Spring Forecast
Mel Stride Excerpts(2 days, 8 hours ago)
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Sir Mel Stride (Central Devon) (Con)
Is that it? What utter complacency—a Chancellor in denial. She speaks of stability, but what planet is she on? She has lurched from putting up taxes to destroying growth and headroom, and then to coming back and putting up more taxes, with more growth destroyed. Round and round we go, like a fiscal twister, ripping up everything in its path. [Interruption.]
Mr Speaker
Order. I will hear the shadow Chancellor. People need to recognise that there are two sides—let us hear the other side now.
Sir Mel Stride
Thank you, Mr Speaker; they just do not like the truth—that is the truth of it.
As our economy bleeds out, what does the right hon. Lady do? She comes to this House with nothing to say and with no plan—unless, of course, doing nothing is a cunning plan to avoid those U-turns further down the line. She is weak. She has even stripped the OBR of its ability to assess whether she is meeting her fiscal targets. Let it be remembered that at this time in this Chamber, this weak and chaotic Government gave up on the British people.
The right hon. Lady has nothing to say to us today. This is not a spring statement—
Mr Speaker
Order. Mr Gardiner, I expect better. We have to listen to you on a Thursday night; I do not need to hear you now.
Sir Mel Stride
No, they do not like it, Mr Speaker; they do not like the truth.
This is not a spring statement. It is a surrender statement. The Chancellor has the temerity to suggest that she is creating the conditions for renewed growth. She is rather like a dodgy estate agent standing in a crumbling building with the roof gone, the windows gone and the floor gone, saying, “Just think of the potential.” But that potential has been undermined by the terrible state of our public finances.
When it comes to the deficit, the right hon. Lady knows that borrowing this year is almost double that which was forecast at the time of the general election. She knows that the forecasts are predicated on the numbers that she has given to the OBR, which it has to accept. That includes squeezing spending at the end of the Parliament, and raising taxes and energy bills at the same time. We know that is unrealistic, and the reason we know it is because she and the Prime Minister have no backbone when it comes to taking difficult decisions. That is what we saw before the Budget: winter fuel payment—U-turn; welfare reform—U-turn; two-child benefit cap—U-turn. It is what we saw in a short period after the Budget: farm tax—U-turn; family business tax—U-turn; public houses—U-turn.
On the deficit, when the right hon. Lady rises again, will she tell the House how she will fill the £6 billion black hole in the special educational needs and disabilities budget? She mentions, quite rightly, the Iran war and the greater threats that our country faces, but could she explain how she is going to fund what we have been urging: 3% of GDP on defence by the end of this Parliament? How will she fund that—[Interruption.]
Mr Speaker
Order. Seriously, we need to hear this—[Interruption.] Oh, I can help hon Members if they do not want to hear it.
Sir Mel Stride
Thank you, Mr Speaker.
The right hon. Lady says the cost of borrowing is coming down, but does she not know that the cost of borrowing in this country has been the highest in the G7 —[Interruption.]
Mr Speaker
Order. Somebody needs to switch their phone off; this is not acceptable.
Sir Mel Stride
Our borrowing is even higher than Greece’s. Indeed, if debt were a Department, it would be the third largest spending Department in Whitehall. That is money not going on the people’s priorities, but simply being flushed down the drain. The right hon. Lady puts great store in the latest forecasts on debt and says that it is coming down, compared with the forecasts back in the autumn, but if we strip away her dodgy definition of debt, we can see that it will be going up in just about every year of the forecast period.
The right hon. Lady has the audacity to praise her own performance. She points to growth, but does she not know that, only last month, the Bank of England downgraded growth for both this year and next year? A moment ago, she said that the Government had beaten the forecasts for growth from last year. The forecast at the beginning of last year was for 2% growth, but the growth outcome at the end of last year was 1.3%. By my mathematics, that is not an improvement. It should be of considerable concern to the entire House that the right hon. Lady clearly thinks that it is.
The right hon. Lady points to interest rates coming down, but does she not know that her ruinous inflationary policies have seen interest rates higher for longer, meaning more expensive mortgages for hundreds of thousands of people across our country? She was slightly coy about unemployment—because, of course, we know that it now stands at a five-year high. Under every single Labour Government in history, unemployment has risen, and this Government are no exception.
The right hon. Lady is fond of saying that she is simply asking people to pay a little more tax. Well, I do not remember the taxman phoning me up and asking me if I would awfully mind paying a little more tax. And what does it mean? It means workers struggling, employers laying off staff, and tens of thousands of the most talented people in our country going to other places, where they believe the opportunities are greater. That is what a little more tax means. And what has that tax done? It has destroyed and deeply damaged entire sectors of our economy. Hospitality has seen almost 100,000 job losses since this Government came to office, and that has particularly impacted our youngest people.
Youth unemployment is the highest in Europe for the first time in a quarter of a century. The dreams, aspirations and hopes of young people—of all those bright young faces—have been smashed on the altar of the right hon. Lady’s incompetence. What is her message to young people today? Her message today has been that her so-called plan is working, but what is the reality? Inflation? Up. Borrowing? Up. Spending? Up. Tax? Up. Welfare? Up. Unemployment? Up. All this speaks to the weakness and chaos of this Government. Is it any wonder that her so-called plan is not working? Our energy costs are among the highest in the world, and yet she is doubling down on net zero. Given where we are, the first thing that the right hon. Lady should do is get rid of those taxes on North sea oil and allow us to start exploiting those opportunities.
We have a welfare bill that is spiralling ever upwards, but what does the right hon. Lady do? She removes the two-child benefit cap. We have taxes heading to the highest level in history because of her choices, destroying the futures of men, women and children right up and down our country—and there is no contrition, no apology and no plan to do anything about it.
It does not have to be this way. At our conference, we set out how we can control public spending with £47 billion of savings, especially on the welfare bill, with some £23 billion of savings. We are a party that believes in work, rather than benefits. We are a party that will do something about it. We are a party of work; Labour is the party of “Benefits Street”. We will bring taxes down to kick-start the economy, abolish stamp duty, scrap business rates for businesses on our high streets, and give our young people a £5,000 tax cut. We have a cheap power plan. We will fix student loans and invest in apprenticeships. Though our golden rule, we will get on top of the deficit and, by doing that, grow the economy.
That is our plan. What is the right hon. Lady’s plan? The truth is that she has no plan, or, as her Health Secretary said, there is
“no growth strategy at all”.
Even if she did have a plan, she would be too weak to deliver it, given the psychodramas swirling around No. 10, the almost daily scandals visiting the door of the Prime Minister, the sight of a person once at the highest level in the diplomatic service being carted away in a car by the police, and Back Benchers calling the shots. The Chancellor’s credibility has gone. The Prime Minister’s chief of staff has gone. His Cabinet Secretary has gone. But somehow the Chancellor hangs on.
Through the chaotic fog, the drums are drawing ever closer. The British people deserve so much better. So, for the hard-working people in our country crushed by taxes, for those denied employment, for the farmers and the family business owners who have suffered in fear for too long, for every hollowed-out high street, for every young person robbed of their future, for every elderly person struggling to survive and for the generations yet to come, we say: go!
Rachel Reeves
I know that the OBR did not publish the forecast until I sat down, but I still think the shadow Chancellor could have done a little bit better than that. To be honest, I was hoping that the Leader of the Opposition was going to respond today; after that performance, I expect she does, too! [Hon. Members: “More!”] Don’t worry; I’ve got more.
The right hon. Gentleman said that the Conservatives set out their economic policy at their conference a few weeks ago. Well, they had 14 years to set out their economic policy, and it is because of their economic policy that they are now sitting on the Opposition Benches. Today’s performance is yet another reminder of how irrelevant the Conservative party now is. I hate to break it to the shadow Chancellor, but people stopped listening to the Conservatives a long while ago. And we can see why: because whether it is in office or in opposition, the right hon. Gentleman’s party and his leader have been wrong about the economy time and time again. They opposed economic responsibility and backed Liz Truss—wrong. They opposed closer ties to Europe and backed Brexit—wrong. They opposed cuts in child poverty and want to repeat austerity: wrong values, wrong economics—they are just plain wrong.
After last year’s Budget, the right hon. Gentleman’s leader predicted with characteristic foresight that borrowing would increase every year. She was wrong: borrowing is now coming down faster. That is faster than under the Tories—well, that is not difficult, because under them it went up—it is faster than forecast in the autumn and it is faster than in any other G7 economy. Last year, the Leader of the Opposition told us that energy bills would rise. She was wrong; they are coming down by £117 next month. She also told us that there would be no more Tory defections to Reform. How is that one going?
Let me let me return to the substance of the shadow Chancellor’s remarks—although I have had to reduce this section somewhat! He mentioned student loans, but he neglected to mention that he was in the Government who tripled university tuition fees, froze thresholds and oversaw higher interest rates, which led to the problems we are in today. On special educational needs, the Conservatives left a system in utter crisis, as every parent, every child and every school will tell you, so we will take no lessons from them. But in terms of where the money is coming from, that is set out today in the documents. Of course, the shadow Chancellor does not know that because he did not even bother listening to my statement.
The shadow Chancellor mentioned defence, but he neglected to mention that it was his Government who left office without any plan to fund their pledge to spend 2.5% of GDP on defence. It is this Government, with me as Chancellor, who are delivering the biggest increase in defence spending since the cold war.
The shadow Chancellor mentioned the welfare bill. I have to say that that was a little bit rich, because he neglected to mention that the welfare bill rose twice as fast in the last Parliament and that he was Secretary of State for Work and Pensions. His Government broke the welfare system, and it is this Government who are fixing it.
The shadow Chancellor mentioned youth unemployment. As I said, there is more that needs to be done, after the Conservatives increased the number of young people not in education, employment or training by 113,000 and slashed the number of young people starting apprenticeships by 40%. We will take no lessons from them. They are the arsonists, not the fire brigade, and if they cannot be honest about the mess they made, no wonder they cannot recognise that we are fixing it.
Today’s forecast shows that debt is down, borrowing is down, inflation is down, and interest rates are down from 5.25%, where the Conservatives left them, to 3.75% today. And what about investment, living standards and growth? They are all up. Let me break it to the shadow Chancellor and to his leader: there is no blank page for the Tory party—no year zero. They gave us chaos and instability; Labour is fixing it. They gave us austerity; Labour is investing in Britain. They gave us 14 years of barely managed decline, and we are reversing it. We know that if they ever get the chance, they will do all of the same again: more chaos, more kids in poverty, and more and deeper cuts. It would be terrifying if there was any prospect at all that they would ever win an election again.
The Leader of the Opposition can keep turning up every week, but it is a total waste of time. Her party is the past and not the future. I do not know what is more pathetic: the culprits who jumped ship and joined Reform and its Russian mates, or the culprits who stayed in the Conservative party and pretended that the last 14 years never happened. Either way, the choices are clear: investment with Labour or austerity with the Conservatives; stability with Labour, or more chaos with the Conservatives—wrong leader, wrong choices, wrong plan. Only Labour has the right plan for our economy and for our country.
Business Rates
Mel Stride Excerpts(1 month ago)
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Madam Deputy Speaker (Caroline Nokes)
Order. I say very gently to the Minister that it was always open to him to ask for extra time, but we cannot find any record of him having done so. He has already got to 10 minutes, and he seems to have three more pages, so I will allow the Opposition spokespersons more time as well. This is an important statement, and I think that the hon. Member wants to finish, but it is very unfair to exceed the time by what I reckon will be 50%.
Dan Tomlinson
Let me apologise profusely for not letting you know in advance, Madam Deputy Speaker. This is the first time I have done one of these statements, and I will not make the same mistake again. I am glad that the same courtesy will be afforded to the shadow Chancellor, and I look forward to hearing a full 15 minutes of remarks from him. I am sure that they will be entertaining for us all. [Interruption.] I will make progress now, and we will hear more from the shadow Chancellor.
This decision will mean that the amount of business rates paid by the pub sector as a whole will be lower in 2028-29 than it is today. This is Independent Venue Week, so it is particularly appropriate that our package will apply also to music venues. Many live music venues are valued as pubs, and many pubs are grassroots live music venues. It would not be right to seek to draw the line in a way that includes some and not others, and I thank MPs who have made constructive representations on this issue in recent weeks. In the meantime, we are pressing ahead with wider regulatory reforms, building on the new licensing policy framework in the Budget, and we are working with the sector to ensure that local authorities are using that to ease licensing decisions on the ground. As part of our ongoing licensing reforms, for home nation games in the later stages of the men’s football world cup this summer, pubs and other licensed venues will be able to open until 1 am or 2 am, depending on when the game starts. We will legislate to increase the number of temporary events notices for pubs and other hospitality venues, whether to help them screen world cup games, or for other community and cultural events.
This Government are committed to helping pubs build sustainable business models over the long term. In the spring we will consult on further loosening planning rules to benefit pubs, helping them to add new guest rooms or expand their main room without planning applications. We will also continue to engage with the sector to ensure that other retail leisure and hospitality premises have planning flexibility—
Sir Mel Stride (Central Devon) (Con)
Mr Speaker, I think the mood of the House is that 10 minutes from the hon. Gentleman is more than enough, although I am grateful to him for having given me advance sight of his statement.
Mr Speaker
You can have some extra time, if you need it, and the same applies to the Liberal Democrat spokesperson.
Sir Mel Stride
That is much appreciated, Mr Speaker.
Mr Speaker, was that it? After all this time, and weeks of telling our local pubs that help was on the way, this is all they get—a temporary sticking plaster that will only delay the pain for a few, while thousands of businesses despair as their bills skyrocket. The Labour party manifesto promised to completely replace the business rates system. Labour Members said that they would create a system that levels the playing field for our high streets and supports entrepreneurship and investment. Well, we are waiting.
So far, what we have seen is the exact opposite of what our local businesses were promised, with business rates soaring across the board. Despite the temporary relief announced today, pubs will still end up, in time, with bills more than 70% higher than they are today. The Federation of Small Businesses has calculated that the business rates of a typical medium-sized shop or restaurant with a rateable value of around £50,000 will increase by 71% over the coming years. For hotels, it will be over 100%.
Ministers expect those businesses to be grateful for some temporary relief, tweaks to multipliers and changes to licensing, but the Conservatives have been clear: support must be permanent. We have to cut business rates for our high streets to give certainty to local businesses. Measures must be far wider than those that the Government have announced today, applying not just to pubs but to the whole of the retail, hospitality and leisure sectors, which bring life to our high streets and town centres. We would not just introduce temporary reductions in rates, but completely abolish business rates for thousands of pubs, shops and restaurants across our country.
These huge tax rises introduced by this Government are a choice, but it does not have to be this way. The Government have chosen to increase spending by vast amounts, including on the benefits bill, with a benefits giveaway of over £3 billion at the Budget to abolish the two-child cap. These choices are why bills are going up, businesses are going under, jobs are being lost and our high streets are being hollowed out.
Let us not forget that this is not an isolated issue. Businesses are having to shoulder not just business rates rises, but a long list of other burdens that are being piled on by a Government who simply do not understand how businesses work. Many of those facing the highest increases in their business rates were among the worst impacted by the Chancellor’s jobs tax. They have already seen their business rates go up by as much as 140% last year, and they face yet more costs and red tape from the Government’s employment rights legislation. Analysis by UKHospitality suggests that, on average, as many as six hospitality venues could close every single day this year. That is a tragedy for our high streets and our communities. It is also a tragedy for our young people, many of whom look for their first job in the local pub or coffee shop, and who will find those jobs simply do not exist any more.
I ask the Minister, where is the help for the wider retail, hospitality and leisure sectors? Does what has been announced today include gastropubs, pubs with hotel rooms, bars, nightclubs and private clubs? Why are the Government happy to stand by and watch while businesses close and jobs are lost? When will the guidance be published for businesses, so that they know whether they will be eligible for this further relief and what their bills will be over the coming year? Why did Ministers not come forward with this relief for pubs at the time of the Budget, when they knew the level of increases that many businesses were facing? No new information has been provided between the Budget being announced and this statement. Can the Minister confirm that because this relief was not accounted for at the Budget, today’s announcements will need to be paid for through yet more borrowing?
The Government have proved today that either they do not understand the damage that they are doing or they do not care. Today’s announcement is far too little, far too late.
Dan Tomlinson
Apologies again, Mr Speaker; it will not happen again.
Oral Answers to Questions
Mel Stride Excerpts(1 month ago)
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Sir Mel Stride (Central Devon) (Con)
Mr Speaker, I begin by associating Conservative Members with the Chancellor’s comments about your leg—we wish it well.
We are waiting with interest to hear the details of the latest U-turn on business rates this afternoon, but if the briefing is to be believed, it will be far too little, too late. The Chancellor simply does not understand the desperate situation so many of our pubs are in. Many pubs are asking why the Chancellor chose to spend billions more on the benefits bill instead of providing proper, permanent business rates support.
Rachel Reeves
Under the previous Government—when the right hon. Gentleman was in government—7,000 pubs closed. We have permanently lowered the tax rate that retail, hospitality and leisure businesses pay. When I became Chancellor of the Exchequer, we faced a situation in which all of the covid support was going to disappear overnight. We have put £4.3 billion of taxpayers’ money into supporting our retail and hospitality sector, including pubs, but we recognise the distinct problems that pubs face. That is why, unlike the previous Conservative Government, we are setting out more support.
Sir Mel Stride
They just do not get it. Of course, it is not just pubs; the whole high street—shops, restaurants and hotels—is seeing massive increases in business rates, some well over 100%. Where is the help for those businesses?
Rachel Reeves
Some of the numbers that are bandied around by the right hon. Gentleman do not reflect the reality, because they do not reflect the £4.3 billion of transitional support that we have put in to taper those increases in business rates. I do not think anyone in this House seriously believes that temporary support during the pandemic should continue infinitely. That would not be the right thing, and it would not be affordable for other taxpayers. That is why we are gradually tapering the support, with a £4.3 billion support package in the Budget and some more targeted support for pubs later today. I remind the right hon. Gentleman that he could have taken action when he was in government. Instead, there was a cliff edge, with no support for pubs or any other sector of the economy.
Business Rates: Retail, Hospitality and Leisure
Mel Stride Excerpts(1 month, 2 weeks ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Sir Mel Stride (Central Devon) (Con)
(Urgent Question): To ask the Chancellor of the Exchequer if she will make a statement on the planned changes to business rates for the retail, hospitality and leisure sectors.
The Exchequer Secretary to the Treasury (Dan Tomlinson)
Colleagues will have heard what the Prime Minister and the Chancellor have said on this matter in recent days. I will not add further comments on the specifics in responding to this urgent question. When there are further comments to be made, I am sure they will be made in the usual way.
At the Budget, the Government announced a comprehensive set of reforms to business rates. We have created a new, sustainable system with permanently lower multipliers for retail, hospitality and leisure businesses. Business rates are, in line with the usual timelines, revalued every three years, and new valuations that were set in train by the previous Government come into effect in April.
It was right to support businesses during covid, but the previous Government went into the election with plans to scrap the temporary support entirely in 2025. If they had won re-election, they would have removed that support overnight last April. If the Opposition had intended to extend the relief, why did they not say so and why was that not included in their forecast or projections?
We on this side of the House have chosen a different path: we extended the support at a lower rate in 2025-26 and are slowly unwinding it over the coming three years, with the help of £4.3 billion of transitional support. I think all Members can agree that it would not be sustainable for a £1.7 billion annual temporary covid tax relief to remain fully in place at the end of the decade. At the same time, our reforms—[Interruption.] I am glad someone is enjoying them. Our reforms to rebalance the underlying design of the business rates system towards high street businesses will be implemented in April.
The new, lower tax rates will be introduced for 750,000 RHL businesses, funded by a higher rate on the most valuable properties, including for the online giants. That is worth almost £1 billion and means that smaller high street businesses will have a tax rate that is 25% lower than businesses with the largest properties. That is being supported by a significant support package, as I said, worth £4.3 billion over the next three years. As a result, over half of ratepayers will see their bills flat or falling next year, and around a third of properties pay no business rates at all, as they receive 100% small business rate relief.
I look forward to supplementary questions from the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), and other Members, and I look forward to seeing whether the shadow Chancellor can keep a straight face, given that he knows his Government never did enough for our high streets: 7,000 pubs closed over the 14 years the Conservatives were in power; shops were shuttered on high streets up and down the country; the council services that keep our high streets clean and vibrant were cut to the bone; investment was down; and the public suffered from the longest squeeze on living standards on record. That is the legacy for our communities—one that we are turning around.
Sir Mel Stride
That was a complete non-response. The Minister says he will make a statement in future in the usual way; we can only assume that that will be via the media, not this House.
Of all the excuses for a U-turn that we have heard from the Government, this one beggars belief. The Minister expects us to accept that the Government simply did not know what the impact of the changes would be when they announced them. That is astonishing. Why did they announce crippling rises in business rates without bothering to check who would be hit the hardest?
Worse still, we now know from the chief executive of the Valuation Office Agency, who appeared before the Treasury Committee last week, that Ministers were provided with the data on revaluations before the Budget. We are left with questions not only about whether the Government’s excuse is reasonable, but about whether it is indeed correct. Can the Minister clarify what specific information was given to Ministers on the level of increases that businesses would be facing, and when?
Businesses are now in a terrible limbo over what their bills will look like in the coming years. The Government have indicated that changes will be announced for pubs at least, but there has been no official statement, which is why we have had to drag the Minister to the House this afternoon, so will he answer the following additional questions?
Can the Minister at least make it clear which sectors will be in line for further support? Will it be just pubs? If so, why are the Government refusing to help businesses in the wider retail, hospitality and leisure sectors, some of which are seeing even higher rates increases? Will the new support be a temporary or permanent cut in bills, as we have called for? How much will it cost, and will it be funded by yet more Government borrowing? Will the Minister apologise now to the thousands of local businesses up and down our country that have been so sorely let down by this shambolic Labour Government?
Dan Tomlinson
The shadow Chancellor said that I was dragged to the House, but that is very much not the case; I am very happy to take questions from him and from Conservative and Government Members.
Finance (No. 2) Bill
Mel Stride ExcerptsTuesday 16th December 2025
(2 months, 2 weeks ago)
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Sir Mel Stride (Central Devon) (Con)
I beg to move an amendment, to leave out from “That” to the end of the Question and add
“this House declines to give a Second Reading to the Finance (No. 2) Bill because the Bill includes provisions breaking the Chancellor of the Exchequer’s promise, given after the Autumn Budget 2024, not to raise taxes, and breaking the Chancellor’s promise at the last Budget that there would be no extension of the freeze in Income Tax and National Insurance thresholds and that, from 2028–29, personal tax thresholds would be uprated in line with inflation once again; because the Bill implements changes to Agricultural Property Relief and Business Property Relief for Inheritance Tax which will devastate family farms, businesses and food security; because the Bill is the result of a Budget that will lead to higher spending and borrowing, while damaging growth and living standards with £26 billion of tax rises; and because this House is opposed to raising taxes on working people to pay for increased welfare spending.”
In the middle of Leicester Square, in the heart of our great city, there is a statue of perhaps one of the greatest Englishmen who ever lived: William Shakespeare. In his hand there is a scroll, which reads, in his own words:
“there is no darkness but ignorance”.
This Government have brought plenty of darkness to our country—indeed, during the run-up to the Budget, we had so many kites flown as to what taxes were going to be put up or not that the sun was blotted out of the sky, and a huge, dark shadow was cast across consumers, who stopped spending, and businesses, which stopped investing and employing people. Don’t take my word for it, Madam Deputy Speaker: the Bank of England itself says precisely that it damaged the economy. Indeed, we have seen this in the latest figures on growth, which the Minister was most eager to tell us about in his speech. For the three months to the end of October, growth in the economy was negative—it was minus 0.1%—which is further evidence of the darkness that this Government have cast upon the animal spirits in our economy.
To return to Shakespeare, were he here today, he would be appalled by the ignorance that this Government have shown of the basic rules of economics. It is a basic fact that if you focus on redistribution, as socialists always do—of course, there is always an argument for redistribution—at the expense of getting the incentives right in the economy, you will damage growth. That is exactly what is at the heart of this Budget. The key choice that has been taken is to increase taxes on hard-working people and spend at least a substantial proportion of the money raised on increasing the benefits bill.
The second rule that this Government seem incapable of grasping is that if you tax something, you get less of it. That is a simple fact. That brings me to the topic of work. This Finance Bill further freezes the income tax threshold, meaning that 800,000 people or thereabouts will be dragged into the basic rate of income tax, and 1 million or thereabouts will be dragged through fiscal drag into the higher rate of income tax. By 2030, it is estimated that around one in four taxpayers will be in either the higher rate of income tax or the additional rate—an £8 billion tax grab in the target year, rising to £12.7 billion in 2030. That is on top of various other issues that are coming down the track, such as the freezing of the threshold for repayment of student loans, which is effectively a stealth tax on younger people. It is also on top of the freeze in the employer national insurance threshold, which will raise around £1 billion by 2030. Once again, that comes straight out of employers’ pockets—it is a further instalment of the extra jobs tax.
All of this will reduce the incentive to work, as we have seen. In an intervention a moment ago, my hon. Friend the Member for Keighley and Ilkley (Robbie Moore) raised this very point in the context of hospitality. We have seen 90,000 jobs destroyed on this Government’s watch—and whose jobs are they? They are predominantly young people’s jobs, because increasing national insurance and reducing the threshold at which that tax kicks in disproportionately impacts those on lower incomes, which includes younger people. Of course, we also have the Employment Rights Bill coming down the track, which will make employing people, particularly younger people, even more risky and expensive.
We see in this Finance Bill an outright attack on savers —those who are doing the right thing, putting money by for their retirement—and a 2% increase in taxes on savings income, which the OBR suggests will ironically lead to more people putting cash into individual savings accounts. That is quite the reverse of the effect that the Chancellor is attempting to achieve. According to the OBR, three quarters of the impact of that tax will be borne by working people by way of reduced pension contributions and lower wages. Indeed, the Association of British Insurers says that this measure is
“a short-sighted tax grab which will lower pension saving and undermine people’s retirement security.”
Then we get to inheritance tax. When we shuffle off this mortal coil—to get back to our friend Shakespeare—there will be a tax charge for those who have the temerity to have left something by way of a pension. It is a £1.5 billion tax grab by the Chancellor on those unused pensions.
John Grady (Glasgow East) (Lab)
There has been much mention of Shakespeare. I wonder whether the gravediggers in “Hamlet” might give us some clues as to what the last Conservative Government did to the British economy.
Sir Mel Stride
Sadly, I think the gravediggers are still alive and well under this Government. We are seeing that in the destruction of jobs, businesses, farms and livelihoods up and down this country.
Sir Desmond Swayne (New Forest West) (Con)
The Minister gave his estimate of the number of farms that would be affected by the new tax, which I am quite sure is an underestimate. Notwithstanding that, though, the chilling effect on agricultural investment has been felt across the entire sector as people seek to avoid their farm reaching the threshold for the new tax.
Sir Mel Stride
My right hon. Friend is absolutely right. What businesses, including farms, need to succeed is lower taxes and not to be spending most of their time worrying about how they will cover the impact of future taxation. They need to be planning for the future of their businesses and investing in them.
Caroline Voaden (South Devon) (LD)
The hon. Member will be very familiar with my constituency, as he is my constituency neighbour. Does he agree that the Minister might have got his figures wrong? I surveyed all the farms in South Devon—there are nearly 500 small farms—and 44% of respondents said that they would be hit with an inheritance tax bill of over £300,000 when these measures come in. Does he agree that the Government simply do not understand the value of a farm, particularly in a part of the country like ours?
Sir Mel Stride
I would not naturally defer to the results of a Lib Dem survey over the work of His Majesty’s Treasury. However, I get the gist of what the hon. Lady is saying—perhaps a bar chart with a slightly dodgy scale would be a good way of putting the point.
The Chancellor says that those who are in receipt solely of the state pension should not worry about being dragged slightly into taxation, because that will be dealt with, but we do not know what that actually means. We do not know what the plan is, nor the cost. Perhaps in the wind-ups the Minister can tell us exactly what is envisaged for the very large number of pensioners who, under the Bill, will be dragged into paying tax on their state pension for the first time. What a mess! The Government are working against the instincts of those who are doing the right thing to save for their future.
The same is the case in respect of investment. The 2% increase in tax on dividends—a £1.2 billion tax grab—will simply have the effect of disincentivising investments in equities. That will mean less capital being invested in businesses, which is what drives up productivity. Part of the story of low productivity in our country is the fact that private investment has been too low for too long. This tax increase will weigh in the opposite direction. The Minister spoke about the importance of increasing investment in plant and machinery; the reality is that the Bill cuts the writing-down allowances, unless they relate to new plant and machinery, which will weigh against that very objective.
This is an unfair Bill. My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) raised the issue of the farm tax, and he was absolutely right to do so. Farms up and down this country are now worried about the future. Farms in my constituency, which have sometimes been in the family for decades or generations—in some cases even for centuries—are now having to stare down the barrel of a very uncertain future. What an irony and what a tragedy that, during the run-up to the general election, the then shadow Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Streatham and Croydon North (Steve Reed), looked the president of the National Farmers Union in the eye, and said that, when it came to inheritance tax, farmers had nothing to fear from a future Labour Government. How wrong they were. As Tom Bradshaw said, this whole tax increase is
“morally wrong and economically flawed”,
and he is right.
Rachel Gilmour (Tiverton and Minehead) (LD)
The hon. Gentleman is also a near neighbour of mine in Devon. Does he agree that the changes to agricultural property relief feels like a double taxation that burdens farming families in their old age? One can reasonably reach only one conclusion: this Government neither understand nor value this country’s farming communities —talk about biting the hand that literally feeds us. It is for this reason, amid a host of others adumbrated by colleagues across the Opposition Benches, that I will vote against the Bill this evening.
Sir Mel Stride
I welcome the hon. Lady’s intervention. She is absolutely right on the matter of APR, but the issue is not just APR.
Sorcha Eastwood (Lagan Valley) (Alliance)
We are in a world that is extremely uncertain, and our farmers are part of our national security, but we are farming them to death. What does that do for sustainability and our thriving farm agribusinesses?
Sir Mel Stride
The hon. Lady is absolutely right. The value of farming goes above and beyond successful businesses simply contributing to the economy in the traditional way. Farming also underpins our food security as a nation.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
There are hundreds, if not thousands, of farmers in Parliament Square this afternoon, blasting their horns about the family farm tax. The shadow Chancellor and many other colleagues from the Opposition Benches have been out to meet the farmers to understand their concerns. Has he heard, like I have, their frustration at the Government’s failure to listen and understand the impact that the family farm tax will have on farm viability?
Sir Mel Stride
My hon. Friend is right. I was out there this morning speaking to farmers, including a group up from Newbury, who have taken the trouble to come here to make exactly that case powerfully to us on the day of this debate.
Sir Desmond Swayne
This attack on investment extends well beyond agriculture and family farms; it is an attack on every family undertaking and every family business in the land. It is bonkers.
Sir Mel Stride
I notice that my right hon. Friend is being restrained in his use of language, given the severity of the matters we are discussing. He is absolutely right. Business property relief is being changed in broadly the same way as agricultural property relief in this Bill. That will have a devastating and similar consequence for family businesses across the UK, and I have been up and down the country to meet many of them. One of the foremost in campaigning has been Steve Rigby of the Rigby Group. He is the head of Family Business UK, and he put it perfectly when he said that family businesses are spending too much time protecting their legacy and succession, not on promoting growth. That is the whole point. If this Government want growth, they will have to do things that get businesses to think about growth, rather than having to worry about being broken up because of onerous tax measures.
Graham Stuart
Does my right hon. Friend worry, like me, about the background of those on the Government Front Bench? I do not want to disrespect either of the individuals sitting there now, because they are both fine people, but neither has ever, so far as I am aware, been involved in running a private business. They do not understand how private business works, and they equate the inheritance of money—for example, from a father to a daughter—with a family business. A family business needs to continue, because of all the employment that arises from it. Equating the two and saying that it is half the normal inheritance tax is to show a complete failure of understanding of the economy of this country and the economy of a family business.
Sir Mel Stride
My right hon. Friend is absolutely right. It shows a complete lack of understanding of business, and it reflects the lack of true business experience on the Government Front Bench. It also goes right to the core of the difference in principles and beliefs between the two principal parties in this Chamber. We on the Opposition Benches believe that if someone works hard, saves hard and has something left at the end of their life, they should be allowed—because they love those who they wish to look after in their absence—to pass on that inheritance without the taxman taking a huge, disproportionate amount of what they have accumulated. All the Labour party believes in is mounding up ever more debt in a statist world in which that debt is to be passed on to future generations to be paid back.
We believe in supporting the little platoon, as Burke put it—the families that together form a mighty army. We believe in personal responsibility and for that to be rewarded.
Sir Mel Stride
I will give way to the hon. Gentleman and then I will come to the hon. Lady.
Dave Doogan
Does the shadow Chancellor bristle like I do and like my constituents in Angus and Perthshire Glens who are engaged in farm businesses and agribusiness more generally when they hear Ministers make a false equivalence in talking about the generous rates of agricultural property relief compared with the wider economy and how long people will get to pay? They are making a false equivalence between someone inheriting their mother’s house after her death and transferring the family farm from one generation to the next. They are completely different propositions, are they not?
Sir Mel Stride
As I have to say so often following his interventions, the hon. Gentleman is absolutely right. There is a huge difference between the position of a dynamic, growing organism of a company and the other situation that he has described. Loading up these taxes on the death of the principal owner or one of the significant owners of a business means loading it up with uncertainty, and quite conceivably the business must be broken up as a consequence.
Alison Taylor
As someone who used to be part of a small family business in Glasgow, I wonder whether the right hon. Gentleman agrees that stability in relation to inflation and corporation tax and reducing interest rates are equally important to a small family business.
Sir Mel Stride
It is interesting that the hon. Lady should raise the issue of inflation. Inflation is currently at about twice the target of 2%, and it was bang on target on the day of the general election, at 2%, because of the action that we took, alongside the Bank of England. The International Monetary Fund is forecasting that inflation in our country will be the highest in the G7 this year, and the highest in the G7 next year. If we ask why that has happened, the answer is relatively simple. If national insurance increases are imposed on employers, they pass on some of those additional costs by way of higher prices, and that is inflationary. If vast amounts of money are borrowed, and, notwithstanding what the Minister had to say earlier, vast amounts of money are spent, too—about half a trillion pounds more than was the case under the plans that Labour inherited—that also stokes inflation. Those on the Government Front Bench may trumpet the fact that interest rates have come down five times, but if they had not mismanaged the economy, rates would have come down an awful lot faster. Interest rates are higher, and for longer, because we have sticky inflation, which is due to the choices made by this Government.
Jack Rankin (Windsor) (Con)
My right hon. Friend makes a good case for Conservative economics. Does he agree that the Government have made some wrong-footed changes to non-dom status in their two years in office so far, and that they will damage investment and growth? Not only is that a development that Conservative Members do not want to see, but the Government’s forecasts rely on £34 billion of revenue from these people. Does my hon. Friend agree that they should think again about the wisdom of these changes?
Sir Mel Stride
My hon. Friend is right to suggest that we have become an economy that has closed the door on international investment. In fact, the door has been blown wide open by those fleeing to go to the United Arab Emirates, Milan and other places around the world to escape the high-tax jurisdiction that we have become, and it comes with great cost. Given the 16,000 high net worth individuals who have fled under this Government, about a third of a million to half a million people on average earnings would probably be needed to cover the tax that has just walked out of the door. I can also tell the hon. Member for Angus and Perthshire Glens (Dave Doogan) and others that we will reverse the APR and BPR changes if we form the next Government.
I will now make swift progress. Let me just say that the wrong choices have been made. Tax should not be going up and spending should not be going up in this way, and I do not even believe that the Chancellor’s heart is in the benefit changes that have occurred, including the two-child benefit cap change. If it were, why was the Whip removed from several Labour Members? The reality is that the Prime Minister and the Chancellor are lashed to the same mast. This is all about their survival. They lost control of their own Back Benchers. Let me go back to Shakespeare, and “The Tempest”. The storm has no respect for rank, so they pitch and roll solely at the command of those behind them. The great man also wrote:
“All the world’s a stage…And one man in his time plays many parts”.
However, this Chancellor has played but one part, that of recklessness. At heart, she has taxed that which is good, and in this Bill she has incentivised that which is not. By so doing, with this Bill she will diminish us all.
Several hon. Members rose—
Conduct of the Chancellor of the Exchequer
Mel Stride Excerpts(2 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Sir Mel Stride (Central Devon) (Con)
I beg to move,
That this House calls on the Chancellor of the Exchequer to apologise for misleading the country about the state of the public finances, rolling the pitch for raising taxes, breaking her promises and increasing welfare spending, including her claim on 4 November 2025 that the OBR would be downgrading their productivity forecast which, as the Chancellor said, had ‘consequences for the public finances too, in lower tax receipts’, when in fact on 31 October 2025 the OBR had submitted its forecast to the Chancellor that showed tax receipts would be £16 billion higher than previously thought, resulting in the Government’s current balance target being met by a margin of £4.2 billion; further calls on the Chancellor to apologise for breaching the trust of the OBR, whose forecasts are shared in strict confidence until the Chancellor has given her Budget Statement; also calls on the Chancellor to apologise for the misleading briefings and leaks from HM Treasury in advance of the Budget Statement which caused uncertainty for families, businesses and investors; and calls on the Chancellor to apologise for breaking her promise after the last Budget that the Government was not going to raise taxes again, instead raising taxes in the 2025 Budget by £26 billion.
I will, of course, heed your remonstrations and remarks, Madam Deputy Speaker.
It is said that astrologists are there to make economists look good and second-hard car dealers are there to make politicians look good. It is inconceivable that anywhere in the world there is any trade or career that could possibly make this Chancellor look good. Indeed, one need only look at the polls. The Ipsos poll on the Chancellor’s approval rating shows that she has achieved minus 60%. That is a record low for a poll that was first commenced in the 1970s. A recent YouGov poll stated that the Chancellor was the least trusted on the economy, even more so than Jeremy Corbyn and, yes, Liz Truss—
Sir Mel Stride
You are quite right, Madam Deputy Speaker; I meant to say the right hon. Member for Islington North and Liz Truss. The Chancellor is not so much the wilting lettuce as a complete liability. How could this possibly have occurred? We have a Government who came to power with one of the largest majorities in the history of our country. One could almost see their majority from the moon. This has happened because of a huge failure on their part.
Let us take unemployment. Unemployment is now at a five-year high, back at a level last seen during the pandemic. The latest forecasts from the Office for Budget Responsibility show unemployment higher in every single year than in the forecasts from back in the spring. The International Monetary Fund tells us that inflation will be at the highest level of the G7 this year and next year too. Looking beneath the headline figures, the rate of inflation for food is at almost 5%. For a party that claims and professes to stand up for the poorest in our society, that is a disgrace.
When it comes to growth, we know from the OBR’s latest forecasts that, for every year going forward, growth will be lower than the spring forecast set out. Our borrowing costs not so long ago reached a 27-year high, and we are now paying more on our borrowing than Greece.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I congratulate the shadow Chancellor on finally working out what apologies are; I know he is demanding them from this side of the House. Before he carries on, will he apologise for the 15% spike in interest rates under Liz Truss, the thousands of pounds that were put on mortgages under Liz Truss, the billions that were cut from local governments under his Government and the fact that he ruined the health service under his Government? If people make mistakes they should apologise. When is he going to start?
Sir Mel Stride
I have had many things to say about the mini-Budget, both at the time that it happened and subsequently—and more recently too. Can I remind the hon. Gentleman that on the day of the general election, we had a near record level of employment and a near record low level of unemployment? We had the highest growth in the G7, and we had inflation bang on target at 2%. It is almost double that at present. The reason this Government have failed can be distilled to just two words: one is “deceit” and the other is “incompetence”. In the run-up to the last general election, the Labour party said that it would not put up taxes left, right and centre, and yet, within a few short months, they were to roll out £40 billion-worth of tax increases, including £25 billion by way of increased national insurance contribution taxes on employment.
Graham Stuart (Beverley and Holderness) (Con)
Will my right hon. Friend give way?
Graham Stuart
My right hon. Friend is right to put his finger on the issue of trust. It is not the 280,000 people who are not employed now compared with last year; it is not the lost opportunities for so many young people in hospitality or, indeed, the so many other areas of failure, such as the reduction in numbers of teachers. The issue that is most corrosive for this Government is a loss of trust, because we can see their mendacity from Mars.
Sir Mel Stride
My right hon. Friend is right. To be more accurate, we can see it even from Pluto. He is also so right about the loss of jobs in hospitality; about 90,000 jobs have been destroyed, many of them the first opportunity to get on to the career ladder that young people would otherwise have had. That is as a direct consequence of the increase in national insurance. It was not just an increase in the rate; it was a reduction in the threshold at which that tax cuts in. That disproportionately affects those on lower income, in particular women, part-time workers and, yes, young people.
Sir Mel Stride
I will in a moment.
We have seen the consequences of that up and down our country. I have spent a lot of time speaking to employers—from the large employers down to those on the high streets. They are all struggling and they do so because of the decisions that were taken by this Chancellor.
Natalie Fleet
I welcome the debate and I thank the shadow Chancellor for giving way on the point about women. We are here to talk about the conduct of the most powerful woman in this country, who used her Budget to remove the rape clause, to take children out of poverty and to give justice to miners in my patch. That never would have happened without her. I welcome this moment to celebrate our Chancellor, and I thank the right hon. Gentleman for it.
Sir Mel Stride
I thank the hon. Lady for that passionate intervention. The best way to get people out of poverty is through work. To the point made by the hon. Member for Stoke-on-Trent Central (Gareth Snell), the record of the last Government was exemplary. We had 4 million more jobs, and 800 new jobs every day under the last Conservative Government.
Josh Fenton-Glynn (Calder Valley) (Lab)
Were I not sat in a different place, I would be feeling déjà vu, because this appears to be the same debate that we had on the Budget just a week or so ago when I pointed out to the right hon. Gentleman that the problem we have is that two thirds of children growing up in poverty have a parent in work, when it was a third before the last Government got in. Will the right hon. Gentleman, who is a former Secretary of State for Work and Pensions, like to, first, apologise for that and, secondly, reflect on why work was not a route out of poverty under his Government?
Sir Mel Stride
I just ask the hon. Gentleman what he thinks the effect of increasing taxes on hard-working people does for poverty. Any economist will say it drives poverty up.
There is also the question of the farm tax, with the changes under the inheritance tax regime. In the run-up to the general election, the Secretary of State for the Environment, Food and Rural Affairs, then in his shadow position, looked the National Farmers Union president Tom Bradshaw in the eye and said that, at least on that count, farmers had nothing to fear from a future Labour Government. Well, that lasted about five minutes before they changed and the Chancellor changed her position. That will cause untold misery to farmers up and down our country. It will mean that farms that have been passed down generation to generation over many years will now fall into the tax net and potentially have to be broken up.
Dave Doogan (Angus and Perthshire Glens) (SNP)
We know that there are serious questions over this Chancellor’s alleged experience in the financial services sector. We can see that she has no experience in either industry or commerce. Perhaps the worst of her detriments, however, is her clinical lack of empathy, seeming totally unable to connect cause and effect. That is why she has allowed the disastrous—
Dave Doogan
Indeed. In terms of that conduct and those decisions that have been made, that is most evident in the egregious family farm tax—a betrayal of the producers of our food, no less—and the, let us call it, management of market-sensitive information before the Budget, which had a material effect on the economy of these islands.
Sir Mel Stride
The hon. Gentleman makes excellent points, and I will come to the issue of the market-moving effects of some of the comments made by the Chancellor. On the point that he rightly raises about the impact on people’s lives, these are real jobs. These are people struggling with real businesses. These are farmers getting up early in the morning, going out, working and doing what they know to be right, yet they are weighed down by the decisions taken by the Government.
Labour said that it had no intention of means-testing the winter fuel payment. There was no mention of it in its manifesto during the last general election, yet within a very short period of time, that is precisely what it did. Before Labour Members get excited about excluding millionaires and multimillionaires from those payments, the reality is that about 80% of pensioners living below the poverty line were impacted by that decision, which would have only entrenched and driven up poverty.
Dr Luke Evans (Hinckley and Bosworth) (Con)
One concern that I have is the repeated pattern seen with the Budget. At the time, the Government sat on an impact assessment that showed that 100,000 pensioners would be pushed into poverty and 50,000 into absolute poverty. That was the Government’s own assessment, but they did not release it to the House or the country before pushing through the policy, which we have now seen in the Budget. Does my right hon. Friend agree that this is a pattern of behaviour rather than a one-off mistake?
Sir Mel Stride
My hon. Friend is absolutely right. The Government talk a good game on poverty, but when it comes down to what they do, we see something entirely different.
Sorcha Eastwood (Lagan Valley) (Alliance)
On the point about what poverty means to our constituents, we are sitting in Northern Ireland with the local growth fund and the Treasury refuses to understand that the way we do things is different. We do not need 70% capital funding; we need it the other way around. That, to me, speaks to some of the substantive motion that I am comfortable to speak to, which is that it sometimes feels that the message is not getting through. Whether it is on the farm tax or the winter fuel allowance, our constituents need a Government who will listen. They promised to listen, but so far that has not been reflected.
Sir Mel Stride
The hon. Lady is absolutely right.
There is another change to the inheritance tax regime that will be equally as destructive as the agricultural property relief changes, and that is the business property relief changes—the tax changes relating to family firms up and down the country. I have met many of them. These are sometimes substantial businesses that have gone from having a bright outlook under the last Government to suddenly being concerned about the provisions they will now have to make to avoid being broken up as a consequence of the ruinous changes to the inheritance tax regime for those businesses. This is destroying investment, jobs and growth. That is the story of the Labour party.
Gareth Snell
On the right hon. Gentleman’s new-found concern for pensioners in poverty, the one time that the triple lock was suspended was under the Conservatives in 2021. I believe that he is on record as saying that it was unsustainable and should be replaced with a double lock. Is that still his position or does he support the triple lock?
Sir Mel Stride
I invite the hon. Gentleman to look back a bit further in time, before the triple lock was introduced by the Government of my party, to the time when his party was last in office. Under the last Labour Government, pensioner poverty was the fourth highest in Europe. That is why we brought in the triple lock—to clear up the mess that his party had created.
Labour also said, during the run-up to the general election, that unlike all socialist Governments in the past, it would not borrow and spend massively, yet the plan set out in its first Budget last autumn was to spend around half a trillion pounds more across the Parliament than under the plans it inherited. That was added to further in the recent Budget. Billions of pounds more are to be borrowed and spent. The consequences of that are that inflation has been stickier and higher for longer, as I have set out. It will be the highest in the G7 this year and the highest in the G7 next year. The consequences of that are that the Bank of England has had to keep interest rates higher for longer than it otherwise would have. The consequences of that—[Interruption.] Yes, there should have been more reductions—if the Government had not fuelled inflation, we would have seen interest rates coming down faster.
The reality is that increased borrowing costs have heaped pressure on people with mortgages and on businesses, and have added to the cost of servicing the huge national debt, to which the Government are readily further adding such that we are now spending £100 billion a year just to service our national debt, and that will rise to £140 billion, according to the latest Office for Budget Responsibility forecast. That is more than double what we spend on defence. If debt servicing were a Department, it would be the third largest in Whitehall, but not one looking after public services or providing the additional teachers, which, apparently the Prime Minister does not realise are not there. This is money being spent simply on paying for the profligacy of the Labour party.
David Pinto-Duschinsky (Hendon) (Lab)
I want to help out the right hon. Gentleman, because he seems a bit confused. On his party’s watch, the debt service exceeded £100 billion. When it took over, the debt service was only £30 billion, so his party tripled it. Will he apologise for mortgaging our children’s future as a result of the Conservative party’s inability to manage the public finances?
Sir Mel Stride
May I give the hon. Member a basic lesson in economics? In 2010, when my party came into office, we inherited a deficit at over 10% of GDP—as any economist will say, that is the amount of money being added to the debt every single year. It was over 10% on the watch of the Labour party, and that is the story of increased debt.
The debt pile as a percentage of GDP was coming down just before covid. Along with just about everybody else in the political firmament at the time of covid, the Labour party urged us to spend ever more to support the economy and to support jobs. That is precisely what we did, and of course that came with a fiscal cost.
Sir Mel Stride
Three times might be a bit too much—we will come back to the hon. Gentleman later.
Jonathan Davies (Mid Derbyshire) (Lab)
After the global financial crisis, which hit every country in the world, the Conservatives inherited a growing economy in 2010. I remember that it said it would wipe the deficit by the end of the 2015 Parliament, but that simply did not happen. We acknowledge the huge pressure that covid put on the economy, but we are taking steps to get the deficit and borrowing down, because it is a huge burden on the economy.
Sir Mel Stride
The steps, as the hon. Gentleman terms them, that his party is taking to get the deficit down are to borrow ever larger sums of money—half a trillion more than was laid out in the plans that his party inherited, and that has been added to further by the Chancellor at the last Budget.
You will recall, Madam Deputy Speaker, that after her first Budget, the Chancellor said that she would not be coming back for more tax, which brings me to the issue of her being misleading. That was clearly a misleading statement, because the recent Budget sets out that £26 billion more will be raised in tax in the year 2029-30. But £26 billion is not the extent of the increased tax rises. Because the Government have fuelled inflation, for the reasons that we have been discussing among ourselves, fiscal drag has dragged in a total of £38 billion of additional taxation in that year. The Labour party must start to understand that if it taxes and taxes and taxes the economy, it will get less growth, less productivity and less employment, and that is precisely what we are seeing.
The Labour party also said—if you recall, Madam Deputy Speaker—that the Chancellor would not be taxing hard-working people. Well, that simply was not true. By freezing the income tax thresholds for those extra years, the Chancellor is increasing taxes by £7 billion, which is a direct contradiction of what she said—with great gusto—in the previous Budget. She said that she would not do that because it would hurt hard-working people and that she would stick to her promises. Clearly, she did not mean it when she said it.
Graham Stuart
I wonder how best this behaviour can be described—as a falsehood, an untruth, a fib, a lie or a whopper, or are there other synonyms that better describe the repeated failure to do what one promises?
Sir Mel Stride
I thank the right hon. Member for that observation. I have been cautioned by the Chair as to the language—“misleading”—that I use, but it was clearly misleading for the Chancellor to come to the House and say that she would not be putting up taxes and that this was a one-off, as she used the expression “wipe the slate clean”, and yet be back for £26 billion more only a matter of months later.
The Chancellor also said that she would control welfare spending. Well, how did that go? The first thing that Labour did was to scrap the reforms that we had brought in—in fact, from when I was Secretary of State for Work and Pensions—that the OBR had scored as 450,000 fewer people going on to long-term sickness and disability benefits with a multibillion pound—
Sir Mel Stride
I think I have a jack-in-the-box over there. A jack-in-the-box is great to observe, isn’t it? I am not sure that is the case with the hon. Gentleman, but I might take what is probably the fourth intervention from him momentarily.
The Government scrapped our plans, with the result that 450,000 people who would not have gone on to those benefits are now heading exactly in that direction. They U-turned, of course, on the botched attempt to bring in their own reforms because perhaps some Labour Members sitting here this evening refused to back them. That cost about £5 billion.
We have seen that the terms of reference for the Timms review, which is looking at reform of personal independence payments, make it explicitly clear that there will be no attempt to manage down any of the forecast numbers for that benefit within the OBR’s forecast. Labour has given up on welfare reform.
Sir Mel Stride
Momentarily—I assure the hon. Gentleman that I will come to him.
What Labour has done in the meantime with this Budget is to take entirely the wrong decision, which is to tax all those hard-working people to the tune of £7 billion—a high proportion of that to transfer straight across to those who are on benefits, including scrapping the two-child cap. Those are the wrong priorities. They are about the socialist obsession with redistribution, and nothing to do with driving the incentives in the economy that grow it and make everybody better off.
Mark Pritchard (The Wrekin) (Con)
We heard from Labour Back Benchers about the previous Government’s borrowing, but that was for the country as a whole—for example, covid recovery loans. We have seen with this Budget what I would call career recovery loans, which are for the benefit of two people: the Chancellor of the Exchequer and the Prime Minister.
Sir Mel Stride
My right hon. Friend is absolutely right. In her heart, I do not believe that the Chancellor really thinks the right decision was to scrap the two-child benefit cap—I genuinely do not. This is a case of the political or fiscal tail wagging the welfare dog; it is as simple as that. The Front Bench has given up on any serious welfare reform.
Of course, the Chancellor has reassured us by telling us that she has rebuilt her headroom. She has doubled the headroom against her fiscal target, though it should be pointed out—
David Burton-Sampson (Southend West and Leigh) (Lab)
Will the right hon. Member give way?
Sir Mel Stride
I will in a moment.
It should be pointed out, of course, that that is a fiddled fiscal target. It is not the fiscal target that we were working to—the same definition of debt. It is not net public sector debt at all; it is something different. In fact, if we were to apply the targets that we were running to, which were much more stringent, to the figures in the forecast that we see from the recent Budget, those targets would be underwater in every single year of that forecast.
We should acknowledge that there is now real risk to the stability of our economy, even with an apparently doubled fiscal headroom. The first risk is in defence spending. Although within the numbers, there is the ambition to reach 2.7% of GDP by 2027, there is nothing beyond that. Of course, the Government know that they will have to spend more on defence, and that every increase of 1% of GDP in defence spending is about £25 billion—more than the entire fiscal headroom that the Chancellor has set aside.
The Chancellor knows that part of the problem she had with the forecast—although other things moved strongly and positively in her direction—was the productivity growth downgrade by the OBR from 1.3% to 1%. The trend for productivity over the past 15 years has been just 0.5%. If the OBR decides in a couple of years’ time to return to an assumption of trend growth in productivity, that will wipe out £28 billion of headroom. It will destroy all the headroom and more.
Similarly, on the path of interest rates, a 1% increase in interest rates across the forecast would cost £16 billion. In relation to particular spending pressures, such as special educational needs and disabilities, there is of course a £6 billion cost pressure, because that spending will be taken from local authorities and put on to the Government’s books in 2028. How that additional cost will be met is not in any way accounted for. Similarly, apparent efficiency savings of £4 billion in 2029-30—the target year—are very handy if one is trying to hit a fiscal target, but there is no explanation whatsoever of where or how those efficiency savings will be found.
My final point is that the tax increases set out by the Chancellor are all back-ended. That is when the frozen thresholds kick in. We are expected to believe that, in the run-up to a general election, a party that has shown no resolve, backbone or capacity to take difficult decisions will suddenly find some backbone, stick to its guns and deliver those tax increases. That simply will not happen.
Dr Luke Evans
Nowhere is that more evident than in health, with the abolitions and redundancies in integrated care boards. Given that those redundancies cover 50% of ICB staff, we now understand that the funding is just being reprofiled into later spending in 2028-29. Is that not exactly the kind of example that my right hon. Friend is talking about? Labour will encounter real problems in the next couple of years as it tries to drive through its agenda.
Sir Mel Stride
The reality is that back-loading tax-paying and squeezing spending, as the Government are doing, simply pushes off the inevitable. The evidence shows that, despite its huge majority, Labour does not have the backbone or a plan to control spending and take difficult decisions, even on tax.
The Chancellor is like Mr Micawber in Charles Dickens’s “David Copperfield”, who was just waiting all the time for something to turn up. Mr Micawber, as those who are familiar with the story will recall, not only ruined himself through his inability to manage his own finances, but ended up ruining another person, too. The Chancellor, with her inability to manage the public finances, will, I am afraid, be the ruin of our nation. For most of us, Christmas will be not so much a question of “Great Expectations”, but one of “Bleak House”. I give way to the hon. Member for Southend West and Leigh (David Burton-Sampson), who has been very patient.
David Burton-Sampson
The shadow Chancellor wants to talk about fiction, so let us talk about the Liz Truss Budget. Before we do, though, imagine if the Chancellor had turned up to deliver her Budget with headroom of £4.2 billion—£2.2 billion below what is set out by the stability rules. That would have been fiction. But she did not do that; she took the fiscally responsible decision to create headroom of £21.7 billion, which covers us for future financial shocks. Does the shadow Chancellor not agree?
Sir Mel Stride
Well, no. The reason there is the obsession with fiscal headroom is that this is the Chancellor who set up too little back in the day, blew it all, had to rebuild it, blew it all, and has had to rebuild it again. That is why the markets are so sensitive to fiscal headroom. The fact that the Chancellor is now saying that she needs £22.5 billion as fiscal headroom against her primary current Budget target is evidence of the fact that she had woefully too little back at the time of the first Budget, when she had £9.9 billion. That is the moral of the story.
Sir Desmond Swayne (New Forest West) (Con)
The political reality is that this Government have been dead in the water since they failed to get their very modest reduction in the rate of growth of the benefits bill through Parliament earlier in the year. We saw the ridiculous nonsense in the Budget when, having sacked and suspended Back Benchers after the previous Budget because they voted to end the two-child limit, the Chancellor came back with this great triumphal announcement that she was going to do it for them. May I entreat my right hon. Friend to give way one more time to the hon. Member for Stoke-on-Trent Central (Gareth Snell) so that he can give us an explanation of his socks?
Sir Mel Stride
I think the less said about the socks the better, Madam Deputy Speaker.
Sir Mel Stride
Yes, not bad, but I have to say that the tie runs in a close second—that is pretty shocking too.
I now turn from the substance of the Budget to the chaotic pantomime that we had in the run-up to the Budget? We had every possible kite flown by the Treasury as to which taxes were potentially going up. We had so many kites that they blotted out the sun, and the long shadow of all that chaos swept across businesses who stopped investing, and consumers who stopped spending. Members should not take my word for that; Andy Haldane, the former chief economist at the Bank of England, observed that all that speculation made businesses and consumers “hunker down”. It had real economic consequences.
Dr Andrew Murrison (South West Wiltshire) (Con)
Will my right hon. Friend give way on that point?
Sir Mel Stride
I will take one final intervention, and there is none better than my right hon. Friend.
Dr Murrison
My right hon. Friend is being very generous. The truth is that through dither, delay and changing their mind, the Labour Government in the run-up to the Budget had a real impact on people’s lives. Does he agree that pensioners in particular were encouraged to withdraw funds from their pension funds, which will have an impact on them for many years to come? What does he think of the remarks of Michael Summersgill, the chief executive officer of AJ Bell, who said that millions and billions of pounds were withdrawn from pension funds precisely because of the changing mind of the Chancellor of the Exchequer expressed before the Budget?
Sir Mel Stride
My right hon. Friend is absolutely right, which is why that behaviour was so irresponsible. There are people who would have drawn down on their pensions because they were extremely concerned about what was being briefed out by the Treasury as to what changes may be coming down the line, and about their ability to do so after the Budget. We also had people leaving the country because they were worried about an exit tax, which was another kite flown by the Treasury. That grossly irresponsible behaviour had real-life impacts in the real economy.
When it comes to misleading, there is much to consider in the complete mismanagement of the run-up to this Budget. That is not just my view. Indeed, a member of the Cabinet was quoted in the press saying,
“the handling of this Budget has been a disaster from start to finish.”
The impression that has been given is that there was a deliberate attempt to paint an inaccurate picture of the public finances, designed to give political cover for Labour’s plans for more taxes and more welfare spending. The Chancellor delivered a pre-Budget statement in Downing Street on 4 November in which she said that the OBR would be downgrading its productivity forecast, meaning lower tax receipts, but she failed to mention that in reality the OBR’s forecast had already shown her four days earlier that overall tax receipts were £16 billion higher—not lower—than previously thought. To quote the OBR’s Budget report:
“In isolation, the reduction in productivity growth could have lowered revenues by around £16 billion in 2029-30. However, the boost to receipts from higher inflation and changes to the composition of nominal GDP growth…more than offset this.”
Ministers have pointed out that there was a need to increase headroom, but that was not the justification for tax rises that was being made before the Budget, and it is an admission that the headroom that the Chancellor left in her first two fiscal events was inadequate and irresponsible. Crucially, it also fails to acknowledge that a significant proportion of the increase in taxes was used to fund policy decisions to spend more on welfare.
On 14 November, the media were briefed that a plan to increase income tax rates had been dropped following an improved forecast from the OBR. We now know that that was simply untrue. The finalised pre-measures forecast came weeks before this, on 31 October. That is why it is vital that the Financial Conduct Authority investigates the briefings and leaks that went on, and I have written to it again this week on that matter. Even after the Budget, in a Guardian interview, the Chancellor said that income tax rises had remained on the table well into November,
“because we didn’t know the size of the downgrade, the productivity”.
Again, that is simply untrue.
We now know that at no point was there a deficit of the scale suggested to the media. We know that because the OBR felt it necessary to take the unprecedented step of publishing its forecast rounds in full. The question remains as to why Ministers seem to have been so unconcerned about what was appearing in the press, when the OBR has now revealed that the alarm was being raised before the Budget. The reality is that the briefings and leaks were a smokescreen designed to distract from the real reason that taxes were going up, the utter weakness of this Labour Government and the need to buy off their Back Benchers with yet more welfare spending.
In the process, the uncertainty and speculation fuelled by the Treasury had an impact on families and on growth. As my right hon. Friend the Member for South West Wiltshire (Dr Murrison) rightly pointed out, people made decisions about their finances. They locked in higher mortgage rates, and businesses put off making investments and hiring workers. The British public have been left worse off and they have been misled. They deserve an apology, and they deserve much better than this weak and irresponsible Government.
James Murray
The word “rates” is definitely in there. The manifesto talks about the income tax rates and additional, main and higher rates of income tax, and it is very clear that we were talking about the rates of tax on working people. As I said, the manifesto also says that we will keep taxes on working people as low as possible. I note that the right hon. Gentleman did not take my suggestion to comment on some of the other tax choices we took at the Budget—the fair and necessary choices. The Opposition are picking and choosing what they want to refer to in the Budget. The Budget is a package. If they do not like it, they should explain what they would do instead.
Sir Mel Stride
On the matter of picking and choosing, the right hon. Gentleman is absolutely right that on 4 November, the Chancellor did point out that there was a downgrade in productivity; we now know that to be £16 billion, and she knew that at the time. Does the right hon. Gentleman accept, however, that she did not mention—it was omission—the upgrade to the number, which was twice as much as that £16 billion, and that she thereby gave an inaccurate reflection of the state of the public finances at that time?
James Murray
The Chancellor set out the productivity review that was under way by the OBR. In fact, if the right hon. Gentleman consults the OBR document published on Budget day, he will see in black and white that the productivity downgrade reduced tax receipts by £16 billion. The Chancellor was clear in her speech on 4 November that this, combined with the clear need to increase headroom to build resilience in public finances, would require everyone to contribute, and that is what happened.
James Murray
The right hon. Gentleman had a very long time to comment earlier in this debate—I may give way to him later.
James Murray
As the right hon. Gentleman should know, this Government take our responsibilities to public office incredibly seriously, and we have made sure we focus on that in the way we conduct ourselves in office. In speaking to people on 4 November, the Chancellor was setting out the challenges that we knew we were facing and the principles that would guide her in approaching decisions ahead of the Budget. It was important to set out the priorities she would have in taking her decisions on Budget day.
Sir Mel Stride
The right hon. Gentleman is being very generous with his time. Does he accept that on 4 November, the Chancellor knew that there was an upgrade to the state of the public finances of around £32 billion due to additional tax, inflation and other factors? If he does accept that, could he explain to the House why no mention whatsoever was made of that fact by the Chancellor?
James Murray
What the Chancellor knew when she gave her speech on 4 November was that headroom stood at a precarious £4.2 billion, and that was before previously announced policy measures had been accounted for. As I have said before in this House, and as Professor Miles of the OBR said to the Treasury Committee, that was a very challenging fiscal situation. If I had been at this Dispatch Box trying to justify a headroom of £4.2 billion or less, that would have been completely indefensible. Doing nothing was not an option—£4.2 billion of headroom would have been insufficient and deeply irresponsible.
In her speech at the beginning of November, the Chancellor was clear that she would seek to build more resilient public finances, with headroom to withstand global turbulence. She set out her priorities for the Budget, and those priorities were exactly what the Budget delivered. The apparent astonishment of Conservative Members that a Government could set out circumstances honestly, explain their approach and then deliver as promised is very telling—it must be an alien concept that they never considered during their time in office. As the Chancellor set out on 4 November and then delivered in her Budget, she wanted to cut NHS waiting lists, and that is exactly what we are doing. Waiting lists are already down by 230,000, with an extra 5 million appointments delivered since the election and 250 new neighbourhood health centres on the way.
Oral Answers to Questions
Mel Stride Excerpts(2 months, 3 weeks ago)
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Sir Mel Stride (Central Devon) (Con)
The process surrounding the Budget was utterly chaotic. We had months of damaging speculation, fuelled by briefings and leaks from the Treasury itself. They included briefings on 14 November that moved markets and gave the appearance, at least, of being deliberately inaccurate, which is why we need the Financial Conduct Authority to investigate. May I ask the Chancellor a simple question? Did she at any point authorise or allow confidential details of the Budget or the forecast to be briefed to the press—yes or no?
Sir Mel Stride
The Office for Budget Responsibility’s own guidance states:
“The interim rounds are transmitted to the Chancellor in confidence”.
Yet the Chancellor repeatedly stated before the Budget that the OBR had downgraded its productivity forecast. In her statement in Downing Street on 4 November, she said in relation to the OBR’s forecast that
“it is already clear that the productivity performance…is weaker than previously thought.”
Why did the Chancellor breach the confidentiality of the OBR?
Rachel Reeves
In its spring statement, the OBR was clear that productivity was coming in lower than forecast, and it was clear that it was reviewing that over the summer. The numbers that the OBR has since published showed that in the final pre-measures forecast the fiscal headroom was just over £4 billion. I was clear in my speech on 4 November that I did not want to reduce the headroom; I wanted to increase it. I increased it to bring back the stability that is much needed in our economy after 14 years of Conservative government.
OBR: Resignation of Chair
Mel Stride Excerpts(3 months ago)
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Sir Mel Stride (Central Devon) (Con)
(Urgent Question): To ask the Chancellor of the Exchequer if she will make a statement on the resignation of the chair of the OBR.
The Chief Secretary to the Treasury (James Murray)
Last week, the “Economic and fiscal outlook” was accessed prematurely ahead of the Budget. The Office for Budget Responsibility took full responsibility for this and conducted a review into what had happened. That report was published on Monday, and I came to this House to make a statement. The report found “systemic issues”, which led, in its words, to the
“worst failure in the 15-year history of the OBR.”
While I was making that statement on Monday afternoon, Richard Hughes, the chair of the OBR, resigned. The Chancellor has written to Mr Hughes to thank him for his many years of public service, and I have put my thanks on the record in this House, too. That decision was a matter for Mr Hughes.
We will work closely with the OBR to ensure that robust security arrangements are in place before the spring forecast and for all future forecasts. The permanent secretary to the Treasury will conduct a review of the Treasury’s security processes to inform future fiscal events. As I said when I was again at this Dispatch Box closing the Budget debate yesterday, the Government put the utmost weight on Budget security, including the prevention of leaks of information. A leak inquiry is now under way with the full support of the Chancellor and the whole Treasury team.
There is also speculation in the press today surrounding the letter that the OBR sent to the Treasury Committee last Friday, which I wish to address clearly. The Chancellor was aware of that letter and was content for it to be published, and she agreed that with the permanent secretary.
Sir Mel Stride
Richard Hughes was a respected chair of the OBR, and his departure is a matter of deep regret. The circumstances surrounding his resignation remain unclear—although for the Chancellor, it has clearly been a useful distraction from her own conduct.
On Friday, the OBR took the unprecedented step of publishing the details of the pre-measures forecast rounds, and members of the OBR board were clear to the Treasury Committee yesterday that that step was taken because of serious concerns about partial leaks and briefings about their forecasts. In relation to the market-moving briefings made on 14 November, which suggested that the public finances were, after all, in a better position, David Miles stated to the Committee:
“I think there had been a misconception that there had been some good news. It didn’t exist.”
The board members also clarified that those concerns were raised by Richard Hughes with the Treasury before the Budget, and that the information published on Friday was approved by the permanent secretary.
What discussions did the Treasury, including the Chancellor, have with Mr Hughes immediately prior to his resignation? Mr Hughes said last week that he served
“subject to the confidence of the Chancellor”.
Did the Chancellor give Mr Hughes her full confidence? Was any pressure put on Mr Hughes to resign? Did the Chancellor approve the OBR’s publication on Friday and discuss it with the permanent secretary? I believe that the Minister has confirmed that, but perhaps he might do so again. [Interruption.]
Mr Speaker
Order. Mr Strathern, are you here as a Parliamentary Private Secretary?
Sir Mel Stride
Do Ministers agree with the OBR’s opinion that leaks and briefings about the forecasts damaged growth? If so, what action was taken by the Treasury regarding those leaks? May I ask once again whether it was appropriate for the Chancellor herself to opine publicly on the OBR’s productivity forecast before the Budget, given that those matters should remain strictly confidential?
As you know, Mr Speaker, I have written to the Financial Conduct Authority seeking a full investigation into matters relating to the Chancellor’s statements on the state of the public finances. I have also written again this morning to the permanent secretary at the Treasury, requesting a full investigation into all these matters.
James Murray
I thank the shadow Chancellor for his questions. As I made clear in my opening remarks, the decision for Richard Hughes to resign was a matter for Mr Hughes himself. I referred in my earlier remarks to the media reporting of the letter that the OBR published. The publication of that letter was agreed to by the Chancellor; it is completely untrue to suggest otherwise.
The reason for publishing the letter was the unique nature of the Budget and the context of the OBR’s productivity review, as it said itself, while acknowledging that that would not become usual practice owing to the importance of preserving a private space for discussions. We are completely committed to the OBR’s independence; it is a vital part of our fiscal framework. In fact, one of the first acts of this Parliament was to introduce a fiscal lock so that the OBR could never be sidelined.
The shadow Chancellor also referred to comments by Professor Miles at the Treasury Committee earlier this week. I note that, among his remarks, Professor Miles was very keen to be clear that the positive headroom number in the forecast of 31 October did not in any way suggest that the OBR assessment was that the fiscal outlook was problem-free.
Office for Budget Responsibility Forecasts
Mel Stride Excerpts(3 months ago)
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Sir Mel Stride (Central Devon) (Con)
I begin with the matter of the report on the OBR leak. We will of course study that report in detail, but as the right hon. Gentleman concluded by saying, “We will respond to this matter with the seriousness it demands”, I seek immediate reassurance that this will not include scapegoating the OBR to distract from the serious questions surrounding the handling of the Budget by the Chancellor, Ministers, the Treasury and No. 10.
Let me turn to the other matters that the Chief Secretary to the Treasury addressed in his statement. We expect those in positions of power to act with transparency, openness and integrity, but it is increasingly clear that, in recent weeks, the conduct of people in Government fell short of those standards. That is not just my view; indeed, a member of the Cabinet is quoted in today’s press as saying:
“The handling of this Budget has been a disaster from start to finish.”
The impression has been given that there was a concerted attempt to paint an inaccurate picture of the public finances, designed to give political cover for policy decisions around increases in taxes and welfare spending. On 4 November, the Chancellor delivered a pre-Budget statement in Downing Street, in which she said that the OBR would be downgrading its productivity forecasts, meaning lower tax receipts. The Chancellor herself says that the statement was meant to set the context relating to the public finances and the need take difficult decisions on tax, but—this is the key point that the right hon. Gentleman did not address—she failed to mention that the net result, in the OBR’s review of the economy, was that there was an increase in tax revenues, not a black hole. To quote the OBR’s Budget report:
“In isolation, the reduction in productivity growth could have lowered revenues by around £16 billion… However, the boost to receipts from higher inflation and changes to the composition of nominal GDP growth…more than offset this.”
The Chief Secretary to the Treasury argues that there was a need to increase headroom, but that was not the justification for tax rises that was given before the Budget—although it is effectively an admission that the decision to leave such a small amount of headroom in the previous two fiscal events was irresponsible. The Chief Secretary to the Treasury’s argument fails to acknowledge that a significant proportion of the increase in taxes was used to fund policy decisions on spending, specifically on welfare.
On 14 November, the media were briefed that income tax rates would not be increased, following the improved forecast from the OBR. We now know that that was simply false. As I pointed out in my letter to the OBR before the Budget, the finalised pre-measures forecast came weeks before that, on 31 October. Even after the Budget, in a Guardian interview, the Chancellor said that income tax rises had remained on the table well into November
“because we didn’t know the size of the downgrade, the productivity”.
That is not true.
Since then, on Friday, the OBR took the unprecedented step of publishing its estimates for headroom in each of its pre-measures forecast rounds. As a result, we now know that at no point was there a deficit on the scale suggested to the media. Why did the Chancellor claim that she did not know the size of the headroom forecast by the OBR in November, when its final forecast was submitted on 31 October? At what point were the Cabinet informed that the forecast still showed a surplus, and why did the Chancellor suggest that the OBR’s review of the economy had led to a significant deterioration in the public finances?
We now know that the briefings to the press were not just inappropriate but inaccurate. Those briefings can only have come from inside Government. Will the Chief Secretary to the Treasury finally give us a clear answer: was the Chancellor aware of those briefings, and did she authorise them—yes or no? Will he commit to a full investigation by both the permanent secretary and the Financial Conduct Authority into those briefings, and will he explain why the Chancellor chose to opine repeatedly on the OBR’s forecasts before the Budget, when those forecasts were provided to her in strictest confidence?
The Chief Secretary to the Prime Minister claimed this morning that the OBR’s publication on Friday was simply responding to a request from the Select Committee, but the OBR’s report on Wednesday said that it had already planned to write that letter. Will the Chief Secretary to the Treasury confirm that it was, in fact, a proactive choice by the OBR to publish that information, which clearly suggests that the OBR was concerned that the record of who knew what, when, would otherwise be less than clear? It is a matter of profound regret that although the Chancellor chose to appear before the media yesterday, she did not see fit to appear here today. Her credibility is in tatters, and to the long list of her failings in respect of these matters should be added that of disrespecting this House.
James Murray
I was unclear from what the shadow Chancellor said at the beginning of his comments whether he, like us, values the role of the OBR in the Budget-setting process. We value its independence and we value its integrity. That is why we take what happened last Wednesday with the utmost seriousness, and we are determined to pursue it.
The shadow Chancellor went on to make a series of points, which I will address, but he fails to acknowledge that the productivity downgrade was real. The £16 billion hit to the forecast as a result of the productivity downgrade was real. I wonder why he does not want to acknowledge that. Could it be because the productivity downgrade was the result of things that his Government did over the 14 years that they were in office? Could it be the fact that the productivity downgrade was the result of a review by the OBR of policies including cuts to public investment, the mishandling of Brexit, and the record of the previous Government? That is perhaps why he does not want to acknowledge that point. The productivity downgrade by £16 billion was real. The need to build headroom was crucial. Both were principles that guided the Chancellor going into the Budget, as was the importance of cutting the cost of living, cutting NHS waiting lists, and cutting Government borrowing.
The shadow Chancellor will remember from when he was in government under the Conservatives that the process involving the OBR and the Treasury is an iterative one that runs until Budget day. When the Chancellor delivered her Budget, the “Economic and fiscal outlook”, which, as we have discussed, was published slightly early, set out the context for the decisions that she took. The shadow Chancellor raised the issue of information security. I am sure that he will have received the letter from the permanent secretary sent on 25 November, which stated:
“As Permanent Secretary, I place the utmost weight on Budget security. I will continue to keep all aspects under review to ensure the integrity of the Budget process.”
Finally, the shadow Chancellor asked where the Chancellor is today. I am very pleased to tell the House that the Chancellor has been at the Wales investment summit today, following the announcement yesterday of £1.4 billion of extra investment into Wales—just the latest in £16 billion of new investments announced since the summit was launched.
Budget: Press Briefings
Mel Stride Excerpts(3 months, 2 weeks ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Sir Mel Stride (Central Devon) (Con)
(Urgent Question): To ask the Chancellor of the Exchequer if she will make a statement on briefings to the press about the contents of the Budget.
The Chief Secretary to the Treasury (James Murray)
Every Minister in this Government takes their obligations to this House very seriously. There has been much speculation, as is usual ahead of a Budget, but the Chancellor will come to this House on 26 November and deliver a Budget that will protect the NHS and public services. It will support growth and enable businesses to create jobs and innovate. It will support those struggling with the cost of living, protect families from high inflation and interest rates, and get debt falling, because the less we spend on debt interest, the more we can spend on the priorities of working people.
As you would rightly expect, Mr Speaker, I will not comment on individual measures today. The Chancellor has asked the Office for Budget Responsibility to produce a forecast. The OBR and the Treasury exchange information throughout the forecast process, which is the usual practice, established over many years. The Chancellor will take decisions based on that forecast, and we will set out our fiscal plans at the Budget next week in the usual way. The OBR is making an assessment of the productivity performance of the previous Government, and we will not allow the mistakes of the previous Government to determine our country’s future. The Budget next week will be guided by this Government’s values of fairness and opportunity, and will be focused entirely on the priorities of the British people.
Stability remains at the heart of our approach. By building more resilient public finances with the headroom to withstand global turbulence, we will give businesses the confidence to invest, and leave Government more free to act, when the situation calls for it. We will continue to meet our iron-clad fiscal rules, which allow the Government to invest in homes, transport, energy security and infrastructure. Taking this action means that we can continue to build strong foundations for our economy, because that is the route to securing Britain’s future.
Sir Mel Stride
Given that response, the right hon. Gentleman might try a bit of stand-up in his spare time. The process around the Budget is meant to be the most closely guarded secret in Government, but in recent weeks, we have barely been able to pick up a newspaper without reading a fresh report of the latest policy movements. On 6 November, The Times reported that the Chancellor had included increases in income tax rates in the measures sent to the OBR for scoring. Then, last Thursday, the Financial Times revealed that those proposals have now been removed from the Budget package.
The Chancellor and her officials may think this is a game that they are playing, but it has real-life consequences and impacts markets, as we saw on Friday. More than that, it shows utter contempt for this House. In this place, questions about the Budget are always met with the same answer: “Decisions on tax will be announced at the Budget”. That is right and proper, but it becomes hollow and absurd when those same matters are being openly reported in the national media daily. The Chancellor even delivered a pre-Budget address to the country—not in this House, but in the Downing Street press room.
Given that the Chancellor has chosen not to come to the House today, I will ask the Minister the following questions. Has the Chancellor or any Treasury Minister sanctioned any briefings to journalists on potential Budget tax measures or the contents of the OBR’s forecasts? Have any Treasury officials or special advisers conducted such briefings? Has the Chancellor or the permanent secretary launched an investigation into the source of the leaks, and can the Minister explain why the Chancellor seems to have confirmed that the OBR has downgraded its productivity forecasts before the Budget has even taken place?
Either the Chancellor has been knowingly allowing the Budget process to be briefed out, or serious unauthorised leaks have occurred from her Department. That has fuelled confusion and uncertainty, and disrespects this House.
Mr Speaker
Minister, it is not normal for a Budget to have been put in the press. This is the hokey-cokey Budget: one minute something is in, the next minute it is out. I am very worried. The previous Government also had to be reprimanded for leaking. It is not good policy. At one time, a Minister would have resigned if anything was released. This House should be sacrosanct, and all decisions should be heard here first. Please do pass on the message.