Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 8th April 2025 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

Growth is the No.1 priority of this Government. That is why in the autumn Budget and the spring statement we unlocked an additional £113 billion for capital spending, compared with the plans that we inherited from the previous Government. Yesterday we announced significant support for the automotive sector and life sciences, and ahead of the spending review in June we have announced the roll-out of an additional 60,000 places in construction skills so that we can build the homes and infrastructure that our country desperately needs.

[Deirdre Costigan]

To drive progress on our growth mission and get the most out of taxpayers’ money, it is vital that Departments work collaboratively and not at odds with each other. Will the Chancellor outline how she is promoting cross-departmental working and planning as part of the spending review?

[Rachel Reeves]

The Chief Secretary to the Treasury is working closely in a constructive way to bring together clusters of colleagues to discuss some of the pressing issues that span Departments and that no one Department can address on its own, whether that is reform of special educational needs and disabilities provision for early years, or tackling issues around homelessness and the cost of temporary accommodation. We are working cross-Government to address some of those cross-cutting issues.

[Paul Holmes (Hamble Valley) (Con)]

The Chancellor is right to focus on increasing economic growth, so will she please explain why my office is still waiting for a response on behalf of a small business to a letter that I sent on 12 December, asking her to look into the impacts of her national insurance rise on small businesses? We asked for an update on 11 February, I raised a point of order on 10 March, and I still have not had a response. Will she please get a response to me as soon as possible?

[Rachel Reeves]

I will follow up on that issue. The smallest businesses—those that employ the equivalent of four people on the national living wage—will be paying no national insurance at all from this April. Up to 1 million of the smallest businesses will be paying less or the same national insurance as they were paying previously.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Since the spring statement the world has been rocked by the announcements by President Trump on tariffs last week. It is an event as significant as the financial crisis of 2008, or perhaps as covid, and in those instances the state unleashed everything it could to try to resolve those issues. Is the Chancellor considering changing any of her rules to ensure that everything that the state can throw at this problem is being done?

[Rachel Reeves]

It is incredibly important to retain cool heads at this moment. The tariffs have been imposed, and we are working closely with our friends and counterparts in the United States to reduce the impact from those, not just in the UK but around the world as well. As I said in my opening remarks, at the same time we are looking to secure better trading relationships with some of our biggest trading partners around the world. Of course, as we did yesterday, we are looking at some of the sectoral responses, including on life sciences, automotives and steel, but the fiscal rules are very important for giving our country the stability it needs. We saw what happened when the previous Government lost control of the public finances: it resulted in interest rates going through the roof, meaning higher costs for businesses and for working families. We will not make those mistakes. That is why the fiscal rules are non-negotiable and stability for this Government is sacrosanct.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Is now not the right time to start trying to make our own luck? In that light, would it not also be the right time for the Chancellor to give the green light to the upgrade of the A66 between Penrith and Scotch Corner? Some 25% of traffic on that A road is freight, which is twice the average for A roads across the country, and it is outrageous that so much of the road is single carriageway. Would it not be great for the economy, as well as save lives, if the Chancellor gave the upgrade the green light today?

[Rachel Reeves]

Impressive. We will be considering all such schemes as part of the spending review, but I agree with the hon. Gentleman that we need to go further and faster to grow our economy. That is why we are spending £113 billion more on capital investment in this Parliament, compared to the plans that we inherited, which means that we can upgrade more roads, rail lines and energy infrastructure, and build the 1.5 million homes our country needs too.

[Mr Speaker]

I call the shadow Minister.

[Richard Fuller (North Bedfordshire) (Con)]

Two weeks ago, the spring statement rushed through changes to disability benefits, or “pocket money” to the Chief Secretary to the Treasury, to help plug the £14 billion gap in public finances created by the first Labour Budget. Now we are already in the Office for Budget Responsibility’s scenario 2 on tariffs, and the Chancellor is once again forecast to be out of room on her fiscal targets. What does she plan to ask the Chief Secretary to the Treasury to do to update departmental budgets in his multi-year spending review in order to avoid punishing businesses and people once again with further taxes?

[Rachel Reeves]

The hon. Gentleman is jumping the gun somewhat. We delivered the spring statement just two weeks ago, in which we were able to restore the fiscal headroom after the change in global bond yields. We will set out the Budget in the autumn, moving to one fiscal event a year, which is very different from the multiple Budgets we had from the previous Government. We have set the spending totals for the spending review and we will be setting out the departmental allocations on 11 June.

[Andrew George (St Ives) (LD)]

3. What assessment she has made of the potential impact of her tax policies on investment in second homes.

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[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

4. What steps she is taking with Cabinet colleagues to increase the affordability of new homes.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Prime Minister and the Deputy Prime Minister have set out our ambitions to build 1.5 million homes during this Parliament as part of our plan for change. At the spring statement I announced steps towards that ambition, with an additional £2 billion investment in social and affordable housing next year as a down payment on further investment at the spending review in June.

[Dr Huq]

I welcome the Chancellor’s “build, build, build” policy, but with temporary housing in London costing £4 million a day, soaring rents and a frozen local housing allowance, it is no wonder that London councils fear going bankrupt and having to rehouse people from outside the capital, where only 5% of homes are affordable. In the comprehensive spending review, will my right hon. Friend look into possibly uprating this stingy Tory legacy, so that Londoners are not forced out of London?

[Rachel Reeves]

The key thing we need to do is build the homes our country desperately needs. That is why I put £600 million of investment into creating 60,000 additional places for people to learn the construction skills we need, and into good jobs, paying decent wages and building the homes we need. That is also why we are reforming the planning system, so that we can actually get those homes built. We are backing the builders, not the blockers, which is what the Conservatives did.

[Alison Bennett (Mid Sussex) (LD)]

At the weekend, The Times revealed the problems in the retirement housing market, in terms of both new builds and resales, and many of my constituents have been experiencing a loss on the houses and flats that they have inherited. Does the Chancellor consider the housing market to be adequately providing decent, affordable homes for those who are downsizing as well as first-time buyers?

[Rachel Reeves]

I would be very happy to arrange a meeting for the hon. Lady with the relevant Minister to discuss some of those specific issues around retirement properties. She makes a really important point. We need to make it easier for people to downsize to free up those properties, including in the private sector, so that more homes are available for families.

[Emma Foody (Cramlington and Killingworth) (Lab/Co-op)]

5. What steps she is taking to increase economic growth in the north-east.

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[Navendu Mishra (Stockport) (Lab)]

9. What steps she is taking through the national wealth fund to increase regional economic growth.

[The Chancellor of the Exchequer (Rachel Reeves)]

The national wealth fund has had constructive meetings with all our mayors, and we have given a mandate to the national wealth fund to work with mayors on tailored offers for their communities. I am meeting Mayor Andy Burnham later today to take forward that shared objective to ensure that growth is generated everywhere and felt in all parts of our country.

[Navendu Mishra]

As a fellow north-western MP, I am sure that you, Mr Speaker, share my pride that the banks of the River Mersey were the birthplace of the industrial revolution, and my constituency of Stockport continues to be a hub for innovation. We have many fantastic businesses in Stockport, including KNDS in the Heatons, which manufactures military bridging systems and the Boxer armoured vehicle for the British Army. Can the Minister outline how the national wealth fund will fuel economic growth in Stockport and the investment we need in our local infrastructure?

[Rachel Reeves]

I visited Stockport with my hon. Friend and the Mayor of Greater Manchester last year to see the regeneration work happening there, linking new investment in housing with transport infrastructure. I thank my hon. Friend for his leadership. Last month, alongside the increase in defence spending to 2.5% of GDP, we also set the national wealth fund’s strategic direction, with a focus on support for the defence sector through dual-use technology, creating more good jobs in all parts of the country, including Stockport.

[Sir John Hayes (South Holland and The Deepings) (Con)]

Economic policy should benefit all regions of Britain, including rural counties such as Lincolnshire, where we grow a disproportionate amount of the food that feeds the nation. Does the Chancellor recognise that, in an age when the two biggest economies in the world are protecting their industries—including agriculture—the time has come to reinvest in manufacturing and to consume more of what we produce here in Britain? To echo the call of the Liberal Democrats’ spokesperson, we should buy British. That means using Government procurement to back British jobs, British projects and British workers.

[Rachel Reeves]

My right hon. Friend the Chancellor of the Duchy of Lancaster has set out new reforms for procurement rules to enable just that. We want more British businesses to win contracts. We want more small businesses in Britain to win contracts—businesses in all parts of the economy, including in food and farming. In farming, we gave a record settlement of £5 billion in the Budget last year to support this important part of our national economy.

[Dr Marie Tidball (Penistone and Stocksbridge) (Lab)]

There is currently no tram network from central Sheffield to Oughtibridge, Wharncliffe Side, Deepcar or Stocksbridge, and no operational train service to those areas. My constituents want the Sheffield tram network to be extended to Stocksbridge and to connect those rural communities with jobs, education and hospitals, as well as supporting the advanced manufacturing district and the steel plant in Stocksbridge. Will the Minister meet me and the Mayor of South Yorkshire before the spending review to discuss the next steps to establish the Stocksbridge extension to the Sheffield tram-train service?

[Rachel Reeves]

The Chief Secretary is working closely with mayors, including Oliver Coppard, to understand their priorities for the places that they represent for the purpose of the spending review in June, and will continue that work. At the same time, as the hon. Member for Grantham and Bourne (Gareth Davies) pointed out, we are backing the airport at Doncaster, bringing more good jobs to South Yorkshire.

[Sammy Wilson (East Antrim) (DUP)]

What discussions has the Chancellor had with the Northern Ireland Executive to ensure that the national wealth fund is used to promote economic growth in Northern Ireland? Does she not agree that the big impediment to growth is the fact that she is taxing businesses to death?

[Rachel Reeves]

The Office for Budget Responsibility has revised growth upwards from next year, and expects the economy to be bigger at the end of the forecast period than it thought at the time of the Budget last year. We are using the national wealth fund, the British Business Bank and UK Export Finance to support businesses throughout the UK, and we were recently able to announce significant investment at Thales in Belfast to create jobs in the defence industry there for the export of goods to Ukraine.

[Anna Sabine (Frome and East Somerset) (LD)]

10. What fiscal steps she is taking to support pensioners with the cost of living.

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[Catherine Atkinson (Derby North) (Lab)]

T5. The defence sector is a vital part of our local economy in Derby, particularly with the landmark £9 billion deal struck with Rolls-Royce, which is supporting the Royal Navy’s submarines and providing a major jobs boost. Does the Chancellor agree that national security goes hand in hand with economic security and, in turn, financial security for households?

[The Chancellor of the Exchequer (Rachel Reeves)]

The first duty of any Government is to keep the nation safe. That is why we are increasing defence spending as a share of GDP to 2.5%—the biggest sustained increase in defence spending since the end of the cold war. Derby has a vital role to play within the UK’s defence sector, particularly in nuclear engineering and aerospace, as demonstrated by the landmark £9 billion deal with Rolls-Royce, which will create up to 1,000 jobs in the city and protect thousands more.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I welcome the fast action by the Government to convene the automotive industry in reaction to President Trump’s damaging tariffs, but the measures in and of themselves will not create new export markets or stimulate demand here in the UK. Will Ministers look at Liberal Democrat calls to reintroduce the plug-in car grant and equalise VAT for electric vehicle pavement charging? Will the Government instruct the valuation office to scrap business rates for EV charging bays until the transition is complete?

[Rachel Reeves]

The support that we announced yesterday on the phase-out of internal combustion engine cars was very much welcomed by the automotive sector. It will give much more flexibility around the allowances and around plug-in hybrid vehicles. All of that is welcome, but we are keeping a watching brief as well as trying to ensure that there are new markets for cars made in Britain in other countries around the world by securing more trade deals.

[Oliver Ryan (Burnley) (Ind)]

T6. What is the Chancellor doing to support businesses and boost wages in towns such as Burney, Padiham and Brierfield, which were forgotten for 14 years under the previous Government?

[Rachel Reeves]

My hon. Friend is doing great work supporting local businesses in Burnley, including the digital marketing start-up Door4, which I know he has been championing.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

T2. I have been contacted by many local businesses, including the Cross Keys pub in the Holt Heath nature reserve and the BEAR café in Wimborne. They are two different venues in two different locations, but both tell me that these are the most extreme trading conditions ever seen in hospitality. With national insurance, minimum wage and energy and food costs, will the Chancellor consider a reduction in VAT on hospitality sales to protect high streets and local producers and to save our communities?

[Dan Tomlinson (Chipping Barnet) (Lab)]

T7. As a north London MP, I know that tackling the high housing costs in this city is a priority for my constituents. It is my belief that one route to that is investing in the country as a whole, so that we are not just flying on one London-shaped engine. To that end, did you know, Mr Speaker, that Leeds is the largest city in western Europe that does not have a tram or a mass transit system? That is a damning indictment of decades of economic failure. Will the Chancellor do all she can to ensure that the Leeds tram is built as fast as possible so that her constituents and mine can be better off?

[Rachel Reeves]

Hear, hear. I had better declare an interest as a proud Member of Parliament for Leeds West and Pudsey. West Yorkshire combined authority is receiving £830 million for transport spending through round 1 of the city region sustainable transport settlement. That includes £200 million for the development of a mass transport system. For too long Leeds has lacked this. This Government will put that investment in and get those trams running.

[Wendy Morton (Aldridge-Brownhills) (Con)]

T3. With the jobs tax and the increase in business rates, and as a result of US tariffs, it is vital that we stimulate the UK economy. What is the Chancellor’s plan, and can she expect us to see interest rates fall? Perhaps if she was listening to the question, she would be able to answer.

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[Nick Timothy (West Suffolk) (Con)]

The Chancellor talked earlier about the Government’s response to the new US trade policy, but what are the Government doing about China’s abuse of the world trade system? In particular, what will they do to challenge China’s status as a developing country at the World Trade Organisation? That is the means by which China dodges so many of the rules imposed on countries such as Britain and others in the west.

[Rachel Reeves]

Trade issues are for the Secretary of State for Business and Trade, but I will say this. There are rightly concerns about global trade imbalances, but the response of the United States by putting tariffs on all countries—including the UK, which does not have a trade surplus—is a disproportionate response to a genuine problem of global trade imbalances.

[Bill Esterson (Sefton Central) (Lab)]

I very much welcome the Chancellor’s commitment to investing in life sciences in this country. May I encourage her to support the bid for a national mental health diagnostics and research centre in my constituency, not least because poor mental health is estimated to cost this country up to £300 billion a year in lost economic production?

[Rachel Reeves]

Yesterday, the Prime Minister announced reforms to speed up clinical trials to ensure that the best new drugs can come to this country, benefiting from our NHS. On the issue of mental health treatment, I agree with my hon. Friend about the importance of addressing that, both for the health and wellbeing of individuals and because of the economic benefit that he speaks to. I am happy to arrange a meeting with the relevant Minister.

[Carla Lockhart (Upper Bann) (DUP)]

On 30 October, the Chancellor upended our economy through tax rises and punitive death taxes. She has delivered a devastating blow to family farms and small family businesses—the very backbone of our economy. When will the Chancellor recognise that she is elected by the people, for the people? Every day that she avoids engaging with the farming community is another day of wilful neglect. Our farmers are being driven out, not by market forces but by a Government blind to their struggles and deaf to their voices. When will she listen and speak with them?

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Many thousands of my constituents in Paisley and Renfrewshire South work in and rely on public services that are on their knees after 18 years of under-investment by the SNP Government at Holyrood. Will my right hon. Friend set out how the views of my constituents will be reflected in the spending review?

[Rachel Reeves]

Because of the decisions that we made in the Budget last year, we were able to provide a record settlement for Scotland, Wales and Northern Ireland. It is a shame that the SNP MPs are not in the Chamber today. It is now the SNP’s responsibility to spend that money wisely and invest in public services. We are bringing down NHS waiting lists in England and Wales; the same cannot be said of Scotland.

[Tessa Munt (Wells and Mendip Hills) (LD)]

In July 2023, my constituent Alison claimed a refund of overpaid tax that was mistakenly paid twice. In February 2024, she was told that her claim would be assessed by 20 March, in July 2024 she was told that it would be by 22 October, and in December she was told that she could not have a date but that the department had definitely received her claim 16 months previously. She has heard nothing since. Will the Chancellor agree to meet me to discuss this very vexed situation for someone who has very little money, given that this claim is nearly 21 months delayed?

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[Mr Speaker]

We have an urgent question shortly.

[Rachel Reeves]

We inherited the settlement made by the previous Government, as the hon. and learned Member will know. There is a summit between the UK and the EU on 18 May where we will be looking to reduce the barriers to trade between the whole of the United Kingdom and the European Union. We recognise the specific issues around Northern Ireland, particularly in regard to the response to the tariffs, and we will continue to work with the Executive there to ensure that we get the best outcome for the people of Northern Ireland.