PARLIAMENTARY DEBATE
Topical Questions - 21 January 2025 (Commons/Commons Chamber)

When I became Chancellor, there was a £22 billion black hole in the public finances. We simply could not carry on like that, which is why I have taken control of our public finances and made growth the No. 1 priority of the Government to improve living standards.

In December, I launched the second phase of our spending review, where for the first time in 17 years every single pound of taxpayer money will be investigated line by line to ensure that it is being spent well. The spending review will set resource or day-to-day departmental budgets until 2028-29 and capital departmental budgets until 2029-30. On 11 June, when we conclude the review, I will present departmental budgets to the House.

The recent drop in the rate of inflation is welcome news for those facing financial pressures across Coatbridge and Bellshill, as is the expectation that the UK will become the fastest growing economy in Europe. What further action is my right hon. Friend taking, working in partnership with Cabinet colleagues, to ensure that working families continue to see prices fall and living standards rise?

I thank my hon. Friend for that question. I know that the cost of living has a deep impact on all our constituents, including in Coatbridge and Bellshill. Like my hon. Friend, I was pleased to see the reduction in inflation last week. The Bank of England’s independence is sacrosanct to carry on those efforts. In addition, we increased the minimum wage in the Budget, we have reformed universal credit to reduce deductions and we have extended the household support fund, all to help ensure that working families have more money in their pockets.

I call the shadow Chancellor.

A moment ago, the right hon. Lady spoke about the importance of spending money wisely, so in the light of the Treasury Committee’s conclusion that her new Office for Value for Money is a waste of money, does she agree that one of its early actions should be to abolish itself in order to save money?

I was pleased to appoint Tom Hayhoe to run the Office for Value for Money—somebody who has a track record of delivering value for money for taxpayers. What the Government want to scrap is giving contracts to friends and donors, because that was a colossal waste of money instigated by the Conservative party.

The Chancellor’s answer was an answer, but I do not think that it connected in any way with my question. Could I perhaps ask her about national insurance hikes? A full two thirds of the revenues raised through Labour’s job tax is simply going on servicing the additional debt being run up by this profligate Government. Given that, does she really believe that the catastrophic effects of that tax on businesses right up and down the country are a price worth paying?

We inherited a £22 billion black hole in the public finances, and we set out the detail of that at the time of the Budget. It was essential to close that gap to bring stability back to the public finances. That required difficult decisions, but they were the right decisions to ensure that our country has the stability that it lacked for so many years and under so many different Prime Ministers and Chancellors under the Conservative party.

I thank my hon. Friend for raising this issue, which clearly is important to him and his constituents. I confirmed to the House today that the Minister for Trade in the Department for Business and Trade is working with the trustees of the BCSSS to consider options. I will meet the Minister to look at those options and provide further updates to the House in due course.

This Government cannot account for the decisions made by the Conservative party, but we have created the Office for Value for Money, to ensure value for money when we use taxpayer’s money.

Order. Mr Lowe, topical questions are meant to be short and punchy. I am sure that you are very good at that normally.

When I visited St Barnabas hospice in Lincoln recently, the chief executive told me that it was having to pay £350,000 extra every year to cover the national insurance increase. I do not expect an answer now, but as we all agree that palliative care is so important and we want to encourage it, and the Terminally Ill Adults (End of Life) Bill started its Committee stage today, will the Government keep that increase for hospices under review?

The Health Secretary set out the settlement for hospices just before Christmas to ensure that they have the money they need, including to compensate for the national insurance increase, but I am happy to arrange a meeting for the right hon. Gentleman with the relevant Health Minister.

I call the Minister—welcome to the Front Bench.

My hon. Friend is a powerful advocate for his constituents, and particularly for those who have suffered in recent weeks, including others across Greater Manchester. As I set out earlier, the Government have put in £2.4 billion to ensure flood resilience over the next two years; as he will be aware, future decisions on flood defence funding will be taken in the spending review in the normal way. I know that he will continue to be a powerful advocate for his constituents.

Schools in Westmorland have been told that they will have to meet the costs of teacher pay rises next year, at least in part, from existing funds and by making efficiencies. Does the Chancellor not understand that all that is available to schools in my constituency is sacking teachers and merging classes? Will she instead commit to fully funding the teachers’ pay rise and other cost increases, so that our schools can do the job that they are meant to do?

The hon. Gentleman knows that in order for us to restore public finances and put them on a firm foundation, departmental settlements have to reflect the cost of the civil servants they employ; that is how the Departments are working. As the Chancellor has previously confirmed, the Department for Education has received money to cover the cost of running the education system, and the details will be provided to schools in the normal way in due course.

I thank my hon. Friend, who is an important champion for the Welsh economy. Wales can and will play a vital part in our growth mission. Our two Labour Governments continue to work together as we review the position inherited from the Conservative Government, including on rail infrastructure, and decisions will be set out in the spending review in June.

Will the Chancellor advise businesses in my constituency that are having to make staff unemployed and stop expansion plans in order to pay for her increases in employer national insurance contributions?

I join my hon. Friend in congratulating Intasite on its 10th anniversary as a business, and on the rapid growth it is enjoying. The announcement we were able to make last year on the carbon capture and storage work in Teesside will be a big driver of jobs and growth there, and I look forward to working with him and local businesses in Stockton to make that a reality.

Does the Chancellor of the Exchequer propose funding the reported £9 billion bill to the Mauritians for the continued use of Diego Garcia through higher taxes, more borrowing or spending cuts?

We are in discussions with the new Administration in the United States around the future of Diego Garcia. We will set out details in the spending review, as the right hon. Gentleman would expect.

It is estimated that 148,000 people had their lives cut short between 2010 and 2020 as a result of austerity measures; on top of that, poor health led to more than £13 billion in lost productivity under the previous Government. What are my right hon. Friend’s estimates of the different choices, and the impact that they will have on the health of the nation and economic growth?

I thank my hon. Friend for that question. I know she studies closely the work of Professor Michael Marmot on life expectancy and the impact of health inequalities on our country. At the Budget, we increased the minimum wage. In addition, we extended the household support fund and reduced the amount that could be taken in deductions from universal credit, all to try to put more money in the pockets of ordinary working people, to reduce some of those inequalities and tackle the cost of living crisis.

One of my GP surgeries called me this morning to highlight the impact of the rise in national insurance contributions, which will cost it £40,000. It can only respond by freezing cost of living pay increases for all its support staff. Does the Chancellor finally accept that working people up and down the country are paying the price for her tax rises?

My constituency has a proud industrial heritage, with manufacturing still worth £1 billion a year to the local economy from sectors that account for nearly 10% of the UK’s total economic output. What steps have the Government taken to promote the growth of the manufacturing sector and ensure that towns like Dudley continue to build on their industrial traditions?

I thank my hon. Friend for that question, and for the work she does to support and promote businesses in Dudley. Through our modern industrial strategy, and the targeting of eight sectors in which there is huge potential for growth, we will work with businesses right across the country on, for example, reform of the planning system to make it easier for them to build, and reform of the pension system to get funding for businesses, including those in Dudley, that are looking to grow and expand.

Neither the US Federal Reserve nor the EU Central Bank are engaged in active quantitative tightening, but the Bank of England is. The Bank of England is costing the public finances in the region of £13 billion a year as a result of a fire sale of UK Government bonds. Last time I spoke to the Chancellor about that, she said that that was because of the Bank of England’s operational independence, which we all value, but that is not a licence for impunity. What discussions will she have with the Bank of England about releasing UK Government debt in a way that benefits everybody in the UK?

It is our view that it is absolutely right that the Bank of England has operational independence. That is in line with international standards and what is happening in jurisdictions around the world, including in the United States and the eurozone.

Recent developments in the UK investment trust sector have once again shone a light on the crucial role that retail investors play in our financial markets. In her Mansion House speech last November, the Chancellor rightly prioritised leveraging domestic pension capital to drive the Government’s economic growth mission. Does the Minister agree that greater retail participation in UK financial markets also supports growth and democratises wealth, and will she meet me to discuss how the Government can better support access to financial markets for individuals, including in my constituency?

I am always happy to meet my hon. Friend, who is a near constituency neighbour. We absolutely agree that retail investment is crucial. I want more progress on the advice guidance boundary and targeted support. I will be working closely, in my new role, with the Financial Conduct Authority to take that forward.

Residents in my constituency will have been extremely concerned to read the news this morning that the Chancellor plans to announce next week the expansion of Heathrow. I invite her to tell us, on the Floor of the House this morning, yes or no: will the Government back expansion at Heathrow?

I am not going to comment on leaks. I will say that the Government are absolutely committed to growing our economy, and making this a great place for businesses to invest in and trade.