New Approach to Ensure Regulations and Regulators Support Growth
Rachel Reeves Excerpts(1 week, 1 day ago)
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The Chancellor of the Exchequer (Rachel Reeves)
The Government are today publishing an action plan, setting out a new approach to ensure regulations and regulators support growth.
Improving regulation in the UK, ensuring that it enables growth and does not unduly hold back investment, is an essential part of this Government’s growth mission and delivering on the plan for change.
When used effectively, regulation provides a mechanism to address economic, societal, and environmental risks and deliver positive outcomes in our communities, for example it safeguards employees from harm at work and it can uphold vital standards in building safety.
However, under our current system, businesses tell us that regulation can be too complex and duplicative, stifling progress and innovation. Businesses endure slow processes and a lack of predictability, and our regulatory approach has become too risk averse.
These challenges manifest themselves in costs on business, which means that they have less time and money to invest and create jobs. Over the last 20 years, billions of pounds of regulatory costs have contributed to our economy being less attractive for new investment. Previous studies suggested that the impact of red tape costs could be as high as 3% to 4% of GDP.
The Government will reform the regulatory system to ensure the UK’s position of global competitive leadership and go further and faster to secure and sustain growth, supporting the objectives of our new industrial strategy and the wider growth mission.
This action plan builds on the Prime Minister’s (Keir Starmer) commitment last week to cut bureaucracy for business, reducing administrative costs of regulation for business by a quarter by the end of the Parliament. It sets out a vision to overhaul our regulatory system so that it:
Supports growth. We want a regulatory system that not only protects consumers and supports competition, but also encourages new investment, innovation, and growth. When regulation is designed well, and when it is implemented well by regulators, it can protect consumers while supporting investment and growth.
Is targeted and proportionate. We should regulate only where necessary and allow space for discretion and good behaviour, in most cases, businesses operate in a responsible and sensible manner. The current system too often focuses on regulations and regulatory practices designed to prevent a few bad actors, or very low probability events, rather than trusting and helping most businesses that want to comply.
Is transparent and predictable. To foster the certainty essential for investment, it is vital that our regulatory regime is stable, predictable, and consistent. Regulation will need to change where it is not fit for purpose; but we must be clear about where that is the case and give business the necessary time to adapt to new rules.
Adapts to keep pace with innovation. Our approach to regulation must allow the UK to take advantage of new technologies and innovations, including artificial intelligence, digitalisation, decarbonisation, and increased automation. Effective regulation can create the environment and clarity for innovation to take place. Regulators attuned to the challenges facing business should also be able to adapt to new industries and to the challenges posed by new technologies and avoid disproportionate risk averse behaviour.
To reset the UK’s regulatory landscape and achieve this vision, the Government will implement a package of reforms over the Parliament that focus on:
Tackling complexity and reducing the burden of regulation, including that the Government will commit to reducing the administrative costs of regulation for businesses by 25% by the end of this Parliament; that the Payment Systems Regulator will be consolidated primarily within the Financial Conduct Authority; that the Government will work with regulators to improve areas where regulation is most complex starting with environmental and planning regulation.
Reducing uncertainty across our regulatory system, including that the Government will simplify the duties of key regulators including through the reviews of Ofgem and Ofwat; that it will work with regulators to strengthen transparency, so that business and the public can see how regulators are performing; and that the Government will bring forward packages of reform, including, if necessary, legislation to improve the effectiveness of environmental regulation.
Challenging and shifting excessive risk aversion in the system, including that the Government will overhaul accountability, formalising and strengthening performance reviews which will be conducted by all sponsoring Government Departments, and setting out the next stage of commitments secured by the Regulatory Innovation Office, working alongside Departments and regulators.
The reforms in the action plan are relevant to regulators across sectors such as business, finance, energy, and the environment. Though there is not currently a legal definition of a regulator, the reforms will apply to all bodies exercising regulatory powers and functions.
The Government have worked with a set of key regulators over the past few months to develop measures which will have a tangible effect on driving growth and investment and are implementable within the next 12 months, listed in the action plan. Some of them, such as the Competition and Markets Authority, have already taken substantial action such as taking forward applying the “4Ps” across its digital markets work.
The Government will continue working with industry, regulators, and Parliament to ensure that the regulatory system protects consumers and supports competition, but also encourages new investment, innovation, and growth.
The full action plan is available on gov.uk:
https://www.gov.uk/government/publications/a-new-approach-to-ensure-regulators-and-regulation-support-growth/new-approach-to-ensure-regulators-and-regulation-support-growth-html
A copy will also be placed in the Libraries of both Houses.
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Oral Answers to Questions
Rachel Reeves Excerpts(3 weeks ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Economic growth is the No. 1 mission of this Government. Putting more money in people’s pockets and ensuring growth is felt in all regions of the UK is a core part of our mission. The Government have a clear focus on investing in the infrastructure needed to support cities and regions to grow and thrive. In January, the Government announced a partnership between East Midlands airport and Prologis to build a new advanced manufacturing and logistics park, unlocking up to £1 billion of private investment and 2,000 jobs at the airport site.
Louise Jones
The town of Staveley in my constituency of North East Derbyshire hosts one of the three sites for the east midlands investment zone, which is a fantastic opportunity for us. The Chesterfield-Staveley regeneration route is, however, vital to making the most of the site and it has been long campaigned for by my hon. Friend the Member for Chesterfield (Mr Perkins). It is a huge priority for my constituents. Will the Treasury work with us and our excellent Mayor of the East Midlands, Claire Ward, to bring this hugely beneficial project to fruition?
Rachel Reeves
I thank my hon. Friend for the work that she does alongside my hon. Friend the Member for Chesterfield in campaigning for developments that will boost growth in both North East Derbyshire and Chesterfield. The Department for Transport is considering the scheme for the Chesterfield Staveley regeneration route, and I will suggest to the Roads Minister that he meet the relevant Members as well as the Mayor of the East Midlands, Claire Ward.
Jen Craft
The Government’s decision to increase defence spending is not only an ironclad commitment to national security in the face of generational challenges but an investment in British industry, able to unlock new jobs and opportunities across the country. Industry in the east of England has a significant defence sector, which received £1.5 billion of Government investment last year. Can the Chancellor explain how the additional defence funding has the potential to benefit my constituents in Thurrock as well as those in the wider region?
Rachel Reeves
As my hon. Friend says, defence has an important role to play in the growth mission as well as keeping our country safe and secure, and on Friday the Defence Secretary and I hosted a roundtable at RAF Waddington in Lincoln to announce a new defence innovation hub to harness that potential. Defence has a strong presence in many of our constituencies—indeed, according to the most recent data, Ministry of Defence spending in the east of England accounted for £1.5 billion—and down the road from my hon. Friend’s constituency is the historic MOD Shoeburyness range, which, along with other sites, is operated by the MOD and QinetiQ as part of a long-term partnership worth more than £5 billion. In the years to come, there will be more investment in defence from both the public and the private sector.
Bradley Thomas (Bromsgrove) (Con)
As part of their pursuit of the ever-elusive goal of economic growth, the Government have rebranded the UK Infrastructure Bank as the National Wealth Fund. Even the Office for Budget Responsibility has cast doubt on the effectiveness of that as a driver of economic growth. Can the Chancellor tell the House how much the rebrand has cost?
Rachel Reeves
The National Wealth Fund is doing important work in enabling us to leverage in private sector investment. The most recent of those investments include mining in Cornwall and energy charging points in our roads. At the end of last week, I announced that the fund would play a more important role in funding and supporting investments in the defence sector, which will become even more important in the years ahead.
Lee Anderson (Ashfield) (Reform)
I recently visited a business in Kirkby-in-Ashfield in the east midlands—funnily enough, I did not see the hon. Member for Strangford (Jim Shannon) there—where I was told that the increase in national insurance contributions would cost the business £240 a year, which will prevent it from recruiting people and giving its employees a pay rise next year. Does the Chancellor agree that it is time to reverse this ridiculous decision and help to drive growth in the east midlands?
Rachel Reeves
In the Budget in October I had to fill the £22 billion black hole left by the previous Government, but there are huge opportunities to grow the economy in the east midlands. We recently agreed the £9 billion Unity deal with Rolls-Royce to support the Royal Navy submarine fleet, which will provide a major boost for economic growth in the east midlands, creating and maintaining 5,000 long-term jobs. That is good for our country’s security, and good for the people of the east midlands.
Monica Harding (Esher and Walton) (LD)
Sir Desmond Swayne (New Forest West) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
In the autumn I took the decisions to put our public finances back on a firm footing. The most recent GDP data showed that the economy grew by 0.4% in the final month of last year. As I have said on many occasions, our fiscal rules are non-negotiable. The Conservative party sent mortgage rates and business borrowing costs spiralling; we have returned stability to the public finances to give families and businesses the stability that they need.
Sir Desmond Swayne
The servicing cost is now twice what we are spending on defence, which the Chancellor is right to be increasing. What is her ambition for finding savings in the welfare budget?
Rachel Reeves
I agree that we need to get a grip of the welfare budget, which got out of control under the previous Conservative Government. Frankly, I am not going to take lectures from the Conservative party, which crashed the economy. Let me remind the House what the right hon. Gentleman said about the disastrous mini-Budget:
“I share entirely the free-market ideology that underpins the Chancellor’s statement…The Chancellor was right to be radical.”
He added:
“I rejoice at the two fingers the Chancellor has raised to socialist dogma and envy.”
I think that the financial markets and the British public have united in their view on the previous Government.
Elaine Stewart (Ayr, Carrick and Cumnock) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
Economic stability and growth are vital to help businesses across the UK to grow. The Lloyds business barometer published last week showed business confidence up 12 points, building on recent surveys by EY and PwC that show that business and investor confidence is rising. The Government are partnering with business to unlock investment and to drive growth.
John Cooper
The Chancellor, with her unimpeachable record in the sector, will know that economics is known as the dismal science. As a member of the Business and Trade Committee, rather than using second-hand statistics, I have spoken directly with businesses one to one and found that the mood is indeed dismal. After her dud Budget, can she think again and go back on this desperate jobs tax? She is in danger of becoming tough on growth and tough on the causes of growth.
Rachel Reeves
Conservative Members welcome the additional money for the NHS, but they never welcome the means to pay for it, which is why we are in the mess that we are with the £22 billion black hole we inherited from the previous Government. The hon. Member says that these are backward-looking surveys. The EY survey of UK CEOs found that 82% felt optimistic. PwC’s latest global CEO survey ranked the UK as the second-most attractive global destination for international investment, and last week the Lloyds survey showed a boost in business confidence. Those are the facts. People are choosing Britain as a place to invest and to locate their businesses. On the Government side of the House, we welcome that.
Josh Newbury (Cannock Chase) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
It is clear that the world is changing, which is why we must bring about a new era of security and renewal to keep our country safe. Last week, I convened European Finance Ministers at the G20 to discuss our shared challenges. I set out that national security will always be the first responsibility of this Government as well as national security being the bedrock for economic prosperity.
I was also proud to welcome President Zelensky to Downing Street alongside the Prime Minister at the weekend, where we signed a loan agreement that will deliver £2.26 billion in funding to Ukraine above our other commitments to bolster its military capacity, repaid by the profits from frozen Russian sovereign assets. We will use the additional investment in defence to create more good jobs paying decent wages in all parts of the UK. That is why we are giving the National Wealth Fund a new strategic steer to invest in technologies that better support our security and defence. Britain is a strong country with strong defences, and I know that we can weather this changing world.
Josh Newbury
As the father of five-year-old, I know at first hand how important indoor play facilities are. Providers in Cannock Chase, such as the Beach Hut in Norton Canes and the Kids Rule Play Cafe in Cannock, have written to me asking for consideration for a sector-specific VAT reduction and the opportunity to shape the reform of business rates. Is Treasury Minister willing to meet me, local providers and the Association of Indoor Play to discuss the sector’s priorities?
Rachel Reeves
The Government have no plans to consider zero rating indoor play facilities for VAT. All tax breaks must provide value for money and evidence suggests that such savings are only partially passed on. I would, however, welcome my hon. Friend engaging with us as we look to inform our “Transforming Business Rates” paper ahead of the Budget later this year.
Mel Stride (Central Devon) (Con)
How many jobs will the right hon. Lady destroy as a result of her jobs tax?
Rachel Reeves
I know that the right hon. Gentleman will have looked at the OBR forecast from the Budget last year, which forecasted that employment will rise in this Parliament, unemployment will fall and real household disposable income will increase. That is a far cry from the last Parliament, which was the worst on record for living standards.
Mel Stride
I am surprised that the right hon. Lady did not reference the fact that the OBR also said that there would be 50,000 fewer jobs as a result of the NICs increase; indeed, Bloomberg put that figure at 130,000 jobs. It does not need to be that way. On 26 March, the right hon. Lady should come to this House with a spring statement containing a clear plan around welfare savings, which we had when we were in Government. Will she now confirm that she is prepared to do that with our support and put an end to the pernicious tax increase?
Rachel Reeves
The right hon. Gentleman and his party had 14 years to reform the welfare system. They failed to do so, but this Government will. We are turning the British economy round after the disaster left to us by the previous Government: three cuts in interest rates since the general election, real wages rising at their fastest rate for three years, fuel duty frozen, the payslips of working people protected, and millions getting a pay rise through an increase in the national living wage. That is the change that this Government are delivering; that is the change that the Opposition are blocking.
Perran Moon (Camborne and Redruth) (Lab)
Rachel Reeves
Unlike the Conservatives, we believe that investing alongside private industry is good for jobs and good for economic growth. I visited the National Wealth Fund’s offices last month where I heard at first hand about its equity investment in Cornish Metals. This will help to finance the reopening of Cornwall’s South Crofty tin mine, creating more than 300 local jobs, and—
Mr Speaker
Order. Look, enough is enough. I have to get Members in from both sides. I am sorry that the Front Bench does not want to get these Members in, but I am determined to. These are called topical questions, which means I want quick questions and certainly short answers. I call the Father of the House, Sir Edward Leigh.
Sir Edward Leigh (Gainsborough) (Con)
Rachel Reeves
I very much agree with the right hon. Gentleman. This is why I met my fellow European Finance Ministers in Cape Town at the G20 last week. All of Europe needs to step up. The British Government are doing so and we need to see that from other countries, too.
David Taylor (Hemel Hempstead) (Lab)
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
I congratulate the Government on announcing the greatest level of financial sanctions last week. Does the Chancellor agree that keeping dirty money out of the City of London and homes and communities across our country is vital for our national security, as well as our economic stability?
Rachel Reeves
It is absolutely right that we increased and stepped up the sanctions last week. Also, under the loan agreement we made with Ukraine last week, the loan will be repaid with the profits on foreign sovereign Russian assets. Russia should pay for the damage it has done.
Wera Hobhouse (Bath) (LD)
My constituent is one of hundreds of people who suffered from the collapse of Collateral. While the Financial Conduct Authority has apologised to investors for failing to act faster to stop Collateral’s fraudulent activities, I am concerned that, without internal changes, the FCA will make similar mistakes again. Should there not be an investigation into the FCA’s handling of the case?
Rishi Sunak (Richmond and Northallerton) (Con)
I commend the Government for their international leadership at this challenging time. Events overnight make it even clearer that Europe must find considerably more resources for Ukraine. The Chancellor has rightly continued our policy of using the interest on frozen Russian state assets to benefit Ukraine, but I believe that now is the moment to go further by actually seizing those assets. Russia’s invasion of Ukraine violates the principle of sovereign equality, providing a basis in international law for such a policy, and by acting in concert with our allies, we can ensure that there are no risks to financial stability. May I urge the Chancellor to push for co-ordinated action to seize those frozen Russian state assets and give that money to the Ukrainians so that they can defend and rebuild their country?
Rachel Reeves
I thank the right hon. Gentleman for his words about this Government stepping up the funding for defence. Last week, we expanded sanctions on Russia, including by looking at financial services. This week, we have signed off a UK Export Finance package to provide more military support, above and beyond our defence spending and as well as the loan repaid using the profit on those assets. As the Prime Minister said yesterday, we would look at going further but, as the right hon. Gentleman knows, it is incredibly complicated to do that in line with international law. However, we keep all options on the table, because, as he is absolutely right to say, Russia should pay for the damage that Russia has caused.
Ukraine
Rachel Reeves Excerpts(3 weeks, 1 day ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Three years on from the onset of the war in Ukraine, the Government remain steadfast in their support for Ukraine. The UK’s total military, budgetary and humanitarian support now stands at £12.8 billion, and the Government have committed to contributing £3 billion in guaranteed military support each year for as long as it takes.
The Government have on Saturday 1 March 2025 signed a loan agreement with Ukraine, setting out the terms by which the UK will provide our contribution of £2.26 billion under the G7 extraordinary revenue acceleration loans to Ukraine scheme. The loan will be limited recourse. The UK’s contribution is additional to all previous commitments to Ukraine. This agreement enables the Government to begin disbursing ERA funding to Ukraine shortly.
The G7 ERA initiative is set to collectively provide approximately $50 billion in loans to Ukraine. This crucial funding will be repaid using future flows of extraordinary profits generated from immobilised Russian sovereign assets.
On 16 January 2025, The Financial Assistance to Ukraine Act 2025 achieved Royal Assent. This Act provides HM Treasury with the authority to allocate funding towards the UK’s contribution to the ERA. The Government intend to disburse this contribution in three equal tranches over the next three fiscal years, starting in the current fiscal year 2024-25.
Given the urgent needs of Ukraine and the significant public interest in Ukraine’s defence of its territory and our shared aim of peace through strength, as well as the broader security of Europe and the UK, it is imperative that the first tranche of UK support under this scheme is distributed to Ukraine as soon as possible.
Parliamentary approval for additional capital of £752,667,000 for this new expenditure has been sought in a supplementary estimate for HM Treasury. Urgent expenditure estimated at £752,667,000 will be met by repayable cash advances from the Contingencies Fund.
The second and third tranches, payable in future financial years, will be funded in the usual way through the estimates process.
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Charter for Budget Responsibility
Rachel Reeves Excerpts(2 months ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Today I have laid before Parliament the charter for budget responsibility. The charter sets out the new fiscal framework announced at autumn Budget 2024.
The new fiscal rules will put the public finances on a sustainable path and prioritise investment to support long-term growth. The charter also strengthens fiscal stability and transparency via a series of reforms including enhancing the role of the OBR in scrutinising the Government’s fiscal policy.
In accordance with the Budget Responsibility and National Audit Act 2011, the charter was first published in draft alongside the Budget on 30 October as it includes modified guidance to the Office for Budget Responsibility. No further changes have been made to the charter since it was published in draft.
A debate and votes in the House of Commons on the charter and the level of the welfare cap, will be scheduled in due course.
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Oral Answers to Questions
Rachel Reeves Excerpts(2 months ago)
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Sir Ashley Fox (Bridgwater) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
When we entered office, debt was at highs not seen since the 1960s. My commitment to the fiscal rules is non-negotiable, and we will drive debt down to a sustainable level. There have been movements in global financial markets, and the UK is not immune. The Office for Budget Responsibility will produce a forecast in the usual way, and I will respond with a statement to Parliament on 26 March. I will not be giving a running commentary on that forecast.
Mr Holden
Labour came to office promising to kick-start growth. Instead, it has kicked growth into the gutter. Over the last few months we have seen some of the slowest growth in the G7—in the actual figures rather than the projections. Where will the money for the public sector and public services come from with zero economic growth?
Rachel Reeves
Yesterday’s PwC report shows that the UK is the second most attractive place in the world to invest for global CEOs—it is the first time in 28 years that we have been in that position in the league table. And the International Monetary Fund forecast on Friday that the UK will be the fastest-growing major economy in Europe next year.
Dr Evans
Last time I raised the markets’ concerns about debt with the Chancellor, she told me to “get real.” What is real is that the cost of debt interest is over £10 billion. What is real are the three choices she has: to increase taxes on people and businesses in Earl Shilton, Burbage and across the country; to cut services for people in Hinckley, Donisthorpe and across the country; or to borrow on the country’s credit card. Will she now be real with the public and tell them which of the three it is going to be?
Rachel Reeves
We inherited a high amount of debt from the previous Government, and we have to pay interest costs on that debt. The forecast I set out in the Budget in October showed that debt falling to a sustainable level. As I said, the OBR forecast will be published on 26 March, and I will make a statement at that time.
Sir Desmond Swayne
The Chancellor’s increased demand for Government borrowing drives up its price and crowds out investment by productive private enterprises, doesn’t it? [Hon. Members: “No.”]
Rachel Reeves
Let me have a go. There have undoubtedly been moves in global financial markets this year, and the UK is not immune to those movements. The OBR has not yet started its forecast. It will update that in due course, and I will make a statement on 26 March.
Sir Ashley Fox
Since coming to office, the Chancellor has increased taxes by £40 billion and borrowing by £30 billion and her Employment Rights Bill has increased the costs of employers by a further £5 billion. Does she accept that her decisions have led to a loss of confidence in the British economy and an increase in our borrowing costs?
Rachel Reeves
I do not think the borrowing costs in every major country in the world can be explained by the decisions made by this Government. As I said to the hon. Member for Hinckley and Bosworth (Dr Evans) last week, the hon. Gentleman has to get real. There have been global movements in financial markets that have affected the United Kingdom, but if he looks at the PWC report from yesterday, the most recent report on market confidence, global CEOs see the UK as the second best place in the world to invest, after the US.
Peter Swallow (Bracknell) (Lab)
The International Monetary Fund forecasts that the UK is set to be the fastest-growing major economy in Europe, which one would have thought Conservative Members would welcome. I know my right hon. Friend the Chancellor will not be satisfied until residents in Bracknell, and across the country, feel the benefits of economic improvement in their pay packets and their day-to-day lives, so will she set out what more she can do to ensure we tackle the cost of living and fix the economic mess we have inherited from the Conservatives?
Rachel Reeves
After 14 years of stagnant growth and the decline in living standards during the last Parliament, my hon. Friend is absolutely right that we must turn around that performance. That is what this Government are determined to do. The planning and infrastructure Bill will come to Parliament shortly, followed by the pensions Bill, which will unlock long-term pension capital and make it easier for businesses to get things done in this country.
Mark Garnier (Wyre Forest) (Con)
The Chancellor makes reference to the PWC report, but half of the survey in that report was done before the Budget. The Chancellor and I spent a very happy three years sitting next to each other at the Treasury Committee, and she was incredibly good at demanding straight answers from the witnesses that came in front of the Committee. She has already been asked questions about the fact that the fiscal headroom is only £10 billion and the increase in the cost of borrowing is now going to go through the roof so, at some point, she will have to raise taxes, cut investment or increase debt. Which will it be?
Rachel Reeves
The headroom in our Budget was larger than the headroom that we inherited from the previous Government, so we have put aside more money for changes in economic prospects. The OBR has not yet done its forecast, which will take a whole variety of factors into account, and we will make decisions based on that. I have been really clear that our fiscal rules are non-negotiable because, unlike the Conservatives, we are determined to meet the fiscal rules, not break them time and again.
Daisy Cooper (St Albans) (LD)
The rising cost of borrowing will bring more misery to mortgage holders, with reports suggesting that some mortgage holders could pay an extra £500 a year. Given that potential global trade tensions could further affect the UK’s financial stability, what assurances will the Government provide that UK lenders remain in a strong position to support households and small businesses?
Rachel Reeves
Labour and Liberal Democrat Members are mindful of the last Government’s impact on mortgage borrowing costs for many of our constituents, and we are determined to tackle the cost of living crisis. As the hon. Member knows, I have written to financial regulators, including the Financial Conduct Authority, about regulating for growth, not just for risk, so that we can help more people get on the housing ladder and help grow our economy.
Emily Darlington (Milton Keynes Central) (Lab)
Alison Hume (Scarborough and Whitby) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
The Government are better targeting these reliefs to make them fairer. The latest figures for 2021-22 show that the top 7% of claims are counted for 40% of the total value of agricultural property relief.
Helen Morgan
The Chancellor will know that one of the biggest factors holding back the rural economy is poor public transport. When I visited the jobcentre in Oswestry last year, I was told that one of the biggest impediments to people finding a job is that they cannot get away from where they live because of poor public transport. Can she update me on the discussions that she has had with her colleagues in the Department for Transport over reinstating projects such as the Oswestry to Gobowen railway line and step-free access at Whitchurch railway station?
Rachel Reeves
At the Budget, we introduced sustainable transport settlements, with £650 million of funding for local transport, and confirmed an extension of the UK shared prosperity fund, providing £900 million to local authorities to invest in local growth. We also announced money in the Budget for some trailblazer projects to help those furthest from the labour market back into work. On the specific issues around transport in her constituency, I am very happy to set up a meeting for her with the relevant Minister.
Dr Gardner
The A50/500 growth corridor, a significant transport corridor in my constituency of Stoke-on-Trent South, enjoys an extraordinary concentration of advanced manufacturing, including anchor companies such as JCB and Michelin. With modest targeted investment in transport, energy and digital infrastructure, this vital corridor could generate £12 billion in gross value added and create 18,000 jobs. Will the Chancellor meet me to discuss the targeted investment needed to develop a detailed growth plan for this vital industrial artery and help deliver it on this Government’s mission for growth?
Rachel Reeves
I thank my hon. Friend for the work that she has put into this proposal and for her commitment to delivering growth in her constituency of Stoke. On a recent visit, I had the opportunity to meet JCB in the region and see its important work, particularly on the use of hydrogen. I encourage my hon. Friend to meet the Minister for Services, Small Businesses and Exports—I am happy to set up that meeting—whose portfolio includes local growth. The Government are committed to driving growth in the midlands, which is why I confirmed funding for the west midlands investment zone at the autumn Budget and also confirmed an extension of the UK shared prosperity fund.
David Williams
I warmly welcome the recent investment of an extra £20 million for our buses and an extra £11 million to fix our broken roads across Stoke-on-Trent and Staffordshire. Does the Chancellor agree that continuing to invest in our roads and public transport is an excellent way to keep our communities connected and to increase job opportunities to boost our local economy?
Rachel Reeves
It is great to see two strong advocates for Stoke in the Chamber today. A number of local authorities and, indeed, Labour mayors have raised with me bus procurement and the importance of buses for the local economy. I look forward to working with them, particularly David Skaith in York and North Yorkshire and Steve Rotheram in Liverpool, to boost bus services in communities, and particularly rural communities, to support jobs in the UK. At the Budget, I allocated more than £1 billion for local bus services, and that includes £712 million for local authorities to support and improve bus services in the next financial year.
Jonathan Davies
Museums make an important contribution to our cultural life, but also to our economy. The Arts Council and the Museums Association found that net expenditure on museums and galleries has decreased by almost 40% in real terms since 2009. I welcome the Chancellor’s recognition that the creative industries are key to delivering growth and that national museums were given support in the recent Budget, but what steps can the Government take to support regional civic museums, such as Derby museum, which did not benefit from that funding?
Rachel Reeves
The Culture Secretary was pleased that the creative industries were one of the sectors included in our industrial strategy. She hosted an event with members of the creative industries taskforce in Newcastle just last week to emphasise the importance of having good cultural offers and art and museums in local communities. I am happy to sort out a meeting for my hon. Friend with the relevant Minister to discuss access to the arts and culture in Mid Derbyshire.
Mrs Lewell-Buck
As my right hon. Friend knows, South Shields is a gorgeous coastal tourist town. We pride ourselves on our small businesses and our strong hospitality industry, but she will also know they are struggling after years of neglect by the Conservatives. To help those businesses, will she outline what consideration she has given to reducing VAT on our hospitality, leisure and tourism sectors?
Rachel Reeves
I thank my hon. Friend for that question. I remember a very nice dinner of fish and chips with her in her constituency just a few years ago, and she is a strong advocate for local businesses in South Shields. In the Budget, we were able to extend business rates relief to the retail, hospitality and leisure sector of 40% for the next financial year and then to move it on to a fairer footing, so that high street businesses and smaller businesses pay fairer rates of business tax compared with, for example, the online giants.
Alison Hume
The bus manufacturer Alexander Dennis builds innovative electric buses, employing 800 people in Scarborough. The Chancellor has spoken about the need for public procurement to take better account of employment and environmental standards. As bus services are brought back into the control of mayors and local authorities, will the Government use public procurement to back British companies such as Alexander Dennis to boost economic growth?
Rachel Reeves
My hon. Friend is a good advocate for businesses, including Alexander Dennis in Scarborough. The Government will soon publish a new national procurement policy statement, which will set out our priorities for public procurement in support of our mission to grow the economy. In addition to the answer I gave my hon. Friend the Member for Stoke-on-Trent North (David Williams), we recognise the importance of buses in growing our economy by getting people to work, but also the opportunities to use public procurement to buy more buses made in this country, supporting good jobs here in Britain.
Dame Harriett Baldwin (West Worcestershire) (Con)
Former Chair, Mr Speaker, but thank you very much for calling me.
It is clear that we all want to see economic growth in rural areas and across the UK, but I am concerned that some of the measures in the Chancellor’s Budget are having the opposite effect. Which statistic worries her most: the fact that we are at a 20-year high for business closures, or the 100% increase in millionaires leaving the UK?
Rachel Reeves
I have already outlined some of the positive numbers, including the upgrade in the IMF forecast, the PwC report and the fact that the economy had returned to growth in the most recent data and inflation is falling. Instead of talking our country down, I will be banging the drum to bring in investment and jobs to our country.
Josh Babarinde (Eastbourne) (LD)
A new hospital in Eastbourne would help to drive economic growth in my town and across rural Sussex, but years of Tory tumbleweed and, I am afraid, yesterday’s announcement mean that it will not be delivered and built until 2041. Will the Chancellor accelerate the release of funds to the Department of Health and Social Care to bring forward the building of our new hospital, to support patients in Eastbourne and beyond, and of course to support wider economic growth?
Rachel Reeves
I recognise the strength of feeling about this issue. We were left a terrible situation by the previous Government, with a £22 billion black hole in the public finances and the promise of things for which absolutely no money had been put aside. We have now done the responsible thing by reviewing the programmes that we inherited from the previous Government. That means that the timetable for some projects has had to be pushed back, but it is because the previous Government made promises knowing that the cheque would bounce.
Saqib Bhatti (Meriden and Solihull East) (Con)
Businesses in my constituency and across the country are still reeling from the Chancellor’s damaging Budget. She made a commitment at the Confederation of British Industry conference that she would not come back for more taxes. Does she stand by that commitment?
Rachel Reeves
I had to do a once-in-a-generation Budget in October to fix the mess in the public finances left by the previous Government. I will never have to do a Budget like that again because we have now fixed that terrible inheritance.
Sammy Wilson (East Antrim) (DUP)
Devastating changes to inheritance tax, increased environmental costs because of net zero policies, and diversion of farming support to foreign countries—with those kinds of policies, how does the Chancellor ever expect to generate economic growth in rural areas?
Rachel Reeves
Bringing stability back to our economy by fixing the public finances is the No. 1 thing we can do to help businesses to grow, alongside our planning reforms to make it easier to build things in Britain and our reforms to the pension system to help businesses access long-term patient capital. As for agricultural property relief, the latest figures show that the top 7% of claims—117 claims—accounted for 40% of the total value of the relief, costing the taxpayer £219 million. We cannot afford to carry on like that, which is why we made those progressive and fair reforms in the Budget.
James Wild (North West Norfolk) (Con)
Farming’s vital role in growing our rural economy, growing our food and protecting the countryside is threatened by Labour’s family farm tax. The self-proclaimed “iron Chancellor” is proving herself to be the tin-eared Chancellor, ignoring evidence from the National Farmers Union and others showing that the tax is based on flawed assumptions. Ahead of Saturday’s farming day of unity, rather than threatening family farms, will she speak to farmers, think again and withdraw those damaging proposals?
Rachel Reeves
The problem with the Conservatives is that they support increased spending in vital areas but they have not supported any of the tax increases necessary to pay for them, which, frankly, is why we are in the situation we are in today, having inherited a £22 billion black hole in the public finances. The hon. Gentleman will know that in the Budget we announced £5 billion for the farming budget over two years— including the largest funding directed at sustainable food production and nature recovery in this country’s history—and £60 million to support farmers affected by flooding.
The Chancellor of the Exchequer (Rachel Reeves)
When I became Chancellor, there was a £22 billion black hole in the public finances. We simply could not carry on like that, which is why I have taken control of our public finances and made growth the No. 1 priority of the Government to improve living standards.
In December, I launched the second phase of our spending review, where for the first time in 17 years every single pound of taxpayer money will be investigated line by line to ensure that it is being spent well. The spending review will set resource or day-to-day departmental budgets until 2028-29 and capital departmental budgets until 2029-30. On 11 June, when we conclude the review, I will present departmental budgets to the House.
Frank McNally
The recent drop in the rate of inflation is welcome news for those facing financial pressures across Coatbridge and Bellshill, as is the expectation that the UK will become the fastest growing economy in Europe. What further action is my right hon. Friend taking, working in partnership with Cabinet colleagues, to ensure that working families continue to see prices fall and living standards rise?
Rachel Reeves
I thank my hon. Friend for that question. I know that the cost of living has a deep impact on all our constituents, including in Coatbridge and Bellshill. Like my hon. Friend, I was pleased to see the reduction in inflation last week. The Bank of England’s independence is sacrosanct to carry on those efforts. In addition, we increased the minimum wage in the Budget, we have reformed universal credit to reduce deductions and we have extended the household support fund, all to help ensure that working families have more money in their pockets.
Mel Stride (Central Devon) (Con)
A moment ago, the right hon. Lady spoke about the importance of spending money wisely, so in the light of the Treasury Committee’s conclusion that her new Office for Value for Money is a waste of money, does she agree that one of its early actions should be to abolish itself in order to save money?
Rachel Reeves
I was pleased to appoint Tom Hayhoe to run the Office for Value for Money—somebody who has a track record of delivering value for money for taxpayers. What the Government want to scrap is giving contracts to friends and donors, because that was a colossal waste of money instigated by the Conservative party.
Mel Stride
The Chancellor’s answer was an answer, but I do not think that it connected in any way with my question. Could I perhaps ask her about national insurance hikes? A full two thirds of the revenues raised through Labour’s job tax is simply going on servicing the additional debt being run up by this profligate Government. Given that, does she really believe that the catastrophic effects of that tax on businesses right up and down the country are a price worth paying?
Rachel Reeves
We inherited a £22 billion black hole in the public finances, and we set out the detail of that at the time of the Budget. It was essential to close that gap to bring stability back to the public finances. That required difficult decisions, but they were the right decisions to ensure that our country has the stability that it lacked for so many years and under so many different Prime Ministers and Chancellors under the Conservative party.
Steve Yemm (Mansfield) (Lab)
Brian Leishman (Alloa and Grangemouth) (Lab)
Rachel Reeves
This Government cannot account for the decisions made by the Conservative party, but we have created the Office for Value for Money, to ensure value for money when we use taxpayer’s money.
Sir Edward Leigh (Gainsborough) (Con)
When I visited St Barnabas hospice in Lincoln recently, the chief executive told me that it was having to pay £350,000 extra every year to cover the national insurance increase. I do not expect an answer now, but as we all agree that palliative care is so important and we want to encourage it, and the Terminally Ill Adults (End of Life) Bill started its Committee stage today, will the Government keep that increase for hospices under review?
Rachel Reeves
The Health Secretary set out the settlement for hospices just before Christmas to ensure that they have the money they need, including to compensate for the national insurance increase, but I am happy to arrange a meeting for the right hon. Gentleman with the relevant Health Minister.
Josh Simons (Makerfield) (Lab)
Chris McDonald (Stockton North) (Lab)
Rachel Reeves
I join my hon. Friend in congratulating Intasite on its 10th anniversary as a business, and on the rapid growth it is enjoying. The announcement we were able to make last year on the carbon capture and storage work in Teesside will be a big driver of jobs and growth there, and I look forward to working with him and local businesses in Stockton to make that a reality.
Sir Oliver Dowden (Hertsmere) (Con)
Does the Chancellor of the Exchequer propose funding the reported £9 billion bill to the Mauritians for the continued use of Diego Garcia through higher taxes, more borrowing or spending cuts?
Rachel Reeves
We are in discussions with the new Administration in the United States around the future of Diego Garcia. We will set out details in the spending review, as the right hon. Gentleman would expect.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is estimated that 148,000 people had their lives cut short between 2010 and 2020 as a result of austerity measures; on top of that, poor health led to more than £13 billion in lost productivity under the previous Government. What are my right hon. Friend’s estimates of the different choices, and the impact that they will have on the health of the nation and economic growth?
Rachel Reeves
I thank my hon. Friend for that question. I know she studies closely the work of Professor Michael Marmot on life expectancy and the impact of health inequalities on our country. At the Budget, we increased the minimum wage. In addition, we extended the household support fund and reduced the amount that could be taken in deductions from universal credit, all to try to put more money in the pockets of ordinary working people, to reduce some of those inequalities and tackle the cost of living crisis.
Jerome Mayhew (Broadland and Fakenham) (Con)
One of my GP surgeries called me this morning to highlight the impact of the rise in national insurance contributions, which will cost it £40,000. It can only respond by freezing cost of living pay increases for all its support staff. Does the Chancellor finally accept that working people up and down the country are paying the price for her tax rises?
Sonia Kumar (Dudley) (Lab)
My constituency has a proud industrial heritage, with manufacturing still worth £1 billion a year to the local economy from sectors that account for nearly 10% of the UK’s total economic output. What steps have the Government taken to promote the growth of the manufacturing sector and ensure that towns like Dudley continue to build on their industrial traditions?
Rachel Reeves
I thank my hon. Friend for that question, and for the work she does to support and promote businesses in Dudley. Through our modern industrial strategy, and the targeting of eight sectors in which there is huge potential for growth, we will work with businesses right across the country on, for example, reform of the planning system to make it easier for them to build, and reform of the pension system to get funding for businesses, including those in Dudley, that are looking to grow and expand.
Dave Doogan (Angus and Perthshire Glens) (SNP)
Neither the US Federal Reserve nor the EU Central Bank are engaged in active quantitative tightening, but the Bank of England is. The Bank of England is costing the public finances in the region of £13 billion a year as a result of a fire sale of UK Government bonds. Last time I spoke to the Chancellor about that, she said that that was because of the Bank of England’s operational independence, which we all value, but that is not a licence for impunity. What discussions will she have with the Bank of England about releasing UK Government debt in a way that benefits everybody in the UK?
Sarah Olney (Richmond Park) (LD)
Residents in my constituency will have been extremely concerned to read the news this morning that the Chancellor plans to announce next week the expansion of Heathrow. I invite her to tell us, on the Floor of the House this morning, yes or no: will the Government back expansion at Heathrow?
Rachel Reeves
I am not going to comment on leaks. I will say that the Government are absolutely committed to growing our economy, and making this a great place for businesses to invest in and trade.
UK-China Economic and Financial Dialogue
Rachel Reeves Excerpts(2 months, 1 week ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Growth is the No. 1 mission of this Labour Government. To grow the economy, we need to help Great British businesses to export around the world, including to China, the second biggest economy in the world and our fourth-largest trading partner. Not engaging is simply not an option. That is why I led a delegation, including the Governor of the Bank of England, the chief executive of the Financial Conduct Authority and representatives of some of Britain’s largest financial service firms, including HSBC, Standard Chartered and Schroders, to the 2025 UK-China economic and financial dialogue—the first of its kind since 2019.
This dialogue has delivered a set of tangible benefits to ensure that British firms have greater access to the Chinese market, while safeguarding our national security—the first duty of any Government. In China, I met outstanding British companies, such as Brompton, Jaguar Land Rover and AstraZeneca, that will benefit from the steps that we have agreed. We have worked to lift market access barriers across a range of goods and services, particularly in the agrifood sector. On financial services, we have successfully secured new licences and quota allocations for UK firms to improve operating access in China. We agreed to co-operate further, including by renewing our shared commitment to the UK-China stock connect scheme, first launched in 2019, by deepening our co-operation on wealth management through a UK-China wealth connect scheme, and by progressing initiatives on pensions and sustainable finance, delivering significant benefits for UK firms and the City of London. I am pleased that China agreed to issue its first ever overseas sovereign green bond in London in 2025, underlining the UK’s position as a global capital for high-quality sustainable finance.
The UK is a global leader in financial services. There are significant opportunities to expand our presence in new markets, and the tangible outcomes we have delivered this week will help to deliver that. These steps are part of a wider programme to make substantive progress on improving arrangements for UK exporters and investors, as reflected in new agreements on vaccine approvals, fertiliser, whisky labelling, legal services, automotives and accountancy, which have set us on course for this dialogue to unlock £1 billion of value for the UK economy.
These outcomes, agreed with my counterpart Vice-Premier He Lifeng, represent pragmatic co-operation in action, and support secure and resilient economic growth, because security and economic growth go hand in hand. That means finding the right way to build a stable and balanced relationship with China that is in our national interest—one that recognises the importance of co-operation in addressing the global issues that we face, of competing where our interests differ, and of challenging robustly whenever that is required. In Beijing and Shanghai, I was clear that while we must co-operate on areas of mutual interest, we will confidently challenge on areas where we disagree. I expressed our country’s real economic and trade concerns to the Chinese, including about trade imbalances and economic security, and I raised concerns about Russia’s illegal war in Ukraine, human rights, and restrictions on rights and freedoms in Hong Kong, including the case of Jimmy Lai and the completely unjustified sanctions against British parliamentarians.
A key outcome of this dialogue is that we have secured China’s commitment to improving existing channels, so that we can openly discuss sensitive issues and the ways in which they impact our economy, because if we do not engage with China, we cannot raise our real concerns. This dialogue is just one part of our engagement with trading partners across the world. Since becoming Chancellor, I have been to New York, Washington, Toronto and Brussels to build our global economic relationships, while my right hon. Friend the Business Secretary has travelled to the Gulf to boost trade and investment, and my right hon. Friend the Foreign Secretary is engaging with partners all over the world to deliver growth that benefits people across the United Kingdom.
We must continue to go further, faster, in driving economic growth to make working people better off. That is why the Prime Minister launched our artificial intelligence opportunities action plan yesterday. It throws the full weight of Government behind AI in the UK to revolutionise our public services and make our economy more productive. It is why next week I will talk to business leaders, investors and entrepreneurs at the World Economic Forum meeting in Davos to make the case that the UK is one of the best places in the world in which to invest. In the coming weeks, I will set out further details of our plans to kick-start growth in the economy after 14 years of failure from the Conservative party.
Mel Stride (Central Devon) (Con)
It is good to see the Chancellor in her place, and I thank her for advance sight of her statement. I know that she has been away, so let me update her on the mess that she left behind. The pound has hit a 14-month low; Government borrowing costs are at a 27-year high; growth has been killed stone dead; inflation is rising, impacting millions; interest rates are staying higher for longer; and business confidence has fallen through the floor. The Labour party talked down the economy and crippled businesses with colossal taxes, breaking all their promises. This is a crisis made in Downing Street.
It should hardly surprise the Chancellor that international markets are uneasy. The UK’s long-term borrowing costs have risen to their highest in almost 30 years. But while the Government were losing control of the economy, where was the Chancellor? Her trip to China had not even begun when my urgent question was taken in the House last week. She was still in the country, but she sent the Chief Secretary to the Treasury, rather than facing up to her failures. May I ask her why she chose not to respond herself?
The Chancellor, of course, ducked the difficult questions by jetting off to Beijing. I believe that in Labour circles they are calling it the Peking duck, but whatever was on the menu in China, was it really worth the unedifying sight of an increasingly desperate politician scampering halfway around the world with a begging bowl? The Chancellor’s deal pales in comparison to Labour’s black hole, which opened up in the public finances while the right hon. Lady was absent from her station.
Let me give the House a sense of scale. The deal that the Chancellor has announced amounts to £120 million a year. The rise in our borrowing costs, due to her disastrous Budget, has added about £12 billion to our annual spending on debt interest alone: literally 100 times what she says she has brought back from Beijing. That is money that cannot now be spent on the public’s priorities. That £12 billion is enough to pay for 300,000 nurses or to cover Labour’s pernicious winter fuel payments cut for eight and a half years—and, of course, even before this latest market reaction, the Budget meant spending tens of billions more on servicing our debt. According to the Office for Budget Responsibility’s forecast, two thirds of the money raised from the Chancellor’s jobs tax will be swallowed up by additional debt interest. Forget those billions going towards better public services; they are going on paying the price of Labour’s mismanagement.
We on this side of the House know how this sorry story goes. We have seen it all before: socialist Governments who think that they can tax and spend their way to prosperity; Labour Governments who simply do not understand that if you tax the living daylights out of business, you will get stagnation. They do not understand because there is barely a shred of business experience on the Government Front Bench. May I ask the right hon. Lady which of her promises she will break if the OBR judges in March that she is now in breach of her own fiscal rules? Will she cancel promised spending, will she ramp up borrowing, or will she raise taxes yet again?
This whole sorry tale is nothing short of a Shakespearean tragedy being played out before our eyes. This is the Hamlet of our time. Labour promised the electorate much, while pouring the poison into their ear. And the end—you can feel the end; the Chancellor flailing, estranged, it seems, from those closest to her; those about her falling; the drums beating ever closer. To go, or not to go, that is now a question. The Prime Minister will be damned if he does, but he will surely be damned if he does not. The British people deserve better.
Rachel Reeves
The shadow Chancellor is simply not serious. I was on the Opposition side of the House for 14 years, and I think that after a statement one usually asks some questions.
We heard a great deal from the right hon. Gentleman about what he would not do, but we heard absolutely nothing about what he would do. Now we can see what happens when the Leader of the Opposition tells the shadow Cabinet that it should not have any policies. As far as I can tell, the Conservative party’s economic strategy is to say that the UK should not engage with the second largest economy in the world, or indeed with our nearest neighbours and our biggest trading partners in the European Union. The right hon. Gentleman’s economic strategy is to support higher spending but none of the right decisions that are required to deliver sound public finances, and his economic strategy is to ignore the mistakes of the past with no apology to the British people for his part in Liz Truss’s mini-Budget that crashed the economy. I appreciate that, having said that, I may now receive a “cease and desist” letter from her later.
One question that the shadow Chancellor did ask was: why did I go to China? I went to secure tangible benefits for British businesses trading overseas. The right hon. Gentleman said that it was not worth it; let him say that to the representatives of HSBC, Standard Chartered, Prudential, Schroders and the London Stock Exchange who attended those meetings with me last week, all of whom have spoken of the difference that it will make.
I have been under no illusion about the scale of challenges that we face, after 14 years of stagnant economic growth, higher debt and economic uncertainty, and we have seen global economic uncertainty play out in the last week, but leadership is not about ducking these challenges; it is about rising to them. The economic headwinds we face are a reminder that we should—indeed, we must—go further and faster in our plan to kick-start economic growth, which plunged under the last Government, by bringing stability to the public finances after years of instability under the Conservative party, unlocking investment that plummeted under the previous Government and pushing ahead with essential reforms to our economy and public services. That is my message to the House today, because if we get it right, the prize on offer to us—to the British people—is immense: the opportunity to make working people better off by making Britain better off. That is the mandate this Government have, and that is what we will deliver.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I welcome my right hon. Friend’s commitment to growth in this country and to encouraging investment in the UK. Listening to the shadow Chancellor, the right hon. Member for Central Devon (Mel Stride), we would think the country was going to hell in a handcart. Does my right hon. Friend agree that this is no time for panic, that it is perfectly possible to manage any pressures on the Budget through astute management of public spending, and that we are a very long way from the approach taken during the years of austerity under the Conservative party?
Rachel Reeves
I thank the Chair of the Select Committee for that question. I set out this Government’s fiscal rules at the Budget in October: we will pay for day-to-day spending through tax receipts, and we will get debt down as a share of the economy. We remain committed to those fiscal rules and will meet them at all times.
Daisy Cooper (St Albans) (LD)
I thank the Chancellor for advance sight of her statement.
Let us be blunt: the Budget has not worked. The Chancellor says that the Government’s No. 1 mission is growth, but to date there are no signs that the Government are going to deliver it. The national insurance contributions rise is self-defeating. It undermines growth—it does not unleash it—and it piles pressure on to struggling small businesses and high streets. Nor does it raise anything like the sums of money for the NHS that the Government initially suggested it would. Now we have this much-lauded visit to China, which the Government themselves say is only worth £600 million to the UK over the next five years. That is equivalent to just five and a half hours of NHS spending a year—27.5 hours over the five-year period. All growth is welcome, but this really is small beer.
What are we to make of the Chancellor’s pledge to improve existing channels with China? It is nothing short of warm words and mixed messages. The Chancellor should not have gone to China unless there was a commitment that Jimmy Lai was going to be released.
Does the Chancellor now accept that the national insurance increase will damage growth? Does she accept that there were and still are much fairer ways to raise the necessary revenue without holding back our economy and our high streets? The international market jitters we have seen in the last few days are largely caused by the threat of tariffs by the new Trump Administration, so will the Chancellor guard against the risks of a Trump presidency by rebuilding our trading relationship with our European neighbours?
After the economic vandalism of the previous Conservative Government and their mini-Budget, our NHS and care services are still on their knees. Does the Chancellor accept that wealth and health are two sides of the same coin and that scaling back any investment in the NHS will be not only devastating for local communities but damaging for economic growth?
Rachel Reeves
I am slightly confused by the hon. Lady’s response. The Liberal Democrats opposed every decision we made to get the public finances under control at the Budget, and now they say that we need to spend more on public services. Well, I am afraid they cannot have it both ways. The only way there is more money for our public services is by raising it, as we did in the Budget—decisions that the Liberal Democrats apparently oppose.
The hon. Lady says that £600 million is not worth it. That is £600 million of tangible benefits for British businesses trading overseas. I would have thought she would welcome enhanced trade and investment as a way to create more good jobs paying decent wages in St Albans and, indeed, in all our constituencies.
The hon. Lady says that we should not go to China because we need to raise difficult issues. I am not sure how she thinks we are going to raise difficult issues unless we engage with the second biggest economy in the world. Because I went to China, I was able to raise issues around human rights, forced labour, Hong Kong and Jimmy Lai and the sanctioning of parliamentarians. We cannot raise those issues unless we are in the room. I was in the room and therefore able to do just that.
Labour is the party that put £20 billion into the national health service at the Budget in October. We were able to do that because of the difficult decisions we took, including on taxation. The hon. Lady seems to want the additional money for public services but without finding any way to pay for them. That is the way the Conservative party got into its troubles. I am afraid the Liberal Democrats are going down exactly the same path.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
May I thank the Chancellor for raising the case of my constituent, Jimmy Lai? I know it will mean a lot to him and his family. Does she agree that it is because of the profound differences that it is vital we maintain this strategic engagement?
Rachel Reeves
I thank my hon. Friend for what she has just said. On behalf of the whole House, I want to send our best wishes to the family of Jimmy Lai at this difficult time. I had the opportunity to raise this as well as other issues during my time in China, and it is incredibly important that at every opportunity we have, we raise some of the difficult issues and challenge the Chinese authorities in a way that is appropriate and consistent with our British values.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
The economic and financial dialogue was stayed because of the brutal imposition of the national security law in Hong Kong. When the Chancellor and the Government go back to engage and reopen that dialogue, they do so on the back of things getting worse, not better. The reality I put to her is that while she was away, Shein refused point blank at a Select Committee hearing to answer the question of whether it has slave labour in its supply chain, but the Government want it to list here in London. We have solar arrays being imported by the Government into the UK that demonstrably involve slave labour. Can the Chancellor be clear with the House about the Government’s position on slave labour? Can she explain whether this Government will allow any products or services, or allow companies to align themselves here or import goods here, that contain any slave labour, no matter how important that import is?
Rachel Reeves
I thank the right hon. Gentleman for that question; I know how seriously he takes this issue, like so many other Members on both sides of the House. Listing of companies in the UK is a decision for the Financial Conduct Authority, but any company listing on the London stock exchange has to live up to the responsibilities set out by the United Nations and the OECD on forced labour.
This Government are committed to working with international partners and businesses to ensure that global supply chains are free from human and labour rights abuses. As the right hon. Gentleman knows, under section 54 of the Modern Slavery Act 2015, commercial businesses that operate in the UK and have a turnover of more than £36 million are required to report annually on the steps they have taken, and rightly so, because modern slavery is abhorrent, and this Government continue to take steps to deal with it.
Dr Jeevun Sandher (Loughborough) (Lab)
First, may I remind Conservative Members that UK bond yields are rising for the same reason that German and French bond yields are—because they are tracking the US rate? They never were very good at numbers.
The Chancellor has set out her economic philosophy that our prosperity is built upon secure foundations in a more uncertain world. Will she set out how she is building that economic security here, particularly with reference to having domestic energy, rather than being dependent on foreign fossil fuel dictators?
Rachel Reeves
My hon. Friend is absolutely right to say that economic growth has to be built on strong foundations, which is the approach of this Government. Our mission to make Britain a clean energy superpower is consistent with that. If we can ween ourselves off fossil fuels and the oil of dictators, we will be more secure in our economy, because we will not have to import so much from overseas.
Dame Harriett Baldwin (West Worcestershire) (Con)
It is good to see the Chancellor back from China and to hear her reiterate that growth is her No. 1 mission, because we have not had any growth since her Budget. Given that accepting responsibility is the first step in solving a problem, will she accept that last October’s Budget has caused business confidence and growth prospects in this country’s economy to plunge?
Rachel Reeves
I thought for a moment that the hon. Lady was going to apologise for Liz Truss’s mini-Budget. Maybe she will do so on another occasion.
Yuan Yang (Earley and Woodley) (Lab)
I thank the Chancellor for raising the case of Jimmy Lai. I hope that the Government will in future press the case of pensions owed to British national overseas constituents in Earley and Woodley, and across the UK, who have moved here from Hong Kong.
I was surprised to hear the shadow Chancellor advocate knee-jerk responses to inter-day movements in market prices. I would argue that such short-termism led to the Conservative party having five Chancellors in only four years. Will the Chancellor reassure us that she will not be misled by short-termism, and that she will instead keep her focus on our Government’s long-term ambition to raise living standards and growth?
Rachel Reeves
My hon. Friend is absolutely right. There have been movements in international markets in the past week or so, and they have been global in nature. In the UK, we must do what we can, which is why I have reiterated today my commitment to the fiscal rules that I set out in the Budget in October. I reiterate that growth is the No. 1 mission of this Government: growth built on stability, which will come through securing the public finances; through investment, including through the national wealth fund and GB Energy; and through reform—of our planning system to make it easier to build in Britain, getting people back to work, and of our pension system. This Government are cracking on after 14 years of failure from the Conservative party.
Esther McVey (Tatton) (Con)
Did the Communist party of China tell the Chancellor that she was doing a good job or a bad job of running the UK economy when she was there?
Rachel Reeves
I was not seeking assurance from any foreign Government on the performance of this Government. What I was seeking—I achieved this in China—were tangible outputs for British businesses trading overseas, helping to create more good jobs that pay decent wages here in Britain. The Conservative party absolutely failed to do that in 14 years.
Tim Roca (Macclesfield) (Lab)
I thank the Chancellor for her statement. I particularly welcome the fact that she raised the issues of Jimmy Lai and human rights in Beijing, which is really important. After 14 years of the Conservative party’s inconsistency on China, does she agree that we need a cross-Whitehall strategy and a pragmatic approach?
Rachel Reeves
What is really important is that we take decisions in Britain’s national interest. Taking decisions in the national interest means engaging with our trading partners all around the world, which is why, since being appointed as Chancellor, I have been to Brussels to reset our relations with the European Union, as well as to Washington and New York to welcome investment from overseas. I have secured £600 million-worth of benefits for UK businesses doing business in China.
Stephen Flynn (Aberdeen South) (SNP)
Will the Chancellor of the Exchequer do what the Prime Minister refused to do yesterday and rule out future spending cuts?
Rachel Reeves
I am not going to write five years’ worth of Budgets in the first six months of a Labour Government, but I am absolutely committed to meeting the fiscal rules that I set out in the Budget in October. We know what happens when Governments lose control of the public finances: they crash the economy and end up on the Opposition Benches.
John Grady (Glasgow East) (Lab)
The Chancellor may be able to learn a bit about emergency spending cuts from the Scottish Government in Holyrood, who have had three years of emergency spending cuts. Does the Chancellor agree that it is essential to engage with large economies like China so that we can export our brilliant financial services sector and whisky from Scotland? In the real world, we have to trade with large economies like China.
Rachel Reeves
Many of the benefits that we secured last week were for the financial services sector, and both Edinburgh and Glasgow are important hubs of financial services in the UK. Businesses such as Abrdn and Standard Chartered, which were on the delegation with me, have welcomed the tangible benefits, which will result in more jobs and more economic prosperity in Scotland and across the United Kingdom.
Martin Vickers (Brigg and Immingham) (Con)
It has been reported that the Chancellor was going to meet the owners of British Steel in China. Many of my constituents work at the Scunthorpe steelworks. While I appreciate that Ministers may not have reached a final decision on the steelworks, is she able to give reassurance to my constituents that she has had constructive engagement?
Rachel Reeves
My right hon. Friend the Business Secretary has met Mr Li, from Jingye, on a number of occasions. Talks are ongoing, but I am not able to provide an update on that today.
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
The Chancellor has only my admiration and support for the tough decisions that she is taking to fix the fundamentals. While Conservative Members were carping about the Chancellor’s whereabouts this week, she was having serious discussions with the world’s second largest economy and securing access for UK firms. Is it not clear that only Labour Members are serious about growth?
Rachel Reeves
I will always stand up for Britain’s national and economic interest, which is why I am helping some of our best businesses to export around the world. That is what I did in China at the weekend, and it is what I will continue to do. I will always stand up for our economic interest.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Has the Chancellor of the Exchequer spoken to the Governor of the Bank of England about what action needs to be taken to bring about stability in our bond markets?
Rachel Reeves
I regularly speak to the Governor of the Bank of England; indeed, he was with me on the delegation to China this weekend. We work closely together to ensure that the British economy remains competitive in global markets.
Katie White (Leeds North West) (Lab)
I am quite surprised at the audaciousness of those on the Opposition Benches. The Conservatives oversaw a rise in debt levels over the last 14 years, and it is a shame that they did not turn their minds to the issue earlier. Does the Chancellor agree that serious discussions, such as the one with China, can deliver not just on our economic aims, but on our wider climate and international objectives?
Rachel Reeves
Unless we engage and work with our partners around the world, we will miss out on the opportunities that other countries secure for their businesses and economies. If we miss out on those investment and trade opportunities, we can be sure that other countries will take advantage of them. That is why I was in China, and it is why I will work with counterparts around the world to secure good outcomes for British businesses and jobs here in the United Kingdom.
Dr Andrew Murrison (South West Wiltshire) (Con)
The Chancellor raised the issue of human rights abuses in China, but did she get the opportunity to raise with her interlocutors the extrajudicial work of the United Front Work Department, particularly in relation to UK institutions, especially universities?
Rachel Reeves
I raised a number of issues around human rights abuses, labour and, indeed, rights and freedoms in Hong Kong, including the case of Jimmy Lai. I raised that with all the Ministers I met in China, and I will always stand up for our values and interests.
Kanishka Narayan (Vale of Glamorgan) (Lab)
Unlike the bickering in the Conservative party, we are cutting deals in the national interest and putting Britain at the frontier—£600 million just over the weekend, and an AI opportunities plan just this week. Does the Chancellor agree that we are the party of action and the Conservatives are the party of rhetoric?
Rachel Reeves
We on the Government Benches are not going to apologise for getting a good deal for British businesses and the people working for them. I am determined to leave no stone unturned in ensuring that British businesses have the rights and freedoms to export and trade around the world, helping to create good jobs here in Britain.
Sarah Olney (Richmond Park) (LD)
UK exports to China currently represent less than 10% of the UK’s total exports, whereas our exports to the EU represent over 40%, demonstrating the greater opportunities that trading with the EU makes available to our small and medium enterprises. Will the Chancellor commit to talking four times as much to our European partners about our trading opportunities than she has to China?
Rachel Reeves
This is not either/or; we cannot write off one country and say that we are going to put all our eggs in a different basket. China is our fourth biggest trading partner and we cannot miss out on opportunities in a country that is growing quickly, with an expanding middle class, where there are huge export opportunities. As the hon. Lady knows, I was in Brussels in December to reset our relations—the first British Chancellor to go to a Eurogroup meeting since we left the European Union. I am leaving no stone unturned in exploiting export opportunities for British businesses.
Callum Anderson (Buckingham and Bletchley) (Lab)
I thank the Chancellor for her statement. Can she set out in more detail how the Government intend to help reinvigorate the UK-China stock connect, so that UK companies and investors can access Chinese capital markets and vice versa?
Rachel Reeves
The stock connect is an initiative first set up by the former Conservative Chancellor Philip Hammond to improve links between the Shanghai and London stock exchanges and to help Chinese businesses to access capital on UK financial markets. That is good for financial services firms operating in London, and the enhancement of that stock connect scheme at the weekend offers new opportunities for British businesses in financial services in the UK.
Dr Luke Evans (Hinckley and Bosworth) (Con)
As the Chancellor flew east, the pound plummeted south and Government debt rocketed north. Why? The markets do not believe her plan for growth; that is the fundamental issue. To pick up the question from my right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson), what is she going to say to the markets to make them believe she really does understand how to deliver growth in the UK?
Rachel Reeves
There has been global volatility in markets. It is not reasonable to suggest that bond yields in the United States, Germany and France have risen because of decisions made by this Government. I think the hon. Member should just get real.
Brian Leishman (Alloa and Grangemouth) (Lab)
I thank the Chancellor for her statement. In regard to raising money for public services, an annual wealth tax on the multimillionaire and billionaire class would certainly achieve that. However, that is a conversation for another day—on to China. My right hon. Friend and I have had discussions regarding the closure of the Grangemouth refinery, in which PetroChina—part of the Chinese state-owned China National Petroleum Corporation—is heavily involved. If the refinery closes, thousands of jobs will be lost. This is not just a constituency issue for me. It will impact all of Scotland, as our fuel and national security will be severely weakened. Did the Chancellor speak about the issue with her Chinese counterparts, and if not, will she do so?
Rachel Reeves
We are working closely with the Scottish Government to ensure that there is a bright future for the people of Grangemouth, because deindustrialisation should not be the future for communities, including in Scotland.
Richard Tice (Boston and Skegness) (Reform)
The data in September and October shows that the economy is falling. It is going down and the currency markets and bond markets are selling off and expressing their clear concern that there is no growth and that the economy continues to fall. If the Chancellor is so confident, will she confirm to the House when the economy will start growing again?
Rachel Reeves
Growth is the No. 1 mission of this Labour Government, but the truth is that it is not possible to turn things around quickly after 14 years of lacklustre growth and declining living standards under the Conservatives. We are leaving no stone unturned, which is why last week in China we secured £600 million-worth of tangible benefits for the UK economy, helping great British businesses exporting overseas.
Nesil Caliskan (Barking) (Lab)
Does the Chancellor agree that developing our economic and trading relationships with other nations is one of many important levers; and that, alongside that approach, public investment, planning reforms and an industrial strategy—whose absence under the Conservative Government was problematic—will be returned under this Government so that we can see economic growth?
Rachel Reeves
The best way to grow an economy is to boost investment in an economy. The truth is that, under the Conservatives, we were the only G7 economy where investment stood at less than 20% of GDP. That is the inheritance that our party was bequeathed by the Conservatives, but we are beginning to turn that around through the creation of a national wealth fund to leverage in private sector investment, through planning reform to get Britain building again, and through pensions reform to unlock £80 billion of investment to help small and start-up businesses to grow. We are turning things around after 14 years of failure from the Conservative party.
Paul Holmes (Hamble Valley) (Con)
While the Chancellor was in China securing her measly £600 million, borrowing rates reached the highest they have been since 2008. In 2024 she said that her Budget would be
“a Budget with real ambition, a Budget to fix the foundations…a Budget to rebuild Britain.”
How is that going, given that her mess has caused borrowing to be the highest it has been since 2008, making real working people in this country suffer?
Rachel Reeves
I am not sure whether the hon. Gentleman follows global financial markets, but borrowing costs have increased for countries around the world. What we saw under Liz Truss’s mini-Budget was unique to the United Kingdom, because it was only UK markets that were affected by the decisions of the Conservatives.
Chris McDonald (Stockton North) (Lab)
It is great to see our Chancellor of the Exchequer working with international business and winning investment for the UK. Does she agree that while the Conservatives were happy to sell out our heavy industry to China, leading to the end of steelmaking in Teesside after 150 years, our industrial strategy is delivering investment in steel, chemicals and life sciences in Stockton North, in Teesside and across the UK?
Rachel Reeves
The national wealth fund created by this Government will get investment into industries such as carbon capture and storage, green hydrogen, ports and, indeed, steel. We were really pleased at the end of last year to be able to announce investment in carbon capture and storage in Merseyside and Teesside, securing billions of pounds of investment into those economies and securing many thousands of jobs.
Luke Murphy (Basingstoke) (Lab)
I thank the Chancellor for her statement. I think it is worth reminding the House that under the previous Government business investment fell to 28th out of 31 OECD countries, which was lower than Latvia, Slovenia and Hungary. Could the Chancellor set out how our industrial strategy will overcome that terrible legacy on business investment left by the Conservatives?
Rachel Reeves
One of the reasons for such poor investment—the lowest of all the G7 economies—is that our planning system makes it so hard to get anything done in this country. That is why the planning and infrastructure Bill, which is being brought forward by my right hon. Friend the Deputy Prime Minister, will turn that around, making it easier to invest in transport, in digital, in housing and in so much more. That is the way to get our economy growing after 14 years of failure.
Carla Lockhart (Upper Bann) (DUP)
I thank the Chancellor for her statement. She goes to China, New York, Washington, Toronto and Brussels to build economic relationships, yet she will not take the time to speak with the Ulster Farmers Union, the NFU, the Farmers Union of Wales or NFU Scotland to hear at first hand about the devastating impact that her death tax will have on family farms and small businesses. When will she realise that no matter what deals she does around the world—and I welcome them—Rome is burning around her? Agriculture is the backbone of our economy, so will she commit to meet me as a representative of the thousands of farmers whose farms are going to be decimated by her death tax?
Rachel Reeves
I have had the opportunity on a couple of occasions to meet the First Minister and Deputy First Minister of Northern Ireland, and I am sure that the Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for Streatham and Croydon North (Steve Reed), would be happy to meet colleagues from Northern Ireland. The truth is that we inherited a £22 billion black hole in the public finances from the Conservatives, and in order to stabilise our public finances we had to make difficult decisions on taxes. At the moment we hear from the Opposition that they do not like the increases in taxes but they want increases in public spending. Well, they cannot have it both ways.
Ms Polly Billington (East Thanet) (Lab)
I welcome my right hon. Friend’s statement. Could she elaborate further on how this visit and the discussions she has started are not only consistent with the Government’s approach to China, but a vital part of it—co-operate where we can, compete where we need to, and challenge where we must?
Rachel Reeves
This is the first economic and financial dialogue between our two countries since 2019. Since then, other countries around the world have continued to engage with China, securing tangible benefits for their economies. I do not want UK businesses and the people working in our country to miss out, which is why this weekend we secured £600 million-worth of tangible benefits for businesses that export to China, thereby helping to create more good jobs paying decent wages in our country.
Nick Timothy (West Suffolk) (Con)
I am slightly worried that investors will be watching this statement and wondering what planet the Chancellor is on. She just said that she is investing in transport infrastructure, but she is actually cutting transport capital budgets. She has previously said that she wants only one Budget a year, and the March statement is billed only as a fiscal forecast. Can she rule out any new tax rises or departmental spending cuts in the March statement, or will the fiscal forecast become an emergency Budget?
Rachel Reeves
We have committed to having just one Budget a year to provide businesses with the certainty they need to invest, so we will have an update from the Office for Budget Responsibility in March. I also give the commitment that, as I have already said, the fiscal rules mean we will balance day-to-day spending with tax receipts, and we will get debt down as a share of GDP within the forecast period. We will continue at all times to meet those fiscal rules.
Tony Vaughan (Folkestone and Hythe) (Lab)
I congratulate the Chancellor on unlocking £1 billion of value for the UK economy that would not have been unlocked if she had not gone to China. However, does she agree that the Government’s much-needed decision to thaw UK-China relations is now reaping dividends while also allowing us to press China on difficult issues, including human rights and labour standards?
Rachel Reeves
My hon. Friend is exactly right. We managed to secure tangible benefits for the UK economy and British exporters. At the same time, we were able to raise difficult issues that we would not have been able to raise if we were not engaged. That is the benefit of engagement: we get the economic gains and we can raise those tricky issues.
Dave Doogan (Angus and Perthshire Glens) (SNP)
It is beyond parody that His Majesty’s Chancellor would throw herself at the mercy of the Chinese Government and come back with £600 million in revenue over five years. Is she aware that £600 million in revenue is less than one ninetieth of HSBC’s annual profit? This is what she is holding up as a major achievement of the Treasury’s trade mission. My right hon. Friend the Member for Aberdeen South (Stephen Flynn) very reasonably asked what the Chancellor will do when, not if, her fiscal rules are breached. Will she increase borrowing, raise taxes or cut spending, not over five years but this year?
Rachel Reeves
I am sure the hon. Gentleman is an expert in HSBC, but I would rather take the word of the chairman of HSBC, who welcomed the tangible investments and, indeed, led the financial forum that we held in China last week. I have been really clear that we will meet the fiscal rules that I set out in the Budget, and we will do that at all times. That is the commitment I made, and it is the commitment I continue to make.
Deirdre Costigan (Ealing Southall) (Lab)
Will the Chancellor confirm that, for her, growth must always go hand in hand with economic security? That is a lesson that the previous Conservative Government refused to learn when they left 85% of us dependent on expensive foreign gas to heat our homes this winter.
Rachel Reeves
This Government’s clean energy mission will mean that we are less reliant on foreign dictators for our basic energy needs. That is why we are investing in carbon capture and storage and floating offshore wind, and it is why we are getting rid of the previous Government’s absurd ban on onshore wind.
Harriet Cross (Gordon and Buchan) (Con)
The Chancellor referred in her statement to safeguarding national security, which I welcome, but this must include energy security. Yet her changes to the energy profits levy, removing investment allowances and not permitting new licences at a time when we are still reliant on oil and gas, not only undermines our energy security but dwarfs the £600 million that she has brought back from China with the £12 billion of tax revenues that will be lost from the sector. Why, rather than supporting our energy security, is the Chancellor turning her back on the sector, turning her back on these tax revenues and risking selling our energy security to China?
Rachel Reeves
If the hon. Lady has a brief look at the documents from the Office for Budget Responsibility, she will see that the changes to the energy profits levy—taking the tax rate up from 75% to 78%, the same rate as in Norway—raises money; it does not lose money.
Linsey Farnsworth (Amber Valley) (Lab)
I commend the Chancellor for her visit to advocate for our country’s best interests, but does she agree that Chinese companies must not provide any support to Putin’s illegal war in Ukraine?
Rachel Reeves
I absolutely agree with my hon. Friend, and I raised such issues with my counterparts in China at the weekend. It is really important that, whenever we engage with foreign Governments, we also raise issues consistent with our values, including Chinese companies supplying the Russian Government with materials used in Russia’s illegal invasion of Ukraine.
Jim Allister (North Antrim) (TUV)
Did the Chancellor raise any concerns, or indeed does she have any concerns, about the Confucius Institute, the Chinese Government-backed operation we see across the United Kingdom? And what answer did she get with respect to Jimmy Lai?
Rachel Reeves
When our Prime Minister met President Xi Jinping in Rio last year, they agreed that one of the points of re-engagement is that we were able to make clear our concerns on a range of issues in a private way. I am not going to go into the details of that conversation, but I raised these issues with all the Chinese officials I met at the weekend. [Interruption.] The problem is that Conservative Members, for all their chuntering, did not raise these issues because they did not even engage.
Ben Coleman (Chelsea and Fulham) (Lab)
My constituents, many of whom work in financial services, will have been amazed, just as I was, when the shadow Chancellor, in a fit of pique, demanded that the Chancellor should come home from China to talk to him in this House, rather than staying to promote growth, increase access to the world’s second largest market and win new licences and quota allocations for financial services businesses. As anybody who has taken the trouble to listen carefully to the Chancellor would recognise, there is more on the way. What does she think the City, and the banks that accompanied her, would have preferred in the long-term interests of this country: stay in China to win for this country, or come home to satisfy the shadow Chancellor’s fit of pique?
Rachel Reeves
We just have to look at what the businesses have already said about the deal we managed to secure last week. There are tangible benefits for British businesses exporting to China, helping to create more good jobs paying decent wages here in Britain. It has been welcomed by businesses. It is a shame that the Conservative party no longer stands up for British businesses.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
We have an embargo on Russian oil and gas. China continues to import it, and apparently Russia will be China’s No. 1 supplier this year. Did the Chancellor raise this with her counterparts on her trip to China, and what assessment has she made so that her deal does not inadvertently support the Russian war effort?
Rachel Reeves
As I have already said in the House today, I raised the issue of Chinese companies supplying the Russian Government. Indeed, the hon. Gentleman will know that last week, alongside the United States, we increased sanctions on Russian oil and gas to make it harder for Putin to continue to conduct his illegal war.
Chris Vince (Harlow) (Lab/Co-op)
Will the Chancellor outline how the visit is an example of ongoing dialogue with the international community, which will benefit businesses and residents in my constituency of Harlow? Also, while we are quoting Shakespeare, does she agree that there is something rotten in the state of the Conservative party—or perhaps that the Conservative party is in a rotten state?
Rachel Reeves
I am glad that my hon. Friend has used the 50 minutes of the statement to come up with such a good line. He is right that many people working in Harlow work in the financial services sector and will very much welcome the enhanced licences and quotas, which, incidentally, many other countries and their banks already have because their Governments have engaged with China. Those are opportunities that we have missed out on in Britain for far too long because of the six years during which we failed to be involved in an economic and financial dialogue, while other Governments cracked on and made sure they supported and stood up for their national interest.
Shockat Adam (Leicester South) (Ind)
Notwithstanding the importance of China as a trading partner, will the Chancellor please explain what steps the Government are taking to address the issues of forced labour links with Uyghur workers in supply chains at fast fashion companies such as Shein? Will the Minister provide data on the extent of forced labour in UK supply chains, especially in the garment sector? Will she also outline any actions to strengthen due diligence requirements for companies sourcing from areas with known human rights abuses, such as Xinjiang?
Rachel Reeves
As I have already set out, one of the issues I was able to raise with my counterparts in China was forced labour, particularly in Xinjiang. As I said in answer to the question from the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), I have also been really clear that any company seeking to list in London has to meet stringent requirements, as set out by the United Nations and the OECD, on labour supply and the treatment of workers.
Madam Deputy Speaker (Judith Cummins)
For the final question, I call Jim Shannon.
Jim Shannon (Strangford) (DUP)
While I welcome the UK-China economic and financial dialogue, as the Chancellor will know, as chair of the all-party parliamentary group for international freedom of religion or belief, I have repeatedly highlighted in this House human rights abuses in China, with regard to Uyghur Muslims, Tibetan Buddhists and Christians in Hong Kong and China. How will the Government and the Chancellor make sure that safeguards for British money and goods are put in place to ensure that economic engagements do not directly support those violations? Human rights concerns, forced labour, denial of religious freedom and ongoing suppression in Xinjiang, Tibet, Hong Kong and Taiwan must be remembered at all costs and in all deals with China.
Rachel Reeves
I thank the hon. Gentleman for that thoughtful question. It is important that when we engage with China, we co-operate where we can, we compete where necessary, but we challenge whenever our values do not align. Like the hon. Gentleman, I care deeply about issues of religious freedom and forced labour, but that is the whole point of engaging. We have to engage in the world as it is, not in the world as we would like it to be. It is through those engagements that we are able to raise even some of the most difficult issues and be very clear about the values of our great country.
UK-China Economic and Financial Dialogue: 2025
Rachel Reeves Excerpts(2 months, 1 week ago)
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The Chancellor of the Exchequer (Rachel Reeves)
I visited China 10-13 January to deliver the 2025 UK-China economic and financial dialogue.
Growing the economy is the No.1 mission of this Government. But that growth must be secure and resilient, built on the stable foundations that we have prioritised as we deliver on our Plan for Change and embark on a decade of national renewal.
National security and growth are not opposed. They are mutually reinforcing. We must and will continue to engage with international partners on trade and investment to grow our economy, while ensuring that our security and values are not compromised.
This means finding the right way to build a stable and balanced relationship with China. One that recognises the importance of co-operation in addressing the global issues we face, competing where our interests differ, and challenging robustly where we must.
It is for this reason that I visited Beijing and Shanghai for an economic and financial dialogue with China. I was accompanied by the Governor of the Bank of England, the chief executive of the Financial Conduct Authority, and representatives from Britain’s financial services firms. This dialogue unlocked market access for UK exporters in financial services and agri-products, providing greater certainty for business and an expected boost to the UK economy of £600 million over five years.
However, this is not a return to the “golden era” of UK-China relations. Throughout the visit, I was clear that while we must co-operate on areas of mutual interest, we will also confidently express our economic and trade concerns to the Chinese, including on market access and wider market distorting practices. A key outcome of this dialogue is that we have secured China’s commitment to improve existing channels so that we can openly discuss sensitive issues and the ways in which they impact our economy. Our engagement also advanced wider UK interests. I raised a range of UK concerns in meetings with Chinese Government counterparts, including Russia’s illegal war in Ukraine, developments in constraints on rights and freedoms in Hong Kong, and human rights. Our approach ensures we can confidently challenge China on areas where we disagree and uphold the UK’s national security—the first duty of our Government.
This visit builds a platform for a long-term relationship with China that works squarely in our national interest, ensuring our economy has the broad base and resilient foundations for the growth that makes working people in every corner of Britain better off.
[HCWS361]
Office for Budget Responsibility: Economic and Fiscal Forecast
Rachel Reeves Excerpts(3 months, 1 week ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Today I can inform the House that I have asked the Office for Budget Responsibility (OBR) to prepare an economic and fiscal forecast for publication on 26 March 2025.
This forecast, in addition to the forecast that was published in October 2024, will fulfil the obligation required by the Budget Responsibility and National Audit Act 2011 for the OBR to produce at least two forecasts in a financial year.
I intend to respond to the March forecast with a parliamentary statement. This is in line with my commitment to deliver one major fiscal event a year, to give families and businesses the stability and certainty they need and, in turn, to support the Government’s growth mission.
[HCWS315]
Oral Answers to Questions
Rachel Reeves Excerpts(3 months, 3 weeks ago)
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David Williams (Stoke-on-Trent North) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
At the Budget, the Government announced major steps towards delivering a once-in-a-generation increase in social housing, including a £500 million boost to the affordable homes programme, increasing annual spend to £3.1 billion. The Government will set out future grant investment beyond the current affordable homes programme at phase 2 of the spending review.
David Williams
In Stoke-on-Trent and Kidsgrove there are many historic buildings that are lying dormant, and they have done so for a very long time. What steps will the Chancellor take to help to bring these beautiful buildings back into use as affordable homes for local people?
Rachel Reeves
Stoke-on-Trent has a proud industrial history and some beautiful buildings. My hon. Friend makes an important point—I will raise it with colleagues at the Ministry of Housing, Communities and Local Government. The £500 million boost to the affordable homes programme also allows up to 10% of that delivery to come from acquiring existing homes. Social landlords, including some local authorities, can bid for funding to bring empty homes back into use for social housing.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Many of my constituents have benefited over many years from the right to buy their council homes and social housing, which has given them an important step on to the ladder to home ownership. The discounts in Staffordshire are going to be cut to £16,000. I do not doubt that the Chancellor, like me, wants to help as many people as possible on to the path to home ownership. Will she pledge to review that decision with regard to the impact it will have on so many people, and look at restoring that discount in future?
Rachel Reeves
As the right hon. Gentleman will know, home ownership fell under the previous Government. We are determined to turn that around and ensure that more people, particularly families, get on to the housing ladder. As he has confirmed, the right to buy discounts will continue, but in future every penny of that money will go back into building new social housing, so that more people can have a home of their own and a roof over their head.
Bob Blackman (Harrow East) (Con)
Mr Mark Sewards (Leeds South West and Morley) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
We have brought stability back to the economy, which is the foundation for attracting investment and is vital to our growth mission. We have already launched the national wealth fund, which will mobilise over £70 billion of private investment with an expanded remit for the Office for Investment overseen by the Minister for investment. In October, we welcomed global investors from around the world to London for the international investment summit, where we were able to announce a record-breaking £63 billion of private sector investment into our economy.
Darren Paffey
I have been meeting a number of maritime companies in and around the port of Southampton, and they tell me that the single biggest key to unlocking further investment would be the expansion of the national grid to our city. What steps is the Chancellor taking to secure that vital investment, and will she meet me and local industry leaders to discuss how this would boost our local and national economy?
Rachel Reeves
It was a pleasure to go to my hon. Friend’s constituency in June to see the port and the wealth creation and jobs that it is bringing to Southampton. As I set out in the autumn Budget, as well as focusing on the national wealth fund’s capital investment in ports, we are committed to accelerating grid connections and ensuring that new network infrastructure is built at pace to unlock investment and growth opportunities. We are particularly focused on driving network build, including by completing the strategic planning of the energy system needed for 2030, to ensure that projects such as those my hon. Friend has mentioned in Southampton make the progress that they need to.
Alan Gemmell
New green businesses such as XLCC in Ayrshire, a sub-sea cable manufacturer, are seeking long-term investment to create jobs. Recently, my hon. Friend the Member for North Ayrshire and Arran (Irene Campbell) and I visited its training academy in Irvine. What more will my right hon. Friend the Chancellor do to help Scottish businesses such as XLCC to secure long-term investment, and might she visit Ayrshire to see it in action?
Rachel Reeves
I thank my hon. Friend for his question and for the invitation. In October, the Government launched the national wealth fund to mobilise billions of pounds of investment into world-leading clean energy and growth industries. I am pleased that the national wealth fund already announced a £20 million investment in XLCC to support it in moving towards a construction phase. This will support 900 jobs, as well as making a contribution to the UK being a clean energy superpower by strengthening the home-grown energy suppliers that are fundamental to achieving our energy independence.
Mr Sewards
As the chair of the all-party parliamentary group for Yorkshire and Northern Lincolnshire, I am always on the lookout for opportunities to encourage investment and growth in our region. That is why I am backing the campaign to put the national infrastructure and service transformation authority in Leeds, and I was delighted that the national wealth fund was put in Leeds. Given these facts, will my right hon. Friend the Chancellor meet me to discuss the opportunities we have to maximise the benefits from the national wealth fund?
Rachel Reeves
I welcome the work that my hon. Friend does on the all-party parliamentary group for Yorkshire and Northern Lincolnshire. As I announced in October, the UK Infrastructure Bank has now become the national wealth fund and it will expand its team and be headquartered in the brilliant city of Leeds, to realise our ambition on the national wealth fund. The national wealth fund will also have a strong regional focus, working with the mayors, including Tracy Brabin in West Yorkshire, so that we can realise the potential of all our regions, including Yorkshire. Further details on the national infrastructure and service transformation authority’s governance and location will be confirmed in due course.
Dave Doogan (Angus and Perthshire Glens) (SNP)
One of the economic investments that we do not want to see in Angus and Perthshire Glens, or anywhere else in Scotland, is foreign multinationals buying up farms because farmers have given up under the weight of the taxes introduced by this Government. This would destroy local supply chains and make larger farms that are less responsive to consumer demand. What has the Chancellor seen in her impact assessment of the agricultural property relief changes to allay those fears?
Rachel Reeves
One of the current challenges, as the hon. Gentleman will know, is that agricultural property relief is often used for tax avoidance. People are buying farmland not because they are family farmers but because they do not want to pay any inheritance tax. That is why we are reforming the system to bring in much-needed money to fund our public services, and to have a fair system with a 50% discount to inheritance tax paid on agricultural property and a 10-year period to pay that inheritance tax, interest free.
Pippa Heylings (South Cambridgeshire) (LD)
Last week, I joined a biotech boot camp in South Cambridgeshire. Although the investors and entrepreneurs recognise and welcome the research and development budget announced in the Budget, they said it is a reduction from 2021. Does the Chancellor recognise that we need to increase investment in R&D to encourage long-term investment in our leading services?
Rachel Reeves
We were really pleased to announce an R&D budget of more than £20 billion at the autumn Budget. This is important to funding and accelerating R&D not just in the hon. Lady’s constituency but across the country. Combined with the corporate tax road map, as well as the commitment to continuing funding for Horizon, our universities and great innovators can look to the future with confidence.
Josh Babarinde (Eastbourne) (LD)
Local leisure and sports facilities, such as the Sovereign centre where I learned to swim, deserve more long-term investment. I want Eastbourne to be able to invest its £20 million from the towns fund in such facilities, but it will not be unlocked by the Treasury until 2026. Will the Chancellor commit to accelerating the unlocking of that funding, so that we can invest in facilities for local families and people in Eastbourne much sooner?
Rachel Reeves
I agree it is important that all children learn to swim, especially in our coastal communities. We had to make difficult decisions at the Budget, but I am happy to try to arrange a meeting between the hon. Gentleman and the relevant Minister to make sure the investment can go ahead at pace.
Jonathan Hinder (Pendle and Clitheroe) (Lab)
Jen Craft (Thurrock) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
Sound management of the public finances means spending wisely and not sending money to fraudsters. Today, I have appointed the health expert Tom Hayhoe as our new covid counter-fraud commissioner. As chair of an NHS trust during the pandemic, he saw the urgency of getting personal protective equipment to NHS staff when they needed it. Now he is at his desk in my Department starting the work to investigate the billions of pounds lost to fraud and underperforming contracts, and instead ensuring that that money is where it belongs—in our public services.
Jen Craft
My constituents expect the Government to treat taxpayer money with the utmost respect. However, during the pandemic the Conservatives handed out contracts to their friends and donors and failed to prevent fraud, using the crisis as a cover for their greed. Does the Chancellor agree with me that that money belongs to the taxpayer?
Rachel Reeves
My hon. Friend’s constituents in Thurrock are right to be angry about the waste and corruption that happened under the previous Government. That money belongs to the British people and in our public services, not in the pockets of fraudsters taking advantage of a national emergency. Tom Hayhoe will leave no stone unturned in investigating the carnival of fraud that the previous Government presided over, including in PPE contracts, where they recommended any attempts to reclaim that money be abandoned. Letting huge sums of taxpayers’ money be wasted would be egregious and I will not tolerate that.
Harriet Cross (Gordon and Buchan) (Con)
The Treasury consistently insists that only 500 farms a year will be impacted by the family farm tax. However, the Central Association for Agricultural Valuers calculates that the real number will be five times higher and will include many farms in my Gordon and Buchan constituency. Who is right: the Treasury or the experts?
Rachel Reeves
We have published the detail of how that money is raised, but the numbers from His Majesty’s Revenue and Customs are very clear: only a quarter of estates will pay any additional tax. At the moment, the vast majority of agricultural property relief is enjoyed by a very small number of very large and very expensive estates. That is not affordable, and it will not continue.
Brian Leishman (Alloa and Grangemouth) (Lab)
I declare an interest: I am a member of Unite the Union. The Grangemouth refinery costs £100 million a year to run, and its economic contribution to Scotland exceeds £400 million per annum. Unite has a credible plan to save the refinery and prevent thousands of job losses. Will the Treasury consider the plan, and meet me, Unite and the refinery owners to discuss its viability and Government intervention for the public good?
Rachel Reeves
I am happy to arrange a meeting between my hon. Friend and the relevant Minister.
Nick Timothy (West Suffolk) (Con)
Last week, the Chancellor told the CBI conference that she would not come back
“with more borrowing or more taxes”.
Last Wednesday, the Prime Minister hung her out to dry and refused to repeat those words. Will she repeat them today and rule out any more borrowing or any more taxes—yes or no?
Rachel Reeves
At the Budget in October, we had to fill a £22 billion black hole left by the previous Government. We will never have to repeat a Budget like this one, because we will not have to clear up the mess of the previous Government ever again.
Rachel Reeves
The hon. Gentleman talks about uncertainty, but he was a Minister in the Treasury under Liz Truss, when huge damage was done to families’ and businesses’ finances. Frankly, I will take no lessons from Conservative Members on how to run the economy. We have already done phase 1 of the spending review; phase 2 will begin shortly and be concluded next year, when we will make multi-year settlements on resource departmental expenditure limits and capital budgets for the next few years.
Richard Fuller
The Chancellor may find that in her job, she needs to listen and learn lessons. One of the many criticisms of the last Budget was that the Government fiddled the figures to borrow more money, and still left little headroom for if their forecast went wrong. Since the Budget, business confidence has collapsed, putting further pressure on that headroom. Does the Chancellor have a problem with balancing her books, and will she, like Oliver Twist, be coming back for more?
Rachel Reeves
The hon. Gentleman will know that there is more headroom in our Budget in October than was left by the previous Government. The lesson I have learned is that I will never play fast and loose with the public finances, as the Conservative party did, because when it did, interest rates went through the roof and inflation topped 11%, and families and businesses in our country are still paying the price for its disastrous economic management.
Clive Efford (Eltham and Chislehurst) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
At the Budget, I wiped the slate clean after 14 years of chaos and mismanagement of our public finances, and I have brought stability back to our economy, so that we can get on with fulfilling our promise of delivering change. That means investing to fix the NHS and rebuild Britain, while ensuring that working people do not face higher taxes in their payslips.
Only through economic growth can we deliver on the promise of change. That is why we have wasted no time in delivering on the Government’s No. 1 mission. We have established the national wealth fund, have kick-started planning reforms to boost long-term growth, are developing an industrial strategy, and are announcing reforms for our world-leading financial services sector, including in pensions. I am under no illusion about the size and scale of the challenge that we face, and the struggles of working people. That is why we choose stability and investment. The Conservatives, however, choose chaos, austerity and decline.
Clive Efford
According to the Local Government Association, local government spending on public services is down 42% on what it would have been had it kept pace with demand and costs since 2010. My local authority, Greenwich, faces a £3 million to £5 million gap in commissioned social care costs, and after 14 years of Tory austerity, there is very little headroom to bridge that gap. Does my right hon. Friend agree that local authorities need more assistance to bridge such gaps in the December local government finance statement?
Rachel Reeves
As my hon. Friend will know, in the autumn Budget and phase 1 of the spending review, more than £1 billion was made available to local government, including £600 million for social care. The allocation of that money will be set out in the normal way over the next few weeks, so that local government is funded properly and can deliver the services that it needs to deliver.
Mel Stride (Central Devon) (Con)
What a pleasure it is to appear opposite the right hon. Lady for the first time. I was tempted to ask her how things were going, but I did not want to start out by being unkind. I will instead ask this: when she recently pledged to the CBI that she would not raise taxes again, did she mean it?
Rachel Reeves
I welcome the right hon. Member to his place, and look forward to many exchanges with him across the Dispatch Box. At the Budget in October, as he knows, we had to fix a £22 billion black hole in the public finances. Some of that black hole comes from the fact that we are the only G7 economy in which employment is lower than it was before the pandemic, when he was Secretary of State for Work and Pensions, so we had to raise taxes to fund our public services; but never again will we have to repeat a Budget like that one, because we have now wiped the slate clean and drawn a line under the mess created by the previous Government.
Mel Stride
I did not actually discern any answer to my question, so may I put it this way? No. 10 has stated that it is not prepared to stand by the Chancellor’s commitment on tax. Is that because No. 10 changed its mind, or because the right hon. Lady spoke without thinking?
Rachel Reeves
No Chancellor of the Exchequer would write five years’ worth of Budget in their first five months in post, but I can say that we will never have to deliver a Budget like that again. We took decisions in this Budget in order to wipe the slate clean after the mismanagement, decline and chaos of the previous Government. That required us to make difficult decisions, but we were right to make them, so that we can get going with our plans to achieve growth and reform public services, and deliver the NHS and schools that our country desperately needs.
Jacob Collier (Burton and Uttoxeter) (Lab)
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
Rachel Reeves
The tax rises in the Budget were used to provide a £22.6 billion uplift in the Department of Health and Social Care budget to ensure that our NHS is properly funded. The NHS will ensure that important services are properly funded, and those allocations will be set out in the normal way.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
Rachel Reeves
I will head to the Great Northern conference in Hull later this afternoon to speak about the impact of this Government’s policies on Yorkshire and the wider north of England. We are supporting local leaders and communities through integrated settlements, are investing in the trans-Pennine route upgrade, East West Rail and High Speed 2, and are reshaping public services.
Helen Maguire (Epsom and Ewell) (LD)
Peter Lamb (Crawley) (Lab)
Rachel Reeves
In the past four weeks since the Leader of the Opposition was elected, the Conservatives have made £7 billion of commitments to cut taxes, but with no idea of how they would cut public services to afford them. I do not know how they will vote on national insurance, but we can see pretty quickly how they ended up leaving us a £22 billion black hole.
Damian Hinds (East Hampshire) (Con)
The single most important factor in raising living standards, driving income equality and improving children’s life chances is having a job. Why is the Chancellor disregarding that fundamental truth, with tax policies that will actively harm employment, particularly youth employment?
Steve Yemm (Mansfield) (Lab)
Rachel Reeves
I happily join my hon. Friend in welcoming Mansfield’s success. We have launched a revamped fair payment code, under which signatories commit to paying their suppliers on time, and the disability finance code for entrepreneurship. That comes on top of reforms announced at the Budget to protect small businesses, such as doubling the employment allowance to £10,500, and our commitment to maintaining the small profits rate and marginal relief at their current rates and thresholds, as well as to freezing the small business multiplier for 2025-26—
Rachel Reeves
And like my hon. Friend, I look forward to small business Saturday this week—
Mr Speaker
Order. [Interruption.] No, we are going to have a little talk now, because this is not fair; I have to get all these other Members in. I understand that these are set questions, but questions and answers should be short—it works both ways—otherwise I cannot get Members in and it makes my job impossible. Please work with me.
Rupert Lowe (Great Yarmouth) (Reform)
I cannot help but think that this morning has made for rather depressing listening. We hear this repetition about a £22 billion black hole, but we are dealing with very serious matters such as people’s employment. Ultimately I hear the Chancellor talking about a central planning agenda, but it is public services that are the problem; they are wasting money, and we must seriously consider that. Will the Chancellor accept, if the economy turns down next year, which it surely will, that she has made a mess of it?
Rachel Reeves
We mention the £22 billion because that is the inheritance that the Government now have to address. We have published a line-by-line account of the £22 billion black hole that the previous Government left. We are now growing the economy through our national wealth fund, our planning reform and our pensions reform, and we are reforming our public services, so that we can deliver for the people we came here to represent.
Clive Lewis (Norwich South) (Lab)
As the Treasury team may be aware, there is a growing body of evidence that the growth of the financial sector beyond a certain size has an impact on the economy, particularly the productive economy. Over a 10-year period, it has cost the rest of the economy £4.5 trillion, so how will the Chancellor ensure that a growing financial sector will not harm the Government’s wider missions and the productive economy?
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Today is International Day of Persons with Disabilities. With a disability employment gap of nearly 30% and a disability pay gap of nearly 14%, how is the Chancellor helping to address those inequalities?
Rachel Reeves
Just today, the Government launched the disability finance code for entrepreneurship—something championed by my right hon. Friend the Secretary of State for Business and Trade—to ensure that people from all types of backgrounds, including those with disabilities, can start and grow their own businesses.
Jim Allister (North Antrim) (TUV)
When the Windsor framework was introduced, it was accompanied by the boast that access to the EU single market would result in a huge increase in investment in Northern Ireland. Is the Chancellor aware that Invest NI has reported that there has been no upturn, and is that not because of the barrier presented by the Irish sea border to the bringing of raw materials into Northern Ireland from Great Britain?
Notification of Contingent Liability
Rachel Reeves Excerpts(4 months, 1 week ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Rachel Reeves)
The independent Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the asset purchase facility by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022. The sales of corporate bonds ceased on 6 June 2023, with a small number of outstanding corporate bonds reaching maturity on 5 April 2024. Therefore, the APF is now comprised solely of gilts.
The Chancellor at the time agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.
Since 30 April 2024 when the maximum authorised size of the APF was last reduced, the total stock of assets held by the APF for monetary policy purposes has fallen further from £704.2 billion to £654.5 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £654.5 billion, comprising entirely of gilts.
The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. Provision for any payment due under the liability will continue to be sought through the normal supply procedure.
A full departmental minute has been laid in Parliament providing more detail on this contingent liability.
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