Budget Responsibility Bill

Nigel Huddleston Excerpts

Committee of the whole House
Wednesday 4th September 2024 Commons Chamber

[Nigel Huddleston (Droitwich and Evesham) (Con)]

I beg to move amendment 9, page 1, line 14, at end insert—

“(c) or any changes to the government’s fiscal targets.”

This amendment requires the OBR to produce and publish a section 4(3) report at the time new fiscal rules are announced by the Treasury.

[The Chairman]

With this is will be convenient to take the following:

Amendment 2, page 1, line 25, at end insert—

“(2A) In any case where the Office has acted in accordance with subsection (2), it may notify the Independent Adviser on Ministers’ Interests of the circumstances in any case where it considers those circumstances may be relevant to—

(a) the Ministerial Code, or

(b) the functions of the Independent Adviser on Ministers’ Interests.”

This amendment enables the OBR to notify the Independent Adviser on Ministers’ Interests where the OBR considers that any instance where the Treasury had not requested a report under section 4A(1) in advance may give rise to consideration of compliance with the Ministerial Code.

Amendment 5, page 1, line 25, at end insert—

“(2A) Where the OBR prepares a report in accordance with subsection (1) or (2), it must take account of the impact of the measure or measures on—

(a) the UK’s compliance with, and

(b) the fiscal cost of meeting,

the UK’s net zero target as set in section 1(2) of the Climate Change Act 2008.”

This amendment requires the OBR to report on the impact of fiscally significant measures announced by Government on the UK’s statutory net zero target.

Amendment 1, page 2, line 4, at end insert “or

(b) the measure, or combination of measures, is likely to have an impact on—

(i) the cost of government borrowing,

(ii) interest rates, or

(iii) the rate of growth of gross domestic product.”

This amendment broadens the definition of fiscally significant measures to those which fall below the costing threshold, but have wider fiscal effects, by affecting either the cost of government borrowing, interest rates or rates of economic growth.

Amendment 6, page 2, line 4, at end insert

“or if the condition in subsection (3A) is met.”

See the statement for Amendment 7.

Amendment 7, page 2, line 6, at end insert—

“(3A) The condition in this subsection is that the measure, or combination of measures, forms part of category of measures with a cumulative impact on—

(a) public sector net debt,

(b) public sector contingent liabilities, or

(c) both,

that exceeds a specified percentage of the gross domestic product for a specified period.

“Specified” means specified in, or determined in accordance with, the Charter for Budget Responsibility”

The purpose of this amendment is to extend the definition of fiscally significant measures to include measures with a cumulative impact on public sector net debt or contingent liabilities when taken together with other measures in the same category, such as public projects with private sector partners.

Amendment 3, page 2, line 16, leave out “28” and insert “56”.

See the statement for Amendment 4.

Amendment 4, page 2, line 17, at end insert—

“(6A) After the publication of a draft under subsection (6), the Treasury must consult—

(a) the Office for Budget Responsibility,

(b) the Treasury Committee of the House of Commons, and

(c) such other persons as the Treasury considers appropriate.

(6B) When a modified Charter so as to include provision by virtue of this section is laid before Parliament, the Treasury must also lay before Parliament a report on the outcome of consultation under subsection (6A).”

The purpose of this amendment is to impose a requirement on the Treasury to undertake a full consultation and publish the outcome of that consultation prior to revision of the Charter for the purposes of the Bill.

Clause 1 stand part.

Clause 2 stand part.

Amendment 10, Title, after “measures” insert

“and of any changes to the government’s fiscal targets”.

This amendment is consequential to Amendment 9. It would amend the long title of the Bill.

[Nigel Huddleston]

Thank you very much, Madam Chair. May I first take the opportunity to congratulate you on your election? I promise to try not to try your patience over the coming weeks, years and so on, but we will see how things go.

I wish primarily to speak today to amendment 9 and, of course, consequential amendment 10, which effectively seek to ensure that the fiscal lock proposed in the Bill should also include any changes to the fiscal rules and would require the Office for Budget Responsibility to produce a report on their effect on public finances. The Office for Budget Responsibility was of course constructed by a Conservative Chancellor following the poor forecasting record of the previous Labour Government. Between 2000 and 2010, the then Labour Government’s forecasts for economic growth were out by an average of £13 billion, and their forecasts for the budget deficit three years ahead were out by an average of £40 billion. Their forecasts therefore lacked credibility, and to re-establish confidence and credibility the OBR was created by the Conservative Government.

Labour lacked economic credibility in the past, and I am afraid it still lacks it now. The facts simply do not stand up the false claim that the Government have inherited the worst economic circumstances since the second world war; they transparently have not. Contrary to the rewriting of history that the current Labour Government are attempting, when we took over from Labour back in 2010, inflation was 3.4%. When they took over from us, it was 2.2%. The annual deficit is half what we inherited in 2010, unemployment is about half what it was in 2010, and we handed Labour the fastest economic growth in the G7. The dominant political and economic narrative since the second world war is in fact, as has been widely commented on, that every single Labour Government end up with unemployment higher at the end of their time in power than when they took over from the Conservatives preceding them.

The British public should not be taken for fools. Just because Labour keeps claiming something, that does not mean that it suddenly becomes true, which is why clarity over plans and rules is so important. The fiscal rules are of course restrictions on fiscal policy set by the Government to constrain their own decisions on spending and taxes. The fiscal rules set by the previous Government said that the debt to GDP ratio should be falling within a five-year horizon, and that the ratio of the annual budget deficit to GDP should be below 3% by the end of the same period. Labour’s manifesto for the election proposed the following fiscal rules: balancing the current budget, so that day-to-day costs are met by revenues, and that debt must be falling as a share of the economy by the fifth year of the forecast. On the surface, therefore, the debt rules appear to be broadly the same under the new Government. The Government have even said that they have an “ironclad” commitment to reduce Government debt. It is therefore critical what definition of debt is used for the fiscal rules. Clearly, any changes to the fiscal rules are financially significant decisions because they affect how much the Government can borrow and spend.

On Second Reading, the Exchequer Secretary to the Treasury said:

“Our fiscal rules are non-negotiable.”—[Official Report, 30 July 2024; Vol. 752, c. 1263.]

Great, but why then has the Chancellor repeatedly failed to rule out that she will change the definition of debt in her fiscal rules to allow, presumably, for massive borrowing? The Government cannot run from the scrutiny that they should be subjected to if they are considering making such a change. We believe that our amendment requiring an OBR report on changes to the fiscal rules is entirely consistent with the Government’s stated policy intent, and should therefore be fairly uncontentious. After all, on Second Reading, the Chief Secretary to the Treasury said that

“the announcement of a fiscally significant measure should always be accompanied by an independent assessment of its economic and fiscal implications, in order to support transparency and accountability.”—[Official Report, 30 July 2024; Vol. 752, c. 1211.]

We agree, and not accepting our amendment would be contrary to those goals, because clearly changing the fiscal rules would be a fiscally significant measure in anybody’s book. Furthermore, the Chief Secretary said that

“fiscal discipline and sound money is the bedrock of our plans.”—[Official Report, 30 July 2024; Vol. 752, c. 1213.]

Well, changing the fiscal rules would be changing the foundations and that bedrock.

Transparency and clarity are important in relation to the public finances, because Ministers should never forget that it is not their money that they are spending; it is the public’s money. The public have a right to know how their money is being spent, and government is about making difficult choices with limited resources. With Government spending being above £1.2 trillion per year, the British public recognise that the Government clearly have choices. It is not an endless supply of money, but it is a very, very large amount. In the last few weeks, the new Labour Government chose to spend the public’s money on pay settlements for their union friends rather than on supporting pensioners. Those settlements are estimated to cost about £10 billion. They also chose to spend £8.3 billion on a public energy company and £7.3 billion on a national wealth fund, so far from inheriting a £22-billion black hole, they have actually just spent £25 billion creating one within their first few weeks of coming to power.

[Andrew Griffith (Arundel and South Downs) (Con)]

My hon. Friend is making a fantastic speech on the importance of being responsible with our public finances. Much of the Bill is concerned with responsibility and transparency. Does he know whether the Government published an impact assessment when they took away the winter fuel allowance?

[Nigel Huddleston]

I thank my hon. Friend for that point. My understanding is that the Government have not published an impact assessment, as would normally be the case for something with such a significant impact. I think that speaks to the whole narrative that we are hearing from the Government: claiming one thing when the facts speak differently. As I said, far from inheriting a £22 billion black hole, they have actually spent, or committed to spending, an additional £25 billion. That is a choice that they made, so the claim that the Labour Government are having to take the winter fuel allowance away from millions of pensioners as a response to unexpected financial constraints simply does not stack up against the facts, or indeed the words of the Chancellor herself, who on 25 March 2014—yes, a decade ago—said:

“We are the party who have said that we will cut the winter fuel allowance for the richest pensioners and means-test that benefit to save money”.—[Official Report, 25 March 2014; Vol. 578, c. 174.]

That is a direct quote in Hansard from the current Chancellor, so no, the Government’s restriction of winter fuel payments is not a response to financial circumstance; it is a long-established, clearly stated Labour policy intent—a deliberate policy choice, but a policy that they conveniently forgot to tell the public about in the run-up to the last election.

I hope, however, that the Government can be straight with the public on this point about the fiscal rules, accept the amendment that we are proposing, and provide assurance to all Members and the outside world that there is no sleight of hand here. We want the Bill to work as they say it is intended to, and to include financially significant decisions, such as on the levels of Government borrowing and the fiscal rules. I would therefore appreciate it if the Chief Secretary to the Treasury confirmed in his wind-up that the Government do not intend to change the definition of debt in their fiscal rules or practise some accounting trick to hide the level of Government borrowing, and that they do indeed wish to be clear and transparent about the public finances. If Labour Members vote against our amendment, it will merely prove that they are planning to change their fiscal rules in the Budget to borrow more money, increase debt, and run away from independent OBR scrutiny—the very opposite of the stated intent of the Bill.

[Madam Deputy Speaker (Ms Ghani)]

I call Dr Jeevun Sandher to make his maiden speech.

--- Later in debate ---

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I call shadow Minister Nigel Huddleston.

[Nigel Huddleston]

I will not detain the House long by repeating the arguments that I made in my opening comments, but I am disappointed by the Minister’s response, and in particular by his refusal to accept our amendments. It is alarming that he is refusing to do so because, as I outlined, I believe they are consistent with the goals of the Bill overall, and I think the credibility of the Bill will be seriously undermined if it does not include the fiscal rules. I like the Minister a lot. We go back a way and have always had civil conversations, but if he does not believe or consider the level, type and definition of debt to be “fiscally significant”, then with the greatest respect perhaps the Treasury is not the right home for him. They are transparently fiscally significant, and an important part of the consideration we are talking about today.

[Darren Jones]

I thank the hon. Gentleman for giving way, and for inviting me to suggest whether I should try to find a job in another Department. I just point out that, having arrived at the Treasury, I have seen the impact of fiscally significant levels of debt after 14 years of the Conservative Government. Has he got anything to say to the House on that matter?

[Nigel Huddleston]

Yes, I have indeed. As I outlined in my original statement, the arguments the right hon. Member is making do not stack up with the facts. The economic circumstances that Labour inherited are better in many areas than those we inherited from them back in 2010. The economy is the fastest growing in the G7. On unemployment, every Labour Government since the second world war has increased it while in power, for us to then clear up and reduce it when we take over. Inflation was lower when Labour took power then when we inherited it, and annual debt was higher when we took over in 2010.

Labour Members keep saying all those things, but the challenge is that it does not stack up with the facts. They make arguments about the level of debt, as I outlined earlier, but they have already announced £10 billion for inflation-busting salary increasing for their union mates, £8 billion on energy provisions, and £7 billion on the national wealth fund. That is £25 billion of additional money that they have spent. If there is a black hole in the finances, it is clearly one of their own making by the announcements they have made since coming into government. That £25 billion is a huge amount of money, but I will finish discussing those points, because we had this debate earlier.

[Darren Jones]

rose—

[Nigel Huddleston]

I will not give way at the moment, because I want to move on to some more positive things.

[The Comptroller of His Majesty’s Household (Chris Elmore)]

There is loads of time.

[Nigel Huddleston]

We have Third Reading as well, so let us enjoy ourselves. Just because the Government keep repeating the narrative does not make it true. I am sure they will continue to do so, but the £25 billion of additional spending that I have just outlined is a choice they have made. The arguments they are having to make—that they are having to cut payments to pensioners in response to the circumstances they have inherited—are not true because, as I outlined in my opening speech, it is a deliberate, long-stated policy choice articulated by the current Chancellor a decade ago. It is not a response to circumstances, but deliberate Labour policy.

On a more positive note, I congratulate all those who have made their maiden speeches today: the hon. Members for Loughborough (Dr Sandher), for Portsmouth North (Amanda Martin), for Swindon North (Will Stone), for Chelmsford (Marie Goldman), for Southend East and Rochford (Mr Alaba), for Woking (Mr Forster), for Rother Valley (Jake Richards), for Wokingham (Clive Jones), for Dudley (Sonia Kumar), for Rochester and Strood (Lauren Edwards), for Plymouth Moor View (Fred Thomas), and for Northampton North (Lucy Rigby). They have made incredible contributions. The breadth of experience that they bring to this Parliament is astounding, and I am largely talking here about Government Members. I say it with a great degree of respect, because in many circumstances—in fact, in nearly every single circumstance—they have replaced good friends of mine who contributed significantly to this House. They all have big shoes to fill, but what they have said today was impressive. In particular, those who spoke without notes are a lesson to us all.

What a beautiful tour we had around the United Kingdom. Everyone who spoke today spoke eloquently about their constituencies and their constituents and showcased their rich heritage and rich history. It was incredibly impressive. I am sure their constituents will be proud of what they have said. With that, I will finish my comments, but the debate will continue.

Question put, That the amendment be made.