Business and the Economy

Torsten Bell Excerpts

Wednesday 21st May 2025 Commons Chamber

[Mr Mohindra]

That is an excellent point. I have a plea to Government. Perversely, reducing tax rates sometimes increases the amount of money received in the coffers. I say that as a retailer. When VAT was reduced to 15%, it allowed me the certainty to expand our furniture business; we secured another outlet, employed more people and paid more business rates. In effect, it was a win-win for both the state and for our small business.

We have spoken about NICs, but the Employment Rights Bill also causes me massive concerns. I would now think twice about the risks that I would have taken hiring a 16 to 18-year-old, because it would cost me the same to employ someone in their 30s or 40s as to employ a first-jobber. There is a ticking time bomb for people leaving university or college in the summer. Where are they going to work? We have spoken about the 100,000 fewer jobs over the last 12 months; that will only get worse when those people finish their degrees, A-levels, BTECs and so on, and cannot get into employment. That is going to affect the Minister’s workings.

We on the Conservative Benches will be fully supportive of the Government if they do the right thing. Our role in this place is to be critical friends because we all want—

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

Are the hon. Gentleman’s colleagues listening?

[Mr Mohindra]

Well, I have been listening; I spend a lot of time in the Chamber. Yes, there is an element of Punch and Judy, but the reality is that there are 650 of us here who want great legislation to support our communities and make sure that people can get on with their daily lives without the burden of having to think about legislation. They want us to get on with it on their behalf.

On tax rises, we have seen the leak of the Deputy Prime Minister’s letter to the Chancellor. I remain concerned that any ambition to increase taxes is another death by a thousand cuts for our small businesses. We need certainty and support from this Government, saying to people, “Go and be ambitious.” If people are risk-averse, there will be a structural problem for us on our high streets and for our small businesses. That means that we will not create the world’s next unicorn because those ambitious people will already have left our country to generate their income in a better financial climate, typically in the middle east or other parts of Europe.

--- Later in debate ---

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

This is hopefully one thing on which all Members and definitely those on both Front Benches agree: “It’s the economy, stupid.” It is a growing economy that raises living standards and that sustains public services and eases public finances. Perhaps most importantly, it is a growing economy that proves to people that tomorrow can be better than today.

I welcome it that the Conservative party has called this debate. It is an important topic, it is deserving of our time and I thank all hon. Members for their contributions, even if I cannot thank them all for the duration of those contributions. Fifty minutes to deliver one speech is Britain’s productivity crisis right there. [Interruption.] The hon. Member for Arundel and South Downs (Andrew Griffith) is still talking. The productivity crisis rolls on.

Given how important this topic is, it will be a surprise to hon. Members, probably those on both sides of the House, that this is the one and only time that the Conservative party has wanted to talk about the economy in the year since the election. It is the first Opposition day on the economy. I initially thought that that could not be true. I am a new Minister and I have a lot to learn, so I said to my office, “Go and check. They can’t have got through a whole year with no Opposition day on the economy.” My office checked and it found that it has been 10 months with not one debate on the economy. Private schools? Oh yes, the Conservatives want a debate on that. But investment, growth, jobs and the economy? Not one debate. It is no surprise that they do not want to talk about the economy, because their economic legacy was one of entirely unprecedented failure, as my hon. Friend the Member for Loughborough (Dr Sandher) set out.

[Neil O’Brien]

Will the Minister give way?

[Torsten Bell]

I will in a second.

It is a legacy of stagnation not seen in living memory, with the lowest business investment in the G7; wages, which used to grow at a consistent 2% a year, flatlining for their entire period in office; the worst Parliament on record for living standards; and the public finances trashed as debt soared. It is no surprise that the Conservatives have nothing to say about the past—the Leader of the Opposition said that it was true that they had no plan for growth—and it is staggering that they still have nothing to say about the future.

[Matt Rodda (Reading Central) (Lab)]

Will the Minister give way?

[Torsten Bell]

I said that I would give way first to the hon. Member for Harborough, Oadby and Wigston (Neil O’Brien), but I will come to my hon. Friend.

That is not just my view, but the view of George Osborne. He says that the Tory party has no “credible economic plan”. I always enjoy listening to the hon. Member for Grantham and Bourne (Gareth Davies), so I listened extra carefully just now, and there is still no plan, credible or otherwise.

[Neil O’Brien]

I was just observing and enjoying the way in which the Minister was lecturing us about not wanting to talk about the economy, when at one point during the debate, literally only three Labour Members were in the Chamber—it is extraordinary. If they are so wonderfully proud of their record of higher unemployment, higher inflation and slower growth, why are none of them here?

[Torsten Bell]

Because Labour Back Benchers support and have total trust in their Front Benchers. All they would have said is everything that I am about to say about the record of this Government, of which we are very proud.

I will come on to the labour market, which the hon. Member for Harborough, Oadby and Wigston raised. The hon. Member for Richmond Park (Sarah Olney) asked about employment and changes to national insurance, and several Members claimed that there is a direct relationship between changes to national insurance and changes in vacancies in the labour market. Let us introduce some facts to the debate—[Interruption.] While the shadow Secretary of State chunters, here are some facts: vacancies in Britain have been falling for 34 months, there has been a Labour Government for 10 months, and there has been a national insurance change for one month. Those are the facts. We cannot let the Conservative party escape from their disastrous record by reinventing history.

[Dr Luke Evans]

One fact is that the claimant count and unemployment rate in Swansea West have gone up by 4% on the previous year. What does the Minister say to his constituents when they confront him because they are losing their jobs and the unemployment rate has gone up?

[Torsten Bell]

The most important fact for my Swansea West constituents is that wages at the end of the Conservatives’ period in office were stuck at the same level as when they came into office in 2010—14 wasted years for my constituents. To respond to the hon. Gentleman’s question about unemployment, I would not use the claimant count at that level because the data is not as robust as it should be. Several hon. Members have, over the course of the debate, talked about increases in the unemployment rate in recent months. Why has the unemployment rate gone up? It is not because employment has come down, but because the inactivity that shot up on the Conservatives’ watch has started to decline. That is what is going on beneath the numbers.

Why do Conservative Members not want to talk about their disastrous record on the labour market? It is because they left us as the only G7 economy whose employment rate still had not returned to pre-pandemic levels. They left us with 2.8 million people out of work through long-term sickness, and 1 million young people not in education, employment or training—more than one in eight young people were left on the scrapheap by the Conservatives.

Let me turn to the labour market today, which hon. Members have mentioned. Some 200,000 jobs have been created since the Government took office. Pay has outstripped prices, with the strongest real pay growth for years. Let me pause on the question of wages, because for many people, what they get paid is the economy. Here is a fact so staggering that it tells us all we need to know about the failure of the previous Government and the progress made under this one: wages have grown faster in the first 10 months of this Government than they did in the first 10 years of Tory Governments from 2010. That is what a country turning a corner looks like.

[Paul Holmes (Hamble Valley) (Con)]

Boom and bust!

[Torsten Bell]

It is not boom and bust. Wages for workers need to rise in Britain once again. We also need to turn the corner on an economy that is far too unequal. That is what our Employment Rights Bill will do.

[Neil O’Brien]

The Minister is being incredibly generous with his time. He is saying what a wonderful outlook there is for wages. Why, then, is the OBR’s forecast for real household disposable income to be lower than in the 1950s, the 1960s, the 1970s, the 1980s, the 1990s, the noughties and the 2010s?

--- Later in debate ---

[Torsten Bell]

Real household disposable income per capita is growing quite fast, according to the latest measure at the end of the fourth quarter of 2024. The OBR says that the legacy of the previous Government has shown it that productivity and growth in this economy have been too slow. Our job is to turn around their record, so that the forecasts and real wages start to rise.

[Matt Rodda]

I thank the Minister for giving way on that point. He is making an excellent speech, contrasting the 14 years of utter failure by the Conservatives with the quick start by Labour. He has been quoting statistics for the period since Labour was elected, but will he say more about the potential benefits of the three trade deals for growth and investment?

[Torsten Bell]

What is great about my hon. Friend is that he has a forecasting ability that is significantly above that of many economic forecasters. He has predicted exactly where I shall be turning shortly.

I want to dwell on a few points about the unequal economy. Three million workers have benefited from the introduction of a higher minimum wage last month. That is worth £1,400 to a full-time worker. Just today, the Trussell Trust provided an update on the painful symbol of modern Britain that is food banks. Far too many food parcels were provided over the last 12 months: 2.9 million. That is up by nearly a half over five years, which is an absolute disgrace, but it is down 8% on the past year and we need to keep it falling.

Several hon. Members have raised the question of tax. The right hon. Member for East Hampshire (Damian Hinds) and the shadow Minister sounded as if they were opposed to all taxes and made it the core of their argument that a higher tax level is a problem that this Government have put in place. Neither of them mentioned that the increase in taxes under the Tories in the last Parliament was significantly higher than any change in taxes under this Government—[Interruption.] It is true.

The hon. Member for South West Hertfordshire (Mr Mohindra) raised the question of non-doms, but also asked whether HMRC was behaving more aggressively. He favoured direct control of HMRC by Government Ministers. The Exchequer Secretary to the Treasury now chairs HMRC, and I am sure he will have heard the hon. Gentleman’s points. On the idea that HMRC has become more aggressive, one of my first jobs in government was being involved in merging what was then the Inland Revenue and the Customs department, and I promise Members that nobody is as aggressive as the Customs department was in the olden days. There were guns involved.

This Government had to take difficult but fair choices on tax in the autumn Budget—

[Jerome Mayhew]

I am grateful to the Minister for giving way. A moment ago he told the House that real household disposable incomes were rising as a result of this Government, but does he not accept that the OBR, when critiquing the Budget last October, found that during the forecast period real household disposable incomes would fall as a result of the Budget proposals?

[Torsten Bell]

What the Office for Budget Responsibility has said is that disposable incomes will grow during this Parliament at twice the rate that they grew during the last Parliament. The hon. Gentleman has just given me another excuse to repeat my favourite fact, which is this: forget what anybody is forecasting, because in the real world, wages have risen more in the first 10 months of this Government than in an entire 10 years under the Conservatives.

We are going to stick to our promise not to raise working people’s rates of income tax, national insurance or VAT, and we are maintaining an internationally competitive tax system with the lowest rate of corporation tax in the G7. Nobody on this side of the House is pretending that these were easy decisions, but they were the right ones and the responsible ones, yet each and every decision has been opposed by the Opposition parties. It is no surprise to hear SNP Members joining with the Conservatives, as they do on almost everything these days.

[Dave Doogan]

The Minister is making great play of the way in which his new Government have increased wages across the United Kingdom since the election, but will he concede that 91% of earners and workers in Scotland were already earning more than the living wage level that his Government have recently set?

[Torsten Bell]

I will, and that is why I am celebrating the fact that average wage rises are happening. If the hon. Member does not want to be in favour of wage rises in Scotland, that says everything about today’s SNP.

We are all used to the Liberal Democrats’ fantasy economics, but the Conservatives used to believe in sound public finances. They used to understand that it is only on that basis that the Bank of England can sustainably cut interest rates, as it has done on four occasions since the general election. The shadow Secretary of State, in his very long speech, claimed that these choices were not pro-business choices. I tell him that these are pro-business choices because it is pro-business to deliver functioning public services. Was it pro-business when the Conservatives left shops up and down the country paying a retail tax, forced to employ their own security guards because the Tories took the police off the beat? Was it pro-business when employers everywhere faced a health tax under the Conservatives because the NHS was not functioning and their staff were off sick? As I said earlier, growth is key. Of course, the shadow Secretary of State is such a champion of the British economy that he predicted there would not be any. Back in December, he claimed with glee that Britain would start 2025 in recession—

[Andrew Griffith]

I didn’t say that.

[Torsten Bell]

I will quote the hon. Member. He said,

“‘could we be in recession’? Yes we could.”

He talked the economy down—he knows exactly what he did—and British business has proved him wrong: no recession and the fastest growth in the G7.

Although the economy is beginning to turn a corner, the Government recognise that there are big challenges ahead. There is no shortcut if we want to get the economy growing again; we have to start investing once again. That is why we have raised public investment by £113 billion over this Parliament. Compare that with the deep cuts planned by the Conservatives. It is why Britain’s pension funds—my day job is as Pensions Minister—are looking to invest more in productive assets and more in the UK. It is also why we are approving infrastructure projects from wind farms to reservoirs that were previously blocked for years. When firms decide to invest, they have to actually be able to build something. That is why Labour is the party of the builders, not the blockers.

Let me turn to trade. The Prime Minister has in quick succession secured three significant trade deals. Every single one has been opposed by the Conservatives—opposing our whisky industry exporting and opposing lower food prices in the shops. It is increasingly clear that they say they support free trade in principle, but there is no actual existing trade deal that they would ever support. They used to be the party of Robert Peel, and now they are just the party of plonkers.

We are under no illusions as to the challenges ahead. We all know, on both sides of the House, the deep cost of living squeeze that has left far too many British families suffering, but we are getting on with the job: stability in the public finances, investing at home, trade agreements abroad, interest rates down and wages up. After a long decade and a half of stagnation, Britain is growing at the fastest rate in the G7.

We have heard a lot from Conservative Members, but not a single word of apology has crossed their lips for the mess they left—no humility for the unprecedented economic damage they inflicted, no apology to businesses or workers, and not even a sign of an alternative plan to drive growth and investment in our economy. The British public learned a very long time ago: when Tories govern, Britain loses.

Question put.