decision delayed or a decision abandoned?
This autumn statement for growth is now the 11th Conservative economic growth plan from the fifth prime minister, the seventh Chancellor and the ninth Business Secretary. What do those numbers add up to? According to the most recent GDP data, a big fat zero. That is zero growth in the most recent data for the third quarter of this year. The Chancellor mentioned some countries that we are outperforming in growth, but I could not help but notice that he failed to mention any of the many advanced economies that have grown faster than the UK. Over the last 13 years of this low-growth Conservative Government, the UK languishes in the bottom third of OECD countries when it comes to growth. There are 27 OECD economies that have grown faster than us in the 13 years since 2010: the US, Australia, Canada, Sweden, Slovenia and 22 others. In fact, over the next two years, no fewer than 177 economies are forecast by the IMF to grow faster. [Interruption.]
Mr Speaker
It bothers me. I am not being funny. I expect courtesy to be shown to the shadow Chancellor of the Exchequer. Those who do not wish to give that courtesy, please go and find something else to do. My constituents are interested, even if yours are not.
Rachel Reeves
Next year, we are forecast to be the slowest growing economy in the whole of the G7. When it comes to economic growth, under the Tories, we are more world-following than world-beating.
Let us look at how the Conservatives’ record on growth compares to Labour’s record on growth. Under the Conservatives, GDP growth has averaged 1.5% a year. With Labour, it grew by an average of 2% a year in the 13 years that we were last in office. Had the economy continued to grow at the rate it did under Labour, it would now be £150 billion bigger. What is the Government’s economic record? Lower growth and higher borrowing, with debt more than doubling—it is now at almost 100% of GDP. That is a product of their failures over 13 years. A Tory Government who have failed on growth, failed on debt, failed on levelling-up and failed on the cost of living, too. Now they expect the British people to believe them when they say they will turn it all around, when they are the problem, not the solution.
If we are going to grow the economy, we must get more people into work. Let me be clear: people who can work, should work. That is why we have long argued that the work capability assessment needs replacing, because right now it is discouraging people from seeking work. But there is a wider problem that yet again the Government are failing to face up to. Britain is the only country in the G7 where the employment rate still has not returned to pre-pandemic levels, with the increase in the number of people out of the workforce due to long-term health issues costing the taxpayer a staggering £15.7 billion a year. NHS waiting lists have swelled to 7.8 million—an additional half a million since the Prime Minister said he was going to cut them—and 2.6 million people are out of work due to long-term sickness.
A healthy nation is critical to a healthy economy. That is why Labour has pledged to cut hospital waiting lists, investing an additional £1.1 billion a year to deliver 2 million more appointments, scans and operations. It will be funded by abolishing the non-dom tax status and replacing it with a modern scheme for people genuinely living in the UK for short periods. But, once again, we see that that policy has been vetoed by the Prime Minister. The best way to get people back to work is to get our NHS working, but the reality is you can never trust the Tories with our NHS.
The Chancellor has made great fanfare about public sector efficiency and value for money. That is from a Government who have blown £140 million on a discredited Rwanda scheme and yet are not able to send a single asylum seeker there, £7.2 billion of money lost on fraud during the pandemic—all those cheques were signed by the former Chancellor, the current Prime Minister—and £8.7 billion on personal protective equipment that has been written off. High Speed 2 is costing £57 billion, with not a single piece of track going north of Birmingham. No one can trust the Tories with taxpayers' money.
It says it all that after 13 years of Tory Government, there are still nearly 12,000 NHS computers running on outdated software that is vulnerable to cyber-attacks. Ten years ago, when he was Health Secretary, the now Chancellor promised a paperless NHS by 2018, yet today, in 2023, 26 NHS trusts are still using fax machines. Why on earth should people who experience deteriorating public services under this Conservative Government trust them to fix that, when his six years as Health Secretary make him one of the biggest architects of failure? Mr Speaker,
“if you put your hands into people’s pockets and take money out of them, and they do not see visible improvements in the services they receive, they get very angry indeed.”—[Official Report, 14 September 2021; Vol. 700, c. 851.]
Those are not my words but the Chancellor’s words two years ago. I agree with him. The Tories have had 13 years to improve public services and they have failed. This is too little and too late.
I do welcome the Chancellor’s announcement of additional funding to tackle antisemitism and Islamophobia to keep our communities safe, as well as the additional money for the Holocaust Educational Trust. There is no place for hate in our society, and I know that across the House we will work together to eliminate it.
The Chancellor calls this an autumn statement for growth, but it is Labour that has led the agenda on growth. Today, we see that the Conservatives have released their own poor cover version of what we have already announced. The Chancellor is talking about unlocking capital by reforming pensions, but Labour would go further, encouraging investment in British start-up and scale-up firms and introducing measures to ensure the consolidation of pension funds, so that our pensions system gets better returns for savers and for the UK economy.
On planning, the Conservatives are following Labour’s lead on taking money off bills for communities that host grid infrastructure and on speeding up planning decisions. What has taken them so long? Labour will get Britain building again, with a once-in-a-generation set of reforms to accelerate the building of our country’s national infrastructure and to build housing, too. We will fast-track battery factories, our life sciences and 5G technology, to grow our economy and provide good jobs in every part of our country.
We welcome the Chancellor’s announcement that he will make full expensing permanent—another thing that we have been calling for. But that does not make up for the years of uncertainty that businesses have faced, with taxes going up and down like a yo-yo. Small and medium businesses, which play a pivotal role in growing our economy, are left exposed to the Tories’ economic volatility. Labour’s partnership with business will get our economy firing on all cylinders. That is why this week we established a new British infrastructure council, with key investors in the UK economy focused on unlocking private investment by addressing the delivery challenges that businesses face when investing in Britain. Through Labour’s new national wealth fund, we will work alongside the private sector to back the growth of British industries, so that we can make the crucial transition to a zero-carbon economy. For every pound of public investment, we will leverage in three times as much private investment, while also getting a return for taxpayers. Labour’s plan will boost our economy, get debt falling and make working people better off.
If we listened to Members on the Government Benches, we would believe that the cost of living crisis was behind us. But inflation is still double the Bank of England’s target rate. I know the importance of low and stable inflation from my time as an economist at the Bank of England. It is welcome that the Chancellor has accepted this year’s recommendations from the Low Pay Commission—which we set up—on the minimum wage, but the reality of the Conservatives’ record is that average wages for working people have been held back. Under this Government, real average weekly wages have increased by just 3% in 13 years, compared with a 27% increase under the last Labour Government—worth an additional £120 every week for someone going out to work every day. Today is Equal Pay Day, so it is important to recognise that the living standards of working women have also been held back by a gender pay gap that I am determined to close.
The Chancellor and the Prime Minister say that the cost of living crisis has been dealt with. Everything might look a little better 10,000 feet up in a helicopter, but down here on planet Earth, people are approaching Christmas and the year ahead with worry and trepidation. The cost of living crisis has hit us harder because Tory mismanagement has left us so exposed. Some 11 million UK households do not have enough savings to cover three weeks of living expenses if they need it. Working families have been skating on thin ice for too long. As their resilience has been eroded, so has our national economy’s. Let us not forget that this Government oversaw the closure of our critical gas storage facilities, which left our country more exposed to huge fluctuations in international energy markets. The former Prime Minister—that is, four Prime Ministers ago—cut energy efficiency programmes, leading to higher bills for homeowners.
Just last year, we saw the true cost of the Conservatives when their kamikaze Budget crashed the economy, leading to market turmoil, pensions in peril and a spike in interest rates. Some 1.6 million families will see their mortgage deals end this year. Those re-mortgaging since July have seen their payments rocket by an average of £220 every month. Next year, 1.5 million families will face a similar fate. The Conservatives’ economic recklessness inflicted a Tory mortgage penalty on families across the country. In Wellingborough, families with a mortgage will be expected to find an additional £190 every single month. In Richmond, north Yorkshire, homeowners face £200 more a month on their mortgage. In the Chancellor’s own constituency—though maybe not for long—families with a mortgage will see an average increase of £420 a month because of this Conservative Government’s economic failure. Given increased costs for landlords—the Chancellor knows something about that—renters are paying a high price, too.
The truth is that working people just do not have that sort of money lying around. This is what we have come to after 13 years of Conservative Government. This is the record upon which people will judge the Conservatives at the next election. Tory economic recklessness is not a thing of the past. The British people are still paying the price. We say, never again. Last week, Labour tabled an amendment to the King’s Speech to put our fiscal lock into law. It would prevent a repeat of last year’s economic horror show, yet the Tories voted against it. It is clear that today, Labour is the party of economic and fiscal responsibility. What have the Conservatives learned? Absolutely nothing.
The country is crying out for change. A decaying Government can change their personnel but they have failed to change the direction of our country. In 13 years, we have had seven Chancellors. He would not run a business like this; he cannot run a country like it, either. The Prime Minister cannot even promise that this Chancellor will be in place at the next election. We have all heard the reports: when they first came together, it was a fairytale marriage, but one year on, the relationship has hit the rocks. The pair have grown apart, with rumours running rife that the Prime Minister already has his eyes on someone else.
Whoever this Prime Minister picks as Chancellor, the truth is that Britain is and will be worse off under the Conservatives. They have held back growth, crashed our economy, increased debt, trashed our public services, left businesses out in the cold and made life harder for working people. Our country cannot afford five more years of the Conservatives. The ravens are leaving the tower when even Saatchi & Saatchi says that the Tories are not working. The questions that people will ask at the next election, and after today’s autumn statement, are simple: do me and my family feel better off after 13 years of Conservative Government? Do our schools, hospitals and police work better after 13 years of Conservative Government? In fact, does anything in Britain work better today than when the Conservatives came into office 13 years ago? We all know that working people are worse off under the Conservatives, with growth down, mortgages up, prices up, taxes up and debt up. Their time is up. It is time for change—a changed Labour party to lead Britain and to make working people better off.
Economic Growth
Lindsay Hoyle Excerpts(1 year ago)
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Harriett Baldwin (West Worcestershire) (Con)
It has been said that we enjoyed a holiday from history between the fall of the Berlin wall and 11 September 2001, but unfortunately history has now etched two more horrendous dates into our memories: 24 February 2022 for Russia’s evil invasion of Ukraine, and 7 October 2023 for Hamas’s evil terrorist attack on innocent Israelis. It is against this tumultuous backdrop that we discuss His Majesty’s historic first Gracious Speech—the first King’s Speech for 70 years, and a speech that represents a profound moment in the stability and continuity of our unwritten constitution. That we were able to change our sovereign and change our Prime Minister twice last year and arrive at the Gracious Speech with entirely peaceful transitions of power is something that we should all find profoundly moving.
Our world seems increasingly dangerous, and around the perimeters of NATO we see terrible conflict and lots of mischief being played to stir up conflict. As a proud member of the NATO Parliamentary Assembly, I know how important it is that NATO countries continue to show unity and that our door is open to new members such as Sweden and Finland, as well as, of course, Ukraine, Moldova and, I hope, Georgia; I draw attention to my interest in that country. It is time that Putin realised that annexing his neighbours gives him more NATO on his borders, not less.
In His Majesty’s Gracious Speech, there was not a lot to distract the Treasury Committee; that will come in next week’s autumn statement—and let me add, in case colleagues are interested, that in addition to our Committee’s scrutiny of that statement, the Bank of England and the financial regulators, we currently have open inquiries into access to finance for small and medium-sized businesses, quantitative tightening, sexism in the City and central bank digital currencies.
I am glad that His Majesty, and also the Chancellor today, have emphasised the focus on increasing economic growth. I am glad that everyone now agrees that we should continue to take action to bring down inflation, ease the cost of living for families, and help businesses to fund new jobs and investment. I am also glad that Ministers will help the Bank of England to return inflation to target. It is the Bank of England that has raised mortgage rates, and the Governor of the Bank of England has acknowledged that the only increases that mortgage payers are now seeing are thanks to its efforts to control inflation and are nothing to do with the decisions of our now responsible Treasury.
These decisions will help household finances, reduce public sector debt and safeguard the financial security of our country, about which my constituents care deeply. Tomorrow we should see a milestone in the quest to reduce inflation: the market expects the consumer prices index to decline to 4.7%, and, combined with wage growth of more than 7%, that means that real wage growth has returned to our economy. We have also seen low pay fall dramatically: fewer than 10% of the many millions more people who are now in work are low paid, thanks to the national living wage.
There was one omission from the Gracious Speech, in respect of what I regard as constitutional sexism in our country. No steps were announced to end the indefensible system of “men only” seats in the other place. The 92 hereditary peerages are almost exclusively for men, and the Hereditary Titles (Female Succession) Bill, which I tried to get enacted in the last parliamentary Session in order to change that, sadly did not make it on to the statute book. I shall try again to get a good slot in the ballot for private Members’ Bills, and if I do so, I will reintroduce that Bill. If I do not get a good slot, I will invite my colleagues to take up the baton.
Oral Answers to Questions
Lindsay Hoyle Excerpts(1 year ago)
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Jeremy Hunt
My hon. Friend is right to say that our food industry is very important to food security. We need to keep the priorities constantly under review. Nature is a very important part of that, but so too is food production.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
It is good to be addressing an elected Minister this morning. The consumer organisation Which? has described Tesco and Sainsbury’s as committing “dodgy” practices over food prices and loyalty schemes, and Marks & Spencer has just posted record profits on food sales, yet people up and down the nations of the UK are struggling to pay their food bills. Will the Chancellor tell us which supermarkets he has held to account over rising food prices?
Nigel Huddleston
I thank my hon. Friend for his comments. I am afraid that what we are probably seeing is “same old Labour”—we have heard this all before. What they are proposing did not work in the ’70s and it will not work now. We are very proud of our tax record, particularly taking the lowest paid out of income tax.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
I welcome the Minister to his place. The Government have the opportunity next week to right an historical wrong by abolishing non-dom tax status. The Chancellor could use that money to get our NHS back on its feet and to provide free breakfast clubs for all primary-age children, just as Labour has called for. Is the abolition of non-dom tax status under consideration, or has the Prime Minister ruled it out again, for personal reasons?
Jeremy Hunt
I thank my hon. Friend and, indeed, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for their extensive lobbying on this very important issue. I have had meetings with him and her, and with many others, to discuss it. I reassure him that we are absolutely committed to steel production in the United Kingdom, and to making sure that any changes that are necessary support the local communities that depend on steel production.
Darren Jones (Bristol North West) (Lab)
I welcome the Chief Secretary to the Treasury, the hon. Member for Sevenoaks (Laura Trott) to her place. I look forward to holding her to account.
Last month, the Chancellor’s National Infrastructure Commission said that in order to unlock the billions of pounds of private investment that is available to get our economy growing, we need a Government who can “make good decisions, fast.” Why does the Chancellor think his Government have been making bad decisions slowly for quite so long?
Nadhim Zahawi (Stratford-on-Avon) (Con)
Mr Speaker
While we are basking in those questions, would somebody like to answer them?
Alan Brown (Kilmarnock and Loudoun) (SNP)
Can I ask the Minister why he said he wants particularly to support investment and growth in Sussex? [Interruption.] Is that the Tories reverting to type in terms of the blue wall?
Jeremy Hunt
I thank my hon. Friend for raising the support we give to small businesses. As he will know, supporting small businesses, particularly by rolling over the retail, hospitality and leisure business rates discount of 75%, was a major feature of the autumn statement. We will continue to keep under review anything that we can do to help our small businesses.
Rachel Reeves (Leeds West) (Lab)
I welcome all the new Ministers to their roles and wish them well in them. The covid inquiry is uncovering unsavoury examples of Government mismanagement. We already know that Ministers ignored warnings that their business loan schemes were vulnerable to organised crime, yet the Prime Minister left the vaults open to fraudsters. Will the Chancellor update the House on the latest estimates of taxpayers’ money lost to fraud from the covid support schemes?
Jeremy Hunt
I am answering a lot of the topical questions today because I have a new team. I want to reassure the hon. Lady that we are very aware of the financial pressures that local authorities are under. I am having extensive discussions with the Communities Secretary.
Harriett Baldwin (West Worcestershire) (Con)
On the Conservative Benches we all agree that the way to sustainable economic growth without inflation is through business investment. It is early days, but I wonder whether we have indications of how well full expensing is working for encouraging business investment in this country. Is the Chancellor considering making that full expensing permanent next week at the autumn statement?
Jeremy Hunt
Because we attract wealth creators from all over the world—and this may be uncomfortable for those on the Opposition Benches—we generate huge amounts of tax revenue. Financial services pay for half the cost of running the NHS. I am in favour of getting everyone to pay their fair share of tax, but I will not make reforms that mean less tax revenue for the NHS.
David Linden (Glasgow East) (SNP)
The Westminster-made cost of living crisis is having a devastating impact on household incomes, particularly in Broomhouse, where many young homeowners are seeing mortgage prices soaring. Will the Chancellor use the autumn statement to introduce mortgage interest tax relief to help people across Glasgow to deal with the cost of living crisis?
Jeremy Hunt
As the hon. Gentleman knows, we have taken enormous steps over the past year to help families throughout Scotland to deal with cost of living pressures. If he really thinks that people in Scotland believe that this was a “made in Westminster” problem, when we have experienced an invasion of Ukraine and a global pandemic, I simply say to him in return that after 16 years of SNP rule, GDP per head in Scotland is lower, productivity is falling, employment is lower, and inactivity is higher—[Interruption.]
Mr Speaker
Members need to give me a good reason not to bring them in at the end again: be careful! Let us come to the statement—[Interruption.] Angus, you’ll find the door, I think, in a minute.
Oral Answers to Questions
Lindsay Hoyle Excerpts(1 year, 2 months ago)
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Steve Tuckwell (Uxbridge and South Ruislip) (Con)
Thank you, Mr Speaker. Does my hon. Friend agree with my Uxbridge and South Ruislip constituents that Mayor Khan’s ultra low emission zone expansion hits families and businesses without any significant environmental benefit?
Gareth Davies
Pension funds have a fiduciary responsibility to deliver a financial return but also to be mindful of the values of their pensioners. I have every confidence that pension funds will continue to invest in line with the risk that is presented by climate.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
This Tory Government effectively banned new onshore wind, which is vital for net zero, energy security and getting bills down. We now learn this could change because one fine group of Tory rebels is shouting louder than another group of Tory rebels. There is no leadership, just a Government led by their Back Benchers. Can we finally get an answer from the Government on whether they will dither and delay or join Labour in leading the way and acting on onshore wind?
Andrew Griffith
My hon. Friend has great knowledge of these matters. It was a privilege to work with him and the sector on how we can offer consumers and homebuyers more choice. That choice includes the opportunity of long-term fixed-rate mortgages, and my officials and I continue to work on how we can reduce frictions and barriers to those mortgages.
Darren Jones (Bristol North West) (Lab)
It is estimated that 140,000 households will face a rise in their mortgage bills this month. If someone in a random constituency, say Mid Bedfordshire, were to remortgage their house in the next six months, they could pay an average of £300 more per month compared with before the disastrous Tory mini-Budget this time last year. What can the Chancellor and his team do to reassure the country that, if the Conservatives were to win the next election, they would not just mess up the economy all over again?
Jeremy Hunt
I thank my right hon. Friend for her question. Thanks to the excellent work of the Economic Secretary to the Treasury, we have repealed 100 EU rules and regulations in the financial services sector, and we will look very closely at the opportunities when it comes to tokenisation.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
Last week, the Government admitted that their planned introduction of food import checks from the EU would lead to an increase in inflation, hitting the pockets of ordinary people during the worst cost of living crisis in our lifetimes. In the Labour party, we believe that a bespoke veterinary agreement would cut red tape from business and avoid pushing costs on to ordinary people. Are the Government planning to negotiate a veterinary agreement, and if not, why not?
Jeremy Hunt
I gently say to the hon. Lady, who I have a lot of time for, that the last thing business wants is the upheaval of a huge renegotiation of our trading arrangement with the EU, which is the largest tariff-free free trade deal by volume in the world.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Thank you, Mr Speaker. The Chancellor claims that it is a success that inflation in the UK has risen higher and remains more stubbornly so than in the EU. Adam Posen, formerly of the Bank of England, has underlined that up to 80% of the UK’s additional inflation woes can be laid at the door of Brexit—something the Tories and Labour are united on. All the while, food price inflation is crushing household budgets. So why have this Government done nothing? Why have this Government learned nothing from countries such as France, which has worked with food suppliers to keep food prices capped to help those most in need?
Victoria Atkins
As you know, Mr Speaker, I regard Lancashire as my home, and it would be a delight to return to South Ribble. My hon. Friend has named just a few of the roughly 37,000 pubs in England and Wales—perhaps if we had given her longer she would have been able to name them all. All those pubs will benefit from the Brexit pubs guarantee, which means that the duty on a pint sold in a pub will always be lower than in a supermarket.
Tim Farron (Westmorland and Lonsdale) (LD)
Following the question from my dad’s MP, I confess that I have been to all the pubs that the hon. Member for South Ribble (Katherine Fletcher) mentioned. The biggest burden on pubs in the lakes and the dales is the fact that they cannot find any staff or sufficient staff. It is a crisis that affects the entire hospitality sector, 86% of which say that the recruitment of staff is a major problem for them. The solution will include more affordable homes for workers, more intelligent visa rules and funding new training and skills initiatives. Will the Minister meet me and representatives of the hospitality industry to look at a bespoke package to solve the workforce crisis in the lakes and the dales?
Jeremy Hunt
I very much wish my hon. Friend’s local pubs the best of luck in that competition, second only to my desire to encourage South West Surrey pubs to do well. I want to reassure him that we believe that pubs are central to our national life. That is why we have provided relief on business rates of up to 75% for pubs, and as we heard earlier, the Brexit pubs guarantee helps on their duty pricing.
Rachel Reeves (Leeds West) (Lab)
Last week, thousands of parents were told that their children’s schools were unsafe and at risk of collapse. The defining image of 13 years of Conservative government: classrooms propped up to stop the ceilings from falling in. Capital budgets have halved in real terms since 2010, with warnings ignored and repair programmes slashed. Do this Conservative Government take any responsibility for any of this?
Jeremy Hunt
Let me start by reassuring the right hon. Lady that the vast majority of pupils in the 156 schools affected are at school normally, and we are acting fast to minimise the impact on the rest.
Let me answer the more general question that the right hon. Lady raised. Yes, we made cuts in spending in 2010 because, as she knows well, the last Labour Government left this country with an economic crisis. Despite that crisis, the Department for Education budget has gone up by 15% in real terms, and overall capital spend—
Mr Speaker
Order. This is topicals. All your colleagues on both sides of the House want to get in. Topicals are meant to be very short, not a full debate between both sides. I say to everybody: think about others. I think we can move on. I call Rachel Reeves.
Rachel Reeves
I will repeat: capital budgets have halved in real terms since 2010. I understand—indeed, I know—that in the lead-up to the 2021 spending review, the Department for Education made a submission to the Treasury about the dangers of the deteriorating school estate, including from reinforced autoclaved aerated concrete. Those warnings were ignored by the then Chancellor—the current Prime Minister—and we have seen the consequences, so will today’s Chancellor do the right thing and publish the Department for Education’s submission to the last spending review?
Andrew Griffith
With millions of British jobs dependent on financial services, including an estimated 20,000 jobs in Brighton and Hove, I hope the hon. Lady will join me in celebrating a sustainably profitable financial sector. It is only that that gives us the ability to invest in skills and technology.
Harriett Baldwin (West Worcestershire) (Con)
Will the Economic Secretary update the House on the progress he is making to enable our constituents to access personalised financial guidance if they are among the 93% of our constituents who cannot afford regulated financial advice?
Mortgage Charter
Lindsay Hoyle Excerpts(1 year, 4 months ago)
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The Chancellor of the Exchequer (Jeremy Hunt)
Mr Speaker, last week the Bank of England increased interest rates to 5% as the UK, like other countries, grapples with high inflation. We are steadfast in our support for the independent Monetary Policy Committee as it takes whatever action is necessary to return inflation to the 2% target in the medium term.
None the less, I know that higher inflation and interest rates cause anxiety and concern for many families. That is why the Government are already supporting families with one of the largest support packages in Europe, worth £94 billion, or £3,300 per household on average. As interest rates rise, I will not take action that undermines the Bank of England’s monetary objectives, but where we can take non-inflationary measures to relieve the anxiety faced by families, we will do so. That is why on Friday, I met the UK’s principal mortgage lenders, alongside senior representatives from the Financial Conduct Authority and UK Finance, to agree new support for people struggling with their mortgage payments. At that meeting, I secured agreement from lenders to a new mortgage charter that sets out what support customers will receive, which we are publishing today. The charter has been signed by lenders covering 85% of the UK market, and provides support for two groups of people in particular.
The first group is those who are worried about their mortgage repayments. If they want to switch to an interest-only mortgage or extend their mortgage term to reduce their monthly payments, they will be able to do so, with the option of switching back to their original mortgage deal within six months without any affordability check or credit score impact. For most people, the right course of action will be to continue to make payments on their current mortgage. That will always be the best option, and will always mean that they pay less interest overall. However, this new measure means that people will be able to opt for a lower-cost approach for six months with full reversibility, giving them the peace of mind of knowing they can try out a new approach and still change their mind later.
The measure will take effect in the next few weeks. It means that a homeowner with a £200,000 property with £100,000 outstanding on their mortgage over 15 years can change their payments—with no immediate impact on their credit rating—by extending the mortgage term by 10 years, which could save over £200 a month, or moving to interest-only payments, which could save over £350 a month.
A further measure for this group of customers means that if they are approaching the end of a fixed-rate deal, they will be offered the chance to lock in a new deal with the same lender up to six months ahead. However, they will still be able to apply for a better like-for-like deal with the same lender, with no penalty if they find one, until their current deal ends. That will provide people with more flexibility and optionality to find the best deal for their circumstances.
The second group of people we are supporting is those who are at real risk of losing their home because they fall behind in their mortgage payments. Mortgage arrears and defaults remain at historically low levels, with under 1% of residential mortgages in arrears in 2023, and are at a level lower than just before the pandemic. None the less, for the families involved it is extraordinarily distressing to lose their house, so we will do all we can to support people who find themselves in such a challenging financial position.
As part of our strong regulatory framework for mortgage holders, banks and lenders already provide tailored support for anyone who is struggling and deploy highly trained staff to help such customers. Support offered includes temporary payment deferrals and part-interest part-repayment, as well as extending mortgage terms or switching to interest-only payments. To supplement that, we have agreed as part of the mortgage charter that in the extreme situation in which a lender is seeking to repossess a home, there will be a minimum 12-month period from the first missed payment before there is a repossession without consent. Anyone at all who is worried that they could be in this situation should know they can call their lender for advice without any impact whatsoever on their credit score. Lenders will also provide support to customers who are up to date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability test, and provide well-timed information when their current rate is coming to an end.
Taken together, these measures should offer comfort to those who are anxious about the impact of higher interest rates on their mortgages, and provide support to those who do get into any extreme financial difficulties. The mortgage market itself remains robust, and the average homeowner remortgaging over the last year had close to 50% loan to value, indicating that most people have considerable equity in their homes.
Tackling inflation is the Prime Minister’s and my No 1 priority. We said we would halve inflation not because it was an easy thing to do, but because it is the right thing to do, and we will not flinch in our resolve, because we know getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses. That is why we will seek to remove inflationary pressures in our economy, not stoke them. That is what the measures I have set out today will help to do, and I commend this statement to the House.
Jeremy Hunt
As so often, my right hon. Friend is absolutely right and it is in supply-side measures that we see the long-term solution to the inflation problem that we and many other countries face. That is why the Budget was focused on labour supply measures such as a massive reduction in the cost of childcare—a reduction of up to 60% for families with young children—and it is why my right hon. Friend the Chief Secretary to the Treasury is launching the very productivity review my right hon. Friend the Member for Wokingham (John Redwood) has called for many times, to make sure we are getting better value for public money spent.
Stewart Hosie (Dundee East) (SNP)
With a debt to GDP ratio of 100%, the Chancellor was rather brave to talk about sound money. However, I welcome the statement and early sight of it. Notwithstanding the fact that it was described by Reuters as a package of limited relief measures, it is none the less necessary and welcome, with support from lenders, no repossession within 12 months of a missed payment, the chance to lock in a deal six months early, a temporary move to interest-only, and no impact on customer credit scores. The Chancellor’s words about anxiety and concern struck the right tone, unlike his Prime Minister yesterday.
However, that that does not begin to answer some of the fundamental questions. Given that the base rate drives the mortgage rate, and the base rate, as the Chancellor knows, is the primary tool that the Bank has to tackle rising inflation, is this now not the time to review the Bank of England’s targets and tools? Secondly, are the Government genuinely convinced that using a rising base rate to tackle input inflation caused by external shocks is the best approach we have, other than to tip the economy into recession, as some people are suggesting? I hope the Chancellor would agree that that would be an idiotic and catastrophic thing to do. Thirdly and finally, should we now not revert to forward guidance on base rates from the Bank of England, as we had under Mark Carney during the financial crisis? It may not affect the trajectory of interest rates and mortgage rates initially, although it might, but it would certainly provide certainty to business, retail and mortgage borrowers.
Jeremy Hunt
The Bank of England Governor himself has been very open about the fact that the Bank’s inflation forecasting has not been accurate, and it is conducting an independent review to see how it can do that better. It is clear that there have been some issues with how that process has worked, but what I would say to my right hon. Friend—
Jeremy Hunt
Mr Speaker, you are absolutely right to correct me on that point. What I would say to you about the point raised is simply that in my dealings with the Bank of England, I have never once had any reason to question its resolve to hit the target, but we need to ensure that the forecasting is better.
Oral Answers to Questions
Lindsay Hoyle Excerpts(1 year, 5 months ago)
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Jeremy Hunt
No one in Rossendale and Darwen could have a more doughty champion than my right hon. Friend, and I listen to what he says carefully, but I think he will understand that those schemes that involve injecting large amounts of cash into the economy right now would be inflationary. So much as we sympathise with the difficulties and will do everything we can to help people seeing their mortgage costs go up, we will not do anything that would mean we prolonged inflation.
Stewart Hosie (Dundee East) (SNP)
The cost of a two-year fixed mortgage in March 2021 was 2.57%; this week, it reached 6%. The Chancellor and the Economic Secretary have said there are no plans to change the Bank of England inflation target, meaning that the base rate that drives the mortgage rate will continue to rise as inflation stays stubbornly high, and mortgages will go up. In the absence of such a change, what do the Government plan to do to actually tackle the mortgage pain people are suffering?
Andrew Griffith
I thank the hon. Member for her question, but regrettably the proposal that she and her party put forward would not only delay the point at which we are able to bear down on inflation and deliver the nation’s mortgage holders the lower interest they need but, as I understand, it would do nothing for the plight of private renters.
Harriett Baldwin (West Worcestershire) (Con)
The growth plan in September obviously had an impact on the mortgage market, but is the Economic Secretary to the Treasury aware that by November, the Governor of the Bank of England said, when he gave evidence to our Committee, that the increases in mortgages henceforth were down to the Bank of England’s own increases, because that temporary effect from the growth plan had dissipated? Increases since then have been largely due to the fact that inflation has been worse than the Bank was forecasting. Did the Economic Secretary note that this week I received a letter from the Chair of the Court of the Bank of England, saying that they are going to undertake the request that I sent for them to look at their inflation modelling and at why it has been incorrect?
Andrew Griffith
I always listen enormously carefully to my hon. Friend’s powerful advocacy for Stoke-on-Trent, and his constituents put their trust in this Government. One thing they put their trust in, is that this Government would not come forward with the sort of unfunded spending commitments that we see on the Labour Benches. That would be disastrous for my hon. Friend’s constituents because it would see inflation remain higher for longer.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The only thing that grew as a result of what the Government did last September was people’s mortgage payments. Two-year fixed rates are now more than 6%, and payments for householders are up £2,900 over the next year. Have the Government learned the lesson from the previous Prime Minister’s decision—I stress that word; it is nothing to do with international events—to use the country as a giant economic experiment that hurt homeowners, pushed up interest rates and shook international confidence in the United Kingdom? If they have, will the Minister now apologise to the householders who are paying the price for that mistake?
John Glen
I am happy to take up my right hon. Friend’s case. We have expanded the OFSI resources. We have a monthly monitoring and efficiency dashboard. I accept how frustrating it can be for constituents’ businesses when such situations arise, and I am happy to take the matter away and get back to him swiftly.
Victoria Atkins
The sun always shines in my right hon. Friend’s corner of Pembrokeshire when he speaks up for it. He is quite right to identify how the Conservatives in Government are trying to help businesses through our business rates relief in England, through our energy support scheme over recent months and, of course, through the Brexit pub guarantee. Welsh Labour, on the other hand, wants to call last orders and have higher taxes for the businesses he is so keen to support.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
The 2019 Conservative manifesto, some three Prime Ministers and four Chancellors ago, promised a fundamental reform of business rates. This is another broken Tory promise. Will the Minister admit that only a Labour Government will end the chaos, scrap business rates and replace them with a fairer system, so that our amazing hospitality sector can thrive and grow faster?
David Duguid
When the energy profits levy was introduced to help the Government’s support of household energy bills, I welcomed the investment tax allowance that was introduced along with it on new oil and gas for energy security. In recent weeks, I also welcomed the Exchequer Secretary’s announcement in Aberdeen of a price floor in the form of an energy security investment mechanism, at which the EPL will be removed. The devil, of course, will be in the detail. I welcome the Treasury’s ongoing engagement and dialogue with the oil and gas industry, but will the Minister commit to a regular, perhaps quarterly, fiscal forum with the industry, as used to happen prior to covid? Does he agree that Labour’s plans to ban all new oil and gas is based on ideology and not a pragmatic approach to this country’s energy security and net zero?
Mr Speaker
Order. The hon. Gentleman ought to put in for an Adjournment debate. It would be easier for all of us.
Jeremy Hunt
My hon. Friend always speaks extremely wisely on financial matters, and he is absolutely on the money when he talks about the opportunity that would present itself by unlocking £3 trillion of pension fund assets, many of which would get a better return for pensioners if they were invested more in our high-growth businesses, as well as that being a good outcome for the London stock market. All I will say is: watch this space.
Rachel Reeves (Leeds West) (Lab)
While the Government squabble over parties and peerages, mortgage products are being withdrawn and replaced by mortgages with much higher interest rates. This is a consequence of last year’s Conservative mini-Budget and 13 years of economic failure, with inflation higher here than in similar countries. Average mortgage payments will be going up by a crippling £2,900 this year, so where does the Chancellor think families will get the money to pay the Tory mortgage penalty?
Mortgage Market
Lindsay Hoyle Excerpts(1 year, 5 months ago)
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Andrew Griffith
We enjoy, as ever, the hon. Member’s rhetoric, but he did not address what his plan would be. He also did not acknowledge that this has an international factor. Perhaps he or one of his colleagues would like to explain why we have seen similar interest rate increases in the USA, where the 30-year rate—the market is somewhat different there—has increased from 4% at the start of 2022 to more than 6% today.
Mr Speaker
In fairness, the right hon. Member for Wolverhampton South East (Mr McFadden) is right honourable. But there we are. I call the Chair of the Select Committee.
Harriett Baldwin (West Worcestershire) (Con)
The Government have given the Bank of England the task of targeting inflation at 2%, and our Committee has regularly held the Bank of England Governor’s feet to the fire over its performance on that inflation target. Mortgage rates have been increasing because inflation has been higher for longer than expected. In fact, the Governor said in his evidence to our Committee last November that from now on, our grumpy constituents who are having to pay higher mortgage rates should complain to him rather than to the Government. Will the Economic Secretary endorse the Treasury Committee’s campaign to ask the banks why, instead of just raising mortgage rates on the day the Bank of England raises rates, they do not also increase the savings rates that are paid to our constituents?
Andrew Griffith
The independent Governor of the Bank of England is, of course, right. Today we have seen strong print on wage growth, in part due to the 9.7% increase in the national living wage, on which I hope Members will join me in congratulating the Government. My hon. Friend is, as ever, right to highlight the impact on savers. It is important to me and to this Government that savers get a fair deal, which is one of the reasons why National Savings and Investments continues to offer savers an attractive range of products in the market.
Stewart Hosie (Dundee East) (SNP)
Millions of households are now struggling as their fixed-rate mortgages end and they are moved to much higher variable rates. We also know that only a third of the households that are expected to move from cheap fixed-rate deals have done so, so there is a great deal of pain to go, with 116,000 households a month coming off fixed-rate deals.
Some in the City are suggesting that what we are seeing is a complete reset of the mortgage market, which would imply that there should be a complete reset of the Government’s approach. Given that changes to mortgage rates are driven by changes to the base rate, and that the base rate is the central bank’s primary tool to meet the 2% inflation target handed to it by the Government, what discussions have the Government had with the Governor of the central bank about the effectiveness, or the appropriateness, of an inflation target being the primary target that the central bank works towards?
Andrew Griffith
At his spring statement, the Chancellor was very clear about the Bank of England’s continued remit, beyond which it remains operationally independent. It has been a long-standing feature of this House that Treasury Ministers do not tell the Bank of England how to run monetary policy. Three of the Prime Minister’s five priorities are getting the economy growing, reducing debt and halving inflation.
Sir Simon Clarke (Middlesbrough South and East Cleveland) (Con)
That is very kind, Mr Speaker.
I pay tribute to the right hon. Member for Dundee East (Stewart Hosie) for the previous question, which was extremely interesting and perceptive. Of course, it should escape nobody’s attention that, today, gilt yields are higher than they were when my right hon. Friend the Member for South West Norfolk (Elizabeth Truss) was forced from office in the autumn. I agree entirely with the Minister that it is important to avoid the inflaming of inflation that the Opposition would do, but does he also agree that ultra-low interest rates cannot be seen as the sole benchmark of economic success and that we ought to aspire to higher trend growth as much as low interest rates?
Oral Answers to Questions
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John Glen
I think the whole House will agree that the hon. Gentleman must be the most effective advocate for his constituents. We will see what happens. There will be a rigorous process, including wide consultation, and we expect to have an outcome that benefits his constituents and people across Northern Ireland.
Stewart Hosie (Dundee East) (SNP)
The incentives offered by investment zones include 100% business rates relief and enhanced capital allowances. With the exception of reduced national insurance contributions, it is hard to see the difference between an investment zone and an enterprise zone. What additional fiscal support are the Government providing to differentiate these investment zones from enterprise zones?
Layla Moran (Oxford West and Abingdon) (LD)
Inflation is hitting not just individuals and families, but councils and potentially infrastructure projects. Lodge Hill junction on the A34 in Abingdon is one such key piece of local infrastructure, and when completed, will support jobs and housing across Oxfordshire and Science Vale and the economy as a whole. Homes England and the Department for Levelling Up, Housing and Communities say that the final piece of that funding now sits with the Treasury in the brownfield, infrastructure and land fund. Will the Minister meet me so that I can explain why this is such an important piece of funding to be released, and please can the Government supply the last piece of this puzzle so that we can deliver Lodge Hill junction once and—
Mr Speaker
Order. That has absolutely nothing to do with the question. It is a bit of a struggle, is it not? Do you think you can answer it, Minister? No. Okay.
Mrs Pauline Latham (Mid Derbyshire) (Con)
John Glen
Absolutely. It is right that we continue support for the cost of living challenges. I have mentioned the energy price guarantee; we are also sticking to that plan to avoid unnecessary inflationary pressure. [Interruption.] On average this year, as a result of Government decisions made from—[Interruption.]
Mr Speaker
Order. Members will have to continue their conversations at another time. Carry on, Minister.
Victoria Atkins
I hope my hon. Friend has been listening to what the Chancellor said at spring Budget and in speeches since then about the need for fiscal responsibility. We have to be fiscally responsible; we have acknowledged that. We have had to make some very difficult decisions along the way, but we are clear that halving inflation, tackling our debt and growing the economy will enable us to make the sorts of tax cuts that he and I both want to see so much.
James Murray (Ealing North) (Lab/Co-op)
Tens of thousands of people have been affected by the loan charge, with some having faced well-documented distress and harm as a result of HMRC’s approach. At the same time, HMRC has been issuing fewer than two fines a year against the architects and enablers of failed tax avoidance schemes. It is absolutely right that disguised remuneration schemes are tackled fairly and effectively, so how on earth can the Conservative Government justify such a light-touch approach for the promoters of such schemes, while many of those caught up in them face such a nightmare?
Victoria Atkins
I am interested that the hon. Gentleman dismisses these incredibly successful unicorn start-ups in the UK economy. I hope that he will not dismiss their continuing success as we continue to support them through the various tax reliefs we are offering them and investment, including our most recent research and development tax reliefs. I would also point out to him that of course Scotland will benefit from some 73 trade deals secured with non-EU countries—benefits that include control of our fishing waters, something that I know is a matter of great concern to Scottish residents.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I am never quite clear why, if we do not like trade barriers, the answer is to erect even more of them. The Government said that through the Retained EU Law (Revocation and Reform) Bill, they would get rid of 4,000 laws built up during our time in the EU. The Prime Minister even got his shredder out to show us what this would look like, and the Government said there would be a sunset clause to make sure all this happened by the end of the year. Voices from both business and the trade unions have said that this could cause even more chaos and uncertainty and undermine workers’ rights, in breach of the promises made by Ministers at the time of the referendum. Can the Minister confirm whether, after marching their troops up to the top of the hill and getting the Back Benchers very excited, the Government are keeping the sunset clause to have all this done by the end of the year?
Victoria Atkins
I do not know whether I can speak on behalf of the Secretary of State for Business and Trade, who is the portfolio holder for that piece of legislation. What I do know is that the Bill is currently before the House of Lords, and will no doubt be scrutinised very carefully by their lordships. I can also reassure the House that we are taking a careful and considered approach to the benefits—the regulations, the laws—that Brexit presents to us, and we know from our discussions with businesses that business certainty is something that we all want to strive for and achieve. I am sure that once this Bill has been scrutinised by the House of Lords—[Interruption.]
Mr Speaker
Order. I have got another question to come. The Minister should not worry; there will be another chance.
Mr McFadden
I think business certainty might be improved by an answer to the question.
Inflation is at 10%, the highest in the G7, and food inflation is at 19%. The former Prime Minister—the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), to avoid confusion, because there are a few former Prime Ministers—promised us that
“there will be no non-tariff barriers to trade”,
but we already know that many small businesses are giving up exporting to the EU altogether because of costs and delays. With inflation already at those levels, the Government have picked this moment to impose a new system for checks on EU goods that is estimated to add £400 million a year to the cost of goods coming into the UK. Can the Minister tell us why the Government are picking this of all moments to add these new costs and price rises to UK consumers who are already struggling to make ends meet because of the biggest cost of living crisis in decades?
John Glen
Our priority was clear throughout the covid crisis, and that was to get PPE to the frontline as quickly as possible. Due diligence was carried out on all companies that were referred to the Department. Despite all those steps being taken, some instances of fraud did occur with unscrupulous suppliers taking advantage of the situation. This Government take that fraud seriously, and the Department of Health and Social Care is exploring every available option to bring those who commit fraud to account. We have also made a number of other interventions, including investment in the taxpayer protection taskforce to normalise higher compliance activity in HMRC, alongside other measures to deal with fraud elsewhere in some of the emergency schemes that we set up to help this economy and this country get through covid.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
Last week, the Public Accounts Committee revealed that our country lost £9 billion-worth of tax revenue during the pandemic because HMRC redeployed 4,000 staff members whose jobs were to chase down tax avoiders. The Prime Minister was Chancellor at the time and presumably signed off that decision. Can the Minister tell me whether the Prime Minister did that as a deliberate act to give the green light to tax avoiders, or is it just another example of Tory incompetence?
John Glen
I think that is a ridiculous suggestion, to be honest. HMRC received £863 million to modernise the tax system, and that included £136 million invested over the spending period to deliver improvements in terms of a single customer record and account. On what happened over covid, I have already set out the investment we made, including the £100 million in the taxpayer protection taskforce. We take fraud very seriously. Now it is about HMRC looking at financial records of excessive trading to come to terms with those businesses that used some of those schemes fraudulently. We will continue to work on that.
Ashley Dalton (West Lancashire) (Lab)
John Glen
I could not agree more. Responsible public spending is at the core of getting our economy into a state where it can grow, and the £90 billion of unfunded spending pledges made by Opposition Members will be scrutinised very carefully, I am sure, by many in the months ahead.
Rachel Reeves (Leeds West) (Lab)
The Conservatives have now had 13 years in office—wages lower, the weekly food shop astronomical, energy bills unprecedented, 24 Tory tax rises and the national debt has ballooned —so can I ask: after 13 years of Conservative Government, does the Minister think that people feel better off, or worse off?
The Financial Secretary to the Treasury (Victoria Atkins)
I hope the hon. Gentleman knows that we are spending record amounts on the NHS. We are also mindful that non-doms pay some £7.9 billion in UK taxes on their UK earnings and have invested some £6 billion since 2012. So we are mindful of the very real impact that they make on our revenues, but we have managed to tighten the rules around non-dom status, and that is why—
Jonathan Gullis (Stoke-on-Trent North) (Con)
Day one on the job and Labour in Stoke-on-Trent talk about cancelling the £56 million of levelling-up funding, which is UK-leading, going to the great city of Stoke-on-Trent. Will the Chief Secretary to the Treasury confirm that the Conservative Government will have the backs of the people of Stoke-on-Trent and deliver this important levelling up?
Oral Answers to Questions
Lindsay Hoyle Excerpts(1 year, 8 months ago)
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Jeremy Hunt
Let me gently say to the hon. Member that the freeze in alcohol duty which we introduced in the autumn of 2021, and which will continue until August this year, has constituted a £2.7 billion tax cut over four years. We do everything we can to help the vital Scottish whisky industry.
Andrew Griffith
I thank my right hon. Friend for his comments. The Government join the Bank of England in welcoming the comprehensive set of actions taken yesterday by the Swiss authorities to ensure financial stability. It would not be for me to talk from the Dispatch Box about the treatment of creditors, but the UK’s bank resolution framework has a clear statutory order in which shareholders and creditors would bear losses in a resolution or insolvency scenario.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The Conservative party wants to pretend that last September’s mini-Budget and its impact on mortgages was all a bad dream, but it is more than a bad dream for the 4 million households who will face a mortgage rise this year on either fixed or variable rates. The average two-year fixed rate deal is now around £2,000 a year more than it cost in August last year. That is real money and real costs. What is the Government’s estimate of the total cost of September’s mini-Budget to UK homeowners?
Andrew Griffith
The hon. Member—[Interruption.] Forgive me, the right hon. Member will be aware that interest rates have been increasing globally. Interest rates in the UK are now lower than the equivalent in the US and are lower than they were last autumn. The Government have a range of measures to help hard-pressed mortgage payers, but above all else, our strong stewardship of the economy is bringing down interest rates and means that we are on track to halve inflation this year.
Andrew Griffith
The OBR has confirmed that the UK economy will avoid a technical recession and was the fastest growing economy in the G7 for the past two years.
Mr McFadden
The Minister either does not know or will not say what the total cost was. Is it not interesting that it is always someone else’s fault? One of the first things that the Prime Minister did when he took office was to give in to his Back Benchers on house building targets. The Home Builders Federation now says that the supply of new housing is likely to fall to its lowest level since the second world war—less than half the Government’s target. How will building fewer homes as a result of a back-stairs deal inside the Conservative party help young people in our constituencies who dream of owning their own home and getting on the property ladder?
Andrew Griffith
We share the aspiration of young people to own their own home, but the best way to help them do that is to have a vibrant, growing economy. We are on the side of doing that. We are taking actions that will restore the economy to growth. Every Labour Government who have ever taken office have left unemployment at a higher rate than when they came in.
Stewart Hosie (Dundee East) (SNP)
Last August, there were 75,000 mortgage approvals. That number halved by December. We are all aware of the reports from late last year of the number of mortgage products that were removed and the troubling reports of mortgage offers being withdrawn. Before we even get to the issue of support for mortgage holders, what is the Treasury doing to ensure the availability of mortgages, a good range of mortgage products and an end to offers being withdrawn unless there is a very, very good reason to do so?
James Cartlidge
My hon. Friend’s constituency is an island, and she is its rock—there is no doubt about that; she champions these issues consistently. I am assured that the Chief Secretary to the Treasury is giving careful consideration to her proposition, and that just underlines that she has been a champion for her constituency. By delivering on our green plans, we can generate green jobs and green investment in every part of the United Kingdom, including Wales.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
As my hon. Friend the Member for Portsmouth South (Stephen Morgan) just said, the Institute of Directors has warned that
“the UK will find itself left behind in the accelerating race to lead the green economy.”
The Confederation of British Industry says that we are investing five times less in green industries than Germany—five times less. Meanwhile, the United Nations issues warnings of a climate disaster. Where is the urgency and action from the Conservatives to decarbonise our economy and win the global race for green jobs?
The Chief Secretary to the Treasury (John Glen)
I am grateful to my hon. Friend, who has met me on a number of occasions to make the case for the Dartford crossing. Obviously, in the current difficult circumstances with inflationary pressures, we have had to make some tough choices, but I want to be very clear with my hon. Friend: we remain committed to delivering it. This is a two-year delay on construction, not a cancellation, and I will continue to update him in due course.
Rachel Reeves (Leeds West) (Lab)
Confidence has been shaken by the recent bank failures and stock market falls across the world. Is the Chancellor confident that our ringfencing regime is adequate to protect taxpayers and depositors, when we have seen how fast these problems can spread? Can the Chancellor reassure the House that there are no other UK banks or subsidiaries that are vulnerable, and in light of recent developments, is he confident about the Financial Stability Board, or does it need to widen the number of banks regarded as systemically important?
The Chief Secretary to the Treasury (John Glen)
Further to that point of order, Mr Speaker. I can confirm that we have always been ready to sign the MOU, from two years ago—[Interruption.] Well, we have made it very clear to the EU that we are ready to sign. It is a matter for it to come to the table, and we very much hope it will be able to do that. What happened was that as the Financial Secretary came to the Dispatch Box she did not quite hear exactly what I said, and for that I apologise on behalf of the Government. It was my fault.