Backing Business to Create Economic Growth

Tom Tugendhat Excerpts

Monday 18th May 2026 Commons Chamber

[Peter Kyle]

Unfortunately, none of the Conservative Members was listening to what I just said in outlining the measures we are taking, and the admission that we get it and we are listening. Fundamentally and foundationally, what those businesses need is what every business in this country needs, which is a growing economy. In the last year the Conservatives were in office, growth was 0.4%, but in the first year in office of this Government, it was 1.4%. That is what every business needs across the country, and when it comes to specific sectors at specific moments in time, we are watching and attuned, and I am acting where necessary. When the right hon. Member for Central Devon (Sir Mel Stride) addresses the House, I am certain that on that and so much more he will display all the symptoms of the economic illiteracy and ideological incompetence that for too long have engulfed the Conservative party. By contrast, we are taking practical action to end these conditions.

We are bringing in new measures to tackle late payments. The small business protections (late payments) Bill will give the UK the strongest legal framework in the entire G7. Late payments cost the UK economy £11 billion a year, forcing the closure of 38 businesses every single day. For 14 years it was the same under the Conservatives, and they did nothing. The Bill tackles the scourge of late payments, brings in stronger powers for the Small Business Commissioner, sets out strict maximum payment terms of 60 days, and bans the deduction of retentions in construction contracts. The Federation of Small Businesses has said that tackling late payment is one of the biggest things the Government can do to help small businesses to grow. That is the difference that an activist, interventionist Labour Government can make.

Finally, let me turn to another example of the difference. The ghost of free market Thatcherism still haunts many of the industrial areas of this country. It can be seen in the scars of de-industrialisation still marking too many communities around our country. It is high time to exorcise the ghost of de-industrialisation. When I published the steel strategy last month, I told the House I would never hesitate to fight for British industry in defence of the national interest. The legislation we are bringing forward is proof positive of that commitment.

[Tom Tugendhat (Tonbridge) (Con)]

I am grateful to my right hon. Friend—forgive me, I should not call him that; he will be embarrassed. I am grateful to the right hon. Member for his point about the steel industry. Understandably, he has chosen to support one particular aspect of the industry, the steelmaker, but at the expense of and to the cost of every other part of the industry—the steel consumers. How will he balance that and what provision will he make for those who will see steel prices rises because of his intervention?

[Peter Kyle]

I have committed to invest in, modernise and protect the steel industry where I need to. Those are watchwords that I apply throughout the economy in highly volatile times. We are investing up to £2.5 billion to modernise and transform the steel sector, from blast furnaces to electric arc furnaces—those are the kinds of transformations we need to make. If I had invested that money but not also protected our sector, that would be pouring vast amounts of public money straight down the drain. In certain circumstances I have had to step in and use measures to protect the domestic British industry. I am not introducing measures for any products that are not manufactured in the UK. I am doing so wisely; I am doing so to protect and ensure that we can build and retain a steel industry that is fit for the future and sustainable.

We will move forward and ensure that, in an era of global instability, we have the key aspects of our supply chain that we need for our resilience as a nation—yes, in defence; yes, in industry; and yes, in all the money we are investing in infrastructure. We must reserve those capabilities. I am listening and engaging with all parts of the steel sector, and the manufacturers and businesses that depend on it. I am listening closely to them. If there are any impacts, I will of course engage with them to understand and see how it will be possible, where necessary, to provide support.

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[Sir Mel Stride]

My hon. Friend is absolutely right. I have had the great pleasure of visiting her constituency to speak to businesses, and that is exactly what they complain of. The Government made no effort, in the King’s Speech, to get on top of the benefits bill. There was a reference to the Timms review of the personal independence payment, but we know that in the review’s terms of reference, there is an explicit statement that it is not about controlling the welfare bill. There will be no savings as a consequence of the Timms review. That is not good enough. We have got to be about getting people off benefits and back into work.

[Tom Tugendhat]

Does my right hon. Friend not agree that we are seeing not only young people let down, but the deeply immoral act of people being kept on welfare? In five or 10 years’ time, people will have been on welfare for so long that they will not have any options. They will effectively have been left slaves of a state that has no concern for them. Nobody in this Chamber will have any power over how the welfare state will behave then, and those people will have no options. It will be the fault of this House and this Government for having kept those people there, and having imprisoned them.

[Sir Mel Stride]

That is entirely right. The Conservatives know that work matters, and getting people off benefits matters. People’s mental health is improved by going to work, and by having the social interaction, routine and sense of pride and self-worth that comes with work. That is why the level of unemployment and the failure of this Government to tackle benefits is so appalling.

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[Tom Tugendhat (Tonbridge) (Con)]

It has been a pleasure to sit here for a number of hours and hear some views that are, frankly, special.

Let me start with some of the factors that have been completely missed from not only this debate but the King’s Speech. I do not think the realisation in this place takes the reality of our situation very seriously. We are broke. We owe not only £2 trillion to the debt markets—which, I am afraid, despite orders to foreigners to hand over more money, we do not control—but £10 trillion to people to whom we promised pensions and the businesses that built our schools and hospitals the last time we had a Labour Government.

We find ourselves in a situation where the conversation in this House has reached a point of unreality, because we are not addressing a very simple fact: inflation is coming down the tracks very quickly because of the decisions to challenge the energy markets directly in places such as Iran. We are seeing enormous pressures steaming up from Iran, from the strait of Hormuz, from the lack of gas flowing and from the absence of fertiliser. They are about to hit us in the grain markets in September, when the first harvest is not complete, and they will hit us in the meat markets in the spring, because that grain will not have led over the winter to the growth of animals for protein.

We are storing up a whole series of challenges for ourselves. Yet here we are talking about how much more we can spend and how much more we can get individuals to put their hands in their pockets, with the promise that they will get the money back in four, 10 or 20 years’ time. I am afraid that is simply not realistic. It is nothing to do with the credibility of this Prime Minister or whomever the Labour party chooses next; it is down to the simple reality that about a year ago, the Government refused to take the first and only decision that would have strategically mattered in this Parliament—to constrain welfare. The moment they refused to do that, they put themselves in opposition to simple financial reality, and the rest of the path was set. I am afraid that is exactly where we find ourselves.

The King’s Speech—the King, if not the Government, did it well—set out another series of wish lists for a Government who are going to last another few weeks. They are an Administration who are simply not going to change the reality, because they are not willing to take the decisions that need to be taken. I am afraid that is the reality of the United Kingdom’s position.

We are not being serious. We are not dealing seriously with the fact that we have young people who want to work and have energy, drive and determination, but who are being sold down the river by parties that are all sticking to triple locks on pensions and promising benefits to people who are already in work—as the Employment Rights Act 2025 does—but not to those who seek employment.

We are seeking to go down a path of control, statism and nationalisation. In fact, we have replaced socialism not with communism, as the Chinese have, or with the kind of authoritarianism that we see in some parts of eastern Europe, but with command capitalism: the illusion of privatisation with the direct intervention of regulation. We are seeing the absolutely predictable results of Government instructing individuals how to behave. Well, guess what? Individuals are opting out. We saw them opting out of hiring when the national insurance rate went up; we will see them opt out of leasing when the Renters’ Rights Act 2025 closes down that market; and we will see people forced out of the choices that they need to build their own lives. That is a hell of a pattern for this Government to set for the country. Let us be honest: with the current way that they are going, there is no way out.

Whoever the Labour party picks as its leader, unless its Back Benchers change and decide that they are willing to take their responsibilities seriously, we know what the result will be: the International Monetary Fund, the debt markets, and many, many people losing their homes.

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[The Chief Secretary to the Treasury (Lucy Rigby)]

It is a pleasure to close today’s King’s Speech debate on behalf of the Government. I am grateful to Members for their contributions, including the Business Secretary for his excellent opening speech and the shadow Business Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin), for her kind words—although I note that I did not qualify as a “beam of light”, nor others on the Government side. I speak on behalf of the whole House when I say that whichever part of that £5 million charitable donation the right hon. Member for Newark (Robert Jenrick)—he is not here, unfortunately —spent on his amateur dramatics course, he ought to ask for his money back.

Two years ago, the Chancellor stood at this Dispatch Box following the first King’s Speech of this Labour Government. She committed to rejecting the failed economic approach of the 14 years prior and to charting a different economic course, reinvigorating our economy after years of chronic under-investment, austerity and poor productivity, and the only Parliament in recorded history when living standards actually got worse. The Chancellor committed to charting a different course so that our economy delivers for people right across this country.

As a result of that approach, interest rates have been cut six times since the general election. In March, the spring forecast showed inflation coming down, as the right hon. Member for New Forest West (Sir Desmond Swayne) was good enough to highlight, and real wages continuing to rise. Last week, ONS data showed borrowing falling by around £20 billion compared with the year before. Importantly, economic growth accelerated sharply in the first quarter of this year, rising to 0.6%, despite the Iran war. Of course, today we have had the IMF upgrade to growth this year as well.

I am afraid I have to correct the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), and the hon. Member for Rutland and Stamford (Alicia Kearns), because GDP per capita is up too. These things are the result of the fiscally responsible choices that this Government have made, and it is responsibility for a clear purpose. That same purpose will always be at the heart of who we are as a Labour party: improving the lives of working people right across the country.

We increased the national living wage and the national minimum wage. We have frozen prescription costs, and we have frozen rail fares for the first time in 30 years. We have scrapped the two-child benefit cap, lifting 450,000 children out of poverty. We are helping parents to save up to £8,000 a year with our expansion of Government-funded childcare, free breakfast clubs, and the new school uniform cap on branded items. Those things are helping millions of families across the country.

The conflict in the middle east is putting pressure on energy markets and creating renewed fragility in trade and supply chains. The Conservative party and Reform would have raced into that costly war—the Leader of the Opposition was clear about that at the time—with damaging consequences for both our national security and our economy. [Interruption.] Conservative Members are shaking their heads and saying it is not true, but one of two things must be true: either the Leader of the Opposition said that she wanted to take us into the conflict and she meant it, in which case she has catastrophically poor judgment, or she said that she wanted to take us into the conflict but did not mean it, in which case she is deeply confused and Conservative Members have more things to worry about than catastrophically poor judgment.

By contrast, the Prime Minister made the right decision to keep us out of that conflict. Because of his decision, and because of the action we have taken to stabilise the economy over the past two years, Britain today is in a stronger position to withstand the uncertainty and insecurity in the global economy.

As well as immediate support with the cost of living, we must also create the conditions for shared prosperity. That means more jobs, businesses expanding and investing, and people in every community and part of our country having greater security and more of their own money to spend. That is what a Labour growth agenda means. The Chancellor has been clear that she wants to ensure that that growth is stable and resilient. Why? Because that means people secure in their jobs and households secure in their finances and, in our increasingly uncertain world, it means that families the length and breadth of Britain will be more confident and hopeful about what the future holds.

All that is the basis on which the pro-growth legislation set out in the Gracious Speech is being delivered. That begins with legislation to reform and modernise regulation, to ensure that rules are proportionate to risk, and that businesses are able to expand and grow to the benefit of our economy as a whole.

I am grateful to the right hon. Member for Salisbury (John Glen) for his constructive comments about our enhancing financial services Bill. I confirm that the Bill will maintain the UK’s competitive edge by enabling the sector to support businesses of all sizes to invest and grow, including credit unions, with reforms to the common bond. We will ensure that regulation ensures more lending to small businesses, and we will give Government the power to take action on in-person banking services.

As many Members highlighted, the small business protections (late payments) Bill will tackle the scourge of late payments which, as my hon. Friend the Member for North West Leicestershire (Amanda Hack) wrote in her dissertation some years ago, cost the UK economy £11 billion each year and lead to the closure of 38 UK businesses every day.

We must also build resilience to protect our critical infrastructure. Steel is strategically important to our economy, which is why we acted last year to avoid a sudden halt to production at Scunthorpe, protecting workers and the community that depends on the site. It is why we are now bringing forward legislation to give us options to protect Britain’s steelmaking capability.

We have already announced major energy investments, including for the UK’s first ever small modular reactor in Anglesey and the next generation of nuclear submarines in Inverclyde. Our nuclear regulation Bill will modernise the way new nuclear projects are regulated so that we can deliver safe, secure and affordable nuclear power and infrastructure sooner, while maintaining strong environmental protections. Unlike a number of the Opposition parties, including the Greens and the SNP, this Government recognise the importance of new nuclear for our energy security, our climate security and our economic security.

My hon. Friend the Member for Bristol East (Kerry McCarthy) asked about the voluntary carbon consultation. The Government have published a summary of responses and a formal Government response will be published over the summer.

As Members have noted, we must improve connectivity and boost trade to unlock growth. Labour has been saying for years that far too many parts of Britain lack basic and reliable transport connections, and all the many positive economic benefits that flow from that. Some of these points were echoed by Members, including the hon. Member for North Shropshire (Helen Morgan). Northern Powerhouse Rail will help to build a northern economy that reaches its full potential. Backed by up to £45 billion of Government support, the new route will drive jobs and investment across a single, well-connected northern growth corridor. We are also taking steps to protect and grow the freight industry.

On the points raised by my hon. Friend the Member for Brent East (Dawn Butler) and by the hon. Member for St Albans (Daisy Cooper) about the overnight visitor levy, the levy is a key means by which we are delivering our manifesto commitment to devolve new revenue-raising powers. Revenues from the levy will support local economic growth and mayors will make decisions, informed by local consultation, about how revenues should best be invested in their region.

Britain will work closely with those who share our values and interests, which means a closer and more constructive relationship with Europe. That is why we are bringing forward the European partnership Bill.

[Tom Tugendhat]

I am delighted to hear that we will be working more closely with the European Union. As the hon. and learned Lady may know, my wife, being French, will be particularly pleased about that, but what will that mean for the agreement we have struck with the Pacific nations in the comprehensive and progressive agreement for trans-Pacific partnership, or the deal that we did with the Australians? Will the hon. and learned Lady be cancelling those deals as she focuses on the European Union, or will she be staying out of the customs union and the single market, and therefore being focused much more on being a rule taker? I am interested to hear her response.

[Lucy Rigby]

The right hon. Gentleman’s wife, and potentially he himself, will be pleased to know that those two things are entirely compatible. We will have to cancel absolutely nothing at all. The key point is that where it is in our national interest to align with EU regulation, the Bill will enable us to do so.

I want to address some specific points that were raised about Northern Ireland. The Government have worked closely with devolved Governments to design the Bill. The application of the agreements we are making alongside the Windsor framework will sweep away the majority of regulatory barriers for businesses moving agrifood goods.