Oral Answers to Questions
Rishi Sunak Excerpts(2 years, 9 months ago)
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Ian Lavery (Wansbeck) (Lab)
The Chancellor of the Exchequer (Rishi Sunak)
To help people with the cost of living, the Government are providing support worth around £12 billion in this financial year and next. That includes: cutting the universal credit taper rate to make sure that work pays; freezing duties to keep costs down; and providing support to households with the cost of essentials. In addition, the Government’s plan for jobs is helping people into work and giving them the skills they need to succeed—the best approach to managing the cost of living in the long term.
Alex Cunningham
The Chancellor will have plenty of opportunities to get the answer right this morning. Data from the Office for National Statistics show that on average people aged 65 or over spend twice as much on energy compared with those under 30, so they will be hit twice as hard by escalating bills. Meanwhile, Energy UK tells us that without Government action there will soon be 6 million people, many of them pensioners, living in fuel poverty. Will the Chancellor persuade himself to really get into this and take up our pledge to remove VAT from energy bills and extend the warm homes discount? If he will not, what will he do, particularly for our most vulnerable pensioners who are suffering from this cost of living crisis?
Rishi Sunak
I am proud of this Government’s track record in supporting pensioners. Thanks to the triple lock, in place since 2010, pensions are, relative to earnings, the highest they have been in more than three decades. However, I recognise the anxiety that many pensioners will feel about rising energy bills, and we are always looking at the best way to support people. To help with exactly that phenomenon, the winter fuel payment provides up to £300 for everyone over the state pension age.
Ian Byrne
With the cost of living crisis upon us, millions across our country must choose between heating their home or putting a meal on the table. Hunger is a political choice made by this Government and the buck stops with the Chancellor. Last week, he wrote off £4.3 billion of covid fraud. If he has the will, he can end the crisis of food insecurity for millions across our nation. Will he use his spring statement to implement a right to food, including universal free school meals and setting social security payments and the living wage at rates calculated to take account of the rising cost of food?
Rishi Sunak
On providing food for those who most need it, I am pleased that the recent spending review confirmed £200 million of extra funding for the holiday activity and food programme to provide support to families and children outside term time. The national living wage, which the hon. Gentleman mentioned, is going up by 6.6% to £9.50 in April, putting an extra £1,000 in the pockets of hard-working people up and down the country.
Paul Blomfield
A constituent wrote to me recently; she is 57 and works four days a week on the minimum wage. Her energy bill is rising from £95 to £220 a month, eating up an extra 11% of her take-home pay. Weekend reports suggest that Treasury action on the cost of living crisis has stalled due to the paralysis engulfing No. 10. Those struggling to heat their homes should not pay the price for the Prime Minister’s conduct, so will the Chancellor agree to extend eligibility for the warm homes discount further and increase it beyond the pitiful £10 that is planned?
Rishi Sunak
Although I do not know the specific circumstances of the hon. Gentleman’s constituent, it sounds like she will benefit from two measures that we have already announced: the significant increase in the national living wage by 6.6% in April; and the cut in the universal credit taper rate, which will mean that a single mother working full time on the national living wage will be an extra £1,200 better off. That will help significantly with energy and other bills, and of course the warm home discount provides a £140 rebate to those who need it.
Derek Thomas
I have met a number of pensioners in my constituency who are on the state pension, but who also worked hard and saved for a private pension; not a huge pension, but a pension that they believed would help them meet the cost of living. Unfortunately, years of low interest rates and now the rising cost of energy, food and other things have made them begin to worry and they are very concerned about the year ahead. Can the Chancellor provide more information on how he will monitor the situation, and support the families and pensioners whom we encouraged to get private pensions but now find that they cannot meet the cost of living?
Rishi Sunak
My hon. Friend is absolutely right to highlight pensioners and their needs. As I said, I am proud of the Government’s track record in supporting them. I can also provide him with the reassurance that we continue to look at the best way to provide support to all those in need, as we have done over the last year of two. In the meantime, he will be reassured to know that we have protected pensioners this coming year with the double lock and, as I said, the winter fuel payments providing up to £300.
Lloyd Russell-Moyle
Energy prices are rocketing but the price of producing energy has not, meaning that energy companies are experiencing record bonanza profits this year if they are producers. The Chancellor is, of course, worth more than a billion pounds. Could he tell constituents struggling to pay their energy bills what should be taking the cut? Should it be the profits of the energy companies or the lifting of the energy cap that he proposes, costing constituents £1,800 on average a year?
Rishi Sunak
The energy price cap has already protected millions of people against rising energy bills. On the taxation of companies, it is probably worth bearing in mind that one thing that the last few months have shown is that there is an opportunity to invest more in providing natural gas as a transition fuel as we make our way to net zero in a measured manner. To that end, we should be encouraging investment in exporting our natural resources, not disincentivising it.
Kirsten Oswald
While Ministers travel the globe in private jets, more and more families across the UK go hungry. Last year, the Trussell Trust delivered 2.5 million food packages through its food banks, which is 100 times more than in 2008-09. Now families face further cuts in benefits, increasing taxes and the cost of living crisis. Does the Chancellor not think that addressing that perfect storm of poverty drivers would be a better use of his time than plotting leadership bids as he waits for the downfall of his lame duck Prime Minister?
Rishi Sunak
The hon. Lady talks about poverty, but the track record of this Government and the Governments since 2010 shows very clearly that more than 8 million fewer people are living in poverty as a result of the actions of those Conservative Governments. Income inequality today is lower than it was in 2010.
Ian Lavery
It is not good enough to simply say that work lifts people out of poverty when we know that millions of people up and down this country with one job, two jobs or three jobs are still not even making ends meet. The universal credit cut is having a devastating impact, combined with growing food prices and the rise in rents—not to mention the huge hike in national insurance contributions.
I know it is difficult, Chancellor, for someone with financial privilege to really understand what is facing people in communities like mine, but I must say that when I have got elderly people freezing in their homes and more people than ever before using food banks, we need some help from the Government. Poverty is a political choice.
Rishi Sunak
Anyone who has questions about my values can just look at my track record over the last year or two. I am proud of this Government’s achievements in supporting those who most needed our help at a time of anxiety for our country. I respectfully disagree wholeheartedly with the hon. Gentleman: I do believe that work is a route out of poverty. All the evidence shows that children who grow up in workless households are five times more likely to be in poverty than those who do not, which is why I am proud that there are almost a million fewer workless households today as a result of the actions of this Conservative Government.
Kevin Hollinrake (Thirsk and Malton) (Con)
The most effective sanctions that we could impose on Russia would be to block Russian banks’ access to UK and international markets. Will my right hon. Friend consider that and consider cushioning the inevitable blow to our banks, businesses and households from the financial impacts, including to the cost of living?
Rishi Sunak
My hon. Friend makes an excellent point. With regard to sanctions, absolutely nothing is off the table. We are working extremely closely with our international allies to make sure that we can send a robust signal to deter Russian aggression, and we continue to explore diplomatic solutions at the same time. He should rest assured that nothing is off the table.
Harriett Baldwin (West Worcestershire) (Con)
I visited the citizens advice bureau in Malvern and people there were sharing with me the fact that they still have tens of thousands of pounds in household support grants that they can give away between now and the end of March. Will the Chancellor join me in encouraging families who are struggling with the cost of living to apply for the help available?
Rishi Sunak
My hon. Friend, as always, makes an excellent point. I join her in encouraging all those local authorities and others to get those funds out to people who need them as quickly as possible. That is why we have created the household support fund: half a billion pounds to provide £100 or £150 to millions of our most vulnerable families. It is there to help, and I hope we can get the rest of the money out as quickly as possible.
Stephen Crabb (Preseli Pembrokeshire) (Con)
The Chancellor of the Exchequer is exactly right in all the measures that he describes the Government taking to protect families’ incomes. He has always shown a powerful instinct for protecting those on the very lowest incomes, but may I say respectfully to him that we must do something about energy costs? On Friday, I met a couple in my constituency who showed me their fixed tariff agreement with their energy company, which is coming to an end, and the new one coming on stream, which is more than double. They will really struggle to pay their energy costs this year, so may I ask the Chancellor of the Exchequer to look at the issue? The warm home discount scheme is not perfect, but it is a useful vehicle for doing something to help those on the lowest incomes.
Rishi Sunak
My right hon. Friend speaks with compassion and authority on these topics, and I join him in making sure that we are aware of the issue. I am, of course, aware of people’s anxiety about what is coming; he can rest assured that we continue to look at all the policies we have in place to make sure that we are supporting people in the best way possible through the months ahead.
Matt Hancock (West Suffolk) (Con)
With the risk of inflation becoming entrenched, we need fiscal discipline while the Bank of England undertakes the tricky task of monetary tightening. What does the Chancellor think of proposals that would break down that fiscal discipline and therefore risk increasing inflation and being completely counterproductive?
Rishi Sunak
My right hon. Friend is absolutely right; given his career before he was in this place, he, too, speaks with authority on these matters. He is right to highlight that many of the proposals that people suggest would involve a significant fiscal loosening, which would be inflationary and counterproductive at this time. It is right that fiscal policy is supportive of people, but also mindful of the risks of rising inflation, not least because of the risks for the costs of servicing our debt.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The Chancellor will be aware that voters are being hit by a triple whammy on the cost of living: soaring energy bills, the Chancellor’s own tax rises and falling real wages. Next week, the energy price cap could rise by as much as £600. Labour has set out a fully costed plan to cut these bills, funded by a windfall levy on the oil and gas companies making the most money from the current spike in prices. Where is the Government’s plan for those energy costs? What has distracted them from producing one?
Rishi Sunak
I would probably slightly disagree with the idea that Labour’s plans are fully costed, but it would not be the first time that its numbers do not add up. With regard to the responsible way forward, the right hon. Gentleman has talked about funding the NHS—a good example of something that is funded, because Government Members know that the NHS is the people’s No. 1 priority. It is right that we tackle the backlogs and reform social care, as the Prime Minister has set out, but it is also right that we fund that sustainably and responsibly, which is what this Government are committed to doing.
Mr McFadden
On Sunday, the Prime Minister and the Chancellor nailed themselves to the mast of the national insurance rise coming in this April—like Thelma and Louise, they have held hands and are going to drive off the cliff. The Chancellor says that it is all about public services, but we know that the real reason he is so desperate to stick to the timetable is so that he can implement planned tax cuts before the next election. Why should the cost of living crisis be made much worse for families this year just to fit in with the Tory party’s planning grid for the next election?
Rishi Sunak
With regard to the cost of living, the Government have, as we have already discussed, put a range of measures in place to help people, not least the increase in the national living wage by £1,000 a year, the cut to the universal credit taper rate and the freezing of fuel duty. The Government will not shirk from funding the NHS sustainably and responsibly. It is the people’s No. 1 priority; the backlogs are rising at an unprecedented rate, and I think people would like to see them addressed, which can be done only with a sustainable funding stream. That is what we have created, and this is a progressive way to do it. Although these decisions are difficult, a responsible Government do not shirk from them.
Alison Thewliss (Glasgow Central) (SNP)
Inflation is running at 5.4%, the highest level in nearly 30 years. It is already having a real and painful impact on people and businesses, with worrying reports today that increased bills are pushing businesses to lay off staff. The upcoming national insurance hike is a tax on jobs as well as on individuals. This is a cost of living crisis, yet today is the first time that the Chancellor has been to this House since the start of December, and we still do not hear a plan from him—he is too distracted by plotting for the Prime Minister’s job to help those affected by this crisis. People are struggling, so what additional practical financial support can they expect from this Chancellor, and when?
Rishi Sunak
The hon. Lady talked about inflation; she is right and I am very cognisant of the anxiety that people are feeling about rising inflation. It is also right to put that in context. She said it is the highest tier since the early 1990s, and that is right. We are also seeing this as a global phenomenon—inflation in the US is running at its highest since the 1980s, and the highest since the eurozone was created—so we are not alone in facing those challenges. The Government have already set out a plan, but it is a plan that is working. In contrast to what she said about people losing their jobs, what we have seen is 11 months of falling unemployment, which is now back to the almost record pre-pandemic lows, and record numbers of people in work. That is the best way to tackle the cost of living—get people into work and make sure those jobs are well paid.
Steve Brine (Winchester) (Con)
Kirsten Oswald (East Renfrewshire) (SNP)
The Chancellor of the Exchequer (Rishi Sunak)
Thanks to our vaccine booster roll-out, we now have one of the most open economies in Europe, and thanks to our economic plan, we are set to have one of the highest growth rates in the G7 this year and last. We continue to deliver on our plan for jobs, doubling down with a new target to move half a million more people off welfare and into work by the end of June. Unemployment is falling and is now down to almost record lows. Youth unemployment is already at record lows. All of this shows that our plan for jobs is working.
Kirsten Oswald
People in Ukraine are living in dread at the prospect of Russian invasion. While the UK Government talk tough about sanctions, US think-tanks warn that the UK is such a haven for money laundering that such sanctions would not be meaningful. Will the Chancellor take heed of Lord Agnew’s powerful resignation speech and bring his powerful economic crime Bill before the House as soon as possible?
Rishi Sunak
With regard to sanctions, as I said to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), nothing is off the table. It is right that we work with our international partners to develop the most robust sanctions package that we can. The hon. Lady can rest assured that I and my team are doing that. With regard to the economic crime Bill, which contains important measures to strengthen our ability to tackle money laundering, obviously it would not be right for me to pre-empt the Queen’s Speech, but the hon. Lady can be assured that I, the Home Secretary and others fully support the Bill.
Kate Griffiths (Burton) (Con)
Rishi Sunak
My hon. Friend makes an excellent point about giving local councils that certainty to plan budgets years at a time. That is why I am pleased that last year’s spending review was a multi-year spending review—the first we have had in some time—so there are now three-year budgets in place to enable that planning. In terms of the overall quantum, it is £2.7 billion, which represents a 10% increase on the amount we spent on local maintenance in the last Parliament. Hopefully that is reassuring to her and her local council.
Rachel Reeves (Leeds West) (Lab)
Mr Speaker:
“Schoolboy errors… a combination of arrogance, indolence and ignorance… nothing less than woeful.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20-21.]
Those are not my words, but those of former Treasury Minister, Lord Agnew. Some £4.3 billion of taxpayers’ money has been written off as a result of the Chancellor’s fraud failures; a thousand loans were made to companies that were not even trading at the start of the pandemic; and £50,000 was awarded to a person with 48 criminal convictions, and £25,000 to a drugs gang. Is the Chancellor really saying that such examples strike the right balance between getting money to the businesses that need it and looking after the public finances? Will he inform the House of the total amount lost to fraud underwritten by the Treasury and the amount recovered to date?
Rishi Sunak
First, I take this opportunity to pay tribute to Lord Agnew for all his work. I am very grateful to him for everything that he did, and of course we will listen to what he has to say. With regard to the hon. Lady’s questions, she talked about fraud estimates. It is important to be clear, as my right hon. Friend the Chief Secretary to the Treasury said, that nothing has been written off in that regard—we are going after each and every person we suspect of defrauding the taxpayer. I am pleased to tell her that the original estimate of £4.9 billion of fraud—it was an estimate, independently provided—has already been revised down by a third since it was first published, thanks to the actions that we are taking. She asked how much has been paid out already, and I can confirm that the sum total to date is £13 million.
Rachel Reeves
It is in black and white on the Government’s own website still today, and in the Government accounts—£4.3 billion written off. Despite the Chancellor’s words, “written off” means giving up on that money. This is just the tip of the iceberg. [Interruption.] It is on the Government’s website and in the Government’s accounts. Can he tell us how many of the covid fraud cases have gone to court? Given his failure, will he ask the National Crime Agency to conduct a full investigation into all cases of covid fraud and ensure that those responsible are held to account? It is not the Chancellor’s money to write off; it is the public’s money, and the public want their money back.
Rishi Sunak
It is great that the Labour party has realised that it is the taxpayer’s money and not the Government’s money. I am glad that it has joined us in recognising that. I can say categorically that no one has written this off; we are going after it, as the Chief Secretary said. We invested £100 million last March in creating a taxpayer protection taskforce staffed with over 1,200 people to recover hopefully up to £1 billion. That is just one of the many things we are doing, as well as taking more powers to go after rogue directors, enabling Companies House to do exactly that. The hon. Lady asked about the National Crime Agency. I am pleased to tell her that it has already helped in investigations that have led to 13 arrests with regard to bounce back fraud, so that work is already under way.
Nigel Mills (Amber Valley) (Con)
Afzal Khan (Manchester, Gorton) (Lab)
Rishi Sunak
The hon. Gentleman is right to point out the measures that we can take to strengthen the powers against money laundering and illicit crime. Those measures require legislation, as he knows. Although I cannot pre-empt the Queen’s Speech, he should know that I, the Home Secretary and others strongly support the inclusion of the economic crime Bill, which contains those measures.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Tony Lloyd (Rochdale) (Lab)
Rishi Sunak
I am happy to look at the point that the hon. Gentleman raises. I do not think there is a bias against that. The spending review contained billions of pounds for new bus transformation deals across the country and thousands more zero-emission buses. I know that the Prime Minister is passionate about hydrogen buses, so we will look into it and get back to the hon. Gentleman.
Bob Blackman (Harrow East) (Con)
I have no argument against compensation being paid to the victims of the London Capital & Finance scandal, but I am concerned that they were paid 80% of the losses, yet the 800,000 victims of Equitable Life received only 22%. Does the Minister agree that it is a principle of fairness and of ensuring that people who save for their retirement are properly compensated?
Valerie Vaz (Walsall South) (Lab)
Going after money means that the Chancellor is recovering a debt, so there is a hole in the finances. Will the Chancellor tell the House this: why did Lord Agnew resign?
Rishi Sunak
Lord Agnew, obviously, has spoken for himself, and I do nothing but thank him for his service. We look forward to continue working on all the areas he has mentioned, in most of which we are already undertaking work. We are relentless in our aim to tackle those who have defrauded the taxpayer, and we will not stop until we have got as much back as we can.
Sarah Atherton (Wrexham) (Con)
The Wrexham Gateway levelling-up fund bid attracts around £35 million of private finance. However, that investment in Wrexham will depend on a successful levelling-up fund bid the next time round. Will the Minister explain what considerations are made for bids with substantial private investment?
Economy and Fiscal Forecast: 23 March 2022
Rishi Sunak Excerpts(2 years, 10 months ago)
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The Chancellor of the Exchequer (Rishi Sunak)
Today I can inform the House that I have asked the Office for Budget Responsibility to produce an economic and fiscal forecast for 23 March 2022, as per the charter for budget responsibility. The Budget Responsibility and National Audit Act 2011 states that the OBR must produce a forecast on at least two occasions each financial year.
Today I have also laid before Parliament an updated charter for budget responsibility. The updated charter sets out the new fiscal framework announced at autumn Budget and spending review 2021.
The new fiscal rules will allow the Government to continue funding first class public services and drive economic growth through record investment, while ensuring that debt falls over the medium term.
In accordance with the Budget Responsibility and National Audit Act 2011, the charter was first published in draft on 27 October as it includes modified guidance to the Office for Budget Responsibility. No further changes have been made to the updated charter since it was published in draft.
A debate and votes in the House of Commons on the updated charter and the level of the welfare cap will be scheduled in due course.
[HCWS513]
Oral Answers to Questions
Rishi Sunak Excerpts(2 years, 11 months ago)
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Richard Burgon (Leeds East) (Lab)
The Chancellor of the Exchequer (Rishi Sunak)
I am pleased to say that the distribution analysis published in the Budget showed that the actions of this Government since 2019, over this Parliament, will benefit those on the lowest incomes the most. Income inequality is also lower than it was in 2010, and we on the Conservative Benches know that the best way to reduce inequality is to get people into fantastic, well-paid jobs, which is exactly what we are doing.
Rachel Hopkins
Income inequality in the UK has barely changed over the past 10 years, so how can it possibly be fair to ask working people to pay even more tax through the national insurance increase next year, while the Government are also giving away a £4 billion tax cut for banks’ profits through cutting the banks’ surcharge from 2023? Will the Chancellor set out the combined impact of those two decisions on inequality?
Rishi Sunak
Income inequality on the last published statistics is lower than it was in 2010. There are also fewer people living in absolute poverty. With regard to national insurance, we took a decision to fund the NHS in a progressive manner to clear the backlog and usher in reforms to the social care system that will benefit everyone in this country. As for banks, I am not sure whether the hon. Lady has seen that the rate of corporation tax that banks will pay is going up from 27% to 28% while the rest of the UK corporate base will pay 25%. It is right that the banks pay a fair contribution to our coffers, but we should also recognise that financial services is a fantastic UK asset that employs 1 million people, two thirds of whom are outside of London and the south-east.
Kate Osamor
Although discussions about regional inequality between the north and south in the UK are important, this must not be reduced to a simple and misleading binary. My area of Edmonton, north London, has an unemployment rate of 9.7%, almost double the national average. Will the Chancellor assure the House that he will provide the investment that London needs, starting by providing the funding that Transport for London requires to maintain its services, particularly the bus services, on which lower-income Londoners are disproportionately reliant and which face 20% reductions without support?
Rishi Sunak
If Londoners are worrying about the state of their transport system and who is responsible for it, I think we all know, and those problems were there before coronavirus. What we are responsible for is making sure that people have access to high-quality work, and I reassure the hon. Lady that we are investing in our plan for jobs right across the country. I have visited jobcentres in London. We are helping to get people into work and helping them to get the skills they need. I hope that I can work with her local area to bring that unemployment rate down.
Dr Huq
Covid has accelerated the decline of bank branches, so Acton now has none and no cashpoints, because our post office has gone. The resultant cashless society has hit constituents hard, from the chap who came to see me who has come a cropper because of Trump’s sanctions regime—he has had all his accounts frozen—to my son and his pals who cannot get a hot snack after school without plastic, to businesses that want to bank their takings. Will the Chancellor urgently look into this gross economic inequality that is hitting so many of the constituents of all of us?
Rishi Sunak
The hon. Lady makes a fair point; the Economic Secretary to the Treasury is doing work on exactly that issue. The Government have committed to bringing forward legislation, if required, on access to cash, but I would be very happy to look into the specific circumstances of her constituent. If she writes to me, we will do that.
Richard Burgon
As ever, the Chancellor’s warm words do not match the reality faced by so many people across the country. Take disabled people, for example—[Interruption.] Rather than groaning, will hon. Members please listen? Disabled people have been disproportionately attacked by Tory Governments over the past decade through austerity, cuts to benefits and, most recently, a cruel lack of support during covid. Nearly 2 million disabled people were not given the £20 uplift in benefits, including thousands of households in my seat of Leeds East. Every December, we mark the United Nations International Day of People with Disabilities, so if the Government are genuinely interested in tackling economic inequality, will they—[Interruption.] It is not funny, grow up. Will the Government backdate the payments to disabled people and others on so-called legacy benefits who have been left out and let down over the past 18 months? Disabled people deserve to be treated better.
Rishi Sunak
I am enormously proud of the Government’s commitment to those who are disabled. We looked after them during the crisis and we continue to support them. We recently announced £500 million for the disabled facilities grant, more investment in the Department for Work and Pensions to help close the disability employment gap and—this is something I am personally proud of—investment in Changing Places, which means that those with disabled children or adults will have access to the high-quality facilities that they need to enjoy days out with their family. I assure the hon. Gentleman that I and the Government are committed to helping all those who need our help, and we will continue to deliver on that promise.
Esther McVey (Tatton) (Con)
There is currently huge inequality between the taxation of businesses online and those of bricks and mortar. I thank the Chancellor for the support that he has given to the high street during the pandemic through business rate relief. However, as I know that he believes in low taxes, I ask him: when will business rates be modernised so that we can get an even playing field for online and high street businesses, which is very important to the Blue Collar Conservative group?
Rishi Sunak
My right hon. Friend has rightly campaigned on this issue and she raises an excellent point. The good news on business rates is that, next year, thanks to the tax cut that we announced in the Budget, 90% of retail, hospitality and leisure businesses will see at least a 50% cut in their business rates bill. That is worth £1.7 billion; it is the biggest business rates tax cut since the system was created, other than during coronavirus. On her point about offline and online, she will know that we have helped to bring in an international tax treaty to tax large multinational digital companies, and we continue to consult on the pros and cons of an online sales tax.
Gareth Davies (Grantham and Stamford) (Con)
Does my right hon. Friend agree that one of the best ways in which we can reduce inequality is by ensuring that young people are equipped with the skills that they need to succeed, wherever they live? That is why the additional £126 million of funding for work placements and training is so important for young people in Grantham and Stamford.
Rishi Sunak
My hon. Friend is absolutely right; I know that he is a staunch supporter of skills and getting young people into work in his constituency. He mentions traineeships, which are fantastic initiatives with a 75% success rate in helping young people and a great example of our plan for jobs in action, spreading opportunity right across the country.
Stephen Crabb (Preseli Pembrokeshire) (Con)
Boosting the minimum wage, reducing the universal credit taper rate and increasing the work allowance will make a tremendous difference to the real-world choices of people living and struggling on low incomes. Does my right hon. Friend agree that, along with those Budget measures, the fact that we now have a record number of job vacancies means that we have a tremendous opportunity as a nation to really bear down on long-term unemployment and reduce economic inactivity, especially among the most disadvantaged groups?
Rishi Sunak
My right hon. Friend obviously speaks with authority on the topic; I am grateful for his support and engagement on these matters over the past year and a half. He is absolutely right: thanks to the actions of this Government’s plan for jobs, unemployment has now been falling for nine months in a row, record numbers of people are in work and wages are rising. As my right hon. Friend says, that is the best way to help people. That is what this Government are doing.
Virginia Crosbie (Ynys Môn) (Con)
My Ynys Môn island constituency has one of the lowest gross value added levels in the UK and is in desperate need of investment to reverse that inequality. Can the Chancellor confirm that the match funding announced in the nuclear sector deal is in place for the proposed thermal hydraulic testing facility on Anglesey?
Rishi Sunak
I hope that my hon. Friend will forgive me for not treading on the toes of the Business Secretary, but what she will know is that we allocated £120 million for future nuclear development in the Budget and spending review. I know that the subject is of keen interest to her and that she has long campaigned on it in her area. I am happy to support her in her conversations with the Business Secretary as he decides how to allocate that funding.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Thank you, Mr Speaker.
It takes some doing to come up with an inheritance tax aimed at people in the lowest-value properties, but that is exactly what the Chancellor and the Conservatives have done in the way they have designed the social care cap. Even the original author of the policy, Sir Andrew Dilnot, has said that the changes that the Government have made mean that
“the less well off will not gain any benefit from the cap.”
When it comes to tax, we should look at what the Government do, not what they say or the newspapers they brief. Why is the Chancellor imposing a tax rise on almost everyone to pay for a policy that will hurt those with the lowest-value properties in the country?
Rishi Sunak
Our social care reforms will benefit millions of people up and down the country, because they will remove the anxiety that the entirety of their assets will be swamped by ever-escalating social care costs, but that is not all they do. It is important to recognise that they also invest in the social care workforce—half a billion pounds over the next few years to upskill, train and provide development for the social care workforce, which will benefit all of us. Critically, they will also help us to tackle the social care and elective backlog that has built up. I am sure that everyone in this House will want to see that. The waiting lists were scheduled to get to unprecedented levels; we wanted to tackle that, and that is what this funding will do.
Mr McFadden
Families are heading into the winter facing a cost of living crisis with rising prices and the Chancellor’s tax rises on the way. Last week, the Bank of England produced even lower growth forecasts than the Office for Budget Responsibility did at the time of the Budget, and now the Bank is forecasting that inflation will rise above 5% next year. Why does the Chancellor think that the Conservatives have produced such low levels of economic growth over the past 10 years? Has this lost decade of low growth not led directly to the cost-of-living crisis, the high taxes and the inequality that people are facing today?
Rishi Sunak
Forgive me, Mr Speaker; I should have welcomed the right hon. Gentleman to his new position. I look forward to working with him in his new role.
With regard to the winter and energy prices, of course many people are anxious about inflation. It is something that we are grappling with. What I will say to people is that we have put in place multiple interventions to help with those costs, notably the household support fund—half a billion pounds to help millions of our most vulnerable. That comes on top of our existing support, whether it is for pensioners or for those on lower incomes, to help with energy bills that were already in place. This Government remain committed to helping people with the cost of living. I assure the right hon. Gentleman that we will continue to look at the situation carefully.
Kevin Hollinrake (Thirsk and Malton) (Con)
Regional mutual banks are a feature of all the other G7 economies, which have much lower levels of regional inequality. They are key to the provision of small and medium-sized enterprise finance. We have a number around the UK that are ready to go, led by experienced professionals; all they need is some pump-prime funding. Will my right hon. Friend agree to meet me to discuss this very exciting policy area?
Rishi Sunak
I am always delighted to meet my hon. Friend and neighbour, and if we could do that in north Yorkshire, it would be fantastic. He is right—as he always is—to champion the need for small and medium-sized enterprises to have access to the finance that they need, and if he has come up with yet another idea to ensure that that happens, I should be delighted to learn more.
Mr Speaker
I call the Scottish National party spokesperson, Alison Thewliss.
Alison Thewliss (Glasgow Central) (SNP)
The Chancellor likes to talk a good game on the universal credit taper rate and his pretendy living wage, but that only benefits those who are lucky enough to be in work and ignores many people who are disabled, carers or out of work, and those who are still on legacy benefits. Why has he abandoned and forgotten that group when they face a cost-of-living crisis this winter which will often affect them more than the rest of the population?
Rishi Sunak
It is simply not right to say that we have forgotten anyone. We remain committed to supporting all the most vulnerable in our society. I have mentioned previously the various different mechanisms that we have to help people with energy bills, and indeed the recent increase in the local housing allowance.
The hon. Lady says that we talk a good game. Those of us on the Government Benches believe fundamentally in the power and ability of work to transform people’s lives. We want to make sure that people have great jobs, and we want to make sure that those jobs are well paid. The cut in the universal credit taper rate will ensure that there is a £2.2 billion tax cut for those on the lowest incomes, and we are insanely proud of that.
Saqib Bhatti (Meriden) (Con)
The Chancellor of the Exchequer (Rishi Sunak)
A month ago, I set out our plan for a stronger economy, protecting and supporting jobs, driving up economic growth and cutting the universal credit taper rate, giving the lower-paid in our society a tax cut worth £2.2 billion.
Christine Jardine
In the 2019 Queen’s Speech, the rationale for reform was set out as being to
“ensure our tax system is supporting Scottish whisky and gin producers and protecting 42,000 jobs”—
including many in my constituency. How would the Chancellor square that with the actual proposals, which will tax domestic producers more than those of imported cava, prosecco and champagne; do not take into account how people consume spirits with mixers, the sugar and calorific content or his own Government’s health policies; and actually increase the competitive disadvantage of an important domestic sector compared with the international one?
Rishi Sunak
Our reforms of the alcohol duty system usher in a system that is simpler, fairer and better for public health. I am not entirely sure that the hon. Lady has got the details right on this. In fact, for Scotch whisky, this is an improvement because we have levelled the playing field for higher-strength drinks, which the Scotch Whisky Association had been calling for. With regard to the differential between domestic and foreign producers, because English sparkling wine is produced to a lower alcohol content naturally than foreign sparkling wine, it will actually, for the first time, enjoy a tax advantage under the new system. Perhaps most relevant immediately, we also froze all alcohol duties—a half-a-billion-pound tax cut for British people this year.
Rachel Reeves (Leeds West) (Lab)
I want to take this opportunity to put on record my thanks to the Mother of the House, my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), who, in the nearly 40 years that she has been in this place, has done more for the rights and representation of women than anyone else.
At the weekend it was briefed that the Government will set up a star chamber to crack down on waste—which, frankly, has been the hallmark of this Government. Indeed, the Government’s own accounts show that the incompetent way in which the business support schemes were structured meant that the Chancellor has allowed fraudsters to walk away with £6.5 billion of taxpayers’ money. That would be more than enough to cut the basic rate of income tax by a penny in the pound, worth £370 a year to basic rate taxpayers. So can the Chancellor explain why quick electronic checks such as cross-referencing with HMRC tax data were not conducted before money was handed out? Given this huge waste of taxpayers’ money, can the Chancellor confirm that he will be the first witness in front of his own star chamber?
Rishi Sunak
The hon. Lady would usually be on top of the numbers. She will understand that there is a difference between a one-off saving of £6 billon and an annual saving on a tax cut of £6 billion. Those two things are not like-for-like comparable. On the numbers she refers to, I am happy to tell her that in the most recent analysis from the Department for Business, Energy and Industrial Strategy’s independent adviser, the estimate of fraud was reduced by a third because of the actions that the Government had taken, which is welcome news. But of course we remain committed to tackling fraud. That is why in the spring Budget we invested an extra £100 million in HMRC, with 1,200 new people to tackle fraud, and they are expected to recover over £2 billion over the next 12 months. With regard to bounce back loans, 55,000 loans worth up to £2 billion were recovered and stopped. We are absolutely committed to tackling fraud wherever we see it.
Rachel Reeves
The Chancellor might be relaxed about handing out £6.5 billion, or perhaps it is £4 billion, to companies that did not deserve it, but we on this side of the House are absolutely not. It is reported that a £4.7 million loan was given to a business founded just two days before it was handed the cash. It should not be beyond the wit of Government to get money to where it needs to go—to great British business—without allowing fraudsters to steal taxpayer funds. Leaving the till open and unattended for thieves to clear out would be a sackable offence for a shop worker, yet apparently it is acceptable for the Chancellor of the Exchequer. Staggeringly, only one in 40 cases where fraud has been reported is actually being pursued. Let me ask the Chancellor this: when was he first alerted to this fraud, and how much does he think taxpayers will get back from the billions of pounds lost to fraudsters?
Rishi Sunak
As I have said, the new taxpayer protection taskforce at HMRC is expected to recover between £1 billion and £2 billion in the next 12 months, and has already made a good start on that. It is fair to reflect on where we were in spring 2020. I remember being at this Dispatch Box every other day. I remember Members from all parts of the House rightly holding the Government to account for getting money to businesses in a matter of hours and days, not weeks. In fact, I heard from the hon. Member for Oxford East (Anneliese Dodds), the shadow Chancellor at the time:
“We need a full guarantee for…some loans…We are running out of time, so how will the Chancellor ensure that the bounce-back loans get to the businesses that need them?”—[Official Report, 27 April 2020; Vol. 675, c. 110.]
The then shadow Business Secretary, the right hon. Member for Doncaster North (Edward Miliband), said that the Government should:
“urgently look at 100% underwriting of loans and simplified lending criteria.”
Indeed, the hon. Lady herself wrote to me and said that
“the process for SMEs to apply for such loans appears cumbersome.”
I make no apology for making sure—
Mr Speaker
Order. He might want to apologise now—we cannot take so long on the first two questions from either Front Bench.
Alison Thewliss (Glasgow Central) (SNP)
In this season of generosity and good will, will the Chancellor deliver a gift to the hard-pressed hospitality and tourism sector and amend the Finance (No. 2) Bill to extend the lower rate of VAT beyond March next year?
Rishi Sunak
I am glad that our VAT cuts extend all the way to spring. It is a £7 billion tax cut, and next year, as I have said, there is a 50% discount on business rates.
Dr Jamie Wallis (Bridgend) (Con)
Rishi Sunak
My hon. Friend makes an excellent point about the Welsh Government. This Government are supporting hospitality businesses with a lower rate of VAT till spring worth £7 billion and a business tax cut next year that has Barnett consequentials for the Welsh Government, so hopefully they can do the same.
Andy McDonald (Middlesbrough) (Lab)
Rishi Sunak
At the beginning of the crisis, we improved how statutory sick pay works, making it payable from day one. We also changed some things in universal credit and indeed expanded its definition. We also put in place self-isolation payments to help.
Karl Turner (Kingston upon Hull East) (Lab)
Sir David Evennett (Bexleyheath and Crayford) (Con)
May I advise my right hon. and learned Friend that the Government’s step in the Budget last month to cut business rates by 50% for retail, hospitality and leisure companies, which means that 90% of all eligible businesses will see a cut of at least 50%, has been warmly welcomed across my Borough of Bexley? It will help many business to not only survive, but flourish.
Andrew Jones (Harrogate and Knaresborough) (Con)
Harrogate has been the trial and development location for universal credit, and I have seen how it helps people make work pay. Does my right hon. Friend the Chancellor agree that rolling it out further, and migrating people currently on legacy benefits, will help even more people make work pay?
Rishi Sunak
My hon. Friend is absolutely right. This Government are committed to making sure that work always pays, and that is why universal credit is such an improvement on the previous system—an improvement that the Opposition did not support at all.
Stephen Morgan (Portsmouth South) (Lab)
The Minister will be aware that Viktor Fedotov, the secret co-owner of Aquind, has been implicated in a £72 million fraud scheme linked to Putin’s Russia. Can the Minister say what due diligence has been done on the project company and its owners, and if he and ministerial colleagues will protect our national infrastructure from these alleged fraudsters by stopping the disastrous project once and for all?
Jacob Young (Redcar) (Con)
A key way to support economic growth is to help level up our forgotten high streets, such as Eston Square, where the old precinct building is blocking key investment and preventing new businesses from moving in. When the Chancellor is next up in Teesside, will he come with me to Eston, and meet leaders at Redcar and Cleveland Borough Council to see what can be done to level up Eston Square?
Rishi Sunak
Yes, I would be very happy to. I am fresh from my visit to Yarm High Street last week to see levelling up in action, and I am back up in the north-east this week.
Gareth Thomas (Harrow West) (Lab/Co-op)
The Chancellor of the Exchequer will be aware of the considerable public unease about the proposed demutualisation of Liverpool Victoria. Will he therefore consider sympathetically the cross-party letter he has received from over 100 parliamentarians calling for a review of the law governing mutuals?
Oral Answers to Questions
Rishi Sunak Excerpts(3 years ago)
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James Sunderland (Bracknell) (Con)
The Chancellor of the Exchequer (Rishi Sunak)
Last week’s Budget set out an ambitious package to support business, enterprise and innovation: the super-deduction, new relief to incentivise investment, a reduction in business rates and investment in infrastructure, innovation and skills to drive future growth. This was a Budget that backed businesses across the United Kingdom.
Mr Sharma
Business rates are broken. Business owners on Boston Road and The Broadway in Southall in my constituency do not want hypocritical answers. They want the system fixed to support smaller businesses and help them to thrive. What will the Chancellor do to help them?
Rishi Sunak
Last week’s Budget set out a £1.7 billion tax cut for many small and medium-sized businesses across the UK. It will mean that retail, hospitality and leisure businesses will see a 50% discount in their business rates next year, up to the value of £110,000 each. That will, of course, benefit many of the shops in Southall that the hon. Gentleman mentioned, and hopefully I can do my bit by visiting to buy my Diwali mithai later this week.
James Sunderland
The Chancellor will know that Bracknell has successfully reinvigorated its town centre and continues to be a great place to do business. Noting that Bracknell and neighbouring Wokingham have one of the lowest centrally funded budgets in the country from central Government, will he please reassure me that east Berkshire will not be passed by when it comes to levelling-up funding?
Rishi Sunak
I can assure my hon. Friend that, whether through the levelling up fund, the community ownership fund or the community renewal fund, this Government have ambitions to level up across the entire United Kingdom. With regard to the local government funding he asks about, last week’s spending review set out £1.6 billion over the year of additional cash grant, the precise allocation of which will be set out in due course by my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities in the local government finance settlement.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I wish the Chancellor and my hon. Friend the Member for Ealing, Southall (Mr Sharma) a very happy Diwali. As well as all the tax rises on income and business that the Chancellor has announced in the past six months, buried in the Budget Red Book is a plan for a stealth tax on the self-employed of £1.7 billion over the next few years. After the past 18 months, in which many self-employed people have had no help at all, and when they are already being hit with the other tax rises he has announced, why are the self-employed now being hit with this extra tax rise, which he did not even mention in his Budget speech last week?
Rishi Sunak
There were no extra taxes for the self-employed in last week’s Budget; the right hon. Gentleman may be referring to a timing difference that was reflected in the Budget scorecard of previously announced policies. With regard to the self-employed, he should take a moment to reflect on the fact that this Government provided almost £30 billion of support to millions of self-employed people throughout the crisis, and I am very glad that we did so.
Mr Mark Harper (Forest of Dean) (Con)
May I first thank the Chancellor for the steps in the Budget to help retail, hospitality and leisure businesses? They have gone down very well in my constituency, where those businesses are important, were hit hard during in the pandemic and were grateful for the support they got. People have commented to me that the most useful thing he can do is to focus on getting the public finances in order, as he spoke about in the latter part of his speech, so that we get taxes on a downward path as we go through this Parliament. That is the best fiscal way to help businesses to prosper in the future.
Rishi Sunak
As always, my right hon. Friend makes an excellent point, and I thank him for the eloquent speech he made on this topic last week. I wholeheartedly agree with him. My intention and goal over the rest of this Parliament is to reduce taxes, and we both know that the best way to create growth and prosperity in this country is to unleash the entrepreneurial innovation of our private businesses.
Alison Thewliss (Glasgow Central) (SNP)
A happy Diwali to the Chancellor and all who are celebrating. Hospitality and tourism businesses face a tough winter, with rising fuel, staffing and supply costs. While the Scottish Government, to their credit, have brought in 100% rates relief, the Chancellor’s proposals of a few pence off a pint are small comfort in comparison. A greater help would be maintaining the 12.5% value added tax rate right through next year, not putting it back up to 20% in the spring. Will he bring forward proposals to do that and to support our tourism and hospitality businesses in the Finance Bill?
Rishi Sunak
The reduced rate of VAT was put in place to support the hospitality industry during coronavirus. It extends all the way to next spring; it does not step up until next March, as the hon. Lady pointed out. As she also pointed out, the Government are putting in place business rates support to help businesses in that industry—as I said previously, up to £110,000 for each business next year through a 50% discount on their business rates, with Barnett consequentials flowing to Scotland as a result.
Jonathan Gullis (Stoke-on-Trent North) (Con)
Brewers have gone through a really challenging time throughout the pandemic, so the Chancellor’s announcement of a reduction in the draft beer duty rate was extremely welcome. Keith and Dave Bott, owners of Titanic Brewery, want to pass on their thanks to the Chancellor directly and hope that he can come and enjoy the Bulls Head in Burslem to celebrate this fantastic achievement.
Rishi Sunak
I thank my hon. Friend for the kind invitation, which he also sent me by phone. I look forward to accepting it soon and to celebrating Stoke’s success in not one, not two but three levelling-up fund bids.
Nick Smith (Blaenau Gwent) (Lab)
Mr Gagan Mohindra (South West Hertfordshire) (Con)
The Chancellor of the Exchequer (Rishi Sunak)
The fiscal rules announced at Budget will ensure that the public finances remain on a sustainable path and support a strong economic recovery. The Government will borrow only to invest in future growth, so that future generations are not unfairly burdened, and I am pleased to say that the Office for Budget Responsibility’s analysis shows that the Government’s fiscal plan is working.
Mr Mohindra
I welcome the new fiscal rules set out by my right hon. Friend in his Budget last week, which will mean that the Government borrow only to invest and that they get the debt falling again by 2024. Does he agree that, unlike the Labour party, which has no plan to deliver responsible public finances, these rules show how it is only the Conservatives who can be trusted to manage our public finances responsibly, avoiding higher interest rates and even higher taxes in the future?
Rishi Sunak
My hon. Friend is absolutely right. The best foundation for our success as a country is a strong economy and responsible public finances. In contrast to the Labour party, which comes out with unfunded, reckless promises that would lead to our debt rising uncontrollably, it is this Government, and only this Government, who can be trusted to manage the nation’s economy responsibly.
Sammy Wilson (East Antrim) (DUP)
Given the commitments that the Prime Minister is making at the climate circus in Glasgow this week, how can the Chancellor possibly say that the public finances will be managed effectively when the huge costs of net zero are not even published by the Treasury, let alone known by the public? We are already seeing taxes increasing to pay for the huge infrastructure changes that reaching net zero is going to entail.
Rishi Sunak
I very much appreciate the right hon. Gentleman’s concern about the cost of transitioning to net zero. The Government are also mindful of those costs, and the net zero strategy, which my right hon. Friend the Chief Secretary to the Treasury mentioned earlier, sets out a comprehensive approach to transitioning, backed up by £30 billion of investment. Indeed, as a result of the spending review and the Budget, the Northern Ireland Executive will receive on average about £1.5 billion a year in Barnett consequentials to help to fund priorities as required.
Laura Farris (Newbury) (Con)
Duncan Baker (North Norfolk) (Con)
The Chancellor of the Exchequer (Rishi Sunak)
Last week’s Budget delivered a stronger economy for the British people, with stronger public finances; support for business; stronger public services; investment in infrastructure, innovation and skills to drive future growth; and a significant tax cut for the lowest-paid, because this will always be a Government who support and reward work.
Duncan Baker
My constituent Peter Phillips fell victim to the loan charge in 2019 and settled before 30 September 2020. HMRC advised him, like many others, that that was the right thing to do. In effect, those who settled before the Morse review did not get the benefit of the changes that were implemented: my constituent paid more than someone who disclosed nothing to HMRC. Does my right hon. Friend think that was in the spirit of the Morse review? Has HMRC got it wrong?
Rishi Sunak
It is obviously difficult for me to comment on the case of a particular individual. The previous Chancellor, my right hon. Friend the Member for Bromsgrove (Sajid Javid), asked Lord Morse to conduct an independent review and the Government accepted and implemented the vast majority of its recommendations. People who settled early had the benefit of certainty from their settlement, but my hon. Friend should write to the Financial Secretary to the Treasury and we will ensure that we look at that case, as he requests.
Rachel Reeves (Leeds West) (Lab)
According to the Office for Budget Responsibility, the Government’s supply chain chaos, woefully inadequate post-Brexit planning and a lack of HGV drivers have contributed to higher inflation. The cost of the weekly shop is already going up and up, as the Chancellor will have heard from shoppers in Bury last week. Does he have any idea of how much the average weekly supermarket shop is expected to increase in the next year for a typical family?
Rishi Sunak
We are cognisant of and aware that there is price inflation; indeed, last week’s Budget addressed that and explained to the British people some of the global factors that are behind the rise in prices and are not unique to this country. As I said then, where this Government can act, we will. Whether it is the interventions for HGV drivers that my hon. Friend the Exchequer Secretary to the Treasury set out, the £0.5 billion household support fund or, indeed, the freezing of fuel duty, this Government are doing what they can to help with the cost of living.
Rachel Reeves
Let me help the Chancellor with the answer to that question. The typical family shop is likely to go up by £180 more next year. It is not just food prices that are rising: gas and electricity bills are already up by £139 and they are only going to go up more. The Chancellor had the opportunity in the Budget to help people with their gas and electricity bills by reducing VAT to 0% through the winter months—something that Labour has called for and that the Prime Minister backed when he was campaigning to leave the European Union. Who should the public blame for VAT on heating bills not being cut: the Prime Minister, for not keeping his word, or the Chancellor, for choosing to cut taxes for bankers instead?
Rishi Sunak
With regard to a VAT cut for fuel, perhaps I should point out to the hon. Lady some of the remarks from independent commentators about what that would do. The Institute for Fiscal Studies said that the benefit would accrue “to higher-income households.” The Resolution Foundation said a VAT cut
“would not be targeted and would be quite expensive”.
Tax Research UK said:
“This cut will not help the poorest much…this plan is a subsidy to the best-off, not the least well off.”
Instead, we have provided £0.5 billion, targeted at those who need our help. The hon. Lady mentioned £108; the household support fund will be able to provide £150 to between 2 million and 3 million of the most vulnerable families in our country. Indeed, the national living wage is going up next year, which will ensure a £1,000 increase for someone who works full time on the national living wage, and because of the cut to the universal credit taper a single mother with two kids who works full time and rents will be £1,200 better off.
Mark Menzies (Fylde) (Con)
Rishi Sunak
First, may I put on record my thanks to my hon. Friend, who raised this issue with me some months ago in the run-up to the spending review? I hope that he and his communities are pleased with the funding that was allocated, thanks to his and other interventions. I am of course prepared to work with him and the Secretary of State for Business, Energy and Industrial Strategy to consider all relevant proposals and assess the right options for the taxpayer in this country.
Kim Johnson (Liverpool, Riverside) (Lab)
Rishi Sunak
We did have a measure in last week’s Budget to support the hospitality sector with its recovery, and that is the £1.7 billion cut to business rates next year. That represents the largest single-year cut to business rates in more than 30 years outside of the coronavirus. It provides a 50% discount to hospitality businesses, which I know are important to our local communities. I am sad that the hon. Member did not raise the not one but two levelling-up fund bids that Liverpool enjoyed last week, which I know will also help to regenerate parts of the city and provide improved transport connections to benefit local businesses.
Robert Largan (High Peak) (Con)
Rishi Sunak
I am happy to provide my hon. Friend with that reassurance and I hope that his council engages constructively with him, as so many others have and have seen the benefits of that in last week’s announcements. We will open round 2 in due course and it will most likely launch no later than the spring. I can tell him also that we have no plans to change the current way that we assess the priority categorisations, so High Peak should remain as it was.
Sam Tarry (Ilford South) (Lab)
Does the Chancellor agree with the Conservative party donor, Mohamed Amersi, who once claimed that the Tories were operating an access capitalism scheme for their major donors, and described corruption as a “heinous crime”, but who was later seen to have been part of a £162 million bribe to the daughter of Islam Karimov, the awful former president of Uzbekistan? If so, can he look at this and bring forward the response to the Pandora papers, particularly the Registration of Overseas Entities Bill?
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Rishi Sunak
I know that my hon. Friend has paid close attention to this issue, which obviously has a particular impact on his constituency. He will know that the current Dartford crossing is one of the most congested pinch points in the entire strategic road network, which is why the Thames crossing development is part of the Department for Transport’s plans. We also recognise that it needs to be brought about in a way that maximises the benefits and mitigates the cost to local communities and businesses. The commitment does include an obligation to create tens of thousands of new jobs. I understand that National Highways has recently launched a consultation, in which I know my hon. Friend and his communities will be engaged.
Richard Thomson (Gordon) (SNP)
In reforming domestic air passenger duty, the Chancellor could have done something really clever; he could have incentivised the use of low-carbon forms of transport domestically, and in areas where those do not exist, mitigated the impact with a best alternative. Instead, he has done something that is making travel relatively more expensive for those low-carbon alternatives. How on earth, in the week of COP26, is this contributing to the Government’s net zero efforts?
Rishi Sunak
As has been pointed out about three times today, alongside the cut in domestic air passenger duty, we introduced a new ultra-long-haul band with a higher rate. The net effect on carbon emissions of those two things is at least a wash, and one independent forecaster said that it would actually reduce carbon emissions. That comes alongside significant investment of £180 million to incentivise sustainable aviation fuel, and billions more for electric transportation for consumers.
Andrew Selous (South West Bedfordshire) (Con)
Chris Elmore (Ogmore) (Lab)
In an earlier answer, the Chancellor confirmed that the levelling-up fund round 2 bids would be some time in the spring. Many Members across the House want to engage in the process, as does Bridgend County Borough Council, which covers the majority of my Ogmore seat. However, it is difficult to plan if the Treasury will not confirm the date of the conclusion of the round 2 bidding process. May I press the Chancellor to tell us more than just spring next year, because spring does tend to be an awfully long time when the Treasury are making decisions?
Rishi Sunak
I am glad that there is widespread support for the levelling-up fund, and we are keen to work with all Members. I say spring because we want to ensure that we quickly learn the lessons from this round and incorporate them into future rounds. However, I assure the hon. Gentleman that our desire is to get on with this, because we want these projects to be delivered so that our communities can start to see the benefits as soon as possible.
Caroline Ansell (Eastbourne) (Con)
Kerry McCarthy (Bristol East) (Lab)
Rather than talk about competitive bids for funding, could we talk for a moment about mainstream council finances? We know that this Budget will significantly shift the burden to local authorities and require a significant rise in council tax, which people can ill afford. We also know that councils’ finances have not fully recovered and they have not been fully compensated. What is the Chancellor doing to talk to local councils about the pressures that they are facing?
Rishi Sunak
I actually did engage with representatives from local authorities in the run-up to the spending review. Last week’s spending review outlined an additional £1.6 billion a year of cash grant for local authorities, which will ensure that local government core spending power will rise at about 3% a year in real terms over the spending review period; that is historically high. It has been warmly welcomed by local councils up and down the country, and will ensure that council tax increases can be kept at more moderate levels.
Jo Gideon (Stoke-on-Trent Central) (Con)
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The women-run Acton firm Fashionizer, which makes uniforms for hotels, diversified into mask manufacturing during the pandemic. The firm is now getting back on its feet, but the order book is just a third of what it was, so those working there ask the Chancellor if he could please extend the rate relief for the hospitality industry to those who supply hospitality, including food and laundry services, some of them exclusively. They have given me a few of their masks for you, Mr Speaker, for the Chancellor and for anyone who wants one. I think a few of the hon. Members on the back row of the Conservative Benches could do with them.
Rishi Sunak
I commend those at the hon. Lady’s business for what they have done through the pandemic and beyond with the manufacture of masks. We have moved out of crisis phase now, so our interventions to support the economy are broader in scale, but I am confident that the measures we are taking to invest in infrastructure, innovation and skills will lead to economic growth and benefit her businesses, not just the one she mentioned.
Christian Wakeford (Bury South) (Con)
Rishi Sunak
Obviously it would not be right for me to comment on the individual circumstances of any business, but HMRC’s time to pay service has supported tens of thousands of businesses through the crisis with flexible repayment periods. Similarly, the bounce back loan scheme introduced by my hon. Friend the Economic Secretary comes with a pay-as-you-go option to ensure that businesses can settle on a payment plan and stretch out repayment in a way that suits their cash flow.
Mrs Flick Drummond (Meon Valley) (Con)
My pubs and brewers are pleased with the reduction in beer duty, but may we have clarification on keg size, as my small brewers ship their beer in different sizes, including 20-litre pins? May we also have an indication of when the changes to the small brewers relief will be announced, ideally removing the 2,000-hectolitre limit and the cliff-edge at the 5,000-hectolitre limit?
Charter for Budget Responsibility
Rishi Sunak Excerpts(3 years ago)
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The Chancellor of the Exchequer (Rishi Sunak)
Today I have published a draft updated “Charter for Budget Responsibility”, a copy of which has been deposited in the Libraries of both Houses. Copies are also available in the Vote Office and Printed Paper Office. The draft sets out the new fiscal framework announced at autumn Budget and spending review 2021.
The draft charter includes modified guidance to the Office for Budget Responsibility and has been published in line with section 6(4) of the Budget Responsibility and National Audit Act. This requires that if the Treasury proposes to modify the guidance to the Office for Budget Responsibility included in the charter, a draft of the modified guidance must be published at least 28 days before the modified charter is laid before Parliament. The updated charter will be laid before Parliament, and a debate and vote scheduled, in due course.
[HCWS355]
Financial Statement
Rishi Sunak Excerpts(3 years ago)
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The Chancellor of the Exchequer (Rishi Sunak)
Madam Deputy Speaker, I have heard your words and those of Mr Speaker. I have the greatest respect for you both and want to assure you that I have listened very carefully to what you have said. May I also send my best wishes to the Leader of the Opposition? I know that the whole House will join me in doing that.
With your permission, Madam Deputy Speaker, let me turn to today’s Budget. Employment is up, investment is growing, public services are improving, the public finances are stabilising and wages are rising. Today’s Budget delivers a stronger economy for the British people: stronger growth, with the UK recovering faster than our major competitors; stronger public finances, with our debt under control; and stronger employment, with fewer people out of work and more people in work. Growth is up, jobs are up and debt is down. Let there be no doubt: our plan is working.
This Budget is about what this Government are about: investment in a more innovative, high-skilled economy, because that is the only sustainable path to individual prosperity; world-class public services, because they are the common goods from which we all benefit; backing business, because our future cannot be built by the Government alone but must come from the imagination and drive of our entrepreneurs; help for working families with the cost of living, because we will always give people the support they need and the tools to build a better life for themselves; and levelling up, because for too long—far too long—the location of your birth has determined too much of your future, and because the awesome power of opportunity should not be available only to a wealthy few but be the birthright of every child in an independent and prosperous United Kingdom.
Today’s Budget does not draw a line under covid; we have challenging months ahead, and I encourage everyone eligible to get their booster jabs as soon as possible. But today’s Budget does begin the work of preparing for a new economy post covid: the Prime Minister’s economy of higher wages, higher skills and rising productivity, and of strong public services, vibrant communities and safer streets—an economy fit for a new age of optimism, where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make. That is the stronger economy of the future, and this Budget is the foundation.
The House will recognise the challenging backdrop of rising inflation. Let me begin by carefully explaining what is happening in our economy and why. Inflation in September was 3.1% and is likely to rise further, with the Office for Budget Responsibility expecting the consumer prices index to average 4% over the next year. The majority of this rise in inflation can be explained by two global forces. First, as economies around the world reopen, demand for goods has increased more quickly than supply chains can meet. Having been shut down for almost a year, it takes time for factories to scale up production, for container ships to move goods to where demand is and for businesses to hire the people they need.
Secondly, global demand for energy has surged at a time when supplies have already been disrupted, putting a strain on prices. In the year to September, the global wholesale price of oil, coal and gas combined has more than doubled.
The pressures caused by supply chains and energy prices will take months to ease. It would be irresponsible for anyone to pretend that we can solve this overnight. I am in regular communication with Finance Ministers around the world and it is clear that these are shared global problems, neither unique to the UK nor possible for us to address on our own. But where the Government can ease these pressures, we will act. To address the driver shortage, the Transport Secretary is introducing temporary visas, tackling testing backlogs and changing cabotage requirements, and is today announcing new funding to improve lorry park facilities. We have already suspended the HGV levy until August, and I can do more today, extending it for a further year until 2023 and freezing vehicle excise duty for heavy goods vehicles.
To help with the cost of living, we have introduced a new £500 million household support fund, and today’s Budget will support working families further.
On our fiscal policy, we will meet our commitments on public services and capital investment, but we will do so keeping in mind the need to control inflation.
Finally, I have written to the Governor of the Bank of England today to reaffirm the Bank’s remit to achieve low and stable inflation. People should be reassured: it has a strong track record in doing so.
I understand that people are concerned about global inflation, but they have a Government here at home ready and willing to act. In a period of global uncertainty, we need to work hard to maintain a strong economy and be responsible with the public finances, and that is what we are doing. I am grateful to the OBR for its work, and I am pleased to say that it now expects our recovery to be quicker. Thanks to this Government’s actions, it forecasts the economy to return to its pre-covid level at the turn of the year—earlier than it thought in March.
Growth this year is revised up from 4% to 6.5%. The OBR then expects the economy to grow by 6% in 2022, and 2.1 %, 1.3% and 1.6% over the next three years. In July last year, at the height of the pandemic, unemployment was expected to peak at 12%.
Today, the OBR expects unemployment to peak at just 5.2%. That means more than 2 million fewer people out of work than previously feared. Wages are rising: compared with those in February 2020, they have grown in real terms by almost 3.5%. I can confirm for the House that the OBR’s forecast for business investment has been revised up over the next five years.
Because of the actions that we took to support our economy, we have been more successful than previously feared in preventing the long-term economic damage of covid.
The OBR has today revised down its scarring assumption from 3% to 2%. In the depths of the worst economic crisis on record, we set out a plan for jobs. It is a plan that was backed by business groups and trade bodies; a plan that has helped millions of people and saved millions of jobs; and a plan that the OBR has today described as “remarkably successful”. Today’s forecasts confirm beyond doubt that our plan for jobs is working.
Disruption in the global economy highlights the importance of strong public finances. Coronavirus left us with borrowing higher than at any time since the second world war. As the Prime Minister reminded us in his conference speech: higher borrowing today is just higher interest rates and even higher taxes tomorrow. We need to strengthen our public finances so that when the next crisis comes, we have the fiscal space to act. Today I am publishing a new charter for budget responsibility. The charter sets out two fiscal rules that will keep this Government on the path of discipline and responsibility. First, underlying public sector net debt, excluding the impact of the Bank of England, must, as a percentage of GDP, be falling. Secondly, in normal times the state should only borrow to invest in our future growth and prosperity. Everyday spending must be paid for through taxation. Both rules must be met by the third year of every forecast period, giving us the flexibility to respond to crises while credibly keeping the public finances under control. These rules are supplemented by targets to spend up to 3% of GDP on capital investment and to keep welfare spending on a sustainable path.
The House will be asked to vote on our charter, giving Members a simple choice—to abandon our fiscal anchor and leave our economy adrift with reckless unfunded pledges, or to vote for what we on the Government side of the House know is the right course: sound public finances and a stronger economy for the British people.
Important as the charter is, our credibility comes as much from what we do as what we say, so I am pleased to tell the House that, because our plan is delivering a stronger economy and because we have taken tough but responsible decisions on the public finances, the OBR reports today that all our fiscal rules have been met. Underlying debt is forecast to be 85.2% of GDP this year, then 85.4% in 2022-23, before peaking at 85.7% in 2023-24. It then falls in the final three years of the forecast, from 85.1% to 83.3%. Borrowing as a percentage of GDP is forecast to fall in every single year, from 7.9% this year to 3.3% next year, then 2.4%, 1.7%, 1.7% and 1.5% in the following years. Borrowing down, debt down: proving once again it is the Conservatives, and only the Conservatives, who can be trusted with taxpayers’ money.
I have made four fiscal judgements in this Budget. First, we will meet our fiscal rules with a margin to protect ourselves against economic risks. That is the responsible decision at a time of increasing global economic uncertainty, when our public finances are twice as sensitive to changes in interest rates as they were before the pandemic and six times as sensitive as they were before the financial crisis. Just a one percentage point increase in inflation and interest rates would cost us around £23 billion. My second judgment today is to continue to support working families.
Thirdly, as well as helping people at home, our improving fiscal position means that we will meet our obligations to the world’s poorest. I told the House that when we met our fiscal tests, we would return to spending 0.7% of our national income on overseas aid. Some people said this was a trick or a device. I told this House that it was no such thing, and based on the tests that I set out, today’s forecasts show that we are, in fact, scheduled to return to 0.7% in 2024-25—before the end of this Parliament.
My fourth fiscal judgment is this: today’s Budget increases total departmental spending over this Parliament by £150 billion. That is the largest increase this century, with spending growing by 3.8% a year in real terms. As a result of this spending review, and contrary to speculation, there will be a real-terms rise in overall spending for every single Department, and public sector net investment as a share of GDP will be at the highest sustained level for nearly half a century. If anyone still doubts it, today’s Budget confirms it: the Conservatives are the real party of public services.
Our stronger economy lays the foundation for everything that we want to achieve in today’s Budget: world class public services and more investment in our future growth. Before I turn to the details, I would like to thank the Chief Secretary to the Treasury, my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke). Completing the spending review in such challenging circumstances was a tall order—and thankfully we had just the man for the job.
At the start of this Parliament, resource spending on healthcare was £133 billion. Today’s spending review confirms that by the end of this Parliament it will increase by £44 billion to over £177 billion; and the extra revenue we are forecast to raise from the health and social care levy is going direct to the NHS and social care as promised. The health capital budget will be the largest since 2010: record investment in health R&D, including better newborn screening, as campaigned for by my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken); 40 new hospitals; 70 hospital upgrades; more operating theatres to tackle the backlog; and 100 community diagnostic centres, all staffed by a bigger, better-trained workforce, with 50,000 more nurses and 50 million more primary care appointments. As well as funding to deliver the Prime Minister’s historic reforms to social care, we are providing local government with new grant funding over the next three years of £4.8 billion—the largest increase in core funding for over a decade.
We are investing more in housing and home ownership too, with a multi-year housing settlement totalling nearly £24 billion—£11.5 billion to build up to 180,000 new affordable homes, the largest cash investment in a decade, 20% more than the previous programme. We are investing an extra £1.8 billion—enough to bring 1,500 hectares of brownfield land into use, meet our commitment to invest £10 billion in new housing, and unlock 1 million new homes. We are also confirming £5 billion to remove unsafe cladding from the highest risk buildings, partly funded by the residential property developers tax, which I can confirm will be levied on developers with profits over £25 million at a rate of 4%. We have already reduced rough sleeping by over a third, but we will go further, with £640 million a year for rough sleeping and homelessness—an 85% increase in funding compared to 2019.
Today’s Budget funds our ambition to recruit 20,000 new police officers; provides an extra £2.2 billion for courts, prisons and probation services, including £0.5 billion to reduce the courts backlog; pays for programmes to tackle neighbourhood crime, reoffending, county lines, violence against women and girls, victims’ services and improved responses to rape cases; and, over the next three years, commits £3.8 billion to the largest prison-building programme in a generation.
All Governments should aspire to provide greater life chances for future generations, but few Governments can match our ambition. So let me now turn to what this Budget does to support children. The evidence is compelling that the first 1,001 days of a child’s life are the most important. My right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) has recognised this with her inspirational report. We are responding today with £300 million for a start for life offer for families; high-quality parenting programmes; tailored services to help with perinatal mental health; and, I am pleased to tell my hon. Friend the Member for Congleton (Fiona Bruce), funding to create a network of family hubs around the country too. To improve the quality of childcare, we are going to pay providers more, with today’s spending review providing an extra £170 million by 2024-25. We are confirming £150 million to support training and development for the entire early years workforce. To help up to 300,000 more families facing multiple needs, we are investing an extra £200 million in the supporting families programme, and we will provide over £200 million a year to continue the holiday activities and food programme.
Today’s spending review also delivers our commitment to schools, with an extra £4.7 billion by 2024-25, which, combined with the ambitious plans we announced at spending review 2019, will restore per-pupil funding to 2010 levels in real terms, equivalent to a cash increase for every pupil of more than £1,500. For children with special educational needs and disabilities, we are more than tripling the amount we invest to create 30,000 new school places. We know that the pandemic caused significant disruption to children’s learning. We have already announced £3.1 billion to help education recovery. Today, as promised by the Prime Minister and the Education Secretary, we will go further, with just under £2 billion of new funding to help schools and colleges, bringing this Government’s total support for education recovery to almost £5 billion.
As we level up public services, we are also levelling up communities, restoring the pride people feel in the places they call home. To do that, we are providing £560 million for youth services, enough to fund up to 300 youth clubs in England; over £200 million to build or transform up to 8,000 state-of-the-art community football pitches across the UK; and funding to turn over 100 areas of derelict land into new “pocket parks”.
I am allocating the first round of bids from the levelling up fund—£1.7 billion to invest in the infrastructure of everyday life in over 100 local areas. With £170 million in Scotland, £120 million in Wales, and £50 million in Northern Ireland—more than their Barnett shares—this will benefit the whole United Kingdom. We are backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, and not one, not two, but three successful projects for the great city of Stoke-on-Trent. But that is not all. We are also going to fund projects in Ashton-under-Lyne, Doncaster, South Leicester, Sunderland and West Leeds. We are so committed to levelling up, we are even levelling up the Opposition Front Bench.
Levelling up is also about protecting our unique culture and heritage. The British Museum; Tate Liverpool; the York Railway Museum: we are investing £850 million to protect museums, galleries, libraries, and local culture. Thanks to the Culture Secretary, over 100 regional museums and libraries will be renovated, restored and revived; and she has secured up to £2 million to start work on a new Beatles attraction on the Liverpool waterfront. We are also going to review our museum freedoms and make our creative tax reliefs more generous. On current plans, the tax relief for museums and galleries is due to end in March next year, just as exhibitions are starting to tour again, so I have decided to extend it for two years to March 2024. To support theatres, orchestras, museums and galleries to recover from covid, the tax reliefs for all those sectors, from today until April 2023, will be doubled, and they will not return to the normal rate until April 2024. That is a tax relief for culture worth almost a quarter of a billion pounds.
This is a Budget for the whole United Kingdom. Through the Barnett formula, today’s decisions increase Scottish Government funding, in each year, by an average of £4.6 billion, Welsh Government funding by £2.5 billion, and £1.6 billion for the Northern Ireland Executive. This delivers, in real terms, the largest block grants for the devolved Administrations since the devolution settlements of 1998. The whole of the United Kingdom will benefit from the UK shared prosperity fund, and over time we will ramp up funding so that total domestic UK-wide funding will match EU receipts, averaging around £1.5 billion a year. We will fund projects across the UK, including funding for the Extreme E race in Scotland—the 2022 Hebrides X-Prix—accelerating funding for the Cardiff city region deal in Wales, and funding in Northern Ireland for community cohesion. While today demonstrates the indisputable fiscal benefit of being part of the United Kingdom, this is and always will be secondary to the simple truth that we are bound together by more than transactional benefit. It is our collective history, our culture and our security. We are, and always will be, one family and one United Kingdom.
While today’s Budget delivers historically high levels of public spending, its success will be measured not by the billions we spend, but by the outcomes we achieve and the difference we make to people’s lives. The budgets are set; the plans are in place; the task is clear. Now we must deliver because this is not the Government’s money—it is taxpayer’s money.
Our stronger economy allows us to fund world-class public services—the people’s priority—but over the long-term, the only way to pay for higher spending is economic growth. If we want to see higher growth, we have to tackle the problem that has been holding back this country for far too long: our uneven economic geography. As we come out of the worst economic shock we have ever seen, we have a choice—to retrench, or to invest. This Government choose to invest: to invest in our economic infrastructure, to invest in innovation, to invest in skills and to invest in a plan for growth that builds a stronger economy for the future. That is what this Budget is about and that is what this Government are about.
Infrastructure connects our country, drives productivity and levels up. That is why our national infrastructure strategy invests in economic infrastructure such as roads, railways, broadband and mobile—over £130 billion. To connect our towns and cities, we are investing £21 billion on roads and £46 billion on railways. Our integrated rail plan will be published soon, dramatically improving journey times between our towns and cities. Today, we are providing £5.7 billion for London-style transport settlements in Greater Manchester, the Liverpool city region, the Tees Valley, South Yorkshire, West Yorkshire, the west midlands and the west of England. We are helping local transport everywhere with £2.6 billion for a long-term pipeline of more than 50 local roads upgrades, over £5 billion for local roads maintenance—enough to fill 1 million more potholes a year—and funding for buses, cycling and walking totalling more than £5 billion. The Prime Minister promised an infrastructure revolution. This Budget delivers an infrastructure revolution.
Investment in our infrastructure is just the first step. We need to do what the people of this country have always done: invent, discover, and create the ideas and technologies that will change the world. So we will also invest more in innovation. The UK is already a world leader. With less than 1% of the world’s population, we have four of the world’s top 20 universities, 14% of the world’s most impactful research and the second most Nobel laureates. We want to go further. I can confirm we will maintain our target to increase research and development investment to £22 billion. But in order to get there, and deliver on our other priorities, we will reach the target in 2026-27, spending, by the end of this Parliament, £20 billion a year on R&D. That is a cash increase of 50%—the fastest increase ever. I can confirm for the House that this £20 billion is in addition to the cost of our R&D tax reliefs. Combined with those tax reliefs, total public investment in R&D is increasing from 0.7% of GDP in 2018 to 1.1% of GDP by the end of the Parliament.
How does 1.1% compare internationally? Well, the latest available data shows an OECD average of just 0.7%. Germany is investing 0.9%, France 1% and the United States just 0.7%. This unprecedented funding will: increase core science funding to £5.9 billion a year by 2024-25, a cash increase of 37%; meet the full costs of associating with Horizon Europe; establish the new Advanced Research and Invention Agency with £800 million by 2025-26; and strengthen our focus on late-stage innovation, increasing Innovate UK’s annual core budget to £1 billion, double what it was at the start of the Parliament.
There is more to becoming a science superpower than just what the Government spend on R&D. Our ambitious net zero strategy is also an innovation strategy, investing £30 billion to create the new green industries of the future. We have just issued our second green bond, making us the third-largest issuer of sovereign green bonds anywhere in the world. London last week was named the best place in the world for green finance. On Monday, the new UK Infrastructure Bank announced its first ever investment: £107 million to support offshore wind in Teesside. To build on this work, one week today I will be hosting global finance ministers and businesses at COP26.
Innovation comes from the imagination, drive and risk-taking of business. That is why we have launched Help to Grow to turbocharge SME productivity and started a new co-investment venture capital fund, Future Fund: Breakthrough. It is why I am announcing today that we will consult on further changes to the regulatory charge cap for pensions schemes, unlocking institutional investment while protecting savers. It is why we are introducing a new £1.4 billion global Britain investment fund, supporting transformative economic activity in our world-leading sectors, such as life sciences. It is why today’s Budget increases the British Business Bank’s regional financing programmes to £1.6 billion, expanding their coverage and helping innovative businesses get access to the finance they need, across the whole United Kingdom.
A third of our science Nobel laureates have been immigrants. Half of our fastest growing companies have a foreign-born founder. So an economy built on innovation must be open and attractive to the best and brightest minds. Thanks to our brilliant Home Secretary, today’s Budget confirms the eligibility criteria for our new scale-up visa, making it quicker and easier for fast-growing businesses to bring in highly skilled individuals. The Trade Secretary’s new global talent network, launching initially in the Bay Area, Boston and Bangalore, will identify, attract and relocate the best global talent in science and tech sectors. It is all part of our plan to make our visa system for international talent the most competitive in the world.
If we want greater private sector innovation, we need to make our research and development tax reliefs fit for purpose. The latest figures show the UK has the second highest spending on R&D tax reliefs in the OECD. Yet it is not working as well as it should; UK business investment in R&D is less than half the OECD average. We have reviewed the reliefs and identified two issues we are solving today. First, the reliefs need to reflect how businesses conduct research in the modern world. So, as many companies have called for, I am expanding the scope of the reliefs to include cloud computing and data costs.
The second problem is this: companies claimed UK tax relief on £48 billion of R&D spending, yet UK business investment was around half of that, at just £26 billion. We are subsidising billions of pounds of R&D that is not even happening here in the United Kingdom. That is unfair on British taxpayers and it puts us out of step with places like Australia, Canada, Hong Kong, Singapore, Switzerland and the USA, which have all focused their R&D tax reliefs on domestic activity. So from April 2023, we are going to do the same, and incentivise greater investment here at home. So a £22-billion investment in R&D, the net zero strategy, the future fund, Help to Grow, more regional finance, unlocking institutional capital, a more competitive visa system and a modernised R&D tax credits regime—enough action to prove the hypothesis that we are making this country a science and technology superpower.
As well as investing in infrastructure and innovation, there is one further part of our plan for growth that is crucial: providing a world-class education to all our people. Higher skills lead to higher regional productivity and higher productivity leads to higher wages. With 80% of the UK’s 2030 workforce already in work, our future success depends on not just the schooling we give our children but the lifelong learning we offer to adults.
We have already done a lot. Our plan for jobs invested in apprenticeships, traineeships and the kickstart scheme, but we need to go further. Today’s Budget invests in the most wide-ranging skills agenda this country has seen in decades. We are increasing skills spending over the Parliament by £3.8 billion—an increase of 42%. We are expanding T-levels, building institutes of technology, rolling out the Prime Minister’s lifetime skills guarantee, upgrading our further education college estate, quadrupling the number of places on skills bootcamps and significantly increasing funding for apprenticeships.
We are also going to tackle a tragic fact: millions of adults in our country have numeracy skills lower than those expected of a nine-year-old. According to the leading charity National Numeracy, this costs individuals with poor numeracy up to £1,600 a year in lost earnings. People with poor numeracy skills are more than twice as likely to be unemployed as their peers. So today, I can announce a new UK-wide numeracy programme: Multiply. With £560 million, Multiply will improve basic maths skills and help to change people’s lives across the whole United Kingdom.
So we are building our infrastructure with new roads, railways and broadband; cementing our status as a science and technology superpower; and strengthening the skills of our people, the country’s greatest asset. That is a real plan for growth and that is how this Government are building a stronger economy for the British people.
World class public services are the people’s priority. Investment in infrastructure, innovation and skills will create the growth that we need to pay for them. But as Conservatives, we know that Government action alone will not be enough to create a stronger economy. We want this country to be the most exciting and dynamic place in the world for business. Now that we have left the EU, we have the freedom to do things differently and deliver a simpler, fairer tax system.
I want to begin with one of our smallest taxes, but a tax that plays an important role in one of our pre-eminent industries: shipping. Now that we have left the EU, today we start reforming our tonnage tax regime to make it simpler and more competitive. And we are also making it fairer for UK taxpayers.
When we were in the old EU system, ships in the tonnage tax regime were required to fly the flag of an EU state, but that does not make sense for an independent nation. So I can announce today that our tonnage tax will, for the first time ever, reward companies for adopting the UK’s merchant shipping flag, the red ensign. That is entirely fitting for a country with such a proud maritime history as ours. I am sure that the Opposition will be delighted that red flags are still flying somewhere in this country, even if they are all at sea.
Let me turn now to air passenger duty. Right now, people pay more for return flights within and between the four nations of the United Kingdom than they do when flying home from abroad. We used to have a return-leg exemption for domestic flights, but we were required to remove it in 2001. But today I can announce that flights between airports in England, Scotland, Wales and Northern Ireland will, from April 2023, be subject to a new lower rate of air passenger duty. This will help to cut the cost of living, with 9 million passengers seeing their duty cut by half; it will bring people together across the United Kingdom; and because they tend to have a greater proportion of domestic passengers, it is a boost to regional airports like Aberdeen, Belfast, Inverness and Southampton.
Airports are major regional employers, so to help them get through the winter I am also extending our support for English airports for a further six months. We are also making changes to reduce carbon emissions from aviation. Most emissions come from international rather than domestic aviation, so we are introducing, from April 2023, a new ultra-long-haul band in air passenger duty covering flights of over 5,500 miles, with an economy rate of £91. Less than 5% of passengers will pay more, but those who fly furthest will pay the most.
Our approach to corporate taxation strikes a responsible balance between funding public services and encouraging the investment we need for a stronger economy. At the March Budget, we took the difficult but necessary decision to increase the rate of corporation tax to 25% from 2023, which is still the lowest rate in the G7 and the fifth lowest rate in the G20. Alongside, I introduced the new super deduction—the biggest business tax cut in modern British history—and extended, to the end of this year, the annual investment allowance at its higher level of £1 million. Now is not the time to remove tax breaks on investment, so I can confirm today that the £1 million annual investment allowance will not end in December as planned. It will be extended all the way to March 2023.
I also said in March that I would review the bank surcharge within corporation tax to maintain the competitiveness of our financial services industry. We will retain a surcharge of 3%. The overall rate for corporation tax on banks will, in 2023, increase from 27% to 28% and will remain higher than the rate paid by other companies. Small challenger banks are improving banking competition, which is good for the sector and good for consumers, so to help them, I will also raise the annual allowance to £100 million.
Our manifesto promised to review business rates. We are publishing our conclusions today. Before I set out our plans, let me say this: we on the Conservative Benches are clear that reckless, unfunded promises to abolish a tax that raises £25 billion every year are completely irresponsible. It would be wrong to find £25 billion a year in extra borrowing, cuts to public services or tax rises elsewhere, so we will retain business rates, but with key reforms to ease the burden and create stronger high streets.
First, we will make the business rates system fairer and timelier with more frequent revaluations every three years. The new revaluation cycle will be delivered from 2023. Secondly, as called for by the Federation of Small Businesses and the British Property Federation, we are introducing a new investment relief to encourage businesses to adopt green technologies such as solar panels.
I am announcing today that we will accept the CBI and the British Retail Consortium’s recommendation to introduce a new business rates improvement relief. From 2023, every single business will be able to make property improvements and, for 12 months, pay no extra business rates. That means that a hotel adding extra rooms, a manufacturer expanding their factory, and an office adding new air conditioning, CCTV or bike shelters will all pay no extra rates.
Together with the new green investment relief, we are introducing investment incentives totalling £750 million. This will make a difference, but without action, millions of businesses would see their tax bills going up next year because of inflation. I want to help those businesses right now, so our third step is that next year’s planned increase in the multiplier will be cancelled. That is a tax cut for businesses worth, over the next five years, £4.6 billion.
I have one final measure to help those businesses hardest hit by the pandemic. I am announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors: pubs, music venues, cinemas, restaurants, hotels, theatres and gyms. Any eligible business can claim a discount on their bills of 50%, up to a maximum of £110,000. That is a business tax cut worth almost £1.7 billion. Together with small business rates relief, this means that over 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%. Apart from the covid reliefs, this is the biggest single-year cut to business rates in over 30 years. Taken together, today’s Budget cuts business rates by £7 billion.
We are unleashing the dynamism and creativity of British businesses with a simpler, fairer and more competitive tax system: the biggest business tax cut in modern British history; the biggest single-year cut to business rates for 30 years; a £1 million investment allowance; tonnage tax reformed; air passenger duty cut. That is the way to back business and build a stronger economy.
Let me turn now to alcohol duties. First introduced in 1643 to help pay for the civil war, our alcohol duty system is outdated, complex and full of historical anomalies. The Institute for Fiscal Studies has called it “a mess”; the Institute of Economic Affairs said that it “defies common sense”; and the World Health Organisation has warned that countries such as the UK which follow the EU rules are:
“unable to implement tax systems that are optimal from the perspective of public health.”
So today, we are taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years. We are taking five steps today to create a system that is simpler, fairer, and healthier.
First, to radically simplify the system, we are slashing the number of main duty rates from 15 to just six. Our new system will be designed around a common-sense principle: the stronger the drink, the higher the rate. This means that some drinks, like stronger red wines, fortified wines and high-strength white ciders will see a small increase in their rates because they are currently undertaxed, given their strength. That is the right thing to do, and it will help to end the era of cheap, high-strength drinks which can harm public health and enable problem drinking. Because this is a more rational system, the converse is also true: many lower-alcohol drinks are currently overtaxed—and have been for many decades. Rosé, fruit ciders, liqueurs, lower strength beers and wines—today’s changes mean that they will pay less.
The second step I am taking today will encourage small, innovative craft producers: I am announcing proposals for a new small producer relief. This will extend the principle of the small brewers relief to include for the first time ever small cider makers and other producers making alcoholic drinks of less strength than 8.5%.
Thirdly, I am going to modernise the system to reflect the way people drink today. Over the last decade, consumption of sparkling wines like prosecco has doubled. English sparkling wine alone has increased almost tenfold. It is clear they are no longer the preserve of wealthy elites, and they are no stronger than still wines. So I am going to end the irrational duty premium of 28% that they currently pay. Sparkling wines, wherever they are produced, will now pay the same duty as still wines of equivalent strength. Because growing conditions in the UK typically favour lower-strength and sparkling wines, this means English and Welsh wines, compared with stronger imported wines, will now pay less. Sales of fruit cider have increased from one in a thousand ciders sold in 2005 to one in four today, but they can pay two or three times as much duty as cider made with apples or pears, so we are cutting the duty on them too.
The fourth step I am taking today would directly support the home of British community life for centuries: our pubs. Even before the pandemic, pubs were struggling: between 2000 and 2019, consumption in the on-trade fell by 40%. Many public health bodies recognise that pubs are often safer drinking environments than being at home. As my hon. Friends the Members for Dudley South (Mike Wood) and for North West Durham (Mr Holden) will agree, a fairer, healthier system supports pubs, so I can announce today draught relief.
Draught relief will apply a new lower rate of duty on draught beer and cider. It will apply to drinks served from draught containers over 40 litres. It will particularly benefit community pubs that do 75% of their trade on draught. Let me tell the House the new rate: draught relief will cut duty by 5%. That is the biggest cut to cider duty since 1923; the biggest cut to fruit ciders in a generation; the biggest cut to beer duty for 50 years. This is not temporary. It is a long-term investment in British pubs of £100 million a year and a permanent cut in the cost of a pint of 3p. I cannot wait for the Opposition to accuse me tomorrow of beer-barrel politics.
These much needed reforms will come into effect in February 2023, but I want to help the hospitality industry right now, so for my final announcement on alcohol duties today, I can confirm that the planned increases in duty on spirits like Scotch whisky, wine, cider and beer will all, from midnight tonight, be cancelled. That is a tax cut worth £3 billion.
Our reforms make the alcohol duty system simpler, fairer and healthier; they help with the cost of living while tackling problem drinking; they support innovative entrepreneurs and craft producers; they back pubs and public health; and they are only possible because we have left the European Union.
World-class public services; investment in infrastructure, innovation, and skills; simpler, fairer taxes to support businesses and consumers: all built on the foundation of a stronger economy and responsible public finances. That is our vision for the future and that is what this Budget delivers.
This Budget also supports working families. With fuel prices at the highest level in eight years, I am not prepared to add to the squeeze on families and small businesses, so I can confirm today that the planned rise in fuel duty will be cancelled. That is a saving over the next five years of almost £8 billion. Compared to pre-2010 plans, today’s freeze means the average tank of fuel will cost around £15 less per car; £30 less for vans; and £130 less for HGVs. After 12 consecutive years of frozen rates, the average car driver will now save a total of £1,900.
I can also announce today that public sector workers will see fair and affordable pay rises across the whole spending review period as we return to the normal, independent pay-setting process, and I can take action to help the lowest paid as well. It was a Conservative Government who introduced the national living wage in 2016, a Conservative Government who, according to statistics published just yesterday, have overseen the proportion of people in low-paid work falling to its lowest level since 1997, and it is a Conservative Government who are increasing the wage floor again today. The independent Low Pay Commission brings together economists, business groups and trade unions. The Government are accepting its recommendation to increase the national living wage next year by 6.6%, to £9.50 an hour. For a full-time worker that is a pay rise worth over £1,000. It will benefit over 2 million of the lowest paid workers in the country, it is broadly consistent with previous increases, it keeps us on track for our target of two thirds of median earnings by 2024, and it is a major commitment to the high-wage, high-skill, high-productivity economy of the future.
As we build this stronger economy, we are doing so at the end of an extraordinary 18 months. Covid was not just a public health challenge and an economic challenge—it was a moral challenge, too. We had to show we could pull together as a country, and we did. We had to put aside questions of ideology and orthodoxy to do whatever it took to care for our people and each other, and we did.
There is a different moral dimension to the economic challenge we face now. Last year, the state grew to be over half the size of the total economy, and taxes are rising to their highest level as a percentage of GDP since the 1950s. I do not like it, but I cannot apologise for it: it is the result of the unprecedented crisis we faced and the extraordinary action we took in response. But now we have a choice: do we want to live in a country where the response to every question is “What are the Government going to do about it?”, where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always that the taxpayer must pay? Or do we choose to recognise that Government has limits?
Government should have limits. If this seems a controversial statement to make, then I am all the more glad for saying it because that means it needed saying. And it is what we believe. There is a reason we talk about the importance of family, community and personal responsibility. We do so not because these are an alternative to the market or the state, but because they are more important than the market or the state. The moments that make life worth living are not created by Government, are not announced by Government, are not granted by Government: they come from us as people—our choices, our sacrifices, our efforts—and we believe people should keep more of the rewards of those efforts. Yes, we have taken some corrective action to fund the NHS and get our debt under control, but as we look towards the future I want to say this simple thing to the House and the British people: my goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down, not up. I want this to be a society that rewards energy, ingenuity and inventiveness, a society that rewards work. That is what we believe on this side of the House. That is my mission over the remainder of this Parliament.
The final announcement in today’s Budget takes a first step. For many of the lowest paid in society there is a hidden tax on work: the universal credit taper withdraws support as people work more hours. The rate is currently 63%, so for every £1 someone earns, their universal credit is reduced by 63p. Let us be in no doubt: this is a tax on work—and a high rate of tax at that. Organisations as varied as the Trades Union Congress, the Joseph Rowntree Foundation, the Resolution Foundation, the Centre for Policy Studies, and the Centre for Social Justice have all said it is too high. So, to make sure work pays and help some of the lowest-income families in our country to keep more of their hard-earned money, I have decided to cut this rate, not by 1%, not by 2%, but by 8%. This—[Hon. Members: “Hear, hear.”] This is a tax on working people and we are cutting it from 63% to 55%, the rate originally envisaged by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith). And because I am also increasing the work allowances by £500, this is a tax cut next year worth over £2 billion. Nearly 2 million families will keep on average an extra £1,000 a year. Changes like this normally take effect at the start of the new tax year in April, but we want to help people right now, so we will introduce this within weeks and no later than 1 December.
Let me tell the House what these changes mean. A single mother of two renting and working full-time on the national living wage will be better off by around £1,200. A couple renting a home with their two children, one parent working full-time, the other working part-time, will be better off every single year by £1,800. This is a £2 billion tax cut for the lowest paid workers in our country. It supports working families, it helps with the cost of living and it rewards work.
So, fuel duty cut, air passenger duty cut, alcohol duty cut, the biggest cut to business rates in 30 years, growth up, jobs up, wages up, public finances back in a better place, more investment in infrastructure, innovation and skills, a pay rise for over 2 million people, and a £2 billion tax cut for the lowest paid. This Budget helps with the cost of living. This Budget levels up to a higher-wage, higher-skill, higher-productivity economy. This Budget builds a stronger economy for the British people. I commend it to the House.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Returns for disposals of UK land etc (motion No. 19);
(b) Diverted profits tax (closure notices etc) (motion No. 24);
(c) Rates of tobacco products duty (motion No. 39);
(d) Vehicle excise duty (exemption for cabotage operations) (motion No. 41).—(Rishi Sunak.)
Question agreed to.
Madam Deputy Speaker (Dame Eleanor Laing)
We now come to the motion entitled “Income Tax (Charge)”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and the remaining motions will be put at the end of the Budget debate on Tuesday 2 November. I call the Chancellor of the Exchequer to move the motion formally.
Oral Answers to Questions
Rishi Sunak Excerpts(3 years, 2 months ago)
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Karl MᶜCartney (Lincoln) (Con)
The Chancellor of the Exchequer (Rishi Sunak)
It is absolutely right that we remain relentlessly focused on helping young people into work, and our plan for jobs does exactly that with a range of initiatives. I would just draw colleagues’ attention to the fantastic youth offer that our jobcentres are rolling out, providing 13 weeks of intensive tailored support for those young people who enter universal credit and creating 140 dedicated youth hubs across the country.
James Daly
In Bury, Ramsbottom and Tottington, the Government’s plan for jobs is working, saving jobs and getting people back into employment. As chair of the all-party parliamentary group on youth employment, may I ask my right hon. Friend to update the House specifically on how schemes such as kickstart are helping young people with employment and training opportunities throughout the country?
Rishi Sunak
I thank my hon. Friend for all the work he does as chair of the APPG on youth employment, and I thank him and his colleagues for their advice as we have developed these initiatives. He is right to highlight kickstart. This is a signature initiative of this Government, providing Government-funded, high-quality jobs for young people at risk of long-term unemployment. It has got off to a fantastic start, with 50,000 kickstarters already having started and thousands more to come.
Karl MᶜCartney
That initial response is helpful, and of course I commend the Chancellor and his Treasury colleagues for their financial support to some businesses over the last 18 months, and I realise important announcements from the Treasury and the Prime Minister are imminent. However, in a city such as Lincoln with such a vibrant hospitality sector, the cumulative impact of successive lockdowns has hit my constituents hard, especially young people, and my right hon. Friend knows that they are disproportionately employed in those businesses that are forced to close. Does the Chancellor agree that we must do everything possible to keep the economy open so that instead of paying young people not to work, we focus on creating well-paid jobs for them?
Rishi Sunak
My hon. Friend is absolutely right to highlight the importance of hospitality in employing young people, which is why, together with our VAT cut for that sector and indeed £16 billion of business rates reductions, we have helped support all those jobs. He should also know that employers do not pay employers national insurance on those young people under the age of 21, nor on most apprentices up to the age of 25, demonstrating our support to those employers to keep young people in work.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
When I was a very young MP, a Conservative Prime Minister introduced a windfall profit tax on the banks. When will this Administration and this Chancellor of the Exchequer have the imagination and leadership to introduce a windfall profit tax on those who have done very well over the last few years, and put it into green apprenticeships, green training and green skills, and do it now?
Rishi Sunak
Talking about young people and financial services, I was recently in Glasgow talking about young people starting exactly what the hon. Gentleman described: new apprenticeships in the financial services industry, growing in Glasgow, supported by this Government who have put more money behind apprenticeships than any previous Government.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
I am hearing from colleges that fewer level 1 and level 2 students are going to college as they are going straight into work and that is to be commended, but we know that having a level 3 increases people’s earnings potential in the long term and therefore opportunities to obtain that level 3 must be available to those young people as they get older. How can they achieve that, however, when the Chancellor has cut the adult skills budget by half since 2010?
Rishi Sunak
I point the hon. Lady to the Prime Minister’s speech on skills last year when he unveiled this Government’s lifetime skills guarantee, which delivers exactly what she is asking for. Those 10 million adults without a level 3 qualification, who she is absolutely right to highlight, will, for the first time, be able to get one, fully funded by this Government. That is a Conservative Government delivering for people, giving them the skills and opportunities they need.
Matt Hancock (West Suffolk) (Con)
The combination of the furlough scheme, the kickstart scheme and the youth offer the Chancellor has just discussed shows that his efforts are leading to the UK having one of the fastest economic recoveries in the world. Will he commit to working globally to ensure that the confidence and opportunities this brings are available globally as they increasingly are in the UK?
Rishi Sunak
My right hon. Friend is absolutely right, and I want to thank him for two things. First, when he was a Minister he created traineeships, and he will be pleased to know that this Government are tripling the number of them to give young people the best possible start in life, finding new skills and opportunities. Most importantly, this year, because of his success in making sure this country had the fastest roll-out of a vaccine anywhere in the world, we are enjoying the fastest opening up and the fastest economic recovery, and I pay tribute to him for that.
David Linden (Glasgow East) (SNP)
The Government announced the kickstart scheme to much fanfare. However, at the moment they publish the kickstarter statistics breakdown by gender and perhaps by race, but why do they not do so by disability? Will the Chancellor rectify that?
Rishi Sunak
I am always happy to look at what more we can do to improve the transparency of our statistics. However, with regard to kickstart in aggregate, I would just say that there have been 50,000 starts and, when compared with previous versions of similar schemes such as the future jobs fund under the last Labour Government, kickstart is delivering more young people into more jobs at a much faster pace and, importantly, many more of those jobs are in the private sector, not just the public sector.
Rob Butler (Aylesbury) (Con)
Gareth Davies (Grantham and Stamford) (Con)
The Chancellor of the Exchequer (Rishi Sunak)
The Prime Minister is rightly ushering in an infrastructure revolution because infrastructure drives growth and productivity and creates jobs. We are doing that with over £100 billion of investment this year and, thanks to the efforts of the Financial Secretary to the Treasury, a world-leading UK Infrastructure Bank created and set up in Leeds.
Rob Butler
Does my right hon. Friend agree that all parts of the country can benefit from investment in infrastructure, and that an excellent way of achieving that in my constituency, in support of the substantial housing development there, would be to approve funding for the Aylesbury link of East West Rail, which would also help to achieve our target of net zero?
Rishi Sunak
My hon. Friend is absolutely right to focus on making sure that our investment reaches every part of the country, including his constituency. I am pleased to tell him that £760 million has been allocated by the Chief Secretary and the Transport Secretary to deliver East West Rail, and I understand that the Department for Transport is currently working with the East West Rail Company to figure out the best possible way to serve Aylesbury. I hope that my hon. Friend will engage with that process.
Gareth Davies
The Infrastructure Forum recently published a report that showed clearly that the super deduction is already having an impact, accelerating investment by businesses. Will my right hon. Friend join me in encouraging businesses across Grantham and Stamford to take up the relief, and does he agree that this is exactly the kind of investment that will boost jobs and level up our country?
Rishi Sunak
From the Office for Budget Responsibility to the Bank of England, many people have described the super deduction as doing exactly what my hon. Friend has said, and that is why we know it is working. I recently visited BT, for example, which, because of the super deduction, is now increasing the speed of its roll-out to millions more houses and creating thousands of new jobs in the process. My hon. Friend is absolutely right, and I encourage his businesses to take up the super deduction, and, indeed, we see that; a Deloitte survey recently showed that business intentions to invest in this country are the highest they have been in years.
Alison McGovern (Wirral South) (Lab)
I am afraid that I must tell the Chancellor that his infrastructure revolution is not very noticeable in cities in the north of England, which grind to a halt at rush hour. They desperately need infrastructure investment, particularly in public transport. Can he tell the House when he last met our city region Mayors in the north of England, and what his plans are for fiscal reform that will help them invest in public transport infrastructure?
Rishi Sunak
My entire team meet the regional Mayors all the time, and of course we will do so in the run-up to the spending review and the Budget. I agree with the hon. Lady that intra-city transportation is important. Unlocking the economic potential of our cities is important to driving our economic recovery. That is why last year, in my first Budget, we announced £4.2 billion for intra-city transport settlements for our largest several cities outside London so that they enjoy the same long-term funding as London and can invest in exactly the types of schemes that she describes.
Chris Elmore (Ogmore) (Lab)
That investment in infrastructure does not get to the south Wales railway service. DFT Ministers keep announcing increased services along the main line in south Wales, which includes Pencoed in my Ogmore constituency, but no increased investment in stations, level crossings or, indeed, the track. When will the Chancellor get a grip and start investing in much-needed railway infrastructure in south Wales?
Rishi Sunak
I am not sure that I entirely recognise the aggregate picture that the hon. Gentleman presents. Rail investment over the course of this Parliament is at record levels, under CP5—control period 5—and then CP6, to give the technical terms. I am very happy to take away the specific schemes. He will understand that those are a matter for the Welsh Government, but I am happy to facilitate with the Department for Transport as required.
Stephen Hammond (Wimbledon) (Con)
I commend my right hon. Friend for his commitment to infrastructure, and I particularly welcome the UK Infrastructure Bank. Will he consider introducing an infrastructure bond so that long-term pension funds can invest in the future of this country too?
Rishi Sunak
My hon. Friend is right. He has previously highlighted the importance of unlocking pension fund capital to invest in long-term assets such as infrastructure in the UK. He will know that the Prime Minister and I wrote to pension funds just recently discussing that, and my hon. Friend the Economic Secretary is actively working on creating a long-term asset fund, a new vehicle to unlock exactly the investment that my hon. Friend the Member for Wimbledon (Stephen Hammond) wants in exactly the type of infrastructure that this country needs.
Ben Lake (Ceredigion) (PC)
Alex Davies-Jones (Pontypridd) (Lab)
The Chancellor of the Exchequer (Rishi Sunak)
The Government have always been clear that the £20 increase to universal credit was a temporary measure, much like furlough and our other interventions to support this country through the acute phases of this crisis, but we are not done supporting those who need our help. This Government will always be on their side, and that is why we have created our plan for jobs. On the Government side of the House, we know that the best way to help people is to give them the skills and the opportunities they need to find high-quality work, and that is what the plan for jobs is delivering.
Ben Lake
Ending the uplift will mean £286 million less for families in Wales, and risks plunging 275,000 families into poverty. Figures from the Bevan Foundation suggest that families in Ceredigion stand to lose £5.7 million in support. What assessment has the Chancellor made of the economic impact of ending the £20 a week uplift for communities in Wales?
Rishi Sunak
The hon. Gentleman talks about those in poverty. The statistics most recently published show that 200,000 fewer people are living in absolute poverty in the United Kingdom than when this Government came into office. With regard to the economic impacts, I think all colleagues in the House can see the strength in our labour market: the need for businesses to find people and the fact that this Government are giving them the skills they need to get those jobs. That is the right strategy to help people and that is the economic strategy this Government are pursuing.
Ian Byrne
While the Chancellor was pondering the colour of the tiles for his new swimming pool and the site of his new tennis court for his country mansion this summer, back in the real world 20% of my constituency of Liverpool West Derby are facing a £20 a week cut to universal credit and sleepless nights about how they will survive. Can the Chancellor tell me what assessment the Government have made of the impact of the cut, and how many of the 12,530 people in Liverpool West Derby they estimate will be forced into poverty?
Rishi Sunak
I do not accept that people will be forced into poverty, because we know, and all the evidence and history tells us, that the best way to take people out of poverty is to find them high quality work. We are creating jobs at a rapid rate, with eight months of continuous growth in employment supported by this Government: traineeships, sector-based work academies, apprenticeships, kickstart. You name it, we are delivering it to help those people in Liverpool to get the skills and the jobs they need to help support their families.
Stephen Timms
Forty per cent. of the people who claim universal credit are already in work. Does the Chancellor understand that they will be very hard hit by this cut, which is the biggest overnight benefit cut in our history?
Rishi Sunak
Of course there are people already in work who are on universal credit, but our plan for jobs helps them too. We increased the national living wage this year by an inflation-busting amount—£350 a year to help those families. We talked earlier about the lifetime skills guarantee, about apprenticeships, about skills boot camps. Those are all ways the Government are supporting people; each one of those initiatives, by the way, is worth thousands of pounds of support. Those people will benefit from those increased skills and benefit from guaranteed new job interviews or higher wages at the end of it. That is the right strategy to help those people in work.
Alex Davies-Jones
This week, the charity Action for Children highlighted that a street cleaner with two children in private rented accommodation is already on average £729 worse off as a result of Conservative cuts since 2010, but that will soar to over £1,700 as a result of the Chancellor’s planned cut to universal credit. So I ask the Chancellor: how exactly are families meant to manage?
Rishi Sunak
Again, what we know is that children growing up in workless households are five times more likely to be in poverty than those whose parents work. That is why we are supporting their parents to get into work and why almost 800,000 fewer children are living in workless households than when this Government first came into office. That is the right way to support those families. Of course, there are other bits of our welfare system that we have maintained the generosity of, but when it comes to universal credit or employment, we on this side of the House we will support their parents into work and, crucially, with their childcare costs. Mr Speaker, we forget that 85% of childcare costs for people on universal credit are covered to support parents into work, which we know will make a difference to those children.
Stephen Timms (East Ham) (Lab)
The Chancellor of the Exchequer (Rishi Sunak)
Over a year ago, the Government launched their plan for jobs, a comprehensive and ambitious plan to help people back into work to earn more and to gain the skills they need to succeed in the jobs of tomorrow. The latest data shows that our GDP and our economy is recovering quickly, unemployment is falling, jobs are being created, and, indeed, household incomes have been protected. All of that tells me that this Government’s plan for jobs is working.
Stephen Timms
Cutting universal credit by £20 a week will hit working families very hard. It will leave support for unemployed families at the lowest real terms level for over 30 years. It will undermine the recovery and scupper the prospects for levelling up. Does the Chancellor of the Exchequer understand why every single former Work and Pensions Secretary since 2010 has opposed his cut?
Rishi Sunak
The right hon. Gentleman talks about economic recovery. We are forecast to grow faster this year than any other country in the G7. The recovery is under way. Jobs are being created, people are getting into work, wages are rising. That is the right strategy for us to pursue. Our plan is working and we will stick to it.
Theresa Villiers (Chipping Barnet) (Con)
Rishi Sunak
My right hon. Friend is right to highlight this issue, which I know is of particular importance to her and her constituency. I assure her that I have spoken to my team about it and, as part of the spending review, we will further those discussions with the Department for Education. I look forward to the Chief Secretary and she and I talking about this issue again.
Rachel Reeves (Leeds West) (Lab)
The Prime Minister’s and the Chancellor’s plans to increase national insurance will hit workers and businesses hard at the worst possible time. The British Chambers of Commerce described it as a “drag anchor” on jobs growth. The Federation of Small Businesses stated:
“If this hike happens, fewer jobs will be created”.
The TUC said that it is wrong to hit young and low-paid workers while “leaving the wealthy untouched”. We agree. Will the Chancellor of the Exchequer therefore explain why he is choosing a tax on jobs rather than on other forms of income?
Rishi Sunak
I am very pleased to see the Labour party finally focus on the importance of jobs in this House. We also agree that it is important to support companies to hire people, which is why there is no national insurance payable on those employing people under the age of 21, on most apprentices up to the age of 25 or on people who are going to be employed in new freeports. And, because of the steps that Conservative Governments have made to the employment allowance, 40% of all small businesses pay no employer’s national insurance at all.
Rachel Reeves
You cannot have it both ways. Cutting national insurance either benefits jobs or it does not. The Chancellor told voters at the election:
“Our plans are to cut taxes for the lowest paid through cutting national insurance”.
That promise is now in flames. The Chancellor is not cutting national insurance; he is putting it up. It cannot be right that nurses and builders are set to pay hundreds of pounds more each year in national insurance, yet those getting their incomes from a large portfolio of shares, stocks and property will pay not a penny more. Labour cannot and will not support this Tory Government’s manifesto-breaking, economically damaging and unfair tax on jobs. So let me ask the Chancellor again: why will this Government not fund health and social care in a way that is fair for families and for businesses?
Rishi Sunak
I will be brief, Mr Speaker. When the hon. Lady was appointed shadow Chancellor, she went out of her way to say that any policies that the Labour party put forward on her watch would be “fully costed and we will explain how they are paid for”. We have heard about uplifts to welfare. We have heard about more money for public sector pay. We have heard about opposing every difficult and responsible decision that this Government have made. We have not heard once how the Labour party will pay for anything and we know what happened last time around when it did that.
Dr Luke Evans (Bosworth) (Con)
Sir David Evennett (Bexleyheath and Crayford) (Con)
I commend my right hon. Friend the Chancellor for all his determination to create new jobs and new investment and to upskill the workforce; I believe it is paying dividends, as we are seeing in the economy. Does he agree that further education colleges have a vital role in upskilling our workforce, both young and not so young, to get the best jobs for the future?
Rishi Sunak
My right hon. Friend is absolutely right about the important role of FE colleges, which is why I was pleased in the last Budget to invest billions over this Parliament to improve the infrastructure and the quality of our FE estate. With the Prime Minister’s lifetime skills guarantee, FE colleges will be instrumental in delivering to all adults the extra qualification that they need to get better-paid jobs. My right hon. Friend is absolutely right to focus on that.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
Kate Osborne (Jarrow) (Lab)
Rishi Sunak
I thank the hon. Lady for raising that important point. I would be very happy to make sure that it is considered as part of the spending review.
Martin Vickers (Cleethorpes) (Con)
The Chancellor referred earlier to the record amounts being invested in the rail network. May I urge him to ensure that one of the projects that he supports is an east-west freight corridor linking the Humber ports to the west coast? That would greatly maximise the benefits of freeport status; it would also aid the levelling-up agenda.
Peter Kyle (Hove) (Lab)
Rishi Sunak
That is absolutely not right. When it comes to the super deduction, what the Labour party will never understand is that we want to support businesses to create jobs. That is what the super deduction does. I just gave the hon. Gentleman the example of BT creating thousands of new jobs because of the super deduction. When it comes to education, this Govt have invested £3 billion—£800 per pupil—in helping children to catch up with lost education, on top of a record increase in schools funding, which means that per-pupil funding in real terms at the end of this Parliament will be the highest it has been in over a decade.
Katherine Fletcher (South Ribble) (Con)
Jobs are the most important way of helping communities to move forward. Those who have been out of work for 12 months or more can access the restart scheme, worth nearly £3 billion. Will my right hon. Friend ensure that part of his plan is helping everyone to have proper, decent work and decent training to enable them to get the right job?
Alex Davies-Jones (Pontypridd) (Lab)
Rishi Sunak
This Government are proud of the record investment that we have made in our armed forces—a record settlement for the next few years to support our forces and the work that they do around the world to ensure that we can play our responsible role.
We will end on this note, I think. We have had a good debate today, but one thing is clear: the difference between us and the Labour party. We believe in supporting people into work, we believe in supporting their skills, and, crucially, we believe in our plan for jobs, because it is working.
Jeremy Hunt (South West Surrey) (Con)
I thank the Chancellor for his willingness to make extremely difficult decisions to fix the crisis in waiting lists in the NHS and the problems in the social care system. The Health and Social Care Committee heard this morning that we need 4,000 more doctors to tackle the backlog. Does he agree that this is about reform as well as money, particularly in respect of the way we plan our workforce?
Rishi Sunak
My right hon. Friend speaks on these matters with extreme authority and experience, and I thank him for all his engagement on them with me and others. He is right to want to make sure that we have a long-term plan for people in the NHS. He will know that we are committed to delivering 50,000 more nurses and 50 million more primary care appointments, but as part of that plan we must ensure that we get the number of GPs right as well, and I look forward to working with my right hon. Friend on that.
Dame Angela Eagle (Wallasey) (Lab)
Given that the Prime Minister and the Chancellor have already decided to break their manifesto commitment on overseas aid and are now gearing up to break their solemn manifesto promises on the tax lock and the pensions triple lock, why should any voter believe ever again that a Tory manifesto promise is worth the paper it is written on?
Rishi Sunak
What people know they get from this Conservative Government is a Government who are on their side, a Government who are delivering their priorities, whether their priority is 50,000 more nurses, 20,000 more police officers, record investment in every part of our country, or having a Government who are creating jobs and prosperity wherever people live. It says in that document that this is a people’s Government, and that is what we are delivering.
David Morris (Morecambe and Lunesdale) (Con)
I know that this Government are listening to the levelling-up agenda, especially in the north of England, and on that note I should like to suggest that the best way of getting people back into work is putting forward new initiatives. Will the Chancellor meet me shortly to talk about Eden Project North?
Spending Review 2021
Rishi Sunak Excerpts(3 years, 2 months ago)
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The Chancellor of the Exchequer (Rishi Sunak)
Today I can inform the House that I have launched spending review 2021 (SR21) to set departmental resource and capital DEL budgets from 2022-23 to 2024-25 and the devolved Administrations’ block grants for the same period. SR21 will be presented to Parliament alongside autumn budget 2021 and the economic and fiscal forecast from the Office for Budget Responsibility (OBR) on 27 October 2021.
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Official Development Assistance Budget
Rishi Sunak Excerpts(3 years, 4 months ago)
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The Chancellor of the Exchequer (Rishi Sunak)
The Government have acted on a scale unmatched in recent history in responding to the twin health and economic emergencies, with over £400 billion of total support for the economy since the start of the pandemic to protect people’s jobs and livelihoods, and to support businesses and public services.
But the damage inflicted on our economy and the public finances by coronavirus has been immense. We have suffered the biggest recession in 300 years. Last year we borrowed nearly £300 billion—equivalent to 14.3% of GDP—the highest since world war two. Debt as a percentage of GDP reached nearly 100%, the highest since 1962. This year we are forecast to borrow the second highest amount on record during peacetime—second only to last year. This is clearly unsustainable, and the economic damage of coronavirus cannot be fixed overnight.
That is why we have had to take difficult decisions to get borrowing down and restore the public finances—including by increasing corporation tax, freezing income tax personal thresholds and maintaining public sector pay at current levels.
As part of these difficult decisions, we took the decision last year to temporarily reduce the ODA budget to spend 0.5% of gross national income on overseas aid in 2021. The International Development (Official Development Assistance Target) Act 2015 clearly envisages situations in which a departure from spending 0.7% of GNI on ODA may be necessary: for example in response to “fiscal circumstances and, in particular, the likely impact of meeting the target on taxation, public spending and public borrowing”.
Spending at 0.5% of gross national income for this year means we will still spend more than £10 billion to improve global health, fight poverty and tackle climate change. In 2020 we were one of only two G7 countries to meet the 0.7% target, and the only one to do so each year since 2013. Based on the latest OECD data, spending 0.5% GNI as ODA in 2021, as we plan to do, would mean that the UK is still the third largest donor in the G7 as a percentage of GNI.
As we have made clear since that decision, this is a temporary measure and the Government are committed to the 2015 Act and to spending 0.7% of GNI on ODA once the fiscal situation allows. That is why we are today setting out the responsible fiscal circumstances under which we will return to 0.7%.
Consistent with the fiscal principles set out at March Budget 2021, and with the principles contained within the Conservative Party 2019 Manifesto, the Government commit to spending 0.7% of GNI on ODA when the independent Office for Budget Responsibility’s fiscal forecast[1] confirms that, on a sustainable basis, we are not borrowing for day-to-day spending[2] and underlying debt[3]is falling, as explained in more detail below.
At the upcoming Spending Review the Government will set the ODA budget for 2022-23—and provisionally for later years—in line with these tests and the latest fiscal forecast.
Each year over this period, the Government will review, in accordance with the 2015 Act, whether a return to spending 0.7% of GNI on ODA is possible against the latest fiscal forecast. If it expects to meet the fiscal tests described above in the following financial year, the Government will increase overseas aid spending above 0.5% of GNI to 0.7% of GNI and such that these tests are still met. Once the Government have spent 0.7% of GNI as overseas aid in a given year, these tests will no longer apply to overseas aid spending and the Government will return to spending 0.7% of GNI on ODA year on year.
The Government will continue to act compatibly with the International Development (Official Development Assistance Target) Act 2015, under which accountability is to Parliament. The Secretary of State will lay a statement in Parliament in accordance with section 2 of the Act in relation to each calendar year in which the Government do not spend 0.7% GNI on ODA.
A motion will be tabled by the Government alongside this written ministerial statement asking the House of Commons to consider this approach, for debate tomorrow. If the House approves the motion, recognising the need to manage the public finances responsibly and maintaining strong investment in domestic public services like the NHS, schools and police, then the Government will continue with the approach set out in this statement. However, if the House were to negative the motion, rejecting the Government’s assessment of the fiscal circumstances, then the Government would consequently return to spending 0.7% of GNI on international aid in the next calendar year, and with likely consequences for the fiscal situation, including for taxation and current public spending plans.
[1] By fiscal forecast, we refer to the final post-measures official forecasts by the independent Office for Budget Responsibility (OBR) as published in their Economic and Fiscal Outlook.
[2] By “not borrowing for day-to-day spending”, we mean when the fiscal forecast shows a sustainable current budget surplus. The current budget deficit counts all receipts and all current spending, but excludes spending on net investment.
[3] By “underlying debt” we mean public sector net debt—excluding the Bank of England—as a % of GDP. PSND ex BoE is the amount of debt the public sector owes to private sector minus the amount of cash and other short-term assets it holds excluding the liabilities and the liquid assets held on the Bank of England’s balance sheet.
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Fiscal Risks Report 2021
Rishi Sunak Excerpts(3 years, 4 months ago)
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The Chancellor of the Exchequer (Rishi Sunak)
In accordance with the charter for budget responsibility, the OBR has today published its third fiscal risks report (FRR). FRR 2021 provides an update on the risks identified in previous reports, alongside focused coverage of three areas of fiscal risk: the coronavirus pandemic, climate change, and the cost of Government debt. I am grateful to the Budget Responsibility Committee, and staff of the OBR, for their work in preparing this report, which ensures that the UK continues to be at the forefront of fiscal transparency and management during these unprecedented times. The report was laid before Parliament earlier today and copies are available in the Vote Office. The Government will respond formally to FRR 2021 within the next year.
The UK has experienced two “once-in-a-generation” economic shocks in just over a decade, and the challenges faced by the UK since the start of the pandemic have been substantial. Action taken over the last decade to restore the public finances to health enabled the Government to fund a comprehensive package of support for the economy when most needed. The report notes that our direct support to businesses helped keep many of our employers afloat, kept insolvencies in check and avoided the kind of credit crunch that occurred during the financial crisis. The Government have acted on a scale unmatched in recent history to protect people’s jobs and livelihoods and to support businesses and public services across the UK. Taking into account the significant support confirmed at spending review 2020 and Budget 2021, total announced support for the economy in response to covid-19 is £352 billion across 2020-21 and 2021-22.
The report highlights the range of spending choices and risks we face, particularly relating to pandemic spending. These will be considered at the spending review. As the report notes, spending is increasing in cash terms, real terms, and as a share of GDP overall. Total managed expenditure is forecast to rise by 2.1% of GDP between 2019-20 and 2024-25. Core departmental spending is set to grow at an average of over 3% in real terms over this Parliament. Our plans will deliver the largest real-terms increase in departmental spending for any full Parliament this century.
It is clear that unmitigated climate change is another significant fiscal risk and decarbonisation is essential for sustainable long-term growth and therefore also for the health of the public finances. The fiscal consequences of transition to net zero will need to be managed in line with the Government’s broader fiscal strategy. The Government will publish our net zero strategy later this year, which will set out more detail on how we will meet our net zero target.
The pandemic and the Government’s necessary policy response has led to an unprecedented increase in Government borrowing and debt; FRR 2021 illustrates how this has made the public finances more sensitive to changes in interest rates. While borrowing costs are affordable now, interest rates and inflation may not stay low forever. The OBR’s latest forecast recognises that the Government’s current fiscal plans deliver a stable medium-term outlook for public sector net debt, but as I set out at that Budget, we need to pay close attention to the affordability of that debt.
The risks discussed by the OBR in this report underline the importance of returning our public finances to a more sustainable path. The report finds that, in the face of many potential fiscal risks,
“fiscal space may be the single most valuable risk management tool”.
That is why the Government set out at Budget 2021 a plan for returning the public finances to a more sustainable path. It is vital that we rebuild fiscal space to ensure that the Government can maintain fiscal resilience to respond as future risks materialise, continue to invest in excellent public services and give businesses and citizens across the UK the certainty that comes with knowing we can and will support them.
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