Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(4 days, 13 hours ago)
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Rachel Reeves
This Government changed the fiscal rules at the Budget last year with a stability rule, so that for the first time we pay for day-to-day spending through tax receipts, and an investment rule, which enables us to invest in the things that will help grow the economy, such as energy infrastructure, defence spending and transport and digital infrastructure. As a result, in the Budget and then in this year’s spring statement, we unlocked £300 billion more to spend during the course of this Parliament, including the record settlement for the Scottish Government. It is now up to the Scottish Government to spend that money wisely and to try to reduce waiting lists in Scotland, as we have done in England and, indeed, in Wales.
Rachel Reeves
The stability that this Government have returned to the economy has meant that the Bank of England has been able to cut interest rates four times in the last year, taking hundreds of pounds off people’s mortgages—there was such a big impact in that regard under the last Government. The reasons for the increase in business confidence also include the industrial strategy publication, the spending review and the three trade deals, all of which are boosting business confidence and have helped to create 385,000 new jobs in Britain since the last general election.
Richard Fuller (North Bedfordshire) (Con)
Labour’s jobs tax has really clobbered British businesses. The Office for National Statistics says that the number of available jobs is collapsing. Perhaps the Chancellor has not updated herself on how British business thinks about confidence: the Institute of Directors has said today that business confidence has plummeted; the Bank of England is warning of significant declines in wage growth; and the British Chambers of Commerce says that taxes on businesses cannot be increased. The Chancellor has bungled welfare changes, eviscerating confidence in the Prime Minister and blowing an even bigger hole in the public financing, meaning that she will raise taxes yet again this autumn. Will she avoid creating the same damaging uncertainty she did last summer by ruling out from the Dispatch Box today any further tax increases on British businesses?
Rachel Reeves
I am not going to take lessons from the Conservatives: they increased taxes 25 times. When they increased taxes, it was always ordinary working people who paid the price. In our Budget last year, we protected the payslips of ordinary working people by not increasing their income tax, their national insurance or their VAT, and we did not go ahead with the increase in fuel duty that the Conservatives had planned. Instead of talking down the British economy, why do the Conservatives not back the plans that are backed by British businesses to grow our economy and make working people better off?
Rachel Reeves
This Government increased the employment allowance from £5,000 to £10,500, and that means 865,000 employers will pay no national insurance at all. Indeed, half of employers will either gain or see no change. It was also welcome that the Lloyds business barometer showed business confidence at a nine-year high, with a particular uptick in retail. I cannot comment on an individual business, but that is the system nationwide.
Mr Speaker
This is topicals; we have got to get going. Brian Leishman will set a good example.
Rachel Reeves
As my hon. Friend will know, in last year’s Budget we got rid of the non-dom tax status, increased capital gains tax, put VAT on private school fees and ended the loophole for private equity, as well as introducing further measures, in order to raise £40 billion. As a result, we are investing £300 billion more than would have been raised under the plans that we inherited from the Conservative party. Ours is the only country where—
Rachel Reeves
The problem with the Conservatives is that they support all the funding, but they do not support any of the ways of funding it. Agricultural property relief means that estates worth more than £3 million will now be taxed at half the rate at which inheritance tax is usually charged. That can be repaid over a 10-year period, interest-free. I think that is the right and fair settlement, given the fiscal environment we face.
Spending Review 2025
Debate between Lindsay Hoyle and Rachel Reeves(3 weeks, 3 days ago)
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The Chancellor of the Exchequer (Rachel Reeves)
My driving purpose since I became Chancellor is to make working people in all parts of our country better off, to rebuild our schools and our hospitals, and to invest in our economy so that everyone has the opportunity to succeed after 14 years of mismanagement and decline by the party opposite, culminating in a £22 billion black hole in the public finances. That was the Conservatives’ legacy, and the first job I faced as Chancellor was to set it right. So at the Budget last October and again in the spring, I made the choices necessary to fix the foundations of our economy. We wasted no time in removing the barriers to growth: the biggest overhaul of our planning system in a generation; launching Britain’s first National Wealth Fund; and reforming our pensions system to unlock billions of pounds of investment into our economy.
We are starting to see the results. The stability we have provided has helped support four cuts in interest rates, saving hundreds of pounds a year for families with a mortgage. Real wages have grown by more in the first 10 months of this Labour Government than in the first 10 years of the Conservative Government. And the latest figures show that we are the fastest growing economy in the G7. Countries around the world are lining up to do business with Britain again, with new trade deals with India, the United States and the European Union.
We are renewing Britain, but I know that too many people in too many parts of our country are yet to feel it. This Government’s task, my task as Chancellor, and the purpose of this spending review is to change that—to ensure that renewal is felt in people’s everyday lives, in their jobs, and on their high streets. The priorities of this spending review are the priorities of working people: to invest in Britain’s security and Britain’s health and to grow Britain’s economy so that working people are better off.
Today, I am allocating the envelope I set out in the spring. I am enormously grateful to my excellent team of officials at the Treasury and to my right hon. Friend the Chief Secretary to the Treasury for his tireless work throughout this process, crunching the numbers and looking at the assets and liabilities. On that note, I thank all my Cabinet colleagues for their contribution to this process—they are all assets to this Labour Government.
In this spending review, total departmental budgets will grow by 2.3% a year in real terms. Compare that to the Conservatives’ choice of austerity. In contrast to our increase of 2.3%, they cut spending by 2.9% a year in 2010. Let us be clear: austerity was a destructive choice for both the fabric of our society and our economy, choking off investment and demand and creating a lost decade for growth, wages and living standards. That is their legacy.
My choices are different. My choices are Labour choices—the choices in this spending review that are possible only because of my commitment to economic stability and the decisions this Government have made. The Conservatives’ fiscal rules guaranteed neither stability nor investment, and that is why I changed them. My fiscal rules are non-negotiable, and they are the foundation for stability and investment.
My first rule is for stability: day-to-day Government spending should be paid for through tax receipts. That is the sound economic choice. It also the fair choice, because it is not right to expect our children and future generations to pay for the services we rely on today. This first rule allows me, as I set out in the Budget, to allocate £190 billion more to the day-to-day running of our public services over the course of this spending review compared with the previous Government’s plans.
My second fiscal rule enables me to invest in Britain’s economic renewal while getting public debt on a downward path. This rule allowed me to increase public investment by more than £100 billion in the autumn and a further £13 billion in the spring. That is investment to rebuild our transport networks, our defence capability and our energy security—in short, to grow our economy.
I have made my choices: tough decisions for stability and changing Britain’s fiscal rules for investment. Today, I am delivering that investment for the renewal of Britain. Now, it is time for the parties opposite to make their choices. The spending plans I am setting out today are possible only because of the decisions I took in the autumn to raise taxes and the changes to our fiscal rules, every one of which was opposed by the parties opposite. Today, they can make an honest choice and oppose these spending plans as they opposed every penny I raised to fund them, or they can make the same choice as Liz Truss: spend more and borrow more, with no regard for the consequences.
In their clamour to cut taxes for the richest, the Conservatives crashed our economy, sent mortgage rates spiralling and put our pensions in peril. I will never take those risks. Yet Reform is itching to do the same thing all over again. The hon. Member for Clacton (Nigel Farage) may be playing the friend of the workers now, but some of us are old enough to remember when he described the disastrous Liz Truss Budget as “the best Conservative Budget” since the 1980s. [Interruption.] Mr Speaker, after the damage is done, he still nods along. Reform has learned nothing. His party has been in Parliament for less than a year, yet it has already racked up £80 billion of unfunded commitments. Reform is simply not serious. Every day it becomes clearer that it is Labour—and only Labour—that has a credible plan for the renewal of Britain.
As I said in my spring statement, the world is changing before our eyes. Since the spring, the challenges that we face have become even more acute. The signs of our age of insecurity are everywhere, so we are acting on the promise in our plan for change: building renewal on the foundations of national security, border security and economic security. As the Prime Minister said earlier this month,
“A new era in the threats that we face demands a new era for defence and security.”
That is why we took the decision to prioritise our defence spending by reducing overseas development aid. Defence spending will now rise to 2.6% of GDP by April 2027, including the contribution of our intelligence agencies. That uplift provides funding for my right hon. Friend the Defence Secretary, with an £11 billion increase in defence spending and a £600 million uplift for our security and intelligence agencies. That investment will deliver not only security, but renewal in Aldermaston and Lincoln; in Portsmouth and Filton; on the Clyde and in Rosyth. Investment in Scotland, jobs in Scotland, and defence for the United Kingdom—opposed by the Scottish National party; delivered by this Labour Government.
Investing in our armed forces, our military technology and our supply chains also brings huge opportunities: £4.5 billion of investment in munitions, made in factories from Glasgow to Glascoed, Stevenage to Radway Green; and over £6 billion to upgrade our nuclear submarine production, supporting thousands of jobs across Barrow, Derby and Sheffield. We will make Britain a defence industrial superpower, with the jobs, the skills and the pride that come with that.
A more unstable world presents new challenges at our borders too. Conflict has opened the way for organised criminal gangs. The British people rightly expect us to have control of who comes into our country. The Conservatives said that they would “take back control”. Well, Mr Speaker, they lost control. With one failed policy after another, there was no control and no security. In contrast, in the Budget last year I announced £150 million to establish the new Border Security Command, and today, to support the integrity of our borders, I can announce that that funding will increase, with up to £280 million more per year by the end of the spending review period for our new Border Security Command.
Alongside that, we are tackling the asylum backlog. The Conservative party left behind a broken system: billions of pounds of taxpayers’ money spent on housing asylum seekers in hotels, leaving people in limbo and shunting the cost of failure on to local communities. We will not let that stand. I can confirm today that, led by the work of my right hon. Friend the Home Secretary, we will be ending the costly use of hotels to house asylum seekers in this Parliament. Funding that I have provided today, including from the transformation fund, will cut the asylum backlog; allow more appeal cases to be heard; and return people who have no right to be here, saving the taxpayer £1 billion per year. That is my choice, that is Labour’s choice, that is the choice of the British people.
If we want national security in a dangerous world, that does not stop at the strength of our armed forces or at our borders. I have long spoken about what I call “securonomics”—the basic insight that, in an age of insecurity, Government must step up to provide security for working people and resilience for our national economy. Put simply: where things are made, and who makes them, matters.
Take energy: the Tories neglected our nuclear and renewables sectors and closed our gas storage facilities, leaving us exposed to hikes in energy prices when Russia invaded Ukraine, and it was working people who paid the price for their mistakes. Labour understands that energy security is national security. Because it is the right choice for bills, jobs and growth, this Government are investing in the biggest roll-out of nuclear power for half a century, with a £30 billion commitment to our nuclear-powered future.
Yesterday my right hon. Friend the Energy Secretary and I announced £14 billion for Sizewell C, which will produce energy to power 6 million homes and support more than 10,000 jobs, including 1,500 apprenticeships, in order to build the nuclear workforce of tomorrow. That is not all. We are investing over £2.5 billion in a new small modular reactor programme. Our preferred partner is Rolls-Royce—a great British company based in Derby. This investment is just one step towards our ambition for a full fleet of small modular reactors, and it provides a route for private sector-led advanced modular reactor projects to be deployed across the UK.
Alongside these actions, we are making nuclear-approved land available in Sellafield to attract private investment and create thousands more jobs. I thank my hon. Friend the Member for Whitehaven and Workington (Josh MacAlister) for his work in this area. To strengthen Britain’s position at the forefront of a global race for new nuclear technologies—a cause championed by Mayor of the East Midlands Claire Ward and my hon. Friend the Member for Bassetlaw (Jo White)—and to support pioneering work taking place in West Burton in Nottinghamshire, we are investing over £2.5 billion in our nuclear future.
To back British industries, pioneering work in carbon capture, usage and storage will take place. Last year we announced funding for two sites, one on Merseyside and one in Teesside, where we are building the world’s first commercial-scale CCUS plant. Today I can announce support for the Acorn project in Aberdeenshire to support Scotland’s transition from oil and gas to low-carbon technology—a challenge and an opportunity well understood by the leader of Scottish Labour Anas Sarwar and my right hon. Friend the Scotland Secretary. We are also backing the Viking project in Humberside—a cause long supported by my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn).
Because I am determined to ensure that the energy technologies of the future are built here and owned here and that jobs come to Britain, this spending review invests in the wholly publicly owned Great British Energy, headquartered in Scotland. These investments will ensure that the towns and cities that powered the last industrial revolution play their part in our next industrial revolution. Reducing our reliance on overseas oil and gas, protecting working families from price shocks, and a new generation of energy industries for a renewed Britain—that is my choice, that is Labour’s choice, that is the choice of the British people.
Economic security relies on our ability to buy, make and sell more here in Britain. In April, this Government faced a choice: to let British Steel in Scunthorpe go under or to intervene. [Interruption.] That choice was a choice not of the metal trader but of this Labour Government. We heard representations from workers, trade unions and my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin). My right hon. Friend the Business Secretary and I were not prepared to tolerate a situation in which Britain’s steel capacity was fatally undermined. We were not prepared to see another working-class community lose the pride, prosperity and dignity that industry provides, so we did intervene to save British Steel and the jobs that come with it, and I am proud of that decision.
The Government will invest in Scunthorpe’s long-term future and the future of steelworks across our great country. In a vote of confidence in our home-grown steel, Heathrow airport, where we are backing London by backing a third runway, has signed the UK steel charter—a multibillion-pound airport expansion backed by Labour and built with British steel.
Building our train and tram lines, our military hardware and our new power stations will mean orders for steel made in Britain at Sheffield Forgemasters, where we are investing in nuclear-grade steel, and in Port Talbot, where the spending review confirms the £500 million grant to Tata Steel. A future for British-made steel and a proud future for Britain’s steel communities. Things built to last, built here in Britain—that is my choice, that is Labour’s choice, that is the choice of the British people.
This Labour Government are backing British business. There will be more to come in the weeks ahead with our 10-year infrastructure strategy and our modern industrial strategy: a plan drawn up in partnership with businesses and trade unions. When I speak to businesspeople and entrepreneurs about what they need to succeed, they say that they need the chance to innovate, they need access to finance and they need a deep pool of talent. We have heard that message, and today we are taking action.
First, on innovation, which is a great British strength. Our universities are world-leading, and we are proud of them. We want our high-tech industries in Britain to continue to lead the world in years to come in car production, in aerospace and in life sciences, so we are backing our innovators, backing our researchers and backing our entrepreneurs with research and development funding rising to a record high of £22 billion a year by the end of the spending review. Because home-grown artificial intelligence has the potential to solve diverse and daunting challenges, as well as the opportunity for good jobs and investment here in Britain, I am announcing £2 billion to back the Government’s AI action plan overseen by my right hon. Friend the Secretary of State for Science, Innovation and Technology.
Secondly, to champion those small businesses seeking access to finance as they look to grow, I am increasing the financial firepower of the British Business Bank with a two thirds increase in its investments, increasing its overall financial capacity to £25.6 billion to help pioneering businesses to start up and scale up, backing Britain’s entrepreneurs and backing Britain’s wealth creators.
Thirdly, as we invest, if we are to thrive in the industries of the future, we must give our young people the skills they need to contribute to our national success as scientists, engineers and designers, and as builders, welders and electricians. I know the ambition, the drive and the potential of our young people; it cannot be right that too often those ambitions and that potential are stifled. Young people who want training find courses are oversubscribed and are turned away at the door, forcing growing businesses, eager to recruit that talent, to look elsewhere—potential wasted and enterprise frustrated. So today I am providing record investment for training and upskilling with £1.2 billion a year by the end of the spending review to support over a million young people into training and apprenticeships so that their potential, their drive and their ambition is frustrated no longer.
On the subject of skills, we should all recognise the Leader of the Opposition’s own commitment to lifelong learning. At the weekend, she promised to learn and “get better” on the job. I am sure that Opposition Members will be supporting her in that endeavour. Good luck with that.
As we build a strong, secure and resilient economy, working people must feel the benefits. That starts with the security of a proper home. Our planning reforms have opened up the opportunity to build. Now, we must act to make the most of those opportunities, and a plan to match the scale of the housing crisis must include social housing, which has been neglected for too many decades, but not by this Labour Government. So, led by my right hon. Friend the Deputy Prime Minister, we are taking action. I am proud to announce the biggest cash injection into social and affordable housing in 50 years with a new affordable homes programme in which I am investing £39 billion over the next decade—direct Government funding that will support house building, especially for social rent. I am pleased to report that towns and cities including Blackpool, Preston, Sheffield and Swindon already have plans to bring forward bids to build those homes in their communities.
I have gone further. Last autumn, I enabled greater use of financial transactions to support investments in our infrastructure alongside strict guardrails that ensure that money is spent wisely through our public financial institutions. So, in line with that commitment, I am providing an additional £10 billion for financial investments, including to be delivered through Homes England, to crowd in private investment and unlock hundreds of thousands more homes. Homes built by a Labour Government; homes built for working people.
But it is no good investing in new skills, new jobs and new homes if they are not properly connected. That is why last week, with the support of my right hon. Friend the Transport Secretary, I announced £15 billion of investment to connect our cities and our towns—the biggest ever investment of its kind—with investments in buses in Rochdale, train stations in Merseyside and Middlesbrough, mass transit in West Yorkshire and metro extensions in Birmingham, Tyne and Wear and Stockport. Alongside that, we are backing Doncaster airport.
Today, I am announcing a four-year settlement for Transport for London to provide certainty and stability for our largest local transport network to plan for the future. For other regions in the UK, I am today providing for a fourfold increase in local transport grants by the end of this Parliament to make the improvements put off for far too long, to improve the journeys that people make every day.
To unlock the potential of all parts of Britain, we are going further by investing in major rail projects to connect our towns and cities. In October, I announced funding for the trans-Pennine route upgrade—the backbone of rail travel in the north, linking York, Leeds and Manchester—with a quarter of that route expected to be electrified by this summer. I know the commitment of my hon. Friends the Members for Huddersfield (Harpreet Uppal), for York Outer (Mr Charters) and for Colne Valley (Paul Davies) to this issue, and today I can announce a further £3.5 billion of investment for that route. But my ambition, and the ambition of people across the north, is greater still, so in the coming weeks I will set out the Government’s plan to take forward our ambitions for Northern Powerhouse Rail.
I have also heard the representations of my hon. Friends the Members for Milton Keynes North (Chris Curtis), for Milton Keynes Central (Emily Darlington), and for Buckingham and Bletchley (Callum Anderson), and I can tell the House today that to connect Oxford and Cambridge and to back Milton Keynes’s leading tech sector I am providing a further £2.5 billion for the continued delivery of East West Rail. On a matter that I know is of great importance to my hon. Friends the Members for Lichfield (Dave Robertson), for Birmingham Northfield (Laurence Turner) and for Birmingham Erdington (Paulette Hamilton), I can announce today that I am providing funding for the midlands rail hub: the region’s biggest and most ambitious rail improvement scheme for generations, strengthening connections from Birmingham across the west midlands and into Wales, too.
For 14 years, the Conservatives failed the people of Wales. Those days are over. Following representations from my right hon. Friend the Secretary of State for Wales, the First Minister of Wales, and Welsh Labour MPs, today I am pleased to announce £445 million for railways in Wales over 10 years, including new funding for Padeswood sidings and Cardiff West junction. That is the difference made by two Labour Governments, working together to undo a generation of underfunding and neglect.
This Government take seriously their commitment to investment, jobs and growth in every part of the UK. I have heard the concerns of my hon. Friends the Members for Mid Cheshire (Andrew Cooper), and for Rossendale and Darwen (Andy MacNae), and the Mayor of the Liverpool City Region, Steve Rotheram, that past Governments have under-invested in towns and cities outside London and the south-east. They are right, so today I am publishing the conclusion of the review of the Treasury Green Book, which is the Government’s manual for assessing value for money. Our new Green Book will support place-based business cases, and make sure that no region has Treasury guidance wielded against it. I said that we would do things differently, and that we wanted growth in all parts of Britain, and I meant it.
Backing our nations and regions means backing our devolved Governments, and this spending review provides the largest settlement in real terms since devolution was introduced, with £52 billion for Scotland, £20 billion for Northern Ireland by the end of the spending review period, and £23 billion for Wales. Having heard representations from many Welsh Labour colleagues, and because I know the obligation that we owe to our industrial communities, I am providing a multi-year settlement of £118 million to keep coal tips safe in Wales.
I know what pride people feel in their communities—I see it everywhere I go—but I also know that, for too many people, there is a sense that something has been lost as high streets have declined, community spaces have closed, and jobs and opportunity have gone elsewhere. The renewal of Britain must be felt everywhere. Today I am pleased to announce additional funding to support up to 350 communities, especially those in the most deprived areas—funding to improve parks, youth facilities, swimming pools and libraries, and to support councils in fighting back against graffiti and fly-tipping, including in Blackpool South, Stockport, Stoke-on-Trent Central, Swindon North, and Newcastle upon Tyne East and Wallsend.
And there is more. Job creation and community assets are vital to our growth mission, but too often, regeneration projects are held back, gathering dust in bureaucratic limbo. We are changing that. We will establish a growth mission fund to expedite local projects that are important for growth—projects such as Southport pier, an iconic symbol of coastal heritage that has stood empty since 2022; Kirkcaldy’s seafront and high street, where investment would create jobs and new business opportunities; and plans for Peterborough’s new sports quarter, to drive activity and community cohesion. People deserve a Government who share their ambition for their communities, and who deliver renewal, growth, and opportunity, and that is what you get with a Labour Government.
If people are to feel pride in their community, enjoy their public spaces, and spend time on their high streets, they must feel safe when they do so—safe in the knowledge that when people break the law, they feel the full force of the law. The Conservative party left our prisons overflowing and on the brink of collapse, and left it to us to deal with the consequences. We are taking the necessary action, so my right hon. Friend the Justice Secretary and I have announced that we are investing £7 billion to fund 14,000 new prison places, and putting up to £700 million per year into reform of the probation system. Today, I will do more. I am increasing police spending power by an average 2.3% per year in real terms over the spending review period, to protect our people, our homes and our streets. That is more than £2 billion, supporting us to meet our plan for change commitment of putting 13,000 additional police officers, police community support officers and special constables into neighbourhood policing roles across England and Wales.
I am determined that every family, as well as every place, should feel the benefits of Britain’s renewal. Falling interest rates, supported by our commitment to economic stability, are already saving many families hundreds of pounds a month on their mortgage. I have accepted pay review body recommendations for our armed forces, nurses, teachers and prison officers, giving public sector workers the fair pay rises that they deserve. In autumn, I increased the national living wage—a pay rise for around 3 million hard-working people. This Government are doing more: we are banning exploitative zero-hours contracts, strengthening statutory sick pay, and ending the use of unscrupulous fire-and-rehire practices. Those are my choices; those are Labour choices.
I know that for many people the cost of living remains a constant challenge. That is why we are capping the cost of school uniforms. I can tell the House today that I am extending the £3 bus fare cap until at least March 2027. Earlier this week, we announced that over three quarters of pensioners will receive the winter fuel payment this year. And there is more: to get bills down, not just this winter but in winters to come, we have expanded the warm homes plan to support thousands more of the UK’s poorest households. That includes providing £7 million to homes in Bradford, £11 million to homes in Rugby, and £30 million to homes in Blackpool. Today I can announce that I will deliver in full our manifesto commitment to upgrading millions of homes, saving families and pensioners across the country up to £600 off their bills, each and every year. I am determined to do everything in my power to put more money in people’s pockets, to give people security and control in their lives, to make working people better off, and to show them that this Labour Government are on their side.
Taxpayers work hard for their money, and they expect their Government to spend their money with care. For the first time in 18 years, this Government have run a zero-based review, and made a line-by-line assessment of what the Government spend—something that the Tories did not bother to do in 14 years. As a result of that work, and our wider drive for efficiencies, led by my right hon. Friend the Chancellor of the Duchy of Lancaster, in this spending review I have found savings from the closure and sale of Government buildings and land, from cutting back office costs, and from reducing consultancy spend—all of which the previous Government failed to do. Those reforms will make public services more efficient, more productive, and more focused on the user. I have been relentless in driving out inefficiencies, and I will be relentless in cutting out waste, with every single penny reinvested in our public services.
I joined the Labour party almost 30 years ago because I knew, growing up, that the Conservative party did not care much about schools like mine, or the kids I grew up with. I joined because I believed that every young person should have an equal chance to succeed, no matter where they come from or what their parents do. I believe that just as strongly today as I did then. That is why, at the Budget last autumn, I ended the tax loophole that exempted private schools from VAT and business rates. I put that money where it belongs: into helping the 93% of children in our state schools. The Conservatives opposed money for their local state schools, but I will always prioritise those schools. That was my choice; that is the Labour choice.
Because of decisions that we made in this spending review, last week, this Government, working with my right hon. Friend the Education Secretary, announced that free school meals will be extended to over half a million more children. That policy alone will lift 100,000 children out of poverty—children in schools from Tower Hamlets to Sunderland, and from Swansea to Bridgend.
Last year, at the Labour party conference, I was proud to announce the first steps in our plan to deliver breakfast clubs for every child, with an initial roll-out to the first 750 schools. We will continue with that national roll-out as part of our manifesto commitment, so that no child goes hungry, and every child can have the best chance of thriving and succeeding. I know that a good start in life does not start at school, so I can also announce £370 million for school-based nurseries, to put us firmly on track to meet our plan for change commitment to a record number of children being school-ready. On children’s social care, to break the dangerous cycle of late intervention and low-quality care, I am providing £555 million of transformation funding over the spending review period, so that children do not needlessly go into care when they could stay at home, and so that, where state intervention is necessary, there is better care, and there are better outcomes.
Last week, I was pleased to announce, with my right hon. Friend the Secretary of State for Culture, Media and Sport, that more than £130 million from the dormant assets scheme, run with the financial services sector, will be allocated to funding facilities for our young people, to give every child the chance to take part in music, sport and drama, and to fund libraries in our schools, so that the confidence and opportunities that those resources open up are no longer the preserve of the privileged few. Those are my choices, those are Labour choices, and those are the choices of the British people.
Overall, I am providing a cash uplift of over £4.5 billion a year in additional funding for the core schools budget by the end of the spending review, backing our teachers and our kids. People who went to ordinary comprehensives in the ’80s and ’90s are all too familiar with the experience of being taught in temporary classrooms. The previous Conservative Government oversaw another generation of kids being herded into cold and damp buildings as school roofs literally crumbled. It was not acceptable when I was at school, and it is not acceptable now. I am therefore providing investment, rising to nearly £2.3 billion per year, to fix our crumbling classrooms, in addition to £2.4 billion per year to continue our programme to rebuild 500 schools, including Chace community school in Enfield, Woodkirk academy in Leeds and Budmouth academy in Weymouth. Investing in our young people, investing in Britain’s future and investing in opportunity for all: that is Labour’s choice.
Finally, let me turn—[Hon. Members: “More!”] I knew they would cheer. Let me turn to our national health service. It is our most treasured public service, and people rightly expect an NHS that is there when they need it; that an ambulance will come when they call one; that a GP appointment will be available when they need one; and that a scan will be performed when they are referred for one. I am hugely grateful to our nurses, our doctors, our paramedics and other healthcare professionals for everything that they do.
If we want a strong economy where working people can fulfil their potential, we must have a strong NHS—not, as the Reform party have called for, an insurance-based system. We believe in a publicly funded national health service, free at the point of use. Perhaps the hon. Member for Clacton should spend more time focusing on the priorities of the British people, and less time in the Westminster Arms—although, after this week, perhaps the Two Chairmen pub might be a better fit.
At the Budget, I took the decisions necessary to provide an immediate injection of funding to get the NHS back on its feet. I commend my right hon. Friend the Health Secretary for all the progress that he has already made. In less than a year, this Government have recruited 1,700 new GPs, delivered 3.5 million extra appointments and cut waiting lists by more than 200,000. Fixing our NHS also means delivering fundamental reform across social care, so we are backing the first ever fair pay agreement for that sector. I am also increasing the NHS technology budget by almost 50%, and we are investing £10 billion to bring our analogue health system into the digital age, including through the NHS app, so patients can manage their prescriptions, get their test results and book appointments all in one place.
We are shifting care back to the community and providing more funding to support the training of thousands more GPs to deliver millions more appointments. We are investing more in prevention, to meet our manifesto commitment of providing mental health support teams in all schools in England by the end of this Parliament. Those investments will enable the delivery of our upcoming 10-year plan for health and will put the NHS firmly back on the path to renewal.
To support that plan, to back the doctors and nurses we rely on, and to make sure that the NHS is there whenever we need it, I am proud to announce today that this Labour Government are making a record cash investment in our national health service, increasing real-terms, day-to-day spending by 3% per year for every single year of this spending review—an extra £29 billion per year for the day-to-day running of our health service. That is what the British people voted for and that is what we will deliver: more appointments, more doctors and more scanners. The national health service: created by a Labour Government, protected by a Labour Government and renewed by this Labour Government.
This is a spending review to deliver the priorities of the British people: security, with a strong Britain in a changing world; economic growth, powered by investment and opportunity in every part of Britain; and our nation’s health, with an NHS fit for the future. I have made my choices. In place of chaos, I choose stability; in place of decline, I choose investment; and in place of pessimism, division and defeatism, I choose national renewal. These are my choices, these are Labour choices, and these are the choices of the British people. I commend this statement to the House.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(1 month, 2 weeks ago)
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Rachel Reeves
The money from national insurance—which, of course, only came in last month—is being used to fund investment in the national health service. Since the general election we have delivered 3 million additional NHS appointments, which benefits constituents in East Yorkshire and throughout the country. As for supporting business, the trade deal that we secured with the European Union was welcomed yesterday by the Confederation of British Industry, the Food & Drink Federation, the Institute of Directors and others, because it will add about £9 billion to the size of the UK economy.
Sir Mel Stride (Central Devon) (Con)
Only last week the right hon. Lady was trumpeting that the economy had turned a corner, but, as she has just said, it is barely a month since her disastrous jobs tax started to bite. May I ask her precisely which business confidence survey—just one—she can point to which supports her assertion that everything is coming up roses?
Rachel Reeves
According to PwC’s global CEO survey—that is just one of the surveys—Britain is the second-best place in the world in which to invest, and that is what this Government are doing. The shadow Chancellor simply is not serious, and his party is becoming completely irrelevant. He talks about jobs; 200,000 jobs have been created since the general election. He talks about economic growth; the UK is now the fastest-growing economy in the G7. He talks about business; we have secured three trade agreements which are backed by British businesses and British trade unions, and the Conservative party opposes every single one of them. No wonder even George Osborne has said that the shadow Chancellor has “no credible economic plan”. While the Conservative party plummets into irrelevance, this Labour Government will deliver in the national interest.
Rachel Reeves
This Government have committed to increasing the proportion of civil servants who work in the north of England. But we already have a hub that we are expanding in Darlington, where eight Departments work, including officials from the Treasury. The Treasury is very mindful of the importance of investing right across the north of England—in Darlington, Leeds, Cumbria, Rossendale and Darwen and many other constituencies beside.
Rachel Reeves
That is an opportune question, because I will be meeting Lord Vallance this afternoon to discuss the work he is taking forward on the Ox-Cam corridor to bring more good jobs, paying good wages, not only to Oxford and Cambridge, but, crucially, to the towns and cities in between. Some of the extra money we are putting into capital investment will absolutely be going to support the huge growth opportunities in that part of the world.
Speaker’s Statement
Debate between Lindsay Hoyle and Rachel Reeves(2 months, 3 weeks ago)
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Mr Speaker
Before we come to Treasury questions, I have agreed to a request from the Chancellor to make some brief comments about the global financial situation, following which the shadow Chancellor and the Liberal Democrat spokesperson will be allowed to respond and ask a question. I will then call other hon. Members to ask the questions on the Order Paper in the usual way. Other Members may well wish to refer to the Chancellor’s comments in their supplementary or topical questions, and I will take a more liberal view of the scope of supplementary questions than is usually the case. I call the Chancellor of the Exchequer.
The Chancellor of the Exchequer (Rachel Reeves)
Thank you, Mr Speaker. As you say, I would like to make some brief remarks on the current economic situation.
The United States decision to impose tariffs has had, and will continue to have, huge implications for the world economy. These implications have been reflected in the reaction we have seen in global markets in recent days, which the financial authorities have of course been monitoring closely. This morning, I spoke to the Governor of the Bank of England, who confirmed that markets are functioning effectively and that our banking system is resilient.
I know, too, that this is an anxious time for families, who are worried about the cost of living—we have your backs. British businesses are worried about what a changing world will mean for them—we have your backs, too. This Government are clear-eyed that our response to global change cannot be to watch and wait, but instead to act decisively, to take the right decisions that are in our national interest, protecting working people. All the decisions that we make as a Government will be underpinned by the stability of our non-negotiable fiscal rules.
A trade war is in nobody’s interests. That is why we must remain pragmatic and cool-headed, and pursue the best deal with the United States in our national interest. That remains our priority. It was part of the discussion that I had with US Treasury Secretary Scott Bessent last week. But we have been clear that nothing is off the table. That is why we will continue to back British businesses during these uncertain times, particularly in industries that are most affected, as we rebuild our industrial base here in Britain.
We showed that backing yesterday when the Prime Minister and I announced new measures to give British car makers certainty and stability, and to support them on the transition to electric vehicles. We have put forward plans to support our life sciences sector by cutting back the time it will take to set up clinical trials in the UK. It is why we are working with our international allies to reduce barriers to trade right across the world. Over recent days I have had discussions with my counterparts in Canada, Australia, Ireland, France and Spain, and with the European Commission. We will pursue those talks in earnest. Tomorrow, I will hold talks with the Indian Government as part of our two nations’ economic and financial dialogue, as we seek to secure a new trade deal with India.
Finally, we must go further and faster in our mission to kick-start economic growth. I know that the challenges facing the global economy, and their potential impact, could be profound. As a Government, we must step up to that challenge to deliver security for working people through our plan for change, which is underpinned by stability, reform and investment—prioritising the builders, not the blockers; reforming our public services, not defending the status quo; investing in our long-term infrastructure, not cutting it for the short term. Security for working people, renewal for Britain—that is our focus, and that is what this Government will deliver.
Mel Stride (Central Devon) (Con)
I thank the right hon. Lady for advance notice of her comments.
This is a time of great concern for millions of people up and down our country, for businesses, and, as an open-trading nation, for our economy at large. Free trade has been the bedrock of prosperity for our country, and for many countries around the world, for decades. It has raised billions of people out of poverty. Tariffs are the enemy of free trade, and we on the Conservative Benches will do whatever we can to assist the Government in getting those tariffs down.
Having said that, of course we will never cease to be an effective Opposition who vigorously hold the Government to account—not least on the disastrous decisions that they have already taken in respect of our economy. We will be responsible when it comes to these matters, particularly where market sensitivities are engaged.
I want to ask the right hon. Lady the following questions. First, could she provide further details of the US negotiations and specifically whether further meetings with Scott Bessent and others have been arranged that involve her? Secondly, which areas beyond tariffs are being discussed in those negotiations? Thirdly, which sectors beyond cars and life sciences are being considered for potential Government support? Finally, could she update the House on what options there are for protecting sectors of the economy that might be affected by the dumping of goods as a consequence of trade diversion?
Rachel Reeves
I thank the right hon. Gentleman for that response and for his offer to work constructively. I know from my time as shadow Chancellor that those moments when we can work constructively together in the national interest, whether in response to covid or in supporting Ukraine against the aggression of Russia, are when this House is at its best.
The shadow Chancellor asked for further details in a number of areas. Discussions are ongoing across a range of Government Departments, including the Treasury, with the United States, and I will be meeting US Treasury Secretary Scott Bessent shortly. Beyond tariffs, we are discussing a range of different areas, but the focus is on reducing tariff and non-tariff barriers to trade, with a particular focus on those sectors that are subject to the higher tariffs.
Although the 10% tariffs are lower than those for many other countries around the world, and we welcome that, the additional tariffs on cars, on steel and potentially on life sciences pose a real challenge to our country, because those are some of our biggest export markets. That is why we made the announcements yesterday, and in those sectors—automotives, life sciences and steel—we will continue to take the action that is necessary, working in partnership with business and trade unions, to make sure we are addressing those issues. We are also using institutions such as the British Business Bank, the National Wealth Fund and UK Export Finance to help businesses through these times.
The shadow Chancellor also mentioned concerns around dumping. We are working with colleagues around the world to understand those implications, but our first priority is not to create more trade barriers but to reduce the ones that exist today.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 months, 3 weeks ago)
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Rachel Reeves
I will follow up on that issue. The smallest businesses—those that employ the equivalent of four people on the national living wage—will be paying no national insurance at all from this April. Up to 1 million of the smallest businesses will be paying less or the same national insurance as they were paying previously.
Rachel Reeves
Impressive. We will be considering all such schemes as part of the spending review, but I agree with the hon. Gentleman that we need to go further and faster to grow our economy. That is why we are spending £113 billion more on capital investment in this Parliament, compared to the plans that we inherited, which means that we can upgrade more roads, rail lines and energy infrastructure, and build the 1.5 million homes our country needs too.
The Chancellor of the Exchequer (Rachel Reeves)
The first duty of any Government is to keep the nation safe. That is why we are increasing defence spending as a share of GDP to 2.5%—the biggest sustained increase in defence spending since the end of the cold war. Derby has a vital role to play within the UK’s defence sector, particularly in nuclear engineering and aerospace, as demonstrated by the landmark £9 billion deal with Rolls-Royce, which will create up to 1,000 jobs in the city and protect thousands more.
Rachel Reeves
We inherited the settlement made by the previous Government, as the hon. and learned Member will know. There is a summit between the UK and the EU on 18 May where we will be looking to reduce the barriers to trade between the whole of the United Kingdom and the European Union. We recognise the specific issues around Northern Ireland, particularly in regard to the response to the tariffs, and we will continue to work with the Executive there to ensure that we get the best outcome for the people of Northern Ireland.
Spring Statement
Debate between Lindsay Hoyle and Rachel Reeves(3 months, 1 week ago)
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The Chancellor of the Exchequer (Rachel Reeves)
This Labour Government were elected to bring change to our country, to provide security for working people and to deliver a decade of national renewal. That work began in July, and I am proud of what we have delivered in just nine months: restoring stability to our public finances, giving the Bank of England the foundation to cut interest rates three times since the general election, rebuilding our public services, with record investment in our NHS bringing waiting lists down for five months in a row, and increasing the national living wage to give 3 million people a pay rise from next week.
Now our task is to secure Britain’s future in a world that is changing before our eyes. The threat facing our continent was transformed when Putin invaded Ukraine. It has since escalated further and continues to evolve rapidly. At the same time, the global economy has become more uncertain, bringing insecurity at home as trading patterns become more unstable and borrowing costs rise for many major economies. The job of a responsible Government is not simply to watch this change. This moment demands an active Government—a Government not stepping back but stepping up, a Government on the side of working people helping Britain reach its potential. We have the strengths to do just that as one of the world’s largest economies, an ally to trading partners across the globe, and a hub for global innovation. These strengths and the progress we have made so far mean that we can act quickly and decisively in a more uncertain world to secure Britain’s future and to deliver prosperity for working people.
As I set out at the Budget last year, I am today returning to the House to provide an update on our public finances, supported by a new forecast from the independent Office for Budget Responsibility, ahead of a full spending review in June. I will then return to the House in the autumn to deliver a Budget in line with our commitment to deliver just one major fiscal event a year.
Let me now turn to the OBR’s forecasts; I want to thank Richard Hughes and his team for their dedicated work. The increased global uncertainty has had two consequences: first on our public finances and secondly on our economy. I will take each in turn.
In the autumn, I set out our new fiscal rules that would guide this Government. These fiscal rules are non-negotiable. They are the embodiment of this Government’s unwavering commitment to bring stability to our economy and to ensure security for working people, because the British people have seen what happens when a Government borrow beyond their means. The mini-Budget delivered by the Conservatives resulted in higher bills, higher rents and higher mortgages, and it was not the wealthy who suffered most when they crashed the economy; it was ordinary working people. They continue to feel the effects two and a half years later of the damage that the Conservatives did.
Let me be clear: there is nothing progressive, there is nothing Labour, about working people paying the price for economic irresponsibility. The British people put their trust in this Labour Government because they knew that we—they knew that I—would never take risks with the public finances and would never do anything to put household finances in danger. We must earn that trust every single day.
I set out two rules at the Budget. The first was our stability rule, which ensures that public spending is under control, balancing the current budget by 2029-30 so that day-to-day spending is met by tax receipts. The second was our investment rule to drive growth in the economy, ensuring that net financial debt falls by the end of the forecast period, while enabling us to invest alongside business.
Turning first to the stability rule, the OBR’s forecast shows that before the steps that I will take in this statement, the current budget would have been in deficit by £4.1 billion in 2029-30, having been projected to be in surplus by £9.9 billion in the autumn, as the UK, alongside our international peers like France and Germany, has seen the cost of borrowing rise during this period of heightened uncertainty in global markets. As a result of the steps that I am taking today, I can confirm that I have restored in full our headroom against the stability rule, moving from a deficit of £36.1 billion in 2025-26 and £13.4 billion in 2026-27 to a surplus of £6 billion in 2027-28, £7.1 billion in 2028-29 and £9.9 billion in 2029-30. That compares with the headroom left by the previous Government of just £6.5 billion. That means that we are continuing to meet the stability rule two years early, building resilience to shocks in this, a more uncertain world.
The OBR forecast that the investment rule would also be met two years early, with net financial debt of 82.9% of GDP in ’25-26 and 83.5% in ’26-27, before falling to 83.4% in ’27-28, to 83.2% in 2028-29 and then to 82.7% in 2029-30, providing headroom of £15.1 billion in the final year of the forecast, broadly unchanged from the autumn forecast.
After the last Government doubled the national debt—[Interruption.] After they doubled the national debt, debt interest payments now stand at £105.2 billion this year. That is more than we allocate to defence, the Home Office and the Ministry of Justice combined. That is the legacy of the Conservative party. The responsible choice is to reduce our levels of debt and borrowing in the years ahead, so that we can spend more on the priorities of working people, and that is exactly what this Government will do. I said that our fiscal rules were non-negotiable and I meant it. I will always deliver economic stability and I will always put working people first. I said it at the election; I said it at the Budget; and I say it again today.
Let me now set out the steps that the Government have taken. At the Budget we protected working people by keeping our promise not to raise their rates of national insurance, income tax or VAT. At the same time, we began to rebuild our public services after the Conservatives left a £22 billion black hole in our public finances. Ours were the right choices: the right choices for stability and the right choices for renewal, funded by the decisions that we took on tax.
As I promised in the autumn, this statement does not contain any further tax increases, but when working people are paying their taxes while still struggling with the cost of living, it cannot be right that others are still evading what they rightly owe in tax. In the Budget, I delivered the most ambitious package of measures we have ever seen to cut down on tax evasion, raising £6.5 billion per year by the end of the forecast. Today I go further, continuing our investment in cutting-edge technology, investing in HMRC’s capacity to crack down on tax avoidance, and setting out plans to increase the number of tax fraudsters charged every year by 20%. These changes raise a further £1 billion, taking the total revenue raised from reducing tax evasion, under this Labour Government, to £7.5 billion. These figures are verified by the Office for Budget Responsibility and I to thank my hon. Friend the Exchequer Secretary for his continued work in this area.
Last week, my right hon. Friend the Secretary of State for Work and Pensions set out this Government’s plans to reform the welfare system. The Labour party is the party of work: we believe that if you can work, you should work, but if you cannot work, you should be properly supported. This Government inherited a broken system: more than 1,000 people every day are qualifying for personal independence payments; one in eight young people are not in employment, education or training. If we do nothing, we are writing off an entire generation. That cannot be right and we will not stand for it. It is a waste of their potential and it is a waste of their futures, and we will change it.
As my right hon. Friend said in her statement last week, the final costings will be subject to the OBR’s assessment. Today, the OBR has said that it estimates that the package will save £4.8 billion in the welfare budget, reflecting its judgments on behavioural effects and wider factors. This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week and the Government’s “Pathways to Work” Green Paper. The universal credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30, while the universal credit health element will be cut for new claimants by around 50% and then frozen.
On top of that, we are investing £1 billion to provide guaranteed, personalised employment support to help people back into work, and £400 million to support the Department for Work and Pensions and our jobcentres to deliver these changes effectively and fairly, taking total savings from the package to £3.4 billion. While spending on disability and sickness benefits will continue to rise, these plans mean that welfare spending as a share of GDP will fall between 2026 and the end of the forecast period, which is very different from what we inherited from the Conservative party. We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and, most importantly, supporting more people back into secure work and lifting them out of poverty.
At the Budget, I fixed the foundations of our economy to deliver on the promise of change. That work has already begun. There are some 2 million extra appointments in our NHS; waiting lists are down; new breakfast clubs are opening across England; there have been the largest settlements in real terms for Scotland, Wales and Northern Ireland in the history of devolution; and asylum costs are falling—promises made, and promises kept, and every single one of them was opposed by Opposition parties.
At the Budget, alongside providing an increase in funding for this year and next, I set the envelope for the spending review, which we will deliver in June, led by the Chief Secretary to the Treasury. That will set departmental budgets until 2028-29 for day-to-day spending, and until 2029-30 for capital spending.
Today’s statement reflects two steps that we have taken on our spending plans. First, because we are living in an uncertain world, as the Prime Minister has set out, we will increase defence spending to 2.5% of GDP and reduce overseas aid to 0.3% of gross national income. That means that we save £2.6 billion in day-to-day spending in 2029-30 to fund our more capital-intensive defence commitments. Secondly, in recent months, we have begun to fundamentally reform the British state, driving efficiency and productivity across Government to deliver tangible savings and improve services across our country.
Earlier this month, the Prime Minister set out our plans to abolish the arm’s length body NHS England, and to ensure that money goes directly to improving the service for patients. The Secretary of State for Health and Social Care is driving forward vital reforms to increase NHS productivity, and is bearing down on costly agency spend to save money so that we can improve patient care.
The Chancellor of the Duchy of Lancaster is taking forward work to reduce the cost of running Government significantly—by 15%. That will be worth £2 billion by the end of the decade. This work shows that we can make our state leaner and more agile, and deliver more resources to the frontline, while ensuring that we control day-to-day spending to meet our fiscal rules.
Today, I build on that work by bringing forward £3.25 billion of investment to deliver the reforms that our public services need through a new transformation fund. That is money brought forward now to bring down the cost of running Government by the end of the forecast period by making public services more efficient, more productive and more focused on the user. I can confirm today the first allocations from this fund, including funding for voluntary exit schemes to reduce the size of the civil service, and for pioneering artificial intelligence tools to modernise the state; investment in technology for the Ministry of Justice to deliver probation services more effectively; and up-front investment so that we can support more children in foster care, to give them the best possible start in life and reduce cost pressures in the future.
Our work to make Government leaner, more productive and more efficient will help deliver a further £3.5 billion of day-to-day savings by 2029-30. Overall, day-to-day spending will be reduced by £6.1 billion by 2029-30, and it will now grow by an average of 1.2% a year above inflation; for comparison, in the autumn, that figure was 1.3%. I can confirm to the House that day-to-day spending will increase in real terms above inflation in every single year of the forecast. In the spending review, apart from the reductions in overseas aid, day-to-day spending across Government has been fully protected.
I can also confirm our approach to capital investment. In the autumn Budget, I announced £100 billion of additional capital spending to crowd in investment from the private sector, in order to fix our crumbling infrastructure and create jobs in every corner of our country. Today, I am not cutting capital spending, as the Conservative party did time and again, because that choked off growth and left our school roofs literally crumbling. That was the wrong choice. It was the irresponsible choice. It was the Tory choice. Today, I am instead increasing capital spending by an average of £2 billion per year, compared with in the autumn, to drive growth in our economy and to deliver in full our vital commitments on defence. This Government will ensure that every pound we spend will deliver for the British people by increasing productivity, driving growth in our economy and improving our frontline public services.
Let me turn to the impact of increased uncertainty on our economy. To deliver economic stability, we must work closely with the Bank of England, supporting the independent Monetary Policy Committee to meet the 2% inflation target. There have been three interest rate cuts since the general election, and today’s data shows that inflation fell in February, having peaked at 11% under the previous Government. The Office for Budget Responsibility forecasts that consumer prices index inflation will average 3.2% this year, before falling rapidly to 2.1% in 2026 and meeting the 2% target from 2027 onwards, giving families and businesses the security that they need, and providing our economy with the stable platform that it needs to grow.
Earlier this month, the OECD downgraded this year’s growth forecast for every G7 economy, including the UK, and the OBR has today revised down our growth forecast for 2025 from 2% in the autumn to 1% today. I am not satisfied with these numbers. We Labour Members are serious about taking the action needed to grow our economy; we are backing the builders, not the blockers, with a third runway at Heathrow airport and through the Planning and Infrastructure Bill. We are increasing investment with reforms to our pension system and a new national wealth fund, and tearing down regulatory barriers in every sector of our economy. That is a serious plan for growth. That is a serious plan to improve living standards. That is a serious plan to renew our country.
A changing world presents challenges, but also opportunities for new jobs and new contracts in our world-class defence industrial centres from Belfast to Deeside, and from Plymouth to Rosyth. In February, the Prime Minister set out our Government’s commitment to increasing spending on defence to 2.5% of GDP from April 2027—the biggest sustained increase in defence spending since the end of the cold war—and an ambition to spend 3% of GDP on defence in the next Parliament. That was the right decision in a more insecure world—we are putting an extra £6.4 billion into defence spending by 2027—but we have to move quickly in this changing world, and that starts with investment. Today, I can confirm that I will provide an additional £2.2 billion for the Ministry of Defence in the next financial year—a further down payment on our plan to deliver 2.5% of GDP by 2027. This additional investment is about increasing not just our national security, but our economic security.
As defence spending rises, I want the whole country to feel its benefits, so I will now set out the immediate steps that we are taking to boost Britain’s defence industry, and to make the UK a defence industrial superpower. We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on new, novel technologies, including drones and artificial intelligence-enabled technology, driving forward advanced manufacturing production in places like Glasgow, Derby and Newport, creating demand for highly skilled engineers and scientists, and delivering new business opportunities for UK tech firms and start-ups. We will establish a protected budget of £400 million in the Ministry of Defence—a budget that will rise over time—for UK defence innovation, and a clear mandate to bring innovative technology to the frontline at speed.
We will reform our broken defence procurement system, making it quicker, more agile and more streamlined, and giving small businesses across the UK better access to Ministry of Defence contracts—something welcomed by the Federation of Small Businesses. We will take forward our plan for Barrow, a town at the heart of our nuclear security, working with my hon. Friend the Member for Barrow and Furness (Michelle Scrogham). We are providing £200 million to support the creation of thousands of jobs there. We will regenerate Portsmouth naval base, securing its future, as called for by my hon. Friend the Member for Portsmouth South (Stephen Morgan). We will secure better homes for thousands of military families—the homes that they deserve, which were denied to them by the previous Government—in the constituencies of my hon. Friends the Members for Plymouth Moor View (Fred Thomas), for Plymouth Sutton and Devonport (Luke Pollard) and for York Outer (Mr Charters) and in Aldershot. That is the difference that this Labour Government are making.
Finally, we will provide £2 billion of increased capacity for UK Export Finance to provide loans for overseas buyers of UK defence goods and services. I want to do more with our defence budget, so that we can buy, make and sell things here in Britain. I want to give our world-leading defence companies and those who work in them further opportunities to grow, and to create jobs in Britain, as military spending rightly increases all across Europe. To oversee all this vital work, my right hon. Friend the Defence Secretary and I will establish a new defence growth board to maximise the benefits from every pound of taxpayers’ money that we spend, and we will put defence at the heart of our modern industrial strategy to drive innovation, which can deliver huge benefits for the British economy. That is how we make our country a defence industrial superpower, so that the skills, jobs and opportunities of the future can be found right here in the United Kingdom.
As the previous Government learned to their detriment, there are no shortcuts to economic growth. It will take long-term decisions. It will take our putting in the hard yards. It will take time for the effect of the reforms that we are introducing to be felt in the everyday economy. It is right that the Office for Budget Responsibility should consider the evidence and look carefully at measures before recognising a growth impact in its forecast, but I can announce to the House that the OBR has considered and has scored one of the central planks of our plan for growth.
In my first week as Chancellor, I announced that we were pursuing the most ambitious set of planning reforms in decades to get Britain building again, and in December we published changes to the national planning policy framework, driven forward tirelessly by my right hon. Friend the Deputy Prime Minister. We are reintroducing mandatory housing targets, and bringing grey-belt land into scope. The OBR has today concluded that these reforms will permanently increase the level of real GDP by 0.2% in ’29-30—an additional £6.8 billion for our economy—and by 0.4% of GDP within 10 years, which is an additional £15.1 billion in the British economy. That is the biggest positive growth impact that the OBR has ever reflected in its forecast, for a policy with no fiscal cost. Taken together with our plans to increase capital spending, which we set out in the Budget last year, this Government’s policies will increase the level of real GDP by 0.6% in the next 10 years. That is the difference that this Labour Government are making. Those are policies to grow our economy promised by a Labour Government, delivered by a Labour Government and opposed by the parties opposite.
The planning system that we inherited was far too slow. The OBR has concluded that our reforms will lead to house building reaching a 40-year high, with 305,000 homes a year by the end of the forecast period. Changes to the national planning policy framework alone will help build over 1.3 million homes in the UK over the next five years, taking us within touching distance of delivering our manifesto promise to build 1.5 million homes in England in this Parliament. Those are homes promised by this Labour Government, homes built by this Labour Government and homes opposed by the parties opposite.
The impact on our economy goes further still. I said at the election that we could not simply tax and spend our way to prosperity. We need economic growth, so I can today confirm that the effect of our growth policies, including our planning reforms, means an additional £3.4 billion to support our public finances and our public services by 2029-30. Those are the proceeds of growth, promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.
Earlier this week, we provided an additional £2 billion of investment in social and affordable homes next year, delivering up to 18,000 new homes, and allowing local areas to bid for new development across our country, including sites in Thanet, Sunderland and Swindon. That is more security for families across the country, promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.
To build these new homes, we need people with the right skills. Earlier this week, my right hon. Friend the Education Secretary announced more than £600 million to train up 60,000 more construction workers, including through 10 new technical excellence colleges across every region of the country, giving working people the chance to fulfil their potential. Those are new opportunities for our young people, promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.
All this is just the start. The Planning and Infrastructure Bill passed its Second Reading on Monday. That was no thanks to the parties opposite. Once that Bill completes its passage, it will help deliver the homes and infrastructure our country badly needs. I say to the parties opposite: the British people will be watching. If the parties opposite do not support these reforms, let us be clear about what that would mean: they are opposing economic growth, they are opposing more homes for families and they are opposing good jobs across our country. We on the Government Benches are clear about whose side we are on; the parties opposite must decide, too.
This Labour Government are taking the right decisions now to secure Britain’s future. Today, I can confirm to the House that the OBR has upgraded its growth forecast next year and every single year thereafter, with GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029. By the end of the forecast, our economy will be larger compared with the OBR’s forecast at the time of the Budget. That is the difference that this Labour Government are making.
This is not just about lines on a graph; it is about improving people’s lives. Working people are still feeling the pinch after a cost of living crisis caused by the Conservatives that caused interest rates and inflation to go through the roof, so I am pleased that the OBR confirms today that real household disposable income will now grow this year at almost twice the rate expected in the autumn. Compared with the forecast in the final Budget delivered by the Conservatives, and after taking inflation into account, the OBR says today that households will be on average more than £500 a year better off under this Labour Government. That will mean more money in the pockets of working people and higher living standards—promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.
The world is changing. We can see that, and we can feel it. A changing world demands a Government who are on the side of working people, acting in their interest, acting in the national interest, not retreating from challenges, and not stepping back. It demands a Government with the courage to step up to secure Britain’s future and to seize the opportunities that are out there and before us. I am impatient for change. The British people are impatient for change after 14 years of failure, and we are beginning to see change happen. Our plan for change is working. Defence spending is rising. Waiting lists are falling. Wages are up and interest rates are cut. That is the difference that this Labour Government are making.
Today, the OBR confirms that our plan to get Britain building will drive growth in our economy and put more money in people’s pockets. There are no quick fixes, but we have taken the right choices: returning stability to our economy after years of mismanagement by the party opposite, and delivering security for our country and security for working people. That is what drives this Government; that is what drives me as Chancellor; and, that is what drives the choices I have set out today. I commend this statement to the House.
Mel Stride
May I just point out that all the Chancellor’s fiscal headroom disappeared, not just some of it? In fact, she went underwater to the tune of £4.1 billion. Reeling from one fiscal event to the next is not a way to run the public finances, and breaking your fiscal rules to the extent that the right hon. Lady has in just six months is a public humiliation.
May I now focus briefly on defence spending? We on this side of the House welcome the fact that the Government will reach 2.5% of GDP by 2027, as we pressed them to do, and we note the stepping stone along the way that the right hon. Lady has just announced, but we should go further than that. The 3% target should be brought forward to this Parliament. So may I ask the right hon. Lady: given the geopolitical tensions that she has raised, what provision she has made in her headroom, in her fiscal plans, for increasing defence spending more quickly in this Parliament, if that proves necessary? May I also ask her this: would she scrap the absurd Chagos deal, and put that money behind our armed forces?
The economy is in a perilous state, but there was a different way. There were different choices on taxing and spending and borrowing, and on productivity, and on welfare. Let me just say a few words about welfare. It was the privilege of my life to serve as the Secretary of State for Work and Pensions, and when it came to welfare reform, with that privilege came a deep responsibility: the responsibility for welfare reform to be properly thought through, with a very clear plan—[Interruption]—I know that Labour Members do not like it, because it is an alien idea to their party—so that we could be fair to the taxpayer, but equally fair to the many people up and down the country, some of whom are highly vulnerable. That was an approach, on our watch, that led to £5 million of savings across the forecast period, and 450,000 fewer people going on to long-term sickness and disability benefits as a direct consequence.
We would have gone further—much further—and we set out a clear plan in our manifesto to do exactly that, but those in the party opposite rushed their changes. They had no plan. There was not a single mention of the personal independence payment in the Labour party manifesto, and when they got into office, the Labour Government pussyfooted around and dithered. Why? Because it is deeply divisive within their rank and file. Then suddenly, when the Chancellor decided that she had run out of money, out went the word to find some savings in welfare, to scrabble around, to yank every lever possible.
Then there was the spectacle, frankly, of what the OBR has said about the simply shambolic changes that were announced only last week by the Secretary of State for Work and Pensions. We have gone from incompetence to chaos. There have been more changes to this policy than there were at the last minute to the right hon. Lady’s LinkedIn profile. The result is the worst of all worlds: a wholly inadequate level of savings on welfare, with welfare costs spiralling ever higher, and changes that are likely to harm many vulnerable people. May I ask the right hon. Lady: when the Secretary of State for Work and Pensions came to the House last week with these changes, she did not provide an impact assessment, but was this because the OBR had not signed off the numbers, was it because the Department did not have enough time to produce one, or was it only provided today, as many of us suspect, because this was thought to be a good time to bury bad news?
The forecast for growth is down, the forecasts for borrowing costs and inflation are up, and business confidence has been smashed into a million pieces. This Chancellor is constantly trying to blame forces beyond her control. The right response is not to duck responsibility, but to build a resilient economy. The right hon. Lady would have us believe that that is what she is doing, but how can we believe this Chancellor? How can we trust this Chancellor? She is the Chancellor who said she would not increase borrowing, but she did. She said she would not change her fiscal rules, but she did. She said she would not put up national insurance, but she did. She said she would not cut the winter fuel payment, but she did. She said she would not tax farmers, but she did, and she said she would not move to more than one fiscal event a year, and she just has. Now we are all paying the price of her broken promises. Today’s numbers confirm it. We are poorer and we are weaker. To govern is to choose, and this Chancellor has made all the wrong choices.
Rachel Reeves
I know that the shadow Chancellor has not been in his role for very long, but at least he is not misquoting Shakespeare today. If this was a Budget, it would be the Leader of the Opposition responding. I am glad that she is still in her place, but I know she will want to get back to her office for a lunchtime steak soon.
The right hon. Gentleman talks about Budgets. Let me remind the Conservative party that the only emergency Budget we have seen in recent years was in response to their party’s disastrous mini-Budget—a mini-Budget that crashed the economy, sent mortgage bills spiralling and left a £22 billion black hole in our nation’s finances. Conservative Members may have forgotten about the damage that they did to our country, but the British people never will.
As always, the shadow Chancellor talked a lot, but he did not offer a single alternative. He says he opposes our tax rises, but he cannot tell us whether he would cut the NHS to reverse them. He says he wants economic growth, but Conservative Members abstained on the very planning reforms that the OBR has said will kick-start growth. Mr Speaker, you do not change the country by abstaining or by sitting on the fence; you change the country by leading and by taking action, and that is what this Government are doing. The shadow Chancellor says he wants businesses to trade, but he does not want us to talk to the second largest economy in the world or, indeed, our biggest trading partners in the European Union. He simply is not serious. Four months into the job, and he has got no clue.
The right hon. Gentleman wants to talk about growth, but he does not say anything about the fact that the OBR has upgraded growth next year and every single year after. He talks about pensioners, but he forgets that it is his party’s policy to scrap the triple lock, which we are protecting and which will mean the state pension rising next month by over £400. He talks about wages, but he forgets the fact that we are boosting wages by boosting the national living wage from next month. The shadow Chancellor says nothing about living standards or this morning’s fall in inflation, because the last Parliament was the worst on record, and the OBR has today revised up its forecast for family finances. Working people are always better off with Labour.
The right hon. Gentleman is learning something, because at least this time he has asked a couple of questions, so let me respond to them. He asked what the markets should make of this. What the markets should see is that, when I have been tested with a deterioration in the headroom, we have restored that headroom in full. That is one of the choices that I made. He says that it is a sliver of a headroom. Well, it is 50% more headroom than I inherited from the Conservative party. When I was left with a sliver of headroom, I rebuilt it after the last Government eroded it. That is the difference that we have made. While they left the public finances and the public services in a mess, we wiped the slate clean, which means that we have the flexibility now to increase defence spending, as the leader of the Labour party has done. The Conservatives had 14 years to increase defence spending, and now they lately come to the party.
The shadow Chancellor mentions welfare reform and his time at the Department for Work and Pensions. What a legacy: one in eight young people not in education, employment or training, and 1,000 people a day going on to personal independence payments. The OBR says today that welfare spending as a share of GDP will now start falling—a far cry from what we had under the Conservative party. The shadow Chancellor speaks about employment. The OBR says that employment will increase, that wages will increase and that living standards will increase. What a change, after 14 years of the Conservative party.
The world is changing, and no one can be in any doubt about it, but the Conservative party is stuck in the past—divided, out of touch and carping from the sidelines. Conservative Members have no plan: no plan to kick-start growth, no plan to fix our public services and no plan to keep our country safe. The only plan for change they are working on is a plan to change their party leader, and we cannot blame them for that.
If the Opposition have no plan, let me remind them about ours. The minimum wage up, real wages up, house building up, NHS investment up, investment in our schools up, investment in our roads up, defence spending up—and every single one of those policies is opposed by the party opposite. They are opposed by the Conservatives, opposed by Reform, opposed by the SNP, opposed by the Liberal Democrats and opposed by the Greens. It is the anti-growth coalition in action. They are the blockers. We are the builders—securing Britain’s future, protecting working people and delivering change.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
My right hon. Friend inherited a very difficult challenge when she became Chancellor of the Exchequer last July, and she is absolutely right that the books need to balance. This is not other people’s money we are spending, but taxpayers’ money—our constituents’ hard-earned money—and she is right to be tough as Chancellor. We look forward to quizzing her at the Treasury Committee next week, and I am sure she is looking forward to it just as much.
The Chancellor announced an extra £2 billion a year in capital spending, and she talked about extra defence spending. Could she give some more detail about where she hopes that extra £2 billion a year will go?
Rachel Reeves
I thank my hon. Friend for that question, and I do indeed look forward to attending the Treasury Committee next week. I was pleased to serve on the Treasury Committee in the past, and it is a pleasure to give evidence to it.
We will set out in the spending review—my right hon. Friend the Chief Secretary will set out in the spending review—the allocation of the additional capital money. However, I was able to announce today the £2.2 billion for defence from next year, as well as the £2 billion as a downpayment to build the affordable and social housing that we need. Those are two examples of the priorities of this Government to get Britain building and to secure our national security.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(4 months ago)
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Rachel Reeves
The Government have no plans to consider zero rating indoor play facilities for VAT. All tax breaks must provide value for money and evidence suggests that such savings are only partially passed on. I would, however, welcome my hon. Friend engaging with us as we look to inform our “Transforming Business Rates” paper ahead of the Budget later this year.
Rachel Reeves
The right hon. Gentleman and his party had 14 years to reform the welfare system. They failed to do so, but this Government will. We are turning the British economy round after the disaster left to us by the previous Government: three cuts in interest rates since the general election, real wages rising at their fastest rate for three years, fuel duty frozen, the payslips of working people protected, and millions getting a pay rise through an increase in the national living wage. That is the change that this Government are delivering; that is the change that the Opposition are blocking.
Rachel Reeves
Unlike the Conservatives, we believe that investing alongside private industry is good for jobs and good for economic growth. I visited the National Wealth Fund’s offices last month where I heard at first hand about its equity investment in Cornish Metals. This will help to finance the reopening of Cornwall’s South Crofty tin mine, creating more than 300 local jobs, and—
Mr Speaker
Order. Look, enough is enough. I have to get Members in from both sides. I am sorry that the Front Bench does not want to get these Members in, but I am determined to. These are called topical questions, which means I want quick questions and certainly short answers. I call the Father of the House, Sir Edward Leigh.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(5 months, 2 weeks ago)
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Rachel Reeves
After 14 years of stagnant growth and the decline in living standards during the last Parliament, my hon. Friend is absolutely right that we must turn around that performance. That is what this Government are determined to do. The planning and infrastructure Bill will come to Parliament shortly, followed by the pensions Bill, which will unlock long-term pension capital and make it easier for businesses to get things done in this country.
Mark Garnier (Wyre Forest) (Con)
The Chancellor makes reference to the PWC report, but half of the survey in that report was done before the Budget. The Chancellor and I spent a very happy three years sitting next to each other at the Treasury Committee, and she was incredibly good at demanding straight answers from the witnesses that came in front of the Committee. She has already been asked questions about the fact that the fiscal headroom is only £10 billion and the increase in the cost of borrowing is now going to go through the roof so, at some point, she will have to raise taxes, cut investment or increase debt. Which will it be?
Rachel Reeves
The headroom in our Budget was larger than the headroom that we inherited from the previous Government, so we have put aside more money for changes in economic prospects. The OBR has not yet done its forecast, which will take a whole variety of factors into account, and we will make decisions based on that. I have been really clear that our fiscal rules are non-negotiable because, unlike the Conservatives, we are determined to meet the fiscal rules, not break them time and again.
Rachel Reeves
My hon. Friend is a good advocate for businesses, including Alexander Dennis in Scarborough. The Government will soon publish a new national procurement policy statement, which will set out our priorities for public procurement in support of our mission to grow the economy. In addition to the answer I gave my hon. Friend the Member for Stoke-on-Trent North (David Williams), we recognise the importance of buses in growing our economy by getting people to work, but also the opportunities to use public procurement to buy more buses made in this country, supporting good jobs here in Britain.
Rachel Reeves
Bringing stability back to our economy by fixing the public finances is the No. 1 thing we can do to help businesses to grow, alongside our planning reforms to make it easier to build things in Britain and our reforms to the pension system to help businesses access long-term patient capital. As for agricultural property relief, the latest figures show that the top 7% of claims—117 claims—accounted for 40% of the total value of the relief, costing the taxpayer £219 million. We cannot afford to carry on like that, which is why we made those progressive and fair reforms in the Budget.
Rachel Reeves
I thank my hon. Friend for that question. I know that the cost of living has a deep impact on all our constituents, including in Coatbridge and Bellshill. Like my hon. Friend, I was pleased to see the reduction in inflation last week. The Bank of England’s independence is sacrosanct to carry on those efforts. In addition, we increased the minimum wage in the Budget, we have reformed universal credit to reduce deductions and we have extended the household support fund, all to help ensure that working families have more money in their pockets.
UK-China Economic and Financial Dialogue
Debate between Lindsay Hoyle and Rachel Reeves(5 months, 3 weeks ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Growth is the No. 1 mission of this Labour Government. To grow the economy, we need to help Great British businesses to export around the world, including to China, the second biggest economy in the world and our fourth-largest trading partner. Not engaging is simply not an option. That is why I led a delegation, including the Governor of the Bank of England, the chief executive of the Financial Conduct Authority and representatives of some of Britain’s largest financial service firms, including HSBC, Standard Chartered and Schroders, to the 2025 UK-China economic and financial dialogue—the first of its kind since 2019.
This dialogue has delivered a set of tangible benefits to ensure that British firms have greater access to the Chinese market, while safeguarding our national security—the first duty of any Government. In China, I met outstanding British companies, such as Brompton, Jaguar Land Rover and AstraZeneca, that will benefit from the steps that we have agreed. We have worked to lift market access barriers across a range of goods and services, particularly in the agrifood sector. On financial services, we have successfully secured new licences and quota allocations for UK firms to improve operating access in China. We agreed to co-operate further, including by renewing our shared commitment to the UK-China stock connect scheme, first launched in 2019, by deepening our co-operation on wealth management through a UK-China wealth connect scheme, and by progressing initiatives on pensions and sustainable finance, delivering significant benefits for UK firms and the City of London. I am pleased that China agreed to issue its first ever overseas sovereign green bond in London in 2025, underlining the UK’s position as a global capital for high-quality sustainable finance.
The UK is a global leader in financial services. There are significant opportunities to expand our presence in new markets, and the tangible outcomes we have delivered this week will help to deliver that. These steps are part of a wider programme to make substantive progress on improving arrangements for UK exporters and investors, as reflected in new agreements on vaccine approvals, fertiliser, whisky labelling, legal services, automotives and accountancy, which have set us on course for this dialogue to unlock £1 billion of value for the UK economy.
These outcomes, agreed with my counterpart Vice-Premier He Lifeng, represent pragmatic co-operation in action, and support secure and resilient economic growth, because security and economic growth go hand in hand. That means finding the right way to build a stable and balanced relationship with China that is in our national interest—one that recognises the importance of co-operation in addressing the global issues that we face, of competing where our interests differ, and of challenging robustly whenever that is required. In Beijing and Shanghai, I was clear that while we must co-operate on areas of mutual interest, we will confidently challenge on areas where we disagree. I expressed our country’s real economic and trade concerns to the Chinese, including about trade imbalances and economic security, and I raised concerns about Russia’s illegal war in Ukraine, human rights, and restrictions on rights and freedoms in Hong Kong, including the case of Jimmy Lai and the completely unjustified sanctions against British parliamentarians.
A key outcome of this dialogue is that we have secured China’s commitment to improving existing channels, so that we can openly discuss sensitive issues and the ways in which they impact our economy, because if we do not engage with China, we cannot raise our real concerns. This dialogue is just one part of our engagement with trading partners across the world. Since becoming Chancellor, I have been to New York, Washington, Toronto and Brussels to build our global economic relationships, while my right hon. Friend the Business Secretary has travelled to the Gulf to boost trade and investment, and my right hon. Friend the Foreign Secretary is engaging with partners all over the world to deliver growth that benefits people across the United Kingdom.
We must continue to go further, faster, in driving economic growth to make working people better off. That is why the Prime Minister launched our artificial intelligence opportunities action plan yesterday. It throws the full weight of Government behind AI in the UK to revolutionise our public services and make our economy more productive. It is why next week I will talk to business leaders, investors and entrepreneurs at the World Economic Forum meeting in Davos to make the case that the UK is one of the best places in the world in which to invest. In the coming weeks, I will set out further details of our plans to kick-start growth in the economy after 14 years of failure from the Conservative party.
Rachel Reeves
The shadow Chancellor is simply not serious. I was on the Opposition side of the House for 14 years, and I think that after a statement one usually asks some questions.
We heard a great deal from the right hon. Gentleman about what he would not do, but we heard absolutely nothing about what he would do. Now we can see what happens when the Leader of the Opposition tells the shadow Cabinet that it should not have any policies. As far as I can tell, the Conservative party’s economic strategy is to say that the UK should not engage with the second largest economy in the world, or indeed with our nearest neighbours and our biggest trading partners in the European Union. The right hon. Gentleman’s economic strategy is to support higher spending but none of the right decisions that are required to deliver sound public finances, and his economic strategy is to ignore the mistakes of the past with no apology to the British people for his part in Liz Truss’s mini-Budget that crashed the economy. I appreciate that, having said that, I may now receive a “cease and desist” letter from her later.
One question that the shadow Chancellor did ask was: why did I go to China? I went to secure tangible benefits for British businesses trading overseas. The right hon. Gentleman said that it was not worth it; let him say that to the representatives of HSBC, Standard Chartered, Prudential, Schroders and the London Stock Exchange who attended those meetings with me last week, all of whom have spoken of the difference that it will make.
I have been under no illusion about the scale of challenges that we face, after 14 years of stagnant economic growth, higher debt and economic uncertainty, and we have seen global economic uncertainty play out in the last week, but leadership is not about ducking these challenges; it is about rising to them. The economic headwinds we face are a reminder that we should—indeed, we must—go further and faster in our plan to kick-start economic growth, which plunged under the last Government, by bringing stability to the public finances after years of instability under the Conservative party, unlocking investment that plummeted under the previous Government and pushing ahead with essential reforms to our economy and public services. That is my message to the House today, because if we get it right, the prize on offer to us—to the British people—is immense: the opportunity to make working people better off by making Britain better off. That is the mandate this Government have, and that is what we will deliver.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I welcome my right hon. Friend’s commitment to growth in this country and to encouraging investment in the UK. Listening to the shadow Chancellor, the right hon. Member for Central Devon (Mel Stride), we would think the country was going to hell in a handcart. Does my right hon. Friend agree that this is no time for panic, that it is perfectly possible to manage any pressures on the Budget through astute management of public spending, and that we are a very long way from the approach taken during the years of austerity under the Conservative party?
Rachel Reeves
I thank the Chair of the Select Committee for that question. I set out this Government’s fiscal rules at the Budget in October: we will pay for day-to-day spending through tax receipts, and we will get debt down as a share of the economy. We remain committed to those fiscal rules and will meet them at all times.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(7 months ago)
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Rachel Reeves
At the Budget in October, we had to fill a £22 billion black hole left by the previous Government. We will never have to repeat a Budget like this one, because we will not have to clear up the mess of the previous Government ever again.
Rachel Reeves
As my hon. Friend will know, in the autumn Budget and phase 1 of the spending review, more than £1 billion was made available to local government, including £600 million for social care. The allocation of that money will be set out in the normal way over the next few weeks, so that local government is funded properly and can deliver the services that it needs to deliver.
Rachel Reeves
I happily join my hon. Friend in welcoming Mansfield’s success. We have launched a revamped fair payment code, under which signatories commit to paying their suppliers on time, and the disability finance code for entrepreneurship. That comes on top of reforms announced at the Budget to protect small businesses, such as doubling the employment allowance to £10,500, and our commitment to maintaining the small profits rate and marginal relief at their current rates and thresholds, as well as to freezing the small business multiplier for 2025-26—
Rachel Reeves
And like my hon. Friend, I look forward to small business Saturday this week—
Mr Speaker
Order. [Interruption.] No, we are going to have a little talk now, because this is not fair; I have to get all these other Members in. I understand that these are set questions, but questions and answers should be short—it works both ways—otherwise I cannot get Members in and it makes my job impossible. Please work with me.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(8 months ago)
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The Chancellor of the Exchequer (Rachel Reeves)
In July, a Treasury assessment of public spending showed that this Government inherited a £22 billion black hole in the public finances. I took immediate action—[Interruption.] Those on the Opposition Benches may not like it, but it is true. [Interruption.]
Rachel Reeves
There are not many Conservative Members, but they still make quite a lot of noise.
I took immediate action by identifying savings and making reforms to the spending and fiscal framework to ensure that never again can a Government be allowed to make unfunded commitments, and to leave their successors with a massive black hole, as the Leader of the Opposition and the previous Chancellor did. As my right hon. Friend the Chief Secretary to the Treasury said to the House yesterday, the Budget will confirm the detail of the robust fiscal rules—this was set out in our manifesto—and will set out tax and spending plans, alongside an updated forecast from the independent Office for Budget Responsibility.
Mr Speaker
Order. Who wants to go for that cup of tea? Normally this happens at Prime Minister’s questions; I do not want it starting in Treasury questions.
Rachel Reeves
All of the above. That is why my hon. Friend is in his place and Conservative Members are on the Opposition Benches.
Rachel Reeves
I know that the hon. Gentleman is a proud supporter of businesses big and small in his constituency and across Northern Ireland. I will set out more detail in tomorrow’s Budget, including on business rates, but I recognise how important it is for us to support small businesses, so that they can grow and create jobs right across the United Kingdom.
Rachel Reeves
My hon. Friend makes a really important point, which I think is familiar to all of us in our communities, about the cost of housing outstretching people’s incomes. In our manifesto we committed to building 1.5 million new homes, including social housing, which is so important and can give security to people who would otherwise be left in insecure housing in the private rented sector.
Mr Speaker
As this is his farewell question time, let us now come to the shadow Chancellor.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(10 months ago)
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Mr Speaker
Order. Mr Farron, please do not take complete advantage. I think you have slightly strayed from the original question. Chancellor, if you want to have a go at it, by all means do so, but I will understand if you do not.
Rachel Reeves
The rural economy plays an incredibly important role in our economic prosperity as a country, and boosting food security and biodiversity is obviously incredibly important to a whole range of this Government’s objectives. I will ensure that the Secretary of State for Environment, Food and Rural Affairs hears loud and clear the message from the hon. Member, and I am sure he will include it as part of his submission to the spending review on 30 October.
Rachel Reeves
The Government have committed to the triple lock not just for this year, but for the duration of this Parliament. That means that pensioners are £900 better off than they were a year ago. Based on September earnings and inflation data, we will uprate pensions next year by whichever is higher: 2.5%, inflation or average earnings. We are ensuring that pensioners get the pensions that they are entitled to and have contributed to.
Rachel Reeves
That is the purpose of elections, and at the last election, this Government achieved a sizeable majority for our missions, including growing the economy, improving living standards and making working people better off. We have just got started, and that is what we are absolutely determined to do, in order to deliver on the mandate we got on 4 July.
Rachel Reeves
Let me respond directly on the issue of Ukraine. In my first couple of weeks in this job, I had the pleasure of meeting Minister Marchenko from Ukraine, and made a commitment to him to go ahead with the extraordinary revenue acceleration programme. It is important that we work together across the House to support the Ukrainian people against the Russian invasion. In the previous Parliament, Labour always supported the Government when they took action to support the Ukrainian people, and I hope that that cross-party support can continue.
Mr Speaker
Can I remind everybody that this is topical questions? I have a big list to get through. Rachael Maskell will give us a good example.
Rachael Maskell (York Central) (Lab/Co-op)
Rachel Reeves
The basic state pension is worth £900 more than it was a year ago, and will go up again in April next year because of the triple lock, which we have committed to for the duration of this Parliament. We have already written to York council and are working with local authorities across the country to boost take-up of pension credit, because this Government, unlike the last Government, are determined to ensure that 800,000 people entitled to pension credit actually receive it.
Public Spending: Inheritance
Debate between Lindsay Hoyle and Rachel Reeves(11 months ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Before I begin my statement, my thoughts and prayers are with those affected by the events in Southport, and I am sure that the whole House will join me in paying tribute to our emergency services who are dealing with this ongoing situation.
On my first day as Chancellor of the Exchequer, I asked Treasury officials to assess the state of public spending. That work is now complete and I am today presenting it to this House. In this statement, I will do three things. First, I will expose the scale—and the seriousness—of what has been uncovered; second, I will lay out the immediate action that we are taking to deal with the inheritance; and third, I will set out our longer-term plans to fix the foundations of our economy. Let me take each of these points in turn.
First, I turn to the inheritance. Before the election, I said that we would face the worst inheritance since the second world war: taxes at a 70-year high, debt through the roof, and an economy only just coming out of recession. I knew all of those things, and during the campaign, I was honest about them and about the difficult choices that they meant. The British people knew them too. That is why they voted for change. But upon my arrival at the Treasury three weeks ago, it became clear that there were things that I did not know—[Interruption.]
Mr Speaker
Order. This is an important statement for all constituents, including mine. If I am struggling to hear it, they are struggling at home as well. You will all get your chance to ask questions; I think it is more important to hear, and then comment.
Rachel Reeves
There were things that the Conservative party covered up—covered up from the Opposition, from this House and from the country. That is why today we are publishing a detailed audit of the real spending situation, a copy of which will be laid in the House of Commons Library. I take this opportunity to thank the Chief Secretary to the Treasury, my right hon. Friend the Member for Bristol North West (Darren Jones), for his leadership, and Treasury officials for all their work in producing this document.
Let me now explain what that document has uncovered. The previous Government published their plans for day-to-day spending in the spring Budget in March, but when I arrived at the Treasury, I was alerted by officials on the very first day that that was not how much the Government had expected to spend this year. It was not even close; in fact, the total pressure on those budgets across a range of areas was an additional £35 billion. Once we account for the slippage in budgets that we usually see over a year and the reserve of £9 billion designed to respond to genuinely unexpected events, that means that we have inherited a projected overspend of £22 billion. That is a £22 billion hole in the public finances now—not in the future, but now. It is £22 billion of spending this year that was covered up by the Conservative party. If left unaddressed, it would mean a 25% increase in the budget deficit this year, so today I will set out the necessary and urgent work that I have already done to reduce that pressure on the public finances by £5.5 billion this year and over £8 billion next year.
Let me be clear: I am not talking about costs for future years that the previous Government signed up to but did not include, like the compensation for infected blood, which has cross-party support. I am not talking about the state of public services in the future, like the crisis in our prisons that they have left for us to fix. I am talking about the money that the previous Government were already spending this year and had no ability to pay for, which they hid from the country. They had exhausted the reserve and they knew that, but nobody else did. They ducked the difficult decisions, put party before country, and continued to make unfunded commitment after unfunded commitment, knowing that the money was not there. That has resulted in the position that we have now inherited: the reserve was spent more than three times over only three months into the financial year, and the previous Government told no one.
The scale of this overspend is not sustainable, and to not act is simply not an option. This month, we have seen official Office for National Statistics figures showing that borrowing is higher this year than the Office for Budget Responsibility expected, and the disaster of Liz Truss’s mini-Budget shows what happens if we do not take tough decisions to maintain economic stability. Some, including the Leader of the Opposition and the shadow Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), have claimed that the books were open. How dare they? It is not true, and I will tell the House why: there are very clear instances of specific budgets that were overspent and unfunded promises that were made, but that—crucially—the OBR was not aware of for its March forecast. I will take each in turn.
The first is the asylum system. The forecast for the number of asylum seekers has risen dramatically since the last spending review, and costs for asylum support have risen sevenfold in the past three years, but instead of reflecting those costs in the Home Office budget for this year, the previous Government covered up the true extent of the crisis and its spending implications. The document I am publishing today reveals a projected overspend on the asylum system, including the previous Government’s failed Rwanda plan, of more than £6.4 billion for this year alone. That figure was unfunded and undisclosed.
Next, in the wake of the pandemic, demand for rail services fell. Instead of developing a proper plan to adjust to that new reality, the Government handed out cash to rail companies to make up for passenger shortfalls, but failed to budget for this adequately. Because of that, and because of industrial action, there is now an overspend of £1.6 billion in the transport budget. That was unfunded and undisclosed.
Since 2022, the Government, with the support of the whole House, have rightly provided military assistance to Ukraine in response to the Russian invasion. The spending audit found that there was not enough money set aside in the reserve to fund all these costs. We will continue to honour these commitments in full, and unlike the previous Government, we will make sure that they are always fully funded.
On top of these new pressures, since 2021 inflation was above the Bank of England’s target for 33 months in a row—hitting 11% at its peak—but the previous Government had not held a spending review since 2021, which means that they never fully reflected the impact of inflation in departmental budgets. That had a direct impact on budgets for public sector pay.
When the last spending review was conducted, it was assumed that pay awards would be 2% this year. Ordinarily, the Government are expected to give evidence to the pay review bodies on affordability, but extraordinarily, this year the previous Government provided no guidance on what could or could not be afforded to the pay review bodies. That is almost unheard of, but that is exactly what they did. Worse still, the former Education Secretary had the pay review body recommendations sitting on her desk. Instead of responding and dealing with the consequences, the Government shirked the decisions that needed to be taken.
I will not repeat the previous Government’s mistakes. Where they provided no transparency to the public, and no certainty for public services, we will be open about the decisions that are needed and the steps that we are taking. That begins with accepting in full the recommendations of the independent pay review bodies. The details of these awards are being published today. That is the right decision for the people who work in, and most importantly the people who use, our public services. It gives hard-working staff the pay rises they deserve while ensuring that we can recruit and retain the people we need.
It should not have taken this long to come to these decisions and I do not want us to be in this position again, so I will consider options to reform the timetable for responding to the pay review bodies in the future. This decision is in the best interests of our economy too: the last Government presided over the worst set of strikes in a generation, which caused chaos and misery for the British public and wreaked havoc on the public finances. Industrial action in the NHS alone cost the taxpayer £1.7 billion last year. That is why I am pleased to announce today that the Government have agreed an offer to the junior doctors that the British Medical Association is recommending to its members.
My right hon. Friend the Health Secretary will set out further details. Let me pay tribute to him: his leadership on the issue has paved the way to ending a dispute that has caused waiting lists to spiral, operations to be delayed and agony for patients to be prolonged. Today marks the start of a new relationship between the Government and staff working in our national health service, and the whole country will welcome that.
Where the previous Government ducked the difficult decisions, I am taking action. Knowing what they did about the state of the public finances, they continued to make unfunded commitment after unfunded commitment that they knew they could not afford, putting party before country and leaving us with an overspend of £22 billion this year. Where they presided over recklessness, I will bring responsibility. I will take immediate action. Let me set it out in detail.
On pay, I have today set out our decision to meet the recommendations of the pay review bodies. Because the previous Government failed to prepare for these recommendations in the departmental budgets, they come at an additional cost of £9 billion this year. The first difficult choice I am making is to ask all Departments to find savings to absorb as much of this as possible, totalling at least £3 billion. To support Departments as they do this, I will work with them to find savings ahead of the autumn Budget, including through measures to stop all non-essential spending on consultancy and Government communications. I am also taking action to ask Departments to find 2% savings in their back-office costs.
I will now deal with a series of commitments made by the previous Government that they did not fund, because if we cannot afford it, we cannot do it. First, at the Conservative party conference last year, the former Prime Minister announced the introduction of a new qualification: the advanced British standard. That is a commitment costing nearly £200 million next year, rising to billions across future years. This was supposed to be the former Prime Minister’s legacy, but it turns out that he did not put aside a single penny to pay for it. So we will not go ahead with that policy, because if we cannot afford it, we cannot do it.
Next, the Illegal Migration Act 2023, passed by the previous Government, made it impossible to process asylum applications or remove people who have no right to be here.
Instead, they relied on a doomed policy to send asylum seekers to Rwanda on planes that never took off, leaving tens of thousands of people stuck in hotels on the public purse. We need a properly controlled and managed asylum system where rules are enforced, so that those with no right to be here are swiftly removed. So we have scrapped their failed Rwanda scheme, which placed huge pressure on the Home Office budget. To bring down these costs as soon as possible, my right hon. Friend the Home Secretary has already laid legislation to remove the retrospective element of the Illegal Migration Act, which will significantly reduce the use of hotel accommodation. These measures will save nearly £800 million this year and avoid costs spiralling even further next year. This was a bad use of taxpayers’ money, and we will not do it.
The previous Government claimed they were levelling up the country. They made promise after promise to the British people, but the spending audit has uncovered that some of those commitments were not worth the paper that they were written on. At autumn statement last year, the former Chancellor announced £150 million for an investment opportunity fund, but not a single project has been supported from that fund.
So following discussions with my right hon. Friend the Deputy Prime Minister, I am cancelling it today, because if we cannot afford it, we cannot do it.
The previous Government also made a series of commitments on transport, promises that people expected to be delivered and promises that many Members across this House campaigned on in good faith, but the Conservative party has failed them. We have seen from the National Audit Office the chaos that the previous Government presided over, with projects over budget and delayed again and again. The spending audit has revealed £1 billion of unfunded transport projects that have been committed to next year, so my right hon. Friend the Transport Secretary will undertake a thorough review of these commitments. As part of that work, she has agreed not to move forwards with projects that the previous Government refused to publicly cancel, despite knowing full well that they were unaffordable. That includes proposed work on the A303 and the A27, and my right hon. Friend will also cancel the restoring your railway programme, saving £85 million next year, with individual projects to be assessed through her review. If we cannot afford it, we cannot do it.
The previous Government had plans for a retail sale of NatWest shares. We intend to fully exit our shareholding in NatWest by 2025-26. But having considered advice, I have concluded that a retail share sale offer would involve significant discounts that could cost taxpayers hundreds of millions of pounds. It would therefore not represent value for money, and it will not go ahead. It is a bad use of taxpayers’ money, and we will not do it.
Next, let me address the unfunded pressures in our NHS and our social care sector.
In October 2020, the Government announced that 40 new hospitals would be built by 2030. Since then, only one new project has opened to patients, and only six have started their main construction activity. The National Audit Office was clear that delivery was wildly off track, but since coming into office, it has become clear that the previous Government continued to maintain their commitment to 40 hospitals without anywhere close to the funding required to deliver them. That gave our constituents false hope. We need to be straight with the British people about what is deliverable and what is affordable, so we will conduct a complete review of the new hospital programme, with a thorough, realistic and costed timetable for delivery.
Adult social care was also neglected by the previous Government. The sector needs reform to improve care and to support staff. In the previous Parliament, the Government made costly commitments to introduce adult social care charging reforms, but they delayed them two years ago because they knew that local authorities were not ready and that their promises were not funded, so it will not be possible to take forward those charging reforms. This will save over £1 billion by the end of next year.
Hon. Members
Mr Speaker
Order. I want Government Members to be quiet as well—I want to hear the Chancellor of the Exchequer.
Rachel Reeves
I can understand why people, and Members, are angry. I am angry too. The previous Government let people down. The previous Government made commitment after commitment without knowing where the money was going to come from. They did this repeatedly, knowingly and deliberately.
Today, I am calling out the Conservatives’ cover-up and I am taking the first steps to clean up what they have left behind, but the scale of the inheritance we have been left means that the decisions we have so far announced will not be enough. This level of overspend is not sustainable. Left unchecked, it is a risk to economic stability—and unlike the Conservative party, I will never take risks with our country’s economic stability. It therefore falls to us to take the difficult decisions now to make further in-year savings.
The scale of the situation we are dealing with means incredibly tough choices. I repeat today the commitment that we made in our manifesto to protect the triple lock, but today I am making the difficult decision that those not in receipt of pension credit or certain other means-tested benefits will no longer receive the winter fuel payment, from this year onwards. The Government will continue to provide winter fuel payments worth £200 to households receiving pension credit or £300 to households in receipt of pension credit with someone over the age of 80. Let me be clear: this is not a decision I wanted to make, nor is it the one that I expected to make, but these are the necessary and urgent decisions that I must make. It is the responsible thing to do to fix the foundations of our economy and bring back economic stability.
Alongside this change, I will work with my right hon. Friend the Work and Pensions Secretary to maximise the take-up of pension credit by bringing forward the administration of housing benefit and pension credit, repeatedly pushed back by the previous Government, and by working with older people’s charities and local authorities to raise awareness of pension credit and help identify households not claiming it.
This is the beginning of a process, not the end. I am announcing today that I will hold a Budget on 30 October, alongside a full economic and fiscal forecast from the Office for Budget Responsibility. I have to tell the House that the Budget will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax. [Hon. Members: “Ah!”] Mr Speaker, they still don’t get it, do they? Parties in Downing Street, crashing the economy, gambling on the election—party before country, every single time.
It will be a Budget to fix the foundations of our economy, and it will be a Budget built on the principles that this new Government were elected on. First, we will treat taxpayers’ money with respect by ensuring that every pound is well spent, and we will interrogate every line of public spending to ensure that it represents value for money. Secondly, I can repeat from the Dispatch Box our manifesto commitment that we will not increase taxes on working people. That means that we will not increase national insurance, the basic, higher or additional rates of income tax, or VAT. Today, my hon. Friend the Exchequer Secretary is publishing further detail on our manifesto commitments to close tax loopholes and clamp down on tax avoidance to ensure that we bring in that money as quickly as possible. My third principle is that we will meet our fiscal rules: we will move the current budget into balance and we will get debt falling as a share of the economy by the end of the forecast.
These are the principles that will guide me at the Budget, but let me be honest: challenging trade-offs will remain, so today I am launching a multi-year spending review. This review will set departmental budgets for at least three years, providing the long-term certainty that has been lacking for too long. As part of that process, final budgets for this year and budgets for next year, 2025-26, will be set alongside the Budget on 30 October.
I will look closely at our welfare system, because if someone can work, they should work. That is a principle of this Government, yet under the previous Government, welfare spending ballooned, while inactivity has risen sharply in recent years. We will ensure that the welfare system is focused on supporting people into employment, and we will assess the unacceptable levels of fraud and error in our welfare system and take forward action to bring that down.
To fix the foundations of our economy, we must ensure that never again can a Government keep from the public the true state of our public finances. The fiscal framework I have inherited had several flaws. It allowed the Government to run down the clock on departmental budgets to avoid difficult decisions and to push them back beyond the election, so I am announcing the most significant set of changes to our framework since the inception of the Office for Budget Responsibility. These changes will come into effect in the autumn.
First, we have introduced legislation to ensure that we can never again see a repeat of the mini-Budget. Secondly, we will require the Treasury to share with the Office for Budget Responsibility its assessment of immediate public spending pressures, and we will enshrine that rule in the charter for budget responsibility, so that no Government can ever again cover up the true state of our public finances. Finally, we will ensure that never again do public service budgets get set at only a few months’ notice. Instead, spending reviews will take place every two years, with a minimum planning horizon of three years, to avoid uncertainty for Departments and to boost stability for our public finances. I have already spoken to the chair of the Office for Budget Responsibility to brief him on the findings of our audit and our reforms.
By launching the spending review, I am also today starting the firing gun on a new approach to public service reform to drive greater productivity in the public sector. We will embed an approach to government that is mission-led, that is reform-driven, with a greater focus on prevention and the integration of services at a national and local level, and that is enabled by new technology, including through the work of my right hon. Friend the Secretary of State for Science, Innovation and Technology on the opportunities of artificial intelligence to improve our public services. We will establish a new office of value for money, with an immediate focus on identifying areas where we can reduce or stop spending, or improve its value.
We will appoint a covid corruption commissioner to bring back money that is owed to taxpayers after contracts worth billions of pounds were handed out by the previous Government during the pandemic. Ahead of the spending review, I will also review the cost of our political system, including restricting eligibility for ministerial severance payments based on time in office. I expect all levels of government to be run effectively and efficiently, and I will work with leaders across our country to deliver just that. That means effective local government, a civil service delivering good value for the British taxpayer and reform of our political institutions, including the House of Lords, to keep costs as low as possible.
The Budget and spending review will also set out further progress on our No. 1 mission: to grow our economy. Economic growth is the only way to sustainably improve our public services and our public finances, so we will use the spending review to prioritise specific areas of capital investment that leverage in billions more in private investment. It will not happen overnight—it will take time and it will take focus—but we have already made significant progress, including: planning reforms to get Britain building; a national wealth fund to catalyse private investment; a pensions investment review to unlock capital for our businesses; Skills England to create a shared national ambition to boost skills across our country; and work across government on a new industrial strategy, driven forward by a growth mission board, to ensure that we deliver on our commitments.
Our country has fundamental strengths on which we can build, and I look forward to welcoming business leaders to the international investment summit in Britain later this year. I know that if we can create the stable conditions that investors need to thrive, we will return confidence to our economy so that entrepreneurs and businesses big and small know that this is the best place in the world to start and grow a business. That is the bedrock on which economic growth must be built.
The inheritance from the previous Government is unforgiveable. After the chaos of partygate, when they knew that trust in politics was at an all-time low, they gave false hope to Britain. When people were already being hurt by their cost of living crisis, they promised solutions that they knew could never be paid for, roads that would never be built, public transport that would never arrive and hospitals that would never treat a single patient. They spent like there was no tomorrow because they knew that someone else would pick up the bill. Then, in the election—perhaps this is the most shocking part—they campaigned on a platform to do it all over again, with more unfunded tax cuts and more spending pledges, all the time knowing that they had no ability to pay for them. No regard for the taxpayer. No respect for ordinary, hard-working people.
I will never do that. I will restore our country’s economic stability. I will make the tough choices. I will fix the foundations of our economy so that we can rebuild Britain and make every part of our country better off. I commend this statement to the House.
Jeremy Hunt
The Chancellor says that the information is new, but she told the Financial Times:
“You don’t need to win an election to find”
out the state of public finances, as
“We’ve got the OBR now.”
Paul Johnson of the Institute for Fiscal Studies has said:
“The state of public finances were apparent pre-election to anyone who cared to look”
which is why he and other independent figures say that her argument is not credible and will not wash.
Those public finances were audited by the OBR just 10 weeks before the election was called. We are now expected to believe that, in that short period, a £20 billion black hole has magically emerged, but for every single day in that period—in fact, since January, in line with constitutional convention—the right hon. Lady had privileged access to the Treasury permanent secretary. She could have found out absolutely anything she needed. Will she confirm to the House that she did have meetings with the permanent secretary of the Treasury before the election? Will she tell the House whether they discussed public finances? Will she tell the House whether they discussed any of the pressures that she is talking about today? If so, why are we only hearing today what she wants to do about them? That is why today’s exercise is not economic—it is political.
The Chancellor wants to blame the last Conservative Government for tax rises and project cancellations that she has been planning all along. The trouble is, even her own published numbers expose the fiction behind today’s announcement. Just four days ago, she presented to the House the Government’s estimates of spending plans for the year. Those estimates are a legal requirement. The official guidance manual is clear that Departments are responsible for ensuring that estimates are consistent with their “best forecast of requirements”. They are signed off by the most senior civil servants—the accounting officers—in every Department. Yet, four days on, she is saying that those estimates are wrong. Who is right: politically neutral civil servants or a political Chancellor? If she is right, will she ask the cabinet secretary to investigate those civil servants and apologise to the House for laying misleading estimates? Of course not, because she knows that those civil servants are right and today’s black hole is spurious, just like when she says that she inherited the
“worst set of economic circumstances”
since the second world war. When BBC Verify asked a professor at the London School of Economics about that claim, he responded:
“I struggle to find a metric that would make that statement correct.”
The metrics speak for themselves. Inflation is 2% today —nearly half what it was in 2010 when we had to clear up the mess inherited from a Labour Government. Unemployment is nearly half what it was then, with more new jobs than nearly anywhere else in Europe. So far this year, we are the fastest growing G7 economy. Over the next six years, the IMF says that we will grow faster than France, Italy, Germany and Japan.
Just two days before the election was called, the managing director of the IMF praised the previous Government’s handling of the economy, and said it was in a good place. This week, the Institute for Fiscal Studies said that it was
“not a bad situation to take charge of”
and certainly not comparable to the 1940s or 1970s. If the right hon. Lady is in charge of the economy, it is time to stop trash talking it. What is the point of going to New York or Brazil to bang the drum for more investment if she comes home with a cock and bull story about how bad everything is? She should stop playing politics with Britain’s reputation and get on with running the economy.
When it comes to public finances, will the Chancellor confirm to the House that, far from being broke and broken, as Downing Street briefed the media, the forecast deficit today is 4.4%, compared with 10.3% when Labour left office in 2010? In other words, when Labour was last in office, we were borrowing double the current levels. Will she confirm another difference between today and 2010? The Conservatives came to office then, honest about our plans and saying straightforwardly that we needed to cut the deficit. She has just won an election telling us repeatedly that taxes will not go up. How many seats were won on the back of commitments not to raise tax, while she is quietly planning to do the exact opposite?
On the details that the Chancellor has announced today, will she confirm that around half of today’s fictitious black hole comes from discretionary public sector pay awards—in other words, not something that she has to do, but something where she has a choice? Will she confirm to the House that, apart from the teachers recommendation, none of the other pay review body recommendations was seen by the last Government, as they arrived after the election was called? Today she has chosen to accept those recommendations, but before doing so, was she advised by officials to ask unions for productivity enhancements before accepting above-inflation pay awards, to help to pay for those awards, as the last Government did? If she was advised to do that, why did she reject that advice and simply tell the unions, “Here’s your money, thanks for your support”? Will she confirm—[Interruption.] I know Labour Members do not like the truth, but here it is. Will she confirm that one of the reasons for her funding gap is that she has chosen to backdate a 22% pay award to junior doctors, to cover the time when they were striking?
We are just three months into the financial year, so why did the Chancellor not mention today that, at the start of the year, the Treasury had a reserve of £14 billion for unexpected revenue costs, and £4 billion for unexpected capital costs? Additionally, why has she not accounted for the Treasury’s ability to manage down in-year pressures on the reserve—last year alone by £9 billion? Why has she apparently not accounted for underspends—typically £12 billion a year? Has she totally abandoned the £12 billion of welfare savings planned by the last Government? If so, will she confirm that to the House? Has she also abandoned £20 billion of annual productivity savings planned by the last Government? If not, why are they not in her numbers? Finally, for someone who claims continuously the mantle of fiscal rectitude, will she confirm that in order to pay for her public spending plans, she will not change her fiscal rules to target a different debt measure, so she can increase borrowing and debt by the back door?
Every Chancellor faces pressures on public finances. After a pandemic and an energy crisis, those pressures are particularly challenging, which is why in autumn 2022, the previous Government took painful but necessary decisions on tax and spend. But we knew that, if we continued to take difficult decisions on pay, productivity and welfare reform, we could live within our means and start to bring taxes down. She, on the other hand, knew perfectly well that a Labour Government would duck those difficult decisions. She has caved in to the unions on pay, left welfare reform out of the King’s Speech and soft-pedalled on our productivity programme. That is a choice, not a necessity.
That choice means that taxes will have to go up and the right hon. Lady chose not to tell us before the election. Instead, in 24 days—just 24 days—she has announced £7.3 billion for GB Energy, £8.3 billion for the national wealth fund and around £10 billion for public sector pay awards. That is £24 billion in 24 days: around £1 billion for every day she has been in office, leaving taxpayers to pick up the tab for her profligacy.
Doing it this way, she makes the first major misstep of her time as Chancellor, because that great office of state depends more than any on trust—[Interruption.] In her first big moment, she breaks that trust with an utterly bogus attempt to hoodwink the public about the choices she has. Over 50 times in the election, Labour told us it had no plans to raise taxes. Now, in a U-turn that will forever shame this Labour Government, she is laying the ground to break her word. When she does, her first Budget will become the biggest betrayal in history by a new Chancellor. Working families will never forgive her.
Rachel Reeves
The shadow Chancellor had an opportunity this afternoon to admit what he had done, the legacy he had left. Instead, he takes no responsibility. The word the country was looking for today was sorry. He could not find those words; no wonder the Conservative party so definitively lost the trust of the British people at the election three and a half weeks ago. We say never again. [Interruption.] Never again should a party that plays fast and loose with the public finances be in charge of the public finances—[Interruption.]
Mr Speaker
Order. Can I just say to the Whips, who hold responsible jobs and I expect them to keep them that way, that just because they might not be at the end of the Bench does not mean they have to chunter all the way through and pass comment? I don’t need it and I won’t put up with it.
Rachel Reeves
First, specifically on the black hole, we could not have known these numbers because the Conservative party did not tell the OBR these numbers. That is why we are in the position we are in today. That is the biggest scandal of them all.
The shadow Chancellor asks about the estimates. He should recognise the estimates we laid yesterday because he produced them. We had to lay those estimates to allow public spending to continue, but since those estimates were produced, information was given to us by Treasury officials about the true scale of the overspending by the Conservative party.
The shadow Chancellor mentions the IFS. Paul Johnson from the IFS has just said that it appears that these overspends are genuinely unfunded—words not from me, but from the independent IFS, which the shadow Chancellor referenced.
The shadow Chancellor mentions what happened to the reserve. Well, the reserve has been spent, shadow Chancellor. It was spent by you three times over. That is why we are in a position of a £22 billion in-year gap between spending that was happening and the funding to produce it.
If the shadow Chancellor could do all the things he spoke about today, why were they not in the forecasts? If he was able, as he says, to make those in-year changes on welfare and productivity, they would have been in the forecasts. They were not.
On the issue of the pay review bodies, the previous Government set the remit for those but they refused to give them any indication of affordability. That is almost unprecedented. The teachers reported before the election and that recommendation sat on the former Education Secretary’s desk. Today, we are drawing a line on the industrial action: the £1.7 billion cost to the NHS alone last year and 1.4 million cancelled appointments. We are incorporating a third of those pay increases into efficiencies in our public services, as the shadow Chancellor suggested we should.
When it comes to tax, I am not going to take any lessons from the Conservative party. The Conservative party took the tax burden to the highest level in 70 years.
The response of the shadow Chancellor just confirms what we already knew: the previous Government were deluded, out of touch and grossly irresponsible. Today, we begin to fix the mess that they have created.
Rachel Reeves
I can confirm that we will be arranging multi-year settlements with local authorities, as well as with Departments. It is extremely important that both Departments and authorities can plan for the future knowing what money is available, rather than running down the clock towards the end of the year.
I thank my hon. Friend for welcoming the announcement that I made today about working with local government to improve the take-up of pension credit. It is woeful that it is so low. It is vital that everyone receives the money to which they are entitled, especially pensioners, which is why we have taken on those recommendations from elderly people’s charities today to ensure that we work with local government to boost take-up of that benefit.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(1 year, 1 month ago)
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Rachel Reeves (Leeds West) (Lab)
At the Budget, the Chancellor set out his intention to abolish national insurance—a £46 billion annual commitment with no clear plan as to how it would be paid for. One way to do it would be to merge income tax and national insurance. Does the Chancellor agree with analysis from the House of Commons Library that shows that merging those two would increase income tax by 8p in the pound?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(1 year, 3 months ago)
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Rachel Reeves (Leeds West) (Lab)
After the Budget, the Chancellor wrote to Conservative party members telling them that the Government planned to abolish national insurance. The Economic Secretary said that “national insurance will vanish”, and the Prime Minister said it was his “ambition” to abolish it. Will the Chancellor confirm whether he asked the Office for Budget Responsibility to cost the Government’s unfunded plan to abolish national insurance contributions?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(1 year, 4 months ago)
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Rachel Reeves (Leeds West) (Lab)
Last week, at Prime Minister’s questions, when asked about the Tory mortgage penalty, the Prime Minister boasted that someone coming off a fixed-rate mortgage
“will be able to save hundreds of pounds.”—[Official Report, 31 January 2024; Vol. 744, c. 857.]
But the small print was that they had to add many years to their mortgage. Three million people have been coming off fixed-rate mortgage deals this year and last, so does the Chancellor agree with the Prime Minister that British homeowners have never had it so good?
Autumn Statement
Debate between Lindsay Hoyle and Rachel Reeves(1 year, 7 months ago)
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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.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(1 year, 7 months ago)
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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?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(1 year, 10 months ago)
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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?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 years ago)
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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?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 years, 1 month ago)
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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?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 years, 3 months ago)
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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?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 years, 4 months ago)
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Rachel Reeves (Leeds West) (Lab)
Last week, Shell announced profits of £32 billion, the highest in its 115-year history. Today, BP announced profits of £23 billion, the highest in its history. Meanwhile, in April, energy bills for households will go up by £500. The cost of living crisis is far from over, so will the Government follow our lead and impose a proper windfall tax to keep people’s energy bills down.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 years, 7 months ago)
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Rachel Reeves (Leeds West) (Lab)
Today’s numbers show that real wages are down £1,000 a year. The Chancellor himself has admitted that the NHS is on the brink of collapse, and he is preparing for more stealth taxes on working people later this week. Getting our economy firing on all cylinders is essential for fixing this mess, so will the Chancellor tell the House where the UK is projected to finish in OECD growth rates over the next year?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(2 years, 8 months ago)
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Rachel Reeves (Leeds West) (Lab)
Since the Chancellor’s disastrous mini-Budget just 18 days ago, we have seen wild swings in the value of the pound, gilt yields up 100 basis points in a single day and the Bank of England stepping in because of, in its words,
“a material risk to UK financial stability”.
The International Monetary Fund has now said that UK growth is to slow further next year. This is a British crisis, made in Downing Street; no Government are sabotaging their own country’s economic credibility as this Government are. Are the Chancellor and the Prime Minister the last people left on Earth who think their plan is working?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(3 years ago)
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Rachel Reeves (Leeds West) (Lab)
Consumer confidence is at its lowest level since records began because working people have less money to spend, but we are not all in this together. Pay for the top 1% of earners is increasing at 20 times the rate for the bottom 10%, and all the while the Prime Minister eyes up luxury tree houses instead of fixing the broken economy. Does the Chancellor realise that, to avoid a cost of living calamity, he must address the stagnant wage crisis created by Tory policies?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(3 years, 1 month ago)
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Rachel Reeves (Leeds West) (Lab)
At the spring statement, the Chancellor confirmed that the Conservative Government’s rise in national insurance—a tax increase on working people and the businesses that employ them—will go ahead. Since then, retail sales are falling, consumer confidence is tanking and GDP is falling. We are the only G7 country that is increasing taxes on working people in the middle of a cost of living crisis. National insurance is the wrong tax increase at the wrong time. Does the Chancellor still think that his tax rises on working people are the right approach?
Economic Update
Debate between Lindsay Hoyle and Rachel Reeves(3 years, 5 months ago)
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Rachel Reeves (Leeds West) (Lab)
I thank the Chancellor for his statement.
We have known that this price rise was coming for months, and today we learn that the energy price cap will increase to £1,971 in April. In October, I called on the Government to provide immediate support for support for households, cutting VAT on their energy bills and saving £200, with £400 in extra targeted support for those who need it most, which would mean, for some of the poorest families in our country, almost no increase in energy bills from April. The Government have not done that today.
We all remember when the Prime Minister said that cutting VAT on energy bills was one of the benefits of Brexit. He said:
“When we Vote Leave, we will be able to scrap this unfair and damaging tax.”
Could there ever be a time when that policy is needed more than it is today? I should have thought that the Prime Minister, with his unblemished record of integrity, would defend the commitments he had made, but instead, that is another pledge thrown on to the bonfire of broken Tory promises.
The uncomfortable truth for the Chancellor is that even after what he has announced today, families in Britain—including some of the poorest—will still be paying hundreds of pounds more for their energy from April as a result of the breathtaking rise in energy prices just announced by Ofgem. Millions of people will be cutting back to pay the bills. Citizens Advice says that it saw a record number of people in January struggling with fuel debts, before the energy price increase. But what do the Government offer? A buy now, pay later scheme that loads up costs for tomorrow; high prices as far as the eye can see, this year, next year, and the year after that. It is a case of give with one hand now, and take it all back later with the other.
The Conservative party used to talk about the nation’s credit card. Today, we have seen the Chancellor force British households to load up their credit cards. By lending billions of pounds to energy companies, he is gambling that prices are going to fall, but they could go up further in October. What then? Billions more loaded on to people’s bills? The best way of targeting support to those who need it most would be an increase to £400 and an extension to 9 million households of the warm home discount, as Labour has proposed. The Government’s scheme is a pale imitation of Labour’s, especially for the households and pensioners on the most modest incomes, but the Chancellor is using council tax to target extra help. That will mean that many of the poorest households receive no extra support, while some of the richest do, and it is people living in the north and the midlands who will lose out most. The hypocrisy, the day after the publication of the Government’s levelling-up White Paper, is obvious. [Interruption.]
Mr Speaker
Order. Mr Holden, I think we need to be a little calmer. I am sure you will want to catch my eye, and that is not the way to do so.
Rachel Reeves
Can the Chancellor confirm how many people who are fuel-poor will miss out on council tax support compared with the warm home discount support that Labour has announced?
The Government had a choice. Only today, Shell announced that its profits have quadrupled to $20 billion. It described its results as “momentous”—dividends up, profits up, and people’s energy bills up too. Labour’s plan would impose a one-off windfall tax on those excess profits, but this Chancellor would rather shield the oil and gas producers while at the same time loading the cost on to working people and pensioners. Cabinet Ministers have described the oil and gas producers as “struggling”. Tell that to the one in five people who are already skipping meals so they can pay their energy bills.
This energy crisis has not happened overnight. A decade of dither and delay from the Conservative party has brought us to this point: a decade of failure to regulate our energy markets; a decade in which they have slashed our gas storage capacity, leaving us more reliant than ever on Russia for our gas imports; a decade of failure to make the most of solar, tidal and wind energy; and a decade of stalled progress on insulating our homes to keep bills low, not just for one year but into the future. It has been the Tory decade that has led to this announcement of the biggest increase in the price of domestic energy since records began. That is what the Chancellor should acknowledge and apologise for today. The Conservatives are not solving the cost of living crisis, because the Conservatives are the cost of living crisis.
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(4 years ago)
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Rachel Reeves (Leeds West) (Lab)
Thank you, Mr Speaker.
Whether on social care, on Northern Powerhouse Rail or on tackling climate breakdown, there is a growing gap with this Government between what is promised and what is actually delivered. The Treasury’s response to the net zero review was first due to be published in autumn last year, yet it is nowhere to be seen. The COP26 climate summit begins in November. While the UK is hosting, the Government cannot lead with authority, because the fact is that we cannot have a climate strategy without a sustainable economic plan behind it. Will the Chancellor please tell the House on what date he will publish the final report of the net zero review?
Oral Answers to Questions
Debate between Lindsay Hoyle and Rachel Reeves(5 years, 5 months ago)
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Points of Order
Debate between Lindsay Hoyle and Rachel Reeves
Mr Deputy Speaker
That is not a matter for the Chair. It is not for me to speculate on the Privy Council. I am sure that you will not take your eye off your mobile phone, to ensure that that first-line knowledge will be through to your good self once you see it there. But it is not a matter for the Chair, as much as it is frustrating. As a member of the Privy Council, I have to say that I have no further information to add.
Rachel Reeves (Leeds West) (Lab)
On a point of order, Mr Deputy Speaker. Lots of people will be watching Parliament on television today, but, of course, that was not possible 30 years ago. Twenty-seven years ago, Baroness Betty Boothroyd became the first female Speaker of the House of Commons. Today is her 90th birthday. I wondered what pieces of advice you could give on how we could all go about wishing her a happy birthday.
Mr Deputy Speaker
One of them is not to sing in the Chamber. I would say that I have the greatest respect for Baroness Boothroyd. She is one of my idols. She is somebody who I look up to and who set an agenda in this House that we can all respect—the first woman Speaker. It is a privilege to have known her; it is a privilege to have been in this House when she was in this Chair. Everybody who ever worked with her held her in the highest esteem and respect. The one other thing I would say is happy 90th and many more to come, because she is a great lady who I will always respect. I always remember her fighting the by-elections of Nelson and Colne, which my father took over as the MP afterwards. So, yes, we do have a great affinity.
Businesses: Late Payments
Debate between Lindsay Hoyle and Rachel Reeves(6 years ago)
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Mr Deputy Speaker (Sir Lindsay Hoyle)
I call the Chair of the Business, Energy and Industrial Strategy Committee, Rachel Reeves.
Rachel Reeves (Leeds West) (Lab)
Thank you very much, Mr Deputy Speaker.
When our Select Committee looked into this issue, many small businesses insisted on giving evidence in private, so worried were they about retaliation from the big businesses that they supplied. Larger businesses, including Morrisons, Aldi and WH Smith, are not signatories to the prompt payment code, while Boots pays suppliers at a discount for the privilege of their being paid on time. The power imbalance is so great now between bigger and smaller businesses that. I urge the Government and the Minister to look again, make the prompt payment code mandatory and bring down the period to a benchmark of 30 days.
Transport Secretary: East Coast Franchise
Debate between Lindsay Hoyle and Rachel Reeves(7 years, 1 month ago)
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Rachel Reeves (Leeds West) (Lab)
On a point of order, Mr Deputy Speaker. At 10 minutes past 3 this afternoon, just after the Secretary of State for Transport left the Chamber, he issued a press release on plans to tackle poor performance at Northern Rail. I wonder whether the Secretary of State, who is almost back in his place, has indicated any intention to make a statement to the House allowing right hon. and hon. Members to question the Government on those plans, which are of huge significance to many of our constituents.
Mr Deputy Speaker (Sir Lindsay Hoyle)
I have certainly not been given any notification that the Secretary of State wants to come back at this moment, but there is a good chance tomorrow morning at business questions, when I have no doubt you will be able to raise this again.
Royal Assent
Housing Benefit
Debate between Lindsay Hoyle and Rachel Reeves(11 years, 4 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. You are both up at the same time. Is the hon. Lady giving way?
Mr Deputy Speaker
Order. There can be only one person on their feet at a time. It is up to Rachel Reeves whether she wants to give way to the Secretary of State. She has given way to him once already and it is for her to judge whether she will do so again.
Rachel Reeves
I shall not give way to the Secretary of State, because he will have a chance to respond in a few minutes and I look forward to hearing what he has to say.
Let us take a moment to reflect on what this means. The Government have been telling local authorities to take housing benefit away from people who were in fact legally entitled to it all along. Most of these people were already in vulnerable positions and will have been pushed even further into severe hardship as a result of this Government’s errors.
Let us look at a few examples. A widower in Staffordshire suffering from mental health problems told of the sacrifices he had to make to find the extra £14 a week he needed to stay in his home. A 56-year-old woman from Rotherham, who receives support for health-related problems, has had to pay more than £700 in extra rent, which we now know was unlawful. In Greater Manchester, a grandmother who looks after her granddaughter, has been diagnosed with depression and anxiety and who paid £200 in additional rent as a result of the bedroom tax fell into arrears and was threatened with eviction from the home she has lived in for 26 years. These people and many like them are now due a rebate, but nothing will compensate for the distress they have been caused or the time and money that the council will have to spend sorting out the mess this Government have caused. And now the Government want to apply the bedroom tax again to these people and thousands of others like them.
Rachel Reeves
That is what we are calling on the Government to do today—to scrap the bedroom tax altogether.
We had no idea of the numbers affected and the Government clearly did not have a clue, so we asked the question that they should have asked: we asked local authorities how many people have been affected. Of 378 local authorities, 197 have now responded, including Birmingham city council, where 2,100 households are affected, Cardiff with 220 and Glasgow with 913, as well as Tory local authorities, such as Cheshire West and Chester council, where 275 households are affected, Tory Peterborough with 200 and Tory Wandsworth with 234—the list goes on. In total, our replies so far suggest that 21,655 households have been affected. That is on the basis of responses from barely half the councils, while many of them have said that they cannot give complete answers that include housing association tenants. It is therefore already clear that not only have this Government made a complete mess of their own policy, but they do not even have a clue how many people are affected by the loophole.
The Government have responded to this fiasco by scrambling to cover up their own mistake. They introduced a statutory instrument to close a loophole in their own legislation, without even giving this House an opportunity to scrutinise and debate it; it is only through this Opposition day that we can have a vote, which is why we called this debate today.
The bedroom tax was misconceived from the start, and it has been incompetently executed every step of the way. The chaos, confusion and extra costs are mounting, with the heaviest price being paid by the poorest and most vulnerable. The Government should scrap the bedroom tax today, but instead they are making it apply to an extra 40,000 households. If this Government will not scrap the bedroom tax, the next Labour Government will do so.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I call Mr Peter Lilley to make a six-minute speech.
Infrastructure (Financial Assistance) Bill
Debate between Lindsay Hoyle and Rachel Reeves(12 years, 9 months ago)
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Rachel Reeves
I thank my hon. Friend for that intervention. It is not just people in the public sector; people in the private sector, particularly in construction, which has shed 120,000 jobs since the Government came to power, are also worried about their jobs and futures and about how they will get the money to feed and house their families. There is real concern and a real lack of confidence among households and businesses.
This summer showed that things could be done differently. The Olympics showed what can be achieved with an inspiring vision—the right combination of public, private and social enterprise, with the nation united behind it. We delivered on time and on budget, and it was a perfect platform for Britain at its best. Let us hope that the Olympics provided a much-needed boost for our economy, but the lesson to learn is not that we can now rest; if we really want to seize the economic opportunities before us and build a better future, we need to repeat that effort on a much bigger scale, with a nationwide plan for jobs and growth. Let that be the lesson for today and let us get to work on laying the foundations of the economy we need to build for the next generation. Let us have a Government who follow up their rhetoric with real action.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the next speaker, I inform the House that the limit on Back-Bench speeches will be nine minutes.
Industry (Government Support)
Debate between Lindsay Hoyle and Rachel Reeves(15 years ago)
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Mr Deputy Speaker (Mr Hoyle)
Order. Only one Member can be on their feet at any one time. Please allow the Member to finish before rising again.
Rachel Reeves
Thank you, Mr Deputy Speaker. I am sorry for my enthusiasm.
I welcome the clarification from the hon. Member for West Suffolk that regions will be able to make their own decisions, but that was not my understanding of what the Secretary of State for Business, Innovation and Skills said earlier. [Interruption.] If he did say that, I think that everyone on the Opposition Benches would welcome that. If our regions will be able to make the decisions about our regional development agencies and their future, I welcome that. I am grateful for that clarification, but that was not my understanding of what the Business Secretary said in his statement.
I know that Conservative Members will disagree with this, but I am sorry to say that we do not hear enough from them about growth. They cite the G20 advice about reducing deficits while consistently forgetting about or ignoring the advice in the G20 communiqué for
“credible, growth-friendly measures, to deliver fiscal sustainability”.
That omission on growth is worrying from the perspective of industry and jobs—the subject of today’s debate—because the greatest risk we face is that of a double-dip recession, with the job losses, business failures and higher budget deficits that that would bring.
On Monday, the Chancellor dismissed the possibility of a second recession, but businesses in my constituency are less certain that we are out of the woods. Key to the recovery and to bringing down the budget deficit—we hear a lot about that from Conservative Members—are growth and having a regionally strong and diverse economy. That will not happen by chance; it depends on a strategic Government policy supporting industry in all our regions.
Mr Deputy Speaker
Order. Hon. Members can, by all means, seek to intervene, but if the Member does not give way, they just have to leave it there. We cannot have two Members on their feet at the same time.
Rachel Reeves
Thank you, Mr Deputy Speaker. This Government—the party of the hon. Member for West Worcestershire (Harriett Baldwin)—have called for £293 million of cuts from the regional development agencies. Yorkshire Forward was asked to make £44 million of cuts. It was written to and asked to come back with those cuts within two weeks—it had two weeks to determine cuts that will affect 24,000 businesses in my region. These are not Labour cuts; they are Conservative cuts.
I ask the Secretary of State for Business, Innovation and Skills to give my constituents some commitment and some hope and certainty that the work that Yorkshire Forward does to support innovation, manufacturing, jobs and skills will continue. I urge the Government not to destroy the support for jobs and growth that the Labour Government put in place. Without Yorkshire Forward, we would not have brought clean coal to our region and the 1,000 jobs that that means in South Yorkshire. Without Yorkshire Forward, we would not have negotiated a deal with Siemens and GE to bring offshore wind, with thousands of much-needed jobs, to Hull, Grimsby and Scunthorpe.
Rachel Reeves
I thank the hon. Gentleman for that intervention. I hope that I have made it clear that I support the private sector’s coming to our region and bringing jobs with it. However, that requires a Government on the side of our communities and of businesses. That means encouraging jobs to come to this country when they could go to any other country in the world. If we were in Germany or China, we would be urging jobs to come to those countries. If we want a level playing field, we need a Government who support industry.
In Yorkshire, we look to Government for support—to honour the commitments on high-speed rail and on Sheffield Forgemasters. They are key to Yorkshire’s future and good for the British economy, too. Yorkshire Forward and regional development agencies have fought our corner in a way that Whitehall simply cannot. The support is critical and it is good for all of Britain. The short-term hatchet job pursued by the Government risks the recovery and will put Britain in the slow lane of the global economy, making reducing the deficit harder because there will be higher unemployment and tax revenues will be weaker. Growth is the essential ingredient that is missing from the Government’s strategy.
Now is the time for some more ambition. In the wake of the recession, we can build a fairer, stronger and more diverse economy, built on skills and high-end manufacturing, if the Government put in place the policies—